FORM 10-Q

                 ------------------------------------------------


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                               QUARTERLY REPORT
                      PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934


              For the quarterly period ended September 30, 2001.

                         Commission File No. 1-8129.


                            US 1 INDUSTRIES, INC.
            (Exact name of registrant as specified in its charter)


          Indiana                                            95-3585609
          -------                                            ----------
(State of Incorporation)                  (I.R.S. Employer Identification No.)



   1000 Colfax, Gary, Indiana                                   46406
   --------------------------                                   -----
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code: (219) 944-6116
                                                    --------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_  No ___
     -


As of November 9, 2001, there were 10,618,224 shares of registrant's common
stock were outstanding.





<PAGE>

Part I  FINANCIAL INFORMATION


Item 1. FINANCIAL STATEMENTS.


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
             SEPTEMBER 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000
<TABLE>
<CAPTION>
ASSETS
                          September 30, December 31,
                                                      2001          2000
                                                     ----           ----
<S>                                               <C>            <C>
                                                   (Unaudited)
CURRENT ASSETS:
Accounts receivable-trade, less allowance for
    doubtful accounts of $479,000 and $209,000
    respectively                                  $10,713,558    $9,911,436
Other receivables                                   1,133,459       382,057
Deposits                                               44,450        40,450
Prepaid expenses                                      247,354       309,897
Current deferred tax asset                               400,000    400,000
                                                   -----------   ----------
      Total current assets                         12,538,821    11,043,840

FIXED ASSETS:
   Equipment                                        1,448,153      335,402
   Less accumulated depreciation and amortization    (192,727)     (68,797)
                                                    ----------   ----------
      Net fixed assets                              1,255,426      266,605
                                                    ----------  -----------
ASSETS HELD FOR SALE:
   Land                                               195,347       195,347
   Valuation allowance                               (141,347)     (141,347)
                                                    ----------  -----------
      Net assets held for sale                         54,000        54,000
 Non-current deposits                                 126,461       126,461
 Non-current deferred tax asset                       400,000       400,000
                                                    ----------  -----------
TOTAL ASSETS                                      $14,374,708   $11,890,906
                                                    ==========  ===========

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>


<PAGE>


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
             SEPTEMBER 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000

                   LIABILITIES AND SHAREHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
                                                  September 30, December 31,
                                                      2001           2000
                                                      ----           ----
                                                 (Unaudited)
CURRENT LIABILITIES:
<S>                                              <C>            <C>
   Short-term debt                               $ 5,916,888    $ 4,503,896
   Accounts payable                                3,552,740      2,621,107
   Bank overdraft                                    373,395        522,201
   Accrued expenses                                  193,892        244,446
   Insurance and claims                              386,553        418,450
   Accrued compensation                               36,645         33,891
   Accrued interest                                  943,090        836,019
   Fuel and other taxes payable                       67,024        143,796
                                                 -----------   ------------
      Total current liabilities                   11,470,227      9,323,806
                                                 -----------   ------------
LONG-TERM DEBT (primarily to related parties)      3,641,991      4,026,210

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK:
    Authorized 5,000,000 shares; no par value,
    Series A shares outstanding:
    2001 and 2000 - 1,094,224
    Liquidation preference $0.3125 per share       1,077,254      1,000,112
SHAREHOLDERS' DEFICIENCY:
   Common stock, authorized 20,000,000 shares;
    no par value; shares outstanding 10,618,224   40,844,296     40,844,296
   Accumulated deficit                           (42,659,060)   (43,303,518)
                                                 -----------     -----------
   Total shareholders' deficiency                 (1,814,764)    (2,459,222)
                                                 -----------     -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
    DEFICIENCY                                  $ 14,374,708    $11,890,906
                                                 ===========    ============


<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>



<PAGE>


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
        THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED)
<TABLE>
<CAPTION>

                                              Three Months Ended            Nine Months Ended
                                                September 30,                 September 30,
                                              2001          2000            2001        2000
                                              ----          ----            ----        ----
<S>                                    <C>              <C>           <C>            <C>
OPERATING REVENUES                      $ 18,427,655    $13,487,727   $  51,415,279  $34,111,782
                                          ------------  ------------    ------------  -----------
OPERATING EXPENSES:
  Purchased transportation/commissions    16,113,062     11,147,191      45,158,992   29,038,408
  Insurance and claims                       554,342        417,669       1,423,076    1,050,541
  Salaries, wages, and other                 506,283        705,461       1,576,047    1,560,302
  Operating supplies and expense             643,596        658,451       1,700,202    1,164,867
  Other expenses                             181,006         43,148         490,872      262,811
                                          ------------  ------------    ------------  ----------
     Total operating expenses             17,998,289     12,971,920      50,349,189   33,076,929
                                          ------------  ------------    ------------  ----------
OPERATING INCOME                             429,366        515,807       1,066,090    1,034,853
                                          ------------  ------------    ------------  ----------
NON-OPERATING INCOME (EXPENSE):
  Interest income                              1,251         42,451           4,145       67,525
  Interest (expense)                        (162,908)      (313,313)       (535,864)    (639,944)
  Other income (expense)                      50,674         44,950         187,229       79,713
                                          ------------  ------------    ------------   ----------
     Total non-operating (expense)          (110,983)      (225,912)       (344,490)    (492,706)
                                          ------------  ------------    ------------   ----------
NET INCOME                              $    318,383     $  289,895   $     721,600   $  542,147
DIVIDENDS ON PREFFERRED SHARES               (25,714)       (23,143)        (77,142)     (69,429)
                                          -----------   ------------    ------------  -----------
NET INCOME AVAILABLE TO COMMON
SHARES                                       292,669        266,752         644,458      472,718
                                          ===========   ============    ============  ===========
EARNINGS PER COMMON SHARE -
  BASIC AND DILUTED                     $       0.03     $     0.03   $        0.06   $     0.04
                                          ============  ============    ============  ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES-
  BASIC AND DILUTED                       10,618,224     10,618,224      10,618,224    10,618,224
                                          ============  ============    ============  ===========

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>


<PAGE>


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
       SEPTEMBER 30, 2001 (UNAUDITED) AND SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
                                                Nine Months Ended September30,
                                                          2001        2000
                                                      (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                  <C>          <C>
Net Income                                               721,600    441,342
Adjustments to reconcile net income to net
  Cash used for operations:
  Depreciation and amortization                          123,930     17,218
  Provision for doubtful accounts                        269,490     19,851
  Changes in operating assets and liabilities:
    Accounts receivable - trade                       (1,071,612)(2,317,890)
    Other receivables                                   (751,402)  (384,613)
    Prepaid assets                                        62,543    (44,851)
    Deposits                                              (4,000)   (25,488)
    Accounts payable                                     931,633    548,062
    Accrued expenses                                     (50,554)    18,663
    Accrued interest                                     107,071    156,355
    Insurance and claims                                 (31,897)   136,087
    Accrued compensation                                   2,754     12,075
    Fuel and other taxes payable                         (76,772)    21,654
                                                       ---------   --------
  Net Cash provided by(used in) operating activities     232,784 (1,401,535)
                                                       ---------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                 (1,112,751)   (10,310)
                                                        --------   --------

   Net cash used in investing activities              (1,112,751)   (10,310)
                                                        --------
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings(repayments)under line of credit         896,038    246,495
  Proceeds from equipment line of credit                 669,393          0
  Principal payments on long term debt                  (250,091)   (41,291)
  Net(repayment of) proceeds from shareholder loans     (286,567) 1,553,884
  Decrease in bank overdraft                            (148,806)  (345,719)
                                                       ---------   --------
  Net cash provided by financing activities              879,967  1,413,369
                                                       ---------   --------
NET INCREASE IN CASH                                           0      1,524
CASH, BEGINNING OF PERIOD                                      0          0
                                                        ---------  --------
CASH, END OF PERIOD                                            0      1,524
                                                        =========  ========
</TABLE>



<PAGE>


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                 NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000


The accompanying notes are an integral part of the consolidated financial
statements.

1. BASIS OF PRESENTATION

     The accompanying consolidated balance sheet as of September 30, 2001, and
the  consolidated  statements of operations and cash flows for the three month
and nine month periods ended  September 30, 2001 and 2000 are unaudited,  but,
in the opinion of management,  include all adjustments  (consisting of normal,
recurring  accruals)  necessary  for a  fair  presentation  of  the  financial
position and the results of operations for such periods.  The year-end balance
sheet data was derived from audited  financial  statements.  These  statements
should  be  read  in  conjunction  with  the  Company's  audited  consolidated
financial  statements  for the year ended  December  31,  2000,  and the notes
thereto  included  in the  Company's  annual  report  on  Form  10-K.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted,  as  permitted by the  requirements  of the  Securities  and Exchange
Commission,  although the Company  believes that the  disclosures  included in
these   financial   statements  are  adequate  to  make  the  information  not
misleading.  The results of  operations  for the three  months and nine months
ended  September  30,  2001  and 2000 are not  necessarily  indicative  of the
results for a full year.

2. RECLASSIFICATIONS

     Certain  reclassifications have been made to the previously reported 2000
financial statement to conform with the 2001 presentation.

3. EARNINGS PER COMMON SHARE

     The Company  calculates  earnings per share  ("EPS") in  accordance  with
Statement  of  Financial  Accounting  Standards  No.  128.  Following  is  the
reconciliation  of the  numerators and  denominators  of the basic and diluted
EPS. There were no outstanding common stock equivalents in these periods.
<TABLE>
<CAPTION>
                                                       Nine Months Ended
Numerator                                             2001           2000
                                                      ----           ----
<S>                                              <C>          <C>
       Net income                                 $ 721,600    $  542,147
       Dividends on preferred shares                (77,142)      (69,429)
                                                 ----------   ------------
 Net income available to common
        shareholders for basic and diluted EPS      644,458       472,718

Denominator
       Weighted average common shares            10,618,224    10,618,224
       outstanding for basic and diluted EPS
</TABLE>



<PAGE>
                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--(Continued)


4. SHORT-TERM DEBT
Short-term debt at September 30, 2001, and December 31, 2000, comprises:
<TABLE>
<CAPTION>
                                             September 30,       December 31,
                                                 2001               2000
                                              ----------         ----------
<S>                                           <C>               <C>
Line of credit                                $5,167,142         $4,271,104
Current portion of long-term debt                749,746            232,792
                                              ----------         ----------
         Total                                $5,916,888         $4,503,896
                                              ==========         ==========
</TABLE>
     The Company had a $5.5  million  line of credit that matured on September
28, 2001.  This  revolving  line of credit was amended  effective  October 15,
2001,  increasing  the line to $7.0 million and  extending  the maturity  date
until  October  1, 2003.  Advances  under  this  revolving  line of credit are
limited to 70% of eligible accounts  receivable and bear interest at the prime
rate (6.25% at September  30,2001).  The interest rate is currently based upon
certain  financial  covenants  and may range from prime to prime plus .5%. The
Company's  accounts  receivable,  property,  and  other  assets  collateralize
advances  under the  agreement.  Borrowings up to $1 million are guaranteed by
the Chief  Executive  Officer and Chief Financial  Officer of the Company.  At
September  30, 2001,  the  outstanding  borrowings on this line of credit were
$5.2 million.

     In  addition to the $7.0  million  line of credit,  the Company  also has
established  a separate $1 million  line for  equipment  financing.  Effective
October 15, 2001, the maturity date of this line was extended from May 15,2002
until October 1, 2003. The principal  balance on the equipment line is payable
monthly  based  on  a  five-year  amortization  of  the  outstanding  balance.
Borrowings  on this line bear interest at the prime rate in effect plus 1% per
annum. At September 30, 2001, the outstanding borrowings on the equipment line
totaled $702,102.

     Also,  in October 2001,  the Company  established  an additional  line of
credit in the  amount of  $300,000  for  equipment  purchases.  The  principal
balance of this line shall bear  interest  at the prime rate in effect plus 1%
per annum. The maturity date of this equipment line is October 1, 2003.

     These lines of credit are subject to  termination  upon various events of
default,  including  failure to remit timely  payments of  interest,  fees and
principal, any adverse change in the business of the Company or the insecurity
of the lender  concerning the ability of the Company to repay its  obligations
as and when due or  failure to meet  certain  financial  covenants.  Financial
covenants include: minimum net worth requirements, total debt service coverage
ratio,  capital  expenditure   limitations,   and  prohibition  of  additional
indebtedness without prior authorization.





<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION.



You should read the following  discussion regarding the Company along with the
Company's consolidated financial statements and related notes included in this
quarterly report. The following discussion contains forward-looking statements
that are subject to risks, uncertainties and assumptions. The Company's actual
results, performance and achievements in 2001 and beyond may differ materially
from those expressed in, or implied by these forward-looking  statements.  See
cautionary note regarding forward-looking statements.

Results of Operations


The financial  statements and related notes  contained  elsewhere in this Form
10-Q as of and for the nine months and three months ended  September  30, 2001
and in the  Company's  Form 10-K for its fiscal year ended  December 31, 2000,
are essential to an  understanding  of the comparisons and are incorporated by
reference into the discussion that follows.


Nine  months  ended  September  30, 2001  Compared  to the nine  months  ended
September 30, 2000


The Company's  operating  revenues  increased  from $34.1 million for the nine
months ended  September 30, 2000 to $51.4 million for the same period in 2001.
This is an increase of 51.0%.  This increase is  attributable to the continued
growth at Carolina National  Transportation  and Keystone Lines, the expansion
of  Keystone  Logistics,  Inc.  and the start up of three new  companies,  CAM
Transport, Inc., Unity Logistics, Inc. and ERX, Inc.

The following table set forth the percentage relationships of expense items to
revenue for the nine months ended September 30, 2001 and September 30, 2000:

<TABLE>
<CAPTION>
                                                      2001      2000
                                                     ------    ------
<S>                                                   <C>      <C>
Revenue                                               100.0%   100.0%
Operating expenses:
    Purchased transportation and commissions           87.8     85.1
    Insurance and claims                                2.8      3.1
    Salaries, wages and other                           3.1      4.6
    Other operating expenses                            4.3      4.2
                                                     -------   ------
     Total operating expenses                          98.0     97.0
                                                      ------   ------
Operating income                                        2.0      3.0
</TABLE>






<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION (continued)


     The  Company  has  three  direct  variable  costs.  These  are  purchased
transportation,  commissions,  and insurance. At September 30, 2000 the sum of
these direct  variable  costs was 88.2% of revenue in  comparison  to 90.6% at
September 30, 2001.  As reflected in the table above,  the overall cost of the
direct variable items has increased 2.4% while insurance and claims  decreased
 .3% as a percentage of revenues.  This decrease in insurance and corresponding
increase in purchased  transportation  and  commissions  is due to the Company
brokering a higher percentage of its freight in 2001 as compared to 2000. When
the Company  brokers  freight,  the  Company  does not pay  insurance  on this
freight. However, the purchased transportation expense is greater for brokered
freight.

     Salaries,  wages and other expenses were 3.1% of revenue at September 30,
2001 and  4.6% for the same  period  in 2000.  This is a  decrease  of 1.5% as
related to  revenue.  Salaries  and wages do not  increase at the same rate as
revenue  due  to  economies   of  scale,   improved   productivity,   and  the
implementation of technological  solutions.  Other operating expenses remained
relatively  constant as a  percentage  of revenue  for the nine  months  ended
September  30, 2001 in  comparison  to the same period in 2000.  Allowance for
doubtful  accounts for the nine months ended  September  30, 2001 was $479,000
and $209,000 for the same period of 2000. The Company has two large  customers
whose  credit  has  declined.   Management   believes  the  current  allowance
adequately  provides for the possibility that not all accounts  receivable for
these two larger customers will be collected.

     Based on the changes in revenue and expenses  discussed above,  operating
income  increased  by  $31,237  from  $1,034,853  for the  nine  months  ended
September 30, 2000 to $1,066,090 for the nine months ended September 30, 2001.
While operating  income increased for the nine months ended September 30, 2001
in  comparison  to the previous  year,  operating  income as a  percentage  of
revenue actually decreased,  from 3.0% for the nine months ended September 30,
2000 to 2.0%  for the  same  period  in 2001.  This  decrease  is due to costs
related to opening new terminals.

     Interest expense decreased by $104,080 in 2001. Interest at September 30,
2000 was $639,944  and at  September  30, 2001  interest  was  $535,864.  This
decrease in interest  expense is  attributable  to  continued  decrease in the
prime rate. The rate on the Company's loan with Firstar is currently  based on
certain financial covenants and may range from prime to prime plus .5%.

     Non-operating  income,  exclusive  of interest  expense,  increased  from
$147,238 for the nine months ended September 30, 2000 to $191,374 for the nine
months ended  September 30, 2001. The increase was primarily  attributable  to
income generated through the financing of receivables by T.C. Services.

     Net income for the nine months  ended  September  30,  2001 was  $721,600
compared with $542,147 for the same period in 2000.








<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION (continued)



Three  months  ended  September  30, 2001  Compared to the three  months ended
September 30, 2000



The Company's  operating  revenues  increased from $13.5 million for the three
months ended  September 30, 2000 to $18.4 million for the same period in 2001.
This is an increase of 37%.  This  increase is  attributable  to the continued
growth at Carolina National  Transportation  and Keystone Lines, the expansion
of  Keystone  Logistics,  Inc.  and the start up of three new  Companies,  CAM
Transport, Inc., Unity Logistics, Inc. and ERX, Inc.

The following table set forth the percentage relationships of expense items to
revenue for the three months ended September 30, 2001 and September 30, 2000:

<TABLE>
<CAPTION>
                                                      2001      2000
                                                     ------    ------
<S>                                                   <C>      <C>
Revenue                                               100.0%   100.0%
Operating expenses:
    Purchased transportation and commissions           87.4     82.6
    Insurance and claims                                3.0      3.1
    Salaries, wages and other                           2.7      5.2
    Other operating expenses                            4.5      5.2
                                                     -------   ------
     Total operating expenses                          97.6     96.1
                                                      ------   ------
Operating income                                        2.4      3.9
</TABLE>


     The  Company  has  three  direct  variable  costs,  which  are  purchased
transportation,  commissions,  and  insurance.  For  the  three  months  ended
September 30, 2000 the sum of these direct variable costs was 85.7% of revenue
in  comparison  to 90.4% for the three months  ended  September  30, 2001.  As
reflected in the table above, the overall cost of purchased transportation and
commissions has increased 4.7% while  insurance and claims  decreased .1% as a
percentage of revenues.  This decrease in insurance and corresponding increase
in purchased  transportation and commissions is due to the Company brokering a
higher percentage of its freight for the three months ended September 30, 2001
as  compared  to the same  period of time in 2000.  When the  Company  brokers
freight,  the Company does not pay  insurance on this  freight.  However,  the
purchased  transportation  expense is greater for brokered freight.  Partially
offsetting the decrease in insurance expense resulting from a higher amount of
brokered freight, is an increase in accident claims expense.


<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION (continued)


     Salaries,  wages and other  expenses  were 2.7% of revenue  for the three
months ended  September 30, 2001 and 5.2% for the same period in 2000. This is
a decrease of 2.5% as related to revenue.  Salaries  and wages do not increase
at the same rate as revenue due to economies of scale, improved  productivity,
and the  implementation of technological  solutions.  Other operating expenses
were 4.5% of revenue for the three  months ended  September  30, 2001 and 5.2%
for the three months ended  September 30, 2000. The Company has  substantially
increased the allowance  for doubtful  accounts  during the three months ended
September 30, 2001. The addition to the allowance for doubtful accounts during
the three months ended September 30, 2001 was $82,000 and $19,851 for the same
period of 2000. The Company has two large  customers  whose credit declined in
2001.  Management  believes the current allowance  adequately provides for the
possibility  that not all accounts  receivable for these two larger  customers
will be collected.

     Based on the changes in revenue and expenses  discussed above,  operating
income decreased by $86,441 from $515,807 for the three months ended September
30, 2000 to $429,366  for the three  months ended  September  30, 2001.  While
operating  income  increased for the three months ended  September 30, 2001 in
comparison to the previous year,  operating  income as a percentage of revenue
actually decreased, from 3.9% for the three months ended September 30, 2000 to
2.4% for the same period in 2001.  This  decrease  is due to costs  related to
opening new terminals.

     Interest  expense  decreased  by  $150,405  for the  three  months  ended
September 30, 2001 in comparison to the same period of time in 2000. Increased
borrowings  against the Company's  line of credit were  partially  offset by a
decrease in interest rates.  Interest for the three months ended September 30,
2000 was $313,313 and $162,908 for the three months ended September 30, 2001.

     Non-operating  income,  exclusive  of interest  expense,  decreased  from
$87,401 for the three months ended September 30, 2000 to $51,925 for the three
months ended September 30, 2001.

     Net income for the three  months  ended  September  30, 2001 was $318,383
compared with $289,895 for the same period in 2000.

Liquidity and Capital Resources

     As of September 30, 2001, the Company's  financial  position continues to
improve in  comparison  to the prior  fiscal  period.  The  Company  had a net
deficiency  in  shareholder  equity of $1.8 million at September  30, 2001, an
improvement of $644,458 over year-end December 31, 2000.

     Net cash  provided  by (used  in)  operating  activities  increased  $1.6
million from $(1.4)  million for the nine months ended  September  30, 2000 to
$0.2 million for the nine months ended  September 30, 2001.  The cash provided
by operations is due primarily to an increase in net income and an increase in
accounts payable partially offset by an increase in accounts receivable.

     Net cash used in investing  activities  increased $1,102,441 from $10,310
for the nine months ended September 30, 2000 to $1,112,751 for the nine months
ended  September 30, 2001.  Net cash used in investing  activities  during the
first nine months of 2001 related to the investment in additional equipment.

<PAGE>
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION (continued)

     Net cash  provided by  financing  activities,  primarily  generated  from
additional borrowings,  decreased $533,402 from $1,413,369 for the nine months
ended  September 30, 2000 to $879,967 for the nine months ended  September 30,
2001. In 2000, the Company borrowed  approximately $1.5 million from the Chief
Executive officer and Chief Financial  Officer of the Company.  In 2001, there
were no such  borrowings,  accounting  for the  decrease  in cash  provided by
financing  activities.  In addition,  in 2001, the Company paid  approximately
$287,000  on these  shareholder  loans and made  payments of $250,000 on other
long-term  debt.  Partially  offsetting  these  decreases  is an  increase  in
borrowings under the Company's lines of credit agreements totaling
approximately $1.6 million.

     In October 2001, the Company's line of credit was amended,  extending the
maturity date until October 1, 2003 and  increasing the line of credit from $5
million to $7 million.  Borrowings under this line of credit were $5.2 million
at September  30, 2001.  In addition,  the Company has a $1 million  equipment
line of credit with  outstanding  borrowings  of $0.7 million at September 30,
2001.  Effective  October 15, 2001,  the Company  obtained an additional  $0.3
million  equipment line of credit.  The Company believes these lines of credit
along with cash generated from operations will be sufficient to meet the needs
of the Company.

Quantitative and Qualitative Disclosures About Market Risk

Inflation

     Changes in freight  rates  charged by the  Company to its  customers  are
generally  reflected in the cost of purchased  transportation  and commissions
paid by the  Company to  independent  contractors  and  agents,  respectively.
Therefore,  management believes that  future-operating  results of the Company
will be affected primarily by changes in volume of business.  However,  due to
the highly competitive  nature of the truckload motor carrier industry,  it is
possible that future freight rates and cost of purchased transportation may
fluctuate, affecting the Company's profitability.

Certain Relationships and Related Transactions.

     The Company leases office space for its  headquarters  in Gary,  Indiana,
for $3,000 monthly,  from Michael E. Kibler, the president and Chief Executive
Officer  and a director  of the  Company,  and Harold E.  Antonson,  the Chief
Financial Officer, treasurer and a director of the Company. Messrs. Kibler and
Antonson own the property as joint  tenants.  The Company's  monthly rent cost
increased from $2,200 to $3,000 in April 2001.

     One  of the  Company's  subsidiaries  provides  safety,  management,  and
accounting  services  to  companies  controlled  by the  President  and  Chief
Financial Officer of the Company.  These services are priced to cover the cost
of the employees providing the services.

     One  of  the  Company's  insurance  providers,   American  Inter-Fidelity
Exchange (AIFE), is managed by a Director of the Company and the Company has a
deposit with the Provider.

     The  Company  has  long-term  notes  payable  due to its Chief  Executive
Officer, Chief Financial Officer, and August Investment Partnership, an entity
affiliated through common ownership, totaling approximately $4.3 million.


<PAGE>


                    US 1 INDUSTRIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




PART II. OTHER INFORMATION


Item 6(b).  Reports on Form 8-K

     No Reports on Form 8-K have been filed during the quarter.



SIGNATURES

Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  the
registrant  has duly  caused  this  report to be  signed on its  behalf by the
undersigned there unto duly authorized.


US 1 Industries, Inc.


Michael E. Kibler
President



Harold E. Antonson
Chief Financial Officer

November 9, 2001

<PAGE>



                      FOURTH AMENDMENT TO LOAN AGREEMENT
                          AND CONSENT TO ACQUISITION

        This Fourth  Amendment to Loan  Agreement  ("Amendment"),  dated as of
October 15, 2001, is between CAROLINA NATIONAL TRANSPORTATION INC., an Indiana
corporation   ("Carolina");   KEYSTONE   LINES,   a   California   corporation
("Keystone");  GULF LINE TRANSPORT INC., an Indiana corporation ("Gulf Line");
FIVE  STAR  TRANSPORT,  INC.,  an  Indiana  corporation,  ("Five  Star");  CAM
TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC SERVICES INC.,
an Indiana corporation  ("Unity");  ERX, INC., an Indiana corporation ("ERX"),
and FRIENDLY TRANSPORT,  INC., an Indiana corporation  ("Friendly") (Carolina,
Keystone,  Gulf Line, Five Star, Cam, Unity, ERX, and Friendly are hereinafter
collectively  referred to as "Borrowers" or individually as "Borrower");  US 1
INDUSTRIES, INC., an Indiana corporation ("Guarantor"); and FIRSTAR BANK N.A.,
a national  banking  association  ("Lender").  Capitalized  terms not  defined
herein have the meanings ascribed to them in the Loan Agreement,  as that term
is defined herein.

                          PRELIMINARY STATEMENT:

        All Borrowers,  other than Unity,  ERX, and Friendly,  have previously
entered into a Loan  Agreement  with Lender  dated April 18,  2000,  which was
amended by an Amendment  to Loan  Agreement  dated June 9, 2000,  subsequently
amended by a Second  Amendment to Loan  Agreement  dated December 7, 2000, and
further  amended by a Third  Amendment to Loan  Agreement  dated March 1, 2001
(the "Loan Agreement").  Lender has agreed to further amend the Loan Agreement
to 1)  increase  the  Maximum  Revolving  Line of Credit  from  $5,500,000  to
$7,000,000; 2) consent to and provide funds from the proceeds of the Revolving
Loan for the  acquisition  of Transport  Logistics,  LLC, an Arkansas  limited
liability company, and/or Transport Leasing, Inc., an Arkansas corporation; 3)
establish a new $300,000 Guidance Line of Credit for equipment  purchases;  4)
extend the  Revolving  Loan  Maturity  Date to October 1, 2003;  5) modify the
definition of Eligible Accounts Receivable under the Revolving Line of Credit;
and 6) provide for the extension of the Equipment  Loan Maturity Date from May
15, 2002 to October 1, 2003, all on the terms and conditions  hereinafter  set
forth.

         NOW, THEREFORE, it is hereby agreed as follows:

1.        Each of Borrowers and Guarantor  represent and warrant that no Event
          of Default or Incipient  Default exists of will occur as a result of
          any Advance and that each of their  representations  and  warranties
          set forth in the Loan Instruments is true and correct as of the date
          hereof,  except  to the  extent  that  any such  representations  or
          warranties speak exclusively to an earlier date.

2.        Unity,  ERX,  and  Friendly  hereby  agree to all of the  terms  and
          conditions  set forth in the Loan  Agreement  as amended  hereby and
          assume the obligations of Borrowers thereunder jointly and severally
          with the other  Borrowers and agree to be bound by all of the terms,
          covenants,  agreements, and conditions thereof, as the same apply to
          the other Borrowers.

3.        Lender   hereby   consents  to   Guarantor's   formation  of  and/or
          acquisition  of the assets of Unity,  ERX, and Friendly,  and waives
          any breach of the Loan Agreement associated therewith.

4.        The parties  hereby agree to amend and restate in their entirety the
          following  definitions  in  Section  1.1 of the  Loan  Agreement  as
          follows:

                  "Advance: mean any advance of the Revolving Loan, the
                  Equipment Loan, or the Guidance Loan, as the case may be."

                "Borrowers:  means Carolina National  Transportation  Inc., an
        Indiana corporation;  Keystone Lines, a California  corporation;  Gulf
        Line  Transport  Inc., an Indiana  corporation;  Five Star  Transport,
        Inc.,  an  Indiana  corporation;   Cam  Transport,  Inc.,  an  Indiana
        corporation;  Unity Logistic  Services  Inc., an Indiana  corporation;
        ERX,  Inc.,  an Indiana  corporation;  Friendly  Transport,  Inc.,  an
        Indiana  corporation;  and such other  entities owned or controlled by
        any of the foregoing or US 1 Industries, Inc., an Indiana corporation,
        which elects in writing to be designated as a Borrower  hereunder in a
        writing on terms  satisfactory to Lender and as to which Lender elects
        to extend credit  hereunder,  including without  limitation  Transport
        Leasing, Inc., an Arkansas corporation,  and Transport Logistics, LLC,
        an Arkansas limited liability company"

                "Certificated   Collateral:   any  equipment   purchased  with
        proceeds of the  Equipment  Loan or the Guidance Loan which is covered
        by title  issued  under a  statute  of a state  under the law of which
        indication  of a  security  interest  on the  certificate  of title is
        required as a condition of perfection."

                "Eligible  Accounts  Receivable:   The  total  amount  of  the
        Accounts from completed transactions after deducting (i) Accounts over
        75 days past invoice date; (ii) intercompany  Accounts;  (iii) foreign
        Accounts; (iv) Accounts to the extent subject to customer setoffs; (v)
        Accounts  for which the portion of the  Account  aged 75 days past the
        invoice date is in excess of 50% of the total indebtedness owed to any
        of  Borrowers  by the  account  debtor;  (vi)  Accounts  for which the
        account  debtor is a  Governmental  Body,  except  those for which the
        account debtor is the  government of the United States of America,  or
        any department, commission, board, bureau, agency, public authority or
        instrumentality  thereof and with respect to which all  conditions  to
        the pledge of and perfection of a first lien interest in such Accounts
        under the federal  Assignment  of Claims Act codified as 41 USC 15 and
        31 USC 3727, as amended,  on terms  satisfactory to Lender,  have been
        satisfied; and (vii) such other reserves as Lender may reasonably deem
        appropriate."

                "Equipment  Loan  Maturity  Date:  means  the  earlier  of (i)
        October 1, 2003, or (ii) the date on which Borrowers'  obligations are
        accelerated pursuant to this Loan Agreement."

                  "Loan Instruments:

(i)                  Loan Agreement:

(ii)                 Revolving Loan Note;

(iii)                Equipment Loan Note;

(iv)                 Guidance Loan Note;

(v)                  Corporate Guaranty;

(vi)                 Security Instruments;

(vii)                Closing Certificate;

(viii)               Subordination Agreements;

(ix)                 Personal Guaranties; and

(x)                  such other instruments and documents as Lender reasonably
                     may require in connection with the transactions
                     contemplated by this Loan Agreement.

        as the  same  may be  amended  and/or  restated  from  time  to  time,
        including  but  without  limitation  as amended by or pursuant to that
        certain  Amendment to Loan Agreement  dated June 9, 2000, that certain
        Second  Amendment  to Loan  Agreement  dated  December  7, 2000,  that
        certain Third  Amendment to Loan  Agreement  dated March 1, 2001,  and
        this Amendment."

                "Principal  Balance:  the  unpaid  principal  balances  of the
        Revolving Loan, the Equipment Loan, and the Guidance Loan, as the case
        may be."

                "Purchase Date: the date or dates of purchase of any equipment
        purchased with Advances from the Equipment Loan under Section 2.1.A or
        from the Guidance Loan under Section 2.1.B, as the case may be."

                  "Revolving Loan Commitment: $7,000,000"

                "Revolving  Loan Maturity  Date: the earlier of (i) October 1,
        2003 or (ii) the date on which Borrowers'  Obligations are accelerated
        pursuant to the Loan Agreement."

                "Revolving   Loan  Note:  the  promissory   note  executed  by
        Borrowers  payable  to  the  order  of  Lender  in the  amount  of the
        Revolving  Loan  Commitment,  dated  as of the  Closing  Date,  and as
        further  amended and restated as of June 9, 2000,  as further  amended
        and  restated  as of  December  7, 2000,  and as further  amended  and
        restated as of October 15, 2001"

5.      The parties hereby agree to amend Section 1.1 of the Loan Agreement to
        incorporate the following additional definitions:

                "Guidance  Loan:  means the Loan  made by Lender to  Borrowers
        pursuant to Section 2.1.B hereof."

                  "Guidance Loan Commitment: $300,000"

                "Guidance Loan Maturity Date: means the earlier of (i) October
        1,  2003,  or  (ii)  the  date on  which  Borrowers'  obligations  are
        accelerated pursuant to this Loan Agreement."

                "Guidance Loan Note: the promissory note executed by Borrowers
        payable  to the order of Lender in the  amount of the  Revolving  Loan
        Commitment, dated as of October 15, 2001."

6.        Subsection  2.1.4(e)  of  the  Loan  Agreement  is  restated  in its
          entirety to read as follows:

                "availability  shall be limited to  Lender's  advance of funds
        not exceeding  seventy percent (70%) of Borrowers'  Eligible  Accounts
        Receivable, provided that, for so long as Borrowers, at their expense,
        maintain  credit  insurance as to Accounts in amounts,  with a carrier
        and having  provisions  acceptable to Lender,  in its sole discretion,
        availability  shall be  limited  to  Lender's  advance  of  funds  not
        exceeding  seventy-five  percent (75%) of Borrowers' Eligible Accounts
        Receivable."

7.        A new Section 2.1.B of the Loan Agreement is hereby added to read as
          follows:

         "2.1.B   Guidance Loan.
                  -------------

                  2.1.B.1           Amount and Disbursement.
                                    -----------------------

                         Upon the terms and subject to the  conditions  herein
                  set forth,  Lender  agrees to make  Advances of the Guidance
                  Loan to Borrowers from time to time from October 15, 2001 to
                  March 15, 2002, in an aggregate  amount  outstanding  at any
                  one time not in  excess  of the  Guidance  Loan  Commitment.
                  Lender may remit  Advances of the Guidance  Loan directly to
                  the equipment seller. Each of Borrowers shall remain jointly
                  and  severally  liable  with  the  other  Borrowers  for the
                  repayment of all such  Advances of the  Equipment  Loan with
                  interest.

                  2.1.B.2           Guidance Loan Note.
                                    ------------------

                         The Guidance  Loan shall be evidenced by the Guidance
                  Loan Note.

                  2.1.B.3           Reborrowing.
                                    -----------

                         Subject to the  conditions  set forth in this Section
                  2.1.B,  Borrowers  may from time to time  prior to March 15,
                  2002,  reborrow  all or any  portion  of any  Advance of the
                  Guidance Loan which is repaid.

                  2.1.B.4           Conditions.
                                    ----------

                         The  obligation  of Lender to disburse any Advance of
                  the  Guidance  Loan is  subject to the  satisfaction  of the
                  following conditions precedent:

                                   (a)  no  Event  of  Default  or   Incipient
                         Default shall exist or would be created by the making
                         of any such Advance;

                                   (b) each such Advance shall be in a minimum
                         amount of $1,000;

                                   (c) not less  than ten (10)  days  prior to
                         the estimated Purchase Date, Lender shall have:

                                            (i)  received a written request in
                           a form satisfactory to Lender requesting an Advance
                           on the Guidance Loan;

                                            (ii) received and approved of a
                           copy of the purchase agreement and all other
                           agreements or instruments relating to the purchase
                           of any equipment to be purchased with such Advance
                           and shall have received any other information which
                           Lender may request as to any such equipment,
                           including without limitation UCC, judgment and tax
                           lien searches, invoices, bills of sale,
                           certificates of title and other document reports as
                           Lender may request establishing good title in the
                           Seller of the equipment to be purchased free and
                           clear of all encumbrances and that Lender's
                           security interest therein when perfected will be a
                           first Lien; and

                                            (iii) approved the purchase of
                           such equipment, which approval shall not be
                           unreasonably withheld.

                                   (d) on the applicable  Purchase Date,  each
                         of Borrowers'  and  Guarantor's  representations  and
                         warranties set forth in the Loan Instruments shall be
                         true and correct in all material  respects  when made
                         and  at  and as of the  time  of the  Purchase  Date,
                         except to the  extent  that any such  representations
                         and warranties speak expressly to an earlier date;

                                   (e)  delivery  to  Lender  of the  original
                         certificate(s)   of  title  as  to  any  Certificated
                         Collateral  with  the  appropriate  endorsements  and
                         indications thereof of the security interest in favor
                         of Lender;

                                   (f)  Borrower   shall  have  paid  or  made
                         available  in a manner  satisfactory  to  Lender  the
                         balance due for the  purchase of the  equipment to be
                         purchased; and

                                   (g)  the  amount  of  any  Advance  of  the
                         Guidance  Loan  shall be  limited  to eighty  percent
                         (80%) of the purchase  price for the  equipment to be
                         purchased with the proceeds of such Advance."

8.        Section 2.2 of the Loan Agreement is hereby restated in its entirety
          to read as follows:

                  "The  proceeds  of the  Revolving  Loan shall be used to (i)
         refinance  Borrowers'  and  Guarantor's  secured loan  obligations to
         Lender; (ii) for Borrowers' working capital; and (iii) to pay related
         transaction  costs.  Provided that,  with compliance with the Special
         Advance Conditions,  the Borrowers may obtain a Special Advance of up
         to $620,000 of the proceeds of the Revolving Loan.

                  The proceeds of the Equipment Loan shall be used to purchase
         equipment for use in Borrowers' trucking business.

