Document:

<PAGE>
                                                                    EXHIBIT 10.1

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of May 28, 2003 (the "Amendment Date"), among INDUSTRIAL DISTRIBUTION
GROUP, INC., a Delaware corporation (the "Borrower"), those Subsidiaries of the
Borrower identified on the signature pages hereto as "Affiliate Guarantors";
Borrower and the Affiliate Guarantors are sometimes collectively referred to as
the "Obligors" or individually referred to as an "Obligor"); WACHOVIA BANK,
NATIONAL ASSOCIATION, formerly known as First Union National Bank, a national
bank ("Wachovia," or the "Bank"), as a "Lender," together with each of the other
financial institutions identified as "Lenders" on the signature pages hereto
(together with each of their successors and assigns, referred to individually as
a "Lender" and, collectively, as the "Lenders"); Wachovia, acting as agent for
the Lenders (including the Swingline Lender) in the manner and to the extent
described in Article XIII of the Credit Agreement defined below (Wachovia, when
acting in such capacity, herein called the "Administrative Agent"); FLEET
CAPITAL CORPORATION ("Fleet"), a Rhode Island corporation, as a Lender and as
Documentation Agent pursuant to the Credit Agreement; and BANK OF AMERICA, N.A.
("Bank of America"), a national bank, as a Lender and as Syndication Agent
pursuant to the Credit Agreement; for the purpose of amending that certain
Credit Agreement, dated as of December 22, 2000, among the aforesaid parties (as
amended pursuant to a First Amendment to Credit Agreement, dated as of August 1,
2001, and hereby, the "Credit Agreement") in the following particulars.
Capitalized terms used in this Amendment (including within the foregoing
recitals), but not otherwise expressly defined herein, shall have the meanings
given to such terms in the Credit Agreement.

                                    RECITALS:

                  WHEREAS, Borrower has requested that the Lenders extend the
Maturity Date from March 31, 2004 to that date which is three years from the
Amendment Date and, subject to the terms of this Amendment, the Lenders are
willing to do so; and

                  WHEREAS, in connection with such extension, Borrower, Lenders
and the Administrative Agent have agreed to amend the Credit Agreement in
certain other respects, as hereinafter set forth; and

                  WHEREAS, all Affiliate Guarantors will obtain direct and
material economic benefits from such extension being given and such amendments
being made, and have agreed to join with Borrower in executing this Amendment in
order to confirm their continuing credit support to Borrower in respect thereof;

                  NOW, THEREFORE, in consideration of the foregoing recitals and
the agreements, provisions and covenants herein contained, the receipt and
sufficiency of which are hereby acknowledged, the Obligors, together with
Lenders and the Administrative Agent, the Documentation Agent and the
Syndication Agent, each intending to be legally bound, hereby acknowledge,
covenant and agree as follows:

<PAGE>

         1.      Definitions.

         1.1      Cash Management Services. The following definition is hereby
inserted in Section 1.1 of the Credit Agreement in the appropriate alphabetic
order:

                  "Cash Management Services" means all cash management services
         extended by any Lender, individually, to the Borrower or any other
         Obligor in furtherance of, pursuant to, in accordance with or otherwise
         arising from the transactions contemplated to occur in, this Agreement
         or any other Credit Document including, without limitation, any in
         respect of a Lockbox or as a Lockbox Bank.

         1.2      Second Amendment Date. The following definition is hereby
inserted in Section 1.1 of the Credit Agreement in the appropriate alphabetical
order.

                  "Second Amendment Date" means May 28, 2003.

         1.3      Applicable Percentage. The definition of "Applicable
Percentage", set forth in Section 1.1 of the Credit Agreement, is deleted in its
entirety, and the following revised definition is substituted in its place:

                  "Applicable Percentage" shall mean, for Eurodollar Loans, Base
         Rate Loans and Unused Line Fees, the appropriate applicable percentages
         corresponding to the Leverage Ratio in effect as of the most recent
         Calculation Date (as defined below) as shown below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
 Tier          Leverage           Applicable        Applicable       Applicable
Levels         Ratio            Percentage for    Percentage for  Percentage for
                                  Eurodollar        Base Rate       Unused Line
                                     Loans            Loans             Fee
--------------------------------------------------------------------------------
<S>        <C>                  <C>               <C>             <C>
   1       > 5.0 to 1.0              3.00%            1.75%            .375%
           -

   2       > 4.5 to 1.0 but          2.75%            1.50%            .375%
           -
           < 5.0 to 1.0
           -

   3       > 4.0 to 1.0 but          2.50%            1.25%            .375%
           -
           < 4.5 to 1.0
           -

   4       > 3.5 to 1.0 but          2.25%            1.00%             .25%
           -
           < 4.0 to 1.0
           -

   5       < 3.5 to 1.0              2.00%             .75%             .25%
           -
</TABLE>

         Each Applicable Percentage shall be determined and adjusted quarterly
         on the date (each a "Calculation Date") five (5) Business Days after
         the date on which the Borrower provides the quarterly officer's
         certificate for each fiscal quarter in accordance with the provisions
         of Section 7.1(d); provided, however, that: (i)

                                       2
<PAGE>

         commencing on the Second Amendment Date, the Applicable Percentages
         shall be based on Tier Level 3 of the pricing grid shown above and
         shall remain at this Tier Level 3 until the first Calculation Date
         subsequent to June 30, 2003; and, thereafter, the Tier Level shall be
         determined by the then current Leverage Ratio; and (ii) if the Borrower
         fails to provide the officer's certificate to the Administrative Agent
         for any fiscal quarter as required by and within the time limits set
         forth in Section 7.1(d), each Applicable Percentage from the applicable
         date of such failure shall be based on Tier Level 1 until five (5)
         Business Days after an appropriate officer's certificate is provided,
         whereupon the Tier Level shall be determined by the then current
         Leverage Ratio. Except as set forth above, each Applicable Percentage
         shall be effective from one Calculation Date until the next Calculation
         Date.

