EXHIBIT 10(B) - MATERIAL CONTRACTS
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         PLEDGE AND SECURITY AGREEMENT,  dated as February 1, 1996, by and among
METAL RECOVERY TECHNOLOGIES,  INC., a Delaware corporation, having an address at
415 E. 151st  Street,  East  Chicago IN 46312  (herein  referred to as "MRTI" or
"Debtor"), PLENBRICK, LTD., having an address at The Creche Building, Upper Main
Street,  P.O. Box 116 Road Town,  Tortola B.V.I.,  individually and as agent for
certain other parties,  and METAL RECOVERY  INDUSTRIES (U.S.),  INC., a Delaware
corporation,  having an address at 415 E. 151st Street,  East Chicago,  IN 46312
(herein  referred  to as  "MRIUS"),  and the  Secured  Parties  (as  hereinafter
defined) identified on Exhibit A hereto.

                                   WITNESSETH:

         WHEREAS, Debtor owns all of the issued and outstanding capital stock of
MRIUS,  a  Delaware   corporation   (herein   referred  to  as  "MRIUS"  or  the
"Subsidiary"); and
         WHEREAS,  the Secured  Parties (as  hereinafter  defined) have made, or
have agreed to make,  certain loans to Debtor which are convertible  into shares
of common stock of Debtor; and
         WHEREAS, Debtor wishes to extend the maturities of such loans; and
         WHEREAS,  the Secured Parties are concerned about continuing  delays in
the completion and operation of the Debtor's dezincification facility located in
East Chicago,  Indiana (the "Facility") and desire,  as a condition of extending
their  loans  and  the  maturities  thereof,  to be  assured  as to  the  timely
completion of the Facility and against  changes in the control and management of
Debtor; and
         WHEREAS,  the Secured Parties also desire that repayment of their loans
         be secured;  and  WHEREAS,  Debtor is  willing,  in order to induce the
         Secured Parties (i) to make or extend loans to
Debtor, and (ii) to make loans and extend credit to Subsidiary, the repayment of
which  will be  guaranteed  by  Debtor,  to grant to the  Collateral  Agent  (as
hereinafter  defined),  for the pro  rata  benefit  of the  Secured  Parties,  a
security  interest under the Uniform  Commercial  Code in all of Debtor's assets
and properties, tangible and intangible, now existing or hereafter acquired, for
the purpose of securing (x) the timely repayment by Debtor of all such loans and
extensions  of credit  and (y) the full and  complete  performance  by Debtor of
Debtor's obligations under guarantees by Debtor of the timely repayment of loans
and extensions of credit made to Subsidiary; and
         WHEREAS,  Debtor is also willing to provide certain  protections to the
Secured Parties against changes in the control and management of MRIUS; and
         WHEREAS,  Plenbrick,  Ltd. has agreed to hold the Collateral under this
Agreement  for itself  and as agent for all other  Secured  Parties  (Plenbrick,
Ltd., in such capacity,  being herein referred to as the "Collateral Agent"), as
hereinafter set forth;
         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged  and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
                  1.       Loans.
                  (a) The  parties  whose names and  addresses  are set forth on
Exhibits A and B have heretofore made loans to MRTI or have agreed to make loans
to MRTI. Exhibit A sets forth the names of parties having made, or having agreed
to make,  loans, the respective  amounts lent or to be lent, and the maturities,
interest rates and conversion rights with respect thereto.  All of the foregoing
parties are  hereinafter  sometimes  referred to as the "Secured  Parties."  The
Secured  Parties  have  designated  Plenbrick,  Ltd.  as  the  Collateral  Agent
hereunder, with the rights, powers and obligations set forth in this Agreement.
                  (b) Debtor has requested, and the Secured Parties have agreed,
that the terms of their existing loans or commitments  referred to on Exhibit A,
shall be  modified  as set forth on Exhibit  A. In order to induce  the  Secured
Parties to enter into the loan amendments or modifications  described on Exhibit
A, Debtor has agreed to execute and deliver this Agreement,  to grant and create
the  security  interest  granted and arising  hereunder,  and to create  certain
rights in favor of the Secured  Parties  respecting the exchange of indebtedness
of Debtor to the  Secured  Parties for shares of common  stock of MRIUS,  all as
more  particularly  set  forth.  New  promissory  notes  or other  evidences  of
indebtedness may be issued to the Secured Parties to evidence the modified terms
of such  loans,  but the  failure  to do so shall not  affect  the  validity  or
enforceability of the loans as so modified hereby.
                  (c) The Secured Parties and Debtor hereby agree that, with the
consent of Debtor and of either the  Collateral  Agent or of Secured  Parties at
the time  owning a majority in interest  of the  aggregate  principal  amount of
indebtedness  owed by Debtor to all Secured  Parties,  parties  hereafter making
loans or advances,  or renewals  thereof,  to Debtor may become  entitled to the
benefits  of this  Agreement  and in such  event  shall be deemed to be  Secured
Parties  hereunder  with the same force and effect as though  they were  Secured
Parties as of the date of this  Agreement.  The Secured  Parties  identified  on
Exhibit A and all other persons or entities who  hereafter  make loans or extend
credit to Debtor and become  entitled  to the  benefits  of this  Agreement  are
hereinafter  collectively  referred to as Secured Parties, and individually as a
Secured Party.
         2.       Right to Convert Loans.
         In order to induce the Secured Parties to extend, modify or renew their
existing loans to Debtor, or to extend new loans to Debtor or to Subsidiary (the
said loans being herein  individually and collectively  termed  "Indebtedness"),
the Debtor  hereby  agrees that, in addition to any rights which a Secured Party
may have to convert Indebtedness into common shares of MRTI ("MRTI Shares"), the
Collateral  Agent,  acting on  behalf of the  Secured  Parties,  shall  have the
additional rights hereinafter set forth in the event that (i) holders of Class A
Preferred Stock of MRTI exercise, or threaten or purport to exercise,  the right
to elect a majority of the  directors of MRTI,  or (ii)  Collateral  Agent shall
determine that any litigation now or hereafter  pending against Debtor would, if
adversely  determined  have a  material  adverse  affect on  Debtor's  financial
condition or business.  Following the  occurrence of such an event (an "Exchange
Event")  and during its  continuance,  the  Collateral  Agent,  on behalf of the
Secured Parties, shall have a one-time right (the "Exchange Right"), exercisable
by written  notice to  Debtor,  to  exchange  Indebtedness  having an  aggregate
principal  amount of not less than  $2,000,000 for that number of fully-paid and
non-assessable  shares of the common  stock of MRIUS  ("MRIUS  Shares") as shall
represent a majority of all then issued and outstanding  shares of MRIUS (giving
effect to the issuance of MRIUS Shares  hereunder).  The Collateral  Agent shall
exercise the Exchange Right on behalf of Secured  Parties so electing,  provided
that Secured Parties owning a majority in principal amount of the  Indebtedness,
but not less  than  $2,000,000,  so  direct.  A  Secured  Party may not elect to
exercise the Exchange Right as to less than all Indebtedness owned by it.
         Exchange  of  Indebtedness  for MRIUS  Shares  shall be effected by the
Collateral  Agent  (acting for such  purpose as agent for Debtor)  causing to be
issued and delivered, free and clear of the security interest created hereby, to
the Secured Parties so electing,  the respective number of MRIUS Shares to which
each is  entitled,  which  shall be pro rata to their  respective  shares of the
total  Indebtedness  outstanding,  calculated  as of the date when the  Exchange
Right is exercised.  The  Indebtedness  owned by a Secured Party shall be deemed
canceled  upon delivery to it of MRIUS Shares  hereunder,  and the Secured Party
shall so confirm in writing.
         Following the occurrence of an Exchange Event, the MRIUS Shares, if not
required  to be issued to the  Collateral  Agent,  shall  continue to be held in
pledge by the Collateral Agent, upon all of the terms and conditions hereof.
         MRTI and Debtor each covenant  that they shall,  at their sole cost and
expense,  take all corporate and other actions,  including all necessary filings
with the SEC and any other regulatory authorities,  required in order that there
shall be issued to each  party  hereto the  number of MRIUS  Exchange  Shares to
which such  Secured  Party is entitled as  aforesaid,  in  consideration  of the
cancellation of the Indebtedness.  The Collateral Agent, acting on behalf of the
Secured  Parties,  may enforce the provisions  hereof by appropriate  action for
equitable  relief.  MRIUS hereby appoints the Collateral  Agent as the agent and
attorney-in-fact of MRIUS, with power of substitution, for purposes of doing all
acts and things, and executing all documents,  necessary or convenient to effect
the exercise of the Exchange Right and the transfer of the MRIUS shares into the