                  The proceeds of the Guidance  Loan shall be used to purchase
         equipment for use in Borrowers' trucking business."

9.        A new  subsection  2.3.1(c) of the Loan Agreement is hereby added to
          read as follows:

                  "The principal balance of the Guidance Loan outstanding from
         time to time shall accrue  interest  from the date of a Guidance Loan
         Advance at (i) the Prime Rate in effect from time to time,  plus (ii)
         1% per annum  provided,  however,  that during a Default Rate Period,
         Borrowers'  Obligations shall bear interest at the applicable Default
         Rate."

10.       A new  subsection  2.4.1(c) of the Loan Agreement is hereby added to
          read as follows:

                  "Interest on the Guidance  Loan shall be payable  monthly in
         arrears commencing  December 1, 2001, with a final payment due on the
         Guidance Loan Maturity Date."

11.       A new  subsection  2.4.2(c) of the Loan Agreement is hereby added to
          read as follows:

                  "The unpaid principal  balance of the Guidance Loan shall be
         due and  payable  as  follows:  the amount of such  unpaid  principal
         balance  divided by sixty (60) shall be payable on the first Business
         Day of the month  commencing  April 15, 2002, and on the 15th of each
         month thereafter with payment of the remaining  principal  balance of
         the Guidance  Loan  becoming due and payable,  if not sooner paid, on
         the Guidance Loan Maturity Date."

12.       Simultaneously  with the execution  hereof,  Borrowers and Guarantor
          shall deliver to Lender the following,  duly executed by the parties
          thereto other than Lender:

i)       Revolving Loan Note, dated as of October 15, 2001, attached hereto as
         Exhibit "A" (the "Revolving Loan Note");

ii)      Equipment Loan Note, dated as of October 15, 2001, attached hereto as
         Exhibit "B" (the "Equipment Loan Note");

iii)     Guidance Loan Note, dated as of October 15, 2001, attached hereto as
         Exhibit "C" (the "Guidance Loan Note");

iv)           Security Agreements executed by Lender and those Borrowers not
              party to the Loan Agreement before the execution of this
              Amendment, attached hereto as Exhibits "D-1", "D-2", and "D-3".

v)            Acknowledgements (re Security Agreements) executed by Guarantor
              and Borrowers other than Unity, ERX, and Friendly in the forms
              attached hereto as Exhibits "E-1", "E-2", "E-3", "E-4", "E-5",
              "E-6", and "E-7";

vi)      Amended and Restated Personal Guaranties of Michael Kibler and Harold
         Antonson in the forms and attached hereto as Exhibit "F-1" and "F-2";

vii)     Amended and Restated Corporate Guaranty of US 1 Industries, Inc. in
         the form attached hereto as Exhibit "G";

viii)    Acknowledgements (Subordinated Debt) in the form attached hereto as
         Exhibit "H-1" or "H-2";

ix)           Certified Resolutions of the Board of Directors of the
              respective Borrowers and Guarantors authorizing the execution
              and delivery and performance of this Amendment and other
              documents referred to herein;

x)            An opinion letter from the law firm of Borrowers' counsel in a
              form reasonably satisfactory to Lender's counsel regarding
              authorization, execution and delivery of this Amendment and the
              documents referenced herein; and

xi)           Articles of Incorporation of, and Certificates of Good Standing
              for, each of Borrowers and Guarantor, all certified as of a date
              not earlier than October 1, 2001.

13.       Notwithstanding the limitations set forth in Section 2.2 of the Loan
          Agreement,  Lender hereby consents to the use of the proceeds of the
          Revolving  Loan for the purpose of acquiring  100% of the membership
          interests in Transport Logistics, LLC, an Arkansas limited liability
          company  ("Transport  Logistics"),  consistent with the terms of the
          Purchase  Agreement in the form attached  hereto as Exhibit "I", and
          hereby grants its consent to such acquisition in accordance with the
          terms  of  Section  7.3  of  the  Loan  Agreement,  subject  to  the
          satisfaction  of the following prior to or  simultaneously  with the
          Advance of the Revolving Loan for such purpose:

(i)               Satisfactory evidence of the acquisition of all of the
                  membership interests of Transport Leasing on terms and
                  conditions acceptable to the Lender, including copies of the
                  fully-executed Purchase Agreement and closing documents
                  provided for therein including without limitation the
                  assignment of the said membership interests to Guarantor.

(ii)     Delivery of Security Agreements in the forms attached hereto as
         Exhibits "J-1" and "J-2" executed by Transport Leasing, Inc.
         ("Transport Leasing") and Transport Logistics.

(iii)             Delivery of UCC Financing Statements by Transport Leasing
                  and Transport Logistics in the forms attached hereto as
                  Exhibits "K-1" and "K-2".

(iv)     Execution and delivery of the Revolving Loan Note, the Equipment Loan
         Note, and the Guidance Loan Note.

(v)               Delivery of evidence including certified copies of manager's
                  and board of directors' resolutions showing authorization by
                  Transport Leasing and Transport Logistics of the execution
                  and delivery of the Revolving Loan Note, the Equipment Loan
                  Note, and the Guidance Loan Note, of the Security Agreements
                  to be executed between those said entities and Lender; and
                  the pledge of collateral provided for therein.

(vi)              Receipt of UCC judgment and tax lien searches for Transport
                  Leasing and Transport Logistics showing no liens other than
                  those in favor of Citicapital Commercial Corporation, a/k/a
                  Associates Transport Clearings ("Citicapital").

(vii)    A payoff letter from Citicapital in a form satisfactory to Lender.

(viii)   A payoff letter/estoppel letter from W.A.J.A., Inc. in a form
                  satisfactory to Lender regarding a note in the principal face
                  amount of $150,000 dated May 4, 2000, ("W.A.J.A. Note")
                  signed by the appropriate representative of W.A.J.A., Inc.
                  setting forth the balance due under such note.

(ix)              Execution and delivery of an Assumption Agreement by
                  Transport Leasing and Transport Logistics in the form
                  attached hereto as Exhibit "L".

(x)               Copies of Articles of Organization for Transport Logistics
                  and of the Articles of Incorporation for Transport Leasing
                  certified by the State of Arkansas dated as of a date no
                  earlier than October 1, 2001.

(xi)              Good Standing Certificates from the State of Arkansas for
                  Transport Logistics and Transport Leasing dated as of a date
                  not earlier than October 1, 2001.

(xii)    Copy of the Operating Agreement of Transport Logistics certified by
                  the members or manager thereof.

(xiii)   An Opinion Letter from counsel for the owners of Transport Leasing in
                  form and substance satisfactory to the Lender.

(xiv)    Satisfaction of all other conditions to Advances of the Revolving Loan
                  as provided in Section 2.1.4 of the Loan Agreement.

(xv)     The amount of such Advance shall not exceed $620,000 and may be made
                  directly to Citicapital and the holders of the W.A.J.A. Note.

Guarantor hereby designates Unity Logistic Services, ERX, Friendly,  Transport
Leasing, and Transport Logistics as entities to be included as Borrowers under
the Loan Agreement.

14.      Borrowers shall cause the maturity date of the Permitted Subordinated
         Indebtedness to be extended to a date not earlier than October 1,
         2003, and to provide evidence thereof satisfactory to Lender.

15.      Borrowers shall reimburse Lender for all of Lender's out-of-pocket
         costs related to the transaction contemplated herein, including
         without limitation any lien searches ordered by Lender's counsel and
         legal fees incurred by Lender in connection with the preparation of
         documents, due diligence review or closing regarding the transaction
         contemplated herein or the enforcement of the terms hereof or of any
         of the Loan Instruments.

16.      From time to time, Borrowers and Guarantor shall execute and deliver
         to Lender such additional documents as Lender reasonably may require
         to carry out the purposes of this Amendment and the Loan Instruments
         and to protect Lender's rights hereunder and thereunder, and shall
         not take any action inconsistent with the purposes of the Loan
         Instruments.

17.      The parties hereto agree that by execution of the Assumption
         Agreement attached hereto as Exhibit I, Transport Logistics and
         Transport Leasing shall be deemed and shall be made parties to the
         Loan Agreement as amended hereby and shall be additional Borrowers
         (as that term is defined in the Loan Agreement).

18.      Except as expressly amended hereby, the terms and conditions of the
         Loan Agreement as originally set forth therein shall remain in full
         force and effect.



           [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]



<PAGE>


         IN WITNESS WHEREOF, the undersigned Borrowers have signed and Lender
has executed this Amendment as of the date first above written.


CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


KEYSTONE LINES, a California corporation

By: _____________________________

Name: ___________________________

Title: __________________________


GULF LINE TRANSPORT INC. an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


FIVE STAR TRANSPORT, INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


CAM TRANSPORT, INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


UNITY LOGISTIC SERVICES INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________

<PAGE>
ERX, INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


FRIENDLY TRANSPORT, INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


US 1 INDUSTRIES, INC., an Indiana corporation

By: _____________________________

Name: ___________________________

Title: __________________________


FIRSTAR BANK N.A., a national banking association

By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President


<PAGE>


                                  EXHIBIT "A"

                              REVOLVING LOAN NOTE

$7,000,000.00              Dated as of April 18, 2000
Chicago, Illinois       Amended and Restated as of June 12, 2000
                 Further Amended and Restated as of December 7, 2000
                 Further Amended and Restated as of October 15, 2001


          FOR   VALUE   RECEIVED,    the   undersigned,    CAROLINA   NATIONAL
TRANSPORTATION  INC., an Indiana corporation  ("Carolina"),  KEYSTONE LINES, a
California  corporation  ("Keystone"),  GULF LINE  TRANSPORT  INC., an Indiana
corporation ("Gulf Line"),  FIVE STAR TRANSPORT,  INC., an Indiana corporation
("Five Star") and CAM TRANSPORT, INC., an Indiana corporation,  UNITY LOGISTIC
SERVICES  INC.,  an  Indiana  corporation  ("Unity"),  ERX,  INC.,  an Indiana
corporation  ("ERX"),   FRIENDLY  TRANSPORT,   INC.,  an  Indiana  corporation
("Friendly"),  TRANSPORT LEASING,  INC., an Arkansas  corporation  ("Transport
Leasing"), and TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity,
ERX,  Friendly,  Transport  Leasing,  and Transport  Logistics are hereinafter
collectively referred to as "Maker"),  hereby promise,  jointly and severally,
to pay to the order of FIRSTAR  BANK  N.A.,  a  national  banking  association
("Lender"),   the  principal  sum  of  SEVEN  MILLION  AND  NO/100ths  DOLLARS
($7,000,000.00),  or, if less,  the  aggregate  unpaid amount of the Revolving
Loan  made  by  Lender  pursuant  to and in  accordance  with  the  applicable
provisions of that certain Loan Agreement dated April 18, 2000,  amended as of
June 9, 2000,  further  amended as of December 7, 2000, and further amended as
of October  15, 2001 (as the same may be amended,  modified,  supplemented  or
restated from time to time, the "Loan Agreement") between Lender, Maker and US
1 INDUSTRIES,  INC., an Indiana  corporation  ("Guarantor") and Lender, at the
office of Lender at 30 N. Michigan Avenue, Chicago, Illinois 60602, or at such
other place as the holder  hereof may appoint,  plus  interest  thereon as set
forth below.

          This Revolving Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable  provisions of the Loan  Agreement.  All
capitalized  terms  used  but not  elsewhere  defined  herein  shall  have the
respective meanings ascribed to such terms in the Loan Agreement.

          The  Principal  Balance  of this  Revolving  Loan  Note  shall  bear
interest at the per annum rate of interest  set forth in  subsection  2.3.1 of
the Loan Agreement.

          Accrued and unpaid  interest on, and the Principal  Balance of, this
Revolving  Loan Note shall be paid in the  manner set forth in Section  2.4 of
the Loan Agreement.

          Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual  number of days during the period for
which interest is being charged.

          During  a  Default  Rate  Period,  the  Principal  Balance  of  this
Revolving Loan Note shall bear interest at the Default Rate, which interest at
such Default Rate shall be paid by Maker to Lender immediately upon demand.

          Subject to the provisions of Section 8.2 of the Loan  Agreement,  at
the election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance of this Revolving Loan
Note,  and all  accrued  and  unpaid  interest  thereon,  shall be and  become
immediately due and payable in full. Failure to exercise this option shall not
constitute  a waiver  of the  right to  exercise  the same in the event of any
subsequent Event of Default, and such failure shall not be deemed to establish
a custom or course of dealing or performance between Maker and Lender.

          This  Revolving  Loan  Note  may be  prepaid,  in  whole or in part,
without  penalty and in accordance  with the terms and  conditions of the Loan
Agreement applicable thereto.

          All funds  received by Lender  during the  existence  of an Event of
Default  shall be applied  in the manner set forth in Section  8.4 of the Loan
Agreement.

          All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions  therefor set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.

          Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument,  Lender shall not collect a rate of interest on any
obligation  or  liability  due and  owing by Maker in  excess  of the  maximum
contract rate of interest permitted by applicable law ("Excess Interest").  If
any Excess  Interest is provided  for or  determined  by a court of  competent
jurisdiction  to have been  provided  for in this  Revolving  Loan Note or any
other Loan Instrument,  then in such event (i) Maker shall not be obligated to
pay such Excess Interest,  (ii) any Excess Interest  collected by Lender shall
be,  (A) if any Event of  Default  exists  and is  continuing,  applied to the
Principal  Balance or to  accrued  and  unpaid  interest  not in excess of the
maximum rate  permitted by applicable law or (B) if no Event of Default exists
and is  continuing,  refunded to the payor  thereof,  (iii) the interest rates
provided for herein  (collectively  the "Stated Rate") shall be  automatically
reduced to the maximum  rate allowed  from time to time under  applicable  law
(the  "Maximum  Rate")  and  this  Revolving  Loan  Note  and the  other  Loan
Instruments,  as  applicable,  shall be  deemed  to have  been,  and shall be,
modified to reflect such  reduction,  and (iv) Maker shall not have any action
against  Lender for any damages  arising out of the payment or  collection  of
such Excess Interest;  provided,  however,  that if at any time thereafter the
Stated  Rate is less  than  the  Maximum  Rate,  Maker  shall,  to the  extent
permitted by law, continue to pay interest at the Maximum Rate until such time
as the total interest  received by Lender is equal to the total interest which
Lender would have  received had the Stated Rate been (but for the operation of
this  provision)  the interest  rate  payable.  Thereafter,  the interest rate
payable  shall be the  Stated  Rate  unless  and until the  Stated  Rate again
exceeds the Maximum  Rate,  in which event the  provisions  contained  in this
paragraph again shall apply.

          If any suit or action is  instituted  or  attorneys  are employed to
collect  this  Revolving  Loan Note or any part  thereof,  Maker  promises and
agrees, jointly and severally,  to pay all costs of collection,  including all
court costs and reasonable attorneys' fees.

          Maker hereby waives presentment for payment,  protest and demand and
notice of protest,  demand,  dishonor and  nonpayment of this  Revolving  Loan
Note,  and  expressly  agrees that this  Revolving  Loan Note,  or any payment
hereunder,  may be extended  from time to time before,  at or after  maturity,
without in any way affecting the liability of Maker hereunder or any guarantor
hereof.

          This Revolving  Loan Note shall be construed in accordance  with and
governed by the laws and decisions of the State of Illinois, without regard to
the conflict of laws  principles  thereof.  All funds  disbursed to or for the
benefit of Maker will be deemed to have been disbursed in Chicago, Illinois.

          Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Revolving Loan Note shall
be  litigated in either the Circuit  Court of Cook County,  Illinois or in the
United States  District  Court for the Northern  District of Illinois,  or, if
Lender initiates such action, in addition to the foregoing  courts,  any court
in which Lender shall initiate or to which Lender shall remove such action, to
the extent such court has  jurisdiction.  Maker hereby  expressly  submits and
consents in advance to such jurisdiction in any action or proceeding commenced
by Lender in or removed  by Lender to any of such  courts,  and hereby  agrees
that personal service of the summons and complaint, or other process or papers
issued  therein may be made by registered or certified mail addressed to Maker
at the address to which notices are to be sent pursuant to Section 11.1 of the
Loan  Agreement.  Maker waives any claim that either the Circuit Court of Cook
County, Illinois or the United States District Court for the Northern District
of Illinois  is an  inconvenient  forum or an improper  forum based on lack of
venue. To the extent provided by law, should any Maker, after being so served,
fail to  appear  or answer to any  summons,  complaint,  process  or papers so
served within the number of days prescribed by law after the mailing  thereof,
Maker shall be deemed in default and an order  and/or  judgment may be entered
by the  court  against  Maker  as  demanded  or  prayed  for in such  summons,
complaint,  process or  papers.  The  exclusive  choice of forum for Maker set
forth in this  paragraph  shall not be deemed to preclude the  enforcement  by
Lender of any judgment  obtained in any other forum or the taking by Lender of
any  action to enforce  the same in any other  appropriate  jurisdiction,  and
Maker  hereby  waives the right to  collaterally  attack any such  judgment or
action.

          Maker  acknowledges and agrees that any controversy  which may arise
under  this  Revolving  Loan Note would be based upon  difficult  and  complex
issues and,  therefore,  Maker agrees that any lawsuit arising out of any such
controversy  will be  tried in a court of  competent  jurisdiction  by a judge
sitting without a jury.

          This Revolving Loan Note may not be changed or amended  orally,  but
only by an instrument in writing signed by the party against whom  enforcement
of the change or amendment is sought.

          This  Revolving  Loan  Note  shall be  binding  upon  Maker and upon
Maker's  successors  and  assigns,  and  shall  inure  to the  benefit  of the
successors and permitted  assigns of Lender. If more than one party shall sign
this Revolving Loan Note as Maker, their obligations  hereunder as Maker shall
be joint and several.

          In the event that any provision hereof shall be deemed to be invalid
by  reason of the  operation  of any law,  or by reason of the  interpretation
placed thereon by any court or any Governmental Body, this Revolving Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other  provisions  hereof,  and
any and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.

          Time for the performance of Maker's obligations under this Revolving
Loan Note is of the essence.

          This  Revolving  Loan Note is  entitled  to the  benefit  of certain
collateral security, all as more fully set forth in the Loan Agreement.

          The  Revolving  Loan Note  amends,  restates  in its  entirety,  and
supercedes a Revolving Loan Note dated December 7, 2000, in the principal face
amount of  $5,500,000,  which amended and restated a Revolving Loan Note dated
June 12,  2000,  made by Borrowers  and payable to the order of Lender,  which
amended and restated a Revolving Loan Note dated April 18, 2000.

IN WITNESS WHEREOF, this Revolving Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.


               CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: __________________________


               KEYSTONE LINES, a California corporation

                                     By: ____________________________

                                     Name: __________________________

                                     Title: _________________________


               GULF LINE TRANSPORT INC., an Indiana corporation

                                     By: ____________________________

                                     Name: __________________________

                                     Title: _________________________


               FIVE STAR TRANSPORT, INC., an Indiana corporation

                                     By: ____________________________

                                     Name: __________________________

                                     Title: _________________________


               CAM TRANSPORT, INC., an Indiana corporation

                                     By: ____________________________

                                     Name: __________________________

                                     Title: _________________________


               UNITY LOGISTIC SERVICES INC., an Indiana corporation

                                     By: ____________________________

                                     Name: __________________________

                                     Title: _________________________


               ERX, INC., an Indiana corporation

                                     By: ___________________________

                                     Name: _________________________

                                     Title: ________________________

               FRIENDLY TRANSPORT, INC., an Indiana corporation

                                     By: ___________________________

                                     Name: _________________________

                                     Title: ________________________


               TRANSPORT LEASING, INC., an Arkansas corporation

                                     By: __________________________

                                     Name: ________________________

                                     Title: _______________________


               TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company

                                     By: __________________________

                                     Name: ________________________

                                     Title: _______________________



<PAGE>


                                      -5-
                                  EXHIBIT "B"

                              EQUIPMENT LOAN NOTE

$1,000,000.00            Dated as of December 7, 2000
Chicago, Illinois   Amended and Restated as of March 1, 2001
                Further Amended and Restated as of October 15, 2001



          FOR   VALUE   RECEIVED,    the   undersigned,    CAROLINA   NATIONAL
TRANSPORTATION  INC., an Indiana corporation  ("Carolina"),  KEYSTONE LINES, a
California  corporation  ("Keystone"),  GULF LINE  TRANSPORT  INC., an Indiana
corporation ("Gulf Line"),  FIVE STAR TRANSPORT,  INC., an Indiana corporation
("Five Star") and CAM TRANSPORT, INC., an Indiana corporation,  UNITY LOGISTIC
SERVICES  INC.,  an  Indiana  corporation  ("Unity"),  ERX,  INC.,  an Indiana
corporation  ("ERX"),   FRIENDLY  TRANSPORT,   INC.,  an  Indiana  corporation
("Friendly"),  TRANSPORT LEASING,  INC., an Arkansas  corporation  ("Transport
Leasing"), and TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity,
ERX,  Friendly,  Transport  Leasing,  and Transport  Logistics are hereinafter
collectively referred to as "Maker")),  hereby promise, jointly and severally,
to pay to the order of FIRSTAR  BANK  N.A.,  a  national  banking  association
("Lender"),   the  principal   sum  of  ONE  MILLION  AND  NO/100ths   DOLLARS
($1,000,000.00),  or, if less,  the  aggregate  unpaid amount of the Equipment
Loan  made  by  Lender  pursuant  to and in  accordance  with  the  applicable
provisions of that certain Loan Agreement dated April 18, 2000, and amended as
of June 12, 2000,  December 7, 2000, and March 1, 2001, and as further amended
as of the date hereof (as the same may be amended,  modified,  supplemented or
restated from time to time, the "Loan Agreement") between Lender, Maker and US
1 INDUSTRIES,  INC., an Indiana  corporation  ("Guarantor") and Lender, at the
office of Lender at 30 N. Michigan Avenue, Chicago, Illinois 60602, or at such
other place as the holder  hereof may appoint,  plus  interest  thereon as set
forth below.

          This Equipment Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable  provisions of the Loan  Agreement.  All
capitalized  terms  used  but not  elsewhere  defined  herein  shall  have the
respective meanings ascribed to such terms in the Loan Agreement.

          The  principal  balance  of this  Equipment  Loan  Note  ("Principal
Balance")  shall bear  interest at the per annum rate of interest set forth in
subsection 2.3 of the Loan Agreement.

          Accrued and unpaid  interest on, and the Principal  Balance of, this
Equipment  Loan Note shall be paid in the  manner set forth in Section  2.4 of
the Loan Agreement.

          Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual  number of days during the period for
which interest is being charged.

          During a Default  Rate  Period,  the  Principal  Balance  shall bear
interest at the Default  Rate,  which  interest at such  Default Rate shall be
paid by Maker to Lender immediately upon demand.

          Subject to the provisions of Section 8.2 of the Loan  Agreement,  at
the election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal  Balance,  and all accrued and
unpaid interest  thereon,  shall be and become  immediately due and payable in
full.  Failure to exercise  this option  shall not  constitute a waiver of the
right to exercise  the same in the event of any  subsequent  Event of Default,
and such  failure  shall  not be  deemed  to  establish  a custom or course of
dealing or performance between Maker and Lender.

          This  Equipment  Loan  Note  may be  prepaid,  in  whole or in part,
without  penalty and in accordance  with the terms and  conditions of the Loan
Agreement applicable thereto.

          All funds  received by Lender  during the  existence  of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the Loan
Agreement.

          All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions  therefor set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.

          Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument,  Lender shall not collect a rate of interest on any
obligation  or  liability  due and  owing by Maker in  excess  of the  maximum
contract rate of interest permitted by applicable law ("Excess Interest").  If
any Excess  Interest is provided  for or  determined  by a court of  competent
jurisdiction  to have been  provided  for in this  Equipment  Loan Note or any
other Loan Instrument,  then in such event (i) Maker shall not be obligated to
pay such Excess Interest,  (ii) any Excess Interest  collected by Lender shall
be,  (A) if any Event of  Default  exists  and is  continuing,  applied to the
Principal  Balance or to  accrued  and  unpaid  interest  not in excess of the
maximum rate  permitted by applicable law or (B) if no Event of Default exists
and is  continuing,  refunded to the payor  thereof,  (iii) the interest rates
provided for herein  (collectively  the "Stated Rate") shall be  automatically
reduced to the maximum  rate allowed  from time to time under  applicable  law
(the  "Maximum  Rate")  and  this  Equipment  Loan  Note  and the  other  Loan
Instruments,  as  applicable,  shall be  deemed  to have  been,  and shall be,
modified to reflect such  reduction,  and (iv) Maker shall not have any action
against  Lender for any damages  arising out of the payment or  collection  of
such Excess Interest;  provided,  however,  that if at any time thereafter the
Stated  Rate is less  than  the  Maximum  Rate,  Maker  shall,  to the  extent
permitted by law, continue to pay interest at the Maximum Rate until such time
as the total interest  received by Lender is equal to the total interest which
Lender would have  received had the Stated Rate been (but for the operation of
this  provision)  the interest  rate  payable.  Thereafter,  the interest rate
payable  shall be the  Stated  Rate  unless  and until the  Stated  Rate again
exceeds the Maximum  Rate,  in which event the  provisions  contained  in this
paragraph again shall apply.

          If any suit or action is  instituted  or  attorneys  are employed to
collect  this  Equipment  Loan Note or any part  thereof,  Maker  promises and
agrees, jointly and severally,  to pay all costs of collection,  including all
court costs and reasonable attorneys' fees.

          Maker hereby waives presentment for payment,  protest and demand and
notice of protest,  demand,  dishonor and  nonpayment of this  Equipment  Loan
Note,  and  expressly  agrees that this  Equipment  Loan Note,  or any payment
hereunder,  may be extended  from time to time before,  at or after  maturity,
without in any way affecting the liability of Maker hereunder or any guarantor
hereof.

          This Equipment  Loan Note shall be construed in accordance  with and
governed by the laws and decisions of the State of Illinois, without regard to
conflict  of laws  principles.  All funds  disbursed  to or for the benefit of
Maker will be deemed to have been disbursed in Chicago, Illinois.

          Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Equipment Loan Note shall
be  litigated in either the Circuit  Court of Cook County,  Illinois or in the
United States  District  Court for the Northern  District of Illinois,  or, if
Lender initiates such action, in addition to the foregoing  courts,  any court
in which Lender shall initiate or to which Lender shall remove such action, to
the extent such court has  jurisdiction.  Maker hereby  expressly  submits and
consents in advance to such jurisdiction in any action or proceeding commenced
by Lender in or removed  by Lender to any of such  courts,  and hereby  agrees
that personal service of the summons and complaint, or other process or papers
issued  therein may be made by registered or certified mail addressed to Maker
at the address to which notices are to be sent pursuant to Section 11.1 of the
Loan  Agreement.  Maker waives any claim that either the Circuit Court of Cook
County, Illinois or the United States District Court for the Northern District
of Illinois  is an  inconvenient  forum or an improper  forum based on lack of
venue. To the extent provided by law, should any Maker, after being so served,
fail to  appear  or answer to any  summons,  complaint,  process  or papers so
served within the number of days prescribed by law after the mailing  thereof,
Maker shall be deemed in default and an order  and/or  judgment may be entered
by the  court  against  Maker  as  demanded  or  prayed  for in such  summons,
complaint,  process or  papers.  The  exclusive  choice of forum for Maker set
forth in this  paragraph  shall not be deemed to preclude the  enforcement  by
Lender of any judgment  obtained in any other forum or the taking by Lender of
any  action to enforce  the same in any other  appropriate  jurisdiction,  and
Maker  hereby  waives the right to  collaterally  attack any such  judgment or
action.

          Maker  acknowledges and agrees that any controversy  which may arise
under  this  Equipment  Loan Note would be based upon  difficult  and  complex
issues and,  therefore,  Maker agrees that any lawsuit arising out of any such
controversy  will be  tried in a court of  competent  jurisdiction  by a judge
sitting without a jury.

          This Equipment Loan Note may not be changed or amended  orally,  but
only by an instrument in writing signed by the party against whom  enforcement
of the change or amendment is sought.

          This  Equipment  Loan  Note  shall be  binding  upon  Maker and upon
Maker's  successors  and  assigns,  and  shall  inure  to the  benefit  of the
successors and permitted  assigns of Lender. If more than one party shall sign
this Equipment Loan Note as Maker, their obligations  hereunder as Maker shall
be joint and several.

          In the event that any provision hereof shall be deemed to be invalid
by  reason of the  operation  of any law,  or by reason of the  interpretation
placed thereon by any court or any Governmental Body, this Equipment Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other  provisions  hereof,  and
any and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.

          Time for the performance of Maker's obligations under this Equipment
Loan Note is of the essence.

          This  Equipment  Loan Note is  entitled  to the  benefit  of certain
collateral security, all as more fully set forth in the Loan Agreement.

          This  Equipment  Loan Note  amends,  restates in its  entirety,  and
supercedes  an  Equipment  Loan Note dated  December  7, 2000,  as amended and
restated as of March 1, 2001.

IN WITNESS WHEREOF, this Equipment Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.

               CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation

                                     BY: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               KEYSTONE LINES, a California corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               GULF LINE TRANSPORT INC. an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               FIVE STAR TRANSPORT, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               CAM TRANSPORT, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               UNITY LOGISTIC SERVICES INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               ERX, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________



<PAGE>



               FRIENDLY TRANSPORT, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               TRANSPORT LEASING, INC., an Arkansas corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________



<PAGE>


                                  EXHIBIT "C"

                              GUIDANCE LOAN NOTE

$300,000.00              Dated as of October 15, 2001
Chicago, Illinois


          FOR   VALUE   RECEIVED,    the   undersigned,    CAROLINA   NATIONAL
TRANSPORTATION  INC., an Indiana corporation  ("Carolina"),  KEYSTONE LINES, a
California  corporation  ("Keystone"),  GULF LINE  TRANSPORT  INC., an Indiana
corporation ("Gulf Line"),  FIVE STAR TRANSPORT,  INC., an Indiana corporation
("Five Star") and CAM TRANSPORT, INC., an Indiana corporation,  UNITY LOGISTIC
SERVICES  INC.,  an  Indiana  corporation  ("Unity"),  ERX,  INC.,  an Indiana
corporation  ("ERX"),   FRIENDLY  TRANSPORT,   INC.,  an  Indiana  corporation
("Friendly"),  TRANSPORT LEASING,  INC., an Arkansas  corporation  ("Transport
Leasing"), and TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity,
ERX,  Friendly,  Transport  Leasing,  and Transport  Logistics are hereinafter
collectively referred to as "Maker"),  hereby promise,  jointly and severally,
to pay to the order of FIRSTAR  BANK  N.A.,  a  national  banking  association
("Lender"),  the principal sum of THREE-HUNDRED THOUSAND AND NO/100ths DOLLARS
($300,000.00),  or, if less, the aggregate  unpaid amount of the Guidance Loan
made by Lender pursuant to and in accordance with the applicable provisions of
that certain Loan Agreement dated as of April 18, 2000, amended as of June 12,
2000,  further amended as of December 7, 2000,  further amended as of March 1,
2001,  and as  further  amended  as of  October  15,  2001 (as the same may be
amended,  modified,  supplemented  or  restated  from time to time,  the "Loan
Agreement")  between  Lender,  Maker and US 1  INDUSTRIES,  INC.,  an  Indiana
corporation  ("Guarantor")  and  Lender,  at the  office  of  Lender  at 30 N.
Michigan Avenue, Chicago, Illinois 60602, or at such other place as the holder
hereof may appoint, plus interest thereon as set forth below.

          This Guidance Loan Note is delivered by Maker to Lender  pursuant to
and in accordance with the applicable  provisions of the Loan  Agreement.  All
capitalized  terms  used  but not  elsewhere  defined  herein  shall  have the
respective meanings ascribed to such terms in the Loan Agreement.

          The  principal  balance  of  this  Guidance  Loan  Note  ("Principal
Balance")  shall bear  interest at the per annum rate of interest set forth in
Section 2.3 of the Loan Agreement.

          Accrued and unpaid  interest on, and the Principal  Balance of, this
Guidance Loan Note shall be paid in the manner set forth in Section 2.4 of the
Loan Agreement.

          Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual  number of days during the period for
which interest is being charged.

          During a Default  Rate  Period,  the  Principal  Balance  shall bear
interest at the Default  Rate,  which  interest at such  Default Rate shall be
paid by Maker to Lender immediately upon demand.

          Subject to the provisions of Section 8.2 of the Loan  Agreement,  at
the election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal  Balance,  and all accrued and
unpaid interest  thereon,  shall be and become  immediately due and payable in
full.  Failure to exercise  this option  shall not  constitute a waiver of the
right to exercise  the same in the event of any  subsequent  Event of Default,
and such  failure  shall  not be  deemed  to  establish  a custom or course of
dealing or performance between Maker and Lender.

          This Guidance Loan Note may be prepaid, in whole or in part, without
penalty and in accordance  with the terms and conditions of the Loan Agreement
applicable thereto.

          All funds  received by Lender  during the  existence  of an Event of
Default  shall be applied  in the manner set forth in Section  8.4 of the Loan
Agreement.

          All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions  therefor set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.

          Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument,  Lender shall not collect a rate of interest on any
obligation  or  liability  due and  owing by Maker in  excess  of the  maximum
contract rate of interest permitted by applicable law ("Excess Interest").  If
any Excess  Interest is provided  for or  determined  by a court of  competent
jurisdiction  to have been  provided  for in this  Equipment  Loan Note or any
other Loan Instrument,  then in such event (i) Maker shall not be obligated to
pay such Excess Interest,  (ii) any Excess Interest  collected by Lender shall
be,  (A) if any Event of  Default  exists  and is  continuing,  applied to the
Principal  Balance or to  accrued  and  unpaid  interest  not in excess of the
maximum rate  permitted by applicable law or (B) if no Event of Default exists
and is  continuing,  refunded to the payor  thereof,  (iii) the interest rates
provided for herein  (collectively  the "Stated Rate") shall be  automatically
reduced to the maximum  rate allowed  from time to time under  applicable  law
(the  "Maximum  Rate")  and  this  Equipment  Loan  Note  and the  other  Loan
Instruments,  as  applicable,  shall be  deemed  to have  been,  and shall be,
modified to reflect such  reduction,  and (iv) Maker shall not have any action
against  Lender for any damages  arising out of the payment or  collection  of
such Excess Interest;  provided,  however,  that if at any time thereafter the
Stated  Rate is less  than  the  Maximum  Rate,  Maker  shall,  to the  extent
permitted by law, continue to pay interest at the Maximum Rate until such time
as the total interest  received by Lender is equal to the total interest which
Lender would have  received had the Stated Rate been (but for the operation of
this  provision)  the interest  rate  payable.  Thereafter,  the interest rate
payable  shall be the  Stated  Rate  unless  and until the  Stated  Rate again
exceeds the Maximum  Rate,  in which event the  provisions  contained  in this
paragraph again shall apply.

          If any suit or action is  instituted  or  attorneys  are employed to
collect  this  Guidance  Loan Note or any part  thereof,  Maker  promises  and
agrees, jointly and severally,  to pay all costs of collection,  including all
court costs and reasonable attorneys' fees.

          Maker hereby waives presentment for payment,  protest and demand and
notice of protest, demand, dishonor and nonpayment of this Guidance Loan Note,
and expressly  agrees that this Guidance Loan Note, or any payment  hereunder,
may be extended from time to time before, at or after maturity, without in any
way affecting the liability of Maker hereunder or any guarantor hereof.

          This Guidance  Loan Note shall be construed in  accordance  with and
governed by the laws and decisions of the State of Illinois, without regard to
conflict  of laws  principles.  All funds  disbursed  to or for the benefit of
Maker will be deemed to have been disbursed in Chicago, Illinois.

          Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising  directly or indirectly out of this Guidance Loan Note shall
be  litigated in either the Circuit  Court of Cook County,  Illinois or in the
United States  District  Court for the Northern  District of Illinois,  or, if
Lender initiates such action, in addition to the foregoing  courts,  any court
in which Lender shall initiate or to which Lender shall remove such action, to
the extent such court has  jurisdiction.  Maker hereby  expressly  submits and
consents in advance to such jurisdiction in any action or proceeding commenced
by Lender in or removed  by Lender to any of such  courts,  and hereby  agrees
that personal service of the summons and complaint, or other process or papers
issued  therein may be made by registered or certified mail addressed to Maker
at the address to which notices are to be sent pursuant to Section 11.1 of the
Loan  Agreement.  Maker waives any claim that either the Circuit Court of Cook
County, Illinois or the United States District Court for the Northern District
of Illinois  is an  inconvenient  forum or an improper  forum based on lack of
venue. To the extent provided by law, should any Maker, after being so served,
fail to  appear  or answer to any  summons,  complaint,  process  or papers so
served within the number of days prescribed by law after the mailing  thereof,
Maker shall be deemed in default and an order  and/or  judgment may be entered
by the  court  against  Maker  as  demanded  or  prayed  for in such  summons,
complaint,  process or  papers.  The  exclusive  choice of forum for Maker set
forth in this  paragraph  shall not be deemed to preclude the  enforcement  by
Lender of any judgment  obtained in any other forum or the taking by Lender of
any  action to enforce  the same in any other  appropriate  jurisdiction,  and
Maker  hereby  waives the right to  collaterally  attack any such  judgment or
action.

          Maker  acknowledges and agrees that any controversy  which may arise
under this Guidance Loan Note would be based upon difficult and complex issues
and,  therefore,  Maker  agrees  that  any  lawsuit  arising  out of any  such
controversy  will be  tried in a court of  competent  jurisdiction  by a judge
sitting without a jury.

          This  Guidance Loan Note may not be changed or amended  orally,  but
only by an instrument in writing signed by the party against whom  enforcement
of the change or amendment is sought.

          This Guidance Loan Note shall be binding upon Maker and upon Maker's
successors  and assigns,  and shall inure to the benefit of the successors and
permitted  assigns of Lender.  If more than one party shall sign this Guidance
Loan Note as Maker,  their  obligations  hereunder as Maker shall be joint and
several.

          In the event that any provision hereof shall be deemed to be invalid
by  reason of the  operation  of any law,  or by reason of the  interpretation
placed thereon by any court or any Governmental  Body, this Guidance Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other  provisions  hereof,  and
any and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.