         1.4      Approved Acquisition. The definition of "Approved
Acquisition", set forth in Section 1.1 of the Credit Agreement, is hereby
amended by (a) adding after the words "any Acquisition" appearing at the
beginning of clause (A) thereof the words "which is approved for consideration
hereunder as an "Approved Acquisition" by Administrative Agent, in its sole
discretion, and" (b) changing the ratio "4.5:1" in clause (viii) thereof to
"4.75:1", (b) changing the words and figure "Ten Million Dollars ($10,000,000)"
in clause (x) thereof to "Fifteen Million Dollars ($15,000,000)" and (c) by
changing clause (xi) thereof to clause (xii) and inserting therein the following
new clause (xi):

                  (xi)     no Accounts or Inventory of any Acquisition Target
         shall be included as Eligible Accounts Receivable or Eligible Inventory
         hereunder unless approved by the Administrative Agent following such
         field audit and other diligence as it shall deem appropriate;

         1.5      Borrowing Base. Clause (2) of the definition of "Borrowing
Base", set forth in Section 1.1 of the Credit Agreement, is deleted in its
entirety and the following revised clause (2) is substituted in its place:

                  (2)      an amount equal to the lesser of (i) the product of
         the Eligible Inventory multiplied by the Applicable Inventory Advance
         Rate (as hereinafter defined), but limited to Ten Million Dollars
         ($10,000,000) in the case of Qualified Inventory (as hereinafter
         defined), or (ii) Fifty Million Dollars ($50,000,000); where
         "Applicable Inventory Advance Rate" means (i) fifty-five percent (55%)
         for Non-Qualified Inventory (as hereinafter defined); and (ii) seventy
         percent (70%) for Qualified Inventory (as hereinafter defined) and
         where (i) "Qualified Inventory" means Eligible Inventory meeting the
         following conditions: (1) it is situated at an ISA Site pursuant to an
         existing ISA which is then in effect with a Customer whose credit
         quality has been approved by the Administrative Agent in its
         commercially reasonable judgment; (2) Acknowledgment Agreements in
         regard to such Inventory in form satisfactory to the Administrative
         Agent have been duly executed and are then in effect, and (3) the ISA
         or Customer Agreement contains "buyback" or "buyout" provisions with
         respect to such Inventory satisfactory to the Administrative Agent; and
         (iii) "Non-Qualified Inventory" means any Eligible Inventory except
         Qualified Inventory, including

                                       3
<PAGE>

         any Eligible Inventory at any ISA Site which fails to meet any one of
         the foregoing criteria for "Qualified Inventory"; minus

         1.6      Consolidated Fixed Charges. Clause (v) of the definition of
"Consolidated Fixed Charges", set forth in Section 1.1 of the Credit Agreement,
is deleted in its entirety and the following revised clause (v) is substituted
in its place:

                  (v)       cash income taxes paid

         1.7      Credit Documents. The definition of "Credit Documents," set
forth in Section 1.1 of the Credit Agreement, is hereby amended by adding
thereto at the end thereof the following:

                  The term "Credit Documents" shall not include, however,
                  Interest Rate Protection Agreements.

         1.8      Eligible Accounts Receivable. The definition of "Eligible
Accounts Receivable", set forth in Section 1.1 of the Credit Agreement, is
hereby amended by inserting at the beginning of clause (vii) thereof (relative
to Accounts of account debtors that are the subject of bankruptcy or similar
proceedings) the phrase "unless otherwise agreed by the Administrative Agent in
its commercially reasonable judgment" followed by a comma.

         1.9      Fee Letter. The definition of "Fee Letter", set forth in
Section 1.1 of the Credit Agreement, is hereby amended by changing the date
"December 5, 2000" therein to "April 4, 2003".

         1.10     Letter of Credit Obligations. The definition of "Letter of
Credit Obligations", set forth in Section 1.1 of the Credit Agreement, is hereby
amended by deleting the last sentence thereof and substituting the following
sentence in its place:

                  Notwithstanding the foregoing, the term "Letter of Credit
         Obligations," as and when used in this Credit Agreement for purposes of
         determining compliance with borrowing limitations, shall mean, for
         trade Letters of Credit only, an amount equal to one hundred percent
         (100%) of such Letter of Credit Obligations, minus the product of the
         then Applicable Inventory Advance Rate relative to Non-Qualified
         Inventory multiplied by the cost of the goods being purchased with a
         drawing under such letter of credit, plus duty, freight and costs of
         transport relative to such goods.

