10-K405

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

OR

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

FOR THE TRANSITION PERIOD FROM                              TO                             

COMMISSION FILE NUMBER 0-13198

MORTON INDUSTRIAL GROUP, INC.
(Exact name of registrant as specified in its charter)

Georgia
(State or other jurisdiction of
Incorporation or organization) 38-0811650
(I.R.S. Employer Identification No.)

1021 W. Birchwood, Morton, Illinois 61550
(Address of principal executive offices)

(309) 266-7176
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:
Class A Common Stock, par value $.01 per share
(Title of class)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

        As of March 5, 2002, the aggregate market value of the Class A Common Stock held by non-affiliates was approximately $1,500,000 and there were 4,400,850 shares of Class A Common Stock and 200,000 shares of Class B Common Stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the definitive Proxy Statement of the Registrant for the Annual Meeting of Shareholders to be held in June, 2002 are incorporated by reference into Part III hereof.

        "Safe Harbor" Statement Under The Private Securities Litigation Reform Act Of 1995: This annual report contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements containing the words "anticipates," "believes," "intends," "estimates," "expects," "projects" and similar words. The forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results expressed or implied by such forward looking statements. Such factors include, among others, the following: the loss of certain significant customers; the cyclicality of our construction and agricultural sales; risks associated with our acquisition strategy; general economic and business conditions, both nationally and in the markets in which we operate or will operate; competition; and other factors referenced in the Company's reports and registration statements filed with the Securities and Exchange Commission. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward looking statements. The forward looking statements contained herein speak only of the Company's expectation as of the date of this annual report. We disclaim any obligations to update any such factors or publicly announce the result of any revisions to any of the forward looking statements contained herein to reflect future events or developments.

PART I

Item 1. Business

General Development of the Business

        On January 20, 1998, Morton Metalcraft Holding Co. and its subsidiaries ("Morton") merged (the "Merger") with MLX Corp. ("MLX"), with MLX being the surviving corporation. As a result of the Merger, Morton ceased to exist as a separate corporate entity and MLX amended its Articles of Incorporation to change the corporate name of MLX to Morton Industrial Group, Inc. (the Company). Morton was engaged in the business of manufacturing fabricated metal components for construction and agricultural original equipment manufacturers.

        Since the date of Merger, we have made four acquisitions in 1998, one acquisition in 1999 and one disposition at the end of 1999.

        We established our Morton Custom Plastics Division in March 1998 through the acquisition of Carroll George Inc., located in Northwood, Iowa, a manufacturer of thermoformed acoustic products for construction and agricultural original equipment manufacturers. We expanded our plastic manufacturing capabilities and capacity with the acquisition of Mid-Central Plastics in May, 1998. Operating out of West Des Moines, Iowa, this facility specializes in manufacturing injection molded plastic products for construction and agricultural original equipment manufacturers as well as other industrial customers. We sold the assets of Carroll George Inc. on December 31, 1999.

        In April 1998, we acquired B&W Metal Fabricators, a sheet metal fabricator with a facility in Welcome, North Carolina. Through the acquisition of B&W Metal Fabricators, we expanded our presence in the southeastern United States, allowing us to better serve our existing customers. We also acquired certain assets of SMP Steel Corporation in 1998, including its sheet metal fabrication facility in Honea Path, South Carolina. The acquisition of these assets added metal fabrication capacity for our growing business in the southeastern United States.

        On April 15, 1999, we acquired from Worthington Custom Plastics three manufacturing facilities that produce plastic components for industrial original equipment manufacturers. The Worthington acquisition expanded our plastic product offerings to include washing machine parts, electronics housings and other injection molded and thermoformed plastic products. The Worthington acquisition provided us critical mass in the plastics business and added new original equipment manufacturers to our customer base.

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Narrative Description of Business

BUSINESS

Overview

        We are a contract manufacturer of highly engineered metal and plastic components and subassemblies for industrial, construction, agricultural and recreational vehicle original equipment manufacturers ("OEM's"). Our metal products include cabs, engine enclosures, panels, platforms, frames and complex weldments used in backhoes, excavators, tractors, motor homes and similar industrial equipment. Our plastic products include parts used in off-road recreational vehicles, home appliances, aircraft interiors, electronic equipment enclosures and covers, marine engines and commercial lighting products. Our largest customers include Deere & Co. ("Deere"), Caterpillar Inc. ("Caterpillar"), GE Appliances, B/E Aerospace, Compaq and Honda. Our twelve manufacturing facilities are located in the midwestern and southeastern United States in close proximity to their customers.

MARKETS

        Customers use our products in industrial, construction, agricultural and recreational vehicle equipment. As OEM's in these industries have intensified their focus on core competencies, they have increasingly outsourced more of their production parts to reduce costs. To effectively manufacture products for OEMs, suppliers must invest in technologically advanced equipment, develop in-house design capabilities, and coordinate manufacturing and product delivery with their customers.

        Historically, our largest customers, Deere, Caterpillar, GE Appliances, B/E Aerospace, Compaq and Honda, have been supplied by a large number of local suppliers that would each produce a small number of products. As these OEMs have increased the complexity of their equipment and become more dependent on component and subassembly suppliers, they have reduced the size of their supplier base and have established close relationships with a smaller number of sophisticated suppliers who can provide a range of services, including design engineering, prototyping, sophisticated quality systems, and just-in-time delivery. The high levels of service necessary to serve these customers, coupled with significant tooling investments, have resulted in the sole-sourcing of many products rather than dual or multi-sourcing. Currently, we are the sole-source provider of over 85% of the products that we supply to our customers. As these customers continue to reduce the size of their supplier base and outsource a growing percentage of their product needs, we expect to become the sole-source provider on an increasing number of products.

Industrial Equipment

        We produce a range of components and subassemblies for equipment used in a variety of industrial applications. Our products are used in home appliances, computer equipment, aircraft interiors and commercial lighting products. Customers in the industrial equipment area generally serve stable or growth markets, and these customers include GE Appliances, Compaq, B/E Aerospace, Caterpillar and Lithonia Lighting. Industrial equipment products account for approximately 40% of our 2001 net sales.

Construction Equipment

        The $22 billion U.S construction equipment industry includes construction, earth moving and forestry equipment, as well as some material handling equipment, lifts, off-highway trucks and a variety of machines for specialized industrial applications. Caterpillar and Deere dominate the U.S. construction equipment industry, and together accounted for approximately 50% of total unit sales in 2001. We supply metal components and subassemblies, such as engine enclosures, cabs, platforms, frames and complex weldments as well as plastic components such as interior cab dash surround panels, air ducts and handles. Our customers use these products in backhoes, excavators, wheel loaders, skid steer loaders, lifts and

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similar construction equipment. Our sales per construction equipment vehicle range from $500 to $2,500. Construction equipment products account for approximately 33% of our 2001 net sales.

Agricultural Equipment

        The $15 billion U.S. agricultural equipment industry includes large, relatively expensive products such as tractors, combines and other farming equipment. Deere and Caterpillar accounted for approximately 35% of total agricultural equipment unit sales in 2001. We supply metal components and subassemblies such as steps, fenders, feeder housings, grills, and landing decks as well as plastic components such as fenders, tool boxes, facia and covers used in tractors, combines and other agricultural equipment. Our sales per agricultural equipment vehicle range from $200 to $4,000. Agricultural equipment products account for approximately 17% of our 2001 net sales.

Recreational Equipment

        We serve the rapidly growing recreational equipment market with a variety of plastic and metal components and subassemblies. Honda, Arctic Cat, Yamaha and Winnebago make up a growing base for our market that accounted for 10% of our 2001 net sales.

PRODUCTS AND SERVICES

Products

        Our investments in modern equipment and systems have allowed us to produce a broad line of highly engineered components and subassemblies. We strive to meet customers' needs for design engineering, prototyping, product fabrication and just-in-time delivery.

Sheet Metal Fabrication

        Our sheet metal fabrication capabilities include laser cutting, forming, press punching, welding, painting and assembly processes. Our sheet metal fabrication processes operate on information created by CAD/CAM software, utilize optic laser cutting machines to cut parts at high speeds and use robotic welders to complement manual welding operations. Our painting operations are capable of producing the wide variety of paint finishes required by customers.

        Fabricated Sheet Metal Products Include:

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Sheet Metal Enclosures and Boxes—generator set enclosures, electrical and battery boxes, panels, doors, hoods and covers used in backhoes, excavators and tractors.



•

Special Weldments—lift arms, seat modules, frames, guards, platforms, step assemblies and cabs used in backhoes, excavators, crawlers, tractors and skid steer loaders; components for refuse haulers and recreational vehicles



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Fabricated Steel Tanks—fuel and hydraulic fluid reservations used in motor graders, trucks, crawlers, wheel loaders and excavators.



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Feeder Housings—feeder housings and other combine components manufactured for agricultural equipment.



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Sheet Metal Component Packages—laser cut and formed parts that are used in higher level assemblies at customer locations. These products include brackets, plates and frame components that are used in a wide variety of customer end products.



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Store Fixtures—backframes, lights and brackets used in store displays.

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Injection Molded and Thermoformed Plastic Components

        Our injection molded plastic capabilities include such secondary and assembly processes as ultrasonic and hot plate welding, adhesive and solvent bonding, insert staking, snapfit and fastener assembly. Our capabilities in injection molded processes include a wide range of injection molding machine press sizes and gas assist units. Both manual and robotic painting capability exists at a number of plastics facilities. Our thermoformed plastic capabilities include vacuum and pressure thermoforming, robotic router trimming, and adhesive and ultrasonic bonding. In addition, we have extensive capability in plastic machining including specialized equipment to handle plastic gears.

        Plastic Components include:

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Electronics Enclosures and Components—doors, racks, bezels, card holders, back plan connectors and other products that are required on computer servers, memory storage units, monitors and other electronic equipment.



•

Appliance Parts and Components—agitators, tub covers and balance rings for clothes washers, control panels and silverware baskets for dishwashers and door handles for refrigerators.



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Off-Road Work and Recreational Vehicle Parts and Subassemblies—fenders, covers, enclosures and functional components such as brackets and hoppers that are used on tractors and farm equipment. This product category also includes body panels, racks, bumpers, roofs, windshield support assemblies and seat bases for golf carts, snowmobiles, personal watercraft and off-road all terrain vehicles.



•

Off-Road Vehicle Interiors—consoles, control panels and subassemblies, such as ventilation, lighting and entertainment systems, that are installed in construction, agricultural and specialty equipment.



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Other Plastic Components and Subassemblies—plastic enclosures for lighting and reflectors used in commercial buildings and plastic assemblies used in aircraft seating.

SERVICES

        We offer our customers a number of services described below:

Product Design and Development

        This service category includes design, development, analysis and costing for our products. We prefer to and often work with customers in the early stages of designing their products.

Prototyping/Tooling

        This service category includes prototype, tooling and preproduction steps in the manufacturing process. Our dedicated prototype and tooling departments work with customers throughout development efforts, allowing for a smooth introduction of new products.

Part Decorating and Exterior Finishing

        This service category includes a number of decorating operations such as pad printing, hot stamping, liquid and powder coat painting and decal application.

Just-In-Time Delivery

        This service category includes providing customers the ability to order products in low lot sizes with minimal lead time enabling them to reduce their overall order cycle time. Morton also provides deliveries that are specially sequenced to customers' manufacturing schedules.

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Engineering and Design Capabilities

        Engineering capabilities have become increasingly emphasized as suppliers design services for new projects. Computer aided design capabilities include Pro-Engineering, Anvil 1000/5000, Apollo, Merry Mechanization and CADKEY. We have focused our computer aided design investment on the Pro-Engineering system during the last several years because Pro-Engineering is the preferred system of the majority of our customers. Computer aided design allows us to download completed and approved designs directly to production equipment in most plants. The resulting direct interaction between customers' designers and our engineers facilitates joint development of new components and redesigns of old parts.

Systems and Controls

        Consistent with our emphasis on technology, computer systems and controls are an integral part of our operating strategy. We have invested heavily in management information systems and computer aided design capabilities and control functions, particularly during the last several years. We also use computer systems to provide timely performance measurements of shop floor quality and activity, daily actual cost information for each factory, electronic data interchange with major customers, real-time dispatching of work orders, integration of purchasing information with production scheduling, capacity management and inventory information.

Sales and Marketing

        To better serve our customers, we have combined our sales and engineering organizations. The sales and engineering group has primary responsibility for managing relationships with customers and working with them to design new products. Our customers are serviced by account teams led by an account manager and including representatives from our primary functional areas. These areas include engineering, quality assurance and customer service. Account teams work with the customer to design products and produce prototypes, schedule production and monitor quality and customer satisfaction. Our account managers also lead the new business development process, working with customers to obtain details of new outsourcing programs, new products currently being designed and existing products which will be redesigned. We believe that the structure of our sales and marketing organization helps to ensure cooperation in product design and helps us to gain repeat and new business from our customers. In 2001, a corporate "new business team" was established to drive customer diversification.

Manufacturing/Production

        We use a range of manufacturing processes to serve the needs of our customers. Using these processes, we can manufacture products ranging from simple metal and plastic parts to more complex metal and plastic subassemblies. Our design and engineering capabilities provide us with a competitive edge in obtaining and maintaining preferred supplier status with our customers.

        Sheet Metal Fabrication.    Our sheet metal fabrication capabilities include laser cutting, forming, press punching, folding, welding, painting and assembly processes. Our sheet metal fabrication processes, operating on information created by Pro Engineering software, use optic laser cutting machines to cut parts at high speeds. We use robotic welders to complement our manual welding operations. Our painting operations are capable of producing the wide variety of paint finishes required by our customers.

        Injection Molded and Thermoforming Plastic Components.    Our injection molded plastic capabilities include ultrasonic and hot plate welding, adhesive and solvent bonding, insert staking, snapfit and fastener assembly. Our injection molded processes use injection molding machine presses and gas assist units. Our thermoformed plastic capabilities include vacuum and pressure thermoforming, robotic trimming, and adhesive and ultrasonic bonding. These processes are performed on thermoform units and automated robotic trim stations.

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Raw Materials

        The primary raw materials that we use are sheet steel, compounded injection molding resins, fabrications, thermoplastic sheeting, sheeted foam, assembly parts, paint and vinyl sheeting. Prices of these raw materials fluctuate, although the price of our most significant raw material, steel, has dropped over the past several years. Historically we have been able to negotiate with our customers to have them absorb increases in our raw material costs. In addition, we have generally passed on reductions in our raw material costs to our customers. We also participate in the steel purchase programs of certain major customers which lowers our cost for steel. Generally, we purchase our raw materials from multiple suppliers, and we believe that the prices we obtain are competitive.

Competition

        The manufacturing and supplying of highly engineered metal and plastic products to original equipment manufacturers is a fragmented and highly competitive business, with no single supplier having significant market share. We believe suppliers with a strong management team, a range of capabilities, modernized facilities and technologically sophisticated equipment like us are more likely to benefit from original equipment manufacturers' increased outsourcing of production than other participants in the industry lacking such assets. However, competitive pressures or other factors could cause us to lose market share or could result in a significant price erosion with respect to our products.

Regulatory/Environmental Matters

        Our operations are subject to numerous federal, state and local environmental and worker health and safety laws and regulations. We believe that we are in substantial compliance with such laws and regulations.

Financial Information about Industry Segments

        Morton Industrial Group, Inc. has two reportable segments, contract metal fabrication and contract plastic fabrication. The contract metal fabrication segment provides full-service fabrication of parts and sub-assemblies for the construction, agricultural, and industrial equipment industry. The contract plastic fabrication segment provides full-service vacuum formed and injection-molded parts and sub-assemblies for the construction, agricultural, recreational, and industrial equipment industry.

        Additional information regarding segments can be found in footnote 19 of the accompanying Notes to Consolidated Financial Statements of the Company.

Backlog

        Our backlog of orders was approximately $121.0 million at December 31, 2001, and $150.0 million at December 31, 2000. We anticipate that we will substantially fill all of the backlog orders as of December 31, 2001 during the current year.

Patents, Trademarks, Licenses, Franchises, and Concessions

        We hold no material patents, trademarks, franchises, or concessions. We are the licensee under a number of software licenses that we use in our design, production, and other business operations. All of these licenses have customary terms and conditions.

Working Capital Items

        Our working capital requirements reflect several business factors. Our working capital requirements are typically greater during the second half of the calendar year because both Deere & Co. and Caterpillar, Inc. suspend operations for two weeks of vacation time during July and/or August. Production

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operations of both of these customers also slow during the last two weeks of December. During these periods, we must rely more heavily on our credit facilities for liquidity.

Employees

        As of March 1, 2002, we employed 1,783 employees, of which 1,410 were hourly and 373 were salaried. None of these employees was subject to a collective bargaining agreement. We believe our relationship with our employees is good.

Item 2. Properties

        The following table presents summary information regarding our facilities. The properties are owned except where indicated by the word "leased". Lease terms for these facilities expire between 2003 and 2010. Our facilities are generally located in close proximity to our customers.

Location	Approx. Sq. Ft.	Products Manufactured
844 (leased) and 1021 West Birchwood Street, Morton, IL	310,000	Sheet metal enclosures and boxes, sheet metal component packages and store fixtures
400 Detroit Avenue,Morton, IL (leased)	155,000	Special weldments, including seat modules, cabs and fabricated steel tanks
Peoria, IL (leased)	160,000	Special weldments, including feeder housings and tractor frames
Apex, NC (leased)	100,000	Special weldments, sheet metal enclosures and boxes, sheet metal component packages and fabricated steel tanks
Honea Path, SC	30,000	Store fixtures and sheet metal component packages
Welcome, NC	185,000	Sheet metal enclosures and boxes, special weldments, fabricated steel tanks and sheet metal component packages
West Des Moines, IA	115,000	Off road work and recreational vehicle parts and subassemblies, off road vehicle interiors and appliance parts and components
7301 Caldwell Road Harrisburg, NC	110,000	Electronics enclosures and components and other plastic components and subassemblies
5685 Hwy 49 South Harrisburg, NC (leased)	127,000	Plastic components and subassemblies
Concord, NC (leased)	76,000	Plastics components and subassemblies
Lebanon, KY	176,000	Appliance parts and components, off road work and recreational vehicle parts and subassemblies and other plastic components and subassemblies
St. Matthews, SC	135,000	Off road work and recreational vehicle parts and subassemblies and other plastic components and subassemblies

        In addition to manufacturing operations, our 1021 W. Birchwood Street complex in Morton, Illinois, houses the senior management of the Company.

        While we own much of the equipment used in our operations, we also use customer-owned tooling and equipment as well as equipment under operating leases. We believe our facilities are adequate to satisfy current and reasonably anticipated production requirements.

Item 3. Legal Proceedings

        On May 1, 2000, Worthington Industries, Inc. (Worthington) filed suit (in the United States District Court for the Southern District of Ohio, Eastern Division) related to our 1999 acquisition of the non-automotive plastics business from Worthington. Worthington claims that it is owed additional amounts under the sales agreement and a related service agreement, and that it is owed dividends on the preferred

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stock that it received. We believe that certain warranties and representations made by Worthington at the time of acquisition have been breached and that amounts claimed by Worthington are not due. We have filed a counterclaim against Worthington related to these matters. Management believes that we will prevail in this litigation and does not anticipate any material impact on our financial condition or results of operations.

        We are also involved in routine litigation. We are not currently a party to any legal proceedings that we believe would have a material adverse effect on our financial condition or results of operations.

Item 4. Submission of Matters to Vote of Security Holders

        Not applicable

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

        From January 1 through October 19, 2000, our Class A common stock traded on the Nasdaq Small Cap Market under the symbol "MGRP". Effective October 20, 2000, the Company's Class A common stock began trading on the Nasdaq Small Cap Market under the symbol "MGRPC". Effective April 11, 2001, the Company's ticker symbol on the Nasdaq Small Cap Market was restored to MGRP.

        The following table sets forth the quarterly high and low close prices during 2001 and 2000 as reported by the Nasdaq Stock Market.

		High		Low
2001
	October 1 to December 31	$	1.500	$	1.010
	July 1 to September 30	$	1.500	$	1.030
	April 1 to June 30	$	2.000	$	1.220
	January 1 to March 31	$	1.875	$	1.500
2000
	October 1 to December 31	$	3.438	$	1.125
	July 1 to September 30	$	4.750	$	3.125
	April 1 to June 30	$	6.000	$	3.000
	January 1 to March 31	$	6.375	$	3.125

        As of March 5, 2002 there were 3,387 holders of record and 1,861 beneficial holders of our Class A Common Stock.

        We did not declare or pay any common stock dividends in our fiscal years ended December 31, 2001 and 2000. Our credit agreements preclude the payment of dividends.

        On September 20, 2000, the Company issued warrants to purchase 238,548 shares of its Class A common stock. The warrants are exercisable at any time through December 31, 2003 at an exercise price of $.01 per share.

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Item 6. Selected Financial Data

SELECTED HISTORICAL FINANCIAL DATA

        Set forth below are certain selected historical financial data. This information should be read in conjunction with our financial statements and the related notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein. The financial data for, and as of the end of, the fiscal year ended June 30, 1997, the six months ended December 31, 1997 and the fiscal years ended December 31, 1998, 1999, 2000 and 2001 are derived from our audited financial statements. The financial data for, and as of the end of, the six months ended December 31, 1996 and the year ended December 31, 1997 are derived from our unaudited financial statements.

					Six Months Ended December 31,
											Year Ended December 31,
		Year Ended June 30, 1997
					1996			1997			1997			1998			1999			2000			2001
		(in thousands)
Operating data:
Net sales		$	80,762		$	32,958		$	46,598		$	94,402		$	151,196		$	219,323		$	278,828		$	236,390
Cost of sales			70,541			29,206			41,932			83,267			129,740			194,434			242,721			212,573
	Gross profit		10,221			3,752			4,666			11,135			21,456			24,889			36,107			23,817
Selling and administrative expenses			7,003			2,578			4,591			9,016			14,499			24,067			26,996			26,073
Merger related charges(1)			—			—			6,069			6,069			—			—			—			—
Restructuring charges			—			—			—			—			—			—			—			1,323
Operating income (loss)			3,218			1,174			(5,994	)		(3,950	)		6,957			822			9,111			(3,579	)
Gain (loss) on sale of business units and other			—			—			—			—			320			(2,463	)		1,338			61
Interest and other expense			(3,206	)		(1,597	)		(1,682	)		(3,291	)		(4,779	)		(8,193	)		(10,801	)		(9,453	)
Earnings (loss) before income taxes, accounting change and extraordinary charge			12			(423	)		(7,676	)		(7,241	)		2,498			(9,834	)		(352	)		(12,971	)
Income taxes			(5	)		141			3,031			2,885			(415	)		1,165			1,230			(2,100	)
Earnings (loss) before accounting change and extraordinary charge		$	7		$	(282	)	$	(4,645	)	$	(4,356	)	$	2,083		$	(8,669	)		878			(15,071	)
Earnings (loss) per share before accounting change and extraordinary charge:
	Basic		—			(.15	)		(2.39	)		(2.24	)		.52			(2.04	)		.19			(3.28	)
	Diluted		—			(.15	)		(2.39	)		(2.24	)		.45			(2.04	)		.19			(3.28	)
Financial position (at end of period):
Working capital		$	2,147		$	3,869		$	(4,575	)	$	(4,575	)	$	9,258		$	9,809		$	12,858		$	(521	)
Total assets			34,362			29,142			39,388			39,388			99,603			125,706			130,533			107,754
Total debt			27,608			27,328			32,494			32,494			70,292			90,956			88,357			79,138
Stockholders' equity (deficit)		$	(9,099	)	$	(9,388	)	$	(13,552	)	$	(13,552	)	$	6,868		$	(3,956	)	$	(3,073	)	$	(19,965	)

(1)

Merger related charges includes $4,000 for one-time bonuses paid to members of management and other employees, $1,324 of professional fees and $745 in compensation expense from issuance of stock options, all of which were incurred by Morton in connection with the merger with MLX.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this annual report.

General

        We are a contract manufacturer of highly engineered metal and plastic components and subassemblies for construction, agricultural, recreational and industrial original equipment manufacturers. Our largest customers, Caterpillar Inc. and Deere & Co., accounted for approximately 57% of our 2001 net sales.

        We price our fabricated metal and thermoformed plastic products on a cost plus basis and use an industry standard to price our injection molded plastic products. In pricing our products, we consider the volume of the product to be manufactured, required engineering resources and the complexity of the product.

        Our customers typically expect us to offset any manufacturing cost increases with improvements in production flow, efficiency, productivity or engineering redesigns. As a part of their supplier development programs, our primary customers initiate cost improvement efforts on a regular basis. At the conclusion of any such effort, when savings can be documented, we share the savings with our customer.

Results of Operations

        The following table presents certain historical financial information expressed as a percentage of our net sales.

	Year Ended December 31,
	1999		2000		2001
Statements of Operations Data:
Net sales	100.0	%	100.0	%	100.0	%
Gross profit	11.3		13.0		10.1
Selling and administrative expenses	11.0		9.7		11.0
Restructuring charges	—		—		.6
Operating income (loss)	0.3		3.3		(1.5	)
Gain (loss) on sales of business units and other	(1.1	)	0.5		—
Interest and other expense	3.7		3.9		4.0
Earnings (loss) before income taxes and cumulative effect of accounting change	(4.5	)	(0.1	)	(5.5	)

Year Ended December 31, 2001 versus Year Ended December 31, 2000

        Net sales for the year ended December 31, 2001 were $236.4 million compared to $278.8 million for the year ended December 31, 2000, a decrease of $42.4 million or 15.2%. Sales decreased approximately $23.7 million in the contract metal fabrication segment of the business. This decrease resulted primarily from a significant project completed in 2000 that did not repeat in 2001 and other decreases related to the slowdown in the general economy, and also from continuing pricing pressure from major customers. Sales for the contract plastics fabrication segment of the business decreased by approximately $18.7 million for 2001 compared to 2000 or 14.6%, due primarily to decreased demand by existing customers.

        Based upon forecasted customer demand, the Company is not currently anticipating revenue growth for 2002.

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        Sales to Caterpillar and Deere were approximately 57% and 53% of our net sales for 2001 and 2000, respectively.

        Gross profit for the year ended December 31, 2001 was $23.8 million compared with $36.1 million for the year ended December 31, 2000, a decrease of $12.3 million or 34.0%. The Company's gross profit percentage decreased to 10.1% from 13.0%. Gross profit for the contract metal fabrication segment of the business decreased $4.4 million, or 21.7%. The overall gross profit percentage for this segment decreased to 12.4% from 13.3%, primarily as a result of fixed costs absorbed by reduced sales levels. Gross profit for the contract plastic fabrication segment decreased $8.1 million, or 50%. The overall gross profit percentage for this segment decreased to 7.4% from 12.6% primarily as a result of fixed costs absorbed by reduced sales levels.

        Selling and administrative expenses for the year ended December 31, 2001 amounted to $26.1 million, or 11.0% of sales, compared with $27.0 million, or 9.7% of sales, in the prior year, a decrease of $0.9 million or 3.4%. This decreased expense related primarily to a continuing effort to achieve appropriate employment levels for selling and administration functions. The increased percentage results from the reduced sales levels.

        The Company recognized a restructuring charge of $1,323 in the fourth quarter, 2001, associated with the restructuring and consolidation of certain of its Illinois plants. The restructuring included $510 for costs associated with certain leased facilities which will no longer be used, and a $813 impairment charge for the abandonment of certain leasehold improvements.

        Interest expense in the year ended December 31, 2001 amounted to $9.5 million compared to $10.8 million in 2000. This decrease resulted from both lower average levels of debt and lower interest rates.

        We recognized an income tax expense of $2.1 million related to a decrease in our deferred tax assets. Deferred tax assets were decreased to reflect lower anticipated utilization of income tax net operating loss carryforwards than estimated at the preceeding year end. The utilization of the income tax net operating loss carryforwards, and the realization of deferred tax assets, is based upon the Company's future ability to generate the estimated taxable income.

        Net earnings (loss) available to common stockholders increased from $(20) for the year ended December 31, 2000 to $(16,137) for the year ended December 31, 2001. This increased net earnings (loss) resulted primarily from reduced sales, fixed costs absorbed by those reduced sales and the reduction in the deferred tax assets.

Year Ended December 31, 2000 versus Year Ended December 31, 1999

        Net sales for the year ended December 31, 2000 were $278.8 million compared to $219.3 million for the year ended December 31, 1999, an increase of $59.5 million or 27.1%. Sales increased over $41.4 million in the contract metal fabrication segment of the business. This increase resulted primarily from existing customers' selection of us to manufacture components for new construction and agricultural products. Sales for the contract plastics fabrication segment of the business increased by $18.1 million for 2000 compared to 1999, due primarily to a full year of operations for Morton Custom Plastics, acquired in April, 1999; sales decreased, however, on a pro forma basis approximately $9 million for 2000 compared to 1999. This approximately 6% decrease resulted from lower sales of computer-related products.

        Sales to Caterpillar and Deere were approximately 53% and 49% of our net sales for 2000 and 1999, respectively.

        Gross profit for the year ended December 31, 2000 was $36.1 million compared with $24.9 million for the year ended December 31, 1999, an increase of $11.2 million or 45.1%. Gross profit for the contract metal fabrication segment of the business increased $4.9 million, or 33.8%. The overall gross profit percentage for this segment decreased slightly, to 13.2% from 13.7%, primarily as a result of costs incurred

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related to new projects. Gross profit for the contract plastic fabrication segment increased $6.3 million, or 60.8%, due primarily to a full year of operations for Morton Custom Plastics, acquired in April, 1999. The combined gross profit percentage increased to 13.0% from 11.3%, primarily as a result of cost savings efforts introduced at the facilities acquired in 1999.

        Selling and administrative expenses for the year ended December 31, 2000 amounted to $27.0 million compared with $24.1 million in the prior year, an increase of $2.9 million or 12.2%. This increase relates primarily to costs incurred by the operations acquired in 1999. During 2000, we owned those facilities for a full year, compared to less than 9 months in 1999.

        Other income of $1.3 million resulted primarily from separate sales of land and a product line from our Harrisburg, NC operations.

        Interest expense in the year ended December 31, 2000 amounted to $10.8 million compared to $8.2 million in 1999. This increase resulted primarily from additional interest costs incurred related to the 1999 acquisitions (a full year in 2000 compared to less than 9 months in 1999), an increased interest rate and other costs related to our financing agreements.

        We recognized an income tax benefit of $1.2 million when our deferred tax assets were increased to reflect future anticipated utilization of income tax net operating loss carryforwards. The utilization of the income tax net operating loss carryforwards is based upon the Company's future ability to generate taxable income.

        Net earnings (loss) available to common stockholders decreased from $(10,872) for the year ended December 31, 1999 to $(20) for the year ended December 31, 2000. This decreased net earnings (loss) resulted primarily from increased sales and the lack of one-time costs, such as the loss on the sale of a business and the cumulative effect of an accounting change experienced in the year ended December 31, 1999.

Financial Position and Liquidity

        Historically, we have funded our business with cash generated from operations and borrowings under revolving credit and term loan facilities. In the years ended December 31, 1999, 2000 and 2001, we generated cash from operating activities of $2.8 million, $2.9 million and $12.5 million respectively. A significant portion of the cash generated during 2001 related to a reduction in accounts receivable and inventory levels. Our capital expenditures for the years ended December 31, 1999, 2000 and 2001, were $5.0 million, $6.7 million and $4.4 million respectively. These capital expenditures were principally for additions to improve or maintain our manufacturing capacity and efficiency.

        Our consolidated working capital at December 31, 2001 was a deficit of $0.5 million compared to positive working capital of $12.9 million at December 31, 2000. This represents a decrease in working capital of approximately $13.4 million. The 2001 results of operations created significant pressure on our liquidity. As previously reported in Form 10-Q for the period ended September 29, 2001, the Company was seeking additional loans or funding support. Subsequent to December 31, 2001, the Company entered into separate new amended and restated agreements with both of its existing lenders.

        In February, 2002, the Company entered into an amended and restated secured revolving credit facility with Harris Trust and Savings Bank, as Agent (Harris). The revolving credit agreement permits the Company to borrow up to a maximum of $21,000. The agreement requires payment of a quarterly commitment fee of .50% per annum of the average daily unused portion of the revolving credit facility. Interest is due monthly and is based on LIBOR plus 4.0% (totalling 6.25% at March 26, 2002). We, alternatively, could select an interest rate of bank prime plus 1.5%. The amount available under the revolving credit facility is limited to 85% of qualified accounts receivable, 50% of eligible inventory, plus $2,500 of other assets. The revolving credit agreement expires July 1, 2003. At December 31, 2001, the Company had $18,400 outstanding and $1,110 available under its Harris revolving credit facility.

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        In February, 2002, the Company entered into an amended and restated secured term loan arrangement with Harris for a term loan of $32,965. This term loan is amortized monthly with principal payments ranging from $235 to $500 and the balance of $24,930 due July 1, 2003. Interest is due monthly and is based upon LIBOR plus 4.0% (totalling 6.25% at March 26, 2002). We, alternatively, could select an interest rate of bank prime plus 1.5%. These Harris debt agreements have maturity dates of July 1, 2003. The Company intends to obtain loans to refinance the debt from other sources by the end of the term of this arrangement, which may not be available on acceptable terms and conditions. Failure to do so could have a material adverse effect on the Company's operations.

        In connection with these Harris loans, we have granted the lender a first lien on all of the Company's accounts receivable, inventory, equipment and various other assets, except for the assets of Morton Custom Plastics, LLC. These Harris debt agreements, which finance the contract metal fabrication segment and one of the contract plastic fabrication segment locations, contain restrictions on capital expenditures, additional debt or liens, investments, mergers and acquisitions, asset sales and payments such as dividends or stock repurchases. The agreements also impose various financial covenants.

        In connection with the Harris financing, we have two fixed interest rate swap agreements with a commercial bank (the "counter party"). The first agreement has a notional principal amount of $5.6 million and a termination date of May 31, 2003. The second agreement has a notional principal amount of $14.2 million and a termination date of June 30, 2003. The notional principal amount declines over the term of both agreements based upon a defined amortization schedule. The counter party waived its unilateral right to cancel both agreements as of June 30, 2001. As described in Item 7A below, these agreements are for the purpose of limiting the effects of interest rate increases on half of the Company's floating rate term debt.

        Historically, we have met our near term liquidity requirements for our businesses financed by Harris with cash flow from operations, the Harris line of credit, and management of our working capital to reflect current levels of operations. The national economic slowdown, which our reduced revenues reflect, has increased pressure on these sources of liquidity. The new Harris revolving credit facility and term loans replaced existing credit facilities and did not provide additional availability. However, the repayment and fee terms were modified, and the short-term principal payments and fees were reduced. We anticipate that the amended and restated agreements with Harris will assist us in meeting our liquidity requirements through the term of these agreements.

        In March, 2002, to restructure the financing related to the Morton Custom Plastics, LLC operations, the Company entered into an amended and restated revolving credit facility and a new senior credit facility with its existing lender, General Electric Capital Corp. (GECC).

        The new revolving credit facility allows for borrowings up to a maximum of $10,000. Of the amount available under the revolver, $1,000 is held back as a reserve for discretionary use approved by the lender. The amount available under the revolving credit facility is generally limited to 85% of qualified accounts receivable and 60% of eligible inventory. The revolving credit agreement expires August 30, 2006. At December 31, 2001, the Company had $9,435 and $1,618, outstanding and available, respectively, under its GECC revolving credit facility.

        The new senior credit facility includes three term loans with initial balances of $10 million (Term A), $7 million (Term B) and $5 million (Term C), respectively.    The maturity date on the new senior credit facility is August 30, 2006.

        The loans are secured by a first priority security interest in all of the Morton Custom Plastics, LLC assets, including, but not limited to, accounts receivable, inventories, leaseholds, fixed assets, intangible assets and tradenames.

        The interest on the revolving credit facility, Term A and Term B is LIBOR plus 450 basis points, with a LIBOR floor of 3%. The Company, alternatively, could select an Index rate. Interest is to be paid monthly

13

on these loans. The interest on Term C is 13% payment-in-kind. Unpaid interest on Term C is due at maturity.

        The principal on Term A and Term B amortizes quarterly in various amounts beginning on September 30, 2002 for Term A and June 30, 2002 for Term B. Final installments for Term A and Term B are due at maturity, which is August 30, 2006. The principal on the revolving credit facility and Term C are due at maturity, which is August 30, 2006.

        In conjunction with the new credit facility, the Company issued common stock warrants to purchase 70% ("Warrant Ownership Percentage") of the outstanding ownership interests (on a fully diluted basis) of Morton Custom Plastics LLC. The Warrant Ownership Percentage can be reduced to 35% if the loan is repaid in full before March 25, 2004. If adjusted EBITDA for the year ending December 31, 2003, as defined in the agreement, is at least $8,000 and the Warrant Ownership Percentage has not already been reduced, the Warrant Ownership Percentage will be reduced to 51%. The warrants will be recorded at fair value as a discount on the related debt.

        At any time on or after the occurrence of (i) the scheduled maturity date, (ii) an event of default, or (iii) the date of indefeasible prepayment in full of the loans and cancellation of letters of credit and permanent reduction of revolving loan commitment to zero ("Trigger Events"), each holder has the right to require the Company to purchase all or any part of the warrants ("Put Feature"). The Company also has the right to repurchase all, but not less than all, of the outstanding warrant and equity interests of the holders subsequent to a Trigger Event ("Call Feature"). The Put Feature and Call Feature each have a purchase price equal to the greater of the applicable floor price and the fair market value as determined in good faith by the board and subject to approval by the holders. The initial floor price is $500,000.

        Under the terms of any of these credit agreements, no amount would have been available for payment of dividends at December 31, 2000 and 2001.

        Historically, we have met our near term liquidity requirements for our businesses financed by GECC with cash flow from operations, the GECC line of credit, and management of our working capital to reflect current levels of operations. The national economic slowdown, which the Morton Custom Plastics, LLC's reduced revenues reflect, has increased pressure on these sources of liquidity. The new GECC revolving credit facility and term loans total $32 million and replaced a similar facility which totaled approximately $28 million, providing additional availability. Additionally, repayment terms were modified and short-term principal payments were reduced. We anticipate that the amended and restated agreements with GECC will assist the Company in meeting its near term liquidity requirements.

        As part of the financing for the 1999 Morton Custom Plastics, LLC acquisition, we issued 10,000 shares of redeemable preferred stock, which we must redeem in April, 2004 at $1,000 per share plus any dividends accrued since April 15, 1999. The $10 million face value preferred stock was recorded at its fair value of $4.25 million. We are accreting the discount over a five year period using the effective yield method. Dividends are payable in kind at the rate of 8% per annum. We believe that certain provisions of the agreement with Worthington preclude the payment of dividends, and no dividends have been accrued in 2000 or 2001. There are current legal proceedings related to certain Worthington matters as described in Part I, Item 3.

        On November 3, 2000, the Company entered into an agreement with First Union Securities, Inc. ("FUSI"), under which FUSI acted as the Company's exclusive financial advisor with respect to possible debt or equity financings or recapitalizations from November 3, 2000 until March 12, 2002. Mark Mealy, a director of the Company, is Head of the Commercial and Industrial Corporate Finance and Mergers and Acquisition Group at Wachovia Securities, Inc. (formerly FUSI).

        We incurred $4.4 million of capital expenditures during 2001, primarily for the update and purchases of manufacturing equipment.

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        We estimate that our capital expenditures in 2002 will total approximately $4.2 million, of which $1.2 million will be for new production equipment and the remaining $3.0 million will be for normal replacement items.

Quarterly Financial Information

        Selected quarterly financial information for the years ended December 31, 2001 and 2000 is as follows:

			(In thousands, except per share data)
			First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total Year
2001
	Sales		$	74,404		$	61,718		$	52,373		$	47,895		$	236,390
	Gross margin			9,577			6,957			6,529			754			23,817
	Operating income (loss)			2,596			1,243			1,100			(8,518	)		(3,579	)
	Net earnings (loss) available to common stockholders			(201	)		(1,394	)		(1,496	)		(13,046	)		(16,137	)
	Earnings per share of common stock
		Basic		(0.04	)		(0.31	)		(0.33	)		(2.83	)		(3.51	)
		Diluted		(0.04	)		(0.31	)		(0.33	)		(2.83	)		(3.51	)
2000
	Sales		$	73,094		$	71,887		$	67,575		$	66,272		$	278,828
	Gross margin			10,769			10,218			7,773			7,347			36,107
	Operating income			4,290			2,931			1,860			30			9,111
	Net earnings (loss) available to common stockholders			853			91			(721	)		(243	)		(20	)
	Earnings per share of common stock
		Basic		0.19			0.02			(0.16	)		(0.05	)		0.00
		Diluted		0.18			0.02			(0.16	)		(0.04	)		0.00

        The fourth quarter, 2001 includes a restructuring charge of $1,323.

Significant Cash Commitments

        The Company has significant future cash commitments, primarily scheduled debt payments and scheduled lease payments. The commitments related to debt payments and lease payments are fully described in Notes 9 and 10 of the accompanying financial statements.

Seasonality

        Our operating results vary significantly from quarter to quarter due to, among other things, the purchasing schedules of our key customers. Our sales and profits historically have been higher in the first half of the calendar year due to our largest customers' preparation in the first two quarters for increased demand during the warmer months of the year.

Critical Accounting Policies

        In the preparation of the financial statements in accordance with generally accepted accounting principles, management must often make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Some of these estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. Such estimates and assumptions affect the Company's most critical accounting policies: the allowance for doubtful accounts, inventory valuation and the recoverability of deferred tax assets.

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        In determining the allowance for doubtful accounts, management specifically analyzes customer credit worthiness, historic bad debts and changes in economic conditions and records allowances for bad debts as appropriate. Inventories are valued at lower of cost or market. When, in management's judgment, circumstances indicate the cost of certain inventories exceed their recoverable value, reserves for inventory obsolescence are recorded. In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment, and the valuation allowance is adjusted as appropriate.

Impact of New Accounting Standards

        In July 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment.

        The Company is required to adopt the provisions of Statement 141 immediately and will adopt Statement 142 effective January 1, 2002. Furthermore, goodwill and intangible assets determined to have an indefinite useful life acquired in a purchase business combination completed after June 30, 2001, but before Statement 142 is adopted in full will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-Statement 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized and tested for impairment in accordance with the appropriate pre-Statement 142 accounting requirements prior to the adoption of Statement 142.

        Statement 141 will require upon adoption of Statement 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Upon adoption of Statement 142, the Company will be required to reassess the useful lives and residual values of all intangible assets acquired, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

        In connection with Statement 142's transitional goodwill impairment evaluation, the Statement will require the Company to perform an assessment of whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this, the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the

16

Company must perform the second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption.

        As of December 31, 2001, the Company had unamortized goodwill in the amount of $8.3 million which is subject to the transition provisions of Statements 141 and 142. Because of the extensive effort needed to comply with adopting Statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report, including whether it will be required to recognize any transitional impairment losses as the cumulative effect of a change in accounting principle.

        In August 2001, the Financial Accounting Standards Board issued FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (Statement 144), which supersedes both FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (Statement 121) and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). Statement 144 retains the fundamental provisions in Statement 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with Statement 121. For example, Statement 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. Statement 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike Statement 121, an impairment assessment under Statement 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under Statement No. 142, Goodwill and Other Intangible Assets.

        The Company is required to adopt Statement 144 effective January 1, 2002. Management does not expect the adoption of Statement 144 for long-lived assets held for use to have a material impact on the Company's financial statements because the impairment assessment under Statement 144 is largely unchanged from Statement 121. The provisions of the Statement for assets held for sale or other disposal generally are required to be applied prospectively after the adoption date to newly initiated disposal activities. Therefore, management cannot determine the potential effects that adoption of Statement 144 will have on the Company's financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to interest rate changes primarily as a result of our lines of credit and long-term debt used for maintaining liquidity, funding capital expenditures and expanding our operations. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flow and to lower overall borrowing costs. To achieve our objectives, we entered into two separate financing agreements with a group of banks and another lender. Both financing arrangements contain term loans and revolving credit facilities. Interest is based on our lead bank's or lender's prime rate plus an applicable variable margin. We have also entered into two interest rate swap agreements, as required by our bank financing arrangement, to limit the effect of increases in the interest rates on half of our floating rate term debt. We do not enter into interest rate transactions for speculative purposes. Under the swap agreements, which expire May 31, 2003 to June 30, 2003, the interest rate component of the interest rate is limited to 5.875% on half of our $32,965 term loans under that certain financing arrangement.

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Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
Report of KPMG LLP, Independent Auditors	19
Consolidated Balance Sheets as of December 31, 2000 and 2001	20
Consolidated Statements of Operations for the years ended December 31, 1999, 2000 and 2001	21
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1999, 2000 and 2001	22
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 2000 and 2001	23
Notes to Consolidated Financial Statements	24
Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 1999, 2000 and 2001	47

18

Independent Auditors' Report

The Board of Directors and Stockholders

Morton Industrial Group, Inc.:

We have audited the accompanying consolidated balance sheets of Morton Industrial Group, Inc. and Subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2001. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Morton Industrial Group, Inc. and Subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Indianapolis, Indiana

March 25, 2002

19

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2000 and 2001
(Dollars in thousands, except share data)

Assets				2000			2001
Current assets:
	Trade accounts receivable, less allowance for doubtful accounts of $1,324 in 2000 and $381 in 2001			$	28,198		$	19,519
	Inventories				29,429			22,570
	Prepaid expenses				2,474			2,816
	Deferred income taxes				1,650			800
			Total current assets		61,751			45,705
Property, plant, and equipment, net					51,555			46,462
Intangible assets, at cost, less accumulated amortization					11,186			10,353
Deferred income taxes					5,398			4,148
Other assets					643			1,086
				$	130,533		$	107,754
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
	Outstanding checks in excess of bank balance			$	2,792		$	4,021
	Current installments of long-term debt				10,201			5,268
	Accounts payable				30,735			30,133
	Accrued expenses				5,165			6,804
		Total current liabilities			48,893			46,226
Long-term debt, excluding current installments					78,156			73,870
Other liabilities					280			280
		Total liabilities			127,329			120,376
Redeemable preferred stock. Authorized 10,000 shares; issued and outstanding 10,000 shares in 2000 and 2001 (redemption value $10,567 at December 31, 2000 and 2001)					6,277			7,343
Stockholders' equity (deficit):
	Class A common stock, $.01 par value. Authorized 20,000,000 shares; issued and outstanding 4,400,850 shares in 2000 and 2001				44			44
	Class B common stock, convertible, $.01 par value. Authorized 200,000 shares; issued and outstanding 200,000 shares in 2000 and 2001				2			2
	Additional paid-in capital				20,883			20,883
	Retained deficit				(24,002	)		(40,139	)
	Accumulated other comprehensive loss				—			(755	)
		Total stockholders' equity (deficit)			(3,073	)		(19,965	)
Commitments and contingencies (notes 10 and 20)
				$	130,533		$	107,754

See accompanying notes to consolidated financial statements.

20

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 1999, 2000 and 2001
(Dollars in thousands, except per share data)

			December 31,
			1999			2000		2001
Net sales			$	219,323		278,828		236,390
Cost of sales				194,434		242,721		212,573
		Gross profit		24,889		36,107		23,817
Operating expenses:
	Selling expenses			6,005		6,679		5,599
	Administrative expenses			18,062		20,317		20,474
	Restructuring charges (Note 4)			—		—		1,323
		Total operating expenses		24,067		26,996		27,396
		Operating income (loss)		822		9,111		(3,579	)
Other income (expense):
	Gain (loss) on sale of businesses			(2,463	)	320		—
	Interest income			15		—		—
	Interest expense			(8,208	)	(10,801	)	(9,453	)
	Other			—		1,018		61
		Total other income (expense)		(10,656	)	(9,463	)	(9,392	)
		Earnings (loss) before income taxes and cumulative effect of accounting change		(9,834	)	(352	)	(12,971	)
Income taxes				(1,165	)	(1,230	)	2,100
		Earnings (loss) before cumulative effect of accounting change		(8,669	)	878		(15,071	)
Cumulative effect of accounting change, net of income tax benefit of $69				(1,074	)	—		—
		Net earnings (loss)		(9,743	)	878		(15,071	)
Dividends and accretion of discount on preferred shares				(1,129	)	(898	)	(1,066	)
		Net earnings (loss) available to common stockholders	$	(10,872	)	(20	)	(16,137	)
Earnings (loss) available to common stockholders per share—basic			$	(2.55	)	0.00		(3.51	)
Earnings (loss) available to common stockholders per share—diluted			$	(2.55	)	0.00		(3.51	)

See accompanying notes to consolidated financial statements.

21

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (Deficit)

Years ended December 31, 1999, 2000 and 2001
(Dollars in thousands)

						Class B common stock
			Class A common stock
						Shares issued			Additional paid-in capital		Retained earnings (deficit)			Accumulated other comprehensive loss
			Shares issued	Amount			Amount										Total
Balance, December 31, 1998			3,866,944	$	39	200,000	$	2	$	19,937	$	(13,110	)	$	—		$	6,868
	Net loss		—		—	—		—		—		(9,743	)		—			(9,743	)
	Stock options exercised		437,172		4	—		—		44		—			—			48
	Dividends and accretion of discount on preferred shares		—		—	—		—		—		(1,129	)		—			(1,129	)
Balance, December 31, 1999			4,304,116		43	200,000		2		19,981		(23,982	)		—			(3,956	)
	Net earnings		—		—	—		—		—		878			—			878
	Stock options exercised		96,734		1	—		—		39		—			—			40
	Issuance of warrants		—		—	—		—		863		—			—			863
	Accretion of discount on preferred shares		—		—	—		—		—		(898	)		—			(898	)
Balance, December 31, 2000			4,400,850		44	200,000		2		20,883		(24,002	)		—			(3,073	)
	Comprehensive loss:
		Net loss	—		—	—		—		—		(15,071	)		—			(15,071	)
		Other comprehensive loss, loss on derivative instruments													(671	)		(671	)
		Total comprehensive loss																(15,742	)
	Transition adjustment resulting from adoption of SFAS 133		—		—	—		—		—		—			(84	)		(84	)
	Accretion of discount on preferred shares		—		—	—		—		—		(1,066	)		—			(1,066	)
Balance, December 31, 2001			4,400,850	$	44	200,000	$	2	$	20,883	$	(40,139	)	$	(755	)	$	(19,965	)

See accompanying notes to consolidated financial statements.

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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 1999, 2000 and 2001
(Dollars in thousands)

					December 31,
					1999			2000		2001
Cash flows from operating activities:
	Net earnings (loss)				$	(9,743	)	878		(15,071	)
	Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization of plant and equipment				7,886		8,143		8,672
		Other amortization				1,307		1,479		1,338
		Asset impairment (note 4)				—		—		803
		Write-off of intangible assets				1,125		—		—
		Increase (decrease) in allowance for doubtful accounts				(251	)	1,004		(943	)
		Deferred income taxes				—		(1,230	)	2,100
		Gain on sale of property and equipment				(93	)	(927	)	—
		(Gain) loss on sale of businesses				2,463		(320	)	—
		Changes in current assets and liabilities, excluding effects of acquisitions and dispositions:
			Decrease (increase) in accounts receivable			3,275		(1,867	)	9,622
			Decrease (increase) in inventories			149		(8,024	)	6,859
			Decrease (increase) in prepaid expenses			319		(1,212	)	(342	)
			(Increase) in other assets			—		(643	)	(825	)
			Decrease in refundable income taxes			977		63		—
			Increase (decrease) in accounts payable			5,588		6,592		(602	)
			Increase (decrease) in accrued expenses and other			(10,189	)	(996	)	884
				Net cash provided by operating activities		2,813		2,940		12,495
Cash flows from investing activities:
	Capital expenditures					(4,963	)	(6,651	)	(4,382	)
	Proceeds from sale of property and equipment					105		1,261		—
	Acquisitions, net of cash acquired					(30,287	)	—		—
	Proceeds from sale of businesses					7,500		2,915		—
	Decrease in tax escrow					1,605		—		—
				Net cash used in investing activities		(26,040	)	(2,475	)	(4,382	)
Cash flows from financing activities:
	Net borrowings (repayments) of notes payable					9,859		9,976		(3,710	)
	Increase (decrease) in checks issued in excess of bank balance					(455	)	1,669		1,229
	Proceeds from issuance of long-term debt					26,000		—		—
	Principal payments on long-term debt and capital leases					(15,222	)	(11,831	)	(5,509	)
	Proceeds from issuance of common stock					48		40		—
	Proceeds from issuance of preferred stock					4,250		—		—
	Debt issuance cost					(1,253	)	(319	)	(123	)
				Net cash provided by (used in) financing activities		23,227		(465	)	(8,113	)
Net increase (decrease) in cash						—		—		—
Cash at beginning of period						—		—		—
Cash at end of period					$	—		—		—
Supplemental disclosures of cash flow information:
	Cash paid during the year for:
		Interest			$	8,519		10,355		9,653
		Income taxes			$	63		1		24

See accompanying notes to consolidated financial statements.

23

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2000 and 2001

(Dollars in thousands, except per share data)

(1)    Description of Business and Summary of Significant Accounting Policies

(a)  Description of Business

Morton Industrial Group, Inc. and subsidiaries is a contract manufacturer and supplier of high-quality fabricated sheet metal and plastic components and subassemblies for construction, agricultural, industrial equipment and recreational equipment manufacturers located primarily in the Midwestern and Southeastern United States. Sales for the year ended December 31, 2001, were approximately as follows: construction—33%, agricultural—17%, industrial—40% and recreational equipment—10%. The Company's raw materials are readily available, and the Company is not dependent on a single supplier or only a few suppliers.

(b)  Principles of Consolidation

The consolidated financial statements include the financial statements of Morton Industrial Group, Inc. (the Company) and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

(c)  Use of Estimates in Preparing Financial Statements

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

(d)  Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method for all inventories.

(e)  Property, Plant, and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. Equipment under capital leases is stated at the lower of the net present value of the minimum lease payments at the beginning of the lease term or fair value at the inception of the lease.

Depreciation of plant and equipment is calculated over the estimated useful lives of the respective assets using straight-line and accelerated methods. The equipment held under capital leases is amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset.

(f)    Intangible Assets

Intangible assets are recorded at cost and include goodwill, amortized over periods ranging from 18 to 25 years; covenants not to compete, amortized over their contractual periods which range from 3 to 10 years; and debt issuance costs, amortized over the term of the related loans.

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In April 1998, the Accounting Standards Executive Committee of the AICPA issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities" which requires costs of start-up activities and organization costs to be expensed as incurred. SOP 98-5 was effective for fiscal years beginning after December 15, 1998, with initial application reported as the cumulative effect of a change in accounting principle. Accordingly, adoption of the statement resulted in a cumulative effect charge of $1,074, net of income tax benefits, in the first quarter of 1999. The cumulative effect of the change in accounting principle increased 1999 basic and diluted loss available to common shareholders per share by $.25.

(g)  Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(h)  Stock Option Plan

The Company accounts for its stock option plan in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.

(i)    Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

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(j)    Revenue Recognition

Revenue from sales is recognized when the goods are shipped to the customer.

(k)  Interest Rate Swaps

As required by one of its financing arrangements, the Company enters into interest rate swap agreements to limit the effect of increases in the interest rates on certain floating rate debt. The difference between the floating rate on the Company's debt and the rate on the swap agreements is accrued as interest rates change and is recorded in interest expense. During 1998, the Company entered into two swap agreements, expiring May 31, 2003 to June 30, 2003, with an initial aggregate notional amount of $27,500. The effect of these agreements is to limit the LIBOR interest rate component to 5.87% on half of the Company's $32,459 term loans under the applicable financing arrangement. As a result of these swap agreements, interest expense was decreased by $161 in 2000 and increased by $291 in 2001.

(l)    Fair Value of Financial Instruments

The Company believes the recorded value of cash, accounts receivable, accounts payable and accrued expenses approximates fair value because of the short maturity of these financial instruments. The Company believes the recorded value of notes payable and long-term debt approximates fair value because their respective interest rates fluctuate with market rates or approximate current market rates.

The fair value of interest rate swaps are the estimated amounts that the Company would receive or pay to terminate the agreements at the reporting date, taking into account current interest rates and the current creditworthiness of the counterparties. At December 31, 2000 and 2001, the Company estimates it would have paid $84 and $755 to terminate the agreements, respectively.

(m)  Earnings (Loss) Per Share

Earnings (loss) per share is computed under the provisions of Statement of Financial Accounting Standards No. 128, Earnings Per Share. Amounts reported as earnings (loss) per share reflect the earnings available to common stockholders for the year divided by the weighted average number of Class A and Class B common shares outstanding during the year.

(n)  Design and Development Costs

The Company capitalizes design and development costs for molds, dies and other tools owned by customers when the Company has the noncancelable right to use the molds, dies and other tools during a long-term supply arrangement. Included in other assets at December 31, 2000 and 2001 are $530 and $1,077 of such capitalized costs, net of amortization of $79 and $286, respectively.

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(o)  Impact of Recently Issued Accounting Standards

In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. SFAS 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. SFAS 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 will also require that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment.

The Company is required to adopt the provisions of SFAS 141 immediately and will adopt SFAS 142 effective January 1, 2002. Furthermore, goodwill and intangible assets determined to have an indefinite useful life acquired in a purchase business combination completed after June 30, 2001, but before SFAS 142 is adopted in full will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-SFAS 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized and tested for impairment in accordance with the appropriate pre-SFAS 142 accounting requirements prior to the adoption of SFAS 142.

SFAS 141 will require upon adoption of SFAS 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in prior purchase business combinations, and to make any necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. Upon adoption of SFAS 142, the Company will be required to reassess the useful lives and residual values of all intangible assets acquired, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of SFAS 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

In connection with SFAS 142's transitional goodwill impairment evaluation, the Statement will require the Company to perform an assessment of whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this, the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the Company must perform the

27

second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company's statement of operations.

As of December 31, 2001, the Company has unamortized goodwill in the amount of $8.3 million which is subject to the transition provisions of SFAS 141 and 142. Because of the extensive effort needed to comply with adopting SFAS 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report, including whether it will be required to recognize any transitional impairment losses as the cumulative effect of a change in accounting principle.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes both SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). SFAS 144 retains the fundamental provisions in SFAS 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with SFAS 121. For example, SFAS 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. SFAS 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike SFAS 121, an impairment assessment under SFAS 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under SFAS No. 142.

The Company is required to adopt SFAS 144 on January 1, 2002. Management does not expect the adoption of SFAS 144 for long-lived assets held for use to have a material impact on the Company's financial statements because the impairment assessment under SFAS 144 is largely unchanged from SFAS 121. The provisions of the Statement for assets held for sale or other disposal generally are required to be applied prospectively after the adoption date to newly initiated disposal activities. Therefore, management cannot determine the potential effects that adoption of SFAS 144 will have on the Company's financial statements.

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(2)    Acquisition of the Assets of Worthington Non-Automotive Plastics Group of Worthington Custom Plastics, Inc.

        On April 15, 1999, Morton Custom Plastics, LLC acquired substantially all of the assets of the Non-Automotive Plastics Group of Worthington Custom Plastics, Inc. ("Worthington"), a manufacturer of plastic components for construction and industrial equipment manufacturers with locations in Harrisburg, North Carolina; St. Matthews, South Carolina; and Lebanon, Kentucky. The Company paid $25,000 in cash, subject to a working capital adjustment, issued 10,000 shares of preferred stock, and provided for a contingent payment to Worthington Custom Plastics, Inc. The contingent payment will be 15% of the fair market value of the acquired business as of December 31, 2004. The acquisition was accounted for as a purchase and the entire cost was allocated to the net assets acquired. During 2000, the estimated working capital adjustment was reduced by $2,313 and the cost allocated to property, plant and equipment was reduced accordingly.

        Morton Custom Plastics, LLC, is wholly owned by Morton Holdings, LLC. Morton Holdings, LLC is 49% owned by Morton Industrial Group, Inc. and 51% owned by Quilvest Custom Plastics, an affiliate of a significant shareholder of the Company. However, the LLC agreement specifies that Morton Industrial Group, Inc. will receive 100% of the net income or loss as well as the proceeds from any sale of Morton Customs Plastics, LLC. Additionally, Quilvest Custom Plastics has granted Morton Industrial Group, Inc. an irrevocable option to purchase its interest in Morton Holdings, LLC at any time for $1. Accordingly, the results of Morton Holdings, LLC and subsidiaries have been consolidated in the accompanying financial statements.

        The results of operations of the above acquired company are included in the accompanying financial statements since the date of the acquisition.

        The following unaudited pro forma summary presents the Company's consolidated results of operations for the year ended December 31, 1999 as if the acquisition had occurred at the beginning of the year:

	December 31, 1999
Net sales	$	246,187
Net earnings (loss) available to common shareholders	$	(11,679	)
Net earnings (loss) available to common shareholders per share—basic	$	(2.75	)
Net earnings (loss) available to common shareholders per share—diluted	$	(2.75	)

(3)    Sale of Businesses

        On December 31, 1999, the Company sold substantially all of the assets and certain liabilities of one of its plastics subsidiaries, Carroll George, Inc. The Company received $7,500 of cash for net assets with a book value at the date of sale of $9,963, resulting in a loss on the sale of subsidiary of $2,463.

29

        During 2000, the Company sold the assets and certain liabilities of a product line and a machining division from the contract plastics fabrication segment. The Company received $2,915 of cash for net assets with a book value at the dates of sale of $2,595, resulting in a gain on the sales of $320.

(4)    Restructuring Charge

        In connection with a restructuring plan adopted in October of 2001, the Company recorded a $1,323 restructuring charge associated with the restructuring and consolidation of certain of its Illinois plants. The restructuring included $520 for costs associated with certain leased facilities which will no longer be used and an $803 impairment charge for the abandonment of certain leasehold improvements and impairment of certain assets under the provisions of SFAS 121. The restructuring activities will be substantially completed by the end of the third quarter 2002. As of December 31, 2001, a restructuring reserve of $520 is included in accrued expenses relating to facility lease payments, utilities, insurance and taxes expected to be incurred through the lease termination date.

(5)    Inventories

        A summary of inventories follows:

	December 31,
	2000		2001
Finished goods	$	9,555	$	9,626
Work in process		7,121		4,847
Raw materials		12,753		8,097
	$	29,429	$	22,570

(6)    Property, Plant, and Equipment

        A summary of property, plant, and equipment, including assets held under capital leases as described in note 10 is as follows:

			December 31,
		Depreciable Lives (in years)
			2000		2001
Land and land improvements		15	$	1,837	$	1,852
Buildings and leasehold improvements		15 - 39		15,003		15,004
Machinery and vehicles		5 - 12		46,642		47,627
Tooling		3		8,676		9,927
Office equipment		5 - 10		6,160		6,708
Construction in progress		—		1,574		217
				79,892		81,335
Less accumulated depreciation				28,337		34,873
	Property, plant and equipment, net		$	51,555	$	46,462

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(7)    Intangible Assets

        A summary of intangible assets is as follows:

		December 31,
		2000		2001
Goodwill		$	11,063	$	11,063
Covenants not to compete			2,591		2,591
Debt issuance costs			2,629		2,533
Other			435		435
			16,718		16,622
Less accumulated amortization			5,532		6,269
	Net intangible assets	$	11,186	$	10,353

(8)    Derivative Instruments and Hedging Activities

        The Company uses variable-rate debt to finance its operations. The debt obligations expose the Company to variability in interest payments due to changes in interest rates. Management believes it is prudent to limit the variability of a portion of its interest payments. To meet this objective, management enters into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate risk. These swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the interest rate swaps, the Company receives variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed rate debt.

        The Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as amended by SFAS No. 137 and No. 138 on January 1, 2001. SFAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company uses derivative financial instruments (interest rate swaps) to mitigate its interest rate risk on a related financial instrument. SFAS 133 requires that changes in the fair value of derivatives that qualify as a cash flow hedge be recognized in other comprehensive income while the ineffective portion of the derivative's change in fair value be recognized immediately in earnings. SFAS 133 requires that unrealized gains and losses on that portion of derivatives not qualifying for hedge accounting be recognized currently in earnings. The cumulative effect of change in accounting principle due to the adoption of SFAS 133 as of January 1, 2001 was $84 and was recorded in accumulated other comprehensive income (loss) as a transition adjustment. The Company recorded a net loss of $671 in other comprehensive income (loss) for its interest rate swap contracts qualifying for hedge accounting for the year ended December 31, 2001.