          Time for the performance of Maker's  obligations under this Guidance
Loan Note is of the essence.

          This  Guidance  Loan Note is  entitled  to the  benefit  of  certain
collateral security, all as more fully set forth in the Loan Agreement.

          IN WITNESS  WHEREOF,  this  Guidance Loan Note has been executed and
delivered by Maker by its duly authorized  officer on the date first set forth
above.

               CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               KEYSTONE LINES, a California corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               GULF LINE TRANSPORT INC., an Indiana corporation

                                     By: ______________________________

                                     Name: ____________________________

                                     Title: _____________________________


               FIVE STAR TRANSPORT, INC., an Indiana corporation

                                     By: _______________________________

                                     Name: _____________________________

                                     Title: ______________________________


               CAM TRANSPORT, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ___________________________


               UNITY LOGISTIC SERVICES INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               ERX, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               FRIENDLY TRANSPORT, INC., an Indiana corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               TRANSPORT LEASING, INC., an Arkansas corporation

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________


               TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company

                                     By: _____________________________

                                     Name: ___________________________

                                     Title: ____________________________



<PAGE>


                                     -12-
                                 EXHIBIT "D-1"

                              SECURITY AGREEMENT

          This  SECURITY  AGREEMENT,  dated as of October 15, 2001, is between
UNITY  LOGISTIC  SERVICES  INC.,  an Indiana  corporation,  ("Borrower"),  and
FIRSTAR BANK N.A., a national banking association ("Lender").

                            Preliminary Statement:

A.        Borrower,  CAROLINA  NATIONAL  TRANSPORTATION  INC.,  GULF  LINE
TRANSPORT  INC., FIVE STAR  TRANSPORT,  INC., CAM TRANSPORT,  INC., ERX, INC.,
FRIENDLY TRANSPORT,  INC., TRANSPORT LEASING,  INC., TRANSPORT LOGISTICS,  LLC
("Other  Borrowers"),  US 1 INDUSTRIES,  INC.  ("Guarantor"),  and Lender have
entered into a Fourth  Amendment to Loan  Agreement of even date  herewith (as
the same may be amended, modified, supplemented or restated from time to time,
the "Loan  Agreement"),  pursuant and subject to the terms and  conditions  of
which Lender has agreed to make loans and other  financial  accommodations  to
Borrower and Other Borrowers.

B.        One of the conditions precedent to Lender's obligations under the
Loan  Agreement  is that  Borrower  shall have  executed  and  delivered  this
Security  Agreement  to secure  the  payment  and  performance  of  Borrowers'
Obligations.

          NOW, THEREFORE,  in order to induce Lender to make Advances, and for
other good and valuable  consideration,  the receipt and  sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

1.        Definitions. All terms used herein which are defined in the Illinois
          Uniform  Commercial  Code (the  "Code")  shall have the same meaning
          herein as in the Code  unless  the  context  in which such terms are
          used herein indicates otherwise.  All capitalized terms used but not
          elsewhere  defined  in  this  Security   Agreement  shall  have  the
          respective meanings ascribed to such terms in the Loan Agreement. As
          used herein, the following terms shall have the following meanings:

          Corporate  Changes:  any change in Borrower's place of organization,
form of organization,  or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.

          Intellectual   Property   Collateral:   collectively,   the   Patent
Collateral and the Trademark Collateral.

          Patent   Collateral:   shall  mean  all  (i)   letters   patent  and
applications  for letters patent of Borrower  throughout the world,  including
all patent  applications of Borrower in preparation for filing anywhere in the
world,   (ii)  patent  licenses  of  Borrower,   (iii)  reissues,   divisions,
continuations, continuations-in-part,  extensions, renewals and reexaminations
of any Patent Collateral and (iv) all proceeds of, and rights associated with,
the foregoing  (including  licenses,  royalties  and proceeds of  infringement
suits),  the right of  Borrower  to sue third  parties  for past,  present and
future  infringements of any patent or patent  application,  and for breach or
enforcement  of any patent license of Borrower,  and all rights  corresponding
thereto throughout the world.

          Trademark  Collateral:  shall mean all (i) trademarks,  trade names,
corporate names,  company names,  business names,  fictitious  business names,
trade dress,  service marks,  certification  marks,  collective marks,  logos,
other sources of business  identifiers,  prints and labels on which any of the
foregoing have appeared or appear,  designs and general  intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter  adopted or acquired,  whether
currently  in use or not, all  registrations  and  recordings  thereof and all
applications  in connection  therewith,  whether pending or in preparation for
filing,  including  registrations,  recordings and  applications in the United
States Patent and Trademark Office and any foreign country, (ii) all Trademark
licenses of Borrower, (iii) all reissues, extensions or renewals of any of the
items described in clauses (i) and (ii) above, (iv) all of the goodwill of the
business  connected with the use of, and symbolized by the items  described in
clauses (i) and (ii) above,  and (v) all  proceeds  of, and rights  associated
with, the foregoing, including any claim by Borrower against third parties for
past, present or future  infringement or dilution of any Trademark,  Trademark
registration  or  Trademark  license,  or  for  any  injury  to  the  goodwill
associated  with the use of any such Trademark or for breach or enforcement of
any Trademark license.

2.        Security  Interests.  In order  to  secure  Borrowers'  Obligations,
          Borrower hereby grants to Lender a security interest in all Property
          of  Borrower,  whether  now  owned or  hereafter  acquired,  and all
          additions and accessions thereto, including, without limitation, the
          Property described below:

2.1       Goods, Machinery,  Equipment and Inventory. All of Borrower's goods,
          machinery,  equipment  and  inventory,  wherever  located,  and  all
          additions and accessions thereto or replacements thereof, including,
          but not limited to, all  machinery,  inventory  and equipment of any
          and every kind and description  comprising,  belonging to or used in
          connection   with  the   operation   of  the  business  of  Borrower
          (collectively, the "Tangible Collateral");

2.2       Accounts, General Intangibles.  All of Borrower's accounts, contract
          rights,  chattel paper,  instruments,  investment property,  deposit
          accounts,  documents, and general intangibles, and all additions and
          accessions  thereto and  replacements  thereof,  including,  but not
          limited to, all  licenses,  franchises,  permits and  authorizations
          heretofore or hereafter granted or issued to Borrower under federal,
          state or local laws (excluding,  however, any licenses,  franchises,
          permits and  authorizations  issued by any Governmental  Body to the
          extent,  and only to the extent,  it is unlawful to grant a security
          interest in such licenses,  franchises,  permits and authorizations,
          but including, without limitation, the right to receive all proceeds
          derived or arising from or in connection with the sale or assignment
          of such  licenses,  franchises,  permits and  authorizations)  which
          permit or pertain to the operation of the business of Borrower,  and
          all  of  Borrower's  Intellectual  Property  Collateral,   Operating
          Agreements,  income tax refunds,  copyrights,  patents,  trademarks,
          trade names, trade styles, goodwill, going concern value, franchise,
          supply and distributorship  agreements,  non-competition  agreements
          and   employment    contracts    (collectively,    the   "Intangible
          Collateral").

2.3       Proceeds.  All proceeds  (including  proceeds of insurance,  eminent
          domain and other  governmental  taking and tort claims) and products
          of the Property described in Sections 2.1 and 2.2 above; and

2.4       Books and Records.  All of the books and records  pertaining  to the
          Property described in Sections 2.1, 2.2 and 2.3 above.


All of the Property described above hereinafter is referred to collectively as
the "Collateral." The security interest of Lender in the Collateral shall be
superior and prior to all other Liens except Permitted Prior Liens.

3.        Representations  and  Warranties.  Borrower  hereby  represents  and
          warrants to Lender as follows:

3.1       Ownership of  Collateral.  It is the owner of all of the  Collateral
          free from any Lien except for  Permitted  Liens,  except the portion
          thereof consisting of after-acquired  Property, and Borrower will be
          the owner of such after-acquired Property, free from any Lien except
          for Permitted Liens.

3.2       Places of Business. There is listed on Exhibit A hereto the location
          of the chief executive  office of Borrower,  all of the other places
          of  business  of  Borrower  and all  locations  where  the  Tangible
          Collateral and the books and records of Borrower are kept. Except as
          described in Exhibit A, none of the  Collateral is in the possession
          of any consignee, bailee, warehouseman, agent or possessor.

3.3       Trade or Assumed  Names.  Borrower has not used any trade or assumed
          names during the six years preceding the date hereof.

3.4       Financing Statements.  Except for the financing statements of Lender
          and the financing  statements  pertaining  to the  Permitted  Senior
          Indebtedness  Liens,  if any, no  financing  statement  covering any
          Collateral  or any  portion  or  proceeds  thereof is on file in any
          public office.

3.5       Intangible   Collateral.   The   Intangible   Collateral   hereunder
          represents  bona  fide  and  existing   indebtedness,   obligations,
          liabilities,  rights and privileges owed or belonging to Borrower to
          which, to the best of Borrower's  knowledge,  as of the date of this
          Security   Agreement,   there  is  no  valid  defense,   set-off  or
          counterclaim  against Borrower and in connection with which there is
          no  default  with  respect  to  any  material  payment  or  material
          performance  on the part of Borrower,  or, to the best of Borrower's
          knowledge,  any  other  party.  With  respect  to  any  Intellectual
          Property Collateral of Borrower the loss, impairment or infringement
          of which singly or in the aggregate could  reasonably be expected to
          have a  Material  Adverse  Effect:  (i) such  Intellectual  Property
          Collateral  is  subsisting  and has not  been  adjudged  invalid  or
          unenforceable,  in whole or in part, (ii) such Intellectual Property
          Collateral  is valid and  enforceable,  (iii)  Borrower has made all
          filings and recordations necessary in the exercise of reasonable and
          prudent   business   judgment  to  protect  its   interest  in  such
          Intellectual  Property  Collateral  in the United  States Patent and
          Trademark  Office,   the  United  States  Copyright  Office  and  in
          corresponding  offices  throughout the world, as  appropriate,  (iv)
          Borrower is the owner of the entire and  unencumbered  right,  title
          and interest in and to such Intellectual  Property Collateral and no
          claim  has  been  made  that the use of such  Intellectual  Property
          Collateral  does or may  violate  the  asserted  rights of any third
          party,  and (v) Borrower has  performed and will continue to perform
          all acts and has paid and will continue to pay all required fees and
          taxes to maintain each and every item of such Intellectual  Property
          Collateral  in full  force  and  effect  throughout  the  world,  as
          applicable. Borrower owns directly, or is entitled to use by license
          or otherwise,  all  Intellectual  Property  Collateral of any Person
          used in,  necessary  for or material  to the  conduct of  Borrower's
          businesses. Except as set forth in the Loan Agreement, no litigation
          is pending or, to the best knowledge of Borrower,  threatened  which
          contains  allegations   respecting  the  validity,   enforceability,
          infringement  or  ownership  of  any of  the  Intellectual  Property
          Collateral of Borrower.

3.6       Tangible  Collateral-Personal  Property.  All Tangible Collateral at
          all times shall be considered personal property.


3.7       Accounts.  Each existing  Account  constitutes,  and each  hereafter
          arising  Account  will   constitute,   to  the  best  of  Borrower's
          knowledge,  the legally valid and binding  obligation of the account
          debtor obligated to pay the same. The amount represented by Borrower
          to  Lender  as owing by each  account  debtor  is,  or will be,  the
          correct amount actually and unconditionally owing, except for normal
          cash  discounts  and  allowances  where  applicable.  To the best of
          Borrower's  knowledge,  no account debtor has any defense,  set-off,
          claim or counterclaim  against Borrower that can be asserted against
          Lender,  whether in any proceeding to enforce Lender's rights in the
          Collateral  or  otherwise.  None of the  Accounts  is,  nor will any
          hereafter  arising  Account be,  evidenced by a  promissory  note or
          other instrument other than a check, unless delivered to Lender with
          appropriate endorsements.

3.8       Inventory.  No  Inventory  is  subject  to  any  licensing,  patent,
          trademark,  trade name or copyright  agreement  with any Person that
          restricts   Borrower's   ability  to  manufacture  and/or  sell  the
          Inventory other than territorial restrictions not materially adverse
          to the Borrower or its business.

4.        Affirmative Covenants.  Until all of Borrowers' Obligations are paid
          and  performed  in full  and the  Loan  Agreement  shall  have  been
          terminated, Borrower agrees that it will:

4.1       Corporate  Changes.  Inform  Lender  within  ten  (10)  days  of any
          Corporate Change.

4.2       Taxes.  Pay promptly  when due all taxes,  levies,  assessments  and
          governmental  charges  upon  and  relating  to any of the  Property,
          income or receipts of Borrower or otherwise for which Borrower is or
          may be liable,  except to the extent  that the failure to pay any of
          such taxes, levies,  assessments or charges is permitted by the Loan
          Agreement.

4.3       Insurance.  At its sole expense, keep the Collateral insured against
          loss or damage by  insurance  policies  which shall be in such form,
          with  such  companies  and in  such  amounts  as  may be  reasonably
          satisfactory  to Lender and otherwise  comply with the provisions of
          Section 6.6 of the Loan Agreement.

4.4       Tangible Collateral.

4.4.1             Good Repair.  Keep the Tangible  Collateral  in good working
                  order and repair and make all necessary replacements thereof
                  and  renewals  thereto  so  that  the  value  and  operating
                  efficiency  thereof  at all times  shall be  maintained  and
                  preserved.

4.4.2             Insurance Requirements.  Maintain the Tangible Collateral at
                  all  times  in  accordance  with  the  requirements  of  all
                  insurance  carriers which provide  insurance with respect to
                  such Tangible Collateral so that such insurance shall remain
                  in full force and effect.

4.4.3             Certificates  of  Title.  Upon the  request  of  Lender  (i)
                  promptly   deliver  to  Lender  all  certificates  of  title
                  pertaining  to the  Tangible  Collateral  and (ii)  take all
                  actions  reasonably  requested  by  Lender to cause the Lien
                  granted to Lender hereunder to be noted on such certificates
                  of title.

4.4.4             Use of Collateral.  Use the Tangible  Collateral in material
                  compliance  with  all  statutes,  regulations,   ordinances,
                  requirements  and  regulations  and all  judgments,  orders,
                  injunctions and decrees  applicable  thereto,  and all other
                  federal, state and local laws.

4.5       Intangible Collateral.

4.5.1             Payments.  Make all payments and perform all acts reasonably
                  necessary   to  maintain   and   preserve   the   Intangible
                  Collateral,   including,   without  limitation,   filing  of
                  documents,   renewals   or   other   information   with  any
                  Governmental Body or any other Person.

4.5.2             Delivery  of  Instruments  and  Letters of Credit.  Upon the
                  request of Lender,  promptly  deliver to Lender the original
                  executed  copies of all  instruments  and  letters of credit
                  which constitute part of the Intangible Collateral, together
                  with such endorsements,  assignments and other agreements as
                  Lender  may  request  in  order  to  perfect  the   Security
                  Interests.

4.5.3             Accurate  Records.  At all times keep  accurate and complete
                  records of payment and  performance  by  Borrower  and other
                  Persons of their respective  obligations with respect to the
                  Intangible Collateral and permit Lender or any of its agents
                  to call at Borrower's place of business without hindrance or
                  delay to inspect,  audit,  check or make  extracts  from the
                  books, records, correspondence or other data relating to the
                  Intangible  Collateral in accordance  with the provisions of
                  the Loan Agreement.

4.5.4             Verification of  Indebtedness.  Upon request of Lender after
                  the  occurrence and during the  continuation  of an Event of
                  Default,  permit Lender itself,  at any time, in the name of
                  Lender or Borrower, to verify directly with the obligors the
                  indebtedness  due  Borrower  on any account or other item of
                  Intangible Collateral.

4.5.5             Defaults,  Other  Claims.  Immediately  inform Lender of any
                  default in payment or  performance  by Borrower or any other
                  Person of any  obligation  with  respect  to the  Intangible
                  Collateral  or of  claims  made by  others  in regard to the
                  Intangible  Collateral,  if  either  of which  could  have a
                  Material Adverse Effect.

4.5.6             Ownership of Intellectual Property Collateral. Notify Lender
                  immediately  if it knows,  or has  reason to know,  that any
                  application or registration relating to any material item of
                  its Intellectual Property Collateral may become abandoned or
                  dedicated  to the public or placed in the  public  domain or
                  invalid or unenforceable, or of any adverse determination or
                  development  (including  the  institution  of,  or any  such
                  determination  or  development  in,  any  proceeding  in the
                  United States Patent and Trademark Office, the United States
                  Copyright Office or any foreign  counterpart  thereof or any
                  court)  regarding   Borrower's   ownership  of  any  of  its
                  Intellectual Property Collateral,  its right to register the
                  same or to keep and maintain and enforce the same.

4.5.7             Maintenance of Intellectual  Property  Collateral.  Take all
                  necessary  steps,  including  in any  proceeding  before the
                  United States Patent and Trademark Office, the United States
                  Copyright  Office  or any  similar  office  or agency in any
                  country or any political  subdivision  thereof,  to maintain
                  and  pursue  any  application  (and to obtain  the  relevant
                  registration)  filed with  respect to, and to  maintain  any
                  registration  of,  its  Intellectual   Property  Collateral,
                  including the filing of applications for renewal, affidavits
                  of  use,  affidavits  of  incontestability  and  opposition,
                  interference and cancellation proceedings and the payment of
                  fees and taxes.

4.6       Collection  of  Proceeds.  Use  commercially  reasonable  efforts to
          collect the proceeds of indebtedness owing to Borrower by any Person
          under any  instrument  or by any Account  Debtor with respect to any
          account, contract right, chattel paper or general intangible.

4.7       Financing  Statements,  Further  Assurances.  Concurrently  with the
          execution  of  this  Security  Agreement,  and  from  time  to  time
          hereafter as requested by Lender, execute and deliver to Lender such
          financing   statements,    continuation   statements,    termination
          statements,  amendments to any of the foregoing and other documents,
          in form satisfactory to Lender, as Lender may require to perfect and
          continue in effect the Security Interests, to carry out the purposes
          of this Security Agreement and to protect Lender's rights hereunder.
          Borrower,  upon  demand,  shall  pay the  cost of  filing  all  such
          financing   statements,    continuation   statements,    termination
          statements, amendments to any of the foregoing and other documents.

5.        Negative Covenants. Until all of Borrower's Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated,
          Borrower agrees that it will not:

5.1       Sales and Transfer of Collateral.  Sell, lease,  assign,  license or
          otherwise  dispose  of  any  of  the  Collateral,  except  as may be
          permitted by and in accordance  with the  applicable  provisions the
          Loan Agreement.

5.2       Places of  Business.  Borrower  shall not change the location of (i)
          Borrower's  (A) chief  executive  office or (B) books and records or
          (ii) any  Tangible  Collateral,  in each case  without  first giving
          Lender at least 30 days' advance  written  notice thereof and having
          taken any and all action reasonably  requested by Lender to maintain
          and  preserve  the  first  perfected  Lien in favor of Lender on all
          Property  thereof free and clear of any Lien  whatsoever  except for
          Permitted Liens.

5.3       Installation  of  Tangible  Collateral.  Permit any of the  Tangible
          Collateral to be  installed,  affixed or attached to the real estate
          of  Borrower or any other  Person so as to become a part  thereof or
          become in any sense a fixture not otherwise pledged to Lender.

5.4       Bailees. Permit any Collateral to be in the possession or control of
          any warehouseman, bailee or processor without Lender's prior written
          consent and unless Lender has received  warehouse receipts or bailee
          letters satisfactory to Lender prior to such possession or control.

5.5       Licenses of Intellectual Property.  Sell, transfer,  assign or grant
          any  exclusive  license  with respect to the  Intellectual  Property
          Collateral to an Affiliate of Borrower or otherwise  take any action
          with respect to its Intellectual Property Collateral in violation of
          any term or provision of the Loan Agreement.

5.6       Trademark  Collateral.  Permit,  and permit any of its licensees to,
          unless  Borrower  shall  either  (i)  reasonably  and in good  faith
          determine  that any of its  Trademark  Collateral  is of  negligible
          economic value to Borrower or (ii) have a valid business  purpose to
          do  otherwise:  (A)  fail to  continue  to use any of its  Trademark
          Collateral in order to maintain all of its  Trademark  Collateral in
          full force free from any claim of abandonment for non-use,  (B) fail
          to  maintain as in the past the  quality of  products  and  services
          offered  under all of its Trademark  Collateral,  (C) fail to employ
          all of its Trademark Collateral  registered with any federal,  state
          or   foreign   authority   with  an   appropriate   notice  of  such
          registration,  (D) adopt or use any trademark  which is  confusingly
          similar or a colorable imitation of any of its Trademark  Collateral
          except  in  compliance  with  applicable  law,  (E)  use  any of its
          Trademark Collateral  registered with any federal,  state or foreign
          authority except for the uses for which  registration or application
          for  registration of such Trademark  Collateral has been made except
          in  compliance  with  applicable  law or (F) do or permit any act or
          knowingly omit to do any act whereby any of its Trademark Collateral
          may lapse or become invalid or unenforceable.

5.7       Patent  Collateral.  Unless Borrower shall either (i) reasonably and
          in good  faith  determine  that any of its Patent  Collateral  is of
          negligible  economic value to Borrower or (ii) have a valid business
          purpose to do otherwise,  do any act, or omit to do any act, whereby
          any of Borrower's Patent Collateral may lapse or become abandoned or
          dedicated to the public or unenforceable.

6.        Protection of Collateral. In the event of any failure of Borrower
          to (i)  maintain  in force and pay for any  insurance  or bond which
          Borrower is required to provide pursuant to this Security  Agreement
          or the other Loan Instruments,  (ii) keep the Tangible Collateral in
          good repair and operating condition,  (iii) keep the Collateral free
          from all Liens  except for  Permitted  Liens,  (iv) pay when due all
          taxes,  levies and  assessments on or in respect of the  Collateral,
          except as permitted  pursuant to the terms of Section 4.1 above, (v)
          make all payments and perform all acts on the part of Borrower to be
          paid or performed with respect to any of the Collateral,  including,
          without   limitation,   all   expenses   of   protecting,   storing,
          warehousing,  insuring,  handling and  maintaining the Collateral or
          (vi) keep fully and perform promptly any other of the obligations of
          Borrower   under  this   Security   Agreement   or  the  other  Loan
          Instruments,  Lender, at its option,  may (but shall not be required
          to) procure and pay for such  insurance,  place such  Collateral  in
          good repair and operating  condition,  pay or contest or settle such
          Liens or taxes or any judgments based thereon or otherwise make good
          any other  aforesaid  failure of Borrower.  Borrower shall reimburse
          Lender  immediately  upon  demand for all sums paid or  advanced  on
          behalf of Borrower for any such  purpose,  together  with all costs,
          expenses  and  attorneys'   fees  paid  or  incurred  by  Lender  in
          connection therewith and interest at the Default Rate on all sums so
          paid or advanced from the date of such payment or advancement  until
          repaid to Lender.  All such sums paid or  advanced  by Lender,  with
          interest thereon,  immediately upon payment or advancement  thereof,
          shall be deemed to be part of Borrower's Obligations secured hereby.

7.        Event of  Default.  Borrower  shall  be in  default  under  this
          Security  Agreement upon the occurrence of an Event of Default under
          the Loan Agreement.

8.        Right of Lender to Contact  Account  Debtors.  Lender shall have the
          right, from time to time, at Lender's discretion, to contact account
          debtors of Borrower and  Guarantor to verify that Accounts are valid
          and  not  subject  to  setoff  or  counterclaim  and to  verify  the
          creditworthiness of the account debtor.

9.        Remedies  Upon  Default.   Upon  the   occurrence   and  during  the
          continuation of an Event of Default:


9.1      Rights of Lender. Lender shall have all of the rights and remedies of
         a secured party under the Code and all other rights and remedies
         accorded to Lender at equity or law, including, without limitation,
         the right to apply for and have a receiver appointed by a court of
         competent jurisdiction to manage, protect and preserve the
         Collateral, to continue operating the business of Borrower and to
         collect all revenues and profits thereof. Any notice of sale or other
         disposition of Collateral given not less than ten (10) days prior to
         such proposed action shall constitute reasonable and fair notice of
         such action. Lender may postpone or adjourn any such sale from time
         to time by announcement at the time and place of sale stated in the
         notice of sale or by announcement of any adjourned sale, without
         being required to give a further notice of sale. Any such sale may be
         for cash or, unless prohibited by applicable law, upon such credit or
         installment terms as Lender shall determine. Borrower shall be
         credited with the net proceeds of such sale only when such proceeds
         actually are received by Lender in Good Funds. Despite the
         consummation of any such sale, Borrower shall remain liable for any
         deficiency on Borrower's Obligations which remains outstanding
         following any such sale. All net proceeds received pursuant to a sale
         shall be applied in the manner set forth in Section 8.4 of the Loan
         Agreement.

9.2       Assembly of Collateral.  Upon the request of Lender,  Borrower shall
          assemble  and make the  Collateral  available  to  Lender at a place
          designated by Lender.

9.3       Proceeds.  Borrower  shall  hold  all  proceeds  of  the  Collateral
          collected  by  Borrower  in trust for Lender,  and,  after  Borrower
          receives  notice  from  Lender,  promptly  after the  receipt of the
          proceeds  of  Collateral,  turn over such  proceeds to Lender in the
          exact form in which they were received.

9.4       Other  Rights.  Lender,  at its  election,  and  without  notice  to


9.4.1             Terminate  Right of  Collection.  Terminate  the  rights  of
                  Borrower to collect the proceeds described in Section 8.3.


9.4.2             Notification. Notify the obligors under any instruments and
                  the Account Debtors of any account, contract right, chattel
                  paper or general intangible to make all payments directly to
                  Lender.

9.4.3             Collection of Payments. Demand, sue for, collect or receive,
                  in the name of Borrower or Lender, any money or Property
                  payable or receivable on any item of Collateral.

9.4.4             Settlement. Settle, release, compromise, adjust, sue upon or
                  otherwise  enforce  any item of  Collateral  as  Lender  may
                  determine.

9.4.5             Mail of Borrower; Endorsement of Checks. For the purpose of
                  enforcing Lender's rights under this Security Agreement,
                  receive and open mail addressed to Borrower, and endorse
                  notes, checks, drafts, money orders, documents of title or
                  other forms of payment on behalf and in the name of
                  Borrower.

All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.

10.       Power of Attorney.  To effectuate  the rights and remedies of Lender
          under this Security Agreement,  Borrower hereby irrevocably appoints
          Lender as its  attorney-in-fact,  in the name of  Borrower or in the
          name of Lender,  (i) to execute and file from time to time financing
          statements,  continuation  statements,  termination  statements  and
          amendments thereto, covering the Collateral, in form satisfactory to
          Lender and (ii) take all action and execute all  documents  referred
          to in Section 9.4 above.  The power of attorney  granted pursuant to
          this Section 10 is coupled with an interest and shall be irrevocable
          until all of Borrower's  Obligations have been paid and performed in
          full and the Loan Agreement shall have been terminated.

11.       Certain Agreements of Borrower.

11.1      Waiver of Notice. Borrower hereby waives notice of the acceptance of
          this  Security  Agreement  and,  except  as  otherwise  specifically
          provided in Section 9.1 and 9.3 above or in the Loan Agreement,  all
          other notices, demands or protests to which Borrower otherwise might
          be entitled by law (and which  lawfully  may be waived) with respect
          to  this  Security   Agreement,   Borrower's   Obligations  and  the
          Collateral.

11.2      Rights of Lender. Borrower agrees that Lender (i) shall have no duty
          as to the  collection or protection of the  Collateral or any income
          thereon,  (ii) may  exercise  the rights and remedies of Lender with
          respect to the Collateral without resort or regard to other security
          or sources  for payment and (iii) shall not be deemed to have waived
          any of the rights or  remedies  granted to Lender  hereunder  unless
          such  waiver  shall be in  writing  and shall be  signed by  Lender.
          Borrower  and  Lender   acknowledge  their  intent  that,  upon  the
          occurrence  of an Event of Default,  Lender  shall  receive,  to the
          fullest extent permitted by law and governmental  policy, all rights
          necessary or desirable to obtain, use or sell the Collateral, and to
          exercise   all   remedies   available   to  Lender  under  the  Loan
          Instruments,  the Code or other applicable law.  Borrower and Lender
          further  acknowledge  and agree that, in the event of changes in law
          or governmental policy occurring  subsequent to the date hereof that
          affect in any  manner  Lender's  rights of access to, or use or sale
          of, the Collateral,  or the procedures necessary to enable Lender to
          obtain such rights of access, use or sale, Lender and Borrower shall
          amend the Loan Instruments,  in such manner as Lender shall request,
          in order to  provide  Lender  such  rights  to the  greatest  extent
          possible  consistent  with  then  applicable  law  and  governmental
          policy.

11.3      No Delay, Single or Partial Exercise Permitted. No delay or omission
          on the part of Lender in exercising any rights or remedies contained
          herein  shall  operate as a waiver of such right or remedy or of any
          other  right or  remedy,  and no single or partial  exercise  of any
          right  or  remedy  shall  preclude  any  other or  further  exercise
          thereof,  or the exercise of any other right or remedy.  A waiver of
          any right or remedy on any one occasion  shall not be construed as a
          bar or waiver of any  right or  remedy on future  occasions,  and no
          delay,  omission,  waiver or single or partial exercise of any right
          or remedy shall be deemed to establish a custom or course of dealing
          or performance between the parties hereto.

11.4      Borrower to Remain Liable.  Borrower hereby  expressly  agrees that,
          anything  herein to the  contrary  notwithstanding,  Borrower  shall
          remain liable under each contract, agreement, interest or obligation
          assigned by Borrower to Lender  hereunder to observe and perform all
          of the  conditions  and  obligations to be observed and performed by
          Borrower  thereunder,  all in  accordance  with and  pursuant to the
          terms and provisions  thereof.  The exercise by Lender of any of the
          rights assigned hereunder shall not release Borrower from any of its
          duties or obligations under any such contract,  agreement,  interest
          or obligation. Lender shall have no duty, responsibility, obligation
          or  liability  under  any  such  contract,  agreement,  interest  or
          obligation by reason of or arising out of the assignment  thereof to
          Lender or the granting to Lender of a Security  Interest  therein or
          the receipt by Lender of any payment  relating to any such contract,
          agreement,  interest or obligation pursuant hereto, nor shall Lender
          be required or  obligated in any manner to perform or fulfill any of
          the obligations of Borrower  thereunder or pursuant  thereto,  or to
          make  any  payment,  or to make  any  inquiry  as to the  nature  or
          sufficiency of any payment  received by Lender or the sufficiency of
          any  performance  of any party under any such  contract,  agreement,
          interest or obligation,  or to present or file any claim, or to take
          any action to collect or enforce any  performance  of the payment of
          any amounts which may have been assigned to Lender,  in which Lender
          may have been granted a Security  Interest or to which Lender may be
          entitled at any time or times.

11.5      Grant of License to Use Intellectual  Property Collateral.  Borrower
          hereby  grants  to  Lender,  after the  occurrence  and  during  the
          continuance  of an Event of Default,  an  irrevocable,  nonexclusive
          license   (exercisable   without   payment   of   royalty  or  other
          compensation to Borrower) to use, assign,  license or sublicense any
          Intellectual Property Collateral, now owned or hereafter acquired by
          Borrower,  and wherever  the same may be located,  including in such
          license  reasonable  access  as to all  media  in  which  any of the
          licensed  items  may be  recorded  or  stored  and  to all  computer
          programs and used for the compilation or printout thereof.

12.       Rights  Cumulative.  All rights and  remedies of Lender  pursuant to
          this Security Agreement,  the Loan Agreement or otherwise,  shall be
          cumulative  and  non-exclusive,  and may be exercised  singularly or
          concurrently.

13.       Severability.  In the  event  that any  provision  of this  Security
          Agreement is deemed to be invalid by reason of the  operation of any
          law or by reason of the  interpretation  placed thereon by any court
          or any other  Governmental  Body,  this Security  Agreement shall be
          construed as not  containing  such  provision and the  invalidity of
          such provision shall not affect the validity of any other provisions
          hereof,  and any and all other provisions hereof which otherwise are
          lawful and valid shall remain in full force and effect.

14.       Notices.   All  notices  and  communications   under  this  Security
          Agreement  shall be in writing and delivered in the manner set forth
          in the Loan Agreement.

15.       Successors  and Assigns.  This Security  Agreement  shall be binding
          upon  and  inure  to  the  benefit  of  and  be  enforceable  by the
          respective successors and assigns of Lender and Borrower.

16.       Captions.  The headings in this Security  Agreement are for purposes
          of  reference  only and  shall  not limit or  otherwise  affect  the
          meaning hereof.

17.       Counterparts. This Security Agreement may be executed in one or more
          counterparts,  each of which shall be deemed to be an original,  but
          all of  which,  when  taken  together,  shall  be one and  the  same
          instrument.

18.       Survival  of  Security   Agreement;   Termination.   All  covenants,
          agreements, representations and warranties made herein shall survive
          the execution and delivery of the Loan  Agreement and shall continue
          in fall force and effect until  Borrower's  Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated.

19.       Governing  Law.  This  Security  Agreement  shall  be  construed  in
          accordance  with and governed by the laws and decisions of the State
          of Illinois, without regard to conflict of laws principles.

20.       Jurisdiction  and Venue.  Borrower hereby agrees that all actions or
          proceedings initiated by Borrower and arising directly or indirectly
          out of this  Security  Agreement  shall be  litigated  in either the
          Circuit  Court of Cook  County,  Illinois  or in the  United  States
          District Court for the Northern District of Illinois,  or, if Lender
          initiates  such action,  in addition to the  foregoing  courts,  any
          other court in which Lender shall  initiate or to which Lender shall
          remove  such  action,  to the extent  such  court has  jurisdiction.
          Borrower  hereby  expressly  submits and consents in advance to such
          jurisdiction  in any action or proceeding  commenced by Lender in or
          removed  by Lender to any of such  courts,  and hereby  agrees  that
          personal  service of the summons and complaint,  or other process or
          papers  issued  therein  may be served in the  manner  provided  for
          notices  herein,  and  agrees  that  service  of  such  summons  and
          complaint or other  process or papers may be made by  registered  or
          certified mail addressed to Borrower at the address to which notices
          are to be sent  pursuant  to  Section  11.1 of the  Loan  Agreement.
          Borrower  waives any claim that  either  the  Circuit  Court of Cook
          County,  Illinois  or the  United  States  District  Court  for  the
          Northern  District  of  Illinois  is  an  inconvenient  forum  or an
          improper  forum  based on lack of venue.  To the extent  provided by
          law,  should  Borrower,  after  being so  served,  fail to appear or
          answer to any summons, complaint, process or papers so served within
          the  number of days  prescribed  by law after the  mailing  thereof,
          Borrower shall be deemed in default and an order and/or judgment may
          be entered by the court  against  Borrower as demanded or prayed for
          in such summons, complaint,  process or papers. The exclusive choice
          of forum  for  Borrower  set forth in this  Section  19 shall not be
          deemed  to  preclude  the  enforcement  by  Lender  of any  judgment
          obtained in any other forum or the taking by Lender of any action to
          enforce the same in any other appropriate jurisdiction, and Borrower
          hereby waives the right to collaterally  attack any such judgment or
          action.

21.       Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
          any controversy which may arise under any of the Loan Instruments or
          with respect to the transactions contemplated thereby would be based
          upon difficult and complex issues and, therefore,  the parties agree
          that any lawsuit arising out of any such  controversy  will be tried
          in a court of competent  jurisdiction  by a judge sitting  without a
          jury.

22.       Time  of  the  Essence.  Time  for  the  performance  of  Borrower's
          Obligations under this Security Agreement is of the essence.

23.       Termination.  This  Security  Agreement  and the Liens and  security
          interests  granted  hereunder shall not terminate until the full and
          complete  performance  and payment and  satisfaction  of  Borrower's
          Obligations and the Loan Agreement shall have terminated,  whereupon
          Lender shall release all such Liens and security  interests in favor
          of Lender affecting the Collateral.

          [remainder of this page intentionally left blank]



<PAGE>


         IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each such
party on the date first set forth above.

Address:                             UNITY LOGISTIC SERVICES INC.,
1000 Colfax                          an Indiana corporation
Gary, IN 46406


                                     By: _____________________________
                                     Name: ___________________________
                                     Title: ____________________________



Address:
30 N. Michigan Avenue                FIRSTAR BANK N.A.,
Chicago, IL 60602                    a national banking association


                                     By: _____________________________
                                     Name: Craig B. Collinson
                                     Title: Senior Vice President


<PAGE>


                                   EXHIBIT A

                      Location of Chief Executive Office,
                     Location of other Places of Business,
                       Location of Books and Records and
                     Locations of All Tangible Collateral


                      Location of Chief Executive Office
                                  1000 Colfax
                                Gary, IN 46406


                     Location of Other Places of Business
                                     NONE


                         Location of Books and Records
                                  1000 Colfax
                                Gary, IN 46406


                     Locations of All Tangible Collateral
                                  1000 Colfax
                                Gary, IN 46406



<PAGE>


                                      -4-
                                 EXHIBIT "D-2"

                              SECURITY AGREEMENT

          This  SECURITY  AGREEMENT,  dated as of October 15, 2001, is between
ERX,  INC.,  an Indiana  corporation,  ("Borrower"),  and FIRSTAR BANK N.A., a
national banking association ("Lender").

                            Preliminary Statement:

A.        Borrower,  CAROLINA  NATIONAL  TRANSPORTATION  INC.,  GULF  LINE
TRANSPORT INC., FIVE STAR TRANSPORT, INC., CAM TRANSPORT, INC., UNITY LOGISTIC
SERVICES INC., FRIENDLY TRANSPORT,  INC.,  TRANSPORT LEASING,  INC., TRANSPORT
LOGISTICS, LLC ("Other Borrowers"), US 1 INDUSTRIES,  INC. ("Guarantor"),  and
Lender have  entered into a Fourth  Amendment  to Loan  Agreement of even date
herewith (as the same may be amended, modified,  supplemented or restated from
time to time,  the "Loan  Agreement"),  pursuant  and subject to the terms and
conditions  of which  Lender  has  agreed to make  loans  and other  financial
accommodations to Borrower and Other Borrowers.