         1.11     Maturity Date. The definition of "Maturity Date", set forth in
Section 1.1 of the Credit Agreement, is hereby amended by changing the date
"March 31, 2004" therein to "May 28, 2006".

         1.12     Obligations. The definition of "Obligations," set forth in
Section 1.1 of the Credit Agreement, is changed by adding thereto, as the end of
the last line thereof, after the word "individually," the following words:

         including, without limitation, all indebtedness arising under or in
         respect of the provision of any Cash Management Services.

                                       4
<PAGE>

         1.13     Name Change. All references in the Credit Agreement and the
other Credit Documents to "First Union" or "First Union National Bank" or "First
Union Securities, Inc." henceforth shall be deemed to be references, instead, to
"Wachovia," "Wachovia Bank, National Association" and "Wachovia Securities
Corporation," respectively.

         2.       Collection. Not later than thirty (30) days after, the Second
Amendment Date, the Borrower shall have executed and delivered Lockbox
Agreements with Wachovia in anticipation of all existing Lockboxes and Lockbox
Accounts being transferred to Wachovia, and Wachovia becoming the sole Lockbox
Bank as soon as practicable thereafter.

         3.       Cash Control. Section 2.3(b)(ii)(C) of the Credit Agreement
(as previously amended) is hereby amended by changing the words and figure
"Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000)" therein to
"Fifteen Million Dollars ($15,000,000)."

         4.       Applications of Funds. Section 2.3 of the Credit Agreement
shall be further amended by adding thereto a new subsection (e), to read as
follows:

                  (e)      All monies to be applied to the Obligations, whether
         such monies represent voluntary payments by the Borrower or are
         received pursuant to acceleration of the Obligations or realized from
         any disposition of Collateral, shall be allocated among the
         Administrative Agent, the Issuing Bank and such of the Lenders as are
         entitled thereto (and, with respect to monies allocated to the Lenders,
         on a pro rata basis unless and except to the extent otherwise expressly
         provided herein), as follows: (i) to the Issuing Bank, to pay any
         Issuing Bank Fees then due and payable; (ii) to the Issuing Bank, to
         pay the amount of any drawings on any portion of the Letters of Credit
         which the Issuing Bank has honored then due and payable and for which
         the Issuing Bank has not been reimbursed by the Agent or the Revolving
         Lenders in accordance with Section 3.4; (iii) to the Administrative
         Agent, to fund any depositing of cash in respect of Letters of Credit
         then required pursuant to Section 11.2; (iv) to the Administrative
         Agent, to pay principal and accrued interest on any portion of the
         Swingline Loans then due and payable and for which the Administrative
         Agent has not been reimbursed by the Lenders in accordance with Section
         2.10(b)(ii); (v) to the Administrative Agent, to pay principal and
         accrued interest on any portion of the Revolving Loans which Agent may
         have advanced on behalf of any Lenders and for which Agent has not been
         reimbursed by such Lender or the Borrower, in accordance with Section
         2.1(d), (vi) to the Administrative Agent, first, and then to the
         Lenders, to pay the amount of expenses that have not been reimbursed,
         respectively, to the Agent or the Lenders by the Borrower (or the other
         Lenders, as applicable) in accordance with the terms of this Agreement,
         together with any interest accrued thereon; (vii) to the Administrative
         Agent, to pay any amounts owed under indemnification obligations that
         have not been paid to the Administrative Agent by the Lenders or the
         Borrower, together with interest accrued thereon; (viii) to the Lenders
         for any amounts owed under

                                       5
<PAGE>

         indemnification obligations that they have paid to the Administrative
         Agent and for any expenses that they have reimbursed to the
         Administrative Agent; (ix) to the Administrative Agent, to pay any
         Administrative Agent's Fees due and payable; (x) to the Lenders, to pay
         any Lenders' Fees and any Unused Line Fees then due and payable; (xi)
         to the Lenders, to pay accrued interest on the Revolving Loans then due
         and payable; (xii) to the Lenders, to pay Revolving Loans and any other
         Obligations then due and payable, excluding, however, any arising in
         respect of Cash Management Services or Interest Rate Protection
         Agreements; (xiii) to any Lender party to any agreement respecting Cash
         Management Services, to pay any Obligations then owing thereunder; and
         (xiv) to any Lender party to an Interest Rate Protection Agreement, to
         pay any Obligations then owing thereunder. The allocations set forth in
         this subsection (e) are solely to determine the rights and priorities
         of the Issuing Bank, the Administrative Agent and Lenders as among
         themselves and may be changed by the Issuing Bank Administrative Agent
         and Lenders at any time or from time to time without notice to or the
         consent or approval of any Obligor.