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(9)    Long-term Debt and Subsequent Events

        A summary of long-term debt follows:

	December 31,
	2000		2001
Revolving credit facility with the Harris syndicate	$	17,700	$	18,400
Note payable to the Harris syndicate, with variable rate interest (10.5% and 5.75% as of December 31, 2000 and 2001, respectively)		12,747		9,301
Note payable to the Harris syndicate, with variable rate interest (13.25% and 8.5% as of December 31, 2000 and 2001, respectively)		23,175		23,159
Revolving credit facility with GECC		13,835		9,424
Note payable to GECC, with variable rate interest (10.5% to 11.5% and 6.25% to 7.0% as of December 31, 2000 and 2001, respectively)		17,747		15,997
Subordinated note payable with interest payable at 7.0%, discounted $393 to yield 10.0%, due in quarterly payments with the balance due April 8, 2008		2,624		2,346
Note payable, bank, with interest payable at 8.5%, due in monthly payments with the balance due December 1, 2002		185		82
Note payable, bank, with interest payable at 7.85%, due in monthly payments with the balance due May 1, 2001		47		—
Note payable, electric cooperative, non-interest bearing, due in monthly payments with the balance due November 1, 2006		263		219
Capital lease obligations		34		210
		88,357		79,138
Less current installments		10,201		5,268
	$	78,156	$	73,870

        The Company has two significant credit facilities: one facility with General Electric Capital Corporation ("GECC") to finance the operations of Morton Custom Plastics LLC acquired from Worthington Custom Plastics, Inc. and another facility with a syndicate of banks led by Harris Trust and Savings Bank ("the Harris syndicate") to finance the operations of the Company's steel fabrication operations and one plastics location.

        In May 1998, the Company entered into a revolving credit facility with the Harris syndicate. The revolving credit agreement, as amended, permitted the Company to borrow up to a maximum of $23,000. The agreement required payment of a quarterly commitment fee of .25% of the average daily unused

32

portion of the revolving credit facility. Interest was due monthly and was based on the Bank's prime rate plus an applicable margin (10.5% and 5.75% at December 31, 2000 and 2001, respectively). The amount available under the revolving credit facility was limited to 85% of qualified accounts receivable, 50% of eligible inventory, plus $2,000 of other assets. At December 31, 2000, the Company had $17,700 outstanding and $2,492 available under this revolving credit facility. At December 31, 2001, the Company had $18,400 outstanding and $1,110 available under this revolving credit facility.

        In May 1998, the Company also entered into a financing arrangement with the Harris syndicate which originally provided for term loans of up to $55,000. The term loans under this financing arrangement were amortized quarterly. Interest was payable monthly at rates based upon the lender's prime rate plus an applicable margin. The agreement was secured by a first lien on all of the Company's accounts receivable, inventory, equipment and various other assets, other than assets of Morton Custom Plastics LLC. Effective January 30, 2000, the Company was paying this lender a fee of .125% per month based upon the amount of the revolving credit commitment and the balance of the term loans.

        The Harris syndicate agreed to defer principal payments totaling $2,400 due in installments of $1,200 each on September 30 and December 31, 2001 and amendment fee payments of $450 due on December 15, 2001.

        This debt agreement contained restrictions on capital expenditures, incurring additional debt or liens, making investments, mergers and acquisitions, selling assets or making payments such as dividends or stock repurchases. The credit agreements also contained various financial covenants.

        The GECC revolving credit facility allowed for borrowings up to a maximum of $24,000. Interest was due monthly and was based on the prime rate as published in the Wall Street Journal plus an applicable margin (10.5% at December 31, 2000 and 6.5% at December 31, 2001). The Company also incurred a fee based upon the unused revolving credit facility. The amount available under the revolving credit facility was generally limited to 85% of qualified accounts receivable and 60% of eligible inventory. At December 31, 2000 and 2001, the Company had $13,835 and $9,424, respectively, outstanding and $360 and $1,618, respectively, available under the GECC revolving credit facility.

        The GECC term loan facility allowed for maximum borrowings of $26,000. Interest was due monthly and was based on the prime rate as published in the Wall Street Journal plus an applicable margin which varied depending on certain financial ratios achieved by the Company. The term loan facility amortized quarterly throughout its term. The Company was also required to prepay certain amounts from the sale of assets, the issuance of new equity capital and from excess cash flow as defined by the agreement.

        GECC agreed to defer principal payments totaling $2,000 due in installments of $1,000 each on September 30 and December 31, 2001.

        Subsequent to December 31, 2001, the Company's credit facilities were revised as described in the following paragraphs:

        In February 2002, the Company entered into a new secured revolving credit facility with the Harris syndicate. The revolving credit agreement permits the Company to borrow up to a maximum of $21,000. The agreement requires payment of a quarterly commitment fee of .50% per annum of the average daily

33

unused portion of the revolving credit facility. Interest is due monthly and is based on LIBOR plus 4.0% (effective rate of 5.883% at December 31, 2001). The Company, alternatively, could select a domestic interest rate. The amount available under the revolving credit facility is limited to 85% of qualified accounts receivable, 50% of eligible inventory, plus $2,500 of other assets. The revolving credit agreement expires July 1, 2003.

        In February 2002, the Company entered into a secured term loan arrangement with the Harris syndicate for a term loan of $32,965. The new Harris term loan arrangement replaced existing term loans and did not provide additional availability. The term loan under this financing arrangement is amortized monthly with principal payments ranging from $235 to $500 and the balance of $24,930 due July 1, 2003. Interest is due monthly and is based upon LIBOR plus 4.0% (effective rate of 5.883% at December 31, 2001). The Company, alternatively, could select a domestic interest rate. The agreement is secured by a first lien on all of the Company's accounts receivable, inventory, equipment and various other assets, other than the assets of Morton Custom Plastics LLC. The Company intends to obtain additional loans or funding support from other sources by the end of the term of this arrangement, which may not be available on acceptable terms and conditions. Failure to do so could have a material adverse effect on the operations.

        These debt agreements contain restrictions on capital expenditures, incurring additional debt or liens, making investments, mergers and acquisitions, selling assets or making payments such as dividends or stock repurchases, as well as containing various financial covenants.

        In March 2002, Morton Custom Plastics LLC entered into a new revolving credit facility and a new senior credit facility with GECC.

        The new GECC revolving credit facility allows for borrowings up to a maximum of $10,000. Of the amount available under the revolver, $1,000 is held back as reserve for discretionary use approved by the lender. The Company also incurs a fee based upon the unused revolving credit facility. The amount available under the revolving credit facility is generally limited to 85% of qualified accounts receivable and 60% of eligible inventory. The revolving credit agreement expires August 30, 2006.

        The new GECC senior credit facility includes three term loans with initial balances of $10,000 (Term A), $7,000 (Term B) and $5,000 (Term C), respectively. The maturity date on the new senior credit facility is August 30, 2006.

        The new GECC revolving credit facility and term loans total $32,000 and replaced a similar facility which totaled $28,000, providing additional availability.

        The GECC loans are secured by a first priority security interest in all of the Morton Custom Plastics LLC assets, including, but not limited to, accounts receivable, inventories, leaseholds, fixed assets, intangible assets and trade names.

        The interest on the GECC revolving credit facility, Term A and Term B is at LIBOR plus 450 basis points, with a LIBOR floor of 3% (effective rate of 6.383% at December 31, 2001). The Company, alternatively, could select an index rate. Interest is to be paid monthly on these loans. The interest on Term C is 13% payment-in-kind. Unpaid interest on Term C is due at maturity.

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        The principal on Term A and Term B amortizes quarterly in various amounts beginning on September 30, 2002 for Term A and June 30, 2002 for Term B. Final installments for Term A and Term B are due at maturity, which is August 30, 2006. The principal on the revolving credit facility and Term C are due at maturity, which is August 30, 2006.

        In conjunction with the new credit facility, the Company issued to GECC common stock warrants to purchase 70% ("Warrant Ownership Percentage") of the outstanding ownership interests (on a fully diluted basis) of Morton Custom Plastics LLC. The Warrant Ownership Percentage can be reduced to 35% if the loan is repaid in full before March 25, 2004. If adjusted EBITDA for the year ending December 31, 2003, as defined in the agreement, is at least $8,000 and the Warrant Ownership Percentage has not already been reduced, the Warrant Ownership Percentage will be reduced to 51%. The warrants will be recorded at fair value as a discount on the related debt.

        At any time on or after the occurrence of (i) the scheduled maturity date, (ii) an event of default, or (iii) the date of indefeasible prepayment in full of the loans and cancellation of letters of credit and permanent reduction of revolving loan commitment to zero ("Trigger Events"), each holder has the right to require the Company to purchase all or any part of the warrants ("Put Feature"). The Company also has the right to repurchase all, but not less than all, of the outstanding warrant and equity interests of the holders subsequent to a Trigger Event ("Call Feature"). The Put Feature and Call Feature each have a purchase price equal to the greater of the applicable floor price and the fair market value as determined in good faith by the board and subject to approval by the holders. The initial floor price is $500.

        Under the most restrictive covenant in any agreement, no amount was available for payment of dividends at December 31, 2000 and 2001.

        The aggregate amounts of long-term debt maturities and principal payments, based upon the new credit facilities for each of the five years subsequent to December 31, 2001 and thereafter are as follows:

Fiscal year ending:
	2002	$	5,268
	2003		48,783
	2004		3,660
	2005		4,114
	2006		16,669
	Thereafter		644
		$	79,138

        On September 20, 2000, the Company issued warrants to a lender, in connection with an amendment to the credit agreement, to purchase 238,548 shares of its Class A common stock. The 238,548 warrants issued are exercisable at any time through December 31, 2003, at an exercise price of $.01 per share. The warrants were valued at $863 and were recorded as a discount on the related term loans in the year ended December 31, 2000.

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(10)    Leases

        The Company is obligated under various capital leases for certain machinery. At December 31, 2001, the gross amount of equipment and related amortization recorded under capital leases was as follows:

Machinery	$	228
Less accumulated amortization		18
	$	210

        Assets under capital leases are included in property, plant and equipment and amortization of assets held under capital leases is included with depreciation expense.

        The present value of future minimum capital lease payments at December 31, 2001 was as follows:

Year ending December 31:
	2002		$	58
	2003			58
	2004			58
	2005			49
	2006			21
		Total minimum lease payments		244
Less amount representing interest (from 7.1% to 7.9%)				34
		Present value of net minimum capital lease payments	$	210

        The Company also has operating leases for several of its plants, certain warehouse space, and manufacturing and computer equipment. Rental expense for operating leases was $6,733, $7,266 and $7,901 for the years ended December 31, 1999, 2000 and 2001, respectively.

        Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2001 are:

Year ending December 31:
	2002		$	7,710
	2003			7,216
	2004			6,471
	2005			4,936
	2006			2,521
	Thereafter			5,451
		Total minimum lease payments	$	34,305

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(11)    Income Taxes

        Total income tax expense for the periods presented was allocated as follows:

	December 31,
	1999			2000			2001
Income tax before cumulative effect of accounting change	$	(1,165	)	$	(1,230	)	$	2,100
Cumulative effect of accounting change		(69	)		—			—
	$	(1,234	)	$	(1,230	)	$	2,100

        Income tax expense (benefit) consists of the following:

		Current			Deferred			Total
Year ended December 31, 1999:
	Federal	$	—		$	—		$	—
	State		(1,165	)		—			(1,165	)
		$	(1,165	)	$	—		$	(1,165	)
Year ended December 31, 2000:
	Federal	$	—		$	(1,072	)	$	(1,072	)
	State		—			(158	)		(158	)
		$	—		$	(1,230	)	$	(1,230	)
Year ended December 31, 2001:
	Federal	$	—		$	1,830		$	1,830
	State		—			270			270
		$	—		$	2,100		$	2,100

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(11)    Income Taxes (Continued)

        Total income tax expense (benefit) attributable to income before extraordinary item and cumulative effect of accounting change differed from the amounts computed by applying the U.S. Federal corporate income tax rate of 34% for all periods to loss before income taxes as a result of the following:

	December 31,
	1999			2000			2001
Computed "expected" tax benefit	$	(3,344	)	$	(120	)	$	(4,410	)
State income tax benefit, net of Federal income tax benefit		—			(104	)		(326	)
Amortization of goodwill		152			149			149
Officer's life insurance		23			29			20
Increase (decrease) in valuation allowance		3,104			(1,085	)		6,747
Resolution of tax contingency		(1,165	)		—			—
Other, net		65			(99	)		(80	)
	$	(1,165	)	$	(1,230	)	$	2,100

        The state tax benefit for the year ended December 31, 1999 primarily results from the resolution of a tax contingency related to the Company's 1998 merger with MLX Corp.

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        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 2001, are presented below:

			December 31,
			2000			2001
Deferred tax assets attributable to:
	Net operating loss and credit carryforwards		$	28,043		$	32,098
	Accrued vacation pay			314			228
	Compensation expense from issuance of stock options			291			291
	Reserves and other			818			879
		Total gross deferred tax assets		29,466			33,496
Less valuation allowance				(17,461	)		(24,208	)
		Net deferred tax assets		12,005			9,288
Deferred tax liabilities attributable to:
	Plant and equipment, principally due to differences in depreciation			(4,723	)		(4,166	)
	Recapture of inventory LIFO valuation for tax purposes			(39	)		—
	Excess of tax over book amortization of organization costs			(63	)		(56	)
	Discount on debt for financial reporting purposes			(132	)		(118	)
		Total deferred tax liabilities		(4,957	)		(4,340	)
		Net deferred tax asset	$	7,048		$	4,948

        In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income of approximately $12,800 prior to the expiration of the net operating loss carryforwards in 2021. Management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2001 based upon anticipated profitability over the period of years that the temporary differences are expected to become tax deductions. Management believes that sufficient book and taxable income will be generated to realize the benefit of these tax assets. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

        During 2001, net operating loss carryforwards of approximately $45 expired unused. At December 31, 2001, the Company has net operating loss carryforwards for Federal income tax purposes of approximately $82,100 which are available to offset future federal taxable income, if any, through 2021.

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(12)    Redeemable Preferred Stock

        Pursuant to the agreement to purchase certain assets of Worthington Custom Plastics, Inc., the Company issued 10,000 shares of preferred stock, without par value, of Morton Industrial Group, Inc. to Worthington. The preferred stock is mandatorily redeemable five years from its issuance date at $1,000 per share, and will pay or accrue annual dividends at a rate of 8%. The Company may pay such dividends in cash or in additional shares of preferred stock. The agreement provides that the dividend rate may be reduced based upon changes in pricing of certain customer contracts. The Company has determined that those dividends should be reduced as provided in the agreement, and accordingly, has accrued no dividends for the years ending December 31, 2000 and 2001. The preferred stock was valued at $4,250 at the time of the acquisition and the discount is being accreted over a five-year period using the effective yield method.

(13)    Stockholders' Equity

        The Company's capital stock consists of Class A and Class B common stock. The Class A and Class B shares have the same rights and preferences, except that the Class B shares guarantee the holders certain special voting rights. The holders of the Class B common stock are ensured that the total votes available to be cast by the holders, when combined with Class A common stock held, will be at least 24% of the votes available to be cast by all holders of common stock.

        The Board of Directors is also authorized to issue one or more series of preferred stock, with the number of shares, dividend rate, voting rights, redemption features and other rights to be determined by the Board of Directors.

(14)    Stock Option Plans

        In 1998, the Company adopted a stock option plan (the "Plan") pursuant to which the Company's Board of Directors may grant stock options to officers and key employees. The Plan authorizes grants of options to purchase up to 1,166,896 shares of authorized but unissued Class A common stock. Stock options are granted with an exercise price equal to the stock's fair market value at the date of grant. All stock options under the Plan have ten-year terms and vest and become fully exercisable after three years from the date of grant. At December 31, 1999, 2000 and 2001, there were 275,330, 139,150 and 139,600 additional shares available for grant under the Plan.

        Prior to the Merger, the Company had a stock option plan under which key officers and employees were granted options at prices equal to fair market value of the stock on the date of grant. At December 31, 1999, 2000 and 2001, there were 165,690, 68,956 and 68,956 options outstanding under the prior plan.

        The per share weighted-average fair value of stock options granted during 1999, 2000 and 2001 was $3.37, $3.70 and $1.67 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0%, risk-free interest rate of 6%, volatility of 91%, and an expected life of 10 years.

        The Company applies APB Opinion No. 25 in accounting for its Plan and, accordingly, no compensation cost has been recognized for its stock options in the financial statements. Had the Company

40

determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net earnings would have been reduced to the pro forma amounts indicated below:

		1999			2000			2001
Net earnings (loss) available to common shareholders:
	As reported	$	(10,872	)	$	(20	)	$	(16,137	)
	Pro forma		(12,334	)		(1,622	)		(16,177	)
Diluted earnings (loss) available to common shareholders per share:
	As reported		(2.55	)		0.00			(3.51	)
	Pro forma		(2.90	)		(0.36	)		(3.52	)

        Stock option activity during the periods indicated is as follows:

	Number of shares		Weighted average exercise price
Outstanding at December 31, 1998	1,466,143		$	10.057
Issued	56,100			7.109
Exercised	(437,172	)		0.111
Forfeited	(28,000	)		(6.660	)
Outstanding at December 31, 1999	1,057,071			14.040
Issued	164,000			4.610
Exercised	(96,734	)		0.411
Forfeited	(27,820	)		(11.235	)
Outstanding at December 31, 2000	1,096,517			13.904
Issued	139,150			1.875
Exercised	—			—
Forfeited	(139,600	)		(8.447	)
Outstanding at December 31, 2001	1,096,067		$	13.072

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        The following is summary information about the Company's stock options outstanding at December 31, 2001:

Number of shares	Exercise price		Expiration date	Number of shares exercisable
59,697	$	0.216	July 13, 2002	59,697
9,259		0.900	May 8, 2005	9,259
765,461		17.125	January 20, 2008	765,461
30,000		13.125	September 2, 2008	30,000
10,000		7.375	June 8, 2009	6,667
120,000		4.500	March 10, 2010	40,000
101,650		1.875	February 5, 2011	—
1,096,067				911,084

(15)    Concentration of Sales

        Sales to customers in excess of 10% of total net sales for the years ended December 31, 1999, 2000 and 2001 are as follows:

		Customer A		Customer B
Periods ended:
	December 31, 1999	20	%	29	%
	December 31, 2000	18	%	35	%
	December 31, 2001	22	%	35	%

        Trade accounts receivable with these customers totaled $9,100 and $8,173 at December 31, 2000 and 2001, respectively.

(16)    Employee Participation Plan

        The Morton Metalcraft Co. Employee Participation Plan allows substantially all employees to defer up to 15 percent of their income through payroll deduction of pre-tax contributions under section 401(k) of the Internal Revenue Code. The Company matches 25 percent of the first 6 percent of pre-tax income contributed by each employee. Employees may also make contributions of after-tax income. Additionally, the Company may make discretionary contributions to the plan for the benefit of participating employees. Certain of the acquired subsidiaries also had defined contribution plans which allow for employee pre-tax contributions and employer matching and discretionary contributions. The expense charged to operations related to defined contribution plans was $365, $490 and $423 for the years ended December 31, 1999, 2000 and 2001, respectively.

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(17)    Earnings (Loss) Per Share

        The following reflects the reconciliation of the numerators and denominators of the earnings (loss) per share and net earnings (loss) per share assuming dilution computations:

		Year ended December 31, 1999
		Income (numerator)			Shares (denominator)	Per share amount
Basic loss per share available to common stockholders		$	(10,872	)	4,253,763	$	(2.55	)
Effect of dilutive securities			—		—
	Diluted loss per share available to common stockholders	$	(10,872	)	4,253,763	$	(2.55	)

		Year ended December 31, 2000
		Income (numerator)			Shares (denominator)	Per share amount
Basic loss per share available to common stockholders		$	(20	)	4,563,958	$	0.00
Effect of dilutive securities			—		—
	Diluted earnings per share available to common stockholders	$	(20	)	4,563,958	$	0.00

		Year ended December 31, 2001
		Income (numerator)			Shares (denominator)	Per share amount
Basic loss per share available to common stockholders		$	(16,137	)	4,600,850	$	(3.51	)
Effect of dilutive securities			—		—
	Diluted earnings per share available to common stockholders	$	(16,137	)	4,600,850	$	(3.51	)

        Options to purchase 1,057,071 shares of Class A common stock at an average purchase price of $14.040 were outstanding at December 31, 1999, but were not included in the computation of diluted earnings per share because they were anti-dilutive.

        Options to purchase 1,096,517 shares of Class A common stock at an average price of $13.904 per share and warrants to purchase 238,548 shares of Class A common stock at $.01 per share were outstanding at December 31, 2000, but were not included in the computation of diluted earnings per share because they were anti-dilutive.

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        Options to purchase 1,096,067 shares of Class A common stock at an average price of $13.072 per share and warrants to purchase 238,548 shares of Class A common stock at $.01 per share were outstanding at December 31, 2001, but were not included in the computation of diluted earnings per share because they were anti-dilutive.

(18)    Related Party Transactions

        During the year ended December 31, 1999, the Company paid $64 for merger and acquisition advisory services to two firms affiliated with members of the Company's board of directors.

        On November 3, 2000, the Company entered into an agreement with First Union Securities, Inc. ("FUSI"), under which FUSI acted as the Company's exclusive financial advisor with respect to possible debt or equity financings or recapitalizations from November 3, 2000 until March 12, 2002. A director of Morton Industrial Group, Inc. is head of the Commercial and Industrial Corporate Finance and Mergers and Acquisitions Group at Wachovia Securities, Inc. (formerly FUSI).

(19)    Segment Reporting

        Morton Industrial Group, Inc. has two reportable segments, contract metal fabrication and contract plastic fabrication. The contract metal fabrication segment provides full-service fabrication of parts and sub-assemblies for the construction, agricultural, and industrial equipment industry. The contract plastic fabrication segment provides full-service vacuum formed and injection-molded parts and sub-assemblies for the construction, agricultural, and industrial equipment industry.

        The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

        Morton Industrial Group, Inc. accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices, although these intersegment sales were insignificant in 2000 and 2001.

        Morton Industrial Group, Inc.'s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology

44

and production methods. Most of the businesses were acquired as a unit, and most of the management at the time was retained.

	1999
	Contract Metal Fabrication		Contract Plastic Fabrication			Total
Revenues from external customers	$	106,048	$	113,275		$	219,323
Intersegment revenues		—		314			314
Interest income		—		15			15
Interest expense		4,802		3,406			8,208
Depreciation and amortization		6,428		2,765			9,193
Segment operating profit		2,416		(1,594	)		822
Segment assets including intangible assets		53,905		71,801			125,706
Expenditures for segment fixed assets		3,363		1,600			4,963

	2000
	Contract Metal Fabrication		Contract Plastic Fabrication		Total
Revenues from external customers	$	150,809	$	128,019	$	278,828
Intersegment revenues		—		596		596
Interest expense		4,249		6,552		10,801
Depreciation and amortization		5,459		4,163		9,622
Segment operating profit		8,093		1,018		9,111
Segment assets including intangible assets		58,350		72,183		130,533
Expenditures for segment fixed assets		3,912		2,739		6,651

	2001
	Contract Metal Fabrication		Contract Plastic Fabrication			Total
Revenues from external customers	$	127,103	$	109,287		$	236,390
Intersegment revenues		—		237			237
Interest expense		4,028		5,425			9,453
Depreciation and amortization		5,471		4,539			10,010
Segment operating profit (loss)		2,937		(6,516	)		(3,579	)
Segment assets including intangible assets		49,786		57,968			107,754
Expenditures for segment fixed assets		3,222		1,160			4,382

(20)    Litigation

        On May 1, 2000, Worthington Industries, Inc. filed suit (in the United States District Court for the Southern District of Ohio, Eastern Division) related to the Company's 1999 acquisition of the

45

non-automotive plastics business from Worthington. Worthington claims that it is owed additional amounts under the sales agreement and a related service agreement, and that it is owed dividends on the preferred stock that it received. The Company believes that certain warranties and representations made by Worthington at the time of acquisition have been breached and that amounts claimed by Worthington are not due. The Company has filed a counterclaim against Worthington related to these matters. Management believes that the Company will prevail in this litigation and does not anticipate any material impact on earnings or financial position.

        The Company is also involved in routine litigation. Management does not believe that any legal proceedings would have a material adverse effect on the Company's financial condition or results of operations.

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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES

Schedule II—Valuation and Qualifying Accounts

		Additions
Description		Balance at beginning of period		Charged to costs and expenses	Charged to other accounts		Deductions	Balance at end of period
Allowance for doubtful accounts:
	Year ended December 31, 1999	$	314	64	370	*	428	320
	Year ended December 31, 2000	$	320	1,430	—		426	1,324
	Year ended December 31, 2001	$	1,324	595	—		1,538	381

*Represents the acquisition date allowance for doubtful accounts of businesses acquired.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

        The information required by this Item 10 about the executive officers and Directors of the Company is incorporated herein by reference to the information set forth under the caption "Election of Directors" in our definitive proxy statement for the 2002 annual meeting of shareholders, which we expect to file with the Securities and Exchange commission not later than one hundred twenty days after December 31, 2001 pursuant to Regulation 14A.

Item 11. Executive Compensation.

        The information required by this Item 11 is incorporated herein by reference to the information set forth under the caption "Executive Compensation" in our definitive proxy statement for the 2002 annual meeting of shareholders, which we expect to file with the Securities and Exchange commission not later than one hundred twenty days after December 31, 2001 pursuant to Regulation 14A.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

        The information required by this Item 12 is incorporated herein by reference to the information set forth under the caption "Principal Shareholders of the Company" in our definitive proxy statement for the 2002 annual meeting of shareholders, which we expect to file with the Securities and Exchange commission not later than one hundred twenty days after December 31, 2001 pursuant to Regulation 14A.

Item 13. Certain Relationships and Related Transactions.

        The information required by this Item 13 is incorporated herein by reference to the information set forth under the caption "Executive Compensation—Certain Relationships and Related Transactions" in our definitive proxy statement for the 2002 annual meeting of shareholders, which we expect to file with the Securities and Exchange commission not later than one hundred twenty days after December 31, 2001 pursuant to Regulation 14A.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)

The following documents are filed as a part of this report:

1.

Financial Statements.

        The following financial statements of the Company are included in Item 8:

a.

Report of KPMG LLP, Independent Auditors

b.

Consolidated Balance Sheets as of December 31, 2000 and 2001

c.

Consolidated Statements of Operations for the years ended December 31, 1999, 2000 and 2001

d.

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1999, 2000 and 2001

e.

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 2000 and 2001

f.

Notes to Consolidated Financial Statements

2.

Financial Statement Schedules

        The following financial statement schedule of the Company is included in Item 8:

Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 1999, 2000 and 2001

48

Exhibit Number and Document Title	Incorporated by Reference to	Filed Herewith
2.1 and 10.1—Agreement and Plan of Merger Between MLX Corp. and Morton Metalcraft Holding Co., dated as of October 20, 1997	Annex B to the Definitive Proxy Statement on Schedule 14A filed by MLX Corp. with the Securities and Exchange Commission ("SEC") on January 6, 1998.
2.2 and 10.2—Securities Purchase Agreement Among MLX Corp. and Security Holders of Morton Metalcraft Holding Co., dated as of October 20, 1997	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
3.1 and 4.1—Articles of Incorporation of the registrant as Amended prior to January 20, 1998	MLX Corp. Form 10-Q for the quarter ended June 30, 1993
3.2 and 4.2—Articles of Amendment to Articles of Incorporation of the Registrant Effective January 20, 1998	Exhibit 3 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on February 4, 1998
3.2 and 4.2—Bylaws of the Registrant, as Amended	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
4.3 and 10.3—Credit Agreement Among the Registrant, Metalcraft Co., Morton Metalcraft Co. of North Carolina and Harris Trust & Savings Bank, individually and as Agent, dated January 20, 1998	Morton Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
4.4 and 10.4—Security Agreement executed by Morton Industrial Group, Inc., Morton Metalcraft Co., and Morton Metalcraft Co. of North Carolina in favor of Harris Trust & Savings Bank, individually and as Agent, dated January 20, 1998	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
4.5 and 10.5—Mortgage and Security Agreement with Assignment of Rents executed by Morton Metalcraft Co. in favor of Harris Trust & Savings Bank, individually and as Agent, dated January 20, 1998	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
4.6 and 10.6—Pledge Agreement executed by Registrant in favor of Harris Trust & Savings Bank, individually and as Agent, dated January 20, 1998	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.7—Limited Indemnification Agreement dated as of October 20, 1997, among MLX Corp., William D. Morton, and Other Morton Metalcraft Shareholders and Option Holders	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.8—Industrial Building Lease between Morton Welding Co., Inc., and Morton Metalcraft Co. dated September 1, 1994	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997

49

10.9—Lease between Caterpillar, Inc., and Morton Metalcraft Co., Inc. dated June 9, 1995	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.10—Lease between Agracel, Inc., and Morton Metalcraft Co. dated November 6, 1996.	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.11—Employment Agreement dated as of January 20, 1998, between the Registrant and William D. Morton	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.12—Employment Agreement dated as of January 20, 1998, between the Registrant and Daryl R. Lindemann	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.13—MLX Corp. 1997 Stock Option Plan	Appendix C to the Definitive Proxy Statement on Schedule 14A filed by MLX Corp. with the SEC on January 6. 1998.
10.14—MLX Corp. 1995 Stock Option Plan	MLX Corp. Definitive Proxy Statement on Schedule 14A for the 1995 Annual Meeting of Stockholders
10.15—Master Lease Agreement between Morton Metalcraft Co. and General Electric Capital Corporation dated August 7, 1996	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.16—Guaranty of Master Lease Agreement by Morton Metalcraft Holding Co., dated August 7, 1996	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.17—Split Dollar Insurance Agreement between Morton Metalcraft Co. and William D. Morton dated February 3, 1995.	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.18—Split Dollar Assignment between William D. Morton and Morton Metalcraft Co. dated February 3, 1995	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.19—Split Dollar Insurance Agreement between Morton Metalcraft Co. and William D. Morton dated October 10, 1993	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.20—Split Dollar Assignment between William D. Morton and Morton Metalcraft Co., dated October 10, 1993	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.21—Split Dollar Insurance Agreement between Morton Metalcraft Co. and Daryl R. Lindemann dated October 10, 1993	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.22—Split Dollar Assignment between Daryl R. Lindemann and Morton Metalcraft Co., dated October 10, 1993	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997

50

10.23—Death Benefit Agreement between Morton Metalcraft Co. and William D. Morton	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.24—Salary Continuation Agreement between Morton Metalcraft Co. and William D. Morton dated February 26, 1996.	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1997
10.25—Stock Purchase Agreement among the Company and Gary L. George and Gloria J. George, dated March 2, 1998.	Exhibit 10.1 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 14, 1998
10.26—Stock Purchase Agreement among the Company, Joseph T. Buie, Jr., and Ernest J. Butler, dated April 8, 1998.	Exhibit 10.2 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 14, 1998
10.27—Non-negotiable Promissory Note (subordinated) of the Company to Joseph T. Buie, Jr., dated April 8, 1998.	Exhibit 10.3 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 14, 1998
10.28—Non-negotiable Promissory Note (subordinated) of the Company to Ernest. J. Butler, dated April 8, 1998.	Exhibit 10.4 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 14, 1998
10.29—Stock Purchase Agreement among the Company and Richard L. Goreham, Delores A. Staples and William B. Goreham, dated April 27, 1998.	Exhibit 10.1 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.30—Credit Agreement dated May 28, 1998 among the Company, Harris Trust and Savings Bank, and the lenders signatory thereto.	Exhibit 10.2 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.31—Mortgage and Security Agreement with Assignment of Rents executed by Carroll George Inc. dated May 28, 1998.	Exhibit 10.3 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.32—Deed of Trust and Security Agreement with Assignment of Rents executed by B&W Metal Fabricators, Inc.	Exhibit 10.4 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.33—Amended and Restated Security Agreement executed by the Company, Morton Metalcraft Co., Morton Metalcraft Co. of North Carolina, Morton Metalcraft Co. of South Carolina, Carroll George Inc. and B&W Metal Fabricators, Inc. dated May 28, 1998.	Exhibit 10.5 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.34—Amended and Restated Pledge Agreement executed by the Company, Morton Metalcraft Co., Morton Metalcraft Co. of North Carolina, Morton Metalcraft Co. of South Carolina, Carroll George Inc. and B&W Metal Fabricators, Inc. dated May 28, 1998.	Exhibit 10.6 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998

51

10.35—Amended and Restated Mortgage and Security Agreement with Assignment of Rents executed by Morton Metalcraft Co., dated May 28, 1998.	Exhibit 10.7 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.35—Mortgage and Security Agreement with Assignment of Rents to executed by Mid-Central Plastics, Inc. dated May 28, 1998.	Exhibit 10.8 Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on June 12, 1998
10.36—First Amendment to Credit Agreement with Harris Trust & Savings Bank.	Morton Industrial Group, Inc. Form 10-K for the year ended December 31, 1998
10.37—Asset Purchase Agreement among the Company, Morton Custom Plastics, LLC, and Worthington Custom Plastics, Inc. dated February 26, 1999 and First Amendment to Asset Purchase Agreement, dated as of April 15, 1999, among the Company, Morton Custom Plastics, LLC and Worthington Custom Plastics, Inc.	Exhibits 10.1 and 10.2 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 29, 1999
10.38—Credit Agreement dated as of April 15, 1999, among Morton Custom Plastics, LLC, Morton Holding, LLC and General Electric Capital Corporation	Exhibit 99.1 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on April 29,1999
10.39—Agreement dated December 31, 1999 by and among Carroll George Inc., Morton Industrial Group, Inc. and Advanced Component Technologies, Inc.	Exhibit 99.2 to Morton Industrial Group, Inc. Report on Form 8-K filed with SEC on January 18, 2000
10.40—Third Amendment to Credit Agreement with Harris Trust & Savings Bank	Exhibit 99.1 to Morton Industrial Group, Inc. Report on Form 8-K filed with SEC on February 29, 2000
10.41—Amended and Restated Agreement with Harris Trust and Savings Bank	Exhibit 99.1 to Morton Industrial Group, Inc. Report on Form 10-K filed with SEC on April 1, 2002	X
10.42—Amended and Restated Agreement with General Electric Capital Corporation	Exhibit 99.2 to Morton Industrial Group, Inc. Report on Form 10-K filed with SEC on April 1, 2002	X
13—Annual Report	Exhibit 13.1 to Morton Industrial Group, Inc. Report on Form 10-K filed with SEC on April 1, 2002	X
16.2—Letter re: change in certifying accountant	Exhibit 16.1 to Morton Industrial Group, Inc. Report on Form 8-K filed with the SEC on February 18, 1999
21.1—Subsidiaries of Registrant		X
23.1—Consent of KPMG LLP		X

(b)

Reports on Form 8-K

        None

52

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MORTON INDUSTRIAL GROUP, INC.
Dated: March 29, 2002	By:	/s/  WILLIAM D. MORTON William D. Morton President, Chief Executive Officer, and Chairman of the Board of Directors

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signatures	Title	Date
/s/  WILLIAM D. MORTON William D. Morton	President, Chief Executive Officer, and Chairman of the Board of Directors	March 29, 2002
/s/  THOMAS D. LAUERMAN Thomas D. Lauerman	Vice President of Finance and Treasurer (Principal Accounting Officer)	March 29, 2002
/s/  FRED W. BROLING Fred W. Broling	Director	March 29, 2002
/s/  MARK W. MEALY Mark W. Mealy	Director	March 29, 2002
Willem F.P. de Vogel	Director

53

SHAREHOLDER INFORMATION

CORPORATE OFFICES

Morton Industrial Group, Inc.
1021 W. Birchwood
Morton, Illinois 61550-0429
Phone: 309-263-3300 Fax: 309-263-3216

INVESTOR INFORMATION

Shareholders and prospective investors are welcome to call or write with questions or requests for additional information. Please direct inquiries to Van Negris at:

Kehoe, White, Van Negris & Company, Inc.
766 Madison Avenue
New York, NY 10021
Phone: 212-396-0606 Fax: 212-396-9025

ANNUAL MEETING

The Annual Meeting of the Shareholders of Morton Industrial Group, Inc. will be held at:

Bertha Frank Performaing Arts Center
350 N. Illinois Avenue
Morton, Illinois 61550
Tuesday, June 11, 2002 at 10:00 a.m. (CDT)

FORM 10-K

A copy of form 10-K, the Annual Report which the Company is required to file with the Securities and Exchange Commission, is available without charge upon request to the Company at the above address.

STOCK TRANSFER AGENT AND REGISTRAR

For inquiries about stock transfers or address changes, shareholders may contact:

American Stock Transfer & Trust Co.
59 Maiden Lane
New York, NY 10038
Phone: 800-937-5449

INDEPENDENT PUBLIC ACCOUNTANTS

KPMG LLP
Indianapolis, Indiana

STOCK MARKET INFORMATION

The common stock of Morton Industrial Group, Inc. is traded on the Nasdaq SmallCap Market under the ticker symbol MGRP.

54

BOARD OF DIRECTORS

William D. Morton
    Chairman of the Board, President and CEO
    Morton Industrial Group, Inc.

Fred W. Broling
    President and CEO
    US Precision Glass

Willem F.P. de Vogel
    President
    Three Cities Research, Inc.

Mark W. Mealy
    Head of the Commercial
    and Industrial Corporate Finance
    and Mergers and Acquisition Group
    Wachovia Securities, Inc.

CORPORATE OFFICERS

William D. Morton
    Chairman of the Board, President and CEO

Daryl R. Lindemann
    Secretary

Thomas D. Lauerman
    Vice President of Finance & Treasurer

55

QuickLinks

PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Item 6. Selected Financial Data
SELECTED HISTORICAL FINANCIAL DATA
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2000 and 2001 (Dollars in thousands, except share data)
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Operations Years ended December 31, 1999, 2000 and 2001 (Dollars in thousands, except per share data)
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Deficit) Years ended December 31, 1999, 2000 and 2001 (Dollars in thousands)
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 1999, 2000 and 2001 (Dollars in thousands)
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2000 and 2001 (Dollars in thousands, except per share data)
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES Schedule II—Valuation and Qualifying Accounts
PART III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
SIGNATURES
SHAREHOLDER INFORMATION

EX-13

[MORTON LOGO]

1021 W. Birchwood Street
Morton, Illinois 61550

P 309 263-263-3300
F 309 263-3216

www.mortongroup.com

MORTON INDUSTRIAL GROUP, INC.



[MORTON LOGO]

[GRAPHIC]

MORTON INDUSTRIAL GROUP, INC.



FULL SERVICE CONTRACT MANUFACTURING

MORTON INDUSTRIAL GROUP, INC.

M I S S I O N

Morton Industrial Group, Inc.'s mission is to own and operate highly respected
contract manufacturing suppliers who have significant relationships with
industrial original equipment manufacturers.

POSITIONING FOR THE FUTURE

Manufacturing has been challenged by the longest economic constriction since the
Great Depression of 1928. Faced with economic uncertainty and global competitive
pressures, American industry has responded by adopting new technology, lean
manufacturing techniques and aligning with only the most efficient members of
the supply network. Morton Industrial Group, Inc. has maintained and grown
market share with our prestigious customer base because, like them, we have
aggressively eliminated non-value added costs while pursuing new technologies
and manufacturing techniques.

[GRAPHIC]



SHAREHOLDER INFORMATION

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

This annual report contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements containing the words "anticipates,"
"believes," "intends," "estimates," "expects," "projects" and similar words. The
forward looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results to be materially different from
any future results expressed or implied by such forward looking statements. Such
factors include, among others, the following: the loss of certain significant
customers; the cyclicality of our construction and agricultural sales; risks
associated with our acquisition strategy; general economic and business
conditions, both nationally and in the markets in which we operate or will
operate; competition; and other factors referenced in the Company's reports and
registration statements filed with the Securities and Exchange Commission. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward looking statements. The forward looking statements
contained herein speak only of the Company's expectation as of the date of this
annual report. We disclaim any obligations to update any such factors or
publicly announce the result of any revisions to any of the forward looking
statements contained herein to reflect future events or developments.

CORPORATE OFFICES

Morton Industrial Group, Inc.
1021 W. Birchwood Street
Morton, Illinois 61550
Phone: (309) 263-3300
Fax: (309) 263-3216

STOCK LISTING

The common stock of Morton Industrial Group, Inc. is quoted on The Nasdaq
Small Cap Market under the ticker symbol MGRP.

ANNUAL MEETING

The Annual Meeting of the Shareholders of Morton Industrial Group, Inc. will
be held at the Bertha Frank Performing Arts Center, located at 350 N. Illinois
Avenue in Morton, Illinois on Tuesday, June 11, 2002 at 10:00 a.m. (CDT).

STOCK TRANSFER AGENT AND REGISTRAR

For inquiries about stock transfers or address changes, Shareholders may
contact:
American Stock Transfer & Trust Co.
59 Maiden Lane
New York, New York 10007
Phone: (800) 937-5449

INVESTOR RELATIONS

Shareholders and prospective investors are welcome to call or write with
questions or requests for additional information. Please direct inquiries to:
Kehoe, White, Van Negris & Company, Inc.
766 Madison Avenue
New York, New York 10021
Phone: (212) 396-0606
Fax: (212) 396-9025

INDEPENDENT AUDITORS

KPMG LLP, Indianapolis, Indiana

COUNSEL

Husch & Eppenberger LLC Peoria, Illinois

ANNUAL REPORT ON FORM 10-K

Additional copies of this Annual Report and the Annual Report on Form 10-K may
be obtained without charge by writing to the Company at the address listed
above. These reports are also available to the public on request as required by
the Securities and Exchange Commission (SEC). These statements have not been
reviewed or confirmed for accuracy or relevance by the SEC.



MORTON METALCRAFT CO. LOCATIONS

[GRAPHIC]

[MORTON LOGO]

M O R T O N  I N D U S T R I A L  G R O U P , I N C .
is a contract manufacturer of highly engineered components and sub-assemblies
for industrial original equipment manufacturers. Its products include metal
fabrications, thermoformed and injection molded components and assemblies for a
broad range of industry segments which include the construction equipment,
agricultural equipment, aerospace, home appliance, computer equipment and
recreational vehicle industries. Morton's superior competitive strengths have
resulted in strong, focused relationships with its prestigious customer base.
Its twelve manufacturing facilities are strategically located in the Midwestern
and Southeastern United States in close proximity to its customers'
manufacturing and assembly facilities. Morton's principal customers include B/E
Aerospace, Caterpillar Inc., Compaq Computer Corporation, Deere & Company, EMC
Corp., General Electric Company and Honda.

[GRAPHIC]

                          1021 W. Birchwood Street
MIDWEST DIVISION          Morton, Illinois 61550
                          Phone: (309) 266-7176
                          Fax: (309) 263-1866

                          400 Detroit Avenue
                          Morton, Illinois 61550
                          Phone: (309) 263-3299
                          Fax: (309) 263-1854

                          2223 W. Altorfer Drive
                          Peoria, Illinois 61615
                          Phone: (309)589-8550
                          Fax: (309)589-8581

                          2080 E. Williams Street
SOUTHEAST DIVISION        Apex, North Carolina 27502
                          Phone: (919) 363-1630
                          Fax: (919) 363-1103

                          835 Salem Road
                          Welcome, North Carolina 27374
                          Phone: (336) 731-5700
                          Fax: (336) 731-8005

                          534 Corbin Road
                          Honea Path, South Carolina 29654
                          Phone: (864) 369-1800
                          Fax: (864) 369-9022



MORTON CUSTOM PLASTICS LOCATIONS

[GRAPHIC]

[MORTON LOGO]

                          2360 Grand Avenue, PO Box 65337
MIDWEST DIVISION          West Des Moines, Iowa 50265
                          Phone: (515) 225-6707
                          Fax: (515) 225-9673

                          7301 Caldwell Road
SOUTHEAST MOLDING         Harrisburg, North Carolina 28075
DIVISION                  Phone: (704) 454-1278
                          Fax: (704) 454-1311

                          130 Morton Drive, PO Box 378
                          St. Matthews, South Carolina 29135
                          Phone: (803) 655-6000
                          Fax: (803) 655-5678

                          5685 Hwy. 49 South, PO Box 579
FABRICATION DIVISION      Harrisburg, North Carolina 28075
                          Phone: (704) 455-5191
                          Fax: (704) 455-5025

                          4287 Stough Road
                          Concord, North Carolina 28075
                          Phone: (704) 455-5191
                          Fax: (704) 455-5025

                          655 Industrial Drive, PO Box 1160
CENTRAL DIVISION          Lebanon, Kentucky 40033
                          Phone: (270) 692-0901
                          Fax: (270) 692-0411

                          OUR TWELVE MANUFACTURING
                          FACILITIES IN THE MIDWESTERN
                          AND SOUTHEASTERN UNITED
                          STATES ARE STRATEGICALLY LOCATED
                          NEAR OUR CUSTOMERS' MANUFACTURING
                          AND ASSEMBLY FACILITIES.



BOARD OF DIRECTORS

          WILLIAM D. MORTON, 54, served as Chairman, Chief Executive Officer and
          President of Morton Metalcraft Co. from 1989 until its merger into
          Morton Industrial Group, Inc. in 1998. At that time, he became
          Chairman, Chief Executive Officer and President of Morton Industrial
          Group, Inc.

          FRED W. BROLING, 66, served as Chairman of the Board and Chief
          Executive Officer of US Precision Glass Company since 1998. He served
          as Chairman of the Board and Chief Executive Officer of Plastics
          Specialties and Technologies, Inc. from 1983 to 1998 and PureTec
          Corporation from 1995 to 1998. Mr. Broling became a director of Morton
          Metalcraft Co. in 1989, and upon conclusion of the merger, a Morton
          Industrial Group, Inc. director and is a member of the Compensation
          and Stock Option Committee and is a member of the Audit Committee of
          the Board.

          MARK W. MEALY, 45, has been a Managing Director and currently serves
          as Head of Commercial & Industrial Corporate Finance and
          Mergers & Acquisition Group at Wachovia Securities, Inc. Mr. Mealy
          became a director of Morton Metalcraft Co. in 1995, and upon
          conclusion of the merger, a Morton Industrial Group, Inc. director.

          WILLEM F.P. DE VOGEL, 51, has been President since 1982 of Three
          Cities Research, Inc., a firm engaged in the investment and management
          of private capital. Mr. de Vogel became a Morton Industrial Group,
          Inc. director in 1998 and is a member of the Audit Committee of the
          Board.

MANAGEMENT TEAM

          BRIAN R. DOOLITTLE, Vice President of Sales & Engineering, Morton
          Metalcraft Co.

          BRIAN L. GEIGER, Vice President of Operations, Morton Metalcraft Co.

          ROBERT J. JANECZKO, PH.D., President & Chief Operating Officer, Morton
          Metalcraft Co.

          HASKELL G. KNIGHT, President & Chief Operating Officer, Morton Custom
          Plastics

          THOMAS D. LAUERMAN, Chief Financial Officer, Treasurer and Vice
          President of Finance of Morton Industrial Group, Inc.

          DARYL R. LINDEMANN, Secretary, Morton Industrial Group, Inc. and Vice
          President of Finance & Support Services, Morton Metalcraft Co.

          WILLIAM D. MORTON, Chairman and Chief Executive Officer, Morton
          Industrial Group, Inc., Morton Metalcraft Co. and Morton Custom
          Plastics

          CRUGAR B. TUTTLE, General Manager and Vice President, Morton Custom
          Plastics



TO OUR SHAREHOLDERS AND EMPLOYEES

[PHOTO OF WILLIAM D. MORTON]

          After surviving the 1999 agricultural depression, the 2000
          construction recession, and the 2001 general economic downturn, we
          found ourselves, our customers, and our country responding to the
          national crisis resulting from the 9/11/01 terrorist attacks on New
          York City and Washington D.C. and our corresponding "War on
          Terrorism". Customers have had, in almost all cases, reduced demand
          for their products. Overall, this economic softening has resulted in
          our 2001 revenues being off from 2000 by 15% instead of an expected
          increase of about the same amount.

          In the years prior to this current environment of uncertainty, (during
          1998, 1999 and 2000), we expanded our production capacity in response
          to major customer opportunities and sought attractive strategic
          acquisitions. Today we find ourselves with excellent but
          underutilized assets which are well positioned to respond to the
          economic recovery anticipated in late 2002.

          Across our organization, we have made dramatic improvements in the
          efficiencies of our operations. The management structure has been
          flattened, staffing has been reduced from a peak of 3,000 full-time
          equivalents in early 2000 to a current level below 1,850. At the same
          time, facilities are being consolidated in both our metals and
          plastics businesses.

          Each of our factories has engaged outside resources to lean out their
          respective manufacturing activities with improvements at varying
          stages of implementation. We have utilized Value Added Supply Team
          (VAST) methodology to implement a results oriented cultural change in
          our Midwest locations, lowering our cost structures dramatically. We
          are now implementing 6 Sigma at all company locations which will
          continue to help drive us to world class standards during 2002 and
          beyond.

          Competing in a global economy will continue to be challenging in 2002.
          But we continue to manage for the long term and will emerge from the
          recession with a strong market position, a lower cost structure, a
          talented work force and a superior supplier network. The business
          strategies we are pursuing today will put us in a solid position to
          grow profitably and provide attractive returns for our stakeholders.

          We appreciate your support during this very difficult year.

          /s/ William D. Morton
          ---------------------
          William D. Morton
          Chairman and Chief Executive Officer

EX-21.1

EXHIBIT 21.1

Subsidiaries of the Registrant

At December 31, 2001, the Company had five directly wholly owned subsidiaries:

     Morton Metalcraft Co., an Illinois corporation
     Morton Metalcraft Co., of North Carolina, a North Carolina corporation
     B & W Metal Fabricators, Inc., a North Carolina corporation
     Mid-Central Plastics, Inc., an Iowa corporation
     Morton Metalcraft Co. of South Carolina, a South Carolina corporation

At December 31, 2001, the Company owned 49% of Morton Holdings, LLC. Morton
Holdings, LLC owns 100% of Morton Custom Plastics, LLC. Morton Custom Plastics,
LLC holds the assets acquired in 1999 from Worthington Custom Plastics, Inc.
Quilvest Custom Plastics, Inc., an affiliate of shareholders of Morton
Industrial Group, Inc. owns 51% of Morton Holdings, LLC. Morton Industrial
Group, Inc., acts as the manager of Morton Holdings, LLC and is allocated 100%
of each item of Morton Holdings, LLC's income, gains, losses, deductions and
credits. Quilvest Custom Plastics, Inc. has granted Morton Industrial Group,
Inc., an irrevocable option to purchase its interest in Morton Holdings, LLC at
any time for the sum of One Thousand Dollars.

EX-23.1

        EXHIBIT 23.1

The Board of Directors and Stockholders

Morton Industrial Group, Inc.:

We consent to incorporation by reference in the registration statements (Nos. 333-68927 and 333-69575) on Form S-8 of Morton Industrial Group, Inc. of our report dated March 25, 2002, relating to the consolidated balance sheets of Morton Industrial Group, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows and the consolidated financial statement schedule for each of the years in the three-year period ended December 31, 2001, which report appears in the December 31, 2001, annual report on Form 10-K of Morton Industrial Group, Inc.

KPMG LLP

Indianapolis, Indiana

March 25, 2002

EX-99.1

                                                                    EXHIBIT 99.1

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                  BY AND AMONG

                         MORTON INDUSTRIAL GROUP, INC.,

                 THE GUARANTORS FROM TIME TO TIME PARTY HERETO,

                   THE LENDERS FROM TIME TO TIME PARTY HERETO

                                       AND

                     HARRIS TRUST AND SAVINGS BANK, AS AGENT

                          DATED AS OF FEBRUARY 25, 2002

================================================================================



                                TABLE OF CONTENTS



SECTION                                                HEADING                                            PAGE
                                                                                                      
SECTION 1.            THE CREDITS............................................................................2

     Section 1.1.     Revolving Credit.......................................................................2
              (a)     Generally..............................................................................2
              (b)     Revolving Loans........................................................................2
     Section 1.2.     Term Credit............................................................................3
     Section 1.3.     Letters of Credit......................................................................3
              (a)     General Terms..........................................................................3
              (b)     Applications...........................................................................4
              (c)     The Reimbursement Obligation...........................................................4
              (d)     The Participating Interests............................................................5
              (e)     Indemnification........................................................................6
              (f)     Change in Laws.........................................................................6
     Section 1.4.     Manner and Disbursement of Borrowings..................................................6
              (a)     Generally..............................................................................6
              (b)     Reimbursement Obligation...............................................................7
              (c)     Agent Reliance on Bank Funding.........................................................7
     Section 1.5.     Manner of Obtaining Letters of Credit..................................................7
     Section 1.6.     The Swing Line.........................................................................8

SECTION 2.            INTEREST AND CHANGE IN CIRCUMSTANCES..................................................10

     Section 2.1.     Interest Rate Options.................................................................10
     Section 2.2.     Minimum Amounts.......................................................................11
     Section 2.3.     Computation of Interest...............................................................11
     Section 2.4.     Manner of Rate Selection..............................................................11
     Section 2.5.     Change of Law.........................................................................11
     Section 2.6.     Unavailability of Deposits or Inability to Ascertain Adjusted LIBOR...................12
     Section 2.7.     Taxes and Increased Costs.............................................................12
     Section 2.8.     Change in Capital Adequacy Requirements...............................................13
     Section 2.9.     Funding Indemnity.....................................................................14
     Section 2.10.    Lending Branch........................................................................14
     Section 2.11.    Lender's Duty to Mitigate.............................................................14
     Section 2.12.    Discretion of Lenders as to Manner of Funding.........................................15
     Section 2.13.    Replacement of Lender.................................................................15
     Section 2.14.    Default Rate..........................................................................16

SECTION 3.            FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND NOTATIONS...........................16

     Section 3.1.     Fees..................................................................................16
     Section 3.2.     Voluntary Prepayments of Revolving Credit and Term Notes..............................18


                                       -i-


                                                                                                      
     Section 3.3.     Mandatory Prepayments.................................................................18
     Section 3.4.     Terminations of Revolving Credit Commitments..........................................19
     Section 3.5.     Place and Application of Payments.....................................................20
     Section 3.6.     Notations and Requests................................................................21
     Section 3.7.     Excess Revolving Credit...............................................................21

SECTION 4.            COLLATERAL............................................................................22

     Section 4.1.     Collateral............................................................................22
     Section 4.2.     Guaranties............................................................................22
     Section 4.3.     Further Assurances....................................................................22
     Section 4.4.     Collections...........................................................................23

SECTION 5.            DEFINITIONS; INTERPRETATION...........................................................23

     Section 5.1.     Definitions...........................................................................23
     Section 5.2.     Interpretation........................................................................36
     Section 5.3.     Change in Accounting Principles.......................................................36

SECTION 6.            REPRESENTATIONS AND WARRANTIES........................................................36

     Section 6.1.     Organization and Qualification........................................................36
     Section 6.2.     Subsidiaries..........................................................................37
     Section 6.3.     Margin Stock..........................................................................37
     Section 6.4.     Financial Reports.....................................................................37
     Section 6.5.     Full Disclosure.......................................................................38
     Section 6.6.     Good Title............................................................................38
     Section 6.7.     Litigation and Other Controversies....................................................38
     Section 6.8.     Taxes.................................................................................38
     Section 6.9.     Approvals.............................................................................38
     Section 6.10.    Affiliate Transactions................................................................39
     Section 6.11.    Investment Company; Public Utility Holding Company....................................39
     Section 6.12.    ERISA.................................................................................39
     Section 6.13.    Compliance with Laws..................................................................39
     Section 6.14.    Other Agreements......................................................................39
     Section 6.15.    [Intentionally Omitted]...............................................................40
     Section 6.16.    [Intentionally Omitted]...............................................................40
     Section 6.17.    No Default............................................................................40
     Section 6.18.    Capital Structure.....................................................................40

SECTION 7.            CONDITIONS PRECEDENT..................................................................41

     Section 7.1.     All Advances..........................................................................41
     Section 7.2.     Initial Advance.......................................................................42
     Section 7.3.     Initial Loans.........................................................................43

SECTION 8.            COVENANTS.............................................................................43

     Section 8.1.     Maintenance of Business...............................................................43



                                      -ii-


                                                                                                      
     Section 8.2.     Maintenance of Property...............................................................43
     Section 8.3.     Taxes and Assessments.................................................................44
     Section 8.4.     Insurance.............................................................................44
     Section 8.5.     Financial Reports.....................................................................44
     Section 8.6.     Interest Coverage Ratio...............................................................46
     Section 8.7.     Cash Flow Leverage Ratio..............................................................47
     Section 8.8.     EBITDA................................................................................47
     Section 8.9.     Fixed Charge Coverage Ratio...........................................................48
     Section 8.10.    Capital Expenditures..................................................................49
     Section 8.11.    Indebtedness..........................................................................49
     Section 8.12.    Liens.................................................................................49
     Section 8.13.    Investments, Loans, Advances and Guaranties...........................................51
     Section 8.14.    Leases................................................................................52
     Section 8.15.    Dividends and Certain Other Restricted Payments.......................................52
     Section 8.16.    Mergers, Consolidations and Sales.....................................................52
     Section 8.17.    Acquisitions..........................................................................53
     Section 8.18.    Maintenance of Subsidiaries...........................................................53
     Section 8.19.    Formation of Subsidiaries.............................................................53
     Section 8.20.    ERISA.................................................................................54
     Section 8.21.    Compliance with Laws..................................................................54
     Section 8.22.    Burdensome Contracts with Affiliates..................................................54
     Section 8.23.    Changes in Fiscal Year................................................................54
     Section 8.24.    Change in the Nature of Business......................................................54
     Section 8.25.    Use of Loan Proceeds..................................................................54
     SECTION 8.26.    [INTENTIONALLY DELETED]...............................................................55
     Section 8.27.    Net Worth.............................................................................55
     Section 8.28.    Bank Warrants.........................................................................55
     Section 8.29.    Class A Common Stock..................................................................55
     Section 8.30.    Issuance of Dilutive Equity...........................................................55
     Section 8.31.    Financial Advisor.....................................................................55

SECTION 9.            EVENTS OF DEFAULT AND REMEDIES........................................................56

SECTION 10.           THE AGENT.............................................................................59

     Section 10.1.    Appointment and Authorization.........................................................59
     Section 10.2.    Rights as a Lender....................................................................59
     Section 10.3.    Standard of Care......................................................................59
     Section 10.4.    Costs and Expenses....................................................................60
     Section 10.5.    Indemnity.............................................................................60
     Section 10.6.    Interest Rate Hedging Arrangements....................................................60

SECTION 11.           JOINT AND SEVERAL LIABILITY AND GUARANTIES............................................61

     Section 11.1.    Joint and Several Liability and Guaranties............................................61
     Section 11.2.    Guaranty Unconditional................................................................61



                                      -iii-


                                                                                                      
     Section 11.3.    Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances...........62
     Section 11.4.    Waivers...............................................................................62
     Section 11.5.    Limit on Recovery.....................................................................63
     Section 11.6.    Stay of Acceleration..................................................................63
     Section 11.7.    Benefit to Guarantors.................................................................63
     Section 11.8.    Guarantor Covenants...................................................................63

SECTION 12.           MISCELLANEOUS.........................................................................63

     Section 12.1.    Holidays..............................................................................63
     Section 12.2.    No Waiver, Cumulative Remedies........................................................63
     Section 12.3.    Waivers, Modifications and Amendments.................................................64
     Section 12.4.    Costs and Expenses....................................................................64
     Section 12.5.    Documentary Taxes.....................................................................64
     Section 12.6.    Survival of Representations...........................................................65
     Section 12.7.    Survival of Indemnities...............................................................65
     Section 12.8.    Notices...............................................................................65
     Section 12.9.    Headings..............................................................................65
     Section 12.10.   Severability of Provisions............................................................65
     Section 12.11.   Counterparts..........................................................................66
     Section 12.12.   Binding Nature, Governing Law, Etc....................................................66
     Section 12.13.   Entire Understanding..................................................................66
     Section 12.14.   Participations........................................................................66
     Section 12.15.   Assignment Agreements.................................................................66
     Section 12.16.   Confidentiality.......................................................................67
     Section 12.17.   Release of Claims.....................................................................67

Signature...................................................................................................69



Exhibit A       --   Revolving Credit Note
Exhibit B       --   Term Note
Exhibit C       --   [Intentionally Deleted]
Exhibit D       --   Swing Line Note
Exhibit E       --   Compliance Certificate
                     Attachment to Compliance Certificate
Exhibit F       --   Notice of Payment Request
Exhibit G       --   Guaranty
Schedule 1         --   Existing Letter of Credit
Schedule 6.2       --   Subsidiaries
Schedule 6.7       --   Litigation
Schedule 8.12      --   Other Liens

                                      -iv-


                          MORTON INDUSTRIAL GROUP, INC.

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

        This Amended and Restated Credit Agreement is entered into as of
February 25, 2002, by and among Morton Industrial Group, Inc., a Georgia
corporation (the "BORROWER"), each of the Subsidiaries from time to time
becoming a party hereto, as Guarantors, each of the financial institutions which
are or hereafter become party hereto (hereinafter referred to as a "LENDER" and
collectively as the "LENDERS"), and Harris Trust and Savings Bank in its
capacity as agent hereunder (hereinafter referred to as the "AGENT").

                                 R E C I T A L S

        A.     The Borrower has requested that the Lenders continue to extend
credit to the Borrower.

        B.     The Borrower, the Guarantors, the Lenders and the Agent are
currently party to that certain Credit Agreement dated as of May 29, 1998 (as
amended, the "PREVIOUS CREDIT AGREEMENT"). The Borrower hereby requests that
certain amendments be made to the Previous Credit Agreement and, for the sake of
clarity and convenience, that the Previous Credit Agreement be restated as so
amended. As part of such amendments to the Previous Credit Agreement, the
Borrower has requested that the Lenders refinance the Loans thereunder (the
"PREVIOUS LOANS"), extend the maturity of the credit facility provided thereby,
and restate the Term A Loan and Term B Loan facilities thereunder as a single
Term Loan facility all on and subject to the terms and conditions set forth
below. This Agreement shall become effective, and shall amend and restate the
Previous Credit Agreement, upon the execution of this Agreement by the Borrower,
the Guarantors, the Agent and the Lenders and the satisfaction of the conditions
precedent contained in Section 7 hereof; and from and after the Effective Date,
(i) all references made to the Previous Credit Agreement in the Loan Documents
or in any other instrument or document shall, without more, be deemed to refer
to this Amended and Restated Credit Agreement and (ii) the Previous Credit
Agreement shall be deemed amended and restated in its entirety hereby.

        C.     The Lenders, upon acceptance of this Agreement in writing and
satisfaction of the conditions precedent contained in Section 7 hereof, will
continue to lend monies and/or make advances, extensions of credit or other
financial accommodations to, on behalf of or for the benefit of the Borrower
pursuant hereto, and (i) any Previous Loans which were Revolving Loans under the
Previous Credit Agreement and which are not repaid on the Effective Date will
automatically, and without further action on the part of the Lenders or the
Borrower, become Revolving Loans under this Agreement and be evidenced by the
Revolving Credit Notes issued under this Agreement, and (ii) any Previous Loans
which were Term A Loans or Term B Loans under the Previous Credit Agreement and
are not repaid on the Effective Date will automatically, and without further
action on the part of the Lenders or the Borrower, become Term Loans under this
Agreement and be evidenced by the Term Notes issued under this Agreement. Any
Previous Loans under the Previous Credit Agreement which are repaid on the
Effective Date will be paid



to the holders of the Notes issued under the Previous Credit Agreement ratably
according to their interests therein; PROVIDED that Swing Loans outstanding on
the Effective Date will become Swing Loans under this Agreement and be evidenced
by the Swing Line Notes issued under this Agreement.

        NOW, THEREFORE, in consideration of the recitals set forth above, which
by this reference are incorporated into this Agreement set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and subject to the terms and conditions hereof and on the
basis of the representations and warranties herein set forth, the Borrower, the
Guarantors, the Agent and the Lenders hereby agree to the following:

SECTION 1.     THE CREDITS.

        SECTION 1.1.   REVOLVING CREDIT.