names of the  Exchange  Agent and of the Secured  Parties.  Such agency shall be
deemed  coupled with an interest and  irrevocable  until  payment in full of the
Indebtedness.  Debtor shall  reimburse  the  Collateral  Agent for all costs and
expenses  incurred in enforcing the provisions  hereof and the Collateral  Agent
shall  retain  a  security   interest  to  secure   Debtor's   obligations   for
reimbursement hereunder.
         3.       Debtor's Grant of Security Interest in Collateral.
         Debtor hereby grants to the Collateral  Agent,  for its benefit and for
the benefit of all of the Secured Parties,  as security for the repayment of the
Indebtedness,  including  all  interest  due or to become due thereon and of all
other sums payable  hereunder  and the  performance  of (a) all  obligations  of
Debtor under this Agreement (b) the payment and  performance of all  obligations
arising under and pursuant to any loans or extensions of credit which,  by their
terms, are entitled to the benefit hereof and (c) the payment and performance of
all obligations arising under any guarantees by Debtor of loans or extensions of
credit made to Subsidiary  which,  by their terms,  are entitled to the benefits
hereof (all such obligations and indebtedness being herein collectively referred
to as the "Obligations") a security interest in all of the Debtor's right, title
and interest in the following  described property  (collectively  referred to as
the "Collateral"):
                  (i) (A) All shares of the capital stock of the  Subsidiary and
         of any  other  corporations  which  are  subsidiaries  of  Debtor  (the
         "Pledged Securities"), together with any additional securities or other
         property hereafter issued by way of a dividend or distribution  thereon
         and any proceeds thereof and any securities  issued in exchange for the
         Pledged Securities; and
                           (B) All  other  proceeds  or other  distributions  in
         respect of any or all of the Pledged  Securities or any replacements or
         substitutions  thereto or therefor  and all  proceeds  generated by the
         sale or disposition thereof.
                  (ii) all of Debtor's personal property and fixtures,  wherever
         located, whether now owned or hereafter acquired or created, including,
         without limitation, all of Debtor's right, title and interest in and to
         the items and types of property  described  below and the  products and
         proceeds thereof:
                           (A) all accounts,  accounts receivable, all rights to
                  receive  the  payment  of money or other  consideration  under
                  present or future contracts or by virtue of services rendered,
                  merchandise   sold  or   leased,   advances   made  or   other
                  consideration  given, whether or not earned by performance and
                  whether or not  evidenced by or set forth in or arising out of
                  any  present or future  chattel  paper,  note,  draft,  lease,
                  acceptance,   writing,  bond,  insurance  policy,  instrument,
                  document  or  general  intangible,   and  all  extensions  and
                  renewals of any  thereof,  all rights  under or arising out of
                  present   or   future   contracts,   agreements   or   general
                  intangibles, including, without limitation, all payments under
                  licensing  agreements or arrangements,  and all claims for tax
                  refunds,  if any,  all claims or causes of action which it may
                  now or hereafter  have whether  arising in connection  with or
                  under any  agreement  or  document or by  operation  of law or
                  otherwise,  including,  without  limitation,  all  present and
                  future  indebtedness  and  obligations  of  any  affiliate  or
                  subsidiary  to  it,   including   specifically,   but  without
                  limitation,  indebtedness  of the  Subsidiary  to  the  Debtor
                  arising  pursuant to loans or advances made to the  Subsidiary
                  from the  proceeds  of the  Indebtedness  wherever  any of the
                  foregoing may be located and whether the same are owned by the
                  Debtor  on the  date  hereof  or  are  hereafter  acquired  or
                  created;
                           (B)  all  inventories  of  every  nature,  including,
                  without  limitation,  all  goods  held  for  sale or  lease or
                  furnished or to be furnished under  contracts of service,  all
                  raw  materials,  work in process and finished  goods,  and all
                  supplies,   materials   and   products  of  every  nature  and
                  description   used  or  usable,   consumed  or  consumable  in
                  connection   with   the   manufacture,    packing,   shipping,
                  advertising,  selling, leasing or furnishing of such goods and
                  all right,  title and interest in merchandise which gives rise
                  to any or all of the foregoing,  wherever any of the foregoing
                  may be located and whether the same are owned by the Debtor on
                  the date hereof or are hereafter acquired or created;
                           (C) all equipment,  machinery,  apparatus,  chattels,
                  tools,  dies,  jigs,  molds,  parts,  machine  tools,  trucks,
                  automobiles,  vehicles, rolling stock, furniture, furnishings,
                  fixtures and supplies,  of every  nature,  wherever any of the
                  foregoing may be located and whether the same are owned by the
                  Debtor  on the  date  hereof  or  are  hereafter  acquired  or
                  created, and all additions, accretions and accessories thereto
                  and substitutions and replacements of any of the foregoing and
                  all parts and equipment  which may be attached to or usable in
                  any way in  connection  with or which  are  necessary  for the
                  operation  and use of such personal  property  wherever any of
                  the foregoing may be located and whether the same are owned by
                  the Debtor on the date  hereof or are  hereafter  acquired  or
                  created;
                           (D) all documents and chattel paper,  wherever any of
                  the foregoing may be located and whether the same are owned by
                  the Debtor on the date  hereof or are  hereafter  acquired  or
                  created;
                           (E)  all  general   intangibles   of  every   nature,
                  including,  without limitation,  patents, patent applications,
                  trademarks,    licensing    agreements,    royalty   payments,
                  copyrights,  service names, service marks, logos, goodwill and
                  rights of  indemnification,  whether the same are owned by the
                  Debtor  on the  date  hereof  or  are  hereafter  acquired  or
                  created;
                           (F) all books, correspondence, credit files, customer
                  lists,   records   and  other   documents   relating   to  the
                  above-described   types  of   property,   including,   without
                  limitation,  all  tapes,  cards,  runs and  other  papers  and
                  documents in the  possession or control of the Debtor,  or any
                  affiliate or subsidiary of the Debtor or any computer  service
                  bureau,  wherever  any of the  foregoing  may be  located  and
                  whether the same are owned by the Debtor on the date hereof or
                  are hereafter acquired or created;
                           (G) all rights in, to and under policies of insurance
                  of every kind and nature covering the  Collateral,  including,
                  without  limitation,  claims or rights to payment and proceeds
                  heretofore or hereafter  arising therefrom with respect to the
                  above-described types of property,  whether the same are owned
                  by the Debtor on the date hereof or are hereafter  acquired or
                  created;
                           (H)      all fixtures;
                           (I)      all rights in and to any proceeds  from  any
                  condemnation,  in whole or in part, of all or any of the above
                  -described property; and
                           (J)  all  proceeds,   product,  offspring,  rents  or
                  profits  of any or all of  the  property  described  above  in
                  clauses  (A)  through  (I) of  this  Subsection  (ii)  and any
                  replacements,  additions,  accessions or substitutions thereto
                  or  therefor,  afteracquired  property in respect  thereof and
                  proceeds  generated by the sale,  casualty loss or disposition
                  thereof.