         5.       Early Termination Fee. Section 4.11 of the Credit Agreement is
hereby deleted in its entirety, and the following revised Section 4.11 is
substituted in its place:

                  4.11     EARLY TERMINATION FEE.

                  In the event that, pursuant to Section 2.2(c), the Borrower
         voluntarily prepays in full all Obligations and terminates all
         Commitments at any time prior to the second anniversary of the Second
         Amendment Date, then, notwithstanding any terms thereof or of this
         Credit Agreement to the contrary, the Borrower shall pay to the
         Administrative Agent, for the benefit of the Lenders, on the date on
         which such prepayment and termination becomes effective, an early
         termination fee, to compensate the Lenders for the loss of their
         bargain, and not as a penalty, in an amount equal to the product of (i)
         the original Revolving Credit Committed Amount; i.e., $100,000,000,
         multiplied by (ii) a percentage, which shall equal (A) one percent
         (1%), if the foregoing occurs on or prior to the first anniversary of
         the Second Amendment Date, and (B) one-half of one percent (1/2%), if
         the foregoing occurs after the first such anniversary but on or before
         the second anniversary of the Second Amendment Date. This early
         termination fee shall be in addition to, and separate from, any other
         fees and charges associated with such prepayment and termination, as
         provided herein or in any other Credit Document.

         6.       Borrowing Base Certificate Change. Existing Section 7.1(e) of
the Credit Agreement (as previously amended) is deleted in its entirety, and the
following revised Section 7.1(e) is substituted in its place:

                  (e)      not later than 12:00 Noon on the second Business Day
         of each week, a certificate, to be substantially in the form of Exhibit
         T (the "Borrowing Base Certificate"), duly completed and certified by
         an Authorized Officer of the Borrower, detailing the Obligors' Eligible
         Accounts Receivable as of the most recent date of determination (which
         shall be determined not less frequently than

                                       6
<PAGE>

         monthly) and Eligible Inventory as of each Friday of the immediately
         preceding week (unless the Administrative Agent requires otherwise, in
         its commercially reasonable judgment). Notwithstanding the foregoing,
         however, if (i) no Event of Default or Default exists, and (ii) Average
         Excess Availability is at least Twenty Million Dollars ($20,000,000),
         the Borrower, at its election, may defer the reporting of the Borrowing
         Base from weekly to monthly, in which event such report shall be due
         not later than the thirtieth (30th) day of each month (or if such day
         is not a Business Day, then, on the next succeeding Business Day). In
         addition, on the thirtieth (30th) day of each month (or if such day is
         not a Business Day, then on the next succeeding Business Day), the
         Borrower shall furnish a written report to the Lenders setting forth
         (i) the accounts receivable aged trial balance at the immediately
         preceding month end for each account debtor, aged by due date, which
         aging reports shall indicate which Accounts are current, up to 30,
         30-to-60 and over 60 days past due and shall list the names and
         addresses of all applicable account debtors, (ii) a monthly accounts
         payable aging with such aging to be in form satisfactory to the
         Administrative Agent, (iii) a schedule of Inventory owned by each
         Obligor by location and category, in summary form, together with, on at
         least a quarterly basis, a detailed report in respect thereof, and (iv)
         a monthly report on the addition of any new locations of Inventory
         (including ISA Sites) and the entry into any new ISA. The
         Administrative Agent may, but shall not be required to, rely on each
         Borrowing Base Certificate delivered hereunder as accurately setting
         forth the available Borrowing Base for all purposes of this Credit
         Agreement until such time as a new Borrowing Base Certificate is
         delivered to the Administrative Agent in accordance herewith; Borrowing
         Base Certificates may be prepared and submitted to the Lenders on a
         more frequent basis than weekly (or, in the Administrative Agent's
         discretion, less frequently, but in no case less than monthly),
         provided, however, that such certificate complies with the requirements
         set forth elsewhere herein;

         7.       Minimum Tangible Net Worth. Section 8.4 of the Credit
Agreement is hereby deleted in its entirety and the following revised Section
8.4 is substituted in its place:

                  8.4       MINIMUM TANGIBLE NET WORTH.

                  The Borrower shall maintain a minimum Consolidated Tangible
         Net Worth, measured quarterly, at the end of each fiscal quarter,
         beginning on June 30, 2003, equal in amount to the sum of (i)
         eighty-five percent (85%) of actual Tangible Net Worth as of December
         31, 2002, as determined by the Administrative Agent from the Borrower's
         audited financial statements for the fiscal year ended December 31,
         2002 delivered pursuant to Section 7.1 (a) (the "Base Amount") plus
         (ii) fifty percent (50%) of Consolidated Net Income (excluding losses),
         determined quarterly for each fiscal quarter of the Borrower occurring
         thereafter, commencing with the Fiscal Quarter ending March 31, 2003,
         on a cumulative basis.

         8.       Appraisals. Section 14.8 of the Credit Agreement is hereby
amended by adding the following sentence at the end of such Section:

                                       7
<PAGE>

         Without limitation of the foregoing, Obligors shall pay all reasonable
         out-of-pocket costs and expenses of the Administrative Agent in
         connection with its obtaining, from time to time, as it shall determine
         in its commercially reasonable judgment, appraisals of Obligors'
         Inventory.

         9.       Conditions Precedent. The amendments set forth herein shall
not become effective unless and until (a) each Obligor shall have delivered to
the Administrative Agent copies of resolutions of its Board of Directors or
similar managing body approving and adopting this Amendment and any other Credit
Documents executed in connection with this Amendment, the transactions
contemplated herein and therein and authorizing the execution and delivery
hereof and thereof, certified by a secretary or assistant secretary of such
Obligor to be true and correct and in force and effect as of the Closing Date;
(b) each Obligor shall have delivered to the Administrative Agent copies of
certificates of good standing, existence or equivalent with respect to such
Obligor certified as of a recent date by the appropriate Governmental
Authorities of its state or other jurisdiction of incorporation; (c) each
Obligor shall have executed and delivered to the Administrative Agent an
amendment to the Security Agreement (which may be in the form of an amendment
and restatement, in its entirety, thereof) updating the terms thereof and
otherwise to be in a form and substance satisfactory to the Administrative
Agent; (d) to the extent not previously delivered to the Administrative Agent
pursuant to the Security Agreement each Obligor shall have endorsed and
delivered to the Administrative Agent as additional Collateral any Instrument
held by it; (f) each Obligor shall have delivered to the Administrative Agent
such other documents, instruments and agreements as it may request in connection
herewith; and (e) Borrower shall have paid to the Administrative Agent and
Lenders, as applicable, each of the fees payable to the Administrative Agent and
Lenders on the Amendment Date pursuant to that certain Fee Letter, dated as of
April 4, 2003 between Borrower and Administrative Agent.

         10.      Certain Representations And Warranties. Each Obligor
represents and warrants to the Lenders as inducements to their entry into this
Amendment that: (a) it has the power and authority to enter into, deliver and to
perform this Amendment and any Credit Documents to be executed and delivered in
connection herewith (herein, "Amendment Documents"), and to incur any
obligations provided for in this Amendment and any Amendment Documents, all of
which have been duly authorized and approved in accordance with its corporate
documents; (b) it has obtained all consents or approvals from any Person
necessary to permit it to enter into and perform under the Amendment Documents
without its being in violation of any material agreements with such Person; (c)
this Amendment, together with all other Amendment Documents, shall constitute,
when executed, its valid and legally binding obligations in accordance with
their respective terms; (d) except with respect to events or circumstances
occurring subsequent to the date thereof and known to the Lenders, all
representations and warranties made by it in the Credit Agreement remain true
and correct in all material respects as of the date hereof, with the same force
and effect as if all such representations and warranties were fully set forth
herein (except to the extent that any such representations or warranties refer
to a specific date or period); (e) its obligations under the Credit Agreement
and the other Credit Documents remain valid and enforceable obligations, and the
execution and delivery of the Amendment and the other Amendment Documents shall
not be construed as a novation of the Credit Agreement or any of the other
Credit Documents; (f) as of the Amendment Date, it has no knowledge of any
offsets or defenses existing in its favor in respect of the payment of any of
the

                                       8
<PAGE>

Obligations; and (g) as of the Amendment Date, after giving effect to this
Amendment, it has no knowledge that any Default or Event of Default exists.

          11.      Miscellaneous.

                  (a)      Reference to Agreement and Note. This Amendment shall
become effective upon its execution by all parties hereto and, at such time, its
effective date shall be the date of this Amendment. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to "this Agreement" and
each reference in the other Credit Documents to the Loan Agreement, shall mean
and be a reference to the Credit Agreement as amended hereby.

                  (b)      Effect on Credit Documents. Except as specifically
amended above, the Credit Agreement and all other Credit Documents shall remain
in full force and effect and are hereby ratified and confirmed.

                  (c)      No Waiver. The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power, or remedy
of the Agent or Lenders under any of the Credit Documents, nor constitute a
waiver of any provision of any of the Credit Documents.

                  (d)      Costs and Expenses. The Borrower agrees to pay on
demand all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, reproduction, execution, and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect hereto. All such fees and charges, if not paid promptly when
due, may be charged directly as Revolving Loans.

                  (e)      No Novation. Nothing contained herein is intended, or
shall be construed, to constitute a novation of the Credit Agreement or any
Credit Document.

                  (f)      Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of Georgia, without
giving effect to conflict of law provisions.

                  (g)      Credit Document. This Amendment constitutes a Credit
Document. (a)

                                       9
<PAGE>

         IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed under seal and delivered by their proper and duly authorized officers
as of the date set forth above.

                                 BORROWER:

                                 INDUSTRIAL DISTRIBUTION GROUP, INC. (SEAL)

                                 By: /s/ Jack P. Healey
                                    ------------------------------------------
                                      Jack P. Healey, Senior Vice President

                                       10
<PAGE>

                                AFFILIATED GUARANTORS:

                                IDG USA, LLC            (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       11
<PAGE>

                                BUFORD BROS., INC.              (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       12
<PAGE>

                                CARDINAL MACHINERY, INC.         (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       13
<PAGE>

                                E.G. BLACKSTONE COMPANY         (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       14
<PAGE>

                                IDG-MEXICO, INC.        (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       15
<PAGE>

                                THE NEW ENGLAND GROUP INDUSTRIAL
                                DISTRIBUTORS, INC.      (SEAL)

                                By: /s/ Jack P. Healey,
                                    ----------------------------
                                    Jack P. Healey,
                                    Secretary

                                       16
<PAGE>

                                ADMINISTRATIVE AGENT AND LENDER:

                                WACHOVIA BANK, NATIONAL         (SEAL)
                                ASSOCIATION, as Administrative Agent and
                                as a Lender

                                By: /s/ Scott Goldstein
                                   --------------------------------------
                                   Name:    Scott Goldstein
                                           -------------------------------
                                   Title:   Vice President
                                           -------------------------------

                                       17
<PAGE>

                                OTHER LENDERS:

