<PAGE>   1

                      AMENDMENT NO. 2 TO CREDIT AGREEMENT


         THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") is made
and entered into effective as of December 31, 1999, among INDUSTRIAL
DISTRIBUTION GROUP, INC., a Delaware corporation (the "Borrower"), the lending
institutions listed on the signature pages of this Amendment (collectively, the
"Lenders"), BANK ONE, NA (formerly The First National Bank of Chicago), in its
capacities as agent for the Lenders (in such capacity, the "Agent") and as
issuing bank for the "Facility LCs" as provided in the Credit Agreement
referred to below (in such capacity, the "LC Issuer"), BANK OF AMERICA, N.A.
(formerly Bank of America National Trust and Savings Association), in its
capacity as Co-Agent for the Lenders, and FIRST UNION NATIONAL BANK, in its
capacity as Co-Agent for the Lenders.


                              W I T N E S S E T H:


         WHEREAS, the Borrower, the Lenders, and the Agent and LC Issuer are
parties to a certain Credit Agreement dated as of December 11, 1997, as amended
and restated by a certain First Amendment and Restatement of Credit Agreement
dated as of December 11, 1998, as amended by Amendment No. 1 to Credit
Agreement dated as of November 1, 1999 (as so amended and restated, the "Credit
Agreement");

         WHEREAS, the Borrower has requested that the Lenders amend the Credit
Agreement so as to revise certain of the financial covenants set forth therein
and in certain other respects;

         WHEREAS, the Lenders have agreed to make such amendments, subject to
the terms, conditions and requirements set forth in this Amendment;

         NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:


1. DEFINED TERMS. Except as otherwise expressly defined herein, capitalized
terms used in this Amendment that are defined in the Credit Agreement are used
in this Amendment with the respective meanings assigned to such capitalized
terms in the Credit Agreement.

2. AMENDMENTS TO ARTICLE I ("DEFINITIONS").

         (a)      Article I of the Credit Agreement is hereby amended by
deleting the defined terms "Aggregate Revolving Commitment", "Borrower Credit
Documents", "Collateral Documents", "Consolidated EBITDA", "Permitted
Acquisition", and "Subsidiary Credit Documents" and the
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accompanying definitions for such defined terms in their entirety, and
substituting in lieu thereof the following defined terms and accompanying
definitions in appropriate alphabetical order:

                  "AGGREGATE REVOLVING COMMITMENT" means the aggregate of the
         Revolving Commitments of all the Lenders, which amount shall be, on
         and after the Amendment No. 2 Effective Date, $100,000,000, as such
         amount may be reduced from time to time pursuant to the terms hereof.

                  "BORROWER CREDIT DOCUMENTS" means this Agreement, any and all
         Notes, any and all Facility LC Application Agreements, the Borrower
         Pledge Agreement, and the Borrower Security Agreement.

                  "COLLATERAL DOCUMENTS" means, collectively, the Borrower
         Pledge Agreement, the Borrower Security Agreement, the Subsidiary
         Guaranty, the Contribution Agreement, the Subsidiary Pledge Agreement,
         and the Subsidiary Security Agreement.

                  "CONSOLIDATED EBITDA" means Consolidated Net Income plus, to
         the extent deducted from revenues in determining Consolidated Net
         Income, (i) Consolidated Interest Expense, (ii) expense for current
         federal, state and local income taxes paid or accrued, (iii)
         depreciation, amortization and all other non-cash charges, and (iv)
         the 1999 Specified Cash Charges, minus, to the extent added in
         determining Consolidated Net Income, (A) non-recurring items such as
         gains on sale of assets or extraordinary items, which items constitute
         positive net income, (B) earnings from discontinued businesses, (C)
         any non-cash gains, and (D) the positive income of any Affiliate or
         other Person (other than a Subsidiary of the Borrower) in which any
         Person (other than the Borrower or any of its Subsidiaries) has a
         joint interest, except to the extent of the amount of dividends or
         other distributions actually paid to the Borrower or any of its
         Subsidiaries by such Affiliate or other Person during such period.

                  "PERMITTED ACQUISITION" means an Acquisition (i) that was not
         preceded by an unsolicited public tender offer for Capital Stock of
         the Person being acquired (the "Acquired Entity"), (ii) where the
         Acquired Entity is in the same or similar line of business as the
         Borrower and its Subsidiaries, (iii) in the case of an Acquisition of
         an Acquired Entity organized in the United States of America whose
         principal business is conducted in the United States of America, if
         the cash consideration to be paid in the Acquisition exceed
         $5,000,000, where the Borrower has submitted to the Agent and the
         Lenders evidence satisfactory to them that, after giving pro forma
         effect to the Acquisition, the Borrower will be in compliance with all
         financial and other covenants set forth in this Agreement and the
         Required Lenders have given their prior written approval of such
         Acquisition, (iv) in the case of an Acquisition of an Acquired Entity
         organized outside the United States of America or whose principal
         business is conducted outside the United States of America, where the
         Required Lenders have given their prior written approval of such
         Acquisition, (v) where immediately prior to and after giving effect to
         such Acquisition, no Default or Unmatured Default then exists or would
         occur as a result thereof, and (vi) where the cash consideration to be
         paid in such Acquisition, plus all cash


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         consideration paid in respect of all other Acquisitions on and after
         the Amendment No. 2 Effective Date, does not exceed $15,000,000 in the
         aggregate.

                  "SUBSIDIARY CREDIT DOCUMENTS" means, collectively, the
         Subsidiary Guaranty, the Subsidiary Pledge Agreement, and the
         Subsidiary Security Agreement.

         (b)      Article I of the Credit Agreement is hereby amended by adding
the following new defined terms and accompanying definitions in appropriate
alphabetical order:

                  "ACCOUNT DEBTOR" shall mean any Person who is or who may
         become obligated to the Borrower or any Subsidiary under or on account
         of a Receivable.

                  "AMENDMENT NO. 2" means Amendment No. 2 to Credit Agreement
         dated as of December 31, 1999, among the Borrower, the Lenders, and
         the Agent and LC Issuer.

                  "AMENDMENT NO. 2 CREDIT DOCUMENTS" means, collectively,
         Amendment No. 2 and the Notes, the Borrower Security Agreement, and
         Subsidiary Security Agreement required to be executed and delivered to
         the Agent pursuant to Section 4.4.

                  "AMENDMENT NO. 2 EFFECTIVE DATE" means the date on which all
         conditions and requirements set forth in Section 4.4 have been
         satisfied or waived in writing by the Required Lenders.

                  "AMENDMENT NO. 2 FEES" means, collectively, the fee payable
         to each Lender on the amount of such Lender's Revolving Commitment as
         in effect immediately after giving effect to Amendment No. 2, in an
         amount equal to 0.20% of such Revolving Commitment.

