SECOND AMENDED AND RESTATED REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

Revolving Credit Agreement

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This Revolving Credit Agreement involves

HALLWOOD GROUP INC | BROOKWOOD COMPANIES INCORPORATED | KENYON INDUSTRIES, INC. | BROOKWOOD LAMINATING, INC | ASHFORD BROMLEY, INC | XTRAMILE, INC | LAND AND OCEAN III, INC. | STRATEGIC TECHNICAL ALLIANCE, LLC | KEYBANK NATIONAL ASSOCIATION

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Title: SECOND AMENDED AND RESTATED REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
Governing Law: Maine Date: 3/30/2004
Industry: Textiles - Non Apparel Sector: Consumer Cyclical

SECOND AMENDED AND RESTATED REVOLVING CREDIT LOAN AND SECURITY AGREEMENT, Parties: hallwood group inc , brookwood companies incorporated , kenyon industries inc. , brookwood laminating inc , ashford bromley inc , xtramile inc , land and ocean iii inc. , strategic technical alliance llc , keybank national association

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EXHIBIT 10.21

[KEYBANK LOGO]

SECOND AMENDED AND RESTATED

REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

DATED AS OF JANUARY 30, 2004

by and among

BROOKWOOD COMPANIES INCORPORATED

KENYON INDUSTRIES, INC.

BROOKWOOD LAMINATING, INC.

ASHFORD BROMLEY, INC.

XTRAMILE, INC.

LAND AND OCEAN III, INC.

STRATEGIC TECHNICAL ALLIANCE, LLC

and

KEYBANK NATIONAL ASSOCIATION

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TABLE OF CONTENTS

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1. DEFINITIONS................................................................................ 2

1.1. Certain Definitions........................................................................ 2

1.2. General.................................................................................... 10

2. LOANS...................................................................................... 10

2.1. Working Capital Revolving Credit Facility.................................................. 10

2.1.1 Availability of Credit Facility and Purpose................................................ 10

2.1.2. Working Capital Revolving Credit Note...................................................... 10

2.1.3. Limitations on Advances.................................................................... 10

2.1.4. Fees....................................................................................... 10

2.1.5 Repayment; Security........................................................................ 11

2.1.6. Interest Payments.......................................................................... 11

2.1.7. Facility Maturity.......................................................................... 11

2.1.8. Borrowing Base............................................................................. 11

2.1.9. Acquisition Sub-Limit...................................................................... 13

2.2. Equipment Revolving Credit Facility........................................................ 13

2.2.1. Availability of Credit Facility and Purpose................................................ 13

2.2.2. Equipment Revolving Credit Notes........................................................... 13

2.2.3. Limitation on Advances..................................................................... 14

2.2.4. Fees....................................................................................... 14

2.2.5. Repayment of Equipment Revolving Credit Loans; Security.................................... 14

2.2.6. Interest................................................................................... 14

2.2.7. Facility Maturity.......................................................................... 14

2.3 Reserved................................................................................... 15

2.4. Borrowing Procedures....................................................................... 15

2.5. LIBOR Loans................................................................................ 15

2.6. Interest and Payments...................................................................... 17

2.6.1. Interest Rate Pricing Formula for Working Capital Revolving Credit Loans................... 17

2.6.2. Interest Rate Pricing Formula for Equipment Revolving Credit Loans......................... 18

2.6.3. Interest Rate Pricing...................................................................... 18

2.6.4. LIBOR Rate Selection....................................................................... 18

2.6.5. Interest Payment Date...................................................................... 18

2.6.6. Prime Rate................................................................................. 18

2.7. Payments................................................................................... 19

2.8. Limitation on Interest..................................................................... 19

2.9. Late Charges............................................................................... 19

2.10. Default Rate............................................................................... 19

2.11. One Obligation............................................................................. 19

2.12. Modified Following Business Day Convention................................................. 19

3. GRANT OF SECURITY INTEREST................................................................. 20

4. REPRESENTATIONS AND WARRANTIES............................................................. 21

4.1. Organization, Existence and Good Standing.................................................. 21

4.2. Consents................................................................................... 21

4.3. No Legal Bar............................................................................... 21

4.4. Compliance with Charter and Agreements..................................................... 22

4.5. Negative Pledges........................................................................... 22

4.6. Title to Property.......................................................................... 22

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4.7. Books and Records.......................................................................... 22

4.8. Power and Authority; Due Execution......................................................... 22

4.9. Legal, Valid, Binding Obligation........................................................... 22

4.10. Name .................................................................................. 22

4.11. Subsidiaries and Investments............................................................... 22

4.12. Financial Statements, No Change............................................................ 22

4.13. Taxes .................................................................................. 23

4.14. Litigation................................................................................. 23

4.15. Chief Executive Office..................................................................... 23

4.16. ERISA .................................................................................. 23

4.17. No Default................................................................................. 23

4.18. No Burdensome Restrictions................................................................. 24

4.19. Regulation U; Etc.......................................................................... 24

4.20. Investment Company Act; Etc................................................................ 24

4.21. Indebtedness............................................................................... 24

4.22. Compliance with Laws....................................................................... 24

4.23. Contingent Liabilities..................................................................... 24

4.24. Bonds; Indemnities......................................................................... 25

4.25. Intellectual Property...................................................................... 25

4.26. Leases .................................................................................. 25

4.27. Labor Contracts/Relations.................................................................. 25

4.28. Trade Relations............................................................................ 25

4.29. Capitalization............................................................................. 25

4.30. Real Property.............................................................................. 25

4.31. Accuracy of Information.................................................................... 26

4.32. Business Purpose of Loans.................................................................. 26

5. BORROWER'S REPORTS AND NOTICES............................................................. 26

5.1. Annual Financial Statements................................................................ 26

5.2. Annual Financial Budgets................................................................... 26

5.3. Quarterly Financial Statements............................................................. 26

5.4. Quarterly Compliance Certificate........................................................... 26

5.5. Monthly Reports............................................................................ 26

5.6. Semi-Annual Field Exam..................................................................... 27

5.7. Additional Information..................................................................... 27

5.8. Notices.................................................................................... 27

5.9. ERISA Notices.............................................................................. 27

5.10. Taxes .................................................................................. 28

6. BANK'S REPORTS............................................................................. 28

7. BORROWER'S AFFIRMATIVE COVENANTS........................................................... 28

7.1. Legal Existence, Compliance with Laws...................................................... 28

7.2. Insurance.................................................................................. 28

7.3. Compliance with Contracts and Laws......................................................... 28

7.4. Business................................................................................... 28

7.5. Taxes .................................................................................. 29

7.6. Deposit Accounts........................................................................... 29

7.7. Accounts Covenants......................................................................... 29

7.8. Inventory Covenants........................................................................ 29

7.9. Equipment Covenants........................................................................ 30

8. BORROWER'S NEGATIVE COVENANTS.............................................................. 30

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8.1. Disposition of Assets...................................................................... 30