The Security  interest  created  hereunder shall be held by the Collateral Agent
for the  respective  pro rata  benefit of all  parties who are from time to time
Secured Parties hereunder,  determined based on the respective principal amounts
of  Indebtedness  held by all such Secured  Parties at any time and from time to
time; and the pro rata interests of all such Secured Parties shall be pari passu
in priority of payment.

         4.       Delivery of Pledged Securities.
         The Pledged Securities shall be evidenced by certificates, all of which
shall be delivered to and held in the possession of the Collateral Agent or such
other  person as the  Collateral  Agent  may  designate.  In the event  that the
Collateral Agent so designates any such person to take possession of the Pledged
Securities,  such person  shall be  entitled  to all rights and  benefits of the
Collateral  Agent  contained  in this  Pledge and  Security  Agreement,  and all
references  herein  to  the  "Collateral  Agent"  shall  be  deemed  to  include
references to such other  person.  Upon delivery to the  Collateral  Agent,  any
Pledged  Securities in certificated  form shall be in suitable form for transfer
by delivery or shall be accompanied by duly executed  instruments of transfer or
assignment in blank, with signatures appropriately  guaranteed,  all in form and
substance  satisfactory to the Collateral  Agent. All other property  comprising
part of the Collateral shall be accompanied by proper  instruments of assignment
duly  executed  by the Debtor and such other  instruments  or  documents  as the
Collateral Agent may reasonably request.

         5.  Warranties,   Covenants  and  Agreements  of  the  Debtor  and  the
         Cooperative Corporation. Debtor warrants, covenants and agrees that:
                  (a) Except  for the  security  interest  granted  hereby,  the
         Debtor is, and as to the collateral  acquired after the date hereof the
         Debtor  shall  and will be at the time of  acquisition,  the  owner and
         holder  of  the  Collateral  free  from  any  adverse  claim,  security
         interest,  encumbrance, lien, charge, or other right, title or interest
         of any person other than the Collateral Agent and covenants that at all
         times  the  Collateral  will be and  remain  free of all  such  adverse
         claims,  security interests or other liens or encumbrances;  the Debtor
         has full  power and  lawful  authority  to enter  into this  Pledge and
         Security  Agreement and to sell,  assign and transfer the Collateral to
         the Collateral  Agent and to grant to the Collateral  Agent a first and
         prior security  interest therein as herein provided,  all of which have
         been authorized by all necessary  corporate  action;  the execution and
         delivery and the  performance  hereof are not in  contravention  of any
         charter  or  by-law  provision  or  of  any  indenture,   agreement  or
         undertaking  to which the Debtor is a party or by which its property or
         the Pledged  Securities are bound;  this Pledge and Security  Agreement
         constitutes  the legal,  valid and  binding  obligation  of the Debtor,
         enforceable  in  accordance  with its  terms,  subject  to  bankruptcy,
         insolvency,  reorganization  and other  laws of  general  applicability
         relating  to or  affecting  creditors'  rights  and to  general  equity
         principles;  and the Debtor  will  defend the  Collateral  against  all
         claims and demands of all persons at any time  claiming the same or any
         interest therein. Any officer, agent or representative acting for or on
         behalf  of the  Debtor in  connection  with this  Pledge  and  Security
         Agreement or any aspect  hereof,  or entering  into or  executing  this
         Pledge and Security  Agreement  on behalf of the Debtor,  has been duly
         authorized  so to do, and is fully  empowered to act for and  represent
         the Debtor in  connection  with this Pledge and Security  Agreement and
         all matters related thereto or in connection therewith.
                  (b)  (i)  As  long  as  any  amount   remains  unpaid  on  the
         Indebtedness,  (a) the  Debtor  will  not  enter  into or  execute  any
         security agreement or any financing  statement covering the Collateral,
         other than those security agreements and financing  statements in favor
         of the Collateral Agent hereunder, and further (b) there will not be on
         file in any public office any financing statement or statements (or any
         documents or papers filed as such) covering the Collateral,  other than
         financing statements in favor of the Collateral Agent hereunder, unless
         in any case the prior  written  consent of the  Collateral  Agent shall
         have been obtained.
                           (ii) Debtor hereby authorizes the Collateral Agent to
         file, in its discretion, in jurisdictions where this authorization will
         be given effect,  a financing  statement  signed only by the Collateral
         Agent covering the Collateral, and hereby appoints the Collateral Agent
         as the Debtor's  attorney-in-fact  to sign and file any such  financing
         statements  covering the  Collateral.  At the request of the Collateral
         Agent,  the Debtor will join the  Collateral  Agent in  executing  such
         documents  as it may  determine,  from time to time,  to be  reasonably
         necessary  or  desirable  under   provisions  of  the  Indiana  Uniform
         Commercial  Code  or of any law in any  other  jurisdiction  which  the
         Collateral Agent deems  applicable to the Collateral;  without limiting
         the  generality  of the  foregoing,  the  Debtor  agrees  to  join  the
         Collateral  Agent,  at its request,  in executing one or more financing
         statements  in form  satisfactory  to it, and the  Debtor  will pay the
         costs of filing or recording the same,  or of filing or recording  this
         Pledge and Security  Agreement,  in all public  offices at any time and
         from time to time,  whenever  filing or recording of any such financing
         statement  or of this Pledge and  Security  Agreement  is deemed by the
         Collateral  Agent to be necessary or desirable.  In connection with the
         foregoing,  it is agreed and understood between the parties hereto (and
         the  Collateral  Agent is hereby  authorized to carry out and implement
         this  agreement and  understanding  and the Debtor hereby agrees to pay
         the costs thereof) that the Collateral Agent may, at any time or times,
         file as a financing statement any counterpart,  copy or reproduction of
         this Pledge and Security Agreement. The Debtor hereby acknowledges that
         the duties of the  Collateral  Agent with respect to the collateral are
         ministerial in nature and,  notwithstanding anything in this Pledge and
         Security  Agreement to the contrary,  neither the Collateral  Agent nor
         any of its employees, directors, or agents shall be liable to any party
         whatsoever in respect of any duties hereunder absent willful misconduct
         or gross negligence.
                  (c) All dividends, payments of interest or principal and other
         distributions  of  every  character  made  upon  or in  respect  of the
         Collateral  or any part thereof  shall be deemed to be  Collateral  and
         shall be paid directly to and shall be held by the Collateral  Agent as
         additional  Collateral  pledged  under and  subject to this  Pledge and
         Security Agreement.
                  (d)  The  chief  executive  offices  of and  other  places  of
         business of the Debtor are located,  and the books and records relating
         to the  Collateral are located,  as of the date hereof,  at the address
         set forth,  and the Debtor  will not change any of the same or its name
         without 30 days' prior written  notice to and consent of the Collateral
         Agent (which consent will not be unreasonably withheld);
                  (e) All Uniform  Commercial  Code filings  required to perfect
         the security  interest (to the extent  perfectable  by such filings) of
         the Collateral  Agent in the Collateral  have been made or will be made
         within one day of the date  hereof,  and  evidence  thereof has been or
         will be delivered to the Collateral Agent within seven days of the date
         received by Debtor.

