Document:

<PAGE>
                                                                   EXHIBIT 10.20

                         FIRST AMENDMENT TO AMENDED AND
                            RESTATED CREDIT AGREEMENT

         This First Amendment to Amended and Restated Credit Agreement (this
"FIRST AMENDMENT") is executed as of the 26th day of January, 2004 (the
"EFFECTIVE DATE"), by and among HWG, LLC, a Delaware limited liability company
("BORROWER"), THE HALLWOOD GROUP INCORPORATED, a Delaware corporation
("PARENT"), and FIRST BANK (d/b/a First Bank & Trust), as Administrative Agent
("ADMINISTRATIVE AGENT") and the sole Lender party to the Credit Agreement
("LENDER").

                                   WITNESSETH:

         WHEREAS, Borrower, Parent, Administrative Agent and Lender are parties
to that certain Amended and Restated Credit Agreement dated as of July 28, 2003
(the "CREDIT AGREEMENT") (unless otherwise defined herein, all terms used herein
with their initial letter capitalized shall have the meaning given such terms in
the Credit Agreement); and

         WHEREAS, pursuant to the Credit Agreement, Lender has made Revolving
Loans, the Term A Loan and the SPA Loans to Borrower; and

         WHEREAS, Borrower failed to borrow the proceeds of the SPA Term Loans
to make the Separation Agreement Payment by August 26, 2003; and

         WHEREAS, the obligation of Lender to make the SPA Term Loans expired on
August 26, 2003; and

         WHEREAS, Borrower and Parent have requested that Lender amend certain
terms of the Credit Agreement in certain respects including, without limitation,
extending the Separation Agreement Payment Date to December 15, 2004; and

         WHEREAS, subject to the terms and conditions herein contained, Lender
has agreed to Borrower's and Parent's request.

         NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrower, Parent, Administrative Agent and Lender hereby agree as follows:

         Section 1 AMENDMENTS. In reliance on the representations, warranties,
covenants and agreements contained in this First Amendment, and subject to the
terms and conditions contained herein, the Credit Agreement is hereby amended,
effective as of the Effective Date, in the manner provided in this Section 1.

         1.1 DEFINITIONS.

                  (a) The definitions of "SPA TERM LOAN PREPAYMENT HORIZON" and
         "SPA TERM LOAN RATE" are hereby deleted from the Credit Agreement.

                                       1
<PAGE>

                  (b) The definitions of "ADVANCE NOTICE", "APPLICABLE MARGIN",
         "BASE RATE LOAN", "EURODOLLAR LOAN", FINANCING DOCUMENTS", and
         "SEPARATION AGREEMENT PAYMENT DATE" contained in Section 1.1 of the
         Credit Agreement shall be amended to read in full as follows:

         "ADVANCE NOTICE" shall mean written or telecopy notice (with telephone
         confirmation in the case of telecopy notice), which in each case shall
         be irrevocable, from the Borrower to be received by the Administrative
         Agent before 10:00 a.m. (Dallas, Texas time), by the number of Business
         Days in advance of any Borrowing, conversion, continuation or
         prepayment of any SPA Term Loan or Revolving Credit Loan pursuant to
         this Agreement, as respectively indicated below:

         (a)      Eurodollar Loans - 3 Business Days; and

         (b)      Base Rate Loans - Same Business Day.

         For the purpose of determining the respectively applicable SPA Term
         Loans or Revolving Credit Loans in the case of the conversion from one
         Type of SPA Term Loan or Revolving Credit Loan, respectively, into
         another, the SPA Term Loans or Revolving Credit Loans, respectively,
         into which there is to be a conversion shall control. The
         Administrative Agent and each Lender are entitled to rely upon and act
         upon telecopy notice made or purportedly made by the Borrower, and the
         Borrower hereby waives the right to dispute the authenticity and
         validity of any such transaction once the Administrative Agent or any
         Lender has advanced funds, absent manifest error.

         "APPLICABLE MARGIN" shall mean, on any day and with respect to any SPA
         Term Loan or Revolving Credit Loan, the applicable per annum percentage
         set forth below:

         (a)      Eurodollar Loans - 3.250%; and

         (b)      Base Rate Loans - 0.500%.

         "BASE RATE LOAN" shall mean a Revolving Credit Loan or a SPA Term Loan
         bearing interest at the rate provided in Section 2.5(a).

         "EURODOLLAR LOAN" shall mean a Revolving Credit Loan or a SPA Term Loan
         bearing interest at the rate provided in Section 2.5(b).

         "FINANCING DOCUMENTS" shall mean this Agreement, the First Amendment,
         the Revolving Credit Notes, the Term Notes, the Security Instruments,
         the Borrowing Requests, the Gotham Payment Notice, the Separation
         Agreement Payment Notice, and the other documents, instruments or
         agreements described in Section 3.1, Section 3.2, Section 3.3 and
         Section 3.4, together with any other document, instrument or agreement
         now or hereafter entered into in connection with the Loans, the Lender
         Indebtedness or the Collateral, as such documents,

                                       2
<PAGE>

         instruments or agreements may be amended, modified or supplemented from
         time to time.

         "SEPARATION AGREEMENT PAYMENT DATE" shall mean any Business Day after
         the Closing Date but prior to December 15, 2004, on which the
         Separation Agreement Payment is made, which date shall be expressly set
         forth in the Separation Agreement Payment Notice as the "Separation
         Agreement Payment Date".

                  (c) The following definitions of "FIRST AMENDMENT" and "SPA
         TERM CREDIT EXPOSURE" are added to Section 1.1 of the Credit Agreement
         in alphabetical order:

         "FIRST AMENDMENT" shall mean that certain First Amendment to Amended
         and Restated Credit Agreement dated as of January 26, 2004 entered into
         by and among Borrower, Parent, Administrative Agent and Lenders.

         "SPA TERM CREDIT EXPOSURE" shall mean, at any time and as to each
         Lender, the aggregate principal amount of the SPA Term Loans made by
         such Lender outstanding as of such date.

         1.2 AMENDMENT TO SECTION 2.1(b). Section 2.1(b) is hereby amended to
read in its entirety as follows:

         (b) TYPES OF REVOLVING CREDIT LOANS AND SPA TERM LOANS. The Revolving
         Credit Loans and SPA Term Loans made pursuant hereto by each Lender
         shall, at the option of the Borrower, be either Base Rate Loans or
         Eurodollar Loans and may be continued or converted pursuant to Section
         2.9; provided, that, except as otherwise specifically provided herein,
         all Revolving Credit Loans and SPA Term Loans made pursuant to the same
         Borrowing shall be of the same Type.

         1.3 AMENDMENT TO SECTION 2.1(d). Section 2.1(d) is hereby amended to
read in its entirety as follows:

         (d) TERM AND SPA LOAN COMMITMENTS. The Term A Loans, SPA Term Loans and
         SPA Loans made pursuant hereto by each Lender shall not exceed in the
         aggregate principal amount outstanding the amount set forth opposite
         such Lender's name on Annex I under the caption "Term A Loan
         Commitment", "SPA Term Loan Commitment" or "SPA Loan Commitment",
         respectively (its "TERM A LOAN COMMITMENT", "SPA TERM LOAN COMMITMENT"
         [as may be reduced pursuant to the provisions below] and "SPA LOAN
         COMMITMENT", respectively, and collectively for all Lenders, the "TERM
         A LOAN COMMITMENTS", "SPA TERM LOAN COMMITMENTS" [as may be reduced
         pursuant to the provisions below] and "SPA LOAN COMMITMENTS",
         respectively). Notwithstanding the foregoing, if the Separation
         Agreement Payment Date does not occur by January 31, 2004, the SPA Term
         Loan Commitment shall automatically reduce (without any further action
         or notice by Administrative Agent or any Lender) by $50,000 on the
         first day of each calendar month thereafter (beginning February 1,
         2004) until the earlier of (i) December 15, 2004 or (ii) the Separation
         Agreement Payment Date.

                                       3
<PAGE>

         1.4 AMENDMENT TO SECTION 2.2(a). Section 2.2(a) is hereby amended to
read in its entirety as follows:

         (a) BORROWING REQUESTS. Whenever the Borrower desires to make a
         Borrowing of Revolving Loans or SPA Term Loans hereunder, it shall give
         Advance Notice in the form of a Borrowing Request (which, in the case
         of a Borrowing of a SPA Term Loan, shall be the Separation Agreement
         Payment Notice), specifying, subject to the provisions hereof, (1) the
         aggregate principal amount of the Revolving Loans or SPA Term Loans to
         be made pursuant to such Borrowing, (2) the date of Borrowing (which
         shall be a Business Day), (3) whether the Revolving Loans or SPA Term
         Loans being made pursuant to such Borrowing are to be Base Rate Loans
         or Eurodollar Loans, and (4) in the case of Eurodollar Loans, the
         Interest Period to be applicable thereto.

         1.5 AMENDMENT TO SECTION 2.4(b). Section 2.4(b) is hereby amended to
read in its entirety as follows:

                  (b) TERM NOTES AND AMORTIZATION. The Borrower's obligation to
         pay the principal of, and interest on, the Term A Loans and SPA Term
         Loans maintained outstanding by each Lender shall be further evidenced
         by the Borrower's issuance, execution and delivery of a Term A Note and
         SPA Term Note, respectively, payable to the order of each such Lender
         in the amount of such Lender's Term A Loan Commitment (if issued at or
         prior to the Closing Date) and SPA Term Loan Commitment (if issued
         prior to the Separation Agreement Payment Date), respectively, or in
         the principal amount of such Lender's Term A Loans (if issued after the
         Closing Date) and SPA Term Loans (if issued after the Separation
         Agreement Payment Date), respectively (if issued after the Closing
         Date), and dated as of the date of issuance of such Term A Note and SPA
         Term Note, respectively. The aggregate principal amount of the Term A
         Notes applicable to the aggregate Term A Loans of all Lenders shall be
         payable in monthly installments of principal and interest in the amount
         of $92,631.29 each, and the aggregate principal amount of the SPA Term
         Notes applicable to the aggregate SPA Term Loans of all Lenders shall
         be payable in monthly installments of principal in the amount of
         $50,000.00 each plus interest thereon. Each such installment shall be
         applied first to accrued but unpaid interest on the Term A Loans and
         the SPA Term Loans, as applicable, and then to principal on the Term A
         Loans and the SPA Term Loans, as applicable. The first such monthly
         installment with respect to Term A Loans shall be payable on August 1,
         2003, and the first such monthly installments with respect to SPA Term
         Loans shall be payable on the first day of the calendar month
         immediately following the Separation Agreement Payment Date. The
         remaining monthly installments with respect to each of the Term A Loans
         and the SPA Term Loans shall be payable on each Monthly Date after the
         applicable date set forth in the preceding sentence, with the final
         installments in the amounts of the aggregate unpaid principal balance
         on the Term A Loans and the SPA Term Loans, as applicable, then owing,
         together with all accrued and unpaid interest, being payable on or
         before

                                       4
<PAGE>

         the Term A Loan Maturity Date in the case of the Term A Loans and the
         SPA Term Loan Maturity Date in the case of the SPA Term Loans.

         1.6 AMENDMENTS TO SECTION 2.5. Sections 2.5(c), 2.5(d) and 2.5(e) are
hereby amended to read in their entirety as follows:

                  (c) TERM A LOANS. Subject to Section 2.5(d), the Borrower
         agrees to pay interest in respect of the unpaid principal amount of
         each Term A Loan from the date thereof until payment in full thereof at
         a rate per annum which shall be, for any day, equal to the Term A Loan
         Rate, but in no event shall such rate exceed the Highest Lawful Rate.

                  (d) DEFAULT INTEREST. If the Borrower shall default in the
         payment of the principal of or interest on any Loan or any other amount
         becoming due hereunder or under any Financing Document, by acceleration
         or otherwise, the Borrower shall on demand from time to time pay
         interest, to the extent permitted by law, on such defaulted amount to
         but excluding the date of actual payment (after as well as before
         judgment) at a rate per annum equal to (1) in the case of any
         Eurodollar Loan, the rate that would be applicable under Section 2.5(b)
         to such Eurodollar Loan plus 4% per annum, (2) in the case of any Term
         A Loan, eleven percent (11%) per annum, and (3) in the case of any
         other amount, the rate that would be applicable under Section 2.5(a) to
         a Base Rate Loan plus 4% per annum, but in no event to exceed the
         Highest Lawful Rate.

                  (e) INTEREST PAYMENT DATES. Interest on each Loan shall accrue
         from and including the date of such Loan to but excluding the date of
         payment in full thereof. Interest on each Eurodollar Loan shall be
         payable on each Monthly Date and the last day of each Interest Period
         applicable thereto, and on any prepayment (on the amount prepaid), at
         maturity (whether by acceleration or otherwise) and, after maturity, on
         demand. Interest on each Term A Loan and Base Rate Loan shall be
         payable on each Monthly Date, commencing on the first of such days to
         occur after such Loan is made, at maturity (whether by acceleration or
         otherwise) and, after maturity, on demand.

         1.7 AMENDMENT TO SECTION 2.6(d). Section 2.6(d) is hereby amended to
read in its entirety as follows:

         (d) MATURITY DATES. No Interest Period with respect to a Revolving
         Credit Loan shall extend beyond the Revolving Credit Maturity Date, and
         no Interest Period with respect to a SPA Term Loan shall extend beyond
         the SPA Term Loan Maturity Date.

         1.8 AMENDMENT TO SECTION 2.8(a)(5). Section 2.8(a)(5) is hereby amended
to read in its entirety as follows:

                  (5) Any or all of (a) the Term A Loan Commitment remaining
         unused after the Closing Date shall automatically terminate at 5:00
         p.m. (Dallas, Texas time) on such date, (b) the SPA Term Loan
         Commitment remaining unused after

                                       5
<PAGE>
         December 15, 2004 shall automatically terminate at 5:00 p.m. (Dallas,
         Texas time) on such date, and (c) the SPA Loan Commitment remaining
         unused after the Gotham Litigation Payment Date shall automatically
         terminate at 5:00 p.m. (Dallas, Texas time) on such date.

         1.9 AMENDMENT TO SECTION 2.8(c). Section 2.8(c) is hereby amended to
read in its entirety as follows:

         (c) PREPAYMENT PENALTY. In the event that the Term A Loans are prepaid
         in whole or in part on or prior to the Term A Loan Maturity Date,
         including, without limitation, pursuant to a mandatory prepayment
         required by Article 8 hereof, but excluding, however, pursuant to a
         mandatory prepayment required by Section 2.8 or Section 7.4 hereof, the
         Borrower shall also pay to the Lenders at the time of such prepayment,
         a prepayment penalty equal to a percentage of the amount prepaid in
         accordance with the following schedule:

<Table>
<Caption>
                                          Penalty as Percentage of
      Time of Prepayment                       Amount Prepaid
-----------------------------             ------------------------
<S>                                       <C>
On or prior to April 1, 2004                        2%
Prior to April 1, 2005                              1%
</Table>

         Furthermore, in the event any Credit Party shall (1) receive Net Cash
         Proceeds from any Equity Contribution, and (2) apply, prior to the Term
         A Loan Maturity Date (in the case of Term A Loans), all or a portion of
         such Net Cash Proceeds as a prepayment of more than thirty-five percent
         (35%) of the then outstanding principal balance of the Term A Loans
         (any portion prepaid in excess of thirty-five percent (35%) of the then
         outstanding principal balance of the Term A Loans, as the case may be,
         being referred to herein as an "EXCESS PREPAID AMOUNT"), the Borrower
         shall also pay to the Lenders at the time of such prepayment, a
         prepayment penalty equal to a percentage of the Excess Prepaid Amount
         in accordance with the foregoing provisions.

         1.10 AMENDMENT TO SECTION 2.10(A). Section 2.10(a) is hereby amended to
read in its entirety as follows:

         (a) UNUSED COMMITMENT FEES. The Borrower shall pay to the
         Administrative Agent for the account of and distribution to each
         Lender: (1) in accordance with its Revolving Credit Percentage a
         commitment fee for the period commencing on the Closing Date, to and
         including the Revolving Credit Maturity Date (or such earlier date as
         the Revolving Credit Commitments shall have been terminated entirely)
         computed at a rate per annum equal to the Commitment Fee Percentage on
         the average daily excess amount of the Revolving Credit Commitments
         over the Revolving Credit Exposure; (2) in accordance with its SPA Loan
         Percentage a commitment fee for the period commencing on the Closing
         Date, to and including the Gotham Litigation Payment Date computed at

                                       6
<PAGE>

         a rate per annum equal to the Commitment Fee Percentage on the average
         daily excess amount of the SPA Loan Commitments over the SPA Credit
         Exposure; and (3) in accordance with its SPA Term Loan Percentage a
         commitment fee for the period commencing on the Effective Date (as
         defined in the First Amendment), to and including the earlier of (A)
         December 15, 2004, or (B) the Separation Agreement Payment Date
         computed at a rate per annum equal to the Commitment Fee Percentage on
         the average daily excess amount of the SPA Term Loan Commitments over
         the SPA Term Credit Exposure. The commitment fees on the (i) Revolving
         Credit Commitments earned from and after the Closing Date shall be
         payable in arrears on each Quarterly Date, commencing on the first
         Quarterly Date to occur after the Closing Date, (ii) SPA Loan
         Commitments earned from and after the Closing Date shall be payable in
         arrears on or before the first Quarterly Date following the Gotham
         Payment Date, and (iii) SPA Term Loan Commitments earned from and after
         the Effective Date (as defined in the First Amendment) shall be payable
         in arrears on or before the first Quarterly Date following the
         Effective Date (as defined in the First Amendment).

         1.11 AMENDMENTS TO SECTION 2.11(c). Section 2.11(c) is hereby amended
to read in its entirety as follows:

         (c) COMPUTATIONS. All computations of interest shall be made on the
         basis of a year of 360 days (unless such calculation would result in a
         usurious rate, in which case interest shall be calculated on the basis
         of a year of 365 or 366 days, as the case may be) in the case of Term A
         Loans and Eurodollar Loans, and 365 or 366 days (as the case may be) in
         the case of Base Rate Loans, and all computations of fees shall be made
         on the basis of a year of 360 days (unless such calculation would
         result in a usurious rate, in which case interest shall be calculated
         on the basis of a year of 365 or 366 days, as the case may be), in each
         case for the actual number of days (including the first day but
         excluding the last day) occurring in the period for which such interest
         or fees are payable.

         1.12 AMENDMENT TO EXHIBIT I. The form of Separation Agreement Payment
Notice attached as Exhibit I to the Credit Agreement shall be replaced with the
form attached hereto as Exhibit I.

         Section 2 CONDITIONS PRECEDENT. The effectiveness of the amendments to
the Credit Agreement contained in Section 1 hereof is subject to the
satisfaction of the each of the following conditions precedent:

         2.1 EXECUTION OF FIRST AMENDMENT. Counterparts of this First Amendment
shall have been duly executed by each of the parties hereto, and a fully
executed copy of this First Amendment shall have been received by Administrative
Agent.

         2.2 FEES. Borrower shall have paid to Administrative Agent: (a) an
amendment fee in the amount of $5,000.00 and (b) all fees and expenses of
counsel to Administrative Agent in connection with the preparation, negotiation
and execution of this First Amendment.

                                       7
<PAGE>

         2.3 NO DEFAULT. No Default or Event of Default shall have occurred
which is continuing.

         2.4 OTHER DOCUMENTS. Administrative Agent shall have been provided with
such other documents, instruments and agreements, and Borrower and Parent shall
have taken such actions, as Administrative Agent may reasonably require in
connection with this First Amendment and the transactions contemplated hereby.

         Section 3 REPRESENTATIONS AND WARRANTIES. In order to induce
Administrative Agent and Lender to enter into this First Amendment, Borrower and
Parent hereby jointly and severally represent and warrant to Administrative
Agent and each Lender that:

         3.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of each Credit Party contained in the Financing Documents is true and
correct in all material respects as of the date hereof (except to the extent
that any such representation and warranty is expressly made as of a particular
date, in which event such representation and warranty was true and correct as of
such date).

         3.2 ABSENCE OF DEFAULTS. Neither a Default nor an Event of Default has
occurred which is continuing.

         3.3 NO DEFENSES. No Credit Party has any defenses to payment,
counterclaims or rights of set-off with respect to the Lender Indebtedness on
the date hereof.

         Section 4 MISCELLANEOUS.

         4.1 REAFFIRMATION OF FINANCING DOCUMENTS; EXTENSION OF LIENS. Any and
all of the terms and provisions of the Credit Agreement and the Financing
Documents shall, except as amended and modified hereby, remain in full force and
effect. Borrower hereby extends the Liens securing the Lender Indebtedness until
the Lender Indebtedness has been paid in full, and Borrower and Parent hereby
agree that the amendments and modifications herein contained shall in no manner
affect or impair the Lender Indebtedness, the Liens securing payment and
performance thereof and/or the Facility Guaranty executed and delivered by
Parent in connection with the Credit Agreement.

         4.2 PARTIES IN INTEREST. All of the terms and provisions of this First
Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.

         4.3 COUNTERPARTS. This First Amendment may be executed in counterparts,
and all parties need not execute the same counterpart. Facsimiles shall be
effective as originals.

         4.4 COMPLETE AGREEMENT. THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND
THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

                                       8
<PAGE>

         4.5 HEADINGS. The headings, captions and arrangements used in this
First Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this First Amendment, nor
affect the meaning thereof.

         4.6 EXPENSES. Borrower and Parent jointly and severally agree to
promptly pay all reasonable fees and expenses of counsel to Administrative Agent
incurred by Administrative Agent in connection with the preparation, negotiation
and execution of this First Amendment and all related documents.

         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed by their respective authorized officers on the date and year
first above written.

                           [Signature pages to follow]

                                       9
<PAGE>

                        SIGNATURE PAGE TO FIRST AMENDMENT
                    TO AMENDED AND RESTATED CREDIT AGREEMENT

                                    HWG, LLC

                                    By:
                                        ----------------------------------------
                                            William L. Guzzetti, President

                                    THE HALLWOOD GROUP INCORPORATED

                                    By:
                                        ----------------------------------------
                                            Melvin J. Melle, Vice President

                                [Signature Page]

<PAGE>

                        SIGNATURE PAGE TO FIRST AMENDMENT
                    TO AMENDED AND RESTATED CREDIT AGREEMENT

                                    FIRST BANK, individually and as
                                    Administrative Agent

                                    By:
                                        ----------------------------------------
                                            Steve D. Israel, Vice President

                                [Signature Page]

<PAGE>

                                    EXHIBIT I

                   FORM OF SEPARATION AGREEMENT PAYMENT NOTICE

         Reference is made to that certain Amended and Restated Credit Agreement
dated as of July 28, 2003 (as may be amended from time to time, the "CREDIT
AGREEMENT") by and among The Hallwood Group Incorporated, a Delaware
corporation, as parent guarantor, HWG, LLC, a Delaware limited liability company
("BORROWER"), First Bank, in its individual capacity as a Lender and as
Administrative Agent, and certain other Lenders a party thereto. Terms which are
defined in the Credit Agreement and which are used but not defined herein are
used herein with the meanings given them in the Credit Agreement. Pursuant to
Section 3.4 of the Credit Agreement, Borrower hereby provides notice to the
Administrative Agent and the Lenders that Borrower intends to make the
Separation Agreement Payment on _________, 2004, such date to be the Separation
Agreement Payment Date, and requests that the Lenders make the SPA Term Loan to
Borrower on such date.

