Exhibit 10.49

               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT




             PNC BANK, NATIONAL ASSOCIATION (AS LENDER AND AS AGENT)




                                      WITH


                     U.S. RUBBER RECLAIMING, INC. (BORROWER)






                          Dated as of October 25, 2002



<PAGE>





                                Table of Contents



1.       DEFINITIONS ........................................................1
         1.1 ACCOUNTING TERMS ...............................................1
         1.2 GENERALTERMS....................................................1
1.1      UNIFORM COMMERCIAL CODE TERMS.......................................16
1.2      CERTAIN MATTERS OF CONSTRUCTION.....................................16
2.       ADVANCES, PAYMENTS..................................................16
2.1      REVOLVING ADVANCES..................................................16
2.2      DISCRETIONARY
                  RIGHTS.....................................................17
         2.3      PROCEDURE FOR REVOLVING ADVANCES BORROWING ................17
         2.4      DISBURSEMENT OF ADVANCE PROCEEDS...........................19
         2.5      TERM LOAN..................................................19
         2.6      MAXIMUM ADVANCES.......................................... 20
         2.7      REPAYMENT OF ADVANCES..................................... 20
         2.8      REPAYMENT OF EXCESS ADVANCES ............................. 20
         2.9      STATEMENT OF ACCOUNT...................................... 20
         2.10     LETTERS OF CREDIT......................................... 21
         2.11     ISSUANCE OF LETTERS OF CREDIT..............................21
         2.12     REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.............22
         2.13     ADDITIONAL PAYMENTS........................................23
         2.14     MANNER OF BORROWING AND PAYMENT........................... 23
         2.15     MANDATORY PREPAYMENTS..................................... 25
         2.16     USE OF PROCEEDS........................................... 25
         2.17     DEFAULTING LENDER......................................... 25
3.      INTEREST AND 0FEES...................................................26

3.1     INTEREST.............................................................26
3.2     LETTER OF CREDIT FEES .............................................. 26
3.3     CLOSING FEE..........................................................27
3.4     FACILITY FEE.........................................................27
3.5     COLLATERAL EVALUATION FEE........................................... 28
3.6     COLLATERAL MONITORING FEE........................................... 28
3.7     COMPUTATION OF INTEREST AND FEES.................................... 28
3.8     MAXIMUM CHARGES..................................................... 28
3.9     INCREASED COSTS..................................................... 28
3.10    BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR............ 29
3.11    CAPITAL ADEQUACY.....................................................30
3.12    GROSS UP FOR TAXES.................................................. 30
3.13    WITHHOLDING TAX EXEMPTION .......................................... 30

4.      COLLATERAL: GENERAL TERMS........................................... 31
4.1     SECURITY INTEREST THE COLLATERAL.................................... 31
4.2     PERFECTION OF SECURITY INTEREST..................................... 31
4.3     DISPOSITION OF COLLATERAL........................................... 32
4.4     PRESERVATION OF COLLATERAL.......................................... 32
4.5     OWNERSHIP OF COLLATERAL..............................................32
4.6     DEFENSE OF AGENT'S AND LENDER'S INTERESTS .......................... 32
4.7     BOOKS AND RECORDS................................................... 33
4.8     FINANCIAL DISCLOSURE................................................ 33
4.9     COMPLIANCE WITH LAWS ............................................... 33
4.10    INSPECTION OF PREMISES ............................................. 34
<PAGE>

4.11    INSURANCE............................................................34
4.12    FAILURE TO PAY INSURANCE ........................................... 34
4.13    PAYMENT OF TAXES.....................................................35
4.14    PAYMENT OF LEASEHOLD OBLIGATIONS.................................... 35
4.15    RECEIVABLES..........................................................35
        4.15.1  Nature of Receivables....................................... 35
        4.15.2  Solvency of Customers ...................................... 35
        4.15.3  Location of Borrower........................................ 35
        4.15.4  Collection of Receivables................................... 35
        4.15.5  Notification of Assignment of Receivables................... 36
        4.15.6  Power of Agent to Act on Borrower's Behalf.................. 36
        4.15.7  No Liability.................................................36
        4.15.8  Establishment of a Lockbox Account, Dominion Account ....... 37
        4.15.9  Adjustments..................................................37
4.16    INVENTORY............................................................37
4.17    MAINTENANCE OF EQUIPMENT............................................ 37
4.18    EXCULPATION OF LIABILITY............................................ 37
4.19    ENVIRONMENTAL MATTERS................................................38
4.20    FINANCING STATEMENTS ............................................... 40

5.      REPRESENTATIONS AND WARRANTIES...................................... 40
5.1     AUTHORITY............................................................40
5.2     FORMATION AND QUALIFICATION..........................................40
5.3     SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................41
5.4     TAX RETURNS..........................................................41
5.5     FINANCIAL STATEMENTS.................................................41
5.6     CORPORATE NAME.......................................................42
5.7     O.S.H.A. AND ENVIRONMENTAL COMPLIANCE............................... 42
5.8     SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT ........ 42
5.9     PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES ....................... 43
5.10    LICENSES AND PERMITS................................................ 44
5.11    DEFAULT OF INDEBTEDNESS............................................. 44
5.12    NO DEFAULT...........................................................44
5.13    NO BURDENSOME RESTRICTIONS.......................................... 44
5.14    NO LABOR DISPUTES....................................................44
5.15    MARGIN REGULATIONS...................................................44
5.16    INVESTMENT COMPANY ACT.............................................. 45
5.17    DISCLOSURE...........................................................45
5.18    DELIVERY OF MEZZANINE DOCUMENTATION ................................ 45
5.19    SWAPS................................................................45
5.20    CONFLICTING AGREEMENTS...............................................45
5.21    APPLICATION OF CERTAIN LAWS AND REGULATIONS .........................45
5.22    BUSINESS AND PROPERTY OF BORROWER................................... 45
5.24    SECTION 20 SUBSIDIARIES..............................................45

6.      AFFIRMATIVE COVENANTS................................................46
6.1     PAYMENT OF FEES......................................................46
6.2     CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS .........46
6.3     VIOLATIONS...........................................................46
6.4     GOVERNMENT RECEIVABLES.............................................. 46
6.5     NET WORTH............................................................46
6.6     FIXED CHARGE COVERAGE RATIO......................................... 46
6.7     EXECUTION OF SUPPLEMENTAL INSTRUMENTS .............................. 47
6.8     PAYMENT OF INDEBTEDNESS............................................. 47
6.9     STANDARDS OF FINANCIAL STATEMENTS................................... 47
<PAGE>

7.      NEGATIVE COVENANTS.................................................. 47
7.1     MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS .............. 47
7.2     CREATION OF LIENS....................................................47
7.3     GUARANTEES...........................................................47
7.4     INVESTMENTS..........................................................47
7.5     LOANS................................................................48
7.6     CAPITAL EXPENDITURES.................................................48
7.7     DIVIDENDS............................................................48
7.8     INDEBTEDNESS.........................................................48
7.9     NATURE OF BUSINESS...................................................48
7.10    TRANSACTIONS WITH AFFILIATES.........................................48
7.11    LEASES...............................................................48
7.12    SUBSIDIARIES.........................................................48
7.13    FISCAL YEAR AND ACCOUNTING CHANGES.................................. 48
7.14    PLEDGE OF CREDIT.....................................................49
7.15    AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS .....................49
7.16    COMPLIANCE WITH ERISA............................................... 49
7.17    PREPAYMENT OF INDEBTEDNESS...........................................49
7.18    SUBORDINATED NOTE....................................................49

8.      CONDITIONS PRECEDENT................................................ 49
8.1     CONDITIONS TO INITIAL ADVANCES...................................... 49
8.1.1   Note.................................................................50
8.1.2   Filings, Registrations and Recordings............................... 50
8.1.3   Corporate Proceedings of Borrower................................... 50
8.1.4   Incumbency Certificates of Borrower................................. 50
8.1.5   Certificates.........................................................50
8.1.6   Good Standing Certificates.......................................... 50
8.1.7   Legal Opinion........................................................50
8.1.8   No Litigation........................................................51
8.1.9   Collateral Examination.............................................. 51
8.1.10  Fees.................................................................51
8.1.11  Financial Statements.................................................51
8.1.12  Acquisition and Mezzanine Documents................................. 51
8.1.13  Subordination Agreements............................................ 51
8.1.14  Insurance............................................................51
8.1.15  Title Insurance......................................................51
8.1.16  Environmental Reports............................................... 52
8.1.17  Payment Instructions................................................ 52
8.1.18  Blocked Accounts.....................................................52
8.1.19  Consents.............................................................52
8.1.20  No Adverse Material Change.......................................... 52
8.1.21  Leasehold Agreements................................................ 52
8.1.22  Mortgage.............................................................52
8.1.23  Subordinated Note Documentation..................................... 52
8.1.24   Contract Review.....................................................52
8.1.25   Closing Certificate.................................................52
8.1.26   Borrowing Base..................................................... 52
8.1.27   UNDRAWN AVAILABILITY................................................53
8.1.28   Other...............................................................53
8.2      CONDITIONS TO EACH ADVANCE......................................... 53
8.2.1    Representations and Warranties..................................... 53
8.2.2    No Default..........................................................53
8.2.3    Maximum Advances....................................................53
<PAGE>

9.      INFORMATION AS TO BORROWERS......................................... 53
9.1     DISCLOSURE OF MATERIAL MATTERS...................................... 53
9.2     SCHEDULES............................................................53
9.3     ENVIRONMENTAL REPORTS................................................54
9.4     LITIGATION...........................................................54
9.5     MATERIAL OCCURRENCES................................................ 54
9.6     GOVERNMENT RECEIVABLES.............................................. 54
9.7     ANNUAL FINANCIAL STATEMENTS......................................... 54
9.8     QUARTERLY FINANCIAL STATEMENTS...................................... 55
9.9     MONTHLY FINANCIAL STATEMENTS........................................ 55
9.10    OTHER REPORTS....................................................... 56
9.11    ADDITIONAL INFORMATION.............................................. 56
9.12    PROJECTED OPERATING BUDGET.......................................... 56
9.13    VARIANCES FROM OPERATING BUDGET..................................... 56
9.14    NOTICE OF SUITS, ADVERSE EVENTS..................................... 56
9.15    ERISA NOTICES AND REQUESTS.......................................... 56
9.16    ADDITIONAL DOCUMENTS................................................ 57

10.     EVENTS OF DEFAULT....................................................57

11.     LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT ..........................60
11.1    RIGHTS AND REMEDIES................................................. 60
11.2    AGENT'S DISCRETION.................................................. 61
11.3    SETOFF...............................................................61
11.4    RIGHTS AND REMEDIES NOT EXCLUSIVE................................... 61
11.5    ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT........................61

12.     WAIVERS AND JUDICIAL PROCEEDINGS.....................................62
12.1    WAIVER OF NOTICE.....................................................62
12.2    DELAY................................................................62
12.3    JURY WAIVER..........................................................62

13.     EFFECTIVE DATE AND TERMINATION.......................................62
13.1    TERM.................................................................62
13.2    TERMINATION..........................................................63

14.     REGARDING AGENT......................................................63
14.1    APPOINTMENT..........................................................63
14.2    NATURE OF DUTIES.................................................... 64
14.3    LACK OF RELIANCE ON AGENT AND RESIGNATION .......................... 64
14.4    CERTAIN RIGHTS OF AGENT............................................. 65
14.5    RELIANCE.............................................................65
14.6    NOTICE OF DEFAULT................................................... 65
14.7    INDEMNIFICATION......................................................65
14.8    AGENT IN ITS INDIVIDUAL CAPACITY.................................... 65
14.9    DELIVERY OF DOCUMENTS............................................... 66
14.10   BORROWER'S UNDERTAKING TO AGENT..................................... 66

15.     MISCELLANEOUS........................................................66
15.1    GOVERNING LAW........................................................66
15.2    ENTIRE UNDERSTANDING.................................................66
15.3    SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS................. 69
15.4    APPLICATION OF PAYMENTS............................................. 70
15.5    INDEMNITY............................................................70
15.6    NOTICE...............................................................71
15.7    SURVIVAL.............................................................72
15.8    SEVERABILITY.........................................................72
15.9    EXPENSES.............................................................72
15.10   INJUNCTIVE RELIEF................................................... 73
15.11   CONSEQUENTIAL DAMAGES................................................73
15.12   CAPTIONS.............................................................73
15.13   COUNTERPARTS; FACSIMILE SIGNATURES...................................73
15.14   CONSTRUCTION.........................................................73
15.15   CONFIDENTIALITY; SHARING INFORMATION ................................73
15.16   PUBLICITY............................................................74


<PAGE>


               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT


     Revolving Credit,  Term Loan and Security Agreement dated as of October 25,
2002 among U.S. RUBBER RECLAIMING,  INC., a corporation organized under the laws
of the State of Indiana ("Borrower"),  the financial  institutions which are now
or which  hereafter  become a party  hereto  (collectively,  the  "Lenders"  and
individually a "Lender") and PNC BANK,  NATIONAL  ASSOCIATION  ("PNC"), as agent
for Lenders (PNC, in such capacity, the "Agent").

     IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower, Lenders and Agent hereby agree as follows:

1.   DEFINITIONS.

     1.1 Accounting Terms. As used in this Agreement,  the Loan Documents or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement,  accounting  terms not  defined in Section 1.2 or  elsewhere  in this
Agreement and  accounting  terms partly defined in Section 1.2 to the extent not
defined,  shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance  with financial  covenants in this Agreement,  such accounting  terms
shall be  defined in  accordance  with GAAP as  applied  in  preparation  of the
audited  financial  statements of Borrower for the fiscal year ended October 31,
2001.

     1.2 General Terms. For purposes of this Agreement the following terms shall
have the following meanings:

     "Accountants" shall have the meaning set forth in Section 9.7 hereof.

     "Advances"  shall  mean and  include  the  Revolving  Advances,  Letters of
Credit, as well as the Term Loan.

     "Advance Rates" shall have the meaning set forth in Section 2.1 hereof.

     "Affiliate"  of  any  Person  shall  mean  (a)  any  Person  (other  than a
Subsidiary) which,  directly or indirectly,  is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person  described  in clause (a) above.  For  purposes  of this  definition,
control of a Person shall mean the power, direct or indirect,  (x) to vote 5% or
more  of the  securities  having  ordinary  voting  power  for the  election  of
directors  of such  Person,  or (y) to  direct  or cause  the  direction  of the
management and policies of such Person whether by contract or otherwise.

     "Agent" shall have the meaning set forth in the preamble to this  Agreement
and shall include its successors and assigns.
<PAGE>

     "Alternate  Base Rate" shall  mean,  for any day, a rate per annum equal to
the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 1/2 of 1%.

     "Applicable Law" shall mean all laws,  rules and regulations  applicable to
the  Person,  conduct,  transaction,  covenant,  Other  Document  or contract in
question,  including all  applicable  common law and equitable  principles;  all
provisions of all applicable state, federal and foreign constitutions, statutes,
rules,  regulations  and  orders  of any  Governmental  Body,  and  all  orders,
judgments and decrees of all courts and arbitrators.

     "Authority" shall have the meaning set forth in Section 4.19.4.

     "Base Rate" shall mean the base commercial  lending rate of PNC as publicly
announced  to be  in  effect  from  time  to  time,  such  rate  to be  adjusted
automatically, without notice, on the effective date of any change in such rate.
This  rate of  interest  is  determined  from  time to time by PNC as a means of
pricing some loans to its  customers and is neither tied to any external rate of
interest  or index nor does it  necessarily  reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.

     "Blocked Accounts" shall have the meaning set forth in Section 4.15.8.

     "Borrower"  shall  have  the  meaning  set  forth in the  preamble  to this
Agreement  and shall  extend to all  permitted  successors  and  assigns of such
Person.

     "Borrower's Account" shall have the meaning set forth in Section 2.9.

     "Business  Day" shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in East Brunswick,  New Jersey and, if the applicable  Business Day
relates  to any  Eurodollar  Rate  Loans,  such day must  also be a day on which
dealings are carried on in the London interbank market.

     "Capital  Availability  Agreement"  shall  mean  the  capital  availability
agreement among Agent, Borrower and Obsidian Capital Partners,  L.P. dated as of
even date herewith, and all amendments, modifications and restatements thereof.

     "Capital Expenditures" shall mean expenditures made or liabilities incurred
for  the  acquisition  of  any  fixed  assets  or  improvements,   replacements,
substitutions  or  additions  thereto  which have a useful life of more than one
year,  including the total principal portion of Capitalized  Lease  Obligations,
which, in accordance with GAAP, would be classified as capital expenditures.

     "Capitalized  Lease  Obligation"  shall mean any  Indebtedness  of Borrower
represented by obligations  under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
<PAGE>

     "CERCLA" shall mean the Comprehensive Environmental Response,  Compensation
and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.

     "Change of Control"  shall mean (a) the occurrence of any event (whether in
one or more transactions)  which results in a transfer of control of Borrower to
a Person who is not an Original Owner or (b) any merger or  consolidation  of or
with Borrower or sale of all or  substantially  all of the property or assets of
Borrower. For purposes of this definition,  "control of Borrower" shall mean the
power,  direct  or  indirect  (x) to vote 50% or more of the  securities  having
ordinary voting power for the election of directors of Borrower or (y) to direct
or cause the direction of the management and policies of Borrower by contract or
otherwise.

     "Change of  Ownership"  shall  mean (a) 50% or more of the common  stock of
Borrower is no longer owned or controlled by (including  for the purposes of the
calculation of percentage  ownership,  any shares of common stock into which any
capital stock of Borrower held by the Original Owner is convertible or for which
any such shares of the capital  stock of Borrower or of any other  Person may be
exchanged  and any  shares of common  stock  issuable  to  Original  Owner  upon
exercise of any  warrants,  options or similar  rights  which may at the time of
calculation be held by Original  Owner) a Person who is an Original Owner or (b)
any merger, consolidation or sale of substantially all of the property or assets
of Borrower.

     "Charges" shall mean all taxes,  charges,  fees,  imposts,  levies or other
assessments,  including, without limitation, all net income, gross income, gross
receipts,  sales, use, ad valorem,  value added, transfer,  franchise,  profits,
inventory,  capital stock, license,  withholding,  payroll,  employment,  social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom  duties,  fees,  assessments,  liens,  claims  and  charges  of any  kind
whatsoever,  together with any interest and any  penalties,  additions to tax or
additional  amounts,  imposed  by any  taxing or other  authority,  domestic  or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral,  Borrower or any
of its Affiliates.

     "Closing  Date" shall mean the date of this Agreement or such other date as
may be agreed to by the parties hereto.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time and the regulations promulgated thereunder.

     "Collateral" shall mean and include:

     (a)  all Receivables;

     (b)  all Equipment;

     (c)  all General Intangibles;

     (d)  all Inventory;

     (e)  all Investment Property;

     (f)  all Real Property;

     (g)  all Subsidiary Stock;

     (h)  the Leasehold Interests;

     (i)  all of  Borrower's  right,  title  and  interest  in  and  to (i)  its
          respective goods and other property including, but not limited to, all
          merchandise returned or rejected by Customers, relating to or securing
          any of the Receivables;  (ii) all of Borrower's rights as a consignor,
          a consignee,  an unpaid vendor,  mechanic,  artisan,  or other lienor,
          including stoppage in transit, setoff, detinue, replevin,  reclamation
          and repurchase;  (iii) all additional amounts due to Borrower from any
          Customer relating to the Receivables;  (iv) other property,  including
          warranty  claims,  relating to any goods securing this Agreement;  (v)
          all of Borrower's  contract rights,  rights of payment which have been
          earned  under a  contract  right,  instruments  (including  promissory
          notes), documents, chattel paper (including electronic chattel paper),
          warehouse  receipts,  deposit  accounts,  letters of credit and money;
          (vi) all  commercial  tort claims  (whether  now existing or hereafter
          arising);  (vii)  if and  when  obtained  by  Borrower,  all  real and
          personal  property of third parties in which Borrower has been granted
          a lien or security interest as security for the payment or enforcement
          of Receivables;  and (viii) any other goods, personal property or real
          property  now  owned  or  hereafter  acquired  in which  Borrower  has
          expressly  granted a security  interest  or may in the future  grant a
          security  interest  to  Agent  hereunder,   or  in  any  amendment  or
          supplement  hereto or thereto,  or under any other  agreement  between
          Agent and Borrower;

     (j)  all of Borrower's ledger sheets, ledger cards, files,  correspondence,
          records,  books  of  account,  business  papers,  computers,  computer
          software (owned by Borrower or in which it has an interest),  computer
          programs,  tapes,  disks and documents relating to (a), (b), (c), (d),
          (e), (f), (g), (h) or (i) of this Paragraph; and

     (k)  all proceeds and products of (a),  (b),  (c), (d), (e), (f), (g), (h),
          (i) and (j) in whatever  form,  including,  but not limited to:  cash,
          deposit  accounts  (whether  or not  comprised  solely  of  proceeds),
          certificates  of  deposit,   insurance  proceeds   (including  without
          limitation,   hazard,   flood,   business   interruption   and  credit
          insurance),  negotiable  instruments  and  other  instruments  for the
          payment  of money,  chattel  paper,  security  agreements,  documents,
          eminent  domain  proceeds,   condemnation   proceeds  and  tort  claim
          proceeds.

     "Commitment  Percentage"  of any Lender shall mean the percentage set forth
below such Lender's  name on the  signature  page hereof as same may be adjusted
upon any assignment by a Lender pursuant to Section 15.3.2 hereof.

     "Commitment  Transfer  Supplement"  shall  mean  a  document  in  form  and
substance  satisfactory  to Agent by which the Purchasing  Lender  purchases and
assumes a portion  of the  obligation  of Lenders  to make  Advances  under this
Agreement.
<PAGE>

     "Consents"  shall mean all filings  and all  licenses,  permits,  consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties,  domestic or foreign,  necessary to carry on Borrower's
business,  including,  without  limitation,  any  Consents  required  under  all
applicable federal, state or other applicable law.

     "Contract Rate" shall mean, as applicable,  the Revolving  Interest Rate or
the Term Loan Rate.

     "Controlled  Group"  shall  mean  all  members  of a  controlled  group  of
corporations and all trades or businesses  (whether or not  incorporated)  under
common control which,  together with Borrower,  are treated as a single employer
under Section 414 of the Code.

     "Customer"  shall mean and include the account  debtor with  respect to any
Receivable  and/or the  prospective  purchaser  of goods,  services or both with
respect to any contract or contract  right,  and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.

     "Default"  shall mean an event which,  with the giving of notice or passage
of time or both, would constitute an Event of Default.

     "Default Rate" shall have the meaning set forth in Section 3.1 hereof.

     "Defaulting  Lender"  shall have the  meaning  set forth in Section  2.17.1
hereof.

     "Depository  Accounts"  shall have the meaning set forth in Section  4.15.8
hereof.

     "Disclosure  Schedule" shall mean the Disclosure Schedule and the responses
thereto provided by Borrower and delivered to Agent.

     "Documents" shall have the meaning set forth in Section 8.1.3 hereof.

     "Dollar" and the sign "$" shall mean lawful  money of the United  States of
America.

     "Domestic  Rate Loan" shall mean any Advance that bears interest based upon
the Alternate Base Rate.

     "Early  Termination  Date" shall have the meaning set forth in Section 13.1
hereof.

     "Earnings  Before  Interest and Taxes" shall mean for any period the sum of
(i) net income (or loss) of Borrower  for such period  (excluding  extraordinary
gains [and losses],  plus (ii) all interest expense of Borrower for such period,
plus (iii) all charges  against  income of Borrower for such period for federal,
state and local taxes actually paid.
<PAGE>

     "EBITDA" shall mean for any period the sum of (i) Earnings  Before Interest
and Taxes for such period plus (ii) depreciation  expenses for such period, plus
(iii) amortization expenses for such period.

     "Eligible  Inventory"  shall mean and include  Inventory  excluding work in
process  valued  at  the  lower  of  cost  or  market  value,  determined  on  a
first-in-first-out  basis,  which is not,  in Agent's  opinion,  obsolete,  slow
moving or unmerchantable and which Agent, in its sole discretion, shall not deem
ineligible  Inventory,  based on such  considerations  as Agent may from time to
time deem appropriate  including,  without limitation,  whether the Inventory is
subject to a perfected,  first priority  security interest in favor of Agent and
whether the  Inventory  conforms to all  standards  imposed by any  governmental
agency,  division or department thereof which has regulatory authority over such
goods or the use or sale thereof.

     "Eligible  Receivables"  shall mean and include  with  respect to Borrower,
each  Receivable  of  Borrower  arising  in the  ordinary  course of  Borrower's
business  and which  Agent,  in its sole  credit  judgment,  shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem  appropriate.  A  Receivable  shall  not be  deemed  eligible  unless  such
Receivable is subject to Agent's first priority  perfected security interest and
no other Lien  (other  than  Permitted  Encumbrances),  and is  evidenced  by an
invoice or other  documentary  evidence  satisfactory to Agent. In addition,  no
Receivable shall be an Eligible Receivable if.

     (a)  it arises out of a sale made by Borrower to an  Affiliate  of Borrower
          or to a Person controlled by an Affiliate of Borrower;

     (b)  it is due or unpaid  more than  ninety  (90) days  after the  original
          invoice date;


     (c)  fifty percent (50%) or more of the Receivables  from such Customer are
          not deemed  Eligible  Receivables  hereunder.  Such percentage may, in
          Agent's sole discretion, be increased or decreased from time to time;

     (d)  any covenant,  representation or warranty  contained in this Agreement
          with respect to such Receivable has been breached;

     (e)  the  Customer  shall  (i)  apply  for,  suffer,   or  consent  to  the
          appointment of, or the taking of possession by, a receiver, custodian,
          trustee or liquidator of itself or of all or a substantial part of its
          property or call a meeting of its creditors, (ii) admit in writing its
          inability, or be generally unable, to pay its debts as they become due
          or cease  operations  of its  present  business,  (iii) make a general
          assignment  for the benefit of  creditors,  (iv)  commence a voluntary
          case under any state or federal  bankruptcy  laws (as now or hereafter
          in effect),  (v) be  adjudicated a bankrupt or insolvent,  (vi) file a
          petition  seeking to take advantage of any other law providing for the
          relief of debtors, (vii) acquiesce to, or fail to have dismissed,  any
          petition which is filed against it in any involuntary  case under such
          bankruptcy  laws,  or  (viii)  take  any  action  for the  purpose  of
          effecting any of the foregoing;
<PAGE>

     (f)  the sale is to a Customer  outside the  continental  United  States of
          America,  unless  the  sale  is  on  letter  of  credit,  guaranty  or
          acceptance  terms,  in each  case  acceptable  to  Agent  in its  sole
          discretion,  provided  however,  that  Receivables  from  Customers in
          Canada  (excluding  the  provinces  of Quebec  and  Newfoundland,  the
          Northwest  Territories  and the  Territory  of  Nunavit) to be paid in
          Dollars may be Eligible Receivables up to the maximum aggregate amount
          of $500,000  assuming in all cases that the  Receivable  is  otherwise
          acceptable to Agent in its reasonable credit judgment and not excluded
          by the other eligibility standards set forth herein;

     (g)  the  sale to the  Customer  is on a  bill-and-hold,  guaranteed  sale,
          sale-and-return, sale on approval, consignment or any other repurchase
          or return basis or is evidenced by chattel paper;

     (h)  Agent  believes,  in  its  sole  judgment,  that  collection  of  such
          Receivable  is  insecure  or that such  Receivable  may not be paid by
          reason of the Customer's financial inability to pay;

     (i)  the  Customer  is the  United  States  of  America,  any  state or any
          department,  agency or instrumentality of any of them, unless Borrower
          assigns its right to payment of such  Receivable to Agent  pursuant to
          the   Assignment  of  Claims  Act  of  1940,  as  amended  (31  U.S.C.
          Sub-Section 3727 et seq. and 41 U.S.C.  Sub-Section 15 et seq.) or has
          otherwise complied with other applicable statutes or ordinances;

     (j)  the goods giving rise to such  Receivable have not been shipped to the
          Customer or the services  giving rise to such Receivable have not been
          performed by Borrower or the Receivable otherwise does not represent a
          final sale;

     (k)  the  Receivables of the Customer  exceed a credit limit  determined by
          Agent, in its sole discretion,  to the extent such Receivable  exceeds
          such limit;

     (l)  the Receivable is subject to any offset, deduction,  defense, dispute,
          or  counterclaim,  the  Customer  is also a creditor  or  supplier  of
          Borrower or the  Receivable  is  contingent  in any respect or for any
          reason;

     (m)  Borrower has made any  agreement  with any Customer for any  deduction
          therefrom,  except for  discounts or  allowances  made in the ordinary
          course of  business  for prompt  payment,  all of which  discounts  or
          allowances are reflected in the  calculation of the face value of each
          respective invoice related thereto;

     (n)  any return,  rejection or repossession of the merchandise has occurred
          or the rendition of services has been disputed;

     (o)  such Receivable is not payable to Borrower; or

     (p)  such  Receivable is not otherwise  satisfactory to Agent as determined
          in  good  faith  by  Agent  in the  exercise  of its  discretion  in a
          reasonable manner.
<PAGE>

     "Environmental  Complaint"  shall  have the  meaning  set forth in  Section
4.19.4

hereof.

     "Environmental Laws" shall mean all federal, state and local environmental,
land use, zoning,  health,  chemical use, safety and sanitation laws,  statutes,
ordinances  and codes  relating  to the  protection  of the  environment  and/or
governing the use, storage, treatment, generation,  transportation,  processing,
handling,  production  or  disposal  of  Hazardous  Substances  and  the  rules,
regulations,  policies,  guidelines,  interpretations,   decisions,  orders  and
directives of federal,  state and local  governmental  agencies and  authorities
with respect thereto.

     "Equipment"  shall mean and include  all of  Borrower's  goods  (other than
Inventory)  whether  now  owned  or  hereafter  acquired  and  wherever  located
including,  without  limitation,  all  equipment,  machinery,  apparatus,  motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder.

     "Eurodollar  Rate"  shall  mean for any  Eurodollar  Rate Loan for the then
current  Interest Period relating thereto the interest rate per annum determined
by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest  1/100th of 1% per annum) (i) the rate of interest  determined by PNC in
accordance with its usual procedures  (which  determination  shall be conclusive
absent manifest error) to be the average of the London  interbank  offered rates
for U.S.  Dollars  quoted by the British  Bankers'  Association  as set forth on
Bridge  Information  Services  (formerly known as Dow Jones Markets Service) (or
appropriate  successor  or, if British  Banker's  Association  or its  successor
ceases to provide  such  quotes,  a comparable  replacement  determined  by PNC)
display page 3750 (or such other display page on the Bridge Information Services
system as may  replace  display  page 3750) two (2)  Business  Days prior to the
first day of such Interest  Period for an amount  comparable to such  Eurodollar
Rate Loan and having a borrowing date and a maturity comparable to such Interest
Period  by (ii) a  number  equal  to 1.00  minus  the  Reserve  Percentage.  The
Eurodollar Rate may also be expressed by the following formula:

Average of London  interbank  offered rates quoted by BBA as shown on Eurodollar
Rate = Bridge  Information  Services display page 3750 or appropriate  successor
1.00 - Reserve Percentage.

     "Eurodollar  Rate  Loan"  shall  mean an  Advance  at any time  that  bears
interest based on the Eurodollar Rate.

     "Event of Default" shall have the meaning set forth in Article 10 hereof.

     "Federal Funds Rate" shall mean,  for any day, the weighted  average of the
rates on  overnight  Federal  funds  transactions  with  members of the  Federal
Reserve System arranged by Federal funds brokers,  as published for such day (or
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of New York,  or if such rate is not so published  for any
day which is a Business  Day,  the  average of  quotations  for such day on such
transactions  received by PNC from three  Federal  funds  brokers of  recognized
standing selected by PNC.
<PAGE>

     "Fixed Charge Coverage  Ratio" shall mean and include,  with respect to any
fiscal  period,   the  ratio  of  (a)  EBITDA,   minus  unfinanced   capitalized
expenditures  made during such period,  minus cash taxes paid during such period
to (b) all Senior Debt Payments, plus all Subordinated Debt Payments made during
such period, plus all dividends and distributions made during such period.

     "Formula Amount" shall have the meaning set forth in Section 2.1.

     "GAAP" shall mean generally  accepted  accounting  principles in the United
States of America in effect from time to time.

     "General  Intangibles"  shall mean and  include all of  Borrower's  general
intangibles,   whether  now  owned  or  hereafter  acquired  including,  without
limitation,  all payment  intangibles,  all choses in action,  causes of action,
corporate  or other  business  records,  inventions,  designs,  patents,  patent
applications, equipment formulations,  manufacturing procedures, quality control
procedures,  trademarks,  trademark applications,  service marks, trade secrets,
goodwill,  copyrights,  design rights,  software,  computer information,  source
codes, codes, records and dates, registrations,  licenses, franchises,  customer
lists,  tax refunds,  tax refund  claims,  computer  programs,  all claims under
guaranties,  security interests or other security held by or granted to Borrower
to secure  payment of any of the  Receivables  by a Customer  (other than to the
extent  covered  by  Receivables)  all rights of  indemnification  and all other
intangible property of every kind and nature (other than Receivables).

     "Governmental Body" shall mean any nation or government, any state or other
political   subdivision  thereof  or  any  entity  exercising  the  legislative,
judicial,   regulatory  or  administrative  functions  of  or  pertaining  to  a
government.

     "Guarantor"  shall mean any Person who may hereafter  guarantee  payment or
performance of the whole or any part of the Obligations and  "Guarantors"  means
collectively all such Persons.

     "Guarantor  Security  Agreement" shall mean any Security Agreement executed
by any Guarantor in favor of Agent securing the Guaranty of such Guarantor.

     "Guaranty" shall mean any guaranty of the obligations of Borrower  executed
by a Guarantor in favor of Agent for its benefit and for the ratable  benefit of
Lenders.

     "Hazardous  Discharge"  shall have the meaning set forth in Section  4.19.4
hereof.

     "Hazardous  Substance"  shall  mean,  without  limitation,   any  flammable
explosives,  radon,  radioactive  materials,  asbestos,  urea  formaldehyde foam
insulation,   polychlorinated  biphenyls,   petroleum  and  petroleum  products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous  Materials  Transportation
Act, as amended (49 U.S.C.  Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New  York  State  Environmental  Conservation  Law or any  other  applicable
Environmental Law and in the regulations adopted pursuant thereto.
<PAGE>

     "Hazardous  Wastes"  shall mean all waste  materials  subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state  laws  now in force or  hereafter  enacted  relating  to  hazardous  waste
disposal.

     "Indebtedness"  of a Person at a particular date shall mean all obligations
of such Person which in accordance  with GAAP would be classified upon a balance
sheet as liabilities  (except capital stock and surplus earned or otherwise) and
in any event,  without  limitation by reason of  enumeration,  shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed,  and all premiums,  if any, due at the required prepayment
dates of such  indebtedness,  and all  indebtedness  secured by a Lien on assets
owned by such Person,  whether or not such indebtedness actually shall have been
created,  assumed or incurred by such Person.  Any  indebtedness  of such Person
resulting from the  acquisition by such Person of any assets subject to any Lien
shall be deemed,  for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the  indebtedness  secured  thereby,  whether or not
actually so created, assumed or incurred.

     "Ineligible Security" shall mean any security which may not be underwritten
or dealt in by member banks of the Federal  Reserve  System under  Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

     "Interest  Period" shall mean the period  provided for any Eurodollar  Rate
Loan pursuant to Section 2.3.2.

     "Inventory" shall mean and include all of Borrower's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to be
furnished  under any  consignment  arrangement,  contract of service or held for
sale or lease, all raw materials,  work in process, finished goods and materials
and supplies of any kind,  nature or  description  which are or might be used or
consumed in  Borrower's  business or used in selling or  furnishing  such goods,
merchandise  and other  personal  property,  and all documents of title or other
documents representing them.

     "Inventory  Advance Rate" shall have the meaning set forth in Section 2.1.2
hereof.

<PAGE>

     "Investment Property" shall mean and include all of Borrower's now owned or
hereafter  acquired   securities   (whether   certificated  or  uncertificated),
securities   entitlements,   securities  accounts,   commodities  contracts  and
commodities accounts.

     "Issuer" shall mean any Person who issues a Letter of Credit and/or accepts
a draft pursuant to the terms hereof.

     "Leasehold  Interests"  shall  mean  all of  Borrower's  right,  title  and
interest in and to the premises listed on the Disclosure Schedule, and all other
premises in which Borrower may hereafter hold an interest.

     "Lender" and "Lenders" shall have the meaning  ascribed to such term in the
preamble  to this  Agreement  and shall  include  each  Person  which  becomes a
transferee, successor or assign of any Lender.

     "Letter of Credit Fees" shall have the meaning set forth in Section 3.2.

     "Letters of Credit" shall have the meaning set forth in Section 2.10.

     "Lien"  shall  mean any  mortgage,  deed of trust,  pledge,  hypothecation,
assignment,  security interest,  lien (whether statutory or otherwise),  Charge,
claim or  encumbrance,  or preference,  priority or other security  agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including,  without limitation,  any conditional sale or other
title  retention  agreement,  any lease having  substantially  the same economic
effect as any of the  foregoing,  and the filing of, or agreement  to give,  any
financing  statement under the Uniform  Commercial Code or comparable law of any
jurisdiction.

     "Loan  Documents"  shall  mean  the  Mortgage,   the  Capital  Availability
Agreement,  the Note,  the  Disclosure  Schedule,  any  Guaranty,  any Guarantor
Security Agreement and any and all other agreements,  instruments and documents,
including,  without  limitation,   guaranties,   pledges,  powers  of  attorney,
consents,  interest or currency swap agreements or other similar  agreements and
all other  writings  heretofore,  now or  hereafter  executed by Borrower or any
Guarantor and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.

     "Material  Adverse Effect" shall mean a material  adverse effect on (a) the
condition, operations, assets, business or prospects of Borrower, (b) Borrower's
ability to pay the  Obligations in accordance  with the terms  thereof,  (c) the
value of the  Collateral,  or Agent's Liens on the Collateral or the priority of
any such Lien or (d) the  practical  realization  of the benefits of Agent's and
each Lender's rights and remedies under this Agreement and the Loan Documents.

     "Maximum Loan Amount" shall mean Eight Million  Dollars  ($8,000,000)  less
repayments of the Tern Loan.

     "Maximum  Revolvine  Advance  Amount"  shall  mean  -Four  Million  Dollars
($4,000,000).


     "Mezzanine  Documentation"  shall mean collectively,  the subordinated loan
documents between Borrower and Mezzanine Lender.

     "Mezzanine  Lender"  shall mean  individually  and  collectively,  Obsidian
Enterprises, Inc. and DC Investments, LLC.
<PAGE>

     "Mortgage"  shall  mean the  mortgage  on the Real  Property  securing  the
Obligations  together with all extensions,  renewals,  amendments,  supplements,
modifications, substitutions and replacements thereto and thereof.

     "Multiemaloyer  Plan"  shall  mean a  "multiemployer  plan" as  defined  in
Sections 3(37) and 4001(a)(3) of ERISA.

     "Note"  shall mean  collectively,  the Term Note and the  Revolving  Credit
Note.

     "Obligations"  shall mean and include any and all loans,  advances,  debts,
liabilities,  obligations, covenants and duties owing by the Borrower to Lenders
or Agent or to any other direct or indirect  subsidiary or affiliate of Agent or
any  Lender  of any  kind or  nature,  present  or  future  (including,  without
limitation, any interest accruing thereon after maturity, or after the filing of
any  petition  in   bankruptcy,   or  the   commencement   of  any   insolvency,
reorganization  or like  proceeding  relating to the Borrower,  whether or not a
claim for post-filing or post-petition  interest is allowed in such proceeding),
whether or not  evidenced  by any note,  guaranty or other  instrument,  whether
arising  under  any  agreement,  instrument  or  document,  (including,  without
limitation,  this  Agreement  and the  Loan  Documents)  whether  or not for the
payment of money,  whether arising by reason of an extension of credit,  opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency  swap,  future,  option  or other  similar  agreement,  or in any other
manner,  whether  arising  out of  overdrafts  or deposit or other  accounts  or
electronic  funds  transfers  (whether  through  automated  clearing  houses  or
otherwise) or out of the Agent's or any Lenders  non-receipt  of or inability to
collect funds or otherwise not being made whole in  connection  with  depository
transfer  check  or other  similar  arrangements,  whether  direct  or  indirect
(including  those  acquired  by  assignment  or   participation),   absolute  or
contingent,  joint or several,  due or to become due,  now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated,  regardless of how
such  indebtedness or liabilities  arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of Borrower's  Indebtedness  and/or  liabilities
under this Agreement,  the Loan Documents or under any other  agreement  between
Agent or Lenders  and  Borrower  and any  amendments,  extensions,  renewals  or
increases  and all costs and  expenses  of Agent and any Lender  incurred in the
documentation,  negotiation, modification,  enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses and all obligations of Borrower to Agent or Lenders
to perform acts or refrain from taking any action.

     "Original Owner" shall mean Obsidian Enterprises, Inc.

     "Out-of-Formula Loans" shall have the meaning set forth in Section 15.2.2.

                  "Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
<PAGE>

     "Participant"  shall mean each Person who shall be granted the right by any
Lender to  participate  in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.

     "Payment  Office" shall mean  initially Two Tower Center Blvd.,  8th Floor,
East Brunswick, NJ 08816; thereafter,  such other office of Agent, if any, which
it may  designate  by notice to  Borrower  and to each  Lender to be the Payment
Office.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation.

     "Permitted  Encumbrances"  shall  mean (a)  Liens in favor of Agent for the
benefit  of Agent  and  Lenders;  (b)  Liens  for  taxes,  assessments  or other
governmental  charges not  delinquent  or being  contested  in good faith and by
appropriate  proceedings  and with  respect to which proper  reserves  have been
taken by Borrower; provided, that, the Lien shall have no effect on the priority
of the  Liens in favor of Agent or the value of the  assets  in which  Agent has
such a Lien and a stay of enforcement  of any such Lien shall be in effect;  (c)
Liens  disclosed  in the  financial  statements  referred to in Section 5.5, the
existence of which Agent has consented to in writing; (d) deposits or pledges to
secure obligations under worker's compensation, social security or similar laws,
or under  unemployment  insurance;  (e)  deposits  or  pledges  to secure  bids,
tenders,  contracts  (other than  contracts  for the payment of money),  leases,
statutory  obligations,  surety and appeal bonds and other  obligations  of like
nature arising in the ordinary course of Borrower's business; (f) judgment Liens
that have been stayed or bonded and mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of Borrower's business with respect to
obligations  which  are not due or which are being  contested  in good  faith by
Borrower; and (g) Liens disclosed on Schedule 1.2.

     "Person"  shall  mean any  individual,  sole  proprietorship,  partnership,
corporation,   business  trust,  joint  stock  company,  trust,   unincorporated
organization,   association,  limited  liability  company,  institution,  public
benefit  corporation,  joint  venture,  entity or government  (whether  federal,
state,  county,  city,  municipal or otherwise,  including any  instrumentality,
division, agency, body or department thereof).

     "Plan" shall mean any  employee  benefit plan within the meaning of Section
3(3) of  ERISA,  maintained  for  employees  of  Borrower  or any  member of the
Controlled  Group  or any such  Plan to  which  Borrower  or any  member  of the
Controlled Group is required to contribute on behalf of any of its employees.

     "Purchasing  Lender"  shall have the  meaning  set forth in Section  15.3.3
hereof.

     "RCRA"  shall  mean  the  Resource   Conservation   and  Recovery  Act,  42
U.S.C.ss.ss.6901 et seq., as same may be amended from time to time.

     "Real Property" shall mean all of Borrower's  right,  title and interest in
and to the owned and leased premises identified on the Disclosure Schedule.
<PAGE>

     "Receivables"  shall mean and include,  as to Borrower,  all of  Borrower's
accounts,  contract rights, instruments (including those evidencing indebtedness
owed  to  Borrower  by its  Affiliates),  documents,  chattel  paper  (including
electronic chattel paper), general intangibles relating to accounts,  drafts and
acceptances, credit card receivables and all other forms of obligations owing to
Borrower  arising out of or in connection with the sale or lease of Inventory or
the rendition of services,  all  supporting  obligations,  guarantees  and other
security  therefor,  whether  secured or  unsecured,  now  existing or hereafter
created, and whether or not specifically sold or assigned to Agent hereunder.

     "Receivables  Advance  Rate"  shall have the  meaning  set forth in Section
2.1.1 hereof.


     "Release" shall have the meaning set forth in Section 5.7.3 hereof.

     "Reportable  Event"  shall mean a  reportable  event  described  in Section
4043(b) of ERISA or the regulations promulgated thereunder.

     "Required  Lenders" shall mean Lenders  holding  greater than fifty percent
(50%) of the Advances  and, if no Advances are  outstanding,  shall mean Lenders
holding greater than fifty percent (50%) of the Commitment Percentages.

     "Reserve  Percentage" shall mean the maximum effective percentage in effect
on any day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including,  without
limitation,  supplemental,  marginal and emergency  reserve  requirements)  with
respect to eurocurrency funding.

     "Revolving  Advances" shall mean Advances made other than Letters of Credit
and the Term Loan.

     "Revolving  Credit  Note"  shall mean the  promissory  note  referred to in
Section 2.1.1 hereof.


     "Revolving  Interest  Rate" shall mean an interest  rate per annum equal to
(a) the  Alternate  Base Rate with respect to Domestic Rate Loans or (b) the sum
of the  Eurodollar  Rate plus three  percent  (3.00%) with respect to Eurodollar
Rate Loans.

     "Section  20  Subsidiary"  shall mean the  Subsidiary  of the bank  holding
company  controlling  PNC, which  Subsidiary  has been granted  authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

     "Senior Debt Payments" shall mean and include all cash actually expended by
Borrower to make (a)  interest  payments  on any  Advances  hereunder,  plus (b)
scheduled  principal  payments on the Term Loan, plus (c) payments for all fees,
commissions and charges set forth herein and with respect to any Advances,  plus
(d)  capitalized  lease  payments,  plus (e) payments  with respect to any other
Indebtedness for borrowed money.
<PAGE>

     "Settlement  Date" shall mean the Closing Date and thereafter  Wednesday or
Thursday of each week or more frequently if Agent deems appropriate  unless such
day is not a Business Day in which case it shall be the next succeeding Business
Day.