B.        One of the conditions precedent to Lender's obligations under the
Loan  Agreement  is that  Borrower  shall have  executed  and  delivered  this
Security  Agreement  to secure  the  payment  and  performance  of  Borrowers'
Obligations.

          NOW, THEREFORE,  in order to induce Lender to make Advances, and for
other good and valuable  consideration,  the receipt and  sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

1.        Definitions. All terms used herein which are defined in the Illinois
          Uniform  Commercial  Code (the  "Code")  shall have the same meaning
          herein as in the Code  unless  the  context  in which such terms are
          used herein indicates otherwise.  All capitalized terms used but not
          elsewhere  defined  in  this  Security   Agreement  shall  have  the
          respective meanings ascribed to such terms in the Loan Agreement. As
          used herein, the following terms shall have the following meanings:

          Corporate  Changes:  any change in Borrower's place of organization,
form of organization,  or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.

          Intellectual   Property   Collateral:   collectively,   the   Patent
Collateral and the Trademark Collateral.

          Patent   Collateral:   shall  mean  all  (i)   letters   patent  and
applications  for letters patent of Borrower  throughout the world,  including
all patent  applications of Borrower in preparation for filing anywhere in the
world,   (ii)  patent  licenses  of  Borrower,   (iii)  reissues,   divisions,
continuations, continuations-in-part,  extensions, renewals and reexaminations
of any Patent Collateral and (iv) all proceeds of, and rights associated with,
the foregoing  (including  licenses,  royalties  and proceeds of  infringement
suits),  the right of  Borrower  to sue third  parties  for past,  present and
future  infringements of any patent or patent  application,  and for breach or
enforcement  of any patent license of Borrower,  and all rights  corresponding
thereto throughout the world.

          Trademark  Collateral:  shall mean all (i) trademarks,  trade names,
corporate names,  company names,  business names,  fictitious  business names,
trade dress,  service marks,  certification  marks,  collective marks,  logos,
other sources of business  identifiers,  prints and labels on which any of the
foregoing have appeared or appear,  designs and general  intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter  adopted or acquired,  whether
currently  in use or not, all  registrations  and  recordings  thereof and all
applications  in connection  therewith,  whether pending or in preparation for
filing,  including  registrations,  recordings and  applications in the United
States Patent and Trademark Office and any foreign country, (ii) all Trademark
licenses of Borrower, (iii) all reissues, extensions or renewals of any of the
items described in clauses (i) and (ii) above, (iv) all of the goodwill of the
business  connected with the use of, and symbolized by the items  described in
clauses (i) and (ii) above,  and (v) all  proceeds  of, and rights  associated
with, the foregoing, including any claim by Borrower against third parties for
past, present or future  infringement or dilution of any Trademark,  Trademark
registration  or  Trademark  license,  or  for  any  injury  to  the  goodwill
associated  with the use of any such Trademark or for breach or enforcement of
any Trademark license.

2.        Security  Interests.  In order  to  secure  Borrowers'  Obligations,
          Borrower hereby grants to Lender a security interest in all Property
          of  Borrower,  whether  now  owned or  hereafter  acquired,  and all
          additions and accessions thereto, including, without limitation, the
          Property described below:

2.1       Goods, Machinery,  Equipment and Inventory. All of Borrower's goods,
          machinery,  equipment  and  inventory,  wherever  located,  and  all
          additions and accessions thereto or replacements thereof, including,
          but not limited to, all  machinery,  inventory  and equipment of any
          and every kind and description  comprising,  belonging to or used in
          connection   with  the   operation   of  the  business  of  Borrower
          (collectively, the "Tangible Collateral");

2.2       Accounts, General Intangibles.  All of Borrower's accounts, contract
          rights,  chattel paper,  instruments,  investment property,  deposit
          accounts,  documents, and general intangibles, and all additions and
          accessions  thereto and  replacements  thereof,  including,  but not
          limited to, all  licenses,  franchises,  permits and  authorizations
          heretofore or hereafter granted or issued to Borrower under federal,
          state or local laws (excluding,  however, any licenses,  franchises,
          permits and  authorizations  issued by any Governmental  Body to the
          extent,  and only to the extent,  it is unlawful to grant a security
          interest in such licenses,  franchises,  permits and authorizations,
          but including, without limitation, the right to receive all proceeds
          derived or arising from or in connection with the sale or assignment
          of such  licenses,  franchises,  permits and  authorizations)  which
          permit or pertain to the operation of the business of Borrower,  and
          all  of  Borrower's  Intellectual  Property  Collateral,   Operating
          Agreements,  income tax refunds,  copyrights,  patents,  trademarks,
          trade names, trade styles, goodwill, going concern value, franchise,
          supply and distributorship  agreements,  non-competition  agreements
          and   employment    contracts    (collectively,    the   "Intangible
          Collateral").

2.3       Proceeds.  All proceeds  (including  proceeds of insurance,  eminent
          domain and other  governmental  taking and tort claims) and products
          of the Property described in Sections 2.1 and 2.2 above; and

2.4       Books and Records.  All of the books and records  pertaining  to the
          Property  described in Sections  2.1, 2.2 and 2.3 above.  All of the
          Property  described above hereinafter is referred to collectively as
          the  "Collateral." The security interest of Lender in the Collateral
          shall be  superior  and prior to all other  Liens  except  Permitted
          Prior Liens.

3.        Representations  and  Warranties.  Borrower  hereby  represents  and
          warrants to Lender as follows:


3.1       Ownership of  Collateral.  It is the owner of all of the  Collateral
          free from any Lien except for  Permitted  Liens,  except the portion
          thereof consisting of after-acquired  Property, and Borrower will be
          the owner of such after-acquired Property, free from any Lien except
          for Permitted Liens.

3.2       Places of Business. There is listed on Exhibit A hereto the location
          of the chief executive  office of Borrower,  all of the other places
          of  business  of  Borrower  and all  locations  where  the  Tangible
          Collateral and the books and records of Borrower are kept. Except as
          described in Exhibit A, none of the  Collateral is in the possession
          of any consignee, bailee, warehouseman, agent or possessor.

3.3       Trade or Assumed  Names.  Borrower has not used any trade or assumed
          names during the six years preceding the date hereof.


3.4       Financing Statements.  Except for the financing statements of Lender
          and the financing  statements  pertaining  to the  Permitted  Senior
          Indebtedness  Liens,  if any, no  financing  statement  covering any
          Collateral  or any  portion  or  proceeds  thereof is on file in any
          public office.

3.5       Intangible   Collateral.   The   Intangible   Collateral   hereunder
          represents  bona  fide  and  existing   indebtedness,   obligations,
          liabilities,  rights and privileges owed or belonging to Borrower to
          which, to the best of Borrower's  knowledge,  as of the date of this
          Security   Agreement,   there  is  no  valid  defense,   set-off  or
          counterclaim  against Borrower and in connection with which there is
          no  default  with  respect  to  any  material  payment  or  material
          performance  on the part of Borrower,  or, to the best of Borrower's
          knowledge,  any  other  party.  With  respect  to  any  Intellectual
          Property Collateral of Borrower the loss, impairment or infringement
          of which singly or in the aggregate could  reasonably be expected to
          have a  Material  Adverse  Effect:  (i) such  Intellectual  Property
          Collateral  is  subsisting  and has not  been  adjudged  invalid  or
          unenforceable,  in whole or in part, (ii) such Intellectual Property
          Collateral  is valid and  enforceable,  (iii)  Borrower has made all
          filings and recordations necessary in the exercise of reasonable and
          prudent   business   judgment  to  protect  its   interest  in  such
          Intellectual  Property  Collateral  in the United  States Patent and
          Trademark  Office,   the  United  States  Copyright  Office  and  in
          corresponding  offices  throughout the world, as  appropriate,  (iv)
          Borrower is the owner of the entire and  unencumbered  right,  title
          and interest in and to such Intellectual  Property Collateral and no
          claim  has  been  made  that the use of such  Intellectual  Property
          Collateral  does or may  violate  the  asserted  rights of any third
          party,  and (v) Borrower has  performed and will continue to perform
          all acts and has paid and will continue to pay all required fees and
          taxes to maintain each and every item of such Intellectual  Property
          Collateral  in full  force  and  effect  throughout  the  world,  as
          applicable. Borrower owns directly, or is entitled to use by license
          or otherwise,  all  Intellectual  Property  Collateral of any Person
          used in,  necessary  for or material  to the  conduct of  Borrower's
          businesses. Except as set forth in the Loan Agreement, no litigation
          is pending or, to the best knowledge of Borrower,  threatened  which
          contains  allegations   respecting  the  validity,   enforceability,
          infringement  or  ownership  of  any of  the  Intellectual  Property
          Collateral of Borrower.

3.6       Tangible  Collateral-Personal  Property.  All Tangible Collateral at
          all times shall be considered personal property.


3.7       Accounts.  Each existing  Account  constitutes,  and each  hereafter
          arising  Account  will   constitute,   to  the  best  of  Borrower's
          knowledge,  the legally valid and binding  obligation of the account
          debtor obligated to pay the same. The amount represented by Borrower
          to  Lender  as owing by each  account  debtor  is,  or will be,  the
          correct amount actually and unconditionally owing, except for normal
          cash  discounts  and  allowances  where  applicable.  To the best of
          Borrower's  knowledge,  no account debtor has any defense,  set-off,
          claim or counterclaim  against Borrower that can be asserted against
          Lender,  whether in any proceeding to enforce Lender's rights in the
          Collateral  or  otherwise.  None of the  Accounts  is,  nor will any
          hereafter  arising  Account be,  evidenced by a  promissory  note or
          other instrument other than a check, unless delivered to Lender with
          appropriate endorsements.

3.8       Inventory.  No  Inventory  is  subject  to  any  licensing,  patent,
          trademark,  trade name or copyright  agreement  with any Person that
          restricts   Borrower's   ability  to  manufacture  and/or  sell  the
          Inventory other than territorial restrictions not materially adverse
          to the Borrower or its business.

4.        Affirmative Covenants.  Until all of Borrowers' Obligations are paid
          and  performed  in full  and the  Loan  Agreement  shall  have  been
          terminated, Borrower agrees that it will:

4.1       Corporate  Changes.  Inform  Lender  within  ten  (10)  days  of any
          Corporate Change.


4.2       Taxes.  Pay promptly  when due all taxes,  levies,  assessments  and
          governmental  charges  upon  and  relating  to any of the  Property,
          income or receipts of Borrower or otherwise for which Borrower is or
          may be liable,  except to the extent  that the failure to pay any of
          such taxes, levies,  assessments or charges is permitted by the Loan
          Agreement.

4.3       Insurance.  At its sole expense, keep the Collateral insured against
          loss or damage by  insurance  policies  which shall be in such form,
          with  such  companies  and in  such  amounts  as  may be  reasonably
          satisfactory  to Lender and otherwise  comply with the provisions of
          Section 6.6 of the Loan Agreement.

4.4       Tangible Collateral.

4.4.1             Good Repair.  Keep the Tangible  Collateral  in good working
                  order and repair and make all necessary replacements thereof
                  and  renewals  thereto  so  that  the  value  and  operating
                  efficiency  thereof  at all times  shall be  maintained  and
                  preserved.

4.4.2             Insurance Requirements.  Maintain the Tangible Collateral at
                  all  times  in  accordance  with  the  requirements  of  all
                  insurance  carriers which provide  insurance with respect to
                  such Tangible Collateral so that such insurance shall remain
                  in full force and effect.

4.4.3             Certificates  of  Title.  Upon the  request  of  Lender  (i)
                  promptly   deliver  to  Lender  all  certificates  of  title
                  pertaining  to the  Tangible  Collateral  and (ii)  take all
                  actions  reasonably  requested  by  Lender to cause the Lien
                  granted to Lender hereunder to be noted on such certificates
                  of title.

4.4.4             Use of Collateral.  Use the Tangible  Collateral in material
                  compliance  with  all  statutes,  regulations,   ordinances,
                  requirements  and  regulations  and all  judgments,  orders,
                  injunctions and decrees  applicable  thereto,  and all other
                  federal, state and local laws.

4.5       Intangible Collateral.

4.5.1             Payments.  Make all payments and perform all acts reasonably
                  necessary   to  maintain   and   preserve   the   Intangible
                  Collateral,   including,   without  limitation,   filing  of
                  documents,   renewals   or   other   information   with  any
                  Governmental Body or any other Person.

4.5.2             Delivery  of  Instruments  and  Letters of Credit.  Upon the
                  request of Lender,  promptly  deliver to Lender the original
                  executed  copies of all  instruments  and  letters of credit
                  which constitute part of the Intangible Collateral, together
                  with such endorsements,  assignments and other agreements as
                  Lender  may  request  in  order  to  perfect  the   Security
                  Interests.

4.5.3             Accurate  Records.  At all times keep  accurate and complete
                  records of payment and  performance  by  Borrower  and other
                  Persons of their respective  obligations with respect to the
                  Intangible Collateral and permit Lender or any of its agents
                  to call at Borrower's place of business without hindrance or
                  delay to inspect,  audit,  check or make  extracts  from the
                  books, records, correspondence or other data relating to the
                  Intangible  Collateral in accordance  with the provisions of
                  the Loan Agreement.

4.5.4             Verification of  Indebtedness.  Upon request of Lender after
                  the  occurrence and during the  continuation  of an Event of
                  Default,  permit Lender itself,  at any time, in the name of
                  Lender or Borrower, to verify directly with the obligors the
                  indebtedness  due  Borrower  on any account or other item of
                  Intangible Collateral.

4.5.5             Defaults,  Other  Claims.  Immediately  inform Lender of any
                  default in payment or  performance  by Borrower or any other
                  Person of any  obligation  with  respect  to the  Intangible
                  Collateral  or of  claims  made by  others  in regard to the
                  Intangible  Collateral,  if  either  of which  could  have a
                  Material Adverse Effect.

4.5.6             Ownership of Intellectual Property Collateral. Notify Lender
                  immediately  if it knows,  or has  reason to know,  that any
                  application or registration relating to any material item of
                  its Intellectual Property Collateral may become abandoned or
                  dedicated  to the public or placed in the  public  domain or
                  invalid or unenforceable, or of any adverse determination or
                  development  (including  the  institution  of,  or any  such
                  determination  or  development  in,  any  proceeding  in the
                  United States Patent and Trademark Office, the United States
                  Copyright Office or any foreign  counterpart  thereof or any
                  court)  regarding   Borrower's   ownership  of  any  of  its
                  Intellectual Property Collateral,  its right to register the
                  same or to keep and maintain and enforce the same.

4.5.7             Maintenance of Intellectual  Property  Collateral.  Take all
                  necessary  steps,  including  in any  proceeding  before the
                  United States Patent and Trademark Office, the United States
                  Copyright  Office  or any  similar  office  or agency in any
                  country or any political  subdivision  thereof,  to maintain
                  and  pursue  any  application  (and to obtain  the  relevant
                  registration)  filed with  respect to, and to  maintain  any
                  registration  of,  its  Intellectual   Property  Collateral,
                  including the filing of applications for renewal, affidavits
                  of  use,  affidavits  of  incontestability  and  opposition,
                  interference and cancellation proceedings and the payment of
                  fees and taxes.

4.6       Collection  of  Proceeds.  Use  commercially  reasonable  efforts to
          collect the proceeds of indebtedness owing to Borrower by any Person
          under any  instrument  or by any Account  Debtor with respect to any
          account, contract right, chattel paper or general intangible.

4.7       Financing  Statements,  Further  Assurances.  Concurrently  with the
          execution  of  this  Security  Agreement,  and  from  time  to  time
          hereafter as requested by Lender, execute and deliver to Lender such
          financing   statements,    continuation   statements,    termination
          statements,  amendments to any of the foregoing and other documents,
          in form satisfactory to Lender, as Lender may require to perfect and
          continue in effect the Security Interests, to carry out the purposes
          of this Security Agreement and to protect Lender's rights hereunder.
          Borrower,  upon  demand,  shall  pay the  cost of  filing  all  such
          financing   statements,    continuation   statements,    termination
          statements, amendments to any of the foregoing and other documents.

5.        Negative Covenants. Until all of Borrower's Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated,
          Borrower agrees that it will not:

5.1       Sales and Transfer of Collateral.  Sell, lease,  assign,  license or
          otherwise  dispose  of  any  of  the  Collateral,  except  as may be
          permitted by and in accordance  with the  applicable  provisions the
          Loan Agreement.

5.2       Places of  Business.  Borrower  shall not change the location of (i)
          Borrower's  (A) chief  executive  office or (B) books and records or
          (ii) any  Tangible  Collateral,  in each case  without  first giving
          Lender at least 30 days' advance  written  notice thereof and having
          taken any and all action reasonably  requested by Lender to maintain
          and  preserve  the  first  perfected  Lien in favor of Lender on all
          Property  thereof free and clear of any Lien  whatsoever  except for
          Permitted Liens.

5.3       Installation  of  Tangible  Collateral.  Permit any of the  Tangible
          Collateral to be  installed,  affixed or attached to the real estate
          of  Borrower or any other  Person so as to become a part  thereof or
          become in any sense a fixture not otherwise pledged to Lender.

5.4       Bailees. Permit any Collateral to be in the possession or control of
          any warehouseman, bailee or processor without Lender's prior written
          consent and unless Lender has received  warehouse receipts or bailee
          letters satisfactory to Lender prior to such possession or control.

5.5       Licenses of Intellectual Property.  Sell, transfer,  assign or grant
          any  exclusive  license  with respect to the  Intellectual  Property
          Collateral to an Affiliate of Borrower or otherwise  take any action
          with respect to its Intellectual Property Collateral in violation of
          any term or provision of the Loan Agreement.

5.6       Trademark  Collateral.  Permit,  and permit any of its licensees to,
          unless  Borrower  shall  either  (i)  reasonably  and in good  faith
          determine  that any of its  Trademark  Collateral  is of  negligible
          economic value to Borrower or (ii) have a valid business  purpose to
          do  otherwise:  (A)  fail to  continue  to use any of its  Trademark
          Collateral in order to maintain all of its  Trademark  Collateral in
          full force free from any claim of abandonment for non-use,  (B) fail
          to  maintain as in the past the  quality of  products  and  services
          offered  under all of its Trademark  Collateral,  (C) fail to employ
          all of its Trademark Collateral  registered with any federal,  state
          or   foreign   authority   with  an   appropriate   notice  of  such
          registration,  (D) adopt or use any trademark  which is  confusingly
          similar or a colorable imitation of any of its Trademark  Collateral
          except  in  compliance  with  applicable  law,  (E)  use  any of its
          Trademark Collateral  registered with any federal,  state or foreign
          authority except for the uses for which  registration or application
          for  registration of such Trademark  Collateral has been made except
          in  compliance  with  applicable  law or (F) do or permit any act or
          knowingly omit to do any act whereby any of its Trademark Collateral
          may lapse or become invalid or unenforceable.

5.7       Patent  Collateral.  Unless Borrower shall either (i) reasonably and
          in good  faith  determine  that any of its Patent  Collateral  is of
          negligible  economic value to Borrower or (ii) have a valid business
          purpose to do otherwise,  do any act, or omit to do any act, whereby
          any of Borrower's Patent Collateral may lapse or become abandoned or
          dedicated to the public or unenforceable.

6.        Protection of Collateral. In the event of any failure of Borrower to
          (i)  maintain  in  force  and pay for any  insurance  or bond  which
          Borrower is required to provide pursuant to this Security  Agreement
          or the other Loan Instruments,  (ii) keep the Tangible Collateral in
          good repair and operating condition,  (iii) keep the Collateral free
          from all Liens  except for  Permitted  Liens,  (iv) pay when due all
          taxes,  levies and  assessments on or in respect of the  Collateral,
          except as permitted  pursuant to the terms of Section 4.1 above, (v)
          make all payments and perform all acts on the part of Borrower to be
          paid or performed with respect to any of the Collateral,  including,
          without   limitation,   all   expenses   of   protecting,   storing,
          warehousing,  insuring,  handling and  maintaining the Collateral or
          (vi) keep fully and perform promptly any other of the obligations of
          Borrower   under  this   Security   Agreement   or  the  other  Loan
          Instruments,  Lender, at its option,  may (but shall not be required
          to) procure and pay for such  insurance,  place such  Collateral  in
          good repair and operating  condition,  pay or contest or settle such
          Liens or taxes or any judgments based thereon or otherwise make good
          any other  aforesaid  failure of Borrower.  Borrower shall reimburse
          Lender  immediately  upon  demand for all sums paid or  advanced  on
          behalf of Borrower for any such  purpose,  together  with all costs,
          expenses  and  attorneys'   fees  paid  or  incurred  by  Lender  in
          connection therewith and interest at the Default Rate on all sums so
          paid or advanced from the date of such payment or advancement  until
          repaid to Lender.  All such sums paid or  advanced  by Lender,  with
          interest thereon,  immediately upon payment or advancement  thereof,
          shall be deemed to be part of Borrower's Obligations secured hereby.

7.        Event of Default.  Borrower  shall be in default under this Security
          Agreement  upon the occurrence of an Event of Default under the Loan
          Agreement.

8.        Right of Lender to Contact  Account  Debtors.  Lender shall have the
          right, from time to time, at Lender's discretion, to contact account
          debtors of Borrower and  Guarantor to verify that Accounts are valid
          and  not  subject  to  setoff  or  counterclaim  and to  verify  the
          creditworthiness of the account debtor.

9.        Remedies  Upon  Default.   Upon  the   occurrence   and  during  the
          continuation of an Event of Default:

9.1       Rights of Lender.  Lender  shall have all of the rights and remedies
          of a secured  party under the Code and all other rights and remedies
          accorded to Lender at equity or law, including,  without limitation,
          the right to apply for and have a receiver  appointed  by a court of
          competent   jurisdiction   to  manage,   protect  and  preserve  the
          Collateral,  to continue  operating  the business of Borrower and to
          collect  all  revenues  and profits  thereof.  Any notice of sale or
          other  disposition  of Collateral  given not less than ten (10) days
          prior to such proposed action shall  constitute  reasonable and fair
          notice of such action.  Lender may postpone or adjourn any such sale
          from  time to time by  announcement  at the time  and  place of sale
          stated in the  notice of sale or by  announcement  of any  adjourned
          sale,  without being  required to give a further notice of sale. Any
          such sale may be for cash or, unless  prohibited by applicable  law,
          upon such credit or  installment  terms as Lender  shall  determine.
          Borrower  shall be credited  with the net proceeds of such sale only
          when such  proceeds  actually  are received by Lender in Good Funds.
          Despite the  consummation  of any such sale,  Borrower  shall remain
          liable for any  deficiency on Borrower's  Obligations  which remains
          outstanding  following  any such  sale.  All net  proceeds  received
          pursuant  to a sale  shall be  applied  in the  manner  set forth in
          Section 8.4 of the Loan Agreement.

9.2       Assembly of Collateral.  Upon the request of Lender,  Borrower shall
          assemble  and make the  Collateral  available  to  Lender at a place
          designated by Lender.

9.3       Proceeds.  Borrower  shall  hold  all  proceeds  of  the  Collateral
          collected  by  Borrower  in trust for Lender,  and,  after  Borrower
          receives  notice  from  Lender,  promptly  after the  receipt of the
          proceeds  of  Collateral,  turn over such  proceeds to Lender in the
          exact form in which they were received.

9.4       Other  Rights.  Lender,  at its  election,  and  without  notice  to
          Borrower, may:

9.4.1             Terminate  Right of  Collection.  Terminate  the  rights  of
                  Borrower to collect the proceeds described in Section 8.3.

9.4.2             Notification. Notify the obligors under any instruments and
                  the Account Debtors of any account, contract right, chattel
                  paper or general intangible to make all payments directly to
                  Lender.

9.4.3             Collection of Payments. Demand, sue for, collect or receive,
                  in the name of Borrower or Lender, any money or Property
                  payable or receivable on any item of Collateral.

9.4.4             Settlement. Settle, release, compromise, adjust, sue upon or
                  otherwise  enforce  any item of  Collateral  as  Lender  may
                  determine.

9.4.5             Mail of Borrower; Endorsement of Checks. For the purpose of
                  enforcing Lender's rights under this Security Agreement,
                  receive and open mail addressed to Borrower, and endorse
                  notes, checks, drafts, money orders, documents of title or
                  other forms of payment on behalf and in the name of
                  Borrower.

All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.

10.       Power of Attorney.  To effectuate  the rights and remedies of Lender
          under this Security Agreement,  Borrower hereby irrevocably appoints
          Lender as its  attorney-in-fact,  in the name of  Borrower or in the
          name of Lender,  (i) to execute and file from time to time financing
          statements,  continuation  statements,  termination  statements  and
          amendments thereto, covering the Collateral, in form satisfactory to
          Lender and (ii) take all action and execute all  documents  referred
          to in Section 9.4 above.  The power of attorney  granted pursuant to
          this Section 10 is coupled with an interest and shall be irrevocable
          until all of Borrower's  Obligations have been paid and performed in
          full and the Loan Agreement shall have been terminated.

11.       Certain Agreements of Borrower.

11.1      Waiver of Notice. Borrower hereby waives notice of the acceptance of
          this  Security  Agreement  and,  except  as  otherwise  specifically
          provided in Section 9.1 and 9.3 above or in the Loan Agreement,  all
          other notices, demands or protests to which Borrower otherwise might
          be entitled by law (and which  lawfully  may be waived) with respect
          to  this  Security   Agreement,   Borrower's   Obligations  and  the
          Collateral.

11.2      Rights of Lender. Borrower agrees that Lender (i) shall have no duty
          as to the  collection or protection of the  Collateral or any income
          thereon,  (ii) may  exercise  the rights and remedies of Lender with
          respect to the Collateral without resort or regard to other security
          or sources  for payment and (iii) shall not be deemed to have waived
          any of the rights or  remedies  granted to Lender  hereunder  unless
          such  waiver  shall be in  writing  and shall be  signed by  Lender.
          Borrower  and  Lender   acknowledge  their  intent  that,  upon  the
          occurrence  of an Event of Default,  Lender  shall  receive,  to the
          fullest extent permitted by law and governmental  policy, all rights
          necessary or desirable to obtain, use or sell the Collateral, and to
          exercise   all   remedies   available   to  Lender  under  the  Loan
          Instruments,  the Code or other applicable law.  Borrower and Lender
          further  acknowledge  and agree that, in the event of changes in law
          or governmental policy occurring  subsequent to the date hereof that
          affect in any  manner  Lender's  rights of access to, or use or sale
          of, the Collateral,  or the procedures necessary to enable Lender to
          obtain such rights of access, use or sale, Lender and Borrower shall
          amend the Loan Instruments,  in such manner as Lender shall request,
          in order to  provide  Lender  such  rights  to the  greatest  extent
          possible  consistent  with  then  applicable  law  and  governmental
          policy.

11.3      No Delay, Single or Partial Exercise Permitted. No delay or omission
          on the part of Lender in exercising any rights or remedies contained
          herein  shall  operate as a waiver of such right or remedy or of any
          other  right or  remedy,  and no single or partial  exercise  of any
          right  or  remedy  shall  preclude  any  other or  further  exercise
          thereof,  or the exercise of any other right or remedy.  A waiver of
          any right or remedy on any one occasion  shall not be construed as a
          bar or waiver of any  right or  remedy on future  occasions,  and no
          delay,  omission,  waiver or single or partial exercise of any right
          or remedy shall be deemed to establish a custom or course of dealing
          or performance between the parties hereto.

11.4      Borrower to Remain Liable.  Borrower hereby  expressly  agrees that,
          anything  herein to the  contrary  notwithstanding,  Borrower  shall
          remain liable under each contract, agreement, interest or obligation
          assigned by Borrower to Lender  hereunder to observe and perform all
          of the  conditions  and  obligations to be observed and performed by
          Borrower  thereunder,  all in  accordance  with and  pursuant to the
          terms and provisions  thereof.  The exercise by Lender of any of the
          rights assigned hereunder shall not release Borrower from any of its
          duties or obligations under any such contract,  agreement,  interest
          or obligation. Lender shall have no duty, responsibility, obligation
          or  liability  under  any  such  contract,  agreement,  interest  or
          obligation by reason of or arising out of the assignment  thereof to
          Lender or the granting to Lender of a Security  Interest  therein or
          the receipt by Lender of any payment  relating to any such contract,
          agreement,  interest or obligation pursuant hereto, nor shall Lender
          be required or  obligated in any manner to perform or fulfill any of
          the obligations of Borrower  thereunder or pursuant  thereto,  or to
          make  any  payment,  or to make  any  inquiry  as to the  nature  or
          sufficiency of any payment  received by Lender or the sufficiency of
          any  performance  of any party under any such  contract,  agreement,
          interest or obligation,  or to present or file any claim, or to take
          any action to collect or enforce any  performance  of the payment of
          any amounts which may have been assigned to Lender,  in which Lender
          may have been granted a Security  Interest or to which Lender may be
          entitled at any time or times.

11.5      Grant of License to Use Intellectual  Property Collateral.  Borrower
          hereby  grants  to  Lender,  after the  occurrence  and  during  the
          continuance  of an Event of Default,  an  irrevocable,  nonexclusive
          license   (exercisable   without   payment   of   royalty  or  other
          compensation to Borrower) to use, assign,  license or sublicense any
          Intellectual Property Collateral, now owned or hereafter acquired by
          Borrower,  and wherever  the same may be located,  including in such
          license  reasonable  access  as to all  media  in  which  any of the
          licensed  items  may be  recorded  or  stored  and  to all  computer
          programs and used for the compilation or printout thereof.

12.       Rights  Cumulative.  All rights and  remedies of Lender  pursuant to
          this Security Agreement,  the Loan Agreement or otherwise,  shall be
          cumulative  and  non-exclusive,  and may be exercised  singularly or
          concurrently.

13.       Severability.  In the  event  that any  provision  of this  Security
          Agreement is deemed to be invalid by reason of the  operation of any
          law or by reason of the  interpretation  placed thereon by any court
          or any other  Governmental  Body,  this Security  Agreement shall be
          construed as not  containing  such  provision and the  invalidity of
          such provision shall not affect the validity of any other provisions
          hereof,  and any and all other provisions hereof which otherwise are
          lawful and valid shall remain in full force and effect.

14.       Notices.   All  notices  and  communications   under  this  Security
          Agreement  shall be in writing and delivered in the manner set forth
          in the Loan Agreement.

15.       Successors  and Assigns.  This Security  Agreement  shall be binding
          upon  and  inure  to  the  benefit  of  and  be  enforceable  by the
          respective successors and assigns of Lender and Borrower.

16.       Captions.  The headings in this Security  Agreement are for purposes
          of  reference  only and  shall  not limit or  otherwise  affect  the
          meaning hereof.

17.       Counterparts. This Security Agreement may be executed in one or more
          counterparts,  each of which shall be deemed to be an original,  but
          all of  which,  when  taken  together,  shall  be one and  the  same
          instrument.

18.       Survival  of  Security   Agreement;   Termination.   All  covenants,
          agreements, representations and warranties made herein shall survive
          the execution and delivery of the Loan  Agreement and shall continue
          in fall force and effect until  Borrower's  Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated.

19.       Governing  Law.  This  Security  Agreement  shall  be  construed  in
          accordance  with and governed by the laws and decisions of the State
          of Illinois, without regard to conflict of laws principles.

20.       Jurisdiction  and Venue.  Borrower hereby agrees that all actions or
          proceedings initiated by Borrower and arising directly or indirectly
          out of this  Security  Agreement  shall be  litigated  in either the
          Circuit  Court of Cook  County,  Illinois  or in the  United  States
          District Court for the Northern District of Illinois,  or, if Lender
          initiates  such action,  in addition to the  foregoing  courts,  any
          other court in which Lender shall  initiate or to which Lender shall
          remove  such  action,  to the extent  such  court has  jurisdiction.
          Borrower  hereby  expressly  submits and consents in advance to such
          jurisdiction  in any action or proceeding  commenced by Lender in or
          removed  by Lender to any of such  courts,  and hereby  agrees  that
          personal  service of the summons and complaint,  or other process or
          papers  issued  therein  may be served in the  manner  provided  for
          notices  herein,  and  agrees  that  service  of  such  summons  and
          complaint or other  process or papers may be made by  registered  or
          certified mail addressed to Borrower at the address to which notices
          are to be sent  pursuant  to  Section  11.1 of the  Loan  Agreement.
          Borrower  waives any claim that  either  the  Circuit  Court of Cook
          County,  Illinois  or the  United  States  District  Court  for  the
          Northern  District  of  Illinois  is  an  inconvenient  forum  or an
          improper  forum  based on lack of venue.  To the extent  provided by
          law,  should  Borrower,  after  being so  served,  fail to appear or
          answer to any summons, complaint, process or papers so served within
          the  number of days  prescribed  by law after the  mailing  thereof,
          Borrower shall be deemed in default and an order and/or judgment may
          be entered by the court  against  Borrower as demanded or prayed for
          in such summons, complaint,  process or papers. The exclusive choice
          of forum  for  Borrower  set forth in this  Section  19 shall not be
          deemed  to  preclude  the  enforcement  by  Lender  of any  judgment
          obtained in any other forum or the taking by Lender of any action to
          enforce the same in any other appropriate jurisdiction, and Borrower
          hereby waives the right to collaterally  attack any such judgment or
          action.

21.       Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
          any controversy which may arise under any of the Loan Instruments or
          with respect to the transactions contemplated thereby would be based
          upon difficult and complex issues and, therefore,  the parties agree
          that any lawsuit arising out of any such  controversy  will be tried
          in a court of competent  jurisdiction  by a judge sitting  without a
          jury.

22.       Time  of  the  Essence.  Time  for  the  performance  of  Borrower's
          Obligations under this Security Agreement is of the essence.

23.       Termination.  This  Security  Agreement  and the Liens and  security
          interests  granted  hereunder shall not terminate until the full and
          complete  performance  and payment and  satisfaction  of  Borrower's
          Obligations and the Loan Agreement shall have terminated,  whereupon
          Lender shall release all such Liens and security  interests in favor
          of Lender affecting the Collateral.

                 [remainder of this page intentionally left blank]



<PAGE>


          IN WITNESS  WHEREOF,  this Security  Agreement has been executed and
delivered  by the  parties  hereto by a duly  authorized  officer of each such
party on the date first set forth above.

Address:                             ERX, INC.,
1000 Colfax                          an Indiana corporation
Gary, IN 46406

                                     By: _____________________________
                                     Name: ___________________________
                                     Title: ____________________________



Address:
30 N. Michigan Avenue                FIRSTAR BANK N.A., a
Chicago, IL 60602                    national banking association


                                     By: _____________________________
                                     Name: Craig B. Collinson
                                     Title: Senior Vice President


<PAGE>


                                   EXHIBIT A

                      Location of Chief Executive Office,
                     Location of other Places of Business,
                       Location of Books and Records and
                     Locations of All Tangible Collateral


                      Location of Chief Executive Office
                                  1000 Colfax
                                Gary, IN 46406


                     Location of Other Places of Business
                                     NONE


                         Location of Books and Records
                                  1000 Colfax
                                Gary, IN 46406

                     Locations of All Tangible Collateral
                                  1000 Colfax
                                Gary, IN 46406


<PAGE>


                                 EXHIBIT "D-3"

                              SECURITY AGREEMENT

          This  SECURITY  AGREEMENT,  dated as of October 15, 2001, is between
FRIENDLY TRANSPORT,  INC., an Indiana corporation,  ("Borrower"),  and FIRSTAR
BANK N.A., a national banking association ("Lender").

                            Preliminary Statement:

A.        Borrower,  CAROLINA  NATIONAL  TRANSPORTATION  INC.,  GULF  LINE
TRANSPORT INC., FIVE STAR TRANSPORT, INC., CAM TRANSPORT, INC., UNITY LOGISTIC
SERVICE,  INC., ERX, INC., TRANSPORT LEASING,  INC., TRANSPORT LOGISTICS,  LLC
("Other  Borrowers"),  US 1 INDUSTRIES,  INC.  ("Guarantor"),  and Lender have
entered into a Fourth  Amendment to Loan  Agreement of even date  herewith (as
the same may be amended, modified, supplemented or restated from time to time,
the "Loan  Agreement"),  pursuant and subject to the terms and  conditions  of
which Lender has agreed to make loans and other  financial  accommodations  to
Borrower and Other Borrowers.

B.        One of the conditions precedent to Lender's obligations under the
Loan  Agreement  is that  Borrower  shall have  executed  and  delivered  this
Security  Agreement  to secure  the  payment  and  performance  of  Borrowers'
Obligations.

          NOW, THEREFORE,  in order to induce Lender to make Advances, and for
other good and valuable  consideration,  the receipt and  sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

1.        Definitions. All terms used herein which are defined in the Illinois
          Uniform  Commercial  Code (the  "Code")  shall have the same meaning
          herein as in the Code  unless  the  context  in which such terms are
          used herein indicates otherwise.  All capitalized terms used but not
          elsewhere  defined  in  this  Security   Agreement  shall  have  the
          respective meanings ascribed to such terms in the Loan Agreement. As
          used herein, the following terms shall have the following meanings:

          Corporate  Changes:  any change in Borrower's place of organization,
form of organization,  or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.

          Intellectual   Property   Collateral:   collectively,   the   Patent
Collateral and the Trademark Collateral.

          Patent   Collateral:   shall  mean  all  (i)   letters   patent  and
applications  for letters patent of Borrower  throughout the world,  including
all patent  applications of Borrower in preparation for filing anywhere in the
world,   (ii)  patent  licenses  of  Borrower,   (iii)  reissues,   divisions,
continuations, continuations-in-part,  extensions, renewals and reexaminations
of any Patent Collateral and (iv) all proceeds of, and rights associated with,
the foregoing  (including  licenses,  royalties  and proceeds of  infringement
suits),  the right of  Borrower  to sue third  parties  for past,  present and
future  infringements of any patent or patent  application,  and for breach or
enforcement  of any patent license of Borrower,  and all rights  corresponding
thereto throughout the world.