6.       Events of Default.

         (a) The occurrence of any one of the following  events shall constitute
a default  ("Event of Default") by Debtor  under this  Agreement:  (a) if Debtor
fails or neglects to perform,  keep or observe any term,  provision,  condition,
covenant, warranty or representation contained in this Agreement or in the Other
Agreements,  which is required to be performed,  kept or observed by Debtor; (b)
if the Collateral  Agent or any Secured Party demands payment when due under any
note or other evidence of  indebtedness  representing  indebtedness  executed by
Debtor, a true copy of which shall have been delivered to Collateral  Agent; (c)
if Debtor  fails to pay any of  Debtor's  liabilities,  when due and  payable or
declared due and payable;  (d) if the Collateral or any other of Debtor's assets
are attached,  seized,  subjected to a writ of distress  warrant,  or are levied
upon,  or become  subject  to any lien,  or come  within the  possession  of any
receiver,  trustee,  custodian or assignee for the benefit of creditors;  (e) if
Debtor or any Guarantor of Debtor's  liabilities  becomes insolvent or generally
fails to pay, or admits in writing its  inability  to pay,  debts as they become
due,  if a petition  under  Title 11,  United  States Code or any similar law or
regulation  shall be filed by or  against  Debtor  or if  Debtor  shall  make an
assignment  for the benefit of its  creditors  or if any case or  proceeding  is
filed by or against  Debtor for its  dissolution  or liquidation or if Debtor is
enjoined,  restrained or in any way prevented by court order from conducting all
or any material part of its business  affairs;  (f) if a notice of lien, levy or
assessment  is filed of record or given to Debtor with  respect to all or any of
Debtor's assets by any federal,  state or local  department or agency;  (g) if a
contribution  failure  occurs with  respect to any pension  plan  maintained  by
Debtor or any  corporation,  trades or business  that is, along with  Debtor,  a
member of a controlled  group of corporations  or controlled  group of tracks or
businesses (as described in Section 414(b) and (c) of the Internal  Revenue Code
of 1986 or Section 4001, of the Employee Retirement Income Security Act of 1974,
as amended  ("ERISA")  sufficient to give rise to a lien under Section 302(f) of
ERISA;  (h)  if  Debtor  is in  default  in  the  payment  of  any  obligations;
indebtedness  or other  liabilities  to any third  parties  and such  default is
declared and is not cured  within the time,  if any,  specified  therefor in any
agreement  governing the same; (i) the death or incompetency  of Debtor,  or the
appointment of a conservator for all or any portion of Debtor's assets;  (j) the
reasonable  insecurity of the Collateral Agent; (k) the failure of Debtor (A) to
complete the Facility on or before  April 15,  1996,  or (B) to commence  active
operations  at the  Facility  on or before May 1,  1996,  unless  Debtor  shall,
immediately  upon demand of the Collateral  Agent,  take all steps necessary and
effective,  in the  reasonable  judgment of the Collateral  Agent,  forthwith to
remedy the  circumstances  giving rise to any such failure;  or (l) a "change of
control" of Debtor (as hereinafter defined) shall occur; or (m) Collateral Agent
shall  determine  that any litigation  now or hereafter  pending  against Debtor
would,  if  adversely  determined,  have a material  adverse  affect on debtor's
financial condition or business.
         (b) As used  herein,  the  following  terms  shall  have the  following
meanings:
                  (i)  "Change of  Control"  shall mean a change in control of a
nature that would be required to be reported by Debtor in response to either (i)
Item 5(f) of Schedule 14A of Regulation  14A  promulgated  under the  Securities
Exchange Act of 1934, as amended (the  "Exchange  Act"),  or (ii) Item 1(a) of a
Current Report on Form 8-K, each as in effect on the date hereof; provided that,
without  limitation,  a Change in Control  shall be deemed to have  occurred if,
while any of the Indebtedness is outstanding:

     (A)  there  shall  be  consummated  (i)  any   consolidation,   merger,  or
recapitalization  of MRTI or any similar  transaction  involving  MRTI, in which
MRTI is not the continuing or surviving  corporation or pursuant to which shares
of  MRTI's  common  stock  ("Common  Stock"),  would  be  converted  into  cash,
securities or other  property,  other than a merger of MRTI in which the holders
of MRTI's Common Stock  immediately prior to the merger have the same proportion
and ownership of common Stock of the surviving corporation immediately after the
merger, (ii) any sale, lease,  exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of
MRTI,  (iii) the adoption of a plan of complete  liquidation of MRTI (whether or
not in connection with the sale of all or substantially all of MRTI's assets) or
a series of partial  liquidations  of MRTI that is de jure or de facto part of a
plan of complete  liquidation of MRTI, or (iv) any other transaction after which
Common  Stock  is no  longer  to be  publicly  traded,  provided  (x)  that  the
divestiture  of  less  than  substantially  all of the  assets  of  MRTI  in one
transaction  or a series of  related  transactions,  whether  effected  by sale,
lease,  exchange,  spin-off,  sale of the  stock or merger  of a  subsidiary  or
otherwise,  or (y) a transaction solely for the purpose of reincorporating  MRTI
in another  jurisdiction,  shall not  constitute a Change in Control;  (iv) if a
majority  of the  members of the Board of  Directors  of MRTI  shall  consist of
persons who were not elected  either (A) by vote of the holders of the requisite
number of shares of common  stock of MRTI  entitled to vote for the  election of
directors  (i)  acting at a meeting  called for such  purpose or (ii)  acting by
written consent, or (B) by the then acting directors of MRTI; or (v) an Exchange
Event of the type defined in clause (i) of Section 2 hereof shall occur.

     (B) any "person" or "group", within the meaning of Sections 13(d) and 14(d)
(2) of the Exchange Act, (i) becomes the  "beneficial  owner" as defined in Rule
13d-3 under the Exchange Act of 50% or more of the combined  voting power of the
then outstanding voting securities of MRTI, otherwise than through a transaction
or  transactions  arranged by, or  consummated  with the prior  approval of, the
Board of Directors of MRTI, or (ii) acquires by proxy or otherwise,  50% or more
of the combined  voting  securities of MRTI,  granting the right to vote for the
election of directors of MRTI,  for any merger or  consolidation  of MRTI or for
any other matter or question other than through an  arrangement or  arrangements
consummated with the prior approval of the Board of Directors of MRTI.