        (a)    GENERALLY. Subject to the terms and conditions hereof, each
Lender severally agrees to extend credit to the Borrower on a revolving basis
under the revolving credit facility described in this Section 1.1 (the
"REVOLVING CREDIT") which may be availed of by the Borrower from time to time,
and borrowings thereunder may be repaid and used again, during the period from
the date hereof to and including the Termination Date, at which time the
commitments of the Lenders to extend credit under the Revolving Credit shall
expire, PROVIDED that, as set forth in the recitals hereto, the making of the
initial Revolving Loans and Letters of Credit on the Effective Date shall not
require that the Lenders advance additional funds but instead shall represent a
continuation of the Revolving Loans and Letters of Credit outstanding under the
Previous Credit Agreement. The maximum amount of the Revolving Credit which each
Lender agrees to extend to the Borrower, taken together, shall not exceed its
Revolving Credit Commitment. The Revolving Credit may be utilized by the
Borrower in the form of Revolving Loans and Letters of Credit, all as more fully
hereinafter set forth; PROVIDED, HOWEVER, that the aggregate amount of Revolving
Loans, L/C Obligations and Swing Loans outstanding at any one time from the
Borrower shall not exceed the lesser of (x) the Available Revolving Credit
Commitments in effect at such time or (y) the Borrowing Base as then determined
and computed. For all purposes of this Agreement, where a determination of the
unused or available amount of the Revolving Credit Commitments is necessary, the
Revolving Loans and L/C Obligations shall be deemed to utilize the Revolving
Credit Commitments then in effect. The obligations of the Lenders hereunder are
several and not joint, and no Lender shall under any circumstances be obligated
to extend credit under the Revolving Credit in excess of its Revolving Credit
Commitment.

        (b)    REVOLVING LOANS. Subject to the terms and conditions hereof, the
Revolving Credit may be availed of by the Borrower in the form of loans in U.S.
Dollars (individually a "REVOLVING LOAN" and collectively the "REVOLVING
LOANS"). Each Revolving Loan by the Lenders shall be in a minimum amount of
$500,000 or such greater amount which is an integral multiple of $100,000,
except to the extent Section 2 provides otherwise in the case of LIBOR Portions.
Each Revolving Loan shall be made pro rata by the Lenders in accordance with the
amounts of their respective Revolver Percentages. Each advance made by a Lender
of its pro rata share of each Revolving Loan shall be evidenced by the same
Revolving Credit Note of the Borrower (individually, for each Lender, its
"REVOLVING CREDIT NOTE" and collectively, for all the

                                       -2-


Lenders, their "REVOLVING CREDIT NOTES"), jointly and severally, payable to the
order of such Lender in the amount of its Revolving Credit Commitment, with each
Revolving Credit Note to be in the form (with appropriate insertions) attached
hereto as Exhibit A. Each Revolving Credit Note shall be dated the date of
issuance thereof, be expressed to bear interest as provided in Section 2 hereof
and be expressed to mature on the Termination Date. Without regard to the
principal amount of each Revolving Credit Note stated on its face, the actual
principal amount at any time outstanding and owing by the Borrower on account
thereof shall be the sum of all advances then or theretofore made thereon less
all payments of principal actually received.

        SECTION 1.2.   TERM CREDIT. Subject to all of the terms and conditions
hereof, the Lenders severally agree to make a term loan in U.S. Dollars (the
"TERM LOAN") to the Borrower under the term credit facility set forth in this
Section 1.2 in an amount not to exceed their Term Loan Commitments, PROVIDED
that the making of the Term Loan shall not require that the Lenders advance
additional funds but instead shall represent a continuation of the Term A Loans
and Term B Loans outstanding under the Previous Credit Agreement. The Term Loan
shall be disbursed in a single advance made on the Effective Date, at which time
the commitments of the Lenders to make the Term Loan shall expire. Each Lender
shall advance a pro rata share of the Term Loan in accordance with the amounts
of its respective Term Percentage. Each Lender's pro rata share of the Term Loan
shall be evidenced by a Term Note of the Borrower (individually a "TERM NOTE"
and collectively the "TERM NOTES") payable to the order of such Lender in the
amount of its pro rata share of the Term Loan, each Term Note to be in the form
(with appropriate insertions) attached hereto as Exhibit B. Each Term Note shall
mature in monthly installments, commencing on February 28, 2002 and continuing
on the last day of each month occurring thereafter to and including June 30,
2003, with the principal installments on the Term Notes to aggregate $235,000
for the installment due on February 28, 2002, $400,000 per installment
thereafter and through and including April 30, 2002 and $500,000 per installment
thereafter and through and including June 30, 2003, and with a final principal
payment on all the Term Notes due on July 1, 2003 in an amount equal to all
principal and interest not sooner paid, and with the amount of each payment due
on the Term Note held by each Lender to be equal to such Lender's Term
Percentage of such payment.

        SECTION 1.3.   LETTERS OF CREDIT.

        (a)    GENERAL TERMS. Subject to the terms and conditions hereof, as
part of the Revolving Credit, the Agent shall issue standby or commercial
letters of credit (each a "LETTER OF CREDIT") for the account of the Borrower
(whether for its own account individually or also for the account of any
Subsidiary) in U.S. Dollars in an aggregate undrawn face amount up to the amount
of the L/C Sublimit as then in effect; PROVIDED, HOWEVER, that the aggregate L/C
Obligations at any time outstanding shall not exceed the difference between (x)
the lesser of (i) the Available Revolving Credit Commitments in effect at such
time or (ii) the Borrowing Base as then determined and computed and (y) the
aggregate principal amount of Revolving Loans and Swing Loans then outstanding.
Each Letter of Credit shall be issued by the Agent, but each Lender shall be
obligated to reimburse the Agent for its Revolver Percentage of the amount of
each drawing thereunder and, accordingly, the undrawn face amount of each Letter
of Credit shall constitute usage of the Revolving Credit Commitment of each
Lender pro rata in accordance with each Lender's Revolver Percentage.

                                       -3-


        (b)    APPLICATIONS. At any time before the Termination Date, the Agent
shall, at the request of the Borrower, issue one or more Letters of Credit for
the account of the Borrower (whether for its own account individually or also
for the account of any Subsidiary), in a form satisfactory to the Agent, in an
aggregate face amount as set forth above, upon the receipt of an application for
the Letter of Credit in the form customarily prescribed by the Agent duly
executed by the Borrower for whose account such Letter of Credit was issued
(each an "APPLICATION"). Each Letter of Credit issued hereunder which is a
standby letter of credit shall expire not later than the earlier of (i) twelve
(12) months from the date of issuance and each renewal or (ii) five (5) Business
Days prior to the Termination Date. Each Letter of Credit issued hereunder which
is a commercial letter of credit shall expire not later than the earlier of (i)
one hundred eighty (180) days from the date of issuance and each renewal or (ii)
five (5) Business Days prior to the Termination Date. Notwithstanding anything
contained in any Application to the contrary (i) the Borrower shall be liable
for all obligations in respect of each Letter of Credit, (ii) the Borrower's
obligation to pay fees in connection with each Letter of Credit shall be as
exclusively set forth in Section 3.1(b) hereof, (iii) except during the
continuance of an Event of Default, the Agent will not call for the funding by
the Borrower of any amount under a Letter of Credit, or any other form of
collateral security for the Borrower's obligations in connection with such
Letter of Credit, before being presented with a drawing thereunder, and (iv) if
the Agent is not timely reimbursed for the amount of any drawing under a Letter
of Credit on the date such drawing is paid, the Borrower's obligation to
reimburse the Agent for the amount of such drawing shall bear interest (which
the Borrower hereby promises to pay) from and after the date such drawing is
paid at a rate per annum equal to the sum of 2-3/4% plus the Domestic Rate from
time to time in effect. The Agent will promptly notify the Lenders of each
issuance by it of a Letter of Credit. If the Agent issues any Letters of Credit
with expiration dates that are automatically extended unless the Agent gives
notice that the expiration date will not so extend beyond its then scheduled
expiration date, the Agent will give such notice of non-renewal before the time
necessary to prevent such automatic extension if before such required notice
date (i) the expiration date of such Letter of Credit if so extended would be
after the Termination Date, (ii) the Revolving Credit Commitments have been
terminated or (iii) an Event of Default exists and the Required Lenders have
given the Agent instructions not to so permit the extension of the expiration
date of such Letter of Credit. The Agent agrees to issue amendments to the
Letter(s) of Credit increasing the amount, or extending the expiration date,
thereof at the request of the Borrower subject to the conditions of Section 7
and the other terms of this Section 1.3. Without limiting the generality of the
foregoing, the Agent's obligation to issue, amend or extend the expiration date
of a Letter of Credit is subject to the conditions of Section 7 and the other
terms of this Section 1.3 and the Agent will not issue, amend or extend the
expiration date of any Letter of Credit if any Lender notifies the Agent of any
failure to satisfy or otherwise comply with such conditions and terms and
directs the Agent not to take such action.

        (c)    THE REIMBURSEMENT OBLIGATION. Subject to Section 1.3(b) hereof,
the obligation of the Borrower to reimburse the Agent for all drawings under a
Letter of Credit (a "REIMBURSEMENT OBLIGATION") shall be governed by the
Application related to such Letter of Credit, except that reimbursement of each
drawing shall be made in immediately available funds at the Agent's principal
office in Chicago, Illinois by no later than 12:30 p.m. (Chicago time) on the
date when such drawing is paid or, if drawing was paid after 11:30 a.m. (Chicago
time), by the end of such day. If the Borrower does not make any such
reimbursement payment on the date due and the

                                       -4-


Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the Agent in
discharge of any of the relevant Reimbursement Obligations shall be distributed
in accordance with Section 1.3(d) below.

        (d)    THE PARTICIPATING INTERESTS. Each Lender (other than the Lender
then acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Lender (a "PARTICIPATING LENDER"), an undivided percentage
participating interest (a "PARTICIPATING INTEREST"), to the extent of its
Revolver Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by the Borrower to pay any
Reimbursement Obligation in respect of a Letter of Credit issued for the
Borrower's account at the time required on the date the related drawing is paid,
as set forth in Section 1.3(c) above, or if the Agent is required at any time to
return to the Borrower or to a trustee, receiver, liquidator, custodian or other
Person any portion of any payment of any Reimbursement Obligation, each
Participating Lender shall, not later than the Business Day it receives a
certificate in the form of Exhibit F hereto from the Agent to such effect, if
such certificate is received before 1:00 p.m. (Chicago time), or not later than
the following Business Day, if such certificate is received after such time, pay
to the Agent an amount equal to its Revolver Percentage of such unpaid or
recaptured Reimbursement Obligation together with interest on such amount
accrued from the date the related payment was made by the Agent to the date of
such payment by such Participating Lender at a rate per annum equal to (i) from
the date the related payment was made by the Agent to the date two (2) Business
Days after payment by such Participating Lender is due hereunder, the Federal
Funds Rate for each such day and (ii) from the date two (2) Business Days after
the date such payment is due from such Participating Lender to the date such
payment is made by such Participating Lender, the Domestic Rate in effect for
each such day. Each such Participating Lender shall thereafter be entitled to
receive its Revolver Percentage of each payment received in respect of the
relevant Reimbursement Obligation and of interest paid thereon, with the Agent
retaining its Revolver Percentage as a Lender hereunder.

        The several obligations of the Participating Lenders to the Agent under
this Section 1.3 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever (except to the extent the Borrower is relieved from
its obligation to reimburse the Agent for a drawing under a Letter of Credit
because of the Agent's gross negligence or willful misconduct in determining
that documents received under the Letter of Credit comply with the terms
thereof) and shall not be subject to any set-off, counterclaim or defense to
payment which any Participating Lender may have or have had against the
Borrower, the Agent, any other Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Revolving Credit Commitment of any Lender, and each payment by a Participating
Lender under this Section 1.3 shall be made without any offset, abatement,
withholding or reduction whatsoever. The Agent shall be entitled to offset
amounts received for the account of a Lender under this Agreement against unpaid
amounts due from such Lender to the Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Agent by any Lender arising outside this Agreement.

                                       -5-


        (e)    INDEMNIFICATION. Each Participating Lender shall, to the extent
of its respective Revolver Percentage, indemnify the Agent (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the Agent's gross negligence or willful misconduct)
that the Agent may suffer or incur in connection with any Letter of Credit. The
obligations of the Participating Lenders under this Section 1.3(d) and all other
parts of this Section 1.3 shall survive termination of this Agreement and of all
other L/C Documents.

        (f)    CHANGE IN LAWS. If the Agent or any Lender shall determine in
good faith that any change in any applicable law, regulation or guideline
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System) or any new law, regulation or guideline, or any
interpretation of any of the foregoing by any governmental authority charged
with the administration thereof or any central bank or other fiscal, monetary or
other authority having jurisdiction over the Agent or such Lender (whether or
not having the force of law), shall:

               (i)    impose, modify or deem applicable any reserve, special
        deposit or similar requirement against the Letters of Credit, or the
        Agent's or such Lender's or the liability of the Borrower with respect
        thereto; or

               (ii)   impose on the Agent or such Lender any penalty with
        respect to the foregoing or any other condition regarding this
        Agreement, the Applications or the Letters of Credit;

and the Agent or such Lender shall determine in good faith that the result of
any of the foregoing is to increase the cost (whether by incurring a cost or
adding to a cost) to the Agent or such Lender of issuing, maintaining or
participating in the Letters of Credit hereunder (without benefit of, or credit
for, any prorations, exemptions, credits or other offsets available under any
such laws, regulations, guidelines or interpretations thereof), then the
Borrower shall pay on demand to the Agent or such Lender from time to time as
specified by the Agent or such Lender such additional amounts as the Agent or
such Lender shall determine are sufficient to compensate and indemnify it for
such increased cost in respect of each such Letter of Credit; PROVIDED, HOWEVER,
that the Borrower shall not be obligated to pay any such amount or amounts to
the extent such additional cost was incurred or paid by such Lender more than
sixty (60) days prior to the date of the delivery of the certificate referred to
in the immediately following sentence (nothing herein to impair or otherwise
affect the Borrower's liability hereunder for costs subsequently incurred or
paid by such Lender).

        SECTION 1.4.   MANNER AND DISBURSEMENT OF BORROWINGS. (a) GENERALLY. The
Borrower shall give written or telephonic notice to the Agent (which notice
shall be irrevocable once given and, if given by telephone, shall be promptly
confirmed in writing) by no later than 11:00 a.m. (Chicago time) on any Business
Day of each request for a Loan, in each case specifying the type of Loan
(whether a Revolving Loan or a Term Loan) which is to be made, the amount of
such Loan and the date such Loan is to be made. The Agent shall promptly notify
each Lender of the Agent's receipt of each such notice. Each Loan shall
initially constitute part of the applicable Domestic Rate Portion except to the
extent the Borrower has otherwise timely

                                       -6-


elected as provided in Section 2 hereof. Not later than 12:00 noon (Chicago
time) on the date specified for any Loan to be made by a Lender hereunder, such
Lender shall make the proceeds of its pro rata share of such Loan available to
the Agent in Chicago in immediately available funds. Subject to the provisions
of Section 7 hereof, the proceeds of each Loan shall be made available to the
Borrower at the principal office of the Agent in Chicago, Illinois, in
immediately available funds, upon receipt by the Agent from each Lender of its
pro rata share of such Loan.

        (b)    REIMBURSEMENT OBLIGATION. In the event the Borrower fails to give
notice pursuant to Section 1.4(a) above of a Revolving Loan equal to the amount
of a Reimbursement Obligation and has not notified the Agent by 11:00 a.m.
(Chicago time) on the day such Reimbursement Obligation becomes due that it
intends to repay such Reimbursement Obligation through funds not borrowed under
this Agreement, the Borrower shall be deemed to have requested a Revolving Loan
constituting part of the Domestic Rate Portion on such day in the amount of the
Reimbursement Obligation then due, subject to Section 7.1 hereof, which
Revolving Loan shall be applied to pay the Reimbursement Obligation then due.

        (c)    AGENT RELIANCE ON BANK FUNDING. Unless the Agent shall have been
notified by a Lender prior to 11:30 a.m. (Chicago time) on the date a Loan is to
be made hereunder that such Lender does not intend to make its pro rata share of
such Loan available to the Agent, the Agent may assume that such Lender has made
such share available to the Agent on such date and the Agent may in reliance
upon such assumption make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Lender and the Agent has made such amount available to the Borrower, the Agent
shall be entitled to receive such amount from such Lender forthwith upon the
Agent's demand, together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to the Borrower and
ending on but excluding the date the Agent recovers such amount at a rate per
annum equal to the effective rate charged to the Agent for overnight federal
funds transactions with member banks of the federal reserve system for each day
as determined by the Agent (or in the case of a day which is not a Business Day,
then for the preceding day). If such amount is not received from such Lender by
the Agent immediately upon demand, the Borrower will, on demand, repay to the
Agent the proceeds of the Loan attributable to such Lender with interest thereon
at a rate per annum equal to the interest rate applicable to the relevant Loan,
but without such payment being considered a payment or prepayment of a Loan, so
that the Borrower will have no liability under Section 2.9 hereof with respect
to such payment.

        SECTION 1.5.   MANNER OF OBTAINING LETTERS OF CREDIT. The Borrower shall
provide at least four (4) Business Days' advance written notice to the Agent of
a Borrower's request for the issuance for the Borrower's account of a Letter of
Credit, such notice in each case to be accompanied by an Application for such
Letter of Credit properly completed and executed by the Borrower and in the case
of an extension or an increase in the amount of a Letter of Credit, a written
request therefor, in a form acceptable to the Agent, in each case, together with
the fees called for by this Agreement. The Agent shall promptly notify each
Lender of the Agent's receipt of each such notice.

                                       -7-


        SECTION 1.6.   THE SWING LINE. (a) SWING LOANS. Subject to all of the
terms and conditions hereof, Harris Trust and Savings Bank ("HARRIS") agrees to
make loans ("SWING LOANS") in U.S. Dollars to the Borrower under the swing line
facility set forth in this Section 1.6 (the "SWING LINE") which shall not in the
aggregate at any time outstanding exceed the lesser of (i) the Swing Line
Commitment or (ii) the difference between (a) the lesser of (1) the Available
Revolving Credit Commitments in effect at such time or (2) the Borrowing Base as
then determined and computed and (b) the sum of Revolving Loans and L/C
Obligations outstanding at the time of computation. The Swing Line Commitment
shall be available to the Borrower and may be availed of by the Borrower from
time to time and borrowings thereunder may be repaid and used again during the
period ending on the Termination Date; PROVIDED that each Swing Loan must be
repaid on the last day of the Interest Period applicable thereto. All Swing
Loans shall be evidenced by a single promissory note of the Borrower issued to
Harris in the form of Exhibit D hereto (the "SWING LINE NOTE"). Without regard
to the face principal amount of the Swing Line Note, the actual principal amount
at any time outstanding and owing by the Borrower on account of the Swing Line
Note during the period ending on the Termination Date shall be the sum of all
Swing Loans then or theretofore made thereon less all payments actually received
thereon during such period.

        (b)    PAYMENT. Each Swing Loan shall be due and payable on the last day
of the Interest Period selected therefor. The Borrower may voluntarily prepay
any Swing Loan bearing interest at the Domestic Rate before its maturity at any
time upon notice to Harris prior to 1:00 p.m. (Chicago time) on the date fixed
for prepayment, each such prepayment to be made by the payment of the principal
amount to be prepaid and accrued interest thereon to the date of prepayment;
PROVIDED, HOWEVER, the Borrower may not voluntarily prepay any Swing Loan
bearing interest at Harris' Quoted Rate before its maturity.

        (c)    MINIMUM BORROWING AMOUNT. Each Swing Loan which bears interest
with reference to the Domestic Rate shall be in an amount not less than
$100,000. Each Swing Loan which bears interest at Harris' Quoted Rate shall be
in an amount not less than $500,000.

        (d)    INTEREST ON SWING LOANS. Each Swing Loan shall bear interest at
the Domestic Rate from time to time in effect plus the Applicable Margin; or (y)
if the Borrower so elects in accordance with the following provisions, Harris'
Quoted Rate; PROVIDED, HOWEVER, that if any Swing Loan is not paid when due
(whether by lapse of time, acceleration or otherwise) such Swing Loan shall bear
interest, whether before or after judgment, until payment in full thereof
through the end of the Interest Period then applicable thereto at a rate per
annum equal to the sum of two percent (2%) plus the interest rate which would
otherwise be applicable thereto and, thereafter, at a rate per annum equal to
the sum of two percent (2%) plus the Applicable Margin plus the Domestic Rate
from time to time in effect. Interest on each Swing Loan shall be due and
payable on the last day of each Interest Period applicable thereto, and interest
after maturity (whether by lapse of time, acceleration or otherwise) shall be
due and payable upon demand.

        (e)    REQUESTS FOR SWING LOANS. The Borrower shall give Harris prior
notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on
the date upon which the Borrower requests that any Swing Loan be made, of the
amount and date of such Swing Loan and the Interest Period selected therefor.
Within thirty (30) minutes after receiving such notice, Harris

                                       -8-


shall in its discretion quote an interest rate to the Borrower at which Harris
would be willing to make such Swing Loan available to the Borrower for a given
Interest Period (the rate so quoted for a given Interest Period being herein
referred to as "HARRIS' QUOTED RATE"). The Borrower acknowledges and agrees that
the interest rate quote is given for immediate and irrevocable acceptance, and
if the Borrower does not so immediately accept Harris' Quoted Rate for the full
amount requested by the Borrower for such Swing Loan, the Harris' Quoted Rate
shall be deemed immediately withdrawn and such Swing Loan shall bear interest at
the sum of the Applicable Margin plus the Domestic Rate from time to time in
effect. Subject to all of the terms and conditions hereof, the proceeds of such
Swing Loan shall be made available to the Borrower on the date so requested at
the offices of the Agent in Chicago, Illinois. Anything contained in the
foregoing to the contrary notwithstanding, (i) the obligation of Harris to make
Swing Loans shall be subject to all of the terms and conditions of this
Agreement and (ii) Harris shall not be obligated to make more than one Swing
Loan during any one day.

        (f)    REFUNDING LOANS. In its sole and absolute discretion, Harris may
at any time, on behalf of the Borrower (which hereby irrevocably authorizes
Harris to act on its behalf for such purpose) and with notice to the Borrower,
request each Lender to make a Revolving Loan constituting the Domestic Rate
Portion of the Revolving Credit Notes in an amount equal to such Lender's
Revolver Percentage of the amount of the Swing Loans outstanding on the date
such notice is given. Unless any of the conditions of Section 7.1 are not
fulfilled on such date, each Bank shall make the proceeds of its requested pro
rata share of such Revolving Loan available to Harris, in immediately available
funds, at Harris' principal office in Chicago, Illinois, before 12:00 Noon
(Chicago time) on the Business Day following the day such notice is given. The
proceeds of such Revolving Loan shall be immediately applied to repay the
outstanding Swing Loans; PROVIDED, HOWEVER, that unless any Default or Event of
Default has occurred and is continuing or the Borrower otherwise permits, the
proceeds of such Revolving Loan shall not be applied to repay any outstanding
Swing Loan bearing interest at Harris' Quoted Rate prior to the end of the
Interest Period applicable thereto.

        (g)    PARTICIPATIONS. If any Lender refuses or otherwise fails to make
its pro rata share of a Revolving Loan when requested by Harris pursuant to
Section 1.6(f) above (because the conditions in Section 7.1 are not satisfied or
otherwise), such Lender will, by the time and in the manner such share of such
Revolving Loan was to have been funded to Harris, purchase from Harris an
undivided participating interest in the outstanding Swing Loans in an amount
equal to its Revolver Percentage of the aggregate principal amount of Swing
Loans that were to have been repaid with such Revolving Loans, PROVIDED no
purchase of a participation in a Swing Loan bearing interest at Harris' Quoted
Rate need be made until after expiration of the Interest Period applicable
thereto. Each Lender that so purchases a participation in a Swing Loan shall
thereafter be entitled to receive its Revolver Percentage of each payment of
principal received on the Swing Loan and of interest received thereon accruing
from the date such Bank funded to Harris its participation in such Loan. The
several obligations of the Lenders under this Section 1.6(g) shall be absolute,
irrevocable and unconditional under any and all circumstances whatsoever and
shall not be subject to any set-off, counterclaim or defense to payment which
any Lender may have or have had against the Borrower, any other Lender or any
other Person whatever. Without limiting the generality of the foregoing, such
obligations shall not be affected by any Default or Event of Default or by any
reduction or termination of the Commitments of any Lender, and each payment

                                       -9-


made by a Lender under this Section 1.6(g) shall be made without any offset,
abatement, withholding or reduction whatsoever.

SECTION 2.     INTEREST AND CHANGE IN CIRCUMSTANCES.

        SECTION 2.1.   INTEREST RATE OPTIONS. (a) Subject to the terms and
conditions of this Section 2, portions of the principal indebtedness evidenced
by the Revolving Credit Notes and Term Notes (all of the indebtedness evidenced
by such Notes, whether or not such Notes are of the same class, bearing interest
at the same rate for the same period of time being hereinafter referred to as a
"PORTION") may, at the option of the Borrower, bear interest with reference to
the Domestic Rate (the "DOMESTIC RATE PORTION") or with reference to the
Adjusted LIBOR ("LIBOR PORTIONS"), and Portions of a particular class of Notes
may be converted from time to time from one basis for such Notes to the other.
All of the indebtedness evidenced by the Revolving Credit Notes and Term Notes
which is not part of a LIBOR Portion shall constitute a single Domestic Rate
Portion. All of the indebtedness evidenced by the Revolving Credit Notes and
Term Notes which bears interest with reference to a particular Adjusted LIBOR
for a particular Interest Period shall constitute a single LIBOR Portion.
Anything contained herein to the contrary notwithstanding, the obligation of the
Lenders to create, continue or effect by conversion any LIBOR Portion shall be
conditioned upon the fact that at the time no Default or Event of Default shall
have occurred and be continuing. The Borrower hereby promises to pay interest on
each Portion at the rates and times specified in this Section 2.

        (b)    DOMESTIC RATE PORTION. Each Domestic Rate Portion shall bear
interest (which the Borrower hereby promises to pay at the times herein
provided) at the rate per annum determined by adding the Applicable Margin to
the Domestic Rate as in effect from time to time, PROVIDED that if a Domestic
Rate Portion or any part thereof is not paid when due (whether by lapse of time,
acceleration or otherwise) such Portion shall bear interest (which the Borrower
hereby promises to pay at the times herein provided), before as well as after
judgment, until payment in full thereof at the rate per annum determined by
adding 2% to the interest rate which would otherwise be applicable thereto from
time to time. Interest on the Domestic Rate Portion shall be payable monthly on
the last day of each month in each year and at maturity of the applicable Notes,
and interest after maturity shall be due and payable upon demand. Any change in
the interest rate on the Domestic Rate Portions resulting from a change in the
Domestic Rate shall be effective on the date of the relevant change in the
Domestic Rate.

        (c)    LIBOR PORTIONS. Each LIBOR Portion shall bear interest (which the
relevant Borrower hereby promises to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum determined by adding the
Applicable Margin to the Adjusted LIBOR for such Interest Period, PROVIDED that
if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise) such Portion shall bear interest (which the Borrower
hereby promises to pay at the times herein provided), whether before or after
judgment, until payment in full thereof through the end of the Interest Period
then applicable thereto at the rate per annum determined by adding 2% to the
interest rate which would otherwise be applicable thereto, and effective at the
end of the Interest Period such LIBOR Portion shall automatically be converted
into and added to the Domestic Rate Portion and shall thereafter bear interest
at the interest rate applicable to the Domestic Rate Portion of the

                                      -10-


applicable Notes after default. Interest on each LIBOR Portion shall be due and
payable on the last day of each Interest Period applicable thereto and, with
respect to any Interest Period applicable to a LIBOR Portion in excess of three
(3) months, on the date occurring every three (3) months after the date such
Interest Period began and at the end of such Interest Period, and interest after
maturity shall be due and payable upon demand. The Borrower shall notify the
Agent on or before 11:00 a.m. (Chicago time) on the third Business Day preceding
the end of an Interest Period applicable to a LIBOR Portion whether such LIBOR
Portion is to continue as a LIBOR Portion, in which event the Borrower shall
notify the Agent of the new Interest Period selected therefor, and in the event
the Borrower shall fail to so notify the Agent, such LIBOR Portion shall
automatically be converted into and added to the Domestic Rate Portion of the
applicable Notes as of and on the last day of such Interest Period. The Agent
shall promptly notify each Lender of each notice received from the Borrower
pursuant to the foregoing provision.

        SECTION 2.2.   MINIMUM AMOUNTS. Each LIBOR Portion shall be in a minimum
amount of $1,000,000 or such greater amount which is an integral multiple of
$500,000.

        SECTION 2.3.   COMPUTATION OF INTEREST. All interest on each LIBOR
Portion shall be computed on the basis of a year of 360 days for the actual
number of days elapsed. All interest on the Domestic Rate Portion shall be
computed on the basis of a year of 365 days (or, in a leap year, 366 days) for
the actual number of days elapsed.

        SECTION 2.4.   MANNER OF RATE SELECTION. The Borrower shall notify the
Agent by 11:00 a.m. (Chicago time) at least three (3) Business Days prior to the
date upon which it requests that any LIBOR Portion be created or that any part
of the Domestic Rate Portion be converted into a LIBOR Portion (each such notice
to specify in each instance the amount thereof and the Interest Period selected
therefor), and the Agent shall advise each Lender of each notice by 2:00 p.m.
(Chicago time) on the same Business Day the Agent receives such notice. If any
request is made to convert a LIBOR Portion into the Domestic Rate Portion, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the creation,
continuance or conversion of Portions under this Agreement shall be irrevocable.

        SECTION 2.5.   CHANGE OF LAW. Notwithstanding any other provisions of
this Agreement or of the Notes, if at any time any Lender shall determine in
good faith that any change in applicable laws, treaties or regulations or in the
interpretation thereof makes it unlawful for such Lender to create or continue
to maintain any LIBOR Portion, it shall promptly so notify the Agent (which
shall in turn promptly notify the Borrower and the other Lenders) and the
obligation of such Lender to create, continue or maintain LIBOR Portions under
this Agreement shall terminate until it is no longer unlawful for such Lender to
create, continue or maintain LIBOR Portions. The Borrower, on demand, shall, if
the continued maintenance of any such LIBOR Portion is unlawful, thereupon
prepay the outstanding principal amount of the affected LIBOR Portions, together
with all interest accrued thereon and all other amounts payable to the affected
Lender with respect thereto under this Agreement; PROVIDED, HOWEVER, that the
Borrower may instead elect to convert the principal amount of the affected LIBOR
Portion into

                                      -11-


the Domestic Rate Portion of the applicable Notes, subject to the terms and
conditions of this Agreement.

        SECTION 2.6.   UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN
ADJUSTED LIBOR. Notwithstanding any other provision of this Agreement or of the
Notes, if prior to the commencement of any Interest Period:

               (a)    the Agent or Required Lenders in good faith determine that
        deposits in the amount of any LIBOR Portion scheduled to be outstanding
        during such Interest Period are not readily available to the Lenders in
        the relevant market;

               (b)    the Agent or Required Lenders in good faith determine that
        by reason of circumstances affecting the relevant market, adequate and
        reasonable means do not exist for ascertaining Adjusted LIBOR; or

               (c)    the Agent or Required Lenders in good faith determine
        that (i) LIBOR as determined by the Agent will not adequately and fairly
        reflect the cost to the Lenders of funding their LIBOR Portions for such
        Interest Period and (ii) the Lenders' rights to payment under Section
        2.7 hereof will not reasonably compensate them for such inadequate or
        unfair reflection of such cost;

then the Agent or Required Lenders, as the case may be, shall promptly give
notice thereof to the other Lenders and the Borrower and the obligations of the
Lenders to create, continue or effect by conversion any LIBOR Portion in such
amount and for such Interest Period shall terminate until deposits in such
amount and for the Interest Period selected by or on behalf of the relevant
Borrower shall again be readily available in the relevant market and adequate
and reasonable means exist for ascertaining Adjusted LIBOR.

        SECTION 2.7.   TAXES AND INCREASED COSTS. With respect to any LIBOR
Portion, if any Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the LIBOR Portions
contemplated by this Agreement (whether or not having the force of law) shall:

               (i)    impose, increase, or deem applicable any reserve, special
        deposit or similar requirement against assets held by, or deposits in or
        for the account of, or loans by, or any other acquisition of funds or
        disbursements by, such Lender which is not in any instance already
        accounted for in computing Adjusted LIBOR;

               (ii)   subject such Lender, any LIBOR Portion or a Note to the
        extent it evidences such a Portion, to any tax (including, without
        limitation, any United States interest equalization tax or similar tax
        however named applicable to the acquisition or holding of debt
        obligations and any interest or penalties with respect thereto), duty,

                                      -12-


        charge, stamp tax, fee, deduction or withholding in respect of this
        Agreement, any LIBOR Portion or a Note to the extent it evidences such a
        Portion, except such taxes as may be measured by the overall net income
        or gross receipts of such Lender or its lending branches and imposed by
        the jurisdiction, or any political subdivision or taxing authority
        thereof, in which such Lender's principal executive office or its
        lending branch is located;

               (iii)  change the basis of taxation of payments of principal and
        interest due from the Borrower to such Lender hereunder or under a Note
        to the extent it evidences any LIBOR Portion (other than by a change in
        taxation of the overall net income or gross receipts of such Lender); or

               (iv)   impose on such Lender any penalty with respect to the
        foregoing or any other condition regarding this Agreement, the
        disbursement of credit hereunder, any LIBOR Portion or a Note to the
        extent it evidences any LIBOR Portion;

and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of creating or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received or receivable by such Lender (without
benefit of, or credit for, any prorations, exemption, credits or other offsets
available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the Borrower shall pay on demand to such Lender
from time to time as specified by such Lender such additional amounts as such
Lender shall reasonably determine are sufficient to compensate and indemnify it
for such increased cost or reduced amount; PROVIDED, HOWEVER, that the Borrower
shall not be obligated to pay any such amount or amounts to the extent such
additional cost or payment was incurred or paid by such Lender more than sixty
(60) days prior to the date of the delivery of the certificate referred to in
the immediately following sentence (nothing herein to impair or otherwise affect
the Borrower's liability hereunder for costs or payments subsequently incurred
or paid by such Lender). If a Lender makes such a claim for compensation, it
shall provide to the Borrower (with a copy to the Agent) a certificate setting
forth the computation of the increased cost or reduced amount as a result of any
event mentioned herein in reasonable detail and such certificate shall be
conclusive if reasonably determined.

        SECTION 2.8.   CHANGE IN CAPITAL ADEQUACY REQUIREMENTS. If any Lender
shall determine that the adoption after the date hereof of any applicable law,
rule or regulation regarding capital adequacy, or any change in any existing
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
(or any of its branches or any corporation controlling such Lender) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or such
corporation's capital, as the case may be, as a consequence of such Lender's
obligations hereunder or for the credit which is the subject matter hereof to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to liquidity and capital adequacy)
by an amount deemed by such Lender to

                                      -13-


be material, then from time to time, within fifteen (15) days after demand by
such Lender, the Borrower shall pay to the Lender such additional amount or
amounts reasonably determined by such Lender as will compensate such Lender for
such reduction; PROVIDED, HOWEVER, that the Borrower shall not be obligated to
compensate such Lender to the extent its rate of return was so reduced more than
sixty (60) days prior to the date of such demand (nothing herein to impair or
otherwise affect the Borrower's liability hereunder to compensate for subsequent
reductions in such Lender's rate of return).

        SECTION 2.9.   FUNDING INDEMNITY. In the event any Lender shall incur
any loss, cost or expense (including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired or contracted to be acquired by such Lender to fund or
maintain its part of any Fixed Rate Loan or the relending or reinvesting of such
deposits or other funds or amounts paid or prepaid to such Lender) as a result
of:

               (i)    any payment of a Fixed Rate Loan on a date other than the
        last day of the then applicable Interest Period for any reason, whether
        before or after default, and whether or not such payment is required by
        any provisions of this Agreement; or

               (ii)   any failure by the Borrower to create, borrow, continue or
        effect by conversion a Fixed Rate Loan on the date specified in a notice
        given pursuant to this Agreement, unless such failure results from the
        Lenders' inability or unwillingness pursuant to Sections 2.5 and 2.6
        hereof to create, continue or effect by conversion a LIBOR Portion;

then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense. If a Lender
requests such a reimbursement, it shall provide to the Borrower (with a copy to
the Agent) a certificate setting forth the computation of the loss, cost or
expense giving rise to the request for reimbursement in reasonable detail and
such certificate shall be conclusive if reasonably determined; PROVIDED,
HOWEVER, that the Borrower shall not be obligated to pay any such amount or
amounts to the extent such loss, cost or expense was incurred by such Lender
more than sixty (60) days prior to the date of the delivery of such certificate
(nothing herein to impair or otherwise affect the Borrower's liability hereunder
to compensate for any subsequent loss, cost, or expense incurred by such
Lender).

        SECTION 2.10.  LENDING BRANCH. Each Lender may, at its option, elect to
make, fund or maintain its pro rata share of the Loans hereunder at the branches
or offices specified on the signature pages hereof or on any Assignment
Agreement executed and delivered pursuant to Section 12.15 hereof or at such of
its branches or offices as such Lender may from time to time elect.

        SECTION 2.11.  LENDER'S DUTY TO MITIGATE. Each Lender agrees that, as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under Section
2.5, 2.6 or 2.7 hereof, such Lender will, after notice to the Borrower, to the
extent not inconsistent with such Lender's internal policies and customary
business practices, use its best efforts to make, fund or maintain the affected
LIBOR

                                      -14-


Portion or issue or participate in the affected Letter of Credit, as the case
may be, through another lending office of such Lender if as a result thereof the
unlawfulness which would otherwise require payment of such Portion pursuant to
Section 2.5 hereof would cease to exist or the circumstances which would
otherwise terminate such Lender's obligation to make such Portion under Section
2.6 hereof would cease to exist or the increased costs which would otherwise be
required to be paid in respect of such Portion or Letter of Credit pursuant to
Section 2.7 hereof would be materially reduced, and if, as determined by such
Lender, in its sole discretion, the making, funding or maintaining of such
Portion, or issuance or participation in such Letter of Credit, as the case may
be, through such other lending office would not otherwise adversely affect such
Portion or such Lender. The Borrower hereby agrees to pay all reasonable
expenses incurred by each such Lender in utilizing another lending office
pursuant to this Section 2.11.

        SECTION 2.12.  DISCRETION OF LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Notes in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including, without
limitation, determinations under Sections 2.5, 2.6, 2.7 and 2.9 hereof) shall be
made as if each Lender had actually funded and maintained each LIBOR Portion
during each Interest Period applicable thereto through the purchase of deposits
in the relevant market in the amount of its share of such LIBOR Portion, having
a maturity corresponding to such Interest Period, and bearing an interest rate
equal to the LIBOR for such Interest Period.

        SECTION 2.13.  REPLACEMENT OF LENDER. (a) In the event that (x) the
Borrower receives from a Lender a certificate requesting an amount be paid to
such Lender under Section 1.3(f), 2.7 or 2.8 hereof and the Required Lenders
      have not similarly made requests for payment arising out of the same
circumstances or (y) the obligation of any Lender to make or maintain any LIBOR
Portion has terminated under Section 2.5 or 2.6 hereof and the obligations of
the Required Lenders to make or maintain LIBOR Portions have not similarly
terminated by reason of the same circumstances or (z) any Lender becomes a
Defaulting Lender, then the Borrower may request other Lenders hereunder to
assume in full the Commitments then in effect of the Lender requesting such
amount be paid or whose obligations with respect to LIBOR Portions have so
terminated or of such Defaulting Lender, as the case may be (such Lender in each
case being herein referred to as the "REPLACEABLE LENDER"), and to purchase the
Notes issued to the Replaceable Lender at a price equal to the outstanding
principal amount of such Notes and the Replaceable Lender's share of any accrued
and unpaid interest on such Notes plus accrued and unpaid commitment fees owed
to the Replaceable Lender, and if any Lender or Lenders (each an "ASSUMING
LENDER") in their sole discretion agree so to assume in full the Commitments of
the Replaceable Lender (provided only one Assuming Lender shall assume the Swing
Line Commitment, if relevant), and after payment by the Borrower to the
Replaceable Lender of all amounts due under this Agreement to such Lender
(including any amount specified as due in a certificate submitted under Section
1.3(f), 2.7 or 2.8 hereof) not so paid by the Assuming Lender, then such
assumption shall take place in the manner set forth in subsection (b) below. In
the event no Lender or Lenders agrees to assume in full the Commitments of the
Replaceable Lender, then the Borrower may nominate one or more Lenders not then
party to this Agreement so to assume in full the Commitments of the Replaceable
Lender, and if such nominated Lender

                                      -15-


or Lenders are acceptable to the Agent and Required Lenders (excluding the
Replaceable Lender), such assumption shall take place in the manner set forth in
subsection (b) below and each such Lender or Lenders shall become a Lender
hereunder (each a "NEW LENDER") and the Replaceable Lender shall no longer be a
party hereto or have any rights hereunder.

        (b)    In the event a Replaceable Lender's Commitments are to be assumed
in full by an Assuming Lender or a New Lender, then such assumption shall take
place on a date acceptable to the Borrower, the Replaceable Lender and the
Assuming Lender or New Lender, as the case may be, and such assumption shall
take place through the payment of all amounts due under this Agreement to the
Replaceable Lender and the execution of such instruments and documents as shall,
in the reasonable opinion of the Agent, be reasonably necessary or appropriate
for the Assuming Lender or New Lender to assume in full the Commitments of the
Replaceable Lender (including, without limitation, the issuance of new Notes and
the execution of an amendment hereto making any New Lender a party hereto). In
the event no Assuming Lender or New Lender agrees to assume in full the
Commitments of the Replaceable Lender, then such Replaceable Lender shall remain
a party hereto and its Commitments shall remain in effect.

        (c)    The rights and remedies against a Defaulting Lender under this
Agreement, including without limitation this Section 2.13, are in addition to
other rights and remedies that the Borrower may have against such Defaulting
Lender with respect to any Loan which such Defaulting Lender has not funded, and
that the Agent, or any Lender may have against such Defaulting Lender with
respect to any such Loan.

        SECTION 2.14.  DEFAULT RATE. Notwithstanding anything to the contrary
contained in Section 2 hereof, while any Event of Default exists or after
acceleration, the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
Loans owing by it (computed on the basis of a year of 360 days and actual days
elapsed) at a rate per annum equal to the sum of 4.50% plus the Domestic Rate
from time to time in effect; PROVIDED, HOWEVER, that in the absence of
acceleration, any adjustments pursuant to this Section shall be made at the
election of the Agent, acting at the request or with the consent of the Required
Lenders, with written notice to the Borrower. While any Event of Default exists
or after acceleration, interest shall be paid on demand of the Agent at the
request or with the consent of the Required Lenders.

SECTION 3.     FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND NOTATIONS.

        SECTION 3.1.   FEES.

        (a)    COMMITMENT FEE. For the period from and including the date hereof
to but not including the Termination Date, the Borrower shall pay to the Agent
for the ratable benefit of the Lenders as hereinafter set forth, a commitment
fee at the Applicable Margin (computed on the basis of a year of 360 days for
the actual number of days elapsed) on the average daily Unused Revolving Credit
Commitments. Such commitment fee shall be payable monthly in arrears on the last
day of each month (commencing on February 28, 2002) and on the Termination Date.
Such commitment fee shall be allocated among the Lenders ratably in accordance
with the amount of their respective Revolving Credit Commitments which is not in

                                      -16-


use in the form of Revolving Loans, but with Swing Loans to be deemed Revolving
Loans which use exclusively the Revolving Credit Commitment of Harris (or if
different, any other Lender which then holds the Swing Line Commitment).

        (b)    LETTER OF CREDIT FEES. On the date of issuance or extension, or
increase in the amount, of each Letter of Credit pursuant to Section 1.3 hereof,
the Borrower shall pay to the Agent for its own account an issuance fee equal to
 .125% of the face amount of (or the increase in the face amount of) such Letter
of Credit. On the last day of each month (commencing on February 28, 2002), and
on the Termination Date, the Borrower shall pay to the Agent for the ratable
benefit of the Lenders in accordance with their percentages a fee equal to the
Applicable Margin for LIBOR Portions of the Revolving Loans (computed on the
basis of a year of 360 days for the actual number of days elapsed) on the
average daily outstanding undrawn amounts during such month of the Letters of
Credit. In addition to the letter of credit fees called for above, the Borrower
further agrees to pay to the Agent for its own account such processing and
transaction fees and charges as the Agent from time to time customarily imposes
in connection with any issuance, amendment, cancellation, negotiation and/or
payment of letters of credit and drafts drawn thereunder.

        (c)    AUDIT AND APPRAISAL FEES. The Borrower shall pay to the Agent for
its own use and benefit reasonable charges for audits of the Collateral by the
Agent or its agents or representatives in such amounts as the Agent may from
time to time reasonably request (the Agent acknowledging and agreeing that such
charges shall be computed in the same manner as it at the time customarily uses
for the assessment of charges for similar collateral audits actually performed
by it); PROVIDED, HOWEVER, that (i) unless otherwise agreed by the Required
Lenders, at least two (2) such audits (each a "SCHEDULED FIELD AUDIT") shall be
conducted during each calendar year, and (ii) in the absence of any Default or
Event of Default, the Borrower shall not be required to reimburse the Agent for
more than two (2) Scheduled Field Audits per calendar year. In addition, the
Required Lenders may one time during the term of this Agreement request a
comprehensive written appraisal of all of the fixed assets of the Borrower and
its Subsidiaries, such appraisal to be conducted at the Borrower's expense by a
recognized independent appraisal firm acceptable to the Agent and the Required
Lenders and resulting in a written report with a level of detail acceptable to
the Agent and the Required Lenders. Absent the occurrence and continuance of an
Event of Default, this appraisal shall not be requested prior to July 31, 2002.

        (d)    AGENT'S FEE. The Borrower shall pay to the Agent the fees agreed
to in a letter exchanged between them.

        (e)    RESTRUCTURING AND ACCRUED FEES. The Borrower shall pay to the
Agent, for the ratable account of the Lenders, on the earliest of (i) July 1,
2003, (ii) the Termination Date (whether due to acceleration or otherwise) or
(iii) the repayment in full of the aggregate principal amount of all Loans
hereunder, the sum of (1) $250,000, representing a restructuring fee earned on
the Effective Date and (2) $450,000, representing other fees due and owing to
the Lenders on the Effective Date the payment of which has been deferred by
agreement of the parties hereto.

                                      -17-


        SECTION 3.2.   VOLUNTARY PREPAYMENTS OF REVOLVING CREDIT AND TERM NOTES.

        (a)    REVOLVING CREDIT NOTES. The Borrower shall have the privilege of
prepaying the Revolving Credit Notes in whole or in part (but if in part, then
in a minimum amount of $100,000 or such greater amount which is an integral
multiple of $100,000) on any Business Day upon notice thereof to the Agent not
later than 11:00 a.m. (Chicago time) on such day, in the case of Domestic Rate
Portions, and on the third Business Day prior to such day, in the case of LIBOR
Portions, the Agent to promptly so notify the Lenders, by the Borrower paying to
the Agent for the account of the Lenders the principal amount to be prepaid and
(i) if such a prepayment prepays such Notes in full and is accompanied by the
termination in whole of the Revolving Credit Commitments pursuant to which such
Notes were issued, accrued interest thereon to the date of prepayment plus any
commitment fee which has accrued and is unpaid and (ii) any amount due the
Lenders under Section 2.9 hereof. Any amount so prepaid on the Revolving Credit
Notes may, subject to the terms and conditions of this Agreement, be reborrowed.

        (b)    TERM NOTES. The Borrower shall have the privilege of prepaying
the Term Notes in whole or in part (but if in part, then in a minimum amount of
$100,000 or such greater amount which is an integral multiple of $100,000 as to
any particular class of Term Notes being prepaid) at any time upon one (1)
Business Day's prior notice, in the case of Domestic Rate Portions, and three
(3) Business Days' prior notice, in the case of LIBOR Portions, to the Agent
(such notice, if received subsequent to 11:00 a.m. (Chicago time) on a given
day, to be treated as though received at the opening of business on the next
Business Day), which shall promptly so notify the Lenders, by paying to the
Agent for the account of the Lenders the principal amount to be prepaid and (i)
if such a prepayment prepays such Notes in full, accrued interest thereon to the
date of prepayment and (ii) any amounts due to the Lenders under Section 2.9
hereof. Voluntary prepayments of the principal of each class of the Term Notes
shall be applied in several installments thereof due on such class of Notes in
the inverse order of their respective maturities. No amount paid or prepaid on
the Term Notes may be reborrowed.

        SECTION 3.3.   MANDATORY PREPAYMENTS.

        (a)    EXCESS CASH FLOW. No later than August 15, 2002 and February 28,
2003, respectively, the Borrower shall pay over to the Agent for the ratable
benefit of the Lenders, as and for a mandatory prepayment, an amount equal to
(i) in the case of the August 15, 2002 payment, 50% of that portion of EBITDA
exceeding $7,350,000 for the six (6) month period ending June 30, 2002, and (ii)
in the case of the February 28, 2003 payment, 50% of that portion of EBITDA
exceeding $13,000,000 for the twelve (12) month period ending December 31, 2002,
LESS the amount actually paid to the Agent by the Borrower for the period ending
June 30, 2002 pursuant to the immediately preceding clause (i), each such
prepayment to be allocated to the Term Loans until repaid in full, and then to
prepay the Revolving Loans and prefund any outstanding Letters of Credit.

        (b)    EQUITY OFFERING. Within five (5) Business Days of receipt by the
Borrower of cash proceeds from any public offering or private placement of any
capital stock or other equity securities of the Borrower (other than proceeds
from (i) any sale of capital stock of Borrower

                                      -18-


pursuant to an employee stock ownership plan or (ii) any sale of capital stock
of Borrower, or any options to acquire any such stock, to officers, directors or
key employees of the Borrower or any of its Subsidiaries as compensation for
services rendered or (iii) any exercise by such officers or directors of such
options), the Borrower shall make a mandatory prepayment in an amount equal to
100% of the net cash proceeds of such issuance (net only of underwriting
discounts and commissions and any other reasonable out-of-pocket costs and
expenses directly incurred and payable in connection therewith), such prepayment
to be allocated to the Term Loans until repaid in full, and then to prepay the
Revolving Loans and prefund any outstanding Letters of Credit.

        (c)    ASSET SALES. Any and all proceeds derived from the sale or
disposition (whether voluntary or involuntary), or on account of damage or
destruction, of the real estate, furniture, fixtures, equipment or other fixed
assets of the Borrower or any Subsidiary shall be paid over to the Agent as and
for a mandatory prepayment, such prepayment to be allocated to the Term Loans
until repaid in full, and then to prepay the Revolving Loans and prefund any
outstanding Letters of Credit; PROVIDED, HOWEVER, that (i) the foregoing
provisions shall be inapplicable to proceeds received by the Agent under the
Collateral Documents if and so long as, pursuant to the terms of the Collateral
Documents, the same are to be held by the Agent and disbursed for the
restoration, repair or replacement of the property in respect of which such
proceeds were received, (ii) no prepayment shall be required with respect to the
first $100,000 of net proceeds (i.e., gross proceeds net of out-of-pocket
expenses incurred in effecting the sale or other disposition) received during
any one calendar year from the sale or other disposition of equipment, furniture
and fixtures of the Borrower and its Subsidiaries, taken together, which are
worn out, obsolete or, in the good faith judgment of the Borrower or such
Subsidiary, no longer desirable to the efficient conduct of its business as then
conducted, (iii) no prepayment shall be required with respect to proceeds
received from the sale, damage or destruction of any of the equipment or other
assets subject to Liens permitted by Section 8.12 hereof if and to the extent
such proceeds are applied to reduce the indebtedness secured by such Liens and
(iv) so long as no Default or Event of Default has occurred or is continuing the
Borrower or such Subsidiary, as the case may be, may retain the proceeds derived
from the sale, damage or destruction of fixtures, furniture and equipment if and
to the extent that the Borrower or such Subsidiary establishes to the reasonable
satisfaction of the Agent that the equipment sold, damaged, or destroyed has
been replaced (or repaired in the case of damaged property) with fixtures,
furniture or equipment of at least equal value and utility to that replaced
(before any such damage or destruction) which is subject to a first lien in
favor of the Agent for the benefit of the Lenders. Nothing herein contained
shall in any manner impair or otherwise affect the prohibitions against the sale
or other disposition of Collateral contained herein and in the Collateral
Documents.

        (d)    APPLICATION. Each such prepayment required by this Section 3.3
shall be applied to the Term Notes or the Revolving Credit Notes, as the case
may be, ratably in accordance with the unpaid principal balances thereof, with
the amount of such prepayments on the Term Notes applied to reduce the remaining
scheduled amortization payments on the Term Notes in inverse order of maturity,
starting with the final payment due on July 1, 2003.

        SECTION 3.4.   TERMINATIONS OF REVOLVING CREDIT COMMITMENTS. (a)
VOLUNTARY. The Borrower shall have the right as of the close of any calendar
quarter, upon three (3) Business Days' prior notice to the Agent (which shall
promptly notify the Lenders), to ratably terminate

                                      -19-


the Revolving Credit Commitments without premium or penalty and in whole or in
part (but if in part, then in an amount not less than $5,000,000 or such greater
amount which is an integral multiple of $100,000), PROVIDED that the Revolving
Credit Commitments may not be reduced to an amount less than the aggregate
principal amount of the Revolving Loans, Swing Loans and L/C Obligations then
outstanding. Any termination of the Revolving Credit Commitments pursuant to
this Section may not be reinstated. Any reduction of the Revolving Credit
Commitments to a level below the L/C Sublimit shall effect a concurrent
reduction in the L/C Sublimit so as to equal the total Revolving Credit
Commitments after giving effect to such reduction. Each reduction of the
Revolving Credit Commitments shall concurrently reduce the Swing Line Commitment
by the same percentage as such reduction in the Revolving Credit Commitments.

               (b)    MANDATORY. Concurrent with each prepayment of Revolving
Loans required under subsections (a), (b) and (c) of Section 3.3, the Revolving
Credit Commitments shall permanently terminate ratably in accordance with each
Lender's Revolver Percentage by an amount equal to the aggregate amount required
to be prepaid and applied against Revolving Loans.

        SECTION 3.5.  PLACE AND APPLICATION OF PAYMENTS. All payments of
principal, interest, fees and all other amounts payable hereunder shall be made
to the Agent at its office at 111 West Monroe Street, Chicago, Illinois (or at
such other place as the Agent may specify) on the date any such payment is due
and payable. All such payments shall be made in lawful money of the United
States of America, in immediately available funds at the place of payment,
without setoff or counterclaim and without reduction for, and free from, any and
all present or future taxes, levies, imposts, duties, fees, charges, deductions,
withholdings, restrictions or conditions of any nature imposed by any government
or any political subdivision or taxing authority thereof (but excluding any
taxes imposed on or measured by the net income of the Lender). Payments received
by the Agent after 11:00 a.m. (Chicago time) shall be deemed received as of the
opening of business on the next Business Day. Except as herein provided, all
payments shall be received by the Agent for the ratable account of the Lenders
and shall be promptly distributed by the Agent ratably to the Lenders. Unless
the Borrower otherwise directs or this Agreement otherwise requires, principal
payments on any particular class of Notes shall be first applied to the Domestic
Rate Portion of such Notes until payment in full thereof, with any balance
applied to the LIBOR Portions of such Notes in the order in which their Interest
Periods expire. Any amount paid or prepaid on the Revolving Credit Notes or
Swing Line Note may, subject to all of the terms and conditions hereof, be
borrowed, repaid and borrowed again. No amount paid or prepaid on the Term Notes
may be reborrowed.

        Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Loans and other Obligations or the
Hedging Liability by the Agent or any of the Lenders after the occurrence of an
Event of Default shall be remitted to the Agent and distributed as follows:

               (a)    first, to the payment of any outstanding costs and
        expenses incurred by the Agent in protecting, preserving or enforcing
        rights under this Agreement and the other Loan Documents and in any
        event including all costs and expenses of a character which

                                      -20-


        the Borrower has agreed to pay under Section 12.4 hereof (such funds to
        be retained by the Agent for its own account unless it has previously
        been reimbursed for such costs and expenses by the Lenders, in which
        event such amounts shall be remitted to the Lenders to reimburse them
        for payments theretofore made to the Agent);

               (b)    second, to the payment of any outstanding interest or
        other fees or indemnification amounts due under the Loan Documents other
        than for principal of the Loans and L/C Obligations, ratably as among
        the Agent and the Lenders in accord with the amount of such interest and
        other fees or Obligations owing each;

               (c)    third, to the payment of the principal of the Swing Loans;

               (d)    fourth, to the payment of the principal of the other Loans
        and any liabilities in respect of Reimbursement Obligations and to the
        Agent to be held as collateral security for any undrawn Letters of
        Credit (until the Agent is holding an amount of cash equal to the then
        outstanding amount of all such Letters of Credit), and Hedging
        Liability, the aggregate amount paid to or held as collateral security
        for the Lenders and, in the case of Hedging Liability, their Affiliates,
        to be allocated pro rata as among the Lenders in accord with the then
        respective aggregate unpaid principal balances of such Loans, the amount
        of L/C Obligations, and the amount of Hedging Liability;

               (e)    fifth, to the Agent and the Lenders ratably in accord with
        the amounts of other Obligations owing to each of them unless and until
        all such Obligations have been fully paid and satisfied; and

               (f)    sixth, to the Borrower or to whoever the Agent reasonably
        determines to be lawfully entitled thereto.

        SECTION 3.6.  NOTATIONS AND REQUESTS. All Loans made by a Lender
against a Note, the status of all amounts evidenced by a Note (if relevant) as
constituting part of the Domestic Rate Portion or a LIBOR Portion, and the rates
of interest and Interest Periods applicable to such Portions shall be recorded
by such Lender on its books and records or, at its option in any instance,
endorsed on a schedule to its Note and the unpaid principal balance and status,
rates and Interest Periods so recorded or endorsed by such Lender shall be prima
facie evidence in any court or other proceeding brought to enforce its Note of
the principal amount remaining unpaid thereon, the status of the Loans evidenced
thereby and the interest rates and Interest Periods applicable thereto; PROVIDED
THAT the failure of a Lender to record any of the foregoing shall not limit or
otherwise affect the obligation of the Borrower to repay the principal amount of
each Note together with accrued interest thereon. Prior to any Lender's
negotiation of a Revolving Credit or Term Note, such Lender shall record on a
schedule thereto the status of all amounts evidenced thereby as constituting
part of the Domestic Rate Portion or LIBOR Portion and the rates of interest and
the Interest Periods applicable thereto.

        SECTION 3.7.  EXCESS REVOLVING CREDIT. The Borrower covenants and
agrees that if at any time the aggregate principal amount outstanding on the
Revolving Loans, Swing Loans and L/C Obligations shall at any time and for any
reason exceed the lesser of the (x) the Revolving

                                      -21-


Credit Commitments then in effect or (y) the Borrowing Base as then determined
and computed, the Borrower shall within one (1) Business Day, without notice or
demand, pay over the amount of such excess to the Agent for the account of the
Lenders as and for a mandatory prepayment on the Swing Loans or, if the Swing
Loans have been prepaid in full but Revolving Loans are outstanding, then and in
any such event, such excess shall be paid over to the Agent as and for mandatory
prepayment on the Revolving Loans or, if the Revolving Loans have been prepaid
in full but L/C Obligations are outstanding, then and in any such event, such
excess shall be paid over to the Agent to be applied against the Reimbursement
Obligations then outstanding, with any balance held as collateral security for
any remaining L/C Obligations.

SECTION 4.     COLLATERAL.

        SECTION 4.1.  COLLATERAL. The payment and performance of the
Obligations and Hedging Liability shall at all times be secured by, among other
things, (a) all of the Borrower's and its Subsidiaries' accounts, chattel paper,
documents, instruments, general intangibles, inventory, equipment and certain
other assets and property of the Borrower and its Subsidiaries, in each case
whether now owned or held or hereafter acquired or arising, pursuant to that
certain Second Amended and Restated Security Agreement from the Borrower and its
Subsidiaries dated as of even date herewith, as the same may be amended,
modified or supplemented from time to time (the "SECURITY AGREEMENT"), (b) all
of the capital stock of the Subsidiaries and certain other assets and property
of the Borrower and its Subsidiaries, in each case whether now owned or held or
hereafter acquired or arising, pursuant to that certain Second Amended and
Restated Pledge Agreement from the Borrower dated as of even date herewith, as
the same may be amended, modified or supplemented from time to time (the "PLEDGE
AGREEMENT"), and (c) the real estate and related assets and properties of the
Borrower and its Subsidiaries, in each case whether now owned or held or
hereafter acquired or arising, pursuant to mortgages and trust deeds reasonably
acceptable to the Agent as to form and substance (as supplemented or otherwise
modified from time to time, collectively the "MORTGAGES" and individually each a
"MORTGAGE").

        SECTION 4.2.  GUARANTIES. Payment of the Notes and the other
Obligations, as well as the Hedging Liability, shall at all times be jointly and
severally guaranteed by each Subsidiary pursuant hereto or pursuant to a
Guaranty issued by such Subsidiary. In the event any Subsidiary is hereafter
acquired or formed, the Borrower shall also cause such Subsidiary to execute
such Collateral Documents (having terms and conditions substantially similar to
those executed by the Borrower and its Subsidiaries in connection with the
initial Loans under this Agreement) as the Agent may then require granting the
Agent for the benefit of the Lenders a security interest in and lien on the
assets of such Subsidiary as collateral security for the Notes and the other
Obligations, as well as the Hedging Liability, together with such other
instruments, documents, certificates and opinions required by the Agent in
connection therewith.

        SECTION 4.3.  FURTHER ASSURANCES. The Borrower covenants and agrees
that it shall, and shall cause each Subsidiary to, comply with all terms and
conditions of each of the Collateral Documents and that the Borrower shall, and
shall cause each Subsidiary to, at any time and from time to time as requested
by the Agent, execute and deliver such further instruments and do such other
acts as the Agent or the Required Lenders may deem necessary or desirable to
provide for or protect or perfect the Lien of the Agent in the Collateral.

                                      -22-


        SECTION 4.4.  COLLECTIONS. The Borrower shall establish and maintain
such arrangements as shall be necessary or appropriate to assure that all
proceeds of the Collateral of the Borrower and its Subsidiaries are deposited
(in the same form as received) in accounts maintained with, or under the
dominion and control of, the Agent, such accounts to constitute special
restricted accounts, the Borrower and Guarantors acknowledging that the Agent
has (and is hereby granted) a lien on such accounts and all funds contained
therein to secure the Obligations and Hedging Liability. If and to the extent
that proceeds are deposited or maintained in one or more accounts maintained
with financial institutions other than the Agent, it shall be a condition to the
Borrower's or any Subsidiary's right to establish and maintain such deposit
accounts at any time following the Effective Date, that the financial
institutions maintaining such accounts shall have delivered to the Agent blocked
account agreements satisfactory to the Agent in form and substance pursuant to
which such financial institutions acknowledge the Agent's Lien thereon, waive
any right of offset or bankers' liens thereon (other than with respect to
account maintenance charges and returned items) and agree that, upon notice from
the Agent, the collected balances in such accounts will only be transferred to
the Agent. The Lenders agree with the Borrower that if and so long as no Default
or Event of Default has occurred or is continuing, amounts on deposit in the
accounts maintained with the Agent will (subject to the rules and regulations of
the Agent as from time to time in effect applicable to demand deposit accounts)
be made available to the Borrower and its Subsidiaries for use in the conduct of
their business. Upon the occurrence of an Event of Default, the Agent may apply
the funds on deposit in such accounts to the Obligations and Hedging Liability.

SECTION 5.     DEFINITIONS; INTERPRETATION.

        SECTION 5.1.  DEFINITIONS. The following terms when used herein shall
have the following meanings:

        "ACQUISITION" means (i) the acquisition of all or any substantial part
of the assets, property or business of any other person, firm or corporation,
(ii) any acquisition of a majority of the common stock or other equity
securities of any firm or corporation, or (iii) any other transaction pursuant
to which a Person is newly allocated a majority of the profits or losses of any
other Person.