8.2. Indebtedness............................................................................... 30

8.3. Liens...................................................................................... 31

8.4. Distributions; Distributions to Hallwood................................................... 31

8.5. Loans; Loans to Hallwood................................................................... 31

8.6. Guaranties................................................................................. 31

8.7. Investments................................................................................ 31

8.8. Subsidiaries............................................................................... 32

8.9. Mergers and Acquisitions................................................................... 32

8.10. Affiliates................................................................................. 32

8.11. Limitation on Use of Proceeds.............................................................. 32

9. FINANCIAL COVENANTS........................................................................ 32

9.1. EBITDA to TFC Ratio........................................................................ 32

9.2. Total Debt to Tangible Net Worth Ratio..................................................... 32

10. ADDITIONAL COVENANTS AND ASSURANCES........................................................ 32

10.1. No Overadvances............................................................................ 32

10.2. Notice of Changes.......................................................................... 32

10.3. Additional Assurances...................................................................... 33

10.4. Additional Collateral Actions.............................................................. 33

10.5. Verification of Accounts................................................................... 33

10.6. Power of Attorney.......................................................................... 33

10.7. Insurance Assignment....................................................................... 34

10.8. Government Accounts........................................................................ 34

10.9. Payments by Bank........................................................................... 34

10.10. Debits to Borrower's Accounts.............................................................. 34

10.11. Access to Records.......................................................................... 34

10.12. License to Use Premises.................................................................... 35

10.13. Instruments Evidencing Accounts............................................................ 35

10.14. Security Interest in Deposits; Set-off..................................................... 35

10.15. No Bank Liability.......................................................................... 35

10.16. Transfer of Investment Property to Bank's Name............................................. 35

11. EVENTS OF DEFAULT.......................................................................... 35

12. BANK'S RIGHTS AND REMEDIES................................................................. 37

12.1. Exercise of Remedies....................................................................... 37

12.2. Disposition of Collateral.................................................................. 38

12.3. Possession Following Event of Default...................................................... 38

13. EXPENSES; INDEMNIFICATION; ETC............................................................. 38

13.1. Payment of Expenses........................................................................ 38

13.2. Indemnification............................................................................ 39

13.3. Authority for Loan Requests................................................................ 39

13.4. Exculpation................................................................................ 39

13.5. Collateral Secures Indemnification......................................................... 39

14. CONDITIONS PRECEDENT....................................................................... 39

14.1. Conditions to Initial Loans................................................................ 39

14.2. Conditions Precedent to All Loans.......................................................... 43

15. MISCELLANEOUS PROVISIONS................................................................... 43

15.1. Notices.................................................................................... 43

15.2. No Waiver.................................................................................. 43

15.3. Assignment................................................................................. 43

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15.4. Headings................................................................................... 44

15.5. Waiver of Remedies......................................................................... 44

15.6. Pledge to Federal Reserve.................................................................. 44

15.7. Participations............................................................................. 44

15.8. Replacement Notes.......................................................................... 45

16. GOVERNING LAW; JURISDICTION................................................................ 45

16.1. Governing Law.............................................................................. 45

16.2. Jurisdiction............................................................................... 45

16.3. Waiver of Counterclaims.................................................................... 45

17. CAUTION.................................................................................... 46

18. NOTICE .................................................................................. 45

19. COUNTERPARTS............................................................................... 46

SCHEDULES

Schedule 3 Contracts......................................................................... 49

Schedule 4.1 States and Other Locations Where Authorized to do Business........................ 50

Schedule 4.2 Consents.......................................................................... 51

Schedule 4.10 Name.............................................................................. 52

Schedule 4.11 Subsidiaries and Investments...................................................... 53

Schedule 4.12 Financial Statements; No Change................................................... 54

Schedule 4.13 Taxes............................................................................. 55

Schedule 4.14 Litigation........................................................................ 56

Schedule 4.15 Chief Executive Office of Each Borrower........................................... 57

Schedule 4.16 ERISA............................................................................. 58

Schedule 4.21 Indebtedness...................................................................... 59

Schedule 4.22 Compliance with Laws.............................................................. 60

Schedule 4.23 Contingent Liabilities............................................................ 61

Schedule 4.24 Bonds, Indemnities................................................................ 62

Schedule 4.25 Intellectual Property............................................................. 63

Schedule 4.26 Leases............................................................................ 64

Schedule 4.27 Labor Contracts/Relations......................................................... 65

Schedule 4.29 Capitalization.................................................................... 66

Schedule 4.30 Real Property..................................................................... 67

Schedule 8.3 Liens............................................................................. 68

EXHIBITS

Exhibit A Working Capital Revolving Credit Note............................................. 69

Exhibit B Equipment Revolving Credit Note................................................... 72

Exhibit C Borrowing Base Certificate........................................................ 75

Exhibit D Compliance Certificate............................................................ 79

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KEYBANK NATIONAL ASSOCIATION

SECOND AMENDED AND RESTATED

REVOLVING CREDIT LOAN AND SECURITY AGREEMENT

This Second Amended and Restated Revolving Credit Loan and Security

Agreement (this "Agreement") dated as of January 30, 2004, is entered into by

and among KeyBank National Association, a national banking association having a

place of business at 176 Federal Street, Boston, Massachusetts 02110 ("Bank")

and Brookwood Companies Incorporated, a Delaware corporation , having a place of

business at 232 Madison Avenue, 10th Floor, New York, New York 10016

("Brookwood"), Kenyon Industries, Inc., a Delaware corporation, having a place

of business at 36 Sherman Avenue, Kenyon, Rhode Island 02836 ("Kenyon"),

Brookwood Laminating, Inc., a Delaware corporation, having a place of business

at 1425 Kingstown Road, Peace Dale, Rhode Island 02883 ("Laminating"), Ashford

Bromley, Inc., a Delaware corporation, having a place of business at 36 Sherman

Avenue, Kenyon, Rhode Island 02836 ("Ashford"), XtraMile, Inc., a Delaware

corporation, having a place of business at 2333 Stirling Road, Fort Lauderdale,

Florida 33312 ("Xtra"), Land and Ocean III, Inc., a Florida corporation having a

place of business at 2333 Stirling Road, Fort Lauderdale, Florida 33312

("Land"), and Strategic Technical Alliance, LLC, a Delaware limited liability

company, having a place of business at 233 Madison Avenue, 10th Floor, New York,

New York 10016 ("STA" and, together with Brookwood, Kenyon, Laminating, Ashford,

Xtra and Land, being individually and collectively referred to herein as

"Borrower").

RECITALS:

WHEREAS, Bank, Brookwood, Kenyon, Laminating, Ashford, Xtra and Land

entered into a certain First Amended and Restated Revolving Credit Loan and

Security Agreement dated as of June 6, 2000 ("Existing Agreement"); and

WHEREAS, the Existing Agreement was amended by a certain First

Amendment thereto dated October 23, 2000; and

WHEREAS, the Existing Agreement was further amended by a certain Second

Amendment thereto dated January 2, 2001; and

WHEREAS, the Existing Agreement was further amended by a certain Third

Amendment thereto dated May 13, 2002; and

WHEREAS, the Existing Agreement was further amended by a certain Fourth

Amendment thereto dated December 24, 2003; and

WHEREAS, STA became a party to the Existing Agreement pursuant to an

Assumption and Joinder Agreement dated December 16, 2002; and

WHEREAS, Borrower has requested that Bank make certain changes to the

Existing Agreement; and

WHEREAS, Bank is willing to make such changes to the Existing Agreement

and provide such financial accommodations to Borrower, subject to the terms and

conditions set forth in this Agreement;

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NOW, THEREFORE, in consideration of the mutual conditions and

agreements set forth herein, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, Borrower and Bank

agree to amend and restate the Existing Agreement, as amended, in its entirety

as follows:

1. DEFINITIONS

1.1. Certain Definitions. As used herein the following terms have

the meanings set forth below:

"Accessions" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

"Accounts' shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

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

"Affiliate" shall mean any Person which directly or indirectly is in control of,

is controlled by, or is under common control with Borrower.

"Ashford" shall have the meaning set forth in the preamble hereto and is

wholly-owned by Brookwood.

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

"Automatic Electronic Fund Transfer Agreement" ("AFT Agreement") has the meaning

set forth in Section 10.10 hereof.

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

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

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

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

is made.

"Brookwood" shall have the meaning set forth in the preamble hereto and is

wholly-owned by Hallwood.

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

"Capital Expenditures" shall mean, for any period, amounts included or required

to be included in the fixed assets account on a balance sheet of a Borrower in

accordance with GAAP and shall include Capital Leases and, in the case of a

purchase, the entire purchase price.

"Capital Leases" means capital leases, conditional sales contracts and other

title retention documents relating to the acquisition of capital assets (as

classified in accordance with GAAP).

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"Chattel Paper" shall have the meaning set forth in the Uniform Commercial Code

as the same may, from time to time, be in effect in the State of Maine.

"Chess" shall mean Amos Chess who sold the business and assets of certain

corporations controlled by him to Xtra on February 11, 2001.

"Closing Date" means January 30, 2004.

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

"Commercial Tort Claims" shall have the meaning set forth in the Uniform

Commercial Code as the same may, from time to time, be in effect in the State of

Maine.