                  (ii) an "Affiliate" of a specified  person shall mean a person
who directly, or indirectly through one or more intermediaries,  controls, or is
controlled by, or is under common control with, the person specified.  7. Rights
of the Collateral Agent and the Debtor Related to Collateral.
         Upon the occurrence  and during the  continuance of an Event of Default
after the expiration of any grace period applicable thereto hereunder:
                  (a) The Collateral Agent shall be entitled to exercise against
         any account debtor or obligor, any or all rights, power and remedies of
         an obligee under any deferred payment  obligation or account,  accounts
         receivable,   note,   document,   instrument   or  general   intangible
         constituting part of the Collateral, including, without limitation, the
         right to notify  such  account  debtor or obligor to make all  payments
         under such account, account receivable,  note, document,  instrument or
         general  intangible  directly to Collateral  Agent and to exercise such
         other rights and remedies as are provided for herein, at law, in equity
         or under the Uniform Commercial Code, or to restrain from doing so; and
         shall be entitled to  prosecute  any action,  suit or  proceeding  with
         respect to such accounts, accounts receivable,  documents,  instruments
         or general intangibles,  settle,  compromise or release, in whole or in
         part,  any  amounts  owing on any  such  account,  account  receivable,
         document, instrument or general intangible or any property securing the
         payment of same, make allowances thereon and adjustments thereto,  file
         proofs of claim with  respect  thereto and take such other steps as the
         Agent,  in its sole and absolute  discretion,  deems to be necessary in
         order to realize thereon, and
                  (b)  shall  be   entitled   to  exercise  in  respect  of  the
         Collateral,  in  addition  to all other  rights,  powers  and  remedies
         specifically  provided for herein, all rights and remedies of a secured
         party on default under the Uniform  Commercial Code and under any other
         applicable law as in effect in any relevant  jurisdiction,  all without
         liability except to account for property actually received by it,

but the Collateral Agent shall have no duty to exercise, and the Secured Parties
shall have no duty to request  the  exercise  of, any of the  aforesaid  rights,
privileges  or options and neither the  Collateral  Agent nor any Secured  Party
shall be responsible for any failure to do so or delay in so doing.

         Unless an Event of Default then exists, or unless otherwise provided by
the  provisions  of the Credit  Agreement,  the  Debtor  shall have the right to
receive all income from or  dividends  (other  than  dividends  arising out of a
complete  or  partial  liquidation  of the  payor  thereto)  on or  interest  or
principal  payment on the Collateral,  and if the Collateral  Agent receives any
such  income  or  dividends  or  interest  or  principal  payment  prior  to the
occurrence  of an Event of  Default,  the  Collateral  Agent  shall pay the same
promptly to the Debtor,  except that in the case of securities or other property
distributed  by way of a dividend or otherwise  with respect to the  Collateral,
such securities or other property shall be promptly  delivered to the Collateral
Agent  in the  manner  described  in  Section  2  hereof  to be held as  Pledged
Securities or other  Collateral  hereunder.  Upon the  occurrence and during the
continuance  of an Event of  Default,  the Debtor will not demand or receive any
income from or dividends or interest or principal payment on the Collateral, and
if the Debtor receives any such income or interest or principal  payment without
any  demand  by it,  the same  shall  be held by the  Debtor  in  trust  for the
Collateral  Agent in the same medium in which received,  shall not be commingled
with any assets of the Debtor and shall be delivered to the Collateral  Agent in
the form received,  properly endorsed to permit  collection,  not later than the
next  business day following the day of its receipt.  The  Collateral  Agent may
apply the net cash received from such income or interest or principal payment to
payment of the Obligations, provided that the Collateral Agent shall account for
and pay over to the Debtor any such income or interest  remaining  after payment
in full of the Obligations then outstanding.

8.       Collateral Agent's Appointment as Attorney-in-Fact.
         The Debtor hereby  irrevocably  constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution,  as its
true and lawful  attorney-in-fact  with full irrevocable  power and authority in
the place and stead of the  Debtor  and in the name of the  Debtor or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying  out the terms of this Pledge and Security  Agreement,  to take any and
all appropriate  action and, provided that Debtor's  obligations are not thereby
enlarged beyond those contained herein or required to protect Collateral Agent's
rights  hereunder,  to execute any and all document and instruments which may be
necessary or desirable  to  accomplish  the purposes of this Pledge and Security
Agreement. Without limiting the generality of the foregoing, Debtor hereby gives
the  Collateral  Agent the power and  right,  on behalf of the  Debtor,  without
notice to or assent by the Debtor to do the following:
                  (i) To ask, demand, collect, receive and give acquittances and
         receipts  for any and  all  monies  due and to  become  due  under  any
         Collateral  and, in the name of the Debtor or its own name, the name of
         its  nominee,  or  otherwise,  to take  possession  of and  endorse and
         collect any checks, drafts, notes, acceptances or other instruments for
         the payment of monies due under any Collateral and to file any claim or
         to take any other action or proceeding in any court of law or equity or
         otherwise deemed appropriate by the Collateral Agent for the purpose of
         collection  any and all such monies due under any  Collateral  whenever
         payable;
                  (ii) To pay or discharge taxes,  liens,  security interests or
         other  encumbrances  levied  or  placed on or  threatened  against  the
         Collateral,  to effect any repairs or any  insurance  called for by the
         terms of this Pledge and Security  Agreement and to pay all or any part
         of the premiums therefor and the costs thereof; and
                  (iii) (A) To direct any party liable for any payment under any
         of the  Collateral  to make  payment  of any and all  monies due and to
         become  due  thereunder  directly  to the  Collateral  Agent  or as the
         Collateral Agent shall direct;
                           (B) In addition to other rights  provided for herein,
         to receive  payment of and  receipt or any and all  monies,  claims and
         other  amounts  due and to  become  due at any  time in  respect  of or
         arising out of any Collateral;
                           (C) To sign and endorse any  assignments  and notices
         in  connection  with  accounts  and  other  documents  relating  to the
         Collateral;
                           (D) To commence and prosecute  any suits,  actions or
         proceedings at law or in equity in any court of competent  jurisdiction
         to collect the  Collateral or any part thereof and to enforce any other
         right in respect of any Collateral;
                            (E) To defend any suit, action or proceeding brought
         against such Debtor with respect to any Collateral;
                           (F) To settle,  compromise or adjust any suit, action
         or proceeding  described  above and, in connection  therewith,  to give
         such   discharges  or  releases  as  the  Collateral   Agent  may  deem
         appropriate;
                           (G) To assign, license or, to the extent permitted by
         an  applicable  license,   sublicense,   whether  general,  special  or
         otherwise,  and  whether  on an  exclusive  or  nonexclusive  basis any
         copyright, service mark, patent or trademark owned by the Debtor (along
         with the  goodwill of the business to which such  trademark  pertains),
         throughout the world for such term or terms, on such conditions, and in
         such manner, as the Collateral Agent shall in its reasonable discretion
         determine; and
                           (H)  Generally to sell,  transfer,  pledge,  make any
         agreement  with respect to or otherwise deal with any of the Collateral
         in such manner as is  consistent  with the Uniform  Commercial  Code or
         applicable  law and as fully and  completely  as though the  Collateral
         Agent were the  absolute  owner  thereof for all purposes and to do, at
         the Collateral Agent's option and the Debtor's expense, at any time, or
         from time to time, all acts and things which the Collateral Agent deems
         necessary to protect,  preserve or realize upon the  Collateral and the
         Collateral  Agent's security interest  therein,  in order to effect the
         intent  of  this  Pledge  and  Security  Agreement,  all as  fully  and
         effectively  as the Debtor  might do. The  Collateral  Agent  agrees to
         forbear  from  exercising  the power  granted by the Debtor  under this
         Section 6 as long as no Event of  Default  shall have  occurred  and be
         continuing.  The Debtor hereby ratifies all that said  attorney-in-fact
         shall  lawfully and without  violation of the rights of any third party
         do or cause to be done by virtue  hereof.  This power of  attorney is a
         power coupled with an interest and shall be irrevocable  until full and
         indefeasible payment and satisfaction of the Obligations.
                                    (a) The powers  conferred on the  Collateral
                  Agent  hereunder  are solely to protect its  interests  in the
                  Collateral  and shall not impose any duty upon it to  exercise
                  any such powers.  The  Collateral  Agent shall be  accountable
                  only for amounts that it actually  receives as a result of the
                  exercise  of  such  powers  and  neither  it  nor  any  of its
                  officers, directors,  employees or agents shall be responsible
                  to the Debtor for any act or failure to act,  except for their
                  own gross negligence or willful misconduct.
                                    (b)   The   Debtor   also   authorizes   the
                  Collateral  Agent,  at any time from and after the  occurrence
                  and during the  continuation  of an Event of  Default,  (i) to
                  communicate  in its own name with any  party to any  contract,
                  agreement  or  arrangement  to which the Debtor is a party and
                  which constitutes  Collateral with regard to the continuation,
                  amendment,  assignment,  notation,  discharge  or  termination
                  thereof  and  other  matters  relating  thereto  and  (ii)  to
                  execute,  in  connection  with any sale  provided  for in this
                  Pledge and Security Agreement,  any endorsements,  assignments
                  or other instruments of conveyance or transfer with respect to
                  the Collateral.
                                    (c) If the Debtor fails to perform or comply
                  with  any of its  agreements  contained  herein  and the  same
                  continues after notice of Collateral  Agent's  intention to do
                  so, and the Collateral  Agent, as provided for by the terms of
                  this  Pledge and  Security  Agreement,  may itself  perform or
                  comply,  or otherwise  cause  performance or compliance,  with
                  such agreement,  the expenses of the Collateral Agent incurred
                  in connection  with such  performance or compliance  (together
                  with  interest  thereon  from and after the date of payment of
                  such  expenses by the  Collateral  Agent at the  Default  Rate
                  (hereinafter  defined)  shall be  payable by the Debtor to the
                  Collateral  Agent on demand and shall  constitute  Obligations
                  secured hereby.

