<PAGE>

         FIRST MODIFICATION TO POST-PETITION LOAN AND SECURITY AGREEMENT

    THIS FIRST MODIFICATION (the "Modification") is made effective as of the
______ day of February, 1998, by and between CONSOLIDATED STAINLESS, INC. (the
"Borrower"), RONALD J. ADAMS and HARVEY B. ADAMS (collectively, the "Guarantors"
and each, a "Guarantor"), and MELLON BANK, N.A. (the "Bank"). Borrower and
Guarantors are sometimes collectively referred to herein as the "Obligors".

                                   BACKGROUND

    A. Pursuant to a certain Post-Petition Loan and Security Agreement dated
December 12, 1997 by and between Borrower and Bank, (the "Loan Agreement"), Bank
agreed, subject to the terms and conditions stated therein, to extend to
Borrower a line of credit up to the maximum amount as defined therein (the
"Line").

    B. By that certain Surety Agreement dated December 12, 1997, Guarantors
agreed to guarantee and become sureties for certain obligations of Borrower to
Bank, including those arising under the Loan Documents.

    C. Borrower has requested that Bank consent to the modification of certain
provisions of the Loan Agreement, which Bank is willing to do upon and subject
to the terms and conditions of this Amendment.

    D. All capitalized terms not defined herein shall have the meanings set
forth therefor in the Loan Agreement.

    NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:

    1. ACKNOWLEDGE OF DEFAULTS. Borrower hereby confirms and acknowledges that
it is in default of its respective obligations under the Loan Documents as a
result, inter alia, of (a) Borrower's failure to achieve projected monthly sales
as required in Article 13.1(c) of the Loan Agreement, and (b) Borrower exceeding
the inventory sublimit and permitted overadvance as originally scheduled under
the Loan Agreement. Borrower further acknowledges and agrees that Bank has
certain rights and remedies available to it as a result of the occurrence of
such defaults, including the right to confess judgment against the Borrower and
each Guarantor. BORROWER EXPRESSLY AGREES THAT NOTHING CONTAINED HEREIN SHALL BE
DEEMED TO CONSTITUTE A WAIVER OR RELEASE OF ANY EXISTING EVENTS OF DEFAULTS OR
OF ANY RIGHTS AND REMEDIES AVAILABLE TO BANK AS A RESULT THEREOF.

    2. MODIFICATIONS.

    The Loan Agreement shall be amended, effective as of the date hereof, as
follows:

    (a) Schedule 1.57 shall be modified by substituting the following Schedule
1.57:


                                        1


<PAGE>


                        PERMITTED OUT-OF-FORMULA ADVANCES

<TABLE>
<CAPTION>

        Time Period                             Permitted Out-of-Formula Advances
        -----------                             ---------------------------------
<S>                                              <C>
From Petition Date to and including              $ 2,750,000.00 - Required Reduction
February 8, 1998

From February 9, 1998 to and including           $ 2,600,000.00 - Required Reduction
February 23, 1998

From February 24, 1998 to and including          $ 2,545,000.00 - Required Reduction
March 2, 1998

On March 3, 1998                                 $ 2,475,000.00 - Required Reduction

From March 4, 1998 to and including              $ 2,400,000.00 - Required Reduction
March 31, 1998

From April 1, 1998 to and including              $ 2,300,000.00 - Required Reduction
April 30, 1998

From May 1, 1998 to and including                $ 2,200,000.00 - Required Reduction
May 31, 1998

From June 1, 1998 and at all times thereafter    $ 2,100,000.00 - Required Reduction

</TABLE>

"Required Reduction" means (a) the sum of (i) eighty percent (80%) of the amount
by which the Borrower's ineligible receivables is less than $1,380,000.00, plus
(ii) sixty-five percent (65%) of the amount by which the Value of Borrower's
ineligible inventory is less than $1,337,000.00, less (b) $100,000.00.

    (b) Schedule 3.1(b) shall be modified by substituting the following Schedule
3.1(b):

                     SUBLIMITS ON INVENTORY AND WIP ADVANCES

A. Inventory Sublimit

<TABLE>
<CAPTION>

        Time Period                               Inventory Sublimit
        -----------                               ------------------
<S>                                                <C>
From Petition Date to and                           $12,000,000.00
including December 28, 1997

From December 29, 1997 to and                       $11,500,000.00
including January 11, 1998
</TABLE>

                                        2


<PAGE>

<TABLE>
<CAPTION>

        Time Period                               Inventory Sublimit
        -----------                               ------------------
<S>                                                <C>
From January 12, 1998 to and                        $11,000,000.00
including January 18, 1998

From January 19, 1998 to and                        $10,500,000.00
including February 1, 1998

From February 2, 1998 to and                        $10,000,000.00
including February 15, 1998

From February 16, 1998 to and                       $ 9,500,000.00
including March 2, 1998

On March 3, 1998                                    $ 9,400,000.00

From March 4, 1998 to and                           $ 8,750,000.00
including May 31, 1998

From June 1, 1998 and at all times thereafter       $ 8,000,000.00

</TABLE>

B. WIP Sublimit

<TABLE>
<CAPTION>

        Time Period                                  WIP Sublimit
        -----------                                  ------------
<S>                                                 <C>
From Petition Date to and                           $  800,000.00
including February 1, 1998

From February 2, 1998                               $  750,000.00
to and including February 23, 1998

From  February 24, 1998
to and including March 3, 1998                      $  500,000.00

From March 4, 1998 and at all times thereafter      $        0.00

</TABLE>

    3. OTHER REFERENCES. All references in the Loan Agreement and all the Loan
Documents to the term "Loan Documents" shall mean the Loan Documents as defined
therein, and this Amendment, and any and all other documents executed and
delivered by Borrower pursuant to and in connection herewith.