"Commitment Period" means the period from and including the Closing Date, to but

not including, the Termination Date.

"Commonly Controlled Entities" shall mean entities sharing "common control"

under ERISA.

"Contingent Liability" means any obligation of a Person guaranteeing or in

effect guaranteeing any Indebtedness, leases, dividends or other obligations of

any other Person in any manner, whether directly or indirectly or any obligation

otherwise to assure or hold harmless any other Person against any loss or cost

in respect of services rendered or products furnished and any other contingent

liability or obligation as determined in accordance with GAAP; provided,

however, that the term Contingent Liability shall not include endorsements of

negotiable instruments in the ordinary course of business.

"Default" means any event or occurrence which, with notice or lapse of time or

both, might become an Event of Default.

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

"Deposit Accounts" shall have the meaning set forth in the Uniform Commercial

Code as the same may, from time to time, be in effect in the State of Maine.

"Distributions" means, for the applicable period, the aggregate of all amounts

paid or payable (without duplication) as dividends, distributions or owner

withdrawals and includes any purchase, redemption or other retirement of any of

any Borrower's equity interests, directly or indirectly through a subsidiary of

any Borrower or otherwise and includes return of capital by any Borrower to its

equity holders; provided, however, that the following shall not be deemed to be

Distributions hereunder: (a) salary and other compensation paid to equity

holders in their capacities as employees and officers of any Borrower, (b)

expense reimbursement payable to officers of any Borrower, and (c) management

fees as may be paid by Brookwood to Hallwood in an amount not to exceed

$120,000.00 per annum.

"Documents" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

"Earnings" means, for any applicable period, income (loss) from continuing

operations and before all extraordinary and nonrecurring items, determined in

accordance with GAAP.

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Earnings Before Interest, Taxes, Depreciation and Amortization" ("EBITDA")

means, for the trailing twelve-month period, consolidated net income (exclusive

of any extraordinary or non-recurring non-cash gains and extraordinary or

non-recurring non-cash losses and other income which is not from the continuing

operations of the Borrower) of the Borrower and its subsidiaries plus, to the

extent deducted from such consolidated net income, net interest expenses, income

taxes paid and depreciation/amortization expense, all determined in accordance

with GAAP.

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

"Eligible Accounts Receivable" shall have the meaning set forth in Section

2.1.8(a).

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

"Equipment" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

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

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

Section 2.2.1.

"Equipment Revolving Credit Limit" means $3,000,000 from the Closing Date

through and including the Equipment Revolving Credit Facility Maturity Date.

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

2.2.1.

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

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

Exhibit "B".

"Equipment Revolving Credit Note Maturity Date" shall mean a date five years

from the execution of an Equipment Revolving Credit Note.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended

from time to time.

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

"Factor" or "Factors" as the context may require, shall mean CIT

Group/Commercial Services, Inc. and GMAC Commercial Finance, LLC, each of which

are parties to an Intercreditor Agreement with Bank.

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

"Fixtures" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

"GAAP" means generally accepted accounting principles in the United States of

America, consistently applied.

"General Intangibles" shall have the meaning set forth in the Uniform Commercial

Code as the same may, from time to time, be in effect in the State of Maine.

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"Hallwood" shall mean The Hallwood Group Incorporated, a Delaware corporation,

having a place of business at 3710 Rawlins, Dallas, Texas 75219, of which

Brookwood is a wholly-owned subsidiary.

"Indebtedness" means (i) Indebtedness for Borrowed Money and (ii) all other

liabilities or obligations which would, in accordance with GAAP, be classified

as liabilities of such Person.

"Indebtedness for Borrowed Money" means (i) all liabilities for borrowed money,

(A) for the deferred purchase price of property or services, and (B) under

leases which are or should be, under GAAP, recorded as Capital Leases, in each

case in respect of which a Person is directly or indirectly, absolutely or

continently liable as obligor, guarantor, endorser or otherwise, or in respect

of which such Person otherwise assures a creditor against loss, and (ii) all

liabilities of the type described in (i) above which are secured by (or for

which the holder has an existing right, contingent or otherwise, to be secured

by) any Lien upon property owned by such Person, whether or not such Person has

assumed or become liable for the payment thereof.

"Instruments" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

"Intangible Assets" means assets that in accordance with GAAP are properly

classified as intangible assets, including, but not limited to, goodwill,

franchises, licenses, patents, trademarks, tradenames and copyrights.

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

"Intercreditor Agreement" shall mean each of the Intercreditor Agreements

between the Bank and each of CIT Group Commercial Services Inc. and GMAC

Commercial Finance, LLC.

"Interest" means, for the applicable period, all interest paid or payable,

including, but not limited to, interest paid or payable on Indebtedness for

Borrowed Money, determined in accordance with GAAP.

"Interest Period" shall mean, with respect to any LIBOR Loans, the period

commencing on the date such Loans are made or converted from Prime Rate Loans or

the last day of the next preceding Interest Period with respect to such Loans

and ending on the numerically corresponding day in the first, second or third

calendar month thereafter, as the Borrower may select as provided in Section 2.4

hereof, except that each such Interest Period which commences on the last

Business Day of a calendar month (or on any day for which there is no

numerically corresponding day in the appropriate subsequent calendar month)

shall end on the last Business Day of the appropriate subsequent calendar month.

Notwithstanding the foregoing: (i) no Interest Period may end after the

Termination Date; (ii) each Interest Period which would otherwise end on a day

which is not a Business Day shall end on the next succeeding Business Day (or,

if such next succeeding Business Day falls in the next succeeding calendar

month, on the next preceding Business Day).

"Inventory" means all inventory of whatever name, nature, kind or description,

all goods held for sale or lease or to be furnished under contracts of service,

finished goods, work in process, raw materials, materials used or consumed by

Borrower, supplies, all wrapping, packaging, advertising, labeling, and shipping

materials, rights and documents relating to any of the foregoing, whether any of

the foregoing be now existing or hereafter arising, wherever located, now owned

or hereafter acquired by Borrower.

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"Investment" means any transfer of property to, contribution to capital of,

acquisition of stock, other securities or evidences of indebtedness of,

acquisition of businesses or acquisition of property of any Person, other than

in the ordinary course of business.

"Investment Property" means all now owned or hereafter acquired securities,

financial assets, securities entitlements and investment property of the

Borrower, as such terms are defined in Article 9 of the UCC.

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

Brookwood.

"KeyCorp" means Bank's parent company having a principal place of business at

127 Public Square, Cleveland, OH 44114-1306.

"Laminating" shall have the meaning set forth in the preamble and is

wholly-owned by Brookwood.

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

Brookwood.

"Letter of Credit Rights" shall have the meaning set forth in the Uniform

Commercial Code as the same may, from time to time, be in effect in the State of

Maine.

"LIBOR Loans" shall mean Revolving Loans which bear interest at a rate based

upon the LIBOR Rate.

"LIBOR Rate" shall mean, with respect to any LIBOR Loan, the rate per annum

(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined

on the basis of the offered rates for deposits in U.S. dollars, for a period of

time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of

11:00 a.m. London time on the day that is two (2) London Banking Days preceding

the first day of such LIBOR Loan; provided, however, if the rate described above

does not appear on the Telerate System on any applicable interest determination

date, the LIBOR Rate shall be the rate (rounded upwards as described above, if

necessary) for deposits in dollars for a period substantially equal to the

interest period on the Reuters Page "LIBO" (or such other page as may replace

the LIBO Page on that service for the purpose of displaying such rates), as of

11:00 a.m. (London Time), on the day that is two (2) London Banking Days prior

to the beginning of such interest period. "London Banking Day" shall mean in

respect to any city, any date on which commercial banks are open for business in

London, England.