9.       Special Provisions for Pledged Securities, etc.
         The Debtor hereby acknowledges that the sale by the Collateral Agent of
any Pledged  Securities  pursuant  to the terms  hereof in  compliance  with the
Securities  Act of 1933  (as now in  effect  or as  hereafter  amended),  or any
similar  stature   hereafter   adopted  with  similar  purpose  or  effect  (the
"Securities  Act"),  as well as  applicable  blue sky or other state  securities
laws,  may require  strict  limitations as to the manner in which the Collateral
Agent or any subsequent transferee of the Pledged Securities may dispose of such
securities.  The Debtor  acknowledges that to the extent the Pledged  Securities
are sold in a private  sale,  the sales price  therefor may be less than a sales
price that might have been otherwise  obtainable.  The Debtor  acknowledges  the
reasonableness of a sale in such a manner under such circumstances.

10.      Further Assurances.
         The Debtor  agrees to take such  actions  and to execute  such stock or
bond  powers  and such  other  or  different  instruments  and  writings  as the
Collateral Agent may request (and irrevocably authorizes the Collateral Agent to
execute such  writings as the Debtor's  agent and  attorney-in-fact)  further to
perfect,  confirm and assure the  Collateral  Agent's  security  interest in the
Collateral  and  to  assist  the  Collateral  Agent's   realization  thereon  in
accordance  with the terms of this  Pledge and  Security  Agreement,  including,
without  limitation the right to receive,  endorse,  and collect all instruments
made payable to the Debtor representing any dividend,  interest payment or other
distribution in respect of the Collateral or any part thereof.

11.      Rights and Remedies of the Collateral  Agent upon Default.  If an Event
         of Default shall have occurred and be continuing:
                  (a) The  Collateral  Agent  shall have and may  exercise  with
reference  to the  Collateral  and the  Obligations,  in  addition  to all other
rights,  powers and remedies  provided for in this Agreement,  any or all of the
rights and  remedies of a secured  party under the  Uniform  Commercial  Code in
effect in the State of Indiana,  and as  otherwise  granted  herein or under any
other  applicable  law or under any other  agreement  now or hereafter in effect
executed by the Debtor,  including,  without limitation,  the right and power to
sell, at public or private sale or sales, or otherwise  dispose of, or otherwise
utilize the Collateral and any part or parts thereof in any manner authorized or
permitted under said Uniform  Commercial Code after default by a debtor,  and to
apply  the  proceeds  thereof  toward  payment  of any costs  and  expenses  and
attorney's fees and expenses thereby incurred by the Collateral Agent and toward
payment of the Obligations. Specifically and without limiting the foregoing, the
Collateral  Agent shall have the right to take  possession of all or any part of
the  Collateral  or any  security  therefor and all books,  records,  papers and
documents of the Debtor or in the Debtor's possession or control relating to the
Collateral which are not already in the Collateral Agent's  possession,  and for
such purpose may enter upon any premises upon which any of the Collateral or any
security  therefor  or any of said  books,  records,  papers and  documents  are
situated and remove the same  therefrom  without any  liability  for trespass or
damages thereby  occasioned.  The Debtor agrees that, to the extent permitted by
law, notice given in the manner provided in Paragraph ___ hereof at least thirty
(30) days before the time of the sale or  disposition  of any of the  Collateral
(or any agreement  related  thereto) shall be deemed  reasonable and shall fully
satisfy any requirement for giving of said notice, such notice being intended to
permit the Debtor an  opportunity  for it or any of its  designees to bid on and
purchase any such Collateral or to otherwise cure the Event of Default hereunder
precipitating such proposed sale or disposition.  The Collateral Agent shall not
be obligated to make any sale of Collateral  regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale.
                  (b) The Collateral Agent or its nominee or nominees shall have
the sole and  exclusive  right (but not  obligation)  to exercise all voting and
consensual  powers  pertaining  to the  Collateral  or any part  thereof and may
exercise such powers in such manner as the Collateral Agent may elect.
                  (c) All dividends, payments of interest or principal and other
distributions  of every  character  made upon or in respect of the Collateral or
any part thereof shall be deemed to be Collateral  and shall be paid directly to
and shall be held by the Collateral Agent as additional Collateral pledged under
and subject to this Pledge and Security Agreement.
                  (d) All rights to marshaling  assets of the Debtor,  including
any such right with respect to the Collateral, are hereby waived by the Debtor.
                  (e) All recitals in any  instrument of assignment or any other
instrument  executed  by  the  Collateral  Agent  incident  to  sale,  transfer,
assignment or other  disposition of the Collateral or any part thereof hereunder
shall be full proof of the  matters  stated  therein and no other proof shall be
requisite to establish full legal propriety of the sale or other action taken by
the Collateral Agent or of any fact, condition or thing incident thereto and all
prerequisites  of such sale or other  action or of any fact,  condition or thing
incident  thereto shall be presumed  conclusively  to have been  performed or to
have occurred.