    4. APPLICATION OF INSURANCE PROCEEDS. Bank shall reverse application of
$83,000.00 of insurance proceeds received by Bank from a reduction of the
Permitted Overadvance to the reduction of the loan balance. Bank shall apply
$55,000.00 of insurance proceeds received by Bank to a reduction of the
Permitted Overadvance as reflected on the amendment to Schedule 1.57 as set
forth herein.


                                        3


<PAGE>


    5. FURTHER AGREEMENTS AND REPRESENTATIONS. Obligors hereby:

    (a) Ratify, confirm and acknowledge that the Loan Agreement, as amended
hereby, and the other Loan Documents continue to be valid, binding and in full
force and effect;

    (b) Covenant and agree to perform all of their respective obligations under
the Loan Agreement, as amended hereby, and the Loan Documents;

    (c) Acknowledge and agree that as of the date hereof, no Obligor has any
defense, set-off, counterclaim or challenge against the payment of any sums
constituting Bank Indebtedness or the enforcement of any of the terms of the
Loan Agreement, as amended hereby, or any of the other Loan Documents;

    (d) Ratify and confirm that all representations and warranties of the
Obligors, contained in the Loan Agreement and/or the other Loan Documents, are
true and complete on and as of the date hereof, as if made on and as of the date
hereof;

    (e) Acknowledge and agree that nothing contained herein shall be deemed to
impair, reduce or release in any manner whatsoever any of the Obligations of
Guarantors under the Surety Agreement;

    (f) Represent and warrant that the execution and delivery of this Amendment
by Obligors and all documents and agreements to be executed and delivered
pursuant to the terms hereof;

          (i) have been duly authorized by all requisite corporate action by
Borrower;

         (ii) will not conflict with or result in the breach of or constitute a
default (upon the passage of time, delivery of notice or both) under Borrower's
Certificate of Incorporation or By-Laws or any applicable statute, law, rule,
regulation or ordinance or any indenture, mortgage, loan or other document or
agreement to which any Obligor is a party or by which any of them is bound or
affected; and

        (iii) will not result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the property or assets of
any Obligor, except liens in favor of the Bank or as permitted hereunder or
under the Loan Documents;

    (g) Represent and warrant that all of the information described in the
foregoing Background is accurate; and

    (h) Acknowledge and agree that Obligors' failure to comply with or perform
any of their respective covenants, agreements or obligations contained in this
Amendment or any other documents executed and delivered by any of them in
connection herewith will, subject to applicable notice, grace and cure periods,
constitute an Event of Default under the Loan Agreement and each of the Loan
Documents.

    6. NO NOVATION. Nothing contained herein and no actions taken pursuant to
the terms hereof are intended to constitute a novation of the Loan Agreement or
any of the Loan Documents


                                        4


<PAGE>


and shall not constitute a release, termination or waiver of any of the liens,
security interests, rights or remedies granted to Bank in the Loan Documents.

    7. NO FURTHER AMENDMENTS. Nothing contained herein constitutes an agreement
or obligation by Bank to grant any further amendments to any of the Loan
Documents.

    8. INCONSISTENCIES. To the extent of any inconsistency between the terms and
conditions of this Amendment and the terms and conditions of the Loan Agreement
or the Loan Documents, the terms and conditions of this Amendment shall prevail.
All terms and conditions of the Loan Agreement and the Loan Documents not
inconsistent herewith shall remain in full force and effect, and are hereby
ratified and confirmed by Borrower.

    9. CONSTRUCTION. All references to the Loan Agreement therein or in any of
the other Loan Documents shall be deemed to be a reference to the Loan
Agreement, as amended hereby.

    10. BINDING EFFECT. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

    11. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

    12. HEADINGS. The headings of the sections of this Amendment are inserted
for convenience only and shall not be deemed to constitute a part of this
Amendment.

    13. COUNTERPARTS. This amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Amendment by signing any such
counterpart.


    IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
effective as of the day and year first above written.

                          CONSOLIDATED STAINLESS, INC.

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


                          ----------------------------------------(SEAL)
                          RONALD J. ADAMS


                          ----------------------------------------(SEAL)
                          HARVEY B. ADAMS


                     [SIGNATURES CONTINUED ON THE NEXT PAGE]


                                       5

<PAGE>


                  [SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]

                          MELLON BANK, N.A.


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


                                        6