If both the Telerate and Reuters system are unavailable, then the rate

for that date will be determined on the basis of the offered rates for deposits

in U.S. dollars for a period of time comparable to such LIBOR Loan which are

offered by four major banks in the London interbank market at approximately

11:00 a.m. London time, on the day that is two (2) London Banking Days preceding

the first day of such LIBOR Loan as selected by the Bank. The principal London

office of each of the four major London banks will be requested to provide a

quotation of its U.S. dollar deposit offered rate. If at least two such

quotations are provided, the rate for that date will be the arithmetic mean of

the quotations. If fewer than two quotations are provided as requested, the rate

for that date will be determined on the basis of the rates quoted for loans in

U.S. dollars to leading European banks for a period of time comparable to such

LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m.

New York City time, on the day that is two London Banking Days preceding the

first day of such LIBOR Loan. In the event that Bank is unable to obtain any

such quotation as provided above, it will be deemed that LIBOR pursuant to a

LIBOR Loan cannot be determined.

In the event that the Board of Governors of the Federal Reserve System

shall impose a Reserve Requirement with respect to LIBOR deposits of Bank then

for any period during which such Reserve

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Requirement shall apply, LIBOR shall be equal to the amount determined above

divided by an amount equal to 1 minus such Reserve Requirement.

"Lien" means any mortgage, pledge, assignment, lien, charge, encumbrance or

security interest of any kind whatsoever, or the interest of a vendor or lessor

under a conditional sale, title retention or capital lease agreement.

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

Loans.

"Loan Documents" means this Agreement, the Notes and any and all other

agreements, instruments and documents relating to, evidencing or securing the

Obligations.

"Material Adverse Effect" shall mean an effect that constitutes a material

adverse change in Borrower's financial condition, operations, business or

prospects, taken as a whole.

"Modified Following Business Day Convention" has the meaning given such term in

Section 2.12 hereof.

"Money" shall have the meaning set forth in the Uniform Commercial Code as the

same may, from time to time, be in effect in the State of Maine.

"Non-Financed Capital Expenditures" means Capital Expenditures not financed with

additional long-term debt or Capital Leases.

"Note" or "Notes" means (as the context permits) any or all notes evidencing the

Loans, including, without limitation, the Working Capital Revolving Credit Note,

the Equipment Revolving Credit Note(s) and the Acquisition Revolving Credit

Note.

"Obligations" means all loans, advances, interest, fees, debts, liabilities,

obligations (including, without limitation, contingent obligations under

indemnities and guaranties with respect thereto), agreements, undertakings,

covenants and duties owing or to be performed or observed by Borrower to or in

favor of Bank, of every kind and description (whether or not evidenced by any

note or other instrument or arising out of this Agreement, Notes, Loan Documents

or any other agreement between Bank and any Borrower or any other instrument of

any Borrower in favor of Bank), direct or indirect, absolute or contingent, due

or to become due, now existing or hereafter arising, including, without

limitation, all interest, fees, charges, and amounts chargeable to any Borrower

under Section 13. 1.

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

"PBGC" means the Pension Benefit Guaranty Corporation.

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

"Person" means any individual, partnership, firm, association, business,

enterprise, trust, estate, company, joint venture, governmental authority,

corporation or other entity.

"Plan" means any employee plan subject to Title IV of ERISA maintained for

employees of any Borrower, any subsidiary of any Borrower or any other trade or

business under common control with any Borrower within the meaning of Section

414(c) of the Internal Revenue Code or the regulations thereunder.

<PAGE>

"Prime Rate" shall mean that interest rate established from time to time by Bank

as its Prime Rate, whether or not such rate is publicly announced; and such rate

may not be the lowest interest rate charged by Bank for commercial or other

extensions of credit.

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

on the Prime Rate.

"Proceeds" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

"Products" shall have the meaning set forth in the Uniform Commercial Code as

the same may, from time to time, be in effect in the State of Maine.

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

"Reserve Requirement" shall mean for any LIBOR Loans for any Interest Period

therefor, the maximum marginal percentage prescribed by the Board of Governors

of the Federal Reserve System for determining the reserve requirements for the

Bank in respect of Eurodollar deposits having a maturity equal to the Interest

Period.

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

Agreement.

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

Brookwood.

"Subordinated Debt" means indebtedness of Borrower to any subordinated lender

that is subordinated to the prior payment and enforcement of the Obligations

pursuant to a subordination agreement, the terms and conditions of which shall

be satisfactory to Bank in its sole discretion.

"Subsidiary" means with respect to any Person, any limited liability company,

corporation, partnership, trust or other organization, whether or not

incorporated, the majority of the voting stock or voting rights of which is

owned or controlled, directly or indirectly, by such Person.

"Supporting Obligations" shall have the meaning set forth in the Uniform

Commercial Code as the same may, from time to time, be in effect in the State of

Maine.

"Tangible Net Worth" means Borrower's total assets excluding all intangible

assets (i.e., goodwill, trademarks, patents, copyrights, organizational

expenses, and similar intangible items, but including leaseholds and leasehold

improvements) less Total Debt.

"Termination Date" means the earlier of (a) January 30, 2007, or (b) a

termination of the Bank's commitments hereunder pursuant to Section 12.1.

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

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

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

Tangible Net Worth.

<PAGE>

"Total Debt Service" means the sum of interest expense and scheduled payments of

principal on all long-term debt, including payments on Capital Leases and

payments on Subordinated Debt.

"Total Fixed Charges" ("TFC") means the sum of interest expense, required

payments of principal, dividends paid, income taxes paid (including state income

taxes), earn-out payments to Seller under Uzzi Purchase Agreements, and the cash

portion of Capital Expenditures for the trailing twelve month period.

"Total Funded Debt" ("TFD") means the sum of all Indebtedness for Borrowed Money

and similar monetary obligations evidenced by bonds, notes, debentures,

overdrafts, short-term debt facilities, notes payable, all liabilities secured

by any lien existing on any property owned or acquired subject thereto, whether

or not the liabilities secured shall have been assumed, all capitalized lease

obligations, all reimbursement obligations under outstanding letters of credit,

bankers acceptances and similar instruments and all guaranties and other

contingent liabilities with respect to any obligations or liabilities of the

type described above and including, without limitation, Bank debt.

"Treasury Rate" shall mean a rate per annum (computed on the basis of actual

days elapsed and a year of 360 days) equal to the rate determined by the Bank

(such determination to be conclusive, absent manifest error) on the date of such

payment to the yield on United States Treasury securities having the same term

to maturity as the remaining term of such Interest Period (such determination to

be based upon quotes obtained by the Bank from established dealers in such

market).

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

of Maine.

"Uzzi Purchase" shall mean, the acquisition by Xtra of the businesses of Uzzi

Amphibious Gear, Inc., a Florida corporation, TEK Sportswear, Inc., a Florida

corporation, and TAUB Sportswear, Inc., a dissolved Florida corporation, all of

which once had a place of business at 2315 Stirling Road, Ft. Lauderdale, FL

33312.

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

Section 2.1.4.

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

Section 2.1.1.

"Working Capital Revolving Credit Limit" means $22,000,000 from the Closing Date

through and including the Working Capital Revolving Credit Maturity Date.

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

Section 2.1.1.

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

"Working Capital Revolving Credit Note" means the promissory note in the form of

Exhibit "A" hereto.

"Xtra" shall have the meaning set forth in the preamble hereto and is owned by

Ashford (80%), its management (10%) and Chess (10%).

1.2. General. All terms used herein which are defined in Article 1

or Article 9 of the UCC shall have the meanings given therein unless otherwise

defined in this Agreement. All references to the plural herein shall also mean

the singular and to the singular shall also mean the plural. All references to

the Borrower and Bank pursuant to the definitions set forth in the recitals

hereto, or to any other person herein, shall include their respective successors

and assigns. Any accounting term used herein unless

<PAGE>

otherwise defined in this Agreement shall have the meanings customarily given to

such term in accordance with GAAP. The words "hereof," "herein," "hereunder,"

"this Agreement" and words of similar import when used in this Agreement shall

refer to this Agreement as a whole and not any particular provision of this

Agreement and as this Agreement now exists or may hereafter be amended,

modified, supplemented, extended, renewed, restated or replaced.