         So long as no Event of Default shall have occurred and be continuing:

                  (a) The  Debtor  shall be  entitled  to  exercise  any and all
voting and other consensual rights  pertaining to the Pledged  Securities or any
part thereof for any purpose not inconsistent  with the terms of this Pledge and
Security Agreement; and
                  (b) The  Collateral  Agent shall execute and deliver (or cause
to be  executed  and  delivered)  to the  Debtor  all  such  proxies  and  other
instruments as the Debtor may reasonably request for the purpose of enabling the
Debtor to exercise  the voting and other rights which it is entitled to exercise
pursuant to this Paragraph 9.

12.Usury, etc.
         Nothing in this  Agreement or in any agreement  governing or applicable
to the  Indebtedness  between any Secured Party and the Debtor shall require the
Debtor to pay, or the  Collateral  Agent to accept,  interest in an amount which
would  exceed the maximum rate  permitted  under  applicable  law or which would
subject the Collateral  Agent to any penalty or forfeiture under applicable law.
In the event that the payment of any charges,  fees or other sums due  hereunder
or under  any such  other  agreement,  which  are  held to be in the  nature  of
interest would subject the Collateral  Agent to any penalty or forfeiture  under
applicable  law, then,  ipso facto,  the  obligations of Debtor or the Debtor to
make  such  payment  shall be  reduced  to the  highest  rate  authorized  under
applicable  law.  Should the  Collateral  Agent  receive any payment which is or
would be in excess of the highest rate authorized  under law, such payment shall
have  been,  and  shall  be  deemed  to have  been,  made in  error,  and  shall
automatically  be  applied to reduce the  outstanding  principal  balance of the
Indebtedness.

13.      Right to Assign.

         The  Collateral  Agent has the right to assign this  Agreement  and the
Collateral  Agent's  security  interest  in the  Collateral  without  consent of
Debtor.

14.      No Right to Redeem.
         Debtor shall have no right to redeem the  Collateral  after a sale, and
Debtor  absolutely  and  irrevocably  specifically  waives and releases any such
right.

15.      Repayment of Expenses.
         The Collateral Agent has the right, upon a default  hereunder,  to make
payments  on  Debtor's  behalf  or to take any  action  needed  to  protect  the
Collateral  or to  defend  any of  the  Collateral  Agent's  rights  under  this
Agreement.  If  Collateral  Agent makes any  payments or incurs any  expenses in
taking such action,  which may include  reasonable  attorney's  fees, the Debtor
shall repay the Collateral  Agent with interest at the lesser of (i) the maximum
rate of  interest  which can  lawfully be charged to Debtor and (ii) the rate of
15% per annum  (the  "Default  Rate").  Debtor  shall be  obligated  to repay to
Collateral Agent upon demand all such payments and expenses,  and the obligation
to do so shall  constitute  additional  obligations  ("Obligations")  hereunder,
repayable to Collateral  Agent from the proceeds of any sale of the  Collateral.
If the principal balance of the Indebtedness or any other Obligation is not paid
when due,  whether at maturity or by  acceleration  after a default or otherwise
the  outstanding  balance  shall bear  interest from the due date to the date of
payment at the Default Rate.

16.      Application of Proceeds by the Collateral Agent.
         In the event the  Collateral  Agent sells or otherwise  disposes of the
Collateral in the course of exercising the remedies provided herein, any amounts
held,  realized or received by the  Collateral  Agent pursuant to the provisions
hereof,  including the proceeds of the sale of any of the Collateral or any part
thereof,  shall be applied by the Collateral Agent, first, toward the payment of
any costs and expenses incurred by the Collateral Agent in enforcing this Pledge
and Security  Agreement,  in realizing on or protecting  any  Collateral  and in
enforcing or collecting the  Obligations,  including,  without  limitation,  the
reasonable attorneys' fees and expenses incurred by the Collateral Agent, all of
which costs and  expenses are secured by the  Collateral  and all of which costs
and  expenses  the  Debtor  agrees to pay;  second,  to all  accrued  and unpaid
interest  on  the   Indebtedness;   third,  to  the  unpaid   principal  of  the
Indebtedness; fourth, to any other unpaid Obligations; and, fifth, to the Debtor
or to whomsoever  may be lawfully  entitled to receive the same or as a court of
competent  jurisdiction  may direct.  Any amounts and any  Collateral  remaining
after such application and after payment to the Collateral  Agents of all of the
Obligations  in full shall be paid or delivered to the Debtor,  its successor or
assigns, or as a court of competent jurisdiction may direct.
         The Collateral Agent shall be deemed to have exercised  reasonable care
in the custody and  preservation  of the  Collateral  in its  possession  if the
Collateral  is  accorded  treatment   substantially  equal  to  that  which  the
Collateral  Agent  accords  its  own  property,  it  being  understood,  without
limitation  that the  Collateral  Agent  shall not have any  responsibility  for
taking any necessary  steps to preserve  rights against any parties with respect
to any Collateral.

17.      Absolute Interest.
                  (a) All  rights of the  Collateral  Agent  hereunder,  and all
obligations  of the  Debtor  hereunder,  shall  be  absolute  and  unconditional
irrespective of (i) any lack of validity or enforceability of any agreement with
respect to the  Indebtedness;  (ii) any  change in the time,  manner or place of
payment  of or in any  other  term of,  any  payment  required  hereby or by any
promissory  note evidencing the  Indebtedness or any part thereof,  or any other
amendment  or waiver of or any consent to any  departure  from any  agreement or
instrument;  (iii) any exchange, release or non-perfection of any Collateral, or
any release or amendment or waiver of or any consent to or departure  from,  any
guarantee for all or part of the Obligation;  (iv) any other  circumstance which
might  constitute a defense  available  to, or a discharge of, the Debtor or the
Debtor in respect of the  Indebtedness  or any part  thereof or this  Pledge and
Security Agreement.
                  (b) This Pledge and Security  Agreement shall not be construed
as  relieving  the Debtor from full  liability  on the  Obligations  and for any
deficiency thereon.
                  (c) The  Collateral  Agent is hereby  subrogated to all of the
Debtor's  interests,  rights and remedies in respect to the  Collateral  and all
security now or hereafter  existing with respect  thereto and all guaranties and
endorsement  thereof and with respect thereto,  but only to the extent necessary
to satisfy  the  Obligations  in  accordance  with the terms of this  Pledge and
Security Agreement.

18.      Additional Information.
         The Debtor  agrees to furnish  the  Collateral  Agent from time to time
with such additional  information and copies of such documents  relating to this
Pledge  and  Security  Agreement,  the  Collateral,  the  Obligations  and their
respective  financial  condition as the Collateral Agent may reasonably request,
and  upon  request,  to  certify  the  amount  of the  Indebtedness  at the time
outstanding, including both interest and principal.

19.      Notices.
         Any communication, notice or demand to be given hereunder shall be duly
given if delivered or mailed by certified or registered  mail at the  applicable
address set forth on the first page of this Pledge and  Security  Agreement,  or
such  other  address  as shall be  designated  by any party  hereto to the other
parties  hereto in a  written  notice  delivered  in  accordance  with the terms
hereof.