     "Subordinated  Debt  Payments"  shall mean and  include  all cash  actually
expended to make payments of principal and interest on the Subordinated Note.

     "Subordinated  Loan"  shall mean the loans  evidenced  by the  Subordinated
Note.

     "Subordinated   Note"  shall  mean  individually  and   collectively,   the
subordinated  promissory  notes  issued by Borrower  in favor of each  Mezzanine
Lender dated as of even date herewith, in the principal sum of $700,000 each.

     "Subordination  Agreement" shall mean the Subordination  Agreement dated as
of even date, herewith among Agent, Borrower and Mezzanine Lender.

     "Subsidiary"  shall mean a  corporation  or other entity of whose shares of
stock or other  ownership  interests  having  ordinary  voting power (other than
stock or other  ownership  interests  having  such  power  only by reason of the
happening  of a  contingency)  to  elect a  majority  of the  directors  of such
corporation,  or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

     "Subsidiary  Stock" shall mean all of the issued and outstanding  shares of
the subsidiaries of the Borrower, if any.

     "Tangible  Net Worth" shall mean, at a particular  date,  (a) the aggregate
amount of all  assets  of  Borrower  as may be  properly  classified  as such in
accordance  with GAAP  consistently  applied  excluding such other assets as are
properly  classified  as  intangible  assets under GAAP,  less (b) the aggregate
amount of all liabilities of Borrower.

     "Term" shall have the meaning set forth in Section 13.1 hereof.

     "Term Loan" shall mean the Advances made pursuant to Section 2.5 hereof.

     "Term Loan Rate" shall mean an interest rate per annum equal to (a) the sum
of the  Alternate  Base Rate plus  one-half  percent  (0.50%)  with  respect  to
Domestic  Rate  Loans  or (b) the sum of the  Eurodollar  Rate  plus  three  and
one-half percent (3.50%) with respect to Eurodollar Rate Loans.

     "Term Note" shall mean the promissory note described in Section 2.5 hereof.

     "Termination  Event" shall mean (i) a Reportable  Event with respect to any
Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the
Controlled Group from a Plan or  Multiemployer  Plan during a plan year in which
such entity was a  "substantial  employer" as defined in Section  4001(a)(2)  of
ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress
termination  described in Section 4041(c) of ERISA;  (iv) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer  Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination  of, or the  appointment  of a trustee  to  administer,  any Plan or
Multiemployer  Plan, or (b) that may result in  termination  of a  Multiemployer
Plan  pursuant  to Section  4041 A of ERISA;  or (vi) the  partial  or  complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or
any member of the Controlled Group from a Multiemployer Plan.
<PAGE>

     "Toxic  Substance"  shall mean and include any material present on the Real
Property or the  Leasehold  Interests  which has been shown to have  significant
adverse effect on human health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C.  ss.ss. 2601 et seq.,  applicable state
law,  or any other  applicable  Federal or state laws now in force or  hereafter
enacted  relating to toxic  substances.  "Toxic  Substance"  includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

     "Transferee" shall have the meaning set forth in Section 15.3.2 hereof.

     "Undrawn  Availability"  at a particular date shall mean an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Maximum  Revolving  Advance
Amount,  minus (b) the sum of (i) the outstanding amount of Advances (other than
the Term Loan) plus (ii) all amounts due and owing to Borrower's trade creditors
which are outstanding beyond 60 days after the due date thereof, plus (iii) fees
and expenses of Agent or Lenders for which Borrower is liable but which have not
been paid or charged to Borrower's Account.

     "Week" shall mean the time period  commencing  with the opening of business
on a Wednesday and ending on the end of business the following Tuesday.

     1.3 Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform  Commercial  Code as adopted  in the State of Indiana  from time to time
shall have the meaning given therein unless  otherwise  defined  herein.  To the
extent the  definition  of any category or type of collateral is expanded by any
amendment,  modification  or  revision  to the  Uniform  Commercial  Code,  such
expanded  definition will apply  automatically as of the date of such amendment,
modification or revision.

     1.4 Certain  Matters of  Construction.  The terms  "herein",  "hereof"  and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular  section,  paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used  herein in the  singular  also  include  the  plural  and vice  versa.  All
references to statutes and related  regulations  shall include any amendments of
same and any successor statutes and regulations.  Unless otherwise provided, all
references  to  any  instruments  or  agreements  to  which  Agent  is a  party,
including,  without limitation,  references to any of the Loan Documents,  shall
include  any  and  all  modifications  or  amendments  thereto  and  any and all
extensions or renewals thereof.

     2.   ADVANCES, PAYMENTS.

     2.1 Revolving  Advances.  Subject to the terms and  conditions set forth in
this  Agreement  including,  without  limitation,   Section  2.2,  each  Lender,
severally and not jointly, will make Revolving Advances to Borrower in aggregate
amounts outstanding at any time equal to such Lender's Commitment  Percentage of
the lesser of (x) the Maximum Revolving Advance Amount less the aggregate amount
of outstanding Letters of Credit or (y) an amount equal to the sum of:
<PAGE>

     2.1.1 up to eighty-five percent (85%), subject to the provisions of Section
2.2 hereof ("Receivables Advance Rate"), of Eligible Receivables, plus

     2.1.2 up to the  lesser of (A)  forty-two  percent  (42%),  subject  to the
provisions of Section 2.2 hereof ("Inventory Advance Rate"), of the value of the
Eligible Inventory (the Receivables  Advance Rate and the Inventory Advance Rate
shall be referred to  collectively,  as the "Advance  Rates") or (B) One Million
Five Hundred  Thousand  Dollars  ($1,500,000)  in the aggregate at any one time,
minus

     2.1.3 the aggregate amount of outstanding Letters of Credit, minus

     2.1.4 such reserves as Agent may reasonably  deem proper and necessary from
time to time.

The  amount  derived  from the sum of (x)  Sections  2.1.1 and  2.1.2  minus (y)
Sections  2.1.3 and 2.1.4 at any time and from time to time shall be referred to
as the "Formula  Amount".  The Revolving  Advances  shall be evidenced by one or
more secured promissory notes (collectively, the "Revolving Credit Note").

     2.2 Discretionary  Rights.  The Advance Rates may be increased or decreased
by Agent at any time and from  time to time in the  exercise  of its  reasonable
discretion.   Borrower   consents  to  any  such   increases  or  decreases  and
acknowledges  that  decreasing  the Advance  Rates or increasing or imposing the
reserves may limit or restrict Advances requested by Borrower.

     2.3 Procedure for Revolving Advances Borrowing.

     2.3.1  Borrower  may notify  Agent prior to 11:00 a.m. on a Business Day of
Borrower's request to incur, on that day, a Revolving Advance hereunder.  Should
any  amount  required  to be paid as  interest  hereunder,  or as fees or  other
charges under this Agreement or any other  agreement  with Agent or Lenders,  or
with respect to any other Obligation, become due, same shall be deemed a request
for a  Revolving  Advance  as of the date such  payment  is due,  in the  amount
required to pay in full such  interest,  fee,  charge or  Obligation  under this
Agreement or any other  agreement with Agent or Lenders,  and such request shall
be irrevocable.

     2.3.2  Notwithstanding  the provisions of Section 2.3.1 above, in the event
Borrower desires to obtain a Eurodollar Rate Loan,  Borrower shall give Agent at
least three (3) Business Days' prior written notice,  specifying (i) the date of
the  proposed  borrowing  (which  shall  be a  Business  Day),  (ii) the type of
borrowing  and the  amount on the date of such  Advance  to be  borrowed,  which
amount shall be an integral multiple of $100,000,  and (iii) the duration of the
first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall
be for one, two, or three months; provided, if an Interest Period would end on a
day that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next  succeeding  calendar  month in which case the
Interest Period shall end on the next preceding Business Day. No Eurodollar Rate
Loan shall be made available to Borrower  during the continuance of a Default or
an Event of Default.
<PAGE>

     2.3.3 Each Interest  Period of a Eurodollar Rate Loan shall commence on the
date such  Eurodollar  Rate Loan is made and shall end on such date as  Borrower
may elect as set forth above  provided  that the exact  length of each  Interest
Period shall be  determined  in  accordance  with the practice of the  interbank
market for offshore  Dollar  deposits and no Interest Period shall end after the
last day of the Term.

     Borrower shall elect the initial Interest Period applicable to a Eurodollar
Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.3.2 or
by its notice of conversion  given to Agent  pursuant to Section  2.3.4,  as the
case may be.  Borrower  shall  elect the  duration of each  succeeding  Interest
Period by giving  irrevocable  written notice to Agent of such duration not less
than three (3) Business Days prior to the last day of the then current  Interest
Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely
notice of the Interest  Period elected by Borrower,  Borrower shall be deemed to
have  elected  to  convert to a  Domestic  Rate Loan  subject  to Section  2.3.4
hereinbelow.

     2.3.4  Provided  that no  Event  of  Default  shall  have  occurred  and be
continuing,  Borrower may, on the last Business Day of the then current Interest
Period  applicable to any  outstanding  Eurodollar Rate Loan, or on any Business
Day with  respect to Domestic  Rate Loans,  convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a  Eurodollar  Rate Loan shall be made only on the last  Business  Day of the
then  current  Interest  Period  applicable  to such  Eurodollar  Rate Loan.  If
Borrower  desires  to  convert a loan,  Borrower  shall give Agent not less than
three (3) Business  Days' prior  written  notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such  conversion,  the loans to be converted and if the  conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor. After giving effect to each such conversion, there shall not be
outstanding more than three (3) Eurodollar Rate Loans, in the aggregate.

     2.3.5 At its option and upon three (3) Business Days' prior written notice,
Borrower  may prepay the  Eurodollar  Rate Loans in whole at any time or in part
from time to time with accrued  interest on the  principal  being prepaid to the
date of such  repayment.  Borrower  shall  specify  the  date of  prepayment  of
Advances which are Eurodollar Rate Loans and the amount of such  prepayment.  In
the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current  Interest  Period
with respect  thereto,  Borrower shall indemnify  Agent and Lenders  therefor in
accordance with Section 2.3.6 hereof.

     2.3.6 Borrower shall indemnify Agent and Lenders and hold Agent and Lenders
harmless  from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence  of any  prepayment,  conversion of or any
default by  Borrower  in the  payment of the  principal  of or  interest  on any
Eurodollar  Rate Loan or failure by  Borrower  to  complete  a  borrowing  of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including,  but not limited to, any interest payable by Agent or
Lenders to  lenders of funds  obtained  by it in order to make or  maintain  its
Eurodollar  Rate Loans  hereunder.  A certificate as to any  additional  amounts
payable pursuant to the foregoing  sentence  submitted by Agent or any Lender to
Borrower shall be conclusive absent manifest error.
<PAGE>

     2.3.7  Notwithstanding  any other provision  hereof, if any applicable law,
treaty,  regulation or directive, or any change therein or in the interpretation
or application  thereof,  shall make it unlawful for any Lender (for purposes of
this Section 2.3.7, the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar  Rate Loans) to make or maintain its Eurodollar Rate
Loans,  the obligation of Lenders to make  Eurodollar Rate Loans hereunder shall
forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans
are then  outstanding,  promptly  upon request  from Agent,  either pay all such
affected  Eurodollar  Rate Loans or convert such affected  Eurodollar Rate Loans
into loans of another type. If any such payment or conversion of any  Eurodollar
Rate  Loan is made on a day  that is not the  last  day of the  Interest  Period
applicable to such Eurodollar Rate Loan,  Borrower shall pay Agent, upon Agent's
request,  such amount or amounts as may be necessary to  compensate  Lenders for
any loss or  expense  sustained  or  incurred  by  Lenders  in  respect  of such
Eurodollar  Rate Loan as a result of such payment or conversion,  including (but
not limited to) any interest or other  amounts  payable by Lenders to lenders of
funds  obtained by Lenders in order to make or  maintain  such  Eurodollar  Rate
Loan.  A  certificate  as to any  additional  amounts  payable  pursuant  to the
foregoing  sentence  submitted by Lenders to Borrower shall be conclusive absent
manifest error.

     2.4 Disbursement of Advance Proceeds.  All Advances shall be disbursed from
whichever  office  or other  place  Agent may  designate  from time to time and,
together  with any and all other  Obligations  of  Borrower to Agent or Lenders,
shall be  charged to  Borrower's  Account  on  Agent's  books.  During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance  with the terms and  conditions  hereof.  The proceeds of each
Revolving  Advance  requested  by Borrower or deemed to have been  requested  by
Borrower under Section 2.3.1 hereof shall,  with respect to requested  Revolving
Advances to the extent Lenders make such Revolving  Advances,  be made available
to Borrower on the day so  requested  by way of credit to  Borrower's  operating
account  at PNC,  or  such  other  bank  as  Borrower  may  designate  following
notification  to  Agent,  in  immediately   available  federal  funds  or  other
immediately  available  funds or, with respect to Revolving  Advances  deemed to
have been  requested  by  Borrower,  be  disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.

     2.5 Term Loan. Subject to the terms and conditions of this Agreement,  each
Lender,  severally and not jointly, will make a Term Loan to Borrower in the sum
equal  to  such  Lender's   Commitment   Percentage  of  Four  Million   Dollars
($4,000,000).  The Term Loan shall be advanced on the Closing Date and shall be,
with respect to principal,  payable as follows, subject to acceleration upon the
occurrence of an Event of Default under this  Agreement or  termination  of this
Agreement:  Principal will be due and payable in monthly  installments  of Forty
Seven  Thousand Six Hundred  Nineteen  Dollars  ($47,619)  each,  commencing  on
November  1, 2002 and  continuing  on the first  day of each  month  thereafter.
Accrued interest at the applicable Term Loan Rate will be due and payable on the
due date of each principal payment.  The remaining principal balance and accrued
interest  on the Term Loan will be due and payable in full on the earlier of the
last day of the Term or the maturity date set forth in the Tern Note,  whichever
is sooner.  The Term Loan shall be evidenced  by one or more secured  promissory
notes (collectively, the "Term Note").
<PAGE>

     2.6  Maximum  Advances.   The  aggregate  balance  of  Revolving   Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula Amount.

     2.7 Repayment of Advances.

     2.7.1 The Revolving  Advances  shall be due and payable in full on the last
day of the Term subject to earlier prepayment as herein provided.  The Term Loan
shall be due and  payable as  provided  in Section  2.5.  hereof and in the Term
Note, subject to mandatory prepayments as herein provided.

     2.7.2  Borrower  recognizes  that the amounts  evidenced by checks,  notes,
drafts or any other items of payment  relating to and/or  proceeds of Collateral
may not be  collectible  by Agent  on the date  received.  In  consideration  of
Agent's agreement to conditionally  credit Borrower's Account as of the Business
Day on which Agent  receives  those items of payment,  Borrower  agrees that, in
computing the charges under this Agreement, all items of payment shall be deemed
applied by Agent on account of the  Obligations  one (1)  Business Day after (i)
the Business Day Agent  receives  such  payments via wire transfer or electronic
depository check or (ii) in the case of payments  received by Agent in any other
form, the Business Day such payment  constitutes  good funds in Agent's account.
Agent is not, however,  required to credit Borrower's  Account for the amount of
any item of  payment  which is  unsatisfactory  to Agent and  Agent  may  charge
Borrower's  Account  for the amount of any item of payment  which is returned to
Agent unpaid.

     2.7.3  All  payments  of  principal,  interest  and other  amounts  payable
hereunder,  or  under  any of the Loan  Documents  shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York time) on the due date therefor
in lawful money of the United  States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all  Obligations  due and  owing  hereunder  by  charging  Borrower's
Account or by making Advances as provided in Section 2.3 hereof.

     2.7.4 Borrower shall pay principal, interest, and all other amounts payable
hereunder,  or under any related  agreement,  without any deduction  whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.

     2.8  Repayment  of Excess  Advances.  The  aggregate  balance  of  Advances
outstanding  at any time in excess of the maximum  amount of Advances  permitted
hereunder  shall be  immediately  due and payable  without the  necessity of any
demand, at the Payment Office,  whether or not a Default or Event of Default has
occurred.

     2.9 Statement of Account.  Agent shall  maintain,  in  accordance  with its
customary  procedures,  a loan  account  ("Borrower's  Account")  in the name of
Borrower in which shall be recorded  the date and amount of each Advance made by
Agent and the date and  amount of each  payment in  respect  thereof;  provided,
however, the failure by Agent to record the date and amount of any Advance shall
not  adversely  affect  Agent or any  Lender.  Each  month,  Agent shall send to
Borrower a statement showing the accounting for the Advances made, payments made
or  credited  in  respect  thereof,  and other  transactions  between  Agent and
Borrower,  during such month. The monthly statements shall be deemed correct and
binding upon Borrower in the absence of manifest  error and shall  constitute an
account  stated  between  Lenders and Borrower  unless Agent  receives a written
statement of  Borrower's  specific  exceptions  thereto  within thirty (30) days
after such statement is received by Borrower.  The records of Agent with respect
to the loan account shall be conclusive  evidence  absent  manifest error of the
amounts  of  Advances  and other  charges  thereto  and of  payments  applicable
thereto.
<PAGE>

     2.10 Letters of Credit.  Subject to the terms and conditions hereof,  Agent
shall (a) issue or cause the issuance of Letters of Credit ("Letters of Credit")
on behalf of  Borrower;  provided,  however,  that Agent will not be required to
issue or cause to be issued any  Letters  of Credit to the extent  that the face
amount of such Letters of Credit would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) outstanding  Letters of Credit to exceed the lesser
of (x) the  Maximum  Revolving  Advance  Amount or (y) the Formula  Amount.  The
maximum  amount of  outstanding  Letters of Credit  shall not exceed Two Hundred
Fifty   Thousand   Dollars   ($250,000)  in  the  aggregate  at  any  time.  All
disbursements  or  payments  related to Letters of Credit  shall be deemed to be
Domestic Rate Loans consisting of Revolving  Advances and shall bear interest at
the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have
not been drawn upon shall not bear interest.

     2.11 Issuance of Letters of Credit.

     2.11.1  Borrower  may  request  Agent to issue or cause the  issuance  of a
Letter of Credit by delivering to Agent at the Payment  Office,  Agent's form of
Letter of Credit Application (the "Letter of Credit  Application")  completed to
the  satisfaction of Agent;  and, such other  certificates,  documents and other
papers and  information as Agent may reasonably  request.  Borrower also has the
right to give  instructions and make agreements with respect to any application,
any applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any  amendment,  extension or renewal of any Letter
of Credit.

     2.11.2 Each Letter of Credit shall, among other things, (i) provide for the
payment of sight drafts or acceptances of usance drafts when presented for honor
thereunder in  accordance  with the terms  thereof and when  accompanied  by the
documents  described therein and (ii) have an expiry date not later than six (6)
months after such Letter of Credit's date of issuance and in no event later than
the last day of the Term.  Each Letter of Credit shall be subject to the Uniform
Customs and Practice for  Documentary  Credits  (1993  Revision),  International
Chamber of Commerce  Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer and, to the extent not inconsistent therewith, the laws
of the State of Indiana.
<PAGE>

     2.11.3  Agent  shall use its  reasonable  efforts to notify  Lenders of the
request by Borrower for a Letter of Credit hereunder.

     2.11.4 Agent shall have  absolute  discretion  whether to accept any draft.
Without in any way limiting  Agent's absolute  discretion  whether to accept any
draft,  Borrower  will not  present  for  acceptance  any draft,  and Agent will
generally not accept any drafts (i) that arise out of transactions involving the
sale of goods by Borrower not in the ordinary course of its business,  (ii) that
involve a sale to an Affiliate of Borrower,  (iii) that involve any purchase for
which  Agent has not  received  all  related  documents,  instruments  and forms
requested by Agent,  (iv) for which Agent is unable to locate a purchaser in the
ordinary  course of business on standard  terms, or (v) that is not eligible for
discounting  with Federal Reserve Banks pursuant to paragraph 7 of Section 13 of
the Federal Reserve Act, as amended.

     2.12 Requirements For Issuance of Letters of Credit.

     2.12.1 In  connection  with the issuance of any Letter of Credit,  Borrower
shall indemnify,  save and hold Agent, each Lender and each Issuer harmless from
any loss, cost, expense or liability,  including,  without limitation,  payments
made by Agent,  any Lender or any Issuer and expenses and reasonable  attorneys'
fees  incurred by Agent,  any Lender or Issuer  arising out of, or in connection
with, any Letter of Credit to be issued or created for Borrower.  Borrower shall
be bound by Agent's or any Issuer's  regulations and good faith  interpretations
of any Letter of Credit issued or created for Borrower's Account,  although this
interpretation  may be  different  from its own;  and,  neither  Agent,  nor any
Lender, nor any Issuer nor any of their  correspondents  shall be liable for any
error, negligence, or mistakes,  whether of omission or commission, in following
Borrower's  instructions  or those  contained  in any Letter of Credit or of any
modifications,  amendments  or  supplements  thereto or in issuing or paying any
Letter of  Credit,  except for  Agent's,  any  Lender's,  any  Issuer's  or such
correspondents' willful misconduct.

     2.12.2  Borrower shall  authorize and direct any Issuer to name Borrower as
the "Applicant" or "Account Party" of each Letter of Credit. If Agent is not the
Issuer of any Letter of Credit,  Borrower shall  authorize and direct the Issuer
to deliver to Agent all instruments,  documents, and other writings and property
received  by the Issuer  pursuant to the Letter of Credit and to accept and rely
upon Agent's  instructions and agreements with respect to all matters arising in
connection with the Letter of Credit or the application therefor.

     2.12.3 In  connection  with all  Letters  of Credit  issued or caused to be
issued by Agent under this  Agreement,  Borrower  hereby  appoints Agent, or its
designee, as its attorney,  with full power and authority if an Event of Default
or Default shall have occurred,  (i) to sign and/or endorse Borrower's name upon
any warehouse or other receipts, and letter of credit applications; (ii) to sign
Borrower's name on bills of lading;  (iii) to clear Inventory through the United
States of America  Customs  Department  ("Customs")  in the name of  Borrower or
Agent or Agent's  designee,  and to sign and deliver to Customs officials powers
of attorney in the name of Borrower  for such  purpose;  and (iv) to complete in
Borrower's name or Agent's, or in the name of Agent's designee,  any order, sale
or  transaction,  obtain the necessary  documents in connection  therewith,  and
collect the proceeds thereof. Neither Agent nor its attorneys will be liable for
any acts or omissions  nor for any error of judgment or mistakes of fact or law,
except for Agent's or its  attorney's  willful  misconduct.  This  power,  being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
<PAGE>

     2.12.4 Each Lender  shall to the extent of the  percentage  amount equal to
the product of such Lender's Commitment Percentage times the aggregate amount of
all unreimbursed  reimbursement  obligations  arising from disbursements made or
obligations  incurred  with  respect to the  Letters of Credit be deemed to have
irrevocably  purchased  an  undivided  participation  in each such  unreimbursed
reimbursement  obligation.  In the event that at the time a disbursement is made
the unpaid  balance of  Revolving  Advances  exceeds or would  exceed,  with the
making of such disbursement,  the lesser of the Maximum Revolving Advance Amount
or the Formula  Amount,  and such  disbursement  is not  reimbursed  by Borrower
within two (2) Business Days,  Agent shall promptly  notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's  proportionate share
of such  unreimbursed  disbursement  together with such  Lender's  proportionate
share of Agent's  unreimbursed  costs and expenses relating to such unreimbursed
disbursement.  Upon receipt by Agent of a repayment  from Borrower of any amount
disbursed by Agent for which Agent had already been reimbursed by Lenders, Agent
shall  deliver to each Lender that  Lender's  pro rata share of such  repayment.
Each Lender's participation commitment shall continue until the last to occur of
any of the following events:  (A) Agent ceases to be obligated to issue or cause
to be issued  Letters  of Credit  hereunder;  (B) no Letter of Credit  issued or
created hereunder remains  outstanding and uncancelled or (C) all Persons (other
than  Borrower)  have been  fully  reimbursed  for all  payments  made  under or
relating to Letters of Credit.

     2.13 Additional  Payments.  Any sums expended by Agent or any Lender due to
Borrower's  failure  to  perform  or  comply  with its  obligations  under  this
Agreement  or any  Other  Document  including,  without  limitation,  Borrower's
obligations  under Sections 4.2, 4.4, 4.12,  4.13,  4.14 and 6.1 hereof,  may be
charged  to  Borrower's  Account  as  a  Revolving  Advance  and  added  to  the
Obligations.

     2.14 Manner of Borrowing and Payment.

     2.14.1 Each borrowing of Revolving  Advances shall be advanced according to
the  applicable  Commitment  Percentages  of  Lenders.  The Term  Loan  shall be
advanced according to the Commitment Percentages of Lenders.

     2.14.2 Each payment  (including each  prepayment) by Borrower on account of
the principal of and interest on the Revolving Advances, shall be applied to the
Revolving Advances pro rata according to the applicable  Commitment  Percentages
of Lenders.  Each payment  (including each prepayment) by Borrower on account of
the  principal  of and  interest on the Term Note,  shall be made from or to, or
applied  to that  portion of the Term Loan  evidenced  by the Term Note pro rata
according to the Commitment Percentages of Lenders. Except as expressly provided
herein, all payments  (including  prepayments) to be made by Borrower on account
of  principal,  interest and fees shall be made without set off or  counterclaim
and shall be made to Agent on behalf of the  Lenders to the Payment  Office,  in
each case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.

     2.14.3 (i)  Notwithstanding  anything to the contrary contained in Sections
2.14.1 and 2.14.2 hereof,  commencing  with the first Business Day following the
Closing Date,  each  borrowing of Revolving  Advances shall be advanced by Agent
and each payment by Borrower on account of Revolving  Advances  shall be applied
first to those Revolving  Advances advanced by Agent. On or before 1:00 P.M, New
York time, on each Settlement  Date  commencing  with the first  Settlement Date
following  the Closing Date,  Agent and Lenders  shall make certain  payments as
follows:  (I) if the aggregate  amount of new  Revolving  Advances made by Agent
during the preceding  Week (if any) exceeds the  aggregate  amount of repayments
applied to outstanding  Revolving Advances during such preceding Week, then each
Lender  shall  provide  Agent  with funds in an amount  equal to its  applicable
Commitment  Percentage of the difference between (w) such Revolving Advances and
(x) such  repayments and (II) if the aggregate  amount of repayments  applied to
outstanding  Revolving Advances during such Week exceeds the aggregate amount of
new  Revolving  Advances  made during such Week,  then Agent shall  provide each
Lender with funds in an amount equal to its applicable  Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances; (ii)
each Lender shall be entitled to earn interest at the  applicable  Contract Rate
on outstanding  Advances which it has funded;  or (iii) promptly  following each
Settlement Date, Agent shall submit to each Lender a certificate with respect to
payments  received and Advances made during the Week immediately  preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of
manifest error.
<PAGE>

     2.14.4 If any Lender or Participant  (a  "benefitted  Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether  voluntarily or involuntarily
or by set-off) in a greater  proportion  than any such payment to and Collateral
received  by any  other  Lender,  if any,  in  respect  of such  other  Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other  Lender's  Advances,  or shall  provide  such other  Lender  with the
benefits of any such Collateral,  or the proceeds thereof, as shall be necessary
to cause such benefitted  Lender to share the excess payment or benefits of such
Collateral  or  proceeds  ratably  with  each of the  other  Lenders;  provided,
however,  that if all or any  portion  of such  excess  payment or  benefits  is
thereafter  recovered  from  such  benefitted  Lender,  such  purchase  shall be
rescinded,  and the purchase price and benefits returned,  to the extent of such
recovery,  but without interest.  Each Lender so purchasing a portion of another
Lender's  Advances  may  exercise  all  rights of  payment  (including,  without
limitation,  rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

     2.14.5  Unless Agent shall have been  notified by  telephone,  confirmed in
writing,  by any Lender that such  Lender  will not make the amount  which would
constitute its  applicable  Commitment  Percentage of the Advances  available to
Agent,  Agent may (but shall not be obligated  to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption,  make available to Borrower a corresponding  amount. Agent
will promptly  notify  Borrower of its receipt of any such notice from a Lender.
If such amount is made  available to Agent on a date after such next  Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such  Settlement Date to the date on which
such amount  becomes  immediately  available to Agent.  A  certificate  of Agent
submitted to any Lender with respect to any amounts  owing under this  paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made  available to Agent by such Lender  within three (3) Business  Days
after such Settlement  Date,  Agent shall be entitled to recover such an amount,
with interest  thereon at the rate per annum then  applicable to such  Revolving
Advances hereunder,  on demand from Borrower;  provided,  however,  that Agent's
right to such  recovery  shall  not  prejudice  or  otherwise  adversely  affect
Borrower's rights (if any) against such Lender.

     2.15 Mandatory Prepayments.

     2.15.1  Subject to Section 4.3 hereof,  when  Borrower  sells or  otherwise
disposes  of any  Collateral  other than  Inventory  in the  ordinary  course of
business,  Borrower  shall  repay the  Advances  in an  amount  equal to the net
proceeds of such sale (i.e.,  gross proceeds less the  reasonable  costs of such
sales or other  dispositions),  such  repayments  to be made  promptly but in no
event more than one (1) Business Day following receipt of such net proceeds, and
until the date of payment,  such proceeds shall be held in trust for Agent.  The
foregoing  shall not be deemed to be implied  consent to any such sale otherwise
prohibited by the terms and conditions hereof.  Such repayments shall be applied
first, to the outstanding principal installments of the Term Loan in the inverse
order of the maturities  thereof and second,  to the remaining  Advances in such
order  as Agent  may  determine,  subject  to  Borrower's  ability  to  reborrow
Revolving Advances in accordance with the terms hereof.

     2.15.2  Borrower  shall repay or cause the  repayment of the Advances in an
amount equal to the  following,  such  repayments  to be made promptly but in no
event more than 5 Business Days following receipt of the proceeds  thereof,  and
until the date of payment,  such proceeds shall be held in trust for Agent:  (a)
all cash proceeds of condemnation awards; (b) all tax refunds received;  (c) all
proceeds of  insurance  recoveries;  and (d) all proceeds of debt (except to the
extent  permitted  by  Section  7.8).  Such  repayments  shall be applied to the
Advances in such order as Agent may determine.

     2.16 Use of Proceeds.  Borrower shall apply the proceeds of Advances to (i)
refinance existing  indebtedness owed to Bank One, Indiana, NA, and (ii) provide
for the ongoing working capital needs of Borrower.

     2.17 Defaulting Lender.

     2.17.1  Notwithstanding  anything to the contrary  contained herein, in the
event any Lender (x) has refused  (which  refusal  constitutes  a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies  either Agent or Borrower that it does not intend to
make  available  its  portion  of any  Advance  (if  the  actual  refusal  would
constitute  a breach by such  Lender of its  obligations  under this  Agreement)
(each, a "Lender Default"),  all rights and obligations hereunder of such Lender
(a  "Defaulting  Lender")  as to which a Lender  Default is in effect and of the
other parties  hereto shall be modified to the extent of the express  provisions
of this Section 2.17 while such Lender Default remains in effect.

     2.17.2   Advances   shall  be   incurred   pro  rata  from   Lenders   (the
"Non-Defaulting  Lenders")  which  are not  Defaulting  Lenders  based  on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any  Advances  required to be advanced by any Lender shall
be increased as a result of such Lender Default.  Amounts received in respect of
principal  of any type of  Advances  shall be applied  to reduce the  applicable
Advances  of each  Lender pro rata  based on the  aggregate  of the  outstanding
Advances of that type of all Lenders at the time of such application;  provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that,  the aggregate  amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
<PAGE>

     2.17.3 A Defaulting  Lender shall not be entitled to give  instructions  to
Agent or to approve,  disapprove,  consent to or vote on any matters relating to
this  Agreement  and the Loan  Documents.  All  amendments,  waivers  and  other
modifications  of this  Agreement  and the Loan  Documents  may be made  without
regard to a Defaulting  Lender and, for purposes of the  definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.

     2.17.4 Other than as expressly set forth in this Section  2.17,  the rights
and  obligations of a Defaulting  Lender  (including the obligation to indemnify
Agent) and the other  parties  hereto  shall remain  unchanged.  Nothing in this
Section  2.17  shall  be  deemed  to  release  any  Defaulting  Lender  from its
obligations  under  this  Agreement  and the Loan  Documents,  shall  alter such
obligations,  shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.

     2.17.5  In  the  event  a  Defaulting  Lender  retroactively  cures  to the
satisfaction  of Agent the breach  which  caused a Lender to become a Defaulting
Lender,  such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.

3.   INTEREST AND FEES.

     3.1 Interest. Interest on Advances shall be payable in arrears on the first
day of each  month with  respect to  Domestic  Rate Loans and,  with  respect to
Eurodollar  Rate Loans,  at the end of each Interest  Period.  Interest  charges
shall be computed on the actual principal amount of Advances  outstanding during
the month at a rate per annum equal to (i) with respect to  Revolving  Advances,
the applicable  Revolving  Interest Rate and (ii) with respect to the Term Loan,
the applicable Tern Loan Rate (as applicable,  the "Contract  Rate").  Whenever,
subsequent to the date of this  Agreement,  the Alternate Base Rate is increased
or decreased,  the applicable  Contract Rate shall be similarly  changed without
notice or demand of any kind by an amount  equal to the amount of such change in
the Alternate Base Rate during the time such change or changes remain in effect.
The  Eurodollar  Rate shall be adjusted  with respect to  Eurodollar  Rate Loans
without  notice or demand of any kind on the effective date of any change in the
Reserve  Percentage as of such effective  date. Upon and after the occurrence of
an Event of Default,  and during the continuation  thereof,  (i) the Obligations
other than the then outstanding Eurodollar Rate Loans shall bear interest at the
applicable  Contract  Rate  plus two (2%)  percent  per  annum and (ii) the then
outstanding Eurodollar Rate Loans shall bear interest at the applicable Contract
Rate for Eurodollar  Rate Loans plus two (2%) percent per annum (as  applicable,
the "Default Rate").
<PAGE>

     3.2 Letter of Credit Fees.

     3.2.1 Borrower shall pay (x) to Agent, for the benefit of Lenders, fees for
each Letter of Credit for the period from and  excluding the date of issuance of
same to and  including  the  date of  expiration  or  termination,  equal to the
average  daily face amount of each  outstanding  Letter of Credit  multiplied by
three  percent  (3%) per  annum,  such fees to be  calculated  on the basis of a
360-day year for the actual number of days elapsed and to be payable  monthly in
arrears  on the first day of each  month and on the last day of the Term and (y)
to the  Issuer,  any and all fees and  expenses as agreed upon by the Issuer and
the  Borrower  in  connection  with any  Letter of  Credit,  including,  without
limitation,  in  connection  with the opening,  amendment or renewal of any such
Letter of Credit and any  acceptances  created  thereunder  and shall  reimburse
Agent for any and all fees and  expenses,  if any,  paid by Agent to the  Issuer
(all of the foregoing  fees,  the "Letter of Credit and Acceptance  Fees").  All
such  charges  shall be deemed  earned in full on the date when the same are due
and payable  hereunder and shall not be subject to rebate or proration  upon the
termination of this  Agreement for any reason.  Any such charge in effect at the
time of a  particular  transaction  shall be the  charge  for that  transaction,
notwithstanding  any subsequent  change in the Issuer's  prevailing  charges for
that type of transaction.  All Letter of Credit Fees payable  hereunder shall be
deemed  earned in full on the date when the same are due and  payable  hereunder
and shall not be subject to rebate or  proration  upon the  termination  of this
Agreement for any reason.

On demand, Borrower will cause cash to be deposited and maintained in an account
with  Agent,  as cash  collateral,  in an amount  equal to one  hundred and five
percent  (105%) of the  outstanding  Letters of Credit  [and  Acceptances],  and
Borrower hereby irrevocably  authorizes Agent, in its discretion,  on Borrower's
behalf and in Borrower's  name, to open such an account and to make and maintain
deposits therein,  or in an account opened by Borrower,  in the amounts required
to be made by Borrower,  out of the proceeds of Receivables or other  Collateral
or out of any other funds of Borrower coming into any Lender's possession at any
time. Agent will invest such cash collateral (less applicable  reserves) in such
short-term  money-market items as to which Agent and Borrower mutually agree and
the net  return  on such  investments  shall be  credited  to such  account  and
constitute  additional  cash  collateral.  Borrower  may  not  withdraw  amounts
credited to any such account except upon payment and  performance in full of all
Obligations and termination of this Agreement.

     3.3 Closing Fee. Upon the execution of this  Agreement,  Borrower shall pay
to Agent for the  ratable  benefit  of Lenders a closing  fee of Forty  Thousand
Dollars  ($40,000)  less that  portion  of the  commitment  fee of Ten  Thousand
Dollars  ($10,000)  and the  Deposit  Fee of Forty  Thousand  Dollars  ($40,000)
heretofore paid by Borrower to Agent remaining after  application of such fee to
out of pocket expenses.

     3.4  Facility  Fee.  If, for any  calendar  quarter  during the Tenor,  the
average  daily  unpaid  balance of the  Revolving  Advances for each day of such
calendar  quarter  does not equal the Maximum  Revolving  Advance  Amount,  then
Borrower  shall pay to Agent for the ratable  benefit of Lenders a fee at a rate
equal to  three-eighths of one percent (0.375%) per annum on the amount by which
the Maximum  Revolving Advance Amount exceeds such average daily unpaid balance.
Such fee shall be payable to Agent in arrears on the first day of each  calendar
quarter with respect to the previous calendar quarter.
<PAGE>

     3.5  Collateral  Evaluation  Fee.  Borrower  shall pay  Agent a  collateral
evaluation  fee equal to One Thousand  Five Hundred  Dollars  ($1,500) per month
commencing  on the first day of the month  following the Closing Date and on the
first day of each month  thereafter  during the Term. The collateral  evaluation
fee  shall be deemed  earned  in full on the date  when same is due and  payable
hereunder and shall not be subject to rebate or proration  upon  termination  of
this Agreement for any reason.

     3.6 Collateral Monitoring Fee. Borrower shall pay to Agent on the first day
of each  month  following  any  month in which  Agent  performs  any  collateral
monitoring - namely any field examination, collateral analysis of other business
analysis,  the need for which is to be determined by Agent and which  monitoring
is undertaken by Agent or for Agent's  benefit - a collateral  monitoring fee in
an amount  equal to seven  hundred  and fifty  dollars  ($750)  per day for each
person  employed to perform such  monitoring,  plus all costs and  disbursements
incurred by Agent in the performance of such examination or analysis.

     3.7 Computation of Interest and Fees.  Interest and fees hereunder shall be
computed  on the basis of a year of 360 days and for the  actual  number of days
elapsed.  If any payment to be made  hereunder  becomes due and payable on a day
other than a Business  Day, the due date  thereof  shall be extended to the next
succeeding  Business Day and interest thereon shall be payable at the applicable
Contract Rate during such extension.

     3.8  Maximum  Charges.  In no event  whatsoever  shall  interest  and other
charges charged  hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed  hereunder would  otherwise  exceed
the highest rate permitted  under law, such excess amount shall be first applied
to any unpaid  principal  balance  owed by Borrower,  and if the then  remaining
excess amount is greater than the previously unpaid principal  balance,  Lenders
shall promptly  refund such excess amount to Borrower and the provisions  hereof
shall be deemed amended to provide for such permissible rate.

     3.9  Increased  Costs.  In the event  that any  applicable  law,  treaty or
governmental  regulation,  or any  change  therein or in the  interpretation  or
application  thereof,  or compliance by any Lender (for purposes of this Section
3.9, the term "Lender" shall include Agent or any Lender and any  corporation or
bank  controlling  Agent or any Lender) and the office or branch  where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or  directive  (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

     3.9.1  subject Agent or any Lender to any tax of any kind  whatsoever  with
respect to this  Agreement or any Other Document or change the basis of taxation
of payments  to Agent or any Lender of  principal,  fees,  interest or any other
amount payable  hereunder or under any Loan Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by the jurisdiction
in which it maintains its principal office);

     3.9.2  impose,  modify or hold  applicable  any reserve,  special  deposit,
assessment or similar  requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender,  including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
<PAGE>

     3.9.3  impose on Agent or any  Lender or the  London  interbank  Eurodollar
market any other condition with respect to this Agreement or any Other Document;
and the result of any of the  foregoing  is to increase the cost to Agent or any
Lender of making,  renewing or maintaining  its Advances  hereunder by an amount
that Agent or such  Lender  deems to be  material or to reduce the amount of any
payment  (whether of principal,  interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material,  then,  in
any case Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional  amount as will  compensate  Agent or such Lender for such additional
cost or such  reduction,  as the case may be,  provided that the foregoing shall
not apply to increased costs which are reflected in the Eurodollar  Rate, as the
case may be.  Agent or such Lender shall  certify the amount of such  additional
cost or reduced amount to Borrower,  and such certification  shall be conclusive
absent manifest error.

     3.10 Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Agent or any Lender shall have determined that:

     3.10.1  reasonable  means do not exist for ascertaining the Eurodollar Rate
for any Interest Period; or

     3.10.2 Dollar deposits in the relevant amount and for the relevant maturity
are not available in the London interbank  Eurodollar market, with respect to an
outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall
give  Borrower  prompt  written,   telephonic  or  telegraphic  notice  of  such
determination.  If such notice is given, (i) any such requested  Eurodollar Rate
Loan shall be made as a Domestic Rate Loan,  unless  Borrower shall notify Agent
no later than 10:00 a.m. (New York time) two (2) Business Days prior to the date
of such  proposed  borrowing,  that  its  request  for such  borrowing  shall be
cancelled  or made as an  unaffected  type of  Eurodollar  Rate  Loan,  (ii) any
Domestic Rate Loan or Eurodollar  Rate Loan which was to have been  converted to
an affected type of Eurodollar Rate Loan shall be continued as or converted into
a Domestic Rate Loan,  or, if Borrower  shall notify Agent,  no later than 10:00
a.m.  (New York time) two (2) Business  Days prior to the  proposed  conversion,
shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding  affected  Eurodollar  Rate Loans shall be converted into a Domestic
Rate Loan,  or, if Borrower  shall notify  Agent,  no later than 10:00 a.m. (New
York  time) two (2)  Business  Days prior to the last  Business  Day of the then
current Interest Period applicable to such affected  Eurodollar Rate Loan, shall
be  converted  into an  unaffected  type of  Eurodollar  Rate Loan,  on the last
Business Day of the then current  Interest  Period for such affected  Eurodollar
Rate  Loans.  Until  such  notice  has been  withdrawn,  Lenders  shall  have no
obligation  to make  an  affected  type  of  Eurodollar  Rate  Loan or  maintain
outstanding affected Eurodollar Rate Loans and Borrower shall not have the right
to convert a Domestic  Rate Loan or an unaffected  type of Eurodollar  Rate Loan
into an affected type of Eurodollar Rate Loan.
<PAGE>

     3.11 Capital Adequacy.

     3.11.1 In the event that Agent or any Lender shall have determined that any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental  authority,  central bank or comparable agency charged with the
interpretation or administration  thereof,  or compliance by Agent or any Lender
(for purposes of this Section 3.11, the term "Lender" shall include Agent or any
Lender and any  corporation  or bank  controlling  Agent or any  Lender) and the
office or branch  where Agent or any Lender (as so defined)  makes or  maintains
any  Eurodollar  Rate Loans  with any  request or  directive  regarding  capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable  agency, has or would have the effect of reducing the rate of
return on Agent or any  Lender's  capital as a  consequence  of its  obligations
hereunder to a level below that which Agent or such Lender  could have  achieved
but for such adoption,  change or compliance (taking into consideration  Agent's
and each Lender's policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material,  then, from time to time,  Borrower shall
pay upon  demand to Agent or such Lender  such  additional  amount or amounts as
will  compensate  Agent or such Lender for such reduction.  In determining  such
amount or amounts,  Agent or such  Lender may use any  reasonable  averaging  or
attribution  methods.  The protection of this Section 3.11 shall be available to
Agent and each Lender  regardless  of any possible  contention  of invalidity or
inapplicability with respect to the applicable law, regulation or condition.

     3.11.2 A certificate  of Agent or such Lender  setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section  3.11.1 hereof when  delivered to Borrower  shall be  conclusive  absent
manifest error.

     3.12 Gross Up for Taxes. If Borrower shall be required by Applicable Law to
withhold  or deduct any taxes from or in respect of any sum  payable  under this
Agreement  or any of the Loan  Documents,  (a) the sum  payable to Agent or such
Lender shall be increased as may be necessary so that, after.making all required
withholding or deductions, Agent or such Lender (as the case may be) receives an
amount  equal to the sum it  would  have  received  had no such  withholding  or
deductions  been made, (b) Borrower  shall make such  withholding or deductions,
and (c) Borrower shall pay the full amount  withheld or deducted to the relevant
taxation authority or other authority in accordance with Applicable Law.