2. LOANS.

2.1. Working Capital Revolving Credit Facility

2.1.1. Availability of Credit Facility and Purpose. During the

Commitment Period, Bank shall make available to Borrower, a Working Capital

Revolving Credit Facility, in an aggregate principal amount not to exceed

$22,000,000.00 outstanding at any one time ("Working Capital Revolving Credit

Facility"), and from time to time, at Borrower's request, shall advance Working

Capital Revolving Credit Loans ("Working Capital Revolving Credit Loans") to

Borrower subject to the terms and conditions contained in this Agreement. The

proceeds of the Working Capital Revolving Credit Loans shall be used by Borrower

to finance Borrower's accounts receivables and inventory.

2.1.2. Working Capital Revolving Credit Note. Working Capital

Revolving Credit Loans shall be evidenced by the Working Capital Revolving

Credit Note. The Working Capital Revolving Credit Note shall be a master note,

and the principal amount of all Working Capital Revolving Loans outstanding

shall be evidenced by the Working Capital Revolving Credit Note.

2.1.3. Limitations on Advances. The aggregate principal amount of

Working Capital Revolving Credit Loans shall not exceed at any time the

aggregate principal amount of $22,000,000.00 outstanding at any one time, the

"Working Capital Revolving Credit Limit" and each advance shall be subject to

the limitations of the Borrowing Base referred to in Section 2.1.8.

2.1.4. Fees. On the Closing Date, Borrower shall pay to Bank a

nonrefundable facility modification and extension fee of $17,000.00, which shall

be deemed fully earned on the date thereof. Borrower shall also pay to Bank a

commitment fee of one quarter of one percent (0.25%) per annum up to

$19,000,000.00 and one eighth of one percent (0.125%) per annum on the remaining

$3,000,000.00 of the amount by which the Working Capital Revolving Credit Limit

exceeds the average daily principal balance of the outstanding Working Capital

Revolving Credit Loans during the immediately preceding calendar quarter (or

part thereof) during the Commitment Period, which unused credit line commitment

fee (the "Working Capital Commitment Fee") shall be payable on the first day of

each calendar quarter in arrears, commencing with March 31, 2004.

2.1.5. Repayment; Security. Working Capital Revolving Credit Loans

may be repaid and reborrowed during the Commitment Period. All Working Capital

Revolving Credit Loans shall be payable on the Termination Date and shall be

secured by all the Collateral.

2.1.6. Interest Payments. Borrower shall pay to Bank interest monthly

on the unpaid principal balance of all Working Capital Revolving Credit Loans at

the rates and in the amount calculated in accordance with Section 2.6.

2.1.7. Facility Maturity. The Working Capital Revolving Credit

Facility shall mature on the Working Capital Revolving Credit Maturity Date. In

no event shall Bank have any obligation to renew

<PAGE>

the Working Capital Revolving Credit Facility after the Working Capital

Revolving Credit Maturity Date. By its execution hereof, the Borrower

represents, warrants and agrees that no representations, assurances or promises

have been made regarding any extension or renewal, or the terms of any extension

or renewal, and Borrower will not rely upon any representations, assurances or

promises unless in writing and signed by Bank.

2.1.8. Borrowing Base. All advances under the Working Capital

Revolving Credit Facility shall be limited by and subject to a Borrowing Base

which shall be the sum of: ninety percent (90%) of Factor Receivables, eighty

percent (80%) of Eligible Receivables, fifty percent (50%) of Eligible

Inventory, and seventy-five percent (75%) of the appraised orderly liquidation

value of Equipment (to be depreciated by 20% per year). Borrower will be able to

increase the orderly liquidation value each quarter to include additions to

Equipment at its cost as evidenced by supplier invoices. Any such additional

Equipment shall be unencumbered.

(a) Eligible Accounts Receivable. For the purposes of determination of

the Borrowing Base, Eligible Accounts Receivables shall be those

Accounts Receivable ("Receivable") meeting the following criteria:

(1) The Receivable arose from a bona fide outright sale of

goods or services performed under an enforceable contract, and such

goods have been shipped to the appropriate account debtor, or the sale

has otherwise been consummated or services have been performed for the

appropriate account debtors in accordance with such order or contract;

(2) Title to the receivable is in the name of Borrower and

such title is absolute and is not subject to any prior assignment,

claim, lien or security interest;

(3) The amount shown on the books of Borrower with respect to

the Receivable and on any invoice or statement delivered to Bank is

owing to Borrower, and no partial payment has been made thereon by

anyone;

(4) The Receivable is not the subject of any claim of

reduction, counterclaim, set-off, recoupment, or any claim for credits,

allowances or adjustments by the account Borrower because of returned,

inferior or damaged goods or unsatisfactory services or for any other

reason;

(5) The account debtor has not returned or refused to retain

any of the goods from the sale out of which the Receivable arose;

(6) The Receivable does not arise out of a contract or order

from an account debtor that, by its terms, forbids an assignment or

makes the assignment of the Receivable to Bank void or unenforceable;

(7) Borrower has not received any note, trade acceptance,

draft or other instrument with respect to or in payment of the

receivable or any chattel paper with respect to the goods giving rise

to the receivable;

(8) Borrower has not received any notice of the death of the

account debtor or a partner thereof, nor of the dissolution,

termination of existence, insolvency, business failure, appointment of

a receiver for any part of the property of, assignment for the benefit

of creditors by, or the filing of any petition in bankruptcy or the

commencement of any proceeding under any bankruptcy or

<PAGE>

insolvency laws by or against the account debtor of Borrower (not

including, however, a post-petition Receivable which has been ratified

and reaffirmed by the account debtor);

(9) The account debtor is not an affiliate of Borrower and is

not a subsidiary thereof, nor is it under common management or

ownership with Borrower;

(10) The Receivable is not a government receivable from any

government; provided, however, that an account payable by the United

States government may become an Eligible Receivable after compliance

with the Federal Assignment of Claims Act in a manner satisfactory to

Bank;

(11) The Receivable is not governed by the law of a

jurisdiction that does not (i) recognize and conform to the Uniform

Commercial Code with respect to secured transactions, or (ii)

acknowledge perfection of such secured transactions by the filing of a

financing statement in the jurisdiction of the chief executive office

of Borrower;

(12) The Receivable does not arise under an agreement of

consignment, a sale or return, a sale with a right to return for

credit, a "guaranteed sale" or any other arrangement other than an

outright, absolute and final sale; or

(13) The Receivable is not an account that Bank, in its sole

and reasonable discretion and having a rational basis therefor, has

determined to be ineligible in whole or in part and has notified

Borrower thereof.

(b) Ineligible Accounts Receivable. In addition to any Receivable which

does not meet the foregoing criteria, the following Receivables are also

ineligible for the purposes of determination of the Borrowing Base:

(1) Any Receivable which is sixty (60) days or more past the

due date, provided that the due date shall be no more than one-hundred

twenty (120) days from the invoice date;

(2) Re-aged credits which represent previously booked

Receivables;

(3) Eighty percent (80%) of "cross aged" receivables, such

that if twenty percent (20%) or more of any account debtor's

receivables are aged more than sixty (60) days from the due date, all

receivables from that account debtor shall be deemed ineligible; and

(4) All inter-company Receivables.

determination, Eligible Inventory shall mean and refer to finished roll goods

inventory valued at the lower of cost or market, and having the following

characteristics:

(1) title to which is vested in Borrower free and clear of any

prior assignment, claim, lien or security interest;

(2) of a type ordinarily sold by Borrower in its business and

acquired in the ordinary course of business for resale; and

<PAGE>

(3) not subject to any consignment agreement, sale or return

agreement or other similar agreement in any way limiting

Borrower's outright ownership of said inventory.

(d) Ineligible Inventory. In addition to any Inventory which does not

meet the foregoing criteria, the following Inventory is also ineligible for the

purposes of determination of the Borrowing Base:

(1) Fixtures and displays representing display racks sold to

customers to hold and display products of Borrower;

(2) Discontinued products;

(3) Inventory located at third party vendors;

(4) Proprietary packaging materials that include the name of

the client or which are not of standard size.