        "ADJUSTED LIBOR" means a rate per annum determined by the Agent pursuant
to the following formula:

                      Adjusted LIBOR =        LIBOR
                                        -----------------
                                        100%-Reserve Percentage

"RESERVE PERCENTAGE" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirement by such Board
or its successor, and taking into account any transitional adjustments thereto
becoming effective during

                                      -23-


such Interest Period. For purposes of this definition, LIBOR Portions shall be
deemed to be Eurocurrency liabilities as defined in Regulation D without benefit
of or credit for prorations, exemptions or offsets under Regulation D. "LIBOR"
means, for an Interest Period, (a) the LIBOR Index Rate for such Interest
Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be
determined, the arithmetic average of the rate of interest per annum (rounded
upwards, if necessary, to nearest 1/100 of 1%) at which deposits in U.S. dollars
in immediately available funds are offered to the Agent at 11:00 a.m. (London,
England time) two (2) Business Days before the beginning of such Interest Period
by major banks in the interbank eurodollar market for a period equal to such
Interest Period and in an amount equal or comparable to the principal amount of
such LIBOR Portion which is scheduled to be made by the Agent. Each
determination of LIBOR made by the Agent shall be conclusive and binding absent
manifest error.

        "AFFILIATE" means any Person, directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; PROVIDED that, in any event, any
Person that owns, directly or indirectly, 5% or more of the securities having
the ordinary voting power for the election of directors or governing body of a
corporation or 5% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.

        "AGENT" means Harris Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.

        "APPLICABLE MARGIN" means, with respect to Loans, Reimbursement
Obligations, and the commitment fees payable under Section 3.1 hereof the rate
per annum specified below:

            Applicable Margin for Domestic Rate Portions under
            the Revolving Credit and Swing Line Commitment and
            Term Loan and Reimbursement Obligations:                 1.50%

            Applicable Margin for LIBOR Portions under the
            Revolving Credit and Term Loan and letter of credit
            fee:                                                     4.00%

            Applicable Margin for commitment fee:                    0.50%.

        "APPLICATION" is defined in Section 1.3 hereof.

        "APPROVED BASE CASE" means the Borrower's final base case projections
covering a period at least through June 30, 2003, and approved in form and
substance by the Lenders.

        "AUTHORIZED REPRESENTATIVE" means those persons shown on the list of
officers and employees of the Borrower pursuant to Section 7.2(a) hereof or on
any update of any such list

                                      -24-


provided by the Borrower to the Agent, or any further or different officers and
employees so named by any Authorized Representative in a written notice to the
Agent.

        "AVAILABLE REVOLVING CREDIT COMMITMENTS" shall mean Revolving Credit
Commitments as then in effect.

        "BANK WARRANTS" means warrants to purchase Class A shares of the
Borrower's Common Stock heretofore issued by the Borrower substantially in the
form of Exhibit I to the Previous Credit Agreement.

        "BORROWER" is defined in the introductory paragraph hereof.

        "BORROWING BASE" means, as of any time it is to be determined, the sum
of:

                    (a)   85% of the then net book value of Eligible Accounts
               (computed using the method of receivables valuation applied by
               the Borrower in accordance with GAAP which reflects such value as
               the net book value of its receivables, except that net book value
               for such purposes shall not reflect any reserve for accounts more
               than ninety days past due that have already been excluded from
               gross accounts in computing such Eligible Accounts) less such
               other reserves for uncollectibility, location of account debtor,
               contras and other matters as the Agent or Required Lenders in
               good faith shall from time to time reasonably deem appropriate to
               adjust such net book value; PLUS

                    (b)   50% of the value (computed at its cost using the
               method of inventory valuation applied by the Borrower in
               accordance with GAAP which reflects such cost on the Borrower's
               books as its net book value, but in any event after reducing such
               value as so computed by the aggregate amount of all reserves for
               obsolescence, slow-moving items, shrinkage and all such other
               matters as the Agent or Required Lenders in good faith shall from
               time to time reasonably deem appropriate to adjust such net book
               value) of Eligible Inventory; PLUS

                    (c)   the Other Asset Value then in effect;

PROVIDED that the Borrowing Base shall be computed only as against and on so
much of the Collateral as is included on the certificates to be furnished from
time to time by the Borrower pursuant to Section 8.5(f) hereof and, if required
by the Agent pursuant to any of the terms hereof or any Collateral Document, as
verified by such other evidence required to be furnished to the Agent pursuant
hereto or pursuant to any such Collateral Document. Notwithstanding the
foregoing to the contrary: (i) the amount of Eligible Accounts otherwise
included in the Borrowing Base shall be reduced, dollar for dollar, by a reserve
equal to the amount (if any) by which (x) the aggregate amount of accounts
payable owing by the Borrower and its Subsidiaries

                                      -25-


to Deere and Caterpillar and their respective Affiliates for inventory and
supplies purchased (the "DEERE/CATERPILLAR PAYABLES") at any time exceeds (y)
$1,000,000; (ii) no reserve will be imposed in computing the Borrowing Base as
of any time solely in respect of the Deere/Caterpillar Payables to the extent
the same do not exceed such limit; and (iii) the Agent and the Required Lenders
shall have the right to impose reserves for other matters arising in connection
with receivables owing by Deere and Caterpillar and to otherwise impose reserves
in accordance with the Credit Agreement.

        "BUSINESS DAY" means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois and, when
used with respect to LIBOR Portions, a day on which banks are dealing in United
States Dollar deposits in the interbank market of London, England and Nassau,
Bahamas.

        "CAPITAL EXPENDITURES" means for any period capital expenditures of the
Borrower and its Subsidiaries during such period as defined and classified in
accordance with GAAP.

        "CAPITAL LEASE" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.

        "CAPITALIZED LEASE OBLIGATION" means the amount of the liability shown
on the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.

        "CASH FLOW LEVERAGE RATIO" means, as of any date the same is to be
determined, the ratio of (x) Total Funded Debt as of such date to (y) EBITDA for
the twelve (12) consecutive monthly accounting periods of the Borrower ending
on, or (if none so end) most recently completed prior to such date; PROVIDED
HOWEVER, that as of the last day of each monthly accounting period of the
Borrower ending prior to January 1, 2003, the Cash Flow Leverage Ratio shall
mean the ratio of (x) Total Funded Debt as of such date to (y) the product of
(i) EBITDA for each monthly accounting period of the Borrower (with each such
period taken together) which commenced on or any time after January 1, 2002 and
is then fully completed and (ii) a fraction, the numerator of which is 12 and
the denominator of which is the whole number of such fully completed monthly
accounting periods.

        "CASH MATURITIES" means, with reference to any period, the aggregate
amount of payments required to be made by the Borrower and its Subsidiaries
during such period with respect to principal on all Indebtedness (whether at
maturity, as a result of mandatory sinking fund redemption, scheduled mandatory
prepayment or otherwise).

        "CASH PREPAYMENTS" means, with reference to any period, the aggregate
amount of payments voluntarily made by the Borrower and its Subsidiaries during
such period with respect to principal on all Indebtedness.

        "CHANGE OF CONTROL" means the occurrence, at any time after the date
hereof, of (i) any Person or two or more Persons acting in concert acquiring
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of Borrower (or other

                                      -26-


securities convertible into such securities) representing more than 25% of the
combined voting power of all securities of the Borrower entitled to vote in the
election of directors; or (ii) commencing after the date hereof, individuals who
as of the date hereof were directors of the Borrower ceasing for any reason to
constitute a majority of the Board of Directors of the Borrower unless the
Persons replacing such individuals were nominated by William D. Morton or the
Board of Directors of the Borrower; or (iii) any Person or two or more Persons
acting in concert acquiring by contract or otherwise, or entering into a
contract or arrangement which upon consummation will result in its or their
acquisition of, or control over, securities of the Borrower (or other securities
convertible into such securities) representing more than 25% of the combined
voting power of all securities of the Borrower entitled to vote in the election
of directors.

        "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.

        "COLLATERAL DOCUMENTS" means the Security Agreement, the Pledge
Agreement and all other mortgages, deeds of trust, security agreements,
assignments, financing statements and other documents as shall from time to time
secure the Obligations.

        "COMMITMENTS" means and includes the Revolving Credit Commitments, the
Swing Line Commitment and the Term Loan Commitments.

        "COMPANIES" means the Borrower and the Domestic Subsidiaries, and the
term "COMPANY" shall mean any of the foregoing unless the context in which such
term is used shall otherwise require.

        "COMPLIANCE CERTIFICATE" means a certificate in the form Exhibit E
hereto.

        "CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or net deficit) of the Borrower and its Subsidiaries for such period as
computed on a consolidated basis in accordance with GAAP.

        "CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414 of the Code.

        "DEFAULT" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.

        "DEFAULTING LENDER" shall mean a Lender which has failed to fund as and
when required by the terms and conditions of this Agreement such Lender's
ratable share of any Loan hereunder, if any so long as such failure continues
unremedied.

        "DOMESTIC RATE" means, for any day, the greater of (i) the rate of
interest announced by the Agent from time to time as its prime commercial rate,
as in effect on such day; and (ii) the sum of (x) the rate determined by the
Agent to be the average (rounded upwards, if necessary, to the next higher 1/100
of 1%) of the rates per annum quoted to the Agent at approximately

                                      -27-


10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day
(or, if such day is not a Business Day, on the immediately preceding Business
Day) by two or more Federal funds brokers selected by the Agent for the sale to
the Agent at face value of Federal funds in an amount equal or comparable to the
principal amount owed to the Agent for which such rate is being determined, PLUS
(y) 1/2 of 1% (0.5%).

        "DOMESTIC RATE PORTION" is defined in Section 2.1(a) hereof.

        "DOMESTIC SUBSIDIARY" means each Subsidiary of the Borrower which is
organized under the laws of the United States of America or any State thereof.

        "EBIT" means, with reference to any period, Consolidated Net Income for
such period plus all amounts deducted in arriving at such Consolidated Net
Income for such period in respect of (i) Interest Expense for such period, PLUS
(ii) federal, state and local income taxes for such period.

        "EBITDA" means, with reference to any period, Consolidated Net Income
for such period plus all amounts deducted in arriving at such Consolidated Net
Income for such period in respect of (i) Interest Expense for such period, plus
(ii) federal, state and local income taxes for such period, plus (iii) all
amounts properly charged for depreciation of fixed assets and amortization of
intangible assets during such period on the books of the Borrower and its
Subsidiaries.

        "EFFECTIVE DATE" means the date on which the Agent has received signed
counterpart signature pages of this Agreement from each of the signatories (or,
in the case of a Lender, confirmation that such Lender has executed such a
counterpart and dispatched it for delivery to the Agent) and the conditions in
Section 7.1 and 7.2 hereof have been fulfilled.

        "ELIGIBLE ACCOUNT" means each account receivable of each Company that:

               (a)    arises out of the sale by such Company of inventory
        delivered to and accepted by, or out of the rendition of services fully
        performed by such Company and accepted by, the account debtor on such
        account receivable, and in each case such account receivable otherwise
        represents a final sale;

               (b)    is an asset of such Company to which it has good and
        marketable title, is freely assignable, is subject to a perfected, first
        priority Lien in favor of the Agent, and is free and clear of any other
        Lien;

               (c)    the account debtor thereon is not a Subsidiary or an
        Affiliate of any Company; and

               (d)    is not unpaid more that ninety (90) days after the
        original due date of the applicable original invoice (which due date
        must be not more than sixty (60) days subsequent to the date of such
        original invoice and which invoice date must not be more

                                      -28-


        than four (4) days after the date of the relevant shipment or
        performance of the relevant services giving rise to such account
        receivable).

        "ELIGIBLE INVENTORY" means all raw materials and finished goods
inventory of each Company (other than packaging, crating and supplies
inventory), provided that such inventory:

               (a)    is an asset of such Company to which it has good and
        marketable title, is freely assignable, is subject to a perfected, first
        priority Lien in favor of the Agent, and is free and clear of any other
        Lien other than Liens permitted by Sections 8.12(a) hereof; and

               (b)    is located in the United States.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.

        "EVENT OF DEFAULT" means any event or condition identified as such in
Section 9.1 hereof.

        "EXISTING LETTERS OF CREDIT" means the Letters of Credit set forth on
Schedule 1 hereto.

        "FIXED CHARGE COVERAGE RATIO" means, as of any date the same is to be
determined, the ratio of (i) EBITDA for the twelve (12) consecutive monthly
accounting periods of the Borrower ending on, or (if none so end) most recently
completed prior to such date to (ii) the sum (during the same twelve (12)
consecutive monthly accounting periods) of (a) Interest Expense and (b) Cash
Maturities; PROVIDED, HOWEVER, as of the last day of each monthly accounting
period of the Borrower ending prior to January 1, 2003, the Fixed Charge
Coverage Ratio shall mean the ratio of (i) EBITDA for each monthly accounting
period of the Borrower (with each such period taken together) which commenced on
or any time after January 1, 2002 and is then fully completed to (ii) the sum of
(for the same monthly accounting period or periods of the Borrower) (a) Interest
Expense and (b) Cash Maturities.

        "FIXED RATE LOAN" means any LIBOR Portion and (to the extent bearing
interest with reference to Harris' Quoted Rate) any Swing Loan.

        "GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Borrower and its Subsidiaries on a basis consistent
with the preparation of the Borrower's audited financial statements referred to
in Section 6.4 hereof.

        "GUARANTOR" means each Subsidiary that is a signatory hereto or that
executes and delivers to the Agent a Guaranty along with the accompanying
closing documents required by Section 4.2 hereof.

        "GUARANTEED OBLIGATIONS" is defined in Section 11.1 hereof.

        "GUARANTY" means this Agreement as to Guarantors party hereto and
otherwise, a letter to the Agent in the form of Exhibit G hereto executed by a
Subsidiary whereby it acknowledges it

                                      -29-


is party hereto as a Guarantor under Section 11 hereof and also in the case of
any Subsidiary not organized under the laws of the United States of any State
thereof, such other form of guaranty as shall be reasonably acceptable to the
Agent and the Required Lenders.

        "HARRIS" is defined in Section 1.6(a) hereof.

        "HARRIS' QUOTED RATE" is defined in Section 1.6(e) hereof.

        "HEDGING ARRANGEMENTS" is defined in Section 8.26 hereof.

        "HEDGING LIABILITY" means the liability of the Borrower to any of the
Lenders or their Affiliates in respect of any interest rate swaps, interest rate
caps, interest rate collars, or other interest rate hedging arrangements as the
Borrower may from time to time enter into with any one or more of the Lenders or
their Affiliates. Unless and until the amount of the Hedging Liability is fixed
and determined, the Hedging Liability shall be deemed to be the market value of
the notional amount of the hedge from the date of computation to the date the
hedge expires.

        "INDEBTEDNESS" means for any Person (without duplication) (i) all
indebtedness created, assumed or incurred in any manner by such Person
representing money borrowed (including by the issuance of debt securities), (ii)
all indebtedness for the deferred purchase price of property or services (but
specifically excluding (x) trade accounts payable arising in the ordinary course
of business which are not more than 180 days past due and (y) unsecured
indebtedness of the type and in the amount permitted pursuant to Section 8.11(e)
hereof), (iii) all indebtedness secured by any Lien upon Property of such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, (iv) all indebtedness secured by a purchase money mortgage
or other Lien to secure all or part of the purchase price of Property subject to
such mortgage or Lien, (v) all Capitalized Lease Obligations of such Person,
(vi) all obligations of such Person on or with respect to letters of credit,
bankers' acceptances and other extensions of credit whether or not representing
obligations for borrowed money and (vii) each "NON-COMPETE" and like payment
owed by such Person in connection with an Acquisition, to the extent such
payment would be classified as a liability under GAAP.

        "INTEREST COVERAGE RATIO" means, as of any date the same is to be
determined, the ratio of (i) EBIT for the twelve (12) consecutive monthly
accounting periods of the Borrower ending on, or (if none so end) most recently
completed prior to such date to (ii) Interest Expense for the same twelve (12)
consecutive monthly accounting periods; PROVIDED, HOWEVER, as of the last day of
each monthly accounting period of the Borrower ending prior to January 1, 2003,
the Interest Coverage Ratio shall mean the ratio of (i) EBIT for each monthly
accounting period of the Borrower (with each such period taken together) which
commenced on or any time after January 1, 2002 and is then fully completed to
(ii) Interest Expense for the same monthly accounting period or periods of the
Borrower.

        "INTEREST EXPENSE" means, with reference to any period (the "MEASUREMENT
PERIOD"), the sum of all interest charges with respect to Indebtedness
(including imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense) of

                                      -30-


the Borrower and its Subsidiaries for such measurement period determined in
accordance with GAAP.

        "INTEREST PERIOD" means, (a) with respect to any Swing Loan, the period
commencing on the date such Swing Loan is made and ending one to five,
inclusive, days thereafter as selected by the Borrower in the notice provided
herein and (b) with respect to any LIBOR Portion, the period commencing on, as
the case may be, the creation, continuation or conversion date with respect to
such LIBOR Portion and ending one (1), two (2) or three (3) months thereafter as
selected by the Borrower in its notice as provided herein; PROVIDED THAT, all of
the foregoing provisions relating to Interest Periods are subject to the
following:

               (i)    if any Interest Period would otherwise end on a day which
        is not a Business Day, that Interest Period shall be extended to the
        next succeeding Business Day, unless the result of such extension would
        be to carry such Interest Period into another calendar month in which
        event such Interest Period shall end on the immediately preceding
        Business Day;

               (ii)   no Interest Period may extend beyond the final maturity
        date of any Note evidencing such Portion;

               (iii)  the interest rate to be applicable to each LIBOR Portion
        or Swing Loan for each Interest Period shall apply from and including
        the first day of such Interest Period to but excluding the last day
        thereof; and

               (iv)   no Interest Period may be selected if after giving effect
        thereto the Borrower will be unable to make a principal payment
        scheduled to be made during such Interest Period without paying part of
        a LIBOR Portion on a date other than the last day of the Interest Period
        applicable thereto.

        For purposes of determining an Interest Period, a month means a period
starting on one day in a calendar month and ending on a numerically
corresponding day in the next calendar month, provided, however, if an Interest
Period begins on the last day of a month or if there is no numerically
corresponding day in the month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such month.

        "L/C DOCUMENT" shall mean the Letters of Credit, any draft or other
document presented in connection with a drawing thereunder, the Applications and
this Agreement.

        "L/C OBLIGATIONS" means as of any date the same is to be determined, the
sum of (i) the aggregate undrawn amount then available under the Letters of
Credit then outstanding (with the undrawn amount available under a Letter of
Credit to be the maximum amount which can then be drawn thereunder (after giving
effect to any prior reductions in such amount, whether scheduled on the face of
such Letter of Credit or due to prior partial drawings) under any circumstances
and over any period of time plus (ii) all unpaid Reimbursement Obligations then
outstanding (other than any such Reimbursement Obligations as are being repaid
the same day directly out of the proceeds of a Revolving Loan requested for such
purpose).

                                      -31-


        "L/C SUBLIMIT" shall mean $2,000,000, in each case as the same may be
reduced pursuant to Section 3.4 hereof.

        "LENDER" means Harris Trust and Savings Bank, the other financial
institutions which are signatories hereto, and all other financial institutions
becoming parties hereto pursuant to Section 12.15 hereof.

        "LETTERS OF CREDIT" is defined in Section 1.3 hereof.

        "LIBOR INDEX RATE" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.

        "LIBOR PORTIONS" is defined in Section 2.1(a) hereof.

        "LIEN" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, capital lease or other title
retention arrangement.

        "LOAN DOCUMENTS" means this Agreement, the Notes, the Applications, the
L/C Documents, the Guaranties and the Collateral Documents.

        "LOANS" means and includes Revolving Loans, the Term Loans and the Swing
Loans.

        "MATERIAL PLAN" is defined in Section 9.1(j) hereof.

        "MID-CENTRAL" means Mid-Central Plastics, Inc., an Iowa corporation.

        "MORTON SOUTH CAROLINA" means Morton Metalcraft Co. of South Carolina, a
South Carolina corporation.

        "NET WORTH" means, at any time the same is to be determined, the total
shareholder equity (including common and preferred capital stock, additional
paid-in capital and retained earnings after deducting treasury stock, but
excluding minority interest in Subsidiaries) which would appear on the balance
sheet of the Borrower and its Subsidiaries determined on a consolidation basis
in accordance with GAAP.

        "NOTES" means and includes the Revolving Credit Notes, the Swing Line
Note and the Term Notes. When used with reference to the Notes, the term "CLASS"
of Notes refers to the status of such Notes as one of the following three types,
Revolving Credit Notes, Term Notes and the Swing Line Note, such Notes to
constitute three separate classes of Notes.

        "OBLIGATIONS" means all obligations of the Borrower to pay the principal
and interest on the Loans, all Reimbursement Obligations, all fees and charges
payable hereunder, and all other

                                      -32-


payment obligations of the Borrower arising under or in relation to any Loan
Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.

        "OTHER ASSET VALUE" means $2,500,000.

        "PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.

        "PERCENTAGES" means, for each Lender, such Lender's Revolver Percentage,
Term A Percentage and Term B Percentage, unless the context in which such term
is used shall otherwise require.

        "PERSON" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.

        "PLAN" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group, (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions, or (iii) under which a member of the Controlled
Group has any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years or by reason of being deemed a contributing
sponsor under Section 4064 of ERISA.

        "PLEDGE AGREEMENT" is defined in Section 4.1 hereof.

        "PORTION" is defined in Section 2.1(a) hereof.

        "PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

        "REIMBURSEMENT OBLIGATION" is defined in Section 1.3(c) hereof.

        "REQUIRED LENDERS" means, as of the date of determination thereof, any
two (2) or more Lenders holding (including through participation interests) at
least 66-2/3% in aggregate principal amount of the Loans, L/C Obligations and
Unused Revolving Credit Commitments outstanding hereunder.

        "REVOLVER PERCENTAGE" means, for each Lender, the percentage of the
Revolving Credit Commitments represented by such Lender's Revolving Credit
Commitment or, if the Revolving Credit Commitments have been terminated, the
percentage held by such Lender (including

                                      -33-


through participation interests in L/C Obligations) of the aggregate principal
amount of all outstanding Revolving Loans and L/C Obligations.

        "REVOLVING CREDIT" is defined in the introductory paragraph hereof.

        "REVOLVING CREDIT COMMITMENTS" shall mean the commitments of each Lender
to extend credit under the Revolving Credit in the aggregate amount of
$21,000,000 for all the Lenders (each Lender's share of the total Revolving
Credit Commitments to be in the percentage set forth opposite such Lender's
signature to this Credit Agreement under the heading "Revolving Credit
Commitment" and, if applicable, opposite such Lender's signature on the relevant
Assignment Agreement delivered pursuant to Section 12.15 hereof) (subject to the
paragraph immediately following).

        All increases or reductions in the Revolving Credit Commitments shall
increase or decrease the Revolving Credit Commitments of the Lenders pro rata in
accordance with their Revolver Percentages.

        "REVOLVING CREDIT NOTES" is defined in Section 1.1 hereof.

        "REVOLVING LOANS" is defined in Section 1.1 hereof.

        "SECURITY AGREEMENT" is defined in Section 4.1 hereof.

        "SMP" means SMP Steel Corporation, a South Carolina corporation.

        "SUBORDINATED DEBT" means (x) the currently outstanding Indebtedness of
the Borrower evidenced by those two Non-Negotiable Promissory Notes
(subordinated) each dated as of April 8, 1998, one payable to the order of
Joseph T. Buie, Jr. in the currently outstanding principal amount of $1,739,831
and the second payable to the order of Ernest J. Butler in the currently
outstanding principal amount of $827,018 and (y) any other indebtedness for
borrowed money subordinated in right of payment to the prior payment of the
Obligations by written provisions acceptable to the Agent and Required Lenders
in form and substance and otherwise pursuant to documentation, in an amount, and
containing interest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies and other material terms in form and substance
satisfactory to the Agent and Required Lenders.

        "SUBSIDIARY" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Borrower, by one or more of its
Subsidiaries, or by the Borrower and one or more of such Subsidiaries.

        "SWING LINE" is defined in the introductory paragraph hereof.

        "SWING LINE COMMITMENT" means $1,000,000 as reduced pursuant to the
terms hereof.

        "SWING LINE NOTE" is defined in Section 1.6(a) hereof.

                                      -34-


        "SWING LOANS" is defined in Section 1.6(a) hereof.

        "TELERATE PAGE 3750" means the display designated as "PAGE 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).

        "TERM LOAN" is defined in Section 1.2 hereof.

        "TERM LOAN COMMITMENTS" means the commitments of the Lenders to make
Term Loans in the amounts set forth opposite their signature hereto under the
headings "TERM LOAN" and opposite their signatures on Assignment Agreements
delivered pursuant to Section 12.15 hereof under the heading "TERM LOAN," as
such amount may be reduced pursuant hereto. The Term Loan Commitments are
$32,965,419.92 as of the date hereof.

        "TERM NOTE" is defined in Section 1.2 hereof.

        "TERM PERCENTAGE" means, for each Lender, the percentage held by such
Lender of the aggregate principal amount of the outstanding Term Loan.

        "TERMINATION DATE" means (x) July 1, 2003, or (y) if earlier, such
earlier date on which the Revolving Credit Commitments are terminated in whole
pursuant to Sections 3.4, 9.2 or 9.3 hereof.

        "TOTAL FUNDED DEBT" means, at any time the same is to be determined, the
aggregate of all Indebtedness of the Borrower and its Subsidiaries at such time,
PLUS all Indebtedness of any other Person which is directly or indirectly
guaranteed by the Borrower or any of its Subsidiaries or which the Borrower of
any of its Subsidiaries has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which the Borrower or any of its Subsidiaries
has otherwise assured a creditor against loss.

        "UNFUNDED VESTED LIABILITIES" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.

        "UNUSED REVOLVING CREDIT COMMITMENTS" means, at any time, the difference
between the Revolving Credit Commitments then in effect and the aggregate
outstanding principal amount of Revolving Loans, Swing Loans and L/C
Obligations.

        "WELFARE PLAN" means a "welfare plan" as defined in Section 3(1) of
ERISA.

        "WHOLLY OWNED SUBSIDIARY" means a Subsidiary of the Borrower all of the
issued and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or

                                      -35-


other equity interests are owned by the Borrower and/or one or more Wholly Owned
Subsidiaries within the meaning of this definition.

        SECTION 5.2.   INTERPRETATION. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. All
references to time of day herein are references to Chicago, Illinois time unless
otherwise specifically provided. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with GAAP except
where such principles are inconsistent with the specific provisions of this
Agreement.

        SECTION 5.3.   CHANGE IN ACCOUNTING PRINCIPLES. If, after the date of
this Agreement, there shall occur any change in generally accepted accounting
principles from those used in the preparation of the financial statements
referred to in Section 6.4 hereof and such change shall result in a change in
the method of calculation of any financial covenant, standard or term found in
this Agreement, either the Borrower or the Required Lenders may by notice to the
Lenders and the Borrower, respectively, require that the Lenders and the
Borrower negotiate in good faith to amend such covenant, standard and term so as
equitably to reflect such change in accounting principles, with the desired
result being that the criteria for evaluating the financial condition of the
Borrower and its Subsidiaries shall be the same as if such change had not been
made. No delay by the Borrower or the Required Lenders in requiring such
negotiation shall limit their right to so require such a negotiation at any time
after such a change in accounting principles. Without limiting the generality of
the foregoing, the Borrower shall neither be deemed to be in compliance with any
financial covenant hereunder nor out of compliance with any financial covenant
hereunder if such state of compliance or noncompliance, as the case may be,
would not exist but for the occurrence of a change in accounting principles
after the date hereof.

SECTION 6.     REPRESENTATIONS AND WARRANTIES.

        The Borrower represents and warrants to the Lenders as follows:

        SECTION 6.1.   ORGANIZATION AND QUALIFICATION. The Borrower is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Georgia, and has full and adequate corporate power to own its
Property and carry on its business as now conducted. The Borrower is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying unless and to the extent that
the failure to be so licensed or qualified or to be in such good standing would
not have any material adverse effect on the financial condition, Properties,
business, or operations of the Borrower or in its ability to perform or the
Agent's ability to enforce performance of the Borrower's obligations under the
Loan Documents. The Borrower has full right and authority to enter into this
Agreement, to obtain the credit herein provided for, to issue its Notes in
evidence of the borrowings herein provided for, to execute and deliver each Loan
Document delivered by it, and to perform each and all of the matters and things
therein provided for; and the Loan Documents do not, nor does the performance or
observance by the Borrower of any of the matters and things therein provided
for, contravene or constitute a default under any provision of law or any
judgment, injunction, order or decree

                                      -36-


binding upon the Borrower or any charter or by-law provision of the Borrower or
any covenant, indenture or agreement of or affecting the Borrower or any of its
respective Properties, or result in the creation or imposition of any Lien on
any Property of the Borrower.

        SECTION 6.2.  SUBSIDIARIES. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and carry on its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying unless and to the extent that
the failure to be so licensed or qualified or to be in such good standing would
not have any material adverse effect on the financial condition, Properties,
business or operations of the Borrower and its Subsidiaries taken as a whole or
in its ability to perform or the Agent's ability to enforce performance of the
Borrower's obligations under the Loan Documents. Each Subsidiary has full right,
power and authority to execute and deliver each Loan Document delivered by it
and to observe and perform each and all of the matters and things therein
provided for, and the Loan Documents do not, nor will the performance or
observance by any Subsidiary of any of the matters and things therein provided
for, contravene any provision of law or any charter or by-law provision of any
Subsidiary or any covenant, indenture or agreement of or affecting the Borrower
or any Subsidiary or any of their respective Properties or require any
governmental approval or consent. Schedule 6.2 hereto identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Borrower and the
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned by the Borrower or a
Subsidiary are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens. There are no outstanding commitments or
other obligations of any Subsidiary to issue, and no options, warrants or other
rights of any Person to acquire, any shares of any class of capital stock or
other equity interests of any Subsidiary.

        SECTION 6.3.  MARGIN STOCk. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Loan or Letter of Credit issued hereunder will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.

        SECTION 6.4.  FINANCIAL REPORTS. The consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 2000 and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
KPMG LLP, independent public accountants, and the unaudited interim consolidated
balance sheet of the Borrower and its Subsidiaries as at November 30, 2001 and
the related consolidated

                                      -37-


statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the eleven (11) months then ended, heretofore furnished to the
Lenders, fairly present the consolidated financial condition of the Borrower and
its Subsidiaries as at said dates and the consolidated results of their
operations and cash flows for the periods then ended in conformity with GAAP
applied on a consistent basis. Neither the Borrower nor any of its respective
Subsidiaries has contingent liabilities which are material to it other than as
indicated on such financial statements or, with respect to future periods, on
the financial statements furnished pursuant to Section 8.5 hereof. Since
November 30, 2001, there has been no material adverse change in the condition
(financial or otherwise) or business prospects of the Borrower and its
Subsidiaries taken as a whole.

        SECTION 6.5.  FULL DISCLOSURE. The statements and information furnished
to the Agent and the Lenders in connection with the negotiation of this
Agreement and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a material
fact or omit a material fact necessary to make the material statements contained
therein or herein not misleading, the Lenders acknowledging that as to any
projections furnished to any Lender and the Borrower only represent that the
same were prepared on the basis of information and estimates the Borrower
believed to be reasonable.

        SECTION 6.6.  GOOD TITLE. The Borrower and its respective Subsidiaries
have good and defensible title to their respective material assets as reflected
on the most recent consolidated balance sheet of the Borrower and its
Subsidiaries furnished to the Lenders (except for sales of assets by the
Borrower and such Subsidiaries in the ordinary course of their respective
businesses), subject to no Liens other than such thereof as are permitted by
Section 8.12 hereof.

        SECTION 6.7.  LITIGATION AND OTHER CONTROVERSIES. Except as set forth
on Schedule 6.7, there is no litigation or governmental proceeding or labor
controversy pending, nor to the knowledge of the Borrower threatened, against
the Borrower or any of its Subsidiaries which if adversely determined would
result in any material adverse change in the financial condition, Properties,
business or operations of the Borrower and its Subsidiaries taken as a whole.

        SECTION 6.8.  TAXES. All tax returns with respect to any income tax or
other material tax required to be filed by the Borrower or any Subsidiary in any
jurisdiction have, in fact, been filed, and all taxes, assessments, fees and
other governmental charges upon the Borrower or any Subsidiary or upon any of
their respective Properties, income or franchises, which are shown to be due and
payable in such returns, have been paid. The Borrower does not know of any
proposed additional tax assessment against the Borrower or any Subsidiary which
if paid (taking into consideration any cash segregated for such purpose) would
result in any material adverse change in the financial condition, Properties,
business or operations of the Borrower and its Subsidiaries taken as a whole.
Adequate provisions in accordance with GAAP for taxes on the books of the
Borrower and each Subsidiary have been made, or (to the extent such provisions
have not been made) adequate cash reserves for such taxes have been segregated,
in each case for all open years, and for its current fiscal period.

        SECTION 6.9.  APPROVALS. No authorization, consent, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality, nor any

                                      -38-


approval or consent of the stockholders of the Borrower or any other Person, is
or will be necessary to the valid execution, delivery or performance by the
Borrower of this Agreement, the Applications or the Notes.

        SECTION 6.10. AFFILIATE TRANSACTIONS. Neither the Borrower nor any of
its Subsidiaries is a party to any contracts or agreements with any of its
Affiliates (other than with Wholly Owned Subsidiaries) on terms and conditions
which are less favorable to the Borrower or such Subsidiary than would be usual
and customary in similar contracts or agreements between Persons not affiliated
with each other.

        SECTION 6.11. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY.
Neither the Borrower nor any of its Subsidiaries is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "public utility holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

        SECTION 6.12. ERISA. The Borrower and each other member of its
Controlled Group has fulfilled its obligations under the minimum funding
standards of and is in compliance in all material respects with ERISA and the
Code to the extent applicable to it and has not incurred any liability to the
PBGC or a Plan under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA. Neither the Borrower nor any Subsidiary
has any contingent liabilities with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described
in article 6 of Title I of ERISA.

        SECTION 6.13. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries
are in compliance with the requirements of all federal, state and local laws,
rules and regulations applicable to or pertaining to the Properties or business
operations of the Borrower or any such Subsidiary (including, without
limitation, the Occupational Safety and Health Act of 1970, the Americans with
Disabilities Act of 1990, and laws and regulations establishing quality criteria
and standards for air, water, land and toxic or hazardous wastes or substances),
non-compliance with which would reasonably be expected to have a material
adverse effect on the financial condition, Properties, business or operations of
the Borrower and its Subsidiaries taken as a whole. Neither the Borrower nor any
of its Subsidiaries has received notice to the effect that its operations are
not in compliance with any of the requirements of applicable federal, state or
local environmental, health and safety statutes and regulations or are the
subject of any governmental investigation evaluating whether any remedial action
is needed to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action would reasonably
be expected to have a material adverse effect on the financial condition,
Properties, business or operations of the Borrower and its Subsidiaries taken as
a whole.

        SECTION 6.14. OTHER AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries is in default under the terms of any covenant, indenture or
agreement of or affecting the Borrower or any such Subsidiary or any of their
Properties, which default would have a material adverse effect on the financial
condition, Properties, business or operations of the Borrower and its
Subsidiaries taken as a whole.

                                      -39-


        SECTION 6.15. [INTENTIONALLY OMITTED].

        SECTION 6.16. [INTENTIONALLY OMITTED].

        SECTION 6.17. NO DEFAULT. No Default or Event of Default has occurred
and is continuing.

        SECTION 6.18. CAPITAL STRUCTURE.

        (a)    GENERALLY. The authorized capital stock of the Borrower consists
of (i) 20,000,000 shares of Class A Common Stock, $.01 par value, of which there
were 4,400,850 shares issued and outstanding as of December 31, 2001 and no
shares held in the treasury of the Borrower; (ii) 200,000 shares of Class B
Common Stock, $.01 par value, of which there were 200,000 shares issued and
outstanding as of December 31, 2001 and no shares held in the treasury of the
Borrower; and (iii) 2,000,000 shares of Preferred Stock, no par value, of which
10,000 shares were issued and outstanding as of December 31, 2001 and no shares
held in the treasury of the Borrower. All outstanding shares of the Borrower's
Class A and Class B Common Stock and Preferred Stock are duly authorized,
validly issued, fully paid and nonassessable and are not subject to preemptive
rights created by statute, the Articles of Incorporation or Bylaws of the
Borrower or any agreement or document to which the Borrower is a party or by
which it is bound. As of December 31, 2001 the Borrower had remaining a reserve
of an aggregate of 1,166,711 shares, 68,956 shares and 25,000 shares,
respectively, of the Borrower's Class A Common Stock for issuance to employees
pursuant to the Borrower's 1997 Employee Stock Option Plan (the "STOCK OPTION
PLAN"), the Borrower's Amended and Restated Executive and Director Stock Option
Agreements ("EXECUTIVE OPTION AGREEMENTS") and the Borrower's Morton Industrial
Group, Inc. Nonemployee Directors' Compensation Plan (the "BORROWER DIRECTOR
PLAN"). The Borrower may also issue "payment-in-kind" Preferred Stock in lieu of
cash dividends on its outstanding Preferred Stock. Schedule 6.18 sets forth for
each Person who held options to acquire shares of the Borrower's Class A or
Class B Common Stock, or any other capital stock of the Borrower, in each case
at December 31, 2001 the name of the holder of such option, the number of shares
subject to such option, the exercise price of such option, the number of shares
as to which such option was vested at such date and the vesting schedule for
such option.

        (b)    OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 6.18(a), as of December 31, 2001, there are no equity securities,
partnership interests or similar ownership interests of any class of the
Borrower, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding. Except for the Bank Warrants
listed on Schedule 6.18 and as set forth in Section 6.18(a), as of December 31,
2001, there are no options, warrants, equity securities, partnership interests
or similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Borrower or any of its
Subsidiaries is a party or by which it is bound obligating the Borrower or any
of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition, of any shares of capital stock, partnership interests
or similar ownership interests of the Borrower or any of its Subsidiaries or
obligating the Borrower or any of its Subsidiaries to grant, extend, accelerate
the

                                      -40-


vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement.

SECTION 7.     CONDITIONS PRECEDENT.

        The obligation of the Lenders to make any Loan or of the Agent to issue
any Letter of Credit under this Agreement is subject to the following conditions
precedent:

        SECTION 7.1.  ALL ADVANCES. As of the time of the making of each Loan
and the issuance of each Letter of Credit (including the initial Loan and the
initial Letter of Credit) hereunder:

               (a)    each of the representations and warranties set forth in
        Section 6 hereof and the Applications shall be true and correct in all
        material respects as of such time, except to the extent the same relate
        expressly to an earlier date;

               (b)    the Borrower shall be in compliance with all of the terms
        and conditions hereof, and no Default or Event of Default shall have
        occurred and be continuing hereunder;

               (c)    in the case of each Revolving Loan, Swing Loan or Letter
        of Credit, after giving effect to such extension of credit, the
        aggregate principal amount outstanding on all Revolving Loans, Swing
        Loans and L/C Obligations shall not exceed the lesser of (i) the
        Available Revolving Credit Commitments then in effect or (ii) the
        Borrowing Base as then determined and computed;

               (d)    in the case of each Swing Loan, after giving effect to
        such extension of credit, the aggregate principal amount of all Swing
        Loans shall not exceed the Swing Line Commitment then in effect;

               (e)    such extension of credit shall not violate any order,
        judgment or decree of any court or other authority or any provision of
        law or regulation applicable to the Agent or any Lender (including,
        without limitation, Regulation U of the Board of Governors of the
        Federal Reserve System) as then in effect; and

               (f)    in the case of the issuance of any Letter of Credit, the
        Agent shall have received a properly completed Application therefor and,
        in the case of an extension or increase in the amount of the Letter of
        Credit, the Agent shall have received a written request therefor, in a
        form acceptable to the Agent, with such Application or written request,
        in each case to be accompanied by the fees required by this Agreement.

        Each Borrower's request for any Loan or for any Letter of Credit, shall
constitute its warranty to the Agent and the Lenders on the date such credit is
to be extended as to the facts specified in paragraphs (a) and (b) of this
Section.

                                      -41-


        SECTION 7.2.  INITIAL ADVANCE. Prior to the making of the initial Loan
or the issuance of the initial Letter of Credit hereunder, the following
conditions precedent shall also have been satisfied:

               (a)    the Agent shall have received the following for the
        account of the Lenders (each to be properly executed and completed) and
        the same shall have been approved as to form and substance by the
        Lenders:

                      (i) the Notes;

                      (ii) the Collateral Documents and the UCC financing
               statements requested by the Agent in connection therewith;

                      (iii) a date-down endorsement for each policy of title
               insurance and all endorsements thereunder delivered in connection
               with the Previous Credit Agreement in form and substance
               acceptable to the Agent (which will, among other things, insure
               over any survey exception) from the issuer of such policy or
               another title insurance company acceptable to the Agent,
               maintaining the existing level of coverage under each such
               policy, PROVIDED that any such endorsements which are not
               available at the time of the making of the initial Loan hereunder
               will be delivered by the Borrower not later than 90 days after
               the date hereof;

                      (iv) supplements to each mortgage delivered under the
               Previous Credit Agreement, duly executed, reflecting the terms of
               this Amended and Restated Credit Agreement;

                      (v) certified copies of resolutions of the Board of
               Directors of the Borrower and each Guarantor authorizing the
               execution and delivery of the Loan Documents delivered by them
               and indicating the authorized signers of such Loan Documents;

                      (vi) copies of the articles of incorporation and by-laws
               of the Borrower and each Guarantor certified as true and correct
               by the Secretary or other appropriate officer of the Borrower or
               such Guarantor, as the case may be;

                      (vii) a good standing certificate for the Borrower and
               each Guarantor, dated as of a date no earlier than thirty days
               prior to the date hereof, from the appropriate governmental
               office in the jurisdiction of its incorporation; and

                    (viii) an incumbency certificate containing the name, title
               and genuine signatures of the Borrower's Authorized
               Representatives; and

               (b)    the Agent shall have received for the account of and
        addressed to the Lenders the favorable written opinion of counsel for
        the Borrower and certain Guarantors in form and substance acceptable to
        the Agent and the Lenders;

                                      -42-


               (c)    the Agent shall have received from the Borrower
        reimbursement for any expenses incurred in connection with the Loan
        Documents or the Previous Credit Agreement (including, without
        limitation, legal fees);

               (d)    the Agent shall have received (i) a certificate showing a
        computation of the Borrower's compliance with the financial covenants
        set forth herein as of a date and covering periods to be determined by
        the Agent, such computation to be in form and substance reasonably
        satisfactory to the Agent and otherwise in reasonable detail and (ii) a
        Borrowing Base Certificate as of a date no less than five Business Days
        prior to the Effective Date;

               (e)    the Liens granted to the Agent under the Collateral
        Documents shall have been perfected in a manner satisfactory to each
        Lender and its counsel;

               (f)    The Agent shall have received and approved as to form and
        substance an internally prepared balance sheet for the Borrower and each
        Subsidiary as at November 30, 2001 and an internally prepared income
        statement and statement of retained earnings and cash flows for the
        quarter then ended;

               (g)    the Lenders shall have received and approved the Approved
        Base Case;

               (h)    the Borrower and the holders of the Bank Warrants shall
        have executed and delivered amendments thereto in form satisfactory to
        each such holder extending the Expiration Dates (as defined in the Bank
        Warrants) to December 31, 2003; and

               (i)    the Agent shall have received for the account of the
        Lenders such other agreements, instruments, documents, certificates and
        opinions as the Agent or the Lenders may reasonably request.

        SECTION 7.3.   INITIAL LOANS.  As described in the recitals  hereto,
the initial Loans shall represent a continuation of the Previous Loans.

SECTION 8.     COVENANTS.

        The Borrower agrees that, so long as any Loans, Letters of Credit or
Commitments are available to or in use by the Borrower hereunder, except to the
extent compliance in any case or cases is waived in writing by the Required
Lenders:

        SECTION 8.1.   MAINTENANCE OF BUSINESS. The Borrower shall, and shall
cause each of its Subsidiaries to, preserve and keep in force and effect its
corporate existence (except to the extent such existence terminates in mergers
and consolidations permitted by Section 8.16 hereof) and all licenses, permits
and franchises necessary to the proper conduct of its business.

        SECTION 8.2.   MAINTENANCE OF PROPERTY. The Borrower will maintain,
preserve and keep those of its Properties material to its business in good
repair, working order and condition (ordinary wear and tear excepted) and will
from time to time make all needful and proper repairs,

                                      -43-


renewals, replacements, additions and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained, and will cause
each of their respective Subsidiaries to do so in respect of Property owned or
used by it.

        SECTION 8.3.   TAXES AND ASSESSMENTs. The Borrower will duly pay and
discharge, and will cause each of its Subsidiaries to duly pay and discharge,
all federal and other material taxes, rates, assessments, fees and governmental
charges upon or against it or its Properties, in each case before the same
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings
which prevent enforcement of the matter under contest and adequate reserves are
provided therefor.

        SECTION 8.4.   INSURANCE. The Borrower will insure and keep insured, and
will cause each of its Subsidiaries to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Borrower will insure, and cause each of their respective
Subsidiaries to insure, such other hazards and risks (including employers' and
public liability risks) with other good and responsible insurance companies as
and to the extent usually insured by Persons similarly situated and conducting
similar businesses. The Borrower will upon request of the Agent furnish a
certificate setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section.

        SECTION 8.5.   FINANCIAL REPORTS. The Borrower will, and will cause each
of its Subsidiaries to, maintain a standard system of accounting in accordance
with GAAP, will permit the Agent, each Lender and their representatives to visit
and inspect the properties and assets (including books and records) of the
Borrower and its Subsidiaries at all reasonable times and will furnish to the
Agent, each Lender and their duly authorized representatives such information
respecting the business and financial condition of the Borrower and its
Subsidiaries as the Agent or such Lender may reasonably request; and without any
request, the Borrower will furnish to the Lenders:

               (a)    (i) as soon as available, and in any event within 45 days
        after the close of each monthly fiscal period of the Borrower which is
        also the end of a fiscal quarter of the Borrower and within 30 days
        after the close of each other monthly fiscal period of the Borrower, a
        copy of the balance sheet and statements of income of the Borrower and
        its Subsidiaries for such period, and (ii) as soon as available, and in
        any event within 45 days after the close of each monthly fiscal period
        of the Borrower which is also the end of a fiscal quarter of the
        Borrower, a copy of the statements of retained earnings and cash flows
        of the Borrower and its Subsidiaries for such period, all prepared on a
        consolidated basis and in reasonable detail showing in comparative form
        the figures for the corresponding date and period in the previous fiscal
        year, prepared by the Borrower in accordance with GAAP (subject to
        normal year-end audit adjustments and the absence of notes) and
        certified to by the chief financial officer of the Borrower;

                                      -44-


               (b)    as soon as available, and in any event within 90 days
        after the close of each fiscal year of the Borrower, a copy of the
        consolidated balance sheet of the Borrower and its Subsidiaries as of
        the close of such fiscal year and the consolidated statements of income,
        retained earnings and cash flows of the Borrower and its Subsidiaries
        for such period, and accompanying notes thereto, all in reasonable
        detail showing in comparative form the figures for the previous fiscal
        year, accompanied by an unqualified opinion thereon of KPMG LLP or
        another firm of independent public accountants of recognized national
        standing, selected by the Borrower and satisfactory to the Agent, to the
        effect that the financial statements have been prepared in accordance
        with GAAP and present fairly in accordance with GAAP the consolidated
        financial condition of the Borrower and its Subsidiaries as of the close
        of such fiscal year and the results of their operations and cash flows
        for the fiscal year then ended and that an examination of such accounts
        in connection with such financial statements has been made in accordance
        with generally accepted auditing standards and, accordingly, such
        examination included such tests of the accounting records and such other
        auditing procedures as were considered necessary in the circumstances;

               (c)    if any Lender so requests, the Borrower, not later than 10
        days after receipt thereof, a copy of any management letters on internal
        accounting controls of the Borrower or any Subsidiary prepared by its
        independent public accountants;

               (d)    promptly after the sending or filing thereof, copies of
        all proxy statements, financial statements and reports the Borrower
        sends to its shareholders, and copies of all other regular, periodic and
        special reports (other than SEC Form 3, Form 4, Form 5, Form S-8 or
        similar administrative reports) and all registration statements the
        Borrower files with the Securities and Exchange Commission or any
        successor thereto, or with any national securities exchanges;

               (e)    promptly after knowledge thereof shall have come to the
        attention of any responsible officer of the Borrower, written notice of
        any threatened or pending litigation or governmental proceeding or labor
        controversy against the Borrower or any Subsidiary which, if adversely
        determined, would have a material adverse effect on the financial
        condition, Properties, business or operations of the Borrower and its
        Subsidiaries taken as a whole or of the occurrence of any Default or
        Event of Default hereunder; and

               (f)    as soon as available, but in any event within 3 Business
        Days following the close of each weekly accounting period of the
        Borrower, a written certificate signed by the Borrower's chief financial
        officer showing in reasonable detail the computation of the Borrowing
        Base as of the close of such weekly accounting period, such certificate
        to be in form and substance reasonably acceptable to the Agent and the
        Required Banks (it being understood, however, that Eligible Inventory
        need only be computed within 30 days after the last day of each month).

        Each of the financial statements furnished to the Lenders pursuant to
clauses (a) and (b) of this Section shall be accompanied by a written
certificate in the form attached hereto as Exhibit E signed by the chief
financial officer of the Borrower to the effect that to the best of the

                                      -45-


chief financial officer's knowledge and belief no Default or Event of Default is
continuing as of the close of the period covered by such statements or, if any
such Default or Event of Default is continuing as of the close of such period,
setting forth a description of such Default or Event of Default and specifying
the action, if any, taken by the Borrower to remedy the same. Such certificate
shall also set forth the calculations supporting such statements in respect of
Sections 8.6, 8.7, 8.8, 8.9 and 8.10 of this Agreement.

        The Borrower will, and will cause each Subsidiary to, permit the Agent,
the Lenders and their duly authorized representatives to visit and inspect any
of the Properties of the Borrower and its Subsidiaries, to examine all of their
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants (and by
this provision the Borrower authorizes such accountants to discuss with the
Lenders (and such Persons as any Lender may designate) the finances and affairs
of the Borrower and its Subsidiaries) all at such reasonable times and as often
as may be reasonably requested.

        SECTION 8.6.   INTEREST COVERAGE RATIO. The Borrower will, as of the
last day of each monthly accounting period of the Borrower ending on or about
any date specified below, maintain an Interest Coverage Ratio as of such date of
not less than:

                                              INTEREST COVERAGE RATIO
              PERIOD ENDING ON OR ABOUT        SHALL NOT BE LESS THAN

                  February 28, 2002                  0.15 to 1.0
                     March 31, 2002                  0.95 to 1.0
                     April 30, 2002                  0.90 to 1.0
                       May 31, 2002                  0.90 to 1.0
                      June 30, 2002                  1.10 to 1.0
                      July 31, 2002                  0.90 to 1.0
                    August 31, 2002                  0.80 to 1.0
                 September 30, 2002                   1.0 to 1.0
                   October 31, 2002                  0.90 to 1.0
                  November 30, 2002                  0.90 to 1.0
                  December 31, 2002                  0.90 to 1.0
                   January 31, 2003                  0.90 to 1.0
                  February 28, 2003                  0.90 to 1.0
                     March 31, 2003                  0.90 to 1.0
                     April 30, 2003                  0.95 to 1.0
                       May 31, 2003                   1.0 to 1.0
                      June 30, 2003                  1.05 to 1.0

                                      -46-


        SECTION 8.7.   CASH FLOW LEVERAGE RATIO. The Borrower shall not, at any
time during any monthly accounting period of the Borrower ending on or about any
date specified below, permit the Cash Flow Leverage Ratio at any time during
such monthly accounting period to be greater than:

                                                CASH FLOW LEVERAGE
                                                RATIO SHALL NOT BE
              PERIOD ENDING ON OR ABOUT            GREATER THAN

                  February 28, 2002                  7.75 to 1.0
                     March 31, 2002                  4.95 to 1.0
                     April 30, 2002                  4.65 to 1.0
                       May 31, 2002                  4.75 to 1.0
                      June 30, 2002                  4.45 to 1.0
                      July 31, 2002                  4.60 to 1.0
                    August 31, 2002                  4.85 to 1.0
                 September 30, 2002                  4.60 to 1.0
                   October 31, 2002                  4.60 to 1.0
                  November 30, 2002                  4.65 to 1.0
                  December 31, 2002                  4.70 to 1.0
                   January 31, 2003                  4.85 to 1.0
                  February 28, 2003                  4.85 to 1.0
                     March 31, 2003                  4.85 to 1.0
                     April 30, 2003                  4.40 to 1.0
                       May 31, 2003                  4.25 to 1.0
                      June 30, 2003                  4.20 to 1.0

        SECTION 8.8.   EBITDA. The Borrower will maintain EBITDA for the period
specified below in an amount not less than the sum indicated to the right of
such period below:



                                                         EBITDA SHALL NOT
            FROM AND INCLUDING      TO AND INCLUDING       BE LESS THAN:
                                                    
              January 1, 2002       February 28, 2002     $    1,175,000
              January 1, 2002          March 31, 2002     $    2,745,000
              January 1, 2002          April 30, 2002     $    3,750,000
              January 1, 2002            May 31, 2002     $    4,500,000
              January 1, 2002           June 30, 2002     $    5,865,000
              January 1, 2002           July 31, 2002     $    6,485,000
              January 1, 2002         August 31, 2002     $    7,040,000


                                      -47-




                                                          EBITDA SHALL NOT
            FROM AND INCLUDING      TO AND INCLUDING       BE LESS THAN:
                                                    
              January 1, 2002      September 30, 2002     $    8,465,000
              January 1, 2002        October 31, 2002     $    9,150,000
              January 1, 2002       November 30, 2002     $    9,835,000
              January 1, 2002       December 31, 2002     $   10,700,000
             February 1, 2002        January 31, 2003     $   10,195,000
                March 1, 2002       February 28, 2003     $   10,155,000
                April 1, 2002          March 31, 2003     $   10,120,000
                  May 1, 2002          April 30, 2003     $   10,520,000
                 June 1, 2002            May 31, 2003     $   10,750,000
                 July 1, 2002           June 30, 2003     $   10,900,000


        SECTION 8.9.   FIXED CHARGE COVERAGE RATIO. The Borrower will not, as of
the last day of each monthly accounting period of the Borrower ending on or
about any date specified below, permit the Fixed Charge Coverage Ratio to be
less than:

                                          FIXED CHARGE LEVERAGE
                                            RATIO SHALL NOT BE
              PERIOD ENDING ON OR ABOUT        GREATER THAN

                  February 28, 2002            0.90 to 1.0
                     March 31, 2002            1.35 to 1.0
                     April 30, 2002            1.20 to 1.0
                       May 31, 2002            1.15 to 1.0
                      June 30, 2002            1.25 to 1.0
                      July 31, 2002            1.10 to 1.0
                    August 31, 2002            1.05 to 1.0
                 September 30, 2002            1.15 to 1.0
                   October 31, 2002            1.05 to 1.0
                  November 30, 2002            1.05 to 1.0
                  December 31, 2002            1.05 to 1.0
                   January 31, 2003            0.95 to 1.0
                  February 28, 2003            0.95 to 1.0
                     March 31, 2003            0.95 to 1.0
                     April 30, 2003             1.0 to 1.0
                       May 31, 2003             1.0 to 1.0

                                      -48-


                                          FIXED CHARGE LEVERAGE
                                            RATIO SHALL NOT BE
              PERIOD ENDING ON OR ABOUT        GREATER THAN

                     June 30, 2003              1.0 to 1.0

        SECTION 8.10.  CAPITAL EXPENDITUES. The Borrower will not, nor will it
permit any Subsidiary to, expend or (without duplication) become obligated to
expend, in each case for Capital Expenditures aggregating for the Borrower and
its Subsidiaries (taken together) in excess of $3,500,000 during fiscal 2002 and
$2,000,000 during fiscal 2003.

        SECTION 8.11.  INDEBTEDNESS. The Borrower will not, nor will it permit
any of its Subsidiaries to, issue, incur, assume, create or have outstanding any
Indebtedness; PROVIDED, HOWEVER, that the foregoing provisions shall not
restrict nor operate to prevent:

               (a)    the Obligations;

               (b)    purchase money indebtedness and Capitalized Lease
        Obligations secured by Liens permitted by Section 8.12(d) hereof in an
        aggregate amount which does not exceed $3,000,000 at any one time
        outstanding;

               (c)    intercompany borrowings by and from the Borrower and its
        Subsidiaries;

               (d)    indebtedness secured by Liens permitted by Section 8.12(e)
        hereof in an aggregate amount which does not exceed $1,000,000 at any
        one time outstanding;

               (e)    unsecured indebtedness in an aggregate principal amount
        not to exceed $1,500,000 at any one time outstanding in favor of vendors
        or suppliers other than Deere or Caterpillar representing the extension,
        with the consent of the creditor, beyond the normal due date (but not
        beyond 360 days from invoice) of trade credit incurred in the ordinary
        course of business;

               (f)    unsecured Subordinated Debt;

               (g)    the liability of Morton Metalcraft Co. of South Carolina
        for the currently outstanding indebtedness of SMP to Little River
        Electric Cooperative, Inc. ("LITTLE RIVER") evidenced by that certain
        Mortgage Note of SMP dated as of November 22, 1996 payable to the order
        of Little River in the face principal amount of $400,000 PROVIDED such
        liability at no time aggregates in excess of $400,000; and

               (h)    unsecured indebtedness not otherwise permitted by this
        Section 8.11 provided the aggregate amount at any one time outstanding
        does not exceed $100,000.

        SECTION 8.12.  LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur or permit to exist any Lien of any kind on
any Property owned by the Borrower or

                                      -49-


any such Subsidiary; PROVIDED, HOWEVER, that this Section shall not apply to nor
operate to prevent:

               (a)    Liens arising by statute in connection with worker's
        compensation, unemployment insurance, old age benefits, social security
        obligations, taxes, assessments, statutory obligations or other similar
        charges, good faith cash deposits in connection with tenders, contracts
        or leases to which the Borrower or any of its Subsidiaries is a party or
        other cash deposits required to be made in the ordinary course of
        business, provided in each case that the obligation is not for borrowed
        money and that the obligation secured is not overdue or, if overdue, is
        being contested in good faith by appropriate proceedings which prevent
        enforcement of the matter under contest and adequate reserves have been
        established therefor;

               (b)    mechanics', workmen's, materialmen's, landlords',
        carriers', or other similar Liens arising in the ordinary course of
        business with respect to obligations which are not overdue or which are
        being contested in good faith by appropriate proceedings which prevent
        enforcement of the matter under contest;

               (c)    the pledge of assets for the purpose of securing an
        appeal, stay or discharge in the course of any legal proceeding,
        provided that the aggregate amount of liabilities of the Borrower and
        its Subsidiaries secured by a pledge of assets permitted under this
        clause, including interest and penalties thereon, if any, shall not be
        in excess of $250,000 at any one time outstanding;

               (d)    Liens securing indebtedness permitted by Section 8.11(b)
        hereof in respect of Property now owned or hereafter acquired by the
        Borrower or any of its Subsidiaries (not extending to any other
        Property), or Liens on Property so acquired (not extending to any other
        Property) existing at the time of acquisition thereof, or renewals,
        extensions and refundings of any such Liens (not extending to any other
        Property);

               (e)    any Lien existing on any Property (other than (i) shares
        of stock in any Subsidiary, (ii) receivables, inventory and similar
        working capital assets and (iii) patents, trademarks and similar
        intangibles) prior to the acquisition thereof by the Borrower or any
        Subsidiary, provided that such Lien is not created in contemplation of
        or in connection with such acquisition;

               (f)    Liens on the real estate of Morton Metalcraft Co. of South
        Carolina in Honea Path, Abbeville County, South Carolina and the
        buildings and other improvements situated on such real estate securing
        the indebtedness permitted by Section 8.11(g) hereof PROVIDED such liens
        do not in any event encumber any trade fixtures or similar equipment;

               (g)    the Liens described on Schedule 8.12 hereof; and

               (h)    with respect to real property, easements, rights of way,
        reservations and other minor defects or irregularities in title which do
        not materially impair the use thereof for the purposes for which it is
        held by the Borrower or any of its Subsidiaries.

                                      -50-


        SECTION 8.13.  INVESTMENTS, LOANS, ADVANCES AND GUARANTIES. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or be or become liable as
endorser, guarantor, surety or otherwise for any debt, obligation or undertaking
of any other Person, or otherwise agree to provide funds for payment of the
obligations of another, or supply funds thereto or invest therein or otherwise
assure a creditor of another against loss or apply for or become liable to the
issuer of a letter of credit which supports an obligation of another, or
subordinate any claim or demand it may have to the claim or demand of any other
Person; PROVIDED, HOWEVER, that the foregoing provisions shall not apply to nor
operate to prevent:

               (a)    investments in direct obligations of the United States of
        America or of any agency or instrumentality thereof whose obligations
        constitute full faith and credit obligations of the United States of
        America, provided that any such obligations shall mature within one year
        of the date of issuance thereof;

               (b)    investments in commercial paper rated at least P-1 by
        Moody's Investors Services, Inc. and at least A-1 by Standard & Poor's
        Corporation maturing within 270 days of the date of issuance thereof;

               (c)    investments in certificates of deposit issued by any
        United States commercial bank having capital and surplus of not less
        than $100,000,000 which have a maturity of one year or less;

               (d)    endorsement of items for deposit or collection of
        commercial paper received in the ordinary course of business;

               (e)    intercompany loans and advances by and from the Borrower
        and its Subsidiaries; and

               (f)    the Guaranties.

        In determining the amount of investments, loans, advances and guarantees
permitted under this Section, investments shall always be taken at the original
cost thereof (regardless of any subsequent appreciation or depreciation
therein); loans and advances shall be taken at the principal amount thereof then
remaining unpaid; and guarantees shall be taken at the amount of obligations
guaranteed thereby.

        In addition to the foregoing, neither the Borrower nor any Subsidiary
will, after the Effective Date, (i) create or become a party to the creation of
any special-purpose vehicle or entity, whether or not the Borrower or any
Subsidiary owns an equity interest therein, (ii) become a partner of any general
or limited partnership or a member of any limited liability Company or similar
Person, or (iii) enter into any agreement pursuant to which it will be allocated
any profits or losses of any Person, whether or not it holds an equity interest
of any type therein.

                                      -51-


        SECTION 8.14.  LEASES. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any arrangement with any bank, insurance company
or any other lender or investor providing for the leasing by the Borrower or any
such Subsidiary of any Property theretofore owned by it and which has been or is
to be sold or transferred by such owner to such lender or investor.

               (b)    OPERATING LEASES. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, acquire the use or possession of any Property
under a lease or similar arrangement, whether or not the Borrower or any of its
Subsidiaries have the express or implied right to acquire title to or purchase
such Property, at any time if, after giving effect thereto, the aggregate amount
of fixed rentals and other consideration payable by the Borrower and its
Subsidiaries under all such leases and similar arrangements would exceed
$7,000,000 during any fiscal year of the Borrower.

        SECTION 8.15.  DIVIDENDS AND CERTAIN OTHER RESTRICTED PAYMENTS. The
Borrower will not (a) declare or pay any dividends on or make any other
distributions in respect of any class or series of its capital stock or (b)
directly or indirectly purchase, redeem or otherwise acquire or retire any of
its capital stock, PROVIDED, HOWEVER, that the foregoing shall neither apply to
nor operate to prevent the Borrower's expenditure of up to $63,000 in the
aggregate to redeem fractional shares of its common stock resulting from a
previous reverse stock split of the Borrower.

