<PAGE>
                                                                   EXHIBIT 10(a)

AMSOUTH BANK     AmSouth Bank                              Phone: (205) 801-0549
                 1900 5th Avenue North                     Fax:   (205) 801-0745
                 6th Floor
                 Birmingham, AL  35203
--------------------------------------------------------------------------------

                                  July 1, 2002

Martin Industries, Inc.
Attention: Mr. James W. Truitt
Vice President and Chief Financial Officer
P.O. Box 128
Florence, Alabama 35631

Re:      Line of Credit (Account #120435-524769); Loan Agreement dated January
         7, 1993, as amended April 5, 1994, February 17, 1995, March 15, 1995,
         March 28, 1996, August 28, 1997, January 1, 2000, December 29, 2000,
         January 31, 2001, March 15, 2001, May 15, 2001, June 15, 2001,
         September 1, 2001, October 15, 2001, October 31, 2001, November 9,
         2001, November 19, 2001, November 26, 2001, December 19, 2001, January
         14, 2002 and April 1, 2002 (collectively "Loan Agreement") by and among
         Martin Industries, Inc. ("Martin Industries") and AmSouth Bank ("the
         Bank"). In this letter capitalized terms shall be given the meanings
         indicated in the Loan Agreement and/or in this letter.

Dear Mr. Truitt:

I am writing this letter to you concerning the indebtedness ("Indebtedness")
referenced above of Martin Industries to the Bank and your recent request that
the Loan Agreement be amended to effect an extension of the Line of Credit
Termination Date. You have also requested a waiver of certain covenants included
in the Loan Agreement.

In response to your requests, the Bank hereby amends the Loan Agreement as
follows:

         A.       The definition of "Line of Credit Termination Date" in Section
1.02 is amended as follows:

                           LINE OF CREDIT TERMINATION DATE shall
                           mean the earlier to occur of (a) the
                           date on which an Event of Default
                           occurs or (b) August 31, 2002 (or such
                           later termination date as the Borrower
                           and the Lender hereafter agree on in a
                           written extension agreement pursuant
                           to Section 3).

Effective as of July 1, 2002, all references in the Loan Documents to the "Loan
Agreement" shall mean the Loan Agreement, as heretofore modified and amended and
as further modified and amended hereby.


                                       1
<PAGE>

In all other respects, the Loan Agreement shall remain in full force and effect
in accordance with its terms.

In addition to the foregoing, the Bank waives any default or Event of Default
arising out of the Borrower's failure to comply with Sections 8.09, 8.11, 8.12,
8.13 and 8.20 of the Loan Agreement with respect to the fiscal periods ended
through June 30, 2002.

In addition, the Bank agrees that the payment of the fee in the amount of One
Hundred Thousand and No/100 Dollars ($100,000) due to be paid to the Bank by
Martin Industries on July 1, 2002 (the "Maturity Fee"), is extended to August
31, 2002; provided, however, that if Martin Industries pays in full all amounts
outstanding under the Line of Credit Note on or before July 31, 2002, Martin
Industries shall not be obligated to pay the Maturity Fee; and, provided
further, that if Martin Industries pays in full all amounts outstanding under
the Line of Credit Note following July 31, 2002, but on or before August 15,
2002, Martin Industries shall be obligated to pay only one-half of the Maturity
Fee ($50,000.00).

To evidence the acceptance of the foregoing amendments and agreements on the
terms and conditions set forth herein, please sign and return to me the enclosed
copy of this letter agreement. By so signing the enclosed copy of this letter
agreement, Martin Industries acknowledges and agrees to the following terms and
conditions of such amendments and agreements:

1.       This letter agreement shall not be deemed to be an accord and
         satisfaction of the Indebtedness or any other obligation owed to the
         Bank.

2.       All collateral that now secures all or any of the Indebtedness shall
         continue to secure same. Nothing in this letter agreement diminishes
         any security interest or lien that the Bank has in any assets securing
         the Indebtedness. All of the collateral, rights, security, and
         guarantees that the Bank now has to secure any of the Indebtedness due
         from Martin Industries shall remain in full force and effect and are
         hereby ratified and confirmed.

3.       The Bank reserves all of its rights and remedies under the Loan
         Agreement, the Security Documents, any other Loan Documents, and/or
         applicable law, in respect of any Event(s) of Default. The current
         non-exercise by the Bank of any rights and remedies which it may have
         shall not constitute a release or waiver of any of its rights and/or
         remedies or a release or waiver of any Event(s) of Default under the
         Loan Agreement, the Security Documents, or any other Loan Documents,
         except for the Waiver provided in this letter agreement. The Bank
         specifically reserves the right to invoke any and all rights and
         remedies at any time in its sole discretion.

4.       Martin Industries hereby releases, satisfies, cancels, waives, acquits,
         and forever discharges the Bank, its directors, officers, employees,
         agents, attorneys, successors and assigns, of and from any and all
         claims, demands, actions, or causes of action of any kind or character,
         arising at any time in the past, up to and including the date of this
         letter agreement, which relate or pertain in any way to the
         Indebtedness and/or collection of them.


                                       2
<PAGE>

5.       The Indebtedness is owed by Martin Industries to the Bank for the
         amount (exclusive of outstanding letters of credit, ACH exposures and
         the Bank's attorneys fees) herein stated and there are no defenses,
         setoffs, or counterclaims with respect thereto:


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                                            Payoff as of
           General Description                   Obligation No.             July 1, 2002
         -----------------------               ------------------         ----------------
         <S>                                   <C>                        <C>
         Line of Credit                              #524769                $7,072,424.35
</TABLE>

6.       Martin Industries agrees to pay the Indebtedness strictly and promptly
         in accordance with the terms of the applicable promissory notes or
         other debt instruments, as specifically modified by the Loan Agreement
         and this letter agreement.

7.       Martin Industries shall pay to the Bank a fee in the total amount of
         Five Thousand and No/100 Dollars ($5,000.00) upon the execution of this
         letter agreement. Subject to the terms and conditions otherwise
         applicable to the making of Advances under the Loan Agreement, Martin
         Industries may request and receive an Advance to pay the Closing Fee.

8.       In the event Martin Industries does not pay in full all amounts
         outstanding under the Line of Credit on or before July 31, 2002, Martin
         Industries will issue to the Bank warrants to purchase common stock in
         Martin Industries equal to ten percent (10%) of the outstanding shares
         of Martin Industries for a per share purchase price of $0.14. The Bank
         hereby waives its right to obtain warrants to purchase common stock in
         Martin Industries as provided for in paragraph 8 of that certain letter
         agreement between Martin Industries and the Bank dated April 1, 2002
         (the "April 2002 Letter Agreement"), and acknowledges and agrees that
         the obligation of Martin Industries to issue said warrants to purchase
         common stock to the Bank pursuant to the April 2002 Letter Agreement is
         null and void and is replaced by the agreement contained in this
         paragraph 8.

9.       Martin Industries agrees to pay to the Bank's counsel, Wilmer, Lee &
         Rowe, P.A., on or before August 31, 2002, all of its attorney's fees
         incurred in connection with this amendment and/or the collection of the
         Indebtedness.

                                  Very truly yours,



                                  /s/ DARLENE CHANDLER
                                  Darlene Chandler
                                  Vice President

cc:  Denson N. Franklin III, Esq.
     S. Dagnal Rowe, Esq.

ACCEPTED AND AGREED TO BY:

                MARTIN INDUSTRIES, INC.



By:               /s/ JAMES W. TRUITT
    -------------------------------------------------
                    James W. Truitt
    Its Vice President and Chief Financial Officer


                                       4