2.1.9 Acquisition Sub-Limit. During the Commitment Period, Bank

shall permit Borrower to utilize up to $3,000,000.00 of the Working Capital

Revolving Credit Limit to finance acquisitions (the "Acquisition Sub-Limit").

Advances pursuant to the Acquisition Sub-Limit shall be subject to all terms and

conditions of the Working Capital Revolving Credit Facility.

2.2. Equipment Revolving Credit Facility

2.2.1. Availability of Credit Facility and Purpose. During the

Commitment Period, Bank shall make available to Borrower an Equipment Revolving

Credit Facility, in an aggregate principal amount not to exceed $3,000,000.00

outstanding at any one time ("Equipment Revolving Credit Facility"), and shall,

from time to time, at Borrower's request, advance Equipment Revolving Credit

Loans ("Equipment Revolving Credit Loans") to Borrower, subject to the terms and

conditions of this Agreement. Equipment Revolving Credit Loans shall be used by

Borrower to finance the purchase or lease of equipment for Borrower's ongoing

operations.

2.2.2. Equipment Revolving Credit Notes. Each advance under the

Equipment Revolving Credit Facility shall be evidenced by separate promissory

notes, individually an "Equipment Revolving Credit Note" and collectively, the

"Equipment Revolving Credit Notes".

2.2.3. Limitation on Advances. Advances under the Equipment Revolving

Credit Facility shall be limited to the lesser of:

(a) eighty percent (80%) of the invoice value for equipment

purchases, one hundred percent (100%) of the accepted

collateral value for equipment lease financing, or

(b) the remaining availability under the Equipment Revolving

Credit Facility.

2.2.4. Fees. On the Closing Date, Borrower shall pay to Bank an

additional non-refundable facility modification and extension fee of $3,000.00,

which shall be deemed fully earned on the date thereof.

2.2.5. Repayment of Equipment Revolving Credit Loans; Security.

<PAGE>

(a) Term; Security. Each Equipment Revolving Credit Note

shall have a term of five years from the date of execution thereof and

Borrower promises to pay and there shall become absolutely due and

payable on the earlier of the Equipment Revolving Credit Note Maturity

Date or the termination of the Bank's commitments hereunder pursuant to

Section 12.1, all principal of such Equipment Revolving Credit Note

outstanding on such date, together with any and all accrued and unpaid

interest and other charges, if any, thereon. All Equipment Revolving

Credit Loans shall be secured by all the Collateral.

(b) Principal Monthly Payments. Each Equipment Revolving

Credit Note shall be repaid in consecutive, fixed monthly installments

of principal, in accordance with an amortization period of five years,

commencing one (1) month from the date of such Equipment Revolving

Credit Note, and continuing on the 1st Business Day of each month

thereafter, plus accrued interest.

Notes. Borrower shall have the right at any time to prepay any

Equipment Revolving Credit Note on or before such Equipment Revolving

Credit Note Maturity Date, as a whole, or in part, upon not less than

five (5) Business Days prior written notice to Bank, without premium or

penalty, except for LIBOR breakage costs. Any prepayment of principal

of any Equipment Revolving Credit Note shall be applied against the

scheduled installments of principal due on such Equipment Revolving

Credit Note in inverse order of maturity.

2.2.6 Interest. Borrower shall pay to the Bank interest monthly on

the unpaid principal balance of each Equipment Revolving Credit Note at the

rates and in the amounts calculated in accordance with Section 2.6.

2.2.7. Facility Maturity. The Equipment Revolving Credit Facility

shall mature on the Equipment Revolving Credit Facility Maturity Date. Any

Equipment Revolving Credit Note executed prior to the Equipment Revolving Credit

Facility Maturity Date shall be repaid by Borrower in accordance with its

remaining term. In no event shall Bank have any obligation to renew the

Equipment Revolving Credit Facility after the Equipment Revolving Credit

Facility Maturity Date. By its execution hereof, the Borrower represents,

warrants and agrees that no representations, assurances or promises have been

made regarding any extension or renewal, or the terms of any extension or

renewal, and Borrower will not rely upon any representations, assurances or

promises unless in writing and signed by Bank.

2.3. [RESERVED]

2.4. Borrowing Procedures.

Notices to Bank of borrowings and conversions of Revolving Loans and of

the duration of Interest Periods with respect to LIBOR Loans shall be

irrevocable and shall be effective only if received by Bank in writing not later

than: (A) with respect to borrowings of Prime Rate Loans, prior to 11:00 a.m.

(Portland, Maine time) on the Business Day of the relevant borrowing, or, (B)

with respect to the borrowing of, conversion of or into, or duration of Interest

Period for, LIBOR Loans, two (2) Business Days prior to the date of the relevant

action.

Each notice of borrowing or conversion shall be delivered to Bank by

Borrower and shall specify the amount of the Revolving Loans to be borrowed or

converted, the date of borrowing or conversion (which shall be a Business Day)

and, in the case of LIBOR Loans, the duration of the Interest Period

<PAGE>

therefor. Each such notice of duration of an Interest Period shall specify the

LIBOR Loans to which such Interest Period is to relate. In the event that the

Borrower fails to select the duration of any Interest Period for any LIBOR Loans

within the time period and otherwise as provided in this Section 2.4, such

Revolving Loans (if outstanding as LIBOR Loans) will be automatically converted

into Prime Rate Loans on the last day of the then current Interest Period for

such Revolving Loans or (if outstanding as Prime Rate Loans) will remain as, or

(if not then outstanding) will be made as, Prime Rate Loans. Each Prime Rate

Loan shall be in a minimum amount of $100,000 and each LIBOR Loan shall be in a

minimum amount of $100,000 and in integral multiples of $100,000 in excess

thereof.

2.5. LIBOR Loans.

(a) Optional Conversions of Revolving Loans. Borrower shall have the

right to convert LIBOR Loans into Prime Rate Loans, or to convert Prime Rate

Loans into LIBOR Loans, at any time or from time to time, provided that: (i)

Borrower shall give Bank notice of each such conversion as provided in Section

2.4 hereof, and (ii) the conversion of any LIBOR Loan shall be subject to

Section 2.5(d) hereof. In the absence of such conversion, a Revolving Loan shall

be a Prime Rate Loan.

(b) Limitation on LIBOR Loans. Anything herein to the contrary

notwithstanding, if, with respect to any LIBOR Loans Bank determines (which

determination shall be conclusive) that the relevant rates of interest referred

to in the definition of "LIBOR Rate" in Section 1 hereof upon the basis of which

the rates of interest for such Revolving Loans are to be determined do not

accurately reflect the cost to Bank of making or maintaining such Revolving

Loans for Interest Periods therefor; then Bank shall promptly notify Borrower

(in the same manner in which Bank notifies its other customers with LIBOR loan

facilities), and so long as such condition remains in effect, Bank shall be

under no obligation to make LIBOR Loans or to convert Prime Rate Loans into

LIBOR Loans and Borrower shall, on the last day(s) of the then current Interest

Period(s) for the outstanding LIBOR Loans, convert such Revolving Loans into

Prime Rate Loans in accordance with Section 2.5(a) hereof.

to the contrary, in the event that it becomes unlawful for Bank to (a) honor its

obligation to make LIBOR Loans hereunder, or (b) maintain LIBOR Loans hereunder,

then Bank shall promptly notify Borrower thereof (in the same manner in which

the Bank notifies its other customers with LIBOR loan facilities), and Bank's

obligation to make LIBOR Loans hereunder shall be suspended until such time as

Bank may again make and maintain LIBOR Loans (in which case the provisions of

Section 2.5(d) hereof shall be applicable).

(d) Substitute Prime Rate Loans. If the obligation of Bank to make

LIBOR Loans shall be suspended pursuant to Sections 2.5(b), 2.5(c) or 2.5(f)

hereof, all Loans which would otherwise be made by Bank as LIBOR Loans shall be

made instead as Prime Rate Loans (and, if an event referred to in Sections

2.5(b), 2.5(c) or 2.5(f) hereof has occurred and Bank so requests by notice to

Borrower, each LIBOR Loan of Bank then outstanding shall be automatically

converted into a Prime Rate Loan on the date specified by Bank in such notice)

and, to the extent that LIBOR Loans are so made as (or converted into) Prime

Rate Loans, all payments of principal which would otherwise be applied to such

LIBOR Loans shall be applied instead to such Prime Rate Loans.