     3.13  Withholding  Tax Exemption.  At least five (5) Business Days prior to
the first date on which  interest or fees are payable  hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States or any state  thereof  agrees that it will  deliver to Borrower and Agent
two (2) duly completed  copies of United States  Internal  Revenue  Service Form
1001 or 4224,  certifying in either case that such Lender is entitled to receive
payment under this  Agreement and its Notes without  deduction or withholding of
any United States  federal  income  taxes.  Each Lender which so delivers a Form
1001 or 4224  further  undertakes  to  deliver  to  Borrower  and  Agent two (2)
additional  copies of such form (or a successor form) on or before the date that
such form expires (currently,  three (3) successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event  requiring a change in the most recent form so delivered by it, and
such amendments  thereto or extensions or renewals  thereof as may be reasonably
requested  by Borrower or Agent,  in each case,  certifying  that such Lender is
entitled to receive payments under this Agreement and its Note without deduction
or  withholding  of any United  States  federal  income  taxes,  unless an event
(including any change in treaty,  law or  regulation)  has occurred prior to the
date on which any such  delivery  would  otherwise be required  that renders all
such forms  inapplicable  or that would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises Borrower
and Agent that it is not capable of receiving  payments without any deduction or
withholding of United States federal income taxes.
<PAGE>

4.   COLLATERAL: GENERAL TERMS.

     4.1 Security.  Interest in the Collateral. To secure the prompt payment and
performance  to Agent  and  each  Lender  of the  Obligations,  Borrower  hereby
assigns, pledges and grants to Agent for its benefit and for the ratable benefit
of each Lender a continuing  security  interest in and to all of its Collateral,
whether now owned or existing or hereafter  acquired or arising and  wheresoever
located.  Borrower  shall  mark its books and  records  as may be  necessary  or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest. Borrower shall
promptly  provide Agent with written notice of all commercial tort claims,  such
notice to contain the case title together with the applicable  court and a brief
description of the claim(s).  Upon delivery of each such notice,  Borrower shall
be deemed to hereby  grant to Agent a security  interest and lien in and to such
commercial tort claims and all proceeds thereof.

     4.2  Perfection of Security  Interest.  Borrower shall take all action that
may be necessary or desirable,  or that Agent may request, so as at all times to
maintain  the  validity,  perfection,  enforceability  and  priority  of Agent's
security  interest in the Collateral or to enable Agent to protect,  exercise or
enforce its rights hereunder and in the Collateral,  including,  but not limited
to, (i)  immediately  discharging  all Liens other than Permitted  Encumbrances,
(ii)  obtaining  landlords' or  mortgagees'  lien waivers,  (iii)  delivering to
Agent,  endorsed or accompanied  by such  instruments of assignment as Agent may
specify,  and stamping or marking, in such manner as Agent may specify,  any and
all chattel  paper,  instruments,  letters of credits  and  advices  thereof and
documents  evidencing  or forming a part of the  Collateral,  (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent, and
(v)  executing  and  delivering   financing   statements,   control  agreements,
instruments of pledge, mortgages,  notices and assignments, in each case in form
and  substance  satisfactory  to  Agent,  relating  to the  creation,  validity,
perfection,  maintenance or continuation of Agent's security  interest under the
Uniform  Commercial Code or other applicable law. Agent is hereby  authorized to
file financing statements signed by Agent instead of Borrower in accordance with
the  Uniform  Commercial  Code as adopted  in the State of Indiana  from time to
time. By its signature hereto,  Borrower hereby authorizes Agent to file against
Borrower, one or more financing continuation or amendment statements pursuant to
the Uniform  Commercial Code in form and substance  satisfactory to Agent (which
statements may have a description  of collateral  which is broader than that set
forth  herein).  All charges,  expenses and fees Agent may incur in doing any of
the  foregoing,  and any local  taxes  relating  thereto,  shall be  charged  to
Borrower's  Account as a Revolving  Advance of a Domestic Rate Loan and added to
the Obligations,  or, at Agent's option,  shall be paid to Agent for its benefit
and for the ratable benefit of Lenders immediately upon demand.
<PAGE>

     4.3  Disposition  of  Collateral.  Borrower will  safeguard and protect all
Collateral for Agent's general  account and make no disposition  thereof whether
by sale,  lease or  otherwise  except (a) the sale of  Inventory in the ordinary
course of business and (b) the  disposition or transfer of obsolete and worn-out
Equipment  in the ordinary  course of business  during any fiscal year having an
aggregate  fair market value of not more than Fifty Thousand  Dollars  ($50,000)
and only to the extent that (i) the proceeds of any such disposition are used to
acquire  replacement  Equipment  which is  subject  to  Agent's  first  priority
security  interest  or (ii) the  proceeds  of which are  remitted to Agent to be
applied pursuant to Section 2.15.

     4.4  Preservation  of Collateral.  Following the occurrence of a Default or
Event of Default and the demand by Agent for payment of all  Obligations due and
owing,  in addition to the rights and remedies set forth in Section 11.1 hereof,
Agent:  (a) may at any time take such steps as Agent deems  necessary to protect
Agent's interest in and to preserve the Collateral, including the hiring of such
security  guards or the placing of other security  protection  measures as Agent
may deem appropriate;  (b) may employ and maintain at any of Borrower's premises
a custodian  who shall have full  authority to do all acts  necessary to protect
Agent's interests in the Collateral; (c) may lease warehouse facilities to which
Agent may move all or part of the  Collateral;  (d) may use Borrower's  owned or
leased lifts,  hoists,  trucks and other facilities or equipment for handling or
removing the Collateral;  and (e) shall have, and is hereby granted,  a right of
ingress  and egress to the  places  where the  Collateral  is  located,  and may
proceed over and through any of Borrower's  owned or leased  property.  Borrower
shall cooperate fully with all of Agent's efforts to preserve the Collateral and
will take such actions to preserve the  Collateral  as Agent may direct.  All of
Agent's expenses of preserving the Collateral,  including any expenses  relating
to the  bonding of a  custodian,  shall be charged  to  Borrower's  Account as a
Revolving Advance and added to the Obligations

     4.5 Ownership of Collateral.  With respect to the  Collateral,  at the time
the Collateral becomes subject to Agent's security interest:  (a) Borrower shall
be the sole owner of and fully  authorized  and able to sell,  transfer,  pledge
and/or grant a first  priority  security  interest in each and every item of the
its respective  Collateral to Agent; and, except for Permitted  Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each  document and  agreement  executed by Borrower or delivered to Agent or any
Lender  in  connection  with this  Agreement  shall be true and  correct  in all
respects;  (c) all signatures and  endorsements  of Borrower that appear on such
documents and agreements  shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's  Equipment and Inventory shall be located as
set  forth on the  Disclosure  Schedule  and  shall  not be  removed  from  such
location(s)  without the prior  written  consent of Agent except with respect to
the sale of Inventory in the  ordinary  course of business and  Equipment to the
extent permitted in Section 4.3 hereof.

     4.6  Defense of Agent's  and  Lender's  Interests.  Until (a)  payment  and
performance  in  full of all of the  Obligations  and  (b)  termination  of this
Agreement,  Agent's interests in the Collateral shall continue in full force and
effect.  During such period  Borrower shall not,  without  Agent's prior written
consent,  pledge,  sell (except Inventory in the ordinary course of business and
Equipment  to the extent  permitted in Section 4.3  hereof),  assign,  transfer,
create  or  suffer  to exist a Lien  upon or  encumber  or allow or suffer to be
encumbered  in any  way  except  for  Permitted  Encumbrances,  any  part of the
Collateral.  Borrower shall defend Agent's  interests in the Collateral  against
any and all  Persons  whatsoever.  At any time  following  demand  by Agent  for
payment of all Obligations, Agent shall have the right to take possession of the
indicia  of  the  Collateral  and  the  Collateral  in  whatever  physical  form
contained,   including  without  limitation:   labels,  stationery,   documents,
instruments  and  advertising  materials.  If Agent exercises this right to take
possession of the Collateral,  Borrower shall,  upon demand,  assemble it in the
best  manner  possible  and make it  available  to  Agent at a place  reasonably
convenient  to Agent.  In addition,  with respect to all  Collateral,  Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further  provided  by the  Uniform  Commercial  Code or  other  applicable  law.
Borrower shall, and Agent may, at its option, instruct all suppliers,  carriers,
forwarders,  warehousers or others receiving or holding cash, checks, Inventory,
documents  or  instruments  in which Agent holds a security  interest to deliver
same to Agent  and/or  subject  to  Agent's  order and if they  shall  come into
Borrower's  possession,  they,  and each of them,  shall be held by  Borrower in
trust as Agent's trustee, and Borrower will immediately deliver them to Agent in
their original form together with any necessary endorsement.
<PAGE>

     4.7 Books and Records.  Borrower  shall (a) keep proper books of record and
account in which full,  true and correct entries will be made of all dealings or
transactions  of or in relation to its business  and affairs;  (b) set up on its
books  accruals  with  respect to all taxes,  assessments,  charges,  levies and
claims;  and (c) on a  reasonably  current  basis set up on its books,  from its
earnings, allowances against doubtful Receivables,  advances and investments and
all  other  proper  accruals   (including   without   limitation  by  reason  of
enumeration,  accruals  for  premiums,  if any,  due on  required  payments  and
accruals for depreciation,  obsolescence, or amortization of properties),  which
should be set aside from such  earnings in  connection  with its  business.  All
determinations  pursuant to this subsection shall be made in accordance with, or
as required  by, GAAP  consistently  applied in the opinion of such  independent
public accountant as shall then be regularly engaged by Borrower.

     4.8  Financial  Disclosure.  Borrower  hereby  irrevocably  authorizes  and
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each Lender copies of any of Borrower's
financial statements,  trial balances or other accounting records of any sort in
the  accountant's  or  auditor's  possession,  and to disclose to Agent and each
Lender any information such accountants may have concerning Borrower's financial
status and business  operations.  Borrower hereby authorizes all federal,  state
and municipal  authorities to furnish to Agent and each Lender copies of reports
or  examinations  relating to Borrower,  whether made by Borrower or  otherwise;
however,  Agent and each  Lender  will  attempt to obtain  such  information  or
materials  directly  from  Borrower  prior  to  obtaining  such  information  or
materials from such accountants or such authorities.

     4.9 Compliance  with Laws.  Borrower shall comply in all material  respects
with all acts, rules, regulations and orders of any legislative,  administrative
or judicial body or official applicable to the Collateral or any part thereof or
to the  operation of  Borrower's  business the  non-compliance  with which could
reasonably be expected to have a Material Adverse Effect. Borrower may, however,
contest or dispute any acts, rules, regulations,  orders and directions of those
bodies or officials in any reasonable manner,  provided that any related Lien is
inchoate or stayed and  sufficient  reserves are  established  to the reasonable
satisfaction  of Agent to protect  Agent's  Lien on or security  interest in the
Collateral.  The  assets  of  Borrower  at all  times  shall  be  maintained  in
accordance  with  the  requirements  of all  insurance  carriers  which  provide
insurance  with respect to the assets of Borrower so that such  insurance  shall
remain in full force and effect.
<PAGE>

     4.10 Inspection of Premises.  At all reasonable times Agent and each Lender
shall  have  full  access to and the right to  audit,  check,  inspect  and make
abstracts and copies from Borrower's books, records, audits,  correspondence and
all other papers  relating to the  Collateral  and the  operation of  Borrower's
business.  Agent,  any Lender and their agents may enter upon any of  Borrower's
premises at any time during business hours and at any other reasonable time, and
from time to time,  for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrower's business.

     4.11 Insurance. Borrower shall bear the full risk of any loss of any nature
whatsoever with respect to the Collateral. At Borrower's own cost and expense in
amounts and with carriers  acceptable to Agent,  Borrower shall (a) keep all its
insurable  properties and  properties in which Borrower has an interest  insured
against the hazards of fire, flood,  sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards,  and for such amounts, as is
customary in the case of companies  engaged in businesses  similar to Borrower's
including,  without limitation,  business interruption insurance; (b) maintain a
bond in such  amounts  as is  customary  in the  case of  companies  engaged  in
businesses  similar to Borrower insuring against larceny,  embezzlement or other
criminal  misappropriation  of insured's  officers and  employees who may either
singly or jointly  with others at any time have access to the assets or funds of
Borrower  either  directly  or through  authority  to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others;  (d)  maintain  all such  worker's  compensation  or similar
insurance  as may be  required  under the laws of any state or  jurisdiction  in
which Borrower is engaged in business;  (e) furnish Agent with (i) copies of all
policies and evidence of the maintenance of such policies by the renewal thereof
at least thirty (30) days before any expiration  date, and (ii) appropriate loss
payable  endorsements in form and substance  satisfactory to Agent, naming Agent
as a co-insured  and loss payee as its  interests may appear with respect to all
insurance  coverage referred to in clauses (a), and (c) above, and providing (A)
that all proceeds  thereunder  shall be payable to Agent,  (B) no such insurance
shall be affected by any act or neglect of the insured or owner of the  property
described in such policy,  and (C) that such policy and loss payable clauses may
not be cancelled,  amended or terminated unless at least thirty (30) days' prior
written  notice is given to  Agent.  In the  event of any loss  thereunder,  the
carriers named therein hereby are directed by Agent and Borrower to make payment
for such loss to Agent and not to Borrower and Agent  jointly.  If any insurance
losses are paid by check,  draft or other  instrument  payable to  Borrower  and
Agent  jointly,  Agent may  endorse  Borrower's  name  thereon and do such other
things as Agent may deem  advisable to reduce the same to cash.  Agent is hereby
authorized to adjust and compromise claims under insurance  coverage referred to
in clauses (a), (b) and (c) above.  All loss  recoveries  received by Agent upon
any such insurance may be applied to the Obligations,  in such order as Agent in
its sole  discretion  shall  determine.  Any  surplus  shall be paid by Agent to
Borrower or applied as may be otherwise required by law.

     4.12 Failure to Pay  Insurance.  If Borrower  fails to obtain  insurance as
hereinabove  provided,  or to keep the same in force, Agent, if Agent so elects,
may obtain such  insurance  and pay the premium  therefor on behalf of Borrower,
and charge Borrower's Account therefor as a Revolving Advance of a Domestic Rate
Loan and such expenses so paid shall be part of the Obligations.
<PAGE>

     4.13 Payment of Taxes. Borrower will pay, when due, all taxes,  assessments
and other  Charges  lawfully  levied or  assessed  upon  Borrower  or any of the
Collateral  including,  without  limitation,  real and personal  property taxes,
assessments and charges and all franchise,  income, employment,  social security
benefits, withholding, and sales taxes. If any tax by any governmental authority
is or may be imposed on or as a result of any transaction  between  Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or pay
or if any taxes,  assessments,  or other  Charges  remain  unpaid after the date
fixed for their payment,  or if any claim shall be made which, in Agent's or any
Lender's opinion, may possibly create a valid Lien on the Collateral,  Agent may
without  notice to  Borrower  pay the taxes,  assessments  or other  Charges and
Borrower hereby  indemnifies and holds Agent and each Lender harmless in respect
thereof.  The amount of any  payment by Agent under this  Section  4.13 shall be
charged  to  Borrower's  Account  as  a  Revolving  Advance  and  added  to  the
Obligations  and, until Borrower shall furnish Agent with an indemnity  therefor
(or supply Agent with evidence  satisfactory to Agent that due provision for the
payment  thereof has been made),  Agent may hold  without  interest  any balance
standing to  Borrower's  credit and Agent shall retain its security  interest in
any and all Collateral held by Agent.

     4.14 Payment of  Leasehold  Obligations.  Borrower  shall at all times pay,
when and as due,  its rental  obligations  under all leases  under which it is a
tenant,  and shall otherwise  comply, in all material  respects,  with all other
terms of such  leases  and keep them in full force and  effect  and,  at Agent's
request will provide evidence of having done so.

     4.15 Receivables.

     4.15.1 Nature of Receivables.  Each of the Receivables shall be a bona fide
and valid account representing a bona fide indebtedness incurred by the Customer
therein  named,  for a fixed sum as set forth in the  invoice  relating  thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach  hereof) with respect to an absolute  sale or lease and delivery of goods
upon stated terms of Borrower,  or work, labor or services  theretofore rendered
by Borrower  as of the date each  Receivable  is created.  Same shall be due and
owing in accordance  with  Borrower's  standard  terms of sale without  dispute,
setoff  or  counterclaim  except as may be  stated  on the  accounts  receivable
schedules delivered by Borrower to Agent.

     4.15.2  Solvency of  Customers.  Each  Customer,  to the best of Borrower's
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all  Receivables on which the Customer is obligated in full when due
or with respect to such  Customers of Borrower who are not solvent  Borrower has
set up on its books and in its financial  records bad debt reserves  adequate to
cover such Receivables.

     4.15.3 Location of Borrower.  Borrower's  chief executive office is located
as set forth on the Disclosure Schedule.  Until written notice is given to Agent
by Borrower of any other office at which Borrower  keeps its records  pertaining
to Receivables, all such records shall be kept at such executive office.

     4.15.4  Collection of Receivables.  Until Borrower's  authority to do so is
terminated  by Agent  (which  notice  Agent may give at any time  following  the
occurrence  of an  Event  of  Default  or a  Default  or when  Agent in its sole
discretion deems it to be in Lenders' best interest to do so), Borrower will, at
Borrower's sole cost and expense, but on Agent's behalf and for Agent's account,
collect as  Agent's  property  and in trust for Agent all  amounts  received  on
Receivables,  and shall not commingle such  collections with Borrower's funds or
use the same except to pay  Obligations.  Borrower  shall deposit in the Blocked
Account or, upon request by Agent, deliver to Agent, in original form and on the
date of receipt thereof, all checks,  drafts, notes, money orders,  acceptances,
cash and other evidences of Indebtedness.
<PAGE>

     4.15.5 Notification of Assignment of Receivables. At any time following the
occurrence  of an Event of Default or a Default,  Agent  shall have the right to
send  notice of the  assignment  of,  and  Agent's  security  interest  in,  the
Receivables  to any and all  Customers  or any third party  holding or otherwise
concerned  with any of the  Collateral.  Thereafter,  Agent  shall have the sole
right to collect the  Receivables,  take possession of the Collateral,  or both.
Agent's actual collection  expenses,  including,  but not limited to, stationery
and postage, telephone and telegraph,  secretarial and clerical expenses and the
salaries of any  collection  personnel  used for  collection,  may be charged to
Borrower's Account and added to the Obligations.

     4.15.6  Power of Agent to Act on  Borrower's  Behalf.  Agent shall have the
right  to  receive,  endorse,  assign  and/or  deliver  in the  name of Agent or
Borrower  any and all checks,  drafts and other  instruments  for the payment of
money  relating  to the  Receivables,  and  Borrower  hereby  waives  notice  of
presentment,  protest and  non-payment of any  instrument so endorsed.  Borrower
hereby  constitutes Agent or Agent's designee as Borrower's  attorney with power
(i) to endorse  Borrower's  name upon any notes,  acceptances,  checks,  drafts,
money  orders  or  other  evidences  of  payment  or  Collateral;  (ii)  to sign
Borrower's  name  on any  invoice  or  bill  of  lading  relating  to any of the
Receivables,   drafts  against  Customers,   assignments  and  verifications  of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign  Borrower's  name on all  financing  statements  or any other  documents or
instruments  deemed necessary or appropriate by Agent to preserve,  protect,  or
perfect  Agent's  interest  in the  Collateral  and to file same;  (v) to demand
payment of the Receivables;  (vi) to enforce payment of the Receivables by legal
proceedings  or  otherwise;  (vii) to  exercise  all of  Borrower's  rights  and
remedies  with  respect  to the  collection  of the  Receivables  and any  other
Collateral;   (viii)  to  settle,  adjust,  compromise,   extend  or  renew  the
Receivables;  (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a proof
of claim in  bankruptcy  or  similar  document  against  any  Customer;  (xi) to
prepare,  file and sign  Borrower's  name on any notice of Lien,  assignment  or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said  attorney or designee are hereby  ratified and  approved,  and said
attorney or designee  shall not be liable for any acts of omission or commission
nor for any  error  of  judgment  or  mistake  of  fact or of law,  unless  done
maliciously or with gross (not mere)  negligence;  this power being coupled with
an interest is irrevocable  while any of the  Obligations  remain unpaid.  Agent
shall have the right at any time following the occurrence of an Event of Default
or Default,  to change the address for delivery of mail addressed to Borrower to
such address as Agent may designate and to receive, open and dispose of all mail
addressed to Borrower.

     4.15.7  No  Liability.  Neither  Agent  nor any  Lender  shall,  under  any
circumstances  or in any event  whatsoever,  have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument  received in payment thereof, or for
any damage resulting therefrom.  Following the occurrence of an Event of Default
or Default  Agent may,  without  notice or consent  from  Borrower,  sue upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit  or upon  any  terms  any of the  Receivables  or any  other  securities,
instruments or insurance  applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept following the occurrence of an Event
of  Default  or  Default  the  return  of the  goods  represented  by any of the
Receivables,  without notice to or consent by Borrower,  all without discharging
or in any way affecting Borrower's liability hereunder.
<PAGE>

     4.15.8  Establishment of a Lockbox Account,  Dominion Account. All proceeds
of Collateral  shall be deposited by Borrower into a lockbox  account,  dominion
account  or such  other  "blocked  account"  ("Blocked  Accounts")  as Agent may
require pursuant to an arrangement with such bank as may be selected by Borrower
and be  acceptable  to  Agent.  Borrower  shall  issue  to  any  such  bank,  an
irrevocable letter of instruction  directing said bank to transfer such funds so
deposited to Agent, either to any account maintained by Agent at said bank or by
wire transfer to appropriate  account(s) of Agent.  All funds  deposited in such
Blocked  Accounts  shall  immediately  become the property of Agent and Borrower
shall obtain the agreement by such bank to waive any offset  rights  against the
funds so deposited.  Neither Agent nor any Lender assumes any responsibility for
such blocked account  arrangement,  including without  limitation,  any claim of
accord and satisfaction or release with respect to deposits accepted by any bank
thereunder.  Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and  Borrower  shall  deposit  all  proceeds of  Collateral  or cause same to be
deposited,  in kind, in such Depository  Accounts of Agent in lieu of depositing
same to the Blocked Accounts.

     4.15.9 Adjustments.  Borrower will not, without Agent's consent, compromise
or adjust any material amount of the Receivables (or extend the time for payment
thereof) or accept any material  returns of  merchandise or grant any additional
discounts,   allowances  or  credits  thereon  except  for  those   compromises,
adjustments,  returns, discounts, credits and allowances as have been heretofore
customary in the business of Borrower.

     4.16  Inventory.  To the extent  Inventory  held for sale or lease has been
produced by Borrower, it has been and will be produced by Borrower in accordance
with the Federal Fair Labor  Standards Act of 1938,  as amended,  and all rules,
regulations and orders thereunder.

     4.17  Maintenance of Equipment.  The Equipment  shall be maintained in good
operating  condition  and repair  (reasonable  wear and tear  excepted)  and all
necessary  replacements  of and repairs  thereto shall be made so that the value
and operating  efficiency of the Equipment  shall be maintained  and  preserved.
Borrower  shall  not use or  operate  the  Equipment  in  violation  of any law,
statute,  ordinance, code, rule or regulation.  Borrower shall have the right to
sell Equipment to the extent set forth in Section 4.3 hereof.

     4.18 Exculpation of Liability.  Nothing herein contained shall be construed
to  constitute  Agent  or  any  Lender  as  Borrower's  agent  for  any  purpose
whatsoever,  nor shall  Agent or any  Lender be  responsible  or liable  for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and  regardless of the cause  thereof.  Neither
Agent  nor any  Lender,  whether  by  anything  herein or in any  assignment  or
otherwise,  assume any of Borrower's obligations under any contract or agreement
assigned  to Agent or such  Lender,  and neither  Agent nor any Lender  shall be
responsible  in any way for the  performance by Borrower of any of the terms and
conditions thereof.
<PAGE>

     4.19 Environmental Matters.

     4.19.1  Borrower shall ensure that the Real Property  remains in compliance
with all Environmental  Laws and they shall not place or permit to be placed any
Hazardous  Substances on any Real Property except as permitted by applicable law
or appropriate governmental authorities.

     4.19.2 Borrower shall establish and maintain a system to assure and monitor
continued  compliance with all applicable  Environmental Laws which system shall
include periodic reviews of such compliance.

     4.19.3  Borrower  shall (i) employ in  connection  with the use of the Real
Property  appropriate  technology  necessary  to  maintain  compliance  with any
applicable  Environmental  Laws and (ii) dispose of any and all Hazardous  Waste
generated  at the  Real  Property  only at  facilities  and with  carriers  that
maintain valid permits under RCRA and any other applicable  Environmental  Laws.
Borrower shall use its best efforts to obtain certificates of disposal,  such as
hazardous waste manifest  receipts,  from all treatment,  transport,  storage or
disposal  facilities or operators  employed by Borrower in  connection  with the
transport or disposal of any Hazardous Waste generated at the Real Property.

     4.19.4 In the  event  Borrower  obtains,  gives or  receives  notice of any
Release  or  threat  of  Release  of a  reportable  quantity  of  any  Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a  "Hazardous  Discharge")  or  receives  any notice of  violation,  request for
information or notification that it is potentially responsible for investigation
or cleanup of  environmental  conditions at the Real Property,  demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of  Environmental  Laws  affecting  the Real  Property or
Borrower's  interest  therein (any of the  foregoing is referred to herein as an
"Environmental   Complaint")  from  any  Person,   including  any  state  agency
responsible in whole or in part for environmental  matters in the state in which
the Real  Property  is  located or the United  States  Environmental  Protection
Agency (any such person or entity  hereinafter the  "Authority"),  then Borrower
shall,  within five (5)  Business  Days,  give  written  notice of same to Agent
detailing facts and  circumstances of which Borrower is aware giving rise to the
Hazardous  Discharge  or  Environmental  Complaint.  Such  information  is to be
provided to allow Agent to protect its  security  interest in the Real  Property
and the  Collateral  and is not  intended  to create  nor  shall it  create  any
obligation upon Agent or any Lender with respect thereto.

     4.19.5  Borrower shall promptly  forward to Agent copies of any request for
information,  notification  of potential  liability,  demand letter  relating to
potential  responsibility  with  respect  to the  investigation  or  cleanup  of
Hazardous  Substances  at any other site owned,  operated or used by Borrower to
dispose  of  Hazardous  Substances  and  shall  continue  to  forward  copies of
correspondence between Borrower and the Authority regarding such claims to Agent
until the claim is settled.  Borrower shall promptly  forward to Agent copies of
all documents and reports concerning a Hazardous  Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such information
is to be provided solely to allow Agent to protect Agent's security  interest in
the Real Property and the Collateral.
<PAGE>

                  4.19.6 Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower shall fail to comply
with any of the requirements of any Environmental Laws, Agent on behalf of
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in the Collateral: (A) give such notices or (B)
enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrower, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and Borrower.

     4.19.7  Promptly  upon the  written  request  of Agent  from  time to time,
Borrower shall provide Agent, at Borrower's expense,  with an environmental site
assessment  or   environmental   audit  report  prepared  by  an   environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable  degree of certainty the  existence of a Hazardous  Discharge and the
potential  costs in  connection  with  abatement,  cleanup  and  removal  of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or  investigation  of such  Hazardous  Discharge  proposed and  acceptable to an
appropriate  Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent.  If such  estimates,  individually or in
the aggregate,  exceed $100,000,  Agent shall have the right to require Borrower
to post a bond,  letter of credit or other security  reasonably  satisfactory to
Agent to secure payment of these costs and expenses.

     4.19.8  Borrower  shall  defend and  indemnify  Agent and  Lenders and hold
Agent, Lenders and their respective  employees,  agents,  directors and officers
harmless  from and  against all loss,  liability,  damage and  expense,  claims,
costs, fines and penalties,  including  attorney's fees, suffered or incurred by
Agent or  Lenders  under or on  account of any  Environmental  Laws,  including,
without  limitation,  the assertion of any Lien thereunder,  with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the Real
Property,  whether or not the same  originates or emerges from the Real Property
or any contiguous real estate,  including any loss of value of the Real Property
as a result of the foregoing except to the extent such loss,  liability,  damage
and expense is attributable to any Hazardous Discharge resulting from actions on
the part of Agent or any Lender.  Borrower's obligations under this Section 4.19
shall arise upon the  discovery of the presence of any  Hazardous  Substances at
the Real Property,  whether or not any federal,  state,  or local  environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances.  Borrower's obligation and the indemnifications  hereunder
shall survive the termination of this Agreement.
<PAGE>

     4.19.9  For  purposes  of  Section  4.19 and 5.7,  all  references  to Real
Property shall be deemed to include all of Borrower's right,  title and interest
in and to its owned and leased premises.

     4.19.10 In addition to the foregoing  covenants,  Borrower shall, within 60
days of the Closing Date:

     4.19.10.1  select an  environmental  consultant  reasonably  acceptable  to
Lender  (the  "Environmental  Consultant")  to review  the  prior  environmental
reports,  recommendations and proposals from other environmental consultants and
provide an opinion and  recommendations,  if any, regarding the need for further
investigation and/or remedial action with respect to environmental conditions at
the Real Property.  If the Environmental  Consultant makes  recommendations with
respect to additional investigation and/or remedial action at the Real Property,
Borrower shall diligently implement the recommendations,  including any followup
recommendations; or

     4.19.10.2  provide a  secured  creditor  impaired  property  policy  with a
coverage amount of Nine Hundred Thousand  Dollars  ($900,000) with regard to the
Real Property reasonably acceptable to the Agent.

     4.20  Financing  Statements.  Except as respects the  financing  statements
filed by Agent and the  financing  statements  described  on  Schedule  1.2,  no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.

5.   REPRESENTATIONS  AND  WARRANTIES.   Borrower  represents  and  warrants  as
     follows:

     5.1 Authority.  Borrower has full power, authority and legal right to enter
into this  Agreement and the Loan  Documents  and to perform all its  respective
Obligations  hereunder and  thereunder.  This  Agreement and the Loan  Documents
constitute the legal,  valid and binding  obligation of Borrower  enforceable in
accordance with their terms, except as such enforceability may be limited by any
applicable  bankruptcy,   insolvency,   moratorium  or  similar  laws  affecting
creditors'  rights  generally.  The execution,  delivery and performance of this
Agreement and of the Loan Documents (a) are within Borrower's  corporate powers,
have  been  duly  authorized,  are not in  contravention  of law or the terms of
Borrower's by-laws,  certificate of incorporation or other applicable  documents
relating to Borrower's  formation or to the conduct of Borrower's business or of
any material  agreement or  undertaking to which Borrower is a party or by which
Borrower is bound,  and (b) will not  conflict  with nor result in any breach in
any of the provisions of or constitute a default under or result in the creation
of any Lien except Permitted  Encumbrances  upon any asset of Borrower under the
provisions of any agreement,  charter  document,  instrument,  by-law,  or other
instrument  to which  Borrower is a party or by which it or its  property may be
bound.
<PAGE>

     5.2 Formation and Qualification.

     5.2.1 Borrower is duly  incorporated and in good standing under the laws of
the state listed on the Disclosure  Schedule and is qualified to do business and
is in good  standing  in the  states  listed on the  Disclosure  Schedule  which
constitute all states in which qualification and good standing are necessary for
Borrower to conduct its  business  and own its property and where the failure to
so qualify  could  reasonably  be  expected to have a Material  Adverse  Effect.
Borrower has delivered to Agent true and complete  copies of its  certificate of
incorporation  and by-laws and will  promptly  notify Agent of any  amendment or
changes thereto.

     5.2.2 The only  Subsidiaries  of  Borrower  are  listed  on the  Disclosure
Schedule.

     5.3 Survival of Representations  and Warranties.  All  representations  and
warranties of Borrower  contained in this Agreement and the Loan Documents shall
be true at the  time of  Borrower's  execution  of this  Agreement  and the Loan
Documents,  and shall survive the execution,  delivery and acceptance thereof by
the parties  thereto and the closing of the  transactions  described  therein or
related thereto.

     5.4 Tax Returns.  Borrower's federal tax identification number is set forth
on the Disclosure Schedule.  Borrower has filed all federal, state and local tax
returns  and  other  reports  each is  required  by law to file and has paid all
taxes,  assessments,  fees  and  other  governmental  charges  that  are due and
payable.  Federal,  state and local  income tax  returns of  Borrower  have been
examined  and reported  upon by the  appropriate  taxing  authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending  October 31, 2001.  The  provision  for taxes on the books of
Borrower is adequate for all years not closed by  applicable  statutes,  and for
its current  fiscal year,  and Borrower  has no knowledge of any  deficiency  or
additional assessment in connection therewith not provided for on its books.

        5.5    Financial Statements.

     5.5.1 The twelve-month  cash flow projections of Borrower and its projected
balance  sheets as of the  Closing  Date were  prepared  by the Chief  Financial
Officer  of  Borrower,  are  based on  underlying  assumptions  which  provide a
reasonable basis for the projections  contained  therein and reflect  Borrower's
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period.

     5.5.2 The consolidated and  consolidating  balance sheets of Borrower,  its
Subsidiaries and such other Persons described therein (including the accounts of
all  Subsidiaries   for  the  respective   periods  during  which  a  subsidiary
relationship  existed) as of October 31,  2001,  and the related  statements  of
income, changes in stockholder's equity, and changes in cash flow for the period
ended on such date,  all  accompanied  by reports  thereon  containing  opinions
without  qualification by independent  certified public  accountants,  copies of
which have been delivered to Agent,  have been prepared in accordance with GAAP,
consistently   applied   (except  for  changes  in  application  in  which  such
accountants concur and present fairly the financial position of Borrower and its
Subsidiaries  at such date and the results of their  operations for such period.
Since October 31, 2001 there has been no change in the  condition,  financial or
otherwise,  of Borrower or its Subsidiaries as shown on the consolidated balance
sheet as of such  date  and no  change  in the  aggregate  value  of  machinery,
equipment  and Real  Property  owned by Borrower  and its  Subsidiaries,  except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially  adverse.  The financial  statements  delivered to
Agent in accordance with Article 9 hereof are true, complete and accurate in all
material  respects  and  fairly  present  its  financial  condition,  assets and
liabilities,  whether accrued, absolute, contingent or otherwise and the results
of its operations for the periods specified therein.
<PAGE>

     5.6 Corporate Name. Borrower has not been known by any other corporate name
in the past five years and does not sell  Inventory  under any other name except
as set forth on the  Disclosure  Schedule,  nor has Borrower  been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years, except as noted on
Disclosure Schedule.

     5.7 O.S.H.A. and Environmental Compliance.

     5.7.1  Borrower  has duly  complied  with,  and its  facilities,  business,
assets,  property,  leaseholds  and  Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental  Protection Act, RCRA and all other  Environmental Laws; there
have been no outstanding  citations,  notices or orders of non-compliance issued
to Borrower  or  relating  to its  business,  assets,  property,  leaseholds  or
Equipment under any such laws, rules or regulations.

     5.7.2  Borrower  has been  issued  all  required  federal,  state and local
licenses, certificates or permits relating to all applicable Environmental Laws.

     5.7.3 Except as noted in Phase I Environmental  Report of the Real Property
dated as of  October  10,  2002,  (i) there are no  visible  signs of  releases,
spills,  discharges,  leaks or disposal (collectively referred to as "Releases")
of  Hazardous  Substances  at,  upon,  under or within any Real  Property or any
premises  leased by Borrower;  (ii) there are no  underground  storage  tanks or
polychlorinated  biphenyls  on the  Real  Property  or any  premises  leased  by
Borrower;  (iii) neither the Real  Property nor any premises  leased by Borrower
has ever been used as a  treatment,  storage or disposal  facility of  Hazardous
Waste; and (iv) no Hazardous  Substances are present on the Real Property or any
premises  leased by  Borrower,  excepting  such  quantities  as are  handled  in
accordance  with all applicable  manufacturer's  instructions  and  governmental
regulations  and in  proper  storage  containers  and as are  necessary  for the
operation of the commercial business of Borrower or of its tenants.

     5.8 Solvency; No Litigation, Violation, Indebtedness or Default.

     5.8.1  Borrower  is  solvent,  able to pay its  debts as they  mature,  has
capital  sufficient  to carry on its business and all  businesses in which it is
about to engage, and (i) as of the Closing Date, the fair present saleable value
of its assets,  calculated on a going concern basis,  is in excess of the amount
of its  liabilities  and (ii)  subsequent to the Closing Date, the fair saleable
value of its assets  (calculated  on a going concern basis) will be in excess of
the amount of its liabilities.
<PAGE>

     5.8.2 Except as disclosed in the Disclosure  Schedule,  Borrower has no (i)
pending or threatened  litigation,  arbitration,  actions or  proceedings  which
involve  the  possibility  of  having  a  Material  Adverse  Effect,   and  (ii)
liabilities or indebtedness for borrowed money other than the Obligations.

     5.8.3 Borrower is not in violation of any applicable statute, regulation or
ordinance in any respect  which could  reasonably be expected to have a Material
Adverse  Effect,  nor is  Borrower  in  violation  of any  order  of any  court,
governmental authority or arbitration board or tribunal.

     5.8.4 Neither  Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8.4 hereto. Except
as set  forth in  Schedule  5.8.4,  (i) no Plan has  incurred  any  "accumulated
funding deficiency," as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the  Code,  whether  or not  waived,  and  Borrower  and each  member  of the
Controlled  Group has met all  applicable  minimum  funding  requirements  under
Section  302 of ERISA in respect of each Plan,  (ii) each Plan which is intended
to be a qualified  plan under Section  401(a) of the Code as currently in effect
has been  determined  by the  Internal  Revenue  Service to be  qualified  under
Section 401 (a) of the Code and the trust related thereto is exempt from federal
income tax under  Section  501(a) of the Code,  (iii)  neither  Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC,  and there is no occurrence  which would cause the PBGC
to institute  proceedings  under Title IV of ERISA to terminate any Plan, (v) at
this time,  the  current  value of the assets of each Plan  exceeds  the present
value of the accrued  benefits  and other  liabilities  of such Plan and neither
Borrower  nor  any  member  of  the  Controlled  Group  knows  of any  facts  or
circumstances which would materially change the value of such assets and accrued
benefits  and other  liabilities,  (vi)  neither  Borrower nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan,  (vii) neither Borrower nor any
member of a  Controlled  Group has  incurred  any  liability  for any excise tax
arising under Section 4972 or 4980B of the Code,  and no fact exists which could
give rise to any such liability,  (viii) neither  Borrower nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged
in a "prohibited  transaction"  described in Section 406 of the ERISA or Section
4975 of the Code nor taken any  action  which  would  constitute  or result in a
Termination  Event with respect to any such Plan which is subject to ERISA, (ix)
Borrower and each member of the Controlled Group has made all  contributions due
and payable  with respect to each Plan,  (x) there exists no event  described in
Section 4043(b) of ERISA,  for which the thirty (30) day notice period contained
in 29 CFR ss.2615.3 has not been waived, (xi) neither Borrower nor any member of
the  Controlled  Group has any fiduciary  responsibility  for  investments  with
respect to any plan existing for the benefit of persons other than  employees or
former  employees of Borrower and any member of the Controlled  Group, and (xii)
neither  Borrower  nor  any  member  of  the  Controlled  Group  has  withdrawn,
completely or partially,  from any  Multiemployer  Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.
<PAGE>

     5.9 Patents,  Trademarks,  Copyrights  and  Licenses.  All patents,  patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications,  copyrights,  copyright applications,  design rights,  tradenames,
assumed names,  trade secrets and licenses owned or utilized by Borrower are set
forth on the  Disclosure  Schedule,  are valid and have been duly  registered or
filed with all  appropriate  governmental  authorities and constitute all of the
intellectual  property  rights  which are  necessary  for the  operation  of its
business;  there is no objection to or pending  challenge to the validity of any
such patent,  trademark,  copyright,  design right,  tradename,  trade secret or
license and  Borrower is not aware of any grounds for any  challenge,  except as
set forth in the Disclosure Schedule.  Each patent,  patent application,  patent
license,  trademark,  trademark  application,  trademark license,  service mark,
service  mark  application,  service  mark  license,  design  right,  copyright,
copyright  application  and copyright  license owned or held by Borrower and all
trade  secrets  used by  Borrower  consist  of  original  material  or  property
developed by Borrower or was lawfully  acquired by Borrower  from the proper and
lawful owner thereof.  Each of such items has been  maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all customized or specialized operational software used by Borrower, Borrower
is in  possession  of all  source  and  object  codes  related  to each piece of
software or is the  beneficiary  of a source code  escrow  agreement,  each such
source code escrow agreement being listed on the Disclosure Schedule.

     5.10 Licenses and Permits.  Except as set forth in Schedule 5.10,  Borrower
(a) is in compliance  with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal,  state or local
law or regulation for the operation of its business in each jurisdiction wherein
it is now  conducting  or proposes to conduct  business and where the failure to
procure such licenses or permits could have a Material Adverse Effect.

     5.11 Default of Indebtedness.  Borrower is not in default in the payment of
the  principal of or interest on any  Indebtedness  or under any  instrument  or
agreement  under or subject  to which any  Indebtedness  has been  issued and no
event has occurred  under the  provisions  of any such  instrument  or agreement
which  with or  without  the  lapse of time or the  giving of  notice,  or both,
constitutes or would constitute an event of default thereunder.

     5.12 No Default.  Borrower is not in default in the payment or  performance
of any of its contractual obligations and no Default has occurred.

     5.13 No Burdensome  Restrictions.  Borrower is not party to any contract or
agreement  the  performance  of which  could  have a  Material  Adverse  Effect.
Borrower  has not agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property,  whether now owned
or  hereafter  acquired,  to be  subject  to a Lien  which  is  not a  Permitted
Encumbrance.

     5.14 No Labor  Disputes.  Borrower is not  involved  in any labor  dispute;
there are no strikes or walkouts or union  organization of Borrower's  employees
threatened or in existence  and no labor  contract is scheduled to expire during
the Term other than as set forth on the Schedule 5.14 hereto.

     5.15  Margin  Regulations.  Borrower  is not  engaged,  nor will it engage,
principally or as one of its important activities,  in the business of extending
credit for the purpose of  "purchasing"  or "carrying" any "margin stock" within
the  respective  meanings of each of the quoted terms under  Regulation U of the
Board of  Governors of the Federal  Reserve  System as now and from time to time
hereafter  in effect.  No part of the  proceeds of any Advance  will be used for
"purchasing"  or  "carrying"  "margin  stock" as defined in Regulation U of such
Board of Governors.
<PAGE>

     5.16  Investment  Company  Act.  Borrower  is not an  "investment  company"
registered  or required to be  registered  under the  Investment  Company Act of
1940, as amended, nor is it controlled by such a company.

     5.17  Disclosure.  No  representation  or warranty made by Borrower in this
Agreement  or in any  financial  statement,  report,  certificate  or any  other
document  furnished in connection  herewith  contains any untrue  statement of a
material  fact or  omits  to  state  any  material  fact  necessary  to make the
statements herein or therein not misleading.  There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to Agent in  writing  with  respect  to the  transactions  contemplated  by this
Agreement which could reasonably be expected to have a Material Adverse Effect.

     5.18  Delivery of  Mezzanine  Documentation.  Agent has  received  complete
copies of the Mezzanine  Documentation  (including  all exhibits,  schedules and
disclosure  letters referred to therein or delivered  pursuant thereto,  if any)
and all amendments  thereto,  waivers relating thereto and other side letters or
agreements  affecting the terms  thereof.  None of such documents and agreements
has been amended or  supplemented,  nor have any of the provisions  thereof been
waived,  except  pursuant  to  a  written  agreement  or  instrument  which  has
heretofore been delivered to Agent.

     5.19 Swaps. Borrower is not a party to, nor will it be a party to, any swap
agreement  whereby  Borrower has agreed or will agree to swap interest  rates or
currencies unless same provides that damages upon termination following an event
of default thereunder are payable on an unlimited "two-way basis" without regard
to fault on the part of either party.

     5.20  Conflicting,  Agreements.  No provision of any  mortgage,  indenture,
contract, agreement,  judgment, decree or order binding on Borrower or affecting
the  Collateral  conflicts  with,  or requires any Consent which has not already
been  obtained  to,  or would in any way  prevent  the  execution,  delivery  or
performance of, the terms of this Agreement or the Loan Documents.

     5.21 Application of Certain Laws and Regulations.  Neither Borrower nor any
Affiliate  of  Borrower  is subject to any  statute,  rule or  regulation  which
regulates the  incurrence of any  Indebtedness,  including  without  limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone,  telegraph or other public utility
services.

     5.22  Business and Property of Borrower.  Upon and after the Closing  Date,
Borrower does not propose to engage in any business  other than as conducted now
and activities necessary to conduct the foregoing. On the Closing Date, Borrower
will own all the property  and possess all of the rights and Consents  necessary
for the conduct of the business of Borrower.

     5.23 Section 20 Subsidiaries. Borrower does not intend to use and shall not
use any portion of the  proceeds of the  Advances,  directly or  indirectly,  to
purchase during the underwriting  period, or for 30 days thereafter,  Ineligible
Securities being underwritten by a Section 20 Subsidiary.
<PAGE>

6.   AFFIRMATIVE  COVENANTS.  Borrower  shall,  until  payment  in  full  of the
     Obligations and termination of this Agreement:

     6.1 Payment of Fees.  Pay to Agent on demand all usual and  customary  fees
and expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the  establishment  and maintenance of any Blocked  Accounts or
Depository Accounts as provided for in Section 4.15.8. Agent may, without making
demand, charge Borrower's Account for all such fees and expenses.

     6.2  Conduct of Business  and  Maintenance  of  Existence  and Assets.  (a)
Conduct  continuously  and  operate  actively  its  business  according  to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition  (reasonable wear and tear excepted
and  except  as  may be  disposed  of in  accordance  with  the  terms  of  this
Agreement),  including,  without limitation, all licenses, patents,  copyrights,
design  rights,  tradenames,  trade secrets and  trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence  and comply in all  material  respects  with the laws and  regulations
governing  the  conduct  of  its  business  where  the  failure  to do so  could
reasonably be expected to have a Material Adverse Effect;  and (c) make all such
reports and pay all such  franchise  and other taxes and license fees and do all
such other acts and things as may be lawfully  required to maintain  its rights,
licenses,  leases,  powers and franchises under the laws of the United States or
any political subdivision thereof where the failure to do so could reasonably be
expected to have a Material Adverse Effect.

     6.3  Violations.  Promptly  notify Agent in writing of any violation of any
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof,  applicable  to Borrower  which could  reasonably be expected to have a
Material Adverse Effect.

     6.4 Government  Receivables.  Take all steps  necessary to protect  Agent's
interest in the Collateral  under the Federal  Assignment of Claims Act or other
applicable   state  or  local  statutes  or  ordinances  and  deliver  to  Agent
appropriately  endorsed,  any  instrument  or chattel paper  connected  with any
Receivable  arising out of contracts between Borrower and the United States, any
state or any department, agency or instrumentality of any of them.