                  "BORROWER SECURITY AGREEMENT" means the Borrower Security
         Agreement executed by the Borrower in favor of the Agent for the
         ratable benefit of the Lenders, substantially in the form of Exhibit
         L, as the same may be amended, supplemented, and restated from time to
         time.

                  "BORROWING BASE" shall mean, at any date of determination,
         (a) the sum of the following amounts as of such date: (i) 85% percent
         of the net dollar value of the Eligible Receivables of the Borrower
         and those Subsidiaries that are parties to the Subsidiary Security
         Agreement, and (ii) 50% of the net dollar value (based on the lower of
         market value and actual cost, with cost being determined on a
         first-in, first-out basis) of the Eligible Inventory of the Borrower
         and those Subsidiaries that are parties to the Subsidiary Security
         Agreement, less all amounts owing to any other Persons secured by
         Liens granted to such Persons in any such Inventory.

                  "BORROWING BASE CERTIFICATE" shall mean a certificate of an
         authorized officer of the Borrower substantially in the form of
         Exhibit N attached hereto.


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                  "COLLATERAL" means, collectively, the "Collateral" as defined
         in the Borrower Pledge Agreement, the Borrower Security Agreement, the
         Subsidiary Pledge Agreement, and the Subsidiary Security Agreement.

                  "COLLATERAL LOCATIONS" shall mean all locations of Inventory
         as described in the Perfection Certificates, as supplemented from time
         to time pursuant to written notice provided to the Agent pursuant to
         the Borrower Security Agreement or Subsidiary Security Agreement, as
         the case may be.

                  "ELIGIBLE INVENTORY" shall mean and include only such
         Inventory of the Borrower and those Subsidiaries that are parties to
         the Subsidiary Security Agreement that has been listed on a schedule
         delivered to the Agent and the Lenders in accordance with Section
         6.1(xi), (a) that consists solely of Inventory not deemed to be a
         non-stock item or out of condition, stale, obsolete, slow moving (as
         reflected by reserves therefor established by the Borrower or such
         Subsidiary in accordance with GAAP), damaged, or otherwise
         unmerchantable by the Agent (as determined in its reasonable judgment)
         or any governmental agency or any department or division thereof
         having regulatory authority over the Borrower or any Subsidiary or any
         of their respective agents or activities, (b) located at one or more
         of the Collateral Locations within the United States or its
         territories and is not in-transit from the vendor or supplier thereof
         (except where title to such Inventory is held by the Borrower or such
         Subsidiary and such Inventory is being transported by Borrower or such
         Subsidiary), (c) that is subject to internal control and management
         procedures conducted by the Borrower and its Subsidiaries that are
         reasonably satisfactory to the Agent, (d) that is subject to a first
         priority (other than tax liens permitted by Section 6.14 and
         landlord's, warehousemen's, and similar liens in respect of Inventory
         at Collateral Locations where the obligations of the Borrower or any
         Subsidiary to pay rent or other storage charges are not more than ten
         (10) days past due) perfected security interest in favor of the Agent,
         (e) that is not consigned or demonstration Inventory, (f) that is not
         work in process or packaging supplies, and (g) that the Agent
         otherwise determines in good faith to be Eligible Inventory, based on
         such reasonable and customary credit and collateral considerations as
         the Agent takes into account generally to determine collateral
         eligibility of inventory of such type, condition, and location.

                  "ELIGIBLE RECEIVABLES" shall mean and include only such
         Receivables (i) consisting of accounts receivable arising from bona
         fide transactions (excluding sales for cash or paid by credit cards)
         in the ordinary course of the business of the Borrower and those
         Subsidiaries that are parties to the Subsidiary Security Agreement,
         (ii) that are described on a schedule delivered to the Agent and the
         Lenders in accordance with Section 6.1(xi) hereof, (iii) that are
         adjusted to deduct appropriate amounts for rebates due to Account
         Debtors, credit balances in favor of Account Debtors, and unreconciled
         differences in the Accounts, and (iv) that the Agent otherwise
         determines in good faith to be Eligible Receivables based on such
         reasonable and customary credit and collateral considerations as the
         Agent takes into account generally to determine the collateral
         eligibility of accounts receivables of such type and creditworthiness.
         In any event,


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         however, unless the Agent specifically consents otherwise in writing,
         no Receivable shall be considered to be an Eligible Receivable if (a)
         it arises out of a sale made by the Borrower or any Subsidiary to an
         Affiliate of the Borrower or such Subsidiary or to a Person controlled
         by an Affiliate of the Borrower or such Subsidiary, (b) it is due more
         than 90 days after the original invoice date, (c) unpaid more than 60
         days after the due date, (d) 25% or more of the Receivables from the
         Account Debtor are unpaid for more than 90 days after the original
         invoice date or for more than 60 days after the due date (other than
         in circumstances where clause (g) is applicable), (e) any covenant,
         representation or warranty contained in this Agreement, the Borrower
         Security Agreement, or the Subsidiary Security Agreement with respect
         to such Receivable has been breached, (f) the Account Debtor is also
         the Borrower's or such Subsidiary's creditor or supplier, or the
         Account Debtor has disputed liability, or the Account Debtor has made
         any claim with respect to any other Receivable due from such Account
         Debtor to the Borrower or such Subsidiary, or the Receivable otherwise
         is or may become subject to any right of setoff (actual or potential)
         by the Account Debtor, whether by virtue of the terms of the contract
         between the Borrower or such Subsidiary and the Account Debtor, or by
         virtue of any other defense or claim of the Account Debtor against the
         Borrower or such Subsidiary; provided, however, that the Receivables
         of such Account Debtor shall only be ineligible to the extent of such
         offset or potential offset, (g) the Account Debtor has commenced a
         voluntary case under the federal Bankruptcy Code, or made an
         assignment for the benefit of creditors, or if a decree or order for
         relief has been entered by a court having jurisdiction in the premises
         in respect of the Account Debtor in an involuntary case under the
         federal Bankruptcy Code, or if any other petition or other application
         for relief under the Bankruptcy Code has been filed against the
         Account Debtor, or if the Account Debtor has failed, suspended
         business, ceased to be solvent, or consented to or suffered a
         receiver, trustee, liquidator or custodian to be appointed for it or
         for all or a significant portion of its assets or affairs, (h) the
         sale is to an Account Debtor outside the United States unless the sale
         is on letter of credit, guaranty or acceptance terms, in each case
         acceptable to the Agent, (i) the sale to the Account Debtor is on a
         bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
         consignment or any other repurchase or return basis, (j) the Agent
         believes that collection of such Receivable is insecure or that such
         Receivable may not be paid by reason of the Account Debtor's financial
         inability to pay, (k) the Account Debtor is the United States of
         America or any department, agency or instrumentality thereof, unless
         the Borrower or such Subsidiary, as the case may be, assigns its right
         to payment of such Receivable to the Agent pursuant to the Assignment
         of Claims Act of 1940, as amended, (l) the goods giving rise to such
         Receivable have not been shipped and delivered to the Account Debtor
         (or, if shipped and delivered, the Borrower or any such Subsidiary has
         received knowledge or notice of their loss in transit, mis-delivery or
         their non-acceptance by the Account Debtor) or the services giving
         rise to such Receivable have not been performed by the Borrower or
         such Subsidiary with respect thereto (or, if performed, the Borrower
         or such Subsidiary has received knowledge or notice of their
         non-acceptance by the Account Debtor), or the Receivable otherwise
         does not represent a final bona fide sale, (m) the Receivables of any
         Account Debtor, together with the Receivables of any Affiliates of
         such Account Debtor, exceed at any time 15% of the aggregate amount of