          Trademark  Collateral:  shall mean all (i) trademarks,  trade names,
corporate names,  company names,  business names,  fictitious  business names,
trade dress,  service marks,  certification  marks,  collective marks,  logos,
other sources of business  identifiers,  prints and labels on which any of the
foregoing have appeared or appear,  designs and general  intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter  adopted or acquired,  whether
currently  in use or not, all  registrations  and  recordings  thereof and all
applications  in connection  therewith,  whether pending or in preparation for
filing,  including  registrations,  recordings and  applications in the United
States Patent and Trademark Office and any foreign country, (ii) all Trademark
licenses of Borrower, (iii) all reissues, extensions or renewals of any of the
items described in clauses (i) and (ii) above, (iv) all of the goodwill of the
business  connected with the use of, and symbolized by the items  described in
clauses (i) and (ii) above,  and (v) all  proceeds  of, and rights  associated
with, the foregoing, including any claim by Borrower against third parties for
past, present or future  infringement or dilution of any Trademark,  Trademark
registration  or  Trademark  license,  or  for  any  injury  to  the  goodwill
associated  with the use of any such Trademark or for breach or enforcement of
any Trademark license.

2.        Security  Interests.  In order  to  secure  Borrowers'  Obligations,
          Borrower hereby grants to Lender a security interest in all Property
          of  Borrower,  whether  now  owned or  hereafter  acquired,  and all
          additions and accessions thereto, including, without limitation, the
          Property described below:

2.1       Goods, Machinery,  Equipment and Inventory. All of Borrower's goods,
          machinery,  equipment  and  inventory,  wherever  located,  and  all
          additions and accessions thereto or replacements thereof, including,
          but not limited to, all  machinery,  inventory  and equipment of any
          and every kind and description  comprising,  belonging to or used in
          connection   with  the   operation   of  the  business  of  Borrower
          (collectively, the "Tangible Collateral");

2.2       Accounts, General Intangibles.  All of Borrower's accounts, contract
          rights,  chattel paper,  instruments,  investment property,  deposit
          accounts,  documents, and general intangibles, and all additions and
          accessions  thereto and  replacements  thereof,  including,  but not
          limited to, all  licenses,  franchises,  permits and  authorizations
          heretofore or hereafter granted or issued to Borrower under federal,
          state or local laws (excluding,  however, any licenses,  franchises,
          permits and  authorizations  issued by any Governmental  Body to the
          extent,  and only to the extent,  it is unlawful to grant a security
          interest in such licenses,  franchises,  permits and authorizations,
          but including, without limitation, the right to receive all proceeds
          derived or arising from or in connection with the sale or assignment
          of such  licenses,  franchises,  permits and  authorizations)  which
          permit or pertain to the operation of the business of Borrower,  and
          all  of  Borrower's  Intellectual  Property  Collateral,   Operating
          Agreements,  income tax refunds,  copyrights,  patents,  trademarks,
          trade names, trade styles, goodwill, going concern value, franchise,
          supply and distributorship  agreements,  non-competition  agreements
          and   employment    contracts    (collectively,    the   "Intangible
          Collateral").

2.3       Proceeds.  All proceeds  (including  proceeds of insurance,  eminent
          domain and other  governmental  taking and tort claims) and products
          of the Property described in Sections 2.1 and 2.2 above; and

2.4       Books and Records.  All of the books and records  pertaining  to the
          Property  described in Sections  2.1, 2.2 and 2.3 above.  All of the
          Property  described above hereinafter is referred to collectively as
          the  "Collateral." The security interest of Lender in the Collateral
          shall be  superior  and prior to all other  Liens  except  Permitted
          Prior Liens.

3.        Representations  and  Warranties.  Borrower  hereby  represents  and
          warrants to Lender as follows:

3.1       Ownership of  Collateral.  It is the owner of all of the  Collateral
          free from any Lien except for  Permitted  Liens,  except the portion
          thereof consisting of after-acquired  Property, and Borrower will be
          the owner of such after-acquired Property, free from any Lien except
          for Permitted Liens.

3.2       Places of Business. There is listed on Exhibit A hereto the location
          of the chief executive  office of Borrower,  all of the other places
          of  business  of  Borrower  and all  locations  where  the  Tangible
          Collateral and the books and records of Borrower are kept. Except as
          described in Exhibit A, none of the  Collateral is in the possession
          of any consignee, bailee, warehouseman, agent or possessor.

3.3       Trade or Assumed  Names.  Borrower has not used any trade or assumed
          names during the six years preceding the date hereof.


3.4       Financing Statements.  Except for the financing statements of Lender
          and the financing  statements  pertaining  to the  Permitted  Senior
          Indebtedness  Liens,  if any, no  financing  statement  covering any
          Collateral  or any  portion  or  proceeds  thereof is on file in any
          public office.

3.5       Intangible   Collateral.   The   Intangible   Collateral   hereunder
          represents  bona  fide  and  existing   indebtedness,   obligations,
          liabilities,  rights and privileges owed or belonging to Borrower to
          which, to the best of Borrower's  knowledge,  as of the date of this
          Security   Agreement,   there  is  no  valid  defense,   set-off  or
          counterclaim  against Borrower and in connection with which there is
          no  default  with  respect  to  any  material  payment  or  material
          performance  on the part of Borrower,  or, to the best of Borrower's
          knowledge,  any  other  party.  With  respect  to  any  Intellectual
          Property Collateral of Borrower the loss, impairment or infringement
          of which singly or in the aggregate could  reasonably be expected to
          have a  Material  Adverse  Effect:  (i) such  Intellectual  Property
          Collateral  is  subsisting  and has not  been  adjudged  invalid  or
          unenforceable,  in whole or in part, (ii) such Intellectual Property
          Collateral  is valid and  enforceable,  (iii)  Borrower has made all
          filings and recordations necessary in the exercise of reasonable and
          prudent   business   judgment  to  protect  its   interest  in  such
          Intellectual  Property  Collateral  in the United  States Patent and
          Trademark  Office,   the  United  States  Copyright  Office  and  in
          corresponding  offices  throughout the world, as  appropriate,  (iv)
          Borrower is the owner of the entire and  unencumbered  right,  title
          and interest in and to such Intellectual  Property Collateral and no
          claim  has  been  made  that the use of such  Intellectual  Property
          Collateral  does or may  violate  the  asserted  rights of any third
          party,  and (v) Borrower has  performed and will continue to perform
          all acts and has paid and will continue to pay all required fees and
          taxes to maintain each and every item of such Intellectual  Property
          Collateral  in full  force  and  effect  throughout  the  world,  as
          applicable. Borrower owns directly, or is entitled to use by license
          or otherwise,  all  Intellectual  Property  Collateral of any Person
          used in,  necessary  for or material  to the  conduct of  Borrower's
          businesses. Except as set forth in the Loan Agreement, no litigation
          is pending or, to the best knowledge of Borrower,  threatened  which
          contains  allegations   respecting  the  validity,   enforceability,
          infringement  or  ownership  of  any of  the  Intellectual  Property
          Collateral of Borrower.

3.6       Tangible  Collateral-Personal  Property.  All Tangible Collateral at
          all times shall be considered personal property.

3.7       Accounts.  Each existing  Account  constitutes,  and each  hereafter
          arising  Account  will   constitute,   to  the  best  of  Borrower's
          knowledge,  the legally valid and binding  obligation of the account
          debtor obligated to pay the same. The amount represented by Borrower
          to  Lender  as owing by each  account  debtor  is,  or will be,  the
          correct amount actually and unconditionally owing, except for normal
          cash  discounts  and  allowances  where  applicable.  To the best of
          Borrower's  knowledge,  no account debtor has any defense,  set-off,
          claim or counterclaim  against Borrower that can be asserted against
          Lender,  whether in any proceeding to enforce Lender's rights in the
          Collateral  or  otherwise.  None of the  Accounts  is,  nor will any
          hereafter  arising  Account be,  evidenced by a  promissory  note or
          other instrument other than a check, unless delivered to Lender with
          appropriate endorsements.

3.8       Inventory.  No  Inventory  is  subject  to  any  licensing,  patent,
          trademark,  trade name or copyright  agreement  with any Person that
          restricts   Borrower's   ability  to  manufacture  and/or  sell  the
          Inventory other than territorial restrictions not materially adverse
          to the Borrower or its business.

4.        Affirmative Covenants.  Until all of Borrowers' Obligations are paid
          and  performed  in full  and the  Loan  Agreement  shall  have  been
          terminated, Borrower agrees that it will:

4.1       Corporate  Changes.  Inform  Lender  within  ten  (10)  days  of any
          Corporate Change.

4.2       Taxes.  Pay promptly  when due all taxes,  levies,  assessments  and
          governmental  charges  upon  and  relating  to any of the  Property,
          income or receipts of Borrower or otherwise for which Borrower is or
          may be liable,  except to the extent  that the failure to pay any of
          such taxes, levies,  assessments or charges is permitted by the Loan
          Agreement.

4.3       Insurance.  At its sole expense, keep the Collateral insured against
          loss or damage by  insurance  policies  which shall be in such form,
          with  such  companies  and in  such  amounts  as  may be  reasonably
          satisfactory  to Lender and otherwise  comply with the provisions of
          Section 6.6 of the Loan Agreement.

4.4       Tangible Collateral.

4.4.1             Good Repair.  Keep the Tangible  Collateral  in good working
                  order and repair and make all necessary replacements thereof
                  and  renewals  thereto  so  that  the  value  and  operating
                  efficiency  thereof  at all times  shall be  maintained  and
                  preserved.

4.4.2             Insurance Requirements.  Maintain the Tangible Collateral at
                  all  times  in  accordance  with  the  requirements  of  all
                  insurance  carriers which provide  insurance with respect to
                  such Tangible Collateral so that such insurance shall remain
                  in full force and effect.

4.4.3             Certificates  of  Title.  Upon the  request  of  Lender  (i)
                  promptly   deliver  to  Lender  all  certificates  of  title
                  pertaining  to the  Tangible  Collateral  and (ii)  take all
                  actions  reasonably  requested  by  Lender to cause the Lien
                  granted to Lender hereunder to be noted on such certificates
                  of title.

4.4.4             Use of Collateral.  Use the Tangible  Collateral in material
                  compliance  with  all  statutes,  regulations,   ordinances,
                  requirements  and  regulations  and all  judgments,  orders,
                  injunctions and decrees  applicable  thereto,  and all other
                  federal, state and local laws.

4.5       Intangible Collateral.

4.5.1             Payments.  Make all payments and perform all acts reasonably
                  necessary   to  maintain   and   preserve   the   Intangible
                  Collateral,   including,   without  limitation,   filing  of
                  documents,   renewals   or   other   information   with  any
                  Governmental Body or any other Person.

4.5.2             Delivery  of  Instruments  and  Letters of Credit.  Upon the
                  request of Lender,  promptly  deliver to Lender the original
                  executed  copies of all  instruments  and  letters of credit
                  which constitute part of the Intangible Collateral, together
                  with such endorsements,  assignments and other agreements as
                  Lender  may  request  in  order  to  perfect  the   Security
                  Interests.

4.5.3             Accurate  Records.  At all times keep  accurate and complete
                  records of payment and  performance  by  Borrower  and other
                  Persons of their respective  obligations with respect to the
                  Intangible Collateral and permit Lender or any of its agents
                  to call at Borrower's place of business without hindrance or
                  delay to inspect,  audit,  check or make  extracts  from the
                  books, records, correspondence or other data relating to the
                  Intangible  Collateral in accordance  with the provisions of
                  the Loan Agreement.

4.5.4             Verification of  Indebtedness.  Upon request of Lender after
                  the  occurrence and during the  continuation  of an Event of
                  Default,  permit Lender itself,  at any time, in the name of
                  Lender or Borrower, to verify directly with the obligors the
                  indebtedness  due  Borrower  on any account or other item of
                  Intangible Collateral.

4.5.5             Defaults,  Other  Claims.  Immediately  inform Lender of any
                  default in payment or  performance  by Borrower or any other
                  Person of any  obligation  with  respect  to the  Intangible
                  Collateral  or of  claims  made by  others  in regard to the
                  Intangible  Collateral,  if  either  of which  could  have a
                  Material Adverse Effect.

4.5.6             Ownership of Intellectual Property Collateral. Notify Lender
                  immediately  if it knows,  or has  reason to know,  that any
                  application or registration relating to any material item of
                  its Intellectual Property Collateral may become abandoned or
                  dedicated  to the public or placed in the  public  domain or
                  invalid or unenforceable, or of any adverse determination or
                  development  (including  the  institution  of,  or any  such
                  determination  or  development  in,  any  proceeding  in the
                  United States Patent and Trademark Office, the United States
                  Copyright Office or any foreign  counterpart  thereof or any
                  court)  regarding   Borrower's   ownership  of  any  of  its
                  Intellectual Property Collateral,  its right to register the
                  same or to keep and maintain and enforce the same.

4.5.7             Maintenance of Intellectual  Property  Collateral.  Take all
                  necessary  steps,  including  in any  proceeding  before the
                  United States Patent and Trademark Office, the United States
                  Copyright  Office  or any  similar  office  or agency in any
                  country or any political  subdivision  thereof,  to maintain
                  and  pursue  any  application  (and to obtain  the  relevant
                  registration)  filed with  respect to, and to  maintain  any
                  registration  of,  its  Intellectual   Property  Collateral,
                  including the filing of applications for renewal, affidavits
                  of  use,  affidavits  of  incontestability  and  opposition,
                  interference and cancellation proceedings and the payment of
                  fees and taxes.

4.6       Collection  of  Proceeds.  Use  commercially  reasonable  efforts to
          collect the proceeds of indebtedness owing to Borrower by any Person
          under any  instrument  or by any Account  Debtor with respect to any
          account, contract right, chattel paper or general intangible.

4.7       Financing  Statements,  Further  Assurances.  Concurrently  with the
          execution  of  this  Security  Agreement,  and  from  time  to  time
          hereafter as requested by Lender, execute and deliver to Lender such
          financing   statements,    continuation   statements,    termination
          statements,  amendments to any of the foregoing and other documents,
          in form satisfactory to Lender, as Lender may require to perfect and
          continue in effect the Security Interests, to carry out the purposes
          of this Security Agreement and to protect Lender's rights hereunder.
          Borrower,  upon  demand,  shall  pay the  cost of  filing  all  such
          financing   statements,    continuation   statements,    termination
          statements, amendments to any of the foregoing and other documents.

5.        Negative Covenants. Until all of Borrower's Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated,
          Borrower agrees that it will not:

5.1       Sales and Transfer of Collateral.  Sell, lease,  assign,  license or
          otherwise  dispose  of  any  of  the  Collateral,  except  as may be
          permitted by and in accordance  with the  applicable  provisions the
          Loan Agreement.

5.2       Places of  Business.  Borrower  shall not change the location of (i)
          Borrower's  (A) chief  executive  office or (B) books and records or
          (ii) any  Tangible  Collateral,  in each case  without  first giving
          Lender at least 30 days' advance  written  notice thereof and having
          taken any and all action reasonably  requested by Lender to maintain
          and  preserve  the  first  perfected  Lien in favor of Lender on all
          Property  thereof free and clear of any Lien  whatsoever  except for
          Permitted Liens.

5.3       Installation  of  Tangible  Collateral.  Permit any of the  Tangible
          Collateral to be  installed,  affixed or attached to the real estate
          of  Borrower or any other  Person so as to become a part  thereof or
          become in any sense a fixture not otherwise pledged to Lender.

5.4       Bailees. Permit any Collateral to be in the possession or control of
          any warehouseman, bailee or processor without Lender's prior written
          consent and unless Lender has received  warehouse receipts or bailee
          letters satisfactory to Lender prior to such possession or control.

5.5       Licenses of Intellectual Property.  Sell, transfer,  assign or grant
          any  exclusive  license  with respect to the  Intellectual  Property
          Collateral to an Affiliate of Borrower or otherwise  take any action
          with respect to its Intellectual Property Collateral in violation of
          any term or provision of the Loan Agreement.

5.6       Trademark  Collateral.  Permit,  and permit any of its licensees to,
          unless  Borrower  shall  either  (i)  reasonably  and in good  faith
          determine  that any of its  Trademark  Collateral  is of  negligible
          economic value to Borrower or (ii) have a valid business  purpose to
          do  otherwise:  (A)  fail to  continue  to use any of its  Trademark
          Collateral in order to maintain all of its  Trademark  Collateral in
          full force free from any claim of abandonment for non-use,  (B) fail
          to  maintain as in the past the  quality of  products  and  services
          offered  under all of its Trademark  Collateral,  (C) fail to employ
          all of its Trademark Collateral  registered with any federal,  state
          or   foreign   authority   with  an   appropriate   notice  of  such
          registration,  (D) adopt or use any trademark  which is  confusingly
          similar or a colorable imitation of any of its Trademark  Collateral
          except  in  compliance  with  applicable  law,  (E)  use  any of its
          Trademark Collateral  registered with any federal,  state or foreign
          authority except for the uses for which  registration or application
          for  registration of such Trademark  Collateral has been made except
          in  compliance  with  applicable  law or (F) do or permit any act or
          knowingly omit to do any act whereby any of its Trademark Collateral
          may lapse or become invalid or unenforceable.

5.7       Patent  Collateral.  Unless Borrower shall either (i) reasonably and
          in good  faith  determine  that any of its Patent  Collateral  is of
          negligible  economic value to Borrower or (ii) have a valid business
          purpose to do otherwise,  do any act, or omit to do any act, whereby
          any of Borrower's Patent Collateral may lapse or become abandoned or
          dedicated to the public or unenforceable.

6.        Protection of Collateral. In the event of any failure of Borrower to
          (i)  maintain  in  force  and pay for any  insurance  or bond  which
          Borrower is required to provide pursuant to this Security  Agreement
          or the other Loan Instruments,  (ii) keep the Tangible Collateral in
          good repair and operating condition,  (iii) keep the Collateral free
          from all Liens  except for  Permitted  Liens,  (iv) pay when due all
          taxes,  levies and  assessments on or in respect of the  Collateral,
          except as permitted  pursuant to the terms of Section 4.1 above, (v)
          make all payments and perform all acts on the part of Borrower to be
          paid or performed with respect to any of the Collateral,  including,
          without   limitation,   all   expenses   of   protecting,   storing,
          warehousing,  insuring,  handling and  maintaining the Collateral or
          (vi) keep fully and perform promptly any other of the obligations of
          Borrower   under  this   Security   Agreement   or  the  other  Loan
          Instruments,  Lender, at its option,  may (but shall not be required
          to) procure and pay for such  insurance,  place such  Collateral  in
          good repair and operating  condition,  pay or contest or settle such
          Liens or taxes or any judgments based thereon or otherwise make good
          any other  aforesaid  failure of Borrower.  Borrower shall reimburse
          Lender  immediately  upon  demand for all sums paid or  advanced  on
          behalf of Borrower for any such  purpose,  together  with all costs,
          expenses  and  attorneys'   fees  paid  or  incurred  by  Lender  in
          connection therewith and interest at the Default Rate on all sums so
          paid or advanced from the date of such payment or advancement  until
          repaid to Lender.  All such sums paid or  advanced  by Lender,  with
          interest thereon,  immediately upon payment or advancement  thereof,
          shall be deemed to be part of Borrower's Obligations secured hereby.

7.        Event of Default.  Borrower  shall be in default under this Security
          Agreement  upon the occurrence of an Event of Default under the Loan
          Agreement.

8.        Right of Lender to Contact  Account  Debtors.  Lender shall have the
          right, from time to time, at Lender's discretion, to contact account
          debtors of Borrower and  Guarantor to verify that Accounts are valid
          and  not  subject  to  setoff  or  counterclaim  and to  verify  the
          creditworthiness of the account debtor.

9.        Remedies  Upon  Default.   Upon  the   occurrence   and  during  the
          continuation of an Event of Default:

9.1       Rights of Lender.  Lender  shall have all of the rights and remedies
          of a secured  party under the Code and all other rights and remedies
          accorded to Lender at equity or law, including,  without limitation,
          the right to apply for and have a receiver  appointed  by a court of
          competent   jurisdiction   to  manage,   protect  and  preserve  the
          Collateral,  to continue  operating  the business of Borrower and to
          collect  all  revenues  and profits  thereof.  Any notice of sale or
          other  disposition  of Collateral  given not less than ten (10) days
          prior to such proposed action shall  constitute  reasonable and fair
          notice of such action.  Lender may postpone or adjourn any such sale
          from  time to time by  announcement  at the time  and  place of sale
          stated in the  notice of sale or by  announcement  of any  adjourned
          sale,  without being  required to give a further notice of sale. Any
          such sale may be for cash or, unless  prohibited by applicable  law,
          upon such credit or  installment  terms as Lender  shall  determine.
          Borrower  shall be credited  with the net proceeds of such sale only
          when such  proceeds  actually  are received by Lender in Good Funds.
          Despite the  consummation  of any such sale,  Borrower  shall remain
          liable for any  deficiency on Borrower's  Obligations  which remains
          outstanding  following  any such  sale.  All net  proceeds  received
          pursuant  to a sale  shall be  applied  in the  manner  set forth in
          Section 8.4 of the Loan Agreement.

9.2       Assembly of Collateral.  Upon the request of Lender,  Borrower shall
          assemble  and make the  Collateral  available  to  Lender at a place
          designated by Lender.

9.3       Proceeds.  Borrower  shall  hold  all  proceeds  of  the  Collateral
          collected  by  Borrower  in trust for Lender,  and,  after  Borrower
          receives  notice  from  Lender,  promptly  after the  receipt of the
          proceeds  of  Collateral,  turn over such  proceeds to Lender in the
          exact form in which they were received.

9.4       Other  Rights.  Lender,  at its  election,  and  without  notice  to
          Borrower, may:

9.4.1             Terminate  Right of  Collection.  Terminate  the  rights  of
                  Borrower to collect the proceeds described in Section 8.3.


9.4.2             Notification.  Notify the obligors under any instruments and
                  the Account Debtors of any account,  contract right, chattel
                  paper or general intangible to make all payments directly to
                  Lender.

9.4.3             Collection of Payments. Demand, sue for, collect or receive,
                  in the name of  Borrower  or Lender,  any money or  Property
                  payable or receivable on any item of Collateral.

9.4.4             Settlement. Settle, release, compromise, adjust, sue upon or
                  otherwise  enforce  any item of  Collateral  as  Lender  may
                  determine.

9.4.5             Mail of Borrower;  Endorsement of Checks. For the purpose of
                  enforcing  Lender's  rights under this  Security  Agreement,
                  receive and open mail  addressed  to  Borrower,  and endorse
                  notes, checks,  drafts, money orders,  documents of title or
                  other  forms  of  payment  on  behalf  and  in the  name  of
                  Borrower.

All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.

10.       Power of Attorney.  To effectuate  the rights and remedies of Lender
          under this Security Agreement,  Borrower hereby irrevocably appoints
          Lender as its  attorney-in-fact,  in the name of  Borrower or in the
          name of Lender,  (i) to execute and file from time to time financing
          statements,  continuation  statements,  termination  statements  and
          amendments thereto, covering the Collateral, in form satisfactory to
          Lender and (ii) take all action and execute all  documents  referred
          to in Section 9.4 above.  The power of attorney  granted pursuant to
          this Section 10 is coupled with an interest and shall be irrevocable
          until all of Borrower's  Obligations have been paid and performed in
          full and the Loan Agreement shall have been terminated.

11.       Certain Agreements of Borrower.

11.1      Waiver of Notice. Borrower hereby waives notice of the acceptance of
          this  Security  Agreement  and,  except  as  otherwise  specifically
          provided in Section 9.1 and 9.3 above or in the Loan Agreement,  all
          other notices, demands or protests to which Borrower otherwise might
          be entitled by law (and which  lawfully  may be waived) with respect
          to  this  Security   Agreement,   Borrower's   Obligations  and  the
          Collateral.

11.2      Rights of Lender. Borrower agrees that Lender (i) shall have no duty
          as to the  collection or protection of the  Collateral or any income
          thereon,  (ii) may  exercise  the rights and remedies of Lender with
          respect to the Collateral without resort or regard to other security
          or sources  for payment and (iii) shall not be deemed to have waived
          any of the rights or  remedies  granted to Lender  hereunder  unless
          such  waiver  shall be in  writing  and shall be  signed by  Lender.
          Borrower  and  Lender   acknowledge  their  intent  that,  upon  the
          occurrence  of an Event of Default,  Lender  shall  receive,  to the
          fullest extent permitted by law and governmental  policy, all rights
          necessary or desirable to obtain, use or sell the Collateral, and to
          exercise   all   remedies   available   to  Lender  under  the  Loan
          Instruments,  the Code or other applicable law.  Borrower and Lender
          further  acknowledge  and agree that, in the event of changes in law
          or governmental policy occurring  subsequent to the date hereof that
          affect in any  manner  Lender's  rights of access to, or use or sale
          of, the Collateral,  or the procedures necessary to enable Lender to
          obtain such rights of access, use or sale, Lender and Borrower shall
          amend the Loan Instruments,  in such manner as Lender shall request,
          in order to  provide  Lender  such  rights  to the  greatest  extent
          possible  consistent  with  then  applicable  law  and  governmental
          policy.

11.3      No Delay, Single or Partial Exercise Permitted. No delay or omission
          on the part of Lender in exercising any rights or remedies contained
          herein  shall  operate as a waiver of such right or remedy or of any
          other  right or  remedy,  and no single or partial  exercise  of any
          right  or  remedy  shall  preclude  any  other or  further  exercise
          thereof,  or the exercise of any other right or remedy.  A waiver of
          any right or remedy on any one occasion  shall not be construed as a
          bar or waiver of any  right or  remedy on future  occasions,  and no
          delay,  omission,  waiver or single or partial exercise of any right
          or remedy shall be deemed to establish a custom or course of dealing
          or performance between the parties hereto.

11.4      Borrower to Remain Liable.  Borrower hereby  expressly  agrees that,
          anything  herein to the  contrary  notwithstanding,  Borrower  shall
          remain liable under each contract, agreement, interest or obligation
          assigned by Borrower to Lender  hereunder to observe and perform all
          of the  conditions  and  obligations to be observed and performed by
          Borrower  thereunder,  all in  accordance  with and  pursuant to the
          terms and provisions  thereof.  The exercise by Lender of any of the
          rights assigned hereunder shall not release Borrower from any of its
          duties or obligations under any such contract,  agreement,  interest
          or obligation. Lender shall have no duty, responsibility, obligation
          or  liability  under  any  such  contract,  agreement,  interest  or
          obligation by reason of or arising out of the assignment  thereof to
          Lender or the granting to Lender of a Security  Interest  therein or
          the receipt by Lender of any payment  relating to any such contract,
          agreement,  interest or obligation pursuant hereto, nor shall Lender
          be required or  obligated in any manner to perform or fulfill any of
          the obligations of Borrower  thereunder or pursuant  thereto,  or to
          make  any  payment,  or to make  any  inquiry  as to the  nature  or
          sufficiency of any payment  received by Lender or the sufficiency of
          any  performance  of any party under any such  contract,  agreement,
          interest or obligation,  or to present or file any claim, or to take
          any action to collect or enforce any  performance  of the payment of
          any amounts which may have been assigned to Lender,  in which Lender
          may have been granted a Security  Interest or to which Lender may be
          entitled at any time or times.

11.5      Grant of License to Use Intellectual  Property Collateral.  Borrower
          hereby  grants  to  Lender,  after the  occurrence  and  during  the
          continuance  of an Event of Default,  an  irrevocable,  nonexclusive
          license   (exercisable   without   payment   of   royalty  or  other
          compensation to Borrower) to use, assign,  license or sublicense any
          Intellectual Property Collateral, now owned or hereafter acquired by
          Borrower,  and wherever  the same may be located,  including in such
          license  reasonable  access  as to all  media  in  which  any of the
          licensed  items  may be  recorded  or  stored  and  to all  computer
          programs and used for the compilation or printout thereof.

12.       Rights  Cumulative.  All rights and  remedies of Lender  pursuant to
          this Security Agreement,  the Loan Agreement or otherwise,  shall be
          cumulative  and  non-exclusive,  and may be exercised  singularly or
          concurrently.

13.       Severability.  In the  event  that any  provision  of this  Security
          Agreement is deemed to be invalid by reason of the  operation of any
          law or by reason of the  interpretation  placed thereon by any court
          or any other  Governmental  Body,  this Security  Agreement shall be
          construed as not  containing  such  provision and the  invalidity of
          such provision shall not affect the validity of any other provisions
          hereof,  and any and all other provisions hereof which otherwise are
          lawful and valid shall remain in full force and effect.

14.       Notices.   All  notices  and  communications   under  this  Security
          Agreement  shall be in writing and delivered in the manner set forth
          in the Loan Agreement.

15.       Successors  and Assigns.  This Security  Agreement  shall be binding
          upon  and  inure  to  the  benefit  of  and  be  enforceable  by the
          respective successors and assigns of Lender and Borrower.

16.       Captions.  The headings in this Security  Agreement are for purposes
          of  reference  only and  shall  not limit or  otherwise  affect  the
          meaning hereof.

17.       Counterparts. This Security Agreement may be executed in one or more
          counterparts,  each of which shall be deemed to be an original,  but
          all of  which,  when  taken  together,  shall  be one and  the  same
          instrument.

18.       Survival  of  Security   Agreement;   Termination.   All  covenants,
          agreements, representations and warranties made herein shall survive
          the execution and delivery of the Loan  Agreement and shall continue
          in fall force and effect until  Borrower's  Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated.

19.       Governing  Law.  This  Security  Agreement  shall  be  construed  in
          accordance  with and governed by the laws and decisions of the State
          of Illinois, without regard to conflict of laws principles.

20.       Jurisdiction  and Venue.  Borrower hereby agrees that all actions or
          proceedings initiated by Borrower and arising directly or indirectly
          out of this  Security  Agreement  shall be  litigated  in either the
          Circuit  Court of Cook  County,  Illinois  or in the  United  States
          District Court for the Northern District of Illinois,  or, if Lender
          initiates  such action,  in addition to the  foregoing  courts,  any
          other court in which Lender shall  initiate or to which Lender shall
          remove  such  action,  to the extent  such  court has  jurisdiction.
          Borrower  hereby  expressly  submits and consents in advance to such
          jurisdiction  in any action or proceeding  commenced by Lender in or
          removed  by Lender to any of such  courts,  and hereby  agrees  that
          personal  service of the summons and complaint,  or other process or
          papers  issued  therein  may be served in the  manner  provided  for
          notices  herein,  and  agrees  that  service  of  such  summons  and
          complaint or other  process or papers may be made by  registered  or
          certified mail addressed to Borrower at the address to which notices
          are to be sent  pursuant  to  Section  11.1 of the  Loan  Agreement.
          Borrower  waives any claim that  either  the  Circuit  Court of Cook
          County,  Illinois  or the  United  States  District  Court  for  the
          Northern  District  of  Illinois  is  an  inconvenient  forum  or an
          improper  forum  based on lack of venue.  To the extent  provided by
          law,  should  Borrower,  after  being so  served,  fail to appear or
          answer to any summons, complaint, process or papers so served within
          the  number of days  prescribed  by law after the  mailing  thereof,
          Borrower shall be deemed in default and an order and/or judgment may
          be entered by the court  against  Borrower as demanded or prayed for
          in such summons, complaint,  process or papers. The exclusive choice
          of forum  for  Borrower  set forth in this  Section  19 shall not be
          deemed  to  preclude  the  enforcement  by  Lender  of any  judgment
          obtained in any other forum or the taking by Lender of any action to
          enforce the same in any other appropriate jurisdiction, and Borrower
          hereby waives the right to collaterally  attack any such judgment or
          action.

21.       Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
          any controversy which may arise under any of the Loan Instruments or
          with respect to the transactions contemplated thereby would be based
          upon difficult and complex issues and, therefore,  the parties agree
          that any lawsuit arising out of any such  controversy  will be tried
          in a court of competent  jurisdiction  by a judge sitting  without a
          jury.

22.       Time  of  the  Essence.  Time  for  the  performance  of  Borrower's
          Obligations  under  this  Security  Agreement  is  of  the  essence.

23.       Termination.  This  Security  Agreement  and the Liens and  security
          interests  granted  hereunder shall not terminate until the full and
          complete  performance  and payment and  satisfaction  of  Borrower's
          Obligations and the Loan Agreement shall have terminated,  whereupon
          Lender shall release all such Liens and security  interests in favor
          of Lender affecting the Collateral.

                     [remainder of this page intentionally left blank]



<PAGE>


         IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each such
party on the date first set forth above.

Address:                             FRIENDLY TRANSPORT, INC.,
1000 Colfax                          an Indiana corporation
Gary, IN 46406


                                     By: _____________________________
                                     Name: ___________________________
                                     Title: ____________________________



Address:
30 N. Michigan Avenue                FIRSTAR BANK N.A., a
Chicago, IL 60602                    national banking association


                                     By: _____________________________
                                     Name: Craig B. Collinson
                                     Title: Senior Vice President


<PAGE>


                                   EXHIBIT A

                      Location of Chief Executive Office,
                     Location of other Places of Business,
                       Location of Books and Records and
                     Locations of All Tangible Collateral


                      Location of Chief Executive Office
                                  1000 Colfax
                                Gary, IN 46406


                     Location of Other Places of Business
                                     NONE


                         Location of Books and Records
                                  1000 Colfax
                                Gary, IN 46406


                     Locations of All Tangible Collateral
                                  1000 Colfax
                                Gary, IN 46406




<PAGE>


                                 EXHIBIT "E-1"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously  entered into and executed a Security  Agreement  dated as of April
18, 2000 ("Security  Agreement"),  with Firstar Bank N.A. ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                                        FIVE STAR TRANSPORT, INC.


                                        By ______________________________


<PAGE>


                                 EXHIBIT "E-2"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously  entered into and executed a Security  Agreement  dated as of April
18, 2000 ("Security  Agreement"),  with Firstar Bank N.A. ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                                   CAROLINA NATIONAL TRANSPORTATION INC.


                                   By ________________________________________


<PAGE>


                                 EXHIBIT "E-3"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously  entered into and executed a Security  Agreement  dated as of April
18, 2000 ("Security  Agreement"),  with Firstar Bank N.A. ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                                 KEYSTONE LINES


                                 By ______________________________


<PAGE>


                                 EXHIBIT "E-4"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously  entered into and executed a Security  Agreement  dated as of April
18, 2000 ("Security  Agreement"),  with Firstar Bank N.A. ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                              GULF LINE TRANSPORT INC.


                              By ______________________________


<PAGE>


                                 EXHIBIT "E-5"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously  entered into and executed a Security  Agreement  dated as of April
18, 2000 ("Security  Agreement"),  with Firstar Bank N.A. ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                        US 1 INDUSTRIES, INC.


                        By ______________________________


<PAGE>


                                 EXHIBIT "E-6"


                         ACKNOWLEDGEMENT AND AGREEMENT
                             (Security Agreement)


          The  undersigned   ("Borrower")  hereby  acknowledges  that  it  has
previously entered into and executed a Security Agreement dated as of March 1,
2001  ("Security  Agreement"),  with  Firstar  Bank N.A.  ("Lender"),  wherein
property of Borrower  was pledged to secure  Borrowers'  Obligations  (as that
term is defined in that  certain  Loan  Agreement  dated as of April 18, 2000,
between  the  undersigned  and  others and which was  amended by that  certain
Amendment  to Loan  Agreement  dated June 9, 2000,  Second  Amendment  to Loan
Agreement  dated December 7, 2000,  Third  Amendment to Loan  Agreement  dated
March 1, 2001, and Fourth  Amendment to Loan  Agreement  dated as of even date
herewith   ("Loan   Agreement")).   Borrower   acknowledges   that  Borrowers'
Obligations,  as that  term is used in the  Loan  Agreement  and the  Security
Agreement,  means Borrowers' Obligations under the Loan Agreement,  as amended
by the Amendment to Loan  Agreement,  the Second  Amendment to Loan Agreement,
the Third  Amendment  to Loan  Agreement,  and the  Fourth  Amendment  to Loan
Agreement,  and includes,  without limitation,  the obligation to repay as and
when due any and all amounts  advanced by Lender to  Borrowers  (as defined in
the Loan  Agreement),  or any of them,  together  with  interest  thereon,  as
provided  in the  Revolving  Loan Note in the face  amount of  $7,000,000,  as
amended  and  restated as of  December  7, 2000,  further  amended and further
amended and restated as of October 15, 2001;  the  Equipment  Loan Note in the
face amount of $1,000,000, as amended and restated as of October 15, 2001; and
the  Guidance  Loan in the face  amount of  $300,000,  dated as of October 15,
2001, made by Borrowers and payable to Lender.

          Borrower  agrees to inform Lender of any change in Borrower's  place
of organization,  form of organization,  or name, including but not limited to
changes   resulting   from   mergers,    acquisitions,    divestitures,    and
reorganizations, within ten (10) days after the occurrence of such change.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered by a duly-authorized officer of the Borrower as of October 15, 2001.


                       CAM TRANSPORT, INC.