     6.5 Tangible Net Worth.  Maintain,  as of the end of each calendar month, a
Tangible Net Worth of not less than $1,236,521 through the calendar month ending
September 30, 2003,  and as of the end of each calendar month  thereafter,  such
amount plus 50% of positive net income (with no deductions for net losses), on a
cumulative basis from each fiscal year ending on or after October 31, 2003.

     6.6 Fixed  Charge  Coverage  Ratio.  Maintain  at all times a Fixed  Charge
Coverage  Ratio of not less  than 1.00 to 1.00,  measured  as of the end of each
fiscal quarter on a historical rolling four quarters basis.
<PAGE>

     6.7  Execution of  Supplemental  Instruments.  Execute and deliver to Agent
from  time to time,  upon  demand,  such  supplemental  agreements,  statements,
assignments  and  transfers,  or  instructions  or  documents  relating  to  the
Collateral,  and such other instruments as Agent may request,  in order that the
full intent of this Agreement may be carried into effect.

     6.8 Payment of  Indebtedness.  Pay,  discharge or  otherwise  satisfy at or
before maturity (subject,  where applicable,  to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever  nature,  except when the failure to do so could not
reasonably be expected to have a Material  Adverse  Effect or when the amount or
validity  thereof is  currently  being  contested  in good faith by  appropriate
proceedings  and Borrower  shall have  provided  for such  reserves as Agent may
reasonably  deem proper and  necessary,  subject at all times to any  applicable
subordination arrangement in favor of Lenders.

     6.9  Standards  of Financial  Statements.  Cause all  financial  statements
referred to in Sections  9.7,  9.8, 9.9,  9.10,  9.11,  9.12 9.13 and 9.14 as to
which GAAP is  applicable  to be complete and correct in all  material  respects
(subject, in the case of interim financial statements,  to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied  consistently  throughout  the  periods  reflected  therein  (except  as
concurred in by such reporting  accountants or officer,  as the case may be, and
disclosed therein).

7.   NEGATIVE  COVENANTS.  Borrower shall not, until satisfaction in full of the
     Obligations and termination of this Agreement:

     7.1 Merger, Consolidation, Acquisition and Sale of Assets.

     7.1.1 Enter into any merger,  consolidation or other reorganization with or
into any other Person or acquire all or a  substantial  portion of the assets or
stock of any Person or permit any other Person to consolidate with or merge with
it.

     7.1.2 Sell,  lease,  transfer or otherwise dispose of any of its properties
or assets,  except in the ordinary course of its business and except as provided
in Section 4.3.

     7.2 Creation of Liens.  Create or suffer to exist any Lien or transfer upon
or against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.

     7.3  Guarantees.  Become  liable  upon the  obligations  of any  Person  by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except the endorsement of checks in the ordinary course of business.

     7.4 Investments.  Purchase or acquire obligations or stock of, or any other
interest in, any Person,  except (a)  obligations  issued or  guaranteed  by the
United  States of America  or any  agency  thereof,  (b)  commercial  paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances  having  maturities  of  not  more  than  180  days  and  repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined  capital and surplus of at least  $500,000,000,  or
(ii)  its debt  obligations,  or those  of a  holding  company  of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof.
<PAGE>

     7.5 Loans.  Make  advances,  loans or  extensions  of credit to any Person,
including without  limitation,  any Parent,  Subsidiary or Affiliate except with
respect to the extension of commercial  trade credit in connection with the sale
of Inventory in the ordinary course of its business.

     7.6 Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital  Expenditures in any fiscal year in an aggregate  amount
for all Borrowers in excess of Four Hundred Thousand Dollars ($400,000).

     7.7 Dividends.  Declare,  pay or make any dividend or  distribution  on any
shares of the common stock or preferred  stock of Borrower (other than dividends
or distributions  payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other  retirement  of any common or  preferred  stock,  or of any  options to
purchase or acquire any such shares of common or preferred stock of Borrower.

     7.8 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
of Borrower except in respect of (a) the Obligations; (b) Indebtedness due under
the Mezzanine  Documentation;  and (c) trade debt not outstanding  beyond normal
trade terms.

     7.9 Nature of Business.  Substantially change the nature of the business in
which it is  presently  engaged,  nor except as  specifically  permitted  hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary  course of business for assets or property  which are useful in,
necessary for and are to be used in its business as presently conducted.

     7.10  Transactions  with  Affiliates.  Directly  or  indirectly,  purchase,
acquire or lease any property from, or sell,  transfer or lease any property to,
or otherwise  deal with,  any  Affiliate,  except  transactions  in the ordinary
course of business,  on an  arm's-length  basis on terms no less  favorable than
terms which would have been obtainable from a Person other than an Affiliate.

     7.11  Leases.  Enter as  lessee  into  any  lease  arrangement  for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect  thereto,  aggregate  annual rental  payments for all leased
property would exceed Seventy Five Thousand Dollars  ($75,000) in any one fiscal
year in the aggregate for Borrower.

     7.12 Subsidiaries.

     7.12.1 Form any Subsidiary.

     7.12.2 Enter into any partnership, joint venture or similar arrangement.

     7.13  Fiscal  Year and  Accounting  Changes.  Change its  fiscal  year from
October  31 or  make  any  change  (i) in  accounting  treatment  and  reporting
practices  except as required by GAAP or (ii) in tax reporting  treatment except
as required by law.
<PAGE>

     7.14 Pledge of Credit.  Now or  hereafter  pledge  Agent's or any  Lender's
credit on any purchases or for any purpose  whatsoever or use any portion of any
Advance in or for any business  other than  Borrower's  business as conducted on
the date of this Agreement.

     7.15  Amendment of Articles of  Incorporation,  By-Laws.  Amend,  modify or
waive any term or material provision of its Articles of Incorporation or By-Laws
unless required by law.

     7.16 Compliance with ERISA.  (i) (x) Maintain,  or permit any member of the
Controlled Group to maintain,  or (y) become obligated to contribute,  or permit
any member of the Controlled  Group to become  obligated to  contribute,  to any
Plan, other than those Plans disclosed on Schedule 5.8.4, (ii) engage, or permit
any member of the  Controlled  Group to engage,  in any  non-exempt  "prohibited
transaction",  as that term is defined in section 406 of ERISA and Section  4975
of the Code, (iii) incur, or permit any member of the Controlled Group to incur,
any "accumulated funding deficiency",  as that term is defined in Section 302 of
ERISA or Section 412 of the Code,  (iv)  terminate,  or permit any member of the
Controlled  Group to  terminate,  any Plan where such event could  result in any
liability of Borrower or any member of the Controlled Group or the imposition of
a lien on the  property  of  Borrower  or any  member  of the  Controlled  Group
pursuant  to  Section  4068 of ERISA,  (v)  assume,  or permit any member of the
Controlled  Group to assume,  any obligation to contribute to any  Multiemployer
Plan not disclosed on Schedule  5.8.4,  (vi) incur,  or permit any member of the
Controlled Group to incur, any withdrawal  liability to any Multiemployer  Plan;
(vii) fail promptly to notify Agent of the occurrence of any Termination  Event,
(viii)  fail to comply,  or permit a member of the  Controlled  Group to fail to
comply,  with the  requirements of ERISA or the Code or other applicable laws in
respect of any Plan,  (ix) fail to meet, or permit any member of the  Controlled
Group to fail to meet, all minimum funding  requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled  Group to postpone or
delay any funding requirement with respect of any Plan.

     7.17  Prepayment  of  Indebtedness.  At any time,  directly or  indirectly,
prepay any Indebtedness (other than to Lenders),  or repurchase,  redeem, retire
or otherwise acquire any Indebtedness of Borrower.

     7.18 Subordinated Note. At any time,  directly or indirectly,  pay, prepay,
repurchase,  redeem, retire or otherwise acquire, or make any payment on account
of any  principal  of,  interest on or premium  payable in  connection  with the
repayment or redemption of the Subordinated Note, except as expressly  permitted
in the Subordination Agreement.
<PAGE>

8.   CONDITIONS PRECEDENT.

     8.1  Conditions to Initial  Advances.  The agreement of Lenders to make the
initial  Advances  requested  to be made on the  Closing  Date is subject to the
satisfaction,  or waiver by Agent/Lenders,  immediately prior to or concurrently
with the making of such Advances, of the following conditions precedent:
<PAGE>

     8.1.1 Note/Loan Documents. Agent shall have received the Note duly executed
and delivered by an  authorized  officer of Borrower and shall have received the
other Loan Documents,  duly executed and delivered by the parties thereto; 8.1.2
Filings,   Registrations  and  Recordings.  Each  document  (including,  without
limitation,  any Uniform Commercial Code financing  statement)  required by this
Agreement,  any related  agreement or under law or  reasonably  requested by the
Agent to be filed, registered or recorded in order to create, in favor of Agent,
a perfected  security  interest in or lien upon the  Collateral  shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Agent shall
have received an acknowledgment  copy, or other evidence  satisfactory to it, of
each such filing,  registration or recordation and satisfactory  evidence of the
payment of any necessary fee, tax or expense relating thereto;

     8.1.2 Filings,  Registrations  and  Recordings.  Each document  (including,
without ilmitation, any Uniform Commercial Code financing statement) required by
this Agreement,  any related  agreement or under law or reasonably  requested by
the Agent to be filed,  registered  or recorded in order to create,  in favor of
Agent, a perfected  security  interest in or lien upon the Collateral shall have
been properly  filed,  registered or recorded in each  jurisdiction in which the
filing,  registration  or recordation  thereof is so required or reqeusted,  and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it,  of each  such  filing,  registration  or  recordation  and  satisfactory
evidence of the payment of any necessary fee, tax or expense relating thereto;

     8.1.3 Corporate  Proceedings of Borrower.  Agent shall have received a copy
of the  resolutions in form and substance  reasonably  satisfactory to Agent, of
the Board of Directors of Borrower  authorizing (i) the execution,  delivery and
performance of this Agreement,  the Notes, the Mortgage, any related agreements,
and the Mezzanine  Documentation  (collectively  the  "Documents")  and (ii) the
granting by Borrower of the security  interests in and liens upon the Collateral
in each case certified by the Secretary or an Assistant Secretary of Borrower as
of the Closing Date;  and,  such  certificate  shall state that the  resolutions
thereby  certified have not been amended,  modified,  revoked or rescinded as of
the date of such certificate;

     8.1.4  Incumbency  Certificates  of Borrower.  Agent shall have  received a
certificate  of the Secretary or an Assistant  Secretary of Borrower,  dated the
Closing  Date,  as to the  incumbency  and signature of the officers of Borrower
executing this Agreement, the Loan Documents, any certificate or other documents
to be delivered by it pursuant hereto,  together with evidence of the incumbency
of such Secretary or Assistant Secretary;

     8.1.5  Certificates.  Agent shall have  received a copy of the  Articles or
Certificate of Incorporation of Borrower, and all amendments thereto,  certified
by the Secretary of State or other  appropriate  official of its jurisdiction of
incorporation together with copies of the By-Laws of Borrower and all agreements
of Borrower's  shareholders  certified as accurate and complete by the Secretary
of Borrower;

     8.1.6 Good Standing  Certificates.  Agent shall have received good standing
certificates  for  Borrower  dated not more than  thirty  (30) days prior to the
Closing Date, issued by the Secretary of State or other appropriate  official of
Borrower's jurisdiction of incorporation and each jurisdiction where the conduct
of  Borrower's   business   activities  or  the  ownership  of  its   properties
necessitates qualification;

     8.1.7 Legal Opinion.  Agent shall have received the executed legal opinions
of Neil E. Lucas and William  Shappley  in form and  substance  satisfactory  to
Agent which shall cover such matters incident to the  transactions  contemplated
by this Agreement, the Note, the Loan Documents, and related agreements as Agent
may reasonably  require and Borrower hereby  authorizes and directs such counsel
to deliver such opinions to Agent and Lenders;
<PAGE>

     8.1.8 No Litigation. (i) No litigation,  investigation or proceeding before
or by any  arbitrator  or  Governmental  Body shall be  continuing or threatened
against  Borrower  or against  the  officers or  directors  of  Borrower  (A) in
connection  with this Agreement,  the Loan Documents or any of the  transactions
contemplated  thereby and which,  in the reasonable  opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction,  writ,  restraining order or other order
of any nature  materially  adverse to Borrower or the conduct of its business or
inconsistent  with the due  consummation  of the  Transactions  shall  have been
issued by any Governmental Body;

     8.1.9  Collateral  Examination.   Agent  shall  have  completed  Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form  and  substance  to  Lenders,  of the  Receivables,  Inventory,  General
Intangibles, Real Property, Leasehold Interest and Equipment of Borrower and all
books and records in connection therewith;

     8.1.10  Fees.  Agent  shall  have  received  all fees  payable to Agent and
Lenders  on  or  prior  to  the  Closing  Date  hereunder,   including,  without
limitation, pursuant to Article III hereof;

     8.1.11  Financial  Statements.  Agent  shall have  received  the  financial
statements  and  projections  referred to in Section  5.5 above,  which shall be
satisfactory in all respects to Agent.

     8.1.12 Mezzanine Documents. Agent shall have received final executed copies
of the  Mezzanine  Documentation,  and all  related  agreements,  documents  and
instruments as in effect on the Closing Date and the  transactions  contemplated
by such  documentation  shall have been  consummated  prior to the making of the
initial Advance.

     8.1.13   Subordination   Agreements.   Agent  shall  have  entered  into  a
Subordination Agreement with Borrower and Mezzanine Lender which shall set forth
the basis upon which the "Subordinated Noteholder" may receive, and Borrower may
make, payments under the Subordinated Note, which basis shall be satisfactory in
form and substance to Agent in its sole discretion;

     8.1.14  Insurance.   Agent  shall  have  received  in  form  and  substance
satisfactory  to  Agent,  certified  copies  of  Borrower's  casualty  insurance
policies,  together with loss payable  endorsements on Agent's  standard form of
loss payee  endorsement  naming  Agent as loss payee,  and  certified  copies of
Borrower's liability insurance policies, together with endorsements naming Agent
as a co-insured;

     8.1.15 Title  Insurance.  Agent shall have  received  fully paid  mortgagee
title  insurance  policies  (or binding  commitments  to issue  title  insurance
policies,  marked to Agent's  satisfaction to evidence the form of such policies
to be delivered with respect to the Mortgage),  in standard ALTA form, issued at
closing to Agent by a title insurance company  satisfactory to Agent, each in an
amount equal to not less than the fair market value of the Real Property subject
to the  Mortgage,  insuring  the  Mortgage  to  create a valid  Lien on the Real
Property with no  exceptions  which Agent shall not have approved in writing and
no survey exceptions;
<PAGE>

     8.1.16 Environmental  Reports.  Agent shall have received all environmental
studies and reports prepared by independent environmental engineering firms with
respect to all Real Property owned or leased by Borrower;

     8.1.17 Payment Instructions. Agent shall have received written instructions
from Borrower directing the application of proceeds of the initial Advances made
pursuant to this Agreement;

     8.1.18 Blocked Accounts. Agent shall have received duly executed agreements
establishing  the  Blocked  Accounts  or  Depository   Accounts  with  financial
institutions  acceptable  to  Agent  for  the  collection  or  servicing  of the
Receivables and proceeds of the Collateral;

     8.1.19 Consents.  Agent shall have received any and all Consents  necessary
to permit the  effectuation of the  transactions  contemplated by this Agreement
and the Loan Documents; and, Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the Collateral,  as
Agent and its counsel shall deem necessary;

     8.1.20 No Adverse Material Change.  (i) since October 31, 2001, there shall
not have occurred any event,  condition or state of facts which could reasonably
be expected to have a Material Adverse Effect and (ii) no  representations  made
or  information  supplied  to Agent or  Lenders  shall  have  been  proven to be
inaccurate or misleading in any material respect;

     8.1.21 Leasehold Agreements.  Agent shall have received landlord, mortgagee
or  warehouseman  agreements  satisfactory to Agent with respect to all premises
leased by Borrower at which Inventory and books and records are located;

     8.1.22   Mortgage.   Agent  shall  have  received  in  form  and  substance
satisfactory to Lenders (i) an executed Mortgage and (ii) a title policy for the
Real Property and (iii) surveys;

     8.1.23  Subordinated  Note  Documentation.  Agent shall have received final
executed copies of the Subordinated Note Documentation  which shall contain such
terms  and  provisions  including,  without  limitation,   subordination  terms,
satisfactory to Agent;

     8.1.24 Contract Review. Agent shall have reviewed all material contracts of
Borrower  including,   without  limitation,   leases,  union  contracts,   labor
contracts,  vendor supply  contracts,  license  agreements  and  distributorship
agreements  and such  contracts  and  agreements  shall be  satisfactory  in all
respects to Agent;

     8.1.25 Closing Certificate. Agent shall have received a closing certificate
signed by the Chief  Financial  Officer of Borrower dated as of the date hereof,
stating that (i) all  representations and warranties set forth in this Agreement
and the Loan  Documents  are  true  and  correct  on and as of such  date,  (ii)
Borrower is on such date in  compliance  with all the terms and  provisions  set
forth in this Agreement and the Loan Documents and (iii) on such date no Default
or Event of Default has occurred or is continuing;

     8.1.26  Borrowing  Base.  Agent shall have received  evidence from Borrower
that the  aggregate  amount of Eligible  Receivables  and Eligible  Inventory is
sufficient  in value and amount to support  Advances in the amount  requested by
Borrower on the Closing Date;
<PAGE>

     8.1.27 Undrawn  Availability.  After giving effect to the initial  Advances
hereunder, Borrower shall have Undrawn Availability of at least $750,000;

     8.1.28  Other.  All  corporate and other  proceedings,  and all  documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.

     8.2  Conditions  to Each  Advance.  The  agreement  of  Lenders to make any
Advance  requested to be made on any date (including,  without  limitation,  the
initial  Advance),  is subject to the  satisfaction of the following  conditions
precedent as of the date such Advance is made:

     8.2.1  Representations  and  Warranties.  Each of the  representations  and
warranties  made by Borrower in or  pursuant to this  Agreement  and any related
agreements  to  which  it is a  party,  and  each  of  the  representations  and
warranties  contained  in  any  certificate,  document  or  financial  or  other
statement  furnished at any time under or in connection  with this  Agreement or
any related  agreement shall be true and correct in all material respects on and
as of such date as if made on and as of such date;

     8.2.2 No Default. No Event of Default or Default shall have occurred and be
continuing  on such date,  or would exist after  giving  effect to the  Advances
requested to be made, on such date;  provided,  however that Agent,  in its sole
discretion,  may continue to make Advances  notwithstanding  the existence of an
Event of Default or Default and that any  Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and

     8.2.3 Maximum Advances.  In the case of any Advances  requested to be made,
after giving effect thereto, the aggregate Advances shall not exceed the maximum
amount of Advances permitted under Section 2.1 hereof.

Each  request  for  an  Advance  by  Borrower   hereunder  shall   constitute  a
representation  and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.

9.   INFORMATION AS TO BORROWERS.  Borrower shall, until satisfaction in full of
     the Obligations and the termination of this Agreement:

     9.1  Disclosure of Material  Matters.  Immediately  upon learning  thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
Borrower's  reclamation  or  repossession  of, or the return to  Borrower  of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.

     9.2  Schedules.  Deliver to Agent on or before the fifteenth  (15th) day of
each month as and for the prior month (a) accounts  receivable  agings inclusive
of  reconciliations  to the  general  ledger,  (b)  accounts  payable  schedules
inclusive of  reconciliations  to the general ledger,  (c) Inventory reports and
(d) a borrowing  base  certificate in form and substance  satisfactory  to Agent
(which shall be calculated as of the last day of the prior month and which shall
not  be  binding  upon  Agent  or  restrictive  of  Agent's  rights  under  this
Agreement).  In addition,  Borrower  will deliver to Agent at such  intervals as
Agent  may  require:  (i)  confirmatory  assignment  schedules,  (ii)  copies of
Customer's  invoices,  (iii)  evidence of shipment  or  delivery,  and (iv) such
further  schedules,  documents  and/or  information  regarding the Collateral as
Agent  may  require  including,  without  limitation,  trial  balances  and test
verifications.  Agent shall have the right to confirm and verify all Receivables
by any manner and through any medium it considers  advisable  and do whatever it
may deem reasonably necessary to protect its interests  hereunder.  The items to
be  provided  under this  Section  are to be in form  satisfactory  to Agent and
executed by Borrower and delivered to Agent from time to time solely for Agent's
convenience in maintaining records of the Collateral,  and Borrower's failure to
deliver  any of such  items to Agent  shall  not  affect,  terminate,  modify or
otherwise limit Agent's Lien with respect to the Collateral.
<PAGE>

     9.3 Environmental Reports. Furnish Agent, concurrently with the delivery of
the financial statements referred to in Sections 9.7 and 9.8, with a certificate
signed by the President of Borrower stating, to the best of his knowledge,  that
Borrower is in compliance in all material  respects with all federal,  state and
local laws relating to  environmental  protection  and control and  occupational
safety  and  health.  To the  extent  Borrower  is not in  compliance  with  the
foregoing  laws, the certificate  shall set forth with  specificity all areas of
non-compliance  and the  proposed  action  Borrower  will  implement in order to
achieve full compliance.

     9.4 Litigation. Promptly notify Agent in writing of any litigation, suit or
administrative  proceeding  affecting  Borrower,  whether  or not the  claim  is
covered by insurance, and of any suit or administrative proceeding, which in any
such case could reasonably be expected to have a Material Adverse Effect.

     9.5  Material  Occurrences.  Promptly  notify  Agent  in  writing  upon the
occurrence  of (a) any Event of  Default  or  Default;  (b) any event of default
under the Mezzanine Documentation; (c) any event which with the giving of notice
or lapse of time,  or both,  would  constitute  an event of  default  under  the
Mezzanine Documentation;  (d) any event, development or circumstance whereby any
financial  statements or other  reports  furnished to Agent fail in any material
respect to present fairly,  in accordance with GAAP  consistently  applied,  the
financial  condition  or  operating  results of  Borrower as of the date of such
statements;  (e) any accumulated  retirement plan funding  deficiency  which, if
such  deficiency  continued for two plan years and was not corrected as provided
in Section 4971 of the Code,  could subject Borrower to a tax imposed by Section
4971 of the Code;  (f) each and every default by Borrower  which might result in
the  acceleration of the maturity of any  Indebtedness,  including the names and
addresses of the holders of such  Indebtedness  with respect to which there is a
default  existing  or with  respect to which the  maturity  has been or could be
accelerated, and the amount of such Indebtedness;  and (g) any other development
in the  business or affairs of Borrower  which could  reasonably  be expected to
have a Material  Adverse Effect;  in each case describing the nature thereof and
the action Borrower propose to take with respect thereto.

     9.6  Government  Receivables.  Notify  Agent  immediately  if  any  of  its
Receivables arise out of contracts  between Borrower and the United States,  any
state, or any department, agency or instrumentality of any of them.
<PAGE>

     9.7 Annual  Financial  Statements.  Furnish  Agent within  ninety (90) days
after the end of each fiscal year of Borrower,  financial statements of Borrower
including, but not limited to, statements of income and stockholders' equity and
cash flow  from the  beginning  of the  current  fiscal  year to the end of such
fiscal  year  and the  balance  sheet  as at the end of such  fiscal  year,  all
prepared  in  accordance  with GAAP  applied  on a basis  consistent  with prior
practices,  and in reasonable detail and reported upon without  qualification by
an  independent  certified  public  accounting  firm  selected by  Borrower  and
satisfactory to Agent (the "Accountants"). The accounting firm of Borrower as of
the Closing Date is satisfactory to Agent.  The report of the Accountants  shall
be accompanied by a statement of the  Accountants  certifying that (i) they have
caused this Agreement to be reviewed,  (ii) in making the examination upon which
such report was based either no  information  came to their  attention  which to
their  knowledge  constituted  an Event  of  Default  or a  Default  under  this
Agreement  or any  related  agreement  or,  if such  information  came to  their
attention,  specifying any such Default or Event of Default, its nature, when it
occurred and whether it is  continuing,  and such report  shall  contain or have
appended thereto  calculations  which set forth  Borrower's  compliance with the
requirements or restrictions  imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.
In addition,  the reports shall be  accompanied  by a certificate  of Borrower's
Chief  Financial  Officer  which  shall  state  that,  based  on an  examination
sufficient to permit him to make an informed  statement,  no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default,  its nature,  when it occurred,  whether it is continuing and the steps
being taken by Borrower with respect to such event, and such  certificate  shall
have appended thereto  calculations  which set forth Borrower's  compliance with
the  requirements  or  restrictions  imposed by Sections  6.5, 6.6, 7.6 and 7.11
hereof.

     9.8 Quarterly  Financial  Statements.  Furnish Agent within forty five (45)
days  after  the end of each  fiscal  quarter,  an  unaudited  balance  sheet of
Borrower and unaudited  statements of income and  stockholders'  equity and cash
flow of Borrower  reflecting  results of  operations  from the  beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent  with prior  practices  and  complete  and  correct  in all  material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrower's business.  The reports shall
be  accompanied  by a  certificate  signed by the  Chief  Financial  Officer  of
Borrower,  which shall state that, based on an examination  sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case,  specifying such Default or Event of Default,  its nature,
when it occurred, whether it is continuing and the steps being taken by Borrower
with respect to such default and, such  certificate  shall have appended thereto
calculations  which set forth  Borrower's  compliance  with the  requirements or
restrictions imposed by Sections 6.5, 6.6, 7.6 and 7.11 hereof.

     9.9 Monthly  Financial  Statements.  Furnish  Agent within thirty (30) days
after  the end of each  month,  an  unaudited  balance  sheet  of  Borrower  and
unaudited  statements  of  income  and  stockholders'  equity  and cash  flow of
Borrower  reflecting results of operations from the beginning of the fiscal year
to the end of such month and for such month, prepared on a basis consistent with
prior  practices and complete and correct in all material  respects,  subject to
normal and recurring year end adjustments that individually and in the aggregate
are not material to Borrower's  business.  The reports shall be accompanied by a
certificate of Borrower's Chief Financial Officer, which shall state that, based
on an  examination  sufficient to permit him to make an informed  statement,  no
Default or Event of Default exists, or, if such is not the case, specifying such
Default  or Event of  Default,  its  nature,  when it  occurred,  whether  it is
continuing and the steps being taken by Borrower with respect to such event and,
such  certificate  shall  have  appended  thereto  calculations  which set forth
Borrower's  compliance with the requirements or restrictions imposed by Sections
6.5, 6.6, 7.6 and 7.11 hereof.
<PAGE>

     9.10 Other  Reports.  Furnish Agent as soon as available,  but in any event
within  ten (10)  days  after  the  issuance  thereof,  (i) with  copies of such
financial  statements,  reports  and  returns  as  Borrower  shall  send  to its
stockholders  and (ii) copies of all  notices  sent  pursuant  to the  Mezzanine
Documentation.

     9.11 Additional Information. Furnish Agent with such additional information
as Agent shall reasonably  request in order to enable Agent to determine whether
the terms,  covenants,  provisions and conditions of this Agreement and the Note
have been complied with by Borrower  including,  without  limitation and without
the necessity of any request by Agent,  (a) copies of all  environmental  audits
and reviews,  (b) at least thirty (30) days prior thereto,  notice of Borrower's
opening  of any new office or place of  business  or  Borrower's  closing of any
existing office or place of business,  and (c) promptly upon Borrower's learning
thereof,  notice of any labor dispute to which Borrower may become a party,  any
strikes or walkouts relating to any of its plants or other  facilities,  and the
expiration  of any  labor  contract  to  which  Borrower  is a party or by which
Borrower is bound.

     9.12 Projected  Operating Budget.  Furnish Agent, no later than thirty (30)
days prior to the beginning of Borrower's  fiscal years  commencing  with fiscal
year 2003, a month by month projected operating budget and cash flow of Borrower
for such fiscal year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter),  such projections
to be  accompanied by a certificate  signed by the President or Chief  Financial
Officer of Borrower to the effect that such  projections  have been  prepared on
the basis of sound financial planning practice  consistent with past budgets and
financial  statements  and that  such  officer  has no reason  to  question  the
reasonableness  of any  material  assumptions  on which  such  projections  were
prepared.

     9.13 Variances From Operating Budget. Furnish Agent,  concurrently with the
delivery  of the  financial  statements  referred  to in  Section  9.7 and  each
quarterly  report,  a written  report  summarizing  all material  variances from
budgets  submitted by Borrower  pursuant to Section  9.12 and a  discussion  and
analysis by management with respect to such variances.

     9.14 Notice of Suits,  Adverse Events.  Furnish Agent with prompt notice of
(i) any lapse or other  termination  of any  Consent  issued to  Borrower by any
Governmental  Body or any other  Person  that is material  to the  operation  of
Borrower's  business,  (ii) any  refusal by any  Governmental  Body or any other
Person to renew or extend any such Consent;  and (iii) copies of any periodic or
special reports filed by Borrower with any Governmental  Body or Person, if such
reports  indicate any material  change in the business,  operations,  affairs or
condition of Borrower,  or if copies  thereof are requested by Lender,  and (iv)
copies of any material  notices and other  communications  from any Governmental
Body or Person which specifically relate to Borrower.
<PAGE>

     9.15 ERISA  Notices and  Requests.  Furnish  Agent with  immediate  written
notice in the event  that (i)  Borrower  or any member of the  Controlled  Group
knows or has reason to know that a Termination Event has occurred, together with
a written  statement  describing such Termination  Event and the action, if any,
which Borrower or any member of the Controlled  Group has taken,  is taking,  or
proposes to take with  respect  thereto  and,  when known,  any action  taken or
threatened  by the Internal  Revenue  Service,  Department of Labor or PBGC with
respect  thereto,  (ii) Borrower or any member of the Controlled  Group knows or
has reason to know that a prohibited  transaction (as defined in Sections 406 of
ERISA and 4975 of the  Code)  has  occurred  together  with a written  statement
describing  such  transaction and the action which Borrower or any member of the
Controlled  Group has taken, is taking or proposes to take with respect thereto,
(iii) a funding  waiver request has been filed with respect to any Plan together
with all  communications  received by  Borrower or any member of the  Controlled
Group with  respect to such  request,  (iv) any  increase in the benefits of any
existing  Plan or the  establishment  of any new  Plan  or the  commencement  of
contributions  to any Plan to which  Borrower  or any  member of the  Controlled
Group was not previously contributing shall occur, (v) Borrower or any member of
the  Controlled  Group  shall  receive  from the PBGC a notice of  intention  to
terminate a Plan or to have a trustee  appointed to administer a Plan,  together
with copies of each such notice,  (vi) Borrower or any member of the  Controlled
Group shall receive any favorable or unfavorable  determination  letter from the
Internal Revenue Service regarding the qualification of a Plan under Section 401
(a) of the Code, together with copies of each such letter; (vii) Borrower or any
member of the Controlled  Group shall receive a notice  regarding the imposition
of  withdrawal  liability,  together  with  copies of each such  notice;  (viii)
Borrower  or any member of the  Controlled  Group  shall fail to make a required
installment  or any other  required  payment under Section 412 of the Code on or
before the due date for such installment or payment; (ix) Borrower or any member
of the Controlled Group knows that (a) a Multiemployer Plan has been terminated,
(b) the  administrator  or plan  sponsor  of a  Multiemployer  Plan  intends  to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.

     9.16 Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time,  reasonably request to
carry out the purposes, terms or conditions of this Agreement.

10.  EVENTS  OF  DEFAULT.  The  occurrence  of any one or more of the  following
     events shall constitute an "Event of Default":

     10.1  failure  by  Borrower  to  pay  any  principal  or  interest  on  the
Obligations when due, whether at maturity or by reason of acceleration  pursuant
to the terms of this  Agreement  or by  notice of  intention  to  prepay,  or by
required  prepayment or failure to pay any other  liabilities  or make any other
payment, fee or charge provided for herein when due or in any Other Document;

     10.2 any representation or warranty made or deemed made by Borrower in this
Agreement or any related agreement or in any certificate,  document or financial
or other  statement  furnished at any time in  connection  herewith or therewith
shall prove to have been  misleading  in any  material  respect on the date when
made or deemed to have been made;

     10.3 failure by Borrower to (i) furnish  financial  information when due or
when  requested  which is unremedied  for a period of fifteen (15) days, or (ii)
permit the inspection of its books or records;
<PAGE>

     10.4  issuance  of a  notice  of  Lien,  levy,  assessment,  injunction  or
attachment against a material portion of Borrower's property which is not stayed
or lifted within thirty (30) days;

     10.5 except as otherwise provided for in Sections 10.1 and 10.3, failure or
neglect of Borrower to perform, keep or observe any term, provision,  condition,
covenant herein  contained,  or contained in any other agreement or arrangement,
now or hereafter  entered into between  Borrower and Agent or any Lender  except
for a failure or neglect  of  Borrower  to  perform,  keep or observe  any term,
provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3,
6.4, 9.4 or 9.6 hereof  which is cured within five (5) days from the  occurrence
of such failure or neglect;

     10.6 any judgment or judgments are rendered or judgment liens filed against
Borrower and/or Obsidian Capital Partners,  LP for an aggregate amount in excess
of One  Hundred  Thousand  Dollars  ($100,000)  which  within  30  days  of such
rendering or filing is not either satisfied, stayed or discharged of record;

     10.7 Borrower shall (i) apply for, consent to or suffer the appointment of,
or the taking of possession by, a receiver,  custodian,  trustee,  liquidator or
similar  fiduciary of itself or of all or a  substantial  part of its  property,
(ii) make a general  assignment  for the benefit of creditors,  (iii) commence a
voluntary case under any state or federal  bankruptcy  laws (as now or hereafter
in effect),  (iv) be  adjudicated a bankrupt or  insolvent,  (v) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vi)  acquiesce  to, or fail to have  dismissed,  within  thirty (30) days,  any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

     10.8 Borrower shall admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present business;

     10.9 any Affiliate or any Subsidiary of Borrower,  or any Guarantor,  shall
(i)  apply  for,  consent  to or suffer  the  appointment  of, or the  taking of
possession by, a receiver,  custodian,  trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability,  or be generally  unable,  to pay its debts as they become due or
cease operations of its present  business,  (iii) make a general  assignment for
the benefit of  creditors,  (iv)  commence a  voluntary  case under any state or
federal  bankruptcy  laws (as now or hereafter in effect),  (v) be adjudicated a
bankrupt or  insolvent,  (vi) file a petition  seeking to take  advantage of any
other law  providing for the relief of debtors,  (vii)  acquiesce to, or fail to
have  dismissed,  within thirty (30) days,  any petition filed against it in any
involuntary  case under such bankruptcy  laws, or (viii) take any action for the
purpose of effecting any of the foregoing;

     10.10  any  change  in  Borrower's   condition  or  affairs  (financial  or
otherwise) which in Agent's opinion has a Material Adverse Effect;

     10.11  any Lien  created  hereunder  or  provided  for  hereby or under any
related  agreement  for any reason  ceases to be or is not a valid and perfected
Lien having a first priority interest;

     10.12 an  event of  default  has  occurred  and  been  declared  under  the
Mezzanine Documentation which default shall not have been cured or waived within
any applicable grace period;
<PAGE>

     10.13 a default of the obligations of Borrower under any other agreement to
which it is a party shall occur which adversely  affects its condition,  affairs
or prospects  (financial  or  otherwise)  which  default is not cured within any
applicable grace period;

     10.14 termination or breach of any Guaranty or Guaranty Security  Agreement
or similar  agreement  executed and  delivered to Agent in  connection  with the
Obligations of Borrower,  or if any Guarantor attempts to terminate,  challenges
the validity of, or its liability under, any such Guaranty or Guaranty  Security
Agreement or similar agreement;

     10.15 any Change of Ownership or Change of Control shall occur;

     10.16 any material provision of this Agreement shall, for any reason, cease
to be valid and binding on  Borrower,  or Borrower  shall so claim in writing to
Agent;

     10.17 (i) any  Governmental  Body shall (A) revoke,  terminate,  suspend or
adversely modify any license, permit, patent trademark or tradename of Borrower,
the  continuation  of  which  is  material  to the  continuation  of  Borrower's
business, or (B) commence proceedings to suspend, revoke, terminate or adversely
modify  any such  license,  permit,  trademark,  tradename  or  patent  and such
proceedings  shall not be dismissed or discharged within sixty (60) days, or (c)
schedule or conduct a hearing on the renewal of any license, permit,  trademark,
tradename or patent  necessary for the  continuation of Borrower's  business and
the  staff  of  such  Governmental   Body  issues  a  report   recommending  the
termination,  revocation,  suspension or material,  adverse modification of such
license,  permit,  trademark,  tradename or patent;  (ii) any agreement which is
necessary or material to the operation of Borrower's  business  shall be revoked
or terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination,  and such revocation
or  termination  and  non-replacement  would  reasonably  be  expected to have a
Material Adverse Effect;

     10.18  any  portion  of the  Collateral  shall  be  seized  or  taken  by a
Governmental  Body,  or  Borrower  or the title and  rights of  Borrower  or any
Original  Owner  which is the owner of any  material  portion of the  Collateral
shall have become the subject matter of litigation  which might,  in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Loan Documents;

     10.19 the operations of Borrower's  manufacturing  facility are interrupted
at any time for a period of more than five (5) consecutive Business Days, unless
Borrower  shall (i) be  entitled  to receive  for such  period of  interruption,
proceeds of business  interruption  insurance  sufficient to assure that its per
diem cash needs  during  such  period is at least  equal to its average per diem
cash needs for the consecutive  [three month] period  immediately  preceding the
initial  date of  interruption  and (ii)  receive  such  proceeds  in the amount
described in clause (i) preceding not later than thirty (30) days  following the
initial date of any such interruption;  provided,  however, that notwithstanding
the  provisions  of clauses  (i) and (ii) of this  section,  an Event of Default
shall be deemed to have occurred if Borrower  shall be receiving the proceeds of
business interruption insurance for a period of thirty (30) consecutive days;

     10.20 an event or condition specified in Sections 7.16 or 9.15 hereof shall
occur or exist  with  respect  to any Plan  and,  as a result  of such  event or
condition,  together with all other such events or  conditions,  Borrower or any
member of the  Controlled  Group  shall  incur,  or in the  opinion  of Agent be
reasonably  likely to incur,  a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect; or

     10.21 any breach of the  Subordination  Agreement  or Capital  Availability
Agreement.
<PAGE>

11.  LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

     11.1 Rights and  Remedies.  Upon the  occurrence of (i) an Event of Default
pursuant to Section 10.7 all  Obligations  shall be immediately  due and payable
and this  Agreement  and the  obligation  of Lenders to make  Advances  shall be
deemed terminated;  and, (ii) any of the other Events of Default and at any time
thereafter  (such default not having  previously  been cured),  at the option of
Required  Lenders  all  Obligations  shall be  immediately  due and  payable and
Lenders  shall have the right to terminate  this  Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition  against
Borrower in any involuntary case under any state or federal bankruptcy laws, the
obligation of Lenders to make Advances  hereunder shall be terminated other than
as may be  required  by an  appropriate  order of the  bankruptcy  court  having
jurisdiction over Borrower.  Upon the occurrence of any Event of Default,  Agent
shall have the right to exercise any and all other rights and remedies  provided
for herein,  under the Uniform  Commercial Code and at law or equity  generally,
including,  without  limitation,  the right to foreclose the security  interests
granted  herein and to realize upon any  Collateral  by any  available  judicial
procedure  and/or to take  possession  of and sell any or all of the  Collateral
with or without judicial process.  Agent may enter any of Borrower's premises or
other premises without legal process and without incurring liability to Borrower
therefor, and Agent may thereupon, or at any time thereafter,  in its discretion
without notice or demand,  take the Collateral and remove the same to such place
as  Agent  may  deem  advisable  and  Agent  may  require  Borrower  to make the
Collateral  available to Agent at a convenient place. With or without having the
Collateral at the time or place of sale,  Agent may sell the Collateral,  or any
part thereof,  at public or private  sale, at any time or place,  in one or more
sales, at such price or prices, and upon such terms,  either for cash, credit or
future  delivery,  as Agent may elect.  Except as to that part of the Collateral
which is  perishable  or threatens to decline  speedily in value or is of a type
customarily sold on a recognized  market,  Agent shall give Borrower  reasonable
notification  of such sale or sales,  it being agreed that in all events written
notice  mailed to Borrower at least five (5) days prior to such sale or sales is
reasonable notification.  At any public sale Agent or any Lender may bid for and
become the purchaser,  and Agent,  any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind,  including any equity of redemption and such right and
equity are hereby expressly waived and released by Borrower.  In connection with
the exercise of the foregoing  remedies,  Agent is granted permission to use all
of  Borrower's  (a)  trademarks,  trade  styles,  trade names,  patents,  patent
applications,  licenses,  franchises and other proprietary rights which are used
in connection  with Inventory for the purpose of disposing of such Inventory and
(b) Equipment for the purpose of completing the manufacture of unfinished goods.
The proceeds  realized from the sale of any  Collateral  shall be applied in the
order set forth in Section 11.5 hereof. If any deficiency shall arise,  Borrower
shall remain liable to Agent and Lenders therefor.
<PAGE>

     11.2 Agent's Discretion.  Agent shall have the right in its sole discretion
to determine which rights,  Liens,  security  interests or remedies Agent may at
any time pursue, relinquish,  subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or affect
any of Agent's or Lenders' rights hereunder.

     11.3 Setoff.  In addition to any other rights which Agent or any Lender may
have under applicable law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right to apply  Borrower's  property  held by
Agent and such Lender to reduce the Obligations.

     11.4 Rights and Remedies Not  Exclusive.  The  enumeration of the foregoing
rights and  remedies is not  intended to be  exhaustive  and the exercise of any
rights or remedy  shall not preclude the exercise of any other right or remedies
provided  for  herein  or  otherwise  provided  by law,  all of  which  shall be
cumulative and not alternative.

     11.5  Allocation of Payments  After Event of Default.  Notwithstanding  any
other  provisions of this  Agreement to the contrary,  after the  occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on  account of the  Obligations  or any other  amounts  outstanding
under any of the Loan Documents or in respect of the Collateral  may, at Agent's
discretion, be paid over or delivered as follows:

     11.5.1  FIRST,  to the payment of all  reasonable  out-of-pocket  costs and
expenses (including without limitation, reasonable attorneys' fees) of the Agent
in connection with enforcing its rights and the rights of the Lenders under this
Agreement and the Loan Documents and any  protective  advances made by the Agent
with respect to the Collateral under or pursuant to the terns of this Document;

     11.5.2 SECOND, to payment of any fees owed to the Agent;

     11.5.3  THIRD,  to the payment of all  reasonable  out-of-pocket  costs and
expenses (including without limitation,  reasonable  attorneys' fees) of each of
the Lenders in connection with enforcing its rights under this Agreement and the
Loan  Documents  or  otherwise  with  respect to the  Obligations  owing to such
Lender;

     11.5.4  FOURTH,  to the  payment of all of the  Obligations  consisting  of
accrued fees and interest;

     11.5.5 FIFTH,  to the payment of the  outstanding  principal  amount of the
Obligations  (including the payment or cash collateralization of any outstanding
[L]etters of [C]redit);

     11.5.6 SIXTH, to all other  Obligations and other  obligations  which shall
have become due and payable under the Loan Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above;

     11.5.7  SEVENTH,  to the payment of the surplus,  if any, to whoever may be
lawfully entitled to receive such surplus.
<PAGE>

In carrying  out the  foregoing,  (i) amounts  received  shall be applied in the
numerical  order  provided  until  exhausted  prior to  application  to the next
succeeding  category;  (ii) each of the Lenders  shall receive (so long as it is
not a  Defaulting  Lender) an amount  equal to its pro rata share  (based on the
proportion that the then  outstanding  Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent that any
amounts  available  for  distribution  pursuant  to  clause  "FIFTH"  above  are
attributable to the issued but undrawn amount of outstanding  Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit  and (B) then,  following  the  expiration  of all  Letters of
Credit,  to all other  obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.

12.  WAIVERS AND JUDICIAL PROCEEDINGS.

     12.1 Waiver of Notice.  Borrower hereby waives notice of non-payment of any
of the Receivables, demand, presentment, protest and notice thereof with respect
to any and all  instruments,  notice of  acceptance  hereof,  notice of loans or
advances made, credit extended,  Collateral received or delivered,  or any other
action  taken in  reliance  hereon,  and all other  demands  and  notices of any
description, except such as are expressly provided for herein.

     12.2  Delay.  No delay or  omission  on  Agent's  or any  Lender's  part in
exercising any right,  remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

     12.3 Jury Waiver.  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION  OR CAUSE OF  ACTION  (A)
ARISING  UNDER THIS  AGREEMENT  OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION  HEREWITH,  OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR  INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM
WITH RESPECT TO THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE  AND EACH PARTY HEREBY  CONSENTS  THAT
ANY SUCH  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT
TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

13.  EFFECTIVE DATE AND TERMINATION.

     13.1 Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of Borrower,  Agent
and each Lender, shall become effective on the date hereof and shall continue in
full  force and  effect  until  October  24,  2005 (the  "Term")  unless  sooner
terminated as herein provided. Borrower may terminate this Agreement at any time
upon  ninety  (90)  days'  prior  written  notice  upon  payment  in full of the
Obligations.  In the event the Obligations are prepaid in full prior to the last
day of the Term  (the date of such  prepayment  hereinafter  referred  to as the
"Early  Termination  Date"),  Borrower  shall  pay to Agent for the  benefit  of
Lenders an early termination fee in an amount equal to (x) $240,000 if the Early
Termination  Date occurs on or after the Closing Date to and  including the date
immediately preceding the first anniversary of the Closing Date, (y) $160,000 if
the Early  Termination  Date  occurs on or after  the first  anniversary  of the
Closing  Date  to and  including  the  date  immediately  preceding  the  second
anniversary of the Closing Date, and (z) $80,000 if the Early  Termination  Date
occurs on or after the second anniversary of the Closing Date.
<PAGE>

     13.2  Termination.  The  termination  of the  Agreement  shall  not  affect
Borrower's,  Agent's or any Lender's  rights,  or any of the Obligations  having
their  inception  prior  to the  effective  date  of such  termination,  and the
provisions  hereof shall continue to be fully operative  until all  transactions
entered  into,  rights or  interests  created  or  Obligations  have been  fully
disposed of, concluded or liquidated.  The security interests,  Liens and rights
granted  to Agent and  Lenders  hereunder  and the  financing  statements  filed
hereunder  shall  continue  in  full  force  and  effect,   notwithstanding  the
termination of this Agreement or the fact that Borrower's  Account may from time
to  time  be  temporarily  in a  zero  or  credit  position,  until  all  of the
Obligations  of  Borrower  have  been  paid  or  performed  in  full  after  the
termination of this  Agreement or Borrower has furnished  Agent and Lenders with
an  indemnification  satisfactory  to Agent and Lenders  with  respect  thereto.
Accordingly,  Borrower  waives  any rights  which it may have under the  Uniform
Commercial  Code to demand the filing of termination  statements with respect to
the  Collateral,  and Agent  shall  not be  required  to send  such  termination
statements to Borrower, or to file them with any filing office, unless and until
this Agreement  shall have been  terminated in accordance with its terms and all
Obligations paid in full in immediately  available  funds. All  representations,
warranties,  covenants,  waivers and agreements  contained  herein shall survive
termination hereof until all Obligations are paid or performed in full.