                                FLEET CAPITAL CORPORATION,              (SEAL)
                                as Documentation Agent and as a Lender

                                By:  /s/ Kevin Nodell
                                    --------------------------------------
                                Name:    Kevin Nodell
                                      ------------------------------------
                                Title:   AVP
                                      ------------------------------------

                                       18
<PAGE>

                                BANK OF AMERICA, N.A.,          (SEAL)
                                as Syndication Agent and as a Lender

                                By:  /s/ John Olsen
                                   -------------------------------------
                                Name:  John Olsen
                                Title: Vice President

                                       19
<PAGE>

                                PNC BANK, NATIONAL ASSOCIATION,         (SEAL)
                                as a Lender

                                By:  /s/ Jundie Cademan
                                   -------------------------------------
                                Name:  Jundie Cademan
                                Title: Vice President

                                       20
<PAGE>

                                WHITEHALL BUSINESS CREDIT       (SEAL)
                                CORPORATION, as a Lender

                                By: /s/ Bradford Mitch
                                    --------------------------------------
                                Name:  Bradford Mitch
                                Title: V.P.

                                       21<PAGE>
                                                                     EXHIBIT 4.4

         THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE DISPOSED OF FOR VALUE UNLESS A REGISTRATION
STATEMENT HAS BECOME EFFECTIVE WITH RESPECT TO SUCH WARRANT OR SECURITIES UNDER
THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS OR IN THE OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THERE IS AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR SUCH REGISTRATION IS NOT OTHERWISE REQUIRED.

                                    [FORM OF]
                        THE ULTIMATE SOFTWARE GROUP, INC.
                                     WARRANT

                                                Dated as of         [2002/2003]
                                                              No:

         THIS IS TO CERTIFY THAT, for value received,           (the "Holder")
is entitled to purchase from The Ultimate Software Group, Inc., a Delaware
corporation (the "Company"), prior to 5:00 p.m., New York City time
on          [2006/2007] (the "Expiration Date"), at the offices of the
Company, up to           shares (each a "Share" and collectively, the
"Shares") of common stock, par value $0.01 per share ("Common Stock"), of the
Company at an exercise price of $4.00 per Share (subject to adjustment pursuant
to Article III, the "Exercise Price"), upon the terms and conditions as
hereinafter provided.

         Certain terms used in this Warrant are defined in Article IV.

                                   ARTICLE I
                               EXERCISE OF WARRANT

         1.1 METHOD OF EXERCISE. To exercise this Warrant in whole or in part,
the Holder shall deliver to the Company (a) this Warrant, (b) a written notice,
in substantially the form of the Subscription Notice attached hereto as EXHIBIT
A, of such Holder's election to exercise this Warrant, which notice shall
specify the number of Shares to be purchased (in lots of not less than 10,000
Shares), the denominations of the Share certificate or certificates desired and
the name or names in which such certificates are to be registered and (c)
payment in immediately available funds or certified check of the Exercise Price
multiplied by the number of Shares to be purchased upon such exercise (the
"Aggregate Exercise Price") UNLESS the Holder elects in the Subscription Notice
to exercise the Warrant (or a portion thereof) by authorizing the Company to
withhold from issuance and apply as payment of the Aggregate Exercise Price such
number of Shares otherwise issuable upon such exercise of the Warrant which,
when multiplied by the Market Price (as defined below) of the Shares as of the
date such Subscription Notice is received by the Company, is equal to the
Aggregate Exercise Price (and such withheld Shares shall no longer be issuable
under this Warrant).

                                       1
<PAGE>

         The Company shall as promptly as practicable, and in any event within
five Business Days after receipt of the Subscription Notice, execute and deliver
or cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of Shares to which
the Holder is entitled. The Share certificate or certificates so delivered shall
be in such denominations as may be specified in such notice and shall be issued
in the name of the Holder or such other name or names as shall be designated in
such notice. Such certificate or certificates shall be deemed to have been
issued, and the Holder or any other person so designated to be named therein
shall be deemed for all purposes to have become holders of record of such
Shares, as of the date the aforementioned notice is received by the Company. If
this Warrant shall have been exercised only in part, unless this Warrant shall
have expired, the Company shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing the rights to
purchase the remaining Shares called for by this Warrant, which new Warrant
shall in all other respects be identical to this Warrant. The Company shall pay
all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of Share certificates and new Warrants,
except that, if Share certificates shall be registered in a name or names other
than the name of the Holder, funds sufficient to pay all transfer taxes payable
as a result of such transfer shall be paid by the Holder at the time of
delivering the aforementioned notice of exercise or promptly upon receipt of a
written request of the Company for payment.

         1.2 VESTING OF WARRANT. This Warrant is fully vested and exercisable as
of the date hereof.

         1.3 SHARES TO BE FULLY PAID AND NONASSESSABLE; RESERVATION. All Shares
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable and the Company shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the purpose of issuance
upon the exercise of this Warrant, such number of Shares as shall be issuable
upon the exercise hereof.

         1.4 NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be
required to issue fractions of Shares upon exercise of this Warrant. If any
fraction of a Share would, but for this Section, be issuable upon any exercise
of this Warrant, in lieu of such fractional Share the Company shall pay to the
Holder, in cash, an amount equal to the same fraction of the Market Price per
Share of outstanding Shares at the close of business on the Business Day
immediately prior to the date of such exercise.