        SECTION 8.16.  MERGERS, CONSOLIDATIONS AND SALES. The Borrower will not,
and will not permit any of its Subsidiaries to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of any operating
unit or division or any rights to any trade name or similar intangible or all or
any substantial part of its Property (except for sales of inventory in the
ordinary course of business), or in any event sell or discount (with or without
recourse) any of its notes or accounts receivable; PROVIDED, HOWEVER, that:

               (a)    any Subsidiary of the Borrower may merge or consolidate
        with or into the Borrower or any Wholly Owned Subsidiary of the
        Borrower; PROVIDED THAT in any such merger or consolidation involving
        the Borrower, the Borrower shall be the surviving or continuing
        corporation, or, in the case of any other merger or consolidation of a
        Subsidiary and a Wholly Owned Subsidiary of the Borrower, such Wholly
        Owned Subsidiary shall be the continuing or surviving corporation; and
        PROVIDED, FURTHER, that, in the case of such a merger or consolidation
        involving a Guarantor, the net worth of the continuing or surviving
        corporation shall not be less than the net worth of such Guarantor
        immediately prior to such merger or consolidation;

               (b)    any Subsidiary may in the ordinary course of its business
        sell, lease or otherwise dispose of all or any substantial part of its
        equipment to the Borrower or any Wholly Owned Subsidiary of the
        Borrower; and

               (c)    the Borrower may merge with a Wholly Owned Subsidiary
        incorporated in Delaware and directly owned by the Borrower solely for
        the purpose of changing the

                                      -52-


        Borrower's state of incorporation to Delaware, with such Wholly Owned
        Subsidiary surviving such merger, PROVIDED THAT:

                    (i)    at the time of such merger, no Default or Event of
               Default shall occur or be continuing;

                    (ii)   such Wholly Owned Subsidiary shall have acknowledged
               in writing (in form and substance reasonably satisfactory to the
               Agent and Required Lenders) its assumption of all the Borrower's
               obligations under the Loan Documents to the same extent, with the
               same force and effect, as if such Wholly Owned Subsidiary were
               originally the Borrower identified and defined therein;

                    (iii)  the Agent shall have received an opinion of counsel
               of the Borrower, and such other assurances that the Agent or
               Required Lenders shall reasonably require, to confirm that such
               merger has been effected in accordance with all applicable laws
               and that the foregoing conditions set forth in this subsection
               (c) have been satisfied; and

                    (iv)   such merger shall have no adverse effect on the
               financial condition Properties, business or operations the
               Borrower or any Subsidiary or on the ability of any Subsidiary to
               perform or the Agent's ability to enforce performance of the
               obligations of any of them under the Loan Documents.

The term "substantial" as used herein shall mean the sale, transfer, lease or
other disposition in any fiscal year of five percent (5%) or more of the
Properties of the Borrower and its Subsidiaries taken as a whole.

        SECTION 8.17.  ACQUISITIONS. The Borrower will not, and will not permit
any of its Subsidiaries to, make or commit to make any Acquisitions.

        SECTION 8.18.  MAINTENANCE OF SUBSIDIARIES. The Borrower will not
assign, sell or transfer, or permit any of its Subsidiaries to issue, assign,
sell or transfer, any shares of capital stock of a Subsidiary, PROVIDED that the
foregoing shall not operate to prevent the issuance, sale and transfer to any
person of any shares of capital stock of a Subsidiary solely for the purpose of
qualifying, and to the extent legally necessary to qualify, such person as a
director of such Subsidiary.

        SECTION 8.19.  FORMATION OF SUBSIDIARIES. In the event any Subsidiary is
formed or acquired after the date hereof, the Borrower shall within thirty (30)
Business Days thereof (x) furnish an update to Schedule 6.2 hereof to reflect
such new Subsidiary and (y) cause such newly-formed or acquired Subsidiary to
execute a Guaranty and execute such Collateral Documents to the extent required
by Section 4 hereof (on terms substantially similar to those executed in
connection with this Agreement) as the Agent may then require granting the Agent
for the benefit of the Lenders a security interest in and lien on the personal
property of such Subsidiary as collateral security for the Notes and the other
Obligations, as well as the Hedging Liability, together with documentation
(including a legal opinion) similar to that described in Section 7.2 hereof
relating to the authorization for, execution and delivery of, and validity of

                                      -53-


such Subsidiary's obligations as a Guarantor hereunder and otherwise under its
Loan Documents in form and substance satisfactory to the Agent and such other
instruments, documents, certificates and opinions as are required by the Agent
in connection therewith.

        SECTION 8.20.  ERISA. The Borrower will, and will cause each of its
Subsidiaries to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of a Lien against any material portion of its Properties. The
Borrower will, and will cause each of its Subsidiaries to, promptly notify the
Lenders of (i) the occurrence of any reportable event (as defined in ERISA) with
respect to a Plan, (ii) receipt of any notice from the PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor, (iii) its
intention to terminate or withdraw from any Plan, and (iv) the occurrence of any
event with respect to any Plan which would result in the incurrence by the
Borrower or any of its Subsidiaries of any material liability, fine or penalty,
or any material increase in the contingent liability of the Borrower or any such
Subsidiary with respect to any post-retirement Welfare Plan benefit.

        SECTION 8.21.  COMPLIANCE WITH LAWS. The Borrower will, and will cause
each of its Subsidiaries to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to the Properties or business operations of the
Borrower or any such Subsidiary, non-compliance with which could have a material
adverse effect on the financial condition, Properties, business or operations of
the Borrower and its Subsidiaries taken as a whole or would reasonably be
expected to result in a Lien upon any of their Property.

        SECTION 8.22.  BURDENSOME CONTRACTS WITH AFFILIATES. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any contract,
agreement or business arrangement with any of its Affiliates (other than with
Wholly Owned Subsidiaries) on terms and conditions which are less favorable to
the Borrower or such Subsidiary than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other.

        SECTION 8.23.  CHANGES IN FISCAL YEAR. Except to change (with notice to
the Lenders) its fiscal year to correspond with the calendar year, neither the
Borrower nor any of its Subsidiaries will change its fiscal year from its
present basis without the prior written consent of the Required Lenders.

        SECTION 8.24.  CHANGE IN THE NATURE OF BUSINESS. The Borrower will not,
and will not permit any of its Subsidiaries to, engage in any business or
activity if as a result the general nature of the business of the Borrower or
any such Subsidiary would be changed in any material respect from the general
nature of the business engaged in by the Borrower or such Subsidiary on the date
of this Agreement.

        SECTION 8.25.  USE OF LOAN PROCEEDS. The Borrower will use the Revolving
Credit and Term Loans solely to refinance currently outstanding Indebtedness and
to finance general corporate needs.

                                      -54-


        SECTION 8.26.  [INTENTIONALLY DELETED.].

        SECTION 8.27.  NET WORTH. The Borrower will, as of November 30, 2001,
have a Net Worth of not less than $3,000,000.

        SECTION 8.28.  BANK WARRANTS. Until the Obligations and Hedging
Liability have been fully paid and the Revolving Credit Commitments terminated,
the Borrower will take such actions as may be necessary from time to time
(including, without limitation, extending the expiration dates of the Bank
Warrants) to allow the Bank Warrants to continue to be exercisable by the
holders thereof and their permitted successors and assigns.

        SECTION 8.29.  CLASS A COMMON STOCK. The Borrower shall at all times
maintain, in reserve, and keep available for issuance such number of authorized
shares of Class A Common Stock as may at any time be issuable upon exercise of
the Bank Warrants, solely for the purpose of issue upon the exercise of the Bank
Warrants.

        SECTION 8.30.  ISSUANCE OF DILUTIVE EQUITY. The Borrower will not,
during the period commencing January 1, 2000 and ending December 31, 2003 (1)
issue, deliver or authorize the issuance of, offer, pledge, sell, contract to
sell, sell any option, subscription, rights, warrants or contract to purchase,
purchase any option, subscription, rights, warrants or contract to sell, grant
any option, subscription, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Class A Common Stock or Class
B Common Stock or any securities convertible into or exercisable or exchangeable
for Class A Common Stock or Class B Common Stock, or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Class A Common Stock or Class B Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Class A Common Stock or Class B Common Stock or such
other securities, in cash or otherwise, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, except for (i) the issuance of Class A Common Stock in
exchange for Class B Common Stock outstanding as of December 31, 1999, in
accordance with the Borrower's Articles of Incorporation, (ii) the issuance of
Class A Common Stock upon exercise of the options to purchase Class A Common
Stock outstanding on December 31, 1999, and described on Schedule 6.18 hereto,
(iii) the issuance of options to purchase Class A Common Stock for bona fide
compensatory purposes pursuant to the Borrower's 1997 Stock Option Plan, or (iv)
the issuance of options for bona fide compensatory purposes pursuant to the
Borrower's Morton Industrial Group, Inc. Nonemployee Directors' Compensation
Plan. The Borrower will not seek to increase the number of shares of Class A
Common Stock authorized or issuable under the 1997 Stock Option Plan or the
Amended and Restated Executive and Director Option Agreements, or the Morton
Industrial Group, Inc. Nonemployee Directors' Compensation Plan as of December
31, 1999, other than by an amount not exceeding 50,000 shares.

        SECTION 8.31.  FINANCIAL ADVISOR. The Borrower shall continue to engage
BBK, Ltd., at the Borrower's own cost and expense, as a financial advisor. The
nature and scope of the engagement shall be determined by the Borrower and such
financial advisor, PROVIDED the Borrower shall provide to the Agent and the
Lenders such information and details with respect to

                                      -55-


the engagement of the financial advisor and the nature and scope of its
engagement as may be requested by the Agent or any Lender, and PROVIDED FURTHER
that such engagement shall at least involve review of the Borrower's monthly
performance as compared to the Approved Base Case. As long as the Borrower's
performance is no worse than the Approved Base Case, the financial advisory
engagement may be a "desk top" review. The Borrower shall take reasonable steps
to assure that such financial advisor is available for discussions with the
Lenders regarding the financial advisor's findings and recommendations at such
times and intervals reasonably required by the Agent or the Required Lenders.

SECTION 9.     EVENTS OF DEFAULT AND REMEDIES.

        SECTION 9.1.   Any one or more of the following shall constitute an
Event of Default hereunder:

               (a)    default in the payment when due of all or any part of the
        principal of any Note (whether at the stated maturity thereof or at any
        other time provided for in this Agreement) or default in the
        reimbursement when due of amounts drawn under a Letter of Credit; or

               (b)    default for five (5) days or more in the payment when due
        of all or any part of interest on any Note (whether at the stated
        maturity thereof or at any other time provided for in this Agreement) or
        of any fee or other amount payable by the Borrower hereunder or under
        any Application; or

               (c)    default in the observance or performance of any covenant
        set forth in Section 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13, 8.14,
        8.15, 8.16, 8.17, 8.18, 8.25, 8.27, 8.28, 8.29, 8.30 or 8.31 hereof or
        of any provision in any Loan Document dealing with the use, disposition
        or remittance of the proceeds of Collateral or requiring the maintenance
        of insurance thereon; or

               (d)    default in the observance or performance of any covenant
        set forth in Section 8.5 hereof which is not remedied within ten (10)
        days after written notice thereof to the Borrower by the Agent or any
        Lender; or

               (e)    default in the observance or performance of any other
        provision hereof or of any other Loan Document which is not remedied
        within thirty (30) days after written notice thereof to the Borrower by
        the Agent or any Lender; or

               (f)    any representation or warranty made by the Borrower herein
        or in any other Loan Document, or in any statement or certificate
        furnished by it pursuant hereto or thereto, or in connection with any
        Loan made or Letter of Credit issued hereunder, proves untrue in any
        material respect as of the date of the issuance or making thereof; or

               (g)    any event occurs or condition exists (other than those
        described in subsections (a) through (f) above) which is specified as an
        event of default under any of the other Loan Documents, or any of the
        Loan Documents shall for any reason not be or

                                      -56-


        shall cease to be in full force and effect or is declared to be null and
        void, or any Guarantor shall purport to disavow, revoke, repudiate or
        terminate its obligations thereunder, or any of the Collateral Documents
        shall for any reason fail to create a valid and perfected first priority
        Lien in favor of the Agent in any Collateral purported to be covered
        thereby except as expressly permitted by the terms thereof, or any
        Subsidiary takes any action for the purpose of terminating, repudiating
        or rescinding any Loan Document executed by it or any of its obligations
        thereunder; or

               (h)    default shall occur under any evidence of Indebtedness
        aggregating $1,000,000 or more issued, assumed or guaranteed by the
        Borrower or any Subsidiary or under any indenture, agreement or other
        instrument under which the same may be issued, and such default shall
        continue for a period of time sufficient to permit the acceleration of
        the maturity of any such Indebtedness (whether or not such maturity is
        in fact accelerated) or any such Indebtedness shall not be paid when due
        (whether by lapse of time, acceleration or otherwise); or

               (i)    any judgment or judgments, writ or writs, or warrant or
        warrants of attachment, or any similar process or processes in an
        aggregate amount in excess of $250,000 shall be entered or filed against
        the Borrower or any of its Subsidiaries or against any of their Property
        and which remains unvacated, unbonded, unstayed or unsatisfied for a
        period of thirty (30) days; or

               (j)    the Borrower or any member of its Controlled Group shall
        fail to pay when due an amount or amounts aggregating in excess $250,000
        which it shall have become liable to pay to the PBGC or to a Plan under
        Title IV of ERISA; or notice of intent to terminate a Plan or Plans
        having aggregate Unfunded Vested Liabilities in excess of $250,000
        (collectively, a "MATERIAL PLAN") shall be filed under Title IV of ERISA
        by the Borrower or any other member of its Controlled Group, any plan
        administrator or any combination of the foregoing; or the PBGC shall
        institute proceedings under Title IV of ERISA to terminate or to cause a
        trustee to be appointed to administer any Material Plan or a proceeding
        shall be instituted by a fiduciary of any Material Plan against the
        Borrower or any member of its Controlled Group to enforce Section 515 or
        4219(c)(5) of ERISA and such proceeding shall not have been dismissed
        within thirty (30) days thereafter; or a condition shall exist by reason
        of which the PBGC would be entitled to obtain a decree adjudicating that
        any Material Plan must be terminated; or

               (k)     the Borrower or any Subsidiary makes any prepayment of
        any principal or interest on any Subordinated Debt or otherwise makes
        any payment or other distribution on account of the principal of or
        interest on any indebtedness which payment or other distribution is
        prohibited under the terms of any instrument subordinating such
        indebtedness to the Obligations, or the Borrower or any Subsidiary
        amends or modifies the terms relating to any Subordinated Debt or the
        terms pursuant to which such Subordinated Debt is subordinated to the
        Obligations without the prior written consent of the Required Lenders;

               (l)    a Change of Control shall occur; or

                                      -57-


               (m)    the Borrower or any Subsidiary shall (i) have entered
        involuntarily against it an order for relief under the United States
        Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
        inability to pay, its debts generally as they become due, (iii) make an
        assignment for the benefit of creditors, (iv) apply for, seek, consent
        to, or acquiesce in, the appointment of a receiver, custodian, trustee,
        examiner, liquidator or similar official for it or any substantial part
        of its Property, (v) institute any proceeding seeking to have entered
        against it an order for relief under the United States Bankruptcy Code,
        as amended, to adjudicate it insolvent, or seeking dissolution, winding
        up, liquidation, reorganization, arrangement, adjustment or composition
        of it or its debts under any law relating to bankruptcy, insolvency or
        reorganization or relief of debtors or fail to file an answer or other
        pleading denying the material allegations of any such proceeding filed
        against it, or (vi) fail to contest in good faith any appointment or
        proceeding described in this Section 9.1(m); or

               (n)    a custodian, receiver, trustee, examiner, liquidator or
        similar official shall be appointed for the Borrower or any of its
        Subsidiaries or any substantial part of any of their Property, or a
        proceeding described in Section 9.1(m) shall be instituted against the
        Borrower or any of its Subsidiaries, and such appointment continues
        undischarged or such proceeding continues undismissed or unstayed for a
        period of sixty (60) days.

        SECTION 9.2.   When any Event of Default described in clauses (a)
through (l), both inclusive, of Section 9.1 has occurred and is continuing, the
Agent shall, upon request of the Required Lenders, by notice to the Borrower,
take either or both of the following actions:

               (a)    terminate the obligations of the Lenders to extend any
        further credit hereunder on the date (which may be the date thereof)
        stated in such notice;

               (b)    declare the principal of and the accrued interest on the
        Notes to be forthwith due and payable and thereupon the Notes, including
        both principal and interest and all fees, charges and other amounts
        payable hereunder, shall be and become immediately due and payable
        without further demand, presentment, protest or notice of any kind.

        SECTION 9.3.   When any Event of Default described in clauses (m) or (n)
of Section 9.1 has occurred and is continuing, then the Notes, including both
principal and interest, and all fees, charges and other amounts payable
hereunder, shall immediately become due and payable without presentment, demand,
protest or notice of any kind, and the obligations of the Lenders to extend
further credit pursuant to any of the terms hereof shall immediately terminate.

        SECTION 9.4.   When any Event of Default, other than an Event of Default
described in subsections (m) or (n) of Section 9.1, has occurred and is
continuing, the relevant Borrower shall, upon demand of the Agent (which demand
shall be made upon the request of the Required Lenders), and when any Event of
Default described in subsections (m) or (n) of Section 9.1 has occurred the
Borrower shall, without notice or demand from the Agent, immediately pay to the
Agent the full outstanding amount of each Letter of Credit (such amount to be
held as cash collateral for the Borrower's obligations in respect of the Letters
of Credit), the Borrower

                                      -58-


agreeing to immediately make each such payment and acknowledging and agreeing
the Agent and the Lenders would not have an adequate remedy at law for failure
of the Borrower to honor any such demand and that the Agent shall have the right
to require the Borrower to specifically perform such undertaking whether or not
any draws had been made under any such Letter of Credit.

SECTION 10.    THE AGENT.

        SECTION 10.1.  APPOINTMENT AND AUTHORIZATION. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers hereunder and under the Guaranties and the Applications
as are designated to the Agent by the terms hereof and thereof together with
such powers as are reasonably incidental thereto. The Lenders expressly agree
that the Agent is not acting as a fiduciary of the Lenders in respect of the
Loan Documents, the Borrower or otherwise, and nothing herein or in any of the
other Loan Documents shall result in any duties or obligations on the Agent or
any of the Lenders except as expressly set forth herein. The Agent may resign at
any time by sending twenty (20) days prior written notice to the Borrower and
the Lenders and may be removed by the Required Lenders upon twenty (20) days
prior written notice to the Borrower and the Lenders. In the event of any such
resignation or removal the Required Lenders may appoint a new agent after
consultation with the Borrower, which shall succeed to all the rights, powers
and duties of the Agent hereunder and under the Guaranties and Applications. Any
resigning or removed Agent shall be entitled to the benefit of all the
protective provisions hereof with respect to its acts as an agent hereunder, but
no successor Agent shall in any event be liable or responsible for any actions
of its predecessor. If the Agent resigns or is removed and no successor is
appointed, the rights and obligations of such Agent shall be automatically
assumed by the Required Lenders and (i) the Borrower shall be directed to make
all payments due each Lender hereunder directly to such Lender and (ii) the
Agent's rights in the Guaranties and Applications shall be assigned without
representation, recourse or warranty to the Lenders as their interests may
appear.

        SECTION 10.2.  RIGHTS AS A LENDER. The Agent has and reserves all of the
rights, powers and duties hereunder and under its Notes and the Guaranties and
Applications as any Lender may have and may exercise the same as though it were
not the Agent and the terms "LENDER" or "LENDERS" as used herein and in all of
such documents shall, unless the context otherwise expressly indicates, include
the Agent in its individual capacity as a Lender.

        SECTION 10.3.  STANDARD OF CARE. The Lenders acknowledge that they have
received and approved copies of the Guaranties and such other information and
documents concerning the transactions contemplated and financed hereby as they
have requested to receive and/or review. The Agent makes no representations or
warranties of any kind or character to the Lenders with respect to the validity,
enforceability, genuineness, perfection, value, worth or collectibility hereof
or of the Notes or the Guaranties or of any other documents called for hereby or
thereby. Neither the Agent nor any director, officer, employee, agent or
representative thereof shall in any event be liable for any clerical errors or
errors in judgment, inadvertence or oversight, or for action taken or omitted to
be taken by it or them hereunder or under the Guaranties or Applications or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct. The Agent shall incur no liability under or in respect of
this Agreement or

                                      -59-


the Guaranties or Applications by acting upon any notice, certificate, warranty,
instruction or statement (oral or written) of anyone (including anyone in good
faith believed by it to be authorized to act on behalf of the Borrower), unless
it has actual knowledge of the untruthfulness of same. The Agent may execute any
of its duties hereunder by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders for the default or misconduct of any
such agents or attorneys-in-fact selected with reasonable care except for the
gross negligence or willful misconduct of its employees. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agencies
hereby created and its duties hereunder, and shall incur no liability to anyone
and be fully protected in acting upon the advice of such counsel. The Agent
shall be entitled to assume that no Default or Event of Default exists unless
notified to the contrary by a Lender. The Agent shall in all events be fully
protected in acting or failing to act in accord with the instructions of the
Required Lenders. The Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
the Agent by reason of taking or continuing to take any such action. The Agent
may treat the owner of any Note as the holder thereof until written notice of
transfer shall have been filed with the Agent signed by such owner in form
satisfactory to the Agent. Each Lender acknowledges that it has independently
and without reliance on the Agent or any other Lender and based upon such
information, investigations and inquiries as it deems appropriate made its own
credit analysis and decision to extend credit to the Borrower. It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and the Agent shall have no liability to any Lender with respect
thereto.

        SECTION 10.4.  COSTS AND EXPENSES. Each Lender agrees to reimburse the
Agent for all costs and expenses suffered or incurred by the Agent in performing
its duties hereunder and under the Guaranties and Applications, or in the
exercise of any right or power imposed or conferred upon the Agent hereby or
thereby, to the extent that the Agent is not promptly reimbursed for same by the
Borrower, all such costs and expenses to be borne by the Lenders ratably in
accordance with the amounts of their respective Commitments. If any Lender fails
to reimburse the Agent for such Lender's share of any such costs and expenses,
such costs and expenses shall be paid pro rata by the remaining Lenders, but
without in any manner releasing the defaulting Lender from its liability
hereunder.

        SECTION 10.5.  INDEMNITY. The Lenders, to the extent not prohibited by
applicable law, shall ratably indemnify and hold the Agent, and its directors,
officers, employees, agents or representatives harmless from and against any
liabilities, losses, costs and expenses suffered or incurred by them hereunder
or under the Guaranties or Applications or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the relevant Borrower
and except to the extent that any event giving rise to a claim was caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
If any Lender defaults in its obligations hereunder, its share of the
obligations shall be paid pro rata by the remaining Lenders, but without in any
manner releasing the defaulting Lender from its liability hereunder.

        SECTION 10.6.  INTEREST RATE HEDGING ARRANGEMENTS. By virtue of a
Lender's execution of this Agreement or an Assignment Agreement, as the case may
be, any Affiliate of such Lender

                                      -60-


with whom the Borrower has entered into an agreement creating Hedging Liability
shall be deemed a Lender party hereto for purpose of any reference in a Loan
Document to the parties for whom the Agent is acting, it being understood and
agreed that the rights and benefits of such Affiliate under the Loan Documents
consist exclusively of such Affiliate's right to share in payments and
collections out of the Collateral and the Guaranties as more fully set forth in
other provisions hereof.

SECTION 11.    JOINT AND SEVERAL LIABILITY AND GUARANTIES.

        SECTION 11.1.  JOINT AND SEVERAL LIABILITY AND GUARANTIES. To induce the
Lenders to provide the credit described herein and in consideration of benefits
expected to accrue to each Guarantor by reason of the Commitments and for other
good and valuable consideration, receipt of which is hereby acknowledged, each
Subsidiary party hereto and each Subsidiary which executes and delivers a
Guaranty (each such Subsidiary being hereinafter referred to individually as a
"GUARANTOR" and collectively as the "GUARANTORS") hereby unconditionally and
irrevocably guarantee jointly and severally to the Agent, the Lenders, their
Affiliates and each other holder of any of the Obligations or Hedging Liability,
(x) the due and punctual payment of all present and future Obligations,
including, but not limited to, the due and punctual payment of principal of and
interest on the Loans and Reimbursement Obligations, as and when the same shall
become due and payable, whether at stated maturity, by acceleration or
otherwise, according to the terms hereof and thereof and (y) the due and
punctual payment of all present and future Hedging Liability as and when the
same shall become due and payable, whether at its stated maturity, by
acceleration or otherwise, according to the terms thereof (the Obligations and
Hedging Liability so guaranteed being hereinafter referred to collectively as
the "GUARANTEED OBLIGATIONS"). In case of failure by the Borrower punctually to
pay any Guaranteed Obligations, each Guarantor hereby unconditionally agrees
jointly and severally to make such payment or to cause such payment to be made
punctually as and when the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise, and as if such payment were made by the
Borrower.

        SECTION 11.2.  GUARANTY UNCONDITIONAL. The obligations of each Guarantor
as a guarantor or joint and several obligor under the Loan Documents, the
instruments or documents governing any Hedging Liability (the loan documents and
such other instruments and documents governing the Hedging Liability being
hereinafter referred to collectively as the "GUARANTEED DEBT DOCUMENTS" and
individually as a "GUARANTEED DEBT DOCUMENT," including this Section 11, shall
be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:

               (a)    any extension, renewal, settlement, compromise, waiver or
        release in respect of any obligation of the Borrower or of any other
        Guarantor under this Agreement or any other Guaranteed Debt Document or
        by operation of law or otherwise;

               (b)    any modification or amendment of or supplement to this
        Agreement or any other Guaranteed Debt Document;

               (c)    any change in the corporate existence, structure or
        ownership of, or any insolvency, bankruptcy, reorganization or other
        similar proceeding affecting, the

                                      -61-


        Borrower, any other Guarantor, or any of their respective assets, or any
        resulting release or discharge of any obligation of the Borrower or of
        any other Guarantor contained in any Guaranteed Debt Document;

               (d)    the existence of any claim, set-off or other rights which
        the Guarantor may have at any time against the Agent, any Lender or any
        other Person, whether or not arising in connection herewith;

               (e)    any failure to assert, or any assertion of, any claim or
        demand or any exercise of, or failure to exercise, any rights or
        remedies against the Borrower, any other Guarantor or any other Person
        or Property;

               (f)    any application of any sums by whomsoever paid or
        howsoever realized to any obligation of the Borrower, regardless of what
        obligations of the Borrower remain unpaid;

               (g)    any invalidity or unenforceability relating to or against
        the Borrower or any other Guarantor for any reason of this Agreement or
        of any other Guaranteed Debt Document or any provision of applicable law
        or regulation purporting to prohibit the payment by the Borrower or any
        other Guarantor of the principal of or interest on any Note or any other
        amount payable by them under the Guaranteed Debt Documents; or

               (h)    any other act or omission to act or delay of any kind by
        the Agent, any Lender or any other Person or any other circumstance
        whatsoever that might, but for the provisions of this paragraph,
        constitute a legal or equitable discharge of the obligations of the
        Guarantors under the Guaranteed Debt Documents.

        SECTION 11.3.  DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Each Guarantor's obligations under this Section 11 shall
remain in full force and effect until the Commitments are terminated and the
principal of and interest on the Notes and all other Guaranteed Obligations
shall have been paid in full. If at any time any payment of the principal of or
interest on any Note or any other amount payable by the Borrower under any of
the Guaranteed Debt Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Borrower or of
any Guarantor, or otherwise, each Guarantor's obligations under this Section 11
with respect to such payment shall be reinstated at such time as though such
payment had become due but had not been made at such time.

        SECTION 11.4.  WAIVERS.

        (a)    GENERAL. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Agent, any Lender or
any other Person against the Borrower, another Guarantor or any other Person.

        (b)    SUBROGATION AND CONTRIBUTION. Each Guarantor hereby agrees not to
exercise or enforce any right of exoneration, contribution, reimbursement,
recourse or subrogation available

                                      -62-


to such Guarantor against any Person liable for payment of the Guaranteed
Obligations, or as to any security therefor, unless and until the full amount
owing on the Guaranteed Obligations has been paid and the Commitments have
terminated; and the payment by such Guarantor of any amount pursuant to any of
the Guaranteed Debt Documents on account of credit extended to the Borrower
shall not in any way entitle such Guarantor to any right, title or interest
(whether by way of subrogation or otherwise) in and to any of the Guaranteed
Obligations or any proceeds thereof or any security therefor unless and until
the full amount owing on the Guaranteed Obligations has been paid and the
Commitments have terminated.

        SECTION 11.5.  LIMIT ON RECOVERY. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 11 shall
not (to the extent required by or as may be necessary or desirable to ensure the
enforceability against such Guarantor of its obligations hereunder or thereunder
in accordance with the laws of the jurisdiction of its incorporation or where it
carries on business) exceed (x) the amount which would render such Guarantor's
obligations under this Section 11 void or voidable under applicable law,
including without limitation fraudulent conveyance law minus (y) $1.00.

        SECTION 11.6.  STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by the Borrower under this Agreement or any other
Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement or the other Guaranteed Debt Documents shall nonetheless be
payable jointly and severally by the Guarantors hereunder forthwith on demand by
the Agent made at the request of the Required Lenders.

        SECTION 11.7.  BENEFIT TO GUARANTORS. All of the Guarantors are engaged
in related businesses and integrated to such an extent that the financial
strength and flexibility of each Guarantor has a direct impact on the success of
each other Guarantor. Each Guarantor will derive substantial direct and indirect
benefit from the extension of credit hereunder.

        SECTION 11.8.  GUARANTOR COVENANTS. Each Guarantor shall take such
action as the Borrower is required by this Agreement to cause such Guarantor to
take, and shall refrain from taking such action as the Borrower is required by
this Agreement to prohibit such Guarantor from taking.

SECTION 12.    MISCELLANEOUS.

        SECTION 12.1.  HOLIDAYS. If any payment of principal or interest on any
Note or any fee hereunder shall fall due on a day which is not a Business Day,
principal together with interest at the rate the Note bears for the period prior
to maturity or any fee at the rate such fee accrues shall continue to accrue
from the stated due date thereof to and including the next succeeding Business
Day, on which the same is payable.

        SECTION 12.2.  NO WAIVER, CUMULATIVE REMEDIES. No delay or failure on
the part of the Agent or any Lender or on the part of any other holder of any
Note in the exercise of any power or right shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial exercise
of any power or right preclude any other or further exercise thereof, or

                                      -63-


the exercise of any other power or right, and the rights and remedies hereunder
of the Agent, each Lender and each other holder of any Note are cumulative to,
and not exclusive of, any rights or remedies which any of them would otherwise
have.

        SECTION 12.3.  WAIVERS, MODIFICATIONS AND AMENDMENTS. Any provision
hereof or of the Notes or the Guaranties may be amended, modified, waived or
released and any Default or Event of Default and its consequences may be
rescinded and annulled upon the written consent of the Required Lenders;
PROVIDED, HOWEVER, that without the consent of all Lenders no such amendment,
modification or waiver shall increase the amount or extend the terms of any
Lender's Commitment or increase the L/C Sublimit or reduce the interest rate
applicable to or extend the maturity (including any scheduled installment) of
its Notes or reduce the amount of the principal or interest or fees to which
such Lender is entitled hereunder or release any substantial (in value) part of
the collateral security afforded by the Collateral Documents (except in
connection with a sale or other disposition required to be effected by the
provisions hereof or of the Collateral Documents) or release any Guarantor or
change this Section or change the definition of "REQUIRED LENDERS" or change the
number of Lenders required to take any action hereunder or under the Guaranties.
No amendment, modification or waiver of the Agent's protective provisions shall
be effective without the prior written consent of the Agent.

        SECTION 12.4.  COSTS AND EXPENSES. The Borrower agrees to pay on demand
the costs and expenses of the Agent in connection with the negotiation,
preparation, execution and delivery of the Loan Documents and the other
instruments and documents to be delivered hereunder or thereunder or in
connection with the transactions contemplated hereby or thereby or in connection
with any consents hereunder or waivers or amendments hereto or thereto,
including the fees and expenses of Messrs. Chapman and Cutler, counsel for the
Agent, with respect to all of the foregoing (whether or not the transactions
contemplated hereby are consummated), and all costs and expenses (including
attorneys' fees), if any, incurred by the Agent, the Lenders or any other
holders of a Note in connection with a default under or the enforcement of the
Loan Documents or any other instrument or document to be delivered hereunder or
thereunder. The Borrower agrees to pay on demand all costs and expenses for
which it is liable in accordance with the preceding sentence in connection with
Letters of Credit issued for its account. The Borrower agrees to indemnify and
save the Lenders and the Agent harmless from any and all liabilities, losses,
costs and expenses (collectively, "INDEMNIFIED LIABILITIES") incurred by the
Lenders or the Agent in connection with any action, suit or proceeding brought
against the Agent or any Lender by any Person (but excluding attorneys' fees for
litigation solely between the Lenders to which the Borrower is not a party)
which arises out of the transactions contemplated or financed hereby or out of
any action or inaction by the Agent or any Lender hereunder or thereunder,
except for such thereof as is caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The Borrower agrees to
similarly indemnify and save the Lenders and the Agent harmless from any and all
indemnified liabilities as relate to Letters of Credit issued for its account.
The provisions of this Section and the protective provisions of Section 2 hereof
shall survive payment of the Notes.

        SECTION 12.5.  DOCUMENTARY TAXES. The Borrower agrees to pay on demand
any documentary, stamp or similar taxes payable in respect of this Agreement,
the Notes, the Applications, or any Guaranty including interest and penalties,
in the event any such taxes are

                                      -64-


assessed, irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.

        SECTION 12.6.  SURVIVAL OF REPRESENTATIONS. All representations and
warranties made herein or in any other Loan Documents or in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and shall continue in full force and effect with respect to the date
as of which they were made as long as any credit is in use or available
hereunder.

        SECTION 12.7.  SURVIVAL OF INDEMNITIES. All indemnities and other
provisions relative to reimbursement to the Lenders of amounts sufficient to
protect the yield of the Lenders with respect to the Loans and Letters of
Credit, including, but not limited to, Sections 1.3, 2.7, 2.8 and 2.9 hereof,
shall survive the termination of this Agreement and the payment of the Notes.

        SECTION 12.8.  NOTICES. Except as otherwise specified herein, all
notices hereunder shall be in writing (including cable or telecopy) and shall be
given to the relevant party at its address or telecopier number set forth below,
in the case of the Borrower, or on the appropriate signature page hereof, in the
case of the Lenders and the Agent, or such other address or telecopier number as
such party may hereafter specify by notice to the Agent and the Borrower given
by United States certified or registered mail or by telecopy. Notices hereunder
to the Borrower shall be addressed to the name of such Person at:

                 1021 West Birchwood
                 Morton, Illinois  61550-0429
                 Attention: Chief Financial Officer
                 Telephone: (309)266-7176
                 Telecopy:  (309)263-1841

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; PROVIDED THAT any notice given pursuant
to Section 1 or Section 2 hereof shall be effective only upon receipt.

        SECTION 12.9.  HEADINGS. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.

        SECTION 12.10. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in this Agreement and the Notes may be exercised only to the
extent that the exercise thereof does not violate any applicable mandatory
provisions of law, and all the provisions of this Agreement and the Notes are
intended to be subject to all applicable mandatory provisions of law

                                      -65-


which may be controlling and to be limited to the extent necessary so that they
will not render this Agreement or the Notes invalid or unenforceable.

        SECTION 12.11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.

        SECTION 12.12. BINDING NATURE, GOVERNING LAW, ETC. This Agreement shall
be binding upon the Borrower and its successors and assigns, and shall inure to
the benefit of the Agent and the Lenders and the benefit of their successors and
assigns, including any subsequent holder of an interest in the Notes. This
Agreement and the rights and duties of the parties hereto shall be governed by,
and construed in accordance with, the internal laws of the State of Illinois
without regard to principles of conflicts of laws. The Borrower may not assign
its rights hereunder without the written consent of the Lenders.

        SECTION 12.13. ENTIRE UNDERSTANDING. This Agreement, together with the
Notes, constitute the entire understanding of the parties with respect to the
subject matter hereof and any prior agreements, whether written or oral, with
respect thereto are superseded hereby except for prior understandings related to
fees payable to the Agent upon the initial closing of the transactions
contemplated hereby.

        SECTION 12.14. PARTICIPATIONS. Any Lender may, upon the prior written
consent of the Borrower (which consent shall not be unreasonably withheld),
grant participations in its extensions of credit hereunder to any other bank or
other lending institution (a "PARTICIPANT") PROVIDED that (i) no Participant
shall thereby acquire any direct rights under this Agreement, (ii) no Lender
shall agree with a Participant not to exercise any of such Lender's rights
hereunder without the consent of such Participant except for rights which under
the terms hereof may only be exercised by all Lenders and (iii) no sale of a
participation in extensions of credit shall in any manner relieve the selling
Lender of its obligations hereunder.

        SECTION 12.15. ASSIGNMENT AGREEMENTS. Each Lender may, from time to time
upon at least five (5) Business Days' prior written notice to the Agent, assign
to other commercial lenders part of its rights and obligations under this
Agreement (including without limitation the indebtedness evidenced by any Note
then owned by such assigning Lender, together with an equivalent proportion of
the related Commitment for which such Note was issued) pursuant to written
agreements executed by such assigning Lender, such assignee lender or lenders,
the Borrower and the Agent, which agreements shall specify in each instance the
portion of the indebtedness evidenced by the Notes which is to be assigned to
each such assignee lender and the portion of the Commitments of the assigning
Lender to be assumed by it (the "ASSIGNMENT AGREEMENTS"); PROVIDED, HOWEVER,
that (i) any assignment hereunder shall be of the same percentage of such
Lender's Revolving Credit Note, Revolving Credit Commitment, Revolving Loans and
interests in Letters of Credit and Swing Loans, and Term Loan; (ii) unless the
Agent otherwise consents, the aggregate amount of the Commitments, Loans and
Notes of the assigning Lender being assigned pursuant to each such assignment
(determined as of the effective date of the relevant Assignment Agreement) shall
in no event be less than $5,000,000 and shall be an integral multiple of
$1,000,000; (iii) the Swing Loans and Swing Line Commitment shall only be

                                      -66-


assigned (if at all) in total; (iv) the Agent, each Lender originally party
hereto and the Borrower must each consent (such consent to not be unreasonably
withheld by any such party), to each such assignment to a party which was not an
original signatory of this Agreement (provided no such consent is required from
the Borrower (x) for any assignment to any Lender party hereto, whether an
original signatory of this Agreement or a party hereto by reason of an
Assignment Agreement, (y) for any assignment to any Affiliate of any such Lender
and (z) for any such assignment made during the continuance of any Event of
Default); and (v) the assigning Lender must pay to the Agent a processing and
recordation fee of $3,500 and any out-of-pocket attorneys' fees and expenses
incurred by the Agent in connection with such Assignment Agreement. Upon the
execution of each Assignment Agreement by the assigning Lender thereunder, the
assignee lender thereunder, the Borrower and the Agent and payment to such
assigning Lender by such assignee lender of the purchase price for the portion
of the indebtedness of the Borrower being acquired by it, (i) such assignee
lender shall thereupon become a "LENDER" for all purposes of this Agreement with
Commitments in the amounts set forth in such Assignment Agreement and with all
the rights, powers and obligations afforded a Lender hereunder, (ii) such
assigning Lender shall have no further liability for funding the portion of its
Commitments assumed by such other Lender and (iii) the address for notices to
such assignee Lender shall be as specified in the Assignment Agreement executed
by it. Concurrently with the execution and delivery of such Assignment
Agreement, the Borrower shall execute and deliver Notes to the assignee Lender
in the respective amounts of its Commitments under the Revolving Credit and
Swing Line and its Term Loans and new Notes to the assigning Lender in the
respective amounts of its Commitments under the Revolving Credit and its Term
Loans after giving effect to the reduction occasioned by such assignment, all
such Notes to constitute "NOTES" for all purposes of this Agreement.

        SECTION 12.16. CONFIDENTIALITY. The Agent and each Lender shall hold in
confidence any material nonpublic information delivered or made available to
them by the Borrower or any Subsidiary. The foregoing to the contrary
notwithstanding, nothing herein shall prevent any Lender from disclosing any
information delivered or made available to it by the Borrower or any Subsidiary
(i) to any other Lender, (ii) to any other Person if reasonably incidental to
the administration of the credit contemplated hereby, (iii) upon the order of
any court or administrative agency, (iv) upon the request or demand of any
regulatory agency or authority, (v) which has been publicly disclosed other than
as a result of a disclosure by the Agent or any Lender which is not permitted by
this Agreement, (vi) in connection with any litigation to which the Agent, any
Lender, or any of their respective Affiliates may be a party, along with the
Borrower, any Subsidiary or any of their respective Affiliates, (vii) to the
extent reasonably required in connection with the exercise of any right or
remedy under this Agreement, the other L/C Documents or otherwise, (viii) to
such Lender's legal counsel and financial consultants and independent auditors,
and (ix) to any actual or proposed participant or assignee of all or part of its
rights under the credit contemplated hereby provided such participant or
assignee agrees in writing to be bound by the duty of confidentiality under this
Section to the same extent as if it were a Lender hereunder.

        SECTION 12.17. RELEASE OF CLAIMS. TO INDUCE THE LENDERS AND THE AGENT TO
ENTER INTO THIS AGREEMENT, THE BORROWER AND THE GUARANTORS HEREBY RELEASE,
ACQUIT, AND FOREVER DISCHARGE THE LENDERS, THE AGENT AND THEIR AFFILIATES AND
THEIR

                                      -67-


RESPECTIVE OFFICERS, DIRECTORS, AGENTS, ATTORNEYS, ADVISORS, CONSULTANTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL LIABILITIES, CLAIMS, DEMANDS,
ACTIONS, AND CAUSES OF ACTION OF ANY KIND (IF THERE ARE ANY), WHETHER ABSOLUTE
OR CONTINGENT, DUE OR TO BECOME DUE, DISPUTED OR UNDISPUTED, AT LAW OR IN
EQUITY, THAT THEY NOW HAVE OR EVER HAD AGAINST THE LENDERS, THE AGENT AND THE
OTHER PARTIES IDENTIFIED ABOVE, OR ANY ONE OR MORE OF THEM INDIVIDUALLY, UNDER
OR IN CONNECTION WITH THE PREVIOUS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS AS DEFINED THEREIN, OR THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS AS DEFINED HEREIN.

                                      -68-


        Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.

        Dated as of the date first above written.

                                       MORTON INDUSTRIAL GROUP, INC.

                                       By
                                          Its:
                                              ----------------------------------

                                       MORTON METALCRAFT CO.

                                       By
                                          Its:
                                              ----------------------------------

                                       MORTON METALCRAFT CO. OF NORTH CAROLINA

                                       By
                                          Its:
                                              ----------------------------------

                                       MORTON METALCRAFT CO. OF SOUTH CAROLINA

                                       By
                                          Its:
                                              ----------------------------------

                                       MID CENTRAL PLASTICS, INC.

                                       By
                                          Its:
                                              ----------------------------------

                                      -69-


                                       B&W METAL FABRICATORS, INC.

                                       By
                                          Its:
                                              ----------------------------------

                                      -70-


        Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.

        Each of the Lenders hereby agrees with each other Lender that if it
should receive or obtain any payment (whether by voluntary payment, by
realization upon collateral, by the exercise of rights of setoff or banker's
lien, by counterclaim or cross action, or by the enforcement of any rights under
this Agreement, the Notes, the Guaranties or otherwise) in respect of the
obligations of the Borrower under this Agreement, the Notes and the Guaranties
in a greater amount than such Lender would have received had such payment been
made to the Agent and been distributed among the Lenders as contemplated by
Section 3.5 hereof then in that event the Lender receiving such disproportionate
payment shall purchase for cash without recourse from the other Lenders an
interest in the obligations of the Borrower to such Lenders arising under this
Agreement the Notes, and the Guaranties in such amount as shall result in a
distribution of such payment as contemplated by Section 3.5 hereof. In the event
any payment made to a Lender and shared with the other Lenders pursuant to the
provisions hereof is ever recovered from such Lender, the Lenders receiving a
portion of such payment hereunder shall restore the same to the payor Lender,
but without interest.

Amount and Percentage of Commitments:

Revolving Credit Commitment:              HARRIS TRUST AND SAVINGS BANK
$8,750,000.00 (41.666667%)

Term Loan Commitment:                     By
                                             -----------------------------------
$13,735,591.65 (41.666667%)                   Its Vice President

                                          111 West Monroe Street
                                          Chicago, Illinois 60603

                                          Attention: Kimberly A. McMahon
                                          Telephone: (312) 461-2377
                                          Telecopy: (312) 765-1655

                                          LIBOR Funding Office:
                                          Nassau Branch
                                          c/o 111 West Monroe Street
                                          Chicago, Illinois 60690

                                      -71-


Amount and Percentage of Commitments:

Revolving Credit Commitment:              FIRSTAR BANK, N.A.
$2,916,666.67 (13.888889%)

Term Loan Commitment:                     By
                                             -----------------------------------
$4,578,530.54 (13.888889%)                  Its
                                                --------------------------------

                                          777 East Wisconsin Avenue
                                          Milwaukee, Wisconsin 53202
                                          Attention:
                                                     ---------------------------
                                          Telephone:
                                                     ---------------------------
                                          Telecopy:
                                                    ----------------------------

                                          LIBOR Funding Office

                                          777 East Wisconsin Avenue
                                          Milwaukee, Wisconsin 53202

                                      -72-


Amount and Percentage of Commitments:

Revolving Credit Commitment:              NATIONAL CITY BANK
$2,333,333.33 (11.111111%)

Term Loan Commitment:                     By
                                             -----------------------------------
$3,662,824.43 (11.111111%)                  Its
                                                --------------------------------

                                          1900 East Ninth Street
                                          Locator #2094
                                          Cleveland, Ohio 44114-3484
                                          Attention:  Margaret Moek
                                          Telephone:  (216) 575-2577
                                          Telecopy:  (216) 575-2162

                                          LIBOR Funding Office

                                          1900 East Ninth Street
                                          Locator #2094
                                          Cleveland, Ohio 44114-3484

                                      -73-


Amount and Percentage of Commitments:

Revolving Credit Commitment:              BRANCH BANKING & TRUST CO.
$3,500,000.00 (16.666667%)

Term Loan Commitment:                     By
                                             -----------------------------------
$5,494,236.65 (16.666667%)                 Its
                                               ---------------------------------

                                          ------------------------------
                                          ------------------------------
                                          ------------------------------
                                          Attention
                                                    --------------------
                                          Telephone:  (___) ___-____
                                          Telecopy:  (___) ___-____

                                          LIBOR Funding Office

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

                                      -74-


Amount and Percentage of Commitments:

Revolving Credit Commitment:              LASALLE BANK, NATIONAL ASSOCIATION
$3,500,000.00 (16.666667%)

Term Loan Commitment:                     By
                                             -----------------------------------
$5,494,236.65 (16.666667%)                  Its
                                                --------------------------------

                                          ------------------------------
                                          ------------------------------
                                          ------------------------------
                                          Attention
                                                    --------------------
                                          Telephone:  (___) ___-____
                                          Telecopy:  (___) ___-____

                                          LIBOR Funding Office

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

                                      -75-

EX-99.2

                                                                  EXHIBIT 99.2

          AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 25, 2002,
among MORTON CUSTOM PLASTICS, LLC, a Delaware limited liability company
("BORROWER"), MORTON HOLDINGS, LLC, a Delaware limited liability company
("HOLDINGS"), the other Credit Parties signatory hereto, GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE
CAPITAL"), for itself, as Lender, and as Agent for Lenders, and the other
Lenders signatory hereto from time to time.

                                    RECITALS

          WHEREAS, Borrower, Holdings, the other credit parties signatory
thereto, the lender parties thereto (the "ORIGINAL LENDERS"), and GE Capital, as
agent for the Original Lenders, are parties to a Credit Agreement, dated as of
April 15, 1999, as amended by the First Amendment and Waiver to Credit
Agreement, dated as of October 20, 1999, the Second Amendment to Credit
Agreement, dated as of November 15, 1999, the Third Amendment to Credit
Agreement, dated as of March 24, 2000, the Fourth Amendment to Credit Agreement,
dated as of November 14, 2000, the Fifth Amendment and Waiver to Credit
Agreement, dated as of March 30, 2001, the Sixth Amendment and Waiver to Credit
Agreement dated as of August 14, 2001, the Seventh Amendment to Credit Agreement
dated as of September 29, 2001 and the Eighth Amendment to Credit Agreement,
dated as of December 28, 2001 (as so amended, the "ORIGINAL CREDIT AGREEMENT");

          WHEREAS, pursuant to the Original Credit Agreement, the Original
Lenders agreed to make certain loans and other extensions of credit to Borrower
of up to $50,000,000 upon the terms and conditions set forth therein;

          WHEREAS, each of the parties hereto wishes to and agrees to amend and
restate the Original Credit Agreement on the terms and conditions set forth
herein (including in order to reduce the Commitments to $32,000,000);

          WHEREAS, each of Holdings and the other Credit Parties are willing to
continue to guaranty all of the obligations of Borrower to Lenders under the
Loan Documents;

          WHEREAS, the Credit Parties are willing to continue to secure all of
their obligations under the Loan Documents by granting to Agent, for the benefit
of Agent and Lenders, a security interest in and lien upon all of their existing
and after-acquired personal and real property;

          WHEREAS, it is the intent of the parties hereto that this Agreement
not constitute a novation of the obligations and liabilities under the Original
Credit Agreement or evidence payment of all or any of such obligations and
liabilities, that this Agreement amend and restate in its entirety the Original
Credit Agreement and that from and after the date hereof, the Original Credit
Agreement be of no further force and effect



except as to evidence the incurrence of the Obligations thereunder, the
representations and warranties made thereunder and the obligations, covenants
and liabilities of the parties thereto prior to the Closing Date; and

          WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in ANNEX A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "APPENDICES") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree that as of the Closing Date, the Original Credit
Agreement shall be and hereby is amended and restated in its entirety to read as
follows:

1.   AMOUNT AND TERMS OF CREDIT

     1.1.      CREDIT FACILITIES

          (a)  REVOLVING CREDIT FACILITY.

                    (i)  Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available from time to time to the Borrower
until the Commitment Termination Date its Pro Rata Share of revolving credit
advances (each, a "REVOLVING CREDIT ADVANCE"). The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time exceed its separate
Revolving Loan Commitment. The obligations of each Revolving Lender hereunder
shall be several and not joint. The aggregate amount of Revolving Credit
Advances outstanding shall not exceed at any time the lesser of (A) the Maximum
Amount and (B) the Revolving Borrowing Base, in each case less (x) the amount of
the Letter of Credit Obligations outstanding at such time and (y) the amount of
any Reserves which may have been established at such time by the Agent in its
reasonable credit judgment ("BORROWING AVAILABILITY"). Until the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this SECTION 1.1(a). Each Revolving Credit Advance shall be made on notice
by Borrower to the representative of Agent identified on DISCLOSURE SCHEDULE
(1.1) at the address specified thereon. Those notices must be given no later
than (1) 11:00 a.m. (New York time) on the Business Day of the proposed
Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m.
(New York time) on the date which is three (3) Business Days prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
(a "NOTICE OF REVOLVING CREDIT ADVANCE") must be given in writing (by telecopy
or overnight courier) substantially in the form of EXHIBIT 1.1(a)(i), and shall
include the information required in such Exhibit and such other information as
may be required by Agent. In connection with Borrower's desire to have the
Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower
must comply with SECTION 1.5(e).



                    (ii) Borrower shall execute and deliver to each Revolving
Lender a note to evidence the Revolving Loan Commitment of that Revolving
Lender. Each note shall be in the principal amount of the Revolving Loan
Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of EXHIBIT 1.1(a)(ii) (each a "REVOLVING NOTE" and,
collectively, the "REVOLVING NOTES"). Each Revolving Note shall represent the
obligation of Borrower to pay the amount of each Revolving Lender's Revolving
Loan Commitment or, if less, the applicable Revolving Lender's Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Credit Advances to
Borrower together with interest thereon as prescribed in SECTION 1.5. The entire
unpaid balance of the Revolving Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.

                    (iii) Notwithstanding anything to the contrary contained in
this Agreement, until such time as designated by Agent to Borrower in writing
(such decision to be made by Agent in its sole and absolute discretion) (A)
during any calendar week, the amount of the Revolving Credit Advances shall not
exceed the amount scheduled under the Cash Flow Budget to be paid during such
week; and (B) any of the provisions hereof requiring the Borrower to comply with
the Revolving Borrowing Base shall be inapplicable.

          (b)  TERM LOAN A.

                    (i)  Subject to the terms and conditions hereof, each Term
Loan A Lender agrees to make a term loan (the collectively, the "TERM LOAN A")
on the Closing Date to Borrower in the amount of the applicable Term Loan A
Lender's Term Loan A Commitment. The obligations of each Term Loan A Lender
hereunder shall be several and not joint. Each such Term Loan A shall be
evidenced by a promissory note substantially in the form of EXHIBIT 1.1(b) (each
a "TERM LOAN A NOTE" and collectively the "TERM LOAN A NOTES"), and, except as
provided in SECTION 1.12, Borrower shall execute and deliver the Term Loan A
Notes to the applicable Term Loan A Lenders. Each Term Loan A Note shall
represent the obligation of Borrower to pay the amount of the applicable Term
Loan A Lender's Term Loan Commitment, together with interest thereon as
prescribed in SECTION 1.5.

                    (ii) On each date set forth below, Borrower shall repay the
principal amount of the Term Loan A in the installment set forth opposite such
date:



              PAYMENT DATES                      INSTALLMENT AMOUNT
                                                   
            September, 30, 2002                       $250,000
            December 31, 2002                         $250,000
            March 31, 2003                            $250,000
            June 30, 2003                             $250,000
            September 30, 2003                        $250,000
            December 31, 2003                         $250,000






              PAYMENT DATES                      INSTALLMENT AMOUNT
                                                
            March 31, 2004                         $     575,000
            June 30, 2004                          $     575,000
            September 30, 2004                     $     575,000
            December 31, 2004                      $     575,000
            March 31, 2005                         $     675,000
            June 30, 2005                          $     675,000
            September 30, 2005                     $     675,000
            December 31, 2005                      $     675,000
            March 31, 2006                         $1,166,666.67
            June 30, 2006                          $1,166,666.67


          The final installment due on the Scheduled Maturity Date shall be in
the amount of $1,166,666.65 or, if different, the remaining principal balance of
the Term Loan A.

                    (iii) Notwithstanding SECTION 1.1(b)(ii), the aggregate
outstanding principal balance of the Term Loan A shall be due and payable in
full in immediately available funds on the Commitment Termination Date, if not
sooner paid in full. No payment with respect to the Term Loan A may be
reborrowed.

                    (iv) Each payment of principal with respect to the Term Loan
A shall be paid to Agent for the ratable benefit of each Term Lender making a
Term Loan A, ratably in proportion to each such Term Loan A Lender's respective
Term Loan A Commitment.

          (c)  TERM LOAN B.

                    (i)  Subject to the terms and conditions hereof, each Term
Loan B Lender agrees to make a term loan (collectively, the "TERM LOAN B") on
the Closing Date to Borrower in the amount of the applicable Term Loan B
Lender's Term Loan B Commitment. The obligations of each Term Loan B Lender
hereunder shall be several and not joint. Each such Term Loan B shall be
evidenced by a promissory note substantially in the form of EXHIBIT 1.1(c) (each
a "TERM LOAN B NOTE" and collectively the "TERM LOAN B NOTES"), and, except as
provided in SECTION 1.12, Borrower shall execute and deliver the Term Loan B
Notes to the applicable Term Loan B Lenders. Each Term Loan B Note shall
represent the obligation of Borrower to pay the amount of applicable Term Loan B
Lender's Term Loan Commitment, together with interest thereon as prescribed in
SECTION 1.5.

                    (ii) On each date set forth below, Borrower shall repay the
principal amount of the Term Loan B in the installment set forth opposite such
date:





                    PAYMENT DATES                       INSTALLMENT AMOUNT
                                                          
                  June 30, 2002                              $  100,000
                  September 30, 2002                         $  100,000
                  December 31, 2002                          $  100,000
                  March 31, 2003                             $  100,000
                  June 30, 2003                              $  100,000
                  September 30, 2003                         $  100,000
                  December 31, 2003                          $  100,000
                  March 31, 2004                             $  250,000
                  June 30, 2004                              $  250,000
                  September 30, 2004                         $  250,000
                  December 31, 2004                          $  250,000
                  March 31, 2005                             $  250,000
                  June 30, 2005                              $  250,000
                  September 30, 2005                         $  250,000
                  December 31, 2005                          $  250,000
                  March 31, 2006                             $1,400,000
                  June 30, 2006                              $1,400,000


The final installment due on the Scheduled Maturity Date shall be in the amount
of $1,500,000 or, if different, the remaining principal balance of the Term Loan
B.

                    (iii) Notwithstanding SECTION 1.1(c)(ii), the aggregate
outstanding principal balance of the Term Loan B shall be due and payable in
full in immediately available funds on the Commitment Termination Date, if not
sooner paid in full. No payment with respect to the Term Loan B may be
reborrowed.

                    (iv) Each payment of principal with respect to the Term Loan
B shall be paid to Agent for the ratable benefit of each Term Loan B Lender
making a Term Loan B, ratably in proportion to each such Term Loan B Lender's
respective Term Loan B Commitment.

          (d)  TERM LOAN C.

                    (i)  Subject to the terms and conditions hereof, each Term
Loan C Lender agrees to make a term loan (collectively, the "TERM LOAN C") on
the Closing Date to Borrower in the amount of the applicable Term Loan C
Lender's Term Loan C Commitment. The obligations of each Term Loan C Lender
hereunder shall be several and not joint. Each such Term Loan C shall be
evidenced by a promissory note substantially in the form of EXHIBIT 1.1(d) (each
a "TERM LOAN C NOTE" and collectively the "TERM LOAN C NOTES"), and, except as
provided in SECTION 1.12, Borrower shall execute and deliver the Term Loan C
Notes to the applicable Term Loan C Lenders. Each Term Loan C Note shall
represent the obligation of Borrower to pay the amount of the applicable Term
Loan C Lender's Term Loan Commitment, together with interest thereon as
prescribed in SECTION 1.5.



                    (ii) Borrower shall pay the entire principal amount of the
Term Loan C, together with interest thereon as prescribed in SECTION 1.5, in a
single installment on the Scheduled Maturity Date.

                    (iii) Notwithstanding SECTION 1.1(d)(ii), the aggregate
outstanding principal balance of the Term Loan C, together with interest thereon
as prescribed in Section 1.5, shall be due and payable in full in immediately
available funds on the Commitment Termination Date, if not sooner paid in full.
No payment with respect to the Term Loan C may be reborrowed.

                    (iv) Each payment of principal with respect to the Term Loan
C shall be paid to Agent for the ratable benefit of each Term Loan C Lender
making a Term Loan C, ratably in proportion to each such Term Loan C Lender's
respective Term Loan C Commitment.

               (e)  RELIANCE ON NOTICES. Agent shall be entitled to rely upon,
and shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent
to be genuine. Agent may assume that each Person executing and delivering such a
notice was duly authorized, unless the responsible individual acting thereon for
Agent has actual knowledge to the contrary.

               (f)  LOANS UNDER ORIGINAL CREDIT AGREEMENT. The Credit Parties
acknowledge and agree that as of March 20, 2002 (i) the outstanding principal
amount of Revolving Credit Advances under the Original Credit Agreement equals
$13,070,677.45 and that such Revolving Credit Advances are continued as Loans
hereunder as follows: $7,693,069.95 as Revolving Credit Advances, $377,607.50 as
principal of Term Loan B and $5,000,000 as principal of Term Loan C; (ii) the
outstanding principal amount of the Term Loan under the Original Credit
Agreement equals $16,622,392.50 and that such Term Loan is continued as Term
Loans hereunder as follows: $10,000,000 as principal of Term Loan A and
$6,622,392.50 as principal of Term Loan B; and (iii) Letters of Credit are
outstanding under the Original Credit Agreement having a stated amount of
$980,000 and such Letters of Credit are continued as Letters of Credit
hereunder.

     1.2.           LETTERS OF CREDIT. Subject to and in accordance with the
terms and conditions contained herein and in ANNEX B, Borrower, on behalf of the
Borrower, shall have the right to request, and Revolving Lenders agree to incur,
or purchase participations in, Letter of Credit Obligations in respect of
Borrower.

     1.3.           PREPAYMENTS

               (a)  VOLUNTARY PREPAYMENTS. Borrower may at any time on at least
five (5) days' prior written notice by Borrower to Agent voluntarily prepay all
(but not less than all) of the Term Loans. In addition, Borrower may at any time
on at least ten (10) days' prior written notice by Borrower to Agent terminate
the Revolving Loan



Commitment; provided that upon such termination, all Loans and other Obligations
shall be immediately due and payable in full. Any such voluntary prepayment and
any such termination of the Revolving Loan Commitment must be accompanied the
payment of any LIBOR funding breakage costs in accordance with SECTION 1.13(b).
Upon any such prepayment and termination of the Revolving Loan Commitment,
Borrower's right to request Revolving Credit Advances, or request that Letter of
Credit Obligations be incurred on its behalf shall simultaneously be terminated.

               (b)  MANDATORY PREPAYMENTS.

                    (i)  If at any time the outstanding balance of the aggregate
Revolving Loan exceeds the lesser of (A) the Maximum Amount and (B) the
Revolving Borrowing Base, Borrower shall immediately repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the aggregate
outstanding Revolving Credit Advances, Borrower shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in ANNEX B to the
extent required to eliminate such excess.

                    (ii) Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation proceeds, but
excluding proceeds of asset dispositions permitted by SECTION 6.8 (a)) or any
sale of Stock of any Subsidiary of any Credit Party, Borrower shall prepay the
Loans in an amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection therewith
(in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable
to holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes
in accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with CLAUSE (c) below.

                    (iii) If Holdings or Borrower issues any Stock (other than
Stock issued upon the exercise of the Borrower Warrant) or incurs any
Indebtedness (other than Indebtedness permitted by SECTION 6.3), no later than
the Business Day following the date of receipt of the proceeds thereof, Borrower
shall prepay the Loans in an aggregate amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. Any such prepayment shall be applied in
accordance with CLAUSE (c) below.

                    (iv) Borrower shall prepay the Obligations on the earlier of
the date which is ten (10) days after (A) the date on which Holdings' annual
audited Financial Statements for the immediately preceding Fiscal Year are
delivered pursuant to ANNEX E and (B) the date on which such annual audited
Financial Statements were required to be delivered pursuant to ANNEX E, in an
amount equal to 100% of Excess Cash Flow for the immediately preceding Fiscal
Year. Any prepayments from Excess Cash Flow paid pursuant to this CLAUSE (iv)
shall be allocated to Borrower's Obligations



based upon Borrower's relative contribution to Excess Cash Flow and shall be
applied in accordance with CLAUSE (c) below. Each such prepayment shall be
accompanied by a certificate signed by Borrower's chief financial officer
certifying the manner in which Excess Cash Flow, the resulting prepayment, and
the method of allocation to Borrower's Obligations were calculated, which
certificate shall be in form and substance satisfactory to Agent.

               (c)  APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any
prepayments made by Borrower pursuant to CLAUSES (b)(ii), (b)(iii) or (b)(iv)
above or prescribed by SECTION 5.4(c) shall be applied as follows: FIRST, to
Fees and reimbursable expenses of Agent then due and payable pursuant to any of
the Loan Documents; SECOND to prepay the principal balance of the Term Loan C,
together with interest thereon as prescribed in SECTION 1.5; THIRD, to interest
then due and payable on the Term Loan B; FOURTH, to prepay the scheduled
installments of the Term Loan B in inverse order of maturity until the Term Loan
B shall have been prepaid in full; FIFTH, to interest then due and payable on
the Term Loan A; SIXTH, to prepay the scheduled installments of the Term Loan A
in inverse order of maturity until the Term Loan A shall have been prepaid in
full; SEVENTH, to interest then due and payable on Revolving Credit Advances
made to Borrower; EIGHTH, to the principal balance of Revolving Credit Advances
outstanding to Borrower until the same shall have been paid in full; and last,
to any Letter of Credit Obligations of Borrower to provide cash collateral
therefor in the manner set forth in ANNEX B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set forth in ANNEX
B. The Revolving Loan Commitment shall not be permanently reduced by the amount
of any such prepayments.

               (d)  APPLICATION OF PREPAYMENTS FROM INSURANCE PROCEEDS.
Prepayments from insurance proceeds in accordance with SECTION 5.4(c) shall be
applied in accordance with SECTION 1.3(c) above.

               (e)  NO IMPLIED CONSENT. Nothing in this SECTION 1.3 shall be
construed to constitute Agent's or any Lender's consent to any transaction
referred to in CLAUSES (b)(i) and (b)(ii) above which is not permitted by other
provisions of this Agreement or the other Loan Documents.

     1.4.           USE OF PROCEEDS. Subject to Section 1.1 (a)(iii), Borrower
shall utilize the proceeds of the Revolving Loan for the financing of Borrower's
ordinary working capital and general corporate and limited liability company
needs (but excluding in any event the making of any Restricted Payment not
specifically permitted by SECTION 6.14). DISCLOSURE SCHEDULE (1.4) contains a
description of Borrower's sources and uses of funds as of the Closing Date,
including Loans and Letter of Credit Obligations to be made or incurred on that
date, and a funds flow memorandum detailing how funds from each source are to be
transferred to particular uses.



     1.5.           INTEREST AND APPLICABLE MARGINS. (a) Borrower shall pay
interest to Agent, for the ratable benefit of Lenders in accordance with the
various Loans being made by each Lender, in arrears on each applicable Interest
Payment Date, at the following rates: (i) with respect to the Revolving Credit
Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or,
at the election of Borrower, the applicable LIBOR Rate plus the Applicable
Revolver LIBOR Margin per annum, based on the aggregate Revolving Credit
Advances outstanding from time to time; (ii) with respect to Term Loan A, the
Index Rate plus the Applicable Term Loan A Index Margin per annum or, at the
election of Borrower, the applicable LIBOR Rate plus the Applicable Term Loan A
LIBOR Margin per annum; (iii) with respect to Term Loan B, the Index Rate plus
the Applicable Term Loan B Index Margin per annum or, at the election of
Borrower, the applicable LIBOR Rate plus the Applicable Term Loan B LIBOR Margin
per annum; and (iv) with respect to Term Loan C, thirteen percent (13%) per
annum. Notwithstanding the provisions of SECTION 1.10, interest on the Term Loan
C (including interest on the Term Loan C at the Default Rate) may, at Borrower's
option, be paid in kind by capitalizing such interest and adding it to the
aggregate principal amount of the Term Loan C Note, effective of as of the
applicable Interest Payment Date.

               (b)  If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.

               (c)  All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a three hundred and sixty (360)
day year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Index Rate shall be determined
each day based upon the Index Rate as in effect each day. Each determination by
Agent of an interest rate and Fees hereunder shall be conclusive, absent
manifest error.

               (d)  So long as an Event of Default shall have occurred and be
continuing under Section 8.1(a), (h) or (i) or so long as any other Default or
Event of Default shall have occurred and be continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased by two percent (2%) per annum above
the rates of interest or the rate of such Fees otherwise applicable hereunder
("DEFAULT RATE"), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations. Interest and Letter of Credit Fees
at the Default Rate shall accrue from the initial date of such Default or Event
of Default until that Default or Event of Default is cured or waived and shall
be payable upon demand.



               (e)  So long as no Default or Event of Default shall have
occurred and be continuing, and subject to the additional conditions precedent
set forth in SECTION 2.2, Borrower shall have the option to (i) request that any
Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time all
or any part of outstanding Loans from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with SECTION 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the last day of the LIBOR Period of the Loan to be continued.
Any Loan to be made or continued as, or converted into, a LIBOR Loan must be in
a minimum amount of $2,000,000 and integral multiples of $500,000 in excess of
such amount. Any such election must be made by 11:00 a.m. (New York time) on the
third (3rd) Business Day prior to (1) the date of any proposed Advance which is
to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (New York time) on the third (3rd)
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default shall have occurred and be continuing or if the
additional conditions precedent set forth in SECTION 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower must make such election by notice to Agent in
writing, by telecopy or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a "NOTICE
OF CONVERSION/CONTINUATION") in the form of EXHIBIT 1.5(e).

               (f)  Notwithstanding anything to the contrary set forth in this
SECTION 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in SECTIONS 1.5(a) through (e)
above, unless and until the rate of interest again exceeds the Maximum Lawful
Rate, and at that time this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
If the



Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this SECTION 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in SECTION 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.

     1.6.           ELIGIBLE ACCOUNTS. Based on the most recent Revolving
Borrowing Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Accounts of Borrower shall be "ELIGIBLE ACCOUNTS" for purposes
of this Agreement. In determining whether a particular Account of Borrower
constitutes an Eligible Account, Agent shall not include any such Account to
which any of the exclusionary criteria set forth below applies. Agent reserves
the right, at any time and from time to time after the Closing Date, to adjust
any such criteria or to establish new criteria, in each case in its reasonable
credit judgment. Eligible Accounts shall not include any Account of Borrower:

          (a)  which does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business;

          (b)  (i) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to Borrower's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;

          (c)  to the extent that any defense, counterclaim, setoff or dispute
is asserted as to such Account;

          (d)  that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;

          (e)  with respect to which an invoice, acceptable to Agent in form and
substance, has not been sent to the applicable Account Debtor;

          (f)  that (i) is not owned by Borrower or (ii) is subject to any
right, claim, security interest or other interest of any other Person, other
than Liens in favor of Agent, on behalf of itself and Lenders;



          (g)  that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party, or to any entity which has a majority of
directors who are also directors of any Credit Party;

          (h)  that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower, if
necessary or desirable, has complied with the Federal Assignment of Claims Act
of 1940, and any amendments thereto, or any applicable state statute or
municipal ordinance of similar purpose and effect, with respect to such
obligation;

          (i)  that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Quebec, Newfoundland, Nova
Scotia and Prince Edward Island) unless payment thereof is assured by a letter
of credit assigned and delivered to Agent, satisfactory to Agent as to form,
amount and issue;

          (j)  to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor (including,
without limitation, with respect to any resin expenses owing to General Electric
Company or any of its Affiliates) to Borrower or any Subsidiary thereof but only
to the extent of the potential offset;

          (k)  that arises with respect to goods which are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;

          (l)  that is in default; PROVIDED, THAT, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:

               (i)  it is not paid within the earlier of: sixty (60) days
following its due date or ninety (90) days following its original invoice date;

               (ii) if any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or

               (iii) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;



          (m)  which is the obligation of an Account Debtor if fifty percent
(50%) or more of the dollar amount of all Accounts owing by that Account Debtor
are ineligible under the criteria set forth in clause (l) of this SECTION 1.6;

          (n)  as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;

          (o)  as to which any of the representations or warranties pertaining
to Accounts set forth in this Agreement or the Borrower Security Agreement is
untrue;

          (p)  to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;

          (q)  to the extent such Account exceeds any credit limit established
by Agent, in its reasonable discretion, following prior notice of such limit by
Agent to Borrower;

          (r)  to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates as of any date of determination
exceed ten percent (10%) (or, in the case of an Account Debtor consisting of any
(i) Account Debtor (other than the ones referred to in clause (ii) below) whose
senior unsecured long-term debt is rated at least BBB by Moody's Investors
Service, Inc. or the equivalent thereof by Standard & Poor's Ratings Group or
other nationally recognized rating agency acceptable to Agent, twenty percent
(20%) or (ii) of General Electric Corporation, Deere & Company, Honda of
America, Inc. or BE Aerospace, Inc., twenty-five percent (25%)) of all Eligible
Accounts;

          (s)  which is payable in any currency other than Dollars; or

          (t)  which is unacceptable to Agent in its reasonable credit judgment
relating to such Account or the applicable Account Debtor.

     1.7.           ELIGIBLE INVENTORY. Based on the most recent Revolving
Borrowing Base Certificate delivered by Borrower to Agent and on other
information available to Agent, Agent shall in its reasonable credit judgment
determine which Inventory of Borrower shall be "ELIGIBLE INVENTORY" for purposes
of this Agreement. In determining whether any particular Inventory of Borrower
constitutes Eligible Inventory, Agent shall not include any such Inventory to
which any of the exclusionary criteria set forth below applies. Agent reserves
the right, at any time and from time to time after the Closing Date, to adjust
any such criteria and to establish new criteria, in its reasonable credit
judgment. Eligible Inventory shall not include any Inventory of Borrower that:

          (a)  is not owned by Borrower free and clear of all Liens and rights
of any other Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure Borrower's
performance with



respect to that Inventory), except the Liens in favor of Agent, on behalf of
itself and Lenders, and Permitted Encumbrances in favor of landlords and bailees
to the extent permitted in SECTION 5.9 hereof (subject to Reserves established
by Agent in accordance with Section 5.9 hereof);

          (b)  (i) is not located on premises owned or leased by Borrower or
(ii) is stored with a bailee, warehouseman or similar Person, unless Agent has
given its prior consent thereto and unless (x) a satisfactory bailee letter or
landlord waiver has been delivered to Agent, or (y) Reserves satisfactory to
Agent have been established with respect thereto, or (iii) is located at any
site if the aggregate book value of Inventory at any such location is less than
$100,000;

          (c)  is placed on consignment or is in transit;

          (d)  is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;

          (e)  in Agent's reasonable determination, is excess, obsolete,
unsalable, shopworn, seconds, damaged or unfit for sale;

          (f)  consists of display items or packing or shipping materials,
manufacturing supplies or replacement parts;

          (g)  consists of goods which have been returned by the buyer;

          (h)  is not of a type held for sale in the ordinary course of
Borrower's business;

          (i)  as to which Agent's Lien, on behalf of itself and Lenders,
therein is not a first priority perfected Lien;

          (j)  as to which any of the representations or warranties pertaining
to Inventory set forth in this Agreement or the Borrower Security Agreement is
untrue;

          (k)  consists of any costs associated with "freight-in" charges;

          (l)  consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;

          (m)  is not covered by casualty insurance meeting the requirements of
this Agreement or the other Loan Documents; or

          (n)  is otherwise unacceptable to Agent in its reasonable credit
judgment relating to such Inventory.



     1.8.           CASH MANAGEMENT SYSTEMS. On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management systems described on ANNEX C (the "CASH MANAGEMENT SYSTEMS").

     1.9.           FEES. (a) Borrower and Holdings, jointly and severally,
agree to pay to Agent on April 15 of each year, commencing April 15, 2002, an
agency fee in the amount of $50,000 payable annually in advance; provided that
the agency fee due on April 15, 2002 shall be fully earned as of such date and
shall be paid by Borrower and Holdings to Agent on or before December 15, 2002.

          (b)  As compensation to the Lenders for entering into this Agreement
the Borrower shall pay to Agent, for the ratable benefit of Lenders, a closing
fee in the amount of $200,000, payable in four installments with the initial
payment of $100,000 being due and payable on the Closing Date, the second
payment of $33,333.34 being due on June 30, 2002, the third payment of
$33,333.33 being due on September 30, 2002 and the final payment of $33,333.33
being due on December 31, 2002; provided that, notwithstanding the foregoing,
any unpaid portion of such fee shall be due and payable in full on the
Commitment Termination Date. Borrower acknowledges and agrees that such closing
fee has been fully earned as of the Closing Date and once paid is
non-refundable.

          (c)  Borrower shall pay to Agent in accordance with the terms of
Section 11.3 hereof the field audit charges, together with actual out-of-pocket
expenses related thereto, incurred by Agent in performing up to four field
examinations per calendar year (or more if a Default or Event of Default shall
have occurred and be continuing) after the Closing Date.

          (d)  As compensation for the Lenders having previously entered into
the Sixth Amendment to the Original Credit Agreement, Borrower shall pay to
Agent on or before July 31, 2002, for the ratable benefit of Lenders, a fee in
the amount of $50,000; provided that, notwithstanding the foregoing, any unpaid
portion of such fee shall be due and payable in full on the Commitment
Termination Date. Borrower acknowledges and agrees that such fee has been fully
earned and once paid is non-refundable.

          (e)  As additional compensation for the Revolving Lenders, Borrower
agrees to pay to Agent, for the ratable benefit of such Lenders, in arrears, on
the first Business Day of each month prior to the Commitment Termination Date
and on the Commitment Termination Date, a fee for Borrower's non-use of
available funds in an amount equal to 0.50% percent per annum (calculated on the
basis of a 360 day year for actual days elapsed) of the difference between (x)
the Maximum Amount (as it may be reduced from time to time) and (y) the average
for the period of the daily closing balances of the aggregate Revolving Loan
outstanding during the period for which such fee is due.



          (f)  If, on the date that is twenty four (24) months from the Closing
Date (the "TWO YEAR ANNIVERSARY DATE"), the Termination Date has not occurred,
then as additional compensation for the Lenders, Borrower agrees to pay to
Agent, for the ratable benefit of the Lenders, within fifteen (15) days of the
Two Year Anniversary Date, a fee in an amount equal to one percent (1%) of the
amount of the Obligations outstanding on the Two Year Anniversary Date,
including any accrued and unpaid interest on the Loans.

          (g)  The Fee Letter dated as of April 15, 1999 among Holdings,
Borrower and Agent (the "Original Fee Letter') is hereby null and void and of no
further force or effect as to the parties thereto; provided that any obligations
of Borrower and Holdings under the Original Fee Letter which have accrued prior
to the Closing Date and are still outstanding as of the Closing Date shall not
be affected by this sentence.

     1.10.     RECEIPT OF PAYMENTS. Borrower shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the day of receipt of immediately
available funds therefor in the Collection Account prior to 2:00 p.m. New York
time. Payments received after 2:00 p.m. New York time on any Business Day shall
be deemed to have been received on the following Business Day.

     1.11.     APPLICATION AND ALLOCATION OF PAYMENTS. (a) So long as no Default
or Event of Default shall have occurred and be continuing, (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied to the Revolving Loan; (ii) payments matching specific
scheduled payments then due shall be applied to those scheduled payments; (iii)
voluntary prepayments shall be applied as determined by Borrower, subject to the
provisions of SECTION 1.3(a); and (iv) mandatory prepayments shall be applied as
set forth in SECTION 1.3(c). All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to each other payment, and as to
all payments made when a Default or Event of Default shall have occurred and be
continuing or following the Commitment Termination Date, Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and all such
payments against the Obligations of Borrower as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto, payments shall be applied to amounts then due and payable in
the following order: (1) to Fees and Agent's expenses reimbursable hereunder;
(2) interest on the Loans, ratably in proportion to the interest accrued as to
each Loan; (3) to principal payments on the Loans and to provide cash collateral
for Letter of Credit Obligations in the manner described in ANNEX B, ratably to
the aggregate, combined principal balance of the Loans and outstanding Letter of
Credit Obligations;



and (4) to all other Obligations including expenses of Lenders to the extent
reimbursable under SECTION 11.3.

          (b)  Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
SECTION 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
as and when due, even if such charges would cause the balance of the aggregate
Revolving Loan to exceed Borrowing Availability. At Agent's option and to the
extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.

     1.12.     LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a loan account
(the "LOAN ACCOUNT") on its books to record: all Advances and each of the Term
Loans; all payments made by Borrower, and all other debits and credits as
provided in this Agreement with respect to the Loans or any other Obligations.
All entries in the Loan Account shall be made in accordance with Agent's
customary accounting practices as in effect from time to time. The balance in
the Loan Account, as recorded on Agent's most recent printout or other written
statement, shall, absent manifest error, be presumptive evidence of the amounts
due and owing to Agent and Lenders by Borrower; PROVIDED that any failure to so
record or any error in so recording shall not limit or otherwise affect
Borrower's duty to pay the Obligations. Agent shall render to Borrower a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account as to Borrower. Unless Borrower notifies Agent in writing of
any objection to any such accounting (specifically describing the basis for such
objection), within forty-five (45) days after the date thereof, each and every
such accounting shall (absent manifest error) be deemed final, binding and
conclusive upon Borrower in all respects as to all matters reflected therein.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.

     1.13.     INDEMNITY. (a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"INDEMNIFIED PERSON"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the



transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among ANY PARTIES to any of the Loan Documents
(collectively, "INDEMNIFIED LIABILITIES"); PROVIDED, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

          (b)  To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of any LIBOR Loan; (iii)
Borrower shall default in making any borrowing of, conversion into or
continuation of LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) Borrower shall fail to make any prepayment of a
LIBOR Loan after Borrower has given a notice thereof in accordance herewith,
Borrower shall jointly and severally indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; PROVIDED, HOWEVER, that each Lender may fund each of its LIBOR Loans in
any manner it sees fit, and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this SECTION 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within ten (10) Business Days of receipt thereof, specifying the basis for such
objection in detail.



     1.14.     ACCESS. Each Credit Party which is a party hereto shall, during
normal business hours, from time to time upon reasonable (but no less than one
Business Days') prior notice as frequently as Agent determines to be
appropriate: (a) provide Agent and any of its officers, employees and agents
access to its properties, facilities, advisors and employees (including
officers) of each Credit Party and to the Collateral, (b) permit Agent, and any
of its officers, employees and agents, to inspect, audit and make extracts from
any Credit Party's books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review, evaluate and make test verifications
and counts of the Accounts, Inventory and other Collateral of any Credit Party.
If a Default or Event of Default shall have occurred and be continuing or if
access is necessary to preserve or protect the Collateral as determined by
Agent, each such Credit Party shall provide such access to Agent and to each
Lender at all times and without advance notice. Furthermore, so long as any
Event of Default shall have occurred and be continuing, Borrower shall provide
Agent and each Lender with reasonable access to their suppliers and customers.
Each Credit Party shall make available to Agent and its counsel, as quickly as
is possible under the circumstances, originals or copies of all books and
records which Agent may request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain
records from any service bureau or other Person which maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party. Agent
will give Lenders at least ten (10) days' prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany Agent's
representatives on regularly scheduled audits at no charge to Borrower.

     1.15.     TAXES. (a) Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with this SECTION 1.15, free and clear of
and without deduction for any and all present or future Taxes. If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to SECTION 12) or under the Notes,
(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.15) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days after the
date of any payment of Taxes, Borrower shall furnish to Agent the original or a
certified copy of a receipt evidencing payment thereof.



          (b)  Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within ten (10) Business Days' of demand therefor, pay
Agent and each Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this SECTION 1.15) paid by Agent or
such Lender, as appropriate, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted.

          (c)  Each Lender organized under the laws of a jurisdiction outside
the United States (a "FOREIGN LENDER") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"CERTIFICATE OF EXEMPTION"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person is unable to deliver a Certificate of Exemption.

     1.16.     CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY; REPLACEMENT OF
LENDER IN RESPECT TO INCREASED COSTS. (a) If any Lender shall have determined
that any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to Agent shall, absent manifest error,
be final, conclusive and binding for all purposes.

          (b)  If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such



Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to Borrower and to Agent by such Lender, shall be conclusive and binding on
Borrower for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this SECTION 1.16(b).

          (c)  Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon, UNLESS Borrower on behalf of Borrower,
within five (5) Business Days after the delivery of such notice and demand,
converts all such Loans into a Loan bearing interest based on the Index Rate.

          (d)  Within fifteen (15) days after receipt by Borrower of written
notice and demand from any Lender (an "AFFECTED LENDER") for payment of
additional amounts or increased costs as provided in SECTION 1.15(a), 1.16(a) or
1.16(b), Borrower may, at its option, notify Agent and such Affected Lender of
its intention to replace the Affected Lender. So long as no Default or Event of
Default shall have occurred and be continuing, Borrower, with the consent of
Agent, may obtain, at Borrower's expense, a replacement Lender ("REPLACEMENT
LENDER") for the Affected Lender, which Replacement Lender must be satisfactory
to Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale,
PROVIDED that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment.

          Notwithstanding the foregoing, Borrower shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrower's notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives a notice of



intention to replace and do not so replace such Affected Lender within ninety
(90) days thereafter, Borrower's rights under this SECTION 1.16(d) shall
terminate and Borrower shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to SECTIONS 1.15(a), 1.16(a)
and 1.16(b).

          (e) If any Lender shall fail to notify Borrower of any event occurring
after the date of this Agreement entitling such Lender to compensation under
this Section within 180 days after the officer of such Lender responsible for
the business relationship of such Lender with Borrower obtains actual knowledge
thereof, such Lender shall, with respect to compensation payable pursuant to
this Section in respect of any costs resulting from such event, only be entitled
to payment under this Section for costs incurred from and after the date 180
days prior to the date that such Lender does give such notice.

     1.17.     SINGLE LOAN. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of its Collateral.

     1.18.     COMMITMENT FEE. As compensation for Lenders entering into this
Agreement, Borrower shall issue to Lenders the Borrower Warrant. Lenders and the
Borrower agree that the fair value of the Borrower Warrant is $135,000. The
parties to this Agreement agree to use this value for the Borrower Warrant for
all tax purposes.

2.   CONDITIONS PRECEDENT

     2.1.      CONDITIONS TO THE EFFECTIVE OF THIS AGREEMENT. This Agreement
shall not be effective, and no Lender shall be obligated to make any Loan or
incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill,
or perform any other action hereunder, until the following conditions have been
satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Lenders:

          (a)  CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, the other
Credit Parties signatory hereto, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as ANNEX D, each in form and substance
satisfactory to Agent.

          (b)  APPROVALS. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance satisfactory to Agent affirming that no such consents or
approvals are required.



          (c)  BORROWER WARRANT; BORROWER WARRANT AGREEMENT. Agent shall have
received the Borrower Warrant and the Borrower Warrant Agreement duly executed
and delivered by Borrower and the other Credit Parties signatory thereto.

          (d)  PAYMENT OF FEES. Borrower shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in SECTION 1.9, and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.

          (e)  CAPITAL STRUCTURE; OTHER INDEBTEDNESS. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness (including,
without limitation, in respect of the Lebanon IRBs, the IRB Lease Agreement and
the IRB Indenture) of each Credit Party shall be acceptable to Agent in its sole
discretion.

          (f)  VENDOR PAYMENT TERMS. Agent shall be satisfied with the vendor
payment terms in effect on the Closing Date as set forth on DISCLOSURE SCHEDULE
3.21(b).

          (g)  OPERATING BUDGET. Agent shall have received from Borrower the
Operating Budget.

          (h)  WORTHINGTON ACQUISITION. Agent shall have received such
information and documentation as it may require relating to any liabilities or
obligations of the Credit Parties under or relating to the Worthington
Acquisition and the Worthington Acquisition Agreement, and all of which shall be
acceptable to Agent in its discretion.

     2.2.      FURTHER CONDITIONS TO EACH LOAN. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Loan, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:

          (a)  Any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect as of
such date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement; or

          (b)  Any event or circumstance having a Material Adverse Effect with
respect to the Credit Parties shall have occurred since December 31, 2000, as
reasonably determined by the Requisite Revolving Lenders; or

          (c)  (i) Any Event of Default shall have occurred and be continuing or
would result after giving effect to any Loan (or the incurrence of any Letter of
Credit Obligations), or (ii) a Default shall have occurred and be continuing or
would result after giving effect to any Loan, and Agent or Requisite Revolving
Lenders shall have



determined not to make any Loan or incur any Letter of Credit Obligation so long
as that Default is continuing; or

          (d)  After giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the Borrowing Availability, or (ii) Excess
Borrowing Availability shall not be less than $1,000,000; or

          (e)  Such Advance (or the incurrence of any Letter of Credit
Obligations) is not contemplated and permitted by the Cash Flow Budget.

The request and acceptance by Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a representation
and warranty by Borrower that the conditions in this SECTION 2.2 have been
satisfied and (ii) a reaffirmation by Borrower of the granting and continuance
of Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.

3.   REPRESENTATIONS AND WARRANTIES

          To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.

     3.1.      CORPORATE OR LIMITED LIABILITY COMPANY EXISTENCE; COMPLIANCE WITH
LAW. Each Credit Party (a) is a corporation or limited liability company, as the
case may be, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not result in exposure to
losses, damages or liabilities in excess of $100,000; (c) has the requisite
organizational power and authority and the legal right to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the property it
operates under lease and to conduct its business as now, heretofore and proposed
to be conducted; (d) subject to specific representations regarding Environmental
Laws, has all licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct, except when the failure to have or do so, individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect;
(e) is in compliance with its charter and by-laws or equivalent organizational
or charter or constituent documents; and (f) subject to specific representations
set forth herein regarding ERISA, Environmental Laws, tax and other



laws, is in compliance with all applicable provisions of law, except where the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

     3.2.      EXECUTIVE OFFICES; FEIN. As of the Closing Date, the current
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
have changed within the twelve (12) months preceding the Closing Date. In
addition, DISCLOSURE SCHEDULE (3.2) lists the federal employer identification
number of each Credit Party.

     3.3.      CORPORATE OR LIMITED LIABILITY COMPANY POWER, AUTHORIZATION,
ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by each Credit
Party of the Loan Documents to which it is a party and the creation of all Liens
provided for therein: (a) are within such Person's organizational power; (b)
have been duly authorized by all necessary or proper organizational and
shareholder or membership action; (c) do not contravene any provision of such
Person's charter or bylaws or equivalent organizational or charter or other
constituent documents; (d) do not violate any law or regulation, or any order or
decree of any court or Governmental Authority; (e) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any indenture
(including, without limitation, the IRB Indenture), mortgage, deed of trust,
lease (including, without limitation, the IRB Lease Agreement), agreement or
other instrument to which such Person is a party or by which such Person or any
of its property is bound; (f) do not result in the creation or imposition of any
Lien upon any of the property of such Person other than those in favor of Agent,
on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in SECTION 2.1(b), all of which will have been
duly obtained, made or complied with prior to the Closing Date. On or prior to
the Closing Date, each of the Loan Documents shall have been duly executed and
delivered by each Credit Party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms.

     3.4.      FINANCIAL STATEMENTS AND PROJECTIONS. Except for the Projections,
all Financial Statements concerning Holdings and its Subsidiaries which are
referenced below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.

          (a) The following Financial Statements attached hereto as DISCLOSURE
SCHEDULE (3.4(A)) have been delivered on the date hereof:



               (i) The audited consolidated and consolidating balance sheets at
December 31, 1999 and 2000 and the related statements of income and cash flows
of Borrower for the Fiscal Years then ended, certified by KMPG LLC.

               (ii) The unaudited balance sheet(s) prepared on a monthly basis
for each of (x) the twelve Fiscal Months ending December 31, 2001 and (y) the
Fiscal Month ending January 31, 2002, in each case together with the related
statement(s) of income and cash flows of Borrower for each such Fiscal Month.

          (b) PROJECTIONS. The Projections delivered on the date hereof and
attached hereto as DISCLOSURE SCHEDULE (3.4(B)) have been prepared by Holdings
and Borrower in light of the past operations of their respective businesses, and
reflect projections for the five year period beginning on January 1, 2002 on a
month by month basis for the first year and on a year by year basis thereafter.
The Projections are based upon estimates and assumptions stated therein, all of
which Holdings and Borrower believe as of the Closing Date to be reasonable and
fair in light of current conditions and current facts known to Holdings and
Borrower and, as of the Closing Date, reflect Holdings' and Borrower's good
faith and reasonable estimates of the future financial performance of Holdings
and its Subsidiaries and of the other information projected therein for the
period set forth therein.

     3.5.      MATERIAL ADVERSE EFFECT. Between December 31, 2000 and the
Closing Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or
has become binding upon any Credit Party's assets and no law or regulation
applicable to any Credit Party has been adopted which has had or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrower's knowledge no third party is in
default under any material contract, lease or other agreement or instrument,
which alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Except as set forth on DISCLOSURE SCHEDULE (3.5), between
December 31, 2000 and the Closing Date no event has occurred, which alone or
together with other events, could reasonably be expected to have a Material
Adverse Effect.

     3.6.      OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date, the real
estate ("REAL ESTATE") listed on DISCLOSURE SCHEDULE (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on DISCLOSURE SCHEDULE (3.6), and copies of all such
leases or a summary of terms thereof satisfactory to Agent have been delivered
to Agent. DISCLOSURE SCHEDULE (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or



assignor as of the Closing Date. Each Credit Party also has good and marketable
title to, or valid leasehold interests in, all of its personal properties and
assets. As of the Closing Date, none of the properties and assets of any Credit
Party are subject to any Liens other than Permitted Encumbrances, and there are
no facts, circumstances or conditions known to any Credit Party that may result
in any Liens (including Liens arising under Environmental Laws) other than
Permitted Encumbrances. Each Credit Party has received all deeds, assignments,
waivers, consents, non-disturbance and recognition or similar agreements, bills
of sale and other documents, and has duly effected all recordings, filings and
other actions necessary to establish, protect and perfect such Credit Party's
right, title and interest in and to all such Real Estate and other properties
and assets. DISCLOSURE SCHEDULE (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any
Real Estate. As of the Closing Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss which has
not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Closing Date, all material
permits required to have been issued or appropriate to enable the Real Estate to
be lawfully occupied and used for all of the purposes for which they are
currently occupied and used have been lawfully issued and are in full force and
effect.

     3.7.      LABOR MATTERS. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter; (c) all payments
due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) except as
set forth in DISCLOSURE SCHEDULE (3.7), no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement, consulting
agreement or any employment agreement (and true and complete copies of any
agreements described on DISCLOSURE SCHEDULE (3.7) have been delivered to Agent);
(e) there is no organizing activity involving any Credit Party pending or, to
any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Credit Party has made a pending
demand for recognition; and (g) except as set forth in DISCLOSURE SCHEDULE
(3.7), there are no complaints or charges against any Credit Party pending or,
to the knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.

     3.8.      VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE (3.8), no Credit Party
has any Subsidiaries or is engaged in any joint venture or partnership with any
other Person. Except as set forth in DISCLOSURE SCHEDULE (3.8), as of the
Closing Date no Credit Party is



an Affiliate of any other Person. All of the issued and outstanding Stock of
each Credit Party is owned by each of the stockholders and/or members and in the
amounts set forth on DISCLOSURE SCHEDULE (3.8). There are no outstanding rights
to purchase, options, warrants or similar rights or agreements pursuant to which
any Credit Party may be required to issue, sell, repurchase or redeem any of its
Stock or other equity securities or any Stock or other equity securities of its
Subsidiaries. All outstanding Indebtedness of each Credit Party as of the
Closing Date is described in SECTION 6.3 (including DISCLOSURE SCHEDULE (6.3)).
None of the Credit Parties other than Borrower has any assets (except nominal
cash, Stock of their Subsidiaries, in the case of the IRB Subsidiary, the
Lebanon IRBs and the rights related thereto and, in the case of Holdings, (i)
$5,000,000 of cash received by Holdings from Borrower and evidenced by the
Holdings Note, (ii) capital contributions made to Holdings so long as
immediately thereafter an equal amount is contributed to the capital of Borrower
and (iii) payments that Holdings receives to the extent permitted by SECTION 6.4
or SECTION 6.14) or any Indebtedness or Guaranteed Indebtedness (except the
Obligations and the Holdings Note).

     3.9.      GOVERNMENT REGULATION. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as amended. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

     3.10.     MARGIN REGULATIONS. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "MARGIN STOCK"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.



     3.11.     TAXES. All tax returns, reports and statements, including
information returns, required by any Governmental Authority ("TAX RETURNS") to
be filed by any Credit Party have been filed with the appropriate Governmental
Authority; all such Tax Returns are true, correct and complete in all material
respects; and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with SECTION 5.2(b). No
adjustment relating to any Tax Return has been proposed formally or informally
by any Government Authority and, to the knowledge of each Credit Party, no basis
exists for such adjustment. Proper and accurate amounts have been withheld by
each Credit Party from its respective employees, independent contractors,
creditors, members, partners and other third parties for all periods in full and
complete compliance with all applicable federal, state, local and foreign law
and such withholdings have been timely paid to the respective Governmental
Authorities. DISCLOSURE SCHEDULE (3.11) sets forth as of the Closing Date those
taxable years for which any Credit Party's tax returns are currently being
audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on DISCLOSURE SCHEDULE
(3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties are liable for any Charges: (a) under any agreement
(including any tax sharing agreements other than the Tax Sharing Agreement) or
(b) to each Credit Party's knowledge, as a transferee. As of the Closing Date,
no Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Material Adverse Effect. DISCLOSURE SCHEDULE 3.11 sets forth the
federal and state net taxable income or loss, as the case may be, of the
Borrower for the taxable years ending December 31, 1999, and 2000 (determined as
if Borrower were a separate taxable entity); provided that Borrower represents
that it has filed an extension for the filing of its tax return for the tax year
ended December 31, 2002. During such years, (i) no distributions or payments
were made by Borrower to Holdings or any member of the Morton Group with respect
to the Tax Sharing Agreement and (ii) other than distributions permitted by
Section 6.4 of the Original Credit Agreement, no other distributions or payments
have been made by Borrower to Holdings or any member of the Morton Group.

     3.12.     ERISA. (a) DISCLOSURE SCHEDULE (3.12) lists and separately
identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
5500 for each such Plan, have been delivered to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
IRC, and nothing has occurred which would cause the loss of such qualification
or tax-exempt status. Each Plan is in compliance with the



applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA. No Credit Party or ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any such Plan. No Credit
Party or ERISA Affiliate has engaged in a prohibited transaction, as defined in
Section 4975 of the IRC, in connection with any Plan, which would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
4975 of the IRC.

          (b) Except as set forth in DISCLOSURE SCHEDULE (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan with Unfunded Pension Liabilities
has been transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; and (vi)
no liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency.

     3.13.     NO LITIGATION. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Credit Party,
threatened against any Credit Party, before any Governmental Authority or before
any arbitrator or panel of arbitrators (collectively, "LITIGATION") which
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
has a reasonable risk of being determined adversely to any Credit Party and
which, if so determined, could have a Material Adverse Effect. Except as set
forth on DISCLOSURE SCHEDULE (3.13), as of the Closing Date there is no
Litigation pending or, to the knowledge of any Credit Party, threatened which
seeks damages in excess of $100,000 or injunctive relief or alleges criminal
misconduct of any Credit Party.

     3.14.     BROKERS. No broker or finder acting on behalf of any Credit Party
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.

     3.15.     INTELLECTUAL PROPERTY. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now conducted by it or proposed to be conducted by it,
and each Patent,



Trademark, Copyright and License is listed, together with application or
registration numbers, as applicable, in DISCLOSURE SCHEDULE (3.15) hereto. Each
Credit Party conducts its business and affairs without any known infringement of
or interference with any Intellectual Property of any other Person.

     3.16.     FULL DISCLOSURE. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.

     3.17.     ENVIRONMENTAL MATTERS. (a) Except as described in the
environmental reports listed on DISCLOSURE SCHEDULE (3.17) or as otherwise
described on such Disclosure Schedule, as of the Closing Date: (i) the Real
Estate is free of contamination from any Hazardous Material except for such
contamination that would not materially adversely impact the value or
marketability of such Real Estate and which would not result in Environmental
Liabilities which could reasonably be expected to exceed $100,000; (ii) no
Credit Party has caused or suffered to occur any Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate; (iii) the
Credit Parties are and have been in compliance with all Environmental Laws,
except for such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to exceed $100,000; (iv) the
Credit Parties have obtained, and are in compliance with, all Environmental
Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where
the failure to so obtain or comply with such Environmental Permits would not
result in Environmental Liabilities which could reasonably be expected to exceed
$100,000, and all such Environmental Permits are valid, uncontested and in good
standing; (v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $100,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material which seeks
damages, penalties, fines, costs or expenses in excess of $100,000 or injunctive
relief, or which alleges criminal misconduct by any Credit Party; (vii) no
notice has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are



no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.

          (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.

     3.18.     INSURANCE. DISCLOSURE SCHEDULE (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.

     3.19.     DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE SCHEDULE (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.

     3.20.     GOVERNMENT CONTRACTS. Except as set forth in DISCLOSURE SCHEDULE
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or any similar state or local law.

     3.21.     CUSTOMER AND TRADE RELATIONS; TRADE PAYABLES. (a) As of the
Closing Date, there exists no actual or, to the knowledge of any Credit Party,
threatened termination or cancellation of, or any material adverse modification
or change in: the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or the business relationship of any Credit Party with any supplier or group of
suppliers whose supplies during the preceding twelve (12) months caused them to
be ranked among the ten largest suppliers of such Credit Party.

          (b) DISCLOSURE SCHEDULE 3.21(b) sets forth a true, accurate and
complete aging report (aged from invoice date as follows: 1-30 days, 31-60 days,
61-90 days and 91 days or more) as of the Closing Date with respect to the trade
payables or other amounts or obligations (a "TRADE PAYABLE") payable by the
Credit Parties to each vendor which in the aggregate for any vendor exceeds
$5,000, and a summary of the



payment terms applicable to each of the Trade Payables for each such vendor,
together with copies of all documentation evidencing such trade terms, including
copies of any correspondence with such vendors and promissory notes evidencing
any such Trade Payables.

     3.22.     AGREEMENTS AND OTHER DOCUMENTS. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which are listed on DISCLOSURE
SCHEDULE (3.22): supply agreements and purchase agreements not terminable by
such Credit Party within sixty (60) days following written notice issued by such
Credit Party and involving transactions in excess of $1,000,000 per annum; any
lease of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other payments in excess of $500,000 per annum; licenses
and permits held by the Credit Parties, the absence of which could be reasonably
likely to have a Material Adverse Effect; instruments or documents evidencing
Indebtedness of such Credit Party and any security interest granted by such
Credit Party with respect thereto; and instruments and agreements evidencing the
issuance of any equity securities, warrants, rights or options to purchase
equity securities of such Credit Party.

     3.23.     SOLVENCY. Both before and after giving effect to (a) the
amendment and restatement of the Original Credit Agreement pursuant to this
Agreement and the Loans and Letter of Credit Obligations to be made or extended
on the Closing Date or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or extended, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of Borrower, and (c) the payment and
accrual of all transaction costs in connection with the foregoing, each Credit
Party is Solvent.

     3.24.     WORTHINGTON LITIGATION; WORTHINGTON ACQUISITION AGREEMENT. The
Credit Parties have delivered to Agent as of the Closing Date true, correct and
complete copies of (i) the Worthington Acquisition Agreement (together with all
modifications, amendments and supplements thereto) and (ii) all pleadings,
filings, and non-privileged case summaries, memorandum and related material
relating to the Worthington Litigation; provided that the Credit Parties shall
not be obligated to deliver to Agent any items relating to the Worthington
Litigation which would compromise the attorney-client privilege between the
Credit Parties and their counsel.

     3.25.     STATUS OF HOLDINGS; IRB SUBSIDIARY. Holdings and the IRB
Subsidiary have not engaged in any business or incurred any Indebtedness or any
other liabilities (except in connection with its corporate or limited liability
company formation, the Related Transactions Documents and this Agreement or
except as permitted under SECTION 6.19).



     3.26.     SECURITY AGREEMENTS; INTELLECTUAL PROPERTY SECURITY AGREEMENTS
AND PLEDGE AGREEMENTS. Attached hereto as DISCLOSURE SCHEDULE (3.26) are true,
correct and complete copies of each of the schedules to each of the Security
Agreements, the Intellectual Property Security Agreements and the Pledge
Agreements updated to, and true, correct and complete as of the Closing Date.

4.   FINANCIAL STATEMENTS AND INFORMATION

     4.1.      REPORTS AND NOTICES. (a) Each Credit Party executing this
Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent and/or Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in ANNEX E.

          (b) Each Credit Party executing this Agreement hereby agrees that from
and after the Closing Date and until the Termination Date, it shall deliver to
Agent and/or Lenders, as required, the various Collateral Reports (including
Revolving Borrowing Base Certificates in the form of EXHIBIT 4.1(b)(i)) at the
times, to the Persons and in the manner set forth in ANNEX F.

     4.2.      COMMUNICATION WITH ACCOUNTANTS. Each Credit Party executing this
Agreement authorizes Agent and, so long as a Default or Event of Default shall
have occurred and be continuing, each Lender, to communicate directly with its
independent certified public accountants including KPMG LLP, and authorizes and
shall instruct those accountants and advisors to disclose and make available to
Agent and each Lender any and all Financial Statements and other supporting
financial documents, schedules and information relating to any Credit Party
(including copies of any issued management letters) with respect to the
business, financial condition and other affairs of any Credit Party.

5.   AFFIRMATIVE COVENANTS

          Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:

     5.1.      MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each Credit
Party shall: do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate or limited liability existence and its
material rights and franchises; continue to conduct its business substantially
as now conducted or as otherwise permitted hereunder; at all times maintain,
preserve and protect all of its material assets and properties used or useful in
the conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry



practices; and transact business only in such limited liability company and
trade names as are set forth in DISCLOSURE SCHEDULE (5.1).

     5.2.      PAYMENT OF OBLIGATIONS. (a) Subject to SECTION 5.2(b), each
Credit Party shall pay and discharge or cause to be paid and discharged promptly
all Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (B) lawful claims for labor, materials, supplies and services or
otherwise, provided that claims for any of the items set forth in this
subsection (B) may be paid or discharged after the date due so long as (i) such
claim is paid in the ordinary course of business consistent with past practices,
(ii) no Lien shall be imposed to secure payment of such claim that is superior
to any of the Liens securing the Obligations, (iii) none of the Collateral
becomes subject to forfeiture or loss as a result thereof and (iii) Agent has
not advised Borrower in writing that Agent reasonably believes that nonpayment
or nondischarge thereof could have or result in a Material Adverse Effect.

          (b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges described in SECTION 5.2(a);
PROVIDED, that (i) adequate reserves with respect to such contest are maintained
on the books of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (iv) such Credit Party shall
promptly pay or discharge such contested Charges or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this SECTION 5.2(b) are no longer met, and (v) Agent has
not advised Borrower in writing that Agent reasonably believes that nonpayment
or nondischarge thereof could have or result in a Material Adverse Effect.

     5.3.      BOOKS AND RECORDS. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as DISCLOSURE SCHEDULE
(3.4(A)).

     5.4.      INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL. (a) The Credit
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on DISCLOSURE SCHEDULE (3.18) as in effect on the date
hereof or otherwise in form and amounts and with insurers acceptable to Agent.
If any Credit Party at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay all premiums
relating thereto, Agent may at any time or times thereafter obtain and



maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.

          (b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent's opinion,
adequately protect both Agent's and Lender's interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If Agent requires any such
additional forms or limits of insurance, the applicable Credit Party shall have
thirty (30) days to provide to Agent satisfactory evidence that it has obtained
such additional forms and/or limits. If requested by Agent, each Credit Party
shall deliver to Agent from time to time a report of a reputable insurance
broker, reasonably satisfactory to Agent, with respect to its insurance
policies.

          (c) Borrower shall deliver to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming Agent,
on behalf of itself and Lenders, as additional insured. Borrower irrevocably
makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Default or Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed
$250,000, as Borrower's true and lawful agent and attorney-in-fact for the
purpose of making, settling and adjusting claims under such "All Risk" policies
of insurance, endorsing the name of Borrower on any check or other item of
payment for the proceeds of such "All Risk" policies of insurance and for making
all determinations and decisions with respect to such "All Risk" policies of
insurance. Agent shall have no duty to exercise any rights or powers granted to
it pursuant to the foregoing power-of-attorney. Borrower shall promptly notify
Agent of any loss, damage, or destruction to the Collateral in the amount of
$250,000 or more, whether or not covered by insurance. After deducting from such
proceeds the expenses, if any, incurred by Agent in the collection or handling
thereof, Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with SECTION 1.3(d); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by
Borrower, or permit or require Borrower to use such money, or any part thereof,
to replace, repair, restore or rebuild the Collateral in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or



destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds would not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $250,000 in the aggregate,
Agent shall permit Borrower to replace, restore, repair or rebuild the property;
PROVIDED that if Borrower shall not have completed or entered into binding
agreements to complete such replacement, restoration, repair or rebuilding
within 270 days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with SECTION 1.3(d); provided further that in the case
of insurance proceeds pertaining to any Credit Party that is not Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by
Borrower. All insurance proceeds which are to be made available to Borrower to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Revolving Loan of Borrower
(which application shall not result in a permanent reduction of the Revolving
Loan Commitment) and upon such application, Agent shall establish a Reserve
against the Revolving Borrowing Base in an amount equal to the amount of such
proceeds so applied. All insurance proceeds made available to any Credit Party
that is not a Borrower to replace, repair, restore or rebuild Collateral shall
be deposited in a cash collateral account. Thereafter, such funds shall be made
available to Borrower to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower shall request a Revolving Credit Advance
or a release from the cash collateral account be made to Borrower in the amount
requested to be released; (ii) so long as the conditions set forth in SECTION
2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance or
Agent shall release funds from the cash collateral account; and (iii) in the
case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with SECTION 1.3(d); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by
Borrower.

     5.5.      COMPLIANCE WITH LAWS. Each Credit Party shall comply with all
federal, state, local and foreign laws (including, without limitation, the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976) and regulations
applicable to it, including those relating to ERISA and labor matters, and
Environmental Laws and Environmental Permits, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

     5.6.      SUPPLEMENTAL DISCLOSURE. From time to time as may be requested by
Agent (which request will not be made more frequently than once each year absent
the occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in such Disclosure Schedule or
as an exception to such representation or which



is necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Agent and Requisite Lenders in
writing; and (b) no supplement shall be required as to representations and
warranties that relate solely to the Closing Date.

     5.7.      INTELLECTUAL PROPERTY. Each Credit Party will conduct its
business and affairs without any known infringement of or interference with any
Intellectual Property of any other Person in any material respect.

     5.8.      ENVIRONMENTAL MATTERS. (a) Each Credit Party shall and shall
cause each Person within its control to: (i) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (ii) implement any and all
investigation, remediation, removal and response actions which are appropriate
or necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (iii) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate which is
reasonably likely to result in Environmental Liabilities in excess of $50,000;
and (iv) promptly forward to Agent a copy of any order, notice, request for
information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $50,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, which, in each case, could reasonably be
expected to have a Material Adverse Effect, then each Credit Party shall, upon
Agent's written request (i) cause the performance of such environmental audits
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance acceptable to Agent, and (ii) permit Agent or its representatives to
have access to all Real Estate for the purpose of conducting such environmental
audits and testing as Agent



deems appropriate, including subsurface sampling of soil and groundwater.
Borrower shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.

          (b) In addition to, and not in limitation of, the foregoing, Borrower
and Holdings shall take all actions necessary to cause all of the remedial
actions, reporting obligations and related items listed in the "Recommended
Actions" sections of the Environmental Issues Summary set forth on DISCLOSURE
SCHEDULE (5.8) to be completed, in a manner satisfactory to the Agent, within
ninety (90) days of the Closing Date.

     5.9.      LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS AND BAILEE LETTERS.
Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse, processor or
converter facility or other location where Collateral is located, which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee or bailee may assert against the Inventory
or Collateral at that location, and shall otherwise be satisfactory in form and
substance to Agent. After the Closing Date, no real property or warehouse space
shall be leased or acquired by any Credit Party and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date without the prior written consent of Agent (which consent, in
Agent's discretion, may be conditioned upon the exclusion from the Revolving
Borrowing Base of Eligible Inventory at that location or the establishment of
Reserves acceptable to Agent) or, unless and until a satisfactory landlord or
mortgagee agreement or bailee letter, as appropriate, shall first have been
obtained with respect to such location. Each Credit Party shall timely and fully
pay and perform its obligations under all leases and other agreements with
respect to each leased location or public warehouse where any Collateral is or
may be located.

     5.10.     CHIEF FINANCIAL OFFICER. On or prior to April 15, 2002, Borrower
shall have hired a full-time employee to act as Borrower's chief financial
officer, provided that such individual shall be acceptable to Agent in its sole
discretion (the "NEW CFO"). Until such time as Borrower has hired the New CFO,
one or more representatives of CBW shall continue to act as Borrower's financial
management advisor upon substantially the same terms and with the same duties
and responsibilities, as on the Closing Date.

     5.11.     OPERATING COMMITTEE. On or before April 15, 2002, Borrower shall
create an operating committee composed of William Morton, Haskell Knight, the
New CFO and a representative designated by CBW (the "OPERATING COMMITTEE").
Borrower shall cause the Operating Committee to (i) prepare an annual strategic
plan and updates thereto on a regular basis and as otherwise necessary to
reflect changes in Borrower's condition (financial and otherwise), (ii) evaluate
Borrower's performance relative to the strategic plan and implement actions
designed to remedy any deviations



from said plan and (iii) take such other actions as the Borrower may deem
necessary from time to time. Borrower shall cause the Operating Committee to
meet regularly, but no less frequently than quarterly. Borrower shall cause a
designee of CBW to remain on the Operating Committee until such time as CBW's
engagement by Borrower terminates; provided that upon the termination of CBW's
engagement, the CBW representative on the Operating Committee shall
automatically be removed without any further action by any party.
Notwithstanding anything to the contrary set forth in this Section 5.11, the
Operating Committee shall only have the rights and obligations set forth in this
Section 5.11 and all other rights and obligations with respect to Borrower's
operations and management shall be retained by the manager and/or members of
Borrower in accordance with the provisions of Borrower's operating agreement.

     5.12.     VENDOR PAYMENT TERMS. Within thirty (30) days following the
Closing Date, Agent shall have received a report from a third party consultant
engaged by Borrower (at Borrower's expense) and acceptable to the Agent that the
vendor payment terms for those vendors noted with a "*" on DISCLOSURE SCHEDULE
3.21(b) have been verified as true and accurate as of the Closing Date, which
report shall be in the form and substance satisfactory to the Agent.

     5.13.     VEHICLE TITLES. Within sixty (60) days following the Closing
Date, Borrower shall have delivered to Agent, in form and substance satisfactory
to Agent, evidence that all vehicles owned by Borrower have been properly titled
in Borrower's name.

     5.14.     HASKELL KNIGHT EMPLOYMENT AGREEMENT. Within thirty (30) days
following the Closing Date, Borrower shall have amended the employment agreement
of Haskell Knight in a manner acceptable to Agent.

     5.15.     CASH MANAGEMENT SYSTEMS. Within fifteen (15) days following the
Closing Date, Borrower shall have executed, and caused to have been executed by
one or more banks, such cash management agreements as are required by Annex C
and the Agent including, without limitation, pledge agreements for account nos.
350-030-3, 350-032-9, 349-920-9 and 349-945-6 at Harris Trust & Savings Bank and
account 2000001779325 at First Union National Bank.

     5.16.     FURTHER ASSURANCES. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.



6.   NEGATIVE COVENANTS

          Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that, without the prior written consent of Agent
and the Requisite Lenders, from and after the date hereof until the Termination
Date:

     6.1.      MERGERS, SUBSIDIARIES, ETC. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person.

     6.2.      INVESTMENTS; LOANS AND ADVANCES. Except as otherwise expressly
permitted by this SECTION 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) Borrower may hold investments comprised
of notes payable, or stock or other securities issued by Account Debtors to
Borrower pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, so long as the
aggregate amount of such Accounts so settled by Borrower after the Closing Date
does not exceed $100,000; (b) each Credit Party may maintain its existing
investments in its Subsidiaries as of the Closing Date; (c) Borrower may hold
the Holdings Note evidencing the $5,000,000 loan previously made to Holdings and
evidenced thereby; and (d) other investments not exceeding $100,000 in the
aggregate at any time outstanding.

     6.3.      INDEBTEDNESS. (a) No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (without duplication) (i) Indebtedness
secured by purchase money security interests and Capitalized Leases permitted in
clause (c) of Section 6.7, (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law, (iv) in the case of Holdings, Indebtedness evidenced by the Holdings Note,
(v) existing Indebtedness described in DISCLOSURE SCHEDULE (6.3) and
refinancings thereof or amendments or modifications thereto which do not have
the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and which are otherwise on
terms and conditions no less favorable to any Credit Party, Agent or any Lender,
as reasonably determined by Agent, than the terms of the Indebtedness being
refinanced, amended or modified, (vi) the Existing Vendor Notes, and (vii)
promissory notes issued to vendors in settlement of accounts payable owed to
such vendors not in excess of $1,000,000 in the aggregate issued after the
Closing Date, provided that such notes are not secured by any assets or property
of any Credit Party and are otherwise in form and substance satisfactory to
Agent.

          (b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness



evidenced by the Holdings Note, and (iii) Indebtedness secured by a Permitted
Encumbrance if the asset securing such Indebtedness has been sold or otherwise
disposed of in accordance with SECTIONS 6.8(b), (c) or (d).

     6.4.      EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS. (a) Except as
otherwise expressly permitted in this Section 6 with respect to Affiliates, no
Credit Party shall enter into or be a party to any transaction with any other
Credit Party or any Affiliate thereof except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's business and upon
fair and reasonable terms that are no less favorable to such Credit Party than
would be obtained in a comparable arm's length transaction with a Person not an
Affiliate of such Credit Party; PROVIDED, that (i) so long as no Event of
Default has occurred or would occur as a result thereof Borrower and Holdings
shall be permitted to reimburse MIG for out-of-pocket expenses and costs
incurred by MIG on behalf of the Credit Parties to the extent required and
contemplated by the Credit Parties' constituent documents as in effect on the
date hereof but in no event in an amount exceeding (A) $258,000 for the period
ending June 30, 1999, (B) $79,000 per month from July 1, 1999 until the Closing
Date and (C) $45,000 per month thereafter (such amount to be pro-rated for
partial months), (ii) Holdings shall be permitted to be a party to the Tax
Sharing Agreement and, subject to SECTION 6.14, perform its obligations
thereunder, and (iii) the Credit Parties shall be permitted to enter into the
transactions relating to the Lebanon IRBs, the IRB Assignment Documents, the IRB
Indenture and the IRB Lease Agreement. In addition, if any such transaction or
series of related transactions involves payments in excess of $250,000 in the
aggregate, the terms of these transactions must be disclosed in advance to Agent
and Lenders. All such transactions existing as of the date hereof are described
on DISCLOSURE SCHEDULE (6.4(a)). The parties hereto acknowledge and agree that
each January Agent shall be permitted to review the expenses referred to in
clause (i)(B) above and as a result of such review Agent may in the exercise of
its reasonable credit judgment adjust the amount of expenses permitted by such
clause (i)(B) above.

          (b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $10,000 to any employee and up to a maximum of
$30,000 in the aggregate at any one time outstanding.

     6.5.      CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations which
could reasonably be expected to adversely affect the repayment of the Loans or
any of the other Obligations or could reasonably be expected to have or result
in a Material Adverse Effect, (b) make any change in its capital structure as
described on DISCLOSURE SCHEDULE (3.8), including the issuance of any shares of
Stock (other than the issuance of Stock in connection with the exercise of the
Borrower Warrant), warrants (other than the



Borrower Warrant) or other securities convertible into Stock or any revision of
the terms of its outstanding Stock (other than the issuance of Stock upon
exercise of the Borrower Warrant), or (c) amend its charter or bylaws,
membership agreements, operating agreements (other than the amended and restated
operating agreement of Borrower executed as of the Closing Date) or other
constituent documents. No Credit Party shall engage in any business other than
the businesses currently engaged in by it.

     6.6.      GUARANTEED INDEBTEDNESS. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.

     6.7.      LIENS. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
DISCLOSURE SCHEDULE (6.7); (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $500,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed 100% of the
purchase price of the subject assets); and (d) other Liens securing Indebtedness
not exceeding $100,000 in the aggregate at any time outstanding, so long as such
Liens do not attach to any Accounts or Inventory or any property included in the
real property or Equipment appraisals previously delivered to Agent. In
addition, no Credit Party shall become a party to any agreement, note, indenture
or instrument, or take any other action, which would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases (including the IRB Lease Agreement), the IRB
Indenture, or Licenses which prohibit Liens upon the assets that are subject
thereto.

     6.8.      SALE OF STOCK AND ASSETS. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the capital Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of their Accounts, other than (a) the sale
of Inventory in the ordinary course of business, (b) the sale, transfer,
conveyance or other disposition by a Credit Party of assets that are obsolete or
no longer used or useful in such Credit Party's business and having a value not
exceeding $50,000 in any single transaction or $100,000 in the aggregate in any
Fiscal Year, and (c) other Equipment and Fixtures having a value not exceeding
$50,000 in any single transaction or $100,000 in the aggregate in any



Fiscal Year. With respect to any disposition of assets or other properties
permitted pursuant to CLAUSE (b) and CLAUSE (c) above, Agent agrees on
reasonable prior written notice to release its Lien on such assets or other
properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower, at Borrower's expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrower.

     6.9.      ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.

     6.10.     FINANCIAL COVENANTS. Borrower shall not breach or fail to comply
with any of the Financial Covenants (the "FINANCIAL COVENANTS") set forth in
ANNEX G.

     6.11.     HAZARDOUS MATERIALS. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.

     6.12.     SALE-LEASEBACKS. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.

     6.13.     CANCELLATION OF INDEBTEDNESS. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.

     6.14.     RESTRICTED PAYMENTS. No Credit Party shall make any Restricted
Payment, except (a) dividends and distributions by Subsidiaries of Borrower paid
to Borrower, (b) employee loans permitted under Section 6.4(b) above, (c) the
payments to MIG permitted by clause (i) of the proviso contained in Section
6.4(a), and (d) distributions by Borrower to Holdings, and in turn by Holdings
to MIG for purposes of fulfilling Holdings obligations under the Tax Sharing
Agreement, so long as (i) the amount thereof does not exceed the amount payable
by Holdings to MIG pursuant to the terms of the Tax Sharing Agreement determined
as if Holdings had no assets other than its equity interests in Borrower and no
other source of income other than in connection with such equity interests, (ii)
any such distribution is made no earlier than two Business Days prior to the due
date of the applicable payment pursuant to the Tax Sharing Agreement and (iii)
no Default or Event of Default shall exist or would result as a result of such
distributions; PROVIDED, HOWEVER, that the amount permitted to be distributed to
Holdings from Borrower and, in turn, from Holdings to MIG pursuant to this
Section



6.14(d) shall be (A) reduced by any amounts due Holdings from MIG pursuant to
the Tax Sharing Agreement and (B) limited to the amount of tax attributable to
the income of the Borrower that is actually paid (taking into account available
net operating losses, credits and other offsets and deductions ("TAX ASSETS"))
to the applicable taxing authority by MIG or the affiliated group of
corporations that file a consolidated federal income tax return of which MIG is
a member or the common parent ("MORTON GROUP") (and for purposes of this
proviso, to the extent that there are insufficient Tax Assets available to the
Morton Group to completely offset its taxable income, such Tax Assets shall be
allocated between the taxable income of each of Borrower, Morton Metalcraft Co.,
Morton Metalcraft Co. of North Carolina, Inc., B&W Fabricators, Inc., Morton
Metalcraft Co. of South Carolina, Inc., and Mid-Central Plastics. Inc. on a pro
rata basis based upon the amount of income generated by such entities for the
year in question).

     6.15.     CHANGE OF CORPORATE OR LIMITED LIABILITY COMPANY NAME OR
LOCATION; CHANGE OF FISCAL YEAR. No Credit Party shall (a) change its corporate
or limited liability company name, (b) change its chief executive office,
principal place of business, corporate or limited liability company offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral, (c) change the type of entity that it
is, (d) change its organization identification number, if any, issued by its
state of incorporation or other organization or (e) change its state of
incorporation or organization in any case without at least thirty (30) days
prior written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral, has been completed or taken, and PROVIDED that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or corporate or
limited liability company structure in any manner which might make any financing
or continuation statement filed in connection herewith seriously misleading
within the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to Agent and Lenders and
after Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. No Credit Party shall change its Fiscal Year.

     6.16.     NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.



     6.17.     NO SPECULATIVE TRANSACTIONS. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.

     6.18.     LEASES. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Holdings and its Subsidiaries on a consolidated basis
would exceed $3,000,000.

     6.19.     CREDIT PARTIES OTHER THAN BORROWER. None of the Credit Parties
other than Borrower shall engage in any trade or business, or own any assets
(other than Stock of their Subsidiaries) or incur any Indebtedness or Guaranteed
Indebtedness (other than the Obligations and the Holdings Note); PROVIDED that
the IRB Subsidiary shall be the holder of the Lebanon IRBs.

     6.20.     MODIFICATIONS OF CERTAIN DOCUMENTS. No Credit Party shall amend
or change (or permit or consent to any amendment or change of) the terms of the
Worthington Acquisition Agreement, the Tax Sharing Agreement or any
documentation relating to the Lebanon IRBs, including, without limitation, the
IRB Indenture or the IRB Lease Agreement.

     6.21.     WORTHINGTON LITIGATION; WORTHINGTON ACQUISITION AGREEMENT.
Without the express written consent of the Agent, no Credit Party shall (i)
settle, withdraw, compromise, or make any payments (in cash or any other form of
consideration) in connection with the Worthington Litigation or (ii) make any
payments (in cash or any other form of consideration) (including the Contingent
Payment (as such term is defined in the Worthington Acquisition Agreement) or
the purchase price adjustment payment contemplated by Section 2.2 of the
Worthington Acquisition Agreement) contemplated or required by the Worthington
Acquisition Agreement. No Credit Party will permit (i) the payment of any
dividends upon the Preferred Stock (as such term is defined in the Worthington
Acquisition Agreement) or (ii) any party (including without limitation MIG) to
amend, cancel or otherwise modify the terms of the Preferred Stock. The Credit
Parties will promptly deliver to Agent copies of pleadings or filings and all
non-privileged case summaries and memorandum, received, filed, sent or otherwise
relating to each of the Worthington Litigation, the Worthington Acquisition
Agreement and the Preferred Stock.

7.   TERM

     7.1.      TERMINATION. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.



     7.2.      SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided however,
that in all events the provisions of SECTION 11, the payment obligations under
SECTIONS 1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.

8.   EVENTS OF DEFAULT: RIGHTS AND REMEDIES

     8.1.      EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "EVENT
OF DEFAULT" hereunder:

          (a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.

          (b) Any Credit Party shall fail or neglect to perform, keep or observe
any of the provisions of SECTIONS 1.4, 1.8, 5.4, 5.8(b), 5.10, 5.11, 5.12, 5.14,
5.15 or 6, or any of the provisions set forth in ANNEXES C or G, respectively.

          (c) Borrower shall fail or neglect to perform, keep or observe any of
the provisions of SECTION 4 or any provisions set forth in ANNEXES E or F,
respectively, and the same shall remain unremedied for five (5) days or more
after such Credit Party is aware or should have been aware of such failure or
negligence.

          (d) Any Credit Party shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents
(other than any provision embodied in or covered by any other clause of this
SECTION 8.1) and the same shall remain unremedied for thirty (30) days or more
after such Credit Party is aware or should have been aware of such failure or
negligence.



          (e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $250,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.

          (f) Any information contained in any Revolving Borrowing Base
Certificate is untrue or incorrect in any respect, or any representation or
warranty herein or in any Loan Document or in any written statement, report,
financial statement or certificate other than a Revolving Borrowing Base
Certificate (but including the Cash Flow Budget and the Operating Budget) made
or delivered to Agent or any Lender by any Credit Party is untrue or incorrect
in any material respect as of the date when made or deemed made.

          (g) Assets of any Credit Party with a fair market value of $100,000 or
more shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for forty-five (45) days or more.

          (h) A case or proceeding shall have been commenced against any Credit
Party seeking a decree or order in respect of any Credit Party (i) under Title
11 of the United States Code, as now constituted or hereafter amended or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for any Credit Party or of any substantial part of any
such Person's assets, or (iii) ordering the winding-up or liquidation of the
affairs of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding.

          (i) Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any
Credit Party or of any substantial part of any such Person's assets, (iii) shall
make an assignment for the benefit of creditors, (iv) shall take any corporate
or limited liability company action in furtherance of any of the foregoing; or
(v) shall admit



in writing its inability to, or shall be generally unable to, pay its debts as
such debts become due.

          (j) A final judgment or judgments for the payment of money in excess
of $100,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.

          (k) Any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.

          (l) Any Change of Control shall occur.

          (m) Any event shall occur as a result of which revenue-producing
activities cease or are substantially curtailed at any facility of Borrower
generating more than 15% (or 25% if such facility is covered by insurance,
including business interruption insurance acceptable to Agent) of Borrower's
consolidated revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than twenty (20) days.

          (n) Without limiting the provisions of clause (e) above, a default or
breach shall occur under any of the documentation relating to the Lebanon IRBs,
including, without limitation, the IRB Indenture or the IRB Lease Agreement,
which is not cured within any applicable grace period, and such default or
breach (i) involves the failure to make any payment when due in respect of any
obligations under such documentation, or (ii) causes, or permits any holder of
such obligation or a trustee to cause such obligation to become due prior to its
stated maturity or prior to its regularly scheduled dates of payment, regardless
of whether such default is waived, or such right is exercised, by such holder or
trustee.

          (o) Any Person other than the IRB Subsidiary (or its trustee pursuant
to the terms of the IRB Indenture) or Agent, on behalf of Lenders, shall hold
the Lebanon IRBs or have any rights related thereto.

          (p) The Chapter 7 Trustee in the In re: Outboard Marine Corporation
Chapter 7 bankruptcy case filed in the Northern District of Illinois bearing
case number 00-37405 shall obtain a judgment against the Borrower for an amount
in excess of



$100,000 in the aggregate, or the Borrower shall settle or compromise any claim
brought or asserted by said Chapter 7 Trustee for an amount in excess of
$100,000 in the aggregate.

          (q) All of the Lebanon IRBs (other than those which have matured and
been paid-in-full as of the Closing Date) shall not have been delivered to Agent
within forty-five (45) days following the Closing Date; such Lebanon IRB's to be
in such form as contemplated by the certain Letter of Direction dated April 15,
1999 from Worthington Industries to Firstar Bank, N.A.

     8.2.      REMEDIES. (a) If any Event of Default shall have occurred and be
continuing or if a Default shall have occurred and be continuing and Agent or
Requisite Revolving Lenders shall have determined not to make any Advances or
incur any Letter of Credit Obligations so long as that specific Default is
continuing, Agent may (and at the written request of the Requisite Revolving
Lenders shall), without notice, suspend the Revolving Loan facility with respect
to further Advances and/or the incurrence of further Letter of Credit
Obligations whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Agent's sole discretion (or in the sole discretion
of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default shall have occurred and be continuing, Agent may
(and at the written request of Requisite Lenders shall), without notice except
as otherwise expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.

          (b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, (i) terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; (ii) declare
all or any portion of the Obligations, including all or any portion of any Loan
to be forthwith due and payable, and require that the Letter of Credit
Obligations be cash collateralized as provided in ANNEX B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; and (iii) exercise any
rights and remedies provided to Agent under the Loan Documents and/or at law or
equity, including all remedies provided under the Code; PROVIDED, HOWEVER, that
upon the occurrence of an Event of Default specified in SECTIONS 8.1(g), (h) or
(i), the Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.

     8.3.      WAIVERS BY CREDIT PARTIES. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights,



documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.

9.   ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

     9.1.      ASSIGNMENT AND PARTICIPATIONS. (a) The Credit Parties signatory
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not. Any assignment by a Lender shall (i)
require the consent of Agent and (so long as no Default or Event of Default has
occurred and is continuing) the Borrower (which shall not be unreasonably
withheld or delayed) and the execution of an assignment agreement (an
"ASSIGNMENT AGREEMENT") substantially in the from attached hereto as EXHIBIT
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) if a partial assignment, be in an amount at least
equal to $5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case of an assignment by a Lender under this SECTION 9.1, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned. Notwithstanding the foregoing provisions of this SECTION 9.1(a), any
Lender may at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any Lender that is an investment fund may assign the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; PROVIDED,
HOWEVER, that no such pledge to a



Federal Reserve Bank shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.

          (b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of SECTIONS 1.13,
1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence neither Borrower nor any Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.

          (c) Except as expressly provided in this SECTION 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.

          (d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this SECTION 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent in connection with the primary syndication of the
Commitments and/or the Loans, the preparation of informational materials for,
and the participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their affairs contained in any selling materials provided by them and all
other information provided by them and included in such materials, except that
any Projections delivered by Borrower shall only be certified by Borrower as
having been prepared by Borrower in compliance with the representations
contained in SECTION 3.4(c).



          (e) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in SECTION 11.8.

          (f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under SECTION 1.16(a),
increased costs under SECTION 1.16(b), an inability to fund LIBOR Loans under
SECTION 1.16(c), or withholding taxes in accordance with SECTION 1.15(a).

     9.2.      APPOINTMENT OF AGENT. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this SECTION 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.

          If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, Requisite Revolving Lenders, or all affected Lenders, as the case may
be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking



or continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders, Requisite Revolving
Lenders, or all affected Lenders, as applicable.

     9.3.      AGENT'S RELIANCE, ETC. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, Agent: (a) may treat the payee of
any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made in or in connection with this Agreement or the other
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

     9.4.      GE CAPITAL AND AFFILIATES. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.



     9.5.      LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in SECTION 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

     9.6.      INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
PROVIDED, HOWEVER, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.

     9.7.      SUCCESSOR AGENT. Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until



such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; PROVIDED that such approval shall not be
required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this SECTION 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.

     9.8.      SETOFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to any Credit Party or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
Borrower or any Guarantor (regardless of whether such balances are then due to
Borrower or any Guarantor) and any other properties or assets any time held or
owing by that Lender or that holder to or for the credit or for the account of
Borrower or any Guarantor against and on account of any of the Obligations which
are not paid when due. Any Lender or holder of any Note exercising a right to
set off or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares. Borrower
and each Credit Party that is a Guarantor agree, to the fullest extent permitted
by law, that (a) any Lender or holder may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such amount so set off to other Lenders and holders and
(b) any Lender or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of the
Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of set-off, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.



     9.9.      ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN
CONCERT.

          (a) ADVANCES; PAYMENTS. (i) Agent shall notify Revolving Lenders,
promptly after receipt of a Notice of Revolving Credit Advance and in any event
prior to 1:00 p.m. (New York time) on the date such Notice of Revolving Advance
is received, by telecopy, telephone or other similar form of transmission. Each
Revolving Lender shall make the amount of such Lender's Pro Rata Share of such
Revolving Credit Advance available to Agent in same day funds by wire transfer
to Agent's account as set forth in ANNEX H not later than 3:00 p.m. (New York
time) on the requested funding date, in the case of an Index Rate Loan and not
later than 11:00 a.m. (New York time) on the requested funding date in the case
of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent's sole
discretion, before receipt of such wire transfers), subject to the terms hereof,
Agent shall make the requested Revolving Credit Advance to Borrower as
designated by Borrower in the Notice of Revolving Credit Advance. All payments
by each Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.

               (ii) On the second (2nd) Business Day of each calendar week or
more frequently as aggregate cumulative payments in excess of $2,000,000 are
received with respect to the Loans (each, a "SETTLEMENT DATE"), Agent will
advise each Lender by telephone, or telecopy of the amount of such Lender's Pro
Rata Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that such Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent will pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrower since
the previous Settlement Date for the benefit of that Lender on the Loans held by
it. To the extent that any Lender (a "NON-FUNDING LENDER") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in ANNEX H or the applicable Assignment Agreement)
not later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.

          (b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may assume that
each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this SECTION 9.9(b)



or elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that Borrower may have against any Revolving Lender as a
result of any default by such Revolving Lender hereunder. To the extent that
Agent advances funds to Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.

          (c) RETURN OF PAYMENTS. (i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrower and such related payment is not received
by Agent, then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.

               (ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.

          (d) NON-FUNDING LENDERS. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder or to
purchase any participation to be made or purchased by it on the date specified
therefor shall not relieve any other Revolving Lender (each such other Revolving
Lender, an "OTHER LENDER") of its obligations to make such Advance or purchase
such participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance or to
purchase a participation required hereunder. Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" or a "Revolving Lender" (or be included in the calculation of
"Requisite Lenders" or "Requisite Revolving Lenders" hereunder) for any voting
or consent rights under or with respect to any Loan Document.

          (e) DISSEMINATION OF INFORMATION. Agent will use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, however, that Agent
shall not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct.



          (f) ACTIONS IN CONCERT. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.

10.  SUCCESSORS AND ASSIGNS

     10.1.     SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.

11.  MISCELLANEOUS

     11.1.     COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in SECTION 11.2 below. Any letter of interest, and/or fee letter, if any,
between any Credit Party and Agent or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.

     11.2.     AMENDMENTS AND WAIVERS. (a) Except for actions expressly
permitted to be taken by Agent, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the Notes, or any consent to
any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Agent and Borrower, and by
Requisite Lenders, Requisite Revolving Lenders, or all affected Lenders, as
applicable. Except as set forth in CLAUSES (b) and (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.



          (b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which waives compliance with the
conditions precedent set forth in SECTION 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default (if in connection therewith
Agent or Requisite Revolving Lenders, as the case may be, have exercised its or
their right to suspend the making or incurrence of further Advances or Letter of
Credit Obligations pursuant to SECTION 8.2(a)) or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in SECTION 2.2 unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower.

          (c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby, do any of
the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) except as otherwise permitted
herein or in the other Loan Documents, release, or permit any Credit Party to
sell or otherwise dispose of, any Collateral with a value exceeding $5,000,000
in the aggregate (which action shall be deemed to directly affect all Lenders);
(vi) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for Lenders or any of them
to take any action hereunder; and (vii) amend or waive this SECTION 11.2 or the
definitions of the terms "Requisite Lenders" or "Requisite Revolving Lenders"
insofar as such definitions affect the substance of this SECTION 11.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
SECTION 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.



          (d) If, in connection with any proposed amendment, modification,
waiver or termination (a "PROPOSED CHANGE"):

               (i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as
described this CLAUSE (i) and in CLAUSES (ii), (iii) and (iv) below being
referred to as a "NON-CONSENTING LENDER"), or

               (ii) requiring the consent of Requisite Revolving Lenders, the
consent of Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving Lenders is not
obtained, or

               (iii) requiring the consent of Requisite Lenders, the consent of
Lenders holding 51% or more of the aggregate Commitments is obtained, but the
consent of Requisite Lenders is not obtained, then, so long as Agent is not a
Non-Consenting Lender, at Borrower's request, Agent or a Person acceptable to
Agent shall have the right with Agent's consent and in Agent's sole discretion
(but shall have no obligation) to purchase from such Non-Consenting Lenders, and
such Non-Consenting Lenders agree that they shall, upon Agent's request, sell
and assign to Agent or such Person, all of the Commitments of such
Non-Consenting Lender for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lender and all accrued interest and Fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.

          (e) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section 1.13),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions, proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrower
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.

     11.3.     FEES AND EXPENSES. Borrower shall reimburse Agent for all
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and the Related Transactions and advice in connection therewith).
Borrower shall reimburse Agent (and, with respect to CLAUSES (c), (d) and (e)
below, all Lenders) for all fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including environmental
and management consultants and appraisers) for advice, assistance, or other
representation in connection with:



          (a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;

          (b) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or Related Transactions Documents or advice in
connection with the administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;

          (c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in any
way relating to the Collateral, any of the Loan Documents or any other agreement
to be executed or delivered in connection therewith or herewith, whether as
party, witness, or otherwise, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in connection with
a case commenced by or against Borrower or any other Person that may be
obligated to Agent by virtue of the Loan Documents; including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; PROVIDED that in the case of reimbursement of counsel
for Lenders other than Agent, such reimbursement shall be limited to one counsel
for all such Lenders;

          (d) any attempt to enforce any remedies of Agent against any or all of
the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents; including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; PROVIDED that in the
case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;

          (e) any work-out or restructuring of the Loans during the pendency of
one or more Events of Default; or

          (f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;

including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this SECTION 11.3 shall be payable, on demand, by Borrower to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication



expenses; court reporter fees, costs and expenses; long distance telephone
charges; air express charges; telegram or telecopy charges; secretarial overtime
charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal or other advisory services.

     11.4.     NO WAIVER. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of SECTION 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrower specifying
such suspension or waiver.

     11.5.     REMEDIES. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.

     11.6.     SEVERABILITY. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

     11.7.     CONFLICT OF TERMS. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

     11.8.     CONFIDENTIALITY. Agent and each Lender agree to use commercially
reasonable efforts and at least equivalent to the efforts Agent or such Lender
applies to maintaining the confidentiality of its own confidential information
to maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and any Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender; (b) to
any bona fide assignee or participant or



potential assignee or participant that has agreed to comply with the covenant
contained in this SECTION 11.8 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in CLAUSE (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by Agent or
such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) which ceases to be confidential
through no fault of Agent or such Lender.

     11.9.     GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,



COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.

     11.10.    NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this SECTION
11.10), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on ANNEX I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on ANNEX I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.

     11.11.    SECTION TITLES. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

     11.12.    COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.

     11.13.    WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE



APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS
AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

     11.14.    PRESS RELEASES. Each Credit Party executing this Agreement agrees
that neither it nor its Affiliates will in the future issue any press releases
or other public disclosure using the name of GE Capital or its affiliates or
referring to this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two (2) Business Days' prior notice to
GE Capital and without the prior written consent of GE Capital unless (and only
to the extent that) such Credit Party or Affiliate is required to do so under
law and then, in any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by Agent or any Lender of a tombstone
or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements with Borrower's consent which shall not be unreasonably
withheld or delayed.

     11.15.    REINSTATEMENT. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

     11.16.    ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of SECTIONS 11.9 and 11.13, with its counsel.



     11.17.    NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

     11.18.    AFFIRMATION OF EXISTING LOAN DOCUMENTS. Each of the Credit
Parties and William D. Morton (a) acknowledge, agree and consent to the
amendment and restatement of the Original Credit Agreement effectuated hereby,
(b) confirm and agree that their obligations under each of the Loan Documents to
which they are a party shall continue without any diminution thereof and shall
remain in full force and effect on and after the Closing Date, (c) confirm and
agree that each of the schedules to each of Security Agreements, the
Intellectual Property Security Agreements and the Pledge Agreements are hereby
amended and replaced by the applicable schedule attached hereto as DISCLOSURE
SCHEDULE (3.26); provided that any Exhibit or Power of Attorney to any of the
Security Agreements, Intellectual Property Security Agreements and Pledge
Agreements not attached hereto as a part of DISCLOSURE SCHEDULE (3.26) shall
remain in full force and effect in the form attached to each such agreement, as
applicable, as of the Closing Date and (d) confirm and agree that the Liens
granted pursuant to the Collateral Documents to which they are a party shall
continue without any diminution thereof and shall remain in full force and
effect on and after the Closing Date.



          IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.

                                    MORTON CUSTOM PLASTICS, LLC

                                    By:     Morton Holdings, LLC,
                                            its Manager

                                            By:   Morton Industrial Group, Inc.
                                                  its Manager

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

                                    GENERAL ELECTRIC CAPITAL CORPORATION, as
                                    Agent and Lender

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



          The following Persons are signatories to this Agreement in their
capacity as Credit Parties.

                                    MORTON HOLDINGS, LLC

                                        By:   Morton Industrial Group, Inc.
                                              its Manager

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

                                    MORTON LEBANON KENTUCKY IBRB, LLC

                                    By: Morton Custom Plastics, LLC,
                                        its Manager

                                        By: Morton Holdings, LLC,
                                            its Manager

                                            By: Morton Industrial Group, Inc.,
                                                its Manager

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

                                    ---------------------------
                                    William D. Morton



                                  SCHEDULE 1.1

                             RESPONSIBLE INDIVIDUAL

                    General Electric Capital Corporation
                    335 Madison Avenue, 12th Floor
                    New York, New York 10017
                    Attention: Morton Custom Plastics Account Manager
                    Telecopier No.: (212) 983-8767
                    Telephone  No.: (212) 370-8000


                                  SCHEDULE 1.4
                                       TO
                                CREDIT AGREEMENT

                     SOURCES AND USES; FUNDS FLOW MEMORANDUM

As of Closing Date



                                                                    
         PRE-CLOSING

         Revolving Credit Advances                                     $13,070,677.45
         Term Loans Outstanding                                         16,622,392.50
         Letters of Credit Outstanding                                     980,010.00
                                                                      ---------------

                  Total                                                $30,673,079.95

         POST-CLOSING

         Revolving Credit Advances                                       7,693,069.95
         Term Loan A                                                    10,000,000.00
         Term Loan B                                                     7,000,000.00
         Term Loan C                                                     5,000,000.00
         Letters of Credit Outstanding                                     980,010.00
                                                                      ---------------

                  Total                                                $30,673,079.95


         REVOLVING CREDIT ADVANCE AVAILABILITY

                  Total Commitment                                     $10,000,000.00
                  Current Revolving Credit Advances                     (7,693,069.95)
                  Letter of Credit Obligations                            (980,010.00)
                  Excess Borrowing Availability Covenant                (1,000,000.00)
                  Reserves established by Agent                               (25,000)*
                  Fees payable to CBW                                        (100,000)
                  Fees payable to Agent for benefit of Lenders               (100,000)

         Total available for new Revolving Advances
           as of the Closing Date                                      $   101,920.05


- ----------
* Represents outstanding 1999 and 2000 sales taxin the State of Kentucky.



                               ANNEX A (RECITALS)
                                       TO
                                CREDIT AGREEMENT
                                   DEFINITIONS

               Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all section references in the following definitions shall refer to
Sections of the Agreement:

               "A/P DAYS" means, (A) with respect to Borrower for each Fiscal
Month ending on or prior to December 31, 2002, the number of days for such
Fiscal Month determined as of the last day of such Fiscal Month by reference to
the following formula:

                    ((CAP-CCG)/PCG ) (DPM)) +(DCM) = A/P Days

                    where

                    CAP - means the amount of accounts payable (including
     amounts payable evidenced by notes) of Borrower as of the end of such
     Fiscal Month

                    CCG - means the cost of sales of Borrower for such Fiscal
     Month

                    PCG - means the cost of sales for the immediately preceding
     Fiscal Month

                    DPM - means the number of days in the immediately preceding
     Fiscal Month

                    DCM - means the number of days in such Fiscal Month; and

                    (B) with respect to Borrower for each Fiscal Quarter ending
     on or after March 31, 2003, the number of days for such Fiscal Quarter
     obtained by multiplying (a) the quotient of the amount of accounts payable
     of Borrower (including accounts payable evidenced by notes) as of the end
     of such Fiscal Quarter divided by the cost of sales of Borrower for such
     Fiscal Quarter BY (b) the number of days in such Fiscal Quarter.

                    For purposes of this definition cost of goods and accounts
     payable shall be calculated on a consolidated basis in accordance with
     GAAP.

               "A/R DAYS" means, (A) with respect to Borrower for each Fiscal
Month ending on or prior to December 31, 2002, the number of days for such
Fiscal Month determined as of the last day of such Fiscal Month by reference to
the following formula:

                                      A-1


                    ((CAR-CGS)/PCGS ) (DPM)) +(DCM) = A/R Days

                    where

                    CAR - means the aggregate book value of accounts receivable
     (net of any reserves for doubtful accounts) of Borrower as of the end of
     such Fiscal Month

                    CGS - means the gross sales (less returns and allowances for
     doubtful accounts) of Borrower for such Fiscal Month

                    PCGS - means the gross sales of Borrower (less returns and
     allowances for doubtful accounts) for immediately preceding Fiscal Month

                    DPM - means the number of days in the immediately preceding
     Fiscal Month

                    DCM - means the number of days in such Fiscal Month; and

                    (B) with respect to Borrower for each Fiscal Quarter ending
     on or after March 31, 2003, the number of days for such Fiscal Quarter
     obtained by multiplying (a) the quotient of the aggregate book value of
     accounts payable (net of any reserves for doubtful accounts) of Borrower as
     of the end of such Fiscal Quarter divided by the gross sales of Borrower
     (less returns and allowances for doubtful accounts) for such Fiscal Quarter
     BY (b) the number of days in such Fiscal Quarter.

                    For purposes of this definition aggregate book value of
     accounts receivable and gross sales shall be calculated on a consolidated
     basis in accordance with GAAP.

               "ACCOUNT DEBTOR" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel paper
or General Intangibles (including a payment intangible).

               "ACCOUNTS" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or

                                      A-2


hire of a vessel under a charter or other contract, arising out of the use of a
credit card or charge card, or for services rendered or to be rendered by such
Credit Party or in connection with any other transaction (whether or not yet
earned by performance on the part of such Credit Party), (e) all health care
insurance receivables and (f) all collateral security of any kind, given by any
Account Debtor or any other Person with respect to any of the foregoing.

               "ADVANCE" shall mean any Revolving Credit Advance.

               "AFFILIATE" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, five percent (5%) or more of the
Stock having ordinary voting power in the election of directors of such Persons,
(b) each Person that controls, is controlled by or is under common control with
such Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "CONTROL" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; PROVIDED, HOWEVER, that the term "AFFILIATE" shall
specifically exclude Agent and each Lender.

               "AGENT" shall mean GE Capital or its successor appointed pursuant
to SECTION 9.7.

               "AGREEMENT" shall mean the Amended and Restated Credit Agreement
by and among Borrower, the other Credit Parties named therein, GE Capital, as
Agent and Lender and the other Lenders signatory from time to time to the
Agreement.

               "APPENDICES" shall have the meaning assigned to it in the
recitals to the Agreement.

               "APPLICABLE LIBOR MARGINS" means collectively, the Applicable
Revolver LIBOR Margin, the Applicable Term Loan A LIBOR Margin and the
Applicable Term Loan B LIBOR Margin.

               "APPLICABLE MARGINS" means collectively, the Applicable Revolver
LIBOR Margin, the Applicable Term Loan A LIBOR Margin, the Applicable Term Loan
B LIBOR Margin, the Applicable Term Loan A Index Margin, the Applicable Term
Loan B Index Margin, and the Applicable Revolver Index Margin.

               "APPLICABLE REVOLVER INDEX MARGIN" shall mean 1.35% per annum.

               "APPLICABLE REVOLVER LIBOR MARGIN" shall mean 4.25% per annum.

                                      A-3


               "APPLICABLE TERM LOAN A INDEX MARGIN" shall mean 1.35% per annum.

               "APPLICABLE TERM LOAN A LIBOR MARGIN" shall mean 4.25% per annum.

               "APPLICABLE TERM LOAN B INDEX MARGIN" shall mean 1.60% per annum.

               "APPLICABLE TERM LOAN B LIBOR MARGIN" shall mean 4.5% per annum.

               "ASSIGNMENT AGREEMENT" shall have the meaning assigned to it in
SECTION 9.1(a).

               "BORROWER" shall have the meaning assigned to it in the recitals
to the Agreement.

               "BORROWER ACCOUNTS" shall have the meaning assigned to it in
ANNEX C.

               "BORROWER INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
the Intellectual Property Security Agreement dated as of April 15, 1999 entered
into among Agent, on behalf of itself and Lenders, and Borrower.

               "BORROWER PLEDGE AGREEMENT" shall mean the Pledge Agreement dated
as of April 15, 1999 entered into among Agent, on behalf of itself and Lenders,
and Borrower.

               "BORROWER SECURITY AGREEMENT" shall mean the Security Agreement
dated as of April 15, 1999 entered into among Agent, on behalf of itself and
Lenders, and Borrower, as amended by that certain First Amendment to Borrower
Security Agreement dated September 29, 2001.

               "BORROWER WARRANT" shall mean the warrant of even date herewith
issued by Borrower to Agent, in its capacity as Lender, in the form of EXHIBIT
2.1(c)(ii).

               "BORROWER WARRANT AGREEMENT" shall mean the Warrant Holder
Agreement dated as of even date herewith among GE Capital, Holdings and Borrower
in the form of EXHIBIT 2.1(c)(ii) hereto.

               "BORROWING AVAILABILITY" shall have the meaning assigned to it in
SECTION 1.1(a)(i).

               "BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York and in reference to LIBOR Loans shall mean any such day that
is also a LIBOR Business Day.

               "CAPITAL EXPENDITURES" shall mean, with respect to any Person,
all expenditures (by the expenditure of cash or the incurrence of Indebtedness,
including

                                      A-4


without limitation in connection with Capital Leases) by such Person during any
measuring period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.

               "CAPITAL LEASE" shall mean, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.

               "CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of
such lessee in respect of such Capital Lease.

               "CASH CONVERSION CYCLE DAYS" means, as of any date of
determination, the sum of (a) A/R Days as of such date, PLUS (b) Inventory Days
as of such date LESS (c) A/P Days as of such date.

               "CASH FLOW BUDGET" means the thirteen (13) week cash flow budget
of the Borrower, relative to the operations of Borrower, in substantially the
form attached as EXHIBIT 1.2, deliver by Borrower to Agent pursuant to Annex E.

               "CASH MANAGEMENT SYSTEMS" shall have the meaning assigned to it
in SECTION 1.8.

               "CBW" shall mean Casas, Benjamin & White, LLC.

               "CHANGE OF CONTROL" shall mean any event, transaction or
occurrence as a result of which (a) MIG shall cease to own and control at least
100% of the economic and 35% of the voting rights associated with the
outstanding capital Stock of all classes of Holdings on a fully diluted basis,
(b) Holdings shall cease to own and control all of the economic and voting
rights associated with at least 100% of the outstanding capital Stock of
Borrower (other than solely by reason of the exercise of the Borrower Warrant),
(c) MIG shall cease to be the sole Manager of Holdings and Holdings shall cease
to be the sole Manager of Borrower and Borrower shall cease to be the sole
Manager of the IRB Subsidiary, (d) Borrower shall cease to own and control all
of the economic and voting rights associated with all of the outstanding capital
Stock of any of its Subsidiaries or (e) Haskell Knight shall no longer be
performing such duties and responsibilities on behalf of the Borrower which are
substantially similar to those being performed by Haskell Knight as of the
Closing Date (or following Haskell Knight's promotion to President of the
Borrower, such duties and responsibilities performed by Haskell Knight following
such promotion), unless at the time of such termination or change in duties and
responsibilities Borrower has identified and engaged an individual to act as a
replacement for the position or positions held by, and the duties and
responsibilities performed by

                                      A-5


Haskell Knight at the time of such termination or change in duties and
responsibilities; provided that any such replacement shall be acceptable to
Agent in its sole discretion.

               "CHARGES" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including any interest, penalties or
other additions to tax that may become payable in respect thereof and taxes owed
to the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.

               "CHATTEL PAPER" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party.

               "CLOSING DATE" shall mean March 25, 2002.

               "CLOSING CHECKLIST" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as ANNEX D.

               "CODE" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; PROVIDED, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; PROVIDED FURTHER, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "CODE" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.

               "COLLATERAL" shall mean the property covered by the Security
Agreements, the Mortgages, the Pledge Agreements and the other Collateral
Documents and any other property, real or personal, tangible or intangible, now
existing or hereafter acquired, that may at any time be or become subject to a
security interest or Lien in favor of Agent, on behalf of itself and Lenders, to
secure the Obligations.

               "COLLATERAL DOCUMENTS" shall mean the Security Agreements, the
Pledge Agreements, the Guaranties, the Mortgages, the Intellectual Property
Security Agreements and all similar agreements entered into guaranteeing payment
of, or granting a Lien upon property as security for payment of, the
Obligations.

                                      A-6


               "COLLATERAL REPORTS" shall mean the reports with respect to the
Collateral referred to in ANNEX F.

               "COLLECTION ACCOUNT" shall mean that certain account of Agent,
account number 502-328-54 in the name of Agent at Bankers Trust Company in New
York, New York or such other account as Agent shall specify.

               "COMMITMENT TERMINATION DATE" shall mean the earliest of (a) the
Scheduled Maturity Date, (b) the date of termination of Lenders' obligations to
make Advances and/or incur Letter of Credit Obligations or permit existing Loans
to remain outstanding pursuant to SECTION 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrower of the Loans and the cancellation
and return (or stand-by guarantee) of all Letters of Credit or the cash
collateralization of all Letter of Credit Obligations pursuant to ANNEX B, and
the permanent reduction of the Revolving Loan Commitment to zero dollars ($0).

               "COMMITMENTS" shall mean (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment and Term Loan Commitments as set forth
on ANNEX J to the Agreement or in the most recent Assignment Agreement executed
by such Lender and (b) as to all Lenders, the aggregate of all Lenders'
Revolving Loan Commitments and Term Loan Commitments, which aggregate commitment
shall be $32,000,000 on the Closing Date, as to each of clauses (a) and (b), as
such Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.

               "COMPLIANCE CERTIFICATE" shall have the meaning assigned to it in
ANNEX E.

               "CONTINGENT PAYMENT" shall have the meaning assigned to such term
in the Worthington Acquisition Agreement.

               "CONTRACTS" shall mean all "contracts," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.

               "COPYRIGHT LICENSE" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.

               "COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or

                                      A-7


acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.

               "CREDIT PARTIES" shall mean Holdings, Borrower, and each of their
respective Subsidiaries; PROVIDED that solely for purposes of SECTION 8.1(d),
(h) OR (i) William D. Morton shall also be deemed to be a "Credit Party".

               "CURRENT ASSETS" shall mean, with respect to any Person, all
current assets of such Person as of any date of determination calculated in
accordance with GAAP, but excluding cash, cash equivalents and debts due from
Affiliates.

               "CURRENT LIABILITIES" shall mean, with respect to any Person, all
liabilities which should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year, all accruals for federal or
other taxes based on or measured by income and payable within such year, and the
current portion of long-term debt required to be paid within one year, but
excluding, in the case of Borrower, the aggregate outstanding principal balances
of the Revolving Loan.

               "DEFAULT" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.

               "DEFAULT RATE" shall have the meaning assigned to it in SECTION
1.5(d).

               "DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.

               "DISBURSEMENT ACCOUNTS" shall have the meaning assigned to it on
ANNEX C.

               "DISCLOSURE SCHEDULES" shall mean the Schedules prepared by
Borrower and denominated as Disclosure SCHEDULES 1.4 through 6.7 in the Index to
the Agreement.

               "DOCUMENTS" means all "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.

               "DOLLARS" or "$" shall mean lawful currency of the United States
of America.

               "EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, MINUS (b)

                                      A-8


the sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities, and (v) any other non-cash gains
which have been added in determining consolidated net income, in each case to
the extent included in the calculation of consolidated net income of such Person
for such period in accordance with GAAP, but without duplication, PLUS (c) the
sum of (i) any provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.

               "ELIGIBLE ACCOUNTS" shall have the meaning assigned to it in
SECTION 1.6 of the Agreement.

               "ELIGIBLE INVENTORY" shall have the meaning assigned to it in
SECTION 1.7 of the Agreement.

               "ENVIRONMENTAL LAWS" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and in each case as amended or
supplemented from time to time, and

                                      A-9


any applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. Sections 9601 ET SEQ.) ("CERCLA"); the Hazardous
Materials Transportation Authorization Act of 1994 (49 U.S.C.Sections 5101 ET
SEQ.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 ET SEQ.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 ET
SEQ.); the Toxic Substance Control Act (15 U.S.C. Sections 2601 ET SEQ.); the
Clean Air Act (42 U.S.C. Sections 7401 ET SEQ.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 ET SEQ.); the Occupational Safety and
Health Act (29 U.S.C. Sections 651 ET SEQ.); and the Safe Drinking Water Act (42
U.S.C. Sections 300(f) ET SEQ.), each as from time to time amended, and any and
all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification
or approval statutes.

               "ENVIRONMENTAL LIABILITIES" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.

               "ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.

               "EQUIPMENT" shall mean all "equipment," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located and, in any event, including all such Credit Party's machinery and
equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment with software and peripheral equipment (other
than software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not

                                      A-10


forming a part of real property, all whether now owned or hereafter acquired,
and wherever situated, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.

               "ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time, and
any regulations promulgated thereunder.

               "ERISA AFFILIATE" shall mean, with respect to any Credit Party,
any trade or business (whether or not incorporated) which, together with such
Credit Party, are treated as a single employer within the meaning of Sections
414(b), (c), (m) or (o) of the IRC.

                  "ERISA EVENT" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status;
or (j) the termination of a Plan described in Section 4064 of ERISA.

               "ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.

               "EVENT OF DEFAULT" shall have the meaning assigned to it in
SECTION 8.1.

               "EXCESS BORROWING AVAILABILITY" shall mean at any time the
Borrowing Availability less the aggregate amount of Revolving Credit Advances
then outstanding.

               "EXCESS CASH FLOW" shall mean, without duplication, with respect
to any Fiscal Year of Borrower and its Subsidiaries, consolidated net income
PLUS (a)

                                      A-11


depreciation, amortization and Interest Expense to the extent deducted
in determining consolidated net income, PLUS decreases or MINUS increases (as
the case may be) (b) in Working Capital, MINUS (c) Capital Expenditures during
such Fiscal Year (excluding the financed portion thereof and excluding any
Capital Expenditures in such Fiscal Year to the extent in excess of the amount
permitted to be made in such Fiscal Year pursuant to CLAUSE (a) of Annex G),
MINUS (d) Interest Expense paid or accrued (excluding any original issue
discount, interest paid in kind or amortized debt discount, to the extent
included in determining Interest Expense) and scheduled principal payments paid
or payable in respect of Funded Debt, PLUS or MINUS (as the case may be), (e)
extraordinary gains or losses which are cash items not included in the
calculation of net income, MINUS (f) mandatory prepayments paid in cash pursuant
to SECTION 1.3 other than mandatory prepayments made pursuant to SECTIONS
1.3(b)(i), 1.3(b)(iv) or 1.3(d), PLUS (g) taxes deducted in determining
consolidated net income to the extent not paid for in cash. For purposes of this
definition, "WORKING CAPITAL" means Current Assets LESS Current Liabilities.

               "EXISTING VENDOR NOTES" shall mean those certain promissory notes
issued by Borrower to certain of its vendors that resulted from Borrower's
conversion of accounts payable to such vendors, and set forth on DISCLOSURE
SCHEDULE 6.3-A.

               "FEDERAL FUNDS RATE" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight Federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.

               "FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System, or any successor thereto.

               "FEES" shall mean any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.

               "FINANCIAL STATEMENTS" shall mean the consolidated income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with SECTION 3.4 of the Agreement and ANNEX E to the Agreement.

               "FISCAL MONTH" shall mean any of the monthly accounting periods
of Borrower.

               "FISCAL QUARTER" shall mean any of the quarterly accounting
periods of Borrower, ending on March 31, June 30, September 30 and December 31
of each year.

               "FISCAL YEAR" shall mean any of the annual accounting periods of
Borrower ending on December 31 of each year.

               "FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges.

                                      A-12


               "FIXED CHARGES" shall mean, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period (excluding the financed portion thereof, plus (d) amounts payable by the
Borrower to CBW in connection with CBW's performance of services on behalf of
Borrower, plus (e) fees and other amounts payable to GE Capital, Agent or
Lenders, as the case may be, pursuant to SECTION 1.9 of the Agreement.

               "FIXTURES" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.

               "FUNDED DEBT" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.

               "GAAP" shall mean generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in ANNEX G to the Agreement.

               "GENERAL INTANGIBLES" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records,

                                      A-13


correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.

               "GOODS" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.

               "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

               "GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY
OBLIGOR") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is made and (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.

               "GUARANTIES" shall mean, collectively, the Holdings Guaranty,
each Subsidiary Guaranty and any other guaranty executed by any Guarantor in
favor of Agent and Lenders in respect of the Obligations.

               "GUARANTORS" shall mean Holdings, each Subsidiary of Borrower,
and each other Person, if any, which executes a guarantee or other similar
agreement in favor of Agent in connection with the transactions contemplated by
the Agreement and the other Loan Documents.

               "HAZARDOUS MATERIAL" shall mean any substance, material or waste
which is regulated by or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance which is (a) defined
as a "solid waste,"

                                      A-14


"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "pollutant," "contaminant,"
"hazardous constituent," "special waste," "toxic substance" or other similar
term or phrase under any Environmental Laws, (b) petroleum or any fraction or
by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or any
radioactive substance.

               "HOLDINGS" shall have the meaning ascribed thereto in the
recitals to the Agreement.

               "HOLDINGS GUARANTY" shall mean the Holdings Guaranty dated as of
April 15, 1999 executed by Holdings in favor of Agent, on behalf of itself and
Lenders.

               "HOLDINGS INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
the Intellectual Property Security Agreement dated as of April 15, 1999 entered
into between Agent, on behalf of itself and Lenders, and Holdings.

               "HOLDINGS NOTE" shall mean the $5,000,000 promissory note from
Holdings to Borrower dated April 15, 1999.

               "HOLDINGS PLEDGE AGREEMENT" shall mean the Pledge Agreement dated
as of April 15, 1999 entered into between Agent, on behalf of itself and
Lenders, and Holdings.

               "HOLDINGS SECURITY AGREEMENT" shall mean the Security Agreement
dated as of April 15, 1999 entered into between Agent, on behalf of itself and
Lenders, and Holdings, as amended by that certain First Amendment to Holdings
Security Agreement dated September 29, 2001.

               "INDEBTEDNESS" of any Person shall mean without duplication (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter

                                      A-15


the risks of that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (h) all Indebtedness
referred to above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property or other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, and (i) the Obligations; PROVIDED, that the
obligation of Borrower to make the Contingent Payment shall not constitute
Indebtedness.

               "INDEMNIFIED LIABILITIES" shall have the meaning assigned to it
in SECTION 1.13.

               "INDEX RATE" shall mean, for any day, a floating rate equal to
the higher of (i) the rate publicly quoted from time to time by THE WALL STREET
JOURNAL as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if THE WALL STREET JOURNAL ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate. Notwithstanding
the foregoing, if at any date of determination the Index Rate as determined
shall be less than 5.9% per annum, the Index Rate shall be deemed to be 5.9% per
annum.

               "INDEX RATE LOAN" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.

               "INSTRUMENTS" means all "instruments," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

               "INTELLECTUAL PROPERTY" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.

               "INTELLECTUAL PROPERTY SECURITY AGREEMENTS" shall mean,
collectively, the Holdings Intellectual Property Security Agreement, Borrower
Intellectual Property Security Agreement and Subsidiary Intellectual Property
Security Agreement in each case made in favor of Agent, on behalf of itself and
Lenders, by each applicable Credit Party.

               "INTEREST EXPENSE" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any

                                      A-16


event, interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.

               "INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan, the
first Business Day of each month to occur while such Loan is outstanding, (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; PROVIDED that in
the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of such LIBOR
Period; and PROVIDED further that in addition to the foregoing, each of (x) the
date upon which all of the Commitments have been terminated and the Loans have
been paid in full and (y) the Commitment Termination Date shall be deemed to be
an "Interest Payment Date" with respect to any interest which is then accrued
under the Agreement.

               "INVENTORY" means all "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.

               "INVENTORY DAYS" means, (A) with respect to Borrower for each
Fiscal Month ending on or prior to December 31, 2002, the number of days for
such Fiscal Month determined as of the last day of such Fiscal Month by
reference to the following formula:

                    ((CI-CCG)/PCG ) (DPM)) +(DCM) = Inventory Days

                    where

                    CI - means the aggregate book value of inventory of Borrower
     as of the end of such Fiscal Month

                    CCG - means the cost of sales of Borrower for such Fiscal
     Month

                    PCG - means the cost of sales for the immediately preceding
     Fiscal Month

                    DPM - means the number of days in the immediately preceding
     Fiscal Month

                    DCM - means the number of days in such Fiscal Month; and

                                      A-17


                    (B) with respect to Borrower for each Fiscal Quarter ending
     on or after March 31, 2003, the number of days for such Fiscal Quarter
     obtained by multiplying (a) the quotient of the aggregate book value of
     inventory of Borrower as of the end of such Fiscal Quarter divided by the
     cost of sales of Borrower for such Fiscal Quarter BY (b) the number of days
     in such Fiscal Quarter.

                    For purposes of this definition book value of inventory and
     cost of sales shall be calculated on a consolidated basis in accordance
     with GAAP.

               "INVESTMENT PROPERTY" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.

               "IRC" shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto.

               "IRB ASSIGNMENT DOCUMENTS" shall mean the documentation pursuant
to which (i) Seller assigns its rights and obligations under the IRB Lease
Agreement to Borrower and Borrower assumes such rights and obligations and (ii)
the Lebanon IRBs are transferred by an Affiliate of Seller to IRB Subsidiary.

               "IRB INDENTURE" shall mean the Trust Indenture dated as of
December 1, 1994 by and among the City of Lebanon, Kentucky, a city and
political subdivision of the Commonwealth of Kentucky, and Star Bank, N.A.,
Kentucky, Lebanon, Kentucky (acting through the Corporate Trust Department of
Star Bank, National Association, in Cincinnati, Ohio), as Trustee, and as Paying
Agent and Bond Register.

               "IRB LEASE AGREEMENT" shall mean the Lease Agreement dated as of
December 1, 1994, between the City of Lebanon, Kentucky, a city and political
subdivision of the Commonwealth of Kentucky, and Borrower, as assignee of Seller
thereunder pursuant to the terms of the IRB Assignment Documents.

               "IRB SUBSIDIARY" shall mean Morton Lebanon Kentucky IBRB, LLC, a
Delaware limited liability company, and a wholly-owned domestic Subsidiary of
Borrower which shall be the holder of the Lebanon IRBs.

               "IRS" shall mean the Internal Revenue Service, or any successor
thereto.

                                      A-18


               "L/C ISSUER" shall have the meaning assigned to such term in
ANNEX B.

               "LEBANON IRBS" shall mean the industrial revenue bonds issued in
respect of Borrower's Lebanon, Kentucky location and pursuant to the terms of
the IRB Indenture.

               "LENDERS" shall mean GE Capital, the other Lenders named on the
signature page of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include such assignee.

               "LETTERS OF CREDIT" shall mean commercial letters of credit
issued for the account of Borrower by any L/C Issuer for which Agent and Lenders
have incurred Letter of Credit Obligations.

               "LETTER OF CREDIT FEE" has the meaning ascribed thereto in ANNEX
B.

               "LETTER OF CREDIT OBLIGATIONS" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in ANNEX B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount which
may be payable by Agent or Lenders thereupon or pursuant thereto.

               "LETTER-OF-CREDIT RIGHTS" means letter-of-credit rights as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is entitled to
demand payment or performance.

               "LEVERAGE RATIO" means, with respect to Borrower, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of
determination, to (b) EBITDA for the twelve months ending on that date of
determination.

               "LIBOR BUSINESS DAY" shall mean a Business Day on which banks in
the city of London are generally open for interbank or foreign exchange
transactions.

               "LIBOR LOAN" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.

               "LIBOR PERIOD" shall mean, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one or three months thereafter, as selected by Borrower's
irrevocable notice to Agent as set forth in SECTION 1.5(e); PROVIDED that the
foregoing provision relating to LIBOR Periods is subject to the following:

                                      A-19


               (a)    if any LIBOR Period would otherwise end on a day that is
         not a LIBOR Business Day, such LIBOR Period shall be extended to the
         next succeeding LIBOR Business Day unless the result of such extension
         would be to carry such LIBOR Period into another calendar month in
         which event such LIBOR Period shall end on the immediately preceding
         LIBOR Business Day;

               (b)    any LIBOR Period that would otherwise extend beyond the
         Commitment Termination Date shall end two (2) LIBOR Business Days prior
         to such date;

               (c)    any LIBOR Period pertaining to a LIBOR Loan that begins on
         the last LIBOR Business Day of a calendar month (or on a day for which
         there is no numerically corresponding day in the calendar month at the
         end of such LIBOR Period) shall end on the last LIBOR Business Day of a
         calendar month;

               (d)    Borrower shall select LIBOR Periods so as not to require a
         payment or prepayment of any LIBOR Loan during a LIBOR Period for such
         Loan; and

               (e)    Borrower shall select LIBOR Periods so that there shall be
         no more than eight (8) separate LIBOR Loans in existence at any one
         time.

               "LIBOR RATE" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:

               (a)    the offered rate for deposits in United States Dollars for
         the applicable LIBOR Period which appears on Telerate Page 3750 as of
         11:00 a.m., London time, on the second full LIBOR Business Day next
         preceding the first day of each LIBOR Period (unless such date is not a
         Business Day, in which event the next succeeding Business Day will be
         used); divided by

               (b)    a number equal to 1.0 minus the aggregate (but without
         duplication) of the rates (expressed as a decimal fraction) of reserve
         requirements in effect on the day which is two (2) LIBOR Business Days
         prior to the beginning of such LIBOR Period (including basic,
         supplemental, marginal and emergency reserves under any regulations of
         the Board of Governors of the Federal Reserve system or other
         governmental authority having jurisdiction with respect thereto, as now
         and from time to time in effect) for Eurocurrency funding (currently
         referred to as "Eurocurrency liabilities" in Regulation D of such Board
         which are required to be maintained by a member bank of the Federal
         Reserve System).

         If such interest rates shall cease to be available from Telerate News
         Service, the LIBOR Rate shall be determined from such financial
         reporting service or other information as shall be mutually acceptable
         to Agent and Borrower.

                                      A-20


         Notwithstanding the foregoing, if at any date of determination the
         LIBOR Rate for the applicable LIBOR Period as determined above shall be
         less than 3%, the LIBOR Rate for such LIBOR Period shall be deemed to
         be 3%.

               "LICENSE" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.

               "LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).

               "LITIGATION" shall have the meaning assigned to it in SECTION
3.13.

               "LOAN ACCOUNT" shall have the meaning assigned to it in SECTION
1.12.

               "LOAN DOCUMENTS" shall mean the Agreement, the Notes, the
Collateral Documents, and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Agent and/or Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated hereby.
Any reference in the Agreement or any other Loan Document to a Loan Document
shall include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.

               "LOANS" shall mean the Revolving Loan and the Term Loans.

               "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of the Credit Parties considered as a whole or, (b) Borrower's ability to pay
any of the Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Loan Documents.
Without limiting the foregoing, any event or occurrence adverse to one or more
Credit Parties which results or could reasonably be expected to result in costs
and/or liabilities and/or loss of revenues, individually or in the aggregate, to
any

                                      A-21


Credit Party in any 30-day period in excess of $1,500,000 as of any date of
determination shall be deemed to have had Material Adverse Effect.

               "MAXIMUM AMOUNT" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.

               "MIG" shall mean Morton Industrial Group, Inc., a Georgia
corporation.

               "MIG PREFERRED STOCK" shall mean non-voting shares of the Series
1999A Preferred Stock of MIG, no par value, having terms and conditions
satisfactory to Agent.

               "MORTGAGED PROPERTIES" shall have the meaning assigned to it in
ANNEX D.

               "MORTGAGES" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
with respect to the Mortgaged Properties, all in form and substance satisfactory
to Agent.

               "MORTON PLEDGE AGREEMENT" shall mean that certain Pledge
Agreement, dated as of May 14, 2001 by and between Agent and William D. Morton.

               "MORTON GROUP" shall have the meaning assigned to it in Section
6.14.

               "MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.

               "NET WORTH" shall mean, with respect to any Person as of any date
of determination, the book value of the assets of such Person, MINUS (a)
reserves applicable thereto, and MINUS (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.

               "NEW CFO" shall have the meaning assigned to it in SECTION 5.11.

               "NON-FUNDING LENDER" shall have the meaning assigned to it in
Section 9.9(a)(ii).

               "NOTES" shall mean the Revolving Notes and the Term Notes,
collectively.

               "NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
assigned to it in SECTION 1.5(e).

               "NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning
assigned to it in SECTION 1.1(a).

                                      A-22


               "OBLIGATIONS" shall mean all loans, advances, debts, liabilities
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.

               "OPERATING BUDGET" shall mean the twelve-month operating budget
of Borrower for the period from January ___, 2002 to December 31, 2002, in
substantially the form attached hereto as EXHIBIT 1.3, delivered by Borrower to
Agent pursuant to paragraph (q) of Annex E.

               "OPERATING COMMITTEE" shall have the meaning assigned to it in
SECTION 5.11.

               "ORIGINAL FEE LETTER" shall have the meaning assigned to it in
SECTION 1.9(g).

               "PATENT LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.

               "PATENTS" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.

               "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.

               "PERMITTED ENCUMBRANCES" shall mean the following encumbrances:
(a) Liens for taxes or assessments or other governmental Charges not yet due and
payable; (b) pledges or deposits of money securing statutory obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to

                                      A-23


which any Credit Party is a party as lessee made in the ordinary course of
business; (d) inchoate and unperfected workers', mechanics' or similar liens
arising in the ordinary course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate; (e) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business and securing liabilities in an outstanding aggregate amount not in
excess of $50,000 at any time, so long as such Liens attach only to Inventory;
(f) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (g) any attachment or judgment
lien not constituting an Event of Default under SECTION 8.1(j); (h) zoning
restrictions, easements, licenses, or other restrictions on the use of any Real
Estate or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereinafter created
Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly permitted
under CLAUSES (b) and (c) of SECTION 6.7 of the Agreement.

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

               "PLAN" shall mean, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any Credit Party.

               "PLEDGE AGREEMENTS" shall mean, collectively, the Holdings Pledge
Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreement, the
Morton Pledge Agreement, and any pledge agreements entered into after the
Closing Date by any Credit Party (as required by the Agreement or any other Loan
Document).

               "PROCEEDS" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of,

                                      A-24


interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.

               "PROJECTIONS" means Borrower's forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared on a Subsidiary by Subsidiary or
division by division basis, if applicable, together with appropriate supporting
details and a statement of underlying assumptions.

               "PRO RATA SHARE" shall mean with respect to all matters relating
to any Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment by (ii) the aggregate Revolving Loan
Commitments, (b) with respect to the Term Loan(s), the percentage obtained by
dividing (i) the Term Loan Commitment of that Lender by (ii) the aggregate Term
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to SECTION 9.1, (c) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that Lender
by (ii) the aggregate Commitments of all Lenders, and (d) with respect to all
Loans on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.

               "QUALIFIED PLAN" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.

               "REAL ESTATE" shall have the meaning assigned to it in SECTION
3.6.

               "RELEASE" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.

               "REQUISITE LENDERS" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of all Loans.

               "REQUISITE REVOLVING LENDERS" shall mean (a) Lenders having more
than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than

                                      A-25


sixty-six and two-thirds percent (66 2/3%) of the aggregate outstanding amount
of the Revolving Loan.

               "RESERVES" shall mean, with respect to the Revolving Borrowing
Base (a) reserves established by Agent from time to time against Eligible
Inventory pursuant to SECTION 5.9, (b) reserves established pursuant to SECTION
5.4(c) and (c) such other reserves against Eligible Accounts, Eligible
Inventory, the Revolving Borrowing Base, the Maximum Amount and/or Borrowing
Availability which Agent may, in its reasonable credit judgment, establish from
time to time. Without limiting the generality of the foregoing, Reserves
established (i) to ensure the payment of accrued Interest Expense or
Indebtedness, (ii) because Agent is not satisfied with its Collateral position,
as determined in its sole discretion, with respect to Borrower's assets,
including Borrower's interest in Equipment and Real Estate, located at
Borrower's Lebanon Kentucky facility, or (iii) with respect to unpaid taxes or
contingent liabilities relating to litigation claims (including preference
actions), shall in each case be deemed to be a reasonable exercise of Agent's
credit judgment.

               "RESTRICTED PAYMENT" shall mean (a) the declaration or payment of
any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Person
now or hereafter outstanding; (d) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of such Person's Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; (e) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Person other than payment of
compensation in the ordinary course to stockholders who are employees of such
Person; and (f) any payment of management fees (or other fees of a similar
nature) by such Person to any Stockholder of such Person or their Affiliates.

               "RETIREE WELFARE PLAN" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.

               "REVOLVING BORROWING BASE" shall mean, as of any date of
determination by Agent, from time to time, an amount equal to the sum at such
time of:

                                      A-26


               (a)    up to eighty-five percent (85%) of the book value of
         Borrower's Eligible Accounts, less any Reserves established by Agent at
         such time;

               (b)    up to sixty percent (60%) of the book value of Borrower's
         Eligible Inventory (other than work-in-process Inventory) valued on a
         first-in, first-out basis (at the lower of cost or market), less any
         Reserves established by Agent at such time;

               (c)    up to twenty percent (20%) of the book value of Borrower's
         Eligible Inventory consisting of work-in-process Inventory valued on a
         first-in, first-out basis (at the lower of cost or market), less any
         Reserves established by Agent at such time; and

               (d)    on any date of determination beginning December 28, 2001
         and ending January 31, 2002, $500,000; on any date of determination
         beginning February 1, 2002 and ending February 28, 2002, $400,000; on
         any date of determination beginning March 1, 2002 and ending March 31,
         2002, $300,000; on any date of determination beginning April 1, 2002
         and ending April 30, 2002, $200,000; on any date of determination
         beginning May 1, 2002 and ending May 31, 2002, $100,000; and, on any
         date of determination thereafter, $0.

               REVOLVING BORROWING BASE CERTIFICATE" shall mean a certificate to
be executed and delivered from time to time by Borrower in the form attached to
the Agreement as EXHIBIT 4.1(B).

               "REVOLVING CREDIT ADVANCE" shall have the meaning assigned to it
in SECTION 1.1(a)(i).

               "REVOLVING LENDERS" shall mean, as of any date of determination,
Lenders having a Revolving Loan Commitment.

               "REVOLVING LOAN" shall mean, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrower, plus (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrower.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.

               "REVOLVING LOAN COMMITMENT" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances and/or
incur Letter of Credit Obligations as set forth on ANNEX J to the Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances and/or incur Letter of Credit Obligations, which aggregate commitment
shall be $10,000,000 on the Closing Date, as such amount may be adjusted, if at
all, from time to time in accordance with the Agreement.

                                      A-27


               "REVOLVING NOTE" shall have the meaning assigned to it in SECTION
1.1(a)(ii).

               "SCHEDULED MATURITY DATE" shall mean August 30, 2006.

               "SECURITY AGREEMENTS" shall mean, collectively, the Holdings
Security Agreement, Borrower Security Agreement and Subsidiary Security
Agreement, in each case of even date herewith entered into among Agent, on
behalf of itself and Lenders, and each Credit Party that is a signatory thereto.

               "SELLER" shall mean Worthington Custom Plastics, Inc., an Ohio
corporation.

               "SOFTWARE" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

               "SOLVENT" shall mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probably liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the amount which
can be reasonably be expected to become an actual or matured liability.

               "STOCK" shall mean all shares, options, warrants, membership
interests, general or limited partnership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership or equivalent
entity whether voting or nonvoting, including common stock, preferred stock or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).

               "SUBSIDIARY" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any

                                      A-28


contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of such Person, or
with respect to which any such Person has the right to vote or designate the
vote of fifty percent (50%) or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or of which
any such Person is a general partner or may exercise the powers of a general
partner.

               "SUBSIDIARY GUARANTY" shall mean the Subsidiary Guaranty dated as
of April 15, 1999 executed by each Subsidiary of Borrower in favor of Agent, on
behalf of itself and Lenders.

               "SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
the Intellectual Property Security Agreement dated as of April 15, 1999 entered
into among Agent, on behalf of itself and Lenders, the IRB Subsidiary and each
other Credit Party party thereto.

               "SUBSIDIARY PLEDGE AGREEMENT" shall mean the Subsidiary Pledge
Agreement dated as of April 15, 1999 entered into by Agent, on behalf of itself
and Lenders, and the IRB Subsidiary.

               "SUBSIDIARY SECURITY AGREEMENT" shall mean the Security Agreement
dated as of April 15, 1999 entered into among Agent, on behalf of itself and
Lenders, the IRB Subsidiary and each other Credit Party party thereto, as
amended by that certain First Amendment to Security Agreement dated September
29, 2001.

               "SUPPORTING OBLIGATIONS" means all supporting obligations as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.

               "TANGIBLE NET WORTH" shall mean, with respect to any Person at
any date, the Net Worth of such Person at such date, EXCLUDING, HOWEVER, from
the determination of the total assets at such date, (a) all goodwill,
capitalized organizational expenses, capitalized research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, and (d) any write-up
in the book value of any asset resulting from a revaluation thereof.

               "TAX ASSETS" has the meaning assigned to it in SECTION 6.14.

               "TAX RETURNS" has the meaning assigned to it in SECTION 3.11.

                                      A-29


               "TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement
dated as of April 15, 1999 by and among MIG and Holdings.

               "TAXES" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or any political subdivision
thereof or by the jurisdiction of any lending office of any Lender used to make
Loans hereunder unless the connection with such lending office jurisdiction
arises solely from any Lender having executed, delivered or performed its
obligations or receive a payment under, or enforced the Agreement or the Notes.

               "TERM LENDERS" means the Term Loan A Lenders, the Term Loan B
Lenders and the Term Loan C Lenders.

               "TERM LOAN A" has the meaning assigned to it in SECTION
1.1(b)(i).

               "TERM LOAN A COMMITMENT" means (a) as to any Term Loan A Lender,
the commitment of such Term Loan A Lender to make its Pro Rata Share of the Term
Loan A as set forth on ANNEX J to the Agreement or in the most recent Assignment
Agreement executed by such Term Loan A Lender, and (b) as to all Term Loan A
Lenders, the aggregate commitment of all Term Loan A Lenders to make the Term
Loan A, which aggregate commitment shall be Ten Million Dollars ($10,000,000) on
the Closing Date. After advancing the Term Loan A, each reference to a Lender's
Term Loan A Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan A.

               "TERM LOAN A LENDERS" means those Lenders having Term Loan A
Commitments.

               "TERM LOAN A NOTE" has the meaning assigned to it in SECTION
1.1(b)(i).

               "TERM LOAN B" has the meaning assigned to it in SECTION
1.1(c)(i).

               "TERM LOAN B COMMITMENT" means (a) as to any Term Loan B Lender,
the commitment of such Term Loan B Lender to make its Pro Rata Share of the Term
Loan B as set forth on ANNEX J to the Agreement or in the most recent Assignment
Agreement executed by such Term Loan B Lender, and (b) as to all Term Loan B
Lenders, the aggregate commitment of all Term Loan B Lenders to make the Term
Loan B, which aggregate commitment shall be Seven Million Dollars ($7,000,000)
on the Closing Date. After advancing the Term Loan B, each reference to a
Lender's Term Loan B Commitment shall refer to that Lender's Pro Rata Share of
the outstanding Term Loan B.

                                      A-30


               "TERM LOAN B LENDERS" means those Lenders having Term Loan B
Commitments.

               "TERM LOAN B NOTE" has the meaning assigned to it in SECTION
1.1(c)(i).

               "TERM LOAN C" has the meaning assigned to it in SECTION
1.1(d)(i).

               "TERM LOAN C COMMITMENT" means (a) as to any Term Loan C Lender,
the commitment of such Term Loan C Lender to make its Pro Rata Share of the Term
Loan C as set forth on ANNEX J to the Agreement or in the most recent Assignment
Agreement executed by such Term Loan C Lender, and (b) as to all Term Loan C
Lenders, the aggregate commitment of all Term Loan C Lenders to make the Term
Loan C, which aggregate commitment shall be Five Million Dollars ($5,000,000) on
the Closing Date. After advancing the Term Loan C, each reference to a Lender's
Term Loan C Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan C.

               "TERM LOAN C LENDERS" means those Lenders having Term Loan C
Commitments.

               "TERM LOAN C NOTE" has the meaning assigned to it in SECTION
1.1(d)(i).

               "TERM LOAN COMMITMENTS" means collectively, the Term Loan A
Commitment, Term Loan B Commitment and Term Loan C Commitment.

               "TERM LOANS" means collectively, Term Loan A, Term Loan B and
Term Loan C.

               "TERM NOTES" means collectively, the Term Loan A Notes, Term Loan
B Notes and Term Loan C Notes.

               "TERMINATION DATE" shall mean the date on which the Loans have
been indefeasibly repaid in full and all other Obligations under the Agreement
and the other Loan Documents have been completely discharged and Letter of
Credit Obligations have been cash collateralized, canceled or backed by stand-by
letters of credit in accordance with ANNEX B, and Borrower shall have no further
right to borrow any monies under the Agreement.

               "THIRD PARTY INTERACTIVES" shall mean all Persons with whom any
Credit Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.

               "TITLE IV PLAN" shall mean an employee pension benefit plan, as
defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV

                                      A-31


of ERISA, and which any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any of them.

               "TRADEMARK LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.

               "TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all trademarks, trade names,
corporate or limited liability company names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on
which any of the foregoing have appeared or appear, designs and general
intangibles of like nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.

               "TWO YEAR ANNIVERSARY" shall have the meaning assigned to it in
SECTION 1.9(e).

               "UNFUNDED PENSION LIABILITY" shall mean, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of
five (5) years following a transaction which might reasonably be expected to be
covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.

               "UNIFORM COMMERCIAL CODE JURISDICTION" means any jurisdiction
that has adopted all or substantially all of Article 9 as contained in the 2000
Official Text of the Uniform Commercial Code, as recommended by the National
Conference of Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or modifications to the
Official Text."

               "WORTHINGTON" shall mean the portion of the Seller's business
consisting of substantially all of the assets of Seller's non-automotive
plastics operations located at Seller's Harrisburg and Concord, North Carolina,
St. Matthews, South Carolina and Lebanon, Kentucky facilities.

                                      A-32


               "WORTHINGTON ACQUISITION" shall mean the acquisition of all or
substantially all of the assets of Worthington pursuant to the Worthington
Acquisition Agreement.

               "WORTHINGTON ACQUISITION AGREEMENT" shall mean the Asset Purchase
Agreement, dated February 26, 1999, by and between Seller, MIG and Morton Custom
Plastics, Inc., as amended by that certain First Amendment to Asset Purchase
Agreement dated February 26, 1999 by and among Seller, MIG and Morton Custom
Plastics, Inc.

               "WORTHINGTON LITIGATION" shall mean that certain case titled
Worthington Industries, Inc. and W.I. Products, Inc., f/k/a Worthington Custom
Plastics, Inc., Plaintiffs v. Morton Industrial Group, Inc. and Morton Custom
Plastics, Inc., Defendants (S.D. Ohio, Case No. C2-00-504) and all claims and
counterclaims that have been or could be brought in the future with respect to
such case.

               All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the State of New York to the extent the same are used
or defined therein. Unless otherwise specified, references in the Agreement or
any of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.

               Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.

                                      A-33


                              ANNEX B (SECTION 1.2)
                                       TO
                                CREDIT AGREEMENT
                                LETTERS OF CREDIT

               (a)    ISSUANCE. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued (by a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C ISSUER")) for
Borrower's account and guaranteed by Agent; PROVIDED, HOWEVER, that if the L/C
Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the terms
and conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) $1,500,000 (the "L/C Sublimit"), and (ii) the Maximum
Amount LESS the aggregate outstanding principal balance of the Revolving Credit
Advances. No such Letter of Credit shall have an expiry date which is more than
one year following the date of issuance thereof, and neither Agent nor Revolving
Lenders shall be under any obligation to incur Letter of Credit Obligations in
respect of, or purchase risk participations in, any Letter of Credit having an
expiry date which is later than the Commitment Termination Date.

               (b) (i) ADVANCES AUTOMATIC; PARTICIPATIONS. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance (which would extinguish the corresponding
Letter of Credit Obligations) to the Borrower under SECTION 1.1(a) of the
Agreement regardless of whether a Default or Event of Default shall have
occurred and be continuing and notwithstanding Borrower's failure to satisfy the
conditions precedent set forth in SECTION 2, and each Revolving Lender shall be
obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Revolving Lender to make available to Agent for Agent's own
account its Pro Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve any other
Revolving Lender of its obligation hereunder to make available to Agent its Pro
Rata Share thereof, but no Revolving Lender shall be responsible for the failure
of any other Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.

               (ii)    If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in SECTION 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the

                                      B-1


reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is a
Revolving Lender, then (i) immediately and without further action whatsoever,
each Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation equal to such Revolving Lender's Pro Rata Share
(based on the Revolving Loan Commitments) of the Letter of Credit Obligations in
respect of all Letters of Credit then outstanding and (ii) thereafter,
immediately upon issuance of any Letter of Credit, each Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased from Agent (or such
L/C Issuer, as the case may be) an undivided interest and participation in such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments) of
the Letter of Credit Obligations with respect to such Letter of Credit on the
date of such issuance. Each Revolving Lender shall fund its participation in all
payments or disbursements made under the Letters of Credit in the same manner as
provided in the Agreement with respect to Revolving Credit Advances.

               (c)    CASH COLLATERAL. If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, Borrower will pay to Agent for the benefit
of Revolving Lenders cash or cash equivalents acceptable to Agent ("CASH
EQUIVALENTS") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding for the benefit of
Borrower. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "CASH COLLATERAL ACCOUNT") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of the Borrower and shall be pledged to, and subject to the control
of, Agent, for the benefit of Agent and Lenders, in a manner satisfactory to
Agent. Borrower hereby pledges and grants to Agent, on behalf of Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
ANNEX B, shall constitute a security agreement under applicable law.

                  If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of, the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.

                                      B-2


               From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Lenders with respect to such Letter of Credit Obligations of Borrower and, upon
the satisfaction in full of all Letter of Credit Obligations of Borrower, to any
other Obligations of Borrower then due and payable.

               Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds or Cash Equivalents
held in the Cash Collateral Account, except that upon the termination of all
Letter of Credit Obligations and the payment of all amounts payable by Borrower
to Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be applied to other Obligations when due and owing and upon
payment in full of such Obligations, any remaining amount shall be paid to
Borrower or as otherwise required by law.

               (d)    FEES AND EXPENSES. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (x) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (y) for
each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "LETTER OF CREDIT FEE") in an amount equal to 4.25% per
annum multiplied by the maximum amount available from time to time to be drawn
under the applicable Letter of Credit. Such fee shall be paid to Agent for the
benefit of the Revolving Lenders in arrears, on the first day of each month. In
addition, Borrower shall pay to any L/C Issuer, on demand, such fees (including
all per annum fees), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.