14.  REGARDING AGENT.

     14.1  Appointment.  Each Lender hereby  designates  PNC to act as Agent for
such Lender under this  Agreement  and the Loan  Documents.  Each Lender  hereby
irrevocably  authorizes  Agent to take  such  action  on its  behalf  under  the
provisions of this  Agreement and the Loan Documents and to exercise such powers
and to  perform  such  duties  hereunder  and  thereunder  as  are  specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal  and  interest,  fees,  charges and  collections  (without
giving effect to any collection days) received  pursuant to this Agreement,  for
the ratable benefit of Lenders. Agent may perform any of its duties hereunder by
or through its agents or employees. As to any matters not expressly provided for
by this Agreement  (including without limitation,  collection of the Note) Agent
shall not be required to exercise any  discretion or take any action,  but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding; provided,  however, that Agent shall not
be required to take any action  which  exposes  Agent to  liability  or which is
contrary to this  Agreement or the Loan Documents or applicable law unless Agent
is  furnished  with an  indemnification  reasonably  satisfactory  to Agent with
respect thereto.
<PAGE>

     14.2  Nature of  Duties.  Agent  shall  have no duties or  responsibilities
except  those  expressly  set forth in this  Agreement  and the Loan  Documents.
Neither Agent nor any of its officers,  directors,  employees or agents shall be
(i)  liable for any action  taken or  omitted  by them as such  hereunder  or in
connection  herewith,  unless  caused by their  gross (not mere)  negligence  or
willful  misconduct,  or  (ii)  responsible  in any  manner  for  any  recitals,
statements,  representations  or  warranties  made by  Borrower  or any  officer
thereof  contained in this Agreement,  or in any of the Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection  with,  this Agreement or any of the
Loan  Documents  or for the value,  validity,  effectiveness,  genuineness,  due
execution,  enforceability or sufficiency of this Agreement,  or any of the Loan
Documents or for any failure of Borrower to perform its  obligations  hereunder.
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or  performance  of any of the agreements  contained in, or
conditions  of, this Agreement or any of the Loan  Documents,  or to inspect the
properties,  books or records of  Borrower.  The duties of Agent as respects the
Advances to Borrower shall be mechanical  and  administrative  in nature;  Agent
shall not have by reason of this Agreement a fiduciary  relationship  in respect
of any Lender; and nothing in this Agreement,  expressed or implied, is intended
to or shall be so construed as to impose upon Agent any  obligations  in respect
of this Agreement except as expressly set forth herein.

     14.3 Lack of Reliance on Agent and Resignation.  Independently  and without
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make (i) its own  independent  investigation  of the financial  condition and
affairs of Borrower in  connection  with the making and the  continuance  of the
Advances  hereunder  and the taking or not  taking of any  action in  connection
herewith, and (ii) its own appraisal of the creditworthiness of Borrower.  Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession  before making of the Advances or at any time
or times  thereafter  except as shall be provided  by  Borrower  pursuant to the
terms  hereof.  Agent shall not be  responsible  to any Lender for any recitals,
statements,  information,   representations  or  warranties  herein  or  in  any
agreement,  document, certificate or a statement delivered in connection with or
for  the  execution,   effectiveness,   genuineness,  validity,  enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of the
financial  condition of Borrower,  or be required to make any inquiry concerning
either  the  performance  or  observance  of  any of the  terms,  provisions  or
conditions  of this  Agreement,  the Note,  the Loan  Documents or the financial
condition of Borrower, or the existence of any Event of Default or any Default.

Agent may  resign on sixty  (60) days'  written  notice to each of  Lenders  and
Borrower and upon such resignation, the Required Lenders will promptly designate
a successor Agent reasonably satisfactory to Borrower.

Any such  successor  Agent  shall  succeed to the  rights,  powers and duties of
Agent,  and the tenn "Agent" shall mean such successor  agent effective upon its
appointment,  and the former Agent's rights, powers and duties as Agent shall be
terminated,  without any other or further act or deed on the part of such former
Agent.  After any Agent's  resignation as Agent,  the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
<PAGE>

     14.4 Certain  Rights of Agent.  If Agent shall  request  instructions  from
Lenders  with  respect  to any  act or  action  (including  failure  to  act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain  from such act or taking such  action  unless and until Agent shall have
received  instructions  from the  Required  Lenders;  and Agent  shall not incur
liability  to any  Person by  reason  of so  refraining.  Without  limiting  the
foregoing,  Lenders shall not have any right of action whatsoever  against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

     14.5  Reliance.  Agent  shall  be  entitled  to  rely,  and  shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Loan Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and  attorneys-in-fact  and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.

     14.6 Notice of  Default.  Agent  shall not be deemed to have  knowledge  or
notice of the  occurrence of any Default or Event of Default  hereunder or under
the Loan  Documents,  unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Loan  Documents,  describing  such Default or
Event of Default and stating that such notice is a "notice of  default".  In the
event that Agent  receives  such a notice,  Agent shall give  notice  thereof to
Lenders.  Agent shall take such action with  respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,  with
respect to such  Default or Event of Default as it shall deem  advisable  in the
best interests of Lenders.

     14.7 Indemnification. To the extent Agent is not reimbursed and indemnified
by Borrower, each Lender will reimburse and indemnify Agent in proportion to its
respective  portion  of  the  Advances  (or,  if no  Advances  are  outstanding,
according  to  its  Commitment  Percentage),   from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements of any kind or nature  whatsoever which may be
imposed on,  incurred  by or asserted  against  Agent in  performing  its duties
hereunder,  or in any way  relating to or arising out of this  Agreement  or any
Other  Document;  provided that,  Lenders shall not be liable for any portion of
such liabilities,  obligations,  losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements  resulting from Agent's gross (not mere)
negligence or willful misconduct.

     14.8 Agent in its  Individual  Capacity.  With respect to the obligation of
Agent to lend under this Agreement,  the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein;  and the term "Lender" or any similar term
shall,  unless the context  clearly  otherwise  indicates,  include Agent in its
individual  capacity as a Lender.  Agent may engage in business with Borrower as
if it were not performing the duties specified  herein,  and may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
<PAGE>

     14.9  Delivery  of  Documents.  To  the  extent  Agent  receives  financial
statements  required  under  Sections 9.7, 9.8, 9.9, 9.12 and 9.13 from Borrower
pursuant  to the terms of this  Agreement,  Agent  will  promptly  furnish  such
documents and information to Lenders.

     14.10 Borrower's Undertaking to Agent. Without prejudice to its obligations
to  Lenders  under the  other  provisions  of this  Agreement,  Borrower  hereby
undertakes  with Agent to pay to Agent  from time to time on demand all  amounts
from time to time due and  payable by it for the  account of Agent or Lenders or
any of them  pursuant  to this  Agreement  to the extent not already  paid.  Any
payment made  pursuant to any such demand  shall pro tanto  satisfy the relevant
Borrower's  obligations  to make  payments  for the  account  of  Lenders or the
relevant one or more of them pursuant to this Agreement.

15.  MISCELLANEOUS.

     15.1 Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of  Indiana  applied to  contracts  to be
performed wholly within the State of Indiana. Any judicial proceeding brought by
or against Borrower with respect to any of the Obligations,  this Agreement, the
Loan Documents or any related agreement may be brought in any court of competent
jurisdiction  in the  State of  Indiana,  United  States  of  America,  and,  by
execution  and delivery of this  Agreement,  Borrower  accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts,  and irrevocably agrees to be bound by any
judgment  rendered  thereby in connection with this  Agreement.  Borrower hereby
waives  personal  service of any and all process upon it and  consents  that all
such  service  of  process  may be  made  by  registered  mail  (return  receipt
requested)  directed to  Borrower  at its address set forth in Section  15.6 and
service  so made  shall be deemed  completed  five (5) days after the same shall
have been so  deposited  in the mails of the United  States of America.  Nothing
herein shall affect the right to serve process in any manner permitted by law or
shall  limit  the  right of Agent or any  Lender  to bring  proceedings  against
Borrower in the courts of any other jurisdiction.  Borrower waives any objection
to  jurisdiction  and venue of any  action  instituted  hereunder  and shall not
assert any defense  based on lack of  jurisdiction  or venue or based upon forum
non  conveniens.  Borrower  waives the right to remove any  judicial  proceeding
brought against  Borrower in any state court to any federal court.  Any judicial
proceeding  by  Borrower  against  Agent or any Lender  involving,  directly  or
indirectly,  any  matter  or  claim in any way  arising  out of,  related  to or
connected with this Agreement or any related agreement, shall be brought only in
a federal or state court located in the County of Marion, State of Indiana.

     15.2 Entire Understanding.
<PAGE>

     15.2.1 This  Agreement and the  documents  executed  concurrently  herewith
contain the entire  understanding  between  Borrower,  Agent and each Lender and
supersedes all prior  agreements  and  understandings,  if any,  relating to the
subject matter hereof. Any promises,  representations,  warranties or guarantees
not herein  contained and hereinafter made shall have no force and effect unless
in writing, signed by Borrower's, Agent's and each Lender's respective officers.
Neither  this  Agreement  nor any portion or  provisions  hereof may be changed,
modified,  amended, waived,  supplemented,  discharged,  cancelled or terminated
orally or by any course of dealing,  or in any manner other than by an agreement
in writing, signed by the party to be charged. Borrower acknowledges that it has
been advised by counsel in connection  with the execution of this  Agreement and
Loan  Documents  and is not  relying  upon oral  representations  or  statements
inconsistent with the terms and provisions of this Agreement.

     15.2.2  The  Required  Lenders,  Agent  with the  consent in writing of the
Required  Lenders,  and Borrower may,  subject to the provisions of this Section
15.2.2,  from time to time enter into written  supplemental  agreements  to this
Agreement or the Loan Documents executed by Borrower,  for the purpose of adding
or deleting  any  provisions  or otherwise  changing,  varying or waiving in any
manner the rights of Lenders,  Agent or Borrower  thereunder or the  conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements;  provided,  however, that no
such supplemental agreement shall, without the consent of all Lenders:

     15.2.2.1 increase the Commitment Percentage,  the maximum dollar commitment
of any Lender or the Maximum Revolving Advance Amount.

     15.2.2.2  extend  the  maturity  of any Note or the due date for any amount
payable hereunder, or decrease the rate of interest or reduce any fee payable by
Borrower to Lenders pursuant to this Agreement.

     15.2.2.3 alter the definition of the term Required Lenders or alter,  amend
or modify this Section 15.2.2.

     15.2.2.4  release any  Collateral  during any calendar  year (other than in
accordance with the provisions of this  Agreement)  having an aggregate value in
excess of Fifty Thousand Dollars ($50,000).

     15.2.2.5 change the rights and duties of Agent.

     15.2.2.6  permit any  Revolving  Advance to be made if after giving  effect
thereto the total of Revolving Advances  outstanding  hereunder would exceed the
Formula Amount for more than sixty (60) consecutive  Business Days or exceed one
hundred and ten percent (110%) of the Formula Amount.

     15.2.2.7  increase the Advance  Rates above the Advance  Rates in effect on
the Closing Date.

     15.2.2.8 release any Guarantor, if any.

Any such supplemental  agreement shall apply equally to each Lender and shall be
binding  upon  Borrower,  Lenders  and  Agent  and  all  future  holders  of the
Obligations.  In the case of any waiver,  Borrower,  Agent and Lenders  shall be
restored to their former  positions and rights,  and any Event of Default waived
shall be  deemed  to be cured and not  continuing,  but no waiver of a  specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the  subsequent  Event of Default is the same as the Event of Default  which was
waived), or impair any right consequent thereon.
<PAGE>

     In the event that Agent  requests the consent of a Lender  pursuant to this
Section  15.2 and such  Lender  shall not  respond  or reply to Agent in writing
within five (5) days of delivery of such request, such Lender shall be deemed to
have  consented to the matter that was the subject of the request.  In the event
that Agent  requests  the consent of a Lender  pursuant to this Section 15.2 and
such  consent is denied,  then PNC may,  at its option,  require  such Lender to
assign its interest in the Advances to PNC or to another  Lender or to any other
Person designated by the Agent (the "Designated  Lender"),  for a price equal to
the then  outstanding  principal amount thereof plus accrued and unpaid interest
and fees due such Lender,  which  interest and fees shall be paid when collected
from  Borrower.  In the event PNC  elects to  require  any  Lender to assign its
interest to PNC or to the Designated  Lender,  PNC will so notify such Lender in
writing  within forty five (45) days following  such Lender's  denial,  and such
Lender will assign its  interest to PNC or the  Designated  Lender no later than
five (5) days following receipt of such notice pursuant to a Commitment Transfer
Supplement   executed  by  such  Lender,   PNC  or  the  Designated  Lender,  as
appropriate, and Agent.

     Notwithstanding (a) the existence of a Default or an Event of Default,  (b)
that any of the other applicable  conditions  precedent set forth in Section 8.2
hereof have not been  satisfied or (c) any other  provision  of this  Agreement,
Agent may at its  discretion  and without the consent of the  Required  Lenders,
voluntarily permit the outstanding  Revolving Advances at any time to exceed the
Formula Amount by up to ten percent (10%) of the Formula Amount for up to thirty
(30) consecutive Business Days (the "Out-of-Formula Loans"). If Agent is willing
in its sole and absolute  discretion  to make such  Out-of-Formula  Loans,  such
Out-of-Formula  Loans shall be payable on demand and shall bear  interest at the
Default Rate for Revolving Advances consisting of Domestic Rate Loans;  provided
that, if Lenders do make Out-of-Formula  Loans,  neither Agent nor Lenders shall
be deemed  thereby to have  changed the limits of Section  2.1.  For purposes of
this  paragraph,  the discretion  granted to Agent  hereunder shall not preclude
involuntary  overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally  exceeded for any reason,  including, but
not limited to, Collateral previously deemed to be either "Eligible Receivables"
or "Eligible  Inventory",  as  applicable,  becomes  ineligible,  collections of
Receivables  applied to reduce  outstanding  Revolving  Advances are  thereafter
returned for insufficient  funds. In the event Agent  involuntarily  permits the
outstanding  Revolving  Advances to exceed the  Formula  Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrower decrease such excess
in as expeditious a manner as is  practicable  under the  circumstances  and not
inconsistent  with the reason for such  excess.  Revolving  Advances  made after
Agent has determined the existence of involuntary  overadvances  shall be deemed
to be  involuntary  overadvances  and shall be decreased in accordance  with the
preceding sentence.

     In addition to (and not in  substitution  of) the  discretionary  Revolving
Advances permitted above in this Section 15.2, the Agent is hereby authorized by
Borrower and the Lenders, from time to time in the Agent's sole discretion,  (A)
after the  occurrence  and during the  continuation  of a Default or an Event of
Default,  or (B) at any  time  that  any  of  the  other  applicable  conditions
precedent  set forth in Section  8.2  hereof  have not been  satisfied,  to make
Revolving  Advances to Borrower on behalf of the Lenders which the Agent, in its
reasonable  business  judgment,  deems necessary or desirable (a) to preserve or
protect the Collateral,  or any portion  thereof,  (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other  Obligations,
or (c) to pay any other amount  chargeable to Borrower  pursuant to the terms of
this  Agreement;  provided,  that at any time  after  giving  effect to any such
Revolving Advances the outstanding  Revolving Advances do not exceed one hundred
and ten percent (110%) of the Formula Amount.
<PAGE>

     15.3 Successors and Assigns; Participations; New Lenders.

     15.3.1  This  Agreement  shall be binding  upon and inure to the benefit of
Borrower,  Agent,  each Lender,  all future holders of the Obligations and their
respective  successors  and  assigns,  except  that  Borrower  may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.

     15.3.2  Borrower  acknowledges  that in the  regular  course of  commercial
banking  business one or more Lenders may at any time and from time to time sell
participating  interests in the Advances to other financial  institutions  (each
such transferee or purchaser of a participating interest, a "Transferee").  Each
Transferee  may exercise  all rights of payment  (including  without  limitation
rights of set-off)  with respect to the portion of such  Advances  held by it or
other  Obligations  payable  hereunder as fully as if such  Transferee  were the
direct holder thereof provided that Borrower shall not be required to pay to any
Transferee  more than the  amount  which it would have been  required  to pay to
Lender which  granted an interest in its Advances or other  Obligations  payable
hereunder  to such  Transferee  had such Lender  retained  such  interest in the
Advances hereunder or other Obligations  payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same  circumstances
and with respect to the same Advances or other Obligations  payable hereunder to
both such Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits,  moneys or other property actually
or  constructively  held by such  Transferee  as security  for the  Transferee's
interest in the Advances.

     15.3.3  Any  Lender  may  with the  consent  of Agent  which  shall  not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this  Agreement  and the Loan  Documents to one or more  additional
banks or financial  institutions  and one or more additional  banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than One Million Dollars  ($1,000,000),  pursuant
to a  Commitment  Transfer  Supplement,  executed by a  Purchasing  Lender,  the
transferor  Lender,  and Agent and delivered to Agent for  recording.  Upon such
execution,  delivery,  acceptance  and  recording,  from and after the  transfer
effective date determined pursuant to such Commitment Transfer  Supplement,  (i)
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such  Commitment  Transfer  Supplement,  have the rights and obligations of a
Lender  thereunder with a Commitment  Percentage as set forth therein,  and (ii)
the  transferor  Lender  thereunder  shall,  to  the  extent  provided  in  such
Commitment  Transfer  Supplement,  be released from its  obligations  under this
Agreement,  the  Commitment  Transfer  Supplement  creating a novation  for that
purpose.  Such  Commitment  Transfer  Supplement  shall be deemed to amend  this
Agreement  to the  extent,  and only to the  extent,  necessary  to reflect  the
addition  of  such  Purchasing  Lender  and  the  resulting  adjustment  of  the
Commitment  Percentages  arising from the purchase by such Purchasing  Lender of
all or a portion of the rights and obligations of such  transferor  Lender under
this Agreement and the Loan Documents.  Borrower hereby consents to the addition
of  such  Purchasing  Lender  and the  resulting  adjustment  of the  Commitment
Percentages  arising  from the  purchase by such  Purchasing  Lender of all or a
portion of the rights  and  obligations  of such  transferor  Lender  under this
Agreement  and the Loan  Documents.  Borrower  shall  execute and  deliver  such
further documents and do such further acts and things in order to effectuate the
foregoing.
<PAGE>

     15.3.4  Agent  shall  maintain  at its  address  a copy of each  Commitment
Transfer  Supplement  delivered to it and a register  (the  "Register")  for the
recordation  of the names  and  addresses  of each  Lender  and the  outstanding
principal, accrued and unpaid interest and other fees due hereunder. The entries
in the  Register  shall be  conclusive,  in the absence of manifest  error,  and
Borrower,  Agent and Lenders may treat each Person whose name is recorded in the
Register as the owner of the Advance  recorded  therein for the purposes of this
Agreement.  The Register  shall be available  for  inspection by Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.  Agent  shall  receive  a fee in the  amount of  $3,500  payable  by the
applicable  Purchasing  Lender  upon  the  effective  date of each  transfer  or
assignment to such Purchasing Lender.

     15.3.5  Borrower  authorizes  each Lender to disclose to any  Transferee or
Purchasing  Lender and any prospective  Transferee or Purchasing  Lender any and
all financial  information in such Lender's possession concerning Borrower which
has been  delivered to such Lender by or on behalf of Borrower  pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower.

     15.4 Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and  re-apply  any payment and any and all proceeds of
Collateral to any portion of the Obligations.  To the extent that Borrower makes
a payment  or Agent or any  Lender  receives  any  payment  or  proceeds  of the
Collateral for Borrower's benefit, which are subsequently invalidated,  declared
to be  fraudulent  or  preferential,  set  aside or  required  to be repaid to a
trustee, debtor in possession,  receiver, custodian or any other party under any
bankruptcy  law,  common law or  equitable  cause,  then,  to such  extent,  the
Obligations  or part  thereof  intended  to be  satisfied  shall be revived  and
continue as if such payment or proceeds  had not been  received by Agent or such
Lender.

     15.5  Indemnity.  Borrower shall indemnify  Agent,  each Lender and each of
their  respective  officers,  directors,  Affiliates,  attorneys,  employees and
agents from and against any and all liabilities,  obligations,  losses, damages,
penalties,  actions,  judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on,  incurred by, or asserted  against Agent or
any  Lender  in  any  litigation,  proceeding  or  investigation  instituted  or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Loan  Documents,  whether or not
Agent or any Lender is a party  thereto,  except to the  extent  that any of the
foregoing arises out of the willful misconduct of the party being indemnified.
<PAGE>

     15.6 Notice. Any notice or request hereunder may be given to Borrower or to
Agent or any Lender at their  respective  addresses  set forth  below or at such
other address as may  hereafter be specified in a notice  designated as a notice
of change of address under this Section. Any notice, request,  demand, direction
or other  communication  (for purposes of this Section 15.6 only, a "Notice") to
be given to or made  upon any party  hereto  under  any  provision  of this Loan
Agreement  shall be given or made by telephone or in writing (which  includes by
means of electronic  transmission (i.e.,  "e-mail") or facsimile transmission or
by  setting  forth  such  Notice  on a site on the  World  Wide Web (a  "Website
Posting") if Notice of such Website Posting (including the information necessary
to access such site) has previously  been  delivered to the  applicable  parties
hereto by another means set forth in this Section 15.6) in accordance  with this
Section 15.6. Any such Notice must be delivered to the applicable parties hereto
at the addresses and numbers set forth under their  respective  names on Section
15.6 hereof or in accordance with any subsequent  unrevoked Notice from any such
party that is given in accordance  with this Section  15.6.  Any Notice shall be
effective:

     15.6.1 In the case of hand-delivery, when delivered;

     15.6.2 If given by mail,  four days after such Notice is deposited with the
United States Postal Service,  with first-class postage prepaid,  return receipt
requested;

     15.6.3 In the case of a  telephonic  Notice,  when a party is  contacted by
telephone,  if delivery of such telephonic Notice is confirmed no later than the
next Business Day by hand delivery,  a facsimile or electronic  transmission,  a
Website  Posting or an  overnight  courier  delivery  of a  confirmatory  Notice
(received at or before noon on such next Business Day);

     15.6.4 In the case of a facsimile transmission, when sent to the applicable
party's facsimile  machine's  telephone number, if the party sending such Notice
receives confirmation of the delivery thereof from its own facsimile machine;

     15.6.5 In the case of electronic transmission, when actually received;

     15.6.6 In the case of a Website Posting,  upon delivery of a Notice of such
posting  (including  the  information  necessary to access such site) by another
means set forth in this Section 15.6; and

     15.6.7 If given by any other means (including by overnight  courier),  when
actually received.

     Any  Lender  giving a Notice to  Borrower  shall  concurrently  send a copy
thereof to the Agent,  and the Agent shall promptly  notify the other Lenders of
its receipt of such Notice.
<PAGE>

         If to Agent or PNC at:         PNC Bank, National Association
                                        One PNC Plaza
                                        249 Fifth Avenue,  6th Floor
                                        Pittsburgh,  Pennsylvania  15222
                                        Attention: Doreen K. Casey
                                        Telephone:  (412) 762-2881
                                        Telecopier: (412) 768-4369


         with a copy to:                PNC Bank, National Association
                                        PNC Agency Services
                                        One PNC Plaza, 22nd Floor
                                        249 Fifth Avenue
                                        Pittsburgh, Pennsylvania 15222

         with a copy to:                Frost Brown Todd LLC
                                        2200 PNC Center
                                        201 E. 5th Street
                                        Cincinnati, Ohio 45202
                                        Attention:   Michael  O'Grady
                                        Telephone:  (513)  651-6800
                                        Facsimile: (513) 651-6981

     If to a Lender other than Agent, as specified on the signature pages hereof

         If to Borrower:                U.S. Rubber Reclaiming, Inc.
                                        111 Monument Circle
                                        Bank One Tower, Suite 4800
                                        Indianapolis, IN 46204
                                        Attention: Timothy S. Durham
                                        Telephone: (317) 237-4122
                                        Facsimile: (317) 237-0137

         With a copy to:                Bamberger & Feibleman
                                        111 Monument Circle
                                        Bank One Tower, Suite 4800
                                        Indianapolis, IN 46204
                                        Attention: Neil E. Lucas
                                        Telephone: (317) 472-1480
                                        Facsimile: (317) 237-0137

     15.7 Survival.  The obligations of Borrower under Sections 2.3.6, 3.9, 3.10
3.11 4.19.8,  14.7 and 15.5 shall survive  termination of this Agreement and the
Loan Documents and payment in full of the Obligations.

     15.8 Severability. If any part of this Agreement is contrary to, prohibited
by, or deemed invalid under applicable laws or regulations, such provision shall
be  inapplicable  and deemed  omitted to the extent so contrary,  prohibited  or
invalid,  but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
<PAGE>

     15.9  Expenses.  All  costs and  expenses  including,  without  limitation,
reasonable  attorneys'  fees (including the allocated costs of in house counsel)
and  disbursements  incurred  by Agent on its behalf or on behalf of Lenders and
Lenders (a) in all efforts made to enforce  payment of any  Obligation or effect
collection  of any  Collateral,  or (b) in  connection  with the entering  into,
modification, amendment, administration and enforcement of this Agreement or any
consents  or  waivers  hereunder  and  all  related  agreements,  documents  and
instruments,  or (c) in  instituting,  maintaining,  preserving,  enforcing  and
foreclosing on Agent's  security  interest in or Lien on any of the  Collateral,
whether  through  judicial  proceedings  or  otherwise,  or (d) in  defending or
prosecuting any actions or proceedings  arising out of or relating to Agent's or
any Lender's  transactions  with Borrower,  or (e) in connection with any advice
given to Agent or any Lender with  respect to its rights and  obligations  under
this Agreement and all related agreements,  may be charged to Borrower's Account
and shall be part of the Obligations.

     15.10 Injunctive  Relief.  Borrower  recognizes that, in the event Borrower
fails to perform,  observe or discharge any of its  obligations  or  liabilities
under this  Agreement,  any remedy at law may prove to be  inadequate  relief to
Lenders;  therefore, Agent, if Agent so requests, shall be entitled to temporary
and  permanent  injunctive  relief in any such case  without  the  necessity  of
proving that actual damages are not an adequate remedy.

     15.11 Consequential Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to Borrower for consequential  damages
arising  from any  breach  of  contract,  tort or other  wrong  relating  to the
establishment, administration or collection of the Obligations.

     15.12  Cautions.  The  captions  at various  places in this  Agreement  are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

     15.13 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of and by different parties hereto on separate  counterparts,  all of
which, when so executed,  shall be deemed an original, but all such counterparts
shall constitute one and the same agreement.  Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto.

     15.14 Construction. The parties acknowledge that each party and its counsel
have reviewed this  Agreement  and that the normal rule of  construction  to the
effect that any ambiguities are to be resolved  against the drafting party shall
not be employed  in the  interpretation  of this  Agreement  or any  amendments,
schedules or exhibits thereto.

     15.15 Confidentiality; Sharing Information.

     15.15.1 Agent,  each Lender and each  Transferee  shall hold all non-public
information  obtained by Agent,  such Lender or such Transferee  pursuant to the
requirements  of this  Agreement in accordance  with Agent's,  such Lender's and
such Transferee's customary procedures for handling confidential  information of
this nature;  provided,  however,  Agent,  each Lender and each  Transferee  may
disclose such confidential information (a) to its examiners, affiliates, outside
auditors,  counsel and other professional  advisors, (b) to Agent, any Lender or
to any prospective  Transferees and Purchasing  Lenders,  and (c) as required or
requested  by any  Governmental  Body or  representative  thereof or pursuant to
legal  process;  provided,  further that (i) unless  specifically  prohibited by
applicable law or court order,  Agent, each Lender and each Transferee shall use
its  best  efforts  prior to  disclosure  thereof,  to  notify  Borrower  of the
applicable  request  for  disclosure  of such  non-public  information  (A) by a
Governmental  Body or  representative  thereof  (other than any such  request in
connection  with an  examination  of the  financial  condition  of a Lender or a
Transferee by such Governmental  Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials  furnished by Borrower other than those  documents and  instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once  the  Obligations  have  been  paid in full  and  this  Agreement  has been
terminated.
<PAGE>

     15.15.2 Borrower  acknowledges  that from time to time financial  advisory,
investment  banking and other services may be offered or provided to Borrower or
one or more of its Affiliates  (in connection  with this Agreement or otherwise)
by any Lender or by one or more  Subsidiaries  or  Affiliates of such Lender and
Borrower hereby  authorizes  each Lender to share any  information  delivered to
such Lender by Borrower and its Subsidiaries  pursuant to this Agreement,  or in
connection with the decision of such Lender to enter into this Agreement, to any
such Subsidiary or Affiliate of such Lender,  it being  understood that any such
Subsidiary or Affiliate of any Lender receiving such information  shall be bound
by the provisions of this Section 15.15 as if it were a Lender  hereunder.  Such
authorization  shall  survive the  repayment  of the other  Obligations  and the
termination of the Loan Agreement.

     15.16 Publicity.  Borrower and each Lender hereby  authorizes Agent to make
appropriate  announcements  of the  financial  arrangement  entered  into  among
Borrower, Agent and Lenders, including, without limitation,  announcements which
are commonly  known as  tombstones,  in such  publications  and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.

     [Remainder of page intentionally left blank; signature page to follow.]



<PAGE>


     Each of the parties has signed this  Agreement as of the day and year first
above written.

                                    U.S. RUBBER RECLAIMING, INC.



                                    By:/s/ Timothy S. Durham
                                       ----------------------------------------
                                    Name: Timothy S. Durham
                                    Title:  Chairman

                                    PNC BANK, NATIONAL ASSOCIATION,
                                    as Lender and as Agent

                                    By: /s/ Paul J. Count
                                        ---------------------------------------
                                    Name:  Paul J. Count
                                    Title:  Vice President


                                    Commitment Percentage: 100%



STATE OF INDIANA           )
                           ) ss:
COUNTY OF HAMILTON         )

     On this 25TH day of October, 2002, before me personally came Tim Durham, to
me  known,  who,  being  by me duly  sworn,  did  depose  and say that he is the
authorized officer of U.S. RUBBER RECLAIMING, INC., the corporation described in
and which  executed  the  foregoing  instrument;  that he knows the seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that it was so affixed by order of the board of directors  of said  corporation,
and that he signed his name thereto by like order.

                                        /s/Shannon Frantz
                                        ------------------------------------
                                        Notary Public


SHANNON FRANTZ
NOTARY PUBLIC STATE OF INDIANA
HAMILTON COUNTY
MY COMMISSION EXP. JUNE 13,2010


<PAGE>


                                LIST OF SCHEDULES
Schedules

Schedule 1.2                        Permitted Encumbrances

Schedule 5.7                        Environmental

Schedule 5.8.4                      Plans

Schedule 5.10                       Licenses and Permits

Schedule 5.14                       Labor Disputes



<PAGE>


                                    TERM NOTE

$4,000,000                                          Indianapolis, Indiana
                                                    Dated as of October 25, 2002


     FOR VALUE RECEIVED, U.S. RUBBER RECLAIMING,  INC. (the "Borrower") promises
to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the "Lender"),  in lawful
money of the  United  States of America in  immediately  available  funds at the
Lender's offices located at Two Tower Center Blvd.,  8th Floor,  East Brunswick,
NJ 08816,  or at such other  location as the Lender may  designate  from time to
time, the principal sum of FOUR MILLION DOLLARS  ($4,000,000)  (the  "Facility")
together with interest  accruing on the outstanding  principal  balance from the
date hereof, all as provided below:

1.   Rate of Interest.  Subject to the  applicability  of the Default Rate,  the
     principal amount  outstanding  under this Note will bear interest at a rate
     per  annum as set  forth in the Loan  Agreement  (as  defined  below).  All
     interest  calculations  under the Loan Agreement and this Note will be made
     based on a year of 360 days for the actual  number of days in each interest
     period.  In no event  will the rate of  interest  hereunder  exceed 25% per
     annum or such lesser amount as is the maximum permitted by law.

2.   Payment Terms. The obligation to make payments  hereunder is without relief
     from valuation and  appraisement  laws. The Borrower shall make payments of
     principal  and  accrued  interest  on this  Note as set  forth  in the Loan
     Agreement.  All  outstanding  principal  and  accrued  but unpaid  interest
     hereunder  shall be due and  payable in full on the  Expiration  Date.  The
     "Expiration Date" shall mean the last day of the Term set forth in the Loan
     Agreement,  or such later date as may be designated by the Agent by written
     notice to the Borrower.  The Borrower hereby authorizes the Agent to charge
     the Borrower's  Account for any payment when due  hereunder.  All payments,
     including  prepayments,  received  will be  applied  to  charges,  fees and
     expenses  (including  reasonable  attorneys'  fees),  accrued  interest and
     principal in the order specified in the Loan Agreement.

3.   Late  Payments;  Default Rate. If the Borrower fails to make any payment of
     principal,  interest or other amount due pursuant to the provisions of this
     Note and the Loan  Agreement,  the  Borrower  also shall pay a late  charge
     equal to the lesser of five  percent  (5%) of the amount of such payment or
     $100.00.  The late  charge is  imposed  for the  purpose of  defraying  the
     expenses incident to the handling of delinquent payments and is in addition
     to, and not in lieu of, the  exercise by the Lender and Agent of any rights
     and remedies hereunder,  under the Loan Agreement,  Loan Documents or under
     applicable laws, and any fees and expenses of any agents or attorneys which
     the Lender or Agent may employ.  If any  Obligations  are not paid when due
     (whether by  acceleration,  demand or  otherwise),  the Borrower  shall pay
     interest on such amount at the Default  Rate until it is paid in full.  The
     Default  Rate shall  continue  to apply  whether or not  judgment  shall be
     entered on this Note.
<PAGE>

4.   Loan  Documents.  This  Note is  issued in  connection  with the  Revolving
     Credit,  Term Loan and Security Agreement between Borrower,  Agent, and the
     Lenders identified therein of even date herewith (the "Loan Agreement") and
     is  secured  by the  Collateral  covered  by the  Loan  Agreement  and Loan
     Documents as that term is defined in the Loan Agreement.  All references to
     the Loan  Agreement  and the Loan  Documents  will  include all  amendments
     thereto  as made  from  time to time.  The  terms,  covenants,  conditions,
     stipulations  and  agreements  contained in the Loan  Agreement  hereby are
     incorporated  herein by reference.  Capitalized terns used in this Note and
     not otherwise defined herein will have the meanings given such terms in the
     Loan Agreement.

5.   Events of Default.  Immediately and automatically upon the occurrence of an
     Event of  Default  under  Section  10.7 of the Loan  Agreement,  or, at the
     option of Lender,  immediately  upon the  occurrence  of any other Event of
     Default, in any case without demand or notice of any kind (which are hereby
     expressly  waived):  (i) the  Obligations  will become  immediately due and
     payable,  (ii) Borrower will pay to Agent and Lender all  reasonable  costs
     and expenses  (including  but not limited to  reasonable  Attorneys'  Fees)
     incurred by them in  connection  with  efforts to collect the  indebtedness
     evidenced hereby, and (iii) Lender and Agent may exercise from time to time
     any of the rights and remedies  available to them under the Loan  Documents
     or applicable law. Upon and after the occurrence of any Event of Default or
     the maturity of this Note (by  acceleration  or  otherwise),  the principal
     balance under this Note, together with any arrearage of interest, will bear
     interest at the Default  Rate until paid in full,  whether  before or after
     judgment.  Borrower,  all other  makers,  co-signers  and  indorsers  waive
     presentment,  demand, protest, and notice of demand,  protest,  non-payment
     and  dishonor.  Borrower  also waives all defenses  based on  suretyship or
     impairment of collateral.

6.   Right of Setoff. In addition to all liens upon and rights of setoff against
     the money, securities or other property of the Borrower given to the Lender
     and/or  Agent by law, the Lender  and/or Agent shall have,  with respect to
     the  Obligations  upon the occurrence of an Event of Default under the Loan
     Agreement  and to the extent  permitted  by law, a  contractual  possessory
     security  interest in and a contractual  right of setoff  against,  and the
     Borrower hereby assigns,  conveys,  delivers,  pledges and transfers to the
     Lender and/or Agent all of the Borrower's right,  title and interest in and
     to, all deposits, moneys, securities and other property of the Borrower now
     or hereafter in the possession of or on deposit with, or in transit to, the
     Lender  and/or  Agent  whether  held in a general  or  special  account  or
     deposit,  whether  held  jointly  with  someone  else,  or whether held for
     safekeeping or otherwise,  excluding,  however,  all IRA, Keogh,  and trust
     accounts. Every such security interest and right of setoff may be exercised
     without  demand upon or notice to the Borrower.  Every such right of setoff
     shall be deemed to have been exercised  immediately  upon the occurrence of
     an Event of Default  hereunder  without  any  action of the  Lender  and/or
     Agent,  although the Lender and/or Agent may enter such setoff on its books
     and records at a later time.

7.   Miscellaneous.  No delay or omission of the Lender and/or Agent to exercise
     any right or power arising  hereunder  shall impair any such right or power
     or be  considered  to be a waiver of any such  right or power nor shall the
     Lender's  and/or Agent's action or inaction impair any such right or power.
     The Borrower agrees to pay on demand,  to the extent  permitted by law, all
     reasonable  costs and expenses  incurred by the Lender  and/or Agent in the
     enforcement  of its'  rights  in this  Note and in any  security  therefor,
     including without  limitation  reasonable fees and expenses of the Lender's
     and/or  Agent's  counsel.  If any  provision  of this  Note is  found to be
     invalid by a court,  all the other  provisions  of this Note will remain in
     full force and effect.  The Borrower and all other makers and  endorsers of
     this Note hereby forever waive presentment, protest, notice of dishonor and
     notice of  non-payment.  This Note shall bind the  Borrower  and its heirs,
     executors, administrators,  successors and assigns, and the benefits hereof
     shall inure to the benefit of Lender and its successors and assigns.
<PAGE>

     This Note shall be governed by and construed in accordance with the laws of
     the State of Indiana applied to contracts to be performed wholly within the
     State of Indiana.  Any judicial  proceeding  brought by or against Borrower
     with respect to any of the  Obligations,  this Note,  the Loan Documents or
     any related agreement may be brought in any court of competent jurisdiction
     in the State of Indiana,  United  States of America,  and, by execution and
     delivery of this Note,  Borrower  accepts for itself and in connection with
     its   properties,   generally  and   unconditionally,   the   non-exclusive
     jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by
     any judgment rendered thereby in connection with this Note. Borrower hereby
     waives  personal  service of any and all process upon it and consents  that
     all such service of process may be made by registered  mail (return receipt
     requested) directed to Borrower at its address set forth in Section 15.6 of
     Loan Agreement and service so made shall be deemed  completed five (5) days
     after the same  shall  have been so  deposited  in the mails of the  United
     States of America.  Nothing  herein shall affect the right to serve process
     in any  manner  permitted  by law or shall  limit the right of Agent or any
     Lender to bring  proceedings  against  Borrower  in the courts of any other
     jurisdiction.  Borrower waives any objection to  jurisdiction  and venue of
     any action  instituted  hereunder and shall not assert any defense based on
     lack of  jurisdiction  or venue or based  upon  forum non  conveniens.  Any
     judicial  proceeding  by Borrower  against  Agent or any Lender  involving,
     directly  or  indirectly,  any matter or claim in any way  arising  out of,
     related to or connected with this Note or any related  agreement,  shall be
     brought  only in a federal or state court  located in the County of Marion,
     State of Indiana.

8.   WAIVER OF JURY TRIAL.  The Borrower  irrevocably  waives any and all rights
     the Borrower may have to a trial by jury in any action, proceeding or claim
     of any nature  relating to this Note, any documents  executed in connection
     with this Note or any  transaction  contemplated  in any of such documents.
     The  Borrower  acknowledges  that  the  foregoing  waiver  is  knowing  and
     voluntary.  The Borrower  acknowledges  that it has read and understood all
     the  provisions of this Note,  including the waiver of jury trial,  and has
     been advised by counsel as necessary or appropriate.

                                        U.S. RUBBER RECLAIMING, INC.



                                         By: /s/Timothy S. Durham
                                             ---------------------------------
                                         Print Name: Timothy S. Durham
                                         Title: Chairman



<PAGE>

                        DEED OF TRUST, SECURITY AGREEMENT
                       AND ASSIGNMENT OF LEASES AND RENTS

                         (U.S. Rubber Reclaiming, Inc.)

"This Deed of Trust secures,  among other things, a line of credit as defined in
Miss. Code Ann.ss.89-1-49  (Supp. 1998), and shall not be extinguished until the
conditions of Miss. Code Ann.ss.89-5-21 (Supp. 1998) are met."

     This Deed of Trust is dated as of  October  25,  2002 and is  entered  into
among U.S. Rubber  Reclaiming,  Inc., an Indiana  corporation,  whose address is
2000 Rubberway Road,  Vicksburg,  Mississippi  39182 (referred to hereinafter as
"Grantor"),  PNC Bank, National Association,  as Agent, whose address is One PNC
Plaza, 249 Fifth Avenue, 6th Floor, Pittsburgh, Pennsylvania 15222, (referred to
below  sometimes  as "Agent" and  sometimes  as  "Beneficiary"),  and William L.
Shappley,  Jr..,  whose address is 800 Trustmark  National Bank  Building,  1301
Washington Street, Vicksburg, Mississippi 39181-0991 (referred to hereinafter as
"Trustee").

     For  valuable  consideration,  Grantor  conveys to Trustee in trust for the
benefit of Agent for the Lenders, as Beneficiary,  all of Grantor's right, title
and  interest  in and  to  certain  real  property  located  in  Warren  County,
Mississippi,  more particularly described in Exhibit A, attached hereto and made
a part  hereof for all  purposes  (hereinafter  referred  to as "Real  Estate"),
together  with all  rights,  title and  interests  of Grantor  now  existing  or
hereafter arising in and to:

(A)  All rights, privileges, interests, tenements, hereditaments,  easements and
     appurtenances  in  any  way  now  or  hereafter  benefiting,  belonging  or
     appertaining to all or any of the Real Estate,  including  without limiting
     the  generality  of the  foregoing  all land lying  within any  roadway and
     strips adjoining all or any of the Real Estate, all minerals,  oil, gas and
     other  hydrocarbon  substances  thereon or  therein  and all air rights and
     water rights (collectively, the "Easements and Appurtenances");

(B)  All  buildings,  structures  and  other  improvements  of  every  kind  and
     description  now or hereafter  erected,  constructed  or placed on the Real
     Estate,  together  with  all  fixtures  now or  hereafter  located  upon or
     attached to the Real Estate,  and all replacements  thereof  (collectively,
     the "Improvements");

(C)  All  extensions,  improvements,   betterments,  substitutes,  replacements,
     renewals,   additions  and   appurtenances  of  or  to  the  Easements  and
     Appurtenances   and  of  or  to   the   Improvements   (collectively,   the
     "Additions");
<PAGE>

(D)  All rents,  issues,  proceeds,  income and profits of the Real Estate,  the
     Easements and Appurtenances, the Additions and the Improvements,  including
     all leases and subleases of all or any of such property (collectively,  the
     "Rents");

(E)  All Accounts,  Inventory,  Equipment,  General Intangibles,  Chattel Paper,
     Investment  Property,  Instruments,  Documents,  Letter of  Credit  Rights,
     Supporting  Obligations,  and Commercial Tort Claims,  as each such term is
     defined  under the  applicable  version of the Uniform  Commercial  Code in
     effect (collectively, the "Personal Property"); and

(F)  All awards,  payments  and  proceeds of  conversion,  whether  voluntary or
     involuntary,  of any of  the  Real  Estate,  Easements  and  Appurtenances,
     Improvements,  Additions  and  Rents,  including  without  limitation,  all
     insurance,  condemnation and tort claims, rent claims and other obligations
     dischargeable in cash (collectively, the "Proceeds").

     The Real Estate,  the Easements and  Appurtenances,  the Improvements,  the
Additions,  the Rents, the Personal  Property,  and the Proceeds are referred to
herein collectively, as the "Mortgaged Property".

     Capitalized  terms  used in this  Deed of Trust and not  otherwise  defined
herein  shall have the  meanings  ascribed to such terms in Paragraph 22 of this
Deed of Trust, or in the Loan Agreement, as defined below, as applicable.