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         Eligible Receivables of all Account Debtors, to the extent such
         Receivables of such Account Debtor and its Affiliates exceed such
         amount, (n) the Agent does not hold a first priority, perfected
         security interest in such Receivables, or (o) the Agent otherwise in
         good faith determines such Receivables to be ineligible for borrowing
         purposes hereunder, based on such reasonable and customary credit and
         collateral considerations as the Agent takes into account generally to
         determine collateral eligibility of accounts receivables of such type
         and creditworthiness.

                  "ERP SALE-LEASEBACK" means the Sale and Leaseback of the
         Borrower's enterprise resource planning system.

                  "INVENTORY" shall mean and include all of the Borrower's and
         each Subsidiary's inventory, wherever located and whether now existing
         or hereafter acquired or arising or in which the Borrower or any
         Subsidiary now has or hereafter acquires any rights, including without
         limitation, all cutting tools, hand and power tools, abrasives,
         lubricants, adhesives, electrical products, pipes, valves and
         fittings, power transmission equipment, and other maintenance, repair,
         operating and production products, and all other inventory,
         merchandise, goods and other personal property held by or on behalf of
         the Borrower or any Subsidiary for sale or lease or to be furnished
         under a contract of service, or that constitute raw materials, work in
         process or materials used or consumed or to be used or consumed in the
         business of the Borrower or any Subsidiary, or in the processing,
         production, packaging, promotion, delivery or shipping of the same,
         including other supplies, all returned or repossessed goods now or at
         any time hereafter in the possession or under the control of the
         Borrower or any Subsidiary or the Agent, and all documents of title or
         documents representing the same.

                  "MANDATORY PREPAYMENT EVENT" shall mean a sale (including any
         transaction that has the economic effect of a sale), transfer or other
         disposition (by way of merger or otherwise, including sales in
         connection with a Sale and Leaseback Transaction, or as a result of a
         casualty or condemnation of any property) by the Borrower or any
         Subsidiary to any Person (other than to the Borrower or another
         Subsidiary) of any real property (including any improvements,
         fixtures, and personal property located on or used in connection with
         such real property and improvements that are included in such sale,
         transfer or other disposition) from and after January 1, 2000, where
         (i) the Borrower and its Subsidiaries have failed to use the Net Sale
         Proceeds of such sale, transfer, or other disposition to purchase or
         otherwise invest in properties and assets used in the business of the
         Borrower and its Subsidiaries within 90 days after the date of such
         sale, transfer, or other disposition, and (ii) the total aggregate
         amount of Net Sale Proceeds received from and after January 1, 2000,
         in respect of such sales, transfers, and other dispositions that are
         not invested as described in the preceding clause (i) exceed $500,000;
         provided, however, that neither the UTF Sale-Leaseback nor the ERP
         Sale-Leaseback shall constitute a Mandatory Prepayment Event for
         purposes of this Agreement.

                  "NET SALE PROCEEDS" shall mean, with respect to any
         transaction giving rise to a Mandatory Prepayment Event, the proceeds
         of such transaction to the Borrower and/or its


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         Subsidiaries, including payments in the form of cash or cash
         equivalents, deferred payment obligations, casualty loss insurance
         proceeds, condemnation awards, and proceeds from the conversion of
         other property received, net of (i) brokerage commissions and other
         reasonable and customary fees and expenses of such transaction, (ii)
         provision of all taxes imposed on such transaction, and (iii) payments
         made to repay Indebtedness secured by the assets subject to such
         transaction.

                  "1999 SPECIFIED CASH CHARGES" shall mean, collectively, the
         one-time cash charges being taken and reflected on the consolidated
         financial statements of the Borrower and its Subsidiaries for the
         period ending December 31, 1999, for (i) settlement of pending
         litigation with a dissenting shareholder, such charge to be in an
         amount not to exceed $4,500,000, (ii) discontinued operations at the
         MACS Tucson location, such charge to be in an amount not to exceed
         $300,000, (iii) executive severance payments, such charge to be in an
         amount not to exceed $450,000, and (iv) costs incurred related to the
         abandonment of Project Phoenix, such charge to be in an amount not to
         exceed $50,000.

                  "PERFECTION CERTIFICATES" shall mean the Perfection
         Certificates in the form of Exhibit O attached hereto delivered by the
         Borrower and the Subsidiaries to the Agent and the Lenders.

                  "RECEIVABLES" shall mean and include all of the Borrower's
         and each Subsidiary's accounts, contract rights, chattel paper and
         instruments, whether now existing or hereafter acquired or arising or
         in which the Borrower or any Subsidiary now has or hereafter acquires
         any rights, including without limitation, all present and future
         rights to payments for goods, merchandise or Inventory sold or leased
         or for services rendered, whether or not represented by instruments or
         chattel paper, and whether or not earned by performance; proceeds of
         any letter of credit on which the Borrower or any Subsidiary is a
         beneficiary; and all forms of obligations whatsoever owing to the
         Borrower or any Subsidiary, together with all instruments and
         documents of title representing any of the foregoing, all rights in
         any goods, merchandise or Inventory which any of the foregoing may
         represent, all rights in any returned or repossessed goods,
         merchandise or Inventory, and all rights, security and guaranties with
         respect to each of the foregoing, including without limitation, any
         rights of stoppage in transit and reclamation.

                  "REVOLVING COMMITMENT" means for each Lender, the obligation
         of such Lender to make Loans (other than Swing Line Loans) not
         exceeding its Percentage of the Aggregate Revolving Commitment (with
         the maximum amount of each Lender's Revolving Commitment in effect on
         and after the Amendment No. 2 Effective Date being set forth on the
         signature page for such Lender to Amendment No. 2).