(e) Compensation for LIBOR Rate Loans. Borrower shall pay to Bank, upon

the request of Bank, such amount or amounts as shall be sufficient (in the

reasonable opinion of Bank) to compensate it for any loss, cost or expense

incurred by it as a result of:

<PAGE>

(i) any payment, prepayment or conversion of a LIBOR Loan made by

Bank on a date earlier than the last day of an Interest Period for such

Loan; or

(ii) any failure by Borrower to borrow a LIBOR Loan to be made by

Bank on the date of such borrowing specified in the relevant notice of

borrowing under Section 2.4 hereof if Borrower fails to rescind such

notice at least one (1) Business Day prior to the specified borrowing

debt;

such compensation to include, without limitation, an amount

equal to the excess, if any, of (i) the LIBOR Rate applicable to the principal

amount so repaid, over (ii) the interest which would be earned by reinvesting

the repaid amount at the Treasury Rate for the applicable Interest Period. A

statement of Bank setting forth the formula applied to determine any amount

necessary to compensate Bank under this section shall be delivered to Borrower

and shall be conclusive, except in the case of manifest error, as to such

determination and such amount. Notwithstanding anything to the contrary

contained herein, Bank shall not be required to purchase Dollar deposits in the

London interbank market to fund any LIBOR Loans and the provisions hereof shall

be deemed to apply as if Bank had purchased such deposits to fund the LIBOR

Loans.

(f) Additional Costs.

(i) Borrower shall pay to Bank from time to time such amounts as

Bank may determine to be reasonably necessary to compensate it for any costs

incurred by Bank which Bank determines are attributable to its making or

maintaining of any LIBOR Loans hereunder or its obligation to make any of such

LIBOR Loans hereunder, or any reduction in any amount receivable by Bank

hereunder in respect of any of such LIBOR Loans or such obligation (such

increases in costs and reductions in amounts receivable being herein called

"Additional Costs"), resulting from any regulatory change in applicable

statutes, regulations, rules, orders, or decrees applicable to Bank (a

"Regulatory Change") which:

(A) changes the basis of taxation of any amounts payable

to Bank under this Agreement or its Note in respect of any of

such Revolving Loans (other than changes which affect taxes

measured by or imposed on the overall net income of Bank); or

(B) imposes or modifies any reserve, special deposit,

insurance assessment or similar requirements relating to any

extensions of credit or other assets of, or any deposits with

or other liabilities of, Bank to Borrower; or

(or any of such extensions of credit or liabilities).

Bank will notify Borrower of any event occurring after the date of this

Agreement which will entitle Bank to compensation pursuant to this Section

2.5(f) as promptly as practicable after it obtains knowledge thereof and

determines to request such compensation. Bank will furnish Borrower with a

statement setting forth the basis and amount of each request by Bank for

compensation under this Section 2.5(f). If Bank requests compensation from

Borrower under this Section 2.5(f), the Borrower may, by notice to Bank, suspend

the obligation of Bank to make additional LIBOR Loans to Borrower until the

Regulatory Change giving rise to such request ceases to be in effect (in which

case the provisions of Section 2.5(f) hereof shall be applicable).

(ii) Without limiting the effect of the foregoing provisions

of this Section

<PAGE>

2.5(f), in the event that, by reason of any regulatory change, Bank either (1)

incurs Additional Costs based on or measured by the excess above a specified

level of the amount of a category of deposits or other liabilities of Bank which

includes deposits by reference to which the interest rate on LIBOR Loans is

determined as provided in this Agreement or a category of extensions of credit

or other assets of Bank which includes LIBOR Loans, or (2) becomes subject

generally to restrictions on the amount of such a category of liabilities or

assets which it may hold, then, if Bank so elects by notice to Borrower, the

obligation of Bank to make or continue, or to convert Prime Rate Loans into

LIBOR Loans hereunder shall be suspended until the date Bank withdraws such

notice or such Regulatory Change ceases to be in effect (in which case the

provisions of Section 2.5(d) hereof shall be applicable).

(iii) Determinations and allocations by Bank for purposes of

this Section 2.5(f) of the effect of any regulatory change on its costs of

maintaining its obligations to make Revolving Loans or of making or maintaining

Revolving Loans or on amounts receivable by it in respect of Revolving Loans,

and of the additional amounts required to compensate Bank in respect of any

Additional Costs, shall be conclusive absent manifest error.

2.6. Interest and Payments.

2.6.1. Interest Rate Pricing Formula for Working Capital

Revolving Credit Loans. The Working Capital Revolving Credit Loans shall bear

interest calculated on the basis of a 360-day year and the actual number of days

elapsed and payable monthly in arrears for the periods from the Borrowing Dates

thereof on the unpaid principal amount thereof from time to time outstanding at

a rate per annum equal to the applicable rate and pricing formula indicated

below:

<TABLE>

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

TIER TFD:EBITDA LIBOR + PRIME RATE +

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

1 >=3.25x 3.00% 0.25%

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

2 >=3.00x and <3.25x 2.50% 0.25%

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

3 >=2.50x and <3.00x 2.25% 0.25%

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

4 >=2.00x and <2.50x 2.00% 0.25%

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

5 <2.00x 1.75% 0.25%

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

</TABLE>

2.6.2. Interest Rate Pricing Formula for Equipment Revolving

Credit Loans. The Equipment Revolving Credit Loans shall bear interest

calculated on the basis of a 360-day year and the actual number of days elapsed

and payable monthly in arrears for the periods from the Borrowing Dates thereof

on the unpaid principal amount thereof from time to time outstanding at a rate

per annum equal to the applicable rate and pricing formula indicated below:

<TABLE>

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

TIER TFD:EBITDA LIBOR + PRIME RATE +

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

1 >=3.25x 3.00% 0.25%

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

2 >=3.00x and <3.25x 2.50% 0.25%

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

3 >=2.50x and <3.00x 2.25% 0.25%

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

4 >=2.00x and <2.50x 2.00% 0.25%

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

5 <2.00x 1.75% 0.25%

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

</TABLE>

<PAGE>

2.6.3. Interest Rate Pricing. Interest rate pricing is to be

based upon trailing twelve month EBITDA to be determined quarterly upon receipt

by Bank of quarterly management-prepared financial statements and fiscal

year-end audited financial statements. With respect to the Equipment Revolving

Credit Loans, the following additional terms and conditions shall apply:

(i) Bank shall also make available to Borrower a fixed

rate option based upon Key Equipment Finance market rate pricing then

in effect; and

(ii) When a new equipment lease is put into effect, it

will be priced pursuant to the most recent quarterly

management-prepared financial statements received by Bank, and that

pricing will remain in effect for the duration of the lease.

2.6.4. LIBOR Rate Selection. Upon determination of the LIBOR

Rate for any Interest Period selected by Borrower, Bank shall promptly notify

Borrower thereof by telephone or in writing. Such determination shall, absent

manifest error, be final, conclusive and binding on all parties for all

purposes. Following and during the continuance of an Event of Default, interest

on all Loans shall accrue at the Default Rate and be paid on demand.

2.6.5. Interest Payment Date. Accrued interest on each Loan

shall be payable monthly in arrears on the first Business Day of each month.

Interest on LIBOR Loans shall be due at the conclusion of the Interest Period

but in no event later than ninety (90) days from the date of the LIBOR Loan.

2.6.6. Prime Rate. The effective interest rate applicable to

the Prime Rate Loans shall change on the date of each change in the Prime Rate.

2.7. Payments. Principal and interest on all Loans and payments on

all Obligations, other than payments made pursuant to the ATF Agreement, shall

be payable at Bank's office at 176 Federal Street, 3rd Floor, Boston,

Massachusetts in lawful money of the United States of America in immediately

available funds without set-off, deduction or counterclaim. Borrower authorizes

Bank to debit its deposit account(s) with Bank for all payments due hereunder,

whether for principal, interest or other amounts payable on account of the

Obligations. Bank will notify Borrower in writing after such debits are made.