     This Deed of Trust is given to secure the  performance and payment when due
of the  Indebtedness.  As used  herein,  the  term  "Indebtedness"  shall  mean,
collectively:  (i) the covenants and agreements contained in this Deed of Trust,
(ii) all  Obligations (as defined  below),  together with all interest  accruing
thereon, and all costs, expenses and attorneys' fees incurred in the enforcement
or collection  thereof,  whether such indebtedness,  obligations and liabilities
are  direct,  indirect,  fixed,  contingent,  liquidated,  unliquidated,  joint,
several or joint and several,  (iii) the covenants and  agreements  contained in
any  and  all  other  instruments,   security  agreements,   pledge  agreements,
assignments of collateral,  Deed of Trusts, security documents,  guaranties, and
other agreements or documents ever delivered by Grantor to Agent pursuant to the
Loan Agreement or to secure all or any part of the Obligations, (iv) any and all
future advances made in the discretion of Agent or Lenders, and (v) all renewals
or extensions or restatements of, and any and all amendments or modifications of
or supplements to, all or any part of the foregoing.
<PAGE>

     All persons who have or may acquire an interest in the  Mortgaged  Property
shall be  deemed  to have  notice of and shall be bound by the terms of the Loan
Documents,  and any other  instruments  or  documents  made or  entered  into in
connection herewith and the terms of the Indebtedness, including notice that the
rate of interest on some or all of the Indebtedness may vary from time to time.

     Grantor hereby further covenants with the Agent as follows:

     1.  Payment  of Sums  Due.  Grantor  promptly  will pay as and when due the
Indebtedness,  all without relief from valuation and appraisement  laws and with
reasonable  attorneys'  fees.  Grantor waives demand,  presentment  for payment,
notice of protest and notice of nonpayment or dishonor of the Indebtedness.

     2. Care and  Condition of Mortgaged  Property.  Grantor  shall (a) promptly
repair,  restore or rebuild any part of the Mortgaged  Property which may become
damaged or be destroyed;  (b) keep the Mortgaged  Property in good condition and
thorough repair,  ordinary wear and tear excepted,  without waste, and free from
Liens and  claims  for Liens  (including,  without  limitation,  mechanic's  and
materialmen's  Liens)  not  expressly  subordinated  to the Lien of this Deed of
Trust,  other than Permitted  Encumbrances;  (c) pay any  indebtedness  when due
(after  expiration  of all  applicable  notice and grace  periods)  which may be
secured by a Lien or charge on the Mortgaged Property,  whether or not superior,
equal or junior to the Lien of this Deed of Trust,  excepting only  indebtedness
the payment of which is being  diligently  contested in good faith and by proper
proceedings  and for which adequate  reserves have been  established by Grantor;
(d) comply,  and cause any lessees and  sublessees of the Mortgaged  Property to
comply with all material requirements of law, municipal ordinances, restrictions
of record or insurance  covenants with respect to the Mortgaged Property and its
use; and (e) permit Agent to enter upon and inspect the Mortgaged  Property with
reasonable prior notice and at reasonable times.

     3.  Hazardous   Substances.   The  terms  "hazardous   waste,"   "hazardous
substance,"  "disposal,"  "release," and  "threatened  release," as used in this
Deed of Trust,  shall have the same  meanings as set forth in the  Comprehensive
Environmental Response,  Compensation, and Liability Act of 1980, as amended, 42
U.S.C.   ss.  9601,   et  seq.   ("CERCLA"),   the  Superfund   Amendments   and
Reauthorization  Act of  1986,  Pub.  L.  No.  99-499  ("SARA"),  the  Hazardous
Materials  Transportation  Act,  49  U.S.C.  ss.  1801,  et seq.,  the  Resource
Conservation and Recovery Act, 42 U.S.C.  ss.6901,  et seq., or other applicable
state or Federal laws,  rules,  or  regulations  adopted  pursuant to any of the
foregoing.  The terms  "hazardous  waste" and "hazardous  substance"  shall also
include, without limitation,  petroleum and petroleum byproducts or any fraction
thereof an asbestos.  Grantor  represents and warrants to Agent that,  except as
noted in Phase I  Environmental  Report of the  Mortgaged  Property  dated as of
October 10, 2002: (a) during the period of Grantor's  ownership of the Property,
there has been no use, generation,  manufacture,  storage, treatment,  disposal,
release or threatened  release of any hazardous waste or substance by any person
on,  under,  about or from the  Property;  (b) Grantor has no  knowledge  of, or
reason to believe  that there has been,  except as  previously  disclosed to and
acknowledged by Agent in writing, (i) any use, generation, manufacture, storage,
treatment,  disposal,  release,  or threatened release of any hazardous waste or
substance on, under, about or from the Property by any prior owners or occupants
of the Property,  or (ii) any actual or  threatened  litigation or claims of any
kind by any  person  relating  to such  matters;  and (c)  except as  previously
disclosed to and  acknowledged by Agent in writing,  (i) neither Grantor nor any
tenant,  contractor,  agent or other  authorized user of the Property shall use,
generate,  manufacture, store, treat, dispose of, or release any hazardous waste
or substance  on,  under,  about or from the Property and (ii) any such activity
shall be conducted in compliance with all applicable  federal,  state, and local
laws,  regulations  and ordinances,  including  without  limitation  those laws,
regulations,  and ordinances  described above.  Grantor authorizes Agent and its
agents  to enter  upon the  Property  to make such  inspections  and  tests,  at
Grantor's expense, as Agent may deem appropriate to determine  compliance of the
Property with this section of the Deed of Trust.  Any  inspections or tests made

<PAGE>

by Agent shall be for Agent's purposes only and shall not be construed to create
any  responsibility or liability on the part of Agent to Grantor or to any other
person.  The  representations  and  warranties  contained  herein  are  based on
Grantor's due diligence in  investigating  the Property for hazardous  waste and
hazardous  substances.  Grantor hereby (a) releases and waives any future claims
against Agent for indemnity or  contribution in the event Grantor becomes liable
for cleanup or other costs under any such laws,  and (b) agrees to indemnify and
hold harmless Agent against any and all claims,  losses,  liabilities,  damages,
penalties, and expenses which Agent may directly or indirectly sustain or suffer
resulting from a breach of this section of the Deed of Trust or as a consequence
of any use, generation,  manufacture,  storage,  disposal, release or threatened
release of a hazardous  waste or substance on the  Property.  The  provisions of
this section of the Deed of Trust, including the obligation to indemnify,  shall
survive the payment of the Indebtedness and the satisfaction and reconveyance of
the lien of this Deed of Trust and shall not be affected by Agent's  acquisition
of any interest in the Property, whether by foreclosure or otherwise.

     4.  Covenants and  Warranties.  Grantor  covenants and warrants  that:  (a)
Grantor  is  lawfully  seized of the Real  Estate in fee  simple,  has valid and
indefeasible  title to the Mortgaged  Property and has a good and legal right to
Deed of Trust the  Mortgaged  Property  to Agent;  and (b) all of the  Mortgaged
Property is and will remain free from all Liens  excepting only the Lien of real
estate  taxes  not  yet  delinquent,  Permitted  Encumbrances,  those  easements
disclosed to Agent in writing  prior to the  execution and delivery of this Deed
of Trust,  and those Liens which are in favor of Agent, and Grantor will warrant
and defend, at Grantor's expense,  Grantor's rights,  title and interests in and
to the Mortgaged Property against all claims made thereon.

     5. Insurance.  Grantor, at its sole cost and expense, shall obtain and keep
in full force and effect such policies of insurance as required  under the terms
of the Credit Agreement to be maintained by Grantor ("Required Insurance"),  the
proceeds  of which  shall be  governed  by and  subject to the terms of the Loan
Agreement.

     6. Taxes. Grantor will pay and discharge or cause to be paid and discharged
when due,  and before any penalty  attaches,  all taxes of every kind and nature
relating  to or  imposed  upon  the  Mortgaged  Property,  general  and  special
assessments, water rates and sewer rents, and all other governmental,  municipal
and public dues,  charges,  fmes and impositions  whether of a like or different
nature,  imposed upon or assessed  against Grantor or the Mortgaged  Property or
arising in respect of the occupancy,  use or possession thereof. Upon request by
Agent,  Grantor will deliver to Agent, not later than 30 days after delinquency,
duplicate  receipts  evidencing  the  payment  of all such  taxes,  charges  and
assessments.

     Grantor shall also pay prior to delinquency all taxes, assessments,  levies
and charges  imposed by any  governmental  authority upon the Agent by reason of
its  interest  in any  Indebtedness  or in any of the  Mortgaged  Property or by
reason  of any  payment  made to Agent  hereunder;  but  Grantor  shall  have no
obligation to pay or discharge taxes which may be imposed from time to time upon
this Deed of Trust and which are  measured  by and  imposed  upon the  income of
Agent.
<PAGE>

     7. Protection of Security by Agent. Each and every covenant in this Deed of
Trust shall be performed and kept by Grantor solely at Grantor's expense. At its
option,  but without any duty or  obligation of any sort to do so and without in
any way waiving or  relieving  any Default by Grantor  under this Deed of Trust,
Agent may make any payment and perform any act required of Grantor to be made or
performed by this Deed of Trust, in the event Grantor fails to make such payment
when due or timely  perform any such act,  including but not limited to: payment
of  insurance  premiums,  taxes,  charges  and  assessments;  payment  of  prior
encumbrances;  and purchase,  discharge,  compromise or settlement of any tax or
other Lien or title,  prior or on a parity  with the Lien of this Deed of Trust.
As between  Grantor and Agent,  all such Liens and taxes shall be deemed  valid.
Agent  agrees to give  Grantor at least five (5) days  written  notice  prior to
making any such payment  except that no such prior notice shall be required with
respect to payment of insurance  premiums or in any other  circumstance in which
Agent  reasonably  determines  that  such  payment  is  necessary  to  avoid  an
immediate,  material  adverse  affect  upon  all or any  part  of the  Mortgaged
Property.  All monies so paid and all expenses incurred in connection therewith,
including reasonable attorneys' fees, and any other monies advanced and expenses
incurred by Agent to protect the Mortgaged  Property,  and the security intended
to be given by this Deed of Trust,  including all costs, expenses and reasonable
attorneys  fees,  incurred by Agent in respect of any and all legal or equitable
proceedings  which  relate to this Deed of Trust or to the  Mortgaged  Property,
shall  constitute  Indebtedness  secured  by this  Deed of  Trust  and  shall be
immediately due and payable by Grantor on demand and with interest  thereon from
and after such demand  until paid in full at a rate of interest  per annum equal
to the Default Rate for Domestic Rate Loans.

     8.  Transfer  of  Mortgaged  Property.  Subject  to the  terms  of the Loan
Agreement,  Grantor  shall  not,  without  the prior  written  consent of Agent,
directly or indirectly  (whether  voluntarily,  involuntarily or by operation of
law) sell (whether  outright or by land contract,  conditional sales contract or
any other such  agreement),  lease (other than leasing office or warehouse space
to lessees in the ordinary course of business),  convey,  transfer or in any way
further  encumber,  Deed of Trust or assign  the  Mortgaged  Property  or any of
Grantor's  rights,  title or interests  therein  (each of such actions or events
being hereinafter called a "Transfer").

     9. Condemnation  Proceeds. All awards of damages and all other compensation
payable directly or indirectly by reason of a condemnation for public or private
use affecting any interest in the  Mortgaged  Property  shall be governed by and
subject to the terms of the Loan Agreement.
<PAGE>

     10. Security Agreement, Financing Statement.

     (a) This Deed of Trust is intended to be a security  agreement  pursuant to
the Uniform Commercial Code as adopted and in effect in the State of Mississippi
("UCC") for (i) any and all items of Personal  Property  specified above as part
of the  Mortgaged  Property  which,  under  applicable  law, may be subject to a
security interest pursuant to the UCC and which are not herein  effectively made
part of the real  property,  and (ii) any and all  items of  property  specified
above as part of the Mortgaged Property which, under applicable law,  constitute
fixtures and may be subject to a security  interest  under Article 9 of the UCC;
and Grantor hereby grants Agent a security interest in said property, and in all
additions thereto,  substitutions therefor and proceeds thereof, for the purpose
of securing all  Indebtedness  now or  hereafter  secured by this Deed of Trust.
Grantor  agrees to execute and deliver  financing  and  continuation  statements
covering  said  property from time to time and in such form as Agent may require
to perfect and continue the perfection of Agent's Lien or security interest with
respect to said property.  Grantor shall pay all costs of filing such statements
and  renewals  and  releases  thereof  and  shall pay all  reasonable  costs and
expenses of any record  searches for financing  statements  Agent may reasonably
require.  Upon the  occurrence  of any Default  hereunder,  Agent shall have the
rights  and  remedies  of a secured  party  under the UCC,  as well as all other
rights and remedies available at law or in equity, and, at Agent's option, Agent
may also invoke the remedies provided elsewhere in this Deed of Trust as to such
property.

     (b) This Deed of Trust constitutes a financing statement filed as a fixture
filing  under  the UCC in the real  estate  records  of the  county in which the
Mortgaged  Property is located  with  respect to any and all  fixtures  included
within  the term  "Mortgaged  Property"  and with  respect to any goods or other
personal  property that may now be or hereafter become such a fixture.  PARTS OF
THE MORTAGED PROPERTY ARE, OR ARE TO BECOME, FIXTURES ON THE REAL ESTATE.

     (c) Grantor's address is:

                         U.S. Rubber Reclaiming, Inc. 2000 Rubberway Road
                         Vicksburg, MS 39182
                         Attn: President

     (d) Agent's address is:

                           PNC Bank, National Association One PNC Plaza.
                           249 Fifth Avenue, 6th Floor
                           Pittsburgh, PA 15222 Attention: Doreen Casey

     11. Default and  Acceleration.  It is expressly agreed by Grantor that time
is of the essence of this Deed of Trust.  Except as expressly provided otherwise
in this  Deed of Trust,  upon the  occurrence  of any  Default,  as  hereinafter
defined,  and at any time  thereafter,  then,  in any and every such  case,  the
entire  Indebtedness  shall, at the option of Agent,  become immediately due and
payable without any notice, presentment,  demand, protest, notice of protest, or
other  notice  of  dishonor  or demand  of any  kind,  all of which  are  hereby
expressly  waived by  Grantor,  and Agent  shall have the right  immediately  to
foreclose the Lien created by this Deed of Trust against the Mortgaged Property,
to enforce every other  security  interest  created by this Deed of Trust and to
institute any action, suit or other proceeding which Agent may deem necessary or
proper for the protection of its interests.  The following shall each constitute
a "Default" for purposes of this Deed of Trust:

     (a)  If Grantor shall default under any covenant; condition or term of this
          Deed of Trust;

     (b)  The occurrence of any Transfer prohibited by this Deed of Trust; or

     (c)  The  occurrence  of an "Event of Default"  (as such term is defined in
          the Loan Agreement).
<PAGE>

     12. Possession of Mortgaged Property During Default. During the continuance
of any Default,  Agent (or any person, firm or corporation  designated to act on
behalf of Agent),  with the irrevocable  consent of Grantor herein given (a) may
enter  into  and upon all or any part of the  Mortgaged  Property,  may  exclude
Grantor therefrom and may hold, use, administer, operate, manage and control the
Mortgaged Property,  exercise all rights,  privileges and powers of Grantor with
respect thereto and conduct the business thereof, all to the same extent Grantor
could do so,  and (b) at the  expense  of  Grantor  and from  time to time,  may
maintain  and  restore  or  complete  the  Improvements  and  in the  course  of
completion may make such changes in the  Improvements as Agent deems  desirable.
Agent  shall be  entitled  to collect  and  receive  all the Rents and to deduct
therefrom the expenses of operating and conducting the business of the Mortgaged
Property and of all maintenance,  repairs, renewals, replacements,  alterations,
additions,  betterments,  improvements  and amounts  necessary to pay for taxes,
assessments,  Required  Insurance  and prior or other  proper  charges  upon the
Mortgaged Property as well as reasonable compensation for the services of Agent.
Any expenses of operating and conducting the business of the Mortgaged  Property
or as are  otherwise  incurred  by  Agent  pursuant  to the  provisions  of this
paragraph which remain unpaid after  application of such Rents shall  constitute
Indebtedness  secured  by this Deed of Trust and  shall be  immediately  due and
payable by Grantor without notice and with interest  thereon at the Default Rate
for Domestic  Rate Loans.  If Agent shall  exercise its rights as stated in this
paragraph,  Agent shall apply the net amounts received or collected by it, after
payment of expenses as aforesaid,  to the payment of the Indebtedness,  when and
as the same shall become due and payable.

     13.  Expenses.  All  reasonable  expenses,  costs  and  other  liabilities,
including  reasonable  attorneys'  fees, which Agent reasonably may incur (i) in
enforcing,  defending,  construing or  administering  this Deed of Trust (or its
priority),  (ii) for any  inspection,  evaluation,  appraisal,  survey  or other
service  permitted in connection with any of the Mortgaged  Property,  (iii) for
any title  examination or title insurance policy relating to the title to any of
the  Mortgaged  Property  or (iv) in the  exercise  by  Agent of any  rights  or
remedies granted by this Deed of Trust,  shall be paid by Grantor upon demand by
Agent,  together  with  interest  thereon,  from the date of  expenditure  until
payment  in full,  at the  Default  Rate  for  Domestic  Rate  Loans  and  shall
constitute a part of the Indebtedness secured by this Deed of Trust.

     14. Foreclosure Proceedings and Receiver.  Subject to the rights of tenants
in possession,  Agent shall be entitled and Grantor  consents to, as a matter of
right, if Agent shall so elect, without the giving of notice to any other party,
without   regard  to  the  adequacy  or  inadequacy  of  any  security  for  the
Indebtedness  and without the  requirement of any bond, to the  appointment of a
receiver or receivers. Grantor hereby expressly waives, to the extent allowed by
law, all right to have the Mortgaged  Property marshaled upon any foreclosure of
this Deed of Trust.  Agent shall be entitled to recover a judgment either before
or after or during the pendency of any  proceedings  for the enforcement of this
Deed of Trust. The right of Agent to recover such judgment shall not be affected
by any entry or sale hereunder,  or by the exercise of any other right, power or
remedy for the enforcement of this Deed of Trust, or the foreclosure of the Lien
of this Deed of Trust.
<PAGE>

     If any  Default  shall  have  occurred  then,  in that  event,  the  entire
Indebtedness,  together with all interest accrued thereon,  shall, at the option
of Beneficiary, be and become at once due and payable without notice to Grantor,
and Trustee (or the  Substituted  Trustee) shall, at the request of Beneficiary,
sell the Land conveyed, or a sufficiency thereof, to satisfy the Indebtedness at
public  outcry  to the  highest  bidder  for  cash.  Sale of the  Land  shall be
advertised  for  three  consecutive  weeks  preceding  the  sale in a  newspaper
published  in the  counties  where  the  Land  is  situated,  or if  none  is so
published,  then in some newspaper having a general circulation  therein, and by
posting a notice for the same time at the courthouses of the same counties.  The
notice and  advertisement  shall  disclose the names of the original  debtors in
this Deed of Trust.  If the Property is situated in two or more counties,  or in
two  judicial  districts of the same  county,  Trustee  shall have full power to
select in which county, or judicial district,  the sale of the property is to be
made, newspaper advertisement published and notice of sale posted, and Trustee's
selection  shall  be  binding  upon  Grantor  and  Beneficiary.   The  newspaper
publication in the various  counties where the Land is located shall specify the
county or judicial district in a particular county where the sale is to be made.
The Trustee may sell said property without taking possession of the same, and is
authorized to appoint an agent and  auctioneer to make such sale in his absence,
which  sale  shall be as valid as if made by said  Trustee.  At any such  public
sale,  Trustee  may execute and  deliver to the  purchaser a  conveyance  of the
Mortgaged  Property or any part of the Mortgaged  Property in fee simple. In the
event of any sale  under  this Deed of Trust by virtue  of the  exercise  of the
powers herein granted,  or pursuant to any order in any judicial  proceedings or
otherwise,  the  Mortgaged  Property  may be sold as an  entirety or in separate
parcels and in such manner or order as  Beneficiary  in its sole  discretion may
elect,  and if  Beneficiary  so  elects,  Trustee  or  Beneficiary  may sell the
personal property covered by this Deed of Trust at one or more separate sales in
any manner  permitted by the Uniform  Commercial Code as enacted in the state of
Mississippi,  and one or more  exercises of the powers herein  granted shall not
extinguish or exhaust such powers,  until the entire Mortgaged  Property is sold
or the Indebtedness  paid in full. If the Indebtedness now or hereafter  further
secured by any chattel mortgages, pledges, contracts of guaranty, assignments of
lease or other security  instruments,  Beneficiary at its option may exhaust the
remedies  granted under any of said security  instruments  or this Deed of Trust
either  concurrently  or  independently,  and in such order as  Beneficiary  may
determine.

     Said sale may be adjourned by the Trustee, or his agent or successors,  and
reset  at  a  later  date  without  additional  publication;  provided  that  an
announcement  to that effect be made at the scheduled  place of sale at the time
and on the date the sale is originally  set. Should Agent be a corporation or an
unincorporated  association,  then any officer thereof may declare Grantor to be
in default as provided in Paragraph 11 and request Trustee to sell the Property.
Agent shall have the same right to purchase the property at the foreclosure sale
as would a  purchaser  who is not a party to this Deed of  Trust,  and Agent may
make  settlement  for the purchase price by crediting the sale price against the
Indebtedness.

     With respect to all or any part of the Real Estate,  the Trustee shall,  at
the request of Agent,  sell the Real  Estate  after  giving  notice of the time,
place and terms of sale as required by Miss.  Code Ann. ss. 89-1-55  (1972),  as
amended,  and any successor  provisions,  and execute a deed to the purchaser of
the Real  Estate.  Out of the  proceeds  arising  from the  sale,  the costs and
expenses of executing this Deed of Trust,  including a reasonable  Trustee's fee
and the  attorneys'  fees  prescribed in the Loan  Agreement and in this Deed of
Trust,  shall first be paid; next, the amount of the indebtedness then remaining
unpaid  shall be paid;  and,  lastly,  any  balance  remaining  shall be paid to
Grantor or to Grantor's representatives, agents, or assigns.
<PAGE>

     15. No  Exclusive  Remedy.  Each and every right,  power and remedy  herein
conferred  upon or reserved  to Agent is  cumulative  and is not  intended to be
exclusive  of any other  remedy or  remedies,  and shall be in addition to every
other right,  power and remedy given  hereunder or now or hereafter  existing at
law or in equity or by statute. No delay or omission of Agent in the exercise of
any  right,  power  or  remedy  or any  other  right,  power or  remedy  then or
thereafter  existing,  shall  constitute or shall be construed to be a waiver of
any Default or any acquiescence therein; and every right, power and remedy given
by this  Deed of Trust to Agent may be  exercised  from time to time as often as
and in such order as may be deemed expedient by Agent.

     16. Powers and Obligations of Trustee. The following provisions relating to
the powers and obligations of Trustee are part of this Deed of Trust:

     Powers of Trustee. In addition to all powers of Trustee arising as a matter
     of law,  Trustee  shall have the power to take the  following  actions with
     respect to the Property upon the written request of Agent and Grantor:  (a)
     join in preparing  and filing a map or plat of the Real  Estate,  including
     the  dedication  of  streets  or other  rights to the  public;  (b) join in
     granting any easement or creating any  restriction on the Real Estate;  and
     (c) join in any  subordination  or other  agreement  affecting this Deed of
     Trust or the interest of Agent under this Deed of Trust.

     Obligations  to Notify.  Trustee shall not be obligated to notify any other
     party of a pending sale under any other  trustee,  deed or lien,  or of any
     action or proceeding in which Grantor,  Agent, or Trustee shall be a party,
     unless the action or proceeding is brought by trustee.

     Trustee.  Trustee shall meet all qualifications  required for Trustee under
     applicable  law. In addition to the rights and  remedies  set forth  above,
     with respect to all or any part of the Property, the Trustee shall have the
     right to  foreclose  by notice and sale,  and Agent shall have the right to
     foreclose by judicial foreclosure, in either case in accordance with and to
     the full extent provided by applicable law.

     Successor Trustee.  Agent, at Agent's option, may from time to time appoint
     a successor  Trustee to any Trustee  appointed  hereunder by an  instrument
     executed  and  acknowledged  by Agent  and  recorded  in the  office of the
     Chancery Clerk of Warren County, Mississippi. The instrument shall contain,
     in addition to all other matters  required by Mississippi law, the names of
     the original Agent,  Trustee and Grantor, the book and page where this Deed
     of Trust is recorded,  and the name and address of the  successor  trustee,
     and the  instrument  shall be  executed  and  acknowledged  by Agent or its
     successors in interest.  The successor  Trustee,  without conveyance of the
     Property,  shall succeed to all the title, power, and duties conferred upon
     the Trustee in this Deed of Trust and by applicable law. This procedure for
     substitution  of  trustee  shall  govern  to the  exclusion  of  all  other
     provisions for substitution.

     17. Assignment of Leases and Rents.

     (a) To secure  payment  and  performance  by Grantor  of the  Indebtedness,
Grantor hereby grants,  transfers and assigns to Agent all of Grantor's  rights,
title and  interests  in, to and under all leases and  tenancies now existing or
hereafter entered into by and between Grantor and each and any tenant, lessee or
sublessee  of the  Mortgaged  Property or any part thereof  ("Leases"),  and all
rents,  issues,  income and profits of the same including without limitation all
rentals  reserved in any of the Leases now or hereafter due and any  amendments,
modifications, extensions and renewals thereof.
<PAGE>

     Until the occurrence of a Default,  Grantor shall have the right to collect
and receive,  upon but not prior to accrual, all rents, issues and profits under
and from the Leases and with respect to the Mortgaged  Property.  Subject to the
rights of tenants in  possession,  upon or at any time after the occurrence of a
Default,  Agent at its option and without notice or demand, may enter upon, take
possession of and operate the Mortgaged Property,  as lessor,  enforce,  modify,
and accept the  surrender  of any or all of the Leases,  obtain and evict any of
the lessees or sublessees  under any of the Leases,  fix or modify rents, and do
any acts which Agent deems  proper to protect the security  hereof,  and, in its
own name, sue for or otherwise collect and receive all rents, issues and profits
due to Grantor  under or pursuant to the  Leases,  including  those past due and
unpaid.  Such rights may be exercised by Agent without regard to other security,
if any, for payment of the  Indebtedness  and without  releasing  Grantor or any
guarantor  of  any of the  Indebtedness  from  any  obligation.  Grantor  hereby
irrevocably   appoints   and   constitutes   Agent  as  its   true  and   lawful
attorney-in-fact with full power of substitution for and on behalf of Grantor to
request,  demand,  enforce  payment of, collect and receive the rentals  payable
under the Leases, to change, modify, release, waive, terminate,  alter, or amend
the Leases or any of the terms or  provisions  thereof,  including  the  rentals
thereunder,  to  endorse  any  checks,  drafts or orders  evidencing  payment of
rentals under the Leases,  and to do and perform any acts which Grantor might do
for and on Grantor's own behalf

     All rents  collected by Agent or a receiver  pursuant to this  paragraph 17
shall be  applied  first to the costs of taking  control  of, and  managing  and
operating the Mortgaged  Property and collecting the rents,  including,  but not
limited to, reasonable  attorneys' fees, receiver's fees, premiums on receiver's
bonds,  costs of  repairs  to the  Mortgaged  Property,  premiums  on  insurance
policies,  taxes,  assessments and other charges on the Mortgaged Property,  and
the costs of  discharging  any  obligation  or liability of Grantor as lessor or
landlord of the Mortgaged  Property and then toward payment of the  Indebtedness
secured  hereby.  Agent shall have  access to the books and records  used in the
operation  and  maintenance  of the  Mortgaged  Property  and shall be liable to
account  only for those rents  actually  received.  Agent shall not be liable to
anyone  claiming  under or through  Grantor or anyone  having an interest in the
Mortgaged  Property by reason of anything done or left undone by Agent under the
assignment  made by this  Paragraph 17, unless such  liability  results from the
willful misconduct or bad faith of Agent.

     If the rents of the Leases are not  sufficient  to meet the costs of taking
control of and managing the Mortgaged  Property and  collecting  the rents,  any
funds expended by Agent for such purposes shall become  Indebtedness  of Grantor
to Agent  secured by this Deed of Trust,  and such amounts shall be payable upon
notice from Agent to Grantor  requesting payment thereof and shall bear interest
from the date of disbursement until repaid at the Default Rate for Domestic Rate
Loans.

     The entering  upon and taking and  maintaining  of control of the Mortgaged
Property by Agent or a receiver and the  application of rents as provided herein
shall not cure or waive any Default or  invalidate  any other right or remedy of
Agent hereunder.
<PAGE>

     (b) Grantor hereby  covenants and warrants to Agent that (i) Grantor is and
will remain the lawful owner of the Leases and has not made any prior assignment
of Grantor's right, title and interest in, to and under any of the Leases;  (ii)
Grantor has not accepted any advance rental payments under the Leases other than
one month's  advance and security  deposits;  (iii)  Grantor has not executed or
granted  and will not grant any oral  modification  or  amendment  of any of the
Leases  without the prior written  consent of Agent,  which consent shall not be
unreasonably  withheld or delayed; and (iv) Grantor has not done and will not do
anything which impairs the validity or security of this assignment.

     (c) The  assignment  made by this Paragraph 17 shall not operate to release
or relieve Grantor, as lessor under the Leases, from the full performance of all
of  Grantor's  obligations  and  covenants  under  the  Leases.  Grantor  shall:
faithfully  abide by, perform and discharge each and every material  obligation,
covenant and agreement to be performed by Grantor under the Leases;  give prompt
notice  to Agent of any  notice  of claim  of  material  default  on the part of
Grantor  given or made by any tenant  under any of the Leases;  and, at the sole
cost and expense of Grantor,  enforce,  short of termination  of the Leases,  or
secure  the  performance  of,  each and  every  material  obligation,  covenant,
condition and agreement to be performed by the tenants under the Leases. Without
the prior  written  consent of Agent,  Grantor  shall not further  encumber  its
rights,  title and interest in and to the Leases.  Except in the ordinary course
of Grantor's business,  Grantor shall not anticipate rentals under the Leases or
waive,  excuse,  condone  or in any  manner  release  or  discharge  any  lessee
thereunder,  of or from the  material  obligations,  covenants,  conditions  and
agreements  to be performed by such  lessees,  including  the  obligation to pay
rentals in the manner and at the place and time specified therein.

     (d) Grantor shall, at Grantor's sole cost and expense, appear in and defend
any  action  or  proceeding  arising  under,  growing  out of or in  any  manner
connected with the Leases or the  obligations,  duties or liabilities of Grantor
or the  lessees  or  sublessees  under the  Leases,  and shall pay all costs and
expenses on demand,  with interest  thereon after such demand until paid in full
at the Default Rate for Domestic  Rate Loans,  including  reasonable  attorneys'
fees  incurred  by Agent in any such  action or  proceeding  in which  Agent may
appear, all such expenses being Indebtedness secured by this Deed of Trust.

     (e) After the occurrence of a Default, Agent, at its option but without the
assumption of any of Grantor's  obligations  as lessor and without  notice to or
demand on Grantor,  and without  releasing Grantor from any obligation under the
Leases or this Deed of Trust, may perform any obligation of Grantor under any of
the  Leases.  In the  exercise  of  such  power,  Agent  shall  be  entitled  to
reimbursement  by  Grantor  for all of  Agent's  costs and  expenses,  including
reasonable  attorneys'  fees,  and the same shall be payable upon  demand,  with
interest thereon from the date paid or incurred at the Default Rate for Domestic
Rate Loans, and shall be Indebtedness secured by this Deed of Trust.

     (f) Agent  shall not be  obligated  to  perform or  discharge,  nor does it
hereby  undertake to perform or discharge any  obligation,  duty or liability of
Grantor  under the Leases or  otherwise.  Agent shall not be liable for any loss
sustained by the Grantor  resulting  from Agent's  failure to let the  Mortgaged
Property  after  Default  or from any  other  act or  omission  of the  Agent in
managing the Mortgaged Property after Default, unless such loss is caused by the
willful  misconduct and bad faith of Agent.  Grantor  agrees to indemnify  Agent
against and hold it harmless from any and all liability, loss or damage which it
may or might incur under the Leases or under or by reason of this assignment and
of and from any and all  claims and  demands  whatsoever  which may be  asserted
against Agent by reason of any alleged  obligation or undertaking on its part to
perform or discharge any of the terms,  covenants or agreements contained in the
Leases,  unless such  liability or claim  arises as a result of Agent's  willful
misconduct or bad faith.  Except for liability,  claims or demands  arising from
Agent's  willful  misconduct  or bad faith,  in the event Agent  incurs any such
liability,  loss or damage,  the amount thereof,  including costs,  expenses and
reasonable attorneys' fees, such amount shall be payable by Grantor upon demand,
with  interest  after  such  demand  until paid in full at the  Default  Rate of
Interest,  all of which is  Indebtedness  secured  by this Deed of  Trust.  This
Assignment  shall not operate to place  responsibility  for the  control,  care,
management or repair of the Mortgaged Property or any improvements  thereon upon
Agent,  nor shall it  operate  to make the Agent  responsible  or liable for any
waste  committed  on the  Mortgaged  Property or for any  dangerous or defective
condition of the property unless and until Agent, in person or by agent, assumes
actual possession of the Mortgaged Property.
<PAGE>

     (g)  Grantor  hereby  authorizes  and  directs  each and every  tenant  and
occupant of the Mortgaged Property, or any part thereof, upon receipt from Agent
of written  notice to the effect that a Default  exists under this Deed of Trust
and such tenant is to pay over to Agent all rents, income and profits arising or
accruing from the Mortgaged  Property,  and to continue to do so until otherwise
notified by the Agent.  Grantor  agrees to  facilitate  in all  reasonable  ways
Agent's  collection of such rent, and upon request will execute a written notice
to each tenant and occupant  directing payment to the Agent. Upon the payment in
full of all of the  Indebtedness  secured  hereby,  the assignment  made in this
Paragraph 17 shall terminate.

     18.  Provisions  Severable.  In the event any one or more of the provisions
contained  in this  Deed of Trust  shall for any  reason be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability  shall,  at the  option  of the  Agent,  not  affect  any other
provision of this Deed of Trust, but this Deed of Trust shall be construed as if
such invalid, illegal or unenforceable provision had never been contained herein
or  therein.  The  invalidity  of any  provision  of this  Deed of  Trust in any
jurisdiction  shall not affect the validity or  enforceability of such provision
in any other jurisdiction.

     19. Fees. Grantor will pay for filing,  registration or recording fees, and
all expenses incident to the execution and acknowledgment of this Deed of Trust,
any Deed of Trust supplemental  hereto, any financing statement and continuation
statement  and any  instrument  of further  assurance,  and all federal,  state,
county and municipal stamp taxes and other taxes, duties,  imposts,  assessments
and charges  arising out of or in connection  with the execution and delivery of
this Deed of Trust, any Deed of Trust supplemental  hereto, or any instrument of
further  assurance.  Such amounts shall be due and payable  within  fifteen (15)
days after written demand by Agent for payment therefor, and from and after such
due date until paid in full shall bear interest at the Default Rate for Domestic
Rate Loans.

     20. Successors and Assigns. The grants,  covenants,  terms,  provisions and
conditions  of this Deed of Trust  shall  (a) run with the  land,  (b) apply and
extend to, be binding upon and inure to the benefit of Grantor, Grantor's heirs,
administrators, successors and assigns and all persons claiming under or through
Grantor,  and the word  "Grantor,"  when used  herein,  shall  include  all such
persons,  and (c) shall  apply and extend  to, be binding  upon and inure to the
benefit of Agent and its  successors  and  assigns.  The word  "Agent" when used
herein shall include the successors and assigns of Agent.
<PAGE>

     21.  Miscellaneous.  The  captions  used in  this  Deed  of  Trust  are for
convenience  only  and are not to be  construed  as  defining  or  limiting  the
provisions  of this Deed of Trust.  Any and all  covenants in this Deed of Trust
from time to time may by instrument in writing signed by Agent be waived to such
extent and in such manner as Agent may desire,  but no such waiver  shall affect
or impair Agent's rights hereunder,  except to the extent specifically stated in
such written  instrument.  No waiver by Agent of any Default shall  constitute a
waiver  of,  or  consent  to,  any  subsequent   Default.   All  changes  to  or
modifications  of this  Deed of Trust  must be in  writing  signed  by Agent and
Grantor  and, if this Deed of Trust is recorded,  shall not be  effective  until
being recorded. Wherever used, the singular number shall include the plural, the
plural  the  singular,  and the use of any  gender  shall be  applicable  to all
genders.  Nothing herein  contained shall be construed as  constituting  Agent a
mortgagee in possession of the Mortgaged  Property in the absence of a taking of
actual  possession  of the Mortgaged  Property by Agent.  In the exercise of the
powers herein granted Agent, no liability shall be asserted or enforced  against
Agent by Grantor,  all such  liability and claims of liability  being  expressly
waived and  released by Grantor.  In the event that all of the  Indebtedness  is
fully and timely paid and satisfied and no  Indebtedness  thereafter  may arise,
this Deed of Trust shall become of no further  force and effect and the lien and
security interest hereof shall be released of record at Grantor's request and at
Grantor's cost and expense.

     22.  Definitions.  As used in this Deed of Trust, the following terms shall
have the meanings ascribed to them below:

     "Loan Agreement" shall mean that certain  Revolving  Credit,  Term Loan and
     Security  Agreement,  dated as of even  date,  among  Grantor,  Agent,  and
     Lenders,  as the same may be  modified,  amended,  supplemented,  replaced,
     restated  and/or  extended  from time to time and at any time,  which  Loan
     Agreement  establishes  and provides  for the  following  described  credit
     facilities:
<TABLE>

<S>                     <C>                <C>                                      <C>
Facility                   Amount                      Terms                           Maturity Date

Revolving Loan             $4,000,000       Interest monthly; principal and             October 14, 2005 interest at maturity

Term Loan                  $4,000,000       Principal and interest monthly              October 14, 2005
</TABLE>


     "Lien"  shall  mean any  mortgage,  deed of trust,  pledge,  hypothecation,
     assignment,  security  interest,  lien  (whether  statutory or  otherwise),
     Charge,  claim or  encumbrance,  or preference,  priority or other security
     agreement or  preferential  arrangement  held or asserted in respect of any
     asset of any kind or nature whatsoever including,  without limitation,  any
     conditional  sale or other  title  retention  agreement,  any lease  having
     substantially  the same economic  effect as any of the  foregoing,  and the
     filing of, or agreement to give, any financing  statement under the Uniform
     Commercial Code or comparable law of any jurisdiction.
<PAGE>

     "Obligations"  shall mean and include any and all loans,  advances,  debts,
     liabilities,  obligations,  covenants  and duties  owing by the  Grantor to
     Lenders or Agent or to any other direct or indirect subsidiary or affiliate
     of Agent or any Lender of any kind or nature, present or future (including,
     without limitation,  any interest accruing thereon after maturity, or after
     the  filing of any  petition  in  bankruptcy,  or the  commencement  of any
     insolvency,  reorganization  or like  proceeding  relating to the  Grantor,
     whether or not a claim for post-filing or post-petition interest is allowed
     in such  proceeding),  whether or not  evidenced  by any note,  guaranty or
     other  instrument,  whether  arising  under any  agreement,  instrument  or
     document,  (including,  without limitation, the Loan Agreement and the Loan
     Documents)  whether  or not for the  payment of money,  whether  arising by
     reason of an  extension  of credit,  opening  of a letter of credit,  loan,
     equipment lease or guarantee,  under any interest or currency swap, future,
     option or other similar agreement,  or in any other manner, whether arising
     out of  overdrafts  or  deposit  or  other  accounts  or  electronic  funds
     transfers  (whether through automated  clearing houses or otherwise) or out
     of the Agent's or any Lenders  non-receipt of or inability to collect funds
     or otherwise not being made whole in connection  with  depository  transfer
     check or other similar arrangements,  whether direct or indirect (including
     those  acquired by assignment or  participation),  absolute or  contingent,
     joint or several,  due or to become due, now existing or hereafter arising,
     contractual or tortious, liquidated or unliquidated, regardless of how such
     indebtedness  or liabilities  arise or by what agreement or instrument they
     may be evidenced  or whether  evidenced  by any  agreement  or  instrument,
     including, but not limited to, any and all of Grantor's indebtedness and/or
     liabilities under the Loan Agreement, the Loan Documents or under any other
     agreement  between  Agent  or  Lenders  and  Grantor  and  any  amendments,
     extensions,  renewals or increases  and all costs and expenses of Agent and
     any  Lender  incurred  in  the  documentation,  negotiation,  modification,
     enforcement,  collection  or  otherwise  in  connection  with  any  of  the
     foregoing,  including  but not limited to  reasonable  attorneys'  fees and
     expenses and all obligations of Grantor to Agent or Lenders to perform acts
     or refrain  from  taking any  action.  Obligations  shall also  include all
     loans,  advances,  debts,  liabilities,  obligations,  covenants and duties
     owing by Grantor or Guarantor to Lenders or Agent or to any other direct or
     indirect  subsidiary or affiliate of Agent or any Lender  arising under any
     of the following:  (a) any International Swaps and Derivatives  Association
     Master Agreement ("Master  Agreement"),  and including each Transaction (as
     such  term  is  defined  in the  Master  Agreement),  as  confirmed  in the
     applicable confirmation of each such Transaction;  or (b) any obligation of
     Grantor or Guarantor to any of the foregoing  under any other interest rate
     swap, cap, collar,  floor, option,  forward, or other type of interest rate
     protection, foreign exchange or derivative transaction agreement.

     "Permitted  Encumbrances" has the meaning ascribed to such term in the Loan
     Agreement.

     "Person"  shall  mean any  individual,  sole  proprietorship,  partnership,
     corporation,  business trust,  joint stock company,  trust,  unincorporated
     organization,  association,  limited liability company, institution, public
     benefit corporation,  joint venture, entity or government (whether federal,
     state, county, city, municipal or otherwise, including any instrumentality,
     division, agency, body or department thereof).
<PAGE>

     IN WITNESS  WHEREOF,  Grantor has executed and delivered this Deed of Trust
by its duly authorized signatory as of the 23rd day of October, 2002.

                                    U.S. RUBBER RECLAIMING, INC.



                                    By: /s/Timothy S. Durham
                                        ---------------------------------------
                                    Name: Timothy S. Durham
                                    Title:  Chairman


<PAGE>




Exhibit A to Security Instruments
U. S. Rubber Reclaiming, Inc., Grantor
PNC Bank, National Association, as Agent, Beneficiary
October 25, 2002 Page 1 of
1

     Part of  section  20,  Township  15  North,  Range 3 East,  Warren  County,
Mississippi.

Commencing at the Southwest corner of the U. S. Rubber Reclaiming, Inc. property
as recorded in Deed Book 824 at Page 143 of the land  records of Warren  County,
Mississippi,  said point being on the Easterly  line of the Kansas City Southern
Railroad Company  (formerly  Illinois Central Railroad Company) right of way and
run  thence  South  69(degree)15'  00" East  along the South  line of said U. S.
Rubber Reclaiming  Company,  Inc. property 411.79 feet to an existing iron stake
marking the Southwest  corner of that certain  parcel  conveyed as Parcel One to
Rouse Rubber  Industries,  Inc. by U.S.  Rubber  Reclaiming,  Inc., as described
within deed  recorded in Book 850 at Page 140,  which  point  further  marks the
Southwest  corner of the tract  described an Parcel One within deed  executed by
Rouse Rubber Industries,  Inc. in favor of U.S. Rubber Reclaiming, Inc. recorded
in Deed Book 930 at Page 740,  each within the aforesaid  land  records;  thence
continue  along the South line of the tract  described as Parcel One within said
deed  executed  by Rouse  Rubber  Industries,  Inc.  in  favor  of U. S.  Rubber
Reclaiming, Inc. South 69(degree)15'00" East 166.85 feet to the Southeast corner
of said  Parcel one so  described  within  said deed  executed  by Rouse  Rubber
Industries, Inc. in favor of U. S. Rubber Reclaiming, Inc.; thence run along the
East line of the tract so  described  as Parcel One within  that said deed North
20(degree)51'  58" East 168.87  feet along the center line of an existing  paved
road and easement as described in Deed Book 850 at Page 112 of the Warren County
Land Records to the Northeast  corner of said Parcel One an described within the
aforedescribed  deed executed by Rouse Rubber Industries,  Inc. in favor of said
U. S.  Rubber  Reclaiming,  Inc.;  thence  leaving  the East  line of the  tract
described  within  that  said  deed as  Parcel  One and  continue  thence  North
20(degree)51'  58" East 123.71 feet, more or less, along the center line of said
road to a point,  which  point  marked  the  point  of  beginning  of the  tract
described as Parcel Two within said deed  executed by Rouse  Rubber  Industries,
Inc.  in  favor  of U. S.  Rubber  Reclaiming,  Inc.,  same  further  being  the
Southernmost  Southwest corner of Parcel Two as described within that said deed;
thence  leaving the center line of said road and run thence along the South line
of the tract  described  as Parcel Two within  the said deed  executed  by Rouse
Rubber  Industries,  Inc. in favor of U. S. Rubber  Reclaiming,  Inc.,  with the
following courses and distances,  viz: South  70(degree)13' 59" East 194.29 feet
to a point within a certain existing building sometimes  designated and referred
to as "Manufacturing  Building";  thence run South  19(degree)46' 01" West 24.50
feet to a point on the northerly  face of an existing  interior wall within said
building;  thence run along the  northerly  exterior  face of said interior wall
South 70" 13' 59" East 37.07 feet; thence leaving the northerly exterior face of
said  interior  wall and run North 19" 46'01 " East a distance  of 143.02  feet,
more or less,  along a line within the interior of an existing  building and the
extension  thereof  as  same  intersects  the  Northerly  exterior  face of said
building and  thereafter  continues to a point in the center line of an existing
concrete  paved  road  extending  in an  Easterly-Westerly  direction  along the
Northerly face of said Manufacturing  Building;  thence run North  70(degree)29'
12" West along the center  line of said  concrete  paved road 124.99 feet to the
point of  intersection  of the  centerline of said existing  concrete paved road
with  the   centerline   of   another   paved   plant   road   extending   in  a
Northerly-Southerly   direction,   each  of  said  roadways   providing   common
ingress-egress to facilities in ownership of U. S. Rubber  Reclaiming,,Inc.  and
Rouse  Rubber  Industries,   Inc.;  thence  run  along  the  centerline  of  the
aforementioned   road  extending  in  a   Northerly-Southerly   direction  North
20(degree)54' 32" East 409.14 feet, more or less, to an iron stake being located
on the South bank of an existing  drainage  ditch,  said point being  located 10
feet South of the  centerline  of said drainage  ditch;  thence run along a line
parallel to and Southerly 10 feet from the  centerline  of said  drainage  ditch
with the following courses and distances, viz:

<PAGE>


Exhibit A to Security Instruments
U. S. Rubber Reclaiming, Inc., Grantor
PNC Bank, National Association, as Agent, Beneficiary
October 25, 2002 Page 2 of 2



North 73" 15'47" West 110.60  feet;  North  70(degree)42'43"  West 251.41  feet;
North 63(degree)03'58" West 68.42 feet; North 76(degree)31' 24" West 94.52 feet;
North  68(degree)46'47"  West  195.89  feet,  more or  less,  to a point  on the
Easterly  right of way of the Kansas City Southern  Railroad  Company  (formerly
Illinois Central Railroad Company)  property;  thence run South  18(degree)1700"
West along the Easterly right of way line of said railroad  property 230.03 feet
to a point  marking the  Northernmost  Southwest  corner of that  certain  tract
described as Parcel Two within the aforedescribed  deed executed by Rouse Rubber
Industries,  Inc. in favor of U.S. Rubber  Reclaiming,  Inc.; thence leaving the
Westerly line of the tract  described as Parcel Two within said deed executed by
Rouse Rubber Industries, Inc. in favor of U. S. Rubber Reclaiming,, Inc. and run
along the Westerly line of the lands conveyed to U. S. Rubber  Reclaiming,  Inc.
by deed  recorded in Deed Book 824 at Page 143 of the  aforesaid  Warren  County
land records,  same further  being the Easterly  right of way of the Kansas City
Southern Railroad Company (formerly  Illinois Central Railroad Company) property
South  18(degree)17'00"  West  574.58  feet,  more  or  less,  to the  POINT  OF
BEGINNING, all lying and being situate in Section 20, Township 15 North, Range 3
East, Warren County, Mississippi.