               (e)    REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS.
Borrower shall give Agent at least two (2) Business Days prior written notice
requesting the incurrence of any Letter of Credit Obligation, specifying the
date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary and the Borrower to which such Letter of Credit Obligation relates
and describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the Letter of Credit (which shall
be acceptable to the L/C Issuer) to be guarantied and, to the extent not
previously delivered to Agent, copies of all agreements between Borrower and the
L/C Issuer pertaining to the issuance of Letters of Credit. Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower and approvals by Agent and the L/C Issuer may be made and transmitted
pursuant to electronic codes and security measures mutually agreed upon and
established by and among Borrower, Agent and the L/C Issuer.

                                      B-3


               (f)    OBLIGATION ABSOLUTE. The obligation of Borrower to
reimburse Agent and Revolving Lenders for payments made with respect to any
Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following circumstances:

               (i) any lack of validity or enforceability of any Letter of
     Credit or the Agreement or the other Loan Documents or any other agreement;

               (ii) the existence of any claim, set-off, defense or other right
     which Borrower or any of their respective Affiliates or any Lender may at
     any time have against a beneficiary or any transferee of any Letter of
     Credit (or any Persons or entities for whom any such transferee may be
     acting), Agent, any Lender, or any other Person, whether in connection with
     the Agreement, the Letter of Credit, the transactions contemplated herein
     or therein or any unrelated transaction (including any underlying
     transaction between Borrower or any of their respective Affiliates and the
     beneficiary for which the Letter of Credit was procured);

               (iii) any draft, demand, certificate or any other document
     presented under any Letter of Credit proving to be forged, fraudulent,
     invalid or insufficient in any respect or any statement therein being
     untrue or inaccurate in any respect;

               (iv) payment by Agent (except as otherwise expressly provided in
     paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or
     guaranty thereof against presentation of a demand, draft or certificate or
     other document which does not comply with the terms of such Letter of
     Credit or such guaranty;

               (v) any other circumstance or happening whatsoever, which is
     similar to any of the foregoing; or

               (vi) the fact that a Default or an Event of Default shall have
     occurred and be continuing.

               (g) INDEMNIFICATION; NATURE OF LENDERS' DUTIES. (i) In addition
to amounts payable as elsewhere provided in the Agreement, Borrower hereby
agrees to pay and to protect, indemnify, and save harmless Agent and each Lender
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including attorneys' fees and allocated costs of
internal counsel) which Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of Credit or
guaranty thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any

                                      B-4


Letter of Credit or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result
of the gross negligence or willful misconduct of Agent or such Lender (as
finally determined by a court of competent jurisdiction).

               (ii) As between Agent and any Lender and Borrower, Borrower
assumes all risks of the acts and omissions of, or misuse of any Letter of
Credit by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law neither
Agent nor any Lender shall be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) for failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to demand payment under
such Letter of Credit; PROVIDED that, in the case of any payment by Agent under
any Letter of Credit or guaranty thereof, Agent shall be liable to the extent
such payment was made solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit or guaranty
thereof complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) for errors in interpretation of technical terms; (F) for any loss or delay
in the transmission or otherwise of any document required in order to make a
payment under any Letter of Credit or guaranty thereof or of the proceeds
thereof; (G) for the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) for any consequences arising from causes
beyond the control of Agent or any Lender. None of the above shall affect,
impair, or prevent the vesting of any of Agent's or any Lender's rights or
powers hereunder or under the Agreement.

               (iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between or among Borrower and such L/C
Issuer.

                                      B-5


                              ANNEX C (SECTION 1.8)
                                       TO
                                CREDIT AGREEMENT

                             CASH MANAGEMENT SYSTEMS

                  Borrower shall, and shall cause its Subsidiaries to, establish
and maintain the Cash Management Systems described below:

                  (a) On or before the Closing Date (or such later date as Agent
shall consent to in writing) and until the Termination Date, Borrower shall (i)
establish post office lock boxes ("LOCK BOXES") at one or more of the banks set
forth on DISCLOSURE SCHEDULE (3.19), and shall request in writing and otherwise
take such reasonable steps to ensure that all Account Debtors forward payment
directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries to
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral ("COLLECTIONS"), including, without
limitation, payments, if any, in respect of the Lebanon IRBs (whether or not
otherwise delivered to a Lock Box) into bank accounts in Borrower's name or any
such Subsidiary's name (collectively, the "BORROWER ACCOUNTS") at banks set
forth on DISCLOSURE SCHEDULE (3.19) (each, a "RELATIONSHIP BANK"); provided that
notwithstanding the foregoing all Collections shall only be deposited into the
Lockboxes and/or the Lockbox Concentration Amount referred to in the immediately
succeeding sentence. Borrower acknowledges and agrees that as of the Closing
Date it has established the following Lock Boxes at Harris Trust and Savings
Bank: 95379, 95845 and 95396; and all such Lock Boxes are attached to Borrower
Account, account no. 350-033-7, at Harris Trust and Savings Bank (the "LOCK BOX
CONCENTRATION Amount").

                  (b) On or before the Closing Date (or such later date as Agent
shall consent to in writing), each Relationship Banks, shall have entered into
tri-party blocked account agreements with Agent, for the benefit of itself and
Lenders, and Borrower and its Subsidiaries, as applicable, in form and substance
acceptable to Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the Collection Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of Lenders, (ii) the bank executing
such agreement has no rights of setoff or recoupment or any other claim against
such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for
returned checks or other items of payment, and (iii) from and after the Closing
Date with respect to banks at which a Borrower Account is located, such bank
agrees to forward immediately all amounts in

                                       C-1


Borrower Account to the Collection Account and to commence the process of daily
sweeps from such Borrower Account into the Collection Account. Borrower shall
not, and shall not cause or permit any Subsidiary thereof to, accumulate or
maintain cash in disbursement or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.

                  (c) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend DISCLOSURE SCHEDULE (3.19) to add or replace a
Relationship Bank, Lock Box or Borrower Account or to replace any Disbursement
Account; PROVIDED, HOWEVER, THAT (i) Agent shall have consented in writing in
advance to the opening of such account or Lock Box with the relevant bank and
(ii) prior to the time of the opening of such account or Lock Box, the Borrower
and/or the Subsidiaries thereof, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance satisfactory to Agent. Borrower shall close any of its accounts
(and establish replacement accounts in accordance with the foregoing sentence)
promptly and in any event within thirty (30) days of notice from Agent that the
creditworthiness of any bank holding an account is no longer acceptable in
Agent's reasonable judgment, or as promptly as practicable and in any event
within sixty (60) days of notice from Agent that the operating performance,
funds transfer and/or availability procedures or performance with respect to
accounts or lockboxes of the bank holding such accounts or Agent's liability
under any tri-party blocked account agreement with such bank is no longer
acceptable in Agent's reasonable judgment.

                  (d) The Lock Boxes, Borrower Accounts and Disbursement
Accounts (other than any payroll account) shall be cash collateral accounts,
with all cash, checks and other similar items of payment in such accounts
securing payment of the Loans and all other Obligations, and in which Borrower
and each Subsidiary thereof shall have granted a Lien to Agent, on behalf of
itself and Lenders, pursuant to the Security Agreements.

                  (e) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with SECTION 1.10 of the Agreement and
shall be applied (and allocated) by Agent in accordance with SECTION 1.11 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.

                  (f) Borrower may maintain, in its name, an account (each a
"DISBURSEMENT ACCOUNT" and collectively, the "DISBURSEMENT ACCOUNTS") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances made to Borrower pursuant to SECTION 1.1 for use by
Borrower solely in accordance with the provisions of SECTION 1.4; provided that
Borrower shall not have a deposit in its checking, controlled disbursement or
petty cash accounts of more than $10,000 in the aggregate for any two
consecutive Business Days or deposit

                                       C-2


into any such accounts (other than the petty cash account) more funds than are
necessary to clear checks and other items of payment which are presented for
payment on such Business Day.

                  (g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "RELATED PERSON") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment in
respect of amounts owing to Borrower or any of its Subsidiaries received by
Borrower or any such Related Person, and (ii) within one (1) Business Day after
receipt by Borrower or any such Related Person of any such checks, cash or other
items or payment, deposit the same into a Borrower Account of Borrower or
Subsidiary, as applicable. Borrower and each other Credit Party acknowledges and
agrees that all cash, checks or items of payment constituting proceeds of
Collateral are the property of Agent and Lenders. All proceeds of the sale or
other disposition of any Collateral, shall be deposited directly into the
applicable Borrower Accounts

                                       C-3


                            ANNEX D (SECTION 2.1(a))
                                       TO
                                CREDIT AGREEMENT

                    SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS

                  In addition to, and not in limitation of, the conditions
described in SECTION 2.1 of the Agreement, pursuant to SECTION 2.1(a), the
following items must be received by Agent in form and substance satisfactory to
Agent on or prior to the Closing Date (each capitalized term used but not
otherwise defined herein shall have the meaning ascribed thereto in ANNEX A to
the Agreement):

                  A. APPENDICES. All Appendices to the Agreement, in form and
substance satisfactory to Agent.

                  B. REVOLVING NOTES AND TERM NOTES. Duly executed originals of
the Revolving Notes and Term Notes for each applicable Lender, dated the Closing
Date.

                  C. SECURITY AGREEMENTS. Copies of each of the Security
Agreements, and all instruments, documents and agreements executed pursuant
thereto.

                  D. INSURANCE. Satisfactory evidence that the insurance
policies required by SECTION 5.4 are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements, as requested by Agent, in favor of Agent, on behalf of Lenders.

                  E. SECURITY INTERESTS AND CODE FILINGS.

                     (b) Evidence satisfactory to Agent that Agent (for the
benefit of itself and Lenders) has (or upon the filing of documents delivered to
Agent on or prior to the Closing Date will have) a valid and perfected first
priority security interest in the Collateral, including (i) such documents duly
executed by each Credit Party (including financing statements under the Code and
other applicable documents under the laws of any jurisdiction with respect to
the perfection of Liens) as Agent may request in order to perfect its security
interests in the Collateral and (ii) copies of Code search reports in such
jurisdictions as Agent reasonably determines listing all effective financing
statements that name any Credit Party as debtor, together with copies of such
financing statements, none of which shall cover the Collateral.

                     (c) Evidence satisfactory to Agent, including copies, of
all UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.

                                      D-1


                  F. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. Copies of the
Intellectual Property Security Agreements,together with all instruments,
documents and agreements executed pursuant thereto.

                  G. HOLDINGS GUARANTY. A copy of the Holdings Guaranty, and all
documents, instruments and agreements executed pursuant thereto.

                  H. SUBSIDIARY GUARANTY. A copy of the Subsidiary Guaranty, and
all documents, instruments and agreements executed pursuant thereto.

                  I. CASH MANAGEMENT SYSTEM; BLOCKED ACCOUNT AGREEMENTS.
Evidence satisfactory to Agent that, as of the Closing Date, Cash Management
Systems complying with ANNEX C to the Agreement have been established and are
currently being maintained in the manner set forth in such ANNEX C, together
with copies of duly executed tri-party blocked account and lock box agreements,
satisfactory to Agent, with the banks as required by ANNEX C.

                  J. CHARTER (OR EQUIVALENT DOCUMENTATION) AND GOOD STANDING.
For Credit Party, such Person's (a) charter (or equivalent organizational
documents) and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.

                  K. BYLAWS (OR EQUIVALENT DOCUMENTATION) AND RESOLUTIONS. For
each Credit Party, (a) such Person's bylaws (or other equivalent constituent
documentation), together with all amendments thereto and (b) resolutions of such
Person's Board of Directors (or equivalent governing body) and equityholders,
approving and authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and the transactions to be consummated
in connection therewith, each certified as of the Closing Date by such Person's
secretary or an assistant secretary as being in full force and effect without
any modification or amendment.

                  L. INCUMBENCY CERTIFICATES. For Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's secretary or
an assistant secretary as being true, accurate, correct and complete.

                  M. OPINIONS OF COUNSEL. Duly executed originals of opinions of
Husch & Eppenberger, counsel for the Credit Parties, together with any local
counsel opinions requested by Agent, each in form and substance satisfactory to
Agent and its counsel, dated the Closing Date, and each accompanied by a letter
addressed to such counsel from the Credit Parties, authorizing and directing
such counsel to address its

                                      D-2


opinion to Agent, on behalf of Lenders, and to include in such opinion an
express statement to the effect that Agent and Lenders are authorized to rely on
such opinion.

                  N. PLEDGE AGREEMENTS. Copies of the Pledge Agreements
accompanied by (as applicable and to the extent not already delivered to Agent)
(a) certificates representing all of the outstanding Stock being pledged
pursuant to such Pledge Agreement and stock powers (or similar transfer
instruments) for such certificates executed in blank and (b) any instruments
evidencing Indebtedness, including, without limitation in respect of the
Holdings Note and the Lebanon IRBs, being pledged pursuant to such Pledge
Agreement, duly endorsed in blank.

                  O. ACCOUNTANTS' LETTERS. A letter from the Credit Parties to
their independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders in
accordance with SECTION 4.2.

                  P. APPOINTMENT OF AGENT FOR SERVICE. An appointment of CT
Corporation as each Credit Party's agent for service of process.

                  Q. Intentionally Omitted

                  R. OFFICER'S CERTIFICATE. Agent shall have received duly
executed originals of a certificate of the Chief Executive Officer and Chief
Financial Officer of Borrower or any other appropriate Person as determined by
Agent, dated the Closing Date, stating that, since December 31, 2000 (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) no Litigation has been commenced
which, if successful, would have a Material Adverse Effect or could challenge
any of the transactions contemplated by the Agreement and the other Loan
Documents; (d) there have been no Restricted Payments made by any Credit Party;
and (e) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of Borrower or any of its
Subsidiaries.

                  S. WAIVERS. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agent, in each case as required pursuant to
SECTION 5.9.

                  T. MORTGAGES. Duly executed originals of amendments to the
Mortgages in form and substance satisfactory to Agent together with: (a) title
insurance policy updates, current as-built surveys, zoning letters and
certificates of occupancy, in each case satisfactory in form and substance to
Agent, in its sole discretion, to create a valid and enforceable first priority
lien (subject to Permitted Encumbrances) on each Mortgaged Property in favor of
Agent for the benefit of itself and Lenders (or in favor of such other trustee
as my be required or desired under local law); (b) evidence that counterparts of
such amendments have been recorded in all places to the extent necessary or
desireable in the judgment of Agent; and (c) an opinion of counsel in each state
in

                                      D-3


which any Mortgaged Property is located in form and substance and from counsel
satisfactory to Agent;

                  U. AUDITED FINANCIALS; FINANCIAL CONDITION. Agent shall have
received Borrower's audited Financial Statements for the twelve month period
ended December 31, 2000 which have been certified by KMPG LLP, and the unaudited
consolidated balance sheet of Borrower dated September 30, 2001. Borrower shall
have provided Agent with its current operating statements, a consolidated
balance sheet and statement of cash flows and Projections with respect to
Borrower certified by its Chief Financial Officer, in each case in form and
substance satisfactory to Agent, and Agent shall be satisfied, in its sole
discretion, with all of the foregoing. Agent shall have further received a
certificate of the Chief Executive Officer and/or the Chief Financial Officer of
Borrower or any other appropriate Person as determined by Agent, based on such
Projections, to the effect that (a) Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Projections are
based upon estimates and assumptions stated therein, all of which Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to Borrower and, as of the Closing Date, reflect Borrower's good
faith and reasonable estimates of its future financial performance and of the
other information projected therein for the period set forth therein; and (c)
containing such other statements with respect to the solvency of Borrower and
matters related thereto as Agent shall request.

                  V. IRB DOCUMENTS; TAX SHARING AGREEMENT; WORTHINGTON
LITIGATION. True and correct copies, certified by an officer of Borrower, of (x)
all documents executed in connection with the Lebanon IRB (including, without
limitation, the IRB Indenture, the IRB Lease Agreement and the IRB Assignment
Documents and related consents to the extent required by Agent with respect
thereto), (y) the Tax Sharing Agreement and the Worthington Acquisition
Agreement and (z) all pleadings, filings, non-privileged case summaries,
memorandum and related material relating to the Worthington Litigation; provided
that the Credit Parties shall not be obligated to deliver to Agent any items
relating to the Worthington Litigation which would compromise the
attorney-client privilege between the Credit Parties and their counsel.

                  W. OTHER DOCUMENTS. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.

                                      D-4


                            ANNEX E (SECTION 4.1(a))
                                       TO
                                CREDIT AGREEMENT

                FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING

                  Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:

                  (a) MONTHLY FINANCIALS. To Agent, within thirty (30) days
after the end of each Fiscal Month, financial information regarding Borrower and
its Subsidiaries, certified by the Chief Financial Officer of Borrower,
consisting of consolidated (i) unaudited balance sheets as of the close of such
Fiscal Month and the related statements of income and cash flow for that portion
of the Fiscal Year ending as of the close of such Fiscal Month; and (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting
forth in comparative form the figures for the corresponding period in the prior
year and the figures contained in the Projections for such Fiscal Year, all
prepared in accordance with GAAP (subject to normal year-end adjustments). Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments) the
financial position and results of operations of Borrower and its Subsidiaries,
on a consolidated basis, in each case as at the end of such month and for the
period then ended and (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;

                  (b) QUARTERLY FINANCIALS. To Agent, within forty-five (45)
days after the end of each Fiscal Quarter, consolidated financial information
regarding Borrower and its Subsidiaries, certified by the Chief Financial
Officer of Borrower, including (i) unaudited balance sheets as of the close of
such Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and
(ii) unaudited statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A) a statement
in reasonable detail (each, a "COMPLIANCE CERTIFICATE" showing the calculations
used in determining compliance with each of the financial covenants set forth on
ANNEX G which is tested on a quarterly basis and (B) the certification of the
Chief Financial Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments) the
financial position, results of operations and statements of cash flows of
Borrower and its Subsidiaries, on both a consolidated basis, as at the end of
such Fiscal

                                      E-1


Quarter and for the period then ended, (ii) any other information presented is
true, correct and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrower shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, a management discussion and analysis
which includes a comparison to budget for that Fiscal Quarter and a comparison
of performance for that Fiscal Quarter to the corresponding period in the prior
year;

                  (c) OPERATING PLAN. To Agent, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for Borrower, approved by the Board of Directors of Borrower, for
the subsequent five-year period, which will include a statement of all of the
material assumptions on which such plan is based, will include monthly balance
sheets and a monthly budget for the first year of such five-year period and will
integrate sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections all prepared on the same
basis and in similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing management's good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities;

                  (d) ANNUAL AUDITED FINANCIALS. To Agent, within ninety (90)
days after the end of each Fiscal Year, audited Financial Statements for
Borrower and its Subsidiaries on a consolidated basis, consisting of balance
sheets and statements of income and retained earnings and cash flows, setting
forth in comparative form in each case the figures for the previous Fiscal Year,
which Financial Statements shall be prepared in accordance with GAAP, certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) a statement prepared in reasonable detail showing
the calculations used in determining compliance with each of the financial
covenants set forth on ANNEX G, (ii) a report from such accounting firm to the
effect that, in connection with their audit examination, nothing has come to
their attention to cause them to believe that a Default or Event of Default has
occurred (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed to
Agent, on behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications taken by nationally
recognized accounting firms, signed by such accounting firm acknowledging that
Agent and Lenders are entitled to rely upon such accounting firm's certification
of such audited Financial Statements, (iv) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters, and (v) the certification of the
Chief Executive Officer or Chief Financial Officer of Borrower that all such
Financial Statements present fairly in accordance with GAAP the financial

                                      E-2


position, results of operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated basis, as at the end of such year and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default;

                  (e) MANAGEMENT LETTERS. To Agent, within five (5) Business
Days after receipt thereof by any Credit Party, copies of all management
letters, exception reports or similar letters or reports received by such Credit
Party from its independent certified public accountants;

                  (f) DEFAULT NOTICES. To Agent, as soon as practicable, and in
any event within five (5) Business Days after an executive officer of Borrower
has actual knowledge of the existence of any Default, Event of Default or other
event which has had a Material Adverse Effect, telephonic or telecopied notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;

                  (g) SEC FILINGS AND PRESS RELEASES. To Agent, promptly upon
their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person;

                  (h) EQUITY NOTICES. To Agent, as soon as practicable, copies
of all material written notices given or received by any Credit Party with
respect to any Stock of such Person.

                  (i) SUPPLEMENTAL SCHEDULES. To Agent, supplemental
disclosures, if any, required by SECTION 5.6 of the Agreement;

                  (j) LITIGATION. To Agent (A) in writing, promptly upon
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party that (i) seeks damages in excess of $100,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Liabilities or (vi) involves any product recall; and (B) copies of
all pleadings, filings, non-privileged case summaries, memorandum and related
materials relating to any of the foregoing or to any Litigation commenced or
threatened against any Credit Party (including without limitation the
Worthington

                                      E-3


Litigation, the Victory Lane Productions litigation and the Outboard Marine
Corporation bankruptcy case); provided that the Credit Parties shall not be
obligated to deliver to Agent any items relating to any Litigation which would
compromise the attorney-client privilege between the Credit Parties and their
counsel.

                  (k) INSURANCE NOTICES. To Agent, disclosure of losses or
casualties required by SECTION 5.4 of the Agreement;

                  (l) DEFAULT NOTICES. To Agent, copies of (i) (x) any and all
default notices received under or with respect to any leased location or public
warehouse where Collateral is located, and (y) such other notices or documents
as Agent may request in its reasonable discretion and (ii) any and all default
notices received under or with respect to the Lebanon IRBs, including, without
limitation, under or with respect to the IRB Indenture or the IRB Lease
Agreement;

                  (m) LEASE AMENDMENTS. To Agent, copies of all material
amendments to real estate leases with respect to all Real Estate;

                  (n) OTHER DOCUMENTS. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time, reasonably
request;

                  (o) CASH FLOW BUDGET. To the Agent, not later than Wednesday
of every other calendar week, an updated Cash Flow Budget (in the form of
EXHIBIT 1.2) for the thirteen (13) week period commencing on the immediately
preceding Friday, together with a report, comparing the actual cash flow of the
Borrower for the previous two calendar weeks to the Cash Flow Budget for such
two week period, together with an explanation in reasonable detail of any
variances with Cash Flow Budget for such two week period. Each such updated Cash
Flow Budget shall be subject to the approval of the Agent and shall not be the
"Cash Flow Budget" for any purpose of this Agreement absent such approval by
Agent; PROVIDED, that Agent in its sole discretion may require, by written
notice delivered to Borrower that Borrower deliver Cash Flow Budgets on
Wednesday of every calendar week with the Cash Flow Budgets in such case
relating back to immediately preceding Friday;

                  (p) DAILY CASH REPORT. To the Agent, by 1 p.m. E.S.T. each
Business Day, a daily cash report of Borrower for the immediately preceding
Business Day, in a form approved by Agent;

                  (q) OPERATING BUDGET. To Agent, (i) at least thirty days prior
to the beginning of each Fiscal Year, the Operating Budget (in form and
substance satisfactory to Agent in its discretion) and (ii) within thirty (30)
days of the end of each Fiscal Quarter an update of the Operating Budget;

                                      E-4


                  (r) TRADE PAYABLES. To Agent, within five (5) Business Days
after the end of each Fiscal Month, an updated monthly aging report (aged from
invoice date as follows: 1-30 days, 31-60 days, 61-90 days and 91 days or more)
as of the end of each such Fiscal Month with respect to the trade payables or
other amounts payable by the Credit Parties to each vendor which in the
aggregate for any vendor exceeds $5,000, and a summary of the payment terms
applicable to each payable for each such vendor, together with copies of all
documentation evidencing such trade terms, including copies of any
correspondence with such vendors and promissory notes evidencing such payables;
and

                  (s) To Agent, annually, evidence that Borrower has paid in
full the annual fee necessary to retain CT Corporation as each Credit Party's
agent for service of process.

                                      E-5


                            ANNEX F (SECTION 4.1(b))
                                       TO
                                CREDIT AGREEMENT

                               COLLATERAL REPORTS

                  Borrower shall deliver or cause to be delivered the following:

                  To Agent, upon its request, and in no event less frequently
than five (5) Business Days after the end of each Fiscal Month (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date), each of the following:

                  (a) Revolving Borrowing Base Certificate accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion:

                      (i) a summary of Inventory by location and type with a
        supporting perpetual Inventory report, in each case accompanied by such
        supporting detail and documentation as shall be requested by Agent in
        its reasonable discretion; and

                      (ii) a monthly trial balance showing Accounts outstanding
        aged from invoice due date as follows: 1 to 30 days, 31 to 60 days, 61
        to 90 days and 91 days or more, accompanied by such supporting detail
        and documentation as shall be requested by Agent in its reasonable
        discretion;

                  (b) To Agent, on a weekly basis or at such more frequent
intervals as Agent may request from time to time (together with a copy of all or
any part of such delivery requested by any Lender in writing after the Closing
Date), collateral reports with respect to Borrower, including all additions and
reductions (cash and non-cash) with respect to Accounts of Borrower, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;

                  (c) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to ANNEX E, a reconciliation of the
Accounts trial balance and month-end Inventory reports of Borrower to Borrower's
general ledger and monthly Financial Statements delivered pursuant to such ANNEX
E, in each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;

                                      F-1


                  (d) To Agent, at the time of delivery of each of the annual
Financial Statements delivered pursuant to ANNEX E, (i) a listing of government
contracts of Borrower subject to the Federal Assignment of Claims Act of 1940;
and (ii) a list of any applications for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency which any Credit
Party thereof has filed in the prior Fiscal Quarter;

                  (e) Borrower, at its own expense, shall deliver to Agent the
results of each physical verification, if any, which Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default shall have occurred and be continuing, Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);

                  (f) Borrower, at its own expense, shall deliver to Agent such
appraisals of Equipment and Real Estate as Agent may request from time to time
(provided that so long as no Default or Event of Default has occurred and is
continuing, such appraisals shall be required no more frequently than once every
two (2) years) and such appraisals shall be prepared by an appraiser
satisfactory to Agent, and which shall otherwise be in form and substance
satisfactory to Agent (it being understood that any such appraisal in respect of
Real Estate shall be an MAI appraisal); and

                  (g) Such other reports, statements and reconciliations with
respect to the Collateral of any or all Credit Parties as Agent shall from time
to time request in its reasonable discretion.

                                      F-2


                             ANNEX G (SECTION 6.10)
                                       TO
                                CREDIT AGREEMENT

                               FINANCIAL COVENANTS

                  Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:

                  (a) MAXIMUM CAPITAL EXPENDITURES. Holdings and its
Subsidiaries on a consolidated basis shall not make Capital Expenditures during
the following periods that exceed in the aggregate the amounts set forth
opposite each of such periods:



            PERIOD             MAXIMUM CAPITAL EXPENDITURES PER PERIOD
                                      
            Fiscal Year 2002             $1,200,000
            Fiscal Year 2003             $1,200,000
            Fiscal Year 2004             $1,200,000
            Fiscal Year 2005             $1,200,000
            Fiscal Year 2006             $1,200,000


                  (b) MINIMUM FIXED CHARGE COVERAGE RATIO. Holdings and its
Subsidiaries on a consolidated basis, shall have at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month period
then ended (or with respect to the Fiscal Quarters ending on or before and
December 31, 2002, respectively, the period commencing on January 1, 2002, and
ending on the last day of such Fiscal Quarter) of not less than the following:



                       PERIOD ENDED           RATIO

                                         
                          3/31/02           0.32 to 1.00
                          6/30/02           0.61 to 1.00
                          9/30/02           0.75 to 1.00
                         12/31/02           0.89 to 1.00
                          3/31/03           1.00 to 1.00
                          6/30/03           1.00 to 1.00
                          9/30/03           1.05 to 1.00
                         12/31/03           1.10 to 1.00
                          3/31/04           1.10 to 1.00
                          6/30/04           1.10 to 1.00
                          9/30/04           1.05 to 1.00
                         12/31/05           1.05 to 1.00
                          3/31/05           1.00 to 1.00


                                      G-1




                       PERIOD ENDED           RATIO

                                         
                          6/30/05           1.00 to 1.00
                          9/30/05           1.00 to 1.00
                         12/31/05           1.00 to 1.00
                          3/31/06           1.00 to 1.00
                          6/30/06           1.00 to 1.00


                  (c) MAXIMUM LEVERAGE RATIO. Holdings and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, a Leverage Ratio as of the last day of such Fiscal Quarter and for the
12-month period then ended of not less than the following:



                       PERIOD ENDED    MAXIMUM LEVERAGE RATIO

                                        
                          3/31/03          4.8 to 1.00
                          6/30/03          4.6 to 1.00
                          9/30/03          4.6 to 1.00
                         12/31/03          4.5 to 1.00
                          3/31/04          4.1 to 1.00
                          6/30/04          3.8 to 1.00
                          9/30/04          3.3 to 1.00
                         12/31/04          3.0 to 1.00
                          3/31/05          2.4 to 1.00
                          6/30/05          2.4 to 1.00
                          9/30/05          2.4 to 1.00
                         12/31/05          2.4 to 1.00
                          3/31/06          1.8 to 1.00
                          6/30/06          1.8 to 1.00
                          9/30/06          1.8 to 1.00
                         12/31/06          1.8 to 1.00



                  (d) MINIMUM EBITDA. Holdings and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, EBITDA for the 12-month period then ended (or with respect to each Fiscal
Month ending on or before December 31, 2002, the period commencing on January 1,
2002 and ending on the last day of such Fiscal Month) of not less than the
following:



                         PERIOD ENDED        EBITDA

                                         
                           1/31/02          $ 80,000
                           2/28/02          $152,000
                           3/31/02          $430,000
                           4/30/02          $687,000
                           5/31/02          $981,000


                                      G-2




                         PERIOD ENDED        EBITDA
                                         
                           6/30/02          $1,537,000
                           7/31/02          $1,984,000
                           8/31/02          $2,290,000
                           9/30/02          $3,171,000
                          10/31/02          $3,752,000
                          11/30/02          $4,346,000
                          12/31/02          $5,320,000
                           3/31/03          $6,245,000
                           6/30/03          $6,367,000
                           9/30/03          $6,343,000
                          12/31/03          $5,927,000
                           3/31/04          $6,472,000
                           6/30/04          $7,293,000
                           9/30/04          $7,975,000
                          12/31/04          $8,535,000
                           3/31/05          $8,939,000
                           6/30/05          $8,993,000
                           9/30/05          $9,044,000
                          12/31/05          $8,833,000
                           3/31/06          $8,924,000
                           6/30/06          $9,000,000
                           9/30/06          $9,090,000
                          12/31/06          $9,196,000


                  (e) VENDOR TRADE SUPPORT. Borrower shall not permit its
aggregate Vendor Trade Support for all vendors as in effect on the Closing Date
as set forth on DISCLOSURE SCHEDULE (3.21(b)) to be reduced by more than (i)
$250,000 at any time prior to December 31, 2002 or (ii) $350,000 at any time
thereafter. For purposes hereof "Vendor Trade Support" as of any date shall mean
with respect to any vendor the amount of liquidity per annum provided to
Borrower as of such date by such vendor calculated on the basis of the average
annual purchases of Borrower from such vendor as of such date and the trade
terms provided by such vendor to Borrower (i.e., the number of days from invoice
date that payment is due to such vendor) as of such date, calculated on the
basis of a 360-day year consisting of twelve 30-day months. By way of example, a
vendor with average annual purchases of $1,200,000 which provides to the
Borrower 90 day trade terms is providing $300,000 of Vendor Trade Support
(90/360 x $1,200,000).

                  (f) EXPENSES AND EXPENDITURES. The expenses and expenditures
of Borrower on a weekly basis shall not exceed (i) five percent (5%) on an
aggregate basis, and (ii) ten percent (10%) on a line item basis, of the
expenses and expenditures set forth in the Cash Flow Budget for such week.

                                      G-3


                  (g) MINIMUM EXCESS BORROWING AVAILABILITY. Borrower shall have
at all times Excess Borrowing Availability of not less than $1,000,000, or such
lesser amount as may be established in writing by Agent from time to time.

                  (h) CASH CONVERSION CYCLE. Borrower and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, Cash Conversion Cycle Days as of the last day of such Fiscal Quarter and
for the 3 month period then ended (or with respect to the Fiscal Months ending
on or before December 31, 2002, respectively, the period commencing on January
1, 2002 and ending on the last day of such Fiscal Month) of not more than the
following:



                       PERIOD ENDED       CASH CONVERSION CYCLE DAYS

                                                   
                          4/30/02                     41
                          5/31/02                     41
                          6/30/02                     43
                          7/31/02                     41
                          8/31/02                     43
                          9/31/02                     43
                         10/30/02                     42
                         11/30/02                     44
                         12/31/02                     47
                          3/31/03                     39
                          6/30/03                     40
                          9/30/03                     38
                         12/31/03                     39
                          3/31/04                     36
                          6/30/04                     37
                          9/30/04                     37
                         12/31/04                     38
                          3/30/05                     35
                          6/30/05                     36
                          9/30/05                     36
                         12/31/05                     37
                          3/30/06                     34
                          6/30/06                     35
                          9/30/06                     35
                         12/31/06                     36


                  Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the

                                      G-4


foregoing. If any "Accounting Changes" (as defined below) occur and such changes
result in a change in the calculation of the financial covenants, standards or
terms used in the Agreement or any other Loan Document, then Borrower, Agent and
Lenders agree to enter into negotiations in order to amend such provisions of
the Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating Borrower's and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "ACCOUNTING CHANGES" means (a) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (b) changes in accounting principles concurred
in by Borrower's certified public accountants; (c) purchase accounting
adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (d) the reversal of any reserves established as a result of
purchase accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including capitalization of
costs and expenses or payment of pre-Closing Date liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDA in such period. If Agent, Borrower and Requisite Lenders
agree upon the required amendments, then after appropriate amendments have been
executed and the underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained in the Agreement or in any other
Loan Document shall, only to the extent of such Accounting Change, refer to
GAAP, consistently applied after giving effect to the implementation of such
Accounting Change. If Agent, Borrower and Requisite Lenders cannot agree upon
the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change.

                                      G-5


                            ANNEX H (SECTION 9.9(a))
                                       TO
                                CREDIT AGREEMENT

                            WIRE TRANSFER INFORMATION

AGENT'S AND GE CAPITAL'S ACCOUNT:

Bank Name: Bankers Trust Company
Location: New York, New York
ABA Routing No.: 021001033
Credit Account No.: 50-232-854
Account Name: Morton

                                      H-1


                             ANNEX I (SECTION 11.10)
                                       to
                                CREDIT AGREEMENT

                                NOTICE ADDRESSES

(A)      If to Agent or GE Capital, at

         General Electric Capital Corporation
         335 Madison Avenue, 12th Floor
         New York, New York 10017
         Attention: Morton Customs Account Manager
         Telecopier No.: (212) 983-8767
         Telephone No.:  (212) 370-8000

         with copies to:

         Paul, Hastings, Janofsky & Walker LLP
         1055 Washington Boulevard
         Stamford, Connecticut 06901
         Attention: Mario J. Ippolito, Esq.
         Telecopier No.: (203) 359-3031
         Telephone No.: (203) 961-7400

AND

         Heller Financial, Inc.,
         a GE Capital Company
         500 West Monroe
         Chicago, Illinois 60661-3679
         Attention:  Counsel - Morton Custom Plastics
         Telecopier No.: (312) 441-6876
         Telephone No.: (312) 441-7000

(B)      If to Borrower, to Borrower, at

         Morton Custom Plastics, LLC
         1021 West Birchwood
         Morton, Illinois 61550
         Attention: William D. Morton
         Telecopier No.: (309) 263-1841
         Telephone No.: (309) 263-1748

                                      I-1


         with copies to:

         Husch & Eppenberger
         401 Main Street, Suite 1400
         Peoria, Illinois 61602
         Attention: Kenneth R. Eathington, Esq.
         Telecopier No.: (309) 637-4928
         Telephone No.: (309) 637-4900


                                      I-2


                 ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
                                       to
                                CREDIT AGREEMENT

                                         LENDER(S)
Revolving Loan Commitment                General Electric Capital Corporation
$10,000,000

Term Loan A Commitment:                  General Electric Capital Corporation
$10,000,000

Term Loan B Commitment:                  General Electric Capital Corporation
$7,000,000

Term Loan C Commitment:                  General Electric Capital Corporation
$5,000,000


                                      J-1


                                EXHIBIT 1.1(a)(i)
                                       TO
                                CREDIT AGREEMENT

                       NOTICE OF REVOLVING CREDIT ADVANCE

                  Reference is made to that certain Credit Agreement dated as of
March 25, 2002 among Morton Custom Plastics, LLC ("Borrower"), the other Persons
named therein as Credit Parties, General Electric Capital Corporation, as Agent
for Lenders ("Agent"), and the Lenders from time to time signatory thereto
("Lenders") (including all annexes, exhibits and schedules thereto, and as from
time to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement"). Capitalized terms used herein without definition are so used as
defined in the Credit Agreement.

                  [Borrower hereby gives irrevocable notice, pursuant to SECTION
1.1(a)(i) of the Credit Agreement, of its request for a Revolving Credit Advance
to be made on [DATE] in the aggregate amount of $[________] as [an Index Rate
Loan] [a LIBOR Loan having a LIBOR Period of [_____] month(s).]

                  Borrower hereby (i) represents and warrants that all of the
conditions contained in SECTION 2.1 and SECTION 2.2 of the Credit Agreement have
been satisfied on and as of the date hereof, and will continue to be satisfied
on and as of the date of the Advance(s) requested hereby, before and after
giving effect thereto and to the application of the proceeds therefrom; and (ii)
reaffirms the granting and continuance of Agent's Liens, on behalf of itself and
Lenders, pursuant to the Collateral Documents.

                  IN WITNESS WHEREOF, Borrower has caused this Notice of
Revolving Credit Advance to be executed and delivered by its duly authorized
officer as of the date first set forth above.

                                         MORTON CUSTOM PLASTICS, LLC

                                             By:   Morton Holdings, LLC, its
                                                   Manager

                                                   By: Morton Industrial Group,
                                                       Inc., its Manager


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


                                      J-1


                                 EXHIBIT 1.5(e)

                                       TO

                                CREDIT AGREEMENT

                    FORM OF NOTICE OF CONVERSION/CONTINUATION

                  Reference is made to that certain Amended and Restated Credit
Agreement dated as of March 25, 2002 by and among the undersigned ("MCP"), the
other Persons named therein as Credit Parties, General Electric Capital
Corporation, as Agent for Lenders ("AGENT"), and the Lenders from time to time
signatory thereto (including all annexes, exhibits or schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the
"CREDIT AGREEMENT"). Capitalized terms used herein without definition are so
used as defined in the Credit Agreement.

                  MCP hereby gives irrevocable notice, pursuant to SECTION
1.5(e) of the Credit Agreement, of its request to:

                  (a) on [ date ] convert $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
[________] Rate, into a(n) [________] Loan [and, in the case of a LIBOR Loan,
having a LIBOR Period of [_____] month(s)];

                  [(b) on [ date ] continue $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
LIBOR Rate, as a LIBOR Loan having a LIBOR Period of [_____] month(s)].

                  MCP certifies that the conversion and/or continuation of the
Loans requested above is for the separate account(s) of the MCP in the following
[respective] amount[s]: [Name: $_____________] and [Name: $_______________].

                  MCP hereby represents and warrants that all of the conditions
contained in SECTION 2.2 of the Credit Agreement have been satisfied on and as
of the date hereof, and will continue to be satisfied on and as of the date of
the conversion/continuation requested hereby, before and after giving effect
thereto; and (ii) reaffirms the guaranty and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.

                                 Exh. 1.5 (e)-1


                  IN WITNESS WHEREOF, MCP has caused this Notice of
Conversion/Continuation to be executed and delivered by its duly authorized
officer as of the date first set forth above.

                                          MORTON CUSTOM PLASTICS, LLC

                                          By: Morton Holdings, LLC, its Manager

                                          By: Morton Industrial Group, Inc., its
                                          Manager


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


                                                    :

                                 Exh. 1.5 (e)-2


                               EXHIBIT 4.1 (b)(i)
                                       TO
                                CREDIT AGREEMENT

                       FORM OF BORROWING BASE CERTIFICATE

                      REVOLVING BORROWING BASE CERTIFICATE

                  PURSUANT TO THE AMENDED AND RESTATED CREDIT AGREEMENT DATED AS
OF MARCH 25, 2002, AMONG THE UNDERSIGNED, THE PERSONS DESIGNATED THEREIN AS
CREDIT PARTIES, THE OTHER PERSONS DESIGNATED THEREIN AS LENDERS AND GENERAL
ELECTRIC CAPITAL CORPORATION , AS AGENT (THE "CREDIT AGREEMENT"), THE
UNDERSIGNED CERTIFIES THAT AS OF THE CLOSE OF BUSINESS ON THE DATE SET FORTH
BELOW, THE BORROWING BASE IS COMPUTED AS SET FORTH BELOW.

                  THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THIS REVOLVING
BORROWING BASE CERTIFICATE, DATED AS OF [_______, 200__], IS A TRUE AND CORRECT
STATEMENT OF, AND THAT THE INFORMATION CONTAINED HEREIN IS TRUE AND CORRECT IN
ALL MATERIAL RESPECTS REGARDING, THE STATUS OF ELIGIBLE ACCOUNTS, AND ELIGIBLE
INVENTORY AND THAT THE AMOUNTS REFLECTED HEREIN ARE IN COMPLIANCE WITH THE
PROVISIONS OF THE CREDIT AGREEMENT AND THE APPENDICES THERETO. THE UNDERSIGNED
FURTHER REPRESENTS AND WARRANTS THAT THERE IS NO DEFAULT OR EVENT OF DEFAULT AND
ALL REPRESENTATIONS AND WARRANTIES CONTAINED IN THE CREDIT AGREEMENT AND OTHER
LOAN DOCUMENTS ARE TRUE AND CORRECT. THE UNDERSIGNED UNDERSTANDS THAT GENERAL
ELECTRIC CAPITAL CORPORATION, AS AGENT FOR THE LENDERS, WILL EXTEND LOANS IN
RELIANCE UPON THE INFORMATION CONTAINED HEREIN. IN THE EVENT OF A CONFLICT
BETWEEN THE FOLLOWING SUMMARY OF ELIGIBILITY CRITERIA AND Sections 1.6 AND 1.7
OF THE CREDIT AGREEMENT, THE CREDIT AGREEMENT SHALL GOVERN. CAPITALIZED TERMS
USED HEREIN AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS SPECIFIED
IN THE CREDIT AGREEMENT.

                            See attached calculation.

                                       MORTON CUSTOM PLASTICS, LLC

                                       By: Morton Holdings, LLC,
                                           its Manager

                                           By:    Morton Industrial Group, Inc.,
                                           its Manager


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

                                Exh. 4.1 (b)(i)-1


                                 EXHIBIT 9.1(a)
                              ASSIGNMENT AGREEMENT

                  This Assignment Agreement (this "Agreement") is made as of
___________ __, 200__ by and between __________________________________
("Assignor Lender") and ________________________ ("Assignee Lender") and
acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
("Agent")[, and MORTON CUSTOM PLASTICS, LLC, a Delaware limited liability
company ("Borrower").(1) All capitalized terms used in this Agreement and not
otherwise defined herein will have the respective meanings set forth in the
Credit Agreement (as hereinafter defined.)

                                    RECITALS:

                  WHEREAS, Morton Custom Plastics, LLC ("Borrower"), Morton
Holdings LLC ("Holdings"), the other Persons signatory thereto as Credit
Parties, Agent, Assignor Lender and other Persons signatory thereto as Lenders
have entered into that certain Amended and Restated Credit Agreement dated as of
March 25, 2002 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement") pursuant to which Assignor
Lender has agreed to make certain Loans to, and incur certain Letter of Credit
Obligations for, Borrower;

                  WHEREAS, Assignor Lender desires to assign to Assignee Lender,
and Assignee Lender desires to purchase and assume, [all/a portion] of its
interest in the Loans (as described below), the Letter of Credit Obligations and
the Collateral and to delegate to Assignee Lender [all/a portion] of its
Commitments and other duties with respect to such Loans, Letter of Credit
Obligations and Collateral;

                  WHEREAS, Assignee Lender desires to become a Lender under the
Credit Agreement and to accept such assignment and delegation from Assignor
Lender; and

                  WHEREAS, Assignee Lender desires to appoint Agent to serve as
agent for Assignee Lender under the Credit Agreement.

                  NOW, THEREFORE, in consideration of the premises and the
agreements, provisions, and covenants herein contained, Assignor Lender and
Assignee Lender agree as follows:

1.   ASSIGNMENT AND ACCEPTANCE

     1.1. ASSIGNMENT. Assignor Lender hereby irrevocably transfers and assigns
to Assignee Lender, without recourse and without representations or warranties
of any kind (except as set forth in SECTION 3.2), an interest (the "ASSIGNED
INTEREST") as set forth on Schedule 1.1 in and to Assignor Lender's rights and
Obligations with respect to [THE REVOLVING LOANS INCLUDING THE REVOLVING LETTER
OF CREDIT OBLIGATIONS], [TERM LOAN A] [TERM LOAN B] [TERM LOAN C], Loan
Documents and Collateral or any portion thereof or interest therein, including
any Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not. After giving effect to such assignment
Assignee Lender shall have, as of the Effective Date (as hereinafter defined)
the Commitments and Pro Rata Shares arising from such assignment as are set
forth on Schedule 1.1.

- ----------
(1) Insert so long as no Default or Event of Default has occurred and is
    continuing on the Effective Date.

                                  Exh. 9.1(a)-1


     1.2. ACCEPTANCE BY ASSIGNEE LENDER. By its execution of this Agreement,
Assignee Lender irrevocably purchases, assumes and accepts such assignment and
transfer of the Assigned Interest and agrees to be a Lender with respect to the
Assigned Interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.

     1.3. EFFECTIVE DATE. Such assignment and transfer by Assignor Lender and
acceptance by Assignee Lender will be effective and Assignee Lender (if not
already a Lender) will become a Lender under the Loan Documents as of the date
of this Agreement ("EFFECTIVE DATE") and upon payment of the Assigned Amount and
the Assignment Fee (as each term is defined below). Interest and Fees accrued
prior to the Effective Date are for the account of Assignor Lender. From and
after the Effective Date, the Agent shall make to the Assignee all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) which accrue subsequent to the Effective Date.

2.   INITIAL PAYMENT AND DELIVERY OF NOTES

     2.1. PAYMENT OF THE ASSIGNED AMOUNT. Assignee Lender will pay to Assignor
Lender, in immediately available funds, not later than 12:00 noon (New York
time) on the Effective Date, an amount equal to its Pro Rata Share as set forth
on Schedule 1.1 of the then outstanding principal amount of the Loans (the
"ASSIGNED AMOUNT").

     2.2. PAYMENT OF ASSIGNMENT FEE. [ASSIGNOR LENDER AND/OR ASSIGNEE LENDER]
will pay to Agent, for its own account in immediately available funds, not later
than 12:00 noon (New York time) on the Effective Date, the assignment fee in the
amount of $3,500 (the "ASSIGNMENT FEE") as required pursuant to Section 9.1(a)
of the Credit Agreement.

     2.3. EXECUTION AND DELIVERY OF NOTES. Following payment of the Assigned
Amount and the Assignment Fee, [EACH OF] Assignor Lender [AND ASSIGNEE LENDER]
will deliver to Agent the Notes previously delivered to it for redelivery to
Borrower and Agent will request that Borrower deliver to [ASSIGNOR LENDER AND]
Assignee Lender, newly executed Notes evidencing Assignee Lender's [AND ASSIGNOR
LENDER'S RESPECTIVE] Pro Rata Share[s] in the Loans after giving effect to the
assignment described in SECTION 1. Each new Note will be issued in the aggregate
maximum principal amount of the applicable Commitment of such Lender.

3.   REPRESENTATIONS, WARRANTIES AND COVENANTS

     3.1. ASSIGNEE LENDER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Assignee
Lender hereby represents, warrants, and covenants the following to Assignor
Lender and Agent:

          (a) This Agreement is a legal, valid, and binding agreement of
     Assignee Lender, enforceable according to its terms;

          (b) The execution and performance by Assignee Lender of its duties and
     obligations under this Agreement and the Loan Documents will not require
     any registration with, notice to, or consent or approval by any
     Governmental Authority;

          (c) Assignee Lender is familiar with transactions of the kind and
     scope reflected in the Loan Documents and in this Agreement;



          (d) Assignee Lender has made its own independent investigation and
     appraisal of the financial condition and affairs of each Credit Party, has
     conducted its own evaluation of the Loans and Letter of Credit Obligations,
     the Loan Documents and each Credit Party's creditworthiness, has made its
     decision to become a Lender to Borrower under the Credit Agreement
     independently and without reliance upon Assignor Lender or Agent, and will
     continue to do so;

          (e) Assignee Lender is entering into this Agreement in the ordinary
     course of its business, and is acquiring its interest in the Loans and
     Letter of Credit Obligations for its own account and not with a view to or
     for sale in connection with any subsequent distribution; provided, however,
     that at all times the distribution of Assignee Lender's property shall,
     subject to the terms of the Credit Agreement, be and remain within its
     control;

          (f) No future assignment or participation granted by Assignee Lender
     pursuant to Section 9.1 of the Credit Agreement will require Assignor
     Lender, Agent, or Borrower to file any registration statement with the
     Securities and Exchange Commission or to apply to qualify under the blue
     sky laws of any state;

          (g) Assignee Lender has no loans to, written or oral agreements with,
     or equity or other ownership interest in any Credit Party;

          (h) Assignee Lender will not enter into any written or oral agreement
     with, or acquire any equity or other ownership interest in, any Credit
     Party without the prior written consent of Agent; and

          (i) As of the Effective Date, Assignee Lender is entitled to receive
     payments of principal and interest in respect of the Obligations without
     deduction for or on account of any taxes imposed by the United States of
     America or any political subdivision thereof.

     3.2. ASSIGNOR LENDER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Assignor
Lender hereby represents, warrants and covenants the following to Assignee
Lender:

          (a) Assignor Lender is the legal and beneficial owner of the Assigned
     Amount;

          (b) This Agreement is a legal, valid and binding agreement of Assignor
     Lender, enforceable according to its terms;

          (c) The execution and performance by Assignor Lender of its duties and
     obligations under this Agreement and the Loan Documents will not require
     any registration with, notice to or consent or approval by any Governmental
     Authority;

          (d) Assignor Lender has full power and authority, and has taken all
     action necessary to execute and deliver this Agreement and to fulfill the
     obligations hereunder and to consummate the transactions contemplated
     hereby;

          (e) Assignor Lender is the legal and beneficial owner of the interests
     being assigned hereby, free and clear of any adverse claim, lien,
     encumbrance, security interest, restriction on transfer, purchase option,
     call or similar right of a third party; and

          (f) This Assignment by Assignor Lender to Assignee Lender complies, in
     all material respects, with the terms of the Loan Documents.



4.   LIMITATIONS OF LIABILITY

          Neither Assignor Lender (except as provided in Section 3.2) nor Agent
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any Credit
Party of its obligations under any of the Loan Documents. Neither Assignor
Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.

5.   FAILURE TO ENFORCE

          No failure or delay on the part of Agent or Assignor Lender in the
exercise of any power, right, or privilege hereunder or under any Loan Document
will impair such power, right, or privilege or be construed to be a waiver of
any default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.

6.   NOTICES

          Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.

7.   AMENDMENTS AND WAIVERS

          No amendment, modification, termination, or waiver of any provision of
this Agreement will be effective without the written concurrence of Assignor
Lender, Agent and Assignee Lender.

8.   SEVERABILITY

          Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. In
the event any provision of this Agreement is or is held to be invalid, illegal,
or unenforceable under applicable law, such provision will be ineffective only
to the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement. In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.

9.   SECTION TITLES

          Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.



10.  SUCCESSORS AND ASSIGNS

          This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.

11.  APPLICABLE LAW

          THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
THAT STATE.

12.  COUNTERPARTS

          This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.

                            [signature page follows]



          IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.


ASSIGNEE LENDER:                     ASSIGNOR LENDER:


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


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

Notice Address:                      Notice Address:


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

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

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

ACKNOWLEDGED AND CONSENTED TO:

GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent


By:
   -------------------------------
Its Duly Authorized Signatory

[MORTON CUSTOM PLASTICS, LLC

By:   Morton Holdings, LLC
      its Manager

      By:   Morton Industrial Group, Inc.,
            its Manager


            By:--------------------------------
            Name:
            Title:](2)

- ----------
(2) Insert so long as no Default of Event of Default has occurred and is
    continuing on the Effective Date.



                                  SCHEDULE 1.1
                         ASSIGNED COMMITMENTS AND LOANS



                                                                                            ASSIGNOR LENDER'S
                                                           ASSIGNED INTEREST             LOANS AFTER ASSIGNMENT
                             -----------------------------------------------------------------------------------
                                AGGREGATE FOR                            PRO RATA                       PRO RATA
                                 ALL LENDERS            COMMITMENT         SHARE        COMMITMENT        SHARE
                             -----------------------------------------------------------------------------------
                                                                                            
Revolving Loan Commitment       $ 10,000,000             $                     %         $                  %
Term Loan Commitment A          $ 10,000,000
Term Loan B Commitment          $  7,000,000
Term Loan C Commitment          $  5,000,000
                               --------------           --------------                  --------------
Aggregate Commitments           $ 32,000,000             $                               $


                                   Sch. 1.1-1


================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of March 25, 2002

                                      among

                          MORTON CUSTOM PLASTICS, LLC,

                                   as Borrower


                              MORTON HOLDINGS, LLC
                 AND THE OTHER CREDIT PARTIES SIGNATORY HERETO,

                               as Credit Parties,

                          THE LENDERS SIGNATORY HERETO

                               FROM TIME TO TIME,

                                   as Lenders,

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION,

                               as Agent and Lender

================================================================================



INDEX OF APPENDICES

                                   
Exhibit 1.1(a)(i)              -         Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii)             -         Form of Revolving Note
Exhibit 1.1(b)                 -         Form of Term Loan A Note
Exhibit 1.1(c)                 -         Form of Term Loan B Note
Exhibit 1.1(d)                 -         Form of Term Loan C Note
Exhibit 1.2                    -         Form of Cash Flow Budget
Exhibit 1.3                    -         Form of Operating Budget
Exhibit 1.5(e)                 -         Form of Notice of Conversion/Continuation
Exhibit 2.1(c)(i)              -         Borrower Warrant
Exhibit 2.1(c)(ii)             -         Borrower Warrant Agreement
Exhibit 4.1(b)(i)              -         Form of Revolving Borrowing Base Certificate
Exhibit 9.1(a)                 -         Form of Assignment Agreement
Schedule 1.1                   -         Responsible Individual
Schedule 1.4                   -         Sources and Uses; Funds Flow Memorandum
Schedule 3.2                   -         Executive Offices; FEIN
Schedule 3.4(A)                -         Financial Statements
Schedule 3.4(B)                -         Projections
Schedule 3.5                   -         Material Events
Schedule 3.6                   -         Real Estate and Leases
Schedule 3.7                   -         Labor Matters
Schedule 3.8                   -         Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11                  -         Tax Matters
Schedule 3.12                  -         ERISA Plans
Schedule 3.13                  -         Litigation
Schedule 3.15                  -         Intellectual Property
Schedule 3.17                  -         Hazardous Materials
Schedule 3.18                  -         Insurance
Schedule 3.19                  -         Deposit and Disbursement Accounts
Schedule 3.20                  -         Government Contracts
Schedule 3.21(b)               -         Vendor Payment Terms
Schedule 3.22                  -         Material Agreements
Schedule 3.26                  -         Security Agreement Schedules
Schedule 5.1                   -         Corporate and Trade Names
Schedule 5.8                   -         Environmental Issues Summary
Schedule 6.3                   -         Indebtedness
Schedule 6.3-A                 -         Existing Vendor Notes
Schedule 6.4(a)                -         Transactions with Affiliates
Schedule 6.7                   -         Existing Liens





                                   
Annex A (Recitals)             -         Definitions
Annex B (SECTION 1.2)          -         Letters of Credit
Annex C (SECTION 1.8)          -         Cash Management Systems
Annex D (SECTION 2.1(a))       -         Schedule of Additional Closing Documents
Annex E (SECTION 4.1(a))       -         Financial Statements and Projections -- Reporting
Annex F (SECTION 4.1(b))       -         Collateral Reports
Annex G (SECTION 6.10)         -         Financial Covenants
Annex H (SECTION 9.9(a))       -         Lenders' Wire Transfer Information
Annex I (SECTION 11.10)        -         Notice Addresses
Annex J (from Annex A -        -         Commitments as of Closing Date
Commitments definition)





                                TABLE OF CONTENTS


                                                                                                PAGE
                                                                                            
1.  AMOUNT AND TERMS OF CREDIT.....................................................................2

    1.1.     Credit Facilities.....................................................................2

    1.2.     Letters of Credit.....................................................................6

    1.3.     Prepayments...........................................................................6

    1.4.     Use of Proceeds.......................................................................8

    1.5.     Interest and Applicable Margins.......................................................9

    1.6.     Eligible Accounts....................................................................11

    1.7.     Eligible Inventory...................................................................13

    1.8.     Cash Management Systems..............................................................15

    1.9.     Fees.................................................................................15

    1.10.    Receipt of Payments..................................................................16

    1.11.    Application and Allocation of Payments...............................................16

    1.12.    Loan Account and Accounting..........................................................17

    1.13.    Indemnity............................................................................17

    1.14.    Access...............................................................................19

    1.15.    Taxes................................................................................19

    1.16.    Capital Adequacy; Increased Costs; Illegality; Replacement of
             Lender in Respect to Increased Costs.................................................20

    1.17.    Single Loan..........................................................................22

    1.18.    Commitment Fee.......................................................................22

2.  CONDITIONS PRECEDENT..........................................................................22

    2.1.     Conditions to the Effective of this Agreement........................................22

    2.2.     Further Conditions to Each Loan......................................................23

3.  REPRESENTATIONS AND WARRANTIES................................................................24

    3.1.     Corporate or Limited Liability Company Existence; Compliance with Law................24

    3.2.     Executive Offices; FEIN..............................................................25

    3.3.     Corporate or Limited Liability Company Power, Authorization,
             Enforceable Obligations..............................................................25

    3.4.     Financial Statements and Projections.................................................25

    3.5.     Material Adverse Effect..............................................................26


                                       i

                                TABLE OF CONTENTS
                                  (Continued)


                                                                                                PAGE
                                                                                            
    3.6.     Ownership of Property; Liens.........................................................26

    3.7.     Labor Matters........................................................................27

    3.8.     Ventures, Subsidiaries and Affiliates; Outstanding Stock and
             Indebtedness.........................................................................27

    3.9.     Government Regulation................................................................28

    3.10.    Margin Regulations...................................................................28

    3.11.    Taxes................................................................................29

    3.12.    ERISA................................................................................29

    3.13.    No Litigation........................................................................30

    3.14.    Brokers..............................................................................30

    3.15.    Intellectual Property................................................................30

    3.16.    Full Disclosure......................................................................31

    3.17.    Environmental Matters................................................................31

    3.18.    Insurance............................................................................32

    3.19.    Deposit and Disbursement Accounts....................................................32

    3.20.    Government Contracts.................................................................32

    3.21.    Customer and Trade Relations; Trade Payables.........................................32

    3.22.    Agreements and Other Documents.......................................................33

    3.23.    Solvency.............................................................................33

    3.24.    Worthington Litigation; Worthington Acquisition Agreement............................33

    3.25.    Status of Holdings; IRB Subsidiary...................................................33

    3.26.    Security Agreements; Intellectual Property Security Agreements
             and Pledge Agreements................................................................34

4.  FINANCIAL STATEMENTS AND INFORMATION..........................................................34

    4.1.     Reports and Notices..................................................................34

    4.2.     Communication with Accountants.......................................................34

5.  AFFIRMATIVE COVENANTS.........................................................................34

    5.1.     Maintenance of Existence and Conduct of Business.....................................34

    5.2.     Payment of Obligations...............................................................35

    5.3.     Books and Records....................................................................35

    5.4.     Insurance; Damage to or Destruction of Collateral....................................35


                                       ii

                                TABLE OF CONTENTS
                                  (Continued)


                                                                                                PAGE
                                                                                            
    5.5.     Compliance with Laws.................................................................37

    5.6.     Supplemental Disclosure..............................................................37

    5.7.     Intellectual Property................................................................38

    5.8.     Environmental Matters................................................................38

    5.9.     Landlords' Agreements, Mortgagee Agreements and Bailee Letters.......................39

    5.10.    Chief Financial Officer..............................................................39

    5.11.    Operating Committee..................................................................39

    5.12.    Vendor Payment Terms.................................................................40

    5.13.    Vehicle Titles.......................................................................40

    5.14.    Haskell Knight Employment Agreement..................................................40

    5.15.    Cash Management Systems..............................................................40

    5.16.    Further Assurances...................................................................40

6.  NEGATIVE COVENANTS............................................................................41

    6.1.     Mergers, Subsidiaries, Etc...........................................................41

    6.2.     Investments; Loans and Advances......................................................41

    6.3.     Indebtedness.........................................................................41

    6.4.     Employee Loans and Affiliate Transactions............................................42

    6.5.     Capital Structure and Business.......................................................42

    6.6.     Guaranteed Indebtedness..............................................................43

    6.7.     Liens................................................................................43

    6.8.     Sale of Stock and Assets.............................................................43

    6.9.     ERISA................................................................................44

    6.10.    Financial Covenants..................................................................44

    6.11.    Hazardous Materials..................................................................44

    6.12.    Sale-Leasebacks......................................................................44

    6.13.    Cancellation of Indebtedness.........................................................44

    6.14.    Restricted Payments..................................................................44

    6.15.    Change of Corporate or Limited Liability Company Name or
             Location; Change of Fiscal Year......................................................45

    6.16.    No Impairment of Intercompany Transfers..............................................45


                                      iii

                                TABLE OF CONTENTS
                                  (Continued)


                                                                                                PAGE
                                                                                            
    6.17.    No Speculative Transactions..........................................................46

    6.18.    Leases...............................................................................46

    6.19.    Credit Parties Other than Borrower...................................................46

    6.20.    Modifications of Certain Documents...................................................46

    6.21.    Worthington Litigation; Worthington Acquisition Agreement............................46

7.  TERM..........................................................................................46

    7.1.     Termination..........................................................................46

    7.2.     Survival of Obligations Upon Termination of Financing
             Arrangements.........................................................................47

8.  EVENTS OF DEFAULT: RIGHTS AND REMEDIES........................................................47

    8.1.     Events of Default....................................................................47

    8.2.     Remedies.............................................................................50

    8.3.     Waivers by Credit Parties............................................................50

9.  ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT...........................................51

    9.1.     Assignment and Participations........................................................51

    9.2.     Appointment of Agent.................................................................53

    9.3.     Agent's Reliance, Etc................................................................54

    9.4.     GE Capital and Affiliates............................................................54

    9.5.     Lender Credit Decision...............................................................55

    9.6.     Indemnification......................................................................55

    9.7.     Successor Agent......................................................................55

    9.8.     Setoff and Sharing of Payments.......................................................56

    9.9.     Advances; Payments; Non-Funding Lenders; Information; Actions
             in Concert...........................................................................57

10. SUCCESSORS AND ASSIGNS........................................................................59

    10.1.    Successors and Assigns...............................................................59

11. MISCELLANEOUS.................................................................................59

    11.1.    Complete Agreement; Modification of Agreement........................................59

    11.2.    Amendments and Waivers...............................................................59

    11.3.    Fees and Expenses....................................................................61

    11.4.    No Waiver............................................................................63


                                       iv

                                TABLE OF CONTENTS
                                  (Continued)



                                                                                                PAGE
                                                                                            
    11.5.    Remedies.............................................................................63

    11.6.    Severability.........................................................................63

    11.7.    Conflict of Terms....................................................................63

    11.8.    Confidentiality......................................................................63

    11.9.    GOVERNING LAW........................................................................64

    11.10.   Notices..............................................................................65

    11.11.   Section Titles.......................................................................65

    11.12.   Counterparts.........................................................................65

    11.13.   WAIVER OF JURY TRIAL.................................................................65

    11.14.   Press Releases.......................................................................66

    11.15.   Reinstatement........................................................................66

    11.16.   Advice of Counsel....................................................................66

    11.17.   No Strict Construction...............................................................67

    11.18.   Affirmation of Existing Loan Documents...............................................67


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