                  "SUBSIDIARY SECURITY AGREEMENT" means the Subsidiary Security
         Agreement executed by the Subsidiaries of the Borrower in favor of the
         Agent for the ratable benefit


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         of the Lenders, substantially in the form of Exhibit M, as the same
         may be amended, supplemented, and restated from time to time.

                  "UTF SALE-LEASEBACK" means the Sale and Leaseback
         Transactions between the Borrower and/or certain of its Subsidiaries
         and United Trust Fund Limited Partnership, substantially in accordance
         with the terms of the letter agreement dated November 23, 1999,
         between the Borrower and United Trust Fund.

3.       AMENDMENTS TO ARTICLE II ("THE CREDITS").

         (a)      Section 2.1 ("Revolving Commitment") of the Credit Agreement
is hereby amended by deleting said Section 2.1 in its entirety and substituting
in lieu thereof the following Section 2.1:

                  2.1.  REVOLVING COMMITMENT. From and including the Closing
         Date and prior to the Facility Termination Date, each Lender severally
         agrees, on the terms and conditions set forth in this Agreement, to
         make Loans to the Borrower from time to time; provided, however, that
         upon giving effect to each such Loan, such Lender's Outstanding Credit
         Exposure shall not exceed such Lender's Revolving Commitment; and
         provided further, that upon giving effect to each Loan, the Aggregate
         Outstanding Credit Exposure shall not exceed the lesser of (i) the
         Aggregate Revolving Commitment, (ii) the Borrowing Base as calculated
         pursuant to the most recent Borrowing Base Certificate delivered by
         the Borrower hereunder, and (iii) during the period from the Amendment
         No. 2 Effective Date through the date of delivery of the first
         Borrowing Base Certificate pursuant to Section 6.1(xi), $70,000,000.
         Subject to the terms of this Agreement, the Borrower may borrow, repay
         and reborrow at any time prior to the Facility Termination Date. The
         Revolving Commitments to lend hereunder shall expire on the Facility
         Termination Date.

         (b)      Section 2.2 ("Required Payments; Termination") of the Credit
Agreement is hereby amended by deleting said Section 2.2 in its entirety and
substituting in lieu thereof the following Section 2.2:

                  2.2.  REQUIRED PAYMENTS; TERMINATION. Any outstanding
Advances and Swing Line Loans and all other unpaid Obligations shall be paid in
full by the Borrower on the Facility Termination Date. If at any time prior to
the Facility Termination Date the aggregate principal amount of the outstanding
Advances and Swing Line Loans plus the Aggregate Outstanding LC Exposure
exceeds the lesser of (i) the Aggregate Revolving Commitment, and (ii) the
Borrowing Base as calculated pursuant to the most recent Borrowing Base
Certificate delivered by the Borrower hereunder, the Borrower agrees to pay at
such time a principal amount of such outstanding Advances and/or Swing Line
Loans (together with interest thereon and any applicable funding
indemnification amounts required by Section 3.4) not less than such excess
amount. In addition, not later than the third Business Day following the
occurrence, consummation or completion of each Mandatory Prepayment Event, the
Borrower shall pay to the Lenders an amount


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equal to the Net Sale Proceeds received in respect of such Mandatory Prepayment
Event in excess of the $500,000 amount described in clause (ii) of the
definition of "Mandatory Prepayment Event" as set forth herein, other than any
portion of such Net Sale Proceeds not to exceed ten percent (10%) thereof that
is received in a form other than cash or cash equivalents, which amount shall
be used to prepay principal amounts outstanding under the Loans. If any portion
of such Net Sale Proceeds is received in a form other than cash or cash
equivalents, then the Borrower shall promptly pay to the Lenders all cash and
cash equivalents subsequently received as payment or satisfaction in respect of
such portion of such Net Sale Proceeds.

         (c)      Section 2.19 ("Facility LCs") of the Credit Agreement is
hereby amended by deleting clause (ii) contained in the first sentence of
paragraph (a) of Section 2.19 and substituting in lieu thereof the following
clause (ii):

                  (ii)    the Aggregate Outstanding Credit Exposure shall not
         exceed the lesser of (x) the Aggregate Revolving Commitment, and (y)
         the Borrowing Base as calculated pursuant to the most recent Borrowing
         Base Certificate delivered by the Borrower hereunder;

         (d)      Section 2.21 ("Increase in Commitments") of the Credit
Agreement is hereby amended by deleting said Section 2.21 in its entirety and
substituting in lieu thereof the following Section 2.21:

                  2.21.  DECREASES IN COMMITMENTS.

                  (a)   On the Amendment No. 2 Effective Date, the Aggregate
         Revolving Commitment shall be decreased from $125,000,000 to
         $100,000,000. After giving effect to the foregoing, the Revolving
         Commitments and the Percentages of the Lenders shall be as set forth
         on the signature pages for such Lenders attached to Amendment No. 2.

                  (b)   If the Borrower has been required to make a prepayment
         to the Lenders in connection with any Mandatory Prepayment Event as
         provided in the last sentence of Section 2.2 hereof, the Aggregate
         Revolving Commitment as in effect immediately prior to such Mandatory
         Prepayment Event shall be automatically and permanently decreased by
         an amount equal to the principal amount required to be paid by the
         Borrower pursuant to Section 2.2.

                  (c)   In the event the Borrower and its Subsidiaries
         consummate a securitization or secured financing facility for accounts
         receivable, as approved by all of the Lenders pursuant to the terms
         hereof, on the date of consummation of such securitization or secured
         financing facility the Aggregate Revolving Commitment shall be
         automatically and permanently decreased by an amount equal to the
         maximum aggregate principal amount that may initially be paid or
         loaned to the Borrower and its Subsidiaries under such securitization
         or secured financing facility for all such accounts receivable and
         recovered from all such accounts receivable, and on the date of any
         subsequent increase


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         in the maximum principal amount of accounts receivable that may be so
         purchased or pledged as collateral pursuant to such securitization or
         secured financing facility, the Aggregate Revolving Commitment shall
         be automatically and permanently decreased by the net increase in such
         aggregate principal amount that may be paid or loaned against such
         accounts receivable at any time outstanding.

                  (d)   The Borrower's obligations to pay the principal of, and
         interest on, all Loans shall be evidenced by the records of the Agent
         and each Lender and, if such Lender has received a Note executed by
         the Borrower pursuant to Section 2.13, 4.1, 4.3, or 4.4, by such Note
         payable to such Lender completed in conformity with this Agreement.