                       By ______________________________


<PAGE>


                                 EXHIBIT "F-1"

                              Date: April 18, 2000
                   Amended and Restated as of June 9, 2000
             Further Amended and Restated as of December 7, 2000
               Further Amended and Restated as of March 1, 2001
             Further Amended and Restated as of October 15, 2001

                               LIMITED GUARANTY

          The  undersigned,  Michael  Kibler  ("Kibler")  ("Guarantor"),  does
hereby absolutely and unconditionally,  subject to the limitation as to amount
set  forth  below,   guarantee  to  Firstar  Bank  N.A.,  a  national  banking
association  ("Lender"),  (i)  prompt  payment  when  due,  whether  at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of that
certain  Revolving Loan Note, dated April 18, 2000, as amended and restated as
of June 12, 2000, as further  amended and restated as of December 7, 2000, and
as further amended and restated as of October 15, 2001 in the principal amount
of $7,000,000;  that certain  Equipment Loan Note,  dated December 7, 2000, as
amended and restated as of March 1, 2001, and as further  amended and restated
as of October 15, 2001 in the principal amount of $1,000,000; and that certain
Guidance Loan Note dated October 15, 2001 in the principal amount of $300,000,
all executed by Carolina National  Transportation Inc., an Indiana corporation
("Carolina") Keystone Lines, a California corporation ("Keystone"),  Gulf Line
Transport  Inc., an Indiana  corporation  ("Gulf Line"),  Five Star Transport,
Inc., an Indiana  corporation ("Five Star"),  CAM Transport,  Inc., an Indiana
corporation,  Unity Logistic Services Inc., an Indiana corporation  ("Unity"),
ERX,  Inc.,  an  Indiana  corporation   ("ERX"),   Friendly  Transport,   Inc.
("Friendly"),  Transport Leasing,  Inc., an Arkansas  corporation  ("Transport
Leasing"), and Transport Logistics, LLC, an Arkansas limited liability company
("Transport Logistics") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly,   Transport  Leasing,   and  Transport   Logistics  are  hereinafter
collectively referred to as "Borrowers")  (including all renewals,  extensions
and  modifications  thereof  and all  court  costs,  expert  witness  fees and
reasonable   attorneys'  fees  incurred  by  Lender  in  connection  with  the
collection or enforcement  thereof) (the  Revolving Loan Note,  Equipment Loan
Note and Guidance Loan Note hereinafter collectively referred to herein as the
"Notes")  and  (ii)  prompt  performance  and  payment  of all  of  Borrowers'
Obligations  (as defined in that certain Loan Agreement  dated April 18, 2000,
as amended as of June 9, 2000, further amended as of December 7, 2000, further
amended as of March 1, 2001,  and  further  amended  as on October  15,  2001,
between  Borrowers,  Lender and US 1 Industries,  Inc. (the "Loan Agreement"))
(any and all indebtedness  represented or evidenced by or arising with respect
to the  Notes  in favor  of  Lender  and  Borrower's  Obligations  hereinafter
sometimes collectively referred to as the "Guaranteed Debt").

          The undersigned waives notice of the acceptance of this Guaranty and
of the extension or  continuation  of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment,  protest, notice, demand or action
on delinquency  and any other  formalities  required to charge the undersigned
with  liability  hereunder,  in  respect  of the  Guaranteed  Debt or any part
thereof,  or  otherwise  to enforce  payment  thereof  against any  collateral
securing the Guaranteed Debt or any part thereof. It is the intent hereof that
Guarantor  remain liable as a principal  until all of the  Guaranteed  Debt is
paid in full  notwithstanding any act or thing that might otherwise operate as
a legal or equitable discharge of a surety.

          In the  event of  default  under  the  Notes or the Loan  Agreement,
Guarantor  agrees to pay on demand by Lender all sums then or  thereafter  due
under the Notes and Loan Agreement regardless of any defense,  right of setoff
or claims which any Borrowers or Guarantor might have against Lender.

          This is a guaranty of payment and performance, not collection. It is
expressly  understood  and  agreed  that  the  liability  of  the  undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of (i)
the principal sum of $1,500,000 and (ii) all interest,  fees,  charges,  costs
and attorneys' fees  applicable  thereto which may accrue or be incurred after
demand for payment of such principal sum. It is further  expressly  understood
and agreed that separate recovery may be had by Lender for such sum regardless
of  whether  action is taken or suit is brought  by Lender  against  any other
person liable for the Guaranteed  Debt and regardless of whether any action is
taken  by  Lender  to  enforce  its  rights  against  any  collateral  for the
Guaranteed Debt.

          In any right of  action  which  shall  accrue to Lender by reason of
this Guaranty,  Lender may, at its sole election,  proceed  against  Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor,  US 1
Industries,  Inc., in such action or (b)  commencing  any action  against,  or
obtain any judgment against any of Borrowers.

          The  validity  and  enforceability  of this  Guaranty  shall  not be
impaired or  affected by any of the  following,  whether  occurring  before or
after receipt by Lender of notice of  termination  of this  Guaranty:  (a) any
extension,  modification  or renewal  of, or  indulgence  with  respect to, or
substitutions  for, the  Guaranteed  Debt or any part thereof or any agreement
relating  thereto at any time;  (b) any  failure or  omission  to enforce  any
right, power or remedy with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto,  or any collateral  securing the Guaranteed
Debt or any part thereof;  (c) any waiver of any right,  power or remedy or of
any default  with  respect to the  Guaranteed  Debt or any part thereof or any
agreement  relating  thereto or with  respect to any  collateral  securing the
Guaranteed Debt or any part thereof; (d) any release,  surrender,  compromise,
settlement,   waiver,   subordination   or   modification,   with  or  without
consideration,  of any  collateral  securing the  Guaranteed  Debt or any part
thereof,  any other guaranties with respect to the Guaranteed Debt or any part
thereof,  or any other  obligation of any person or entity with respect to the
Guaranteed Debt or any part thereof; (e) the enforceability or validity of the
Guaranteed  Debt or any part  thereof or the  genuineness,  enforceability  or
validity of any agreement  relating  thereto or with respect to any collateral
securing the Guaranteed  Debt or any part thereof;  or (f) the  application of
payments  received  from any source to the permitted  payment of  indebtedness
other than the  Guaranteed  Debt,  any part  thereof or amounts  which are not
covered by this  Guaranty  even though  Lender might  lawfully have elected to
apply such  payments to any part or all of the  Guaranteed  Debt or to amounts
which are not covered by this  Guaranty,  all  whether or not the  undersigned
shall have had notice or knowledge  of any act or omission  referred to in the
foregoing  clauses (a) through  (f) of this  paragraph.  It is agreed that the
undersigned's  liability hereunder is joint and several and independent of any
other  guaranties or other  obligations  at any time in effect with respect to
the Guaranteed Debt or any part thereof and that the  undersigned's  liability
hereunder may be enforced regardless of the existence,  validity,  enforcement
or non-enforcement of any such other guaranties or other obligations.

          The  undersigned  further agrees that if at any time all or any part
of any payment  heretofore  applied by Lender to the Guaranteed Debt hereby is
or  must be  rescinded  or  returned  by  Lender  for  any  reason  whatsoever
(including, without limitation, the insolvency,  bankruptcy, or reorganization
of any Guarantor),  such indebtedness shall for the purposes of this Guaranty,
to the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence,  notwithstanding  such  application by Lender,
and this Guaranty  shall continue to be effective or be reinstated as the case
may be, as to such guaranteed indebtedness,  all as though such application by
Lender had not been made.

          Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral,  if any, which may from time to time secure the
Guaranteed Debt or any part thereof and (ii) the undersigned authorizes Lender
to take any action or exercise any remedy with respect  thereto,  which Lender
in its sole discretion shall determine,  without notice to the undersigned. In
the event  Lender in its sole  discretion  elects to give notice of any action
with respect to the  collateral,  if any,  securing the Guaranteed Debt or any
part thereof,  ten (10) days' written notice shall be deemed reasonable notice
of any matters contained in such notice. The payment by the undersigned of any
amount pursuant to this Limited  Guaranty shall not entitle the undersigned to
any right, title or interest,  whether by way of subrogation or otherwise,  in
and to any of the Obligations, including, but not limited to, any indebtedness
evidenced by the Notes,  or any  collateral  therefor.  The  undersigned  does
hereby  release  Borrowers from any and all  obligations  of  indemnification,
contribution,  subrogation  and  exoneration  which  may  arise  or come  into
existence as a result of the  undersigned's  assumption or  performance of its
obligations in this Limited Guaranty on behalf of Borrowers in favor of Lender
or its successors and assigns.

          The undersigned  shall pay all costs,  fees and expenses  (including
court costs,  expert witness fees and reasonable  attorneys' fees) incurred by
Lender in  collecting or enforcing the  undersigned's  obligations  under this
Guaranty.

          Any notice,  demand or request which may be  permitted,  required or
desired to be given in  connection  therewith  shall be given in  writing  and
directed to Lender and Guarantor as follows:

         Lender:                    Firstar Bank N.A.
                                    30 N. Michigan Avenue
                                    Chicago, IL 60602
                                    Fax:  (312) 696-1397




<PAGE>


         With a copy to
         its attorneys:             Christopher J. Horvay
                                    Gould & Ratner
                                    222 N. LaSalle Street
                                    Suite 800
                                    Chicago, IL 60601
                                    Fax:  (312) 235-3241

         Guarantor:                 Michael Kibler
                                    1000 Colfax Street
                                    Gary, Indiana  46406
                                    Fax:  (219) 977-5227

         With a copy to             W. Brinkley Dickerson, Jr.
         his attorneys:             Troutman Sanders, L.L.P.
                                    100 Peachtree Street
                                    Atlanta, Georgia  30342
                                    Fax:  (404) 885-3827

          Notices shall be deemed properly  delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier;  or (iii)  delivered  by  facsimile  provided a hard copy of any such
notice  delivered  by  facsimile  is  delivered  to the  addressee  within one
business day thereafter by either of the methods listed in (i) or (ii) above.

          This Guaranty shall (i) bind the  undersigned  and their  successors
and assigns,  (ii) inure to the benefit of Lender,  its successors and assigns
and (iii) be governed by the internal laws of the State of Illinois.

          This Guaranty  amends,  restates in its entirety,  and supercedes an
original  Guaranty made by the Guarantor  dated April 18, 2000, as amended and
restated  as of June 9,  2000,  and as  further  amended  and  restated  as of
December 7, 2000 and March 1, 2001, in favor of Lender.

Chicago, Illinois
                                                   -------------------------
                                                   Michael Kibler



<PAGE>


                                 EXHIBIT "F-2"

                             Date: April 18, 2000
                    Amended and Restated as of June 9, 2000
              Further Amended and Restated as of December7, 2000
               Further Amended and Restated as of March 1, 2001
             Further Amended and Restated as of October 15, 2001

                               LIMITED GUARANTY

          The undersigned,  Harold Antonson ("Antonson")  ("Guarantor"),  does
hereby absolutely and unconditionally,  subject to the limitation as to amount
set  forth  below,   guarantee  to  Firstar  Bank  N.A.,  a  national  banking
association  ("Lender"),  (i)  prompt  payment  when  due,  whether  at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of that
certain  Revolving Loan Note, dated April 18, 2000, as amended and restated as
of June 12, 2000, as further  amended and restated as of December 7, 2000, and
as further amended and restated as of October 15, 2001 in the principal amount
of $7,000,000;  that certain  Equipment Loan Note,  dated December 7, 2000, as
amended and restated as of March 1, 2001, and as further  amended and restated
as of October 15, 2001 in the principal amount of $1,000,000; and that certain
Guidance Loan Note dated October 15, 2001 in the principal amount of $300,000,
all  executed by all executed by Carolina  National  Transportation  Inc.,  an
Indiana  corporation  ("Carolina")  Keystone  Lines, a California  corporation
("Keystone"),  Gulf Line Transport Inc., an Indiana corporation ("Gulf Line"),
Five  Star  Transport,   Inc.,  an  Indiana  corporation  ("Five  Star"),  CAM
Transport,  Inc., an Indiana  corporation,  Unity  Logistic  Services Inc., an
Indiana  corporation  ("Unity"),  ERX, Inc., an Indiana  corporation  ("ERX"),
Friendly Transport,  Inc.  ("Friendly"),  Transport Leasing, Inc., an Arkansas
corporation ("Transport Leasing"),  and Transport Logistics,  LLC, an Arkansas
limited liability company ("Transport  Logistics") (Carolina,  Keystone,  Gulf
Line,  Five Star,  Unity,  ERX,  Friendly,  Transport  Leasing,  and Transport
Logistics are hereinafter  collectively referred to as "Borrowers") (including
all renewals, extensions and modifications thereof and all court costs, expert
witness fees and reasonable  attorneys'  fees incurred by Lender in connection
with  the  collection  or  enforcement  thereof)  (the  Revolving  Loan  Note,
Equipment Loan Note and Guidance Loan Note collectively  referred to herein as
the  "Notes")  and (ii) prompt  performance  and payment of all of  Borrowers'
Obligations  (as defined in that certain Loan Agreement  dated April 18, 2000,
as amended as of June 9, 2000, further amended as of December 7, 2000, further
amended as of March 1, 2001,  and  further  amended  as on October  15,  2001,
between  Borrowers,  Lender and US 1 Industries,  Inc. (the "Loan Agreement"))
(any and all indebtedness  represented or evidenced by or arising with respect
to the  Notes  in favor  of  Lender  and  Borrower's  Obligations  hereinafter
sometimes collectively referred to as the "Guaranteed Debt").

          The undersigned waives notice of the acceptance of this Guaranty and
of the extension or  continuation  of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment,  protest, notice, demand or action
on delinquency  and any other  formalities  required to charge the undersigned
with  liability  hereunder,  in  respect  of the  Guaranteed  Debt or any part
thereof,  or  otherwise  to enforce  payment  thereof  against any  collateral
securing the Guaranteed Debt or any part thereof. It is the intent hereof that
Guarantor  remain liable as a principal  until all of the  Guaranteed  Debt is
paid in full  notwithstanding any act or thing that might otherwise operate as
a legal or equitable discharge of a surety.

          In the  event of  default  under  the  Notes or the Loan  Agreement,
Guarantor  agrees to pay on demand by Lender all sums then or  thereafter  due
under the Notes and Loan Agreement regardless of any defense,  right of setoff
or claims which any Borrowers or Guarantor might have against Lender.

          This is a guaranty of payment and performance, not collection. It is
expressly  understood  and  agreed  that  the  liability  of  the  undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of (i)
the principal sum of $1,500,000 and (ii) all interest,  fees,  charges,  costs
and attorneys' fees  applicable  thereto which may accrue or be incurred after
demand for payment of such principal sum. It is further  expressly  understood
and agreed that separate recovery may be had by Lender for such sum regardless
of  whether  action is taken or suit is brought  by Lender  against  any other
person liable for the Guaranteed  Debt and regardless of whether any action is
taken  by  Lender  to  enforce  its  rights  against  any  collateral  for the
Guaranteed Debt.

          In any right of  action  which  shall  accrue to Lender by reason of
this Guaranty,  Lender may, at its sole election,  proceed  against  Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor,  US 1
Industries,  Inc., in such action or (b)  commencing  any action  against,  or
obtain any judgment against any of Borrowers.

          The  validity  and  enforceability  of this  Guaranty  shall  not be
impaired or  affected by any of the  following,  whether  occurring  before or
after receipt by Lender of notice of  termination  of this  Guaranty:  (a) any
extension,  modification  or renewal  of, or  indulgence  with  respect to, or
substitutions  for, the  Guaranteed  Debt or any part thereof or any agreement
relating  thereto at any time;  (b) any  failure or  omission  to enforce  any
right, power or remedy with respect to the Guaranteed Debt or any part thereof
or any agreement relating thereto,  or any collateral  securing the Guaranteed
Debt or any part thereof;  (c) any waiver of any right,  power or remedy or of
any default  with  respect to the  Guaranteed  Debt or any part thereof or any
agreement  relating  thereto or with  respect to any  collateral  securing the
Guaranteed Debt or any part thereof; (d) any release,  surrender,  compromise,
settlement,   waiver,   subordination   or   modification,   with  or  without
consideration,  of any  collateral  securing the  Guaranteed  Debt or any part
thereof,  any other guaranties with respect to the Guaranteed Debt or any part
thereof,  or any other  obligation of any person or entity with respect to the
Guaranteed Debt or any part thereof; (e) the enforceability or validity of the
Guaranteed  Debt or any part  thereof or the  genuineness,  enforceability  or
validity of any agreement  relating  thereto or with respect to any collateral
securing the Guaranteed  Debt or any part thereof;  or (f) the  application of
payments  received  from any source to the permitted  payment of  indebtedness
other than the  Guaranteed  Debt,  any part  thereof or amounts  which are not
covered by this  Guaranty  even though  Lender might  lawfully have elected to
apply such  payments to any part or all of the  Guaranteed  Debt or to amounts
which are not covered by this  Guaranty,  all  whether or not the  undersigned
shall have had notice or knowledge  of any act or omission  referred to in the
foregoing  clauses (a) through  (f) of this  paragraph.  It is agreed that the
undersigned's  liability hereunder is joint and several and independent of any
other  guaranties or other  obligations  at any time in effect with respect to
the Guaranteed Debt or any part thereof and that the  undersigned's  liability
hereunder may be enforced regardless of the existence,  validity,  enforcement
or non-enforcement of any such other guaranties or other obligations.

          The  undersigned  further agrees that if at any time all or any part
of any payment  heretofore  applied by Lender to the Guaranteed Debt hereby is
or  must be  rescinded  or  returned  by  Lender  for  any  reason  whatsoever
(including, without limitation, the insolvency,  bankruptcy, or reorganization
of any Guarantor),  such indebtedness shall for the purposes of this Guaranty,
to the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence,  notwithstanding  such  application by Lender,
and this Guaranty  shall continue to be effective or be reinstated as the case
may be, as to such guaranteed indebtedness,  all as though such application by
Lender had not been made.

          Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral,  if any, which may from time to time secure the
Guaranteed Debt or any part thereof and (ii) the undersigned authorizes Lender
to take any action or exercise any remedy with respect  thereto,  which Lender
in its sole discretion shall determine,  without notice to the undersigned. In
the event  Lender in its sole  discretion  elects to give notice of any action
with respect to the  collateral,  if any,  securing the Guaranteed Debt or any
part thereof,  ten (10) days' written notice shall be deemed reasonable notice
of any matters contained in such notice. The payment by the undersigned of any
amount pursuant to this Limited  Guaranty shall not entitle the undersigned to
any right, title or interest,  whether by way of subrogation or otherwise,  in
and to any of the Obligations, including, but not limited to, any indebtedness
evidenced by the Notes,  or any  collateral  therefor.  The  undersigned  does
hereby  release  Borrowers from any and all  obligations  of  indemnification,
contribution,  subrogation  and  exoneration  which  may  arise  or come  into
existence as a result of the  undersigned's  assumption or  performance of its
obligations in this Limited Guaranty on behalf of Borrowers in favor of Lender
or its successors and assigns.

          The undersigned  shall pay all costs,  fees and expenses  (including
court costs,  expert witness fees and reasonable  attorneys' fees) incurred by
Lender in  collecting or enforcing the  undersigned's  obligations  under this
Guaranty.

          Any notice,  demand or request which may be  permitted,  required or
desired to be given in  connection  therewith  shall be given in  writing  and
directed to Lender and Guarantor as follows:

         Lender:                    Firstar Bank N.A.
                                    30 N. Michigan Avenue
                                    Chicago, IL 60602
                                    Fax:  (312) 696-1397




<PAGE>


         With a copy to
         its attorneys:             Christopher J. Horvay
                                    Gould & Ratner
                                    222 N. LaSalle Street
                                    Suite 800
                                    Chicago, IL 60601
                                    Fax:  (312) 235-3241

         Guarantor:                 Harold Antonson
                                    1000 Colfax Street
                                    Gary, Indiana  46406
                                    Fax:  (219) 977-5227

         With a copy to             W. Brinkley Dickerson, Jr.
         his attorneys:             Troutman Sanders, L.L.P.
                                    600 Peachtree Street
                                    Atlanta, Georgia  30342
                                    Fax:  (404) 885-3827

          Notices shall be deemed properly  delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier;  or (iii)  delivered  by  facsimile  provided a hard copy of any such
notice  delivered  by  facsimile  is  delivered  to the  addressee  within one
business day thereafter by either of the methods listed in (i) or (ii) above.

          This Guaranty shall (i) bind the  undersigned  and their  successors
and assigns,  (ii) inure to the benefit of Lender,  its successors and assigns
and (iii) be governed by the internal laws of the State of Illinois.

          This Guaranty  amends,  restates in its entirety,  and supercedes an
original  Guaranty made by the Guarantor  dated April 18, 2000, as amended and
restated  as of June 9,  2000,  and as  further  amended  and  restated  as of
December 7, 2000 and March 1, 2001, in favor of Lender.


Chicago, Illinois
                                                  -------------------------
                                                  Harold Antonson


<PAGE>


                                  EXHIBIT "G"

                             Date: April 18, 2000
                   Amended and Restated as of June 9, 2000
             Further Amended and Restated as of December 7, 2000
               Further Amended and Restated as of March 1, 2001
             Further Amended and Restated as of October 15, 2001


                              CORPORATE GUARANTY

          To induce Firstar Bank N.A., a national banking  association,  whose
address is 30 N. Michigan  Avenue,  Chicago,  Illinois  60602  ("Lender"),  to
advance funds to Carolina National Transportation Inc., an Indiana corporation
("Carolina") Keystone Lines, a California corporation ("Keystone"),  Gulf Line
Transport  Inc., an Indiana  corporation  ("Gulf Line"),  Five Star Transport,
Inc., an Indiana  corporation ("Five Star"),  CAM Transport,  Inc., an Indiana
corporation,  Unity Logistic Services Inc., an Indiana corporation  ("Unity"),
ERX,  Inc.,  an  Indiana  corporation   ("ERX"),   Friendly  Transport,   Inc.
("Friendly"),  Transport Leasing,  Inc., an Arkansas  corporation  ("Transport
Leasing"), and Transport Logistics, LLC, an Arkansas limited liability company
("Transport Logistics") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly,   Transport  Leasing,   and  Transport   Logistics  are  hereinafter
collectively  referred to as "Borrowers") and to enter into a Fourth Amendment
to Loan  Agreement of even date herewith  between  Borrowers and Lender (which
Fourth  Amendment to Loan Agreement  together with the original Loan Agreement
dated April 18, 2000,  Amendment to Loan Agreement dated June 9, 2000,  Second
Amendment to Loan Agreement  dated  December 7, 2000,  and Third  Amendment to
Loan  Agreement  dated March 1, 2001,  between  Borrowers  and Lender and US 1
Industries,  Inc.  is  hereafter  referred  to as  "Loan  Agreement")  and  to
otherwise  extend credit to Borrowers,  the  undersigned  hereby  irrevocably,
absolutely and unconditionally  guarantees payment and performance when due of
all presently  existing or hereafter  incurred direct,  indirect,  absolute or
contingent  indebtedness,  liabilities  and other  obligations of Borrowers to
Lender  arising out of or incurred in connection  with the Revolving Loan Note
dated April 18, 2000 from Borrowers to Lender,  as amended and restated in its
entirety as of June 9, 2000, as further amended and restated as of December 7,
2000,  and as  further  amended  and  restated  as of  October  15,  2001 (the
"Revolving Loan Note"); the Equipment Loan Note from Borrowers to Lender dated
as of December  7, 2000,  as amended  and  restated  as March 1, 2001,  and as
further  amended and  restated as of October 15, 2001;  and the Guidance  Line
Note,  established  October 15, 2001 (the  Revolving  Loan Note, the Equipment
Loan Note,  and the Guidance Note are herein  collectively  referred to as the
"Notes"),  or  any  document,  instrument,  mortgage,  guaranty,  or  security
agreement given or delivered to evidence or secure the indebtedness  evidenced
by the  Notes,  and all  modifications,  amendments  and  supplements  thereto
including, but not limited to, charges,  interest and the principal,  interest
and other sums payable  pursuant to the Notes or the Loan  Agreement or any of
the Loan  Instruments  (as defined in the Loan Agreement)  (collectively,  the
"Obligations").  The undersigned further agrees to pay all costs of collection
and  attorneys'  fees paid or  incurred  by Lender  in the  collection  of the
Obligations  and the  enforcement of this Corporate  Guaranty.  This Corporate
Guaranty shall continue in full force and effect until all of the Obligations,
including,  but not limited to, all indebtedness  evidenced by the Notes, have
been fully and irrevocably paid and discharged. This is a guarantee of payment
and not of collection and shall be enforceable  directly without  resorting to
any other right, remedy or security.

          If Borrowers do not pay or otherwise  fully perform the  Obligations
in a  timely  manner  as  provided  in  the  Notes  and  Loan  Agreement,  the
undersigned  will  promptly  pay the amount due and  payable by  Borrowers  to
Lender upon demand. The undersigned acknowledges that it will benefit from the
extension of credit  described herein made by Lender to Borrowers and that, in
order to induce  Lender to accept the Notes and to otherwise  extend credit to
Borrowers that it has agreed to execute and deliver this Corporate Guaranty on
the understanding  that doing so is a condition  precedent to Lender accepting
the Notes and otherwise agreeing to extend credit. The undersigned  represents
and  warrants  that it (i) has  personal  knowledge  of and is  familiar  with
Borrowers'  business affairs,  books and records;  and (ii) has the ability to
influence   Borrowers'  decision  making  process.   The  undersigned  further
represents and warrants that Borrowers are in sound financial condition,  that
all financial statements of Borrowers and the undersigned  heretofore provided
to Lender are true,  correct and complete and that  Borrowers  are able to and
will perform their  obligations in accordance with the terms and conditions of
the Notes.  The  undersigned  acknowledges  that  Lender is  relying  upon the
undersigned's  representations,  warranties and covenants  herein in accepting
the Notes and agreeing to otherwise extend credit to Borrowers, and undertakes
to perform or cause Borrowers to perform the Obligations  promptly and in good
faith.  If  Borrowers  do not pay any sum when  due  under  the  Notes or Loan
Agreement,  upon the expiration of the applicable cure period,  if any, Lender
in its sole discretion,  may proceed  directly  against the undersigned  under
this Corporate  Guaranty without first proceeding  against any of Borrowers or
any of the  collateral  or  exhausting  any of  its  remedies  against  any of
Borrowers.  The  payment by the  undersigned  of any amount  pursuant  to this
Corporate  Guaranty shall not entitle the  undersigned to any right,  title or
interest,  whether by way of  subrogation  or otherwise,  in and to any of the
Obligations,  including, but not limited to, any indebtedness evidenced by the
Notes,  or any  collateral  therefor.  The  undersigned  does  hereby  release
Borrowers  from  any and all  obligations  of  indemnification,  contribution,
subrogation and exoneration which may arise or come into existence as a result
of the  undersigned's  assumption or  performance  of its  obligations in this
Corporate Guaranty on behalf of Borrowers in favor of Lender or its successors
and assigns.

          The liability and obligation of the undersigned  hereunder shall not
be  affected  or  impaired  in any manner by (and  Lender is hereby  expressly
authorized to make, from time to time,  without notice to the undersigned) any
sale,   pledge,   surrender,    compromise,   release,   renewal,   extension,
modification,  or  other  disposition  of  or  with  respect  to  any  of  the
Obligations,  including, without limitation, the indebtedness evidenced by the
Notes,  or any collateral  therefor,  and such obligation and liability of the
undersigned  shall not in any manner be affected or impaired by any acceptance
of  security  for or  other  guarantees  of any  such  indebtedness  or by any
forbearance or indulgence in the collection thereof or any failure, neglect or
omission to realize upon any collateral therefor.  Diligence in collection and
presentment for payment, demand, protest and/or notice of dishonor, default or
nonpayment and notice of the creation or existence of any and all  Obligations
and security  therefor and of the  acceptance of this  Corporate  Guaranty are
hereby expressly waived.

          The  undersigned  agrees that, if at any time all or any part of any
payment theretofore applied to any of the Obligations is rescinded or returned
for any reason  whatsoever  (including,  without  limitation,  the insolvency,
bankruptcy,  liquidation,  receivership,  arrangement or reorganization of any
party or by any defense which any Borrower or any shareholder thereof may have
by reason of the order, decree or decision of any court or administrative body
resulting from any such  proceeding),  such Obligation shall, for the purposes
of this  Corporate  Guaranty,  be deemed to have continued in existence to the
extent of such payment,  notwithstanding  such application by Lender, and this
Corporate  Guaranty shall  continue to be effective or be  reinstated,  as the
case may be, as to such  Obligation,  all as though such  application  had not
been made.

          The  undersigned   agrees  that  the   obligations,   covenants  and
agreements  of the  undersigned  under this  Corporate  Guaranty  shall not be
affected or impaired by any act of Lender,  or any event or  condition  except
full  performance of the  Obligations  and any other sums due  hereunder.  The
undersigned  agree that,  without full  performance  of the  Obligations,  the
liability of the  undersigned  hereunder shall not be discharged or diminished
by:  (i)  the  renewal  or  extension  of  time  for  the  performance  of the
Obligations under the Loan Instruments or any other agreement  relating to the
Obligations,  whether  made with or without  the  knowledge  or consent of the
undersigned; (ii) any transfer, waiver, compromise, settlement,  modification,
surrender,  or release of the Loan  Instruments  or any  collateral  assigned,
pledged or  hypothecated  thereby;  (iii) the  existence  of any  defenses  to
enforcement  of the Loan  Instruments;  (iv) any failure,  omission,  delay or
inadequacy,  whether entire or partial, of Lender to exercise any right, power
or remedy  under  the Loan  Instruments  regarding  the  Obligations;  (v) the
existence of any setoff, claim,  reduction,  or diminution of the Obligations,
or any defense of any kind or nature,  which the  undersigned may have against
any of the  Borrowers  or  which  any  party  has  against  Lender;  (vi)  the
application  of  payments  received  from any  source  to the  payment  of any
obligation other than the Obligations,  even though Lender might lawfully have
elected to apply such payments to any part or all of the Obligations; or (vii)
the addition of any and all other  endorsers,  guarantors,  obligors and other
persons liable for the  performance of the  Obligations  and the acceptance of
any and all other security for the performance of the Obligations, all whether
or not the  undersigned  shall  have had  notice  or  knowledge  of any act or
omission  referred  to in the  foregoing  clauses  (i)  through  (vii) of this
paragraph.  The undersigned  intends that the undersigned  shall remain liable
hereunder as a principal  until all  Obligations  shall have been performed in
full,  notwithstanding,  any  fact,  act,  event  or  occurrence  which  might
otherwise  operate as a legal or equitable  discharge of a surety or guarantor
other than payment and performance in full of the Obligations.

          If this Corporate Guaranty is signed by more than one person,  firm,
or corporation, every obligation of each signatory shall be joint and several.
No release or  discharge  of any one or more of the  undersigned,  if there be
more  than  one,  shall  release  or  discharge  any  other or  others  of the
undersigned  unless  and until all of the  Obligations  shall  have been fully
paid. This Corporate  Guaranty and each and every part hereof shall be binding
upon the  undersigned  jointly and  severally  (if there be more than one) and
upon  the  heirs,  legal  representatives,   successors  and  assigns  of  the
undersigned,  and shall inure to the benefit of Lender and its  successors and
assigns.

          The undersigned  expressly  waives:  (i) notice of the acceptance by
Lender of this Corporate  Guaranty;  (ii) notice of the  existence,  creation,
payment  or  nonpayment  of the  Obligations;  (iii)  presentment,  demand  at
maturity, notice of dishonor,  protest, and all other notices whatsoever;  and
(iv) any failure by Lender to inform the  undersigned  of any facts Lender may
now or hereafter know about any of Borrowers or the transactions  contemplated
by the Loan  Instruments,  it being  understood  and agreed that Lender has no
duty so to inform and that the undersigned is fully  responsible for being and
remaining informed by Borrowers of all circumstances bearing on the existence,
creation,  or risk of nonpayment of the Obligations.  Credit may be granted or
continued  from  time to time by  Lender  to  Borrowers  without  notice to or
authorization  from the  undersigned,  regardless  of the  financial  or other
condition of any of  Borrowers at the time of any such grant or  continuation.
Lender shall have no  obligation  to disclose or discuss with the  undersigned
its assessment of the financial condition of any Borrower.  No modification or
waiver of any of the  provisions  of this  Corporate  Guaranty will be binding
upon  Lender  except  as  expressly  set forth in a writing  duly  signed  and
delivered  on  behalf of  Lender.  The  undersigned  further  agrees  that any
exculpatory  language  pertaining  to  any  Borrower  contained  in  the  Loan
Instruments or any document executed and delivered by any Borrower  thereunder
shall  in no event  apply to this  Corporate  Guaranty,  and will not  prevent
Lender from  proceeding  against the  undersigned  to enforce  this  Corporate
Guaranty.

          This Corporate Guaranty has been executed in Chicago,  Illinois, and
shall be governed by the laws of the State of Illinois  without  reference  to
the principles of conflicts of law thereof. If any provision of this Corporate
Guaranty,  or  any  paragraph,  sentence,  clause,  phrase,  or  word,  or the
application  thereof,  in any  circumstances,  is  adjudicated  by a court  of
competent  jurisdiction  to be invalid,  the validity of the remainder of this
Corporate  Guaranty  shall be  construed  as if such  invalid  part were never
included  herein.  Time is of the  essence  of this  Corporate  Guaranty.  All
payments to be made hereunder shall be made in currency and coin of the United
States of America  which is legal  tender for public and private  debts at the
time of payment.

          This  Corporate  Guaranty is secured by a Security  Agreement  dated
April  18,  2000 from  Guarantor  to Lender  and by all  collateral  described
therein.

          The undersigned hereby submits to personal jurisdiction in the State
of Illinois for the enforcement of this Corporate  Guaranty and waives any and
all  personal  rights to  object  to such  jurisdiction  for the  purposes  of
litigation to enforce this Corporate Guaranty. The undersigned hereby consents
to the jurisdiction of either the Circuit Court of Cook County,  Illinois,  or
the United  States  District  Court for the  Northern  District  of  Illinois,
Eastern  Division,  in any action,  suit or proceeding which Lender may at any
time wish to file in connection  with this  Corporate  Guaranty or any related
matter. The undersigned hereby agrees that any action,  suit or. proceeding to
enforce this Corporate  Guaranty may be. brought in any State or Federal Court
in the State of Illinois and hereby waive any objection  which the undersigned
may have to the laying of the venue of any such action,  suit or proceeding in
any such Court; provided, however, that the provisions of this paragraph shall
not be  deemed  to  preclude  Lender  from  filing  any such  action,  suit or
proceeding in any other appropriate  forum. THE UNDERSIGNED HEREBY IRREVOCABLY
WAIVES THE RIGHT TO TRIAL BY JURY WITH  RESPECT TO ALL ACTIONS OR  PROCEEDINGS
IN ANY WAY,  MANNER OR RESPECT  ARISING OUT OF OR RELATING.  TO THIS CORPORATE
GUARANTY.

          Any notice,  demand or other  communication  which  either party may
desire or may be required to give to the other party shall be in writing,  and
shall be  deemed  given  (i) if and when  personally  delivered,  or (ii) upon
receipt  via  facsimile  transmission  provided  that a copy is also  sent via
overnight mail,  addressed to the intended  recipient at its address set forth
below, or to such other address as such party may have designated to all other
parties by notice furnished in accordance herewith:

         if to Lender:_____        Firstar Bank N.A.
                                   30 N. Michigan Avenue
                                   Chicago, Illinois  60602
                                   Attention:  Craig B. Collinson, Senior Vice
                                               President
                                   Fax No.:  (312) 696-1397


         With a copy to:___         Gould & Ratner
                                    222 North LaSalle Street
                                    Suite 800
                                    Chicago, Illinois 60601
                                    Attention: Christopher J. Horvay
                                    Fax No.: (312) 236-3241

          and if to the undersigned: at the address set forth below its name

Except as otherwise specifically required herein, notice of the exercise of
any right, option or power granted to Lender by this Corporate Guaranty is not
required to be given.

          This  Corporate  Guaranty  amends,  restates  in its  entirety,  and
supercedes an original  Corporate  Guaranty made by the Guarantor  dated April
18, 2000, as amended and restated as of June 9, 2000,  and as further  amended
and restated as of December 7, 2000 and March 1, 2001, in favor of Lender.


                               US 1 INDUSTRIES, INC., an Indiana corporation


                               By:_________________________________
                               Name:_______________________________
                               Title:______________________________


                               Address:          1000 Colfax Street
                               Gary, IN 46406
                               Fax No.:          (219) 977-5227





<PAGE>


                                 EXHIBIT "H-1"

                                ACKNOWLEDGEMENT
                           (Subordination Agreement)

          The undersigned,  August Investment Partnership, hereby acknowledges
that Firstar Bank N.A., a national banking  association  ("Lender") has agreed
to loan additional sums to Carolina  National  Transportation  Inc.,  Keystone
Lines,  Gulf Line Transport Inc.,  Five Star  Transport,  Inc., Cam Transport,
Inc.,  Unity Logistic  Services Inc.,  ERX, Inc.,  Friendly  Transport,  Inc.,
Transport   Leasing,   Inc.,  and  Transport   Logistics,   LLC  (collectively
"Borrowers")  pursuant to a Fourth Amendment to Loan Agreement dated as of the
date hereof between Borrowers and Lender and US 1 Industries, Inc., the parent
of Borrowers ("Borrowers' Parent"), and further acknowledge and agree that the
Subordinated  Debt (as defined in that certain  Subordination  Agreement dated
April 18, 2000,  as amended as of December 7, 2000,  as further  amended as of
March 1, 2001, and as further  amended as of October 15, 2001,  between Lender
and the undersigned (the "Subordination  Agreement")) is and shall continue to
be subordinate,  all as provided in the Subordination  Agreement,  to any such
additional  sums  loaned to the  Borrowers  or any of them as provided in such
Fourth  Amendment to Loan  Agreement in addition to being  subordinate  to any
amounts  otherwise  advanced to Borrowers or any of them by Lender prior to or
subsequent  to the  date  hereof  under  that  certain  Loan  Agreement  among
Borrowers, Lender and Borrowers' Parent dated April 18, 2000, the Amendment to
Loan  Agreement  dated June 9, 2000,  the Second  Amendment to Loan  Agreement
dated December 7, 2000, and the Third  Amendment to Loan Agreement dated March
1, 2001, among Borrowers,  Lender,  and Borrowers' Parent and that any amounts
advanced to any of Borrowers  prior to or  subsequent to the date hereof under
said Loan Agreement,  as amended by such Amendment to Loan  Agreement,  Second
Amendment to Loan  Agreement,  Third  Amendment to Loan  Agreement,  or Fourth
Amendment to Loan Agreement shall  constitute  Senior Debt for purposes of the
Subordination Agreement.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered as of October 15, 2001.