20.      Indemnity and Expenses.
         The Debtor  agrees to  indemnify  the  Collateral  Agent,  the  Secured
Parties and their officers, directors and employees from and against any and all
claims,  losses and liabilities growing out of or resulting from this Pledge and
Security Agreement  (including,  without limitation,  enforcement of this Pledge
and  Security  Agreement  and all claims and  demands of all persons at any time
claiming the  Collateral  or any interest  therein),  except  claims,  losses or
liabilities resulting from the Collateral Agent's or its officers',  directors',
or  employees'  or agents gross  negligence  or willful  misconduct.  The Debtor
agrees to pay on demand all  out-of-pocket  expenses  (including  the reasonable
fees and expenses of the Collateral Agent or its officers, directors, employees,
counsel,  or agents)  relating to the enforcement or protection of the rights of
the Collateral Agent or the Secured Parties  hereunder,  and further agrees that
the Collateral secures such payment.

21.      No Waiver; Cumulative Rights.
         No failure on the part of Collateral Agent to exercise, and no delay in
exercising  any  right,  remedy or power  hereunder  shall  operate  as a waiver
thereof, nor shall any single or partial exercise by the Collateral Agent of any
right,  remedy or power  hereunder  preclude any other or future exercise of any
other  right,  remedy or power.  Each and every  right,  remedy and power hereby
granted to the Collateral Agent or allowed it by law or other agreement shall be
cumulative  and  not  exclusive  of  any  other,  and  may be  exercised  by the
Collateral Agent from time to time.

22.      Governing Law.
         This Pledge and Security  Agreement and the rights and  obligations  of
the parties  hereunder  shall be governed by, and construed in accordance  with,
the  internal  laws of the State of New York  except as  otherwise  specifically
provided herein.

23.      Termination.
         This Pledge and Security  Agreement  shall terminate upon the repayment
in full of the Obligations (which term shall include,  without  limitation,  the
Indebtedness)  at which time the Collateral  Agent shall reassign and deliver to
the  Debtor  such of the  Collateral  (if any) as shall  not have  been  sold or
otherwise  applies  pursuant  to the terms  hereof and shall still be held by it
hereunder, together with appropriate instruments of reassignment and release.

24.      Execution in Counterparts.
         This  Pledge and  Security  Agreement  may be executed in any number of
counterparts,  each of which shall be an original,  but such counterparts  shall
together constitute one and the same instrument.

25.      Definitions.
         All non-capitalized  terms used herein which are defined in the Uniform
Commercial Code of the State of Indiana shall have the meanings ascribed thereto
herein.

26.      Successors and Assigns.
         This Pledge and  Security  Agreement  shall inure to the benefit of any
successors and assigns of the Secured Parties and the Collateral Agent.

27.      Rights of the Collateral Agent.
         (a) The  Collateral  Agent  shall  have no duties  or  responsibilities
except  those  expressly  set forth in this Pledge and Security  Agreement.  The
Collateral  Agent  shall  not  have by  reason  of this  Agreement  a  fiduciary
relationship  in  respect  of Debtor or and  Secured  Party and  nothing in this
Agreement,  expressed  or implied,  is intended to or shall be  construed  as to
impose upon the Collateral  Agent any  obligations in respect of this Pledge and
Security Agreement except as expressly set forth herein.
         (b) The collateral  Agent shall not be responsible to any Secured Party
for any recitals, statements, information,  representations or warranties herein
or  in  any  agreement,  document,  certificate  or  a  statement  delivered  in
connection herewith or for the execution, effectiveness,  genuineness, validity,
enforceability,  collectibility  or  sufficiency  of this  Pledge  and  Security
Agreement,  or be required to make any inquiry concerning either the performance
or observance  of any of the terms,  provisions or conditions of this Pledge and
Security  Agreement,  or the existence of any Event of Default or any condition,
event or act which,  with notice or lapse of time or both, would constitute such
and Event of Default.  The  Collateral  Agent may resign on thirty days' written
notice to each of the Secured  Parties (a copy of which notice shall be provided
to Debtor but shall not be a condition to resignation) and upon such resignation
Secured Parties holding a majority of the  outstanding  principal  amount of the
Indebtedness  (the  "Required  Secured  Parties")  will  designate  a  successor
Collateral Agent.
         (c) If the Collateral Agent shall request instructions from the Secured
Parties  with  respect  to any  act or  action  (including  failure  to  act) in
connection  with this  Agreement,  the  Collateral  Agent  shall be  entitled to
refrain  from such act or taking  such  action  unless and until the  Collateral
Agent shall have received  instructions  from the Required Secured Parties;  and
the  Collateral  Agent shall not incur  liability  to any person by reason of so
refraining.  Without  limiting the  foregoing,  no Secured  Party shall have any
right of  action  whatsoever  against  the  Collateral  Agent as a result of its
acting or refraining from acting  hereunder in accordance with the  instructions
of the Required Secured Parties.
         (d) The Collateral  Agent shall be entitled to rely, and shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters  pertaining  to this Pledge and Security  Agreement and its
duties  hereunder,  upon advice of counsel  selected by it  (including,  without
limitation, special counsel to the Collateral Agent).
         (e)  To  the  extent  the  Collateral   Agent  is  not  reimbursed  and
indemnified by the Debtor,  the Secured Parties will reimburse and indemnify the
Collateral  Agent in proportion to the outstanding  amounts of the Notes held by
them, for 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 the Collateral Agent in performing its duties  hereunder,  or in any way
relating to or arising out of this Pledge and Security Agreement;  provided that
no  Secured  Party  shall  be  liable  for  any  portion  of  such  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements resulting from the Collateral Agent's gross negligence
or willful misconduct.
         (f) With respect to the rights of the  Collateral  Agent as a holder of
Indebtedness  and of any note  issued  to Debtor by the  Collateral  Agent,  the
Collateral  Agent shall have the same rights and powers  hereunder  as any other
Secured Party and as if it were not  performing  the duties as Collateral  Agent
specified herein;  and the terms "Secured Party" or "holders of Indebtedness" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Collateral Agent in its individual capacity.

         IN WITNESS  WHEREOF,  the parties  have caused this Pledge and Security
Agreement to be duly executed as of the date first above written.



                                            METAL RECOVERY TECHNOLOGIES, INC.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            PLENBRICK, LTD., as
                                 Collateral Agent and in its individual capacity


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            METAL RECOVERY INDUSTRIES
                                            (U.S.), INC.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            ALCARIA, LTD.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            ANTHEMIS, LTD.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            JEPHERSON LTD.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            SUNDORNE HOLDINGS S.A.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            SOVEREIGN TRUST SERVICES, LTD.


                                            By:               /s/
                                                     Title:
                                                     Address:


                                            OSBOURNE LTD.


                                            By:               /s/
                                                     Title:
                                                     Address:


<PAGE>
<TABLE>
<CAPTION>


                                    EXHIBIT A
                                    ---------


                                            To be             Present           Interest         Conversion
Lender                     Loaned           Loaned            Maturity          Rate             Price
------                     ------           ------            --------          -----            -----


<S>                        <C>              <C>               <C>               <C>              <C>  
Alcaria, Ltd.                               $250,000          2/28/97           10%              $0.25


Anthemis, Ltd.                              $250,000          12/31/96          10%              $0.25


Jepherson Ltd.                              $250,000          2/28/97           10%              $0.25


Sundorne
Holdings S.A.              $650,000                           6/30/96

Sovereign Trust
Services, Ltd.             $116,523                           9/30/96

Osbourne Ltd.              $200,000                           10/31/96

Plenbrick,
Ltd.                       $550,000                           11/30/96
     
</TABLE>








           All loans have been extended so as to mature March 31, 1997