                  (e)   From and after the Amendment No. 2 Effective Date, all
         references in this Agreement to the Revolving Commitments shall be
         deemed to mean the Revolving Commitments as decreased by this Section
         2.21 (subject, however, to subsequent decreases from time to time as a
         result of any other reductions thereof pursuant to the provisions of
         this Agreement).

4.       AMENDMENT TO ARTICLE IV "CONDITIONS PRECEDENT"). Article IV of the
Credit Agreement is hereby amended by adding a new Section 4.4 thereto as
follows:

                  4.4.  EFFECTIVENESS OF AMENDMENT NO. 2. Amendment No. 2 shall
         not become effective until all of the following conditions and
         requirements have been satisfied and performed:

                  (a)   The Borrower shall have furnished to the Agent the
         following, all in form and substance satisfactory to the Agent and the
         Lenders, with sufficient copies for the Lenders:

                        (i)     Copies of the articles or certificate of
                                incorporation, certificate of limited
                                partnership, articles of organization, or
                                similar organizational documents of each Loan
                                Party, together with all amendments thereto,
                                and a certificate of good standing, each
                                certified by the appropriate governmental
                                officer in its jurisdiction of organization for
                                such Loan Party.

                        (ii)    Copies, certified by its Secretary or
                                Assistant Secretary or similar representative,
                                of each Loan Party's by-laws, partnership
                                agreement, operating or management agreement,
                                or similar organizational documents, and
                                resolutions of its board of directors,
                                managers, or similar officials, authorizing the
                                execution of Amendment No. 2 Credit Documents
                                to which each such Loan Party is a party.

                        (iii)   An incumbency certificate, executed by the
                                Secretary or Assistant Secretary or similar
                                representative of each Loan Party, which shall


                                      10
<PAGE>   11

                                identify by name and title and bear the
                                signatures of the authorized officers and any
                                other representative of such Loan Party
                                authorized to sign the Amendment No. 2 Credit
                                Documents to which such Loan Party is a party,
                                upon which certificate the Agent and the
                                Lenders shall be entitled to rely until
                                informed of any change in writing by such Loan
                                Party.

                        (iv)    A certificate, signed by the Chief Financial
                                Officer of the Borrower, stating that on the
                                Amendment No. 2 Effective Date (A) no Default
                                or Unmatured Default has occurred and is
                                continuing, (B) the representations and
                                warranties set forth in Amendment No. 2 and the
                                other Amendment No. 2 Credit Documents are true
                                and correct in all material respects, and (C)
                                all conditions and requirements set forth in
                                this Section 4.4 have been satisfied and
                                performed or waived in writing by the Required
                                Lenders.

                        (v)     A written opinion of counsel for the Loan
                                Parties, addressed to the Lenders in
                                substantially the form of Exhibit P attached to
                                Amendment No. 2.

                        (vi)    Any Notes requested by Lenders pursuant to
                                Section 2.13 payable to the order of such
                                requesting Lenders.

                        (vii)   The Borrower Security Agreement duly executed
                                by an Authorized Officer of the Borrower,
                                Uniform Commercial Code financing statements
                                naming the Borrower as "debtor" and the Agent,
                                for the ratable benefit of the Lenders, as the
                                "secured party" and covering the "Collateral"
                                (as defined in the Borrower Security
                                Agreement), evidencing a first priority pledge
                                of and security interest in such "Collateral."

                        (viii)  The Subsidiary Security Agreement, duly
                                executed by an authorized officer or other
                                representative of each Subsidiary, together
                                with Uniform Commercial Code financing
                                statements naming each Subsidiary as "debtor"
                                and the Agent, for the ratable benefit of the
                                Lenders, as the "secured party" and covering
                                the "Collateral" (as defined in the Subsidiary
                                Security Agreement), evidencing a first
                                priority pledge of and security interest in
                                such "Collateral", other than any such
                                financing statements that the Borrower and the
                                Agent have agreed in writing may be delivered
                                after the Amendment No. 2 Effective Date
                                pursuant to Section 6.25.


                                      11
<PAGE>   12

                        (ix)    The Perfection Certificates duly executed by
                                the authorized officers or other
                                representatives of the Borrower and the
                                Subsidiaries.

                        (x)     Examination reports from the Uniform
                                Commercial Code, federal tax lien, and judgment
                                lien records of each of the jurisdictions
                                indicated on the Perfection Certificate, in
                                each case showing no outstanding liens or
                                security interests granted by any Loan Party,
                                other than (1) Liens permitted by Section 6.14,
                                and (2) Liens in favor of the Agent.

                        (xi)    Landlord and customer lien waivers with respect
                                to any Inventory of the Borrower or any
                                Subsidiary in the possession or control of a
                                Person other than the Borrower or such
                                Subsidiary, and any other documentation
                                requested by the Agent in order to assure the
                                perfection of a first priority lien in the
                                Collateral described in the Borrower Security
                                Agreement and Subsidiary Security Agreement in
                                favor of the Agent for the ratable benefit of
                                the Lenders, other than any such lien waivers
                                or other documentation that the Borrower and
                                the Agent have agreed in writing may be
                                delivered subsequent to the Amendment No. 2
                                Effective Date pursuant to Section 6.25.

                        (xii)   Copies of all documents and instruments,
                                including all consents, authorizations and
                                filings, required or advisable by any material
                                contractual obligation of any Loan Party in
                                connection with the execution, delivery,
                                performance, validity or enforceability of the
                                Amendment No. 2 Credit Documents, and such
                                consents, authorizations, and filings shall be
                                full force and effect.

                        (xiii)  Such other documents, opinions, certificates
                                and agreements as the Agent may reasonably
                                request.

                  (b)   The Borrower shall have paid to the Agent for the
         benefit of the respective Lenders the full amount of the Amendment No.
         2 Fees.

                  (c)   Amendment No. 2 shall have been executed and delivered
         by the Borrower, the Required Lenders, the Agent and LC Issuer, and
         the Acknowledgment and Agreement of Guarantors attached to Amendment
         No. 2 shall have been executed and delivered by all Domestic Active
         Subsidiaries.

                  (d)   Since September 30, 1999, there shall have been no
         change in the business, Property, prospects, condition (financial or
         otherwise) or results of operations of the Borrower and its
         Subsidiaries which could reasonably be expected to have a Material
         Adverse Effect.