TOGETHER WITH the following non-exclusive perpetual easements styled "Common Use
Agreement and Easement",  recorded in Deed Book 930 at Page 732, and re-recorded
in Deed  Book  932 at  Page  42  within  the  land  records  of  Warren  County,
Mississippi, viz:

     THAT  CERTAIN  NON-EXCLUSIVE  EASEMENT  AND RIGHT OF WAY for the purpose of
     ingress  and  egress,  for the use in common  with  others,  including  the
     Grantor  herein created by deed recorded in Deed Book 930 at Page 740, over
     and  across the  existing  roadway  along the  southern  portions  of lands
     presently  vested in Rouse Rubber  Industries,  Inc. as described as Parcel
     Two  within  deed  recorded  in Deed Book 850 at Page 140 of the  aforesaid
     Warren County Land Records,  leading in a westerly  direction from the west
     right-of-way  line  of  U.S.  Highway  61 and  thereafter  continuing  in a
     westerly  direction  along the southerly 40 feet of the lands  described as
     Parcel One  within  said deed so  recorded  in said Book 850 at Page 140 of
     said land records.



<PAGE>


STATE OF INDIANA                    )
                                    ) ss.
COUNTY of Hamilton                  )


On this 23rd day of October,  2002, before me personally came Timothy S. Durham,
to me known,  who,  being by me duly  sworn,  did  depose and say that he is the
authorized officer of U.S. RUBBER RECLAIMING, INC., the corporation described in
and which  executed  the  foregoing  instrument;  that he knows the seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that it was so affixed by order of the board of directors  of said  corporation,
and that he signed his name thereto by like order.

                                        /s/Shannon Frantz
                                        ------------------------------------



NOTE: No Notary Seal Required in State of Indiana



INDEX:         S20, T15N, R3E
               Warren County, MS

PREPARED BY AND RETURN TO:

Wheeless Shappley Bailess & Rector
P. O. Box 991
Vicksburg, MS 39181
601-636-8451


<PAGE>


                         CAPITAL AVAILABILITY AGREEMENT

     OBSIDIAN  CAPITAL  PARTNERS,   L.P.   ("Investor"),   PNC  BANK,   NATIONAL
ASSOCIATION, as Agent for the Lenders ("Agent") and U.S. RUBBER RECLAIMING, INC.
("Borrower") agree as follows effective as of October 25, 2002:

l. Recitals.

     1.1  Agent is agent for  certain  lenders  ("Lenders")  under that  certain
          Revolving  Credit,  Term Loan and Security  Agreement dated as of even
          date  herewith,  as amended,  restated or modified  from time to time,
          previously or in the future with Borrower (the "Loan Agreement").

     1.2  Pursuant to the Loan Agreement, Borrower has executed and delivered to
          Agent,  as  Lender,  a  revolving  credit  note  dated as of even date
          herewith in the original  principal  amount of $4,000,000,  and a tern
          note dated as of even date herewith in the original  principal  amount
          of $4,000,000.

     1.3  Investor is a shareholder  of Obsidian  Enterprises,  Inc., the parent
          company of Borrower.  Investor has requested that Agent and/or Lenders
          extend  credit to Borrower  and has agreed to execute and deliver this
          Agreement to Agent as an inducement for such extension of credit.

     1.4  Capitalized  terns used herein and not otherwise defined will be given
          the  definitions  set  forth  in the  Loan  Agreement,  including  any
          amendments, modifications, or restatements made from time to time.

2.   Capital Availability. In consideration of the above premises and other good
     and valuable  consideration,  the receipt of which is hereby  acknowledged,
     Investor, Agent and Borrower hereby agree as follows:

     2.1  Capital  Contributions.  In the event that the  Borrower  violates the
          Fixed Charge  Coverage Ratio  requirement  set forth at Section 6.6 of
          the Loan Agreement, at any time and from time to time while any of the
          Obligations are outstanding, Investor, upon written notice as provided
          herein,  shall  contribute  capital  to  Borrower  through  Agent,  in
          immediately  available  funds,  up to $1,600,000  ("Maximum  Available
          Capital") in the  aggregate,  in such  amount(s) as are  determined by
          Agent in its reasonable discretion to cure such violation(s).
<PAGE>

     2.2  Notice.  Investor shall from time to time while any of the Obligations
          are  outstanding,  transfer capital to Borrower through Agent pursuant
          to the terns hereof up to the Maximum Available Capital if so required
          by Borrower or Agent upon 10 calendar days prior written notice, which
          notice shall specify the cure amount calculated by Agent in accordance
          with Section 2.1 above.

     2.3  Borrower Acknowledgment.  At the time of each such transfer,  Borrower
          shall deliver to Investor and Agent written  acknowledgements  that it
          has received an equity contribution which will be reflected as such on
          its books.

     2.4  No  Violations.  Borrower  agrees  that it will not take any action in
          contravention  of the provisions of this Agreement and that all terns,
          covenants and  provisions of this Agreement will be duly performed and
          observed.  Borrower further  acknowledges that in the event that Agent
          requires  Investor to provide funds to Borrower  pursuant to the terms
          of this Agreement, Agent shall receive the funds and Lenders may apply
          the  funds  received  to the  Obligations  in such  order  as Agent or
          Lenders may determine,  and may permanently and  automatically  reduce
          any  commitment  by Lenders to lend funds to Borrower by the amount of
          the  contribution.  The breach by  Borrower  or Investor of any of the
          terms, covenants or provisions herein or of this Agreement shall be an
          Event of Default under the Loan  Agreement but shall have no effect on
          the obligations of Investor hereunder.

     2.5  Investor agrees that Agent and/or Lenders at any time and from time to
          time,  without the consent of or notice to the  Investor,  and without
          impairing or releasing,  discharging  or modifying the  liabilities of
          the Investor  hereunder,  may in its sole  discretion:  (i) change the
          manner,  place or terms of payment or performance of or interest rates
          on, or change or extend  the time of  payment  or  performance  of, or
          other terms relating to any of the Obligations,  (ii) renew, increase,
          substitute,  modify,  amend or alter,  or grant  consents  or  waivers
          relating  to any of the  Obligations,  any other  guarantees  or other
          liabilities,  or any collateral  for any  Obligations or guarantees or
          other  liabilities,  (iii) apply any and all payments  from any source
          whatsoever   including  any  proceeds  of  any   collateral,   to  any
          Obligations of Borrower in any order,  manner and amount, (iv) deal or
          refrain  from  dealing  with  any  person  or  entity,   in  its  sole
          discretion,  with respect to any  Obligations  in such manner as Agent
          and/or Lenders deem  appropriate,  in its sole discretion,  and/or (v)
          accept, sell, substitute,  exchange,  compromise,  release, surrender,
          offset,  realize upon or otherwise  deal with in any manner and in any
          order any of the Obligations, any guarantee or other liability for any
          of the  Obligations,  or any collateral for any of the  Obligations or
          for  any  guarantee  or  other  liability   relating  to  any  of  the
          Obligations.  Irrespective  of the taking of or refraining from taking
          of any of the foregoing actions,  the obligations of the Investor will
          remain in full force and effect  and will not be  affected,  impaired,
          discharged  or released in any manner.  Agent and/or  Lenders in their
          sole discretion may determine the  reasonableness  of the period which
          may elapse prior to the making of demand for any payment upon Borrower
          and it need not  pursue  any of its  remedies  against  Borrower,  any
          guarantor or other person,  or any collateral  before having  recourse
          against Investor under this Agreement.
<PAGE>

3.   Miscellaneous.

     3.1  Borrower and Investor may not assign this Agreement  without the prior
          written consent of Agent, which consent Agent may withhold in its sole
          and absolute discretion.

     3.2  This Agreement shall remain in full force and effect until the payment
          in full of all  principal  and  interest  and  other  Obligations  (as
          defined  in the Loan  Agreement)  due from  Borrower  to Agent  and/or
          Lenders.

     3.3  This Agreement  shall be construed in accordance  with and governed by
          the laws of the State of Indiana,  without  regard to conflicts of law
          principles.

     3.4  No modification or waiver of any provisions of this Agreement shall be
          effective unless the same shall be in writing, and then such waiver or
          consent shall be effective  only in the specific  instance and for the
          purposes  for which  given.  Neither  any failure nor any delay on the
          part of either  party in  exercising  any  right,  power or  privilege
          hereunder  shall  operate as a waiver  thereof,  nor shall a single or
          partial exercise thereof preclude any other or future exercise, or the
          exercise of any other right, power or privilege.

     3.5  Any  capitalized  terns used herein but not otherwise  defined  herein
          will have the meanings provided those terms in the Loan Agreement.

     3.6  This Amendment may be executed by one or more to the parties hereto on
          any number of  separate  counterparts,  each of which when so executed
          shall be an  original,  but all of which shall be together  constitute
          one and the same instrument.

     3.7  Investor agrees to pay on demand,  to the extent permitted by law, all
          reasonable  costs and expenses  incurred by the Lender and/or Agent in
          the enforcement of its rights under this Agreement and in any security
          therefor, including without limitation reasonable fees and expenses of
          the  Lender's  and/or  Agent's  counsel.  If  any  provision  of  this
          Agreement is found to be invalid by a court,  all the other provisions
          of this Agreement will remain in full force and effect. This Agreement
          shall bind the Investor and its respective successors and assigns, and
          the  benefits  hereof  shall  inure to the  benefit  of Agent  and its
          successors  and  assigns.  This  Agreement  shall be  governed  by and
          construed in accordance  with the laws of the State of Indiana applied
          to contracts to be performed  wholly within the State of Indiana.  Any
          judicial proceeding brought by or against Investor with respect to any
          of the  Obligations,  this  Agreement or any related  agreement may be
          brought  in any  court  of  competent  jurisdiction  in the  State  of
          Indiana,  United States of America,  and, by execution and delivery of
          this Agreement, Investor accepts for itself and in connection with its
          properties,   generally   and   unconditionally,   the   non-exclusive
          jurisdiction of the aforesaid  courts,  and  irrevocably  agrees to be
          bound  by any  judgment  rendered  thereby  in  connection  with  this
          Agreement.  Investor  hereby  waives  personal  service of any and all
          process  and consent  that all such  service of process may be made by
          registered mail (return receipt requested) directed to Investor at its
          address  set forth  below its  signature  and service so made shall be
          deemed  completed  five (5) days  after  the same  shall  have been so
          deposited in the mails of the United States of America. Nothing herein
          shall affect the right to serve process in any manner permitted by law
          or shall  limit the right of Agent or any Lender to bring  proceedings
          against  Investor  in the courts of any other  jurisdiction.  Investor
          waives  any  objection  to  jurisdiction   and  venue  of  any  action
          instituted hereunder and shall not assert any defense based on lack of
          jurisdiction or venue or based upon forum non conveniens. Any judicial
          proceeding by Investor against Agent or any Lender involving, directly
          or indirectly,  any matter or claim in any way arising out of, related
          to or connected with this Agreement or any related agreement, shall be
          brought  only in a federal  or state  court  located  in the County of
          Marion, State of Indiana.
<PAGE>

     3.8  WAIVER OF JURY TRIAL.  Investor  irrevocably waives any and all rights
          the Investor may have to a trial by jury in any action,  proceeding or
          claim of any nature relating to this Agreement, any documents executed
          in connection with this Agreement or any  transaction  contemplated in
          any of such documents. Investor acknowledges that the foregoing waiver
          is knowing and voluntary.  Investor  acknowledges that it has read and
          understood all the provisions of this Agreement,  including the waiver
          of jury  trial,  and has been  advised  by  counsel  as  necessary  or
          appropriate.

     IN WITNESS  WHEREOF,  Investor,  Agent and Borrower have duly executed this
Agreement, all as of this day and year first above written.

                                        U.S. RUBBER RECLAIMING.INC.



                                        By: /s/Timothy S. Durham
                                            -----------------------------
                                        Print Name:  Timothy S. Durham
                                        Title: Chairman



                                        PNC BANK, NATIONAL ASSOCIATION, as Agent


                                        By: /s/Paul J. Count
                                            -------------------------
                                        Print Name:  Paul J. Count
                                        Title: Vice President

                                        OBSIDIAN CAPITAL PARTNERS, L.P.

                                        By: /s/Timothy S. Durham
                                            -----------------------------
                                        Print Name:  Timothy S. Durham
                                        Title: Managing Member

                                        Notice Address:

                                        Obsidian Capital Partners
                                        111 Monument Circle
                                        Bank One Tower, Suite 4800
                                        Indianapolis, IN 46204
                                        Attn: Timothy S. Durham
                                        Telephone: (317) 237-4122
                                        Facsimile: (317) 237-0137

                                        Copy to:

                                        Bamberger & Feibleman
                                        111 Monument Circle
                                        Bank One Tower, Suite 4800
                                        Indianapolis, IN 46204
                                        Attn: Neil E. Lucas
                                        Telephone: (317) 472-1480
                                        Facsimile: (317) 237- 0137


<PAGE>




                              REVOLVING CREDIT NOTE

$4,000,000                                          Indianapolis, Indiana
                                                    Dated as of October 25, 2002

     FOR VALUE RECEIVED, U.S. RUBBER RECLAIMING,  INC. (the "Borrower") promises
to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the "Lender"),  in lawful
money of the  United  States of America in  immediately  available  funds at the
Lender's offices located at Two Tower Center Blvd.,  8th Floor,  East Brunswick,
NJ 08816,  or at such other  location as the Lender may  designate  from time to
time, the principal sum of FOUR MILLION DOLLARS ($4,000,000) (the "Facility") or
such lesser  amount as may be  advanced  to or for the  benefit of the  Borrower
hereunder,  together with interest accruing on the outstanding principal balance
from the date hereof, all as provided below:

1.   Advances.  The Borrower may request Advances,  repay and request additional
     Advances under the Loan Agreement until the Expiration Date, subject to the
     terms and conditions of this Note and the Other Documents.  The "Expiration
     Date" shall mean the last day of the Term set forth in the Loan  Agreement,
     or such later date as may be designated  by the Agent by written  notice to
     the Borrower.  The Borrower  acknowledges  and agrees that in no event will
     the  Agent or  Lenders  be under  any  obligation  to  extend  or renew the
     Facility or this Note beyond the initial Expiration Date. In no event shall
     the aggregate  unpaid  principal  amount of Advances under this Note exceed
     the lesser of the face  amount of this Note,  the  Formula  Amount,  or any
     other maximum amount  limitations set forth herein,  in the Loan Agreement,
     or in the Loan Documents.

2.   Rate of Interest.  Subject to the  applicability  of the Default Rate, each
     Advance  outstanding under this Note will bear interest at a rate per annum
     as set forth in the Loan  Agreement.  All interest  calculations  under the
     Loan  Agreement  and this Note will be made based on a year of 360 days for
     the actual  number of days in each  interest  period.  In no event will the
     rate of interest hereunder exceed 25% per annum or such lesser amount as is
     the maximum permitted by law.

3.   Payment Terms. The obligation to make payments  hereunder is without relief
     from valuation and  appraisement  laws. The Borrower shall make payments of
     principal  and  accrued  interest  on this  Note as set  forth  in the Loan
     Agreement.  All  outstanding  principal  and  accrued  but unpaid  interest
     hereunder  shall be due and  payable in full on the  Expiration  Date.  The
     Borrower hereby  authorizes the Agent to charge the Borrower's  Account for
     any  payment  when due  hereunder.  All  payments,  including  prepayments,
     received  will  be  applied  to  charges,   fees  and  expenses  (including
     reasonable  attorneys'  fees),  accrued interest and principal in the order
     specified in the Loan Agreement.

4.   Late  Payments;  Default Rate. If the Borrower fails to make any payment of
     principal,  interest or other amount due pursuant to the provisions of this
     Note and the Loan  Agreement,  the  Borrower  also shall pay a late  charge
     equal to the lesser of five  percent  (5%) of the amount of such payment or
     $100.00.  The late  charge is  imposed  for the  purpose of  defraying  the
     expenses incident to the handling of delinquent payments and is in addition
     to, and not in lieu, of, the exercise by the Lender and Agent of any rights
     and remedies hereunder,  under the Loan Agreement,  Loan Documents or under
     applicable laws, and any fees and expenses of any agents or attorneys which
     the Lender or Agent may employ.  If any  Obligations  are not paid when due
     (whether by  acceleration,  demand or  otherwise),  the Borrower  shall pay
     interest on such amount at the Default  Rate until it is paid in full.  The
     Default  Rate shall  continue  to apply  whether or not  judgment  shall be
     entered on this Note.
<PAGE>

5.   Loan  Documents.  This  Note is  issued in  connection  with the  Revolving
     Credit,  Term Loan and Security Agreement between Borrower,  Agent, and the
     Lenders identified therein of even date herewith (the "Loan Agreement") and
     is  secured  by the  Collateral  covered  by the  Loan  Agreement  and Loan
     Documents as that term is defined in the Loan Agreement.  All references to
     the Loan  Agreement  and the Loan  Documents  will  include all  amendments
     thereto  as made  from  time to time.  The  terms,  covenants,  conditions,
     stipulations  and  agreements  contained in the Loan  Agreement  hereby are
     incorporated  herein by reference.  Capitalized terms used in this Note and
     not otherwise defined herein will have the meanings given such terms in the
     Loan Agreement.

6.   Advance  Procedures.  Advances will be made in accordance with the terms of
     Section 2.3 of the Loan Agreement and the terms of any disbursement account
     agreement between Borrower and Agent. The Borrower may request Advances (i)
     in writing by the  Request for  Advance  attached  hereto as Exhibit A-1 or
     (ii) by  telephone  notice  that is  promptly  confirmed  in  writing.  The
     Borrower  hereby  indemnifies  and holds the Agent and Lender harmless from
     and against any and all damages,  losses,  liabilities,  costs and expenses
     (including  reasonable  attorneys' fees and expenses) which may arise or be
     created by the good faith  acceptance  of  telephone  requests or making of
     such  Advances.  Lender and Agent will have no liability in acting upon any
     request that either  believes in good faith to have been  authorized by the
     Borrower  and  will  have  no  duty  to  verify  the  authenticity  of  the
     signature(s)  appearing  on any  written  request and no duty to verify the
     identity of any person making any telephonic request.  The Lender and Agent
     will enter on its respective books and records,  which entry when made will
     be presumed  correct  absent  manifest  error,  the date and amount of each
     Advance, the interest rate and interest -period applicable thereto, as well
     as the date and amount of each payment made by the  Borrower.  Each request
     for an Advance,  whether  telephonic  or written,  will be binding upon and
     irrevocable by Borrower. Each request for an Advance will be subject to all
     of the terms and  conditions of this Note and the Loan  Agreement.  Without
     limiting the  generality  of the  foregoing,  Agent and Lender will have no
     duty to make any Advance if insufficient funds remain available pursuant to
     the Facility or any other maximum amount limitations set forth herein or in
     any of the Other  Documents.  Agent and/or Lender hereby are  authorized at
     any time and from time to time, in its discretion, to make an Advance under
     this Note for the payment on behalf of Borrower of any interest,  principal
     or other sums due under any of the Obligations,  and each such Advance will
     constitute an Advance under the Loan Agreement and part of the Obligations.
     Notwithstanding the foregoing,  Agent and Lenders are not obligated to take
     such action.

7.   Events of Default.  Immediately and automatically upon the occurrence of an
     Event of  Default  under  Section  10.7 of the Loan  Agreement,  or, at the
     option of Lender,  immediately  upon the  occurrence  of any other Event of
     Default, in any case without demand or notice of any kind (which are hereby
     expressly  waived):  (i) the  Obligations  will become  immediately due and
     payable,  (ii) Borrower will pay to Agent and Lender all  reasonable  costs
     and expenses  (including  but not limited to  reasonable  Attorneys'  Fees)
     incurred by them in  connection  with  efforts to collect the  indebtedness
     evidenced hereby, and (iii) Lender and Agent may exercise from time to time
     any of the rights and remedies  available to them under the Loan  Documents
     or applicable law. Upon and after the occurrence of any Event of Default or
     the maturity of this Note (by  acceleration  or  otherwise),  the principal
     balance under this Note, together with any arrearage of interest, will bear
     interest at the Default  Rate until paid in full,  whether  before or after
     judgment.  Borrower,  all other  makers,  co-signers  and  indorsers  waive
     presentment,  demand, protest, and notice of demand,  protest,  non-payment
     and  dishonor.  Borrower  also waives all defenses  based on  suretyship or
     impairment of collateral.
<PAGE>

8.   Right of Setoff. In addition to all liens upon and rights of setoff against
     the money, securities or other property of the Borrower given to the Lender
     and/or  Agent by law, the Lender  and/or Agent shall have,  with respect to
     the  Obligations  upon the occurrence of an Event of Default under the Loan
     Agreement  and to the extent  permitted  by law, a  contractual  possessory
     security  interest in and a contractual  right of setoff  against,  and the
     Borrower hereby assigns,  conveys,  delivers,  pledges and transfers to the
     Lender and/or Agent all of the Borrower's right,  title and interest in and
     to, all deposits, moneys, securities and other property of the Borrower now
     or hereafter in the possession of or on deposit with, or in transit to, the
     Lender  and/or  Agent  whether  held in a general  or  special  account  or
     deposit,  whether  held  jointly  with  someone  else,  or whether held for
     safekeeping or otherwise,  excluding,  however,  all IRA, Keogh,  and trust
     accounts. Every such security interest and right of setoff may be exercised
     without  demand upon or notice to the Borrower.  Every such right of setoff
     shall be deemed to have been exercised  immediately  upon the occurrence of
     an Event of Default  hereunder  without  any  action of the  Lender  and/or
     Agent,  although the Lender and/or Agent may enter such setoff on its books
     and records at a later time.

9.   Miscellaneous.  No delay or omission of the Lender and/or Agent to exercise
     any right or power arising  hereunder  shall impair any such right or power
     or be  considered  to be a waiver of any such  right or power nor shall the
     Lender's  and/or Agent's action or inaction impair any such right or power.
     The Borrower agrees to pay on demand,  to the extent  permitted by law, all
     reasonable  costs and expenses  incurred by the Lender  and/or Agent in the
     enforcement  of its  rights  in this  Note  and in any  security  therefor,
     including without  limitation  reasonable fees and expenses of the Lender's
     and/or  Agent's  counsel.  If any  provision  of this  Note is  found to be
     invalid by a court,  all the other  provisions  of this Note will remain in
     full force and effect.  The Borrower and all other makers and  endorsers of
     this Note hereby forever waive presentment, protest, notice of dishonor and
     notice of  non-payment.  This Note shall bind the  Borrower  and its heirs,
     executors, administrators,  successors and assigns, and the benefits hereof
     shall inure to the benefit of Lender and its successors and assigns.

     This Note shall be governed by and construed in accordance with the laws of
     the State of Indiana applied to contracts to be performed wholly within the
     State of Indiana.  Any judicial  proceeding  brought by or against Borrower
     with respect to any of the  Obligations,  this Note,  the Loan Documents or
     any related agreement may be brought in any court of competent jurisdiction
     in the State of Indiana,  United  States of America,  and, by execution and
     delivery of this Note,  Borrower  accepts for itself and in connection with
     its   properties,   generally  and   unconditionally,   the   non-exclusive
     jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by
     any judgment rendered thereby in connection with this Note. Borrower hereby
     waives  personal  service of any and all process upon it and consents  that
     all such service of process may be made by registered  mail (return receipt
     requested) directed to Borrower at its address set forth in Section 15.6 of
     Loan Agreement and service so made shall be deemed  completed five (5) days
     after the same  shall  have been so  deposited  in the mails of the  United
     States of America.  Nothing  herein shall affect the right to serve process
     in any  manner  permitted  by law or shall  limit the right of Agent or any
     Lender to bring  proceedings  against  Borrower  in the courts of any other
     jurisdiction.  Borrower waives any objection to  jurisdiction  and venue of
     any action  instituted  hereunder and shall not assert any defense based on
     lack of  jurisdiction  or venue or based  upon  forum non  conveniens.  Any
     judicial  proceeding  by Borrower  against  Agent or any Lender  involving,
     directly  or  indirectly,  any matter or claim in any way  arising  out of,
     related to or connected with this Note or any related  agreement,  shall be
     brought  only in a federal or state court  located in the County of Marion,
     State of Indiana.
<PAGE>

10.  WAIVER OF JURY TRIAL.  The Borrower  irrevocably  waives any and all rights
     the Borrower may have to a trial by jury in any action, proceeding or claim
     of any nature  relating to this Note, any documents  executed in connection
     with this Note or any  transaction  contemplated  in any of such documents.
     The  Borrower  acknowledges  that  the  foregoing  waiver  is  knowing  and
     voluntary.  The Borrower  acknowledges  that it has read and understood all
     the  provisions of this Note,  including the waiver of jury trial,  and has
     been advised by counsel as necessary or appropriate.

                                        U.S. RUBBER RECLAIMING, INC.



                                        By: /s/ Timothy S. Durham
                                            --------------------------------
                                        Print Name:  Timothy S. Durham
                                        Title: Chairman



<PAGE>


                                  EXHIBIT A-1

                               REQUEST FOR ADVANCE

                                 Advance Number

     U.S.  RUBBER  RECLAIMING,  INC.  ("Borrower"),  hereby  requests  PNC BANK,
NATIONAL  ASSOCIATION  ("Agent")  to take the  following  action  under the Loan
Agreement executed by Borrower,  Agent and the Lenders identified therein, dated
as of October ____, 2002 (the "Loan  Agreement').  Capitalized terms used herein
and not otherwise  defined herein have the meanings given such terms in the Loan
Agreement.  To induce Agent to take the action indicated below,  Borrower hereby
represents and agrees as follows:

1.   Representations and Warranties.

     1.1  No Default or Event of Default exists.

     1.2  All conditions  precedent  applicable  under the Loan Agreement to any
          advance requested hereunder have been fully and timely satisfied.

     1.3  The  approval of this  Request for Advance by Agent will not be deemed
          to be a waiver  by  Lender  and/or  Agent of any  Default  or Event of
          Default or of any of the conditions to any obligation of Lender and/or
          Agent to make  further  advances  (nor in the event that  Borrower  is
          unable to satisfy any such condition will any advance made pursuant to
          this Request have the effect of  precluding  Lender  and/or Agent from
          thereafter declaring such inability to be an Event of Default).

     1.4  All of the  representations  and  warranties  made by  Borrower in the
          Other  Documents are true and correct on and as of the date hereof and
          the date of the advance requested hereby.

     1.5  I (the  individual  executing  this  Request on behalf of Borrower) am
          duly authorized to make this request on behalf of Borrower.

2.   Advance.

     2.1  Borrower hereby requests Agent to make an advance on behalf of Lenders
          in the amount of $________________.

     2.2  The  proposed   date  on  which  such   advance   should  be  made  is
          __________________ 200_ (such date must be a Business Day).

     2.3  The  proceeds of the advance  subject to this request will be used for
          the following purpose: (check one)

          _______ Capital Expenditures Described on the Attached Schedule 1

          _______ Other (describe): __________________________________



                                U.S. RUBBER RECLAIMING, INC.

                                By:  ______________________________

                                Print Name: ________________________

                                Title: ______________________________

                                Date: ______________________________
<PAGE>

                             SUBORDINATION AGREEMENT

     PNC BANK, NATIONAL ASSOCIATION,  as agent for the Lenders (the "Agent") and
DC INVESTMENTS, LLC ("Subordinated Creditor"), hereby agree as follows effective
as of October 25, 2002 ("Effective Date"):

1.   Recitals.

     1.1  Agent is agent for  certain  lenders  ("Lenders")  under that  certain
          Revolving  Credit,  Term Loan and Security  Agreement dated as of even
          date  herewith,  as amended from time to time (the "Loan  Agreement"),
          previously  or  in  the  future  with  U.S.  RUBBER  RECLAIMING,  INC.
          ("Borrower"). Lenders contemplate making loans and extending credit or
          other financial accommodations to the Borrowers.

     1.2  For good  and  valuable  consideration,  receipt  of  which is  hereby
          acknowledged  by Agent on  behalf to  Lenders,  and in order to induce
          Subordinated Creditor, now or from time to time hereafter,  to arrange
          for the Subordinated  Indebtedness,  Subordinated Creditor agrees with
          Lenders as follows.

     1.3  For good  and  valuable  consideration,  receipt  of  which is  hereby
          acknowledged by Subordinated Creditor, and in order to induce Lenders,
          now or from time to time hereafter,  to make loans or extend credit or
          other financial  accommodations to Borrower, or to grant such renewals
          or extensions thereof as Lenders may deem advisable in its discretion,
          Subordinated  Creditor agrees with Agent, acting on behalf of Lenders,
          as follows.

2.   Definitions.

     2.1  "Borrower"   will  mean  Borrower  and  its  successors  and  assigns,
          including  but not limited to any  receiver,  custodian,  trustee,  or
          debtor-in-possession.

     2.2  "Closing Date" will mean the date on which this Agreement is executed.

     2.3  "Collateral"  will mean any collateral  now or in the future  securing
          the  Obligations  including  but not  limited  to claims  against  any
          guarantors  of  the  Obligations  and  any  Collateral  securing  such
          guarantees.

     2.4  "Default"  will mean any event or  condition  that with the passage of
          time or giving of notice,  or both, would constitute a Senior Event of
          Default.

     2.5  "Junior  Event of  Default"  will mean:  (a) an Event of  Default  (as
          defined  therein)  under any of the  documents  evidencing  any of the
          Subordinated  Indebtedness,  or  (b)  a  default  under  any  of  such
          documents that do not have a defined set of Events of Default.

     2.6  "Lender's Affiliate" will mean any person, partnership, joint venture,
          company or business  entity  under  common  control or having  similar
          equity  holders  owning at least ten percent  (10%)  thereof  with any
          Lender, whether such common control is direct or indirect. All of each
          Lender's direct or indirect parent corporations,  sister corporations,
          and  subsidiaries  will  be  deemed  to be a  Lender's  Affiliate  for
          purposes of this Agreement.
<PAGE>

     2.7  "Obligations"  will  mean and  include  all  loans,  advances,  debts,
          liabilities,  obligations, covenants and duties owing to any Lender or
          any of such  Lender's  Affiliates,  from any  Borrower  of any kind or
          nature,  present or  future,  whether  or not  evidenced  by any note,
          guaranty  or other  instrument,  including  but not  limited  to those
          arising under:  (i) the Loan Agreement,  (ii) any  International  Swap
          Dealers  Association  Master  Agreement  ("Master   Agreement"),   and
          including  each  Transaction  (as such term is  defined  in the Master
          Agreement),  as confirmed in the applicable  confirmation of each such
          Transaction, (iii) any obligation of any Borrower to Agent, any Lender
          or any Lender's  Affiliate  under any other  interest rate swap,  cap,
          collar,  floor,  option,  forward,  or  other  type of  interest  rate
          protection, foreign exchange or derivative transaction agreement, (iv)
          the Notes,  as such term is defined in the Loan  Agreement,  (v) under
          any other  agreement,  instrument or document,  whether or not for the
          payment of money, whether arising by reason of an extension of credit,
          opening of a letter of credit, loan,  guaranty,  indemnification or in
          any other manner, whether direct or indirect (including those acquired
          by  assignment,  participation,  purchase,  negotiation,  discount  or
          otherwise), absolute or contingent, joint or several, due or to become
          due, now existing or hereafter arising and whether or not contemplated
          by any Borrower,  Agent, any Lender, or any Lender's  Affiliate on the
          Closing  Date;  and  as  to  all  of  the  foregoing,   including  any
          amendments,  modifications,  or  superceding  documents to each of the
          foregoing; and all charges,  expenses, fees, including but not limited
          to reasonable  Attorneys'  Fees, and any other sums  chargeable to any
          Borrower under any of the Obligations.

     2.8  "Permitted   Payments"  means  those  payments  on  the   Subordinated
          Indebtedness listed on Exhibit A attached hereto.

     2.9  "Senior  Event of  Default"  will mean:  (a) an Event of  Default  (as
          defined  therein)  under any of the  documents  evidencing  any of the
          Obligations,  or (b) a default under any of such documents that do not
          have a defined set of Events of Default.

     2.10 "Subordinated  Indebtedness" will mean any and all existing and future
          indebtedness,  liabilities and obligations of Borrower to Subordinated
          Creditor  of every  kind and  nature  whatsoever,  including,  without
          limitation,  such  indebtedness,   liabilities,   and  obligations  of
          Borrower  to  Subordinated   Creditor  which  are  direct,   indirect,
          contingent, primary, secondary, alone, jointly with others, unsecured,
          secured,  future  advances,  principal,  interest,  expense  payments,
          indemnities,  liquidation costs,  post-petition interest due on any of
          the above,  and reasonable  Attorneys' Fees and expenses,  all whether
          arising under contract,  by tort, at law, in equity or otherwise,  and
          all  guarantees,  indemnifications  and other  undertakings of persons
          other  than  Borrower  with  respect  to  the  foregoing.  The  entire
          Subordinated  Indebtedness  existing on the date of this  Agreement is
          described in Exhibit A attached hereto and made a part hereof.

3.   Subordination.

     3.1  Subordination  of  Subordinated  Indebtedness.  Except  for  Permitted
          Payments made by Borrower to Subordinated Creditor where no Default or
          Senior  Event  of  Default  exists  under  any  of  the   Obligations,
          Subordinated  Creditor hereby  subordinates  and postpones the payment
          and the time of payment of all of the Subordinated Indebtedness to and
          in  favor  of the  payment  and  the  time  of  payment  of all of the
          Obligations.
<PAGE>

     3.2  Terms of Payment. Until the Obligations have been indefeasibly paid in
          full and all financing  arrangements  relating to the Obligations have
          been terminated:

          3.2.1No Prepayments.  Subordinated Creditor will not accept from or on
               behalf of Borrower any  prepayment,  in cash or other property or
               in any other manner, on any of the Subordinated Indebtedness;

          3.2.2Permitted  Payments.  Subordinated  Creditor  will  not set  off,
               accept, take or receive, directly or indirectly, in cash or other
               property or in any other  manner,  any payment of any kind of all
               or any part of the Subordinated Indebtedness other than Permitted
               Payments, whether for principal, interest or otherwise; and, if a
               Senior Event of Default has occurred,  the Subordinated  Creditor
               will  not  set  off,  take,   accept  or  receive,   directly  or
               indirectly,  in cash or  property  or in any  other  manner,  any
               payment  of any  kind  whatsoever  on  any  of  the  Subordinated
               Indebtedness;

          3.2.3Standstill.  If a Junior Event of Default occurs under all or any
               part of the Subordinated Indebtedness, Subordinated Creditor will
               not ask,  demand,  accelerate,  declare a default under, sue for,
               set off, accept, take or receive, directly or indirectly, in cash
               or other  property or in any other manner,  any payment of all or
               any part of the  Subordinated  Indebtedness;  provided,  however,
               that if while  such  Junior  Event  of  Default  remains  uncured
               Lenders  accelerate the  indebtedness  under the  Obligations and
               exercises its rights as a secured party to the Collateral,  then,
               in either such event,  Subordinated  Creditor may, upon notice to
               Lenders,  accelerate  and  otherwise  pursue  its  remedies  with
               respect to the Subordinated Indebtedness, subject and subordinate
               in all  respects to Lenders'  rights  under the  Obligations  and
               Lenders' rights in the Collateral, and subject to the other terms
               and conditions of this Agreement;

          3.2.4Notice of Junior  Event of Default.  Subordinated  Creditor  will
               give prompt  notice to Agent of any Junior  Event of Default that
               Subordinated  Creditor  declares  or gives  notice of to Borrower
               together with a copy of any notice given to Borrower  relating to
               such default;

          3.2.5No Right to  Possession of Assets.  Notwithstanding  any right to
               ask, demand,  sue for, or exercise any other right or remedy with
               respect to the Subordinated  Indebtedness,  Subordinated Creditor
               will have no right to possession of any assets of Borrower or any
               Collateral or to foreclose or execute upon any such assets or the
               Collateral, by judicial action or otherwise except as provided in
               Section 3.2.3, above; and

          3.2.6No  Amendments   to   Subordinated   Indebtedness.   Subordinated
               Creditor  will  not  amend  or  modify  all  or any  part  of the
               Subordinated Indebtedness.

     3.3  Security for Subordinated Indebtedness.  Subordinated Creditor agrees,
          represents and warrants that except for the  collateral  listed on the
          attached   Exhibit  A  ("Permitted   Collateral"),   the  Subordinated
          Indebtedness  is not and will not be  secured in any way  directly  or
          indirectly.

     3.4  Subordination of Lien.  Subordinated  Creditor hereby subordinates the
          lien and priority of any claim, security interest, lien or encumbrance
          and other interests now or hereafter acquired by Subordinated Creditor
          in and to the Collateral to Lenders'  existing and future  interest in
          the Collateral.
<PAGE>

     3.5  No  Assignment of  Subordinated  Indebtedness.  Subordinated  Creditor
          agrees not to subordinate, sell, assign, pledge, encumber, transfer or
          otherwise dispose of all or any part of the Subordinated  Indebtedness
          or any Collateral therefor to any other person.

     3.6  Subordination   Legend  on  Evidence  of  Subordinated   Indebtedness.
          Subordinated Creditor agrees (a) that each note described in Exhibit A
          and all other instruments or documents now or hereafter evidencing all
          or any  portion of the  Subordinated  Indebtedness  will bear on their
          face a clear legend that it is subject to the terms of this Agreement,
          (b) that it will mark its books of account in such a manner as will be
          effective to give proper  notice of the effect of this  Agreement  and
          (c) that it will execute such further  documents  and  acknowledgments
          and take such  further  actions as Lenders may  reasonably  require to
          confirm or evidence its obligations under this Agreement.

4.   Distributions, Etc.

     4.1  Insolvency of Borrower. In the event of any distribution,  division or
          application,   partial  or  complete,  voluntary  or  involuntary,  by
          operation  of law or  otherwise,  of all or any part of the  assets of
          Borrower or the  proceeds  thereof to  creditors of Borrower or to any
          indebtedness,  liabilities  and  obligations of Borrower,  or upon any
          liquidation, dissolution or other winding up of Borrower or Borrower's
          business,  or in the event of any sale (singly or in the aggregate) of
          all or any substantial part of the assets of Borrower, or in the event
          of  any  receivership,   insolvency  or  bankruptcy   proceeding,   or
          assignment  for the  benefit of  creditors,  or any  proceeding  by or
          against Borrower for any relief under any bankruptcy or insolvency law
          or other laws  relating  to the  relief of  debtors,  readjustment  of
          indebtedness, reorganization,  compositions or extensions, then and in
          any such event any payment or  distribution  of any kind or character,
          either  in cash,  securities  or  other  property,  whether  or not on
          account of any Collateral,  which will be payable or deliverable  upon
          or with respect to all or any part of the Subordinated Indebtedness or
          the  Collateral  will be paid or  delivered  directly  to Lenders  for
          application  to the  Obligations  (whether  due or not due and in such
          order and manner as Lenders may elect) until the Obligations will have
          been fully paid and satisfied.

     4.2  Appointment of Agent as Attorney-in-Fact. Subordinated Creditor hereby
          irrevocably  authorizes  and  empowers  Agent on behalf of  Lenders to
          demand,   sue  for,   collect  and  receive   every  such  payment  or
          distribution and give acquittance therefor and to file claims and take
          such  other  proceedings  in  Agent's  own  name  or in  the  name  of
          Subordinated  Creditor or  otherwise,  as Agent may deem  necessary or
          advisable to carry out the provisions of this Subordination Agreement.
          Subordinated  Creditor  hereby  irrevocably  authorizes  and  empowers
          Agent,  and  irrevocably  appoints  Agent,   Subordinated   Creditor's
          attorney-in-fact  to demand,  sue for,  collect and receive every such
          payment or  distribution  and give  acquittance  therefor  and to file
          claims and take such other  proceedings  in Agent's own name or in the
          name  of  Subordinated  Creditor  or  otherwise,  as  Agent  may  deem
          necessary or advisable to carry out the provisions of this  Agreement.
          Subordinated  Creditor  hereby  agrees to execute and deliver to Agent
          such other limited powers of attorney,  assignments,  endorsements  or
          other  instruments  as may be  requested  by Agent in order to  enable
          Agent  to  enforce  any and all  claims  upon or with  respect  to the
          Subordinated  Indebtedness  and/or the Collateral,  and to collect and
          receive any and all payments or distributions  which may be payable or
          deliverable  at any  time  upon or with  respect  to the  Subordinated
          Indebtedness and/or the Collateral.

5.   Receipt  of  Payments  by  Subordinated  Creditor.  Should  any  payment or
     distribution  not  permitted  by the  provisions  of this  Agreement or the
     Collateral or proceeds thereof be received by Subordinated Creditor upon or
     with respect to all or any part of the Subordinated Indebtedness and/or the
     Collateral  prior to the full payment and  satisfaction  of the Obligations
     and the  termination  of all  financing  arrangements  between  Lenders and
     Borrower, Subordinated Creditor will deliver the same to Agent in precisely
     the form received  (with the  endorsement  or  assignment  of  Subordinated
     Creditor where necessary),  for application to the Obligations (whether due
     or not due and in such order and manner as Lenders may elect),  and,  until
     so delivered,  the same will be held in trust by  Subordinated  Creditor as
     property of Lenders.  In the event of the failure of Subordinated  Creditor
     to make any such  endorsement or assignment,  Agent, or any of its officers
     or employees on behalf of Agent,  is hereby  irrevocably  authorized in its
     own name or in the name of  Subordinated  Creditor to make the same, and is
     hereby  appointed  Subordinated   Creditor's   attorney-in-fact  for  those
     purposes, that appointment being coupled with an interest and irrevocable.
<PAGE>

6.   Consents,  Waivers,  Etc. Subordinated Creditor hereby consents that at any
     time and  from  time to time and  with or  without  consideration,  without
     further  consent of or notice to  Subordinated  Creditor and without in any
     manner affecting,  impairing,  lessening or releasing any of the provisions
     of this  Subordination  Agreement,  Lenders  may  extend  credit  or  other
     financial accommodation or benefit and loan monies to or for the account of
     Borrower,  and may renew, extend,  change the manner, time, place and terms
     of payment  of,  otherwise  alter the terms of,  sell,  exchange,  release,
     substitute,  surrender, realize upon, modify, waive, grant indulgences with
     respect to and  otherwise  deal with in any manner:  (a) all or any part of
     the Obligations; (b) all or any of the agreements, documents or instruments
     evidencing,  securing,  guaranteeing or otherwise relating to all or any of
     the Obligations;  (c) all or any part of the Collateral; and (d) any person
     at any time  primarily  or  secondarily  liable  for all or any part of the
     Obligations and/or any Collateral,  all as if this Subordination  Agreement
     did not exist. This Subordination Agreement will not be affected,  impaired
     or  released  by any delay or failure of Lenders to  exercise  any of their
     rights and remedies  against  Borrower or any guarantor or under any of the
     Obligations   or  against  any  collateral  or  security  for  any  of  the
     Obligations, by any failure of Lenders to take steps to perfect or maintain
     its  lien  on,  or to  preserve  any  rights  to,  any  Collateral  by  any
     irregularity,  unenforceability  or invalidity of any of the Obligations or
     any part  thereof or any security or  guarantee  therefor,  or by any other
     event or circumstance  which otherwise might constitute a defense available
     to, or a discharge of,  Borrower or a subordinated  creditor.  Subordinated
     Creditor hereby agrees that all payments received by Lenders may be applied
     and reapplied, in whole or in part, to any of the Obligations,  as Lenders,
     in their sole discretion,  deems appropriate.  Subordinated Creditor hereby
     waives demand, presentment for performance, protest, notice of dishonor and
     of protest with respect to the Obligations and/or the Collateral, notice of
     acceptance of this Subordination Agreement,  notice of the making of any of
     the Obligations and notice of default under any of the Obligations.

7.   Representations  and  Warranties.   Subordinated  Creditor  represents  and
     warrants that:

     7.1  No Prior  Assignment  or Transfer.  It is the sole holder and owner of
          the Subordinated  Indebtedness and has not made any sale,  assignment,
          pledge,  encumbrance  or other  disposition  of all or any part of the
          Subordinated Indebtedness,  and the same is free from all encumbrances
          of any kind.

     7.2  Legal. Valid and Binding Agreement. This Agreement is the legal, valid
          and  binding  obligation  of  Subordinated  Creditor,  enforceable  in
          accordance with its terms.

     7.3  No Violation of Other Agreements.  This Agreement does not violate and
          is not in contravention  of any other agreement to which  Subordinated
          Creditor is a party.
<PAGE>

8.   Continuing Agreement. This is a continuing Subordination Agreement and will
     remain in full force and effect  until all of  Borrower's  Obligations  and
     Subordinated  Creditor's  obligations to Lenders have been fully  performed
     and  satisfied  and until all  financing  agreements  between  Lenders  and
     Borrower have been terminated.

9.   Transfer or Assignment of  Obligations;  New Senior  Lender.  If any of the
     Obligations  should be transferred or assigned by any of the Lenders,  this
     Subordination Agreement will inure to the benefit of Lenders' transferee or
     assignee  to the  extent of such  transfer  or  assignment,  provided  that
     Lenders  will  continue  to have  the  unimpaired  right  to  enforce  this
     Subordination  Agreement as to any of the Obligations not so transferred or
     assigned.  In addition,  if the Obligations are paid in full by a loan from
     the proceeds of one or more other  financings  by Borrower,  regardless  of
     whether or not this  Agreement  is  assigned  to the  persons  or  entities
     providing  such  financing(s),   the  obligations  under  the  Subordinated
     Indebtedness  will be subordinate to such  financings to the same extent as
     provided in this Agreement and Subordinated  Creditor on the request of the
     persons  or  entities   providing  such  financing(s)  will  enter  into  a
     subordination agreement with such persons or entities substantially similar
     to this Agreement to confirm such subordination.

10.  Notices.  All notices,  demands,  requests,  consents,  approvals and other
     communications  required or permitted hereunder will be in writing and will
     be  conclusively  deemed to have been  received by a party hereto and to be
     effective  if  delivered  personally  to such  party,  or sent by  telecopy
     (followed by written confirmation),  or by overnight courier service, or by
     certified or registered mail,  return receipt  requested,  postage prepaid,
     addressed  to such party at the  address  set forth  below or to such other
     address as any party may give to the other in writing for such purpose:

         If to Agent at:                    PNC Bank, National Association
                                            One PNC Plaza
                                            249 Fifth Avenue, 6th Floor
                                            Pittsburgh, Pennsylvania 15222
                                            Attention: Doreen K. Casey
                                            Telephone: (412) 762-2881
                                            Telecopier: (412) 768-4369

         with a copy to:                    PNC Bank, National Association
                                            PNC Agency Services
                                            One PNC Plaza, 22nd Floor
                                            249 Fifth Avenue
                                            Pittsburgh, Pennsylvania 15222

         with a copy to:                    Frost Brown Todd LLC
                                            2200 PNC Center
                                            201 E. 5th Street
                                            Cincinnati, Ohio 45202
                                            Attention: Michael O'Grady
                                            Telephone: (513) 651-6800
                                            Facsimile: (513) 651-6981

         To Subordinated Creditor:          DC Investments, LLC
                                            111 Monument Circle
                                            Bank One Tower, Suite 4800
                                            Indianapolis, IN 46204
                                            Attention: Timothy S. Durham
                                            Telephone: (317) 237-4122
                                            Facsimile: (317) 237- 0137

         With a copy to:                    Bamberger & Feibleman
                                            111 Monument Circle
                                            Bank One Tower, Suite 4800
                                            Indianapolis, IN 46204
                                            Attention: Neil E. Lucas
                                            Telephone: (317) 472-1480
                                            Facsimile: (317) 237-0137
<PAGE>

     All such  communications,  if personally  delivered,  will be  conclusively
     deemed to have been received by a party hereto and to be effective  when so
     delivered,  or if sent by telecopy, on the day on which transmitted,  or if
     sent by overnight  courier  service,  on the day after deposit thereof with
     such  service,  or if sent by certified or  registered  mail,  on the third
     business day after the day on which deposited in the mail.

ll.  Further Agreements.

     11.1 Suit by Subordinated Creditor. If Subordinated  Creditor,  contrary to
          this Agreement,  commences or participates in any action or proceeding
          against  Borrower  or the  Collateral,  Borrower  may  interpose  as a
          defense or dilatory plea the making of this  Agreement,  and Agent may
          intervene and interpose such defense or plea in Agent's name or in the
          name of  Borrower.  Should  Subordinated  Creditor,  contrary  to this
          Agreement,  in any way attempt to enforce payment of the  Subordinated
          Indebtedness or any part thereof,  either Agent, in its own name or in
          the name of Borrower,  Borrower itself or both Agent and Borrower, may
          restrain  Subordinated Creditor from so doing, it being understood and
          agreed by Subordinated  Creditor that (i) Lenders'  and/or  Borrower's
          damages  from its actions may at that time be  difficult  to ascertain
          and may be  irreparable,  and (ii)  Subordinated  Creditor  waives any
          defense of Borrower  and/or that  Lenders  cannot  demonstrate  damage
          and/or can be made whole by the  awarding of damages  and/or any other
          defense  based on the  adequacy  of a  remedy  at law  which  might be
          asserted as a bar to the remedy of specific performance.

     11.2 improper Payment by Borrower to Subordinated Creditor. If Subordinated
          Creditor,  Borrower or both, contrary to this Agreement, make, attempt
          to or threaten to make any payment or take any action contrary to this
          Agreement,  Agent may restrain Subordinated Creditor and Borrower from
          so doing, it being understood and agreed by Subordinated  Creditor and
          Borrower that (i) Lenders' damages from their actions may at that time
          be difficult to ascertain and may be irreparable and (ii) Subordinated
          Creditor and Borrower waive any defense or claim that Borrower  and/or
          Lenders  cannot  demonstrate  damage  and/or  can be made whole by the
          awarding of damages.

     11.3 Subrogation of Lenders. Subordinated Creditor also hereby agrees that,
          regardless  of whether  the  Obligations  are  secured  or  unsecured,
          Lenders will be subrogated for  Subordinated  Creditor with respect to
          Subordinated  Creditor's  claims  against  Borrower  and  Subordinated
          Creditors  rights,  liens and  security  interests,  if any, in any of
          Borrower's   assets  and  the  proceeds   thereof  until  all  of  the
          Obligations  will have been fully paid and satisfied and all financing
          arrangements  between  Borrower  and  Lenders  have  been  terminated.
          Subordinated  Creditor  agrees  that no  payment  or  distribution  to
          Lenders pursuant to this Agreement will entitle Subordinated  Creditor
          to exercise any rights of subrogation in respect  thereof until all of
          the  Obligations  have been fully paid and all financing  arrangements
          between Lenders and Borrower terminated.
<PAGE>

     11.4 Effectiveness  of  Agreement.  This  Agreement  will  continue  to  be
          effective  or will be  reinstated,  as the case may be, if at any time
          any payment of the  Obligations  is  rescinded  or must  otherwise  be
          returned by Lenders upon the insolvency, bankruptcy, or reorganization
          of Borrower  or  otherwise,  all as though  such  payment had not been
          made.

     11.5 Indemnification of Lenders.  Subordinated Creditor agrees to indemnify
          Lenders and to hold  Lenders  harmless  for any and all  expenses  and
          obligations,  including  reasonable  attorney's  fees,  as they arise,
          relating to actions of  Subordinated  Creditor  taken contrary to this
          Agreement.

     11.6 No Obligation of Lenders to Borrower.  Nothing  herein  contained will
          obligate   Lenders  to  grant   credit  to,  or   continue   financing
          arrangements with, Borrower.

     11.7 Joint and Several  Liability,  Binding  Nature of  Agreement.  If this
          Subordination  Agreement is executed by more than one person or entity
          as the  "Subordinated  Creditor,"  the  obligations of such persons or
          entities  hereunder  will  be  joint  and  several.  Unless  otherwise
          specified herein,  any reference to "Subordinated  Creditor" will mean
          each such person or entity executing this Note individually and all of
          such persons or entities  collectively.  This Subordination  Agreement
          will  bind  Subordinated  Creditor  and  the  heirs,   administrators,
          successors  and assigns of  Subordinated  Creditor,  and the  benefits
          hereof  will  inure  to the  benefit  of each of the  Lenders  and its
          successors  and assigns.  All references  herein to the  "Subordinated
          Creditor"  and  "Lenders"  will be  deemed  to apply  to  Subordinated
          Creditor  and  Lenders  and their  respective  heirs,  administrators,
          successors and assigns.

     11.8 Gender,  Etc. As used  herein,  the  singular  number will include the
          plural, the plural the singular and the use of the masculine, feminine
          or neuter gender will include all genders, as the context may require,
          and the term "person" will include an individual,  a  corporation,  an
          association,  a partnership,  a trust,  an  organization  or any other
          entity.

     11.9 Headings.  The Section  headings of this Agreement are for convenience
          only, and will not limit or otherwise affect any of the terms hereof.
<PAGE>

     11.10No  Third  Party  Beneficiaries.  This  Agreement  is  solely  for the
          benefit of Lenders and will not give  Borrower or any other person any
          right or remedy hereunder or by reason hereof.

     11.11No Waiver.  No delay or failure on the part of Lenders to exercise any
          of its rights or remedies  hereunder or now or  hereafter  existing at
          law or in equity or by statute or otherwise,  or any partial or single
          exercise  thereof,  will constitute a waiver thereof.  All such rights
          and  remedies  are   cumulative   and  may  be  exercised   singly  or
          concurrently and the exercise of any one or more of them will not be a
          waiver  of any  other.  No waiver of any of its  rights  and  remedies
          hereunder,  and no  modification  or amendment  of this  Subordination
          Agreement,  will be deemed to be made by Lenders  unless the same will
          be in writing, duly signed on behalf of Lenders, and each such waiver,
          if any, will apply only with respect to the specific instance involved
          and will in no way impair the rights and remedies of Lenders hereunder
          in any other respect at any other time.

     11.12Counterparts.  This  Agreement  may  be  executed  in  any  number  of
          counterparts and by different parties hereto in separate counterparts,
          each of which when so executed  will be deemed to be an  original  and
          all  of  which  taken  together  will  constitute  one  and  the  same
          agreement.   Any  party  so  executing  this  Agreement  by  facsimile
          transmission  shall promptly deliver a manually executed  counterpart,
          provided  that any  failure to do so shall not affect the  validity of
          the counterpart executed by facsimile transmission.

     11.13Governing Law. THIS  AGREEMENT WILL BE INTERPRETED  AND THE RIGHTS AND
          LIABILITIES  OF THE PARTIES HERETO  DETERMINED IN ACCORDANCE  WITH THE
          LAWS OF THE STATE OF INDIANA  WITHOUT  REGARD TO ITS CONFLICTS OF LAWS
          AND PRINCIPLES.

     11.14Jurisdiction.  SUBORDINATED  CREDITOR  HEREBY  AGREES TO THE EXCLUSIVE
          JURISDICTION  OF ANY STATE OR  FEDERAL  COURT  LOCATED  WITHIN  MARION
          COUNTY,  INDIANA;  PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
          LENDERS  OR AGENT ON BEHALF OF  LENDERS  FROM  BRINGING  ANY ACTION OR
          EXERCISING  ANY RIGHTS  AGAINST ANY  COLLATERAL  AGAINST  SUBORDINATED
          CREDITOR  INDIVIDUALLY,   OR  AGAINST  ANY  PROPERTY  OF  SUBORDINATED
          CREDITOR WITHIN ANY OTHER STATE OR NATION.  SUBORDINATED  CREDITOR AND
          THE AGENT ACTING ON BEHALF OF LENDERS EACH WAIVE ANY  OBJECTION  BASED
          ON FORUM  NON  CONVENIENS  AND ANY  OBJECTION  TO VENUE OF ANY  ACTION
          INSTITUTED HEREUNDER.

     11.15Waiver of Jury Trial.  SUBORDINATED  CREDITOR AND AGENT EACH WAIVE ANY
          RIGHT TO TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  RELATING  TO THIS
          AGREEMENT,  THE SECURITY DOCUMENTS OR ANY TRANSACTION  CONTEMPLATED IN
          ANY OF SUCH AGREEMENTS.

Signed as of October 25, 2002

                               SUBORDINATED CREDITOR:

                               DC INVESTMENTS, LLC



                               By: /s/ Timothy S. Durham
                                   ------------------------------
                               Name: Timothy S. Durham
                               Title: Managing Member

                                AGENT ON BEHALF OF LENDERS:

                                PNC BANK, NATIONAL ASSOCIATION


                                By: /s/ Paul J. Count
                                    ---------------------------------
                                Name: Paul J. Count
                                Title: Vice President



<PAGE>


                           ACKNOWLEDGMENT OF BORROWER

     U.S.  RUBBER  RECLAIMING,  INC.,  Borrower  referred  to in  the  foregoing
Subordination  Agreement,  hereby accepts and acknowledges  receipt of a copy of
the foregoing Subordination Agreement this 25th day of October, 2002, and agrees
that it will not pay any of the  Subordinated  Indebtedness  (as  defined in the
foregoing  Agreement)  owing  by it to  Subordinated  Creditor,  except  as  the
foregoing Agreement  provides,  or take any other action in contravention of the
provisions  of the foregoing  Agreement and that all other terms,  covenants and
provisions of the foregoing  Agreement will be duly  performed and observed.  In
the event of a breach by Borrower or Subordinated  Creditor of any of the terms,
covenants or provisions herein or of the foregoing Agreement,  then, in addition
to and  not in  lieu  of any  other  right  or  remedy  of  Lenders,  all of the
Obligations  (as  defined in the  foregoing  Agreement)  will,  at the option of
Agent, and without  presentment,  demand,  protest or notice of any kind, become
immediately due and payable.

                                    BORROWER:

                                    U.S. RUBBER RECLAIMING, INC.



                                    By: /s/ Timothy S. Durham
                                        ---------------------------------
                                    Name: Timothy S. Durham
                                    Title: Chairman



<PAGE>


                                    EXHIBIT A

1.   Description of Subordinated Indebtedness:

     Promissory  Note dated as of October 25, 2002,  in the  original  principal
     amount of $700,000, with a maturity date of March 1, 2007.

2.   Verification  of  Subordination  Legend  which  provides  substantially  as
     follows:  " THIS DOCUMENT IS SUBJECT TO A SUBORDINATION  AGREEMENT  BETWEEN
     PNC BANK,  NATIONAL  ASSOCIATION,  AS AGENT AND DC  INVESTMENTS,  LLC DATED
     OCTOBER 25, 2002."

3.   Permitted Payments on Subordinated Indebtedness:

     Scheduled, non-accelerated payments of interest only.

4.   Permitted Collateral for Subordinated Indebtedness:

     All assets of Borrower.



<PAGE>


                             SUBORDINATION AGREEMENT

     PNC BANK, NATIONAL ASSOCIATION,  as agent for the Lenders (the "Agent") and
OBSIDIAN ENTERPRISES,  INC. ("Subordinated  Creditor"),  hereby agree as follows
effective as of October 25, 2002 ("Effective Date"):

1.   Recitals.

     1.1  Agent is agent for  certain  lenders  ("Lenders")  under that  certain
          Revolving  Credit,  Term Loan and Security  Agreement dated as of even
          date  herewith,  as amended from time to time (the "Loan  Agreement"),
          previously  or  in  the  future  with  U.S.  RUBBER  RECLAIMING,  INC.
          ("Borrower"). Lenders contemplate making loans and extending credit or
          other financial accommodations to the Borrowers.

     1.2  For good  and  valuable  consideration,  receipt  of  which is  hereby
          acknowledged  by Agent on  behalf to  Lenders,  and in order to induce
          Subordinated Creditor, now or from time to time hereafter,  to arrange
          for the Subordinated  Indebtedness,  Subordinated Creditor agrees with
          Lenders as follows.

     1.3  For good  and  valuable  consideration,  receipt  of  which is  hereby
          acknowledged by Subordinated Creditor, and in order to induce Lenders,
          now or from time to time hereafter,  to make loans or extend credit or
          other financial  accommodations to Borrower, or to grant such renewals
          or extensions thereof as Lenders may deem advisable in its discretion,
          Subordinated  Creditor agrees with Agent, acting on behalf of Lenders,
          as follows.

2.   Definitions.

     2.1  "Borrower"   will  mean  Borrower  and  its  successors  and  assigns,
          including  but not limited to any  receiver,  custodian,  trustee,  or
          debtor-in-possession.

     2.2  "Closing Date" will mean the date on which this Agreement is executed.

     2.3  "Collateral"  will mean any collateral  now or in the future  securing
          the  Obligations  including  but not  limited  to claims  against  any
          guarantors  of  the  Obligations  and  any  Collateral  securing  such
          guarantees.

     2.4  "Default"  will mean any event or  condition  that with the passage of
          time or giving of notice,  or both, would constitute a Senior Event of
          Default.

     2.5  "Junior  Event of  Default"  will mean:  (a) an Event of  Default  (as
          defined  therein)  under any of the  documents  evidencing  any of the
          Subordinated  Indebtedness,  or  (b)  a  default  under  any  of  such
          documents that do not have a defined set of Events of Default.
<PAGE>

     2.6  "Lender's Affiliate" will mean any person, partnership, joint venture,
          company or business  entity  under  common  control or having  similar
          equity  holders  owning at least ten percent  (10%)  thereof  with any
          Lender, whether such common control is direct or indirect. All of each
          Lender's direct or indirect parent corporations,  sister corporations,
          and  subsidiaries  will  be  deemed  to be a  Lender's  Affiliate  for
          purposes of this Agreement.

     2.7  "Obligations"  will  mean and  include  all  loans,  advances,  debts,
          liabilities,  obligations, covenants and duties owing to any Lender or
          any of such  Lender's  Affiliates,  from any  Borrower  of any kind or
          nature,  present or  future,  whether  or not  evidenced  by any note,
          guaranty  or other  instrument,  including  but not  limited  to those
          arising under:  (i) the Loan Agreement,  (ii) any  International  Swap
          Dealers  Association  Master  Agreement  ("Master   Agreement"),   and
          including  each  Transaction  (as such term is  defined  in the Master
          Agreement),  as confirmed in the applicable  confirmation of each such
          Transaction, (iii) any obligation of any Borrower to Agent, any Lender
          or any Lender's  Affiliate  under any other  interest rate swap,  cap,
          collar,  floor,  option,  forward,  or  other  type of  interest  rate
          protection, foreign exchange or derivative transaction agreement, (iv)
          the Notes,  as such term is defined in the Loan  Agreement,  (v) under
          any other  agreement,  instrument or document,  whether or not for the
          payment of money, whether arising by reason of an extension of credit,
          opening of a letter of credit, loan,  guaranty,  indemnification or in
          any other manner, whether direct or indirect (including those acquired
          by  assignment,  participation,  purchase,  negotiation,  discount  or
          otherwise), absolute or contingent, joint or several, due or to become
          due, now existing or hereafter arising and whether or not contemplated
          by any Borrower,  Agent, any Lender, or any Lender's  Affiliate on the
          Closing  Date;  and  as  to  all  of  the  foregoing,   including  any
          amendments,  modifications,  or  superceding  documents to each of the
          foregoing; and all charges,  expenses, fees, including but not limited
          to reasonable  Attorneys'  Fees, and any other sums  chargeable to any
          Borrower under any of the Obligations.

     2.8  "Permitted   Payments"  means  those  payments  on  the   Subordinated
          Indebtedness listed on Exhibit A attached hereto.

     2.9  "Senior  Event of  Default"  will mean:  (a) an Event of  Default  (as
          defined  therein)  under any of the  documents  evidencing  any of the
          Obligations,  or (b) a default under any of such documents that do not
          have a defined set of Events of Default.

     2.10 "Subordinated  Indebtedness" will mean any and all existing and future
          indebtedness,  liabilities and obligations of Borrower to Subordinated
          Creditor  of every  kind and  nature  whatsoever,  including,  without
          limitation,  such  indebtedness,   liabilities,   and  obligations  of
          Borrower  to  Subordinated   Creditor  which  are  direct,   indirect,
          contingent, primary, secondary, alone, jointly with others, unsecured,
          secured,  future  advances,  principal,  interest,  expense  payments,
          indemnities,  liquidation costs,  post-petition interest due on any of
          the above,  and reasonable  Attorneys' Fees and expenses,  all whether
          arising under contract,  by tort, at law, in equity or otherwise,  and
          all  guarantees,  indemnifications  and other  undertakings of persons
          other  than  Borrower  with  respect  to  the  foregoing.  The  entire
          Subordinated  Indebtedness  existing on the date of this  Agreement is
          described in Exhibit A attached hereto and made a part hereof.
<PAGE>

3.   Subordination.

     3.1  Subordination  of  Subordinated  Indebtedness.  Except  for  Permitted
          Payments made by Borrower to Subordinated Creditor where no Default or
          Senior  Event  of  Default  exists  under  any  of  the   Obligations,
          Subordinated  Creditor hereby  subordinates  and postpones the payment
          and the time of payment of all of the Subordinated Indebtedness to and
          in  favor  of the  payment  and  the  time  of  payment  of all of the
          Obligations.

     3.2  Terms of Payment. Until the Obligations have been indefeasibly paid in
          full and all financing  arrangements  relating to the Obligations have
          been terminated:

          3.2.1No Prepayments.  Subordinated Creditor will not accept from or on
               behalf of Borrower any  prepayment,  in cash or other property or
               in any other manner, on any of the Subordinated Indebtedness;

          3.2.2Permitted  Payments.  Subordinated  Creditor  will  not set  off,
               accept, take or receive, directly or indirectly, in cash or other
               property or in any other  manner,  any payment of any kind of all
               or any part of the Subordinated Indebtedness other than Permitted
               Payments, whether for principal, interest or otherwise; and, if a
               Senior Event of Default has occurred,  the Subordinated  Creditor
               will  not  set  off,  take,   accept  or  receive,   directly  or
               indirectly,  in cash or  property  or in any  other  manner,  any
               payment  of any  kind  whatsoever  on  any  of  the  Subordinated
               Indebtedness;

          3.2.3Standstill.  If a Junior Event of Default occurs under all or any
               part of the Subordinated Indebtedness, Subordinated Creditor will
               not ask,  demand,  accelerate,  declare a default under, sue for,
               set off, accept, take or receive, directly or indirectly, in cash
               or other  property or in any other manner,  any payment of all or
               any part of the  Subordinated  Indebtedness;  provided,  however,
               that if while  such  Junior  Event  of  Default  remains  uncured
               Lenders  accelerate the  indebtedness  under the  Obligations and
               exercises its rights as a secured party to the Collateral,  then,
               in either such event,  Subordinated  Creditor may, upon notice to
               Lenders,  accelerate  and  otherwise  pursue  its  remedies  with
               respect to the Subordinated Indebtedness, subject and subordinate
               in all  respects to Lenders'  rights  under the  Obligations  and
               Lenders' rights in the Collateral, and subject to the other terms
               and conditions of this Agreement;

          3.2.4Notice of Junior  Event of Default.  Subordinated  Creditor  will
               give prompt  notice to Agent of any Junior  Event of Default that
               Subordinated  Creditor  declares  or gives  notice of to Borrower
               together with a copy of any notice given to Borrower  relating to
               such default;

          3.2.5No Right to  Possession of Assets.  Notwithstanding  any right to
               ask, demand,  sue for, or exercise any other right or remedy with
               respect to the Subordinated  Indebtedness,  Subordinated Creditor
               will have no right to possession of any assets of Borrower or any
               Collateral or to foreclose or execute upon any such assets or the
               Collateral, by judicial action or otherwise except as provided in
               Section 3.2.3, above; and
<PAGE>

          3.2.6No Amendments to Subordinated Indebtedness. Subordinated Creditor
               will not  amend  or  modify  all or any part of the  Subordinated
               Indebtedness.

     3.3  Security for Subordinated Indebtedness.  Subordinated Creditor agrees,
          represents and warrants that except for the  collateral  listed on the
          attached   Exhibit  A  ("Permitted   Collateral"),   the  Subordinated
          Indebtedness  is not and will not be  secured in any way  directly  or
          indirectly.

     3.4  Subordination of Lien.  Subordinated  Creditor hereby subordinates the
          lien and priority of any claim, security interest, lien or encumbrance
          and other interests now or hereafter acquired by Subordinated Creditor
          in and to the Collateral to Lenders'  existing and future  interest in
          the Collateral.

     3.5  No  Assignment of  Subordinated  Indebtedness.  Subordinated  Creditor
          agrees not to subordinate, sell, assign, pledge, encumber, transfer or
          otherwise dispose of all or any part of the Subordinated  Indebtedness
          or any Collateral therefor to any other person.

     3.6  Subordination   Legend  on  Evidence  of  Subordinated   Indebtedness.
          Subordinated Creditor agrees (a) that each note described in Exhibit A
          and all other instruments or documents now or hereafter evidencing all
          or any  portion of the  Subordinated  Indebtedness  will bear on their
          face a clear legend that it is subject to the terms of this Agreement,
          (b) that it will mark its books of account in such a manner as will be
          effective to give proper  notice of the effect of this  Agreement  and
          (c) that it will execute such further  documents  and  acknowledgments
          and take such  further  actions as Lenders may  reasonably  require to
          confirm or evidence its obligations under this Agreement.

4.   Distributions, Etc.

     4.1  Insolvency of Borrower. In the event of any distribution,  division or
          application,   partial  or  complete,  voluntary  or  involuntary,  by
          operation  of law or  otherwise,  of all or any part of the  assets of
          Borrower or the  proceeds  thereof to  creditors of Borrower or to any
          indebtedness,  liabilities  and  obligations of Borrower,  or upon any
          liquidation, dissolution or other winding up of Borrower or Borrower's
          business,  or in the event of any sale (singly or in the aggregate) of
          all or any substantial part of the assets of Borrower, or in the event
          of  any  receivership,   insolvency  or  bankruptcy   proceeding,   or
          assignment  for the  benefit of  creditors,  or any  proceeding  by or
          against Borrower for any relief under any bankruptcy or insolvency law
          or other laws  relating  to the  relief of  debtors,  readjustment  of
          indebtedness, reorganization,  compositions or extensions, then and in
          any such event any payment or  distribution  of any kind or character,
          either  in cash,  securities  or  other  property,  whether  or not on
          account of any Collateral,  which will be payable or deliverable  upon
          or with respect to all or any part of the Subordinated Indebtedness or
          the  Collateral  will be paid or  delivered  directly  to Lenders  for
          application  to the  Obligations  (whether  due or not due and in such
          order and manner as Lenders may elect) until the Obligations will have
          been fully paid and satisfied.
<PAGE>

     4.2  Appointment of Agent as Attorney-in-Fact. Subordinated Creditor hereby
          irrevocably  authorizes  and  empowers  Agent on behalf of  Lenders to
          demand,   sue  for,   collect  and  receive   every  such  payment  or
          distribution and give acquittance therefor and to file claims and take
          such  other  proceedings  in  Agent's  own  name  or in  the  name  of
          Subordinated  Creditor or  otherwise,  as Agent may deem  necessary or
          advisable to carry out the provisions of this Subordination Agreement.
          Subordinated  Creditor  hereby  irrevocably  authorizes  and  empowers
          Agent,  and  irrevocably  appoints  Agent,   Subordinated   Creditor's
          attorney-in-fact  to demand,  sue for,  collect and receive every such
          payment or  distribution  and give  acquittance  therefor  and to file
          claims and take such other  proceedings  in Agent's own name or in the
          name  of  Subordinated  Creditor  or  otherwise,  as  Agent  may  deem
          necessary or advisable to carry out the provisions of this  Agreement.
          Subordinated  Creditor  hereby  agrees to execute and deliver to Agent
          such other limited powers of attorney,  assignments,  endorsements  or
          other  instruments  as may be  requested  by Agent in order to  enable
          Agent  to  enforce  any and all  claims  upon or with  respect  to the
          Subordinated  Indebtedness  and/or the Collateral,  and to collect and
          receive any and all payments or distributions  which may be payable or
          deliverable  at any  time  upon or with  respect  to the  Subordinated
          Indebtedness and/or the Collateral.

5.   Receipt  of  Payments  by  Subordinated  Creditor.  Should  any  payment or
     distribution  not  permitted  by the  provisions  of this  Agreement or the
     Collateral or proceeds thereof be received by Subordinated Creditor upon or
     with respect to all or any part of the Subordinated Indebtedness and/or the
     Collateral  prior to the full payment and  satisfaction  of the Obligations
     and the  termination  of all  financing  arrangements  between  Lenders and
     Borrower, Subordinated Creditor will deliver the same to Agent in precisely
     the form received  (with the  endorsement  or  assignment  of  Subordinated
     Creditor where necessary),  for application to the Obligations (whether due
     or not due and in such order and manner as Lenders may elect),  and,  until
     so delivered,  the same will be held in trust by  Subordinated  Creditor as
     property of Lenders.  In the event of the failure of Subordinated  Creditor
     to make any such  endorsement or assignment,  Agent, or any of its officers
     or employees on behalf of Agent,  is hereby  irrevocably  authorized in its
     own name or in the name of  Subordinated  Creditor to make the same, and is
     hereby  appointed  Subordinated   Creditor's   attorney-in-fact  for  those
     purposes, that appointment being coupled with an interest and irrevocable.

6.   Consents,  Waivers,  Etc. Subordinated Creditor hereby consents that at any
     time and  from  time to time and  with or  without  consideration,  without
     further  consent of or notice to  Subordinated  Creditor and without in any
     manner affecting,  impairing,  lessening or releasing any of the provisions
     of this  Subordination  Agreement,  Lenders  may  extend  credit  or  other
     financial accommodation or benefit and loan monies to or for the account of
     Borrower,  and may renew, extend,  change the manner, time, place and terms
     of payment  of,  otherwise  alter the terms of,  sell,  exchange,  release,
     substitute,  surrender, realize upon, modify, waive, grant indulgences with
     respect to and  otherwise  deal with in any manner:  (a) all or any part of
     the Obligations; (b) all or any of the agreements, documents or instruments
     evidencing,  securing,  guaranteeing or otherwise relating to all or any of
     the Obligations;  (c) all or any part of the Collateral; and (d) any person
     at any time  primarily  or  secondarily  liable  for all or any part of the
     Obligations and/or any Collateral,  all as if this Subordination  Agreement
     did not exist. This Subordination Agreement will not be affected,  impaired
     or  released  by any delay or failure of Lenders to  exercise  any of their
     rights and remedies  against  Borrower or any guarantor or under any of the
     Obligations   or  against  any  collateral  or  security  for  any  of  the
     Obligations, by any failure of Lenders to take steps to perfect or maintain
     its  lien  on,  or to  preserve  any  rights  to,  any  Collateral  by  any
     irregularity,  unenforceability  or invalidity of any of the Obligations or
     any part  thereof or any security or  guarantee  therefor,  or by any other
     event or circumstance  which otherwise might constitute a defense available
     to, or a discharge of,  Borrower or a subordinated  creditor.  Subordinated
     Creditor hereby agrees that all payments received by Lenders may be applied
     and reapplied, in whole or in part, to any of the Obligations,  as Lenders,
     in their sole discretion,  deems appropriate.  Subordinated Creditor hereby
     waives demand, presentment for performance, protest, notice of dishonor and
     of protest with respect to the Obligations and/or the Collateral, notice of
     acceptance of this Subordination Agreement,  notice of the making of any of
     the Obligations and notice of default under any of the Obligations.
<PAGE>

7.   Representations  and  Warranties.   Subordinated  Creditor  represents  and
     warrants that:

     7.1  No Prior  Assignment  or Transfer.  It is the sole holder and owner of
          the Subordinated  Indebtedness and has not made any sale,  assignment,
          pledge,  encumbrance  or other  disposition  of all or any part of the
          Subordinated Indebtedness,  and the same is free from all encumbrances
          of any kind.

     7.2  Legal, Valid and Binding Agreement. This Agreement is the legal, valid
          and  binding  obligation  of  Subordinated  Creditor,  enforceable  in
          accordance with its terms.

     7.3  No Violation of Other Agreements.  This Agreement does not violate and
          is not in contravention  of any other agreement to which  Subordinated
          Creditor is a party.

8.   Continuing Agreement. This is a continuing Subordination Agreement and will
     remain in full force and effect  until all of  Borrower's  Obligations  and
     Subordinated  Creditor's  obligations to Lenders have been fully  performed
     and  satisfied  and until all  financing  agreements  between  Lenders  and
     Borrower have been terminated.

9.   Transfer or Assignment of  Obligations,  New Senior  Lender.  If any of the
     Obligations  should be transferred or assigned by any of the Lenders,  this
     Subordination Agreement will inure to the benefit of Lenders' transferee or
     assignee  to the  extent of such  transfer  or  assignment,  provided  that
     Lenders  will  continue  to have  the  unimpaired  right  to  enforce  this
     Subordination  Agreement as to any of the Obligations not so transferred or
     assigned.  In addition,  if the Obligations are paid in full by a loan from
     the proceeds of one or more other  financings  by Borrower,  regardless  of
     whether or not this  Agreement  is  assigned  to the  persons  or  entities
     providing  such  financing(s),   the  obligations  under  the  Subordinated
     Indebtedness  will be subordinate to such  financings to the same extent as
     provided in this Agreement and Subordinated  Creditor on the request of the
     persons  or  entities   providing  such  financing(s)  will  enter  into  a
     subordination agreement with such persons or entities substantially similar
     to this Agreement to confirm such subordination.

10.  Notices.  All notices,  demands,  requests,  consents,  approvals and other
     communications  required or permitted hereunder will be in writing and will
     be  conclusively  deemed to have been  received by a party hereto and to be
     effective  if  delivered  personally  to such  party,  or sent by  telecopy
     (followed by written confirmation),  or by overnight courier service, or by
     certified or registered mail,  return receipt  requested,  postage prepaid,
     addressed  to such party at the  address  set forth  below or to such other
     address as any party may give to the other in writing for such purpose:

         If to Agent at:                    PNC Bank, National Association
                                            One PNC Plaza
                                            249 Fifth Avenue, 6th Floor
                                            Pittsburgh, Pennsylvania 15222
                                            Attention: Doreen K. Casey
                                            Telephone: (412) 762-2881
                                            Telecopier: (412) 768-4369

         with a copy to:                    PNC Bank, National Association
                                            PNC Agency Services
                                            One PNC Plaza, 22nd Floor 249
                                            Fifth Avenue
                                            Pittsburgh, Pennsylvania 15222
<PAGE>

         with a copy to:                    Frost Brown Todd LLC
                                            2200 PNC Center
                                            201 E. 5th Street
                                            Cincinnati, Ohio 45202
                                            Attention: Michael O'Grady
                                            Telephone: (513) 651-6800
                                            Facsimile: (513) 651-6981

         To Subordinated Creditor:          Obsidian Enterprises, Inc.
                                            111 Monument Circle
                                            Bank One Tower, Suite 4800
                                            Indianapolis, IN 46204
                                            Attention: Timothy S. Durham '
                                            Telephone: (317) 237-4122
                                            Facsimile: (317) 237- 0137

         With a copy to:                    Bamberger & Feibleman
                                            111 Monument Circle
                                            Bank One Tower, Suite 4800
                                            Indianapolis, IN 46204
                                            Attention: Neil E. Lucas
                                            Telephone: (317) 472-1480
                                            Facsimile: (317) 237-0137

All such communications, if personally delivered, will be conclusively deemed to
have been received by a party hereto and to be effective  when so delivered,  or
if sent by telecopy,  on the day on which  transmitted,  or if sent by overnight
courier service,  on the day after deposit thereof with such service, or if sent
by  certified or  registered  mail,  on the third  business day after the day on
which deposited in the mail.

11.  Further Agreements.

     11.1 Suit by Subordinated Creditor. If Subordinated  Creditor,  contrary to
          this Agreement,  commences or participates in any action or proceeding
          against  Borrower  or the  Collateral,  Borrower  may  interpose  as a
          defense or dilatory plea the making of this  Agreement,  and Agent may
          intervene and interpose such defense or plea in Agent's name or in the
          name of  Borrower.  Should  Subordinated  Creditor,  contrary  to this
          Agreement,  in any way attempt to enforce payment of the  Subordinated
          Indebtedness or any part thereof,  either Agent, in its own name or in
          the name of Borrower,  Borrower itself or both Agent and Borrower, may
          restrain  Subordinated Creditor from so doing, it being understood and
          agreed by Subordinated  Creditor that (i) Lenders'  and/or  Borrower's
          damages  from its actions may at that time be  difficult  to ascertain
          and may be  irreparable,  and (ii)  Subordinated  Creditor  waives any
          defense of Borrower  and/or that  Lenders  cannot  demonstrate  damage
          and/or can be made whole by the  awarding of damages  and/or any other
          defense  based on the  adequacy  of a  remedy  at law  which  might be
          asserted as a bar to the remedy of specific performance.

     11.2 Improper Payment by Borrower to Subordinated Creditor. If Subordinated
          Creditor,  Borrower or both, contrary to this Agreement, make, attempt
          to or threaten to make any payment or take any action contrary to this
          Agreement,  Agent may restrain Subordinated Creditor and Borrower from
          so doing, it being understood and agreed by Subordinated  Creditor and
          Borrower that (i) Lenders' damages from their actions may at that time
          be difficult to ascertain and may be irreparable and (ii) Subordinated
          Creditor and Borrower waive any defense or claim that Borrower  and/or
          Lenders  cannot  demonstrate  damage  and/or  can be made whole by the
          awarding of damages.

     11.3 Subrogation of Lenders. Subordinated Creditor also hereby agrees that,
          regardless  of whether  the  Obligations  are  secured  or  unsecured,
          Lenders will be subrogated for  Subordinated  Creditor with respect to
          Subordinated  Creditor's  claims  against  Borrower  and  Subordinated
          Creditor's  rights,  liens and security  interests,  if any, in any of
          Borrower's   assets  and  the  proceeds   thereof  until  all  of  the
          Obligations  will have been fully paid and satisfied and all financing
          arrangements  between  Borrower  and  Lenders  have  been  terminated.
          Subordinated  Creditor  agrees  that no  payment  or  distribution  to
          Lenders pursuant to this Agreement will entitle Subordinated  Creditor
          to exercise any rights of subrogation in respect  thereof until all of
          the  Obligations  have been fully paid and all financing  arrangements
          between Lenders and Borrower terminated.
<PAGE>

     11.4 Effectiveness  of  Agreement.  This  Agreement  will  continue  to  be
          effective  or will be  reinstated,  as the case may be, if at any time
          any payment of the  Obligations  is  rescinded  or must  otherwise  be
          returned by Lenders upon the insolvency, bankruptcy, or reorganization
          of Borrower  or  otherwise,  all as though  such  payment had not been
          made.

     11.5 Indemnification of Lenders.  Subordinated Creditor agrees to indemnify
          Lenders and to hold  Lenders  harmless  for any and all  expenses  and
          obligations,  including  reasonable  attorney's  fees,  as they arise,
          relating to actions of  Subordinated  Creditor  taken contrary to this
          Agreement.

     11.6 No Obligation of Lenders to Borrower.  Nothing  herein  contained will
          obligate   Lenders  to  grant   credit  to,  or   continue   financing
          arrangements with, Borrower.

     11.7 Joint and Several  Liability,  Binding  Nature of  Agreement.  If this
          Subordination  Agreement is executed by more than one person or entity
          as the  "Subordinated  Creditor,"  the  obligations of such persons or
          entities  hereunder  will  be  joint  and  several.  Unless  otherwise
          specified herein,  any reference to "Subordinated  Creditor" will mean
          each such person or entity executing this Note individually and all of
          such persons or entities  collectively.  This Subordination  Agreement
          will  bind  Subordinated  Creditor  and  the  heirs,   administrators,
          successors  and assigns of  Subordinated  Creditor,  and the  benefits
          hereof  will  inure  to the  benefit  of each of the  Lenders  and its
          successors  and assigns.  All references  herein to the  "Subordinated
          Creditor"  and  "Lenders"  will be  deemed  to apply  to  Subordinated
          Creditor  and  Lenders  and their  respective  heirs,  administrators,
          successors and assigns.

     11.8 Gender,  Etc. As used  herein,  the  singular  number will include the
          plural, the plural the singular and the use of the masculine, feminine
          or neuter gender will include all genders, as the context may require,
          and the term "person" will include an individual,  a  corporation,  an
          association,  a partnership,  a trust,  an  organization  or any other
          entity.

     11.9 Headings.  The Section  headings of this Agreement are for convenience
          only, and will not limit or otherwise affect any of the terms hereof.

     11.10No  Third  Party  Beneficiaries.  This  Agreement  is  solely  for the
          benefit of Lenders and will not give  Borrower or any other person any
          right or remedy hereunder or by reason hereof.

     11.11No Waiver.  No delay or failure on the part of Lenders to exercise any
          of its rights or remedies  hereunder or now or  hereafter  existing at
          law or in equity or by statute or otherwise,  or any partial or single
          exercise  thereof,  will constitute a waiver thereof.  All such rights
          and  remedies  are   cumulative   and  may  be  exercised   singly  or
          concurrently and the exercise of any one or more of them will not be a
          waiver  of any  other.  No waiver of any of its  rights  and  remedies
          hereunder,  and no  modification  or amendment  of this  Subordination
          Agreement,  will be deemed to be made by Lenders  unless the same will
          be in writing, duly signed on behalf of Lenders, and each such waiver,
          if any, will apply only with respect to the specific instance involved
          and will in no way impair the rights and remedies of Lenders hereunder
          in any other respect at any other time.
<PAGE>

     11.12Counterparts.  This  Agreement  may  be  executed  in  any  number  of
          counterparts and by different parties hereto in separate counterparts,
          each of which when so executed  will be deemed to be an  original  and
          all  of  which  taken  together  will  constitute  one  and  the  same
          agreement.   Any  party  so  executing  this  Agreement  by  facsimile
          transmission  shall promptly deliver a manually executed  counterpart,
          provided  that any  failure to do so shall not affect the  validity of
          the counterpart executed by facsimile transmission.

     11.13Governing Law. THIS  AGREEMENT WILL BE INTERPRETED  AND THE RIGHTS AND
          LIABILITIES  OF THE PARTIES HERETO  DETERMINED IN ACCORDANCE  WITH THE
          LAWS OF THE STATE OF INDIANA  WITHOUT  REGARD TO ITS CONFLICTS OF LAWS
          AND PRINCIPLES.

     11.14Jurisdiction.  SUBORDINATED  CREDITOR  HEREBY  AGREES TO THE EXCLUSIVE
          JURISDICTION  OF ANY STATE OR  FEDERAL  COURT  LOCATED  WITHIN  MARION
          COUNTY,  INDIANA;  PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
          LENDERS  OR AGENT ON BEHALF OF  LENDERS  FROM  BRINGING  ANY ACTION OR
          EXERCISING  ANY RIGHTS  AGAINST ANY  COLLATERAL  AGAINST  SUBORDINATED
          CREDITOR  INDIVIDUALLY,   OR  AGAINST  ANY  PROPERTY  OF  SUBORDINATED
          CREDITOR WITHIN ANY OTHER STATE OR NATION.  SUBORDINATED  CREDITOR AND
          THE AGENT ACTING ON BEHALF OF LENDERS EACH WAIVE ANY  OBJECTION  BASED
          ON FORUM  NON  CONVENIENS  AND ANY  OBJECTION  TO VENUE OF ANY  ACTION
          INSTITUTED HEREUNDER.

     11.15Waiver of Jury Trial.  SUBORDINATED  CREDITOR AND AGENT EACH WAIVE ANY
          RIGHT TO TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  RELATING  TO THIS
          AGREEMENT,  THE SECURITY DOCUMENTS OR ANY TRANSACTION  CONTEMPLATED IN
          ANY OF SUCH AGREEMENTS.


Signed as of October 25, 2002



                                    SUBORDINATED CREDITOR:

                                    OBSIDIAN ENTERPRISES, INC.


                                    By: /s/ Timothy S. Durham
                                        ---------------------------------
                                    Print Name:  Timothy S. Durham
                                    Title:  CEO


                                    AGENT ON BEHALF OF LENDERS:

                                    PNC BANK, NATIONAL ASSOCIATION


                                    By: /s/ Timothy S. Durham
                                        ---------------------------------
                                    Print Name:  Timothy S. Durham
                                    Title:  Vice President




<PAGE>


                           ACKNOWLEDGMENT OF BORROWER

     U.S.  RUBBER  RECLAIMING,  INC.,  Borrower  referred  to in  the  foregoing
Subordination  Agreement,  hereby accepts and acknowledges  receipt of a copy of
the foregoing Subordination Agreement this 25TH day of October, 2002, and agrees
that it will not pay any of the  Subordinated  Indebtedness  (as  defined in the
foregoing  Agreement)  owing  by it to  Subordinated  Creditor,  except  as  the
foregoing Agreement  provides,  or take any other action in contravention of the
provisions  of the foregoing  Agreement and that all other terms,  covenants and
provisions of the foregoing  Agreement will be duly  performed and observed.  In
the event of a breach by Borrower or Subordinated  Creditor of any of the terms,
covenants or provisions herein or of the foregoing Agreement,  then, in addition
to and  not in  lieu  of any  other  right  or  remedy  of  Lenders,  all of the
Obligations  (as  defined in the  foregoing  Agreement)  will,  at the option of
Agent, and without  presentment,  demand,  protest or notice of any kind, become
immediately due and payable.

                                    BORROWER:

                                    U.S. RUBBER RECLAIMING, INC.

                                    By: /s/ Timothy S. Durham
                                        ---------------------------------
                                    Print Name:  Timothy S. Durham
                                    Title:  Chairman


<PAGE>


                                    EXHIBIT A

l.   Description of Subordinated Indebtedness:

     Promissory  Note dated as of October 25, 2002,  in the  original  principal
     amount of $700,000, with a maturity date of March 1, 2007.

2.   Verification  of  Subordination  Legend  which  provides  substantially  as
     follows:

     " THIS DOCUMENT IS SUBJECT TO A SUBORDINATION  AGREEMENT  BETWEEN PNC BANK,
     NATIONAL ASSOCIATION, AS AGENT AND OBSIDIAN ENTERPRISES, INC. DATED OCTOBER
     25,2002."

3.   Permitted Payments on Subordinated Indebtedness:

     Scheduled, non-accelerated payments of interest only.

4.   Permitted Collateral for Subordinated Indebtedness: All assets of Borrower.