                                          ------------------------------
                                          Harold Antonson

                                          ------------------------------
                                          Michael Kibler

<PAGE>


                                      -5-
                                 EXHIBIT "H-2"

                                ACKNOWLEDGEMENT
                           (Subordination Agreement)

          The  undersigned,   Harold  Antonson  and  Michael  Kibler,   hereby
acknowledge that Firstar Bank N.A., a national banking association  ("Lender")
has agreed to loan additional sums to Carolina National  Transportation  Inc.,
Keystone  Lines,  Gulf Line Transport  Inc.,  Five Star  Transport,  Inc., Cam
Transport,  Inc., Unity Logistic Services Inc., ERX, Inc., Friendly Transport,
Inc.,  Transport  Leasing,  Inc., and Transport  Logistics,  LLC (collectively
"Borrowers")  pursuant to a Fourth Amendment to Loan Agreement dated as of the
date hereof between Borrowers and Lender and US 1 Industries, Inc., the parent
of Borrowers ("Borrowers' Parent"), and further acknowledge and agree that the
Subordinated  Debt (as defined in that certain  Subordination  Agreement dated
April 18, 2000,  as amended as of December 7, 2000,  as further  amended as of
March 1, 2001, and as further  amended as of October 15, 2001,  between Lender
and the undersigned (the "Subordination  Agreement")) is and shall continue to
be subordinate,  all as provided in the Subordination  Agreement,  to any such
additional  sums  loaned to the  Borrowers  or any of them as provided in such
Fourth  Amendment to Loan  Agreement in addition to being  subordinate  to any
amounts  otherwise  advanced to Borrowers or any of them by Lender prior to or
subsequent  to the  date  hereof  under  that  certain  Loan  Agreement  among
Borrowers, Lender and Borrowers' Parent dated April 18, 2000, the Amendment to
Loan  Agreement  dated June 9, 2000,  the Second  Amendment to Loan  Agreement
dated December 7, 2000, and the Third  Amendment to Loan Agreement dated March
1, 2001,  among Borrowers,  Lender and Borrowers'  Parent and that any amounts
advanced to any of Borrowers  prior to or  subsequent to the date hereof under
said Loan Agreement,  as amended by such Amendment to Loan  Agreement,  Second
Amendment  to Loan  Agreement,  Third  Amendment  to Loan  Agreement or Fourth
Amendment to Loan Agreement shall  constitute  Senior Debt for purposes of the
Subordination Agreement.

          IN WITNESS  WHEREOF,  this  Acknowledgement  has been  executed  and
delivered as of October 15, 2001.

                                          AUGUST INVESTMENT PARTNERSHIP

                                          By: ______________________________
                                              General Partner



<PAGE>


                                  EXHIBIT "I"

                              PURCHASE AGREEMENT

                       [Please see attached document.]

<PAGE>


                                 EXHIBIT "J-1"

                              SECURITY AGREEMENT

          This  SECURITY  AGREEMENT,  dated as of October 15, 2001, is between
TRANSPORT LEASING,  INC., an Arkansas corporation,  ("Borrower"),  and FIRSTAR
BANK N.A., a national banking association ("Lender").

                            Preliminary Statement:

A.        Borrower,  CAROLINA  NATIONAL  TRANSPORTATION  INC.,  GULF  LINE
TRANSPORT  INC., FIVE STAR  TRANSPORT,  INC., CAM TRANSPORT,  INC., ERX, UNITY
LOGISTIC SERVICES INC., FRIENDLY TRANSPORT,  INC.,  TRANSPORT  LOGISTICS,  LLC
("Other  Borrowers"),  US 1 INDUSTRIES,  INC.  ("Guarantor"),  and Lender have
entered into a Fourth  Amendment to Loan  Agreement of even date  herewith (as
the same may be amended, modified, supplemented or restated from time to time,
the "Loan  Agreement"),  pursuant and subject to the terms and  conditions  of
which Lender has agreed to make loans and other  financial  accommodations  to
Borrower and Other Borrowers.

B.        One of the conditions precedent to Lender's obligations under the
Loan  Agreement  is that  Borrower  shall have  executed  and  delivered  this
Security  Agreement  to secure  the  payment  and  performance  of  Borrowers'
Obligations.

          NOW, THEREFORE,  in order to induce Lender to make Advances, and for
other good and valuable  consideration,  the receipt and  sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

1.        Definitions. All terms used herein which are defined in the Illinois
          Uniform  Commercial  Code (the  "Code")  shall have the same meaning
          herein as in the Code  unless  the  context  in which such terms are
          used herein indicates otherwise.  All capitalized terms used but not
          elsewhere  defined  in  this  Security   Agreement  shall  have  the
          respective meanings ascribed to such terms in the Loan Agreement. As
          used herein, the following terms shall have the following meanings:

          Corporate  Changes:  any change in Borrower's place of organization,
form of organization,  or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.

          Intellectual   Property   Collateral:   collectively,   the   Patent
Collateral and the Trademark Collateral.

          Patent   Collateral:   shall  mean  all  (i)   letters   patent  and
applications  for letters patent of Borrower  throughout the world,  including
all patent  applications of Borrower in preparation for filing anywhere in the
world,   (ii)  patent  licenses  of  Borrower,   (iii)  reissues,   divisions,
continuations, continuations-in-part,  extensions, renewals and reexaminations
of any Patent Collateral and (iv) all proceeds of, and rights associated with,
the foregoing  (including  licenses,  royalties  and proceeds of  infringement
suits),  the right of  Borrower  to sue third  parties  for past,  present and
future  infringements of any patent or patent  application,  and for breach or
enforcement  of any patent license of Borrower,  and all rights  corresponding
thereto throughout the world.

          Trademark  Collateral:  shall mean all (i) trademarks,  trade names,
corporate names,  company names,  business names,  fictitious  business names,
trade dress,  service marks,  certification  marks,  collective marks,  logos,
other sources of business  identifiers,  prints and labels on which any of the
foregoing have appeared or appear,  designs and general  intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter  adopted or acquired,  whether
currently  in use or not, all  registrations  and  recordings  thereof and all
applications  in connection  therewith,  whether pending or in preparation for
filing,  including  registrations,  recordings and  applications in the United
States Patent and Trademark Office and any foreign country, (ii) all Trademark
licenses of Borrower, (iii) all reissues, extensions or renewals of any of the
items described in clauses (i) and (ii) above, (iv) all of the goodwill of the
business  connected with the use of, and symbolized by the items  described in
clauses (i) and (ii) above,  and (v) all  proceeds  of, and rights  associated
with, the foregoing, including any claim by Borrower against third parties for
past, present or future  infringement or dilution of any Trademark,  Trademark
registration  or  Trademark  license,  or  for  any  injury  to  the  goodwill
associated  with the use of any such Trademark or for breach or enforcement of
any Trademark license.

2.        Security  Interests.  In order  to  secure  Borrowers'  Obligations,
          Borrower hereby grants to Lender a security interest in all Property
          of  Borrower,  whether  now  owned or  hereafter  acquired,  and all
          additions and accessions thereto, including, without limitation, the
          Property described below:

2.1       Goods, Machinery,  Equipment and Inventory. All of Borrower's goods,
          machinery,  equipment  and  inventory,  wherever  located,  and  all
          additions and accessions thereto or replacements thereof, including,
          but not limited to, all  machinery,  inventory  and equipment of any
          and every kind and description  comprising,  belonging to or used in
          connection   with  the   operation   of  the  business  of  Borrower
          (collectively, the "Tangible Collateral");

2.2       Accounts, General Intangibles.  All of Borrower's accounts, contract
          rights,  chattel paper,  instruments,  investment property,  deposit
          accounts,  documents, and general intangibles, and all additions and
          accessions  thereto and  replacements  thereof,  including,  but not
          limited to, all  licenses,  franchises,  permits and  authorizations
          heretofore or hereafter granted or issued to Borrower under federal,
          state or local laws (excluding,  however, any licenses,  franchises,
          permits and  authorizations  issued by any Governmental  Body to the
          extent,  and only to the extent,  it is unlawful to grant a security
          interest in such licenses,  franchises,  permits and authorizations,
          but including, without limitation, the right to receive all proceeds
          derived or arising from or in connection with the sale or assignment
          of such  licenses,  franchises,  permits and  authorizations)  which
          permit or pertain to the operation of the business of Borrower,  and
          all  of  Borrower's  Intellectual  Property  Collateral,   Operating
          Agreements,  income tax refunds,  copyrights,  patents,  trademarks,
          trade names, trade styles, goodwill, going concern value, franchise,
          supply and distributorship  agreements,  non-competition  agreements
          and   employment    contracts    (collectively,    the   "Intangible
          Collateral").

2.3       Proceeds.  All proceeds  (including  proceeds of insurance,  eminent
          domain and other  governmental  taking and tort claims) and products
          of the Property described in Sections 2.1 and 2.2 above; and

2.4       Books and Records.  All of the books and records  pertaining  to the
          Property  described in Sections  2.1, 2.2 and 2.3 above.  All of the
          Property  described above hereinafter is referred to collectively as
          the  "Collateral." The security interest of Lender in the Collateral
          shall be  superior  and prior to all other  Liens  except  Permitted
          Prior Liens.

3.        Representations  and  Warranties.  Borrower  hereby  represents  and
          warrants to Lender as follows:

3.1       Ownership of  Collateral.  It is the owner of all of the  Collateral
          free from any Lien except for  Permitted  Liens,  except the portion
          thereof consisting of after-acquired  Property, and Borrower will be
          the owner of such after-acquired Property, free from any Lien except
          for Permitted Liens.

3.2       Places of Business. There is listed on Exhibit A hereto the location
          of the chief executive  office of Borrower,  all of the other places
          of  business  of  Borrower  and all  locations  where  the  Tangible
          Collateral and the books and records of Borrower are kept. Except as
          described in Exhibit A, none of the  Collateral is in the possession
          of any consignee, bailee, warehouseman, agent or possessor.

3.3       Trade or Assumed  Names.  Borrower has not used any trade or assumed
          names during the six years preceding the date hereof.

3.4       Financing Statements.  Except for the financing statements of Lender
          and the financing  statements  pertaining  to the  Permitted  Senior
          Indebtedness  Liens,  if any, no  financing  statement  covering any
          Collateral  or any  portion  or  proceeds  thereof is on file in any
          public office.

3.5       Intangible   Collateral.   The   Intangible   Collateral   hereunder
          represents  bona  fide  and  existing   indebtedness,   obligations,
          liabilities,  rights and privileges owed or belonging to Borrower to
          which, to the best of Borrower's  knowledge,  as of the date of this
          Security   Agreement,   there  is  no  valid  defense,   set-off  or
          counterclaim  against Borrower and in connection with which there is
          no  default  with  respect  to  any  material  payment  or  material
          performance  on the part of Borrower,  or, to the best of Borrower's
          knowledge,  any  other  party.  With  respect  to  any  Intellectual
          Property Collateral of Borrower the loss, impairment or infringement
          of which singly or in the aggregate could  reasonably be expected to
          have a  Material  Adverse  Effect:  (i) such  Intellectual  Property
          Collateral  is  subsisting  and has not  been  adjudged  invalid  or
          unenforceable,  in whole or in part, (ii) such Intellectual Property
          Collateral  is valid and  enforceable,  (iii)  Borrower has made all
          filings and recordations necessary in the exercise of reasonable and
          prudent   business   judgment  to  protect  its   interest  in  such
          Intellectual  Property  Collateral  in the United  States Patent and
          Trademark  Office,   the  United  States  Copyright  Office  and  in
          corresponding  offices  throughout the world, as  appropriate,  (iv)
          Borrower is the owner of the entire and  unencumbered  right,  title
          and interest in and to such Intellectual  Property Collateral and no
          claim  has  been  made  that the use of such  Intellectual  Property
          Collateral  does or may  violate  the  asserted  rights of any third
          party,  and (v) Borrower has  performed and will continue to perform
          all acts and has paid and will continue to pay all required fees and
          taxes to maintain each and every item of such Intellectual  Property
          Collateral  in full  force  and  effect  throughout  the  world,  as
          applicable. Borrower owns directly, or is entitled to use by license
          or otherwise,  all  Intellectual  Property  Collateral of any Person
          used in,  necessary  for or material  to the  conduct of  Borrower's
          businesses. Except as set forth in the Loan Agreement, no litigation
          is pending or, to the best knowledge of Borrower,  threatened  which
          contains  allegations   respecting  the  validity,   enforceability,
          infringement  or  ownership  of  any of  the  Intellectual  Property
          Collateral of Borrower.

3.6       Tangible  Collateral-Personal  Property.  All Tangible Collateral at
          all times shall be considered personal property.

3.7       Accounts.  Each existing  Account  constitutes,  and each  hereafter
          arising  Account  will   constitute,   to  the  best  of  Borrower's
          knowledge,  the legally valid and binding  obligation of the account
          debtor obligated to pay the same. The amount represented by Borrower
          to  Lender  as owing by each  account  debtor  is,  or will be,  the
          correct amount actually and unconditionally owing, except for normal
          cash  discounts  and  allowances  where  applicable.  To the best of
          Borrower's  knowledge,  no account debtor has any defense,  set-off,
          claim or counterclaim  against Borrower that can be asserted against
          Lender,  whether in any proceeding to enforce Lender's rights in the
          Collateral  or  otherwise.  None of the  Accounts  is,  nor will any
          hereafter  arising  Account be,  evidenced by a  promissory  note or
          other instrument other than a check, unless delivered to Lender with
          appropriate endorsements.

3.8       Inventory.  No  Inventory  is  subject  to  any  licensing,  patent,
          trademark,  trade name or copyright  agreement  with any Person that
          restricts   Borrower's   ability  to  manufacture  and/or  sell  the
          Inventory other than territorial restrictions not materially adverse
          to the Borrower or its business.

4.        Affirmative Covenants.  Until all of Borrowers' Obligations are paid
          and  performed  in full  and the  Loan  Agreement  shall  have  been
          terminated, Borrower agrees that it will:

4.1       Corporate  Changes.  Inform  Lender  within  ten  (10)  days  of any
          Corporate Change.

4.2       Taxes.  Pay promptly  when due all taxes,  levies,  assessments  and
          governmental  charges  upon  and  relating  to any of the  Property,
          income or receipts of Borrower or otherwise for which Borrower is or
          may be liable,  except to the extent  that the failure to pay any of
          such taxes, levies,  assessments or charges is permitted by the Loan
          Agreement.

4.3       Insurance.  At its sole expense, keep the Collateral insured against
          loss or damage by  insurance  policies  which shall be in such form,
          with  such  companies  and in  such  amounts  as  may be  reasonably
          satisfactory  to Lender and otherwise  comply with the provisions of
          Section 6.6 of the Loan Agreement.

4.4       Tangible Collateral.

4.4.1             Good Repair.  Keep the Tangible  Collateral  in good working
                  order and repair and make all necessary replacements thereof
                  and  renewals  thereto  so  that  the  value  and  operating
                  efficiency  thereof  at all times  shall be  maintained  and
                  preserved.

4.4.2             Insurance Requirements.  Maintain the Tangible Collateral at
                  all  times  in  accordance  with  the  requirements  of  all
                  insurance  carriers which provide  insurance with respect to
                  such Tangible Collateral so that such insurance shall remain
                  in full force and effect.

4.4.3             Certificates  of  Title.  Upon the  request  of  Lender  (i)
                  promptly   deliver  to  Lender  all  certificates  of  title
                  pertaining  to the  Tangible  Collateral  and (ii)  take all
                  actions  reasonably  requested  by  Lender to cause the Lien
                  granted to Lender hereunder to be noted on such certificates
                  of title.

4.4.4             Use of Collateral.  Use the Tangible  Collateral in material
                  compliance  with  all  statutes,  regulations,   ordinances,
                  requirements  and  regulations  and all  judgments,  orders,
                  injunctions and decrees  applicable  thereto,  and all other
                  federal, state and local laws.

4.5       Intangible Collateral.

4.5.1             Payments.  Make all payments and perform all acts reasonably
                  necessary   to  maintain   and   preserve   the   Intangible
                  Collateral,   including,   without  limitation,   filing  of
                  documents,   renewals   or   other   information   with  any
                  Governmental Body or any other Person.

4.5.2             Delivery  of  Instruments  and  Letters of Credit.  Upon the
                  request of Lender,  promptly  deliver to Lender the original
                  executed  copies of all  instruments  and  letters of credit
                  which constitute part of the Intangible Collateral, together
                  with such endorsements,  assignments and other agreements as
                  Lender  may  request  in  order  to  perfect  the   Security
                  Interests.

4.5.3             Accurate  Records.  At all times keep  accurate and complete
                  records of payment and  performance  by  Borrower  and other
                  Persons of their respective  obligations with respect to the
                  Intangible Collateral and permit Lender or any of its agents
                  to call at Borrower's place of business without hindrance or
                  delay to inspect,  audit,  check or make  extracts  from the
                  books, records, correspondence or other data relating to the
                  Intangible  Collateral in accordance  with the provisions of
                  the Loan Agreement.

4.5.4             Verification of  Indebtedness.  Upon request of Lender after
                  the  occurrence and during the  continuation  of an Event of
                  Default,  permit Lender itself,  at any time, in the name of
                  Lender or Borrower, to verify directly with the obligors the
                  indebtedness  due  Borrower  on any account or other item of
                  Intangible Collateral.

4.5.5             Defaults,  Other  Claims.  Immediately  inform Lender of any
                  default in payment or  performance  by Borrower or any other
                  Person of any  obligation  with  respect  to the  Intangible
                  Collateral  or of  claims  made by  others  in regard to the
                  Intangible  Collateral,  if  either  of which  could  have a
                  Material Adverse Effect.

4.5.6             Ownership of Intellectual Property Collateral. Notify Lender
                  immediately  if it knows,  or has  reason to know,  that any
                  application or registration relating to any material item of
                  its Intellectual Property Collateral may become abandoned or
                  dedicated  to the public or placed in the  public  domain or
                  invalid or unenforceable, or of any adverse determination or
                  development  (including  the  institution  of,  or any  such
                  determination  or  development  in,  any  proceeding  in the
                  United States Patent and Trademark Office, the United States
                  Copyright Office or any foreign  counterpart  thereof or any
                  court)  regarding   Borrower's   ownership  of  any  of  its
                  Intellectual Property Collateral,  its right to register the
                  same or to keep and maintain and enforce the same.

4.5.7             Maintenance of Intellectual  Property  Collateral.  Take all
                  necessary  steps,  including  in any  proceeding  before the
                  United States Patent and Trademark Office, the United States
                  Copyright  Office  or any  similar  office  or agency in any
                  country or any political  subdivision  thereof,  to maintain
                  and  pursue  any  application  (and to obtain  the  relevant
                  registration)  filed with  respect to, and to  maintain  any
                  registration  of,  its  Intellectual   Property  Collateral,
                  including the filing of applications for renewal, affidavits
                  of  use,  affidavits  of  incontestability  and  opposition,
                  interference and cancellation proceedings and the payment of
                  fees and taxes.

4.6       Collection  of  Proceeds.  Use  commercially  reasonable  efforts to
          collect the proceeds of indebtedness owing to Borrower by any Person
          under any  instrument  or by any Account  Debtor with respect to any
          account, contract right, chattel paper or general intangible.

4.7       Financing  Statements,  Further  Assurances.  Concurrently  with the
          execution  of  this  Security  Agreement,  and  from  time  to  time
          hereafter as requested by Lender, execute and deliver to Lender such
          financing   statements,    continuation   statements,    termination
          statements,  amendments to any of the foregoing and other documents,
          in form satisfactory to Lender, as Lender may require to perfect and
          continue in effect the Security Interests, to carry out the purposes
          of this Security Agreement and to protect Lender's rights hereunder.
          Borrower,  upon  demand,  shall  pay the  cost of  filing  all  such
          financing   statements,    continuation   statements,    termination
          statements, amendments to any of the foregoing and other documents.

5.        Negative Covenants. Until all of Borrower's Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated,
          Borrower agrees that it will not:

5.1       Sales and Transfer of Collateral.  Sell, lease,  assign,  license or
          otherwise  dispose  of  any  of  the  Collateral,  except  as may be
          permitted by and in accordance  with the  applicable  provisions the
          Loan Agreement.

5.2       Places of  Business.  Borrower  shall not change the location of (i)
          Borrower's  (A) chief  executive  office or (B) books and records or
          (ii) any  Tangible  Collateral,  in each case  without  first giving
          Lender at least 30 days' advance  written  notice thereof and having
          taken any and all action reasonably  requested by Lender to maintain
          and  preserve  the  first  perfected  Lien in favor of Lender on all
          Property  thereof free and clear of any Lien  whatsoever  except for
          Permitted Liens.

5.3       Installation  of  Tangible  Collateral.  Permit any of the  Tangible
          Collateral to be  installed,  affixed or attached to the real estate
          of  Borrower or any other  Person so as to become a part  thereof or
          become in any sense a fixture not otherwise pledged to Lender.

5.4       Bailees. Permit any Collateral to be in the possession or control of
          any warehouseman, bailee or processor without Lender's prior written
          consent and unless Lender has received  warehouse receipts or bailee
          letters satisfactory to Lender prior to such possession or control.

5.5       Licenses of Intellectual Property.  Sell, transfer,  assign or grant
          any  exclusive  license  with respect to the  Intellectual  Property
          Collateral to an Affiliate of Borrower or otherwise  take any action
          with respect to its Intellectual Property Collateral in violation of
          any term or provision of the Loan Agreement.

5.6       Trademark  Collateral.  Permit,  and permit any of its licensees to,
          unless  Borrower  shall  either  (i)  reasonably  and in good  faith
          determine  that any of its  Trademark  Collateral  is of  negligible
          economic value to Borrower or (ii) have a valid business  purpose to
          do  otherwise:  (A)  fail to  continue  to use any of its  Trademark
          Collateral in order to maintain all of its  Trademark  Collateral in
          full force free from any claim of abandonment for non-use,  (B) fail
          to  maintain as in the past the  quality of  products  and  services
          offered  under all of its Trademark  Collateral,  (C) fail to employ
          all of its Trademark Collateral  registered with any federal,  state
          or   foreign   authority   with  an   appropriate   notice  of  such
          registration,  (D) adopt or use any trademark  which is  confusingly
          similar or a colorable imitation of any of its Trademark  Collateral
          except  in  compliance  with  applicable  law,  (E)  use  any of its
          Trademark Collateral  registered with any federal,  state or foreign
          authority except for the uses for which  registration or application
          for  registration of such Trademark  Collateral has been made except
          in  compliance  with  applicable  law or (F) do or permit any act or
          knowingly omit to do any act whereby any of its Trademark Collateral
          may lapse or become invalid or unenforceable.

5.7       Patent  Collateral.  Unless Borrower shall either (i) reasonably and
          in good  faith  determine  that any of its Patent  Collateral  is of
          negligible  economic value to Borrower or (ii) have a valid business
          purpose to do otherwise,  do any act, or omit to do any act, whereby
          any of Borrower's Patent Collateral may lapse or become abandoned or
          dedicated to the public or unenforceable.

6.        Protection of Collateral. In the event of any failure of Borrower to
          (i)  maintain  in  force  and pay for any  insurance  or bond  which
          Borrower is required to provide pursuant to this Security  Agreement
          or the other Loan Instruments,  (ii) keep the Tangible Collateral in
          good repair and operating condition,  (iii) keep the Collateral free
          from all Liens  except for  Permitted  Liens,  (iv) pay when due all
          taxes,  levies and  assessments on or in respect of the  Collateral,
          except as permitted  pursuant to the terms of Section 4.1 above, (v)
          make all payments and perform all acts on the part of Borrower to be
          paid or performed with respect to any of the Collateral,  including,
          without   limitation,   all   expenses   of   protecting,   storing,
          warehousing,  insuring,  handling and  maintaining the Collateral or
          (vi) keep fully and perform promptly any other of the obligations of
          Borrower   under  this   Security   Agreement   or  the  other  Loan
          Instruments,  Lender, at its option,  may (but shall not be required
          to) procure and pay for such  insurance,  place such  Collateral  in
          good repair and operating  condition,  pay or contest or settle such
          Liens or taxes or any judgments based thereon or otherwise make good
          any other  aforesaid  failure of Borrower.  Borrower shall reimburse
          Lender  immediately  upon  demand for all sums paid or  advanced  on
          behalf of Borrower for any such  purpose,  together  with all costs,
          expenses  and  attorneys'   fees  paid  or  incurred  by  Lender  in
          connection therewith and interest at the Default Rate on all sums so
          paid or advanced from the date of such payment or advancement  until
          repaid to Lender.  All such sums paid or  advanced  by Lender,  with
          interest thereon,  immediately upon payment or advancement  thereof,
          shall be deemed to be part of Borrower's Obligations secured hereby.

7.        Event of Default.  Borrower  shall be in default under this Security
          Agreement  upon the occurrence of an Event of Default under the Loan
          Agreement.

8.        Right of Lender to Contact  Account  Debtors.  Lender shall have the
          right, from time to time, at Lender's discretion, to contact account
          debtors of Borrower and  Guarantor to verify that Accounts are valid
          and  not  subject  to  setoff  or  counterclaim  and to  verify  the
          creditworthiness of the account debtor.

9.        Remedies  Upon  Default.   Upon  the   occurrence   and  during  the
          continuation of an Event of Default:

9.1       Rights of Lender.  Lender  shall have all of the rights and remedies
          of a secured  party under the Code and all other rights and remedies
          accorded to Lender at equity or law, including,  without limitation,
          the right to apply for and have a receiver  appointed  by a court of
          competent   jurisdiction   to  manage,   protect  and  preserve  the
          Collateral,  to continue  operating  the business of Borrower and to
          collect  all  revenues  and profits  thereof.  Any notice of sale or
          other  disposition  of Collateral  given not less than ten (10) days
          prior to such proposed action shall  constitute  reasonable and fair
          notice of such action.  Lender may postpone or adjourn any such sale
          from  time to time by  announcement  at the time  and  place of sale
          stated in the  notice of sale or by  announcement  of any  adjourned
          sale,  without being  required to give a further notice of sale. Any
          such sale may be for cash or, unless  prohibited by applicable  law,
          upon such credit or  installment  terms as Lender  shall  determine.
          Borrower  shall be credited  with the net proceeds of such sale only
          when such  proceeds  actually  are received by Lender in Good Funds.
          Despite the  consummation  of any such sale,  Borrower  shall remain
          liable for any  deficiency on Borrower's  Obligations  which remains
          outstanding  following  any such  sale.  All net  proceeds  received
          pursuant  to a sale  shall be  applied  in the  manner  set forth in
          Section 8.4 of the Loan Agreement.

9.2       Assembly of Collateral.  Upon the request of Lender,  Borrower shall
          assemble  and make the  Collateral  available  to  Lender at a place
          designated by Lender.

9.3       Proceeds.  Borrower  shall  hold  all  proceeds  of  the  Collateral
          collected  by  Borrower  in trust for Lender,  and,  after  Borrower
          receives  notice  from  Lender,  promptly  after the  receipt of the
          proceeds  of  Collateral,  turn over such  proceeds to Lender in the
          exact form in which they were received.

9.4       Other  Rights.  Lender,  at its  election,  and  without  notice  to
          Borrower, may:

9.4.1             Terminate  Right of  Collection.  Terminate  the  rights  of
                  Borrower to collect the proceeds described in Section 8.3.

9.4.2             Notification.  Notify the obligors under any instruments and
                  the Account Debtors of any account,  contract right, chattel
                  paper or general intangible to make all payments directly to
                  Lender.

9.4.3             Collection of Payments. Demand, sue for, collect or receive,
                  in the name of  Borrower  or Lender,  any money or  Property
                  payable or receivable on any item of Collateral.

9.4.4             Settlement. Settle, release, compromise, adjust, sue upon or
                  otherwise  enforce  any item of  Collateral  as  Lender  may
                  determine.

9.4.5             Mail of Borrower;  Endorsement of Checks. For the purpose of
                  enforcing  Lender's  rights under this  Security  Agreement,
                  receive and open mail  addressed  to  Borrower,  and endorse
                  notes, checks,  drafts, money orders,  documents of title or
                  other  forms  of  payment  on  behalf  and  in the  name  of
                  Borrower.

All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.

10.       Power of Attorney.  To effectuate  the rights and remedies of Lender
          under this Security Agreement,  Borrower hereby irrevocably appoints
          Lender as its  attorney-in-fact,  in the name of  Borrower or in the
          name of Lender,  (i) to execute and file from time to time financing
          statements,  continuation  statements,  termination  statements  and
          amendments thereto, covering the Collateral, in form satisfactory to
          Lender and (ii) take all action and execute all  documents  referred
          to in Section 9.4 above.  The power of attorney  granted pursuant to
          this Section 10 is coupled with an interest and shall be irrevocable
          until all of Borrower's  Obligations have been paid and performed in
          full and the Loan Agreement shall have been terminated.

11.       Certain Agreements of Borrower.

11.1      Waiver of Notice. Borrower hereby waives notice of the acceptance of
          this  Security  Agreement  and,  except  as  otherwise  specifically
          provided in Section 9.1 and 9.3 above or in the Loan Agreement,  all
          other notices, demands or protests to which Borrower otherwise might
          be entitled by law (and which  lawfully  may be waived) with respect
          to  this  Security   Agreement,   Borrower's   Obligations  and  the
          Collateral.

11.2      Rights of Lender. Borrower agrees that Lender (i) shall have no duty
          as to the  collection or protection of the  Collateral or any income
          thereon,  (ii) may  exercise  the rights and remedies of Lender with
          respect to the Collateral without resort or regard to other security
          or sources  for payment and (iii) shall not be deemed to have waived
          any of the rights or  remedies  granted to Lender  hereunder  unless
          such  waiver  shall be in  writing  and shall be  signed by  Lender.
          Borrower  and  Lender   acknowledge  their  intent  that,  upon  the
          occurrence  of an Event of Default,  Lender  shall  receive,  to the
          fullest extent permitted by law and governmental  policy, all rights
          necessary or desirable to obtain, use or sell the Collateral, and to
          exercise   all   remedies   available   to  Lender  under  the  Loan
          Instruments,  the Code or other applicable law.  Borrower and Lender
          further  acknowledge  and agree that, in the event of changes in law
          or governmental policy occurring  subsequent to the date hereof that
          affect in any  manner  Lender's  rights of access to, or use or sale
          of, the Collateral,  or the procedures necessary to enable Lender to
          obtain such rights of access, use or sale, Lender and Borrower shall
          amend the Loan Instruments,  in such manner as Lender shall request,
          in order to  provide  Lender  such  rights  to the  greatest  extent
          possible  consistent  with  then  applicable  law  and  governmental
          policy.

11.3      No Delay, Single or Partial Exercise Permitted. No delay or omission
          on the part of Lender in exercising any rights or remedies contained
          herein  shall  operate as a waiver of such right or remedy or of any
          other  right or  remedy,  and no single or partial  exercise  of any
          right  or  remedy  shall  preclude  any  other or  further  exercise
          thereof,  or the exercise of any other right or remedy.  A waiver of
          any right or remedy on any one occasion  shall not be construed as a
          bar or waiver of any  right or  remedy on future  occasions,  and no
          delay,  omission,  waiver or single or partial exercise of any right
          or remedy shall be deemed to establish a custom or course of dealing
          or performance between the parties hereto.

11.4      Borrower to Remain Liable.  Borrower hereby  expressly  agrees that,
          anything  herein to the  contrary  notwithstanding,  Borrower  shall
          remain liable under each contract, agreement, interest or obligation
          assigned by Borrower to Lender  hereunder to observe and perform all
          of the  conditions  and  obligations to be observed and performed by
          Borrower  thereunder,  all in  accordance  with and  pursuant to the
          terms and provisions  thereof.  The exercise by Lender of any of the
          rights assigned hereunder shall not release Borrower from any of its
          duties or obligations under any such contract,  agreement,  interest
          or obligation. Lender shall have no duty, responsibility, obligation
          or  liability  under  any  such  contract,  agreement,  interest  or
          obligation by reason of or arising out of the assignment  thereof to
          Lender or the granting to Lender of a Security  Interest  therein or
          the receipt by Lender of any payment  relating to any such contract,
          agreement,  interest or obligation pursuant hereto, nor shall Lender
          be required or  obligated in any manner to perform or fulfill any of
          the obligations of Borrower  thereunder or pursuant  thereto,  or to
          make  any  payment,  or to make  any  inquiry  as to the  nature  or
          sufficiency of any payment  received by Lender or the sufficiency of
          any  performance  of any party under any such  contract,  agreement,
          interest or obligation,  or to present or file any claim, or to take
          any action to collect or enforce any  performance  of the payment of
          any amounts which may have been assigned to Lender,  in which Lender
          may have been granted a Security  Interest or to which Lender may be
          entitled at any time or times.

11.5      Grant of License to Use Intellectual  Property Collateral.  Borrower
          hereby  grants  to  Lender,  after the  occurrence  and  during  the
          continuance  of an Event of Default,  an  irrevocable,  nonexclusive
          license   (exercisable   without   payment   of   royalty  or  other
          compensation to Borrower) to use, assign,  license or sublicense any
          Intellectual Property Collateral, now owned or hereafter acquired by
          Borrower,  and wherever  the same may be located,  including in such
          license  reasonable  access  as to all  media  in  which  any of the
          licensed  items  may be  recorded  or  stored  and  to all  computer
          programs and used for the compilation or printout thereof.

12.       Rights  Cumulative.  All rights and  remedies of Lender  pursuant to
          this Security Agreement,  the Loan Agreement or otherwise,  shall be
          cumulative  and  non-exclusive,  and may be exercised  singularly or
          concurrently.

13.       Severability.  In the  event  that any  provision  of this  Security
          Agreement is deemed to be invalid by reason of the  operation of any
          law or by reason of the  interpretation  placed thereon by any court
          or any other  Governmental  Body,  this Security  Agreement shall be
          construed as not  containing  such  provision and the  invalidity of
          such provision shall not affect the validity of any other provisions
          hereof,  and any and all other provisions hereof which otherwise are
          lawful and valid shall remain in full force and effect.

14.       Notices.   All  notices  and  communications   under  this  Security
          Agreement  shall be in writing and delivered in the manner set forth
          in the Loan Agreement.

15.       Successors  and Assigns.  This Security  Agreement  shall be binding
          upon  and  inure  to  the  benefit  of  and  be  enforceable  by the
          respective successors and assigns of Lender and Borrower.

16.       Captions.  The headings in this Security  Agreement are for purposes
          of  reference  only and  shall  not limit or  otherwise  affect  the
          meaning hereof.

17.       Counterparts. This Security Agreement may be executed in one or more
          counterparts,  each of which shall be deemed to be an original,  but
          all of  which,  when  taken  together,  shall  be one and  the  same
          instrument.

18.       Survival  of  Security   Agreement;   Termination.   All  covenants,
          agreements, representations and warranties made herein shall survive
          the execution and delivery of the Loan  Agreement and shall continue
          in fall force and effect until  Borrower's  Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated.

19.       Governing  Law.  This  Security  Agreement  shall  be  construed  in
          accordance  with and governed by the laws and decisions of the State
          of Illinois, without regard to conflict of laws principles.

20.       Jurisdiction  and Venue.  Borrower hereby agrees that all actions or
          proceedings initiated by Borrower and arising directly or indirectly
          out of this  Security  Agreement  shall be  litigated  in either the
          Circuit  Court of Cook  County,  Illinois  or in the  United  States
          District Court for the Northern District of Illinois,  or, if Lender
          initiates  such action,  in addition to the  foregoing  courts,  any
          other court in which Lender shall  initiate or to which Lender shall
          remove  such  action,  to the extent  such  court has  jurisdiction.
          Borrower  hereby  expressly  submits and consents in advance to such
          jurisdiction  in any action or proceeding  commenced by Lender in or
          removed  by Lender to any of such  courts,  and hereby  agrees  that
          personal  service of the summons and complaint,  or other process or
          papers  issued  therein  may be served in the  manner  provided  for
          notices  herein,  and  agrees  that  service  of  such  summons  and
          complaint or other  process or papers may be made by  registered  or
          certified mail addressed to Borrower at the address to which notices
          are to be sent  pursuant  to  Section  11.1 of the  Loan  Agreement.
          Borrower  waives any claim that  either  the  Circuit  Court of Cook
          County,  Illinois  or the  United  States  District  Court  for  the
          Northern  District  of  Illinois  is  an  inconvenient  forum  or an
          improper  forum  based on lack of venue.  To the extent  provided by
          law,  should  Borrower,  after  being so  served,  fail to appear or
          answer to any summons, complaint, process or papers so served within
          the  number of days  prescribed  by law after the  mailing  thereof,
          Borrower shall be deemed in default and an order and/or judgment may
          be entered by the court  against  Borrower as demanded or prayed for
          in such summons, complaint,  process or papers. The exclusive choice
          of forum  for  Borrower  set forth in this  Section  19 shall not be
          deemed  to  preclude  the  enforcement  by  Lender  of any  judgment
          obtained in any other forum or the taking by Lender of any action to
          enforce the same in any other appropriate jurisdiction, and Borrower
          hereby waives the right to collaterally  attack any such judgment or
          action.

21.       Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
          any controversy which may arise under any of the Loan Instruments or
          with respect to the transactions contemplated thereby would be based
          upon difficult and complex issues and, therefore,  the parties agree
          that any lawsuit arising out of any such  controversy  will be tried
          in a court of competent  jurisdiction  by a judge sitting  without a
          jury.

22.       Time  of  the  Essence.  Time  for  the  performance  of  Borrower's
          Obligations under this Security Agreement is of the essence.

23.       Termination.  This  Security  Agreement  and the Liens and  security
          interests  granted  hereunder shall not terminate until the full and
          complete  performance  and payment and  satisfaction  of  Borrower's
          Obligations and the Loan Agreement shall have terminated,  whereupon
          Lender shall release all such Liens and security  interests in favor
          of Lender affecting the Collateral.

                   [remainder of this page intentionally left blank]



<PAGE>


         IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each such
party on the date first set forth above.

Address:                          TRANSPORT LEASING, INC.,
1000 Colfax                       an Arkansas limited liability company
Gary, IN 46406
                                  By: _____________________________

                                  Name: ___________________________

                                  Title: ____________________________


Address:                          FIRSTAR BANK N.A., a
30 N. Michigan Avenue             national banking association
Chicago, IL 60602

                                  By: _____________________________
                                  Name: Craig B. Collinson
                                  Title: Senior Vice President


<PAGE>


                                   EXHIBIT A

                      Location of Chief Executive Office,
                     Location of other Places of Business,
                       Location of Books and Records and
                     Locations of All Tangible Collateral


                      Location of Chief Executive Office
                           800 Old Highway 271 South
                             Fort Smith, AR 72916


                     Location of Other Places of Business
                                     NONE


                         Location of Books and Records
                           800 Old Highway 271 South
                             Fort Smith, AR 72916


                     Locations of All Tangible Collateral
                           800 Old Highway 271 South
                             Fort Smith, AR 72916




<PAGE>


                                 EXHIBIT "J-2"

                              SECURITY AGREEMENT

         This SECURITY AGREEMENT, dated as of October 15, 2001, is between
TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company, ("Borrower"),
and FIRSTAR BANK N.A., a national banking association ("Lender").