                                      12
<PAGE>   13

5.       AMENDMENTS TO ARTICLE VI ("COVENANTS").

         (a)    Section 6.1 ("Financial Reporting") of the Credit Agreement is
hereby amended by adding new clauses (xi) and (xii) to the end of said Section
6.1 as follows:

                (xi)    Within 30 days after the end of each fiscal month, the
                        Borrower shall deliver to the Agent and to each Lender,
                        commencing January 30, 2000, a Borrowing Base
                        Certificate as of the end of such fiscal month,
                        specifically setting forth on the schedules attached
                        thereto (1) the amount of Inventory owned by the
                        Borrower and the Subsidiaries that are parties to the
                        Subsidiary Security Agreement, (2) the amount of
                        Eligible Inventory and the Eligible Receivables of the
                        Borrower and such Subsidiaries as of the end of such
                        fiscal month, and (3) the amount, by Collateral
                        Location, of any rent or other payments for storage of
                        Inventory that are past due by more than ten (10) days.

                (xii)   Within 20 days after request of the Agent or any Lender
                        (which request, in the absence of an Unmatured Default
                        or Default, shall not be made more than four (4) times
                        in any one fiscal year), the Borrower shall deliver to
                        the Agent and to any Lender requesting the same, in
                        form acceptable to the Agent, a detailed aged trial
                        balance of all Receivables existing as of the day of
                        the preceding fiscal month, specifying the names,
                        addresses, face value, dates of invoices and due dates
                        for each Account Debtor obligated on a Receivable so
                        listed and all other information necessary to calculate
                        Eligible Receivables as of such last day of the
                        preceding fiscal month and, upon the Agent's request
                        therefor, copies of proof of delivery and the original
                        copy of all documents, including without limitation,
                        repayment histories and present status reports relating
                        to the Receivables so scheduled and such other matters
                        and information relating to the status of the then
                        existing Receivables as the Agent shall reasonably
                        request.

         (b)    Section 6.8 ("Maintenance of Properties") of the Credit
Agreement is hereby amended by deleting said Section 6.8 in its entirety and
substituting in lieu thereof the following Section 6.8:

                  6.8. MAINTENANCE OF PROPERTIES; PAYMENT OF RENTS AND STORAGE
         COSTS. The Borrower will, and will cause each Subsidiary to (i) do all
         things necessary to maintain, preserve, protect and keep its Property
         in good repair, working order and condition, and make all necessary
         and proper repairs, renewals and replacements so that its business
         carried on in connection therewith may be properly conducted at all
         times, and (ii) promptly pay when due all rents and other amounts due
         for storage of Inventory at all


                                      13
<PAGE>   14

         Collateral Locations and any other locations not owned by the Borrower
         or any Subsidiary where any of the Inventory may be stored or
         maintained.

         (c)      Section 6.9 ("Inspection") of the Credit Agreement is hereby
amended by deleting said Section 6.9 in its entirety and substituting in lieu
thereof the following Section 6.9:

                  6.9.   INSPECTION. The Borrower will, and will cause each
         Subsidiary to, permit the Agent and the Lenders, by their respective
         representatives and agents, to conduct field audits and surveys of any
         and all Collateral, wherever located, to inspect any and all other
         Property of the Borrower and each Subsidiary, to inspect, examine, and
         make copies of the books and financial records of the Borrower and
         each Subsidiary, and to discuss the affairs, finances and accounts of
         the Borrower and each Subsidiary with, and to be advised as to the
         same by, their respective officers at such reasonable times and
         intervals as the Agent or any Lender may designate. The Borrower shall
         pay for each field audit of Collateral performed by the Agent pursuant
         to this Section 6.9 at the Agent's customary audit fees and expenses;
         provided, however, that the Borrower shall not be obligated to pay for
         more than three (3) such audits in any one fiscal year so long as no
         Default exists.

         (d)      Section 6.10 ("Indebtedness") of the Credit Agreement is
hereby amended by deleting clauses (ii), (iii) and (v) thereof in their
entirety, and substituting in lieu thereof the following clauses (ii), (iii)
and (v) respectively:

                  (ii)    Indebtedness existing on the Amendment No. 2
         Effective Date and described in Schedule 6.10.

                  (iii)   Indebtedness arising or deemed to arise in respect of
         a securitization or secured financing facility for accounts receivable
         of the Borrower and its Subsidiaries, provided that such facility is
         approved by all of the Lenders.

                  . . . .

                  (v)     Indebtedness not described in clause (ii) above (A)
         incurred or assumed for the purpose of financing or refinancing all or
         any part of the cost of acquiring or constructing any specific fixed
         asset, or (B) owing by any Subsidiary at the time such Subsidiary is
         acquired by the Borrower or merged into or consolidated with the
         Borrower or another Subsidiary, so long as such Indebtedness was not
         incurred in contemplation of such acquisition, merger or
         consolidation; provided that the sum of all Indebtedness described in
         this clause (v), together with all Indebtedness secured by Liens
         permitted pursuant to Section 6.14(vii) and the amount of the
         transactions permitted pursuant to Section 6.17(C) (but without
         duplication of such amounts), does not exceed an amount equal to
         $10,000,000.

         (e)      Section 6.12 ("Sale of Assets") of the Credit Agreement is
hereby amended by deleting clause (iv) thereof in its entirety and substituting
in lieu thereof the following clause (iv):


                                      14
<PAGE>   15

                  (iv)    The UTF Sales-Leaseback and other sales, leases and
         other dispositions of its Property that, together with all other
         Property of the Borrower and its Subsidiaries previously leased, sold
         or disposed of (other than as provided in clauses (i) through (iii)
         above) as permitted by this Section, (x) during any 12-month period
         ending on or before December 31, 1999, do not constitute a Substantial
         Portion of the Property of the Borrower and its Subsidiaries, or (y)
         at any time after December 31, 1999, do not have an aggregate book
         value in excess of $5,000,000 (excluding the Property sold in the UTF
         Sale-Leaseback and the ERP Sale-Leaseback).

         (f)      Section 6.14 ("Liens") of the Credit Agreement is hereby
amended by deleting clauses (v) and (vii) in their entirety and substituting in
lieu thereof the following clauses (v) and (vii) as follows:

                  (v)     Liens existing on the Amendment No. 2 Effective Date
and described in Schedule 6.14.

                  . . . .

                  (vii)   Any Lien not described in clause (v) above and
         existing on any specific fixed asset (A) of any Person at the time
         such Person becomes a Subsidiary of the Borrower and not created in
         contemplation of such event, (B) securing Indebtedness incurred or
         assumed for the purpose of financing or refinancing all or any part of
         the cost of acquiring or constructing such asset, where such
         acquisition is not in connection with the purchase of all or
         substantially all of the assets of a Person, (C) of any Person
         existing at the time such Person is merged or consolidated with or
         into the Borrower or any of its Subsidiaries and not created in
         contemplation of such event, and (D) prior to the acquisition of such
         asset by the Borrower or any of its Subsidiaries and not created in
         contemplation of such acquisition; provided that the Indebtedness
         secured by all such Liens described in this clause (vii), (x) is
         otherwise permitted by Section 6.10, and (y) when taken together with
         all Indebtedness described in Section 6.10(v) and the amount of the
         transactions permitted pursuant to Section 6.17(C) (but without
         duplication of such amounts), does not exceed $10,000,000.