2.8. Limitation on Interest. All agreements between Borrower and

Bank are hereby expressly limited so that in no contingency or event whatsoever,

whether by reason of acceleration of maturity of the indebtedness evidenced

hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the

use or the forbearance of the indebtedness evidenced hereby exceed the maximum

permissible under applicable law. As used herein, the term "applicable law"

shall mean the law in effect as of the date hereof, provided, however that in

the event there is a change in the law which results in a higher permissible

rate of interest, then this Agreement shall be governed by such new law as of

its effective date. In this regard, it is expressly agreed that it is the intent

of Borrower and Bank in the execution, delivery and acceptance of the Notes to

contract in strict compliance with the laws of the State of Maine and any other

applicable state from time to time in effect. If, under or from any

circumstances whatsoever, fulfillment of any provision hereof or of any of the

Loan Documents at the time of performance of such

<PAGE>

provision shall be due, shall involve transcending the limit of such validity

prescribed by applicable law, then the obligation to be fulfilled shall

automatically be reduced to the limits of such validity, and if under or from

circumstances whatsoever Bank should ever receive as interest an amount which

would exceed the then highest lawful rate, such amount which would be excessive

interest shall be applied to the reduction of the principal balance evidenced

hereby and not to the payment of interest. This provision shall control every

other provision of all agreements between Borrower and Bank.

2.9. Late Charges. If the entire amount of any required principal,

interest or other payment hereunder is not paid in full within fifteen (15) days

after the same is due, Borrower shall pay to Bank a late fee equal to five

percent (5%) of the required payment.

2.10. Default Rate. Without limitation of Bank's other rights and

remedies, upon the earlier to occur of an Event of Default (as provided in

Section 12) or the close of business on the Termination Date, Borrower's right

to select pricing options shall cease, and the unpaid principal of all

Obligations shall, at the option of Bank, bear interest at a rate per annum

equal to four percent (4%) in excess of the highest applicable interest rate

(the "Default Rate").

2.11. One Obligation. The Working Capital Revolving Credit Loans,

the Equipment Revolving Credit Loans and other Obligations shall constitute one

obligation of Borrower, and the commitments of Bank to make the Working Capital

Revolving Credit Loans and the Equipment Revolving Credit Loans to Borrower

cannot be separately or individually terminated by Borrower. In the event that

the Borrower intends to terminate any of Bank's commitments hereunder, the

Borrower shall give the Bank thirty (30) days prior irrevocable written notice

thereof and shall repay all the Obligations on the effective date of such

termination.

2.12. Modified Following Business Day Convention. The term "Modified

Following Business Day Convention" means the convention for adjusting any

relevant date if it would not otherwise fall on a day that is not a Business

Day. All dates specified for payments to be made under this Agreement shall be

subject to the Modified Following Business Day Convention. The following terms,

when used in conjunction with the term "Modified Following Business Day

Convention" and a date shall mean that an adjustment will be made if that date

would otherwise fall on a day that is not a Business Day so that the date will

be the first following day that is a Business Day; provided that, in connection

with determining the last day of an Interest Period for a LIBOR Loan, if the

first following day that is a Business Day falls in the next succeeding calendar

month, then an adjustment will be made so that the date will be the next

preceding Business Day. A "Business Day" means, in respect of any date that is

specified in this Agreement to be subject to adjustment in accordance with

applicable Business Day Convention, a day on which commercial banks settle

payments in New York or, if the payment obligation is calculated with reference

to the LIBOR Rate, in London.

3. GRANT OF SECURITY INTEREST. As security for the prompt performance,

observance and payment in full of all Obligations, Borrower hereby grants to

Bank a continuing first priority, perfected security interest in and lien on and

assigns, transfers, sets over and pledges to the Bank all business assets,

properties and rights of Borrower, whether now owned by Borrower or hereafter

acquired or existing, and wherever located (collectively, the "Collateral"),

including, without limitation, the following:

(a) Accessions;

(b) Accounts (including health-care insurance

receivables);

<PAGE>

electronic);

(d) Commercial Tort Claims;

(e) Deposit Accounts;

(f) Documents;

(g) Equipment;

(h) Fixtures;

(i) General Intangibles (including payment

intangibles);

(j) Instruments (including promissory notes);

(k) Inventory;

(l) Investment Property (including all

securities);

(m) Letter-of-Credit Rights (whether or not the

letter-of-credit is evidenced by a writing);

(n) Money (including contract rights or rights

to the payment of money);

(o) Supporting Obligations;

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

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

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

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

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

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

(v) Brookwood's membership interest in STA;

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

(x) To the extent not listed as Original

Collateral, Proceeds and Products of all of

the foregoing.

The term "Collateral" shall also refer to and include any other

property in which Bank is granted a Lien to secure any of the Obligations

pursuant to an agreement supplemental hereto or otherwise (whether or not such

agreement makes reference to this Agreement or the Obligations of Borrower

hereunder).

<PAGE>

4. REPRESENTATIONS AND WARRANTIES. Borrower jointly and severally

represents and warrants (and at the time of each Loan hereunder shall be deemed

to represent and warrant) for itself and for each other Borrower to Bank as

follows:

4.1. Organization, Existence and Good Standing. Each Borrower (i)

is a duly organized, validly existing and in good standing under the laws of the

State of Delaware, (ii) has obtained all material licenses, permits, approvals

and consents and has filed all registrations necessary for the lawful operation

of its business, (iii) has the power and authority and the legal right to own,

lease and operate its property and to conduct the business in which it is

currently engaged, and (iv) is duly qualified to do business and is in good

standing as a foreign entity in each other jurisdiction where its ownership,

lease or operation of property or the conduct of its business requires such

qualification, except where the failure to be so qualified would not have a

Material Adverse Effect. Schedule 4.1 lists all states and other locations where

Borrower is qualified or authorized to do business.

4.2. Consents. No consent, permit, license, approval or

authorization of, or registration, declaration or filing with or notice to, any

governmental authority, bureau or agency or any other Person is required in

connection with the execution, delivery or performance by Borrower, or the

validity or enforceability against Borrower, of any Loan Document to which it is

a party, except for the consents and approvals which have been obtained and are

listed on Schedule 4.2.

4.3. No Legal Bar. The execution, delivery and performance by

Borrower of the Loan Documents, and each agreement, certificate, document,

instrument or other paper delivered pursuant thereto, to which Borrower is a

party, does not conflict with or cause a breach of any provision of any existing

law, rule or regulation, order, judgment, award or decree of any court,

arbitrator or governmental authority, bureau or agency, or of its charter or

organizational documents, or any security issued by Borrower or of any material

mortgage, deed of trust, indenture, lease, contract or other agreement or

undertaking to which Borrower is a party or by which any of its properties may

be bound, and will not result in the creation or imposition of any Lien on

Borrower's revenues or properties, except in favor of Bank.

4.4. Compliance with Charter and Agreements. Borrower (i) is

subject to no charter, organizational or other legal restriction, or any

judgment, award, decree, order, governmental rule or regulation or contractual

restriction which could have a Material Adverse Effect, and (ii) is in material

compliance with its charter or organizational documents and all contractual

requirements of a material nature by which it or any of its properties may be

bound.

4.5. Negative Pledges. Neither Borrower nor any of its Subsidiaries

is a party to or bound by any agreement, indenture, or other instrument which

prohibits the creation, incidence or allowance to exist of any mortgage, deed of

trust, pledge, lien, security interest or other encumbrance or conveyance upon

any of Borrower's property.

4.6. Title to Property. Borrower has good and marketable title to,

or valid leasehold interests in, all of the assets reflected in the balance

sheet (referred in 4.12), including, without limitation, the Collateral, and all

such assets are subject to no Liens except (i) in favor of Bank, or (ii)

Permitted Liens.

4.7. Books and Records. All of Borrower's charter documents have

been duly filed and are in proper order. All of Borrower's books and records,

including without limitation, minute books and books of account

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