                            Preliminary Statement:

A.        Borrower,  CAROLINA  NATIONAL  TRANSPORTATION  INC.,  GULF  LINE
TRANSPORT  INC., FIVE STAR  TRANSPORT,  INC., CAM TRANSPORT,  INC., ERX, INC.,
UNITY LOGISTIC SERVICES INC.,  FRIENDLY  TRANSPORT,  INC.,  TRANSPORT LEASING,
INC., ("Other Borrowers"),  US 1 INDUSTRIES,  INC.  ("Guarantor"),  and Lender
have entered into a Fourth  Amendment to Loan  Agreement of even date herewith
(as the same may be amended,  modified,  supplemented or restated from time to
time, the "Loan Agreement"),  pursuant and subject to the terms and conditions
of which Lender has agreed to make loans and other financial accommodations to
Borrower and Other Borrowers.

B.        One of the conditions precedent to Lender's obligations under the
Loan  Agreement  is that  Borrower  shall have  executed  and  delivered  this
Security  Agreement  to secure  the  payment  and  performance  of  Borrowers'
Obligations.

          NOW, THEREFORE,  in order to induce Lender to make Advances, and for
other good and valuable  consideration,  the receipt and  sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

1.        Definitions. All terms used herein which are defined in the Illinois
          Uniform  Commercial  Code (the  "Code")  shall have the same meaning
          herein as in the Code  unless  the  context  in which such terms are
          used herein indicates otherwise.  All capitalized terms used but not
          elsewhere  defined  in  this  Security   Agreement  shall  have  the
          respective meanings ascribed to such terms in the Loan Agreement. As
          used herein, the following terms shall have the following meanings:

          Corporate  Changes:  any change in Borrower's place of organization,
form of organization,  or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.

          Intellectual   Property   Collateral:   collectively,   the   Patent
Collateral and the Trademark Collateral.

          Patent   Collateral:   shall  mean  all  (i)   letters   patent  and
applications  for letters patent of Borrower  throughout the world,  including
all patent  applications of Borrower in preparation for filing anywhere in the
world,   (ii)  patent  licenses  of  Borrower,   (iii)  reissues,   divisions,
continuations, continuations-in-part,  extensions, renewals and reexaminations
of any Patent Collateral and (iv) all proceeds of, and rights associated with,
the foregoing  (including  licenses,  royalties  and proceeds of  infringement
suits),  the right of  Borrower  to sue third  parties  for past,  present and
future  infringements of any patent or patent  application,  and for breach or
enforcement  of any patent license of Borrower,  and all rights  corresponding
thereto throughout the world.

          Trademark  Collateral:  shall mean all (i) trademarks,  trade names,
corporate names,  company names,  business names,  fictitious  business names,
trade dress,  service marks,  certification  marks,  collective marks,  logos,
other sources of business  identifiers,  prints and labels on which any of the
foregoing have appeared or appear,  designs and general  intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter  adopted or acquired,  whether
currently  in use or not, all  registrations  and  recordings  thereof and all
applications  in connection  therewith,  whether pending or in preparation for
filing,  including  registrations,  recordings and  applications in the United
States Patent and Trademark Office and any foreign country, (ii) all Trademark
licenses of Borrower, (iii) all reissues, extensions or renewals of any of the
items described in clauses (i) and (ii) above, (iv) all of the goodwill of the
business  connected with the use of, and symbolized by the items  described in
clauses (i) and (ii) above,  and (v) all  proceeds  of, and rights  associated
with, the foregoing, including any claim by Borrower against third parties for
past, present or future  infringement or dilution of any Trademark,  Trademark
registration  or  Trademark  license,  or  for  any  injury  to  the  goodwill
associated  with the use of any such Trademark or for breach or enforcement of
any Trademark license.

2.        Security  Interests.  In order  to  secure  Borrowers'  Obligations,
          Borrower hereby grants to Lender a security interest in all Property
          of  Borrower,  whether  now  owned or  hereafter  acquired,  and all
          additions and accessions thereto, including, without limitation, the
          Property described below:

2.1       Goods, Machinery,  Equipment and Inventory. All of Borrower's goods,
          machinery,  equipment  and  inventory,  wherever  located,  and  all
          additions and accessions thereto or replacements thereof, including,
          but not limited to, all  machinery,  inventory  and equipment of any
          and every kind and description  comprising,  belonging to or used in
          connection   with  the   operation   of  the  business  of  Borrower
          (collectively, the "Tangible Collateral");

2.2       Accounts, General Intangibles.  All of Borrower's accounts, contract
          rights,  chattel paper,  instruments,  investment property,  deposit
          accounts,  documents, and general intangibles, and all additions and
          accessions  thereto and  replacements  thereof,  including,  but not
          limited to, all  licenses,  franchises,  permits and  authorizations
          heretofore or hereafter granted or issued to Borrower under federal,
          state or local laws (excluding,  however, any licenses,  franchises,
          permits and  authorizations  issued by any Governmental  Body to the
          extent,  and only to the extent,  it is unlawful to grant a security
          interest in such licenses,  franchises,  permits and authorizations,
          but including, without limitation, the right to receive all proceeds
          derived or arising from or in connection with the sale or assignment
          of such  licenses,  franchises,  permits and  authorizations)  which
          permit or pertain to the operation of the business of Borrower,  and
          all  of  Borrower's  Intellectual  Property  Collateral,   Operating
          Agreements,  income tax refunds,  copyrights,  patents,  trademarks,
          trade names, trade styles, goodwill, going concern value, franchise,
          supply and distributorship  agreements,  non-competition  agreements
          and   employment    contracts    (collectively,    the   "Intangible
          Collateral").

2.3       Proceeds.  All proceeds  (including  proceeds of insurance,  eminent
          domain and other  governmental  taking and tort claims) and products
          of the Property described in Sections 2.1 and 2.2 above; and

2.4       Books and Records.  All of the books and records  pertaining  to the
          Property described in Sections 2.1, 2.2 and 2.3 above.

All of the Property described above hereinafter is referred to collectively as
the "Collateral." The security interest of Lender in the Collateral shall be
superior and prior to all other Liens except Permitted Prior Liens.

3.        Representations  and  Warranties.  Borrower  hereby  represents  and
          warrants to Lender as follows:

3.1       Ownership of  Collateral.  It is the owner of all of the  Collateral
          free from any Lien except for  Permitted  Liens,  except the portion
          thereof consisting of after-acquired  Property, and Borrower will be
          the owner of such after-acquired Property, free from any Lien except
          for Permitted Liens.

3.2       Places of Business. There is listed on Exhibit A hereto the location
          of the chief executive  office of Borrower,  all of the other places
          of  business  of  Borrower  and all  locations  where  the  Tangible
          Collateral and the books and records of Borrower are kept. Except as
          described in Exhibit A, none of the  Collateral is in the possession
          of any consignee, bailee, warehouseman, agent or possessor.

3.3       Trade or Assumed  Names.  Borrower has not used any trade or assumed
          names during the six years preceding the date hereof.

3.4       Financing Statements.  Except for the financing statements of Lender
          and the financing  statements  pertaining  to the  Permitted  Senior
          Indebtedness  Liens,  if any, no  financing  statement  covering any
          Collateral  or any  portion  or  proceeds  thereof is on file in any
          public office.

3.5       Intangible   Collateral.   The   Intangible   Collateral   hereunder
          represents  bona  fide  and  existing   indebtedness,   obligations,
          liabilities,  rights and privileges owed or belonging to Borrower to
          which, to the best of Borrower's  knowledge,  as of the date of this
          Security   Agreement,   there  is  no  valid  defense,   set-off  or
          counterclaim  against Borrower and in connection with which there is
          no  default  with  respect  to  any  material  payment  or  material
          performance  on the part of Borrower,  or, to the best of Borrower's
          knowledge,  any  other  party.  With  respect  to  any  Intellectual
          Property Collateral of Borrower the loss, impairment or infringement
          of which singly or in the aggregate could  reasonably be expected to
          have a  Material  Adverse  Effect:  (i) such  Intellectual  Property
          Collateral  is  subsisting  and has not  been  adjudged  invalid  or
          unenforceable,  in whole or in part, (ii) such Intellectual Property
          Collateral  is valid and  enforceable,  (iii)  Borrower has made all
          filings and recordations necessary in the exercise of reasonable and
          prudent   business   judgment  to  protect  its   interest  in  such
          Intellectual  Property  Collateral  in the United  States Patent and
          Trademark  Office,   the  United  States  Copyright  Office  and  in
          corresponding  offices  throughout the world, as  appropriate,  (iv)
          Borrower is the owner of the entire and  unencumbered  right,  title
          and interest in and to such Intellectual  Property Collateral and no
          claim  has  been  made  that the use of such  Intellectual  Property
          Collateral  does or may  violate  the  asserted  rights of any third
          party,  and (v) Borrower has  performed and will continue to perform
          all acts and has paid and will continue to pay all required fees and
          taxes to maintain each and every item of such Intellectual  Property
          Collateral  in full  force  and  effect  throughout  the  world,  as
          applicable. Borrower owns directly, or is entitled to use by license
          or otherwise,  all  Intellectual  Property  Collateral of any Person
          used in,  necessary  for or material  to the  conduct of  Borrower's
          businesses. Except as set forth in the Loan Agreement, no litigation
          is pending or, to the best knowledge of Borrower,  threatened  which
          contains  allegations   respecting  the  validity,   enforceability,
          infringement  or  ownership  of  any of  the  Intellectual  Property
          Collateral of Borrower.

3.6       Tangible  Collateral-Personal  Property.  All Tangible Collateral at
          all times shall be considered personal property.

3.7       Accounts.  Each existing  Account  constitutes,  and each  hereafter
          arising  Account  will   constitute,   to  the  best  of  Borrower's
          knowledge,  the legally valid and binding  obligation of the account
          debtor obligated to pay the same. The amount represented by Borrower
          to  Lender  as owing by each  account  debtor  is,  or will be,  the
          correct amount actually and unconditionally owing, except for normal
          cash  discounts  and  allowances  where  applicable.  To the best of
          Borrower's  knowledge,  no account debtor has any defense,  set-off,
          claim or counterclaim  against Borrower that can be asserted against
          Lender,  whether in any proceeding to enforce Lender's rights in the
          Collateral  or  otherwise.  None of the  Accounts  is,  nor will any
          hereafter  arising  Account be,  evidenced by a  promissory  note or
          other instrument other than a check, unless delivered to Lender with
          appropriate endorsements.

3.8       Inventory.  No  Inventory  is  subject  to  any  licensing,  patent,
          trademark,  trade name or copyright  agreement  with any Person that
          restricts   Borrower's   ability  to  manufacture  and/or  sell  the
          Inventory other than territorial restrictions not materially adverse
          to the Borrower or its business.

4.        Affirmative Covenants.  Until all of Borrowers' Obligations are paid
          and  performed  in full  and the  Loan  Agreement  shall  have  been
          terminated, Borrower agrees that it will:

4.1       Corporate  Changes.  Inform  Lender  within  ten  (10)  days  of any
          Corporate Change.

4.2       Taxes.  Pay promptly  when due all taxes,  levies,  assessments  and
          governmental  charges  upon  and  relating  to any of the  Property,
          income or receipts of Borrower or otherwise for which Borrower is or
          may be liable,  except to the extent  that the failure to pay any of
          such taxes, levies,  assessments or charges is permitted by the Loan
          Agreement.

4.3       Insurance.  At its sole expense, keep the Collateral insured against
          loss or damage by  insurance  policies  which shall be in such form,
          with  such  companies  and in  such  amounts  as  may be  reasonably
          satisfactory  to Lender and otherwise  comply with the provisions of
          Section 6.6 of the Loan Agreement.

4.4       Tangible Collateral.

4.4.1             Good Repair.  Keep the Tangible  Collateral  in good working
                  order and repair and make all necessary replacements thereof
                  and  renewals  thereto  so  that  the  value  and  operating
                  efficiency  thereof  at all times  shall be  maintained  and
                  preserved.

4.4.2             Insurance Requirements.  Maintain the Tangible Collateral at
                  all  times  in  accordance  with  the  requirements  of  all
                  insurance  carriers which provide  insurance with respect to
                  such Tangible Collateral so that such insurance shall remain
                  in full force and effect.

4.4.3             Certificates  of  Title.  Upon the  request  of  Lender  (i)
                  promptly   deliver  to  Lender  all  certificates  of  title
                  pertaining  to the  Tangible  Collateral  and (ii)  take all
                  actions  reasonably  requested  by  Lender to cause the Lien
                  granted to Lender hereunder to be noted on such certificates
                  of title.

4.4.4             Use of Collateral.  Use the Tangible  Collateral in material
                  compliance  with  all  statutes,  regulations,   ordinances,
                  requirements  and  regulations  and all  judgments,  orders,
                  injunctions and decrees  applicable  thereto,  and all other
                  federal, state and local laws.

4.5       Intangible Collateral.

4.5.1             Payments.  Make all payments and perform all acts reasonably
                  necessary   to  maintain   and   preserve   the   Intangible
                  Collateral,   including,   without  limitation,   filing  of
                  documents,   renewals   or   other   information   with  any
                  Governmental Body or any other Person.

4.5.2             Delivery  of  Instruments  and  Letters of Credit.  Upon the
                  request of Lender,  promptly  deliver to Lender the original
                  executed  copies of all  instruments  and  letters of credit
                  which constitute part of the Intangible Collateral, together
                  with such endorsements,  assignments and other agreements as
                  Lender  may  request  in  order  to  perfect  the   Security
                  Interests.

4.5.3             Accurate  Records.  At all times keep  accurate and complete
                  records of payment and  performance  by  Borrower  and other
                  Persons of their respective  obligations with respect to the
                  Intangible Collateral and permit Lender or any of its agents
                  to call at Borrower's place of business without hindrance or
                  delay to inspect,  audit,  check or make  extracts  from the
                  books, records, correspondence or other data relating to the
                  Intangible  Collateral in accordance  with the provisions of
                  the Loan Agreement.

4.5.4             Verification of  Indebtedness.  Upon request of Lender after
                  the  occurrence and during the  continuation  of an Event of
                  Default,  permit Lender itself,  at any time, in the name of
                  Lender or Borrower, to verify directly with the obligors the
                  indebtedness  due  Borrower  on any account or other item of
                  Intangible Collateral.

4.5.5             Defaults,  Other  Claims.  Immediately  inform Lender of any
                  default in payment or  performance  by Borrower or any other
                  Person of any  obligation  with  respect  to the  Intangible
                  Collateral  or of  claims  made by  others  in regard to the
                  Intangible  Collateral,  if  either  of which  could  have a
                  Material Adverse Effect.

4.5.6             Ownership of Intellectual Property Collateral. Notify Lender
                  immediately  if it knows,  or has  reason to know,  that any
                  application or registration relating to any material item of
                  its Intellectual Property Collateral may become abandoned or
                  dedicated  to the public or placed in the  public  domain or
                  invalid or unenforceable, or of any adverse determination or
                  development  (including  the  institution  of,  or any  such
                  determination  or  development  in,  any  proceeding  in the
                  United States Patent and Trademark Office, the United States
                  Copyright Office or any foreign  counterpart  thereof or any
                  court)  regarding   Borrower's   ownership  of  any  of  its
                  Intellectual Property Collateral,  its right to register the
                  same or to keep and maintain and enforce the same.

4.5.7             Maintenance of Intellectual  Property  Collateral.  Take all
                  necessary  steps,  including  in any  proceeding  before the
                  United States Patent and Trademark Office, the United States
                  Copyright  Office  or any  similar  office  or agency in any
                  country or any political  subdivision  thereof,  to maintain
                  and  pursue  any  application  (and to obtain  the  relevant
                  registration)  filed with  respect to, and to  maintain  any
                  registration  of,  its  Intellectual   Property  Collateral,
                  including the filing of applications for renewal, affidavits
                  of  use,  affidavits  of  incontestability  and  opposition,
                  interference and cancellation proceedings and the payment of
                  fees and taxes.

4.6       Collection  of  Proceeds.  Use  commercially  reasonable  efforts to
          collect the proceeds of indebtedness owing to Borrower by any Person
          under any  instrument  or by any Account  Debtor with respect to any
          account, contract right, chattel paper or general intangible.

4.7       Financing  Statements,  Further  Assurances.  Concurrently  with the
          execution  of  this  Security  Agreement,  and  from  time  to  time
          hereafter as requested by Lender, execute and deliver to Lender such
          financing   statements,    continuation   statements,    termination
          statements,  amendments to any of the foregoing and other documents,
          in form satisfactory to Lender, as Lender may require to perfect and
          continue in effect the Security Interests, to carry out the purposes
          of this Security Agreement and to protect Lender's rights hereunder.
          Borrower,  upon  demand,  shall  pay the  cost of  filing  all  such
          financing   statements,    continuation   statements,    termination
          statements, amendments to any of the foregoing and other documents.

5.        Negative Covenants. Until all of Borrower's Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated,
          Borrower agrees that it will not:

5.1       Sales and Transfer of Collateral.  Sell, lease,  assign,  license or
          otherwise  dispose  of  any  of  the  Collateral,  except  as may be
          permitted by and in accordance  with the  applicable  provisions the
          Loan Agreement.

5.2       Places of  Business.  Borrower  shall not change the location of (i)
          Borrower's  (A) chief  executive  office or (B) books and records or
          (ii) any  Tangible  Collateral,  in each case  without  first giving
          Lender at least 30 days' advance  written  notice thereof and having
          taken any and all action reasonably  requested by Lender to maintain
          and  preserve  the  first  perfected  Lien in favor of Lender on all
          Property  thereof free and clear of any Lien  whatsoever  except for
          Permitted Liens.

5.3       Installation  of  Tangible  Collateral.  Permit any of the  Tangible
          Collateral to be  installed,  affixed or attached to the real estate
          of  Borrower or any other  Person so as to become a part  thereof or
          become in any sense a fixture not otherwise pledged to Lender.

5.4       Bailees. Permit any Collateral to be in the possession or control of
          any warehouseman, bailee or processor without Lender's prior written
          consent and unless Lender has received  warehouse receipts or bailee
          letters satisfactory to Lender prior to such possession or control.

5.5       Licenses of Intellectual Property.  Sell, transfer,  assign or grant
          any  exclusive  license  with respect to the  Intellectual  Property
          Collateral to an Affiliate of Borrower or otherwise  take any action
          with respect to its Intellectual Property Collateral in violation of
          any term or provision of the Loan Agreement.

5.6       Trademark  Collateral.  Permit,  and permit any of its licensees to,
          unless  Borrower  shall  either  (i)  reasonably  and in good  faith
          determine  that any of its  Trademark  Collateral  is of  negligible
          economic value to Borrower or (ii) have a valid business  purpose to
          do  otherwise:  (A)  fail to  continue  to use any of its  Trademark
          Collateral in order to maintain all of its  Trademark  Collateral in
          full force free from any claim of abandonment for non-use,  (B) fail
          to  maintain as in the past the  quality of  products  and  services
          offered  under all of its Trademark  Collateral,  (C) fail to employ
          all of its Trademark Collateral  registered with any federal,  state
          or   foreign   authority   with  an   appropriate   notice  of  such
          registration,  (D) adopt or use any trademark  which is  confusingly
          similar or a colorable imitation of any of its Trademark  Collateral
          except  in  compliance  with  applicable  law,  (E)  use  any of its
          Trademark Collateral  registered with any federal,  state or foreign
          authority except for the uses for which  registration or application
          for  registration of such Trademark  Collateral has been made except
          in  compliance  with  applicable  law or (F) do or permit any act or
          knowingly omit to do any act whereby any of its Trademark Collateral
          may lapse or become invalid or unenforceable.

5.7       Patent  Collateral.  Unless Borrower shall either (i) reasonably and
          in good  faith  determine  that any of its Patent  Collateral  is of
          negligible  economic value to Borrower or (ii) have a valid business
          purpose to do otherwise,  do any act, or omit to do any act, whereby
          any of Borrower's Patent Collateral may lapse or become abandoned or
          dedicated to the public or unenforceable.

6.        Protection of Collateral. In the event of any failure of Borrower to
          (i)  maintain  in  force  and pay for any  insurance  or bond  which
          Borrower is required to provide pursuant to this Security  Agreement
          or the other Loan Instruments,  (ii) keep the Tangible Collateral in
          good repair and operating condition,  (iii) keep the Collateral free
          from all Liens  except for  Permitted  Liens,  (iv) pay when due all
          taxes,  levies and  assessments on or in respect of the  Collateral,
          except as permitted  pursuant to the terms of Section 4.1 above, (v)
          make all payments and perform all acts on the part of Borrower to be
          paid or performed with respect to any of the Collateral,  including,
          without   limitation,   all   expenses   of   protecting,   storing,
          warehousing,  insuring,  handling and  maintaining the Collateral or
          (vi) keep fully and perform promptly any other of the obligations of
          Borrower   under  this   Security   Agreement   or  the  other  Loan
          Instruments,  Lender, at its option,  may (but shall not be required
          to) procure and pay for such  insurance,  place such  Collateral  in
          good repair and operating  condition,  pay or contest or settle such
          Liens or taxes or any judgments based thereon or otherwise make good
          any other  aforesaid  failure of Borrower.  Borrower shall reimburse
          Lender  immediately  upon  demand for all sums paid or  advanced  on
          behalf of Borrower for any such  purpose,  together  with all costs,
          expenses  and  attorneys'   fees  paid  or  incurred  by  Lender  in
          connection therewith and interest at the Default Rate on all sums so
          paid or advanced from the date of such payment or advancement  until
          repaid to Lender.  All such sums paid or  advanced  by Lender,  with
          interest thereon,  immediately upon payment or advancement  thereof,
          shall be deemed to be part of Borrower's Obligations secured hereby.

7.        Event of Default.  Borrower  shall be in default under this Security
          Agreement  upon the occurrence of an Event of Default under the Loan
          Agreement.

8.        Right of Lender to Contact  Account  Debtors.  Lender shall have the
          right, from time to time, at Lender's discretion, to contact account
          debtors of Borrower and  Guarantor to verify that Accounts are valid
          and  not  subject  to  setoff  or  counterclaim  and to  verify  the
          creditworthiness of the account debtor.

9.        Remedies  Upon  Default.   Upon  the   occurrence   and  during  the
          continuation of an Event of Default:


9.1       Rights of Lender.  Lender  shall have all of the rights and remedies
          of a secured  party under the Code and all other rights and remedies
          accorded to Lender at equity or law, including,  without limitation,
          the right to apply for and have a receiver  appointed  by a court of
          competent   jurisdiction   to  manage,   protect  and  preserve  the
          Collateral,  to continue  operating  the business of Borrower and to
          collect  all  revenues  and profits  thereof.  Any notice of sale or
          other  disposition  of Collateral  given not less than ten (10) days
          prior to such proposed action shall  constitute  reasonable and fair
          notice of such action.  Lender may postpone or adjourn any such sale
          from  time to time by  announcement  at the time  and  place of sale
          stated in the  notice of sale or by  announcement  of any  adjourned
          sale,  without being  required to give a further notice of sale. Any
          such sale may be for cash or, unless  prohibited by applicable  law,
          upon such credit or  installment  terms as Lender  shall  determine.
          Borrower  shall be credited  with the net proceeds of such sale only
          when such  proceeds  actually  are received by Lender in Good Funds.
          Despite the  consummation  of any such sale,  Borrower  shall remain
          liable for any  deficiency on Borrower's  Obligations  which remains
          outstanding  following  any such  sale.  All net  proceeds  received
          pursuant  to a sale  shall be  applied  in the  manner  set forth in
          Section 8.4 of the Loan Agreement.

9.2       Assembly of Collateral.  Upon the request of Lender,  Borrower shall
          assemble  and make the  Collateral  available  to  Lender at a place
          designated by Lender.

9.3       Proceeds.  Borrower  shall  hold  all  proceeds  of  the  Collateral
          collected  by  Borrower  in trust for Lender,  and,  after  Borrower
          receives  notice  from  Lender,  promptly  after the  receipt of the
          proceeds  of  Collateral,  turn over such  proceeds to Lender in the
          exact form in which they were received.

9.4       Other  Rights.  Lender,  at its  election,  and  without  notice  to
          Borrower, may:

9.4.1             Terminate  Right of  Collection.  Terminate  the  rights  of
                  Borrower to collect the proceeds described in Section 8.3.

9.4.2             Notification.  Notify the obligors under any instruments and
                  the Account Debtors of any account,  contract right, chattel
                  paper or general intangible to make all payments directly to
                  Lender.

9.4.3             Collection of Payments. Demand, sue for, collect or receive,
                  in the name of  Borrower  or Lender,  any money or  Property
                  payable or receivable on any item of Collateral.

9.4.4             Settlement. Settle, release, compromise, adjust, sue upon or
                  otherwise  enforce  any item of  Collateral  as  Lender  may
                  determine.

9.4.5             Mail of Borrower;  Endorsement of Checks. For the purpose of
                  enforcing  Lender's  rights under this  Security  Agreement,
                  receive and open mail  addressed  to  Borrower,  and endorse
                  notes, checks,  drafts, money orders,  documents of title or
                  other  forms  of  payment  on  behalf  and  in the  name  of
                  Borrower.

All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.

10.       Power of Attorney.  To effectuate  the rights and remedies of Lender
          under this Security Agreement,  Borrower hereby irrevocably appoints
          Lender as its  attorney-in-fact,  in the name of  Borrower or in the
          name of Lender,  (i) to execute and file from time to time financing
          statements,  continuation  statements,  termination  statements  and
          amendments thereto, covering the Collateral, in form satisfactory to
          Lender and (ii) take all action and execute all  documents  referred
          to in Section 9.4 above.  The power of attorney  granted pursuant to
          this Section 10 is coupled with an interest and shall be irrevocable
          until all of Borrower's  Obligations have been paid and performed in
          full and the Loan Agreement shall have been terminated.

11.       Certain Agreements of Borrower.

11.1      Waiver of Notice. Borrower hereby waives notice of the acceptance of
          this  Security  Agreement  and,  except  as  otherwise  specifically
          provided in Section 9.1 and 9.3 above or in the Loan Agreement,  all
          other notices, demands or protests to which Borrower otherwise might
          be entitled by law (and which  lawfully  may be waived) with respect
          to  this  Security   Agreement,   Borrower's   Obligations  and  the
          Collateral.

11.2      Rights of Lender. Borrower agrees that Lender (i) shall have no duty
          as to the  collection or protection of the  Collateral or any income
          thereon,  (ii) may  exercise  the rights and remedies of Lender with
          respect to the Collateral without resort or regard to other security
          or sources  for payment and (iii) shall not be deemed to have waived
          any of the rights or  remedies  granted to Lender  hereunder  unless
          such  waiver  shall be in  writing  and shall be  signed by  Lender.
          Borrower  and  Lender   acknowledge  their  intent  that,  upon  the
          occurrence  of an Event of Default,  Lender  shall  receive,  to the
          fullest extent permitted by law and governmental  policy, all rights
          necessary or desirable to obtain, use or sell the Collateral, and to
          exercise   all   remedies   available   to  Lender  under  the  Loan
          Instruments,  the Code or other applicable law.  Borrower and Lender
          further  acknowledge  and agree that, in the event of changes in law
          or governmental policy occurring  subsequent to the date hereof that
          affect in any  manner  Lender's  rights of access to, or use or sale
          of, the Collateral,  or the procedures necessary to enable Lender to
          obtain such rights of access, use or sale, Lender and Borrower shall
          amend the Loan Instruments,  in such manner as Lender shall request,
          in order to  provide  Lender  such  rights  to the  greatest  extent
          possible  consistent  with  then  applicable  law  and  governmental
          policy.

11.3      No Delay, Single or Partial Exercise Permitted. No delay or omission
          on the part of Lender in exercising any rights or remedies contained
          herein  shall  operate as a waiver of such right or remedy or of any
          other  right or  remedy,  and no single or partial  exercise  of any
          right  or  remedy  shall  preclude  any  other or  further  exercise
          thereof,  or the exercise of any other right or remedy.  A waiver of
          any right or remedy on any one occasion  shall not be construed as a
          bar or waiver of any  right or  remedy on future  occasions,  and no
          delay,  omission,  waiver or single or partial exercise of any right
          or remedy shall be deemed to establish a custom or course of dealing
          or performance between the parties hereto.

11.4      Borrower to Remain Liable.  Borrower hereby  expressly  agrees that,
          anything  herein to the  contrary  notwithstanding,  Borrower  shall
          remain liable under each contract, agreement, interest or obligation
          assigned by Borrower to Lender  hereunder to observe and perform all
          of the  conditions  and  obligations to be observed and performed by
          Borrower  thereunder,  all in  accordance  with and  pursuant to the
          terms and provisions  thereof.  The exercise by Lender of any of the
          rights assigned hereunder shall not release Borrower from any of its
          duties or obligations under any such contract,  agreement,  interest
          or obligation. Lender shall have no duty, responsibility, obligation
          or  liability  under  any  such  contract,  agreement,  interest  or
          obligation by reason of or arising out of the assignment  thereof to
          Lender or the granting to Lender of a Security  Interest  therein or
          the receipt by Lender of any payment  relating to any such contract,
          agreement,  interest or obligation pursuant hereto, nor shall Lender
          be required or  obligated in any manner to perform or fulfill any of
          the obligations of Borrower  thereunder or pursuant  thereto,  or to
          make  any  payment,  or to make  any  inquiry  as to the  nature  or
          sufficiency of any payment  received by Lender or the sufficiency of
          any  performance  of any party under any such  contract,  agreement,
          interest or obligation,  or to present or file any claim, or to take
          any action to collect or enforce any  performance  of the payment of
          any amounts which may have been assigned to Lender,  in which Lender
          may have been granted a Security  Interest or to which Lender may be
          entitled at any time or times.

11.5     Grant of License to Use Intellectual Property Collateral. Borrower
         hereby grants to Lender, after the occurrence and during the
         continuance of an Event of Default, an irrevocable, nonexclusive
         license (exercisable without payment of royalty or other compensation
         to Borrower) to use, assign, license or sublicense any Intellectual
         Property Collateral, now owned or hereafter acquired by Borrower, and
         wherever the same may be located, including in such license
         reasonable access as to all media in which any of the licensed items
         may be recorded or stored and to all computer programs and used for
         the compilation or printout thereof.

12.       Rights  Cumulative.  All rights and  remedies of Lender  pursuant to
          this Security Agreement,  the Loan Agreement or otherwise,  shall be
          cumulative  and  non-exclusive,  and may be exercised  singularly or
          concurrently.

13.       Severability.  In the  event  that any  provision  of this  Security
          Agreement is deemed to be invalid by reason of the  operation of any
          law or by reason of the  interpretation  placed thereon by any court
          or any other  Governmental  Body,  this Security  Agreement shall be
          construed as not  containing  such  provision and the  invalidity of
          such provision shall not affect the validity of any other provisions
          hereof,  and any and all other provisions hereof which otherwise are
          lawful and valid shall remain in full force and effect.

14.       Notices.   All  notices  and  communications   under  this  Security
          Agreement  shall be in writing and delivered in the manner set forth
          in the Loan Agreement.

15.       Successors  and Assigns.  This Security  Agreement  shall be binding
          upon  and  inure  to  the  benefit  of  and  be  enforceable  by the
          respective successors and assigns of Lender and Borrower.

16.       Captions.  The headings in this Security  Agreement are for purposes
          of  reference  only and  shall  not limit or  otherwise  affect  the
          meaning hereof.

17.       Counterparts. This Security Agreement may be executed in one or more
          counterparts,  each of which shall be deemed to be an original,  but
          all of  which,  when  taken  together,  shall  be one and  the  same
          instrument.

18.       Survival  of  Security   Agreement;   Termination.   All  covenants,
          agreements, representations and warranties made herein shall survive
          the execution and delivery of the Loan  Agreement and shall continue
          in fall force and effect until  Borrower's  Obligations are paid and
          performed in full and the Loan Agreement shall have been terminated.

19.       Governing  Law.  This  Security  Agreement  shall  be  construed  in
          accordance  with and governed by the laws and decisions of the State
          of Illinois, without regard to conflict of laws principles.

20.       Jurisdiction  and Venue.  Borrower hereby agrees that all actions or
          proceedings initiated by Borrower and arising directly or indirectly
          out of this  Security  Agreement  shall be  litigated  in either the
          Circuit  Court of Cook  County,  Illinois  or in the  United  States
          District Court for the Northern District of Illinois,  or, if Lender
          initiates  such action,  in addition to the  foregoing  courts,  any
          other court in which Lender shall  initiate or to which Lender shall
          remove  such  action,  to the extent  such  court has  jurisdiction.
          Borrower  hereby  expressly  submits and consents in advance to such
          jurisdiction  in any action or proceeding  commenced by Lender in or
          removed  by Lender to any of such  courts,  and hereby  agrees  that
          personal  service of the summons and complaint,  or other process or
          papers  issued  therein  may be served in the  manner  provided  for
          notices  herein,  and  agrees  that  service  of  such  summons  and
          complaint or other  process or papers may be made by  registered  or
          certified mail addressed to Borrower at the address to which notices
          are to be sent  pursuant  to  Section  11.1 of the  Loan  Agreement.
          Borrower  waives any claim that  either  the  Circuit  Court of Cook
          County,  Illinois  or the  United  States  District  Court  for  the
          Northern  District  of  Illinois  is  an  inconvenient  forum  or an
          improper  forum  based on lack of venue.  To the extent  provided by
          law,  should  Borrower,  after  being so  served,  fail to appear or
          answer to any summons, complaint, process or papers so served within
          the  number of days  prescribed  by law after the  mailing  thereof,
          Borrower shall be deemed in default and an order and/or judgment may
          be entered by the court  against  Borrower as demanded or prayed for
          in such summons, complaint,  process or papers. The exclusive choice
          of forum  for  Borrower  set forth in this  Section  19 shall not be
          deemed  to  preclude  the  enforcement  by  Lender  of any  judgment
          obtained in any other forum or the taking by Lender of any action to
          enforce the same in any other appropriate jurisdiction, and Borrower
          hereby waives the right to collaterally  attack any such judgment or
          action.

21.       Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
          any controversy which may arise under any of the Loan Instruments or
          with respect to the transactions contemplated thereby would be based
          upon difficult and complex issues and, therefore,  the parties agree
          that any lawsuit arising out of any such  controversy  will be tried
          in a court of competent  jurisdiction  by a judge sitting  without a
          jury.

22.       Time  of  the  Essence.  Time  for  the  performance  of  Borrower's
          Obligations under this Security Agreement is of the essence.

23.       Termination.  This  Security  Agreement  and the Liens and  security
          interests  granted  hereunder shall not terminate until the full and
          complete  performance  and payment and  satisfaction  of  Borrower's
          Obligations and the Loan Agreement shall have terminated,  whereupon
          Lender shall release all such Liens and security  interests in favor
          of Lender affecting the Collateral.

               [remainder of this page intentionally left blank]



<PAGE>


          IN WITNESS  WHEREOF,  this Security  Agreement has been executed and
delivered  by the  parties  hereto by a duly  authorized  officer of each such
party on the date first set forth above.

Address:                           TRANSPORT LEASING, INC.,
1000 Colfax                        an Arkansas limited liability company
Gary, IN 46406
                                   By: _____________________________

                                   Name: ___________________________

                                   Title: ____________________________


Address:                           FIRSTAR BANK N.A., a
30 N. Michigan Avenue              national banking association
Chicago, IL 60602

                                   By: _____________________________
                                   Name: Craig B. Collinson
                                   Title: Senior Vice President


<PAGE>


                                   EXHIBIT A

                      Location of Chief Executive Office,
                     Location of other Places of Business,
                       Location of Books and Records and
                     Locations of All Tangible Collateral


                      Location of Chief Executive Office
                           800 Old Highway 271 South
                             Fort Smith, AR 72916


                     Location of Other Places of Business
                                     NONE


                         Location of Books and Records
                           800 Old Highway 271 South
                             Fort Smith, AR 72916


                     Locations of All Tangible Collateral
                           800 Old Highway 271 South
                             Fort Smith, AR 72916






<PAGE>


                                 EXHIBIT "K-1"

                           UCC-1 FINANCING STATEMENT
                        TRANSPORT LEASING, INC., DEBTOR

                       [Please see the attached page.]


<PAGE>


                                 EXHIBIT "K-2"

                           UCC-1 FINANCING STATEMENT
                       TRANSPORT LOGISTICS, LLC, DEBTOR

                       [Please see the attached page.]


<PAGE>




                                  EXHIBIT "L"

                             ASSUMPTION AGREEMENT


          The undersigned,  Transport Leasing,  Inc., an Arkansas corporation,
and Transport  Logistics,  LLC, an Arkansas limited liability company,  hereby
agree to all of the terms and  conditions  as set forth in the Loan  Agreement
dated as of April 18, 2000 and  amended as of December 2, 2000,  March 1, 2001
and October  15,  2001,  by and  between  Carolina  National  Transport  Inc.,
Keystone Lines,  Gulf Line Transport Inc., Five Star Transport,  Inc., and CAM
Transport,  Inc., Unity Logistic Services Inc., ERX, Inc., Friendly Transport,
Inc., US 1 Industries,  Inc. and Firstar Bank N.A.,  including any  Amendments
subsequent  hereto,  and assumes the  obligations  of  "Borrowers"  thereunder
jointly and severally  with the other  Borrowers and agrees to be bound by all
the terms, covenants,  agreements or conditions,  thereof, as the same applied
to Borrowers.

                                       TRANSPORT LEASING, INC.
                                       By: _________________________
                                       Its: ________________________



                                       TRANSPORT LOGISTICS, LLC
                                       By: _________________________
                                       Its: ________________________



Dated: October 15, 2001