         (g)      Section 6.17 ("SALE AND LEASEBACK TRANSACTIONS AND OTHER
OFF-BALANCE SHEET LIABILITIES") of the Credit Agreement is hereby amended by
deleting said Section 6.17 in its entirety and substituting in lieu thereof the
following Section 6.17:

                  Section 6.17. SALE AND LEASEBACK TRANSACTIONS AND OTHER
         OFF-BALANCE SHEET LIABILITIES. The Borrower will not, nor will it
         permit any Subsidiary to, enter into or suffer to exist (i) any Sale
         and Leaseback Transaction, or (ii) any other transaction pursuant to
         which it incurs or has incurred Off-Balance Sheet Liabilities, except
         for (A) Rate Hedging Obligations or other interest rate or foreign
         currency swap contracts entered into in the ordinary course of
         business and not for speculative purposes, (B) the UTF Sale-Leaseback,
         and (C) "synthetic lease" transactions entered into by the Borrower


                                      15
<PAGE>   16

         or any of its Subsidiaries for the acquisition or construction of
         office, distribution or other facilities to be used by the Borrower or
         its Subsidiaries, provided that the aggregate value (measured at the
         higher of book value and fair market value at the time of such
         transaction as determined in good faith by the Board of Directors of
         the Borrower) of the assets that are the subject of such transactions
         described in this clause (C), taken together with the total amount of
         Indebtedness permitted pursuant to Section 6.10(v) and Section
         6.14(vii) (but without duplication of such amounts), does not exceed
         $10,000,000.

         (h)      Section 6.19 ("Financial Covenants") of the Credit Agreement
is hereby amended by deleting subsection 6.19.1 ("Coverage Ratio") and
subsection 6.19.2 ("Debt to Cash Flow Ratio") and substituting in lieu thereof
the following subsection 6.19.1 and subsection 6.19.2:

                  6.19.1. COVERAGE RATIO. The Borrower will not permit the
         ratio, determined as of the end of each of its fiscal quarters for the
         then most-recently ended four fiscal quarters, of (i) Consolidated
         EBITDA plus Consolidated Rentals to (ii) Consolidated Interest Expense
         plus Consolidated Rentals, to be less than (x) 2.50 to 1,00 for any
         fiscal quarter of the Borrower ending on or before June 30, 1999, (y)
         2.40 to 1.00 for the fiscal quarter of the Borrower ending September
         30, 1999, or (z) 1.70 to 1.00 for any subsequent fiscal quarter of the
         Borrower.

                  6.19.2. DEBT TO CASH FLOW RATIO. The Borrower will not permit
         the ratio, determined as of the end of each of its fiscal quarters, of
         (i) Consolidated Indebtedness to (ii) Adjusted Consolidated EBITDA for
         the then most-recently ended four fiscal quarters, to be greater than
         (A) 3.25 to 1.00 for any fiscal quarter of the Borrower ending on or
         before September 30, 1999, (B) 4.00 to 1.00 for the fiscal quarters of
         the Borrower ending December 31, 1999, March 31, 2000, and June 30,
         2000, (C) 3.75 to 1.00 for the fiscal quarters of the Borrower ending
         September 30, 2000 and thereafter.

         (i)      Article VI ("Covenants") of the Credit Agreement is hereby
amended by adding a new Section 6.25 to Article VI as follows:

                  6.25. AMENDMENT NO. 2 POST-EFFECTIVE DATE REQUIREMENTS. The
         Borrower (i) will deliver to the Agent not later than fifteen (15)
         days after the Amendment No. 2 Effective Date, the Uniform Commercial
         Code financing statements that the Borrower and the Agent, pursuant to
         Section 4.4(a)(viii), have agreed may be delivered to the Agent
         subsequent to the Amendment No. 2 Effective Date, (ii) will cause to
         be delivered to the Agent not later than forty-five (45) days after
         the Amendment No. 2 Effective Date a supplemental opinion of counsel
         to the Borrower and the Subsidiaries as to the perfection of the
         security interests in that portion of the "Collateral" described in
         the Security Agreements that may be perfected by filing of UCC
         financing statements outside the State of Georgia (which opinion may
         be furnished on the basis of such counsel's review of statutory
         compilations from such other states, regardless of whether such
         counsel is admitted to practice law in such states), and (iii) will
         use its best efforts to obtain, and will deliver to the Agent not
         later than forty-five (45) days after the Amendment No. 2 Effective
         Date all such documents so obtained, the landlord and


                                      16
<PAGE>   17

         customer lien waivers and other documentation that the Borrower and
         the Agent, pursuant to Section 4.4(a)(xii), have agreed may be
         obtained by the Borrower on such a "best efforts" basis and delivered
         to the Agent subsequent to the Amendment No. 2 Effective Date.

6.       AMENDMENTS TO ARTICLE X ("THE AGENT"). Section 10.16 ("Collateral
Releases") of the Credit Agreement is hereby amended by deleting the
cross-reference in Section 10.16 to "Section 8.2" and substituting in lieu
thereof a cross-reference to "Section 8.3."

7.       AMENDMENTS TO SCHEDULES 5.7, 5.8, 6.10, 6.13, AND 6.14. Schedules 5.8,
6.10 and 6.14 attached to the Credit Agreement are hereby amended by deleting
said Schedules in their entirety and substituting in lieu thereof Schedules
5.7, 5.8, 6.10, 6.13, and 6.14 as attached to this Amendment.

8.       REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and the
Agent and LC Issuer to enter into this Amendment, the Borrower represents and
warrants to the Lenders and the Agent and LC Issuer as follows:

         (a)    All representations and warranties set forth in the Credit
Agreement, as amended by this Amendment, are true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of this Amendment, except to the extent that
such representations and warranties are expressly made with respect to a
specific date, in which case such representations and warranties are true and
correct in all material respects as of such specific date.

         (b)    No Default or Unmatured Default has occurred and is continuing
on the date hereof. Since September 30, 1999, there has been no change in the
business, property, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.

         (c)    Each of the Borrower and the other Loan Parties has the
organizational power and authority to make, deliver and perform their
respective obligations under this Amendment and has taken all necessary
organizational action to authorize the execution, delivery and performance of
this Amendment. No consent or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is required in
connection with the execution, delivery or performance by the Borrower or any
such other Loan Party, or the validity or enforceability against the Borrower
or any such other Loan Party, of this Amendment, other than such consents,
authorizations or filings which have been made or obtained.