Borrower requests that the Borrowing to be made hereunder shall be [A BASE RATE
BORROWING] [A EURODOLLAR BORROWING] and shall have the Interest Periods all as
set forth below:

Type of Borrowing              Aggregate Amount                Interest Period
                                                               (if applicable)

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

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

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

         Borrower hereby certifies that:

                  (a) The Responsible Officer of Borrower signing this
         instrument is the duly elected, qualified and acting officer of
         Borrower as indicated below such officer's signature hereto.

                  (b) The representations and warranties of each Credit Party
         contained in the Credit Agreement and the other Financing Documents are
         true and correct on and as of the date hereof, with the same effect as
         though such representations and warranties had been made on and as of
         the date hereof or, if such representations and warranties are
         expressly limited to particular dates, as of such particular dates.

                  (c) Immediately before and after giving effect to the
         extension of the SPA Term Loan requested hereby, no Default or Event of
         Default has occurred and is continuing, and the making of such SPA Term
         Loan by the Lenders will not cause a Default or Event of Default.

                  (d) The Credit Parties have performed and complied with all
         agreements and conditions in the Credit Agreement required to be
         performed or complied with by such Credit Parties on or prior to the
         date hereof, and each of the conditions precedent to the making of the
         SPA Term Loan contained in the Credit Agreement remain satisfied in all
         material respects.

                                                                             I-1
<PAGE>

         IN WITNESS WHEREOF, this instrument is executed as of
_____________________, 2004.

                                         HWG, LLC

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

                                                                             I-2<PAGE>

                                                                   EXHIBIT 10.21

                                 [KEYBANK LOGO]

                           SECOND AMENDED AND RESTATED
                  REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

                          DATED AS OF JANUARY 30, 2004

                                  by and among

                        BROOKWOOD COMPANIES INCORPORATED
                             KENYON INDUSTRIES, INC.
                           BROOKWOOD LAMINATING, INC.
                              ASHFORD BROMLEY, INC.
                                 XTRAMILE, INC.
                            LAND AND OCEAN III, INC.
                        STRATEGIC TECHNICAL ALLIANCE, LLC

                                       and

                          KEYBANK NATIONAL ASSOCIATION

<PAGE>

                                  TABLE OF CONTENTS

<TABLE>
<S>                                                                                                      <C>
1.       DEFINITIONS................................................................................      2
1.1.     Certain Definitions........................................................................      2
1.2.     General....................................................................................     10
2.       LOANS......................................................................................     10
2.1.     Working Capital Revolving Credit Facility..................................................     10
2.1.1    Availability of Credit Facility and Purpose................................................     10
2.1.2.   Working Capital Revolving Credit Note......................................................     10
2.1.3.   Limitations on Advances....................................................................     10
2.1.4.   Fees.......................................................................................     10
2.1.5    Repayment; Security........................................................................     11
2.1.6.   Interest Payments..........................................................................     11
2.1.7.   Facility Maturity..........................................................................     11
2.1.8.   Borrowing Base.............................................................................     11
2.1.9.   Acquisition Sub-Limit......................................................................     13
2.2.     Equipment Revolving Credit Facility........................................................     13
2.2.1.   Availability of Credit Facility and Purpose................................................     13
2.2.2.   Equipment Revolving Credit Notes...........................................................     13
2.2.3.   Limitation on Advances.....................................................................     14
2.2.4.   Fees.......................................................................................     14
2.2.5.   Repayment of Equipment Revolving Credit Loans; Security....................................     14
2.2.6.   Interest...................................................................................     14
2.2.7.   Facility Maturity..........................................................................     14
2.3      Reserved...................................................................................     15
2.4.     Borrowing Procedures.......................................................................     15
2.5.     LIBOR Loans................................................................................     15
2.6.     Interest and Payments......................................................................     17
2.6.1.   Interest Rate Pricing Formula for Working Capital Revolving Credit Loans...................     17
2.6.2.   Interest Rate Pricing Formula for Equipment Revolving Credit Loans.........................     18
2.6.3.   Interest Rate Pricing......................................................................     18
2.6.4.   LIBOR Rate Selection.......................................................................     18
2.6.5.   Interest Payment Date......................................................................     18
2.6.6.   Prime Rate.................................................................................     18
2.7.     Payments...................................................................................     19
2.8.     Limitation on Interest.....................................................................     19
2.9.     Late Charges...............................................................................     19
2.10.    Default Rate...............................................................................     19
2.11.    One Obligation.............................................................................     19
2.12.    Modified Following Business Day Convention.................................................     19
3.       GRANT OF SECURITY INTEREST.................................................................     20
4.       REPRESENTATIONS AND WARRANTIES.............................................................     21
4.1.     Organization, Existence and Good Standing..................................................     21
4.2.     Consents...................................................................................     21
4.3.     No Legal Bar...............................................................................     21
4.4.     Compliance with Charter and Agreements.....................................................     22
4.5.     Negative Pledges...........................................................................     22
4.6.     Title to Property..........................................................................     22
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                      <C>
4.7.     Books and Records..........................................................................     22
4.8.     Power and Authority; Due Execution.........................................................     22
4.9.     Legal, Valid, Binding Obligation...........................................................     22
4.10.    Name     ..................................................................................     22
4.11.    Subsidiaries and Investments...............................................................     22
4.12.    Financial Statements, No Change............................................................     22
4.13.    Taxes    ..................................................................................     23
4.14.    Litigation.................................................................................     23
4.15.    Chief Executive Office.....................................................................     23
4.16.    ERISA    ..................................................................................     23
4.17.    No Default.................................................................................     23
4.18.    No Burdensome Restrictions.................................................................     24
4.19.    Regulation U; Etc..........................................................................     24
4.20.    Investment Company Act; Etc................................................................     24
4.21.    Indebtedness...............................................................................     24
4.22.    Compliance with Laws.......................................................................     24
4.23.    Contingent Liabilities.....................................................................     24
4.24.    Bonds; Indemnities.........................................................................     25
4.25.    Intellectual Property......................................................................     25
4.26.    Leases   ..................................................................................     25
4.27.    Labor Contracts/Relations..................................................................     25
4.28.    Trade Relations............................................................................     25
4.29.    Capitalization.............................................................................     25
4.30.    Real Property..............................................................................     25
4.31.    Accuracy of Information....................................................................     26
4.32.    Business Purpose of Loans..................................................................     26
5.       BORROWER'S REPORTS AND NOTICES.............................................................     26
5.1.     Annual Financial Statements................................................................     26
5.2.     Annual Financial Budgets...................................................................     26
5.3.     Quarterly Financial Statements.............................................................     26
5.4.     Quarterly Compliance Certificate...........................................................     26
5.5.     Monthly Reports............................................................................     26
5.6.     Semi-Annual Field Exam.....................................................................     27
5.7.     Additional Information.....................................................................     27
5.8.     Notices....................................................................................     27
5.9.     ERISA Notices..............................................................................     27
5.10.    Taxes    ..................................................................................     28
6.       BANK'S REPORTS.............................................................................     28
7.       BORROWER'S AFFIRMATIVE COVENANTS...........................................................     28
7.1.     Legal Existence, Compliance with Laws......................................................     28
7.2.     Insurance..................................................................................     28
7.3.     Compliance with Contracts and Laws.........................................................     28
7.4.     Business...................................................................................     28
7.5.     Taxes    ..................................................................................     29
7.6.     Deposit Accounts...........................................................................     29
7.7.     Accounts Covenants.........................................................................     29
7.8.     Inventory Covenants........................................................................     29
7.9.     Equipment Covenants........................................................................     30
8.       BORROWER'S NEGATIVE COVENANTS..............................................................     30
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                      <C>
8.1.     Disposition of Assets......................................................................     30
8.2.     Indebtedness...............................................................................     30
8.3.     Liens......................................................................................     31
8.4.     Distributions; Distributions to Hallwood...................................................     31
8.5.     Loans; Loans to Hallwood...................................................................     31
8.6.     Guaranties.................................................................................     31
8.7.     Investments................................................................................     31
8.8.     Subsidiaries...............................................................................     32
8.9.     Mergers and Acquisitions...................................................................     32
8.10.    Affiliates.................................................................................     32
8.11.    Limitation on Use of Proceeds..............................................................     32
9.       FINANCIAL COVENANTS........................................................................     32
9.1.     EBITDA to TFC Ratio........................................................................     32
9.2.     Total Debt to Tangible Net Worth Ratio.....................................................     32
10.      ADDITIONAL COVENANTS AND ASSURANCES........................................................     32
10.1.    No Overadvances............................................................................     32
10.2.    Notice of Changes..........................................................................     32
10.3.    Additional Assurances......................................................................     33
10.4.    Additional Collateral Actions..............................................................     33
10.5.    Verification of Accounts...................................................................     33
10.6.    Power of Attorney..........................................................................     33
10.7.    Insurance Assignment.......................................................................     34
10.8.    Government Accounts........................................................................     34
10.9.    Payments by Bank...........................................................................     34
10.10.   Debits to Borrower's Accounts..............................................................     34
10.11.   Access to Records..........................................................................     34
10.12.   License to Use Premises....................................................................     35
10.13.   Instruments Evidencing Accounts............................................................     35
10.14.   Security Interest in Deposits; Set-off.....................................................     35
10.15.   No Bank Liability..........................................................................     35
10.16.   Transfer of Investment Property to Bank's Name.............................................     35
11.      EVENTS OF DEFAULT..........................................................................     35
12.      BANK'S RIGHTS AND REMEDIES.................................................................     37
12.1.    Exercise of Remedies.......................................................................     37
12.2.    Disposition of Collateral..................................................................     38
12.3.    Possession Following Event of Default......................................................     38
13.      EXPENSES; INDEMNIFICATION; ETC.............................................................     38
13.1.    Payment of Expenses........................................................................     38
13.2.    Indemnification............................................................................     39
13.3.    Authority for Loan Requests................................................................     39
13.4.    Exculpation................................................................................     39
13.5.    Collateral Secures Indemnification.........................................................     39
14.      CONDITIONS PRECEDENT.......................................................................     39
14.1.    Conditions to Initial Loans................................................................     39
14.2.    Conditions Precedent to All Loans..........................................................     43
15.      MISCELLANEOUS PROVISIONS...................................................................     43
15.1.    Notices....................................................................................     43
15.2.    No Waiver..................................................................................     43
15.3.    Assignment.................................................................................     43
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                      <C>
15.4.    Headings...................................................................................     44
15.5.    Waiver of Remedies.........................................................................     44
15.6.    Pledge to Federal Reserve..................................................................     44
15.7.    Participations.............................................................................     44
15.8.    Replacement Notes..........................................................................     45
16.      GOVERNING LAW; JURISDICTION................................................................     45
16.1.    Governing Law..............................................................................     45
16.2.    Jurisdiction...............................................................................     45
16.3.    Waiver of Counterclaims....................................................................     45
17.      CAUTION....................................................................................     46
18.      NOTICE   ..................................................................................     45
19.      COUNTERPARTS...............................................................................     46

                                                    SCHEDULES

Schedule 3        Contracts.........................................................................     49
Schedule 4.1      States and Other Locations Where Authorized to do Business........................     50
Schedule 4.2      Consents..........................................................................     51
Schedule 4.10     Name..............................................................................     52
Schedule 4.11     Subsidiaries and Investments......................................................     53
Schedule 4.12     Financial Statements; No Change...................................................     54
Schedule 4.13     Taxes.............................................................................     55
Schedule 4.14     Litigation........................................................................     56
Schedule 4.15     Chief Executive Office of Each Borrower...........................................     57
Schedule 4.16     ERISA.............................................................................     58
Schedule 4.21     Indebtedness......................................................................     59
Schedule 4.22     Compliance with Laws..............................................................     60
Schedule 4.23     Contingent Liabilities............................................................     61
Schedule 4.24     Bonds, Indemnities................................................................     62
Schedule 4.25     Intellectual Property.............................................................     63
Schedule 4.26     Leases............................................................................     64
Schedule 4.27     Labor Contracts/Relations.........................................................     65
Schedule 4.29     Capitalization....................................................................     66
Schedule 4.30     Real Property.....................................................................     67
Schedule 8.3      Liens.............................................................................     68

                                                       EXHIBITS

Exhibit A         Working Capital Revolving Credit Note.............................................     69
Exhibit B         Equipment Revolving Credit Note...................................................     72
Exhibit C         Borrowing Base Certificate........................................................     75
Exhibit D         Compliance Certificate............................................................     79
</TABLE>

                                       iv

<PAGE>

                          KEYBANK NATIONAL ASSOCIATION

                           SECOND AMENDED AND RESTATED
                  REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

         This Second Amended and Restated Revolving Credit Loan and Security
Agreement (this "Agreement") dated as of January 30, 2004, is entered into by
and among KeyBank National Association, a national banking association having a
place of business at 176 Federal Street, Boston, Massachusetts 02110 ("Bank")
and Brookwood Companies Incorporated, a Delaware corporation , having a place of
business at 232 Madison Avenue, 10th Floor, New York, New York 10016
("Brookwood"), Kenyon Industries, Inc., a Delaware corporation, having a place
of business at 36 Sherman Avenue, Kenyon, Rhode Island 02836 ("Kenyon"),
Brookwood Laminating, Inc., a Delaware corporation, having a place of business
at 1425 Kingstown Road, Peace Dale, Rhode Island 02883 ("Laminating"), Ashford
Bromley, Inc., a Delaware corporation, having a place of business at 36 Sherman
Avenue, Kenyon, Rhode Island 02836 ("Ashford"), XtraMile, Inc., a Delaware
corporation, having a place of business at 2333 Stirling Road, Fort Lauderdale,
Florida 33312 ("Xtra"), Land and Ocean III, Inc., a Florida corporation having a
place of business at 2333 Stirling Road, Fort Lauderdale, Florida 33312
("Land"), and Strategic Technical Alliance, LLC, a Delaware limited liability
company, having a place of business at 233 Madison Avenue, 10th Floor, New York,
New York 10016 ("STA" and, together with Brookwood, Kenyon, Laminating, Ashford,
Xtra and Land, being individually and collectively referred to herein as
"Borrower").

                                    RECITALS:

         WHEREAS, Bank, Brookwood, Kenyon, Laminating, Ashford, Xtra and Land
entered into a certain First Amended and Restated Revolving Credit Loan and
Security Agreement dated as of June 6, 2000 ("Existing Agreement"); and

         WHEREAS, the Existing Agreement was amended by a certain First
Amendment thereto dated October 23, 2000; and

         WHEREAS, the Existing Agreement was further amended by a certain Second
Amendment thereto dated January 2, 2001; and

         WHEREAS, the Existing Agreement was further amended by a certain Third
Amendment thereto dated May 13, 2002; and

         WHEREAS, the Existing Agreement was further amended by a certain Fourth
Amendment thereto dated December 24, 2003; and

         WHEREAS, STA became a party to the Existing Agreement pursuant to an
Assumption and Joinder Agreement dated December 16, 2002; and

         WHEREAS, Borrower has requested that Bank make certain changes to the
Existing Agreement; and

         WHEREAS, Bank is willing to make such changes to the Existing Agreement
and provide such financial accommodations to Borrower, subject to the terms and
conditions set forth in this Agreement;

                                       1

<PAGE>

         NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrower and Bank
agree to amend and restate the Existing Agreement, as amended, in its entirety
as follows:

1.       DEFINITIONS

         1.1.     Certain Definitions. As used herein the following terms have
the meanings set forth below:

"Accessions" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Accounts' shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Acquisition Sub-Limit" has the meaning set forth in Section 2.1.9 hereof.

"Affiliate" shall mean any Person which directly or indirectly is in control of,
is controlled by, or is under common control with Borrower.

"Ashford" shall have the meaning set forth in the preamble hereto and is
wholly-owned by Brookwood.

"Assignee" has the meaning set forth in Section 15.3 hereof.

"Automatic Electronic Fund Transfer Agreement" ("AFT Agreement") has the meaning
set forth in Section 10.10 hereof.

"Bank" has the meaning given such term in the preamble hereto.

"Borrower" has the meaning given such term in the preamble hereto.

"Borrowing Base" has the meaning given such term as Section 2.1.8 hereof.

"Borrowing Date" as to any Loan shall mean the Business Day on which such Loan
is made.

"Brookwood" shall have the meaning set forth in the preamble hereto and is
wholly-owned by Hallwood.

"Business Day" has the meaning given such term in Section 2.12 hereof.

"Capital Expenditures" shall mean, for any period, amounts included or required
to be included in the fixed assets account on a balance sheet of a Borrower in
accordance with GAAP and shall include Capital Leases and, in the case of a
purchase, the entire purchase price.

"Capital Leases" means capital leases, conditional sales contracts and other
title retention documents relating to the acquisition of capital assets (as
classified in accordance with GAAP).

                                       2

<PAGE>

"Chattel Paper" shall have the meaning set forth in the Uniform Commercial Code
as the same may, from time to time, be in effect in the State of Maine.

"Chess" shall mean Amos Chess who sold the business and assets of certain
corporations controlled by him to Xtra on February 11, 2001.

"Closing Date" means January 30, 2004.

"Collateral" has the meaning given such term in Section 3 hereof.

"Commercial Tort Claims" shall have the meaning set forth in the Uniform
Commercial Code as the same may, from time to time, be in effect in the State of
Maine.

"Commitment Period" means the period from and including the Closing Date, to but
not including, the Termination Date.

"Commonly Controlled Entities" shall mean entities sharing "common control"
under ERISA.

"Contingent Liability" means any obligation of a Person guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations of
any other Person in any manner, whether directly or indirectly or any obligation
otherwise to assure or hold harmless any other Person against any loss or cost
in respect of services rendered or products furnished and any other contingent
liability or obligation as determined in accordance with GAAP; provided,
however, that the term Contingent Liability shall not include endorsements of
negotiable instruments in the ordinary course of business.

"Default" means any event or occurrence which, with notice or lapse of time or
both, might become an Event of Default.

"Default Rate" shall have the meaning set forth in Section 2.10.

"Deposit Accounts" shall have the meaning set forth in the Uniform Commercial
Code as the same may, from time to time, be in effect in the State of Maine.

"Distributions" means, for the applicable period, the aggregate of all amounts
paid or payable (without duplication) as dividends, distributions or owner
withdrawals and includes any purchase, redemption or other retirement of any of
any Borrower's equity interests, directly or indirectly through a subsidiary of
any Borrower or otherwise and includes return of capital by any Borrower to its
equity holders; provided, however, that the following shall not be deemed to be
Distributions hereunder: (a) salary and other compensation paid to equity
holders in their capacities as employees and officers of any Borrower, (b)
expense reimbursement payable to officers of any Borrower, and (c) management
fees as may be paid by Brookwood to Hallwood in an amount not to exceed
$120,000.00 per annum.

"Documents" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Earnings" means, for any applicable period, income (loss) from continuing
operations and before all extraordinary and nonrecurring items, determined in
accordance with GAAP.

                                       3
<PAGE>

Earnings Before Interest, Taxes, Depreciation and Amortization" ("EBITDA")
means, for the trailing twelve-month period, consolidated net income (exclusive
of any extraordinary or non-recurring non-cash gains and extraordinary or
non-recurring non-cash losses and other income which is not from the continuing
operations of the Borrower) of the Borrower and its subsidiaries plus, to the
extent deducted from such consolidated net income, net interest expenses, income
taxes paid and depreciation/amortization expense, all determined in accordance
with GAAP.

"EBITDA to TFC Ratio" shall mean EBITDA divided by TFC.

"Eligible Accounts Receivable" shall have the meaning set forth in Section
2.1.8(a).

"Eligible Inventory" shall have the meaning set forth in Section 2.1.8(c).

"Equipment" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Equipment Commitment Fee" shall have the meaning set forth in Section 2.2.4.

"Equipment Revolving Credit Facility" shall have the meaning set forth in
Section 2.2.1.

"Equipment Revolving Credit Limit" means $3,000,000 from the Closing Date
through and including the Equipment Revolving Credit Facility Maturity Date.

"Equipment Revolving Credit Loans" shall have the meaning set forth in Section
2.2.1.

"Equipment Revolving Credit Facility Maturity Date" means January 30, 2007.

"Equipment Revolving Credit Note" means the promissory note in the form of
Exhibit "B".

"Equipment Revolving Credit Note Maturity Date" shall mean a date five years
from the execution of an Equipment Revolving Credit Note.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

"Event of Default" means any event specified in Section 11.

"Factor" or "Factors" as the context may require, shall mean CIT
Group/Commercial Services, Inc. and GMAC Commercial Finance, LLC, each of which
are parties to an Intercreditor Agreement with Bank.

"Factor Receivable" shall mean a receivable due from a Factor.

"Fixtures" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"GAAP" means generally accepted accounting principles in the United States of
America, consistently applied.

"General Intangibles" shall have the meaning set forth in the Uniform Commercial
Code as the same may, from time to time, be in effect in the State of Maine.

                                       4
<PAGE>

"Hallwood" shall mean The Hallwood Group Incorporated, a Delaware corporation,
having a place of business at 3710 Rawlins, Dallas, Texas 75219, of which
Brookwood is a wholly-owned subsidiary.

"Indebtedness" means (i) Indebtedness for Borrowed Money and (ii) all other
liabilities or obligations which would, in accordance with GAAP, be classified
as liabilities of such Person.

"Indebtedness for Borrowed Money" means (i) all liabilities for borrowed money,
(A) for the deferred purchase price of property or services, and (B) under
leases which are or should be, under GAAP, recorded as Capital Leases, in each
case in respect of which a Person is directly or indirectly, absolutely or
continently liable as obligor, guarantor, endorser or otherwise, or in respect
of which such Person otherwise assures a creditor against loss, and (ii) all
liabilities of the type described in (i) above which are secured by (or for
which the holder has an existing right, contingent or otherwise, to be secured
by) any Lien upon property owned by such Person, whether or not such Person has
assumed or become liable for the payment thereof.

"Instruments" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Intangible Assets" means assets that in accordance with GAAP are properly
classified as intangible assets, including, but not limited to, goodwill,
franchises, licenses, patents, trademarks, tradenames and copyrights.

"Intellectual Property" shall have the meaning set forth in Section 4.25.

"Intercreditor Agreement" shall mean each of the Intercreditor Agreements
between the Bank and each of CIT Group Commercial Services Inc. and GMAC
Commercial Finance, LLC.

"Interest" means, for the applicable period, all interest paid or payable,
including, but not limited to, interest paid or payable on Indebtedness for
Borrowed Money, determined in accordance with GAAP.

"Interest Period" shall mean, with respect to any LIBOR Loans, the period
commencing on the date such Loans are made or converted from Prime Rate Loans or
the last day of the next preceding Interest Period with respect to such Loans
and ending on the numerically corresponding day in the first, second or third
calendar month thereafter, as the Borrower may select as provided in Section 2.4
hereof, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the
Termination Date; (ii) each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day).

"Inventory" means all inventory of whatever name, nature, kind or description,
all goods held for sale or lease or to be furnished under contracts of service,
finished goods, work in process, raw materials, materials used or consumed by
Borrower, supplies, all wrapping, packaging, advertising, labeling, and shipping
materials, rights and documents relating to any of the foregoing, whether any of
the foregoing be now existing or hereafter arising, wherever located, now owned
or hereafter acquired by Borrower.

                                       5
<PAGE>

"Investment" means any transfer of property to, contribution to capital of,
acquisition of stock, other securities or evidences of indebtedness of,
acquisition of businesses or acquisition of property of any Person, other than
in the ordinary course of business.

"Investment Property" means all now owned or hereafter acquired securities,
financial assets, securities entitlements and investment property of the
Borrower, as such terms are defined in Article 9 of the UCC.

"Kenyon" shall have the meaning set forth in the preamble and is wholly-owned by
Brookwood.

"KeyCorp" means Bank's parent company having a principal place of business at
127 Public Square, Cleveland, OH 44114-1306.

"Laminating" shall have the meaning set forth in the preamble and is
wholly-owned by Brookwood.

"Land" shall have the meaning set forth in the preamble and is wholly-owned by
Brookwood.

"Letter of Credit Rights" shall have the meaning set forth in the Uniform
Commercial Code as the same may, from time to time, be in effect in the State of
Maine.

"LIBOR Loans" shall mean Revolving Loans which bear interest at a rate based
upon the LIBOR Rate.

"LIBOR Rate" shall mean, with respect to any LIBOR Loan, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of
11:00 a.m. London time on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the LIBOR Rate shall be the rate (rounded upwards as described above, if
necessary) for deposits in dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London Time), on the day that is two (2) London Banking Days prior
to the beginning of such interest period. "London Banking Day" shall mean in
respect to any city, any date on which commercial banks are open for business in
London, England.

         If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by the Bank. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two London Banking Days preceding the
first day of such LIBOR Loan. In the event that Bank is unable to obtain any
such quotation as provided above, it will be deemed that LIBOR pursuant to a
LIBOR Loan cannot be determined.

         In the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Requirement with respect to LIBOR deposits of Bank then
for any period during which such Reserve

                                       6
<PAGE>

Requirement shall apply, LIBOR shall be equal to the amount determined above
divided by an amount equal to 1 minus such Reserve Requirement.

"Lien" means any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind whatsoever, or the interest of a vendor or lessor
under a conditional sale, title retention or capital lease agreement.

"Loan" or "Loans" (as the context permits) means any or all of the Revolving
Loans.

"Loan Documents" means this Agreement, the Notes and any and all other
agreements, instruments and documents relating to, evidencing or securing the
Obligations.

"Material Adverse Effect" shall mean an effect that constitutes a material
adverse change in Borrower's financial condition, operations, business or
prospects, taken as a whole.

"Modified Following Business Day Convention" has the meaning given such term in
Section 2.12 hereof.

"Money" shall have the meaning set forth in the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of Maine.

"Non-Financed Capital Expenditures" means Capital Expenditures not financed with
additional long-term debt or Capital Leases.

"Note" or "Notes" means (as the context permits) any or all notes evidencing the
Loans, including, without limitation, the Working Capital Revolving Credit Note,
the Equipment Revolving Credit Note(s) and the Acquisition Revolving Credit
Note.

"Obligations" means all loans, advances, interest, fees, debts, liabilities,
obligations (including, without limitation, contingent obligations under
indemnities and guaranties with respect thereto), agreements, undertakings,
covenants and duties owing or to be performed or observed by Borrower to or in
favor of Bank, of every kind and description (whether or not evidenced by any
note or other instrument or arising out of this Agreement, Notes, Loan Documents
or any other agreement between Bank and any Borrower or any other instrument of
any Borrower in favor of Bank), direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including, without
limitation, all interest, fees, charges, and amounts chargeable to any Borrower
under Section 13. 1.

"Participant" has the meaning given such term in Section 15.7 hereof.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Permitted Liens" has the meaning given such term in Section 8.3.

"Person" means any individual, partnership, firm, association, business,
enterprise, trust, estate, company, joint venture, governmental authority,
corporation or other entity.

"Plan" means any employee plan subject to Title IV of ERISA maintained for
employees of any Borrower, any subsidiary of any Borrower or any other trade or
business under common control with any Borrower within the meaning of Section
414(c) of the Internal Revenue Code or the regulations thereunder.

                                       7
<PAGE>

"Prime Rate" shall mean that interest rate established from time to time by Bank
as its Prime Rate, whether or not such rate is publicly announced; and such rate
may not be the lowest interest rate charged by Bank for commercial or other
extensions of credit.

"Prime Rate Loan" shall mean any Revolving Loan bearing interest at a rate based
on the Prime Rate.

"Proceeds" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Products" shall have the meaning set forth in the Uniform Commercial Code as
the same may, from time to time, be in effect in the State of Maine.

"Reportable Event" means any reportable event as defined in ERISA.

"Reserve Requirement" shall mean for any LIBOR Loans for any Interest Period
therefor, the maximum marginal percentage prescribed by the Board of Governors
of the Federal Reserve System for determining the reserve requirements for the
Bank in respect of Eurodollar deposits having a maturity equal to the Interest
Period.

"Revolving Loans" means the loans made pursuant to Sections 2.1 and 2.2 this
Agreement.

"STA" shall have the meaning set forth in the preamble and is wholly-owned by
Brookwood.

"Subordinated Debt" means indebtedness of Borrower to any subordinated lender
that is subordinated to the prior payment and enforcement of the Obligations
pursuant to a subordination agreement, the terms and conditions of which shall
be satisfactory to Bank in its sole discretion.

"Subsidiary" means with respect to any Person, any limited liability company,
corporation, partnership, trust or other organization, whether or not
incorporated, the majority of the voting stock or voting rights of which is
owned or controlled, directly or indirectly, by such Person.

"Supporting Obligations" shall have the meaning set forth in the Uniform
Commercial Code as the same may, from time to time, be in effect in the State of
Maine.

"Tangible Net Worth" means Borrower's total assets excluding all intangible
assets (i.e., goodwill, trademarks, patents, copyrights, organizational
expenses, and similar intangible items, but including leaseholds and leasehold
improvements) less Total Debt.

"Termination Date" means the earlier of (a) January 30, 2007, or (b) a
termination of the Bank's commitments hereunder pursuant to Section 12.1.

"TFD to EBITDA Ratio" shall mean TFD divided by EBITDA.

"Total Debt" means all of Borrower's liabilities including Subordinated Debt.

"Total Debt to Tangible Net Worth Ratio" shall mean Total Debt divided by
Tangible Net Worth.

                                       8
<PAGE>

"Total Debt Service" means the sum of interest expense and scheduled payments of
principal on all long-term debt, including payments on Capital Leases and
payments on Subordinated Debt.

"Total Fixed Charges" ("TFC") means the sum of interest expense, required
payments of principal, dividends paid, income taxes paid (including state income
taxes), earn-out payments to Seller under Uzzi Purchase Agreements, and the cash
portion of Capital Expenditures for the trailing twelve month period.

"Total Funded Debt" ("TFD") means the sum of all Indebtedness for Borrowed Money
and similar monetary obligations evidenced by bonds, notes, debentures,
overdrafts, short-term debt facilities, notes payable, all liabilities secured
by any lien existing on any property owned or acquired subject thereto, whether
or not the liabilities secured shall have been assumed, all capitalized lease
obligations, all reimbursement obligations under outstanding letters of credit,
bankers acceptances and similar instruments and all guaranties and other
contingent liabilities with respect to any obligations or liabilities of the
type described above and including, without limitation, Bank debt.

"Treasury Rate" shall mean a rate per annum (computed on the basis of actual
days elapsed and a year of 360 days) equal to the rate determined by the Bank
(such determination to be conclusive, absent manifest error) on the date of such
payment to the yield on United States Treasury securities having the same term
to maturity as the remaining term of such Interest Period (such determination to
be based upon quotes obtained by the Bank from established dealers in such
market).

"UCC" means the Uniform Commercial Code, as adopted and in effect in the State
of Maine.

"Uzzi Purchase" shall mean, the acquisition by Xtra of the businesses of Uzzi
Amphibious Gear, Inc., a Florida corporation, TEK Sportswear, Inc., a Florida
corporation, and TAUB Sportswear, Inc., a dissolved Florida corporation, all of
which once had a place of business at 2315 Stirling Road, Ft. Lauderdale, FL
33312.

"Working Capital Commitment Fee" shall have the meaning given such term in
Section 2.1.4.

"Working Capital Revolving Credit Facility" shall have the meaning set forth in
Section 2.1.1.

"Working Capital Revolving Credit Limit" means $22,000,000 from the Closing Date
through and including the Working Capital Revolving Credit Maturity Date.

"Working Capital Revolving Credit Loans" shall have the meaning set forth in
Section 2.1.1.

"Working Capital Revolving Credit Maturity Date" means January 30, 2007.

"Working Capital Revolving Credit Note" means the promissory note in the form of
Exhibit "A" hereto.

"Xtra" shall have the meaning set forth in the preamble hereto and is owned by
Ashford (80%), its management (10%) and Chess (10%).

         1.2.     General. All terms used herein which are defined in Article 1
or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
the Borrower and Bank pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. Any accounting term used herein unless

                                       9
<PAGE>

otherwise defined in this Agreement shall have the meanings customarily given to
such term in accordance with GAAP. The words "hereof," "herein," "hereunder,"
"this Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

2.       LOANS.

2.1.     Working Capital Revolving Credit Facility

         2.1.1.   Availability of Credit Facility and Purpose. During the
Commitment Period, Bank shall make available to Borrower, a Working Capital
Revolving Credit Facility, in an aggregate principal amount not to exceed
$22,000,000.00 outstanding at any one time ("Working Capital Revolving Credit
Facility"), and from time to time, at Borrower's request, shall advance Working
Capital Revolving Credit Loans ("Working Capital Revolving Credit Loans") to
Borrower subject to the terms and conditions contained in this Agreement. The
proceeds of the Working Capital Revolving Credit Loans shall be used by Borrower
to finance Borrower's accounts receivables and inventory.

         2.1.2.   Working Capital Revolving Credit Note. Working Capital
Revolving Credit Loans shall be evidenced by the Working Capital Revolving
Credit Note. The Working Capital Revolving Credit Note shall be a master note,
and the principal amount of all Working Capital Revolving Loans outstanding
shall be evidenced by the Working Capital Revolving Credit Note.

         2.1.3.   Limitations on Advances. The aggregate principal amount of
Working Capital Revolving Credit Loans shall not exceed at any time the
aggregate principal amount of $22,000,000.00 outstanding at any one time, the
"Working Capital Revolving Credit Limit" and each advance shall be subject to
the limitations of the Borrowing Base referred to in Section 2.1.8.

         2.1.4.   Fees. On the Closing Date, Borrower shall pay to Bank a
nonrefundable facility modification and extension fee of $17,000.00, which shall
be deemed fully earned on the date thereof. Borrower shall also pay to Bank a
commitment fee of one quarter of one percent (0.25%) per annum up to
$19,000,000.00 and one eighth of one percent (0.125%) per annum on the remaining
$3,000,000.00 of the amount by which the Working Capital Revolving Credit Limit
exceeds the average daily principal balance of the outstanding Working Capital
Revolving Credit Loans during the immediately preceding calendar quarter (or
part thereof) during the Commitment Period, which unused credit line commitment
fee (the "Working Capital Commitment Fee") shall be payable on the first day of
each calendar quarter in arrears, commencing with March 31, 2004.

         2.1.5.   Repayment; Security. Working Capital Revolving Credit Loans
may be repaid and reborrowed during the Commitment Period. All Working Capital
Revolving Credit Loans shall be payable on the Termination Date and shall be
secured by all the Collateral.

         2.1.6.   Interest Payments. Borrower shall pay to Bank interest monthly
on the unpaid principal balance of all Working Capital Revolving Credit Loans at
the rates and in the amount calculated in accordance with Section 2.6.

         2.1.7.   Facility Maturity. The Working Capital Revolving Credit
Facility shall mature on the Working Capital Revolving Credit Maturity Date. In
no event shall Bank have any obligation to renew

                                       10
<PAGE>

the Working Capital Revolving Credit Facility after the Working Capital
Revolving Credit Maturity Date. By its execution hereof, the Borrower
represents, warrants and agrees that no representations, assurances or promises
have been made regarding any extension or renewal, or the terms of any extension
or renewal, and Borrower will not rely upon any representations, assurances or
promises unless in writing and signed by Bank.

         2.1.8.   Borrowing Base. All advances under the Working Capital
Revolving Credit Facility shall be limited by and subject to a Borrowing Base
which shall be the sum of: ninety percent (90%) of Factor Receivables, eighty
percent (80%) of Eligible Receivables, fifty percent (50%) of Eligible
Inventory, and seventy-five percent (75%) of the appraised orderly liquidation
value of Equipment (to be depreciated by 20% per year). Borrower will be able to
increase the orderly liquidation value each quarter to include additions to
Equipment at its cost as evidenced by supplier invoices. Any such additional
Equipment shall be unencumbered.

         (a) Eligible Accounts Receivable. For the purposes of determination of
         the Borrowing Base, Eligible Accounts Receivables shall be those
         Accounts Receivable ("Receivable") meeting the following criteria:

                  (1) The Receivable arose from a bona fide outright sale of
         goods or services performed under an enforceable contract, and such
         goods have been shipped to the appropriate account debtor, or the sale
         has otherwise been consummated or services have been performed for the
         appropriate account debtors in accordance with such order or contract;

                  (2) Title to the receivable is in the name of Borrower and
         such title is absolute and is not subject to any prior assignment,
         claim, lien or security interest;

                  (3) The amount shown on the books of Borrower with respect to
         the Receivable and on any invoice or statement delivered to Bank is
         owing to Borrower, and no partial payment has been made thereon by
         anyone;

                  (4) The Receivable is not the subject of any claim of
         reduction, counterclaim, set-off, recoupment, or any claim for credits,
         allowances or adjustments by the account Borrower because of returned,
         inferior or damaged goods or unsatisfactory services or for any other
         reason;

                  (5) The account debtor has not returned or refused to retain
         any of the goods from the sale out of which the Receivable arose;

                  (6) The Receivable does not arise out of a contract or order
         from an account debtor that, by its terms, forbids an assignment or
         makes the assignment of the Receivable to Bank void or unenforceable;

                  (7) Borrower has not received any note, trade acceptance,
         draft or other instrument with respect to or in payment of the
         receivable or any chattel paper with respect to the goods giving rise
         to the receivable;

                  (8) Borrower has not received any notice of the death of the
         account debtor or a partner thereof, nor of the dissolution,
         termination of existence, insolvency, business failure, appointment of
         a receiver for any part of the property of, assignment for the benefit
         of creditors by, or the filing of any petition in bankruptcy or the
         commencement of any proceeding under any bankruptcy or

                                       11
<PAGE>

         insolvency laws by or against the account debtor of Borrower (not
         including, however, a post-petition Receivable which has been ratified
         and reaffirmed by the account debtor);

                  (9) The account debtor is not an affiliate of Borrower and is
         not a subsidiary thereof, nor is it under common management or
         ownership with Borrower;

                  (10) The Receivable is not a government receivable from any
         government; provided, however, that an account payable by the United
         States government may become an Eligible Receivable after compliance
         with the Federal Assignment of Claims Act in a manner satisfactory to
         Bank;

                  (11) The Receivable is not governed by the law of a
         jurisdiction that does not (i) recognize and conform to the Uniform
         Commercial Code with respect to secured transactions, or (ii)
         acknowledge perfection of such secured transactions by the filing of a
         financing statement in the jurisdiction of the chief executive office
         of Borrower;

                  (12) The Receivable does not arise under an agreement of
         consignment, a sale or return, a sale with a right to return for
         credit, a "guaranteed sale" or any other arrangement other than an
         outright, absolute and final sale; or

                  (13) The Receivable is not an account that Bank, in its sole
         and reasonable discretion and having a rational basis therefor, has
         determined to be ineligible in whole or in part and has notified
         Borrower thereof.

         (b) Ineligible Accounts Receivable. In addition to any Receivable which
does not meet the foregoing criteria, the following Receivables are also
ineligible for the purposes of determination of the Borrowing Base:

                  (1) Any Receivable which is sixty (60) days or more past the
         due date, provided that the due date shall be no more than one-hundred
         twenty (120) days from the invoice date;

                  (2) Re-aged credits which represent previously booked
         Receivables;

                  (3) Eighty percent (80%) of "cross aged" receivables, such
         that if twenty percent (20%) or more of any account debtor's
         receivables are aged more than sixty (60) days from the due date, all
         receivables from that account debtor shall be deemed ineligible; and

                  (4) All inter-company Receivables.

         (c) Eligible Inventory. For the purposes of Borrowing Base
determination, Eligible Inventory shall mean and refer to finished roll goods
inventory valued at the lower of cost or market, and having the following
characteristics:

                  (1) title to which is vested in Borrower free and clear of any
                  prior assignment, claim, lien or security interest;

                  (2) of a type ordinarily sold by Borrower in its business and
                  acquired in the ordinary course of business for resale; and

                                       12
<PAGE>

                  (3) not subject to any consignment agreement, sale or return
                  agreement or other similar agreement in any way limiting
                  Borrower's outright ownership of said inventory.

         (d) Ineligible Inventory. In addition to any Inventory which does not
meet the foregoing criteria, the following Inventory is also ineligible for the
purposes of determination of the Borrowing Base:

                  (1) Fixtures and displays representing display racks sold to
                  customers to hold and display products of Borrower;

                  (2) Discontinued products;

                  (3) Inventory located at third party vendors;

                  (4) Proprietary packaging materials that include the name of
                  the client or which are not of standard size.

         2.1.9    Acquisition Sub-Limit. During the Commitment Period, Bank
shall permit Borrower to utilize up to $3,000,000.00 of the Working Capital
Revolving Credit Limit to finance acquisitions (the "Acquisition Sub-Limit").
Advances pursuant to the Acquisition Sub-Limit shall be subject to all terms and
conditions of the Working Capital Revolving Credit Facility.

2.2.     Equipment Revolving Credit Facility

         2.2.1.   Availability of Credit Facility and Purpose. During the
Commitment Period, Bank shall make available to Borrower an Equipment Revolving
Credit Facility, in an aggregate principal amount not to exceed $3,000,000.00
outstanding at any one time ("Equipment Revolving Credit Facility"), and shall,
from time to time, at Borrower's request, advance Equipment Revolving Credit
Loans ("Equipment Revolving Credit Loans") to Borrower, subject to the terms and
conditions of this Agreement. Equipment Revolving Credit Loans shall be used by
Borrower to finance the purchase or lease of equipment for Borrower's ongoing
operations.

         2.2.2.   Equipment Revolving Credit Notes. Each advance under the
Equipment Revolving Credit Facility shall be evidenced by separate promissory
notes, individually an "Equipment Revolving Credit Note" and collectively, the
"Equipment Revolving Credit Notes".

         2.2.3.   Limitation on Advances. Advances under the Equipment Revolving
Credit Facility shall be limited to the lesser of:

         (a)      eighty percent (80%) of the invoice value for equipment
                  purchases, one hundred percent (100%) of the accepted
                  collateral value for equipment lease financing, or

         (b)      the remaining availability under the Equipment Revolving
                  Credit Facility.

         2.2.4.   Fees. On the Closing Date, Borrower shall pay to Bank an
additional non-refundable facility modification and extension fee of $3,000.00,
which shall be deemed fully earned on the date thereof.

         2.2.5.   Repayment of Equipment Revolving Credit Loans; Security.

                                       13
<PAGE>

                  (a)      Term; Security. Each Equipment Revolving Credit Note
         shall have a term of five years from the date of execution thereof and
         Borrower promises to pay and there shall become absolutely due and
         payable on the earlier of the Equipment Revolving Credit Note Maturity
         Date or the termination of the Bank's commitments hereunder pursuant to
         Section 12.1, all principal of such Equipment Revolving Credit Note
         outstanding on such date, together with any and all accrued and unpaid
         interest and other charges, if any, thereon. All Equipment Revolving
         Credit Loans shall be secured by all the Collateral.

                  (b)      Principal Monthly Payments. Each Equipment Revolving
         Credit Note shall be repaid in consecutive, fixed monthly installments
         of principal, in accordance with an amortization period of five years,
         commencing one (1) month from the date of such Equipment Revolving
         Credit Note, and continuing on the 1st Business Day of each month
         thereafter, plus accrued interest.

                  (c)      Optional Prepayment of Equipment Revolving Credit
         Notes. Borrower shall have the right at any time to prepay any
         Equipment Revolving Credit Note on or before such Equipment Revolving
         Credit Note Maturity Date, as a whole, or in part, upon not less than
         five (5) Business Days prior written notice to Bank, without premium or
         penalty, except for LIBOR breakage costs. Any prepayment of principal
         of any Equipment Revolving Credit Note shall be applied against the
         scheduled installments of principal due on such Equipment Revolving
         Credit Note in inverse order of maturity.

         2.2.6    Interest. Borrower shall pay to the Bank interest monthly on
the unpaid principal balance of each Equipment Revolving Credit Note at the
rates and in the amounts calculated in accordance with Section 2.6.

         2.2.7.   Facility Maturity. The Equipment Revolving Credit Facility
shall mature on the Equipment Revolving Credit Facility Maturity Date. Any
Equipment Revolving Credit Note executed prior to the Equipment Revolving Credit
Facility Maturity Date shall be repaid by Borrower in accordance with its
remaining term. In no event shall Bank have any obligation to renew the
Equipment Revolving Credit Facility after the Equipment Revolving Credit
Facility Maturity Date. By its execution hereof, the Borrower represents,
warrants and agrees that no representations, assurances or promises have been
made regarding any extension or renewal, or the terms of any extension or
renewal, and Borrower will not rely upon any representations, assurances or
promises unless in writing and signed by Bank.

         2.3.     [RESERVED]

         2.4.     Borrowing Procedures.

         Notices to Bank of borrowings and conversions of Revolving Loans and of
the duration of Interest Periods with respect to LIBOR Loans shall be
irrevocable and shall be effective only if received by Bank in writing not later
than: (A) with respect to borrowings of Prime Rate Loans, prior to 11:00 a.m.
(Portland, Maine time) on the Business Day of the relevant borrowing, or, (B)
with respect to the borrowing of, conversion of or into, or duration of Interest
Period for, LIBOR Loans, two (2) Business Days prior to the date of the relevant
action.

         Each notice of borrowing or conversion shall be delivered to Bank by
Borrower and shall specify the amount of the Revolving Loans to be borrowed or
converted, the date of borrowing or conversion (which shall be a Business Day)
and, in the case of LIBOR Loans, the duration of the Interest Period

                                       14
<PAGE>

therefor. Each such notice of duration of an Interest Period shall specify the
LIBOR Loans to which such Interest Period is to relate. In the event that the
Borrower fails to select the duration of any Interest Period for any LIBOR Loans
within the time period and otherwise as provided in this Section 2.4, such
Revolving Loans (if outstanding as LIBOR Loans) will be automatically converted
into Prime Rate Loans on the last day of the then current Interest Period for
such Revolving Loans or (if outstanding as Prime Rate Loans) will remain as, or
(if not then outstanding) will be made as, Prime Rate Loans. Each Prime Rate
Loan shall be in a minimum amount of $100,000 and each LIBOR Loan shall be in a
minimum amount of $100,000 and in integral multiples of $100,000 in excess
thereof.

         2.5.     LIBOR Loans.

         (a) Optional Conversions of Revolving Loans. Borrower shall have the
right to convert LIBOR Loans into Prime Rate Loans, or to convert Prime Rate
Loans into LIBOR Loans, at any time or from time to time, provided that: (i)
Borrower shall give Bank notice of each such conversion as provided in Section
2.4 hereof, and (ii) the conversion of any LIBOR Loan shall be subject to
Section 2.5(d) hereof. In the absence of such conversion, a Revolving Loan shall
be a Prime Rate Loan.

         (b) Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, with respect to any LIBOR Loans Bank determines (which
determination shall be conclusive) that the relevant rates of interest referred
to in the definition of "LIBOR Rate" in Section 1 hereof upon the basis of which
the rates of interest for such Revolving Loans are to be determined do not
accurately reflect the cost to Bank of making or maintaining such Revolving
Loans for Interest Periods therefor; then Bank shall promptly notify Borrower
(in the same manner in which Bank notifies its other customers with LIBOR loan
facilities), and so long as such condition remains in effect, Bank shall be
under no obligation to make LIBOR Loans or to convert Prime Rate Loans into
LIBOR Loans and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding LIBOR Loans, convert such Revolving Loans into
Prime Rate Loans in accordance with Section 2.5(a) hereof.

         (c) Illegality. Notwithstanding any other provision of this Agreement
to the contrary, in the event that it becomes unlawful for Bank to (a) honor its
obligation to make LIBOR Loans hereunder, or (b) maintain LIBOR Loans hereunder,
then Bank shall promptly notify Borrower thereof (in the same manner in which
the Bank notifies its other customers with LIBOR loan facilities), and Bank's
obligation to make LIBOR Loans hereunder shall be suspended until such time as
Bank may again make and maintain LIBOR Loans (in which case the provisions of
Section 2.5(d) hereof shall be applicable).

         (d) Substitute Prime Rate Loans. If the obligation of Bank to make
LIBOR Loans shall be suspended pursuant to Sections 2.5(b), 2.5(c) or 2.5(f)
hereof, all Loans which would otherwise be made by Bank as LIBOR Loans shall be
made instead as Prime Rate Loans (and, if an event referred to in Sections
2.5(b), 2.5(c) or 2.5(f) hereof has occurred and Bank so requests by notice to
Borrower, each LIBOR Loan of Bank then outstanding shall be automatically
converted into a Prime Rate Loan on the date specified by Bank in such notice)
and, to the extent that LIBOR Loans are so made as (or converted into) Prime
Rate Loans, all payments of principal which would otherwise be applied to such
LIBOR Loans shall be applied instead to such Prime Rate Loans.

         (e) Compensation for LIBOR Rate Loans. Borrower shall pay to Bank, upon
the request of Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of Bank) to compensate it for any loss, cost or expense
incurred by it as a result of:

                                       15
<PAGE>

               (i) any payment, prepayment or conversion of a LIBOR Loan made by
         Bank on a date earlier than the last day of an Interest Period for such
         Loan; or

               (ii) any failure by Borrower to borrow a LIBOR Loan to be made by
         Bank on the date of such borrowing specified in the relevant notice of
         borrowing under Section 2.4 hereof if Borrower fails to rescind such
         notice at least one (1) Business Day prior to the specified borrowing
         debt;

                  such compensation to include, without limitation, an amount
equal to the excess, if any, of (i) the LIBOR Rate applicable to the principal
amount so repaid, over (ii) the interest which would be earned by reinvesting
the repaid amount at the Treasury Rate for the applicable Interest Period. A
statement of Bank setting forth the formula applied to determine any amount
necessary to compensate Bank under this section shall be delivered to Borrower
and shall be conclusive, except in the case of manifest error, as to such
determination and such amount. Notwithstanding anything to the contrary
contained herein, Bank shall not be required to purchase Dollar deposits in the
London interbank market to fund any LIBOR Loans and the provisions hereof shall
be deemed to apply as if Bank had purchased such deposits to fund the LIBOR
Loans.

         (f)  Additional Costs.

              (i) Borrower shall pay to Bank from time to time such amounts as
Bank may determine to be reasonably necessary to compensate it for any costs
incurred by Bank which Bank determines are attributable to its making or
maintaining of any LIBOR Loans hereunder or its obligation to make any of such
LIBOR Loans hereunder, or any reduction in any amount receivable by Bank
hereunder in respect of any of such LIBOR Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any regulatory change in applicable
statutes, regulations, rules, orders, or decrees applicable to Bank (a
"Regulatory Change") which:

                  (A)      changes the basis of taxation of any amounts payable
                  to Bank under this Agreement or its Note in respect of any of
                  such Revolving Loans (other than changes which affect taxes
                  measured by or imposed on the overall net income of Bank); or

                  (B)      imposes or modifies any reserve, special deposit,
                  insurance assessment or similar requirements relating to any
                  extensions of credit or other assets of, or any deposits with
                  or other liabilities of, Bank to Borrower; or

                  (C)      imposes any other condition affecting this Agreement
                  (or any of such extensions of credit or liabilities).

         Bank will notify Borrower of any event occurring after the date of this
Agreement which will entitle Bank to compensation pursuant to this Section
2.5(f) as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Bank will furnish Borrower with a
statement setting forth the basis and amount of each request by Bank for
compensation under this Section 2.5(f). If Bank requests compensation from
Borrower under this Section 2.5(f), the Borrower may, by notice to Bank, suspend
the obligation of Bank to make additional LIBOR Loans to Borrower until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 2.5(f) hereof shall be applicable).

                  (ii) Without limiting the effect of the foregoing provisions
of this Section

                                       16
<PAGE>

2.5(f), in the event that, by reason of any regulatory change, Bank either (1)
incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of Bank which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of Bank which includes LIBOR Loans, or (2) becomes subject
generally to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if Bank so elects by notice to Borrower, the
obligation of Bank to make or continue, or to convert Prime Rate Loans into
LIBOR Loans hereunder shall be suspended until the date Bank withdraws such
notice or such Regulatory Change ceases to be in effect (in which case the
provisions of Section 2.5(d) hereof shall be applicable).

                  (iii) Determinations and allocations by Bank for purposes of
this Section 2.5(f) of the effect of any regulatory change on its costs of
maintaining its obligations to make Revolving Loans or of making or maintaining
Revolving Loans or on amounts receivable by it in respect of Revolving Loans,
and of the additional amounts required to compensate Bank in respect of any
Additional Costs, shall be conclusive absent manifest error.

         2.6. Interest and Payments.

                  2.6.1. Interest Rate Pricing Formula for Working Capital
Revolving Credit Loans. The Working Capital Revolving Credit Loans shall bear
interest calculated on the basis of a 360-day year and the actual number of days
elapsed and payable monthly in arrears for the periods from the Borrowing Dates
thereof on the unpaid principal amount thereof from time to time outstanding at
a rate per annum equal to the applicable rate and pricing formula indicated
below:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
TIER               TFD:EBITDA                     LIBOR +                 PRIME RATE +
----------------------------------------------------------------------------------------------
<S>            <C>                                <C>                     <C>
  1                  >=3.25x                       3.00%                      0.25%
----------------------------------------------------------------------------------------------
  2            >=3.00x and <3.25x                  2.50%                      0.25%
----------------------------------------------------------------------------------------------
  3            >=2.50x and <3.00x                  2.25%                      0.25%
----------------------------------------------------------------------------------------------
  4            >=2.00x and <2.50x                  2.00%                      0.25%
----------------------------------------------------------------------------------------------
  5                  <2.00x                        1.75%                      0.25%
----------------------------------------------------------------------------------------------
</TABLE>

                  2.6.2. Interest Rate Pricing Formula for Equipment Revolving
Credit Loans. The Equipment Revolving Credit Loans shall bear interest
calculated on the basis of a 360-day year and the actual number of days elapsed
and payable monthly in arrears for the periods from the Borrowing Dates thereof
on the unpaid principal amount thereof from time to time outstanding at a rate
per annum equal to the applicable rate and pricing formula indicated below:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
TIER               TFD:EBITDA                     LIBOR +                 PRIME RATE +
----------------------------------------------------------------------------------------------
<S>            <C>                                <C>                     <C>
  1                  >=3.25x                       3.00%                      0.25%
----------------------------------------------------------------------------------------------
  2            >=3.00x and <3.25x                  2.50%                      0.25%
----------------------------------------------------------------------------------------------
  3            >=2.50x and <3.00x                  2.25%                      0.25%
----------------------------------------------------------------------------------------------
  4            >=2.00x and <2.50x                  2.00%                      0.25%
----------------------------------------------------------------------------------------------
  5                  <2.00x                        1.75%                      0.25%
----------------------------------------------------------------------------------------------
</TABLE>

                                       17
<PAGE>

                  2.6.3.   Interest Rate Pricing. Interest rate pricing is to be
based upon trailing twelve month EBITDA to be determined quarterly upon receipt
by Bank of quarterly management-prepared financial statements and fiscal
year-end audited financial statements. With respect to the Equipment Revolving
Credit Loans, the following additional terms and conditions shall apply:

                  (i)      Bank shall also make available to Borrower a fixed
         rate option based upon Key Equipment Finance market rate pricing then
         in effect; and

                  (ii)     When a new equipment lease is put into effect, it
         will be priced pursuant to the most recent quarterly
         management-prepared financial statements received by Bank, and that
         pricing will remain in effect for the duration of the lease.

                  2.6.4.   LIBOR Rate Selection. Upon determination of the LIBOR
Rate for any Interest Period selected by Borrower, Bank shall promptly notify
Borrower thereof by telephone or in writing. Such determination shall, absent
manifest error, be final, conclusive and binding on all parties for all
purposes. Following and during the continuance of an Event of Default, interest
on all Loans shall accrue at the Default Rate and be paid on demand.

                  2.6.5.   Interest Payment Date. Accrued interest on each Loan
shall be payable monthly in arrears on the first Business Day of each month.
Interest on LIBOR Loans shall be due at the conclusion of the Interest Period
but in no event later than ninety (90) days from the date of the LIBOR Loan.

                  2.6.6.   Prime Rate. The effective interest rate applicable to
the Prime Rate Loans shall change on the date of each change in the Prime Rate.

         2.7.     Payments. Principal and interest on all Loans and payments on
all Obligations, other than payments made pursuant to the ATF Agreement, shall
be payable at Bank's office at 176 Federal Street, 3rd Floor, Boston,
Massachusetts in lawful money of the United States of America in immediately
available funds without set-off, deduction or counterclaim. Borrower authorizes
Bank to debit its deposit account(s) with Bank for all payments due hereunder,
whether for principal, interest or other amounts payable on account of the
Obligations. Bank will notify Borrower in writing after such debits are made.

         2.8.     Limitation on Interest. All agreements between Borrower and
Bank are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the
use or the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof, provided, however that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement shall be governed by such new law as of
its effective date. In this regard, it is expressly agreed that it is the intent
of Borrower and Bank in the execution, delivery and acceptance of the Notes to
contract in strict compliance with the laws of the State of Maine and any other
applicable state from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents at the time of performance of such

                                       18
<PAGE>

provision shall be due, shall involve transcending the limit of such validity
prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
circumstances whatsoever Bank should ever receive as interest an amount which
would exceed the then highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Bank.

         2.9.     Late Charges. If the entire amount of any required principal,
interest or other payment hereunder is not paid in full within fifteen (15) days
after the same is due, Borrower shall pay to Bank a late fee equal to five
percent (5%) of the required payment.

         2.10.    Default Rate. Without limitation of Bank's other rights and
remedies, upon the earlier to occur of an Event of Default (as provided in
Section 12) or the close of business on the Termination Date, Borrower's right
to select pricing options shall cease, and the unpaid principal of all
Obligations shall, at the option of Bank, bear interest at a rate per annum
equal to four percent (4%) in excess of the highest applicable interest rate
(the "Default Rate").

         2.11.    One Obligation. The Working Capital Revolving Credit Loans,
the Equipment Revolving Credit Loans and other Obligations shall constitute one
obligation of Borrower, and the commitments of Bank to make the Working Capital
Revolving Credit Loans and the Equipment Revolving Credit Loans to Borrower
cannot be separately or individually terminated by Borrower. In the event that
the Borrower intends to terminate any of Bank's commitments hereunder, the
Borrower shall give the Bank thirty (30) days prior irrevocable written notice
thereof and shall repay all the Obligations on the effective date of such
termination.

         2.12.    Modified Following Business Day Convention. The term "Modified
Following Business Day Convention" means the convention for adjusting any
relevant date if it would not otherwise fall on a day that is not a Business
Day. All dates specified for payments to be made under this Agreement shall be
subject to the Modified Following Business Day Convention. The following terms,
when used in conjunction with the term "Modified Following Business Day
Convention" and a date shall mean that an adjustment will be made if that date
would otherwise fall on a day that is not a Business Day so that the date will
be the first following day that is a Business Day; provided that, in connection
with determining the last day of an Interest Period for a LIBOR Loan, if the
first following day that is a Business Day falls in the next succeeding calendar
month, then an adjustment will be made so that the date will be the next
preceding Business Day. A "Business Day" means, in respect of any date that is
specified in this Agreement to be subject to adjustment in accordance with
applicable Business Day Convention, a day on which commercial banks settle
payments in New York or, if the payment obligation is calculated with reference
to the LIBOR Rate, in London.

3.       GRANT OF SECURITY INTEREST. As security for the prompt performance,
observance and payment in full of all Obligations, Borrower hereby grants to
Bank a continuing first priority, perfected security interest in and lien on and
assigns, transfers, sets over and pledges to the Bank all business assets,
properties and rights of Borrower, whether now owned by Borrower or hereafter
acquired or existing, and wherever located (collectively, the "Collateral"),
including, without limitation, the following:

                           (a)      Accessions;

                           (b)      Accounts (including health-care insurance
                                    receivables);

                                       19
<PAGE>

                           (c)      Chattel Paper (whether tangible or
                                    electronic);

                           (d)      Commercial Tort Claims;

                           (e)      Deposit Accounts;

                           (f)      Documents;

                           (g)      Equipment;

                           (h)      Fixtures;

                           (i)      General Intangibles (including payment
                                    intangibles);

                           (j)      Instruments (including promissory notes);

                           (k)      Inventory;

                           (l)      Investment Property (including all
                                    securities);

                           (m)      Letter-of-Credit Rights (whether or not the
                                    letter-of-credit is evidenced by a writing);

                           (n)      Money (including contract rights or rights
                                    to the payment of money);

                           (o)      Supporting Obligations;

                           (p)      Contracts (as set forth in Schedule 3);

                           (q)      Hallwood's shares of stock in Brookwood;

                           (r)      Brookwood's shares of stock in Kenyon;

                           (s)      Brookwood's shares of stock in Laminating;

                           (t)      Brookwood's shares of stock in Ashford;

                           (u)      Brookwood's shares of stock in Land;

                           (v)      Brookwood's membership interest in STA;

                           (w)      Ashford's shares of stock in Xtra;

                           (x)      To the extent not listed as Original
                                    Collateral, Proceeds and Products of all of
                                    the foregoing.

         The term "Collateral" shall also refer to and include any other
property in which Bank is granted a Lien to secure any of the Obligations
pursuant to an agreement supplemental hereto or otherwise (whether or not such
agreement makes reference to this Agreement or the Obligations of Borrower
hereunder).

                                       20
<PAGE>

4.       REPRESENTATIONS AND WARRANTIES. Borrower jointly and severally
represents and warrants (and at the time of each Loan hereunder shall be deemed
to represent and warrant) for itself and for each other Borrower to Bank as
follows:

         4.1.     Organization, Existence and Good Standing. Each Borrower (i)
is a duly organized, validly existing and in good standing under the laws of the
State of Delaware, (ii) has obtained all material licenses, permits, approvals
and consents and has filed all registrations necessary for the lawful operation
of its business, (iii) has the power and authority and the legal right to own,
lease and operate its property and to conduct the business in which it is
currently engaged, and (iv) is duly qualified to do business and is in good
standing as a foreign entity in each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect. Schedule 4.1 lists all states and other locations where
Borrower is qualified or authorized to do business.

         4.2.     Consents. No consent, permit, license, approval or
authorization of, or registration, declaration or filing with or notice to, any
governmental authority, bureau or agency or any other Person is required in
connection with the execution, delivery or performance by Borrower, or the
validity or enforceability against Borrower, of any Loan Document to which it is
a party, except for the consents and approvals which have been obtained and are
listed on Schedule 4.2.

         4.3.     No Legal Bar. The execution, delivery and performance by
Borrower of the Loan Documents, and each agreement, certificate, document,
instrument or other paper delivered pursuant thereto, to which Borrower is a
party, does not conflict with or cause a breach of any provision of any existing
law, rule or regulation, order, judgment, award or decree of any court,
arbitrator or governmental authority, bureau or agency, or of its charter or
organizational documents, or any security issued by Borrower or of any material
mortgage, deed of trust, indenture, lease, contract or other agreement or
undertaking to which Borrower is a party or by which any of its properties may
be bound, and will not result in the creation or imposition of any Lien on
Borrower's revenues or properties, except in favor of Bank.

         4.4.     Compliance with Charter and Agreements. Borrower (i) is
subject to no charter, organizational or other legal restriction, or any
judgment, award, decree, order, governmental rule or regulation or contractual
restriction which could have a Material Adverse Effect, and (ii) is in material
compliance with its charter or organizational documents and all contractual
requirements of a material nature by which it or any of its properties may be
bound.

         4.5.     Negative Pledges. Neither Borrower nor any of its Subsidiaries
is a party to or bound by any agreement, indenture, or other instrument which
prohibits the creation, incidence or allowance to exist of any mortgage, deed of
trust, pledge, lien, security interest or other encumbrance or conveyance upon
any of Borrower's property.

         4.6.     Title to Property. Borrower has good and marketable title to,
or valid leasehold interests in, all of the assets reflected in the balance
sheet (referred in 4.12), including, without limitation, the Collateral, and all
such assets are subject to no Liens except (i) in favor of Bank, or (ii)
Permitted Liens.

         4.7.     Books and Records. All of Borrower's charter documents have
been duly filed and are in proper order. All of Borrower's books and records,
including without limitation, minute books and books of account, are accurate
and up-to-date.

                                       21
<PAGE>

         4.8.     Power and Authority; Due Execution. Borrower has (i) full
power, authority and legal right to execute, deliver and perform its obligations
under the Loan Documents to which it is a party and to borrow hereunder, (ii)
taken all necessary actions to authorize the execution, delivery and performance
by Borrower of each Loan Document to which such Borrower is a party and to
authorize its borrowings hereunder, and (iii) caused to be duly executed and
delivered on behalf of such Borrower each of the Loan Documents to which
Borrower is a party.

         4.9.     Legal, Valid, Binding Obligation. Each of the Loan Documents
and each agreement, certificate, document, instrument or other paper to which
Borrower is a party, constitute the legal, valid, and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.

         4.10.    Name. Borrower's exact legal name is as set forth at the end
of this Agreement and Borrower has not used or been known by or is using any
fictitious or other name or trade name or style, except as set forth on Schedule
4.10 hereto.

         4.11.    Subsidiaries and Investments. Except as set forth on Schedule
4.11 hereto, Borrower has no Subsidiaries or Investments in any other Person.
Schedule 4.11 accurately sets forth the authorized capitalization and the number
of issued and outstanding membership interests and/or shares of stock for the
Borrower and each Subsidiary of Borrower.

         4.12.    Financial Statements, No Change. The balance sheet of Borrower
as of September 30, 2003 attached as Schedule 4.12 hereto was prepared in
accordance with GAAP and fairly presents Brookwood's financial position as at
the date thereof, after giving effect to the initial Loans to be made hereunder.
Since the date thereof there has occurred no change that would have a Material
Adverse Effect.

         4.13.    Taxes. Borrower has made or filed all tax returns, reports and
declarations relating to any material tax liability required by any jurisdiction
to which it is subject (any tax liability which may result in a Lien on any
Collateral, other than a Permitted Lien, being hereby deemed material); has paid
all taxes shown or determined to be due thereon except those being contested in
good faith; and has made adequate provision for the payment of all taxes so
contested. The federal tax identification number of Borrower is set forth on
Schedule 4.13 hereto.

         4.14.    Litigation. Except as set forth on Schedule 4.14 hereto, there
is no action, suit, proceeding or investigation pending before or by any court
or other governmental authority or, to Borrower's knowledge, threatened against
or affecting (i) the Loan Documents or the transactions contemplated herein or
(ii) the Borrower or any of Borrower's assets which, if determined adversely to
Borrower, would have a Material Adverse Effect.

         4.15.    Chief Executive Office. Borrower's chief executive office and
the office where it keeps its books and records and records concerning its
Accounts and other places of business or locations where it keeps, maintains,
processes or stores its assets is set forth on Schedule 4.15 hereto. Borrower
has no other place of business or place where assets are kept, maintained,
processed or stored.

         4.16.    ERISA. All Plans of Borrower are set forth on Schedule 4.16
hereto. Borrower, all Commonly Controlled Entities, and all their Plans are and
have been in substantial compliance with the provisions of ERISA, the
qualification requirements of IRC Section 401(a), and the published
interpretations thereunder. No notice of intent to terminate a Plan has been
filed under Section 4041 of ERISA, nor has any Plan been terminated under
Section 4041(e) of ERISA which resulted in substantial

                                       22
<PAGE>

liability to Borrower or any of its Commonly Controlled Entities. The PBGC has
not instituted proceedings to terminate, or appointed a trustee to administer, a
Plan and no event has occurred or condition exists which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan. Neither Borrower nor any Commonly
Controlled Entities would be liable for any amount pursuant to Sections 4063 or
4064 of ERISA if all Plans terminated as of the most recent valuation dates of
such Plans. Neither Borrower nor any Commonly Controlled Entities has: withdrawn
from a multi-employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; or failed to make a payment
to a Plan required under Section 302(f)(1) of ERISA such that security would
have to be provided pursuant to Section 307 of ERISA. No lien upon the assets of
Borrower has arisen with respect to a Plan. To the best knowledge of Borrower,
no prohibited transaction or Reportable Event has occurred with respect to a
Plan. Borrower and each Commonly Controlled Entity has made all contributions
required to be made by them to any Plan or multi-employer Plan when due. There
is no accumulated funding deficiency in any Plan, whether or not waived.

         4.17.    No Default. Neither Borrower nor any of Borrower's
Subsidiaries is in default in any respect in the payment or performance of any
of its Indebtedness for Borrowed Money or under any mortgage, deed of trust,
indenture, lease, contract or other agreement or undertaking to which it is a
party or by which it or any of its property may be bound or affected and no
Default or Event of Default has occurred and is continuing. Neither Borrower nor
any of Borrower's Subsidiaries is in default under any order, award or decree of
any court, arbitrator or governmental authority binding upon or affecting it or
by which any of its property may be bound or affected, and no such order, award
or decree has or could reasonably be expected to have a Material Adverse Effect.

         4.18.    No Burdensome Restrictions. Neither Borrower nor any of
Borrower's Subsidiaries is a party to or bound by any contract, agreement or
instrument or subject to any corporate restriction (including any restriction
set forth in its charter, By-Laws or other governing document) or order, award
or decree of any court, arbitrator or governmental authority that would have a
Material Adverse Effect.

         4.19.    Regulation U; Etc. Neither Borrower nor any of Borrower's
Subsidiaries is engaged or will 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 Regulations U, T, or X of the Board of Governors of the
Federal Reserve System and any successors thereto as now and from time to time
hereafter in effect), and no part of the proceeds of any Loan hereunder will be
used for "purchasing" or "carrying" any "margin stock" as so defined or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation U or Regulation G of the Federal Reserve Board.

         4.20.    Investment Company Act; Etc. Borrower is not an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, or a company "Controlled" (within the meaning of such Investment
Company Act) by such an "investment company". Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or to any other federal or state statute or regulation limiting
Borrower's ability to borrow money.

         4.21.    Indebtedness. Except as set forth in Schedule 4.21, neither
Borrower nor any of Borrower's Subsidiaries has Indebtedness of any type except
Indebtedness incurred under this Agreement and that which is permitted under
Section 8.2 of this Agreement.

                                       23
<PAGE>

         4.22.    Compliance with Laws. Except as set forth on Schedule 4.22
hereto, Borrower is in compliance in all material respects with all laws, rules
and regulations, orders of court or other governmental bodies, applicable to it
including, without limitation, all environmental, health and safety statutes and
regulations and specifically the Federal Resource Conservation and Recovery Act,
the Federal Comprehensive Environmental Response, Compensation and Liability
Act, the Federal Clean Water Act, the Clean Air Act, the requirements and
regulations of the Nuclear Regulatory Commission, the Federal Food, Drug and
Cosmetic Act, and the Federal Occupational Safety and Health Act. Borrower is
not subject to any judicial or administrative proceedings alleging the violation
of any applicable law or regulation. Borrower, to the best of Borrower's
knowledge, is not the subject of any federal, state or local investigation
regarding, among other matters, the release of any hazardous or toxic chemical,
material, or substance or oil into the environment, the results of which could
have a Material Adverse Effect. Borrower has not filed any notice under any
applicable law indicating past or present treatment, storage, disposal,
generation, transportation or reporting a spill or release into the environment
of any hazardous or toxic chemical, material or substance or oil into the
environment which could reasonably be expected to have a Material Adverse Effect
on Borrower's financial condition business, prospects or the value of the
Collateral. Neither Borrower nor, to the knowledge of Borrower, any other owner
of any real property owned or used by or on behalf of Borrower or such other
owner, has placed or disposed of, used, generated or transported any hazardous
or toxic chemical, material or substance or oil, in violation of any applicable
law or regulation, upon or over any of Borrower's real property and Borrower or
such other owner, as the case may be, has no knowledge of such hazardous or
toxic chemical, material or substance or oil on such real property.

         4.23.    Contingent Liabilities. Except as set forth on Schedule 4.23
hereto, Borrower has no Contingent Liabilities.

         4.24.    Bonds; Indemnities. Except as set forth on Schedule 4.24
hereto, Borrower is not obligated under any surety or similar bond, indemnity or
other contract issued nor has Borrower entered into or any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person.

         4.25.    Intellectual Property. Borrower owns or licenses the rights to
intellectual property necessary or used in the operation of its businesses (the
"Intellectual Property"). All of such Intellectual Property is listed on
Schedule 4.25 hereto. Except as set on Schedule 4.25, none of such Intellectual
Property is subject to any license or agreement for use by any other Person.

         4.26.    Leases. Schedule 4.26 hereto is a complete listing of all
capital leases and operating leases of Borrower. All such leases are in full
force and effect and no material default has occurred thereunder.

         4.27.    Labor Contracts/Relations. Except as described in Schedule
4.27 hereto, Borrower is not a party to any collective bargaining agreement.
There are no material grievances, disputes or controversies with any union or
any other organization of Borrower's employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization.

         4.28.    Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially and
adversely affect Borrower or prevent Borrower from

                                       24
<PAGE>

conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.

         4.29.    Capitalization.

                  (a)      All of the issued and outstanding stock of Borrower
                  is directly and beneficially owned and held by the Persons
                  listed on Schedule 4.29 hereto and all of such stock has been
                  duly authorized and is fully paid and non-assessable, free and
                  clear of all claims, liens, pledges and encumbrances of any
                  kind, except as set forth in Schedule 4.29.

                  (b)      Borrower is solvent and will continue to be solvent
                  after the creation of the Obligations, the security interests
                  of Bank and the other transactions contemplated hereunder, is
                  able to pay its debts as they mature and has (and has reason
                  to believe it will continue to have) sufficient capital (and
                  not unreasonably small capital) to carry on its business and
                  all businesses in which it is about to engage. The assets and
                  properties of Borrower at a fair valuation and at their
                  present fair salable value as part of a business going concern
                  are, and will be, greater than the Indebtedness of Borrower,
                  and including subordinated and contingent liabilities computed
                  at the amount which, to the best of Borrower's knowledge,
                  represents an amount which can reasonably be expected to
                  become an actual or matured liability.

         4.30.    Real Property. All of the real property owned or leased by
Borrower is listed on Schedule 4.30 (the "Real Property"). Borrower has good
record and marketable title in fee simple to all owned Real Property, and a
valid leasehold interest in all leased Real Property, free and clear of any and
all Liens, except Permitted Liens, and all such Liens are set forth on Schedule
8.3.

         4.31.    Accuracy of Information. All information furnished by or on
behalf of Borrower in writing to Bank in connection with the Loan Documents and
the transactions contemplated hereunder is true and correct in all material
respects on the date of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has or could reasonably
be expected to have a Material Adverse Effect, which has not been fully and
accurately disclosed to Bank in writing.

         4.32.    Business Purpose of Loans. The Working Capital Revolving
Credit Loans and the Equipment Revolving Credit Loans are loans for business and
commercial purposes of Borrower.

5.       BORROWER'S REPORTS AND NOTICES. Borrower will deliver to Bank:

         5.1.     Annual Financial Statements. Annually, as soon as available
but in any event within one hundred twenty (120) days after the last day of each
fiscal year of Borrower, an audited consolidated and consolidating financial
statement of Borrower including, without limitation, audited consolidated and
consolidating balance sheets of Borrower as at the end of such year and audited
consolidated and consolidating statements of income and retained earnings and of
cash flow of Borrower prepared in accordance with GAAP accurately and fairly
reflecting the results of its operations during such year prepared by and with
an unqualified opinion thereon from Borrower's independent certified public
accountants.

         5.2.     Annual Financial Budgets. Annually, as soon as available but
in any event prior to March 31 of each year, consolidated and consolidating
financial projections and a management-prepared budget

                                       25
<PAGE>

for Borrower on a monthly basis for each following year, with segment detail and
explanation of key assumptions.

         5.3.     Quarterly Financial Statements. Quarterly, as soon as
available but in any event within forth-five (45) days after the end of such
quarterly period, unaudited consolidated and consolidating financial statements,
including, without limitation, consolidated and consolidating balance sheets and
unaudited consolidated and consolidating income statements and retained earnings
for the fiscal quarter and year to date and unaudited consolidated statements of
cash flow of Borrower prepared in accordance with GAAP subject to year-end audit
adjustments, certified as true and correct by Borrower's Chief Financial
Officer, which quarterly statements shall compare actual period results with
results for the same period for the prior year and with budget.

         5.4.     Quarterly Compliance Certificate. Simultaneously with the
delivery of the financial statements described in Sections 5.1 and 5.3, a
Compliance Certificate in the form of Exhibit E hereto, certified by the Chief
Financial Officer of Brookwood, and setting forth in reasonable detail
computations evidencing compliance with the covenants in Section 9, along with
supporting schedules.

         5.5.     Monthly Reports. Monthly, as soon as available but in any
event within twenty (20) days after the end of each month, a Monthly Borrowing
Base Certificate for each Borrower, executed by the president and/or chief
financial officer of each respective Borrower, in the form attached as Exhibit
D, along with an Accounts Receivable Aging Report and an Accounts Payable Aging
Report.

         5.6      Semi-Annual Field Exam. Semi-annually, Bank shall be entitled
to conduct a commercial field examination, the reasonable costs and expenses of
which shall be paid for by Borrower.

         5.7.     Additional Information. Promptly, after reasonable notice
thereof from Bank, such other information concerning Borrower, the Collateral,
the operation of Borrower's business or its financial condition and copies of
such governmental filings and other documentation as Bank may from time to time
reasonably request;

         5.8.     Notices. Immediately, notice of:

                  (a)      any Default or Event of Default;

                  (b)      the institution or commencement of any action, suit,
                  proceeding or investigation against or affecting Borrower or
                  any of its assets which, if determined adversely to Borrower,
                  could result in judgment in excess of $100,000;

                  (c)      any judgment, award, decree, order or determination
                  relating thereto in an amount in excess of $100,000;

                  (d)      the imposition or creation of any Lien against any
                  asset of Borrower except in favor of Bank or Permitted Liens;

                  (e)      any capital or operating lease to which Borrower
                  becomes a party, together with a copy of each such lease,
                  which requires payments in excess of $100,000 per annum;

                                       26
<PAGE>

                  (f)      any Reportable Event, together with a statement of
                  the Borrower's President or Chief Financial Officer as to the
                  details thereof, and a copy of its notice thereof to the PBGC;

                  (g)      any known release or potential release or threat of
                  release of hazardous or toxic chemicals, materials or
                  substances or oil from, on or onto any site owned or used by
                  Borrower or the incurrence of any expense or loss in
                  connection therewith, or upon Borrower's obtaining knowledge
                  of the incurrence of any expense or loss by any governmental
                  authority in connection with the containment or removal of any
                  hazardous or toxic chemical, material or substance or oil for
                  which expense or loss Borrower may be liable or potentially
                  responsible; and

                  (h)      any loss or destruction of Collateral or other
                  assets, whether or not covered by insurance, if the value of
                  such loss or destruction or of such Collateral affected
                  exceeds $100,000;

         5.9.     ERISA Notices. Immediately after receipt or filing, a copy of
(i) any notice Borrower may receive from the PBGC relating to the PBGC's
intention to terminate or appoint a trustee to administer any Plan and (ii) any
report or notice relating to any Reportable Event which Borrower may file under
ERISA with the PBGC, the Internal Revenue Service or the United States
Department of Labor; and

         5.10.    Taxes. If requested by Bank, within ten (10) days after the
accrual in accordance with applicable law of Borrower's obligation to make
deposits for F.I.C.A. and withholding taxes, evidence satisfactory to Bank that
such deposits have been made as required.

6.       BANK'S REPORTS. Periodically, Bank will render to Borrower statements
of Borrower's loan account(s) with Bank hereunder, showing applicable credits
and debits. Each statement shall be considered correct and, except for manifest
error, to have been accepted by and conclusively binding upon Borrower as an
account stated in respect of all charges, debits and credits of whatsoever
nature contained therein under this Agreement, and the closing balance shown
therein, unless Borrower notifies Bank in writing of any discrepancy within
thirty (30) days from the date of any such statement.

7.       BORROWER'S AFFIRMATIVE COVENANTS. Borrower agrees that it will at all
times that any amount is unpaid on any Loan or any other Obligation or any
commitment of Bank to make Loans is in effect:

         7.1.     Legal Existence, Compliance with Laws. Preserve, renew and
keep in full force and effect its legal existence and rights and franchises with
respect thereto and maintain in full force and effect all permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on its business as presently or proposed to be conducted.
Borrower shall preserve, renew and keep in full force and effect its
qualification to do business in good standing in every state or location in
which such qualification may be necessary by reason of the nature or location of
its assets or operations.

         7.2.     Insurance. (a) keep its properties insured against fire and
other hazards (so called "All Risk" coverage) in amounts and with companies
satisfactory to Bank to the same extent and covering such risks as is customary
in the same or a similar business, but in no event in an amount less than the
full insurable value thereof, which policies shall name Bank as additional
insured and loss payee as its interest may appear, (b) maintain public liability
coverage against claims for personal injuries or death and (c) maintain all
worker's compensation, employment or similar insurance as may be required by
applicable law. Such All Risk property and public liability insurance coverage
shall provide for a minimum of thirty

                                       27
<PAGE>

(30) days written cancellation notice to Bank (except that, if the basis for
cancellation is non-payment of premiums, the minimum written cancellation notice
may be ten (10) days). Borrower agrees to deliver copies of all of the aforesaid
insurance policies to Bank. In the event of any loss or damage to any of
Borrower's assets, including any Collateral securing the Loan, Borrower shall
give immediate written notice to Bank and to Borrower's insurers of such loss or
damage and shall promptly file proofs of loss with said insurers.

         7.3.     Compliance with Contracts and Laws. Comply with its charter,
By-Laws or other governing document, all material contractual requirements by
which it or any of its properties may be bound and all applicable laws, rules,
regulations licenses, permits, approvals and orders of any federal, state or
local governmental authority applicable to it (including, without limitation,
ERISA and those relating to environmental protection and health and safety)
other than contractual requirements or laws, rules or regulations the failure to
comply with which cannot reasonably be expected to have a Material Adverse
Effect.

         7.4.     Business. Continue to engage in its business as now conducted,
and maintain and preserve all of its properties reasonably necessary for the
conduct thereof in good working order and condition, ordinary wear and tear
excepted.

         7.5.     Taxes. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or against it or its income or
properties, or upon this Agreement or any notes evidencing Obligations,
including, without limitation, taxes, assessments, charges or levies relating to
real and personal property, the Collateral, franchises, income, unemployment,
old age benefits, withholding, or sales or use, prior to the date on which
penalties attach thereto, and all lawful claims (whether for any of the
foregoing or otherwise) which, if unpaid, might give rise to a Lien upon any
property of Borrower, except any of the foregoing which is being contested in
good faith and by appropriate proceedings, for which Borrower has established
and is maintaining adequate reserves, and as to which no Lien having priority
over Bank's Liens arises. Borrower shall indemnify and hold harmless Bank with
respect to the foregoing and agrees to pay Bank on demand the amount thereof and
until paid by Borrower such amount shall be deemed to be added to the
Obligations; provided that nothing contained herein shall be construed to
require Borrower to pay any income taxes of Bank attributable to any amounts
charged or paid to Bank hereunder. This indemnity shall survive the repayment of
the Obligations.

         7.6.     Deposit Accounts. Maintain its primary depository, operating
and disbursement accounts at Bank.

         7.7.     Accounts Covenants.

                  (a)      Notify Bank immediately of: (i) any material delay in
                  Borrower's performance of any of its obligations to any
                  account debtor or the assertion of any material claims,
                  offsets, defenses or counterclaims by any account debtor, or
                  any material disputes with account debtors, or any settlement
                  adjustment or compromise thereof, and (ii) all material
                  adverse information relating to the financial condition of any
                  account debtor. No credit, discount, allowance or extension or
                  agreement for any of the foregoing shall be granted to any
                  account debtor without Bank's consent, except in the ordinary
                  course of Borrower's business in accordance with practices and
                  policies previously disclosed in writing to Bank. So long as
                  no Event of Default exists or has occurred and is continuing,
                  Borrower shall settle, adjust or compromise any claim, offset,
                  counterclaim or dispute with any account debtor. At any time
                  that an Event of Default exists or has occurred and is
                  continuing, Bank

                                       28
<PAGE>

                  shall, at its option, have the exclusive right to settle,
                  adjust or compromise any claim, offset, counterclaim or
                  dispute with account debtors or grant any credits, discounts
                  or allowances.

                  (b)      Promptly report to Bank any return of Inventory by an
                  account debtor having a sales price in excess of $100,000. In
                  the event any account debtor returns Inventory when an Event
                  of Default exists or has occurred and is continuing, Borrower
                  shall, upon Bank's request, (i) hold the returned Inventory in
                  trust for Bank, (ii) segregate all returned Inventory from all
                  of its other property, (iii) dispose of the returned Inventory
                  solely according to Bank's instructions, and (iv) not issue
                  any credits, discounts or allowances with respect thereto
                  without Bank's prior written consent.

         7.8.     Inventory Covenants. With respect to the Inventory: (a)
Borrower shall at all times maintain inventory records reasonably satisfactory
to Bank, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Bank may request on or after an Event of Default, and promptly
following such physical inventory shall supply Bank with a report in the form
and with such specificity as may be reasonably satisfactory to Bank concerning
such physical count; (c) Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Bank, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Bank's request, Borrower
shall, at its expense, as Bank may request on or after an Event of Default,
deliver or cause to be delivered to Bank written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Bank and by an appraiser
acceptable to Bank, addressed to Bank or upon which Bank is expressly permitted
to rely; (e) Borrower shall produce, use, store and maintain the Inventory, with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with applicable laws (including, but not limited
to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended
and all rules, regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) other than in the ordinary
course of business as disclosed to Bank by Borrower from time to time, Borrower
shall not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to repurchase such
Inventory; (h) Borrower shall keep the Inventory in good and marketable
condition; and (i) Borrower shall not, without prior written notice to Bank,
acquire or accept any Inventory on consignment or approval.

         7.9.     Equipment Covenants. With respect to the Equipment: (a) upon
Bank's request, Borrower shall, at its expense, at any time or times as Bank may
request on or after an Event of Default, deliver or cause to be delivered to
Bank written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Bank and by an appraiser acceptable to Bank; (b)
Borrower shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in Borrower's business and not for personal,
family, household or farming use; (e) Borrower shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Borrower or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of Borrower in the ordinary course

                                       29
<PAGE>

of business; (f) the Equipment is now and shall remain personal property and
Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment.

8.       BORROWER'S NEGATIVE COVENANTS. Borrower will not at any time that any
amount is unpaid on any Loan or any other Obligation or any commitment of the
Bank to make Loans to Borrower is in effect, except with the prior written
consent of the Bank:

         8.1.     Disposition of Assets. Sell, assign, exchange or otherwise
dispose of any of its assets or of any stock or equity interests or Indebtedness
of any other Person held by it or any interest therein to any other Person
(except for (i) sales of Inventory in the ordinary course of Borrower's
business; (ii) dispositions of obsolete or worn out Equipment or Equipment no
longer used in its business; and (iii) sales of other Equipment, provided such
Equipment is promptly replaced with Equipment of equal or greater value and
utility to the Borrower).

         8.2.     Indebtedness. Create, incur, assume or allow to exist any
Indebtedness except: (i) Indebtedness owing to or held by Bank; (ii) unsecured
Indebtedness of Borrower existing on the Closing Date and disclosed in the
financial statements attached as Schedule 4.12, provided that none of such
Indebtedness shall be renewed, extended or otherwise modified in any material
respect; (iii) unsecured current liabilities (not the result of borrowing)
incurred in the ordinary course of business and not overdue; (iv) Capital Leases
and other purchase money financing of capital assets permitted under Section
8.3(vii); and (v) other Indebtedness incurred after the Closing Date with prior
notice to and the consent of Bank.

         8.3.     Liens. Create, permit to be created or suffer to exist any
Lien upon any of the Collateral or any other property of Borrower, now owned or
hereafter acquired, except: (i) landlords', carriers', warehousemen's,
mechanics' and other similar Liens arising by operation of law in the ordinary
course of Borrower's business; provided, however, that all such Liens shall be
discharged or bonded off within sixty (60) days from the filing thereof; (ii)
Liens arising out of pledge or deposits under worker's compensation,
unemployment insurance, old age pension, social security, retirement benefits or
other similar legislation; (iii) Liens in favor of Bank; (iv) Liens for taxes
(excluding any Lien imposed pursuant to any provision of ERISA) not yet due or
which are being contested in good faith by appropriate proceedings and Borrower
maintains appropriate reserves in respect thereto provided that in Bank's
judgment such Lien does not adversely affect Bank's rights or the priority of
Bank's Lien in the Collateral; (v) easements, rights of way, restrictions and
other similar charges or Liens relating to real property and not interfering in
a material way with the ordinary conduct of Borrower's business; (vi) Liens set
forth on Schedule 8.3 hereto; (vii) Liens to secure purchase money financing of
capital assets provided that the liens only secure payment of the Indebtedness
so incurred and extend only to the capital asset purchased (collectively,
"Permitted Liens").

         8.4.     Distributions; Distributions to Hallwood. Pay any
Distributions or commit or agree to do so at any time without the prior written
consent of Bank. Payments to Hallwood for distributions and federal income taxes
shall be permitted only if Borrower submits a pro forma covenant compliance
certificate reflecting full compliance with the financial covenants, after
giving affect to any planned distribution or tax payment, based upon the most
recent financial information available to Borrower.

         8.5.     Loans; Loans to Hallwood. Make any loans or advances to any
Person, any of any Borrower's members, directors, officers, employees,
stockholders and Affiliates, except advances to employees with respect to
expenses incurred by them in the ordinary course of their duties which are

                                       30
<PAGE>

properly reimbursable by Borrower (not to exceed $50,000 in the aggregate on an
annual basis during the term of this Agreement). Make any loans or advances to
Hallwood without the express written consent of Bank. Additionally, any payments
of dividends and/or calculated federal income tax liability to Hallwood will be
limited such that said payments shall not create a default of any of the
financial covenants.

         8.6.     Guaranties. Assume, guaranty, endorse or otherwise become
directly or contingently liable in respect of (including, without limitation by
way of agreement, contingent or otherwise, to purchase, provide funds to or
otherwise invest in a debtor or otherwise to assure a creditor against loss),
any Indebtedness of any Person (except guaranties by endorsement of instruments
for deposit or collection in the ordinary course of business and guaranties in
favor of Bank).

         8.7.     Investments. (i) Use any Loan proceeds to purchase or carry
any "margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) or (ii) make any Investment in or otherwise purchase any
stock, Indebtedness or securities of any Person except (x) readily marketable
direct obligations of, or obligations guaranteed by, the United States of
America or any agency thereof, or (y) time deposits with or certificates of
deposit issued by Bank.

         8.8.     Subsidiaries. Form or acquire any Subsidiary.

         8.9.     Mergers and Acquisitions. Merge or consolidate with any
Person, or sell, lease, transfer or otherwise dispose of all or any substantial
part of its assets (whether in one or more transactions) or purchase or acquire
all or substantially all of the assets of any Person, except as otherwise
permitted under Section 2.1.9.

         8.10.    Affiliates. Directly or indirectly, transfer, sell, lease,
assign or otherwise dispose of any material assets to an Affiliate; purchase or
acquire any assets from an Affiliate; enter into any management agreement,
service or consulting agreement with an Affiliate or make any payment thereon;
or enter into any other transaction directly or indirectly with or for the
benefit of an Affiliate (including, without limitation, guaranties or
assumptions of obligations of an Affiliate); except, in each case, in the
ordinary course of Borrower's business and pursuant to the reasonable
requirements of the respective Borrower's business and upon fair and reasonable
terms no less favorable to the Borrower as would be obtained by Borrower in a
comparable arm's length commercial transaction with an independent
non-Affiliated Person.

         8.11.    Limitation on Use of Proceeds. Shall not permit any of the
proceeds of the Loans to be used directly or indirectly for any purposes other
than the purposes expressly set forth in this Agreement, or by any party other
than Borrowers.

9.       FINANCIAL COVENANTS. Borrower covenants and agrees that, as long as any
amount is unpaid with respect to the Loans or any other Obligation, and while
any commitment of Bank to make Loans is in effect, it will meet or exceed the
following financial covenants tested quarterly, on a fully consolidated basis:

         9.1.     EBITDA to TFC Ratio. Borrower shall maintain a minimum EBITDA
                  (trailing four quarters) to TFC Ratio of 1.15:1.00.

         9.2      Total Debt to Tangible Net Worth Ratio. Borrower shall
                  maintain a ratio of Total Debt to Tangible Net Worth Ratio of
                  not more than 1.75:1.00, calculated at the end of each fiscal

                                       31
<PAGE>

                  quarter through the fiscal quarter ending December 31, 2004.
                  Commencing with the fiscal quarter ending March 31, 2005, said
                  ratio shall step down to 1.50:1.00.

10.      ADDITIONAL COVENANTS AND ASSURANCES.

         10.1.    No Overadvances. The amount of the Working Capital Revolving
Credit Loans shall not at anytime exceed the Working Capital Revolving Credit
Limit and the amount of the Equipment Revolving Credit Loans shall not at
anytime exceed the Equipment Revolving Credit Limit, and Borrower shall
immediately make such principal payments as may at any time be necessary to
repay any such excess.

         10.2.    Notice of Changes. Borrower will notify Bank, at least thirty
(30) days prior to any change in Borrower's legal name, any change in its
place(s) of business or location(s) or Collateral as set forth in Section 4.15
or its establishment of any new place of business or location of its assets or
office where its records concerning Accounts and other assets are kept.

         10.3.    Additional Assurances. At Bank's request, Borrower at its
expense will promptly and duly execute and deliver such documents and assurances
and take such actions as may be reasonably necessary or desirable or as Bank may
reasonably request in order to correct any defect, error or omission which may
at any time be discovered or to more effectively carry out the intent and
purpose of this Agreement and to establish, perfect and protect Bank's security
interest, rights and remedies created or intended to be created hereunder.
Without limiting the generality of the above, Borrower will join with Bank in
executing financing and continuation statements pursuant to the Uniform
Commercial Code or other notices appropriate under applicable Federal or state
law in form reasonably satisfactory to Bank and filing the same in all public
offices and jurisdictions wherever and whenever requested by Bank. Moreover,
Borrower appoints Bank and its agents and designees, as Borrower's
attorney-in-fact, to execute in Borrower's name and on Borrower's behalf any UCC
financing statements or amendments thereto for any of the foregoing purposes,
which power is coupled with an interest, and irrevocable, until all Obligations
have been paid in full. Borrower releases Bank and its officers, employees,
agents and designees from any liability arising from any act or acts in
connection with such action(s) or in furtherance thereof, whether of admission
or omission except to the extent arising from the Bank's willful misconduct or
gross negligence.

         10.4.    Additional Collateral Actions. Borrower shall obtain for each
location that is not owned and controlled by Borrower an agreement in writing
from the Person in possession of Borrower's assets and/or the owner or operator
of such premises, in form and substance satisfactory to Bank, acknowledging
Bank's first priority security interest in the Collateral, waiving security
interests and claims by such Person in the Collateral and permitting the Bank
access to, and the right to remain on such premises, so as to exercise the
Bank's rights and remedies and otherwise deal with the Collateral.

         10.5.    Verification of Accounts. Upon the occurrence and continuation
of an Event of Default, Bank may at any time in its own name or in the name of
others communicate with account debtors in order to verify with them to Bank's
satisfaction the existence, amount and terms of any Accounts and the absence of
any reductions, discounts, defenses or offsets with respect thereto.

         10.6.    Power of Attorney. Upon the occurrence and continuation of an
Event of Default, Borrower does hereby make, constitute and appoint any officer
or agent of Bank as Borrower's true and lawful attorney-in-fact, with full power
of substitution: (a) to endorse the name of Borrower or any of its members,
officers or agents upon any notes, checks, drafts, money orders, or other
instruments of payment (including under any policy of insurance on Collateral)
or Collateral that may come into

                                       32
<PAGE>

possession of Bank in full or part payment of any amounts owing to Bank; (b) to
sign and endorse the name of Borrower or any of its officers or agents upon any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with Accounts, and any instruments or documents relating thereto or to
Borrower's rights therein; (c) to give written notice to such offices and
officials of the United States Postal Service to effect such change or changes
of address so that all mail addressed to Borrower may be delivered directly to
Bank; (d) to take any and all other actions necessary or appropriate to collect,
compromise, settle, sell or otherwise deal with any or all of the Collateral or
proceeds thereof, and (e) to obtain, adjust, settle and cancel any insurance
referred to in Section 7.2; hereby granting to each said substitute full power
to do any and all things necessary or appropriate to be done in and about the
premises as fully and effectively as Borrower might or could do, and hereby
ratifying all that any said attorney-in-fact or his substitute shall lawfully do
or cause to be done by virtue hereof.

         10.7.    Insurance Assignment. Upon the occurrence and continuation of
an Event of Default, Borrower hereby assigns to Bank all sums, including without
limitation, return of premiums, which may become payable under any and all of
Borrower's policies of insurance and directs each insurance company issuing any
such policy to make payment thereof directly to Bank.

         10.8.    Government Accounts. If any Accounts arise from contracts with
the United States or any department, agency or instrumentality thereof, Borrower
will immediately notify Bank thereof and execute any instruments and take any
steps requested by Bank in order that all monies due and to become due
thereunder shall be assigned to Bank and notice thereof given to the Federal
authorities under the Federal Assignment of Claims Act.

         10.9.    Payments by Bank. In its sole discretion, Bank may upon notice
to Borrower and Borrower's failure within ten (10) business days to pay any of
the following (or such lesser period of time if imposition of a Lien, loss of
insurance or tax lien is imminent): (i) discharge taxes that Borrower fails to
pay (except taxes being contested in good faith and by appropriate proceedings,
for which Borrower has established and is maintaining appropriate reserves, and
as to which no Lien having priority over Bank's Lien arises) and Liens levied or
placed on Collateral; (ii) pay for insurance of Borrower that Borrower fails to
pay or the maintenance and preservation thereof; or (iii) if Borrower shall fail
to make deposits in respect of F.I.C.A. and withholding taxes referred to in
Section 5.10, make such deposits or pay such taxes, in whole or in part, or set
up such reserves as Bank shall in its sole discretion deem necessary in respect
of Borrower's liability therefor. Any amount so paid, deposited or reserved for
shall constitute a Revolving Loan for all purposes hereunder. Nothing herein
shall be deemed to obligate Bank to do any of the foregoing and the making of
any one or more such payments, deposits or reserves shall not constitute an
agreement by Bank to take any further or similar action or a waiver of any right
of Bank hereunder.

         10.10.   Debits to Borrower's Accounts. In its sole discretion and
without notice to Borrower, Bank may at any time or from time to time debit
Borrower's account(s) at Bank in the amount of any Obligation or Obligations
then due and payable by Borrower. Nothing herein shall be deemed to obligate
Bank to do any of the foregoing and the making of any such debit shall not
constitute an agreement by Bank to take any further or similar action or a
waiver of any right of Bank hereunder. On or before the date hereof, Bank and
Borrower shall execute an Automatic Electronic Fund Transfer Agreement ("AFT
Agreement") by which Borrower has authorized Bank to electronically debit all
payments due under the Notes from Borrower's designated account.

         10.11.   Access to Records. Borrower will at all times keep accurate
records of the Collateral and will permit Bank or its agents or representatives
at Bank's election at any time during normal business

                                       33
<PAGE>

hours from time to time in Bank's reasonable discretion, at Borrower's expense
to visit Borrower's place(s) of business, without hindrance or delay, to inspect
Collateral and examine check audit and make copies and abstracts from Borrower's
records and books of account (including, without limitation, corporate minutes,
and records, journals, orders, receipts and correspondence relating to
Collateral, account debtors, transactions unrelated to collateral and Borrower's
general financial condition, business and affairs); to remove any of such books
and records temporarily for the purpose of having copies made; and to discuss
with any of Borrower's appropriate members, directors, officers, accountants and
other agents or representatives the Collateral and Borrower's general financial
condition, business and affairs. In connection with such examinations by Bank or
its representatives, Borrower shall pay Bank's examination fees plus such costs
and expenses as may be reasonably incurred by Bank in connection therewith.

         10.12.   License to Use Premises. Borrower hereby grants to Bank, for a
term commencing on the Closing Date and continuing so long as any of the
Obligations remain outstanding, at a rental of $1.00 for such entire term, the
right to the use of all premises or places of business which Borrower now or
hereafter may have and where any Collateral may be located for the purpose of
exercising its rights and remedies hereunder to realize on the Collateral;
provided that Bank agrees not to exercise such right unless and until an Event
of Default occurs and is continuing.

         10.13.   Instruments Evidencing Accounts. If any Accounts are at any
time evidenced by promissory notes, trade acceptances or other instruments for
the payment of money, Borrower will immediately deliver the same to Bank
appropriately endorsed to Bank's order and, regardless of the form of such
endorsement, Borrower hereby waives presentment, demand, notice of dishonor,
protest, notice of protest and all other notices with respect thereto.

         10.14.   Security Interest in Deposits; Set-off. Borrower hereby grants
to Bank a lien, security interest and right of setoff as security for all
liabilities and obligations to Bank, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of KeyCorp, or in transit to any of them. At any time
that an Event of Default exists, without demand or notice, Bank may set off the
same or any part thereof and apply the same to any liability or obligation of
Borrower even though unmatured and regardless of the adequacy of any other
collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

         10.15.   No Bank Liability. Notwithstanding anything to the contrary
set forth herein, Bank shall not have any obligation or liability under any
Accounts or other Collateral arising out of this Agreement or Bank's exercise of
its rights and remedies or Borrower's performance of its obligations hereunder,
nor shall Bank have any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it, or to file any claim or take any
action to enforce the payment or performance of any portion of the Collateral.
Beyond the safe custody thereof, Bank shall have no duty as to any Collateral in
its or its nominee's possession or any income thereon, or as to the preservation
of rights against other parties or otherwise.

         10.16.   Transfer of Investment Property to Bank's Name. Bank may
transfer Investment Property of the Borrower into its name or that of its
nominee and may receive the income and any distributions'

                                       34
<PAGE>

thereon and hold the same as Collateral for the Obligations, or apply the same
to any defaulted Obligation, whether or not a Default or an Event of Default has
occurred.

11.      EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default:

                  (a)      failure by Borrower to pay any principal, interest or
         other amount due on account of the Loans, within fifteen (15) days of
         the date when due, including failure by Borrower to comply with the
         terms and conditions of its AFT Agreement; provided, however, that no
         Event of Default shall be created if Bank fails to electronically debit
         any payment due without fault of Borrower;

                  (b)      failure by Borrower to perform or comply with the
         covenants set forth in Sections 8, 9 or 10 hereof.

                  (c)      failure by Borrower to pay any payment Obligation
         other than those described in Section 11 (a) within fifteen (15) days
         of notice by Bank that such other payment Obligation is due;

                  (d)      failure by Borrower to perform or discharge, observe
         or comply with any of its other covenants or agreements set forth
         herein or in the Loan Documents, or any other Obligation, within thirty
         (30) days of the date Borrower became aware of such failure or receives
         notice thereof from the Bank;

                  (e)      any representation, warranty or statement of Borrower
         to Bank in connection with any Obligation (including, without
         limitation, any made in any document provided by Borrower under Section
         5) is found to have been false or misleading in any material respect as
         of the time when made;

                  (f)      occurrence of any event of default (subject to any
         applicable grace period) as defined in any other instrument evidencing
         or governing Indebtedness for Borrowed Money in excess of, in the
         aggregate, $100,000, of Borrower (other than Obligations) now or
         hereafter outstanding; or any event or condition which gives any holder
         or trustee of such Indebtedness for Borrowed Money the right to
         accelerate its maturity;

                  (g)      Borrower's or any guarantor's or endorser's
         liquidation, termination, dissolution or ceasing to carry on actively
         any substantial part of its current business or the death of any
         guarantor or endorser;

                  (h)      commencement by Borrower or any guarantor or endorser
         of a voluntary proceeding seeking relief with respect to itself or its
         debts under any bankruptcy, insolvency or other similar law, or seeking
         appointment of a trustee, receiver, liquidator or other similar
         official for it or any substantial part of its assets; or its consent
         to any of the foregoing in an involuntary proceeding against it; or
         Borrower or any guarantor or endorser shall generally not be paying its
         debts as they become due or admit in writing its inability to do so; or
         an assignment for the benefit of, or the offering to or entering into
         by, Borrower or any guarantor or endorser of any composition,
         extension, reorganization or other agreement or arrangement with, its
         creditors;

                  (i)      commencement of an involuntary proceeding against
         Borrower or any guarantor or endorser seeking relief with respect to it
         or its debts under any bankruptcy, insolvency or other

                                       35
<PAGE>

         similar law, or seeking appointment of a trustee, receiver, liquidator
         or other similar official for it or any substantial part of its assets,
         which proceeding is not dismissed or stayed within sixty (60) days,

                  (j)      service upon Bank of a writ of levy or attachment, or
         naming Bank as trustee for Borrower, or of any other similar process of
         attachment which is not dismissed within thirty (30) days;

                  (k)      entry of any judgment(s) against Borrower in an
         aggregate amount greater than $100,000 which are not covered by
         insurance (and for this purpose a judgment shall be deemed "covered by
         insurance" only if the insurance company has formally advised Borrower
         in writing that the judgment in its entirety is covered by insurance
         and no action is being taken to execute such judgment against any of
         Borrower's assets) and shall remain undischarged or unvacated for a
         period in excess of sixty (60) days or execution shall at any time not
         be effectively stayed;

                  (l)      attachments of any Liens (other than a Permitted
         Lien) exceeding, in the aggregate, $100,000, upon property of Borrower
         not in favor of Bank without Bank's prior written consent which Lien is
         not discharged in thirty (30) days;

                  (m)      entry of any court order which enjoins, restrains, or
         in any way prevents Borrower from conducting all or any substantial
         part of Borrower's business;

                  (n)      any change in the control of Borrower;

                  (o)      any material loss, theft, damage or destruction to or
         of any material portion of the asset(s) of Borrower not covered by
         insurance;

                  (p)      reclamation or repossession constituting a Material
         Adverse Effect of any asset(s) of Borrower;

                  (q)      the occurrence of any event having a Material Adverse
         Effect on Borrower;

                  (r)      there shall occur and be continuing any Reportable
         Event which constitutes grounds for termination of or for appointment
         by a United States District Court of a trustee to administer any Plan;
         the PBGC shall institute proceedings to terminate or to appoint a
         trustee to administer any Plan; a United States District Court shall
         appoint a trustee to administer any Plan; or any Plan shall be
         terminated in circumstances giving rise to liabilities having a
         Material Adverse Effect on Borrower's financial condition; or

                  (s)      termination of, failure to make any payment required
         under or any other default under any guaranty of or other instrument or
         agreement securing any of the Obligations.

                  Borrower acknowledges and agrees that each and every Event of
         Default described above shall be of equal weight and significance, and
         equally and fully shall allow Bank to exercise its rights and remedies
         hereunder. Borrower acknowledges and agrees that the inclusion in this
         Agreement of each such Event of Default has been a material inducement
         for Bank to enter into this Agreement and that Bank would be
         irreparably harmed if Bank, in any way, were unable to exercise its
         rights and remedies on the basis that certain Events of Default (for
         example, Events of

                                       36
<PAGE>

         Default not relating to payment) were of less weight or significance
         than certain other Events of Default (for example, Events of Default
         relating to payment).

12.      BANK'S RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default:

         12.1.    Exercise of Remedies. Bank may by notice to Borrower decline
to make any or all further Revolving Loans hereunder and terminate all its
commitments hereunder; Bank may by notice to Borrower accelerate the payment of
all Obligations and demand payment thereof (provided that no such notice shall
be required if the Event of Default is under Section 11(h) or (i)); Borrower's
right to select pricing options under Section 2.4 shall cease; Bank may proceed
to enforce payment of any of the foregoing and shall have and may exercise any
and all rights under the UCC or which are afforded to Bank herein or otherwise;
and all Obligations (including, without limitation, principal, past due
interest, amounts payable under Section 12 or 13 or upon entry of any judgment)
shall bear interest, payable on demand, at the Default Rate provided under
Section 2.10.

         12.2.    Disposition of Collateral. Upon the occurrence of an Event of
Default, Bank may notify account debtors that the Collateral has been assigned
to Bank and that payments by such account debtors shall be made directly to
Bank. At Bank's request, Borrower will notify any or all such debtors of such
assignment, give instructions and/or indicate on billings to such debtors that
their Accounts shall be paid to Bank and/or supply such debtors with a copy of
this Agreement. Bank may sell, lease or otherwise dispose of and deliver any or
all Collateral at public or private sale, for cash, upon credit or otherwise, at
such prices and upon such terms as Bank deems advisable in its sole discretion.
Any requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to Borrower at its address set forth herein at least ten (10)
days before the time of sale or other disposition. Bank may be the purchaser at
any such sale, if it is public, and in such event Bank shall have all rights of
a good faith, bona fide purchaser for value from a secured party after default.
The proceeds of any sale may be applied (in whatever order and manner Bank
elects in its sole discretion) to all costs and expenses of sale (including,
without limitation, reasonable attorneys' fees and disbursements) and to the
payment of Obligations, and any remaining proceeds shall be applied in
accordance with Article 9, Part 5 of the UCC. Borrower shall remain liable to
Bank for any deficiency.

         12.3.    Possession Following Event of Default. Bank will at any time
following the occurrence of an Event of Default and during the continuation
thereof have the right to take physical possession of the Collateral and to
maintain such possession on Borrower's premises or to remove the Collateral or
any part thereof to such other places as Bank may desire. If Bank exercises such
right, Borrower shall at its sole expense upon Bank's request assemble the same
and make it available to Bank at a place reasonably convenient to Bank. If any
Inventory is in the possession or control of any of Borrower's agents or
processors, Borrower shall, at Bank's request (before or after the occurrence of
an Event of Default), notify them of Bank's security interest therein and, at
Bank's request, instruct them to hold the same for Bank's account and subject to
Bank's instructions. At any time following the occurrence of an Event of Default
and during the continuation thereof, Bank shall have full power, in its own name
or that of Borrower, to collect, endorse, compromise, settle, sell or otherwise
deal with any or all of the Collateral or proceeds thereof.

13.      EXPENSES; INDEMNIFICATION; ETC.

         13.1.    Payment of Expenses. Borrower agrees to pay Bank on demand any
and all costs, expenses, losses, claims, damages, liabilities, penalties, suits,
judgments or disbursements of any nature (including, without limitation,
reasonable attorneys' fees and disbursements and appraisal costs) which

                                       37
<PAGE>

may be incurred by, imposed on or asserted against Bank in connection with:
preparation of this Agreement, and all instruments and documents relating
hereto; all other amendments, modifications or waivers hereof, appraisal fees
and environmental assessment fees incurred in connection with this Agreement;
taxes and other governmental charges payable by reason of this Agreement,
documents and filings relating hereto and Collateral (excluding income and
franchise taxes payable by Bank); exercise of Bank's rights with respect to
Collateral or any guarantor or surety of Borrower; any exercise of Bank's right
of acceleration; any enforcement, collection or other proceedings with respect
to the Obligations or from any negotiations or other measures to preserve Bank's
rights hereunder; any investigative, administrative or judicial proceeding
(whether or not Bank is designated as a party thereto) relating to Borrower or
the Obligations, relating to or arising out of this Agreement or any other
transaction between the Bank and the Borrower or any obligor on the Obligations;
or any bankruptcy, insolvency or other similar proceedings relating to Borrower.

         13.2.    Indemnification. Borrower shall indemnify and hold Bank and
each Participant and Assignee, and their directors, agents, employees and
counsel, harmless from and against any, and shall pay on demand all, losses,
claims, damages, liabilities, costs or expenses imposed on, incurred by or
asserted against any of them in connection with any litigation, investigation,
claim or proceeding commenced or threatened that is related to the delivery,
enforcement, performance or administration of this Agreement, any other Loan
Documents, or any undertaking or proceeding related to any of the foregoing, or
any act, omission, event or transaction related or attendant thereto, including,
without limitation, amounts paid in settlement, court costs, and the reasonable
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion which
it is permitted to pay under applicable law to Bank in satisfaction of
indemnified matters under this Section. Borrower's obligation to make any
payments to Bank under the foregoing indemnity shall be net of any collateral
liquidation proceeds, eminent domain proceeds and insurance proceeds (not
including, however, any tax benefits) actually received by Bank. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.

         13.3.    Authority for Loan Requests. Bank shall be authorized to make
Loans hereunder upon the oral (followed promptly by written confirmation) or
written request in the name of Borrower by the Person executing this Agreement
on Brookwood's behalf; any Person(s) from time to time holding the offices of
President or Chief Financial Officer of Brookwood, and such other Persons as
Borrower may from time to time designate in appropriate documents delivered to
Bank (including, without limitation, certificates of resolutions as requested by
Bank). All such Loans shall be conclusively deemed to have been authorized by
Borrower and to have been made pursuant to duly authorized requests therefor on
their behalf. Bank shall further be entitled to rely on any communication,
instrument or document believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person(s), and with respect to all legal
matters shall be entitled to rely on advice of legal counsel.

         13.4.    Exculpation. In the absence of willful misconduct taken or
omitted in bad faith, or gross negligence, neither Bank nor any attorney-in-fact
pursuant to Sections 10.3 or 10.6 shall be liable to Borrower or any other
Person for any act or omission, any mistake of fact or any error of judgment in
exercising any right or remedy granted herein.

         13.5.    Collateral Secures Indemnification. Bank shall be entitled to
retain Collateral or require substitution therefor to the extent required to
assure Bank of satisfaction of Borrower's Obligations under this Section 13.

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<PAGE>

14.      CONDITIONS PRECEDENT.

         14.1.    Conditions to Initial Loans. Borrower acknowledges and agrees
that the satisfaction of each of the following in a manner satisfactory to Bank
is a condition precedent to the making of the Revolving Loans hereunder:

                  (a)      Delivery of Documents. Borrower shall have delivered,
         or caused to be delivered to Bank all documents, instruments and
         agreements as Bank shall reasonably request in connection herewith,
         duly executed by all parties thereto and substance reasonably
         satisfactory to Bank and Bank's counsel, including but not limited to,
         the following:

                           (1) this Agreement, together with all Schedules and
                  Exhibits hereto;

                           (2) the Working Capital Revolving Credit Note;

                           (3) the Equipment Revolving Credit Note;

                           (4) the Stock Pledge and Security Agreement
                  (Brookwood stock) executed by Hallwood dated December 22,
                  1999, receipt of which is acknowledged by Bank;

                           (5) Hallwood's Assignment Separate from Certificate,
                  with delivery of Brookwood stock certificate(s), receipt of
                  which is acknowledged by Bank;

                           (6) the Intercreditor Agreement (Brookwood stock)
                  among Bank One N.A., First Bank of Texas, N.A., and Bank dated
                  December 22, 1999, receipt of which is acknowledged by Bank;

                           (7) the Stock Pledge and Security Agreement (Kenyon
                  stock) executed by Brookwood dated December 22, 1999, receipt
                  of which is acknowledged by Bank;

                           (8) Brookwood's Assignment Separate from Certificate,
                  with delivery of Kenyon stock certificate(s), receipt of which
                  is acknowledged by Bank;

                           (9) the Stock Pledge and Security Agreement
                  (Laminating stock) executed by Brookwood dated December 22,
                  1999, receipt of which is acknowledged by Bank;

                           (10) Brookwood's Assignment Separate from
                  Certificate, with delivery of Laminating stock certificate(s),
                  receipt of which is acknowledged by Bank;

                           (11) the Stock Pledge and Security Agreement (Ashford
                  stock) executed by Brookwood dated June 6, 2000, receipt of
                  which is acknowledged by Bank;

                           (12) Brookwood's Assignment Separate from
                  Certificate, with delivery of Ashford stock certificate(s),
                  receipt of which is acknowledged by Bank;

                           (13) the Stock Pledge and Security Agreement (Xtra
                  stock) executed by Ashford dated June 6, 2000, receipt of
                  which is acknowledged by Bank;

                                       39
<PAGE>

                           (14) Ashford's Assignment Separate from Certificate,
                  with delivery of Xtra stock certificate(s), receipt of which
                  is acknowledged by Bank;

                           (15) the Stock Pledge and Security Agreement (Land
                  stock) executed by Brookwood dated June 6, 2000, receipt of
                  which is acknowledged by Bank;

                           (16) Brookwood's Assignment Separate from Certificate
                  with delivery of Land stock certificate(s), receipt of which
                  is acknowledged by Bank;

                           (17) the Pledge and Security Agreement (STA
                  membership interest) executed by Brookwood dated December 16,
                  2002, receipt of which is acknowledged by Bank;

                           (18) USPTO Recordation Form Cover Sheet (Patents)
                  dated December 22, 1999;

                           (19) USPTO Recordation Form Cover Sheet (Trademarks)
                  dated December 22, 1999;

                           (20) Assignment of Factor Credit Balance Agreement
                  dated December 22, 1999, receipt of which is acknowledged by
                  Bank;

                           (21) the Intercreditor Agreement among Bank and CIT
                  Group Commercial Services, Inc. dated December 22, 1999,
                  receipt of which is acknowledged by Bank;

                           (22) Assignment Agreement between Bank and Borrower,
                  along with Notice of Assignment (to CIT Group Commercial
                  Services, Inc.) dated December 22, 1999, receipt of which is
                  acknowledged by Bank;

                           (23) the Intercreditor Agreement among Bank and GMAC
                  Commercial Finance, LLC, dated as of January 30, 2004;

                           (24) Assignment Agreement between Bank and Borrower,
                  along with Notice of Assignment (to GMAC Commercial Finance,
                  LLC) dated as of January 30, 2004;

                           (25) the landlord waivers and consents and similar
                  agreements from all owners and operators of locations at which
                  Collateral is stored or maintained and not owned by Borrower
                  dated December 22, 1999, receipt of which is acknowledged by
                  Bank;

                           (26) Environmental Indemnity Agreement;

                           (27) Commercial Property and Casualty (All-Risk) and
                  Commercial General Liability certificates naming Bank as
                  additional insured and loss payee and containing
                  non-cancellation provision without ten (10) days notice to
                  Bank;

                           (28) Incumbency Certificate of Borrower, with
                  authorizing resolutions, and certified copies of the
                  Certificates of Incorporation, By-Laws, certificates of legal
                  existence and good standing, and certificates of foreign good
                  standing and qualification of Borrower;

                                       40
<PAGE>

                           (29) the opinion letter of counsel to Borrower with
                  respect to the Intercreditor Agreements, the Loan Documents
                  and security interest and liens of Bank with respect to the
                  Collateral and such other matters as Bank may reasonably
                  request;

                           (30) the balance sheet attached hereto as Schedule
                  4.12;

                           (31) an Officer's Certificate for Borrower in a form
                  acceptable to Bank;

                           (32) Borrowing Base Certificate in the form of
                  Exhibit C hereto;

                           (33) Compliance Certificate for Borrower, as of the
                  date of execution, in the form of Exhibit D hereto;

                           (34) UCC and tax lien searches satisfactory to the
                  Bank;

                           (35) Consent in writing from Hallwood, regarding its
                  agreement to limitations of Distributions from Brookwood dated
                  December 22, 1999, receipt of which is acknowledged by Bank;

                           (36) the subordinated documents between STA and
                  Burlington Industries, Inc., copies of which are acknowledged
                  by Bank;

                           (37) the Assumption and Joinder Agreement executed by
                  STA dated December 16, 2002, receipt of which is acknowledged
                  by Bank;

                           (38) Patent Security Agreement executed and delivered
                  by Brookwood dated January 30, 2004;

                           (39) Trademark Security Agreement executed and
                  delivered by Brookwood and Xtra dated January 30, 2004;

                           (40) UCC Financing Statement relating to the patents
                  and trademarks owned by Brookwood and Xtra to be filed with
                  the Delaware Secretary of State;

                           (41) USPTO Recordation Form Cover Sheet (Patents)
                  dated January 30, 2004;

                           (42) USPTO Recordation Form Cover Sheet (Trademarks)
                  dated January 30, 2004; and

                           (43) all such other documents and instruments as may
                  be required by the Bank in its reasonable discretion.

                  (b)      Perfection of Security Interests. Borrower shall have
         taken, or caused to be taken, all action that Bank requests in order to
         create and perfect Bank's Liens in the Collateral in all jurisdictions
         designated by Bank and Bank shall have received evidence, satisfactory
         to Bank, thereof;

                                       41
<PAGE>

                  (c)      Required Approvals. Bank shall have received
         certified copies of all consents or approvals of any governmental
         authority or other person or entity which are required in connection
         with the transactions contemplated by the Loan Documents;

                  (d)      No Material Adverse Change. There shall not have
         occurred any material adverse change in Borrower's business, assets,
         operations, prospects and financial condition, taken as a whole, or in
         the value of the Collateral, since the date of the last financial
         statements provided to Bank and Bank shall have received certificates
         signed by Borrower to such effect;

                  (e)      Proceedings. All proceedings to be taken in
         connection with the transactions contemplated by the Loan Documents and
         all documents contemplated in connection herewith, shall be
         satisfactory in form and substance to Bank and Bank's counsel; and

                  (f)      Reimbursement of Fees and Costs. The Borrower shall
         have paid to Bank all expenses, costs and fees, including legal fees,
         appraisal fees and other costs, lien search fees, and filing fees
         incurred by the Bank relating to the preparation of this Agreement, the
         Loan Documents, all instruments and documents relating hereto, and the
         closing of the transactions contemplated thereby.

         14.2.    Conditions Precedent to All Loans. Borrower acknowledges and
agrees that each of the following shall be conditions precedent to Bank making
any Loan or extension of credit hereunder:

                  (a)      Representations and Warranties. Borrower's
         representations and warranties contained herein shall be true, correct
         and complete in all material respects on the date thereof;

                  (b)      No Defaults or Events of Default. There shall exist
         no Default or Event of Default; and

                  (c)      Reimbursement of Fees and Costs. The Borrower shall
         have paid to Bank, all expenses, costs and fees, including legal fees,
         appraisal fees and other costs, lien search fees, and filing fees
         incurred by the Bank in connection with any advance, Loan or extension
         of credit.

15.      MISCELLANEOUS PROVISIONS.

         15.1.    Notices. Unless otherwise specified herein, all notices
hereunder shall be in writing directed to the addresses shown at the beginning
of this Agreement. Written notices and communications shall be effective and
shall be deemed received on the day when delivered by hand or sent by facsimile
transmission; on the next day, if by commercial overnight courier; and on the
third day, if by registered or certified mail, postage prepaid.

         15.2.    No Waiver. No failure to exercise and no delay in exercising,
on the part of Bank, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or remedy. Waiver by
Bank of any right or remedy on any one occasion shall not be construed as a bar
to or waiver thereof or of any other right or remedy on any future occasion.
Without limiting the generality of the foregoing, Borrower expressly agrees that
no failure by Bank to detect or to communicate with Borrower or take action in
response to any failure by Borrower to perform or observe any Obligation shall
operate as a waiver of any right or remedy of Bank. Any waivers by Bank must be
in writing and no officer or employee of Bank is authorized to grant any oral
waiver. Bank's rights and remedies hereunder, under any

                                       42
<PAGE>

agreement or instrument supplemental hereto or under any other agreement or
instrument, shall be cumulative, may be exercised singly or concurrently, and
are not exclusive of any rights or remedies provided by law.

         15.3.    Assignment. This Agreement shall be binding upon and shall
inure to the benefit of Borrower and Bank and their respective heirs, legal
representatives, successors and assigns; provided that Borrower may not assign
or transfer any rights or Obligations hereunder without Bank's prior written
consent. Bank shall have the unrestricted right at any time or from time to
time, and without Borrower's consent, to assign all or any portion of its rights
and obligations hereunder to one or more banks or other financial institutions
(each, an "Assignee"), and Borrower agrees that it shall execute, or cause to be
executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by Bank in
connection with such assignment and the payment by Assignee of the purchase
price agreed to by Assignee, such Assignee shall be a party to this Agreement
and shall have all of the rights and obligations of Bank hereunder (and executed
in connection herewith) to the extent that such rights and obligations have been
assigned by Bank pursuant to the assignment documentation such Assignee, and
Bank shall be released from its obligations hereunder and thereunder to a
corresponding extent.

         15.4.    Headings. The headings contained herein are for convenience
only and shall not affect the construction hereof. If one or more provisions of
this Agreement (or the application thereof) shall be invalid, illegal or
unenforceable in any respect in any jurisdiction, the same shall not, to the
fullest extent permitted by applicable law, invalidate or render illegal or
unenforceable such provision (or its application) in any other jurisdiction or
any other provision of this Agreement (or its application). This Agreement is
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any prior written or verbal communications or instruments
relating thereof.

         15.5.    Waiver of Remedies. Borrower acknowledges that the
transactions contemplated hereby are commercial transactions and waives, to the
fullest extent it may do so under applicable law, such rights as it may have or
hereafter have to notices and/or hearings under applicable federal or state laws
relating to exercise of any of Bank's rights, including, without limitation, the
right to deprive Borrower of or affect Borrower's use, possession or enjoyment
of property prior to rendition of a final judgment against Borrower.

         15.6.    Pledge to Federal Reserve. Bank may at any time pledge all or
any portion of its rights under the Loan Documents, including any portion of the
Notes, to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release Bank from its obligations under any of the Loan Documents.

         15.7.    Participations. Bank shall have the unrestricted right at any
time and from time to time, and without the consent of or notice to Borrower, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in Bank's obligation to lend hereunder
and/or any or all of the loans held by Bank hereunder. In the event of any such
grant by Bank of a participating interest to a

                                       43
<PAGE>

Participant, whether or not upon notice to Borrower, Bank shall remain
responsible for the performance of its obligations hereunder and Borrower shall
continue to deal solely and directly with Bank in connection with Bank's rights
and obligations hereunder. Bank may furnish any information concerning Borrower
in its possession from time to time to prospective Assignees and Participants,
provided that Bank shall require any such prospective Assignee or Participant to
agree in writing to maintain the confidentiality of such information.

         15.8.    Replacement Notes. Upon receipt of an affidavit of any officer
of Bank as to the loss, theft, destruction or mutilation of any of the Notes or
any other security document which is not of public record, and, in the case of
any such loss, theft, destruction or mutilation, upon the surrender and
cancellation of such Note or other security document, the Borrower will issue,
in lieu thereof, a replacement Note or other security document in the same
principal amount thereof and otherwise of like tenor. Bank agrees to indemnify
Borrower for any double payment or increased liability caused by Bank's loss of
any original Note.

16.      GOVERNING LAW; JURISDICTION.

         16.1.    Governing Law. This Agreement shall take effect as a sealed
instrument and shall be governed by and construed in accordance with the laws of
the State of Maine (without giving effect to its conflict of laws rules except
as provided under the provisions of the Uniform Commercial Code with respect to
the perfection and enforcement of security interests).

         16.2.    Jurisdiction. Borrower irrevocably submits to the
non-exclusive jurisdiction of any federal or state court sitting in the State of
Maine, over any suit, action or proceeding arising out of or relating to this
Agreement and agrees that such courts shall have exclusive jurisdiction over any
suit, action or proceeding against Bank. Borrower irrevocably waives, to the
fullest extent it may do so under applicable law, any objection it may have or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that the same has been brought in an
inconvenient forum.

         16.3.    Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
than compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

17.      CAUTION.

         Caution: Read Before Signing. Great effort has been spent to make sure
that this Agreement fully and accurately documents the understanding between the
parties. If you believe that you have an implicit or oral understanding or
agreement not fully and accurately set forth in this Agreement, DO NOT SIGN IT.

         You should also understand that no officer or employee of the Bank has
any authority to modify, alter or amend this Agreement orally. Rather, any and
all changes would have to be put in writing and approved by appropriate
officials at the Bank. If at some future date you believe that this Agreement
needs to be changed in any respect, insist that the change be in writing and
signed by an appropriate officer of the Bank; otherwise, misunderstandings might
occur.

                                       44
<PAGE>

         Finally, all signatories to this Agreement are urged to have their own
legal counsel review it on their behalf.

18.      NOTICE.

         Under Maine law, no promise, contract or agreement to lend money,
extend credit, forbear from collection of a debt, or make any other
accommodation for the repayment of a debt for more than $250,000 may be enforced
in court against the Bank unless the promise, contract or agreement is in
writing and signed by the Bank. Accordingly, the Borrower cannot enforce any
oral promise unless it is contained in any of the Loan Documents signed by the
Bank, nor can any change, forbearance, or other accommodation relating to the
Loans, this Agreement or any other Loan Documents be enforced unless it is in
writing and signed by the Bank. Borrower also understands that all future
promises, contracts or agreements of the Bank relating to any other transaction
between Borrower and Bank cannot be enforced in court unless they are in writing
and signed by the Bank.

19.      COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original, but all counterparts when joined
together constituting but one and the same agreement.

                            [SIGNATURE PAGES FOLLOW]

                                       45
<PAGE>

         Executed as an instrument under seal on the date set forth above.

                                            BORROWER:

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    XTRAMILE, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Treasurer

                                       46

<PAGE>

WITNESS:                                    LAND AND OCEAN III, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Assistant Treasurer

WITNESS:                                    STRATEGIC TECHNICAL ALLIANCE, LLC
                                            By: Brookwood Companies Incorporated
                                                Its Sole Member

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                            BANK:

WITNESS:                                    KEYBANK NATIONAL ASSOCIATION

_____________________________               By:______________________________
                                            Name:  Eric M. Nygren
                                            Title: Vice President

                                       47

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                   Schedule 3

                                    Contracts

         Wholesale Maturity Factoring Agreement dated July 17, 1992, between The
CIT Group/Commercial Services, Inc. and Brookwood Companies Incorporated.

         Factoring Agreement dated August 24, 1993 between The CIT
Group/Commercial Services, Inc. and Brookwood Companies Incorporated.

         Factoring Agreement dated March 27, 2000, between The CIT
Group/Commercial Services, Inc. and XtraMile, Inc.

                                       48

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.1

           States And Other Locations Where Authorized to do Business

<TABLE>
<CAPTION>
                                                                    FOREIGN JURISDICTIONS WHERE
                BORROWER                                             AUTHORIZED TO DO BUSINESS
                --------                                             -------------------------
<S>                                                              <C>
1.        Brookwood Companies Incorporated,                      New York, Rhode Island,
          a Delaware Corporation California                            New Jersey,

2.        Kenyon Industries, Inc.,                                      Rhode Island
          a Delaware Corporation

3.        Brookwood Laminating, Inc.,                                    Rhode Island
          a Delaware Corporation

4.        Ashford Bromley, Inc.,                                           Delaware
          a Delaware Corporation

5.        XtraMile, Inc.,                                                  Florida
          a Delaware Corporation

6.        Land and Ocean III, Inc.                                         Florida
          a Florida Corporation

7.        Strategic Technical Alliance, LLC,                              NY (pending)
          a Delaware limited liability company
</TABLE>

                                       49

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.2
                                    Consents

                                 None Required.

                                       50

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.10
                                      Name

<TABLE>
<CAPTION>
           BORROWER                                        ASSUMED NAME
           --------                                        ------------
<S>                                                 <C>
1.   Brookwood Companies                            Brookwood; Brookwood Roll Goods;
Incorporated                                        First Performance Fabrics

2.   Kenyon Industries, Inc.                        Kenyon; KDP INC.

3.   Brookwood Laminating, Inc.                     None

4.   Ashford Bromley, Inc.                          None

5.   XtraMile, Inc.                                 Uzzi Amphibious Gear

6.   Land and Ocean III, Inc.                       None

7.   Strategic Technical Alliance, LLC              Strategic Technical Alliance
</TABLE>

                                       51

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.11
                          Subsidiaries and Investments

<TABLE>
<CAPTION>
                                       AUTHORIZED                       ISSUED &
               OWNER                    CAPITAL             TYPE           O/S             SUBSIDIARY OWNED         SHARES OWNED
----------------------------------------------------------------------------------   ----------------------------------------------
<S>                                    <C>               <C>          <C>            <C>                            <C>
Brookwood Companies Incorporated          200,000        preferred        135,000    Kenyon Industries, Inc             3,000

                                       15,000,000           common     15,000,000    Brookwood Laminating, Inc            100
                                                                                     Ashford Bromley, Inc                 100
                                                                                     XtraMile, Inc.
                                                                                     Land & Ocean III, Inc.               100
                                                                                     Strategic Technical Alliance,  $     200
                                                                                     LLC
Kenyon Industries, Inc                      3,000           common          3,000
Brookwood Laminating, Inc                   3,000           common            100
Ashford Bromley, Inc                        3,000           common            100    XtraMile, Inc. (80%)             800,000
XtraMile, Inc.                          1,000,000           common      1,000,000
Land & Ocean III, Inc.                        100           common            100
Strategic Technical Alliance,                 N/A           common    $       200
LLC
</TABLE>

                                       52

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.12

                         Financial Statements; No Change

 Attached hereto is Balance Sheet of Borrower as of September 30, 2002 and 2003.

                                       53

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.13
                                      Taxes

<TABLE>
<CAPTION>
                                            STATE OF                                                  AUTHORIZED TO
ENTITY                                       INCORP.            FEDERAL ID #          STATE ID #      DO BUSINESS
--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>                   <C>             <C>
Brookwood Companies Incorporated               DE               22-295-8309                            NY, RI, NJ,
                                                                                                       CA
Kenyon Industries, Inc                         DE               22-295-8305                            RI
Brookwood Laminating, Inc                      DE               05-048-6843                            RI
Ashford Bromley, Inc                           DE               05-050-9672                            DE
XtraMile, Inc.                                 DE               65-097-9634                            FL
Land & Ocean III, Inc.                         FL               65-097-9635                            FL
Strategic Technical Alliance, LLC              DE               13-412-9609                            DE
</TABLE>

                                       54

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.14
                                   Litigation

                                      None

                                       55

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.15
                     Chief Executive Office of Each Borrower

<TABLE>
<CAPTION>
              BORROWER                                         OFFICES
              --------                                         -------
<S>                                                 <C>
1. Brookwood Companies Incorporated                 232 Madison Avenue, 10th Floor
                                                    New York, NY 10016

   Building 14 Warehouse                            36 Sherman Avenue
                                                    Kenyon, RI 02836

   Roll Goods Warehouse                             445 West Walnut Street
    Books and Records                               Gardena, CA 90248

                                                    232 Madison Avenue, 10th Floor
                                                    New York, NY 10016

2. Kenyon Industries, Inc.                          36 Sherman Avenue
                                                    Kenyon, RI 02836

3. Brookwood Laminating, Inc.                       1425 Kingstown Road
                                                    Peace Dale, RI 02883

4. Ashford Bromley, Inc.                            232 Madison Avenue, 10th Floor
                                                    New York, NY 10016

5. XtraMile, Inc.                                   2333 Stirling Road
                                                    Ft. Lauderdale, FL 33312

6. Land and Ocean III, Inc.                         2333 Stirling Road
                                                    Ft. Lauderdale, FL 33312

7. Strategic Technical Alliance, LLC                232 Madison Avenue, 10th Floor
                                                    New York, NY 10016
</TABLE>

                                       56

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.16
                                      ERISA

1. Textile Workers Pension Fund National Plan Sub-Fund

2. Textile Workers Pension Fund National Plus Plan

3. Brookwood Companies Incorporated Tax Favored Savings Plan

                                       57

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.21
                                  Indebtedness

                                      NONE

                                       58

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.22
                              Compliance with Laws
                              Environmental Matters

     1.   The Rose Hill Superfund Site. The Rose Hill Superfund site in South
Kingstown, Rhode Island names Kenyon's predecessor, Kenyon Piece and Dye, as a
Potentially Responsible Party. Kenyon Industries, Inc. (a Delaware corporation)
may be a potential party in the event the United States Government, State or
other Potentially Responsible parties choose to bring Kenyon in as a successor
in interest.

     2.   Drinking Water. The Department of Health has issued a Notice of
Violation for drinking water contamination. The Kenyon facility and a small
number of private homes supplied by the Kenyon wells must use bottled water.
Kenyon is complying with this request. The long-term resolution to this problem
remains open.

     3.   Amended Letter of Responsibility, Case No. 99-021, dated September 20,
1999. Brookwood Companies, Inc. d/b/a Kenyon Industries received an amended
letter of Responsibility from RI DEM dated September 20, 1999 alleging that the
corporation is a "responsible party" under the rules and regulation for the
investigation or remediation of hazardous materials. This Letter of
Responsibility also requires the company to undertake certain investigative
studies at the site located at Sherman Avenue, Charlestown, Rhode Island. The
corporation is complying with this request and has engaged environmental
consultants to that end.

     4.   Notice of Alleged Violations #03-09 NOAV. In October 2003, RI DEM
issued a Notice of Alleged Violations to Brookwood Laminating, Inc., alleging
violations of the Rhode Island Air Pollution Act and seeking an administrative
penalty of $379,000. Settlement negotiations are ongoing and it is anticipated
that a settlement will be reached in the first quarter of 2004.

     5.   Sulfide Issue. Over the last 18 months, wastewater from Kenyon's plant
has apparently exceeded the sulfide limit in Kenyon's discharge permit. Kenyon
and RI DEM have had numerous meetings and correspondence to discuss the excesses
and the methods of testing for sulfides. Kenyon has recently revised its methods
for measuring constituents in the wastewater and the results have shown recent
wastewater discharges have been in compliance with regulatory requirements.

                                       59

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.23
                             Contingent Liabilities

                         See Schedule 4.21 Indebtedness

                                       60

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.24
                               Bonds, Indemnities

                                      NONE

                                       61

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.25
                              Intellectual Property

<TABLE>
<CAPTION>
                                                           U.S. REG. NO.      FOREIGN REG. NO.                   ENTITY
                                                           --------------------------------------------------------------
<S>                                                        <C>                <C>                               <C>
TRADEMARKS
Assault                                                      2,495,003                                          Brookwood
Glacier X-Treme                                              2,455,187                                          Brookwood
Storm-Tech                                                   2,076,074              35612                       Brookwood
Uzzi Amphibious Gear & Design                                2,212,123                                           XtraMile
X202 U.S.A.                                                  2,700,969                                          Brookwood

PATENTS
Breathable Waterproof Laminate                               6,511,927                                          Brookwood
Australia                                                                          748805                       Brookwood
Bangladesh                                                                        1003518                       Brookwood
Europe                                                                            1109666                       Brookwood
Honk Kong                                                                         1038536                       Brookwood
Turkey                                                                            TR 2002                       Brookwood
                                                                                    01727
Canada (pending)                                                                                                Brookwood
Japan (pending)                                                                                                 Brookwood
Mexico (pending)                                                                                                Brookwood
Reversible Fabric For Use In Military
Environments And Method Of Making Same                       6,194,320                                          Brookwood
</TABLE>

                                       62

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.26
                                     Leases

<TABLE>
<CAPTION>
Lessor                         Description                                                 Entity         Mo. Payt.     Expiration
<S>                            <C>                                                       <C>             <C>            <C>
Dashal Madison LLC             232 Madison Ave., NY, NY 10th Fl.                         Marketing       $ 12,187.02     08/31/06
Peacedale Mill Associates      Laminating plant                                          Laminating      $ 18,166.67     12/31/04
Quagletti Family Trust         445 W. Walnut St., Gardena, CA 90248 (BRG whse)           BRG             $  8,160.00     04/30/06
Woon P. Ma                     415 E 37 St, NYC; apt 9H                                  Marketing       $  1,800.00     12/20/06
Melquisidec DeSalvador         21205 Yacht Club Dr., Aventura, FL 33180; Apt 3102        Marketing       $  2,900.00     02/28/04
Equitable Life Assurance       2333 Stirling Rd., Ft. Lauderdale, FL 33312               XtraMile        $  7,278.83     10/31/04
Equitable Life Assurance       2333 Stirling Rd., Ft. Lauderdale, FL 33312               XtraMile        $  7,533.58     10/31/05
</TABLE>

<TABLE>
<CAPTION>
Lessor                            Sq. Ft.  Cost/SF         Deposit       Option
<S>                               <C>      <C>           <C>             <C>
Dashal Madison LLC                         #DIV/0!       $20,372.33
Peacedale Mill Associates         49,611     $4.39       $22,512.50        none
Quagletti Family Trust            15,000     $6.53       $17,424.00   one 3 yr.
Woon P. Ma                                 #DIV/0!       $ 2,600.00        none
Melquisidec DeSalvador                                   $ 2,900.00        none
Equitable Life Assurance          15,344     $5.69
Equitable Life Assurance          15,344     $5.89       $ 7,500.00        none

                                                         $73,308.83
</TABLE>

                                       63

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.27
                            Labor Contracts/Relations

Agreement between Kenyon Industries, Inc. and Union of Needletrades, Industrial
and Textile Employees dated February 28, 1998.

                                       64

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.29

                                 Capitalization

<TABLE>
<S>                                           <C>
Brookwood Companies Incorporated              100% of issued and outstanding stock is owned by The
                                              Hallwood Group Incorporated, which issued and
                                              outstanding stock is subject to that certain Intercreditor
                                              Agreement of even date by and among Bank, Bank One
                                              N.A., and First Bank Texas N.A.

Kenyon Industries, Inc.                       100% of the issued and outstanding stock is owned by
                                              Brookwood Companies Incorporated.

Brookwood Laminating, Inc.                    100% of the issued and outstanding stock is owned by
                                              Brookwood Companies Incorporated.

Ashford Bromley, Inc.                         100% of the issued and outstanding stock is owned by
                                              Brookwood Companies Incorporated.

XtraMile, Inc.                                80% of the issued and outstanding stock is owned by
                                              Ashford Bromley, Inc., 10% of the issued and outstanding
                                              stock is owned by certain members of management, and
                                              10% of the issued and outstanding stock is owned by
                                              Amos Chess.

Land and Ocean III, Inc.                      100% of the issued and outstanding stock is owned by
                                              Brookwood Companies Incorporated.

Strategic Technical Alliance, LLC             100% of the membership interest is owned by
                                              Brookwood Companies Incorporated.
</TABLE>

                                       65

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 4.30
                                  Real Property

                               Real Property Owned

<TABLE>
<CAPTION>
Town                                Map                       Description
<S>                                 <C>                       <C>
Charlestown, RI                     029-006                   N/S South County Trail
                                    029-007                   10 Sherman Avenue
                                    029-008                   Arnold Lot
                                    029-014                   Hutchins Place
                                    028-167                   Clarke Land

Richmond, RI                        10E-12                    36 Sherman Avenue (factory)
                                    10E-12-13C                Parking Lot and right of way
                                    10E-11                    Sherman Avenue
                                    10E-12                    37 Sherman Avenue (post office)
                                    10E-10                    48 Sherman Avenue (residence)
                                    10E-4                     1 Lewiston Avenue (13 acres)
                                    10E-42                    Lewiston Avenue (barn)
</TABLE>

                              Real Property Leased

                   For leased space see Schedule 4.26, Leases

                                       66

<PAGE>

      KeyBank National Association/Brookwood Companies Incorporated, et al.

                                  Schedule 8.3
                                      Liens

Factors' Liens as reported by CT Corporation System in Search Reports of near or
even date.

                                       67
<PAGE>

                                    EXHIBIT A
                          KEYBANK NATIONAL ASSOCIATION
                      Working Capital Revolving Credit Note

                                                                January 30, 2004
$22,000,000.00                                                   Portland, Maine

         The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before January 30, 2007, the principal
amount of TWENTY-TWO MILLION DOLLARS ($22,000,000.00) (the "Working Capital
Revolving Credit Limit"), or such lesser amount as may, at the maturity hereof,
whether by declaration, acceleration or otherwise, be the aggregate unpaid
principal amount of all Working Capital Revolving Credit Loans made by the Bank
to the Borrower pursuant to the Loan Agreement referred to below.

         This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on February 1, 2004 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.

         This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of January 30, 2004 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.

         This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will pay to the Bank such further amount as
shall be sufficient to cover the cost and expense of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.

                                       68

<PAGE>

         The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

         This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       69

<PAGE>

WITNESS:                                 XTRAMILE, INC.

_____________________________            By:________________________________
                                            Name:  Ronald E. Kaplan
                                            Title: Treasurer

WITNESS:                                 LAND AND OCEAN III, INC.

_____________________________            By:________________________________
                                            Name:  Ronald E. Kaplan
                                            Title: Assistant Treasurer

WITNESS:                                 STRATEGIC TECHNICAL ALLIANCE, LLC
                                         By: Brookwood Companies Incorporated
                                             Its Sole Member

_____________________________            By:________________________________
                                            Name:  Ronald E. Kaplan
                                            Title: Chief Financial Officer

                                       70

<PAGE>

                                    EXHIBIT B
                          KEYBANK NATIONAL ASSOCIATION
                         Equipment Revolving Credit Note

                                                                 [date]
$[amount]                                                        Portland, Maine

          The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before ______________, a maturity date
five years from the date hereof, the principal amount of ____________ DOLLARS
($___________.00), or such lesser amount as may, at the maturity hereof, whether
by declaration, acceleration or otherwise, be the aggregate unpaid principal
amount of the Equipment Revolving Credit Loan made by the Bank to the Borrower
pursuant to the Loan Agreement referred to below.

         This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360 -day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below. Commencing on _________________, and on the 1st Business Day of each
month thereafter, Borrower agrees to pay to Bank fixed monthly payments of
principal, based upon a standard five-year amortization schedule, in the amount
of $____________, plus accrued interest, until and including the maturity
(whether by declaration, acceleration or otherwise). During the continuance of
any Event of Default, at the election of the Bank, the Borrower shall pay the
holder of this Note on demand by such holder, interest on the unpaid and overdue
principal of and (to the extent permitted by law) on the unpaid interest on this
Note at a rate per annum equal to the Default Rate; and provided further that in
no event shall the amount contracted for and agreed to be paid by the Borrower
as interest on this Note exceed the highest lawful rate permissible under any
law applicable hereto.

         This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Second Amended and Restated Revolving Credit Loan
and Security Agreement dated as of January 30, 2004 (as amended from time to
time, the "Loan Agreement") by and between the Borrower and the Bank. The holder
of this Note is entitled to the benefits of the Loan Agreement, and to the
benefits of the other Loan Documents referred to therein. Neither this reference
or such Loan Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the Borrower to pay the principal of
and interest on this Note as otherwise provided herein. All payments of
principal of and interest on this Note shall be payable in immediately available
funds at the address of the Bank set forth in the Loan Agreement without
deduction, setoff or counterclaim. Capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Loan
Agreement.

         This Note is subject to prepayment in whole or in part and to
acceleration on Default at times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment,
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will pay to the Bank such further amount as
shall be

                                       71

<PAGE>

sufficient to cover the cost and expense of collection including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

         The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that an Event of Default exists, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of the Borrower and any guarantor even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

         This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       72

<PAGE>

WITNESS:                                XTRAMILE, INC.

_____________________________           By:________________________________
                                           Name:  Ronald E. Kaplan
                                           Title: Treasurer

WITNESS:                                LAND AND OCEAN III, INC.

_____________________________           By:________________________________
                                           Name:  Ronald E. Kaplan
                                           Title: Assistant Treasurer

WITNESS:                                STRATEGIC TECHNICAL ALLIANCE, LLC
                                        By: Brookwood Companies Incorporated
                                            Its Sole Member

_____________________________           By:________________________________
                                           Name:  Ronald E. Kaplan
                                           Title:    Chief Financial Officer

                                       73

<PAGE>

                                    EXHIBIT C
                          KEYBANK NATIONAL ASSOCIATION
                               176 FEDERAL STREET
                                BOSTON, MA 02110

                     CONSOLIDATED BORROWING BASE CERTIFICATE

         In furtherance of the requirements of a certain Second Amended and
Restated Revolving Credit Loan and Security Agreement dated as of January 30,
2004 ("Agreement") by and among Brookwood Companies Incorporated, Kenyon
Industries, Inc., Brookwood Laminating, Inc., Ashford Bromley, Inc., XtraMile,
Inc., Land and Ocean III, Inc., Strategic Technical Alliance, LLC (collectively,
the "Borrower") and KeyBank National Association, the undersigned certifies
that, as of the close of business on _______________, the following computations
are true and correct:

Borrowing Base is defined in the Agreement.
Maximum Credit Available: $22,000,000

ELIGIBLE ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                                         ROLL
                                           BROOKWOOD      FIRST PERF.    GOODS   SOLUTIONS 4   LAMINATING         KENYON      STA
                                           ---------      -----------    -----   -----------   ----------         ------      ---
<S>                                        <C>            <C>           <C>      <C>           <C>                <C>         <C>
                        Payment Terms          30-60          60-90       30-60         30             30               30     30
                                           ---------       --------     -------    -------       --------         --------    ---
AGING BY DUE DATE

Current plus On Account
1-30 Days Past Due Date                        Manually Calculated                Manually Calculated            Manually Calculated
31-60 Days Past Due Date

           Total Eligible Receivables

                                                                     Included With BW

                90 Days Past Due Date
               >90 Days Past Due Date
                                           ---------       --------     -------    -------       --------         --------    ---
               Total Receivables                   0              0           0          0              0                0      0
                                           =========       ========     =======    =======       ========         ========    ===

           Total Eligible Receivables              0              0           0          0              0                0      0

Factor At Risk (below)
Factor Timing Differences:

               CIT
               GMAC

Less: STA Payable to Burlington
                                           ---------       --------     -------    -------       --------         --------    ---
TOTAL ELIGIBLE RECEIVABLES                         0              0           0          0              0                0      0
                                           =========       ========     =======    =======       ========         ========    ===
</TABLE>

                                       74

<PAGE>

  FACTOR CREDIT BALANCES

<TABLE>
<CAPTION>
                                                CIT      HSBC     GMAC     TOTAL
                                                --------------------------------
<S>                                             <C>      <C>      <C>      <C>
BROOKWOOD
US Domestic - CIT client #3099
Export - CIT client #6559
At Risk - CIT client #3102
US Samples - CIT client #5696
Solutions 4 - CIT client #3140
                                                --------------------------------
     Total
                                                --------------------------------

FIRST PERFORMANCE
US - CIT client #3100
Export - CIT client #6560                       --------------------------------
At Risk - CIT client #3114
                                                --------------------------------
     Total
                                                --------------------------------

BROOKWOOD ROLL GOODS
US - CIT client #3101
Export - CIT client #6561 At
Risk - CIT client #3115
                                                --------------------------------
     Total
                                                --------------------------------

STA                                             --------------------------------
CIT client #3113
                                                --------------------------------
NET FACTOR CREDIT BALANCES
                                                --------------------------------
</TABLE>

           Gross Factor Credit Balances (above)
           Less: Ineligible Factor Credit Balances                    ----------
               Brookwood Net Factor Credit Balances
               XtraMile - CIT (client 4418)                           ----------

       I.     NET ELIGIBLE FACTOR CREDIT BALANCES @ 90%               ----------

       II.    NNET ELIGIBLE ACCTS RECEIVABLE (DETAIL ABOVE) @ 80%     ----------

                                       75

<PAGE>

   III.    INVENTORY
              Gross Inventory - BRG
              Less: Reserve for Obsolete Inventory
              Other Inventory
              Less: Reserve for Obsolete Inventory                 -------
           NET ELIGIBLE INVENTORY
           50% of Net Eligible Inventory                           -------

   IV.     EQUIPMENT
             Orderly Liquidation Value of Equipment @ 12/31/03
             75% of Orderly Liquidation Value Value                -------
                                                                          ------
   V.      CALCULATED AVAILABILITY
              Total Borrowing Base
                                                                          ======

              Maximum Availability (lesser of amount above or $22,000,000)

              LESS: OUTSTANDING BALANCES
                  Revolver, Libor & Acquisition Loans
                  Trade Letters of Credit
                  Standby Letters of Credit
                  Steamship Guarantees
                  Air Releases
                  Bankers' Acceptances                             -------
                                                                          ------
              TOTAL OUTSTANDING BALANCES

           NET AVAILABLE
                                                                          ======

         The undersigned, authorized to act and acting for and on behalf of
Borrower, hereby certifies that the foregoing Borrowing Base Certificate is true
and correct to the best of his/her knowledge.

                                            BORROWER:

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       76

<PAGE>

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    XTRAMILE, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Treasurer

WITNESS:                                    LAND AND OCEAN III, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Assistant Treasurer

WITNESS:                                    STRATEGIC TECHNICAL ALLIANCE, LLC
                                            By: Brookwood Companies Incorporated
                                                Its Sole Member

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       77

<PAGE>

                                    EXHIBIT D
                          KEYBANK NATIONAL ASSOCIATION
                               176 FEDERAL STREET
                                BOSTON, MA 02110

                             COMPLIANCE CERTIFICATE

         In furtherance of the requirements of a certain Second Amended and
Restated Revolving Credit Loan and Security Agreement dated as of January 30,
2004 ("Loan Agreement") by and among Brookwood Companies Incorporated, Kenyon
Industries, Inc., Brookwood Laminating, Inc., Ashford Bromley, Inc., XtraMile,
Inc., Land and Ocean III, Inc., Strategic Technical Alliance, LLC (collectively,
the "Borrower") and KeyBank National Association ("Bank"), the undersigned
certifies that, as of the close of business on _______________, the following
computations are true and correct:

1.       No Defaults. I have read a copy of the Loan Agreement between the
         Borrower and Bank. Terms used herein and not otherwise defined herein
         shall have the meanings set forth in Section I of the Loan Agreement.
         The Borrower is not in default in the performance or observance of any
         of the covenants, terms or provisions of the Loan Agreement or any of
         the other Loan Documents. Attached hereto as Appendix I are all
         relevant calculations needed to determine whether the Borrower is in
         compliance with Section 9 of the Loan Agreement.

2.       No Material Changes; Etc. Except as disclosed on Appendix II hereto,
         since ____________ [Date of most recent financial statements furnished
         to the Bank], there have occurred no materially adverse changes in the
         financial condition or business of the Borrower as shown on or
         reflected in the balance sheet of the Borrower as at such date other
         than (a) changes in the ordinary course of business that have not had
         any materially adverse effect, either individually or in the aggregate,
         on the business or financial condition of the Borrower, and (b) changes
         resulting from the making of the Loan and the transactions contemplated
         by the Loan Agreement.

3.       No Materially Adverse Contracts; Etc. The Borrower is not subject to
         any charter, organizational, or other legal restriction, or any
         judgment, decree, order, rule or regulation, that has or is expected,
         in the reasonable judgment of the Borrower's members, managers,
         officers and directors, in the future to have a materially adverse
         effect on the business, assets or financial condition of the Borrower.
         The Borrower is not a party to any contract or, agreement that has or
         is expected, in the reasonable judgment of the Borrower's officers and
         directors, to have any materially adverse effect on the business,
         assets of financial condition of the Borrower.

                                       78

<PAGE>

Date:

                                            BORROWER:

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    XTRAMILE, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Treasurer

WITNESS:                                    LAND AND OCEAN III, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Assistant Treasurer

WITNESS:                                    STRATEGIC TECHNICAL ALLIANCE, LLC
                                            By: Brookwood Companies Incorporated
                                                Its Sole Member

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       79

<PAGE>

                                   APPENDIX I

A.   TOTAL DEBT/TANGIBLE NET WORTH

           TOTAL LIABILITIES (A)

           Shareholders Equity
     Less:

           Intangible Assets
     Equals
           TANGIBLE NET WORTH (B)

           A/B =
           MAXIMUM RATIO = 1.75:1 THROUGH 12/31/04 AND 1.5:1 THEREAFTER
                                                                           -----
     COMPLIANCE - Y/N
                                                                           -----

B.   QUARTERLY EBITDA / TOTAL FIXED CHARGES (TRAILING 12 MONTH BASIS)

<TABLE>
<CAPTION>
                                                      QTR. ENDED   QTR. ENDED    QTR. ENDED   QTR. ENDED     TOTAL
                                                      -------------------------------------------------------------
<S>                                                   <C>          <C>           <C>          <C>            <C>
           Net Income
Plus
           Interest expense
           Income Taxes
           Amortization
           Depreciation
Less
           BW Earnings from Joint Venture
                                                      -------------------------------------------------------------
           EBITDA (C)
                                                      -------------------------------------------------------------
Divided by
           Interest expense
Plus
           State Income Taxes Paid
           Required Principal Payments
           CAPEX
              Less amt. transferred to term loan
           Dividends & FIT Payments to HWG*
                                                      -------------------------------------------------------------
           TOTAL FIXED CHARGES (D)
                                                      -------------------------------------------------------------
           C DIVIDED BY D

           MINIMUM REQUIRED                                                                                  1.15:1

                                                                                                             -------
           COMPLIANCE - Y/N
                                                                                                             -------
</TABLE>

                                       80

<PAGE>

* Payment of dividends and/or federal income tax liabilities to Hallwood will be
allowed only to the extent that said cash outflows do not constitute a default
of quarterly covenant ratios.

         QUARTERLY TOTAL FUNDED DEBT/LTM EBITDA

         Total Liabilities
Plus
         All Letters of Credit
Less
         Trade Accounts Payable
         Accrued Expenses
         TOTAL FUNDED DEBT (A)

         Net Income
Plus
         Interest expense
         Income Taxes
         Amortization
         Depreciation
Less
         BW Earnings from Joint Venture
         EBITDA (B)

C.       QUARTERLY PRICING TIER

         Total Funded Debt - A
Divided by
         EBITDA (B)
         TOTAL FUNDED DEBT / EBITDA

<TABLE>
<CAPTION>
Tier        TFD/EBITDA    Prime Loans       Libor Loans
<S>    <C>                <C>               <C>
I      >=3.25x              P+0.25%         LIBOR+3.00%
II     >=3.00x and <3.25x   P+0.25%         LIBOR+2.50%
III    >=2.50 and <3.00x    P+0.25%         LIBOR+2.25%
IV     >=2.00x and <2.50    P+0.25%         LIBOR+2.00%
IV     <2.00                P+0.25%         LIBOR+1.75%
</TABLE>

APPROPRIATE PRICING TIER

                                       81

<PAGE>

                                   APPENDIX II

                            Material Adverse Changes
                                      None

                                       82
<PAGE>

                          KEYBANK NATIONAL ASSOCIATION
                      Working Capital Revolving Credit Note

                                                                January 30, 2004
$22,000,000.00                                                  Portland, Maine

         The undersigned (collectively, the "Borrower"), for value received,
hereby promise to pay to KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Bank"), or order, on or before January 30, 2007, the principal
amount of TWENTY-TWO MILLION DOLLARS ($22,000,000.00) (the "Working Capital
Revolving Credit Limit"), or such lesser amount as may, at the maturity hereof,
whether by declaration, acceleration or otherwise, be the aggregate unpaid
principal amount of all Working Capital Revolving Credit Loans made by the Bank
to the Borrower pursuant to the Loan Agreement referred to below.

         This Note shall bear interest (computed on the basis of the actual
number of days elapsed over a 360-day year) on the unpaid principal amount
hereof at the rate or rates per annum specified in the Loan Agreement referred
to below, payable monthly in arrears on the first Business Day of each month
commencing on February 1, 2004 (Except as to LIBOR Loans having an Interest
Period of 180 days, which shall be payable on the last Business Day of every
third month of said Interest Period and on the last day of said Interest Period;
otherwise, LIBOR loans are payable on the last day of the applicable Interest
Period), and at maturity (whether by declaration, acceleration or otherwise);
provided that during the continuance of any Event of Default, at the election of
the Bank, the Borrower shall pay the holder of this Note, on demand by such
holder, interest on the unpaid and overdue principal of and (to the extent
permitted by law) on the unpaid interest on this Note at a rate per annum equal
to the Default Rate; and provided further that in no event shall the amount
contracted for and agreed to be paid by the Borrower as interest on this Note
exceed the highest lawful rate permissible under any law applicable hereto.

         This Note evidences a loan or loans under, and is expressly subject to
the provisions of, a certain Revolving Credit Loan and Security Agreement dated
as of January 30, 2004 (as amended from time to time, the "Loan Agreement") by
and between the Borrower and the Bank. The holder of this Note is entitled to
the benefits of the Loan Agreement, and to the benefits of the other Loan
Documents referred to therein. Neither this reference to such Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of and interest on this Note as
otherwise provided herein. All payments of principal of and interest on this
Note shall be payable in immediately available funds at the address of the Bank
set forth in the Loan Agreement without deduction, setoff or counterclaim.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Loan Agreement.

         This Note is subject to prepayment in whole or in part and to
acceleration on Default at the times and in the manner specified in the Loan
Agreement. The maker and all endorsers of this Note hereby waive presentment
demand, notice, protest, notice of intent to accelerate, notice to accelerate,
and all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note. In case of an Event of Default
including, without limitation, a Default in the payment of any principal of or
interest on this Note, the Borrower will pay to the Bank such further amount as
shall be sufficient to cover the cost and expense of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.

         The Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of KeyCorp, or in
transit to any of them. At any time that

<PAGE>

an Event of Default exists, without demand or notice, Bank may set off the same
or any part thereof and apply the same to any liability or obligation of the
Borrower and any guarantor even though unmatured and regardless of the adequacy
of any other collateral securing the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SET OFF WITH RESPECT
TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

         This Note shall be construed in accordance with and governed by the
internal laws of the State of Maine (without giving effect to conflicts of laws
principles) and is executed as a sealed instrument as of the date first above
written.

                            [SIGNATURE PAGES FOLLOW]

                                       2

<PAGE>

WITNESS:                                    BROOKWOOD COMPANIES INCORPORATED

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    KENYON INDUSTRIES, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    BROOKWOOD LAMINATING, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       3

<PAGE>

WITNESS:                                    ASHFORD BROMLEY, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

WITNESS:                                    XTRAMILE, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Treasurer

WITNESS:                                    LAND AND OCEAN III, INC.

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Assistant Treasurer

WITNESS:                                    STRATEGIC TECHNICAL ALLIANCE, LLC
                                            By: Brookwood Companies Incorporated
                                                Its Sole Member

_____________________________               By:________________________________
                                               Name:  Ronald E. Kaplan
                                               Title: Chief Financial Officer

                                       4

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