         1.5 SHARE LEGEND. Each certificate for Shares issued upon exercise of
this Warrant, unless at the time of exercise such Shares are registered under
the Securities Act, shall bear the following legend:

                  THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT
         BE OFFERED FOR SALE, SOLD OR OTHERWISE DISPOSED OF FOR VALUE UNLESS A
         REGISTRATION STATEMENT HAS BECOME EFFECTIVE WITH RESPECT TO SUCH
         SECURITIES UNDER THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS OR

                                       2
<PAGE>

         IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE CORPORATION
         THERE IS AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
         THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR SUCH
         REGISTRATION IS NOT OTHERWISE REQUIRED.

         Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act) shall also bear such legend unless the holder of such
certificate shall have delivered to the Company an opinion of counsel, in
writing and addressed to the Company (which counsel and opinion shall be
reasonably acceptable to the Company), that the securities represented thereby
need no longer be subject to restrictions on resale under the Securities Act or
any state securities laws.

                                   ARTICLE II
                                  TRANSFER AND
                             REPLACEMENT OF WARRANTS

         2.1 NO TRANSFER. Except as provided herein, the Holder of this Warrant,
by its acceptance hereof, covenants and agrees that neither this Warrant nor any
interest herein may be sold, transferred, pledged or hypothecated. Neither the
Shares issuable upon exercise hereof nor any interest therein may be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of, except
pursuant to (i) an effective registration statement under the Securities Act and
any applicable state securities laws or (ii) an exemption from the registration
requirements of the Securities Act and any applicable state securities laws,
such exemption to be evidenced by such documentation as the Company may
reasonably request, including an opinion of counsel, in writing and addressed to
the Company (which counsel and opinion shall be reasonably satisfactory to the
Company), that such transfer is not in violation of the Securities Act and any
applicable state laws. The Company shall treat the Holder, or the transferee of
the Holder as permitted hereunder, as the holder and owner hereof for all
purposes.

         2.2 LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company, at the Holder's expense, will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of Shares.

                                       3
<PAGE>

                                  ARTICLE III
                              ADJUSTMENT PROVISIONS

         3.1 ADJUSTMENTS GENERALLY. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger or
consolidation, or the sale, conveyance, lease or other transfer by the Company
of all or substantially all of its property, or any other change in the
corporate structure or shares of the Company, pursuant to any of which events
the then outstanding shares of Common Stock are split up or combined, or are
changed into, become exchangeable at the holder's election for, or entitle the
holder thereof to, other shares of stock, or in the case of any other
transaction described in Section 424(a) of the Internal Revenue Code of 1986,
the Board of Directors of the Company shall change the number and kind of Shares
(including by substitution of shares of another corporation) subject to this
Warrant and/or the Exercise Price in the manner that it shall reasonably deem to
be equitable and appropriate.

         Notwithstanding anything herein to the contrary, upon a Change of
Control in which shares of Common Stock are converted into cash, securities or
other property, this Warrant shall be terminated and the Holder shall receive,
with respect to each Share issuable under this Warrant at such time, a payment
in cash equal to the excess of the Change of Control Price (as defined below) of
the Share over the Exercise Price. For purposes of this section, "Change of
Control Price" shall mean the average fair market value (as determined by the
Board of Directors in good faith) of such cash, securities and other property
received, in connection with the Change of Control, by holders of Common Stock
with respect to each share of Common Stock.

         3.2 NOTICE OF ADJUSTMENT. Within thirty (30) days after any action is
taken which requires an adjustment or readjustment pursuant to this Article III,
the Company shall give written notice to the Holder of such event, and, if
determinable, the required adjustment and the computation thereof. If the
required adjustment is not determinable at the time of such written notice, the
Company shall give written notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.

                                   ARTICLE IV
                                   DEFINITIONS

         The following terms, as used in this Warrant, have the following
respective meanings:

         "BUSINESS DAY" means each day in which banking institutions in New York
City are not required or authorized by law or executive order to close.

         "CHANGE OF CONTROL" means:

                  (i) The consummation of any consolidation or merger of the
         Company pursuant to which the stockholders of the Company immediately
         prior to the merger or consolidation do not represent, immediately

                                       4
<PAGE>

         after the merger or consolidation, the beneficial owners (within the
         meaning of Rule 13d-3 under the Securities Exchange Act of 1934 (the
         "Exchange Act")) of 50% or more of the combined voting power of the
         Company's (or the surviving entity's) then outstanding securities
         ordinarily having the right to vote (other than rights occurring in
         special circumstances) in the election of directors;

                  (ii) The consummation of any sale, lease, exchange or transfer
         (in any single transaction or series of related transactions) of all or
         substantially all of the assets or business of the Company and its
         Subsidiaries; or

                  (iii) The occurrence of any event the result of which is that
         any "person" (as such term is used in Sections 13(d)(3) and 14(d)(2) of
         the Exchange Act), other than (A) the Company or any Subsidiary, or (B)
         any employee benefit plan sponsored by the Company or any Subsidiary,
         shall become the beneficial owner (within the meaning of Rule 13d-3
         under the Exchange Act) of securities of the Company representing more
         than 50% of the combined voting power of the Company's then outstanding
         securities ordinarily having the right to vote (other than rights
         accruing in special circumstances) in the election of directors, as a
         result of a tender, leveraged buyout or exchange offer, open market
         purchases, privately negotiated purchases, other arrangements or
         understandings or otherwise.

         "COMPANY" shall have the meaning set forth in the first paragraph of
this Warrant.

         "EXERCISE PRICE" shall have the meaning set forth in the first
paragraph of this Warrant.

         "EXPIRATION DATE" shall have the meaning set forth in the first
paragraph of this Warrant.

         "HOLDER" shall have the meaning set forth in the first paragraph of
this Warrant.

         "MARKET PRICE" means, as of any date, (i) if shares of Common Stock are
listed on a national securities exchange, the average of the closing sale prices
per share therefor on the largest securities exchange on which such shares are
traded on the last ten (10) trading days before such date, (ii) if such shares
are listed on the Nasdaq National Market but not on any national securities
exchange, the average of the closing sales prices per share therefor on the
Nasdaq National Market on the last ten (10) trading days before such date, (iii)
if such shares are not listed on either a national securities exchange or the
Nasdaq National Market, the average of the sales prices per share therefor on
the last twenty (20) trading days before such date or, (iv) if no such sales
prices are available, the parties hereto agree for the purposes of this Warrant

                                       5
<PAGE>

that the current Market Price shall be as determined by an investment banking or
appraisal firm of recognized national standing mutually agreed upon by the
Company and the Holder.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SHARES" shall have the meaning set forth in the first paragraph of
this Warrant.

         "SUBSIDIARY" means any corporation of which 50 percent or more of the
combined voting power of all classes of stock is owned by the Company or a
Subsidiary of the Company.

                                   ARTICLE V
                                 MISCELLANEOUS

         5.1 EXPIRATION. This Warrant shall expire and be of no further force
and effect on the Expiration Date.

         5.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt by the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

                  if to the Company, to:

                  The Ultimate Software Group, Inc.
                  2000 Ultimate Way
                  Weston, Florida 33326-6350
                  Attention: Robert Manne, Esq.
                  Facsimile: (954) 331-7100

                  with a copy to:

                  Dewey Ballantine LLP
                  1301 Avenue of the Americas
                  New York, New York  10019
                  Attention:     James A. FitzPatrick, Jr.
                  Telecopy:      (212) 259-6333

                  if to the Holder, to:

                  Facsimile:

                                       6
<PAGE>

         5.3 AMENDMENTS. The provisions of this Warrant may be amended, modified
or waived with (and only with) the written consent of the Company and the
Holder.

         5.4 GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CHOICE OF
LAW PRINCIPLES.

         5.5 SURVIVAL OF AGREEMENTS. All covenants and agreements made by the
parties herein shall be considered to have been relied upon by each party and
shall survive the issuance and delivery of this Warrant, and shall continue in
full force and effect so long as this Warrant is outstanding.

         5.6 SUCCESSOR AND ASSIGNS. All covenants, stipulations, promises and
agreements in this Warrant contained by or on behalf of the Company shall bind
its successors and assigns, whether so expressed or not.

         5.7 WITHHOLDING. The Company shall be entitled to withhold any amounts
required to be withheld under applicable law from any amounts to be paid to the
Holder hereunder.

         5.8 SEVERABILITY. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

         5.9 SECTION HEADINGS. The section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.

         5.10 NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company and no dividends shall be
payable or accrue in respect of this Warrant or the interest represented hereby
or the Shares underlying this Warrant exercisable hereunder unless and until and
only to the extent this Warrant shall be exercised.

         5.11 NO REQUIREMENT TO EXERCISE. Nothing contained in this Warrant
shall be construed as requiring the Holder to exercise this Warrant.

         5.12 COUNTERPARTS This Warrant may be executed in two or more
counterparts, all of which shall be considered one and the same instrument.

                                       7
<PAGE>

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first above written.

                              THE ULTIMATE SOFTWARE GROUP, INC.

                              By:
                                  ----------------------------------------------
                                   Name:  Scott Scherr
                                   Title: President and Chief Executive Officer

  Acknowledged and Agreed
  to this       [2002/2003]

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

                                       8
<PAGE>

                                                                       EXHIBIT A

                               SUBSCRIPTION NOTICE

                    (To be executed upon exercise of Warrant)

To:  The Ultimate Software Group, Inc.

                  The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the attached Warrant for, and to purchase
thereunder, ____________ Shares, as provided for therein, and either (mark one
with an X) ____tenders herewith payment of the Aggregate Exercise Price in
immediately available funds or ____ authorizes the Company to withhold from
issuance a number of Shares issuable upon such exercise of the Warrant which
when multiplied by the Market Price of the Shares as of the date such
Subscription Notice is received by the Company is equal to the Aggregate
Exercise Price (failure to indicate a method of payment shall be deemed an
election to pay the Aggregate Exercise Price in immediately available funds).

                  Please issue a certificate or certificates for such Shares in
the following name or names and denominations:

                  If said number of Shares shall not be all the Shares issuable
upon exercise of the attached Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of such Shares less any fraction of
a Share paid in cash.

Dated:

                                     [                          ]

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

                                       9

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