         (d)    This Amendment has been duly executed and delivered by the
Borrower and the other Loan Parties, as applicable, and this Amendment
constitutes the legal, valid and binding obligation of the Borrower and such
other Loan Parties, respectively, enforceable against the Borrower and such
other Loan Parties in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity. The execution,


                                      17
<PAGE>   18

delivery and performance by the Borrower and such other Loan Parties of this
Amendment will not violate any applicable legal requirements or cause a breach
or default under any of their respective contractual obligations.

         (e)    The Borrower acknowledges and agrees that there are no
defenses, claims, counterclaims, or rights of setoff in its favor against any
Lender or the Agent or LC Issuer with regard to any of the obligations and
liabilities of the Borrower or any of its Subsidiaries under the terms of the
Credit Agreement, the other Credit Documents, or this Amendment.

9.       REFERENCES TO AGREEMENT. On and after the Amendment No. 2 Effective
Date, each and every reference in the Credit Documents to the Credit Agreement
shall be deemed to refer to and mean the Credit Agreement as amended by this
Amendment. The parties further confirm and agree that (i) except as expressly
amended herein, the Credit Agreement remains in full force and effect in
accordance with its terms, and (ii) except as expressly amended or supplemented
by this Amendment, all other Credit Documents remain in full force and effect
in accordance with their respective terms.

10.      COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Agent in connection with the preparation,
execution and delivery of this Amendment and the other Amendment No. 2 Credit
Documents, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities hereunder and
thereunder. In addition, the Borrower shall pay any and all stamp and other
taxes payable or determined to be payable in connection with the execution and
delivery of this Amendment and the other Amendment No. 2 Credit Documents, and
agrees to save the Agent and each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay in paying such taxes.

11.      GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Georgia.

12.      ENTIRE UNDERSTANDING. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations, commitment letters, or agreements,
whether written or oral, with respect to such matters.

13.      COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts and may
be delivered by telecopier. Each counterpart so executed and delivered shall be
deemed an original and all of which taken together shall constitute but one and
the same instrument.

14.      NO WAIVER. The Borrower agrees that nothing herein shall constitute a
waiver by the Lenders of any Default or Unmatured Default, whether known or
unknown, which may exist under the Credit Agreement.


                                      18
<PAGE>   19

15.      AMENDMENT NO. 2 EFFECTIVE DATE. This Amendment shall become effective
as of December 31, 1999 (the "Amendment No. 2 Effective Date") when this
Amendment shall have been executed and delivered by the Borrower, the Required
Lenders, and the Agent, and the other conditions set forth in Section 4.4 have
been satisfied.


                                      19
<PAGE>   20

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.


                               INDUSTRIAL DISTRIBUTION GROUP, INC.


                               By:
                                  -----------------------------

                               Title:
                                     --------------------------


                                20
<PAGE>   21

                               BANK ONE, NA
                               (Formerly The First National Bank of Chicago),
                               Individually and as Agent



                               By:
                                  -------------------------------------
                                Title:
                                      ---------------------------------


                                REVOLVING COMMITMENT:    $24,000,000

                                PERCENTAGE:              24.00%


                                      21
<PAGE>   22

                                  BANK OF AMERICA, N.A.
                                  (Formerly Bank of America National Trust and
                                  Savings Association),
                                  Individually and as Co-Agent



                                  By:
                                     ------------------------------------
                                    Title:
                                     ------------------------------------



                                    REVOLVING COMMITMENT:  $19,000,000

                                    PERCENTAGE:            19.00%


                                      22
<PAGE>   23

                                    FIRST UNION NATIONAL BANK,
                                     Individually and as Co-Agent


                                    By:
                                       -----------------------------------
                                     Title:
                                           -------------------------------

                                      REVOLVING COMMITMENT:    $19,000,000

                                      PERCENTAGE:              19.00%


                                      23
<PAGE>   24

                                      FLEET NATIONAL BANK


                                      By:
                                         ---------------------------------
                                        Title:
                                              ----------------------------

                                        REVOLVING COMMITMENT: $16,000,000

                                        PERCENTAGE:           16.00%


                                      24
<PAGE>   25

                                        WACHOVIA BANK, N.A.


                                        By:
                                           ---------------------------------

                                          Title:
                                           ---------------------------------


                                          REVOLVING COMMITMENT: $14,000,000

                                          PERCENTAGE:           14.00%


                                      25
<PAGE>   26

                                  COMPASS BANK


                                           By:
                                              --------------------------------
                                            Title:
                                                  ----------------------------

                                            REVOLVING COMMITMENT: $8,000,000

                                            PERCENTAGE:           8.00%


                                      26
<PAGE>   27

                 ACKNOWLEDGMENT AND REAFFIRMATION OF GUARANTORS


         Each of the undersigned (i) acknowledges receipt of the foregoing
Amendment No. 2 to Credit Agreement dated as of December 31, 1999 (the
"Amendment"), (ii) consents to the execution and delivery of the Amendment by
the parties thereto, and (iii) reaffirms all of its obligations and covenants
under the Subsidiary Guaranty and Subsidiary Pledge Agreement (all as defined
in the Credit Agreement and in effect as of the date hereof), and agrees that
none of such obligations and covenants shall be affected by the execution and
delivery of the Amendment, and that all of such obligations and covenants
remain in full force and effect on and after the date hereof. This
Acknowledgment and Reaffirmation may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument.

                           Associated Suppliers, Inc.
                           Atlantic Industrial Supply Co., Inc.
                           Austin Ford Logan, Inc.
                           B&J Industrial Supply Company
                           B&J Industrial Supply Company of Spokane
                           B&J Industrial Supply Company of Tacoma
                           Buford Bros., Inc.
                           Cardinal Machinery, Inc.
                           Cramer Industrial Supplies, Inc.
                           The Distribution Group, Inc.
                           Dynamic Tool & Abrasives, Inc.
                           E. C. Blackstone Company
                           Hawley Industrial Supplies, Inc.
                           IDG Real Properties, Inc.
                           Industrial & Tool Suppliers Limited Liability
                             Company
                           Industrial Distribution Group - California, Inc.
                           The Innovative Distributor Group, Inc.
                           J.J. Stangel Co.
                           L.D. Supply, Inc.
                           Mel's Industrial Supplies, Inc.
                           The New England Group Industrial Distributors, Inc.
                           Northern Tool & Supply, Inc.
                           Petry & Morrow, Inc.
                           Refco, Inc.
                           Shearer Industrial Supply Co.
                           Tri-Star Industrial Supply, Inc.
                           Turner Industries, Inc.
                           Wm. H. Taylor & Company, Inc.

                           By:
                                 ------------------------------
                                 Name:
                                 Title: