Exhibit 10.12
                                 Execution Copy

                           LOAN AND SECURITY AGREEMENT

                                  by and among

                   CONGRESS FINANCIAL CORPORATION (SOUTHWEST)

                                    as Lender

                                       and

                           TITANIUM METALS CORPORATION
                       TITANIUM HEARTH TECHNOLOGIES, INC.

                                  as Borrowers

                            Dated: February 25, 2000


<PAGE>



30228-10

                                      (iv)

3-20-00 10:40 AM

<TABLE>

<CAPTION>

                                                  TABLE OF CONTENTS

                                                                                                               Page

<S>     <C>                                                                                                      <C>

SECTION 1.   DEFINITIONS..........................................................................................1

SECTION 2.   CREDIT FACILITIES...................................................................................28
         2.1      Loans..........................................................................................28
         2.2      Letter of Credit Accommodations................................................................29
         2.3      Joint and Several Liability....................................................................32

SECTION 3.   INTEREST AND FEES...................................................................................33
         3.1      Interest.......................................................................................33
         3.2      Closing Fee....................................................................................35
         3.3      Syndication Fee................................................................................35
         3.4      Servicing Fee..................................................................................35
         3.5      Unused Line Fee................................................................................35
         3.6      Changes in Laws and Increased Costs of Loans...................................................36

SECTION 4.   CONDITIONS PRECEDENT................................................................................37

         4.1      Conditions Precedent to Initial Loans and Letter of Credit

                  Accommodations.................................................................................37
         4.2      Conditions Precedent to All Loans and Letter of Credit
                  Accommodations.................................................................................39

SECTION 5.   GRANT OF SECURITY INTEREST..........................................................................40

SECTION 6.   COLLECTION AND ADMINISTRATION.......................................................................42
         6.1      Borrowers' Loan Accounts.......................................................................42
         6.2      Statements.....................................................................................42
         6.3      Collection of Accounts.........................................................................43
         6.4      Payments.......................................................................................44
         6.5      Taxes..........................................................................................45
         6.6      Authorization to Make Loans....................................................................46
         6.7      Use of Proceeds................................................................................46
         6.8      Regulation U...................................................................................47

         6.9      Appointment of Agent for Requesting Loans and Receipts of

                  Loans and Statements...........................................................................48


<PAGE>


SECTION  7.   COLLATERAL REPORTING AND COVENANTS.................................................................48
         7.1      Collateral Reporting...........................................................................48
         7.2      Accounts Covenants.............................................................................49
         7.3      Inventory Covenants............................................................................51
         7.4      Equipment and Real Property Covenants..........................................................52
         7.5      Power of Attorney..............................................................................53
         7.6      Right to Cure..................................................................................53
         7.7      Access to Premises.............................................................................54

SECTION 8.   REPRESENTATIONS AND WARRANTIES......................................................................54
         8.1      Corporate Existence, Power and Authority; Subsidiaries.........................................54
         8.2      Financial Statements; No Material Adverse Change...............................................55
         8.3      Chief Executive Office; Collateral Locations...................................................55
         8.4      Priority of Liens; Title to Properties.........................................................55
         8.5      Tax Returns....................................................................................56
         8.6      Litigation.....................................................................................56
         8.7      Compliance with Other Agreements and Applicable Laws...........................................56
         8.8      Environmental Compliance.......................................................................56
         8.9      Employee Benefits..............................................................................57
         8.10     Bank Accounts..................................................................................58
         8.11     Intellectual Property..........................................................................58
         8.12     Capitalization.................................................................................58
         8.13     Labor Disputes.................................................................................59
         8.14     Corporate Name; Prior Transactions.............................................................59
         8.15     Restrictions on Restricted Subsidiaries........................................................59
         8.16     Material Contracts.............................................................................60
         8.17     Treco Property; BMI Property...................................................................60
         8.18     Interrelated Businesses........................................................................60
         8.19     Accuracy and Completeness of Information.......................................................61
         8.20     Survival of Warranties; Cumulative.............................................................61

SECTION 9.   AFFIRMATIVE AND NEGATIVE COVENANTS..................................................................61
         9.1      Maintenance of Existence.......................................................................61
         9.2      New Collateral Locations.......................................................................62
         9.3      Compliance with Laws, Regulations, Etc.........................................................62
         9.4      Payment of Taxes and Claims....................................................................63
         9.5      Insurance......................................................................................63
         9.6      Financial Statements and Other Information.....................................................64
         9.7      Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................66
         9.8      Encumbrances...................................................................................72
         9.9      Indebtedness...................................................................................73
         9.10     Loans and Investments, Etc.....................................................................79
         9.11     Dividends and Redemptions......................................................................84
         9.12     Transactions with Affiliates...................................................................85
         9.13     Additional Bank Accounts.......................................................................86
         9.14     Compliance with ERISA..........................................................................86
         9.15     End of Fiscal Years; Fiscal Quarters...........................................................86
         9.16     Change in Business.............................................................................87
         9.17     Limitation of Restrictions Affecting Restricted Subsidiaries...................................87
         9.18     Adjusted Net Worth.............................................................................88
         9.19     After Acquired Real Property...................................................................88
         9.20     Costs and Expenses.............................................................................88
         9.21     Further Assurances.............................................................................89

SECTION 10.   EVENTS OF DEFAULT AND REMEDIES.....................................................................89
         10.1     Events of Default..............................................................................89
         10.2     Remedies.......................................................................................91

SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS...................................AND CONSENTS; GOVERNING LAW
         93
         11.1     Governing Law; Choice of Forum; Service of Process;

                  Jury Trial Waiver..............................................................................93
         11.2     Waiver of Notices..............................................................................94
         11.3     Amendments and Waivers.........................................................................94
         11.4     Waiver of Counterclaims........................................................................94
         11.5     Indemnification................................................................................95

SECTION 12.   TERM OF AGREEMENT; MISCELLANEOUS...................................................................95
         12.1     Term...........................................................................................95
         12.2     Interpretative Provisions......................................................................98
         12.3     Notices........................................................................................99
         12.4     Partial Invalidity.............................................................................99
         12.5     Successors.....................................................................................99
         12.6     Confidentiality...............................................................................100
         12.7     Participant=s Security Interest...............................................................100
         12.8     Partial Releases of Collateral by Lender for Permitted Sales or

                  Other Disposition.............................................................................101
         12.9     Entire Agreement..............................................................................101
         12.10    Nonapplicability of Chapter 346; Selection of Optional Interest
                  Rate Ceilings.................................................................................101
         12.11    DTPA Waiver...................................................................................102
         12.12    Oral Agreements Ineffective...................................................................102

</TABLE>


<PAGE>






<TABLE>

<CAPTION>

                                                      INDEX TO

                                               EXHIBITS AND SCHEDULES

               <S>                         <C>

                  Exhibit A                 Information Certificate

                  Exhibit B                 Compliance Certificate

                  Exhibit C                 Initial Availability Status Report

                  Exhibit D                 Form of Subordination Agreement

                  Schedule 1.7              BMI Property

                  Schedule 1.40             Existing Letters of Credit

                  Schedule 1.99             Treco Property

                  Schedule 8.4              Existing Liens

                  Schedule 8.8              Environmental Matters

                  Schedule 8.9              ERISA Matters

                  Schedule 8.10             Bank Accounts

                  Schedule 8.11             Intellectual Property

                  Schedule 8.13             Labor Matters

                  Schedule 8.16             Material Contracts

                  Schedule 9.5              Insurance Coverages

                  Schedule 9.9              Existing Indebtedness

                  Schedule 9.10             Existing Loans, Advances and Guarantees

                  Schedule 9.12             Existing Intercompany Agreements

</TABLE>


<PAGE>



                           LOAN AND SECURITY AGREEMENT

         This Loan and  Security  Agreement  dated  February 25, 2000 is entered
into  by  and  among  Congress  Financial  Corporation   (Southwest),   a  Texas
corporation  ("Lender"),  Titanium Metals  Corporation,  a Delaware  corporation
("Timet") and Titanium Hearth Technologies, Inc., a Delaware corporation ("THT",
and  together  with Timet,  each  individually  a "Borrower"  and  collectively,
"Borrowers").

                              W I T N E S S E T H:
         WHEREAS,  Borrowers  have  requested  that Lender enter into  financing
arrangements with Borrowers  pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and

         WHEREAS,  Lender  is  willing  to make  such  loans  and  provide  such
financial accommodations on the terms and conditions set forth herein;

         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 is hereby  acknowledged,  the parties  hereto
agree as follows:

SECTION 1.   DEFINITIONSSECTION 1.   DEFINITIONS

         For  purposes of this  Agreement,  the  following  terms shall have the
respective meanings given to them below:

         1.1 "Accounts" shall mean, as to each Borrower,  all present and future
rights of such  Borrower  to payment  for goods  sold or leased or for  services
rendered,  whether or not evidenced by instruments or chattel paper, and whether
or not earned by performance.

         1.2  "Adjusted  Eurodollar  Rate"  shall  mean,  with  respect  to each
Interest  Period  for any  Eurodollar  Rate  Loan,  the rate per annum  (rounded
upwards,  if necessary,  to the next  one-sixteenth  (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof,  "Reserve Percentage" shall mean the reserve percentage,  expressed as a
decimal,  prescribed  by any United  States or  foreign  banking  authority  for
determining the reserve  requirement which is or would be applicable to deposits
of United  States  dollars in a non-United  States or an  international  banking
office of Reference  Bank used to fund a Eurodollar  Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such  deposit,  whether or not the Reference
Bank  actually  holds or has  made any such  deposits  or  loans.  The  Adjusted
Eurodollar  Rate shall be adjusted on and as of the  effective day of any change
in the Reserve Percentage.


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3-20-00 10:40 AM

         1.3 "Adjusted  Net Worth" shall mean as to any Person,  at any time, in
accordance with GAAP (except as otherwise  specifically  set forth below),  on a
consolidated  basis for such Person and its  Subsidiaries  (if any),  the amount
equal to (a) the  difference  between:  (i) the  aggregate net book value of all
assets  of such  Person  and its  Subsidiaries,  calculating  the book  value of
inventory for this purpose on a first-in-first-out  or average cost basis, after
deducting from such book values all appropriate reserves in accordance with GAAP
(including all reserves for doubtful  receivables and obsolescence) and (ii) the
aggregate amount of the  Indebtedness  and other  liabilities of such Person and
its Subsidiaries (including tax and other proper accruals), minus (b) the amount
of the BUCS.  For purposes of Section 9.18 hereof,  the  calculation of Adjusted
Net Worth for any period  (commencing after the date hereof) shall exclude:  (i)
all  extraordinary  non-cash charges and one-time  non-cash charges of Timet and
its  Subsidiaries  in each case arising after the date hereof for the applicable
period,  (ii) the amount equal to: (A) the sum of: (1) the depreciation  expense
of Timet and its Subsidiaries after the date hereof for such period plus (2) the
amortization of goodwill of Timet and its Subsidiaries after the date hereof for
such period minus (B) Capital  Expenditures  paid by Timet and its  Subsidiaries
after the date hereof during such period,  and (iii) non-cash  dividends accrued
but  unpaid in  respect of the BUCS  after the date  hereof  which have  reduced
Consolidated Net Income of Timet and its Subsidiaries for the applicable period.

         1.4  "Affiliate"  shall mean, with respect to a specified  Person,  any
other Person (a) which directly or indirectly through one or more intermediaries
controls,  or is controlled by, or is under common control with,  such specified
person;  (b) which  beneficially  owns or holds ten (10%) percent or more of any
class of the Voting Stock or other equity interest of such specified  person; or
(c) of which ten  (10%)  percent  or more of the  Voting  Stock or other  equity
interest is beneficially  owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings,  the terms "controlling",  "controlled by" and "under
common control with") when used with respect to any specified  person shall mean
the  possession,  directly  or  indirectly,  of the power to direct or cause the
direction of the  management  and policies of such Person,  whether  through the
ownership of Voting Stock, by agreement or otherwise.

         1.5  "Applicable  Margin"  shall mean,  at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar  Rate Loans,  the
applicable  percentage  (on a per annum  basis)  set forth  below if either  the
Quarterly  Average Excess  Availability  for the  immediately  preceding  fiscal
quarter is in the  amount  indicated  for such  percentage  or the Fixed  Charge
Coverage Ratio as of the last day of the  immediately  preceding  fiscal quarter
(which  ratio  for  this  purpose  shall  be  calculated  based  on the four (4)
immediately  preceding  fiscal  quarters)  is at the  level  indicated  for such
percentage:


<PAGE>



<TABLE>

<CAPTION>

                                         FIXED CHARGE           APPLICABLE PRIME        Applicable Euro-

       EXCESS AVAILABILITY            COVERAGE RATIO            RATE MARGIN             DOLLAR RATE MARGIN

<S>         <C>                        <C>             <C>               <C>                       <C>

      (a)   $75,000,000 or             1.75 or more to 1                 1/2%                      2%
              more

      (b)   $25,000,000 to             1.25 to 1.75 to 1                 3/4%                  2 1/4%
              $75,000,000

      (c)   Less than                  Less than 1.25 to 1                 1%                  2 1/2%
              $25,000,000
</TABLE>

PROVIDED,  THAT, (i) the Applicable  Margin shall be calculated and  established
once each fiscal  quarter  (commencing  with the fiscal  quarter ending June 30,
2000) and (ii) the  Applicable  Margin shall be the lower  percentage  set forth
above based on the Quarterly  Average  Excess  Availability  or the Fixed Charge
Coverage Ratio.

         1.6   "Blocked Accounts" shall have the meaning set forth in Section
               6.3 hereof.

         1.7 "BMI  Property"  shall  mean the three  contiguous  parcels of Real
Property owned by Timet adjacent to and to the east of Pabco Road,  northeast of
Borrower=s  main plant  described on Schedule 1.7 hereto  located in  Henderson,
Nevada  (sometimes  referred to as the "Pabco/Warm  Springs") and subject to the
Agreement for  Reconveyance of Pabco/Warm  Springs,  dated June 30, 1999, by and
among Timet, Basic Environmental  Company LLC and Basic Remediation Company LLC,
as in effect on the date hereof.

         1.8  ABorrowers@  shall mean,  collectively,  the following  (and their
respective successors and assigns): (a) Titanium Metals Corporation,  a Delaware
corporation, and (b) Titanium Hearth Technologies, Inc., a Delaware corporation;
sometimes being referred to herein individually as a "Borrower".

         1.9  "Borrowing  Base" shall mean, at any time,  as to  Borrowers,  the
amount equal to:

               (a)   eighty-five (85%) percent of the Net Amount of Eligible
                     Accounts of Borrowers; plus

               (b)   the lesser of: (i)  fifty-five  (55%) percent of the Value
                     of Eligible Inventory of Borrowers OR (II) THE INVENTORY
                     LOAN LIMIT; PLUS

               (C)  THE EQUIPMENT AVAILABILITY OF BORROWERS (AS THEN IN EFFECT),
                    LESS

               (d)   any Reserves.


<PAGE>


For purposes  only of applying the  Inventory  Loan Limit,  Lender may treat the
then undrawn  amounts of  outstanding  Letter of Credit  Accommodations  for the
purpose of  purchasing  Eligible  Inventory as Loans to the extent  Lender is in
effect basing the issuance of the Letter of Credit  Accommodations  on the Value
of  the  Eligible   Inventory   being  purchased  with  such  Letter  of  Credit
Accommodations.  In  determining  the actual  amounts  of such  Letter of Credit
Accommodations  to be so treated for purposes of the sublimit,  the  outstanding
Loans and Reserves  shall be attributed  first to any  components of the lending
formulas  set forth above that are not subject to such  sublimit,  before  being
attributed to the components of the lending  formulas  subject to such sublimit.
As of the date hereof,  the Borrowing  Base has been  calculated as set forth on
Exhibit C hereto.  Nothing  contained  in Exhibit C hereto shall be construed to
limit or otherwise  affect any of the rights of Lender hereunder with respect to
the  establishment  of Reserves,  the criteria for Eligible  Accounts,  Eligible
Inventory,  Eligible Equipment or otherwise in accordance with the terms hereof.
The amounts set forth on Exhibit C are subject to adjustment in accordance  with
the terms hereof.

         1.10  ABUCS@  shall  mean,  collectively,   the  convertible  preferred
securities designated the 6 5/8% Convertible  Preferred  Securities,  Beneficial
Unsecured  Convertible  Securities issued by the Trust, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

         1.11 "BUCS Guarantee" shall mean the Convertible  Preferred  Securities
Guarantee  Agreement,  dated as of November 20,  1996,  by Timet in favor of the
holders of the BUCS with respect to any distribution or redemptions  required to
be made  pursuant  to the  BUCS,  as the same now  exists  or may  hereafter  be
amended, modified, supplemented, extended, renewed, restated or replaced.

         1.12 "Business  Day" shall mean any day other than a Saturday,  Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the  State of New  York,  the  State of Texas or the  State of North
Carolina,  and a day on which the  Reference  Bank and  Lender  are open for the
transaction of business,  except that if a determination of a Business Day shall
relate to any  Eurodollar  Rate Loans,  the term Business Day shall also exclude
any day on which banks are closed for dealings in dollar  deposits in the London
interbank market or other applicable Eurodollar Rate market.

         1.13 "Capital  Leases" shall mean, as applied to any Person,  any lease
of (or any  agreement  conveying the right to use) any property  (whether  real,
personal or mixed) by such Person as lessee which in  accordance  with GAAP,  is
required to be reflected as a liability on the balance sheet of such Person.

         1.14 "Capital  Stock" shall mean,  with respect to any Person,  any and
all shares, interests,  participations or other equivalents (however designated)
of such Person's capital stock,  partnership interests,  membership interests or
equivalent interests at any time outstanding,  and any and all rights,  warrants
or options  exchangeable  for or  convertible  into such capital  stock or other
interests  (but  excluding  any  debt  security  that  is  exchangeable  for  or
convertible into such capital stock).


<PAGE>


         1.15 "Cash  Equivalents"  shall mean, at any time,  (a) any evidence of
indebtedness  with a  maturity  date of one  hundred  eighty  (180) days or less
issued or  directly  and fully  guaranteed  or insured  by the United  States OF
AMERICA OR ANY AGENCY OR INSTRUMENTALITY THEREOF; PROVIDED, THAT, the full faith
and credit of the United  States of America is pledged in support  thereof;  (b)
certificates of deposit or bankers'  acceptances  with a maturity of one hundred
eighty (180) days or less of any financial  institution  that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than  $200,000,000;  (c) commercial paper  (including  variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except any Subsidiary or Affiliate of a Borrower) organized under
the laws of any  State of the  United  States  of  America  or the  District  of
Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division
of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's Investors Service,
Inc.; (d) repurchase and reverse repurchase  obligations with a term of not more
than thirty (30) days for underlying securities of the types described in clause
(a) above entered into with any financial  institution  having combined  capital
and surplus and undivided profits of not less than $200,000,000;  (e) repurchase
agreements  and reverse  repurchase  agreements  relating to  marketable  direct
obligations issued or unconditionally guaranteed by the United States of America
or issued by any  governmental  agency  thereof and backed by the full faith and
credit to the United States of America, in each case maturing within one hundred
eighty  (180) days or LESS FROM THE DATE OF  ACQUISITION;  PROVIDED,  THAT,  the
terms of such  agreements  comply with the  guidelines  set forth in the Federal
Financial  Agreements of Depository  Institutions  with  Securities  Dealers and
Others,  as adopted by the  Comptroller of the Currency on October 31, 1985; (f)
investments  in money market  funds and mutual funds which invest  substantially
all of their assets in securities of the types  described in clauses (a) through
(e) above; and (g) funds maintained by such Person in demand deposit accounts at
any national or state bank or trust company.


<PAGE>


         1.16  "Change  of  Control"   shall  mean  (a)  the  transfer  (in  one
transaction  or a series of  transactions)  of all or  substantially  all of the
assets of a  Borrower  to any  Person or group (as such term is used in  Section
13(d)(3) of the Exchange Act,  other than the transfer by THT to Timet of all or
substantially all of the assets of THT,  including any such transfer pursuant to
a  merger  or  consolidation  permitted  hereunder);   (b)  the  liquidation  or
dissolution of a Borrower or the adoption of a plan by the  stockholders of such
Borrower  relating to the dissolution or liquidation of such Borrower other than
(i) the adoption of a plan by Timet as the sole  stockholder  of THT relating to
the liquidation or dissolution of THT and transfer of its assets and liabilities
to  Timet to the  extent  permitted  hereunder,  and  (ii)  the  liquidation  or
dissolution  of THT and transfer of its assets and  liabilities  to Timet to the
extent permitted hereunder;  (c) the acquisition by any Person or group (as such
term is used in Section  13(d)(3) of the Exchange  Act),  except for one or more
Permitted Holders, of beneficial  ownership,  directly or indirectly,  of thirty
(30%) percent or more of the voting power of the total outstanding  Voting Stock
of Timet  and such  Person  or group  shall  beneficially  own more of the total
voting power of the total outstanding Voting Stock of Timet than is beneficially
owned directly or indirectly, in the aggregate, by Permitted Holders; (d) during
any period of two (2)  consecutive  years,  individuals  who at the beginning of
such period  constituted  the Board of Directors of Timet (together with any new
directors who have been appointed by any Permitted  Holder,  or whose nomination
for election by the stockholders of Timet, as the case may be, was approved by a
vote of at least  sixty-six  and  two-thirds  (66 2/3%) percent of the directors
then still in office who were either  directors at the  beginning of such period
or whose election or nomination  for election was previously so approved)  cease
for any reason to  constitute a majority of the Board of Directors of Timet then
still in office;  or (e) the failure of Timet to own one hundred  (100%) percent
of the voting power of the total outstanding  Voting Stock of THT (other than as
the  result of the  merger or  consolidation  of THT with and into  Timet to the
extent permitted hereunder or as the result of the liquidation or dissolution of
THT to the extent permitted hereunder).

        1.17 "Code" shall mean the Internal Revenue Code of 1986, together with
all rules,  regulations and  interpretations  thereunder or related thereto,  as
amended from time to time.

        1.18  "Collateral" shall have the meaning set forth in Section 5 hereof.

        1.19 "Collateral  Access Agreement" shall mean an agreement in writing,
in form and substance  satisfactory to Lender,  from any lessor of premises to a
Borrower,  or any other  person  to whom any  Collateral  (including  Inventory,
Equipment,  bills of lading or other documents of title) is consigned or who has
custody,  control or possession  of any  Collateral or is otherwise the owner or
operator  of any  premises  on which any of such  Collateral  is  located,  duly
authorized, executed and delivered by such lessor, consignee or other person.


<PAGE>


         1.20  "Consolidated  Net Income"shall  mean, with respect to any Person
for any period,  the  aggregate of the net income  (loss) of such Person and its
Subsidiaries,  on a consolidated basis, for such period (excluding to the extent
included therein any  extraordinary or non-recurring  gains) after deducting all
charges  which should be deducted  before  arriving at the net income (loss) for
such period and,  without  duplication,  after deducting the PROVISION FOR TAXES
FOR SUCH PERIOD, ALL AS DETERMINED IN ACCORDANCE WITH GAAP; PROVIDED,  THAT, (a)
the net income of any Person that is not a  consolidated  Subsidiary  or that is
accounted for by the equity  method of accounting  shall be included only to the
extent of the  amount of  dividends  or  distributions  paid or  payable to such
Person or a  consolidated  Subsidiary  of such Person;  (b) except to the extent
included pursuant to the foregoing clause,  the net income of any Person accrued
prior to the date it  becomes a  consolidated  Subsidiary  of such  Person or is
merged  into  or  consolidated  with  such  Person  or any  of its  consolidated
Subsidiaries  or that  Person's  assets are  acquired  by such  Person or by its
consolidated Subsidiaries shall be excluded; (c) the net income (if positive) of
any  consolidated  Subsidiary to the extent that the  declaration  or payment of
dividends  or similar  distributions  by such  consolidated  Subsidiary  to such
Person or to any other consolidated Subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment,  decree, order, statute, rule or governmental regulation applicable to
such consolidated Subsidiary shall be excluded; and (d) the effect of any change
in accounting  principles  adopted by such person or its Subsidiaries  after the
date hereof shall be  excluded.  For the  purposes of this  definition,  (i) net
income excludes any gain together with any related  Provision for Taxes for such
gain realized upon the sale or other disposition of any assets that are not sold
in the ordinary course of business (including, without limitation,  dispositions
pursuant to sale and  leaseback  transactions)  or of any Capital  Stock of such
Person or a Subsidiary of such Person,  and (ii) the term  "Provision for Taxes"
shall mean an amount  equal to all taxes  imposed on or  measured by net income,
whether  Federal,  State,  Provincial,  county or local,  and whether foreign or
domestic,  that are paid or  payable  by any  Person in respect of any period in
accordance with GAAP.

         1.21 "Customary Permitted Liens" shall mean as to any Person:

               (a) liens for  taxes not yet due and  payable  or which are being
contested in good faith by appropriate proceedings diligently pursued,  provided
that  provision  for the payment of all such taxes has been made on the books of
such Person to the extent required by GAAP;

               (b)   mechanics',    processor's,    materialmen's,    carriers',
warehousemen's,  repairmen's,  landlord's  and similar  liens  (other than liens
securing  the payment of taxes)  arising by  operation of law and arising in the
ordinary course of business and securing obligations of such Person that are not
overdue  or are  being  contested  in  good  faith  by  appropriate  proceedings
diligently  pursued in each case prior to the  commencement  of  foreclosure  or
similar  proceedings  (or if such  foreclosure  or  other  proceeding  has  been
commenced,  then so long as any  foreclosure or similar  actions are effectively
stayed), provided that in each case provision for the payment of the obligations
secured  by such  liens has been made on the books of such  Person to the extent
required by GAAP;

               (c)  pledges  and  deposits  of cash in the  ordinary  course  of
business of such Person  consistent with the current practices of such Person as
of  the  date  hereof   arising  in  connection   with  worker's   compensation,
unemployment, insurance, old age pensions and social security benefits, provided
that  provisions  for the payment of the  obligations  secured by such liens has
been made on the books of such Person to the extent required by GAAP;

               (d) (i) pledges and deposits of cash made in the ordinary  course
of  business  to  secure  the  performance  of  bids,   tenders,   statutory  or
obligations,  fee and  expense  arrangements  with  trustees  and fiscal  agents
(exclusive of obligations  incurred in connection with the borrowing of money or
the payment of the deferred  purchase price of property  which,  in either case,
constitutes  Indebtedness) in each case consistent with the current practices of
such  Person and (ii)  pledges  and  deposits  of cash by such  Person  securing
surety,  INDEMNITY,  PERFORMANCE,  APPEAL AND RELEASE BONDS, PROVIDED,  THAT (A)
full  provision  for the  payment of all such  obligations  has been made on the
books of such Person to the extent  required by GAAP and (B) in connection  with
any bonds  issued by a surety or other  person  pursuant to which such surety or
other person may, in the good faith  determination of Lender, have any basis for
any claim or right to any Collateral in the event such surety or other person is
required to fulfill its obligations  pursuant to such bonds (whether pursuant to
equitable  rights of  subrogation,  contract or otherwise) or otherwise may have
any claim or right to any  Collateral,  then the  issuer of such bond shall have
waived  in  writing  any  rights  in or to,  or other  interest  in,  any of the
Collateral, in form and substance satisfactory to Lender;

               (e)   Permitted Real Property Encumbrances;


<PAGE>


               (f) attachment,  judgment, levy, distraint or other similar liens
that do not constitute an EVENT OF DEFAULT  ARISING IN CONNECTION  WITH COURT OR
ARBITRATION  PROCEEDINGS  PROVIDED,  THAT, (i) such liens are being contested in
good faith and by  appropriate  proceedings  diligently  pursued,  (ii) adequate
reserves or other  appropriate  provision,  if any, as are required by GAAP have
been  made  therefor,  (iii)  a stay  of  enforcement  of any  such  attachment,
judgment,  levy,  distraint or other similar lien is in effect or in the case of
any of the foregoing,  a stay is obtained  within five (5) Business Days so long
as in the case of any  properties  or assets of any Borrower or Obligor,  at all
times  during  such five (5)  Business  Day  period,  such  Borrower  or Obligor
continues to have possession and control of all assets or properties which might
be subject to any of the foregoing and no notice of such  attachment,  judgment,
levy,  distraint or other similar lien has been  delivered to any third party in
possession  or control of any assets or  properties  of any Borrower or Obligor,
and no action has been taken by any  Governmental  Authority in connection  with
such  attachment,  judgment,  levy,  distraint  or  other  similar  lien to take
possession,  or deprive any Borrower or Obligor of possession or control, of any
assets or property, and (iv) such attachment, judgment, levy, distraint or other
similar lien does not apply to the Blocked Accounts;

               (g)  customary  rights of set off,  revocation  or  refund  under
deposit  agreements  or under the UCC of banks or other  financial  institutions
where a Borrower maintains deposits in the ordinary course of business permitted
by this  Agreement  and similar  rights of sellers  under  Article 2 of the UCC,
except to the extent such banks or other financial  institutions may have agreed
to waive  or  limit  any of such  rights  either  pursuant  to  arrangements  in
connection with the Blocked Accounts or otherwise.

         1.22 "EBITDA" shall mean, as to any Person, with respect to any period,
an amount  equal to:  (a) the  Consolidated  Net  Income of such  Person and its
Subsidiaries  for such  period  determined  in  accordance  with GAAP,  PLUS (b)
depreciation,  amortization  and  other  non-cash  charges  (including,  but not
limited to, amortization of discount and amortization of deferred financing fees
and closing costs,  imputed interest and deferred  compensation) for such period
(to the extent deducted in the  computation of  Consolidated  Net Income of such
PERSON),  ALL IN ACCORDANCE WITH GAAP, PLUS (c) Interest Expense for such period
(to the extent deducted in the  COMPUTATION OF  CONSOLIDATED  NET INCOME OF SUCH
PERSON),  PLUS (d)  dividends  in  respect  of the BUCS for such  period (to the
extent deducted in the  computation of  Consolidated  Net Income of such Person)
plus (e) charges for  Federal,  State,  local and foreign  income taxes for such
period (to the extent deducted in the computation of Consolidated  Net Income of
such Person).

         1.23  "Eligible  Accounts"  shall mean  Accounts  created by a Borrower
which are and  continue to be  acceptable  to Lender  based on the  criteria set
forth below. In general, Accounts shall be Eligible Accounts if:


<PAGE>


               (A) SUCH  ACCOUNTS  ARISE  FROM THE ACTUAL AND BONA FIDE sale and
delivery  of goods by such  Borrower  (except  as to bill and hold  goods to the
extent  provided for in clause (f) of this  definition) or rendition of services
by such Borrower in the ordinary course of its business which  transactions  are
completed in accordance with the terms and provisions contained in any documents
related thereto to the extent required in order for the account debtors or other
persons  obligated  on or in  respect  of such  Accounts  to be  absolutely  and
unconditionally   obligated   to  make   payment   thereon  in  the  good  faith
determination  of Lender and as is  otherwise  required  so as not to  otherwise
adversely  affect  the  validity,   enforceability   or  collectability  of  the
obligations of such account  debtor or other persons  obligated on or in respect
of such Accounts;

               (b) such  Accounts are not unpaid more than sixty (60) days after
the original due date  thereof,  but in any event one hundred  twenty (120) days
after the date of the original invoice for them;

               (c)  such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;

               (d) such  Accounts  do not arise  from sale and  return,  sale on
approval,  or other  terms  under  which  payment by the  account  debtor may be
conditional  or  contingent  (other than  pursuant to the quality  review in the
ordinary  course of business by such account debtor of the products sold by such
Borrower to it giving rise to such Accounts);

               (e) the chief executive office of the account debtor with respect
to such  Accounts  is  located in the United  States of  America,  or subject to
clause  (i) of this  definition,  the United  Kingdom,  Japan,  Canada,  France,
Germany or Israel or, at  Lender's  option,  if the chief  executive  office and
principal  place of business of the account debtor with respect to such Accounts
is located  other  than in the United  States of  America,  the United  Kingdom,
Japan, Canada, France, Germany or Israel, then if either: (i) the account debtor
has  delivered  to such  Borrower  an  irrevocable  letter of  credit  issued or
confirmed by a bank satisfactory to Lender and payable only in the United States
of America and in U.S.  dollars,  sufficient to cover such Account,  in form and
substance satisfactory to Lender and if required by Lender, the original of such
letter of credit has been  delivered to Lender or Lender's  agent and the issuer
thereof  notified of the  assignment of the proceeds of such letter of credit to
Lender,  or (ii) such Account is subject to credit  insurance  payable to Lender
issued by an insurer and on terms and in an amount acceptable to Lender, or such
Account is  otherwise  acceptable  in all  respects  to Lender  (subject to such
lending formula with respect thereto as Lender may determine);


<PAGE>


               (f) such Accounts do not consist of progress  billings (such that
the  obligation  of the  account  debtors  with  respect  to  such  Accounts  is
conditioned  upon  such  Borrower's   satisfactory  completion  of  any  further
performance under the agreement giving rise thereto),  bill and hold invoices or
retainage  invoices,  except  (i)  bill and hold  sales  to The  Boeing  Company
pursuant to the Purchase and Sale  Agreement,  dated  November 5, 1997,  between
Timet and The Boeing  Company as in effect on the date  hereof (a true,  correct
and complete copy of which has been provided by Borrowers to Lender prior to the
date hereof) and no default  exists under such  arrangements  which would affect
the  obligation  of The  Boeing  Company  to make  payment  in  respect  of such
Accounts,  in the good faith  determination  of Lender,  or otherwise  adversely
affect the validity,  enforceability  or collectability of all or any portion of
the  Accounts  arising from such sales and (ii) as to other bill and hold sales,
if Lender shall have  received an agreement in writing from the account  debtor,
in form and  substance  satisfactory  to Lender,  confirming  the  unconditional
obligation of the account  debtor (other than pursuant to the quality  review in
the ordinary  course of business by such account  debtor of the products sold by
such  Borrower to it giving  rise to such  Accounts)  to take the goods  related
thereto and pay such invoice;

               (g) the account  debtor  with  respect to such  Accounts  has not
asserted a  counterclaim,  defense or  dispute  and does not have,  and does not
engage in transactions  which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by such  Borrower to
such  account  debtor  or  claimed  owed by such  account  debtor  may be deemed
Eligible Accounts);

               (h) there are no facts,  events or occurrences which would impair
the validity,  enforceability  or  collectability of such Accounts or reduce the
amount payable or delay payment thereunder;

               (i) such  Accounts are subject to the first  priority,  valid and
perfected  security  interest  of Lender  (and as to  Accounts  owing by account
debtors with chief executive  offices other than in the United States of America
or Canada,  at any time  promptly  upon Lender's  request,  such Borrower  shall
execute  and  deliver,  or  cause  to be  executed  and  delivered,  such  other
agreements,  documents and  instruments  as may be required by Lender to perfect
the  security  interests  and liens of Lender (or to provide  Lender with rights
equivalent thereto) in those Accounts of such account debtors in accordance with
the applicable  laws of the  jurisdiction  in which such account  debtor's chief
executive office is located and take or cause to be taken such other and further
actions as Lender may  request to enable  Lender as secured  party with  respect
thereto  to  collect  such   Accounts   under  the   applicable   laws  of  such
jurisdictions, including (i) in the case of Accounts owing by account debtors in
France,  compliance with Law no 81.1 of 2 January 1981 and other applicable laws
in a manner  satisfactory  to Lender so that Lender has such rights with respect
thereto  as  Lender  requires,  (ii) in the case of  Accounts  owing by  account
debtors in  Germany,  providing  for such  Accounts  to be subject to a security
assignment in favor of Lender in form and substance  satisfactory  to Lender and
enforceable  under  German law,  (iii) in the case of Accounts  owing by account
debtors in Japan, the filing of a claim  assignment  registration and compliance
with The Law prescribing  Exceptions,  etc. to The Civil Code  Requirements  for
Setting Up Against a Third  Party to an  Assignment  of Claims,  and (iv) in the
case of  Accounts  owing by account  debtors in the United  Kingdom  and Israel,
providing  for such Accounts to be subject to a first ranking fixed and floating
charge in favor of Lender  pursuant to a  debenture)  and any goods  giving rise
thereto are not,  and were not at the time of the sale  thereof,  subject to any
liens except those permitted in this Agreement;

               (j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer,  employee,  agent or
other Affiliate of such Borrower, except if the account debtor is ValTimet;


<PAGE>


               (k) the account debtors with respect to such Accounts are not any
foreign  government,   the  United  States  of  America,  any  State,  political
subdivision,  department,  agency or  instrumentality  thereof,  unless,  if the
account  debtor  is  the  United  States  of  America,   any  State,   political
subdivision,  department,  agency  or  instrumentality  thereof,  upon  Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State  or  local  law,  if  applicable,  has  been  complied  with  in a  manner
satisfactory to Lender;

               (l) there are no  proceedings  or actions which are threatened or
pending  against the account  debtors with respect to such Accounts  which could
reasonably  be expected  to result in any  material  adverse  change in any such
account debtor's financial condition;

               (m) such Accounts of a single  account  debtor or its  Affiliates
(other than The Boeing Company,  Wyman-Gordon Company, Rolls-Royce plc or United
Technologies (and including for this purpose its Subsidiaries referred to below)
do not  constitute  more than fifteen (15%)  percent of all  otherwise  Eligible
Accounts,  or in the case of each of  Wyman-Gordon  Company,  Rolls-Royce plc or
United Technologies Corporation acting through its Pratt & Whitney Division (and
including for this purpose the  following  Subsidiaries  of United  Technologies
Corporation: Sikorsky Aircraft, Inc., Blades Technology Ltd., Carmel Forge Ltd.,
Precision Components  International,  Inc., Hamilton Sundstrand  Corporation and
Pratt & Whitney  Canada,  Inc.), in each case, such Accounts of each such Person
do not constitute more than twenty-five (25%) percent of all otherwise  Eligible
Accounts,  or in the case of The Boeing  Company,  such  Accounts  of The Boeing
Company,  together with such  Accounts of any  Recognized  Boeing  Subcontractor
under the Purchase and Sale Agreement, dated as of November 5, 1997, between The
Boeing  Company and Timet where the Account  arises under such Purchase and Sale
Agreement,  do  not  constitute  more  than  thirty-five  (35%)  percent  of all
otherwise  Eligible  Accounts  (but the portion of the Accounts not in excess of
such percentage may be deemed Eligible Accounts);

               (n) such  Accounts  are not  owed by an  account  debtor  who has
Accounts  unpaid more sixty (60) days after the  original due date for them (but
in any event more than one hundred twenty (120) days after the original  invoice
date for them)  which  constitute  more than  fifty  (50%)  percent of the total
Accounts of such account debtor;

               (o) such  Accounts are not  evidenced by  instruments  or chattel
paper;

               (p)  such  Accounts  are  owed by  account  debtors  whose  total
indebtedness  to such  Borrower does not exceed the credit limit with respect to
such account  debtors as determined by such Borrower from time to time and as is
reasonably  acceptable  to Lender (but the portion of the Accounts not in excess
of such credit limit may be deemed Eligible Accounts); and

               (q) such Accounts are owed by account debtors deemed creditworthy
at all times by such Borrower  consistent with its current  practice and who are
reasonably acceptable to Lender.


<PAGE>


General criteria for Eligible  Accounts may be established and revised from time
to time  by  Lender  in  good  faith  based  on an  event,  condition  or  other
circumstance  arising  after the date hereof,  or existing on the date hereof to
the extent  Lender has no  written  notice  thereof  from such  Borrower,  which
adversely  affects or could  reasonably  be  expected  to  adversely  affect the
Accounts in the good faith  determination of Lender.  Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.

         1.24 "Eligible  Equipment"  shall mean, as to Borrowers,  manufacturing
Equipment  owned  by a  Borrower  as of the  date  hereof  and  included  in the
appraisal of the Equipment by Norman Levy & Associates  received by Lender on or
before the date hereof and which is addressed to Lender and upon which Lender is
expressly  permitted  to  rely,  which is in good  order,  repair,  running  and
marketable  condition,  located at such  Borrower's  premises and  acceptable to
Lender in all respects. In general, Eligible Equipment shall not include, unless
otherwise  approved by Lender:  (a) Equipment at premises other than those owned
or leased and controlled by such Borrower, except as to premises that are leased
by such  Borrower,  only if Lender  shall  have  received  a  Collateral  Access
Agreement  duly  authorized,  executed and delivered by the owner or operator of
such  premises  in form  and  substance  SATISFACTORY  TO  LENDER,  EXCEPT  THAT
notwithstanding  that Lender shall not have  received  such an  agreement  for a
particular  leased  location,  Lender  may  consider  Equipment  at such  leased
location which would  otherwise be Eligible  Equipment to be Eligible  Equipment
and in such event, Lender may establish such Reserves as Lender may determine in
respect of amounts at any time  payable by such  Borrower to the owner or lessor
of such  location,  without  limiting  any other  rights of  Lender  under  this
Agreement  or  under  the  other  Financing   Agreements  with  respect  to  the
establishment  of Reserves or  otherwise;  (b)  Equipment  subject to a security
interest or lien in favor of any person other than Lender except those permitted
in this Agreement;  (c) Equipment which is not located in the continental United
States of America;  (d)  Equipment  which is not subject to the first  priority,
valid and perfected security interest of Lender; (e) worn-out, obsolete, damaged
or defective Equipment or Equipment not used or usable in the ordinary course of
such Borrower's  business as presently  conducted;  (f) computer  hardware;  (g)
tooling or (h)  Equipment  not used for the  manufacturing  of  Inventory in the
ordinary  course of the business of such  Borrower.  Any Equipment  which is not
Eligible Equipment shall nevertheless be part of the Collateral.

         1.25 "Eligible  Inventory" shall mean, as to Borrowers,  Inventory of a
Borrower  consisting of semi-finished  and finished goods held for resale in the
ordinary  course of the  business of such  Borrower and raw  materials  for such
semi-finished  and finished  goods,  in each case which are acceptable to Lender
based on the criteria set forth below. In general,  Eligible Inventory shall not
include:

               (a) work-in-process (other than Inventory which is in a form that
is generally saleable and semi-finished goods);

               (b) components  which are not part of  semi-finished  or finished
goods;

               (c)   spares;

               (d)   packaging and shipping materials;

               (e) supplies used or consumed in such Borrower's business;


<PAGE>


               (F) INVENTORY AT PREMISES  OTHER THAN THOSE OWNED AND  CONTROLLED
BY SUCH BORROWER,  EXCEPT any Inventory which would otherwise be deemed Eligible
Inventory at  locations in the United  States of America or Canada which are not
owned and operated by such  Borrower may  nevertheless  be  considered  Eligible
Inventory: (i) as to locations which are leased by such Borrower if Lender shall
have received a Collateral  Access  Agreement  from the owner and lessor of such
location,  duly  authorized,  executed  and  delivered by such owner and lessor,
EXCEPT  THAT  notwithstanding  that  Lender  shall  not  have  received  such an
agreement for a particular  leased  location,  Lender may consider  Inventory at
such leased location which would otherwise be Eligible  Inventory to be Eligible
Inventory and in such event,  Lender may at any time  establish such Reserves as
Lender may  determine in respect of amounts at any time payable by such Borrower
to the owner or lessor of such location,  without  limiting any other rights and
remedies of Lender under this Agreement or under the other Financing  Agreements
with  respect to the  establishment  of  Reserves  or  otherwise  and (ii) as to
premises of third parties  (including sales agents,  consignees and processors),
Lender  shall have  received a  Collateral  Access  Agreement  duly  authorized,
executed and delivered by the owner and operator of such  premises  (except that
notwithstanding  that Lender shall not have  received  such an agreement as to a
particular third party location,  Lender may consider Inventory at such location
which would otherwise be Eligible Inventory to be Eligible Inventory and in such
event, Lender may at any time establish such Reserves as Lender may determine in
respect of amounts at any time  payable by such  Borrower  to such third  party,
without  limiting any other rights or remedies of Lender under this Agreement or
under the other  Financing  Agreements  with  respect  to the  establishment  of
Reserves or otherwise),  and in addition,  if required by Lender, as to premises
of third  parties  where  assets of a Borrower  are  located:  (A) the owner and
operator  executes  appropriate  UCC-1  financing  statements  in  favor of such
Borrower,  which are duly  assigned to Lender and (B) any secured  lender to the
owner and  operator is  properly  notified  of the first  priority  lien on such
Inventory of Lender;

               (g) Inventory  located outside the  continental  United States of
America or Canada;

               (h) Inventory subject to a security interest, hypothec or lien in
favor of any person other than Lender, except those permitted in this Agreement;

               (i)   bill and hold goods;

               (j)   unserviceable, obsolete or slow moving Inventory;

               (k) Inventory which is not subject to the first  priority,  valid
and perfected  security  interest of Lender as to Inventory in the United States
of America and the first priority,  valid and perfected security interest,  lien
and first ranking hypothec as to Inventory in Canada;

               (l)   damaged and/or defective Inventory; and

               (m) Inventory purchased or sold on consignment.


<PAGE>


General criteria for Eligible Inventory may be established and revised from time
to time  by  Lender  in  good  faith  based  on an  event,  condition  or  other
circumstance  arising  after the date hereof,  or existing on the date hereof to
the extent  Lender has no  written  notice  thereof  from such  Borrower,  which
adversely  affects or could  reasonably  be  expected  to  adversely  affect the
Inventory in the good faith  determination of Lender. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.

         1.26 "Environmental  Laws" shall mean all applicable foreign,  Federal,
State  and  local  laws  (including  common  law),  legislation,  rules,  codes,
licenses,  permits (including any conditions  imposed therein),  authorizations,
judicial  or  administrative  decisions,  injunctions  or  agreements  between a
Borrower and any  Governmental  Authority,  (a)  relating to  pollution  and the
protection, preservation or restoration of the environment (including air, water
vapor,  surface  water,  ground water,  drinking  water,  drinking water supply,
surface  land,  subsurface,  land,  plant,  and animal life or any other natural
resource),  or to human  health,  (b)  relating to the  exposure to, or the use,
storage,   recycling,   treatment,    generation,    manufacture,    processing,
distribution,   transportation,   handling,  labeling,  production,  release  or
disposal, or threatened release, of Hazardous Materials,  or (c) relating to all
laws with  regard  to  recordkeeping,  notification,  disclosure  and  reporting
requirements  respecting  Hazardous  Materials.  The term  "Environmental  Laws"
includes (i) the Federal Comprehensive Environmental Response,  Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water  Pollution  Control Act of 1972,  the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments  thereto),  the Federal
Solid Waste Disposal and the Federal Toxic  Substances  Control Act, the Federal
Insecticide,  Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974,  (ii)  applicable  state  counterparts  to such laws, and (iii) any
common law or equitable  doctrine that may impose  liability or obligations  for
injuries or damages  due to, or  threatened  as a result of, the  presence of or
exposure to any Hazardous Materials.

         1.27  "Equipment"  shall  mean,  as  to  each  Borrower,  all  of  such
Borrower's now owned and hereafter acquired equipment,  machinery, computers and
computer  hardware and software (whether owned or licensed),  tools,  furniture,
fixtures,  all  attachments,  accessions  and property now or hereafter  affixed
thereto or used in CONNECTION  THEREWITH,  AND  SUBSTITUTIONS  AND  REPLACEMENTS
THEREOF, WHEREVER LOCATED,  PROVIDED, THAT, the term Equipment shall not include
motor vehicles.

         1.28 "EQUIPMENT  AVAILABILITY" SHALL MEAN, AS TO BORROWERS,  THE AMOUNT
EQUAL TO $30,890,000,  PROVIDED,  THAT, commencing on March 1, 2000, such amount
shall be reduced  effective as of the first day of each month by an amount equal
to $429,028.

         1.29 "ERISA" shall mean the United States  Employee  Retirement  Income
Security Act of 1974,  together with all rules,  regulations and interpretations
thereunder or related thereto.

         1.30 "ERISA  Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b),  414(c),  414(m)
or 414(o) of the Code.


<PAGE>


         1.31 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations  issued  thereunder,  with respect to a
Plan;  (b) the  adoption  of any  amendment  to a Plan that  would  require  the
provision of security pursuant to Section  401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated  funding
deficiency"  (as  defined in Section  412 of the Code or Section  302 of ERISA),
whether or not  waived;  (d) the filing  pursuant  to Section 412 of the Code or
Section  303(d) of ERISA of an application  for a waiver of the minimum  funding
standard  with  respect  to  any  Plan;  (e)  the  occurrence  of a  "prohibited
transaction"  with respect to which Borrower or any of its ERISA Affiliates is a
"disqualified  person"  (within the meaning of Section 4975 of the Code) or with
respect to which a Borrower or any of its ERISA  Affiliates  could  otherwise be
liable for amounts in excess of $250,000;  (f) a complete or partial  withdrawal
by a Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations  which  is  treated  as  such a  withdrawal  or  notification  that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate in any termination other than a standard termination, the treatment of
a Plan amendment as a termination  under Section 4041 or 4041A of ERISA,  or the
commencement  of  proceedings  by the Pension  Benefit  Guaranty  Corporation to
terminate a Plan or  Multiemployer  Plan; (h) an event or condition  which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination  of, or the  appointment  of a trustee  to  administer,  any Plan or
Multiemployer  Plan; (i) the imposition of any liability under Title IV of ERISA
in excess of  $250,000  (other  than the Pension  Benefit  Guaranty  Corporation
premiums due but not delinquent under Section 4007 of ERISA,  upon a Borrower or
any ERISA  Affiliate);  and (j) any other event or  condition  with respect to a
Plan or Multiemployer  Plan or any Plan subject to Title IV of ERISA maintained,
or contributed to, by any ERISA  Affiliate that could  reasonably be expected to
result in liability of a Borrower in excess of $250,000.

         1.32  "Eurodollar  Rate" shall mean with respect to the Interest Period
for a Eurodollar  Rate Loan to a Borrower,  the interest rate per annum equal to
the arithmetic  average of the rates of interest per annum (rounded upwards,  if
necessary,  to the  next  one-sixteenth  (1/16)  of one (1%)  percent)  at which
Reference  Bank is  offered  deposits  of United  States  dollars  in the London
interbank  market (or other Eurodollar Rate market selected by such Borrower and
approved by Lender) on or about 9:00 a.m.  (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially equal
to the principal  amount of the Eurodollar Rate Loans requested by and available
to  such  Borrower  in  accordance  with  this  Agreement,  with a  maturity  of
comparable duration to the Interest Period selected by such Borrower.

         1.33 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which  interest is payable based on the Adjusted  Eurodollar  Rate in accordance
with the terms hereof.

         1.34 "Event of Default"  shall mean the  occurrence or existence of any
event or condition described in Section 10.1 hereof.


<PAGE>


         1.35 "Excess  Availability"  shall mean the amount,  as  determined  by
Lender,  calculated at any time,  EQUAL TO: (A) THE LESSER OF: (I) THE BORROWING
BASE AND (II) THE  MAXIMUM  CREDIT,  MINUS (b the sum of:  (i) the amount of all
then  outstanding and unpaid  Obligations  plus (ii) the aggregate amount of all
then  outstanding  and unpaid trade payables and other  obligations of Borrowers
which are more than sixty (60) days past due as of such time  (unless  the trade
payable or other  obligation  is being  contested in good faith),  including the
amount of checks issued by Borrowers to pay trade payables and other obligations
which are more than sixty (60) days past due as of such time,  but not yet sent.
So long as Lender is only receiving reports with respect to sales made,  credits
issued and cash  received  pursuant  to Section  7.1(a)(i)  every two (2) weeks,
reports with respect to Inventory pursuant to Section 7.1(a)(ii) every month and
agings of the accounts payable  pursuant to Section  7.1(a)(ii) every month, the
Borrowing Base used for  determining  Excess  Availability  at any time shall be
calculated  based on the sales made,  credits issued and cash received as of the
end of each such  immediately  preceding two (2) week period and Inventory as of
the end of the immediately  preceding month and the outstanding and unpaid trade
payables  which  are  more  than  sixty  (60)  days  past  due for  purposes  of
determining  Excess  Availability  at any time shall be based on such  agings of
accounts  payable as of the end of the  immediately  preceding  month. If Lender
does not receive any of the reports or agings  referred to above,  the Borrowing
Base used for determining Excess  Availability shall be calculated in such other
manner as Lender may determine, without limiting any other rights or remedies of
Lender.

         1.36  "Exchange  Act" shall mean the  Securities  Exchange Act of 1934,
together with all rules,  regulations and interpretations  thereunder or related
thereto.

         1.37 "Exchange Rate" shall mean the prevailing spot rate of exchange of
such bank as Lender may select for the purpose of  conversion of one currency to
another, at or around 11 a.m. Dallas,  Texas time, on the date on which such any
conversion of currency is to be made under this Agreement.

         1.38 "Existing Credit Agreement" shall mean the Credit Agreement, dated
as  of  July  30,  1997,  by  and  among  Timet,   Bankers  Trust  Company,   as
Administrative  Agent, First Union National Bank and Fleet Capital  Corporation,
as  Co-Agents  and the other  Existing  Lenders,  as  amended  prior to the date
hereof.

         1.39  AExisting  Lenders@ shall mean,  collectively,  (a) the financial
institutions  parties to the Existing Credit  Agreement as lenders,  (b) Bankers
Trust  Company,  as  Administrative   Agent  pursuant  to  the  Existing  Credit
Agreement,  (c) First Union National Bank, as Co-Agent  pursuant to the Existing
Credit Agreement and (d) Fleet Capital Corporation,  as Co-Agent pursuant to the
Existing Credit Agreement.

         1.40 AExisting Letter of Credit@ shall mean the letter of credit issued
for the  account of Timet by  Bankers  Trust  Company  listed on  Schedule  1.40
hereto.

         1.41 "Financing  Agreements" shall mean,  collectively,  this Agreement
and all notes, guarantees,  security agreements and other agreements,  documents
and  instruments now or at any time hereafter  executed and/or  delivered by any
Borrower or Obligor in connection with this Agreement.


<PAGE>


         1.42 "Fixed Charge  Coverage Ratio" for any period shall mean the ratio
of (a) EBITDA of Timet and its SUBSIDIARIES FOR SUCH PERIOD TO (B) FIXED CHARGES
OF TIMET AND ITS  SUBSIDIARIES  FOR SUCH PERIOD,  PROVIDED,  THAT, any dividends
paid by the Trust in respect of the BUCS shall be excluded from the  calculation
of the Fixed  Charge  Coverage  Ratio for  purposes of Section 1.5 hereof to the
extent  included  as a Fixed  Charge so long as the Trust  shall  have the right
under  the  terms of the BUCS at any  time  and from  time to time to defer  the
payment of any such dividends,  at its option,  without  restriction (other than
due  notice),  for  successive  periods  of up to  not  less  than  twenty  (20)
consecutive quarters for each such period.

         1.43  "Fixed  Charges"  for any period  shall mean the sum of,  without
duplication,   (a)  all   Consolidated   Interest   Expense,   (b)  all  Capital
Expenditures,  (c)  all  scheduled  (as  determined  at  the  beginning  of  the
respective  period)  mandatory  principal  payments of  Indebtedness  (including
principal payments with respect to all Capital Leases) made by a Borrower or its
Subsidiaries during such period. The foregoing shall not be construed to include
mandatory principal payments on Indebtedness arising pursuant to revolving loans
and advances.

         1.44 "GAAP" shall mean generally accepted accounting  principles in the
United  States of  America  as in  effect  from time to time as set forth in the
opinions and pronouncements of the Accounting  Principles Board and the American
Institute of Certified Public  Accountants and the statements and pronouncements
of  the  Financial  Accounting  Standards  Board  which  are  applicable  to the
circumstances as of the date of determination consistently applied, except that,
if any change in generally accepted accounting  principles after the date hereof
affects the  calculation  of compliance  with the financial  covenant in Section
9.18 hereof,  Timet may by notice to Lender,  or Lender may, by notice to Timet,
require that such covenant thereafter be calculated in accordance with generally
accepted  accounting  principles  as in effect and applied by Timet  immediately
before such change in generally accepted accounting principles occurred. If such
notice  is given by Timet (or if such  notice is given by Lender  then only upon
Lender's request),  the financial  statements  delivered pursuant to Section 9.6
hereof after such change occurs shall be  accompanied  by a calculation  of such
covenant made in accordance with generally accepted accounting  principles as in
effect from time to time after such change occurs.

         1.45 "Governmental Authority" shall mean any nation or government,  any
state,  province,  or other political  subdivision thereof, any central bank (or
similar  monetary  or  regulatory  authority)  thereof,  any  entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining  to  government,  and  any  corporation  or  other  entity  owned  or
controlled,  through  stock or capital  ownership  or  otherwise,  by any of the
foregoing.

         1.46 AGuarantors@ shall mean, collectively,  each of the following (and
their respective  successors and assigns):  (a) TIMET Millbury  Corporation,  an
Oregon corporation;  (b) TIMET Castings Corporation, a Delaware corporation; (c)
on and after March 31, 2000, TMCA  International,  Inc., a Delaware  corporation
(unless Lender has received such evidence as Lender may require that such person
has been  liquidated and dissolved to the extent  permitted  hereunder  prior to
such date); and (d) TIMET Finance Management  Company,  a Delaware  corporation;
sometimes being referred to herein individually as a "Guarantor".


<PAGE>


         1.47 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances,  materials and wastes,  including hydrocarbons  (including naturally
occurring  or  man-made  petroleum  and  hydrocarbons),   flammable  explosives,
asbestos,  urea  formaldehyde  insulation,   radioactive  materials,  biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or  contaminants  (including  materials  which include
hazardous  constituents),  sewage, sludge,  industrial slag, solvents and/or any
other  similar  substances,   materials,  or  wastes  and  including  any  other
substances,  materials  or  wastes  that  are  or  become  regulated  under  any
Environmental  Law (including any that are or become  classified as hazardous or
toxic under any Environmental Law).

         1.48  "Indebtedness"  shall  mean,  with  respect  to any  Person,  any
liability,  whether or not contingent (without  duplication),  (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such  Person  or only to a portion  thereof)  or  evidenced  by bonds,
notes, debentures or similar instruments;  (b) representing the balance deferred
and unpaid of the  purchase  price of any  property or services  (except (i) any
such balance that constitutes an account payable to a trade creditor (whether or
not an Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection  with obtaining  goods,
materials or services that is not overdue by more than one hundred  twenty (120)
days,  unless the trade payable is being contested in good faith or (ii any such
balance that  constitutes an accrued  liability in respect of the purchase price
of any property or services);  (c) all  obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital Leases; (d)
any contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the  payment of any  indebtedness  described  in this  definition  of
another Person, including,  without limitation, any such indebtedness,  directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness,  obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof,  or to maintain solvency,
assets, level of income, or other financial condition;  (e) all obligations with
respect to redeemable stock and redemption or repurchase  obligations  under any
Capital  Stock or other  equity  securities  issued  by such  Person  which  are
redeemable or subject to mandatory  repurchase at the option of the holder;  (f)
all reimbursement  obligations and other liabilities of such Person with respect
to surety bonds  (whether bid,  performance  or  otherwise),  letters of credit,
banker's  acceptances  or  similar  documents  or  instruments  issued  for such
Person's  account;  and (g)  all  indebtedness  of such  Person  in  respect  of
indebtedness  of another  Person for borrowed money or  indebtedness  of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person,  whether or not such
obligations,  liabilities  or  indebtedness  are  assumed  by or are a  personal
liability of such Person, all as of such time.

         1.49 "Information  Certificate" shall mean the Information  Certificate
of Borrowers  constituting Exhibit A hereto containing material information with
respect to each  Borrower,  its business and assets  provided by or on behalf of
Borrowers to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.


<PAGE>


         1.50  "Intellectual  Property@  shall mean, as to each  Borrower,  such
Borrower's now owned and hereafter arising or acquired:  patents, patent rights,
patent  applications,   copyrights,  works  which  are  the  subject  matter  of
copyrights,  copyright  registrations,  trademarks,  trade names,  trade styles,
trademark and service mark  applications,  and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part  of any of the  foregoing;  all  rights  to sue for  past,
present  and future  infringement  of any of the  foregoing;  inventions,  trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained;  and trade secret rights,  copyright rights, rights in
works of authorship, and contract rights relating to computer software programs,
in whatever form created or maintained.

         1.51 "Interest  Expense"  shall mean, for any period,  as to any Person
and its Subsidiaries,  as determined in accordance with GAAP, the total interest
expense of such Person and its  Subsidiaries  for such  period,  whether paid or
accrued  (including  the interest  component of Capital Leases for such period),
including,  without limitation, all bank fees, commissions,  discounts and other
fees and charges owed with respect to letters of credit, banker's acceptances or
similar instruments, but excluding (a) amortization of discount and amortization
of deferred  financing  fees and closing  costs,  (b) interest  paid in property
other than cash and (c) any other interest expense not payable in cash.

         1.52  "Interest  Period" shall mean for any  Eurodollar  Rate Loan to a
Borrower,  a period  of  approximately  one (1),  two (2),  three (3) or six (6)
months duration as such Borrower may elect,  the exact duration to be DETERMINED
IN ACCORDANCE  WITH THE CUSTOMARY  PRACTICE IN THE  APPLICABLE  EURODOLLAR  RATE
MARKET;  PROVIDED,  THAT,  (a) Borrowers may not elect an Interest  Period which
will end after the last day of the  then-current  term of this Agreement and (b)
in no event shall the aggregate  amount of all Eurodollar  Rate Loans  requested
with six (6) months  duration  (regardless  of the amount of time  remaining for
such  Eurodollar  Rate Loans)  outstanding  at any one time exceed  $20,000,000,
except as Lender may otherwise agree.

         1.53  "Interest Rate" shall mean,

               (a    Subject to clauses (b) and (c) of this definition below:

                     (i   as to Prime Rate Loans, a rate equal to one-half (2%)
                           percent per annum in excess of the US Prime Rate,

                     (ii  as to Eurodollar Rate Loans, a rate of two (2%)
                          percent per annum in excess of the

Adjusted  Eurodollar Rate (in each case, based on the Eurodollar Rate applicable
for the Interest  Period  selected by a Borrower as in effect three (3) Business
Days  after the date of receipt by Lender of the  request of such  Borrower  for
such  Eurodollar  Rate Loans in accordance  with the terms hereof,  whether such
rate is higher or lower than any rate previously quoted to such Borrower).


<PAGE>


               (b Subject to clause (c) of this definition  below,  effective as
of  the  fifteenth  (15th)  day of the  second  month  of  each  fiscal  quarter
(commencing  with the fiscal  quarter  ending June 30, 2000),  the Interest Rate
payable by Borrowers shall be increased or decreased, as the case may be, (i) as
to Prime Rate Loans,  to the rate equal to the Applicable  Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar  Rate Loans, to the
rate  equal to the  Applicable  Margin  on a per  annum  basis in  excess of the
Adjusted Eurodollar Rate.

               (c Notwithstanding  anything to the contrary contained in clauses
(a)  and  (b) of  this  definition,  the  Applicable  Margin  otherwise  used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest  percentage  set forth in the  definition of the term  Applicable
Margin  for each  category  of Loans  (without  regard  to the  amount of Excess
Availability  or the Fixed  Charge  Coverage  Ratio)  plus two (2%)  percent per
annum, at Lender=s option, after five (5) Business Days= notice to any Borrower,
(i) for the  period  (A) from and after the  effective  date of  termination  or
non-renewal  hereof  until  Lender has  received  full and final  payment of all
outstanding  and  unpaid  Obligations  or as  to  contingent  Obligations,  cash
collateral  in the amount and on the terms  required  under  Section 12.1 hereof
(notwithstanding  entry of a judgment against a Borrower) and (B) from and after
the date of the  occurrence  of an Event of Default for so long as such Event of
Default is continuing, and (ii) on Loans to any Borrower at any time outstanding
in  excess  of the  Borrowing  Base  of  such  Borrower  (whether  or  not  such
excess(es),  arise or are made with or without Lender's knowledge or consent and
whether made before or after an Event of Default).

         1.54  "Inventory"  shall  mean,  as  to  each  Borrower,  all  of  such
Borrower's now owned and hereafter  existing or acquired raw materials,  work in
process,  semi-finished  goods,  finished  goods  and  all  other  inventory  of
whatsoever kind or nature, wherever located.

         1.55 "INVENTORY  LOAN LIMIT" SHALL MEAN  $65,000,000,  PROVIDED,  THAT,
such amount  shall be  increased to  $70,000,000  effective  January 1, 2001 and
increased to  $75,000,000  effective  January 1, 2002,  so long as the number of
days of the turnover of the  Inventory as determined by Lender for any period of
time has not increased in any material  respect in the good faith  determination
of  Lender,  and no Event of  Default,  or act,  condition  or event  which with
notice,  passage of time or both,  would  constitute an Event of Default,  shall
exist or have occurred.

         1.56  "Letter  of Credit  Accommodations"  shall  mean the  letters  of
credit,  merchandise  purchase or other  guaranties  which are from time to time
either  issued or opened by Lender for the  account of a Borrower or any Obligor
or with respect to which Lender has agreed to indemnify the issuer or guaranteed
to the issuer the  performance  by a Borrower or Obligor of its  obligations  to
such issuer (including the Existing Letter of Credit).

         1.57 "Loans" shall mean the loans now or hereafter made by Lender to or
for  the  benefit  of a  Borrower  on a  revolving  basis  (involving  advances,
repayments and readvances) as set forth in Section 2.1 hereof.


<PAGE>


         1.58 "Material  Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties  of Borrowers  and  Guarantors  taken as a whole;  (b) the  legality,
validity  or  enforceability  of this  Agreement  or any of the other  Financing
Agreements; (c) the legality, validity,  enforceability,  perfection or priority
of the security  interests  and liens of Lender upon the  Collateral  taken as a
whole;  (d) the Collateral or the value of the Collateral  taken as a whole; (e)
the ability of a Borrower to repay the  Obligations  or of a Borrower to perform
its obligations  under this Agreement or any of the other Financing  Agreements;
or (f) the  ability of Lender to enforce  the  Obligations  or realize  upon the
Collateral or otherwise  with respect to the rights and remedies of Lender under
this  Agreement  or any  of  the  other  Financing  Agreements.  Notwithstanding
anything  to the  contrary  in this  Agreement,  no  decrease in the value of or
disposition  with  respect  to the SMC Stock  shall be deemed to have a Material
Adverse Effect.

         1.59 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements),  written or oral, of a Borrower involving
monetary  liability of or to any Person in an amount in excess of $10,000,000 in
any fiscal year and (b) any other  contract or other  agreement  (other than the
Financing  Agreements),  whether written or oral, to which a Borrower is a party
as to which the breach, nonperformance,  cancellation or failure to renew by any
party thereto would have a Material Adverse Effect.

         1.60 "Maximum Credit" shall mean the amount of $125,000,000.

         1.61 "Mortgages" shall mean, individually and collectively, each of the
following:  (a) the Deed of Trust and Assignment of Rents,  Leases and Leasehold
Interests,  dated of even date  herewith,  by Timet in favor of the trustee with
respect thereto for the benefit of Lender, with respect to the Real Property and
related assets of Timet located in Henderson,  Nevada, (b) the Open-End Mortgage
and  Assignment  of Rents,  Leases and Leasehold  Interests,  dated of even date
herewith,  by Timet in favor of Lender  with  respect to the Real  Property  and
related  assets of Timet  located  in  Toronto,  Ohio and (c) the  Mortgage  and
Security Agreement,  dated of even date herewith, by THT in favor of Lender with
respect to the Real  Property and related  assets of THT located in  Morgantown,
Pennsylvania.

         1.62 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section  4001(a)(3)  of ERISA  which is or was at any time during the current
year or the immediately  preceding six (6) years contributed to by a Borrower or
any ERISA Affiliate.

         1.63 "Net Amount of Eligible  Accounts"  shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof,  (b) returns and (c discounts,  claims,  credits and  allowances of any
nature at any time issued, owing, granted, outstanding,  available or claimed in
writing  with  respect  thereto  to the  extent  that the  aggregate  amount  of
discounts, claims, credits and allowances on all of the Eligible Accounts exceed
one (1%) percent of the gross amount of all such Eligible Accounts.


<PAGE>


         1.64  "Obligations"  shall  mean any and all  Loans,  Letter  of Credit
Accommodations and all other obligations,  liabilities and indebtedness of every
kind,  nature and  description  owing by either or both of  Borrowers  to Lender
and/or its Affiliates,  including principal,  interest, charges, fees, costs and
expenses, however evidenced,  whether as principal,  surety, endorser, guarantor
or otherwise, whether arising under this Agreement or any of the other Financing
Agreements,  whether now existing or hereafter arising,  whether arising before,
during or after the initial or any renewal  term of this  Agreement or after the
commencement  of any case with  respect  to a Borrower  under the United  States
Bankruptcy  Code or any similar  statute  (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case,  whether or not such  amounts are allowed or allowable in whole or in part
in such case),  whether  direct or indirect,  absolute or  contingent,  joint or
several,  due or not due,  primary or  secondary,  liquidated  or  unliquidated,
secured or unsecured, and however acquired by Lender.

         1.65 "Obligor" shall mean any guarantor,  endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.

         1.66  "Other   Taxes"  shall  mean  any  present  or  future  stamp  or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies  which  arise from any  payment  made  hereunder  or from the  execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Financing Agreements.

         1.67 "Participant" shall mean any person which at any time participates
with Lender in any of the  Obligations  pursuant to an  agreement  entered  into
pursuant to Section 12.5.

         1.68  "Payment Account" shall have the meaning set forth in Section 6.3
hereof.

         1.69 "Permitted  Holders" shall mean (a) any Person controlled,  in the
aggregate  by any  one or more  of  Tremont  Corporation,  The  Combined  Master
Retirement   Trust,   Simmons,   the  Simmons   Trusts  and  the  Simmons  Trust
Beneficiaries  and  Trustees;  (b)  any  managing  director,   general  partner,
director, limited partner, principal, officer or employee of Tremont Corporation
or its Affiliates (collectively "Tremont Associates");  (c) Simmons, the Simmons
Trusts,  the Simmons  Trust  Beneficiaries  and  Trustees,  The Combined  Master
Retirement  Trust  and  the  heirs,  executors,   administrators,   testamentary
trustees, legatees or beneficiaries of any Tremont Associates; or (d) a trust or
custodianship,  to the extent that the  beneficiaries of which, or a corporation
or  partnership,  the  stockholders  or general or  limited  partners  of which,
include only Simmons,  the Simmons Trusts,  the Simmons Trust  Beneficiaries and
Trustees,  The Combined Master Retirement Trust, any Tremont  Associates,  their
respective  spouses and former spouses and ancestors or lineal  descendants  (by
blood  or  adoption).  For  purposes  of this  definition,  the  term  "control"
(including the correlative meanings, the terms "controlled by" and "under common
control  with"),  as used with respect to any Person shall mean the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management and policies of such Person  whether  through the ownership of voting
securities or by contract or otherwise.


<PAGE>


         1.70 "Permitted Real Property Encumbrances" shall mean (a) those liens,
encumbrances  and other matters  affecting  title to any Real Property listed in
the title  policies in respect  thereof  which are as of the date of delivery of
such title  policies to Lender in accordance  with the terms hereof,  reasonably
acceptable to Lender,  (b) as to any particular  Real Property at any time, such
zoning  restrictions,  minor or customary easements,  encroachments,  covenants,
rights of way, minor defects,  irregularities  or encumbrances on title which do
not arise out of the incurrence of any  Indebtedness  and which do not interfere
in any  material  respect  with the use of such Real  Property  or the  ordinary
conduct  of  business  thereon  for  the  purpose  for  which  it is held by the
mortgagor  thereof,  or impair the value of the Real Property subject thereto in
any  material  respect or impair the rights of Lender with  respect to such Real
Property in any material  respect or the ability of Lender to realize thereon in
any material  respect,  (c) general real estate  taxes and  assessments  not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently  pursued,  provided that  provision for the payment of all such taxes
and  assessments has been made on the books of such Borrower and such Restricted
Subsidiary to the extent required by GAAP, and (d) such other minor or customary
liens or encumbrances  with respect to the Real Property to which the Lender may
consent in writing.

         1.71   "Person"   or   "person"   shall  mean  any   individual,   sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter  S  status  under  the  Code),  limited  liability  company,  limited
liability partnership,  business trust, unincorporated association,  joint stock
corporation,  trust,  joint  venture or other  entity or any  government  or any
agency or instrumentality or political subdivision thereof.

         1.72 "Plan" shall mean any employee  pension benefit plan (other than a
Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or Section
412(l) of the Code or Section 307 of ERISA, and in respect of which any Borrower
or Guarantor is (or, if such plan were  terminated,  would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

         1.73  "Prime  Rate"  shall  mean the rate  from  time to time  publicly
announced by First Union  National Bank, or its  successors,  as its prime rate,
whether or not such announced rate is the best rate available at such bank.

         1.74  "Prime  Rate  Loans"  shall mean any Loans or portion  thereof on
which  interest is payable based on the Prime Rate in accordance  with the terms
thereof.

         1.75 "Quarterly Average Excess  Availability"  shall mean, at any time,
the daily  average  of the Excess  Availability  for the  immediately  preceding
fiscal quarter as calculated by Lender in good faith.

         1.76 "Real Property" shall mean, as to each Borrower, all now owned and
hereafter  acquired  real  property  of  such  Borrower,   including   leasehold
interests,  together  with all  buildings,  structures,  and other  improvements
located thereon and all licenses,  easements and appurtenances relating thereto,
wherever   located,   including  the  real  property  and  related  assets  more
particularly described in the Mortgages located in Henderson,  NEVADA,  TORONTO,
OHIO AND  MORGANTOWN,  PENNSYLVANIA,  PROVIDED,  THAT, the term "Real  Property"
shall not include the Treco Property.


<PAGE>


         1.77 "Receivables" shall mean: (a) all Accounts; (b) all amounts at any
time  payable to a Borrower  in  respect of the sale or other  disposition  by a
Borrower of any Account or other  obligation  for the payment of money;  (c) all
interest, fees, late charges,  penalties,  collection fees and other amounts due
or to become due or otherwise  payable in  connection  with any Account;  (d all
letters of credit,  indemnities,  guarantees,  security  or other  deposits  and
proceeds  thereof  issued  payable to a  Borrower  or  otherwise  in favor of or
delivered  to a  Borrower  in  connection  with any  Account;  and (e) all other
contract rights,  chattel paper,  instruments,  notes,  general  intangibles and
other forms of obligations owing to a Borrower,  whether from the sale and lease
of goods or other property,  licensing of any property  (including  Intellectual
Property or other general  intangibles),  rendition of services or from loans or
advances by a Borrower or to or for the benefit of any third  person  (including
loans or advances to any  Affiliates or  Subsidiaries)  or otherwise  associated
with any Accounts,  Inventory or general  intangibles of a Borrower  (including,
without limitation,  choses in action, causes of action, tax refunds, tax refund
claims,  any funds which may become payable to a Borrower in connection with the
termination  of any Plan or other  employee  benefit plan and any other  amounts
payable to a Borrower from any Plan or other employee  benefit plan,  rights and
claims  against  carriers  and  shippers,  rights to  indemnification,  business
interruption  insurance and proceeds  thereof,  casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance  covering the lives
of employees on which a Borrower is beneficiary.

         1.78 "Records" shall mean, as to each Borrower,  all of such Borrower's
present and future  books of account of every kind or nature,  purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements,  correspondence,  memoranda, credit files and other data relating to
the Collateral or any account debtor,  together with the tapes, disks, diskettes
and  other  data and  software  storage  media and  devices,  file  cabinets  or
containers in or on which the foregoing are stored (including any rights of such
Borrower with respect to the foregoing maintained with or by any other person).

         1.79  "Reference  Bank" shall mean First Union  National  Bank, or such
other bank as Lender may from time to time designate.

         1.80  "Regulation U" shall mean  Regulation U of the Board of Governors
of the Federal Reserve System, as amended from time to time.

        1.81  "Renewal Date" shall the meaning set forth in Section 12.1 hereof.



<PAGE>


         1.82  "Reserves"  shall mean,  as to each  Borrower,  as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith  reducing the amount of Loans and Letter of Credit  Accommodations
which would otherwise be available to such Borrower under the lending formula(s)
provided for herein: (a) to reflect events,  conditions,  contingencies or risks
which, as determined by Lender in good faith,  adversely affect, or would have a
reasonable  likelihood of adversely affecting,  either (i) the Collateral or any
other  property  which is security for the  Obligations  or its value,  (ii) the
assets, business or financial condition of such Borrower or any Obligor or (iii)
the security  interests and other rights of Lender in the Collateral  (including
the enforceability,  perfection and priority thereof) or (b) to reflect Lender's
good faith belief that any collateral report or financial  information furnished
by or on behalf of such  Borrower  or any  Obligor to Lender is or may have been
incomplete,  inaccurate or misleading in any material  respect or (c) to reflect
outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or
(d) in  respect  of any state of facts  which  Lender  determines  in good faith
constitutes  an Event of Default or may, with notice or passage of time or both,
constitute  an Event of  Default.  To the extent  Lender may revise the  lending
formulas  used to determine  the  Borrowing  Base or  establish  new criteria or
revise existing  criteria for Eligible  Accounts or Eligible  Inventory so as to
address  any  circumstances,  condition,  event  or  contingency  in  an  manner
satisfactory  to  Lender,  Lender  shall not  establish  a Reserve  for the same
purpose. The amount of any Reserve established by Lender shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
reserve as determined by Lender in good faith.

         1.83 "Restricted  Subsidiaries" shall mean,  collectively,  each of the
following  (and their  respective  successors  and assigns):  (a) TIMET Millbury
Corporation,  an Oregon corporation;  (b TIMET Castings Corporation,  a Delaware
corporation;  (c) TMCA International,  Inc., a Delaware  corporation;  (d) TIMET
Finance  Management   Company,  a  Delaware   corporation;   (e  TIMET  Colorado
Corporation,  a Colorado  corporation;  (f) TIMET  Real  Estate  Corporation,  a
Colorado   corporation;   (g)  the  Trust;  (h)  TIMET  FSC,  Ltd.,  a  Barbados
corporation;  and (i) any other direct or indirect  Subsidiary of Timet,  THT or
any of the  foregoing  Persons,  however  formed or  acquired;  sometimes  being
REFERRED TO HEREIN INDIVIDUALLY AS A "RESTRICTED  SUBSIDIARY",  PROVIDED,  THAT,
the  term   "Restricted   Subsidiaries"   shall  not  include  the  Unrestricted
Subsidiaries or the Timet Affiliates.

         1.84  "Simmons"  means  Harold C.  Simmons  and his  heirs,  executors,
administrators, successors and assigns.

         1.85  "Simmons Trust" means any trust established for the benefit of
Simmons or members of his family or both.

         1.86 "Simmons Trust Beneficiaries and Trustees" means trustees,  acting
in such  capacity,  or  beneficiaries  of  Simmons  Trust to the  extent  of the
beneficial interest therein and for so long as such Simmons Trust exists.

         1.87  "SMC"  shall  mean  Special   Metals   Corporation,   a  Delaware
corporation, and its successors and assigns.

         1.88 "SMC Stock" shall mean,  collectively,  the Class A 6.625%  Senior
Convertible Preferred Stock, par value $.01 per share, of SMC at any time owned,
directly or indirectly,  by TFMC, and any common stock or other  securities into
which such Class A 6.625% Senior  Convertible  Preferred  Stock may from time to
time be converted or exchanged.


<PAGE>


         1.89 "Solvent" shall mean, at any time with respect to any Person, that
at such time such  Person  (a) is able to pay its debts as they  mature  and has
(and has reason to believe it will continue to have) sufficient capital (and not
unreasonably  small  capital)  to  carry  on its  business  consistent  with its
practices  as of the date  hereof,  and (b) the  assets and  properties  of such
Person at a fair  valuation  and at their present fair salable value are greater
than the Indebtedness of such Person, and including  subordinated and contingent
liabilities  computed  at  the  amount  which,  to the  best  of  such  Person=s
knowledge,  represents  an amount which can  reasonably be expected to become an
actual or matured liability.

         1.90  "Subordinated  Debentures" shall mean,  collectively,  the 6 5/8%
Convertible Junior Subordinated  Debentures due 2026 of Timet issued pursuant to
the Subordinated Debenture Indenture,  as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

         1.91 "Subordinated Debenture Indenture" shall mean the Indenture, dated
as of  November  20,  1996,  between  Timet,  as  issuer,  and the  Subordinated
Debenture Trustee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

         1.92  "Subordinated  Debenture  Trustee" shall mean The Chase Manhattan
Bank, as trustee under the Subordinated  Debenture  Indenture and any successor,
replacement or additional trustee and their respective successors and assigns.

         1.93  "Subsidiary"  or  "subsidiary"  shall mean,  with  respect to any
Person,   any  corporation,   limited  liability   company,   limited  liability
partnership or other limited or general partnership, trust, association or other
business  entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other  interests  entitled to vote in the election of the board
of directors of such corporation  (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency),  managers, trustees
or other controlling persons, or an equivalent  controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.

         1.94 "Taxes"  shall mean any and all present or future  taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto,  excluding,  in the case of Lender, such taxes (including income taxes,
franchise  taxes or capital taxes) as are imposed on or measured by Lender's net
income or capital by any jurisdiction (or any political subdivision thereof).

         1.95 "TFMC" shall mean TIMET  Finance  Management  Company,  a Delaware
corporation, and its successors and assigns.

         1.96 "THT" shall mean Titanium  Hearth  Technologies,  Inc., a Delaware
corporation, and its successors and assigns.

         1.97  "Timet"  shall  mean  Titanium  Metals  Corporation,  a  Delaware
corporation, and its successors and assigns.


<PAGE>


         1.98 "Timet Affiliates" shall mean, collectively, each of the following
(and their  respective  successors and assigns):  (a) Titanium  Memory  Systems,
Inc., a California  corporation;  (b) TICOMP, Inc., a Delaware Corporation;  (c)
MZI, LLC, a Delaware  corporation;  (d Ti$Pro,  LLC, a Nevada limited  liability
company; and (e) ValTimet SAS, a corporation organized under the laws of France;
sometimes being referred to herein individually as a "Timet Affiliate".

         1.99  "Treco   Property"  shall  mean  the  Real  Property  located  in
Henderson,   Nevada  more  particularly   described  in  Schedule  1.99  hereto,
identified  as  parcels 7 and 8 and a portion  of parcel 6 on the  vicinity  map
included in Schedule 1.99 and beneficially owned by Treco LLC.

         1.100 "Trust" shall mean the TIMET Capital Trust I, a Delaware business
trust, and its successors and assigns.

         1.101 "Unrestricted Subsidiaries" shall mean, collectively, each of the
following (and their respective successors and assigns): (a) Timet UK Limited, a
corporation  organized under the laws of the United Kingdom; (b) Loterios SpA, a
corporation  organized under the laws of Italy;  and (c) any other Subsidiary of
Timet UK Limited or Loterios  SpA now or hereafter  existing  during the term of
this  Agreement;   sometimes  being  referred  to  HEREIN   INDIVIDUALLY  AS  AN
"UNRESTRICTED SUBSIDIARY";  PROVIDED, THAT, the term "Unrestricted Subsidiaries"
shall not include the Restricted Subsidiaries.

         1.102  "US Dollars", "US$" or "$" shall mean the lawful currency of the
 United States of America.

         1.103 "Value"  shall mean, as determined by Lender in good faith,  with
respect to  Inventory,  the lower of (a) cost  computed on a first-in  first-out
basis or average cost basis in  accordance  with GAAP (and  consistent  WITH THE
CURRENT  PRACTICES OF BORROWERS) OR (B) MARKET VALUE AS DETERMINED IN ACCORDANCE
WITH GAAP,  PROVIDED,  that,  for purposes of the  calculation  of the Borrowing
Base, the Value of the Inventory shall not include: (i) the portion of the value
of Inventory  equal to the profit earned by any Affiliate on the sale thereof to
a Borrower or  Guarantor  or (ii)  write-ups  in value with  respect to currency
exchange rates.

         1.104 "ValTimet" shall man ValTimet SAS, a corporation  organized under
the laws of France, and its successors and assigns.

         1.105 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having  general voting powers to
elect at least a majority  of the board of  directors,  managers  or trustees of
such  Person,  irrespective  of whether at the time  Capital  Stock of any other
class or classes have or might have voting  power by reason of the  happening of
any  contingency,  and (b) any  Capital  Stock  of such  Person  convertible  or
exchangeable  without  restriction  at the  option of the  holder  thereof  into
Capital Stock of such Person described in clause (a) of this definition.


<PAGE>


SECTION 2. CREDIT FACILITIES SECTION   2. CREDIT FACILITIES

         2.1 LOANS.1 LOANS.

               (a Subject to and upon the terms and conditions contained herein,
Lender agrees to make Loans to Borrowers from time to time in amounts  requested
by a Borrower  or Timet on behalf of  Borrowers  up to the  amount  equal to the
lesser of: (i) the Borrowing Base or (ii) the Maximum Credit.

               (b Lender may,  in its  discretion,  from time to time,  upon not
less  than  five (5) days  prior  notice  to a  Borrower  or Timet on  behalf of
Borrowers,  (i) reduce the lending formula with respect to Eligible  Accounts to
the extent that Lender  determines  in good faith that:  (A) the  dilution  with
respect to the Accounts for any period  (based on the ratio of (1) the aggregate
amount of reductions  in Accounts  other than as a result of payments in cash to
(2) the aggregate  amount of total sales) has increased in any material  respect
or may be  reasonably  anticipated  to increase in any  material  respect  above
historical  levels, or (B) the general  creditworthiness  of account debtors has
declined in any material  respect,  or (ii) reduce the lending  formula(s)  with
respect to Eligible Inventory to the extent that Lender determines that: (A) the
number of days of the turnover of the  Inventory for any period has increased in
any material respect, or (B) the liquidation value of the Eligible Inventory, or
any category thereof,  has decreased in any material respect, or (C) the nature,
quality or mix of the Inventory has  deteriorated in any material  respect.  The
amount  of any  decrease  in  the  lending  formulas  shall  have  a  reasonable
relationship to the event, condition or circumstance which is the basis for such
decrease as determined by Lender in good faith. In determining whether to reduce
the lending formula(s), Lender may consider events, conditions, contingencies or
risks which are also  considered  in  determining  Eligible  Accounts,  Eligible
Inventory or in establishing  Reserves (but without  duplication in reducing the
lending  formula(s) and determining  Eligible  Accounts,  Eligible  Inventory or
Reserves).


<PAGE>


               (c Except in Lender's discretion, (i) the aggregate amount of the
Loans and the Letter of Credit Accommodations  outstanding at any time shall not
exceed the Maximum Credit,  (ii the aggregate amount of the Loans outstanding at
any time based on Accounts owing by account debtors whose chief executive office
is LOCATED OTHER THAN IN THE UNITED STATES OF AMERICA OR CANADA SHALL NOT EXCEED
$5,000,000  (PROVIDED,  THAT,  Loans based upon  Accounts  owing by such account
debtors  shall not be considered  for purposes of this clause  (c)(ii) if Lender
has  obtained a perfected  security  interest  and lien (or  equivalent  thereof
satisfactory  to Lender) under the laws of the  jurisdiction  in which the chief
executive  office of such account debtor is located,  (iii) the aggregate amount
of the Loans  outstanding at any time based on Accounts subject to bill and hold
arrangements  with The Boeing  Company (or any Boeing  Recognized  Subcontractor
under the Purchase and Sale  Agreement,  dated as of November 5, 1997,  of Timet
with The Boeing  Company  where the Accounts  arise under such Purchase and Sale
Agreement)  shall not exceed  $5,000,000,  and (iv) the aggregate  amount of the
Loans  outstanding  at any time based on Accounts owing by ValTimet which may be
Eligible Accounts shall not exceed $5,000,000. In the event that the outstanding
amount of any component of the Loans as set forth above and in the definition of
the Borrowing Base, or the aggregate amount of the outstanding  Loans and Letter
of Credit  Accommodations,  exceed  the  amounts  available  under  the  lending
formulas, the sublimits for Letter of Credit Accommodations set forth in Section
2.2(e) or the Maximum Credit, as applicable,  such event shall not limit,  waive
or otherwise  affect any rights of Lender in that  circumstance or on any future
occasions and Borrowers shall,  upon demand by Lender,  which may be made at any
time or from time to time,  immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.

   2.2  LETTER OF CREDIT ACCOMMODATIONS    2.2  LETTER OF CREDIT ACCOMMODATIONS.

               (a Subject to and upon the terms and conditions contained herein,
at the request of a Borrower, or Timet on behalf of Borrowers,  Lender agrees to
provide  or  arrange  for  Letter of Credit  Accommodations  for the  account of
Borrowers  containing  terms and conditions  acceptable to Lender and the issuer
thereof.  Any  payments  made by Lender to any  issuer  thereof  and/or  related
parties in connection with the Letter of Credit  Accommodations shall constitute
additional Loans to Borrowers pursuant to this Section 2.

               (b In addition to any  charges,  fees or expenses  charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Lender a letter of credit fee at a rate  equal to one and  one-half
(1 2%)  percent  per annum on the daily  outstanding  balance  of the  Letter of
Credit  Accommodations  for the  immediately  preceding month (or part thereof),
payable in arrears as of the first day of each  succeeding  month,  except  that
Borrowers  shall pay to Lender such  letter of credit  fee, at Lender's  option,
without  notice,  at a rate equal to three and one-half (3 2%) percent per annum
on such daily outstanding balance for: (i) the period from and after the date of
termination or non-renewal of this Agreement  until Lender has received full and
final payment of all Obligations  (notwithstanding entry of a judgment against a
Borrower)  and (ii) the period from and after the date of the  occurrence  of an
Event  of  Default  for so  long as such  Event  of  Default  is  continuing  as
determined by Lender. Such letter of credit fee shall be calculated on the basis
of a three  hundred  sixty  (360)  day  year and  actual  days  elapsed  and the
obligation  of  Borrowers  to pay such fee  shall  survive  the  termination  or
non-renewal of this Agreement.

               (c)  Borrowers  shall give Lender three (3) Business  Days= prior
written  of  Borrowers'   request  for  the  issuance  of  a  Letter  of  Credit
Accommodation.  Such notice shall be irrevocable  and shall specify the original
face amount of the Letter of Credit Accommodation  requested, the effective date
(which date shall be a Business  Day) of issuance  of such  requested  Letter of
Credit Accommodation,  whether such Letter of Credit Accommodations may be drawn
in a single or in  partial  draws,  the date on which such  requested  Letter of
Credit  Accommodation  is to expire  (which date shall be a Business  Day),  the
purpose for which such Letter of Credit  Accommodation is to be issued,  and the
beneficiary of the requested  Letter of Credit  Accommodation.  Borrowers  shall
send to Lender  with  such  notice  the  proposed  form of the  Letter of Credit
Accommodation.


<PAGE>


               (d) In  addition  to being  subject  to the  satisfaction  of the
applicable  conditions  precedent  contained  in  Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit  Accommodations shall
be  available  unless  each of the  following  conditions  precedent  have  been
satisfied in a manner satisfactory to Lender: (i) Borrowers shall have delivered
to the proposed issuer of such Letter of Credit  Accommodation at such times and
in such manner as such proposed  issuer may require,  an application in form and
substance  satisfactory  to such proposed  issuer and Lender for the issuance of
the Letter of Credit  Accommodation  and such other documents as may be required
pursuant to the terms thereof,  and the form and terms of the proposed Letter of
Credit  Accommodation  shall be satisfactory to Lender and such proposed issuer,
(ii) as of the date of  issuance,  no order of any  court,  arbitrator  or other
Governmental  Authority  shall purport by its terms to enjoin or restrain  money
center banks  generally  from  issuing  letters of credit of the type and in the
amount  of the  proposed  Letter of Credit  Accommodation,  and no law,  rule or
regulation  applicable  to  money  center  banks  generally  and no  request  or
directive  (whether  or not  having  the  force of law)  from  any  Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit Accommodation  refrain
from,  the  issuance  of letters of credit  generally  or the  issuance  of such
Letters of Credit  Accommodation;  and (iii) the Excess  Availability,  prior to
giving   effect  to  any  Reserves   with  respect  to  such  Letter  of  Credit
Accommodations  requested by Borrowers,  on the date of the proposed issuance of
any Letter of Credit  Accommodations,  shall be equal to or greater than: (A) if
the proposed  Letter of Credit  Accommodation  is for the purpose of  purchasing
Eligible  Inventory,  the sum of (1) forty-five (45%) multiplied by the Value of
such Eligible Inventory,  plus (2) freight,  taxes, duty and other amounts which
Lender estimates must be paid in connection with such Inventory upon arrival and
for delivery to one of a Borrower 's locations for Eligible Inventory within the
United States of America and (iv) if the proposed Letter of Credit Accommodation
is for any other  purpose,  an amount equal to one hundred (100%) percent of the
face amount thereof and all other  commitments and obligations  made or incurred
by Lender with  respect  thereto.  Effective  on the  issuance of each Letter of
Credit  Accommodation,  a Reserve shall be established in the applicable  amount
set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

               (e) Except in Lender's discretion,  the amount of all outstanding
Letter of Credit  Accommodations  and all other commitments and obligations made
or  incurred  by Lender in  connection  therewith  shall not at any time  exceed
$20,000,000.  At any time an Event of  Default  exists  or has  occurred  and is
continuing, upon Lender's request, Borrowers will either furnish cash collateral
to secure the  reimbursement  obligations  to the issuer in connection  with any
Letter of Credit  Accommodations  or furnish cash  collateral  to Lender for the
Letter of Credit Accommodations.


<PAGE>


               (f) Each Borrower shall  indemnify and hold Lender  harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which  Lender  may  suffer  or incur in  connection  with any  Letter  of Credit
Accommodations  and any  documents,  drafts  or  acceptances  relating  thereto,
including any losses, claims,  damages,  liabilities,  costs and expenses due to
any action  taken by any issuer or  correspondent  with respect to any Letter of
Credit Accommodation, except for any losses, claims, damages, liabilities, costs
and expenses as a result of the gross negligence or wilful  misconduct of Lender
as determined pursuant to a final,  non-applicable order of a court of competent
jurisdiction.  Each  Borrower  assumes  all risks  with  respect  to the acts or
omissions  of  the  drawer  under  or   beneficiary  of  any  Letter  of  Credit
Accommodation  and for such purposes the drawer or  beneficiary  shall be deemed
such Borrower's  agent.  Each Borrower assumes all risks for, and agrees to pay,
all foreign,  Federal,  State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder.  Each Borrower hereby releases and holds Lender harmless
from and against any acts, waivers, errors, delays or omissions,  whether caused
by a Borrower,  by any issuer or  correspondent  or otherwise with respect to or
relating to any Letter of Credit Accommodation,  except for the gross negligence
or wilful misconduct of Lender as determined pursuant to a final, non-appealable
order of a court of  competent  jurisdiction.  The  provisions  of this  Section
2.2(e)  shall  survive  the  payment  of  Obligations  and  the  termination  or
non-renewal of this Agreement.

               (g) In connection with Inventory  purchased pursuant to Letter of
Credit  Accommodations,  Borrowers  will,  at  Lender=s  request,  instruct  all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash,  checks,  Inventory,  documents or  instruments in which Lender
holds a security  interest to deliver them to Lender and/or  subject to Lender=s
order,  and if they shall come into a Borrower=s  possession,  to deliver  them,
upon Lender's request,  to Lender in their original form.  Borrowers shall also,
at  Lender=s  request,  designate  Lender  (or such  other  person as Lender may
designate)  as the  consignee  on all bills of lading and other  negotiable  and
non-negotiable documents.

               (h) Each Borrower hereby  irrevocably  authorizes and directs any
issuer of a Letter of Credit  Accommodation  to name  Borrowers  as the  account
party  therein  and to deliver to Lender all  instruments,  documents  and other
writings  and  property  received  by issuer  pursuant  to the  Letter of Credit
Accommodations and to accept and rely upon Lender=s  instructions and agreements
with  respect to all  matters  arising in  connection  with the Letter of Credit
Accommodations  or the  applications  therefor  (subject to the  limitations  on
Lender=s rights provided for below). Nothing contained herein shall be deemed or
construed  to grant  Borrowers  any right or  authority  to pledge the credit of
Lender in any manner. Lender shall have no liability of any kind with respect to
any Letter of Credit  Accommodation  provided  by an issuer  other  than  Lender
unless Lender has duly executed and delivered to such issuer the  application or
a guarantee or  indemnification in writing with respect to such Letter of Credit
Accommodation.

               (i) At any time an Event of Default exists or has occurred and is
continuing,  Borrowers  shall not,  without the prior written consent of Lender,
and Lender  shall have the right and  authority  to (i)  approve or resolve  any
questions of  non-compliance  of  documents,  (ii) give any  instructions  as to
acceptance  or rejection of any  documents or goods,  (iii)  execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any  extensions  of the maturity of, time of payments for, or time of
presentation  of, any drafts,  acceptances,  or documents,  and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of  the  terms  or  conditions  of any of the  applications,  Letter  of  Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit  included in the  Collateral.  Lender may take such actions either in its
own name or in any Borrower's name.


<PAGE>


               (j) At any  time,  so long as no Event of  Default  exists or has
occurred and is continuing,  each Borrower may, with Lender's prior approval (i)
grant any  extensions  of the  maturity  of,  time of  payment  for,  or time of
presentation of, any drafts,  acceptances,  or documents,  and (ii) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of  the  terms  or  conditions  of any of the  applications,  Letter  of  Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit  included  in  the  Collateral.  Each  Borrower  shall  be  bound  by any
interpretation   made  in  good  faith  by  Lender,   or  any  other  issuer  or
correspondent under or in connection with any Letter of Credit  Accommodation or
any  documents,  drafts or  acceptances  thereunder,  notwithstanding  that such
interpretation may be inconsistent with any instructions of such Borrower.

               (k) Any  rights,  remedies,  duties  or  obligations  granted  or
undertaken by a Borrower to any issuer or  correspondent  in any application for
any  Letter of Credit  Accommodation,  or any  other  agreement  in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender. Any duties
or  obligations  undertaken  by Lender to any  issuer  or  correspondent  in any
application  for any Letter of Credit  Accommodation,  or any other agreement by
Lender in favor of any issuer or correspondent  relating to any Letter of Credit
Accommodation,  shall be deemed to have been  undertaken  by Borrowers to Lender
and to apply in all respects to Borrowers.


<PAGE>


         2.3 JOINT AND SEVERAL  LIABILITY..3 JOINT AND SEVERAL  LIABILITY.  Both
Borrowers  shall be liable for all amounts due to Lenders under this  Agreement,
regardless  of which  Borrower  actually  receives the Loans or Letter of Credit
Accommodations  hereunder or the amount of such Loans  received or the manner in
which Lender accounts for such Loans,  Letter of Credit  Accommodations or other
extensions of credit on its books and records.  The Obligations  with respect to
Loans made to a Borrower,  and the Obligations  arising as a result of the joint
and several liability of a Borrower hereunder, with respect to Loans made to the
other Borrower hereunder,  shall be separate and distinct  obligations,  but all
such  other  Obligations  shall be primary  obligations  of all  Borrowers.  The
Obligations arising as a result of the joint and several liability of a Borrower
hereunder  with  respect  to Loans,  Letter of  Credit  Accommodations  or other
extensions of credit made to the other Borrower  hereunder shall, to the fullest
extent  permitted by law, be  unconditional  irrespective of (a) the validity or
enforceability,  avoidance  or  subordination  of the  Obligations  of the other
Borrower or of any promissory note or other document  evidencing all or any part
of the  Obligations  of the other  Borrower,  (b) the  absence of any attempt to
collect the  Obligations  from the other  Borrower,  any  Guarantor or any other
security  therefor,  or the absence of any other action to enforce the same, (c)
the waiver,  consent,  extension,  forbearance  or granting of any indulgence by
Lender  with  respect  to  any  provisions  of  any  instrument  evidencing  the
Obligations of the other Borrower,  or any part thereof,  or any other agreement
now or hereafter executed by the other Borrower and delivered to Lender, (d) the
failure  by  Lender to take any  steps to  perfect  and  maintain  its  security
interest in, or to preserve  its rights and maintain its security or  collateral
for the  Obligations  of the other  Borrower,  (e) the election of Lender in any
proceeding  instituted  under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of
the  claim(s)  of  Lender  for the  repayment  of the  Obligations  of the other
Borrower  under  Section  502  of  the   Bankruptcy   Code,  or  (g)  any  other
circumstances  which might constitute a legal or equitable  discharge or defense
of a Guarantor or of the other  Borrower,  other than the wilful  misconduct  or
gross  negligence  of Lender as determined  pursuant to a final,  non-appealable
order of a court of  competent  jurisdiction.  With  respect to the  Obligations
arising as a result of the joint and several  liability of a Borrower  hereunder
with respect to Loans,  Letter of Credit  Accommodations  or other extensions of
credit made to the other Borrower  hereunder,  each Borrower  waives,  until the
Obligations  shall  have been paid in full and this  Agreement  shall  have been
terminated,  any right to enforce any right of  subrogation  or any remedy which
Lender now has or may  hereafter  have  against  Borrower,  any  endorser or any
guarantor  of all or any part of the  Obligations,  and any  benefit of, and any
right to participate  in, any security or collateral  given to Lender.  Upon any
Event of  Default,  Lender may proceed  directly  and at once,  without  notice,
against any Borrower to collect and recover the full  amount,  or any portion of
the  Obligations,  without first  proceeding  against the other  Borrower or any
other Person,  or against any security or collateral for the  Obligations.  Each
Borrower  consents  and  agrees  that  Lender  shall be under no  obligation  to
marshall any assets in favor of  Borrower(s)  or against or in payment of any or
all of the Obligations.

SECTION 3.   INTEREST AND FEESSECTION 3.   INTEREST AND FEES

         3.1   INTEREST.3.1     INTEREST.

               (a)  Borrowers  shall pay to Lender  interest on the  outstanding
principal  amount of the  Loans at the  Interest  Rate.  All  interest  accruing
hereunder  on and after  the date of any  Event of  Default  or  termination  or
non-renewal hereof shall be payable on demand.


<PAGE>


               (b) Each  Borrower or Timet on behalf of Borrowers  may from time
to time request that Prime Rate Loans be converted to  Eurodollar  Rate Loans or
that any existing  Eurodollar  Rate Loans  continue for an  additional  Interest
Period.  Such request  from a Borrower  (or Timet on behalf of  Borrowers  shall
specify the amount of the Prime Rate Loans which will constitute Eurodollar Rate
Loans  (subject  to the limits set forth  below) and the  Interest  Period to be
applicable to such  Eurodollar  Rate Loans.  Subject to the terms and conditions
contained  herein,  two (2)  Business  Days  after  receipt  by Lender of such a
request from a Borrower (or Timet on behalf of Borrowers), such Prime Rate Loans
shall be converted to Eurodollar  Rate Loans or such Eurodollar Rate Loans shall
CONTINUE,  AS THE CASE MAY BE, PROVIDED,  THAT, (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default  shall exist or have  occurred  and be  continuing,  (ii) no
party hereto shall have sent any notice of  termination  or  non-renewal of this
Agreement, (iii) Borrowers shall have complied with such customary procedures as
are established by Lender and specified by Lender to Borrowers from time to time
for requests by Borrowers for Eurodollar Rate Loans,  (iv) no more than four (4)
Interest  Periods may be in effect at any one time, (v) the aggregate  amount of
the  Eurodollar  Rate Loans must be in an amount not less than  $5,000,000 or an
integral  multiple of $1,000,000 in excess  thereof,  and (vi) Lender shall have
determined that the Interest Period or Adjusted  Eurodollar Rate is available to
Lender through the Reference  Bank and can be readily  determined as of the date
of the request for such Eurodollar Rate Loan by such Borrower.  Any request by a
Borrower  or Timet on  behalf  of  Borrowers  to  convert  Prime  Rate  Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable.  Notwithstanding anything to the contrary contained herein, Lender,
Reference  Bank and any  Participant  shall not be required  to purchase  United
States  Dollar  deposits  in the  London  interbank  market or other  applicable
Eurodollar  Rate market to fund any  Eurodollar  Rate Loans,  but the provisions
hereof shall be deemed to apply as if Lender, Reference Bank or such Participant
had purchased such deposits to fund the Eurodollar Rate Loans.

               (c) Any  Eurodollar  Rate Loans  shall  automatically  convert to
Prime Rate Loans upon the last day of the  applicable  Interest  Period,  unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least two (2)  Business  Days prior to such last day in  accordance  with the
terms hereof.  Any Eurodollar Rate Loans shall, at Lender's option,  upon notice
by Lender to Timet, convert to Prime Rate Loans in the event that this Agreement
shall terminate or not be renewed. Borrowers shall pay to Lender, upon demand by
Lender (or Lender may, at its option, charge any loan account of a Borrower) any
amounts required to compensate  Lender for any loss, cost or expense incurred by
Lender (or any person  providing  funds to Lender  used in  connection  with the
Loans and Letter of Credit  Accommodations  which results in such loss,  cost or
expense to Lender) as a result of the  conversion  of  Eurodollar  Rate Loans to
Prime Rate Loans pursuant to any of the foregoing.

               (d) Interest  shall be payable by Borrowers to Lender  monthly in
arrears  not  later  than the  first  day of each  calendar  month  and shall be
calculated  on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent  Obligations (other than Eurodollar
Rate Loans) shall  increase or decrease by an amount  equal to each  increase or
decrease  in the Prime Rate  effective  on the first day of the month  after any
change in such Prime Rate is announced  based on the Prime Rate in effect on the
last day of the month in which any such change occurs.


<PAGE>


               (e)  No  agreements,   conditions,   provisions  or  stipulations
contained in this  Agreement  or any of the other  Financing  Agreements  or any
Event of  Default,  or the  exercise  by Lender of the right to  accelerate  the
payment  or  the  maturity  of all or any  portion  of the  Obligations,  or the
exercise by Lender of any option  whatsoever  contained in this Agreement or any
of the other  Financing  Agreements,  or the  prepayment  by or on behalf of any
Borrower  of  any  of  the  Obligations,  or the  occurrence  of  any  event  or
contingency whatsoever, shall entitle Lender to contract for, charge or receive,
in any event, interest exceeding the maximum non-usurious rate of interest under
applicable  Federal  or State  Law as in  effect  from  time to time that may be
contracted for, taken, reserved,  charged or received in respect of Indebtedness
of any Borrower to Lender (the "Maximum  Interest Rate").  In no event shall any
Borrower be obligated to pay interest  exceeding such Maximum Interest Rate. All
agreements,  conditions  or  stipulations,  if any,  which  may in any  event or
contingency  whatsoever operate to bind, obligate or compel such Borrower to pay
a rate of interest  exceeding the Maximum Interest Rate shall be without binding
force or effect,  at law or in equity,  to the extent of the excess of  interest
over such Maximum  Interest  Rate. In the event any interest is contracted  for,
charged or received  in excess of the Maximum  Interest  Rate  ("Excess"),  each
Borrower  acknowledges and stipulates that any such contract,  charge or receipt
shall be the  RESULT OF AN  ACCIDENT  AND BONA FIDE  error,  and that any Excess
received  by  Lender  shall  be  applied,  first,  to the  payment  of the  then
outstanding and unpaid principal hereunder;  second, to the payment of the other
Obligations  then outstanding and unpaid;  and third,  returned to such Borrower
(or Timet on behalf of such Borrower), it being the intent of the parties hereto
not to enter at any time into a usurious or otherwise illegal relationship. Each
Borrower recognizes that, with fluctuations in the rate of interest set forth in
this Section 3.1 and the Maximum  Interest Rate,  such an  unintentional  result
could  inadvertently  occur. By the execution of this  Agreement,  each Borrower
agrees  that (i) the  credit  or  return  of any  Excess  shall  constitute  the
acceptance  by such Borrower of such Excess,  and (ii) each  Borrower  shall not
seek or pursue any other remedy,  legal or equitable,  against Lender,  based in
whole or in part upon contracting for,  charging or receiving of any interest in
excess of the Maximum  Interest Rate. For the purpose of determining  whether or
not any Excess has been  contracted  for,  charged or  received  by Lender,  all
interest at any time contracted for, charged or received by Lender in connection
with this Agreement or any of the other Financing Agreements shall be amortized,
prorated,  allocated  and spread in equal  parts  during the entire term of this
Agreement.

         3.2  CLOSING  FEE.2  CLOSING  FEE.  Borrowers  shall pay to Lender as a
closing fee the amount of  $937,500,  which shall be fully earned and payable as
of the date hereof.

         3.3 SYNDICATION FEE3.3 SYNDICATION FEE. Borrowers shall pay to Lender a
syndication  fee in the amount of $625,000,  which fee shall be fully earned and
payable as of the date hereof.

         3.4  SERVICING  FEE3.4  SERVICING  FEE.  Borrowers  shall pay to Lender
monthly a  servicing  fee in an amount  equal to $4,000 in respect  of  Lender's
services for each month (or part thereof) while this Agreement remains in effect
and for so long thereafter as any of the Obligations are outstanding,  which fee
shall be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.

         3.5 UNUSED LINE FEE3.5 UNUSED LINE FEE.  Borrowers  shall pay to Lender
monthly  an unused  line fee at a rate equal to the  percentage  (on a per annum
basis) set forth below  calculated  upon the amount by which the Maximum  Credit
exceeds the average daily principal  balance of the outstanding Loans and Letter
of  Credit  Accommodations  during  the  immediately  preceding  month  (or part
thereof) while this Agreement is in effect and for so long  thereafter as any of
the Obligations are outstanding,  which fee shall be payable on the first day of
each month in arrears.  The percentage  used for determining the unused line fee
shall be as set forth below if either the Quarterly Average Excess  Availability
for the immediately preceding fiscal quarter is in the amount indicated for such
percentage  or  the  Fixed  Charge  Coverage  Ratio  as of the  last  day of the
immediately  preceding  fiscal  quarter  (which ratio for this purpose  shall be
calculated  based on the four (4) immediately  preceding  fiscal quarters) is at
the level indicated for such percentage:

<TABLE>

<CAPTION>

                                                             Fixed Charge             Unused Line

                 EXCESS AVAILABILITY                        COVERAGE RATIO           FEE PERCENTAGE

<S>             <C>                                        <C>             <C>            <C>

          (a)   $75,000,000 or more                        1.75 or more to 1              1/4%

          (b)   $25,000,000 to $75,000,000                 1.25 to 1.75 to 1              3/8%

          (c)   Less than $25,000,000                     Less than 1.25 to 1             1/2%

</TABLE>


<PAGE>


PROVIDED,  THAT,  (i) the unused line fee  percentage  shall be  calculated  and
established  once each fiscal  quarter  and (ii) the unused line fee  percentage
shall be the lower  percentage  set forth above based on the  Quarterly  Average
Excess Availability or the Fixed Charge Coverage Ratio.

 3.6   CHANGES IN LAWS AND INCREASED COSTS OF LOANS
 3.6   CHANGES IN LAWS AND INCREASED COSTS OF LOANS.


               (a)  Notwithstanding  anything to the contrary  contained herein,
all Eurodollar Rate Loans shall, upon notice by Lender to a Borrower, convert to
Prime  Rate  Loans  in the  event  that  (i) any  change  in  applicable  law or
regulation (or the  interpretation or  administration  thereof) shall either (A)
make it unlawful for Lender,  Reference Bank or any  Participant  with Lender to
make or maintain  Eurodollar  Rate Loans or to comply  with the terms  hereof in
connection  with the Eurodollar  Rate Loans, or (B) shall result in the increase
in the  costs  to  Lender,  Reference  Bank  or any  Participant  of  making  or
maintaining  any  Eurodollar  Rate  Loans by an  amount  deemed  by Lender to be
material,  or (C) reduce the amounts  received or receivable by Lender Reference
Bank or  Participant  in respect  thereof,  by an amount  deemed by Lender to be
material or (ii) the cost to Lender, Reference Bank or any Participant of making
or maintaining any Eurodollar  Rate Loans shall otherwise  increase by AN AMOUNT
DEEMED BY LENDER TO BE MATERIAL,  PROVIDED,  THAT,  in the event that it becomes
unlawful for any  Participant to make or maintain its interest in the Eurodollar
Rate  Loans,  or there is an increase  in the costs as to any  Participant  or a
reduction  in  the  amount  receivable  by any  Participant  in  respect  of its
interests in the Eurodollar  Loans, as the case may be, then only the portion of
the Eurodollar  Rate Loans equal to the pro rata share of the Participant in the
Loans shall be converted to Prime Rate Loans and thereafter  such portion of the
Loans shall not be available as Eurodollar  Rate Loans.  Borrowers  shall pay to
Lender,  upon demand by Lender (or Lender  may,  at its option,  charge any loan
account of a Borrower) any amounts  required to compensate  Lender for any loss,
cost or  expense  incurred  by Lender as a result of the  foregoing,  including,
without  limitation,  any such loss, cost or expense  incurred by Lender (or any
person  providing  funds to Lender in  connection  with the Loans and  Letter of
Credit  Accommodations which results in such loss, cost or expense to Lender) by
reason of the liquidation or reemployment of deposits or other funds acquired by
such  person  to make or  maintain  the  Eurodollar  Rate  Loans or any  portion
thereof. In determining such additional amounts,  Lender will act reasonably and
in good  faith  and  will  use  averaging  and  attribution  methods  which  are
reasonable and which will, to the extent the increased costs or reduction in the
rate of return relates to Lender's commitments or obligations in general and are
not specifically attributable to the financing arrangements hereunder, cover all
financing arrangements similar to the financing arrangements of Lender hereunder
whether or not the loan  documentation for such other commitments or obligations
permits  Lender to make the  determination  specified  in this  Section 3.6, and
Lender's  determination  of  compensation  owing under this Section 3.6 shall be
final,  conclusive  and binding on all parties hereto absent  manifest  error. A
certificate  of Lender  setting  forth the basis for the  determination  of such
amount  necessary  to  compensate  Lender as  aforesaid  shall be delivered to a
Borrower and shall be conclusive, absent manifest error.


<PAGE>


               (b) If any payments or  prepayments  in respect of the Eurodollar
Rate Loans are received by Lender  other than on the last day of the  applicable
Interest Period (whether pursuant to acceleration,  upon maturity or otherwise),
including any payments  pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral,  Borrowers shall
pay to Lender upon  demand by Lender (or Lender  may, at its option,  charge any
loan account of a Borrower) any amounts  required to  compensate  Lender for any
additional  loss,  cost or expense  incurred by Lender (or any person  providing
funds to Lender in connection with the Loans and Letter of Credit Accommodations
which  results  in such  loss,  cost or  expense  to  Lender as a result of such
prepayment or payment, including,  without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by Lender or such  person) to make or  maintain  such  Eurodollar  Rate
Loans or any portion thereof.

SECTION 4.   CONDITIONS PRECEDENTSECTION 4.   CONDITIONS PRECEDENT

         4.1  CONDITIONS  PRECEDENT  TO  INITIAL  LOANS  AND  LETTER  OF  CREDIT
ACCOMMODATIONS.1  CONDITIONS  PRECEDENT  TO  INITIAL  LOANS AND LETTER OF CREDIT
ACCOMMODATIONS.  Each of the following is a condition precedent to Lender making
the initial  Loans and  providing  the initial  Letter of Credit  Accommodations
hereunder:

               (a)  Lender  shall  have  received  concurrently,   in  form  and
substance  satisfactory  to Lender,  all releases,  terminations  and such other
documents as Lender may request to evidence and  effectuate  the  termination by
the Existing Lenders to Timet of their respective  financing  arrangements  with
Timet and the  termination and release by it or them, as the case may be, of any
interest in and to any assets and  properties of Borrowers  and  Obligors,  duly
authorized,  executed and  delivered by it or each of them,  including,  but not
limited to, (i) UCC  termination  statements  for all UCC  financing  statements
previously  filed by it or any of them or their  predecessors,  as secured party
and any Borrower or Obligor,  as debtor and (ii) satisfactions and discharges of
any mortgages, deeds of trust or deeds to secure debt by any Borrower or Obligor
in favor of such Existing  Lenders,  in form  acceptable  for recording with the
appropriate Governmental Authority;

               (b) all requisite  corporate action and proceedings in connection
with this  Agreement  and the other  Financing  Agreements  shall be  reasonably
satisfactory in form and substance to Lender, and Lender shall have received all
information  and  copies  of  all  documents,  including  records  of  requisite
corporate  action and proceedings  which Lender may have requested in connection
therewith,  such  documents  where  requested  by  Lender or its  counsel  to be
certified by appropriate corporate officers or Governmental Authority;

               (c) no material adverse change shall have occurred in the assets,
business or financial  condition of Borrowers  since the date of Lender's latest
field  examination and no change or event shall have occurred which would impair
the ability of any Borrower to perform its obligations hereunder or under any of
the other  Financing  Agreements  to which it is a party or of Lender to enforce
the Obligations or realize upon the Collateral;


<PAGE>


               (d) Lender shall have completed a field review of the Records and
such other  information  with respect to the Collateral as Lender may require to
determine  the  amount  of Loans  available  to  Borrowers  (including,  without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory  through the date of closing and test counts of the Inventory in a
manner  satisfactory to Lender,  together with such supporting  documentation as
may be necessary or appropriate,  and other documents and information  that will
enable Lender to accurately identify and verify the Collateral),  the results of
which  each case  shall be  satisfactory  to  Lender,  not more  than  three (3)
Business Days prior to the date hereof;

               (e) Lender shall have received,  in form and substance reasonably
satisfactory  to  Lender,  all  consents,  waivers,  acknowledgments  and  other
agreements  from third persons  which Lender may deem  necessary or desirable in
order to permit,  protect and perfect its  security  interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements  by  owners  and  lessors  of leased  premises  of  Borrowers  and by
warehouses at which Collateral is located;

               (f) the aggregate amount of the Excess  Availability of Borrowers
as  determined  by  Lender,  as of the  date  hereof,  shall  be not  less  than
$50,000,000  after  giving  effect to the  initial  Loans made or to be made and
Letter of Credit  Accommodations  issued or to be issued in connection  with the
initial transactions hereunder;

               (g) Lender shall have  received  evidence,  in form and substance
satisfactory  to  Lender,  that (i) Timet UK  Limited  shall  have  concurrently
herewith entered into financing arrangements with Lloyds TSB Bank plc to provide
loans and other  financial  accommodations  to Timet UK Limited of not less than
$45,000,000  (or the  equivalent in pounds  sterling as of the date hereof),  on
terms  and  conditions  reasonably  acceptable  to  Lender,  (ii) not less  than
$15,000,000  of the initial  proceeds of the loans  received by Timet UK Limited
pursuant  to such  financing  arrangements  shall  have  been  used to repay the
remaining  principal amount outstanding  evidenced by the Promissory Note, dated
January 1, 1996,  issued by Timet UK Limited  payable to TFMC,  (iii) TFMC shall
have used the proceeds of such repayment to pay a dividend to Timet and (iv) not
less than  $15,000,000  in  immediately  available  funds  are being  held in an
account of Theodore  Goddard  with  irrevocable  instructions,  satisfactory  to
Lender and Theodore Goddard, to remit such funds on the next Business Day to the
Payment Account (as defined in Section 6.3 hereof);

               (h) Lender  shall have  received a  Statement  of Purpose  for an
Extension of Credit Secured by Margin Stock by a Person subject to  Registration
under  Regulation U (Federal  Reserve Form G-3) properly  completed by Borrowers
and  TFMC,  in form and  substance  satisfactory  to  Lender,  duly  authorized,
executed and delivered by Borrowers and TFMC;

               (i) Lender  shall have  received  originals  of the shares of the
stock certificates  representing all of the issued and outstanding shares of the
Capital Stock of the Restricted  Subsidiaries  of Timet  incorporated  under the
laws of any  State of the  United  States  of  America  and  stock  certificates
representing  sixty-five  (65%) percent of the issued and outstanding  shares of
Capital Stock of Timet UK Limited,  in each case together with stock powers duly
executed in blank with respect thereto;


<PAGE>


               (j) Lender  shall have  received  originals  of the  certificates
representing  the SMC Stock  owned by TFMC,  together  with  stock  powers  duly
executed in blank with respect thereto;

               (k) Lender shall have received,  in form and substance reasonably
satisfactory to Lender,  all agreements with the depository  banks and Borrowers
with respect to the Blocked  Accounts as Lender may require  pursuant to Section
6.3 hereof, duly authorized, executed and delivered by such depository banks and
Borrowers;

               (l) Lender shall have  received  evidence,  in form and substance
satisfactory  to  Lender,  that  Lender  has a valid  perfected  first  priority
security  interest in all of the Collateral (other than such deposit accounts of
Borrowers and  Guarantors or such other assets for which Lender has not required
that its security interest be perfected as of the date hereof),  subject to such
liens as are permitted hereunder and which by their terms may have priority over
the security interests of Lender;

               (m) Lender shall have  received  and  reviewed  UCC, tax lien and
judgment search results for all  jurisdictions  in which assets of Borrowers and
Guarantors  are located or as Lender may otherwise  agree,  which search results
shall be in form and substance satisfactory to Lender;

               (n) Lender shall have received,  in form and substance reasonably
satisfactory to Lender, a valid and effective title insurance policy issued by a
company and agent  acceptable  to Lender (i) insuring the  priority,  amount and
sufficiency  of the  Mortgages,  (ii)  insuring  against  matters  that would be
disclosed by surveys and (iii)  containing any legally  available  endorsements,
assurances or  affirmative  coverage  requested by Lender for  protection of its
interests;

               (o) Lender shall have  received  evidence of  insurance  and loss
payee endorsements  required hereunder and under the other Financing Agreements,
in form and substance  reasonably  satisfactory to Lender,  and  certificates of
insurance policies and/or endorsements naming Lender as loss payee;

               (p) Lender shall have received,  in form and substance reasonably
satisfactory  to Lender,  such  opinion  letters of  counsel to  Borrowers  with
respect  to the  Financing  Agreements  and such  other  matters  as Lender  may
request; and

               (q)  the  other  Financing  Agreements  and all  instruments  and
documents  hereunder and thereunder  shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.

         4.2   CONDITIONS   PRECEDENT   TO  ALL  LOANS  AND   LETTER  OF  CREDIT
ACCOMMODATIONS4.2  CONDITIONS  PRECEDENT  TO ALL  LOANS  AND  LETTER  OF  CREDIT
ACCOMMODATIONS.  Each of the following is an additional  condition  precedent to
Lender making Loans and/or  providing  Letter of Credit  Accommodations  to each
Borrower,  including the initial Loans and Letter of Credit  Accommodations  and
any future Loans and Letter of Credit Accommodations:


<PAGE>


               (a) all  representations  and warranties  contained herein and in
the  other  Financing  Agreements  shall be true  and  correct  in all  material
respects with the same effect as though such  representations and warranties had
been made on and as of the date of the  making  of each  such Loan or  providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such  representations and warranties  expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);

               (b)  no  law,  regulation,  order,  judgment  or  decree  of  any
Governmental  Authority  shall  exist,  and  no  action,  suit,   investigation,
litigation or  proceeding  shall be pending or threatened in any court or before
any  arbitrator  or  Governmental  Authority,  which  (i)  purports  to  enjoin,
prohibit,  restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated  pursuant to the terms hereof or the other Financing  Agreements or
(ii) has or would reasonably be expected to have a Material Adverse Effect; and

               (c) no Event of Default  and no act,  condition  or event  which,
with notice or passage of time or both,  would  constitute  an Event of Default,
shall  exist or have  occurred  and be  continuing  on and as of the date of the
making of such Loan or providing  each such Letter of Credit  Accommodation  and
after giving effect thereto.

SECTION 5.   GRANT OF SECURITY INTERESTSECTION 5.   GRANT OF SECURITY INTEREST

         5.1 To secure payment and performance of all Obligations, each Borrower
hereby grants to Lender a continuing  security  interest in, a lien upon,  and a
right of set off  against,  and  hereby  assigns  to  Lender  as  security,  the
following property and interests in property of such Borrower, whether now owned
or hereafter acquired or existing, and wherever located (together with all other
collateral  security  for the  Obligations  at any  time  granted  to or held or
acquired by Lender, collectively, the "Collateral"):

               (a)   Receivables;

               (b) all other present and future general  intangibles  (including
Intellectual  Property and existing and future leasehold interests in equipment,
real estate and fixtures),  chattel paper,  documents,  instruments,  investment
property  (including   securities,   whether   certificated  or  uncertificated,
securities  accounts,  security  entitlements,  commodity contracts or commodity
accounts), letters of credit, bankers' acceptances and guaranties;


<PAGE>


               (c)  all  present  and  future   monies,   securities  and  other
investment  property,  credit  balances,  deposits,  deposit  accounts and other
property of such Borrower now or hereafter  held or received by or in transit to
Lender or its Affiliates or at any other depository or other institution from or
for the account of such  Borrower,  whether for  safekeeping,  pledge,  custody,
transmission,  collection  or  otherwise,  and all  present  and  future  liens,
security interests,  rights,  remedies, title and interest in, to and in respect
of Receivables and other Collateral,  including (i) rights and remedies under or
relating to guaranties,  contracts of  suretyship,  letters of credit and credit
and other  insurance  related to the  Collateral,  (ii)  rights of  stoppage  in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid  vendor,  lien or secured  party,  (iii)  goods  described  in  invoices,
documents,  contracts or instruments with respect to, or otherwise  representing
or evidencing,  Receivables or other Collateral, including returned, repossessed
and reclaimed  goods,  and (iv)  deposits by and property of account  debtors or
other persons securing the obligations of account debtors;

               (d)   Inventory;

               (e)   Equipment;

               (f)   Real Property;

               (g)   Records; and

               (h) all  products  and  proceeds of the  foregoing,  in any form,
including  insurance  proceeds and all claims  against third parties for loss or
damage to or destruction of any or all of the foregoing.

         5.2  Notwithstanding  anything to the contrary set forth in Section 5.1
above,  the types or items of  Collateral  described in such  Section  shall not
include any rights or interests in any contract, lease, permit, license, charter
or license agreement covering real or personal  property,  as such, if under the
terms of such contract, lease, permit, license, charter or license agreement, or
applicable law with respect thereto,  the valid grant of a security  interest or
lien therein to Lender is prohibited and such prohibition has not been or is not
waived  or the  consent  of the other  party to such  contract,  lease,  permit,
license,  charter or license agreement HAS NOT BEEN OR IS NOT OTHERWISE OBTAINED
OR UNDER APPLICABLE LAW SUCH PROHIBITION CANNOT BE WAIVED;  PROVIDED,  THAT, the
foregoing  exclusion  shall  in no way be  construed  (a) to  apply  if any such
prohibition is unenforceable  under Section 9-318 of the UCC or other applicable
law or (b) so as to limit,  impair or otherwise  affect  Lender's  unconditional
continuing  security  interests in and liens upon any rights or interests of any
Borrower  in or to monies due or to become due under any such  contract,  lease,
permit, license, charter or license agreement (including any Receivables).


<PAGE>


         5.3  Notwithstanding  anything to the contrary contained in Section 5.1
above,  the types or items of  Collateral  described in such  Section  shall not
include any Equipment of a Borrower which is, or at the time of such  Borrower's
acquisition  thereof  shall be,  subject to a purchase  money  mortgage or other
purchase money lien or security  interest  (including  Capital Leases) permitted
under Section 9.8 hereof if: (a) the valid grant of a security  interest or lien
to Lender in such item of Equipment is  prohibited by the terms of the agreement
between such  Borrower and the holder of such purchase  money  mortgage or other
purchase  money  lien or  security  interest  or under  applicable  law and such
prohibition  has not been or is not waived,  or the consent of the holder of the
purchase money  mortgage or other  purchase money lien or security  interest has
not been or is not otherwise obtained,  or under applicable law such prohibition
cannot be waived and (b) the purchase  money  mortgage or other  purchase  money
lien or security interest on such item of Equipment is or shall become valid and
perfected.

         5.4 In the event  that at any time  Excess  Availability  shall be less
than  $25,000,000,  Timet shall,  promptly  upon Lender=s  request,  execute and
deliver to Lender in form and  substance  satisfactory  to Lender,  a pledge and
security  agreement  granting to Lender a first pledge of and lien on all of the
issued and  outstanding  shares of Capital  Stock of  ValTimet  owned or held by
Timet or any of its  Subsidiaries,  together  with original  stock  certificates
evidencing  such shares of Capital  Stock,  if any,  and such other  agreements,
documents  and  instruments  as Lender  may  require  in  connection  therewith,
including opinion letters of counsel in France and the United States of America.

         5.5 In the event that  Lender has not  received  evidence,  in form and
substance  satisfactory  to  Lender,  that  TMCA  International,  Inc.  has been
liquidated and dissolved to the extent permitted  hereunder by June 30, 2000 and
the assets  thereof  validly  transferred  and  assigned  to Timet by such date,
promptly upon Lender=s request, Borrowers shall cause TMCA International Inc. to
execute and deliver to Lender, in form and substance satisfactory to Lender, (a)
an absolute and  unconditional  guarantee of payment of any and all Obligations,
(b) a security  agreement  granting to Lender a first security interest and lien
(except as  otherwise  consented to in writing by Lender) upon all of the assets
of such Subsidiary,  (c) related Uniform  Commercial Code Financing  Statements,
(d) such other  agreements,  documents  and  instruments  as Lender may require,
including,  but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing  indebtedness of such Subsidiary to Lender,
and (e) an opinion  letter of counsel with respect to such  guarantee,  security
agreement and related matters as Lender may request.

SECTION 6.COLLECTION AND ADMINISTRATIO   SECTION 6.COLLECTION AND ADMINISTRATION

         6.1 BORROWERS' LOAN ACCOUNTS.1  BORROWERS' LOAN ACCOUNTS.  Lender shall
maintain one or more loan account(s) on its books in which shall be recorded (a)
all  Loans,  Letter  of Credit  Accommodations  and  other  Obligations  and the
Collateral,  (b) all  payments  made by or on behalf of a  Borrower  and (c) all
other  appropriate  debits and credits as provided in this Agreement,  including
fees, charges,  costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Lender's customary  practices as in effect from
time to time.


<PAGE>


         6.2 STATEMENTS6.2 STATEMENTS. Lender shall render to Timet each month a
statement   setting  forth  the  balance  in  each  Borrower's  loan  account(s)
maintained  by Lender  for such  Borrower  pursuant  to the  provisions  of this
Agreement,  including principal,  interest,  fees, costs and expenses. Each such
statement shall be subject to subsequent  adjustment by Lender but shall, absent
manifest  errors or  omissions,  be  considered  correct and deemed  accepted by
Borrowers and conclusively binding upon Borrowers as an account stated except to
the extent that  Lender  receives a written  notice  from Timet of any  specific
exceptions  of  Borrowers  thereto  within  thirty (30) days after the date such
statement  has been  mailed by  Lender.  Until  such time as Lender  shall  have
rendered to Timet a written  statement  as provided  above,  the balance in each
Borrower's loan account(s) shall be presumptive  evidence of the amounts due and
owing to Lender by such Borrower.

         6.3   COLLECTION OF ACCOUNTS  6.3    COLLECTION OF ACCOUNTS.

               (a) Borrowers  shall  establish and maintain,  at their  expense,
blocked  accounts or  lockboxes  and related  blocked  accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which  Borrowers  shall  promptly  deposit and direct their  account
debtors  to  directly  remit  all  payments  on  Receivables  and  all  payments
constituting  proceeds of Inventory or other Collateral in the identical form in
which such payments are made,  whether by cash, check or other manner. The banks
at which the Blocked Accounts are established shall enter into an agreement,  in
form and substance satisfactory to Lender,  providing that all items received or
deposited  in the  Blocked  Accounts  are  the  property  of  Lender,  that  the
depository  bank has no lien  upon,  or right to  setoff  against,  the  Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on  deposit  therein  and that the  depository  bank  will  wire,  or  otherwise
transfer,  in immediately  available funds, on a daily basis, all funds received
or deposited into the Blocked  Accounts to such bank account of Lender as Lender
may from time to time  designate  for such  purpose  ("Payment  Account").  Each
Borrower  agrees that all payments made to such Blocked  Accounts or other funds
received and  collected  by Lender,  whether in respect of the  Receivables,  as
proceeds of  Inventory  or other  Collateral  or  otherwise  shall be treated as
payments to Lender in respect of the Obligations and therefore shall  constitute
the property of Lender to the extent of the then outstanding Obligations.

               (b) For purposes of calculating the amount of the Loans available
to  each  Borrower,  such  payments  will be  applied  (conditional  upon  final
collection)  to the  Obligations  on the  Business  Day of  receipt by Lender of
immediately  available funds in the Payment  Account  provided such payments and
notice  thereof are received in  accordance  with  Lender's  usual and customary
practices  as in effect from time to time and within  sufficient  time to credit
such  Borrower's loan account on such day, and if not, then on the next Business
Day. For the purposes of calculating interest on the Obligations,  such payments
or other funds received will be applied  (conditional  upon final collection) to
the  Obligations  one  (1)  Business  Day  following  the  date  of  receipt  of
immediately  available  funds by Lender in the  Payment  Account  provided  such
payments or other  funds and notice  thereof are  received  in  accordance  with
Lender's usual and customary practices as in effect from time to time and within
sufficient  time to credit such Borrower's loan account on such day, and if not,
then on the next Business Day.


<PAGE>


               (c) Each  Borrower  and its  employees,  agents and  Subsidiaries
shall,  acting as trustee for Lender,  receive,  as the property of Lender,  any
monies,  checks,  notes, drafts or any other payment relating to and/or proceeds
of Receivables or other  Collateral  which come into its possession or under its
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts,  or remit the same or cause the same to be
remitted,  in kind, to Lender.  In no event shall the same be commingled  with a
Borrower's own funds. Each Borrower agrees to reimburse Lender on demand for any
amounts owed or paid to any bank at which a Blocked  Account is  established  or
any  other  bank or  person  involved  in the  transfer  of funds to or from the
Blocked Accounts arising out of Lender's payments to or  indemnification of such
bank or person. The obligation of Borrowers to reimburse Lender for such amounts
pursuant to this Section 6.3 shall survive the  termination  or  non-renewal  of
this Agreement.

         6.4   PAYMENTS                6.4     PAYMENTS.

               (a) All  Obligations  shall be payable to the Payment  Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time.  Lender shall apply  payments  received or collected from Borrowers or for
the account of Borrowers  (including the monetary  proceeds of collections or of
realization upon ANY COLLATERAL) AS FOLLOWS: FIRST, to pay any fees, indemnities
or expense  reimbursements  then due to Lender from  BORROWERS;  SECOND,  TO PAY
INTEREST DUE IN RESPECT OF ANY LOANS;  THIRD, to pay principal due in respect of
the LOANS;  FOURTH, to pay or prepay any other  Obligations  whether or not then
due, in such order and manner as Lender determines.  Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by Timet, or unless
an Event of Default shall exist or have occurred and be continuing, Lender shall
not apply any payments  which it receives to any Eurodollar  Rate Loans,  except
(i) on the  expiration  date  of the  Interest  Period  applicable  to any  such
Eurodollar Rate Loans, or (ii) in the event that there are no outstanding  Prime
Rate Loans. To the extent Lender receives any payments or collections in respect
of the  Obligations  in a currency  other than US  Dollars,  Lender  may, at its
option (but is not obligated  to),  convert such other currency to US Dollars at
the  Exchange  Rate on such  date  and in  such  market  as  Lender  may  select
(regardless as to whether such rate is the best available rate). Borrowers shall
pay the costs of such  conversion  (or Lender may,  at its  option,  charge such
costs to the loan  account of  Borrower  maintained  by  Lender).  Payments  and
collections  received  in any  currency  other  than in  which  any  outstanding
Obligations are denominated will be accepted and/or applied at the discretion of
Lender. All payments from account debtors (including account debtors whose chief
executive  offices are located  outside  the United  States of America)  are and
shall  only be  remitted  to the  Blocked  Accounts.  At  Lender's  option,  all
principal,  interest,  fees,  costs,  expenses and other charges provided for in
this Agreement or the other Financing  Agreements may be charged directly to the
loan  account(s) of a Borrower.  Borrowers  shall make all payments to Lender on
the Obligations  free and clear of, and without  deduction or withholding for or
on account of, any setoff, counterclaim,  defense, restrictions or conditions of
any kind. If after receipt of any payment of, or proceeds of Collateral  applied
to the payment of, any of the  Obligations,  Lender is required to  surrender or
return  such  payment  or  proceeds  to any  Person  for any  reason,  then  the
Obligations  intended  to be  satisfied  by such  payment or  proceeds  shall be
reinstated  and continue  and this  Agreement  shall  continue in full force and
effect as if such payment or proceeds had not been received by Lender. Borrowers
shall be  liable  to pay to  Lender,  and do hereby  indemnify  and hold  Lender
harmless  for the amount of any  payments or proceeds  surrendered  or returned.
This Section 6.4(a) shall remain effective  notwithstanding  any contrary action
which may be taken by Lender in reliance  upon such  payment or  proceeds.  This
Section 6.4(a) shall survive the payment of the  Obligations and the termination
or non-renewal of this Agreement.

               (b)  Borrowers  may,  in  accordance   with  the  terms  of  this
Agreement, borrow, prepay and reborrow Loans.


<PAGE>


         6.5   TAXES           6.5   TAXES.

               (a) Any and all  payments  by  Borrowers  to  Lender  under  this
Agreement and any of the other Financing Agreements shall be made free and clear
of, and without  deduction or withholding for any Taxes. In addition,  Borrowers
shall pay all Other Taxes (or Lender  may,  at its option,  pay such Other Taxes
and charge the loan account of a Borrower for such amounts so paid).

               (b) Borrowers  shall  indemnify and hold harmless  Lender for the
full amount of Taxes or Other Taxes paid by Lender (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section, but not
including Other Taxes that arise as a result of Lender=s  arrangements  with the
applicable taxing  jurisdiction,  if any, and not as a result of this Agreement)
and  any  liability  (including  penalties,  interest  and  expenses  (including
reasonable  attorney's fees and expenses) other than those resulting solely from
a failure by Lender to pay any Taxes or Other  Taxes which it is required to pay
and for which it  received  an  indemnity  payment)  arising  therefrom  or with
respect  thereto,  whether or not such Taxes or Other  Taxes were  correctly  or
legally  asserted by the relevant  Governmental  Authority.  Payment  under this
indemnification  shall be made within ten (10) days after the date Lender  makes
written  demand  therefor.  If such Taxes or Other Taxes were not  correctly  or
legally asserted,  Lender shall, upon Timet's request and at Borrowers' expense,
provide such documents to Timet,  in form and substance  satisfactory to Lender,
as Timet may reasonably  request, to enable Timet to contest such Taxes or Other
Taxes pursuant to appropriate  proceedings  then available to Borrowers (so long
as  providing  such  documents  shall not,  in the good faith  determination  of
Lender, have a reasonable likelihood of resulting in any liability of Lender).

               (c) If  Borrowers  shall be required by law to deduct or withhold
any Taxes or Other  Taxes  from or in respect of any sum  payable  hereunder  to
Lender, then:

                     (i)  the sum payable shall be increased as necessary so
                          that after making all required

deductions and withholdings (including deductions and withholdings applicable to
additional  sums payable under this Section)  Lender receives an amount equal to
the sum it would have received had no such deductions or withholdings been made;

                     (ii) Borrowers shall make such deductions and withholdings;

                     (iii)Borrowers shall pay the full amount deducted or
                          withheld to the relevant taxing authority or other
                          authority in accordance with applicable law; and

                     (iv) Borrower or Guarantor shall also pay to Lender, at the
                          time interest is paid, all additional amounts which
                          Lender specifies as necessary to preserve the
                          after-tax yield  Lender  would have  received  if such
                          Taxes or Other  Taxes had not been imposed.

               (d) Within  thirty  (30) days after the date of any  payment by a
Borrower of Taxes or Other Taxes, Borrowers shall furnish to Lender the original
or a certified copy of a receipt evidencing  payment thereof,  or other evidence
of payment satisfactory to Lender.


<PAGE>


               (e) If Borrowers  otherwise  would be required to pay  additional
amounts to Lender pursuant to subsection (c) of this Section,  then upon Timet's
written  request  Lender  shall use  reasonable  efforts at  Borrowers'  expense
(consistent  with  legal and  regulatory  restrictions)  to file  such  forms or
documents and take such other action, including changing the jurisdiction of its
lending office so as to eliminate any such  additional  payment by such Borrower
which may thereafter accrue.

               (f) In the event  Lender  shall  assign the  Obligations  and its
rights  hereunder  to an  assignee  which  is  organized  under  the  laws  of a
jurisdiction  outside the United  States,  such assignee of Lender shall provide
Timet with an IRS Form 4224 or Form 1001 or other applicable  form,  certificate
or document  prescribed by the Internal  Revenue  Service  certifying as to such
assignee's  being entitled to full exemption from United States  withholding tax
with respect to all payments to be made to such assignee hereunder and under any
of the other Financing  Agreements.  Notwithstanding any other provision of this
Section 6.5, such assignee shall not be required to deliver any form pursuant to
this   Section  6.5  that  such   assignee  is  not  legally  able  to  deliver.
Notwithstanding  Sections 6.5(b) and 6.5(c),  Borrowers shall not be required to
indemnify  any  such  assignee  or to pay any  additional  amounts  to any  such
assignee in respect of United Sates Federal  withholding  tax to the extent that
(i) the  obligation to withhold  amounts with respect to United  States  Federal
withholding  tax was applicable on the date such assignee became a party to this
Agreement, provided, that, the foregoing shall not apply (A) to an assignee that
becomes an assignee as a result of an assignment or transfer made at the request
of Borrowers and (B) to the extent the indemnity  payment or additional  amounts
any assignee  would be entitled to receive  (without  regard to this sentence of
Section 6.5(f)) do not exceed the indemnity  payment or additional  amounts that
the person making the  assignment  or transfer to such assignee  would have been
entitled  to receive in the absence of such  assignment  or transfer or (ii) the
obligation  to pay such  additional  amounts  would  not have  arisen  but for a
failure by such assignee to comply with the first sentence of this clause (f).

         6.6 AUTHORIZATION TO MAKE LOANS.6AUTHORIZATION TO MAKE LOANS. Lender is
authorized  to make the Loans and  provide  the Letter of Credit  Accommodations
based upon telephonic or other  instructions  received from anyone purporting to
be an officer of a Borrower or other authorized  person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letter of Credit  Accommodations  hereunder  shall  specify the date on
which the  requested  advance  is to be made or Letter of Credit  Accommodations
established  (which day shall be a Business Day) and the amount of the requested
Loan.  Requests received after 11:00 a.m. Dallas time on any day shall be deemed
to have been made as of the  opening of business  on the  immediately  following
Business Day. All Loans and Letter of Credit Accommodations under this Agreement
shall be  conclusively  presumed to have been made to, and at the request of and
for the benefit of, a Borrower when  deposited to the credit of such Borrower or
otherwise  disbursed or established in accordance with the  instructions of such
Borrower or in accordance with the terms and conditions of this Agreement.


<PAGE>


         6.7 USE OF PROCEEDS.7 USE OF PROCEEDS. Borrowers shall use the proceeds
of the initial  Loans  provided by Lender to Borrowers  hereunder  only for: (a)
payments  to each of the persons  listed in the  disbursement  direction  letter
furnished  by  Borrowers  to  Lender  on or about the date  hereof,  (b)  costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this  Agreement and the other  Financing  Agreements and (c) working
capital of Borrowers, to the extent requested by Borrowers. All other Loans made
or Letter of Credit  Accommodations  provided by Lender to Borrowers pursuant to
the  provisions  hereof shall be used by Borrowers  only for general  operating,
working capital and other proper  corporate  purposes of Borrowers not otherwise
prohibited by the terms hereof.

         6.8   REGULATION U          6.8  REGULATION U.

               (a) A portion of the proceeds of the initial Loans are being used
to repay  Indebtedness of Timet to the Existing  Lenders arising from loans made
to Timet  which may have been used by Timet to  purchase  or carry the SMC Stock
and a portion  of the  proceeds  of the  initial  Loans are being  used to repay
Indebtedness  of Timet to the Existing  Lenders arising from loans made to Timet
which were used by Timet for working capital.  For purposes of Regulation U, the
Loans shall be treated as two separate  extensions of credit. The portion of the
Loans used to repay Indebtedness arising from loans used for working capital and
the Loans  otherwise  hereafter used for working  capital are referred to herein
individually as an "A Credit" and collectively,  as the "A Credits". The portion
of the Loans used to repay  Indebtedness  arising from loans used to purchase or
carry the SMC Stock are  referred  to herein  individually  as a "B Credit"  and
collectively,  as "B Credits".  Borrowers  represent to Lender that a reasonable
estimate of the current market value of the SMC Stock,  determined in accordance
with Regulation U, is $87,400,000.  The aggregate  amount of the B Credits shall
not exceed  $43,700,000,  which represents the maximum loan value as of the date
hereof (as  determined in accordance  with  Regulation U) of the SMC Stock (such
SMC Stock  being  referred  to herein as the  "Margin  Stock  Collateral").  The
aggregate amount of the A Credits shall not exceed the amount equal to all Loans
minus the amount of the B Credits. In the event that any Margin Stock Collateral
is  acquired  or  sold,  the  amount  of the B  Credits  shall be  adjusted  (if
necessary),  to the extent  necessary  through  prepayment by  Borrowers,  to an
amount equal to the maximum loan value (determined in accordance with Regulation
U as of the date of such  acquisition  or sale) of the Margin  Stock  Collateral
immediately  after giving effect to such acquisition or sale.  Nothing contained
in this  Section  6.8  shall  be  deemed  to  permit  any sale of  Margin  Stock
Collateral in violation of the terms of this Agreement.


<PAGE>


               (b) The benefits of the  security in the Margin Stock  Collateral
granted to Lender  shall be  ALLOCATED  FIRST to the benefit and security of the
payment  of the  principal  of and  interest  on the B Credits  and of all other
amounts  payable by  Borrower  under this  Agreement  in  connection  with the B
Credits  (collectively,  the "B CREDIT  AMOUNTS")  AND  SECOND,  only  after the
payment in full of the B Credit  Amounts,  to the  benefit  and  security of the
payment  of the  principal  of and  interest  on the A Credits  and of all other
amounts  payable by  Borrowers  under this  Agreement in  connection  with the A
Credits (collectively,  the "A Credit Amounts"). The benefits of the security in
the Collateral  other than Margin Stock Collateral  created  hereunder and under
the other  Financing  Agreements  and the benefits of the  indirect  security in
Collateral other than Margin Stock Collateral  created by this Agreement,  shall
be  allocated  first to the benefit and  security of the payment of the B Credit
Amounts and second,  only after the payment in full of the B Credit Amounts,  to
the benefit and security of the payment of the A Credit Amounts.

               (c)  Borrowers  shall  furnish  to  Lender  at  the  time  of any
acquisition and sale of Margin Stock  Collateral such  information and documents
as Lender may require to determine the A and B Credits, and at any time and from
time to time,  such other  information  and  documents as Lender may  reasonably
require to determine compliance with Regulation U.

         6.9 APPOINTMENT OF AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS AND
STATEMENTS6.9  APPOINTMENT OF AGENT FOR  REQUESTING  LOANS AND RECEIPTS OF LOANS
AND STATEMENTS.

               (a) THT hereby irrevocably  appoints and constitutes Timet as its
agent to request and receive Loans and Letter of Credit Accommodations  pursuant
to this Agreement and the other Financing  Agreements from Lender in the name or
on behalf of THT. Subject to the terms and conditions  contained herein,  Lender
may disburse  the Loans to such bank  account of THT or Timet or otherwise  make
such Loans to a Borrower and provide such Letter of Credit  Accommodations  to a
Borrower as Timet may designate or direct,  without notice to any other Borrower
or Obligor.

               (b) Timet  hereby  accepts the  appointment  by THT to act as the
agent of THT pursuant to this Section 6.9.

               (c) THT hereby irrevocably  appoints and constitutes Timet as its
agent to receive  statements  on account and all other  notices from Lender with
respect  to the  Obligations  or  otherwise  under or in  connection  with  this
Agreement and the other Financing Agreements.

               (d) No purported termination of the appointment of Timet as agent
as aforesaid  shall be  effective,  except after ten (10)  Business  Days' prior
written notice to Agent.

SECTION  7.  COLLATERAL REPORTING AND COVENANTS
SECTION  7.  COLLATERAL REPORTING AND COVENANTS

         7.1   COLLATERAL REPORTING  7.1 COLLATERAL REPORTING.

               (a) Borrowers  shall provide Lender with the following  documents
in a form satisfactory to Lender:

                     (i)  as soon as possible every two (2) weeks (but in any
event within five (5) Business Days after the end of each two (2) week  period)
so long as Excess  Availability  is greater than $25,000,000 or more frequently
as Lender may reasonably  request if at any time Excess Availability is equal to
or less than $25,000,000, a schedule of sales made, credits issued and cash
received (and including  information with respect to Accounts owing by ValTimet,
Accounts owing by account debtors located other than in the United States of
America and Accounts subject to bill and hold arrangements);


<PAGE>


                     (ii) as soon as  possible  after the end of each month (but
in any event within ten (10)

Business  Days after the end of each  month) so long as Excess  Availability  is
greater than $25,000,000, or more frequently as Lender may reasonably request if
at any  time  Excess  Availability  is equal to or less  than  $25,000,000,  (A)
perpetual  inventory  reports,  including  inventory  reports  by  location  and
category as of the last day of the immediately preceding month, (B) reports with
respect to Inventory sold or purchased on consignments as of the last day of the
immediately  preceding  month,  (C) agings of accounts  payable  (and  including
information  indicating  the status of  payments  to owners  and  lessors of the
leased  premises of Borrowers) as of the last day of the  immediately  preceding
month,  and  (D)  agings  of  accounts  receivable  as of  the  last  day of the
immediately  preceding month (together with a reconciliation to the then current
month's general ledger);

                     (iii)on a monthly basis (but in any event within ten (10)
Business Days after the end of

each  month)  or more  frequently  as Lender  may  reasonably  request,  Timet's
internal price list with respect to such products;

                     (iv)  upon  Lender's   request,   (A)  copies  of  customer
statements and credit memos, remittance

advices and reports, and copies of deposit slips and bank statements, (B) copies
of shipping and delivery documents,  and (C) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by a Borrower;

                     (v) such other reports as to the Collateral as Lender shall
reasonably request from time to

time.

               (b) From time to time, as Timet may  reasonably  request,  Lender
will  provide  Timet  with  the  amount  of  the  Borrowing   Base,  the  Excess
Availability and the most recent Quarterly Average Excess Availability as of the
date of such  request by Timet,  as then  reflected  in the books and records of
Lender  (recognizing  that any such  amounts may from time to time be subject to
adjustment in accordance with the terms hereof).

               (c) If any of a Borrower's  records or reports of the  Collateral
are prepared or  maintained  by an accounting  service,  contractor,  shipper or
other  agent,  such  Borrower  hereby   irrevocably   authorizes  such  service,
contractor,  shipper or agent to deliver  such  records,  reports,  and  related
documents to Lender and to follow Lender's  instructions with respect to further
services  at any time that an Event of  Default  exists or has  occurred  and is
continuing.

         7.2   ACCOUNTS COVENANTS      7.2   ACCOUNTS COVENANTS.


<PAGE>


               (a) Borrowers  shall notify  Lender  promptly upon receipt of any
notice of: (i) any  material  delay in a  Borrower's  performance  of any of its
obligations  to any account  debtor or the  assertion  of any  material  claims,
offsets,  defenses or  counterclaims  by any  account  debtor,  or any  material
disputes  with account  debtors,  or any  settlement,  adjustment  or compromise
thereof,  (ii)  all  material  adverse  information  relating  to the  financial
condition of any account debtor and (iii) any event or circumstance  which, to a
Borrower's  knowledge would cause Lender to consider any then existing  Accounts
as no longer constituting Eligible Accounts. No credit,  discount,  allowance or
extension or agreement for any of the foregoing  shall be granted to any account
debtor by a Borrower without Lender's consent,  except in the ordinary course of
such Borrower's  business in accordance with the current  practices and policies
as of the date hereof. So long as no Event of Default exists or has occurred and
is continuing,  Borrowers shall settle,  adjust or compromise any claim, offset,
counterclaim  or dispute with any account  debtor.  At any time that an Event of
Default exists or has occurred and is continuing,  Lender shall,  at its option,
have the  exclusive  right to settle,  adjust or compromise  any claim,  offset,
counterclaim or dispute with account debtors or grant any credits,  discounts or
allowances.

               (b) Without  limiting the  obligation of Borrowers to deliver any
other  information  to Lender,  Borrowers  shall  promptly  report to Lender any
return of  Inventory by any one account  debtor if the  Inventory so returned in
such case has a value in excess of  $1,000,000  if Excess  Availability  at such
time is greater than  $25,000,000  or if the  Inventory so returned in such case
has a value in excess of $500,000 if Excess  Availability  at such time is equal
to or less than $25,000,000.  At any time that Inventory is returned,  reclaimed
or  repossessed,  the Account (or portion  thereof) which arose from the sale of
such  returned,  reclaimed  or  repossessed  Inventory  shall  not be  deemed an
Eligible  Account.  In the event any account  debtor  returns  Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall, upon
Lender's  request,  (i) hold the returned  Inventory  in trust for Lender,  (ii)
segregate all returned  Inventory from all of its other property,  (iii) dispose
of the returned  Inventory solely according to Lender's  instructions,  and (iv)
not issue any credits,  discounts or  allowances  with respect  thereto  without
Lender's prior written consent.

               (c) With respect to each  Account:  (i) the amounts  shown on any
invoice  delivered  to Lender or schedule  thereof  delivered to Lender shall be
true and  complete,  (ii) no  payments  shall be made  thereon  except  payments
promptly  delivered to Lender pursuant to the terms of this Agreement,  (iii) no
credit,  discount,  allowance or extension or agreement for any of the foregoing
shall be  granted to any  account  debtor by a Borrower  except as  reported  to
Lender in  accordance  with this  Agreement  and except for credits,  discounts,
allowances or extensions made or given in the ordinary course of such Borrower's
business in accordance with current practices and policies of Borrower as of the
date hereof,  previously  disclosed  to Lender,  (iv) there shall be no setoffs,
deductions,  contras,  defenses,  counterclaims or disputes existing or asserted
with respect  thereto except as reported to Lender in accordance  with the terms
of this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations in any material respect, all
documentation  relating  thereto will be legally  sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.

               (d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender,  to verify the  validity,  amount or
any  other  matter  relating  to any  Account  or  other  Collateral,  by  mail,
telephone, facsimile transmission or otherwise.


<PAGE>


               (e)  Borrowers  shall deliver or cause to be delivered to Lender,
with  appropriate  endorsement and assignment,  with full recourse to Borrowers,
any chattel  paper or  instrument  which a Borrower  now owns or may at any time
acquire  within five (5) Business  Days upon such  Borrower's  receipt  thereof,
prior to an Event of Default,  or act,  condition  or event which with notice or
passage of time or both would  constitute an Event of Default,  if the amount of
any such chattel paper or instrument  equals or exceeds $50,000,  or all chattel
paper and  instruments  if the  aggregate  amount of all such chattel  paper and
instruments equals or exceeds $500,000,  and after an Event of Default,  or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, all such chattel paper and other instruments  regardless of
the amount thereof, in each case except as Lender may otherwise agree.

               (f)  Lender  may,  at any time or times  that an Event of Default
exists or has occurred and is continuing,  (i) notify any or all account debtors
or other  obligors  that the  Receivables  have been assigned to Lender and that
Lender has a security interest therein and Lender may direct any or all accounts
debtors or other  obligors to make  payment of  Receivables  directly to Lender,
(ii)  extend  the time of  payment  of,  compromise,  settle or adjust for cash,
credit,  return of merchandise  or otherwise,  and upon any terms or conditions,
any and all  Receivables  or other  obligations  included in the  Collateral and
thereby discharge or release the account debtor or any other party or parties in
any way liable for payment  thereof  without  affecting any of the  Obligations,
(iii)  demand,  collect or  enforce  payment  of any  Receivables  or such other
obligations,  but without any duty to do so, and Lender  shall not be liable for
its failure to collect or enforce the payment  thereof nor for the negligence of
its agents or attorneys with respect thereto and (iv) take whatever other action
Lender may deem necessary or desirable for the  protection of its interests.  At
any time that an Event of Default exists or has occurred and is  continuing,  at
Lender's  request,  all invoices and  statements  sent to any account  debtor or
other obligor shall state that the Receivables and such other  obligations  have
been  assigned  to  Lender  and are  payable  directly  and only to  Lender  and
Borrowers  shall deliver to Lender such  originals of documents  evidencing  the
sale and  delivery of goods or the  performance  of services  giving rise to any
Accounts as Lender may require.


<PAGE>


       7.3  INVENTORY  COVENANTS 7.3  INVENTORY  COVENANTS.  With respect to the
Inventory:  (a) Borrowers shall at all times maintain inventory records, keeping
correct and accurate records  itemizing and describing the kind,  type,  quality
and quantity of Inventory,  such Borrower's cost therefor and daily  withdrawals
therefrom  and  additions  thereto  consistent  with the  current  practices  of
Borrowers as of the date hereof; (b) Borrowers shall conduct a physical count of
the Inventory  either  through  periodic  cycle counts or otherwise so that such
Inventory as is required by the  independent  certified  public  accountants  of
Timet in  connection  with the opinion of such  accountants  to be  delivered to
Lender  pursuant  to Section  9.6(a)(ii)  hereof to be covered by such counts is
subject  to such  counts at least  once each  year,  but at any time or times as
Lender may request on or after an Event of Default,  and promptly following such
physical  inventory  (whether  pursuant to periodic  cycle counts or  otherwise)
shall supply Lender with a report in the form and with such  specificity  as may
be  reasonably  satisfactory  to Lender  concerning  such  physical  count;  (c)
Borrowers  shall  not  remove  any  Inventory  from the  LOCATIONS  SET FORTH OR
PERMITTED  HEREIN,  WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER,  EXCEPT (i) for
sales of Inventory in the ordinary course of a Borrower's business, (ii) to move
Inventory  directly  from one location set forth or permitted  herein to another
such location,  (iii) for Inventory  shipped from the manufacturer  thereof to a
Borrower which is in transit to the locations set forth or permitted  herein and
(iv) to have  material  processed or tested by a  subcontractor  in the ordinary
course of a Borrower=s  business;  (d) upon Lender's request,  at any time after
August 30, 2000, each Borrower shall, at its expense,  no more than twice in any
twelve (12) month  period,  but at any time or times as Lender may request on or
after an Event of Default,  deliver or cause to be delivered  to Lender  written
appraisals  as to the  Inventory in form,  scope and  methodology  acceptable to
Lender and by an appraiser  acceptable  to Lender,  addressed to Lender and upon
which Lender is expressly permitted to rely (and to the extent possible,  Lender
shall use  reasonable  efforts to have the same appraisal firm as had previously
done  appraisals  of the  Inventory  of  Borrowers  conduct any such  subsequent
appraisals,  so long as it does not result in any material delay); (e) Borrowers
shall produce,  use,  store and maintain the Inventory with all reasonable  care
and caution and in accordance with applicable  standards of any insurance and in
conformity  in  all  material  respects  with  applicable  laws  (including  the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules,  regulations and orders related  thereto);  (f) each Borrower assumes all
responsibility  and liability  arising from or relating to the production,  use,
sale or other  disposition  of the  Inventory;  (g) each Borrower shall not sell
Inventory  to any customer on  approval,  or any other basis which  entitles the
customer to return or may obligate such Borrower to  repurchase  such  Inventory
(except for the right of return of customers for Inventory which is defective or
non-conforming);  and (h) each  Borrower  shall keep the  Inventory  in good and
marketable condition in all material respects.

         7.4 EQUIPMENT AND REAL PROPERTY COVENANTS.4 EQUIPMENT AND REAL PROPERTY
COVENANTS.  With respect to the Equipment and Real  Property:  (a) upon Lender's
request,  each Borrower shall,  at its expense,  no more than once in any twelve
(12) month period, but at any time or times as Lender may request on or after an
Event of Default,  deliver or cause to be delivered to Lender written appraisals
as to the Equipment in form,  scope and methodology  acceptable to Lender and by
an appraiser acceptable to Lender,  addressed to Lender and upon which Lender is
expressly  permitted  to rely  (and to the  extent  possible,  Lender  shall use
reasonable  efforts  to have  the same  appraisal  firm as had  previously  done
appraisals of the Equipment of Borrowers conduct any such subsequent appraisals,
so long as it does not result in any material delay); (b) upon Lender's request,
each Borrower shall, at its expense,  at any time or times as Lender may request
on or after an Event of  Default,  deliver  or cause to be  delivered  to Lender
written  appraisals  as to the Real  Property  in form,  scope  and  methodology
acceptable  to Lender and by an  appraiser  acceptable  to Lender,  addressed to
Lender,  and upon which Lender is expressly  permitted  to rely,  each  Borrower
shall keep its Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) each Borrower shall use its Equipment and
Real  Property  with all  reasonable  care and  caution and in  accordance  with
applicable standards of any insurance and in conformity in all material respects
with all  applicable  laws; (d) the Equipment is and shall be used in Borrowers'
businesses  and not for  personal,  family,  household  or farming use; (e) each
Borrower  shall  not  remove  any  Equipment  from the  locations  set  forth or
permitted herein,  except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of such Borrower or to move
Equipment  directly  from one location set forth or permitted  herein to another
such location;  (f) the Equipment is now and shall remain personal  property and
each Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property;  and (g) each Borrower assumes all  responsibility and
liability arising from the use of the Equipment and Real Property.


<PAGE>


         7.5  POWER  OF  ATTORNEY.5  POWER OF  ATTORNEY.  Each  Borrower  hereby
irrevocably  designates  and  appoints  Lender  (and all persons  designated  by
Lender) as such  Borrower's  true and lawful  attorney-in-fact,  and  authorizes
Lender,  in such  Borrower's or Lender's  name,  to: (a) at any time an Event of
Default  exists  or has  occurred  and  is  continuing  (i)  demand  payment  on
Receivables or other  Collateral,  (ii) enforce  payment of Receivables by legal
proceedings  or  otherwise,  (iii)  exercise all of such  Borrower's  rights and
remedies to collect any Receivable or other Collateral,  (iv) sell or assign any
Receivable  upon such  terms,  for such  amount and at such time or times as the
Lender  deems  advisable,  (v)  settle,  adjust,  compromise,  extend or renew a
Receivable,  (vi) discharge and release any Receivable,  (vii) prepare, file and
sign a  Borrower's  name on any proof of claim in  bankruptcy  or other  similar
document  against an account debtor other obligor in respect of any  Receivables
or other  Collateral,  (viii) notify the post office  authorities  to change the
address for delivery of  remittances  from account  debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address  designated
by Lender,  and open and dispose of all mail  addressed to a Borrower and handle
and store all mail relating to the  Collateral;  and (ix) do all acts and things
which  are  necessary,  in  Lender's  determination,  to  fulfill  a  Borrower's
obligations  under this Agreement and the other Financing  Agreements and (b) at
any time to (i) take  control in any manner of any item of payment in respect of
Receivables or constituting  Collateral or otherwise  received in or for deposit
in the Blocked Accounts or otherwise received by Lender, (ii) have access to any
lockbox or postal  box into  which  remittances  from  account  debtors or other
obligors in respect of  Receivables  or other proceeds of Collateral are sent or
received,  (iii) endorse a Borrower's  name upon any items of payment in respect
of Receivables or  constituting  Collateral or otherwise  received by Lender and
deposit the same in Lender's  account for application to the  Obligations,  (iv)
endorse a Borrower's name upon any chattel paper, document, instrument, invoice,
or  similar  document  or  agreement  relating  to any  Receivable  or any goods
pertaining  thereto or any other  Collateral,  including  any warehouse or other
receipts,  or bills of lading and other negotiable or non-negotiable  documents,
(v) clear  Inventory  the purchase of which was  financed  with Letter of Credit
Accommodations  through U.S. Customs in a Borrower=s name,  Lender=s name or the
name of Lender=s  designee,  and to sign and deliver to customs officials powers
of attorney in such  Borrower=s  name for such purpose,  and to complete in such
Borrower=s  or  Lender=s  name,  any  order,  sale or  transaction,  obtain  the
necessary  documents in connection  therewith and collect the proceeds  thereof,
(vi) sign a  Borrower's  name on any  verification  of  Receivables  and notices
thereof  to account  debtors or other  obligors  in  respect  thereof  and (vii)
execute in a Borrower's name and file any UCC financing statements or amendments
thereto.  Each Borrower hereby  releases Lender and its officers,  employees and
designees from any liabilities  arising from any act or acts under this power of
attorney and in furtherance thereof,  whether of omission or commission,  except
as a result of Lender's own gross negligence or wilful  misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.


<PAGE>


         7.6 RIGHT TO CURE.6 RIGHT TO CURE. Lender may, at its option,  (a) upon
notice  to a  Borrower,  cure any  default  by a  Borrower  under  any  material
agreement with a third party which adversely  affects the Collateral,  its value
or the ability of Lender to collect, sell or otherwise dispose of the Collateral
or the rights and  remedies  of Lender  therein or the  ability of a Borrower to
perform its obligations hereunder or under the other Financing  Agreements,  (b)
pay or bond on appeal any judgment  entered  against a Borrower,  (c)  discharge
taxes, liens,  security interests or other encumbrances at any time levied on or
existing with respect to the  Collateral  (except liens,  security  interests or
other  encumbrances  permitted  hereunder)  and (d) pay any  amount,  incur  any
expense or perform any act which, in Lender's judgment,  is reasonably necessary
or appropriate to preserve,  protect,  insure or maintain the Collateral and the
rights of Lender with respect thereto. Lender may add any amounts so expended to
the Obligations  and charge a Borrower's  account  therefor,  such amounts to be
repayable by Borrowers on demand.  Lender shall be under no obligation to effect
such  cure,  payment or  bonding  and shall not,  by doing so, be deemed to have
assumed any  obligation  or liability  of a Borrower.  Any payment made or other
action  taken by Lender  under this  Section  shall be without  prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.

         7.7  ACCESS  TO  PREMISES.7  ACCESS TO  PREMISES.  From time to time as
reasonably requested by Lender, at the cost and expense of Borrowers, (a) Lender
or its designee shall have complete  access to all of each  Borrower's  premises
during  normal  business  hours  and after  notice to Timet,  or at any time and
without  notice to Timet,  if an Event of Default  exists or has occurred and is
continuing,  for  the  purposes  of  inspecting,   verifying  and  auditing  the
Collateral and all of each Borrower's books and records,  including the Records,
and (b) each Borrower shall promptly furnish to Lender such copies of such books
and records or extracts  therefrom as Lender may request,  and (c) Lender or its
designee may use during normal business hours such of each Borrower's personnel,
equipment,  supplies  and  premises  as  may be  reasonably  necessary  for  the
foregoing  and if an Event of Default  exists or has occurred and is  continuing
for the collection of Accounts and realization of other Collateral.

SECTION 8.   REPRESENTATIONS AND WARRANTIE
SECTION 8.   REPRESENTATIONS AND WARRANTIES

         Each Borrower  hereby jointly and severally  represents and warrants to
Lender the  following  (which shall  survive the  execution and delivery of this
Agreement),  the truth and accuracy of which are a  continuing  condition of the
making of Loans and  providing  Letter  of  Credit  Accommodations  by Lender to
Borrowers:


<PAGE>


        8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES 8.1 CORPORATE
EXISTENCE,  POWER AND  AUTHORITY;  SUBSIDIARIES.  Each Borrower is a corporation
duly organized and in good standing under the laws of its state of incorporation
and is duly  qualified  as a foreign  corporation  and in good  standing  in all
states  or other  jurisdictions  where the  nature  and  extent of the  business
transacted by it or the ownership of assets makes such qualification  necessary,
where the  failure to so  qualify  would have a  Material  Adverse  Effect.  The
execution,  delivery and  performance  of this  Agreement,  the other  Financing
Agreements and the  transactions  contemplated  hereunder and thereunder are all
within each Borrower's  corporate powers,  have been duly authorized and are not
in  contravention  of  law  or the  terms  of  such  Borrower's  certificate  of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement  or  undertaking  to which such  Borrower  is a party or by which such
Borrower or its  property  are bound.  This  Agreement  and the other  Financing
Agreements  constitute  legal,  valid and binding  obligations  of each Borrower
enforceable  in  accordance  with  their  respective   terms,   except  as  such
enforceability  may  be  limited  by  any  applicable  bankruptcy,   insolvency,
reorganization, moratorium, or similar law affecting creditor's rights generally
and by general  principles  of equity.  Borrowers  do not have any  Subsidiaries
except as set forth on the  Information  Certificate  or as are permitted  under
Section 9.10 hereto.

         8.2  FINANCIAL  STATEMENTS;  NO MATERIAL  ADVERSE  CHANGE8.2  FINANCIAL
STATEMENTS;  NO MATERIAL ADVERSE CHANGE.  All financial  statements  relating to
Borrowers  which have been or may hereafter be delivered by a Borrower to Lender
have been  prepared in  accordance  with GAAP and fairly  present the  financial
condition  and the RESULTS OF OPERATION OF BORROWERS AS AT THE DATES AND FOR THE
PERIODS SET FORTH THEREIN (PROVIDED,  THAT, monthly or quarterly  statements are
subject to normal year-end adjustments and may not contain footnotes required by
GAAP).  Except as disclosed  in any interim  financial  statements  furnished by
Borrowers  to  Lender  prior to the date of this  Agreement,  there  has been no
material  adverse change in the assets,  liabilities,  properties and condition,
financial or otherwise, of a Borrower, since the date of the most recent audited
financial  statements furnished by Borrowers to Lender prior to the date of this
Agreement.

        8.3 CHIEF EXECUTIVE  OFFICE;  COLLATERAL  LOCATIONS 8.3  CHIEF EXECUTIVE
OFFICE;  COLLATERAL  LOCATIONS.  The chief executive office of each Borrower and
each Borrower's  Records  concerning  Accounts are located only at the addresses
set forth on the signature page hereto and its only other places of business and
the only other locations of Collateral, if any, are: (a) the addresses set forth
in the  Information  Certificate,  (b)  Inventory  and  Equipment  purchased  by
Borrowers in the ordinary  course of business  which is in transit to a location
of Borrowers permitted herein (and the amount of which is separately  identified
as in-transit in any report with respect to Inventory and Equipment  provided by
or on behalf of any Borrower to Lender),  (c) other  locations to the extent the
aggregate  amount of the value at all of such  other  locations  does NOT EXCEED
$250,000, PROVIDED, THAT, at any time upon Lender's request Borrowers shall give
Lender prompt written  notice of the addresses of such other  locations and such
other information with respect thereto as Lender may request,  and (d) locations
established  after the date hereof in  accordance  with Section 9.2 hereof.  The
Information Certificate correctly identifies any of such locations which are not
owned by Borrowers and sets forth the owners and/or operators  thereof,  subject
to such information with respect to locations  established after the date hereof
as is provided to Lender in accordance with Section 9.2 hereof.


<PAGE>


        8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES 8.4  PRIORITY OF LIENS; TITLE
TO  PROPERTIES.  The security  interests  and liens granted to Lender under this
Agreement and the other Financing Agreements constitute valid liens and security
interests in and upon the Collateral.  Such security interests in the Collateral
are duly perfected  (except (a) such liens and security  interests which may not
be  perfected  under the UCC or the  Personal  Property  Security Act or similar
statutes in the Canadian  Provinces of Ontario,  Manitoba,  British  Columbia or
Quebec and (b) interests in Real Property not subject to the  Mortgages) and are
subject  only to the LIENS  INDICATED ON SCHEDULE 8.4 HERETO AND THE OTHER LIENS
PERMITTED UNDER SECTION 9.8 HEREOF,  PROVIDED,  THAT,  security  interests which
require perfection by the filing of financing statements shall only be perfected
upon the filing  thereof,  mortgages and liens which  require  perfection by the
filing of Mortgages shall only be perfected upon the filing thereof and security
interests  in  trademarks  and  patents  which  require  the filing of  security
interests with the Patent and Trademark  Office shall only be perfected upon the
filing  thereof.  Each  Borrower  has  good and  marketable  title to all of the
Collateral  subject  to  no  liens,  mortgages,   pledges,  security  interests,
encumbrances  or charges of any kind,  except  those  granted to Lender and such
others as are  specifically  listed on Schedule  8.4 hereto or  permitted  under
Section 9.8 hereof.

        8.5 TAX RETURNS 8.5 TAX RETURNS.  Each Borrower has filed,  or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it and are material to such Borrower. All information in
such material tax returns,  reports and declarations is complete and accurate in
all material respects. Each Borrower has paid or caused to be paid all taxes due
and payable or claimed due and payable in any assessment  received by it, except
taxes the  validity of which are being  contested  in good faith by  appropriate
proceedings  diligently  pursued and available to such Borrower and with respect
to which adequate  reserves have been set aside on its books in accordance  with
GAAP.  Adequate  resources  have been set aside on its books in accordance  with
GAAP for all accrued and unpaid Federal, State, county, local, foreign and other
taxes whether or not yet due and payable and whether or not disputed.

        8.6  LITIGATION 8.6  LITIGATION.  Except as set forth on the Information
Certificate,  there is no present  investigation by any  Governmental  Authority
pending, or to the best of Borrowers' knowledge  threatened in writing,  against
or affecting a Borrower,  its assets or business  and there is no action,  suit,
proceeding  or  claim  by any  Person  pending,  or to the  best  of  Borrowers'
knowledge  threatened in writing,  against a Borrower or its assets or goodwill,
or against or affecting any transactions  contemplated by this Agreement,  which
if adversely  determined  against such  Borrower  would have a Material  Adverse
Effect.

        8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE  LAWS 8.7 COMPLIANCE
WITH OTHER  AGREEMENTS AND APPLICABLE  LAWS.  Each Borrower is not in default in
any respect  under,  or in  violation in any respect of any of the terms of, any
agreement,  contract,  instrument,  lease or other  commitment  to which it is a
party or by which it or any of its  assets  are  bound  where  such  default  or
violation  would be reasonably  expected to have a Material  Adverse  Effect and
each Borrower is in compliance in all respects with all applicable provisions of
laws,  rules,  regulations,  licenses,  permits,  approvals  and  orders  of any
foreign,  Federal, State or local Governmental Authority where the failure to so
comply would reasonably be expected to have a Material Adverse Effect.

         8.8   ENVIRONMENTAL COMPLIANCE    8.8  ENVIRONMENTAL COMPLIANCE.

               (a) Except as set forth on  Schedule  8.8 hereto,  Borrowers  and
each  Restricted   Subsidiary  have  not  generated,   used,  stored,   treated,
transported,  manufactured,  handled,  produced  or  disposed  of any  Hazardous
Materials,  on or off its  premises  (whether  or not owned by it) in any manner
which at any time  violates  any  applicable  Environmental  Law or any license,
permit,  certificate,  approval or similar  authorization  thereunder where such
violation would be reasonably expected to have a Material Adverse Effect and the
operations  of Borrowers  and any  Subsidiary  comply in all  respects  with all
Environmental  Laws  and all  licenses,  permits,  certificates,  approvals  and
similar  authorizations   thereunder  where  the  failure  to  so  comply  would
reasonably be expected to have a Material Adverse Effect.


<PAGE>


               (b) Except as set forth on  Schedule  8.8  hereto,  there has not
been (i) any investigation,  proceeding,  complaint,  order,  directive,  claim,
citation or notice by any Governmental  Authority or any other person nor is any
pending or to the best of  Borrowers'  knowledge  threatened  in  writing,  with
respect to any  non-compliance  with or  violation  of the  requirements  of any
Environmental  Law by a  Borrower  and  any  Restricted  Subsidiary  where  such
non-compliance  or  violation  would  reasonably  be expected to have a Material
Adverse Effect or (ii) any release, spill or discharge, threatened or actual, of
any Hazardous Material or generation, use, storage,  treatment,  transportation,
manufacture,  handling, production or disposal of any Hazardous Materials or any
other  environmental,  health or safety matter,  which affects a Borrower or its
business,  operations  or  assets  or any  properties  at  which a  Borrower  or
Subsidiary has transported,  stored or disposed of any Hazardous Materials where
such non-compliance or violation would reasonably be expected to have a Material
Adverse Effect.

               (c)   Borrowers   and  their   Subsidiaries   have  no  liability
(contingent  or  otherwise) in  connection  with a release,  spill or discharge,
threatened  or  actual,  of any  Hazardous  Materials  or the  generation,  use,
storage,  treatment,   transportation,   manufacture,  handling,  production  or
disposal of any Hazardous Materials which would reasonably be expected to have a
Material Adverse Effect.

               (d) Borrowers and the Restricted  Subsidiaries  have all material
licenses, permits, certificates, approvals or similar authorizations required to
be obtained or filed in connection  with the  operations of Borrowers  under any
Environmental Law and all of such licenses, permits, certificates,  approvals or
similar  authorizations  are valid and in full force and effect in all  material
respects.

         8.9   EMPLOYEE BENEFITS      8.9   EMPLOYEE BENEFITS.

               (a) Each  Plan is in  material  compliance  with  the  applicable
provisions of ERISA, the Code and other Federal or State law. Each Plan which is
intended to qualify  under  Section  401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best knowledge
of  Borrowers,  nothing  has  occurred  which  would  cause  the  loss  of  such
qualification.  Each  Borrower and its ERISA  Affiliates  have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding  waiver or an extension  of any  amortization  period  pursuant to
Section 412 of the Code has been made with respect to any Plan.

               (b) There are no pending or to the best of Borrowers=  knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited  transaction or violation
of the fiduciary responsibility rules with respect to any Plan.


<PAGE>


               (c) (i) No ERISA Event has occurred or is reasonably  expected to
occur;  (ii) the current value of each Plan's assets  (determined  in accordance
with the  assumptions  used for funding such Plan pursuant to Section 412 of the
Code) exceed such Plan's liabilities under Section  4001(a)(16) of ERISA, except
as set forth on Schedule 8.9 hereto; (iii) each Borrower and its ERISA Affiliate
have not incurred and do not  reasonably  expect to incur,  any liability  under
Title IV of ERISA with  respect to any Plan  (other  than  premiums  due and not
delinquent  under  Section  4007 of  ERISA) in  excess  of  $250,000;  (iv) each
Borrower and its ERISA Affiliates have not incurred and do not reasonably expect
to incur,  any liability  (and no event has occurred  which,  with the giving of
notice  under  Section  4219 of ERISA,  would  result in such  liability)  under
Section 4201 or 4243 of ERISA with respect to a Multiemployer  Plan in excess of
$250,000;  and (v) each Borrower and its ERISA  Affiliates have not engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

        8.10 BANK  ACCOUNT S8.10  BANK  ACCOUNTS.  All of the deposit  accounts,
investment  accounts  or  other  accounts  in the  name of or used by  Borrowers
maintained at any bank or other financial  institution are set forth on Schedule
8.10 hereto,  subject to the rights of  Borrowers  to establish  new accounts in
accordance with Section 9.13 below.

        8.11 INTELLECTUAL  PROPERTY 8.11  INTELLECTUAL  PROPERTY.  Each Borrower
owns or licenses or  otherwise  has the right to use all  Intellectual  Property
necessary for the  operation of its business as presently  conducted or proposed
to be conducted.  As of the date hereof,  Borrowers do not have any Intellectual
Property registered,  or subject to pending  applications,  in the United States
Patent  and  Trademark  Office or any  similar  office  or agency in the  United
States,  any State thereof,  any political  subdivision  thereof or in any other
country,  other than those described in Schedule 8.11 hereto and has not granted
any  licenses  with  respect  thereto  other than as set forth in Schedule  8.11
hereto.  To the best of  Borrowers=  knowledge,  no slogan or other  advertising
device, product,  process,  method,  substance or other Intellectual Property or
goods bearing or using any Intellectual  Property  presently  contemplated to be
sold by or employed by a Borrower infringes any patent, trademark,  servicemark,
tradename,  copyright, license or other Intellectual Property owned by any other
Person presently and as of the date hereof, no claim or litigation is pending or
threatened  against or affecting a Borrower  contesting its right to sell or use
any such Intellectual  Property.  Schedule 8.11 sets forth all of the agreements
or other arrangements of Borrowers pursuant to which a Borrower has a license or
other right to use any  trademarks,  logos,  designs,  representations  or other
Intellectual  Property  owned by another  person as in effect on the date hereof
and the dates of the expiration of such agreements or other arrangements of such
Borrower as in effect on the date hereof.  No  trademark,  servicemark  or other
Intellectual  Property at any time used by a Borrower  which is owned by another
person,  or  owned  by a  Borrower  subject  to  any  security  interest,  lien,
collateral assignment,  pledge or other encumbrance in favor of any person other
than  Lender,  is  affixed  to any  Eligible  Inventory,  except  to the  extent
permitted  under the term of the  license  agreements  listed on  Schedule  8.11
hereto or any license  agreements  entered into by such Borrower  after the date
hereof.

         8.12  CAPITALIZATION       8.12     CAPITALIZATION.


<PAGE>


               (a) All of the  issued  and  outstanding:  (i)  shares of Capital
Stock of Timet, as of the date hereof,  are directly and beneficially  owned and
held by the  persons  listed  on the  Information  Certificate,  (ii)  shares of
Capital  Stock  of Timet UK  Limited,  THT,  TIMET  Millbury  Corporation,  TMCA
International Inc., the Trust, TFMC, TIMET FSC, Ltd., TIMET Colorado Corporation
and TIMET Real Estate  Corporation are directly and beneficially  owned and held
by Timet (subject to transfers thereof as a result of mergers or consolidations,
or liquidations or dissolutions,  in each case permitted  hereunder),  and (iii)
shares  of  Capital  Stock  of  TIMET  Castings  Corporation  are  directly  and
beneficially owned and held by TIMET Millbury  Corporation (subject to transfers
thereof  as  a  result  of  mergers  or   consolidations,   or  liquidations  or
dissolutions,  in each  case,  permitted  hereunder)  , and in each  case  under
clauses (i), (ii) and (iii) above all of such shares referred to above have been
duly  authorized  and are fully paid and  non-assessable,  free and clear of all
claims,  liens,  pledges and  encumbrances  of any kind,  except as disclosed in
writing to Lender.

               (b) Each  Borrower is, as of the date hereof,  Solvent  after the
creation of the  Obligations,  the  security  interests  of Lender and the other
transactions contemplated hereunder.

         8.13  LABOR DISPUTES        8.13     LABOR DISPUTES.

               (a) Set forth on Schedule 8.13 hereto is a list (including  dates
of termination) of all collective  bargaining or similar  agreements  between or
applicable to a Borrower and any union,  labor  organization or other bargaining
agent in respect of the employees of such Borrower on the date hereof.

               (b)  There is (i) no  unfair  labor  practice  complaint  pending
against a Borrower or, to the best of Borrowers=  knowledge,  threatened against
it, before the National Labor  Relations  Board,  which if adversely  determined
against such Borrower  would have a Material  Adverse Effect and no grievance or
arbitration  proceeding  arising  out  of or  under  any  collective  bargaining
agreement  is  pending  on the date  hereof  against a  Borrower  or, to best of
Borrowers=  knowledge,  threatened  in  writing  against  it which if  adversely
determined  against such Borrower would have a Material Adverse Effect, and (ii)
no strike, labor dispute, slowdown or stoppage is pending against a Borrower or,
to the best of  Borrowers=  knowledge,  threatened  against a Borrower as of the
date hereof or any such strike,  labor  dispute,  slowdown or stoppage after the
date hereof  which  would  reasonably  be  expected  to have a Material  Adverse
Effect.

       8.14  CORPORATE  NAME;  PRIOR   TRANSACTIONS  8.14CORPORATE  NAME;  PRIOR
TRANSACTIONS.  Each Borrower has not, during the past five years,  been known by
or used by any other  corporate  or  fictitious  name  (except as  permitted  in
Section 9.1 hereof) or been a party to any merger or consolidation,  or acquired
all or  substantially  all of the assets of any Person,  or acquired  any of its
property or assets out of the ordinary  course of business,  except as set forth
in the  Information  Certificate  or as permitted  in Section  9.7(a) or Section
9.10(e) hereof.

       8.15  RESTRICTIONS  ON  RESTRICTED   SUBSIDIARIES 8.15   RESTRICTIONS  ON
RESTRICTED SUBSIDIARIES.  Except for restrictions contained in this Agreement or
any other  agreement with respect to  Indebtedness or Capital Stock of Borrowers
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual  restrictions  on a Borrower  or any of its  Restricted  Subsidiaries
which  prohibit or  otherwise  restrict (a) the transfer of cash or other assets
(i) between a Borrower and any of its  Restricted  Subsidiaries  or (ii) between
any Restricted  Subsidiaries of Borrower or (b) the ability of a Borrower or any
of its Restricted Subsidiaries to incur Indebtedness or grant security interests
to Lender in the Collateral.


<PAGE>


       8.16 MATERIAL  CONTRACTS 8.16  MATERIAL  CONTRACTS.  Schedule 8.16 hereto
sets forth all Material  Contracts to which each Borrower is a party or is bound
as of the date  hereof.  Borrowers  have  delivered  true,  correct and complete
copies of such Material  Contracts to Lender on or before the date hereof.  Each
Borrower is not in breach of or in default  under any Material  Contract and has
not received any notice of the intention of any other party thereto to terminate
any Material  Contract  (which for this purpose  shall only mean those  Material
Contracts  specified in Schedule 8.16 or other Material  Contracts entered after
the date hereof,  in each case where the breach,  nonperformance,  cancellation,
termination or failure to renew would be reasonably  expected to have a Material
Adverse Affect).

     8.17  TRECO PROPERTY; BMI PROPERTY   8.17     TRECO PROPERTY; BMI PROPERTY.

               (a) Schedule  1.99 hereto  contains a true,  correct and complete
description of the Treco Property.  The real property described on Schedule 1.99
does not  include  the portion of parcel 6 that is to be retained by Timet after
the proposed transfer of legal title by Timet to Treco LLC.  Seventy-five  (75%)
percent  of  the  membership  interests  of  Treco  LLC  are  owned  by  Tremont
Corporation. Timet authorized the transfer of the Treco Property to Treco LLC in
October of 1995. As of the date hereof, the Treco Property is beneficially owned
by Treco LLC and Timet has record ownership  thereof.  The Treco Property is not
material to or  necessary  or  desirable  for the conduct by any Borrower of its
operations  or business or the  operation and use of any other Real Property and
the  transfer  thereof  shall not have an adverse  affect on the  value,  or the
ability to use, any of the remaining assets of Borrowers in a manner  consistent
with the current  uses  thereof or the ability of Lender to realize on the other
assets of Borrowers.

               (b)  Schedule  1.7 hereto  contains a true,  correct and complete
description  of the BMI  Property.  Timet is not  obligated  to transfer the BMI
Property until such time as the BMI Property is no longer  required by Timet for
pollution  abatement.  Timet does not have any liability for and does not intend
to pay any of the costs and expenses  required so that the BMI Real  Property is
no longer required by Timet for pollution  abatement,  except that under certain
circumstances,  Timet may be required to pay up to $2,000,000 for such costs and
expenses  which  exceed  $15,900,000.  As of the date of any transfer of the BMI
Real  Property,  such Real  Property  will not be  material to or  necessary  or
desirable  for the conduct by any Borrower of its  operations or business or the
operation and use of any other Real Property and the transfer  thereof shall not
have an adverse affect on the value, or the ability to use, any of the remaining
assets of Borrowers in a manner  consistent with the current uses thereof or the
ability of Lender to realize on the other assets of Borrowers.


<PAGE>


       8.18 INTERRELATED BUSINESSES  8.18 INTERRELATED BUSINESSES.  Timet is the
direct and  beneficial  owner and  holder of all of the  issued and  outstanding
shares of Capital Stock of THT,  each  Restricted  Subsidiary  (other than Timet
Castings  Corporation)  and Timet UK  Limited.  Timet  Millbury  Corporation,  a
wholly-owned  Subsidiary of Timet is the direct and beneficial  owner and holder
of all of the issued and  outstanding  shares of Capital Stock of Timet Castings
Corporation. Borrowers, Guarantors and the other Restricted Subsidiaries make up
a related  organization of various  entities  constituting a single economic and
business  enterprise  so that  Borrowers,  Guarantors  and the other  Restricted
Subsidiaries  share an identity of interests  such that any benefit  received by
any one of  them  benefits  the  others.  Borrowers,  Guarantors  and the  other
Restricted  Subsidiaries  render  services  to or for the  benefit  of the other
Borrower and/or  Guarantors and other Restricted  Subsidiaries,  as the case may
be,  purchase  or sell and  supply  goods to or from or for the  benefit  of the
others,  make loans,  advances and provide other financial  accommodations to or
for the  benefit of the other  Borrowers,  Guarantors  and the other  RESTRICTED
SUBSIDIARIES  (INCLUDING  INTER ALIA, the payment by Borrowers and Guarantors of
creditors of the other  Borrowers or Guarantors  and guarantees by Borrowers and
Guarantors of  indebtedness  of the other  Borrowers and  Guarantors and provide
administrative, marketing, payroll and management services to or for the benefit
of the other  Borrowers and  Guarantors).  Borrowers,  Guarantors  and the other
Restricted  Subsidiaries have centralized accounting and legal services,  common
officers and directors and are identified to creditors as a single  economic and
business enterprise.

        8.19  ACCURACY  AND  COMPLETENESS  OF   INFORMATION 8.19   ACCURACY  AND
COMPLETENESS  OF  INFORMATION.  All  information  furnished by or on behalf of a
Borrower in writing to Lender in  connection  with this  Agreement or any of the
other Financing  Agreements or any transaction  contemplated  hereby or thereby,
including all information on the Information  Certificate is true and correct in
all  material  respects  on the date as of which  such  information  is dated or
certified  and does not omit any material  fact  necessary in order to make such
information not misleading.  No event or circumstance has occurred which has had
or could reasonably be expected to have a Material Adverse Effect, which has not
been fully and accurately disclosed to Lender in writing.

      8.20  SURVIVAL OF  WARRANTIES;  CUMULATIVE 8.20  SURVIVAL OF  WARRANTIES;
CUMULATIVE.  All representations  and warranties  contained in this Agreement or
any of the other Financing  Agreements  shall survive the execution and delivery
of this  Agreement  and shall be deemed to have been made again to Lender on the
date of each  additional  borrowing  or other  credit  accommodation  hereunder,
except to the extent that such  representations and warranties  expressly relate
solely to an earlier  date (in which case such  representations  and  warranties
shall have been true and accurate on and as of such  earlier  date) and shall be
conclusively  presumed  to have  been  relied  on by  Lender  regardless  of any
investigation made or information  possessed by Lender. The  representations and
warranties  set forth  herein shall be  cumulative  and in addition to any other
representations  or warranties  which a Borrower shall now or hereafter give, or
cause to be given, to Lender.

SECTION 9.   AFFIRMATIVE AND NEGATIVE COVENANTS
SECTION 9.   AFFIRMATIVE AND NEGATIVE COVENANTS


<PAGE>


         9.1 MAINTENANCE OF EXISTENCE.1 MAINTENANCE OF EXISTENCE.  Each Borrower
shall at all times  preserve,  renew  and keep in full,  force  and  effect  its
corporate  existence  and rights  (other  than  pursuant  to a merger  permitted
hereunder or a liquidation  or dissolution  permitted  hereunder) and franchises
with respect thereto and maintain in full force and effect all material permits,
licenses,  trademarks,   tradenames,  approvals,   authorizations,   leases  and
contracts  necessary  to carry on the  business as  presently  or proposed to be
conducted  where the failure to  maintain  any of the same would have a Material
Adverse  Effect.  Each Borrower shall give Lender thirty (30) days prior written
notice of any  proposed  change in its  corporate  name,  which notice shall set
forth  the new name and each  Borrower  shall  deliver  to  Lender a copy of the
amendment to the Certificate of Incorporation of such Borrower providing for the
name  change  certified  by  the  Secretary  of  State  of the  jurisdiction  of
incorporation of such Borrower as soon as it is available.

      9.2 NEW COLLATERAL LOCATIONS 9.2 NEW COLLATERAL LOCATIONS.  Each Borrower
may open any new location  within the  continental  United States  provided such
Borrower (a) gives Lender thirty (30) days prior written  notice of the intended
opening of any such new location (and if it is a location  which is not owned by
Borrowers,  the names and addresses of the owners and/or operators  thereof) and
(b) executes and  delivers,  or causes to be executed and  delivered,  to Lender
such  agreements,  documents,  and  instruments  as Lender  may deem  reasonably
necessary  or  desirable  to protect its  interests  in the  Collateral  at such
location,  including UCC or PPSA financing  statements.  For purposes  hereof, a
"new location" shall mean any location of Collateral  other than those set forth
in the Information Certificate.

9.3   COMPLIANCE WITH LAWS, REGULATIONS, ETC
9.3   COMPLIANCE WITH LAWS, REGULATIONS, ETC.

               (a)  Each  Borrower   shall,   and  shall  cause  any  Restricted
Subsidiary  to, at all  times,  comply  in all  respects  with all laws,  rules,
regulations,  licenses,  permits, approvals and orders applicable to it and duly
observe all requirements of any Federal, State or local Governmental  Authority,
including ERISA,  the Code, the  Occupational  Safety and Health Act of 1970, as
amended,  the Fair Labor  Standards Act of 1938,  as amended,  and all statutes,
rules,  regulations,  orders, permits and stipulations relating to environmental
pollution and employee  health and safety,  including  all of the  Environmental
Laws, where the failure to so comply would have a Material Adverse Effect.

               (b) Each Borrower shall establish and maintain, at its expense, a
system to assure and monitor its continued  compliance in all material  respects
with all Environmental Laws in all of its operations, which system shall include
annual reviews of such compliance by employees or agents of such Borrower or its
Affiliates who are familiar with the  requirements  of the  Environmental  Laws.
Upon Lender=s request, copies of all environmental surveys, audits, assessments,
feasibility  studies and results of  remedial  investigations  shall be promptly
furnished,  or caused to be  furnished,  by Borrowers to Lender.  Each  Borrower
shall take prompt and appropriate action to respond to any  non-compliance  with
any of the Environmental Laws and upon Lender=s request,  shall regularly report
to Lender on such response.


<PAGE>


               (c) Each  Borrower  shall  give both oral and  written  notice to
Lender  promptly  upon  such  Borrower's  receipt  of any  notice  of,  or  such
Borrower's  otherwise  obtaining  knowledge of, (i) the  occurrence of any event
involving  the  release,  spill  or  discharge,  threatened  or  actual,  of any
Hazardous Material which would reasonably be expected to have a Material Adverse
Effect  or (ii) any  investigation,  proceeding,  complaint,  order,  directive,
claims, citation or notice with respect to: (A) any material non-compliance with
or violation of any Environmental Law by a Borrower or (B) the material release,
spill or discharge,  threatened or actual, of any Hazardous  Material or (C) the
generation,  use, storage,  treatment,  transportation,  manufacture,  handling,
production  or disposal of any  Hazardous  Materials  which would  reasonably be
expected  to have a  Material  Adverse  Effect or (D) any  other  environmental,
health or safety matter, which affects a Borrower or its business, operations or
assets or any properties at which a Borrower transported,  stored or disposed of
any Hazardous  Materials  which would  reasonably be expected to have a Material
Adverse Effect.

               (d) Without  limiting the generality of the  foregoing,  whenever
Lender  reasonably  determines  that there is  material  non-compliance,  or any
condition  which  requires  any action by or on behalf of a Borrower in order to
avoid any material non-compliance,  with any Environmental Law, Borrowers shall,
at  Lender's   request  and  Borrowers'   expense:   (i)  cause  an  independent
environmental  engineer  acceptable  to Lender to conduct such tests of the site
where  such  Borrower's  non-compliance  or  alleged  non-compliance  with  such
Environmental  Laws has  occurred  as to such  non-compliance  and  prepare  and
deliver to Lender a report as to such  non-compliance  setting forth the results
of such tests,  a proposed  plan for  responding to any  environmental  problems
described  therein,  and an  estimate of the costs  thereof and (ii)  provide to
Lender  a  supplemental  report  of such  engineer  whenever  the  scope of such
non-compliance,  or such  Borrower's  response  thereto or the  estimated  costs
thereof, shall change in any material respect.

               (e) Each Borrower shall indemnify and hold harmless  Lender,  its
directors,  officers, employees, agents, invitees,  representatives,  successors
and assigns, from and against any and all losses, claims, damages,  liabilities,
costs, and expenses  (including  attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use,  generation,  manufacture,
reproduction,  storage, release, threatened release, spill, discharge,  disposal
or presence  of a Hazardous  Material,  including  the costs of any  required or
necessary repair, cleanup or other remedial work with respect to any property of
a Borrower and the preparation and  implementation  of any closure,  remedial or
other required plans except for losses, claims, damages, liabilities,  costs and
expenses as a result of Lender's own gross  negligence  or wilful  misconduct as
determined  pursuant  to a final  non-appealable  order of a court of  competent
jurisdiction. All representations, warranties, covenants and indemnifications in
this  Section  9.3  shall  survive  the  payment  of  the  Obligations  and  the
termination or non-renewal of this Agreement.

      9.4 PAYMENT OF TAXES AND  CLAIMS  9.4  PAYMENT OF TAXES AND CLAIMS.  Each
Borrower  shall,  and shall  cause any  Restricted  Subsidiary  to, duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its  properties or assets,  except for taxes the validity of which
are being contested in good faith by appropriate  proceedings diligently pursued
and available to such Borrower or such  Restricted  Subsidiary,  as the case may
be, and with respect to which adequate reserves have been set aside on its books
in accordance  with GAAP. Each Borrower shall be liable for any tax or penalties
imposed on Lender as a result of the financing  arrangements provided for herein
to the extent  provided in Section 6.5 hereof,  and Borrower agrees to indemnify
and hold Lender  harmless with respect to the foregoing,  and to repay to Lender
on demand the amount  thereof,  and until paid by Borrowers such amount shall be
added and deemed part of the Loans.  The foregoing  indemnity  shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.


<PAGE>


      9.5  INSURANCE   9.5  INSURANCE.  Each Borrower shall, and shall cause any
Restricted  Subsidiary  to, at all times,  maintain with  financially  sound and
reputable  insurers  insurance  with respect to the  Collateral  against loss or
damage  and all other  insurance  of the kinds  and in the  amounts  customarily
insured against or carried by corporations of established  reputation engaged in
the  same or  similar  businesses  and  similarly  situated.  Said  policies  of
insurance shall be satisfactory to Lender as to form, amount and insurer. Lender
acknowledges that as of the date hereof Borrowers'  current insurance  coverages
set forth on Schedule  9.5 hereto are  reasonably  satisfactory  to Lender as to
form,  amount and insurer based on the circumstances of Borrowers as of the date
hereof  disclosed to Lender in writing.  Borrowers  shall furnish  certificates,
policies or endorsements to Lender as Lender shall  reasonably  require as proof
of such insurance, and, if a Borrower fails to do so, Lender is authorized,  but
not required, to obtain such insurance at the expense of Borrowers. All policies
shall  provide for at least thirty (30) days prior  written  notice to Lender of
any  cancellation  or  reduction  of coverage  as to Borrower or the  Restricted
Subsidiaries  and that  Lender  may act as  attorney  for such  Borrower  or the
Restricted Subsidiaries in obtaining, and at any time an Event of Default exists
or has occurred and is continuing,  adjusting,  settling, amending and canceling
such insurance as to any Borrower or Restricted Subsidiary.  Each Borrower shall
cause Lender to be named as a loss payee under all policies  providing  coverage
for any loss of,  or  damage  to,  any  assets  of any  Borrower  or  Restricted
Subsidiary  and an  additional  insured  (but  without  any  liability  for  any
premiums)  under  such  insurance   policies  and  each  Borrower  shall  obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form  and  substance   satisfactory  to  Lender.   Such  lender's  loss  payable
endorsements  shall  specify that the  proceeds of such  insurance to the extent
relating  to any loss or damage  to any  assets of any  Borrower  or  Restricted
Subsidiary,  or as may  otherwise  constitute  Collateral,  shall be  payable to
Lender as its interests may appear and further specify that Lender shall be paid
regardless of any act or omission by a Borrower or any of its Affiliates. At its
option,  Lender may apply any insurance  proceeds received by Lender at any time
to the cost of repairs or  replacement  of  Collateral  and/or to payment of the
Obligations,  whether or not then due, in any order and in such manner as Lender
may determine or hold such proceeds as cash collateral for the Obligations.

9.6   FINANCIAL STATEMENTS AND OTHER INFORMATION
9.6   FINANCIAL STATEMENTS AND OTHER INFORMATION.


<PAGE>


               (a)  Each  Borrower   shall,   and  shall  cause  any  Restricted
Subsidiary to, keep proper books and records in which true and complete  entries
shall  be  made  of  all  dealings  or  transactions  of or in  relation  to the
Collateral and the business of such Borrower and its  Subsidiaries in accordance
with GAAP.  Borrowers  shall  promptly  furnish to Lender all such financial and
other information as Lender shall reasonably  request relating to the Collateral
and the  assets,  business  and  operations  of  Borrowers  and  the  Restricted
Subsidiaries,  and to notify the auditors  and  accountants  of  Borrowers  that
Lender is authorized  to obtain such  information  directly  from them.  Without
limiting  the  foregoing,  Borrowers  shall  furnish or cause to be furnished to
Lender, the following:  (i) within thirty (30) days after the end of each fiscal
month  (except that,  if a month is the last month in a fiscal  quarter,  within
forty-five  (45) days after the end of such  fiscal  month),  monthly  unaudited
consolidated  financial  information  (including  in each case  balance  sheets,
statements of income and loss and statements of  shareholders'  equity),  and in
addition,  upon Lender's  request,  at any time that Excess  Availability may be
equal to or less than $25,000,000, unaudited consolidating financial information
(including  in each case  balance  sheets,  statements  of  income  and loss and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the  financial  position  and the  results  of the  operations  of Timet and its
Subsidiaries  as of the end of and through  such fiscal  month,  certified to be
correct  by the chief  financial  officer of Timet,  subject to normal  year-end
adjustments and  accompanied by a compliance  certificate  substantially  in the
form of Exhibit B hereto, along with a schedule in form reasonably  satisfactory
to Lender of the calculations used in determining,  as of the end of such month,
whether  Borrowers  were in  compliance  with the covenants set forth in Section
9.18 of this Agreement for such month and the  calculations  used in determining
the Fixed Charge Coverage Ratio for purposes of determining the Interest Rate as
of the last day of the  immediately  preceding  fiscal  quarter  (provided  that
Borrower shall not be required to include such  calculations  if Borrowers shall
state in the compliance  certificate  that Borrowers  agree that for purposes of
determining  the Interest Rate and the unused line fee the Fixed Charge Coverage
Ratio  for such  fiscal  quarter  shall be  deemed  to be less  than  1.25 to 1,
regardless  of the actual Fixed  Charge  Coverage  Ratio as of such date),  (ii)
within  forty-five  (45) days after the end of each  fiscal  quarter,  quarterly
unaudited consolidated statements of cash flow of Timet and its Subsidiaries and
in addition,  upon Lender=s request, at any time that Excess Availability may be
equal to or less than $25,000,000,  quarterly unaudited consolidating statements
of cash flow of Timet, in each case, all in reasonable detail, fairly presenting
the cash flow and results of the operations of Timet and its  Subsidiaries as of
the end of and for such fiscal quarter,  and (iii) within ninety (90) days after
the end of each fiscal  year,  audited  consolidated  financial  statements  and
unaudited  consolidating  financial  information  of Timet and its  Subsidiaries
(including  in  each  case  balance  sheets,  statements  of  income  and  loss,
statements  of cash  flow  and  statements  of  shareholders'  equity),  and the
accompanying  notes thereto,  all in reasonable  detail,  fairly  presenting the
financial  position  and  the  results  of  the  operations  of  Timet  and  its
Subsidiaries  as of the end of and for  such  fiscal  year,  together  with  the
unqualified  opinion  of  independent   certified  public   accountants,   which
accountants  shall be an  independent  accounting  firm selected by Timet and if
other than such  accountants  retained for such  purposes as of the date hereof,
reasonably  acceptable  to  Lender,  that such  financial  statements  have been
prepared in accordance  with GAAP,  and present fairly the results of operations
and financial  condition of Timet and its  Subsidiaries as of the end of and for
the fiscal year then ended.


<PAGE>


               (b)  Borrowers  shall  promptly  notify  Lender in writing of the
details of (i) any loss,  damage,  investigation,  action,  suit,  proceeding or
claim that involves  amounts in excess of $1,000,000  relating to any Collateral
or which would result in any material  adverse change in a Borrower's  business,
properties,  assets,  goodwill or condition,  financial or  otherwise,  (ii) any
Material  Contract of a Borrower being terminated  (other than at the end of the
scheduled  term of such  Material  Contract,  so long as  Borrowers  shall  have
previously  provided to Lender in writing a copy of such  Material  Contract) or
amended in writing in any material  respect,  or any new Material Contract being
entered into (in which event  Borrowers shall provide Lender with a copy of such
Material Contract),  (iii) any order, judgment or decree in excess of $5,000,000
shall have been entered  against a Borrower or any of its  properties or assets,
(iv) any  notification  of  violation of laws or  regulations  received by or on
behalf of a Borrower where such violation would reasonably be expected to have a
Material  Adverse  Effect,  (v) any ERISA Event,  and (vi) the occurrence of any
Event of Default or act, condition or event which, with notice or the passage of
time or giving  of notice or both,  would  constitute  an Event of  Default.  In
addition,  Borrowers shall provide Lender monthly with a report of all locations
of Inventory at consignees, processors,  subcontractors,  warehouses, bailees or
other  third  parties  indicating  the name and  address of such  person and the
approximate amount of the Inventory at such location.

               (c) Borrowers  shall promptly after the sending or filing thereof
furnish  or cause to be  furnished  to  Lender  copies  of all  reports  which a
Borrower  sends to its  stockholders  generally  and copies of all  reports  and
registration  statements which a Borrower files with the Securities and Exchange
Commission,  any national  securities  exchange or the National  Association  of
Securities Dealers, Inc.

               (d) Each  Borrower  shall  furnish  or cause to be  furnished  to
Lender such budgets, forecasts, projections and other information respecting the
Collateral and the business of Timet and its  Subsidiaries,  as Lender may, from
time to time, reasonably request.  Lender is hereby authorized to deliver a copy
of any financial statement or any other information  relating to the business of
such Borrower to any court or other  Government  Authority or to any participant
or assignee or  prospective  participant  or  assignee,  subject to Section 12.6
hereof. Each Borrower hereby irrevocably  authorizes and directs all accountants
or auditors to deliver to Lender, at such Borrower's  expense, to the extent not
already provided to Lender by Borrowers,  copies of the financial  statements of
such Borrower and any reports or management letters prepared by such accountants
or auditors on behalf of such  Borrower and  delivered or to be delivered to the
audit committee of Timet  consistent  with the current  practices of Timet as of
the date hereof or as  otherwise  required by  applicable  law.  Any  documents,
schedules,  invoices or other  papers  delivered  to Lender may be  destroyed or
otherwise  disposed  of by Lender one (1) year after the same are  delivered  to
Lender, except as otherwise designated by Borrowers to Lender in writing.

9.7      SALE OF ASSETS, CONSOLIDATION,  MERGER, DISSOLUTION, ETC.
9.7      SALE OF ASSETS, CONSOLIDATION,  MERGER, DISSOLUTION, ETC.
Each Borrower shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly,


<PAGE>


               (a) merge into or with or  consolidate  with any other  Person or
permit any other Person to merge INTO OR WITH OR  CONSOLIDATE  WITH IT,  EXCEPT,
THAT, any Borrower,  Guarantor or other Restricted Subsidiary may MERGE WITH AND
INTO OR  CONSOLIDATE  WITH ANY OTHER  BORROWER,  GUARANTOR  OR OTHER  RESTRICTED
SUBSIDIARY,  PROVIDED,  THAT,  each of the following  conditions is satisfied as
determined  by Lender:  (i) Lender  shall have  received  not less than ten (10)
Business  Days  prior  written  notice  of the  intention  of such  Borrower  or
Guarantor to so merge or consolidate and such  information  with respect thereto
as  Lender  may  request,  (ii)  as of  the  effective  date  of the  merger  or
consolidation  and after  giving  effect  thereto,  no Event of  Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of  Default,  shall exist or have  occurred,  (iii)  Lender  shall have
received  true,  correct and complete  copies of all  agreements,  documents and
instruments  relating  to such  merger,  including,  but  not  limited  to,  the
certificate or certificates of merger as filed with each  appropriate  Secretary
of State,  (iv) the surviving entity shall immediately upon the effectiveness of
the merger expressly  confirm in writing  pursuant to an agreement,  in form and
substance  satisfactory  to Lender,  its continuing  liability in respect of the
Obligations  and  Financing  Agreements  and  execute  and  deliver  such  other
agreements,  documents  and  instruments  as Lender  may  reasonably  request in
connection  therewith,  (v) the surviving entity shall,  immediately  before and
immediately  after giving effect to such  transaction or series of  transactions
have an Adjusted Net Worth  (including,  without  limitation,  any  Indebtedness
incurred or anticipated to be incurred in connection  with or in respect of such
transaction or series of transactions) equal to or greater than the Adjusted Net
Worth of the entities involved in such merger or consolidation immediately prior
to such  transaction  or series of  transactions  (as reduced by any  reasonable
costs and  expenses  directly  related  to such  merger),  (vi) if the merger or
consolidation  involves a Borrower with a Restricted  Subsidiary,  such Borrower
shall  be the  surviving  entity  or in the case of a  merger  or  consolidation
between  Timet and THT,  Timet shall be the  surviving  corporation,  (vii) such
merger or consolidation  shall not violate any law or any order or decree of any
court or other  Governmental  Authority  in any  material  respect and shall not
conflict  with or result in the breach of, or  constitute a default  under,  any
indenture,  mortgage,  deed of trust,  or any other  agreement or  instrument to
which any Borrower,  Guarantor or such other Restricted Subsidiary is a party or
may be bound,  (viii) such merger or  consolidation  shall be done in accordance
with the  requirements  of all applicable laws and  regulations,  (ix) effective
upon such merger or consolidation, all of the assets and properties of Guarantor
or other Restricted Subsidiary involved in such merger or consolidation shall be
duly and validly  transferred  and  assigned to the  Borrower in the case of any
merger or  consolidation  involving a Borrower,  or otherwise  to the  surviving
entity, free and clear of any liens, restrictions or encumbrances other than the
security  interests and liens of Lender or other  security  interests  expressly
permitted  hereunder  (and Lender shall have received  such evidence  thereof as
Lender may require),  (x) Lender shall have received such deeds,  assignments or
other  agreements  as Lender may request to evidence and confirm the transfer of
such assets to the surviving entity of such merger or consolidation, (xi) to the
extent the assets  transferred  are of a Guarantor,  the Borrower,  Guarantor or
other  Restricted  Subsidiary  shall acquire such assets subject to the security
interests  and liens of Lender which shall  continue in full force and effect as
to the assets transferred and upon Lender's request, the Borrower,  Guarantor or
other Restricted Subsidiary shall acknowledge the same in writing pursuant to an
agreement in form and  substance  satisfactory  to Lender and shall  execute and
deliver to Lender  such  agreements,  documents  and  instruments  as Lender may
require  (including  guarantees,  security  agreements,  UCC and PPSA  financing
statements),  (xii) no  Borrower or  Guarantor  shall  assume any  Indebtedness,
obligations  or  liabilities  as a result  of such  merger or  consolidation  or
otherwise  become  liable in respect of any  obligation  or  liabilities  of the
Person with whom it is merging or  consolidating,  unless such  Indebtedness  is
expressly  permitted  hereunder and such  obligations  and  liabilities  are not
prohibited  under this Agreement or any of the other Financing  Agreements,  and
(xiii)  each  Obligor  shall  ratify  and  confirm  that its  guarantees  of the
Obligations  shall apply to the Obligations as assumed by such surviving entity;
or

               (b) sell, assign, lease,  transfer,  abandon or otherwise dispose
of any  Capital  Stock to any  OTHER  PERSON  OR ANY OF ITS  ASSETS TO ANY OTHER
PERSON, EXCEPT FOR

                     (i)  sales of Inventory in the ordinary course of business
(including sales of Inventory to Unrestricted Subsidiaries and the Timet
Affiliates, but subject to Section 9.12 hereof);


<PAGE>


                     (ii) the disposition of worn-out or obsolete Equipment so
long as (A) any proceeds are paid to Lender for application to the Obligations
(without any permanent reduction in the Maximum  Credit as a result of such
application)  and (B) such sales do not involve Equipment having an appraised or
derly liquidation value (as set forth in the most recent acceptable appraisal
thereof received by Lender), or in the case of any such  Equipment  which is not
included in such  appraisal,  having a fair market  value,  in the  aggregate in
excess of $750,000  for all such  Equipment disposed of in any fiscal year of
Borrowers;

                     (III) THE SALE,  WRITE-OFF OR OTHER  DISPOSITION BY TFMC OF
THE SMC STOCK, PROVIDED, THAT, as

to any such  sale or  other  disposition  each of the  following  conditions  is
satisfied:  (A) Lender shall have  received not less than ten (10) Business Days
prior written notice of any such sale or other  disposition,  which notice shall
set forth in reasonable detail  satisfactory to Lender, the parties to such sale
or other  disposition,  the purchase price and the manner of payment thereof and
such other  information  with  respect  thereto as Lender may  request,  (B) the
consideration  received in  connection  with any such sale or other  disposition
shall be at least  equal to the fair market  value of the SMC Stock,  (C) in the
case of a sale or other disposition,  not less than eighty (80%) percent of such
consideration shall be payable in cash or Cash Equivalents, (D) in the case of a
sale or other  disposition,  such sale or other disposition shall be on fair and
reasonable  prices and terms no less  favorable than would be obtained in a bona
fide  arm=s  length  transaction  and  if  to a  Borrower  or  other  Restricted
Subsidiary,  such a sale or other disposition shall be subject to the pledge and
security  interest of Lender therein,  (E) all net proceeds payable or delivered
to TFMC or any Borrower or any Affiliate of Borrower pursuant to such sale shall
be  paid  or  delivered,  or  caused  to be  paid or  delivered  to  Lender  for
application to the Obligations  (without any permanent  reduction in the Maximum
Credit as a result of such  application) or if no Obligations  pursuant to or in
connection  with  any  Loans  are  then  outstanding,  then  to be  held as cash
collateral for the  Obligations  arising  pursuant to or in connection  with any
Letter of Credit  Accommodations  on terms and  conditions  acceptable to Lender
(and if no Obligations  arising  pursuant to or in connection  with any Loans or
Letter of Credit  Accommodations  are then outstanding,  and no Event of Default
shall exist or have occurred,  then upon Timet's request, such proceeds shall be
delivered  to Timet,  subject to  applicable  law or court order or order of any
other Governmental Authority);

                     (iv)  the grant by Timet after the date hereof of a
non-exclusive license to any person for THE USE OF ANY INTELLECTUAL  PROPERTY
CONSISTING OF TRADEMARKS OR PATENTS OWNED BY  TIMET,  PROVIDED,  THAT,  as to
each and all of such  licenses,  each of the following  conditions is satisfied,
(A) at the time of the grant of the license and after giving effect thereto, no
Event of Default, or act, condition or event which  with  notice or  passage  of
time or both  would  constitute  an Event of Default,  shall exist or have
occurred,  (B) the rights of the  licensee in the trademarks or patents  subject
to such license shall be subject and  subordinate in all respects to the rights
therein of Lender,  (C) such  licenses  shall not include any limitations or
restrictions on the use of such trademarks or patents by any  Borrower or
Guarantor  or which would limit or restrict  the ability of Lender to use such
trademarks  or patents  pursuant to its rights  hereunder or under any of the
other Financing  Agreements or to sell or otherwise  realize on such trademarks
or patents, and (D) Lender shall have received true, correct and complete copies
of the executed license agreement,  promptly after the execution thereof;


<PAGE>


     (v) the disposition through the abandonment,  cancellation or other failure
to maintain any trademark or other Intellectual Property which is no longer used
or useful in the business of Borrowers,  Guarantors and their  Subsidiaries (and
does not appear on, or is  otherwise  not  affixed  to or  incorporated  in, any
Inventory or Equipment or is necessary in connection  with the Records of Timet)
and has a value of less than $250,000;

     (vi) the  transfer,  directly or by one or more  intermediate  transfers to
Timet or another Restricted Subsidiary,  of the Capital Stock of Loterios SpA to
Timet UK Limited or any Subsidiary of Timet UK Limited;

     (VII)  THE  TRANSFER  OF LEGAL  TITLE BY  TIMET TO TRECO  LLC OF THE  TRECO
PROPERTY;  PROVIDED,THAT,  Lender shall have received true, correct and complete
copies of the agreements relating to such transfer;

     (viii)  the  sale or  transfer  by  Timet  of the  BMI  Property  to  Basic
Environmental Company

LLC and Basic  Remediation  Company LLC pursuant to the terms of the  Pabco/Warm
Springs  Agreement for  Reconveyance of Property,  dated as of June 30, 1999, by
and among Timet, Basic  Environmental  Company LLC and Basic Remediation COMPANY
LLC (AS IN EFFECT ON THE DATE  HEREOF),  PROVIDED,  THAT,  (A) Lender shall have
received a true, correct and complete copy of such Agreement for Reconveyance of
Property and all agreements,  documents and instruments related thereto, and (B)
all proceeds from such sale or transfer,  if any,  shall be paid or delivered to
Lender for  application to the Obligations  (without any permanent  reduction in
the Maximum Credit as a result of such application);

     (ix) the sale or  transfer  by Timet,  including  by a grant of easement or
other transfer

(with right of reversion)  of  approximately  9,800 square feet of  undeveloped,
vacant land in Henderson,  Nevada  adjacent to the existing  Federal  government
property interests to the Colorado River Commission for purposes of CONSTRUCTION
AND MAINTENANCE OF A NEW ELECTRIC  FACILITY STEPDOWN YARD;  PROVIDED,  THAT, (A)
Lender shall have  received not less than ten (10)  Business  Days prior written
notice of such sale or transfer,  (B) the transfer thereof shall not in the good
faith  determination  of Lender  have an  adverse  affect on the  value,  or the
ability to use, any of the remaining assets of Borrowers in a manner  consistent
with current  uses thereof or the ability of Lender to realize on the  remaining
assets of  Borrowers  and (C) all proceeds  from such sale or transfer,  if any,
shall  be paid  to  Lender  for  application  to the  Obligations  (without  any
permanent reduction in the Maximum Credit as a result of such application);


<PAGE>


     (x) the  sale or  transfer  by  Timet of any  land  (other  than the  Treco
Property,  and the BMI Property or as provided in Section  9.7(b)(xi)  above) in
the vicinity of Timet=s Henderson, Nevada plant which land is not currently used
or reasonably  expected to be used in the forseeable future for Timet=s titanium
metals OPERATIONS (CONSTITUTING  APPROXIMATELY 130 ACRES), PROVIDED, THAT, as to
any such sale or  transfer,  each of the  following  conditions  is satisfied as
determined by Lender in good faith: (A) Lender shall have received not less than
ten (10) Business  Days' prior  written  notice of the proposed sale by Timet of
any such  property,  which  notice  shall  specify the  parties to any  proposed
agreement  with  respect  thereto  and the  total  amount  of all  cash or other
proceeds  (including the net proceeds) which it is anticipated  will be received
by Timet with respect to such sale or transfer and such other  matters as Lender
may  request,  (B) all  proceeds  are  paid to  Lender  for  application  to the
Obligations  (without any permanent  reduction in the Maximum Credit as a result
of such  application),  (C)  each  such  sale or  transfer  shall be on fair and
reasonable prices and terms on terms no less FAVORABLE THAN WOULD BE OBTAINED IN
A BONA FIDE  arms'-length  transaction  with a person that is not an  Affiliate,
PROVIDED,  THAT,  if  such  sale  or  transfer  is to the  other  Borrower  or a
Restricted Subsidiary, such Borrower or Restricted Subsidiary shall acquire such
property  subject to the mortgage and lien thereon of Lender and shall  promptly
execute and deliver such  agreements with respect thereto as Lender may request,
and (D) as of the date of such sale or transfer and after giving effect thereto,
no Event of Default  shall  exist or have  occurred or act,  condition  or event
which  with  notice or  passage  of time or both  would  constitute  an Event of
Default shall exist or have occurred;


<PAGE>


     (xi) the  issuance  and sale by Timet of Capital  Stock of Timet  after the
date hereof or the issuance  and sale by any  Restricted  Subsidiary  of Capital
Stock of such Restricted  Subsidiary to Timet or another RESTRICTED  SUBSIDIARY;
PROVIDED,  THAT,  (A) Lender shall have received not less than ten (10) Business
Days prior written notice of such issuance and sale by Timet or such  Restricted
Subsidiary, which notice shall specify the parties to whom such shares are to be
sold, the terms of such sale,  the total amount which it is anticipated  will be
realized  from the  issuance  and sale of such  stock and the net cash  proceeds
which it is anticipated will be received by Timet or such Restricted  Subsidiary
from such sale, (B) Borrowers shall not be required to pay any cash dividends or
repurchase  or redeem such Capital  Stock or make any other  payments in respect
thereof  (except (1) in the case where THT is the issuer of such Capital  Stock,
to the extent  permitted  under  Section 9.11 hereof and (2)  Borrowers may make
payments as capital  contributions  in exchange for such Capital  Stock upon its
issuance  to  the  extent   Borrowers   are   permitted  to  make  such  capital
contributions  under Section 9.10 hereof),  (C) the terms of such Capital Stock,
and the terms and conditions of the purchase and sale thereof, shall not include
any terms that  include any  limitation  on the right of Borrowers to request or
receive  Loans or Letter of Credit  Accommodations  or the right of Borrowers to
amend or modify any of the terms and  conditions of this Agreement or any of the
other  Financing  Agreements  or  otherwise  in any way  relate to or affect the
arrangements  of Borrowers with Lender or are more  restrictive or burdensome to
Borrowers than the terms of any Capital Stock in effect on the date hereof,  (D)
in the case of the  issuance  by any  Restricted  Subsidiary  of Capital  Stock,
promptly upon Lender's request (1) Timet or the Restricted  Subsidiary receiving
such Capital  Stock,  as the case may be, shall execute and deliver to Lender in
form and  substance  satisfactory  to Lender,  a pledge and  security  agreement
granting  to  Lender  a  first  pledge  of and  lien  on all of the  issued  and
outstanding shares of Capital Stock of such Restricted Subsidiary, and (2) Timet
or the Restricted  Subsidiary  receiving such Capital Stock, as the case may be,
shall deliver the original stock certificates  evidencing such shares of Capital
Stock  (or  such  other  evidence  as may be  issued  in the  case of a  limited
liability company) together with stock powers with respect thereto duly executed
in blank (or the equivalent thereof in the case of a limited liability company),
(E) any proceeds  payable to Timet or any  Restricted  Subsidiary  in connection
with the  issuance  and sale of such  Capital  Stock shall be paid to Lender for
application to the Obligations  (without any permanent  reduction in the Maximum
Credit as a result of such  application) or if no Obligations  pursuant to or in
connection  with  any  Loans  are  then  outstanding,  then  to be  held as cash
collateral for the  Obligations  arising  pursuant to or in connection  with any
Letter of Credit  Accommodations  on terms and  conditions  acceptable to Lender
(and if no Obligations  arising  pursuant to or in connection  with any Loans or
Letter of Credit  Accommodations  are then outstanding,  and no Event of Default
shall exist or have occurred,  then upon Timet's request, such proceeds shall be
delivered  to Timet,  subject to  applicable  law or court order or order of any
other Governmental Authority),  and (F) as of the date of such issuance and sale
and after giving effect thereto,  no Event of Default or act, condition or event
which  with  notice or  passage  of time or both  would  constitute  an Event of
Default shall exist or have occurred;

     (xii) the  issuance of Capital  Stock of Timet  consisting  of common stock
pursuant  to any stock  option  plan or  restricted  stock plan of Timet for the
benefit of its employees,  directors and consultants,  PROVIDED, THAT, (A) in no
event  shall Timet be required to issue,  or shall Timet  issue,  Capital  Stock
pursuant to such stock or restricted stock option if it would result in a Change
of Control or other Event of Default and (B)  Borrowers  shall give Lender prior
written  notice of the terms of such stock option or  restricted  stock plan and
such other information with respect thereto as Lender may reasonably request;

     (xiii) the sale by Timet of the Capital  Stock of ValTimet,  Timet  Savoie,
S.A. or MZI, LLC to the other holders of Capital  Stock of such person  pursuant
to the terms of  agreements of Timet with such other HOLDERS AS IN EFFECT ON THE
DATE HEREOF, PROVIDED, THAT, all proceeds from such sale shall be paid to Lender
for  application  to the  Obligations  (without any  permanent  reduction in the
Maximum Credit as a result of such application);

     (xiv) the transfer by Timet to Timet UK Limited in the  ordinary  course of
business  consistent  with  current  practices  as  of  the  date  hereof  of  a
non-exclusive right to use certain Intellectual  Property consisting of software
for  maintaining  books  and  records  developed  by  Timet  for use by Timet UK
Limited,  PROVIDED,  THAT,  legal title to such  Intellectual  Property  remains
vested in Timet;

     (xv)  transfers of assets or properties to the extent such transfers may be
permitted under Section 9.9, Section 9.10 or Section 9.11 hereof;


<PAGE>


               (c) wind up, liquidate or dissolve,  except that THT or any other
Restricted Subsidiary may wind UP, LIQUIDATE AND DISSOLVE,  PROVIDED, THAT, each
of the following  conditions is satisfied,  (i) the winding up,  liquidation and
dissolution of such Restricted Subsidiary shall not violate any law or any order
or decree of any court or other  Governmental  Authority in any material respect
and shall not conflict  with or result in the breach of, or constitute a default
under,  any  indenture,  mortgage,  deed of  trust,  or any other  agreement  or
instrument to which any Borrower or such Restricted Subsidiary is a party or may
be bound,  (ii) such winding up,  liquidation  or  dissolution  shall be done in
accordance with the requirements of all applicable laws and  regulations,  (iii)
effective upon such winding up,  liquidation or  dissolution,  all of the assets
and properties of THT or such  Subsidiary (as the case may be) shall be duly and
validly  transferred  and  assigned  to  Timet,  free and  clear  of any  liens,
restrictions  or  encumbrances  other than the security  interests  and liens of
Lender or other security  interests  expressly  permitted  hereunder (and Lender
shall have received such  evidence  thereof as Lender may require),  (iv) Lender
shall have received all documents and agreements of Borrower or such  Restricted
Subsidiary  as filed with any  Governmental  Authority or otherwise  required to
effectuate  such  winding up,  liquidation  or  dissolution,  (v) no Borrower or
Guarantor shall assume any Indebtedness,  obligations or liabilities as a result
of such winding up,  liquidation or dissolution,  or otherwise  become liable in
respect of any  obligations  or  liabilities  of the Person which is winding up,
liquidating  or  dissolving,  unless such  Indebtedness  is otherwise  expressly
permitted  hereunder or such obligations or liabilities are not prohibited under
this Agreement or any of the other Financing Agreements,  (vi) Lender shall have
received  not less  than ten (10)  Business  Days  prior  written  notice of the
intention  of THT or  such  Restricted  Subsidiary  to  wind  up,  liquidate  or
dissolve,  (vii) Lender shall have  received  such deeds,  assignments  or other
agreements  as Lender may request to evidence  and confirm the  transfer of such
assets to Timet,  (viii) to the extent the  assets  transferred  are of THT or a
Guarantor, Timet shall acquire such assets subject to the security interests and
liens of Lender  which shall  continue in full force and effect as to the assets
transferred  and upon  Lender's  request,  Timet shall  acknowledge  the same in
writing  pursuant to an agreement in form and substance  satisfactory  to Lender
and  shall  execute  and  deliver  to  Lender  such  agreements,  documents  and
instruments as Lender may require (including UCC and PPSA financing statements),
and (ix) as of the date of such winding up, liquidation or dissolution and after
giving effect thereto, no Event of Default or act, condition or event which with
notice or  passage of time or both would  constitute  an Event of Default  shall
exist or have occurred; or

               (d) agree to do any of the foregoing  (unless such  agreement has
been  consented  to in  writing  by Lender or  includes  as a  condition  to the
effectiveness of such agreement that Lender's consent thereto be obtained).

         9.8  ENCUMBRANCES9.8  ENCUMBRANCES.  Each Borrower shall not, and shall
not permit any  Restricted  Subsidiary to,  create,  incur,  assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or OTHER ENCUMBRANCE
OF ANY NATURE  WHATSOEVER  ON ANY OF ITS  ASSETS OR  PROPERTIES,  INCLUDING  THE
COLLATERAL,  EXCEPT:  (a) the  security  interests  and  liens  of  Lender;  (b)
Customary  Permitted Liens;  (c) purchase money security  interests in Equipment
(including  Capital  Leases) and purchase  money  mortgages on Real  Property to
secure  Indebtedness  permitted  under Section 9.9(b) hereof;  (d) liens arising
from (i) operating leases and the precautionary UCC or PPSA financing  statement
filings  or  registrations  in  respect  thereof  and  (ii)  equipment  or other
materials  which are not owned by a  Borrower  located on the  premises  of such
Borrower (but not in connection with, or as part of, the financing thereof) from
time to time in the  ordinary  course of business  and  consistent  with current
practices of Borrowers and the  precautionary  UCC or PPSA  financing  statement
filings in respect  thereof;  (e) leases or subleases of any portion of the Real
Property granted to others to the extent permitted under the Mortgages;  (f) the
security  interests and liens set forth on Schedule 8.4 hereto; and (g) liens on
assets of a Borrower or other Restricted Subsidiary (other than any Receivables,
Inventory or  Equipment  or other assets which if not  available to Lender would
impair  Lender=s  rights or  remedies as to any other  Collateral),  which liens
secure  obligations  of  such  Borrower  or  Restricted  Subsidiary  other  than
Indebtedness,  if any, which obligations in the aggregate do not exceed $500,000
(provided,  that,  Borrowers shall promptly  provide notice of any such liens to
Lender).


<PAGE>


         9.9  INDEBTEDNESS9.9  INDEBTEDNESS.  Each Borrower shall not, and shall
not permit any Restricted  Subsidiary to, incur,  create,  assume,  become or be
liable in any manner with respect to, or permit to exist, any Indebtedness, (and
including  any  guarantee or otherwise  becoming  responsible  for  (directly or
indirectly)  the  INDEBTEDNESS,  OBLIGATIONS  OR DIVIDENDS OF ANY OTHER PERSON),
EXCEPT:

               (a)   the Obligations;

               (b) purchase money Indebtedness (including Capital Leases) to the
extent  secured by purchase  money  security  interests in Equipment  (including
Capital  Leases)  and  purchase  money  mortgages  on real  estate not to exceed
$5,000,000  in the  aggregate at any time  outstanding  so long as such security
interests  and  mortgages  do not  apply to any  property  of such  Borrower  or
Restricted  Subsidiary other than the Equipment or real estate so acquired,  and
the  Indebtedness  secured  thereby does not exceed the cost of the Equipment or
real estate so acquired, as the case may be;

               (c)  Indebtedness  of Borrowers  under interest swap  agreements,
interest rate cap  agreements,  interest rate collar  agreements,  interest rate
exchange  agreements  and similar  contractual  agreements  entered INTO FOR THE
PURPOSE OF PROTECTING A PERSON AGAINST FLUCTUATIONS IN INTEREST RATES; PROVIDED,
THAT, such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than $250,000,000
and are not for speculative purposes and such Indebtedness shall be unsecured;

               (d) unsecured Indebtedness of Timet evidenced by or arising under
the  Subordinated  Debentures  (AS IN  EFFECT ON THE DATE  HEREOF)  AND THE BUCS
GUARANTEE (AS IN EFFECT ON THE DATE HEREOF); PROVIDED, THAT:

     (i)  the   principal   amount  of  such   Indebtedness   shall  not  exceed
$201,250,000,  less the  aggregate  amount  of all  repayments,  repurchases  or
redemptions thereof, whether optional or mandatory, plus interest thereon at the
rate  provided  for in the  Subordinated  Debentures  as in  effect  on the date
hereof,

     (ii) such  Indebtedness of Timet is subject to, and subordinate in right of
payment  to, the right of Lender to receive the prior  indefeasible  payment and
satisfaction in full of all of the Obligations as set forth in the  Subordinated
Debenture Indenture and the BUCS Guarantee,

                     (iii) Borrowers shall not, directly or indirectly, make any
payments in respect of such

INDEBTEDNESS, EXCEPT THAT:


<PAGE>


     (A) Timet may make  regularly  scheduled  payments of interest  when due in
accordance  with the terms of the  Subordinated  Debentures  as in effect on the
date hereof and after not less than one (1) Business Day prior written notice to
Lender,  may  otherwise  pay any accrued and unpaid  interest in respect of such
INDEBTEDNESS,  PROVIDED,  THAT, in each case as to any such payment, each of the
following  conditions is satisfied as determined by Lender (except as Lender may
otherwise  agree):  (1) as of the date three (3) Business Days prior to the date
specified in Section 3.12 of the Subordinated  Debenture  Indenture,  if any, by
which Timet must notify the  Subordinated  Debenture  Trustee of the exercise by
Timet of its option to defer the next interest payment to become due and payable
(and if no such date is  specified,  then as of the date three (3) Business Days
prior to the date of the  payment of such  interest),  the daily  average of the
Excess  Availability for the immediately  preceding thirty (30) consecutive days
shall have been not less than $25,000,000, (2) as of the date three (3) Business
Days prior to the date specified in Section 3.12 of the  Subordinated  Debenture
Indenture, if any, by which Timet must notify the Subordinated Debenture Trustee
of the  exercise  by Timet of its option to defer the next  interest  payment to
become due and  payable  (or if no such date is  specified,  then as of the date
three (3) Business  Days prior to the date of the payment of such  interest) and
after  giving  effect  to the  amount  to be paid in  respect  of such  interest
payment,  (aa) the Excess  Availability shall be not less than $25,000,000,  and
(bb) no Event of  Default,  or act,  condition  or event  which  with  notice or
passage of time or both would  constitute  an Event of  Default,  shall exist or
have occurred and be continuing,

     (B)  Timet  may  from  time to time  purchase  BUCS in the open  market  or
pursuant to  PRIVATELY  NEGOTIATED  PURCHASES,  PROVIDED,  THAT,  as to any such
purchase each of the  following  conditions is satisfied as determined by Lender
(except as Lender may  otherwise  agree):  (1) as of the date three (3) Business
Days prior to the date of any  payment in  respect of such  purchase,  the daily
average of the Excess  Availability  for the immediately  preceding  thirty (30)
consecutive days shall have been not less than  $25,000,000,  (2) as of the date
three (3) Business Days prior to any such payment and after giving effect to the
amount to be paid in respect of such purchase,  the Excess Availability shall be
not less than  $25,000,000,  (3) as of the date three (3) Business Days prior to
any such payment and after giving  effect to the amount to be paid in respect of
such purchase, no Event of Default, or act, condition or event which with notice
or passage of time or both would constitute an Event of Default,  shall exist or
have  occurred and be  continuing,  and (4) Lender shall have  received not less
than one (1) Business Day prior written notice of the intention of Timet to make
any  such  purchase,  which  notice  shall  specify  the  amount  of  BUCS to be
purchased,  the price thereof and such other information with respect thereto as
Lender may request,

     (C) in addition to purchases  permitted under clause (iii)(B) above,  Timet
may from TIME TO TIME  PURCHASE BUCS IN THE OPEN MARKET OR PURSUANT TO PRIVATELY
NEGOTIATED PURCHASE,  PROVIDED,  THAT, the only consideration paid or payable by
Timet in respect of any such purchase is Capital Stock of Timet  permitted to be
issued hereunder or Capital Stock constituting treasury stock of Timet,


<PAGE>


     (iv) Borrowers shall not, directly or indirectly,  (A) amend, modify, alter
or  change  any  ofthe  material  terms  of  such  Indebtedness  or  any  of the
Subordinated   Debentures,   the  Subordinated  Debenture  Indenture,  the  BUCS
Guarantee and any related agreements,  documents or instruments, as in effect on
the date HEREOF,  EXCEPT THAT,  Borrowers  may,  after prior  written  notice to
Lender,  amend,  modify,  alter or change the terms  thereof so as to extend the
maturity thereof or defer the timing of any payments in respect  thereof,  or to
forgive  or cancel any  portion of such  indebtedness  other  than  pursuant  to
payments  thereof,  or to reduce  the  interest  rate or any fees in  connection
therewith,  or (B) redeem, retire,  defease,  purchase or otherwise acquire such
Indebtedness  (except for purchases  permitted  under clause (iii)(B) and clause
(iii)(C) above),  or set aside or otherwise  deposit or invest any sums for such
purpose, and

     (v) Borrowers  shall furnish to Lender all notices or demands in connection
with such  Indebtedness  either received by a Borrower or on its behalf promptly
after the receipt thereof,  or sent by a Borrower or on its behalf  concurrently
with the sending thereof, as the case may be;

               (e) unsecured  Indebtedness of any Borrower to the other Borrower
arising after the date hereof  PURSUANT TO LOANS OR ADVANCES BY SUCH BORROWER TO
SUCH OTHER BORROWER,  PROVIDED,  THAT, as to any such loan or advance,  (i) each
month  Borrowers  shall  provide  to  Lender  a  report  in form  and  substance
satisfactory to Lender of any change in the outstanding  amount of such loans or
advances from the amount set forth in the most recent report thereof  previously
provided to Lender under this clause (e) (and a report for the first month after
the date hereof of the outstanding amount of such loans),  (ii) the Indebtedness
arising  pursuant  to any such  loan or  advance  shall  not be  evidenced  by a
promissory note or other instrument,  unless all originals of such note or other
instruments are delivered to Lender to hold as part of the Collateral, with such
endorsement  and/or  assignment by the payee of such note or other instrument as
Lender  may  require,  and (iii) as of the date of such  loan and  after  giving
effect thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would  constitute  an Event of Default shall exist or
have occurred;

               (f)  Indebtedness  of any Restricted  Subsidiary to Timet arising
after the date hereof  pursuant to loans or advances by Timet to such Restricted
Subsidiary,  the  proceeds  of  which  are  used  to pay  actual  and  necessary
out-of-pocket   administrative   and  operating   expenses  of  such  Restricted
Subsidiary in the ordinary course of business in connection with its business as
currently conducted as of the date hereof (including lease PAYMENTS,  INSURANCE,
FRANCHISE  AND OTHER TAXES AND SIMILAR  ITEMS),  PROVIDED,  THAT,  the aggregate
amount of all such loans and advances in any calendar  year,  together  with the
aggregate  amount  of the  capital  contributions  by  Timet  to all  Restricted
Subsidiaries in such calendar year used for the payment of such items, shall not
exceed $5,000,000 in the aggregate;


<PAGE>


               (g)  Indebtedness  of any Restricted  Subsidiary to Timet arising
after the date hereof  pursuant to loans or advances by Timet to such Restricted
Subsidiary (other than loans and advances the proceeds of which are USED FOR THE
PAYMENT OF ITEMS DESCRIBED IN CLAUSE (F) ABOVE),  PROVIDED, THAT, as to any such
loan or advance,  each of the following conditions is satisfied as determined by
Lender (except as Lender may otherwise  agree),  (i) each month  Borrowers shall
provide to Lender a report in form and substance  satisfactory  to Lender of any
change in the outstanding  amounts of such loans or advances from the amount set
forth in the most recent report thereof previously provided to Lender under this
clause (g) (and  Borrowers  shall provide to Lender a report for the first month
after the date  hereof  of the  outstanding  amounts  of such  loans),  (ii) the
Indebtedness arising pursuant to any such loan or advance shall not be evidenced
by a promissory note or other instrument,  unless all originals of such notes or
other  instruments  are  delivered to Lender to hold as part of the  Collateral,
with such endorsement and/or assignment by the payee of such notes as Lender may
require,  (iii) at any time, the aggregate  amount of all such loans by Timet to
all  Restricted  Subsidiaries  outstanding  at  such  time,  together  with  the
aggregate  amount  of all  capital  contributions  by  Timet  to all  Restricted
Subsidiaries  in the then current  calendar  year (other than those used for the
payment  of  the  items  described  in  clause  (f)  above),  shall  not  exceed
$5,000,000,  (iv) as of the date of such loan or advance and after giving effect
thereto,  the Excess  Availability for each of the immediately  preceding thirty
(30) consecutive days shall have been not less than  $25,000,000,  (v) as of the
date of such loan or  advance  and  after  giving  effect  thereto,  the  Excess
Availability  shall be not less than $25,000,000 and (vi) as of the date of such
loan or advance and after  giving  effect  thereto,  no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;

               (h) Indebtedness of any Borrower or Restricted  Subsidiary to any
Unrestricted  Subsidiary  or Timet  Affiliate  arising  after  the  date  hereof
pursuant to loans or advances by such Unrestricted Subsidiary or TIMET AFFILIATE
TO SUCH BORROWER OR RESTRICTED SUBSIDIARY;  PROVIDED,  THAT, as to any such loan
or advance each of the following conditions is satisfied as determined by Lender
(except as Lender may otherwise agree), (i) if such Indebtedness is owing by any
Borrower  or  Guarantor,  Lender  shall  have  received,  in form and  substance
satisfactory to Lender, a subordination agreement duly authorized,  executed and
delivered by the Unrestricted  Subsidiary or Timet Affiliate making such loan or
advance and the Borrower or Guarantor receiving such loan or advance in the form
of Exhibit D hereto or as may otherwise be acceptable to Lender, providing that,
among  other  things,  (A) the  Indebtedness  arising  pursuant  to such loan or
advance shall be subject to, and  subordinate  in right of payment to, the right
of Lender to receive the prior final payment and  satisfaction in full of all of
the  Obligations  on terms and  conditions  acceptable  to Lender,  and (B) such
Borrower or Restricted  Subsidiary,  as the case may be, may only make regularly
scheduled or other  mandatory  payments of principal  and interest in RESPECT OF
SUCH  INDEBTEDNESS IN ACCORDANCE WITH THE TERMS THEREOF,  PROVIDED,  THAT, as to
any such payment each of the following  conditions is satisfied as determined by
Lender  (except  as  Lender  may  otherwise  agree):  (1) as of the date of such
payment and after giving effect thereto, the Excess Availability for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000, (2) as of the date of such payment and after giving effect thereto,
the Excess  Availability  shall be not less than  $25,000,000  and (3) as of the
date of such payment and after  giving  effect  thereto,  no Event of Default or
act,  condition  or event  which  with  notice or  passage of time or both would
constitute an Event of Default shall exist or have occurred, and (ii) each month
Borrowers shall provide to Lender a report in form and substance satisfactory to
Lender of any change in the  outstanding  amount of such loans or advances  from
the amount set forth in the most recent report  thereof  previously  provided to
Lender under this clause (h) (and Borrowers shall provide to Lender a report for
the first month after the date hereof of the outstanding amounts of such loans);


<PAGE>


               (i) Indebtedness of any Borrower or Restricted  Subsidiary to any
other Restricted  Subsidiary  arising after the date hereof pursuant to loans or
advances by such Restricted Subsidiary to such Borrower or SUCH OTHER RESTRICTED
SUBSIDIARY;  PROVIDED,  THAT,  as to any  such  loan  or  advance,  (i) if  such
Indebtedness is owing by a Borrower or Guarantor, Lender shall have received, in
form and substance  satisfactory  to Lender,  a  subordination  agreement,  duly
authorized, executed and delivered by the Restricted Subsidiary making such loan
or advance and the Borrower or Guarantor  receiving  such loan or advance in the
form of Exhibit D hereto or as may otherwise be acceptable to Lender,  providing
that, among other things, (A) the Indebtedness  arising pursuant to such loan or
advance shall be subject to, and  subordinate  in right of payment to, the right
of Lender to receive the prior final payment and  satisfaction in full of all of
the  Obligations  on terms and  conditions  acceptable  to Lender,  and (B) such
Borrower or Restricted  Subsidiary,  as the case may be, may only make regularly
scheduled or other  mandatory  payments of principal  and interest in respect of
such  Indebtedness in accordance with the terms THEREOF,  PROVIDED,  THAT, as to
any such payment each of the following  conditions is satisfied as determined by
Lender  (except  as  Lender  may  otherwise  agree):  (1) as of the date of such
payment and after giving effect thereto, the Excess Availability for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000, (2) as of the date of such payment and after giving effect thereto,
the Excess  Availability  shall be not less than  $25,000,000  and (3) as of the
date of such payment and after  giving  effect  thereto,  no Event of Default or
act,  condition  or event  which  with  notice or  passage of time or both would
constitute  an Event of  Default  shall  exist  or have  occurred,  (ii) if such
Indebtedness  is owing  to a  Restricted  Subsidiary  that is a  Guarantor,  the
Indebtedness  arising pursuant to such loan or advance shall not be evidenced by
a  promissory  note or other  instrument,  unless the  originals of all notes or
other  instruments  are  delivered to Lender to hold as part of the  Collateral,
with such endorsement and/or assignment by the payee of such notes as Lender may
require, and (iii) each month Borrowers shall provide to Lender a report in form
and substance  satisfactory to Lender of any change in the outstanding amount of
such  loans or  advances  from the amount  set forth in the most  recent  report
thereof previously provided to Lender under this clause (i) (and Borrowers shall
provide  to Lender a report  for the first  month  after the date  hereof of the
outstanding amounts of such loans);

               (j)  Indebtedness of  Subsidiaries  of Timet arising  pursuant to
guarantees by any Subsidiaries of Timet of the Obligations in favor of Lender;


<PAGE>


               (k) unsecured  Indebtedness of Timet consisting of the contingent
reimbursement  obligations  of Timet to Bankers  Trust Company in respect of the
Existing  Letter of Credit  (as in effect  on the date  hereof),  together  with
certain  breakage  fees related to  borrowings by Timet prior to the date hereof
from the  Existing  Lenders  under the  arrangements  of Timet with the Existing
Lenders which are being  terminated as of the date hereof,  and amounts owing to
the Existing Lenders for legal fees and expenses and the unsecured  Indebtedness
of Timet  consisting of the  contingent  reimbursement  obligations  of Timet to
Nevada State Bank in respect of letter of credit no. 199903 dated March 17, 1999
issued by the Nevada State Bank for the account of Timet payable to the STATE OF
NEVADA, DEPT. OF INSURANCE AS BENEFICIARY IN THE AMOUNT OF $1,289,000, PROVIDED,
THAT, (i) Borrowers shall not, directly or indirectly,  amend,  modify, alter or
change the terms of such  Indebtedness,  the  Existing  Letters  of Credit,  the
letter  of  credit  issued  by  Nevada  State  Bank  referred  to  above  or any
reimbursement agreement or other agreement related thereto (except to the extent
required in connection  with the  replacement of the Existing Letter of Credit),
(ii) the State of Nevada,  Dept.  of  Insurance  has and shall have the right to
draw on the  Existing  Letter of Credit (or any  Letter of Credit  Accommodation
issued after the date hereof to replace the  Existing  Letter of Credit) for all
amounts owing to it, and (iii)  Borrowers shall furnish to Lender all notices or
demands in connection with such Indebtedness, either received by any Borrower or
on its behalf, promptly after the receipt thereof, or sent by any Borrower or on
its behalf, concurrently with the sending thereof, as the case may be;

               (l)  unsecured   Indebtedness   of  any  Borrower  or  Restricted
Subsidiary  arising  after the date  hereof to any  person  other  than  another
Borrower,  or  Restricted  Subsidiary  or any  Unrestricted  Subsidiary or TIMET
AFFILIATE, PROVIDED, THAT, as to each and all of such Indebtedness,  each of the
following  conditions is satisfied as determined by Lender (except as Lender may
otherwise agree): (i) Lender shall have received not less than ten (10) Business
Days prior  written  notice of the  intention  of such  Borrower  or  Restricted
Subsidiary,  as the case may be, to incur such Indebtedness,  which notice shall
set  forth in  reasonable  detail  satisfactory  to  Lender  the  amount of such
Indebtedness,  the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such  other  information  as Lender  may  reasonably  request  with  respect
thereto,  (ii) Lender shall have received true,  correct and complete  copies of
all  agreements,  documents and instruments  evidencing or otherwise  related to
such  Indebtedness,  (iii) on and before the date of incurring such Indebtedness
and after giving effect thereto, no Event of Default, or act, condition or event
which with the  passage of time or both would  constitute  an Event of  Default,
shall exist or have occurred,  (iv) such Indebtedness  shall be incurred by such
Borrower  or  Restricted  Subsidiary,  as  the  case  may  be,  at  commercially
reasonable rates and terms in an arm's length  transaction or with an Affiliate,
but if with an  Affiliate  at rates and on terms no less  favorable to Borrowers
than  Borrowers  would obtain in a comparable  arm's length  transaction  with a
person  who is not an  Affiliate,  (v) such  Indebtedness  shall not at any time
include  any terms that  include any  limitation  on the right of  Borrowers  to
request  or  receive  Loans or Letter of Credit  Accommodations  or the right of
Borrowers  to amend,  modify,  supplement,  replace,  renew or extend any of the
terms or conditions of this Agreement or any of the other  Financing  Agreements
or  otherwise  in any way  relate to or  adversely  affect the  arrangements  of
Borrowers with Lender and such Indebtedness  shall not at any time include terms
and  conditions  which in any manner  adversely  affect  Lender or any rights of
Lender as  determined  in good faith by Lender and  confirmed  by Lender to such
Borrower in writing,  (vi) the aggregate amount of such  Indebtedness  shall not
exceed $5,000,000, (vii) such Borrower or Restricted Subsidiary, as the case may
be, shall not, directly or indirectly,  (A) amend,  modify,  alter or change the
terms of such  Indebtedness  or any  AGREEMENT,  DOCUMENT OR INSTRUMENT  RELATED
THERETO,  EXCEPT, THAT, such Borrower or Restricted  Subsidiary may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so as
to extend the maturity  thereof,  or defer the timing of any payments in respect
thereof,  or to forgive or cancel any portion of such  Indebtedness  (other than
pursuant to payments  thereof),  or to reduce the  interest  rate or any fees in
connection  therewith  or to make any  provision  thereof  less  restrictive  or
burdensome  to any Borrower or  Restricted  Subsidiary,  or (B) redeem,  retire,
defease,  purchase or otherwise  acquire such  Indebtedness  (except pursuant to
regularly  scheduled or other mandatory payments permitted herein), or set aside
or  otherwise  deposit or invest  any sums for such  purpose,  and  (viii)  such
Borrower or Restricted Subsidiary shall furnish to Lender all notices or demands
in  connection  with such  Indebtedness  either  received  by such  Borrower  or
Restricted  Subsidiary or on its behalf promptly after the receipt  thereof,  or
sent by such  Borrower or Restricted  Subsidiary  or on its behalf  concurrently
with the sending thereof, as the case may be;


<PAGE>


               (M) THE INDEBTEDNESS SET FORTH ON SCHEDULE 9.9 HERETO;  PROVIDED,
THAT,  (i)  Borrowers  may only  make  regularly  scheduled  or other  mandatory
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument  evidencing or giving rise to such
Indebtedness  as in  EFFECT  ON  THE  DATE  HEREOF,  PROVIDED,  THAT,  as to any
Indebtedness  set forth on  Schedule  9.9 of a Borrower  owing to any  Affiliate
(other than in the case of a Borrower,  Indebtedness owing to the other Borrower
or to TFMC, or in the case of a Guarantor,  Indebtedness  owing to a Borrower or
to TFMC), such Borrower or Guarantor shall not make, or be required to make, any
payment in respect of such  Indebtedness  unless as to any such  payment each of
the following  conditions is satisfied as determined by Lender (except as Lender
may otherwise agree): (A) as of the date of such payment and after giving effect
thereto,  the Excess  Availability for each of the immediately  preceding thirty
(30) consecutive days shall have been not less than  $25,000,000,  (B) as of the
date of such payment and after giving effect  thereto,  the Excess  Availability
shall be not less than  $25,000,000  and (C) as of the date of such  payment and
after  giving  effect  thereto,  no Event of Default or act,  condition or event
which  with  notice or  passage  of time or both  would  constitute  an Event of
Default shall exist or have  occurred,  (ii)  Borrowers  shall not,  directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
ANY AGREEMENT,  DOCUMENT OR INSTRUMENT  RELATED THERETO AS IN EFFECT ON THE DATE
HEREOF EXCEPT, THAT, Borrowers may, after prior written notice to Lender, amend,
modify,  alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof,  or to forgive or cancel
any portion of such Indebtedness  (other than pursuant to payments thereof),  or
to reduce the interest rate or any fees in connection therewith,  or (B) redeem,
retire, defease,  purchase or otherwise acquire such Indebtedness,  or set aside
or otherwise  deposit or invest any sums for such purpose,  and (iii)  Borrowers
shall  furnish  to  Lender  all  notices  or  demands  in  connection  with such
Indebtedness either received by a Borrower or on its behalf,  promptly after the
receipt thereof,  or sent by a Borrower or on its behalf,  concurrently with the
sending thereof, as the case may be; and

               (n) any other  Indebtedness  which is not  permitted  under  this
Section 9.9, to the extent such Indebtedness, if any, is permitted under Section
9.7, Section 9.10 or Section 9.11 hereof.

         9.10 LOANS AND INVESTMENTS,  ETC.9.10 LOANS AND INVESTMENTS,  ETC. Each
Borrower shall not, and shall not permit any Restricted  Subsidiary to, directly
or  indirectly,  make any loans or advance  money or property to any person,  or
invest in any  person  (by  capital  contribution,  dividend  or  otherwise)  or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part  of  the  assets  or  property  of any  PERSON,  OR  FORM  OR  ACQUIRE  ANY
SUBSIDIARIES, OR AGREE TO DO ANY OF THE FOREGOING, EXCEPT:

               (a) the  extension  of trade  credit  in the  ordinary  course of
business and the  endorsement  of  instruments  for collection or deposit in the
ordinary course of business;


<PAGE>


               (B) INVESTMENTS IN CASH OR CASH EQUIVALENTS,  PROVIDED, THAT, (i)
no Loans are then outstanding,  EXCEPT THAT,  notwithstanding that any Loans are
outstanding, (A) Borrowers or any Restricted Subsidiary may from time to time in
the  ordinary  course of  business  consistent  with the  current  practices  of
Borrowers  or  such  Restricted  Subsidiary  as of the  date  hereof  have  Cash
Equivalents  consisting of overnight investments purchased with amounts received
by such  Borrower  in the  Blocked  Accounts  (or in the  case  of a  Restricted
Subsidiary, the applicable bank account), in each case to the extent required as
part of the cash management of Borrowers or such  Restricted  Subsidiary so long
as the aggregate amount of such Cash  Equivalents does not exceed  $1,000,000 at
any time, and (B) Borrowers or any  Restricted  Subsidiary may from time to time
in the  ordinary  course of business  consistent  with the current  practices of
Borrowers or such  Restricted  Subsidiary as of the date hereof make deposits of
cash or other  immediately  available funds in operating demand deposit accounts
used for disbursements to the extent required to provide funds for amounts drawn
or  anticipated  to be drawn shortly on such accounts and such funds may be held
in Cash Equivalents  consisting of overnight investments until so drawn (so long
as such funds and Cash Equivalents are not held more than five (5) Business Days
from the date of the initial deposit thereof and do not exceed $1,000,000 at any
time)  and (C) TFMC may hold cash or Cash  Equivalents  purchased  with  amounts
received  by TFMC  constituting  payment  in respect  of  Indebtedness  owing by
certain of its Affiliates to it, so long as such funds and Cash  Equivalents are
not held for more  than  five (5)  Business  Days  from the date of the  initial
deposit  thereof,  and TFMC shall  promptly  use such funds only to make  loans,
dividends, capital contributions or other payments to a Borrower, and (ii) as to
any of the foregoing,  promptly upon Lender's request, Borrowers shall take such
actions as are deemed  necessary by Lender to perfect the  security  interest of
Lender in such investments;

               (c) the  existing  equity  investments  of  Timet  as of the date
hereof  in its  Subsidiaries  and  the  TIMET  AFFILIATES  PROVIDED,  THAT,  the
investment  of Timet in ValTimet or MZI,  LLC may  increase as the result of the
purchase  by  Timet of the  Capital  Stock of any  such  person  which  Timet is
required to purchase  from the other holders of Capital Stock in any such person
pursuant to the terms of such agreements of Timet with such persons as in effect
on the date hereof;


<PAGE>


               (d) the formation or  acquisition  by Timet after the date hereof
of one or more  Subsidiaries  INCORPORATED  OR  ORGANIZED  UNDER THE LAWS OF ANY
STATE OF THE  UNITED  STATES OF  AMERICA;  PROVIDED,  THAT,  promptly  after the
aggregate  amount  of  all  loans,  advances,  capital  contributions  or  other
investments  or  payments  by  Timet  to,  or  for  the   acquisition  of,  such
Subsidiaries or otherwise in connection  therewith exceeds $1,000,000 (except as
Lender may otherwise agree):  (i) Timet shall cause such Subsidiaries to execute
and deliver to Lender,  in form and  substance  satisfactory  to Lender,  (A) an
absolute  and  unconditional  guarantee  of  payment of the  Obligations,  (B) a
security agreement granting to Lender a first security interest and lien (except
as  otherwise  consented to in writing by Lender) upon all of the assets of such
Subsidiaries,  (C) related Uniform Commercial Code Financing Statements, and (D)
such  other  agreements,  documents  and  instruments  as  Lender  may  require,
including,  but not limited to, supplements and amendments hereto and other loan
agreements or instruments  evidencing  Indebtedness of such new  Subsidiaries to
Lender,  and (ii) Timet shall (A)  execute  and  deliver to Lender,  in form and
substance  satisfactory to Lender, a pledge and security  agreement  granting to
Lender a first pledge of and lien on all of the issued and outstanding shares of
Capital  Stock  of  such  Subsidiaries,  and  (B)  deliver  the  original  stock
certificates  evidencing such shares of Capital Stock (or such other evidence as
may be issued in the case of a limited  liability  company)  together with stock
powers with respect thereto duly executed in blank (or the equivalent thereof in
the  case  of  a  limited   liability   company  in  which  such  interests  are
certificated,  or  otherwise  take such  actions as Lender  shall  require  with
respect to the perfection of Lender's  security  interests  therein),  (iii) the
aggregate  amount  of  all  loans,  advances,  capital  contributions  or  other
investments  or  payments  by  Timet  to,  or  for  the   acquisition  of,  such
Subsidiaries or otherwise in connection  therewith,  together with the aggregate
amount of all loans or  investments  made which are  permitted  under clause (e)
below, shall not in the aggregate exceed $10,000,000,  (iv) in the case of loans
and advances, the original of any promissory note or other instrument evidencing
the Indebtedness arising pursuant to such loans and advances shall be delivered,
or caused to be  delivered,  to Lender,  at Lender's  option,  together  with an
appropriate  endorsement and with full recourse to the payee thereof,  (v) as of
the date of any such loan, advance,  capital contribution or other investment or
payment by Timet to, or for the acquisition  of, such  Subsidiaries or otherwise
in connection therewith and after giving effect thereto, the Excess Availability
for each of the immediately  preceding  thirty (30)  consecutive days shall have
been not less than  $25,000,000,  and as of the date of any such loan,  advance,
capital  contribution  or other  investment  or  payment  by Timet to or for the
acquisition of such Subsidiaries or otherwise in connection  therewith and after
giving  effect  thereto,   the  Excess  Availability  shall  be  not  less  than
$25,000,000  and (vi)  Lender  shall  have  received  (A) not less than ten (10)
Business  Days prior  written  notice of the  formation or  acquisition  of such
Subsidiaries  and such  information  with respect thereto as Lender may request,
and (B) true,  correct and  complete  copies of all  agreements,  documents  and
instruments relating thereto;


<PAGE>


               (e) loans of money or property  (other than  Collateral) by Timet
to any Person or investment by TIMET BY CAPITAL CONTRIBUTION IN ANY PERSON WHICH
IS NOT  OTHERWISE  PERMITTED  ABOVE;  PROVIDED,  THAT,  as to any such  loans or
investments,  each of the  following  conditions  is satisfied as  determined by
Lender  (except as Lender may otherwise  agree):  (i) the Person  receiving such
loan or investment is engaged in a business related,  ancillary or complimentary
to the  businesses of Borrowers as conducted on the date hereof,  (ii) the total
amount of any such loans or investments,  together with the aggregate  amount of
all loans,  advances,  capital contributions or other investments or payments by
Timet to, or for the  acquisition  of, all  Subsidiaries  permitted to be formed
pursuant to clause (d) above or otherwise  in  connection  therewith,  shall not
exceed  $10,000,000 in the  aggregate,  (iii) as of the date of any such loan or
investment  and  after  giving  effect  thereto,  no Event of  Default,  or act,
condition or event which with notice or passage of time or both would constitute
an Event  of  Default,  shall  exist  or have  occurred,  (iv) in the case of an
investment  by capital  contribution,  at Lender's  option,  the original of any
stock or other instrument evidencing such capital contribution shall be promptly
delivered to Lender,  together with such stock power,  assignment or endorsement
as Lender may request,  and promptly upon Lender=s request,  Timet shall execute
and deliver to Lender in form and substance satisfactory to Lender, a pledge and
security  agreement  granting to Lender a first pledge of and lien on all of the
issued and outstanding  shares of such stock,  (v) in the case of loans of money
or property,  the original of any promissory note or other instrument evidencing
the Indebtedness arising pursuant to such loans shall be delivered, or caused to
be  delivered,  to Lender,  at Lender's  option,  together  with an  appropriate
endorsement and with full recourse to the payee thereof,  (vi) as of the date of
any loan or investment and after giving effect thereto,  the Excess Availability
for each of the immediately  preceding  thirty (30)  consecutive days shall have
been  not  less  than  $25,000,000,  and as of the  date  of any  such  loan  or
investment and after giving effect thereto, the Excess Availability shall be not
less than $25,000,000 and (vii) Lender shall have received (A) not less than ten
(10)  Business  Days prior written  notice  thereof  setting forth in reasonable
detail the nature and terms thereof,  (B) true,  correct and complete  copies of
all agreements,  documents and instruments  relating  thereto and (C) such other
information with respect thereto as Lender may request;

               (f) stock or  obligations  issued to any  Borrower or  Restricted
Subsidiary  by any Person (or the  representative  of such Person) in respect of
Indebtedness  of such Person owing to any Borrower or  Restricted  Subsidiary in
connection with the insolvency,  bankruptcy,  receivership or  reorganization of
such  Person or a  COMPOSITION  OR  READJUSTMENT  OF THE  DEBTS OF SUCH  PERSON;
PROVIDED,  THAT, prior to an Event of Default, if the amount or value thereof is
greater  than  $100,000,  or the  amount  or  value  of all of  such  stock  and
instruments  in the  aggregate is greater than  $250,000,  and after an Event of
Default,  regardless  of the amount or value  thereof,  the original of any such
stock or instrument evidencing such obligations to a Borrower,  Guarantor or any
Restricted  Subsidiary  shall be promptly  delivered  to Lender,  upon  Lender's
request,  together  with such stock power,  assignment  or  endorsement  by such
Borrower or as Lender may request;

               (g)  obligations of account debtors to any Borrower or Restricted
Subsidiary  arising from  Accounts  which are past due evidenced by a promissory
note  made  by such  account  debtor  payable  to such  Borrower  OR  RESTRICTED
SUBSIDIARY, AS THE CASE MAY BE; PROVIDED, THAT, prior to an Event of Default, if
the amount of such note is greater than  $100,000,  or the amount of all of such
notes in the  aggregate is greater than  $250,000 and after an Event of Default,
regardless of the amount  thereof,  promptly upon the receipt of the original of
any  such  promissory  note  by a  Borrower  to a  Borrower,  Guarantor  or  any
Subsidiary  incorporated  in the United States of America,  such promissory note
shall be  endorsed  to the  order of  Lender  by such  Borrower  to a  Borrower,
Guarantor or any  Subsidiary  incorporated  in the United  States of America and
promptly delivered to Lender as so endorsed;

               (h) capital  contributions by Timet to TIMET Colorado Corporation
the  proceeds  of  which  are  used  by  TIMET  Colorado  Corporation  to make a
substantially  contemporaneous  loan to officers or former officers of Timet the
proceeds of which are used by such  officers or former  officers  solely for the
purpose of purchasing COMMON STOCK OF TIMET OR BUCS;  PROVIDED,  THAT, except as
Lender may otherwise agree,  (i) the aggregate amount of such loans  outstanding
at any time shall not exceed  $5,000,000,  except  that Timet shall not make any
such loans that would cause the outstanding  amount thereof to exceed $2,000,000
in the aggregate  unless as of the date of any such loan and after giving effect
thereto,  the Excess  Availability for each of the immediately  preceding thirty
(30)  consecutive  days shall have been not less than  $25,000,000 and as of the
date of any such loan and after giving effect thereto,  the Excess  Availability
shall be not less than  $25,000,000 and (ii) any repayment of such loans from or
on behalf  of such  officers  or  former  officers  received  by TIMET  Colorado
Corporation shall be promptly paid as dividends to Timet;


<PAGE>


               (i)  loans  and  advances  by  any  Borrower  or  any  Restricted
Subsidiary to employees of such Borrower or Restricted  Subsidiary not to exceed
the principal amount of $1,000,000 in the aggregate at any time outstanding for:
(i) reasonably  and necessary  work-related  travel or other  ordinary  business
expenses to be incurred by such employee in connection  with their work for such
Borrower or Restricted  Subsidiary and (ii) reasonable and necessary  relocation
expenses of such  employees  (including  home  mortgage  financing for relocated
employees);

               (j) loans or advances  of money or  property  to any  person,  or
investments  in any person (by capital  contribution,  dividend or otherwise) or
the purchase or repurchase of Capital Stock or  Indebtedness  of any person,  in
each case to the extent it may be permitted  under  Section 9.7,  Section 9.9 or
Section 9.11 hereof;

               (K) CAPITAL  CONTRIBUTIONS BY TIMET TO THT AFTER THE DATE HEREOF,
PROVIDED,  THAT,  as of the date of such capital  contribution  and after giving
effect thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would  constitute  an Event of Default shall exist or
have occurred;

               (l) capital  contributions  after the date hereof by Timet to any
Restricted  Subsidiary,  the  proceeds  of  which  are  used to pay  actual  and
necessary out-of-pocket administrative and operating expenses of such Restricted
Subsidiary in the ordinary course of business in connection with its business as
currently conducted as of the date hereof (including lease payments,  insurance,
franchise and other taxes and similar ITEMS),  PROVIDED,  THAT, except as Lender
may  otherwise  agree,  at any time,  the  aggregate  amount of all such capital
contributions by Timet to all Restricted  Subsidiaries in the then current year,
together  with  the  aggregate  amount  of  loans  or  advances  by Timet to all
Restricted  Subsidiaries  outstanding  at such time used for the payment of such
items, shall not exceed $5,000,000;

               (m) capital  contributions  after the date hereof by Timet to any
Restricted  Subsidiary  (other than capital  contributions the proceeds of which
are used for the  payment of items  described  in clause (l)  ABOVE),  PROVIDED,
THAT,  except as Lender may  otherwise  agree,  (i) at any time,  the  aggregate
amount of all such capital contributions by Timet to all Restricted Subsidiaries
in the then  current  year,  together  with  the  aggregate  amount  of loans or
advances by Timet to all Restricted Subsidiaries outstanding at such time (other
than those used for the  payment of the items  described  in clause (1)  above),
shall not exceed  $5,000,000,  (ii) as of the date of such capital  contribution
and  after  giving  effect  thereto,  the  Excess  Availability  for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000,  (iii) as of the date of such capital contribution and after giving
effect  thereto,   the  Excess  Availability  shall  have  been  not  less  than
$25,000,000,  and (iv) as of the date of such  capital  contribution  and  after
giving effect thereto, no Event of Default or act, condition or event which with
notice or  passage of time or both would  constitute  an Event of Default  shall
exist or have occurred;


<PAGE>


               (N) THE LOANS,  ADVANCES  AND  INVESTMENTS  SET FORTH ON SCHEDULE
9.10 HERETO;  PROVIDED,  THAT, as to such loans,  advances and investments,  (i)
Borrowers and Restricted  Subsidiaries  shall not,  directly or indirectly,  (A)
amend,  modify, alter or change in any material respect the terms of such loans,
advances  and  investments  or any  agreement,  document or  instrument  related
thereto and (ii) Borrowers and Restricted  Subsidiaries  shall furnish to Lender
all notices or demands in connection  with such loans,  advances and investments
either  received  by a  Borrower  or  Restricted  Subsidiary  or on its  behalf,
promptly  after  the  receipt  thereof,  or sent  by a  Borrower  or  Restricted
Subsidiary or on its behalf,  concurrently with the sending thereof, as the case
may be.

         9.11  DIVIDENDS  AND  REDEMPTIONS9.11DIVIDENDS  AND  REDEMPTIONS.  Each
Borrower shall not, and shall not permit any Restricted  Subsidiary to, directly
or indirectly, declare or pay any dividends on account of any shares of class of
Capital  Stock  of such  Borrower  or  Restricted  Subsidiary  now or  hereafter
outstanding,  or set aside or  otherwise  deposit  or  invest  any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration  other than common stock or apply or set
apart any sum,  or make any other  distribution  (by  reduction  of  capital  or
otherwise)  in respect of any such  shares or agree to do any of the  FOREGOING,
EXCEPT, THAT:

               (a) any Restricted  Subsidiary of a Borrower may pay dividends to
such Borrower or another Restricted Subsidiary and any Restricted Subsidiary may
redeem or repurchase  any of its Capital Stock by making  payments to a Borrower
or if such  Restricted  Subsidiary  is a Subsidiary  of a  Guarantor,  by making
payments to such Guarantor;

               (B) THT MAY PAY  DIVIDENDS TO TIMET,  PROVIDED,  THAT,  as to any
such  dividend,  (i) such  payment  shall be made with funds  legally  available
therefor,  (ii) such  dividend  shall not violate any law or  regulation  or the
terms of any indenture,  agreement or undertaking to which a Borrower is a party
or by which a Borrower or its  property  are bound,  and (iii) as of the date of
such  dividend  and after  giving  effect  thereto,  no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;

               (c) Timet may make  payments  with  respect to stock option plans
(including  restricted  stock plans) and stock  appreciation  rights programs of
Timet and repurchase  options for common stock (and including  restricted stock)
upon the termination of employment, death, permanent disability or retirement of
its  employees,  MANAGEMENT  OR  CONSULTANTS,  PROVIDED,  THAT,  as to any  such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such  repurchase  and after giving effect  thereto,  no Event of
Default shall exist or have  occurred and be  continuing,  (ii) such  repurchase
shall be paid with funds legally available therefor, (iii) such repurchase shall
not violate any law or  regulation or the terms of any  indenture,  agreement or
undertaking  to which  Timet is a party or by which  Timet or its  property  are
bound, and (iv) the aggregate amount of all payments for such repurchases in any
fiscal year shall not exceed $250,000;

               (d)  Timet may  purchase  fractional  interests  in shares of its
Capital Stock pursuant to the conversion or exchange  provisions of such Capital
Stock or the security being  converted or exchanged,  in an amount not to exceed
$200,000 in any fiscal year of Timet;


<PAGE>


               (e) Timet may exchange  any class or series of its Capital  Stock
for  another  class or series of Capital  Stock of Timet  (other  than (i) stock
which is  redeemable at the option of the holder  thereof or which  provides for
any  mandatory  redemption  or similar terms by Timet or (ii) stock which may be
exchanged or  converted  into either  Indebtedness  or into other stock which is
redeemable  at the  option  of the  holder  thereof  or which  PROVIDES  FOR ANY
MANDATORY  REDEMPTION),  PROVIDED,  THAT, Timet is permitted to issue such other
class or series of Capital Stock pursuant to Section 9.7 hereof;

               (f) Timet may exchange  Capital  Stock for BUCS to the extent
permitted in Section 9.9(d) hereof; and

               (g) the Trust may make  distributions  in  respect of the BUCS to
the extent  permitted or required under the Amended and Restated  Declaration of
Trust,  dated as of November  20,  1996,  for the Trust as in effect on the date
hereof.

         9.12  TRANSACTIONS  WITH  AFFILIATES9.12  TRANSACTIONS WITH AFFILIATES.
Each  Borrower  shall not, and shall not permit any  Restricted  Subsidiary  to,
directly or indirectly,

               (a)  purchase,  acquire  or lease  any  property  from,  or sell,
transfer  or lease  any  property  to,  any  officer,  director,  agent or other
Affiliate,  except in the  ordinary  course of and  pursuant  to the  reasonable
requirements of such Borrower's or Restricted  Subsidiary's business and either:
(i) upon  fair  and  reasonable  terms no less  favorable  to such  Borrower  or
Restricted  Subsidiary than such Borrower or Restricted  Subsidiary would obtain
in a comparable arm's length  transaction with a person that is not an Affiliate
or (ii) upon fair and reasonable terms consistent with the current  practices of
such  Borrower  or  Restricted  Subsidiary  as of the  date  hereof  or (iii) in
accordance with the terms of the agreements  listed on Schedule 9.12 hereto,  as
such agreements are in effect on the date hereof, or on substantially consistent
terms and in any event, consistent or substantially  consistent with the current
practices of the parties thereto as of the date hereof  (provided,  that, LENDER
SHALL HAVE  RECEIVED  TRUE,  CORRECT AND  COMPLETE  COPIES OF SUCH  AGREEMENTS),
PROVIDED,  THAT, this Section 9.12(a) shall not apply to any transaction between
Borrowers and Restricted Subsidiaries otherwise permitted under any provision of
this  Agreement  other than sales of  Inventory  by any Borrower to a Restricted
Subsidiary, or


<PAGE>


               (b) make any payments of management, consulting or other fees for
management or similar  services,  or of any  Indebtedness  owing to any officer,
employee,  shareholder,  director or other  Affiliate  of  Borrowers  except (i)
compensation,  directors' fees, tax equalization  payments,  housing allowances,
relocation  expenses,  expense  reimbursement  payments,  severance payments and
similar  payments to officers,  employees  and  directors in respect of services
rendered to Borrowers,  or their respective  Subsidiaries in the ordinary course
of business  consistent with the practices of Borrowers and such Subsidiaries as
of the date  hereof,  (ii) a Borrower  or  Restricted  Subsidiary  may repay the
Indebtedness of such Borrower or Restricted  Subsidiary to the other Borrower or
Restricted  Subsidiary  arising pursuant to loans made by such other Borrower or
Restricted Subsidiary permitted under Section 9.8 hereof to the extent permitted
thereunder,  (iii)  any  Subsidiary  of Timet  may make  payments  to Timet  for
information technology, telecommunication services, legal, accounting, insurance
(including premiums for such insurance), marketing, payroll and similar types of
services  paid  for by Timet  or as the  same  may be  attributable  to any such
Subsidiary,  (iv) any  Subsidiary of Timet may make payment to Timet pursuant to
the tax sharing  arrangements  among Timet and its Subsidiaries,  (v) payment of
management,  consulting  or other fees for  management  or similar  services  in
accordance  with  the  agreements  listed  on  Schedule  9.12  hereto,  as  such
agreements  are in effect on the date  hereof,  or on  substantially  consistent
terms and in any event, consistent or substantially  consistent with the current
practices of the parties thereto as of the date hereof,  and (vi) the payment of
fees by Borrowers and the Restricted Subsidiaries to TFMC in connection with the
LOANS PROVIDED BY TFMC TO ANY BORROWER OR RESTRICTED SUBSIDIARY, PROVIDED, THAT,
any fees so paid to TFMC are  promptly  used to make loans,  dividends,  capital
contributions or other payments to a Borrower.

         9.13  ADDITIONAL  BANK  ACCOUNTS9.13  ADDITIONAL  BANK  ACCOUNTS.  Each
Borrower shall not, and shall not permit any Restricted  Subsidiary to, directly
or  indirectly,  open,  establish  or maintain any deposit  account,  investment
account or any other account with any bank or other financial institution, other
than the Blocked  Accounts and the  accounts set forth in Schedule  8.10 hereto,
except:  (a) as to any new or additional  Blocked Accounts and other such new or
additional  accounts which contain any Collateral or proceeds thereof,  with the
prior written consent of Lender and subject to such conditions thereto as Lender
may  establish  and (b) as to any accounts  used by such  Borrower or Restricted
Subsidiary  to make  payments of payroll,  taxes or other  obligations  to third
parties, after prior written notice to Lender.

         9.14  COMPLIANCE WITH ERISA9.14  COMPLIANCE  WITH ERISA.  Each Borrower
shall and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other  Federal  and State law;  (b) cause each Plan which is  qualified
under  Section  401(a)  of the  Code to  maintain  such  qualification;  (c) not
terminate any of such Plans so as to incur any liability to the Pension  Benefit
Guaranty  Corporation;   (d)  not  allow  or  suffer  to  exist  any  prohibited
transaction  involving any of such Plans or any trust created  thereunder  which
reasonably could subject such Borrower or such ERISA Affiliate to a material tax
or penalty or other material liability on prohibited  transactions imposed under
Section 4975 of the Code or ERISA;  (e) make all required  contributions  to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Plan; or (g)
allow or suffer to exist any occurrence of a reportable event or any other event
or  condition  which  presents a material  risk of  termination  by the  Pension
Benefit  Guaranty  Corporation of any such Plan that is a single  employer plan,
which  termination could result in any liability to the Pension Benefit Guaranty
Corporation in excess of $250,000.

         9.15 END OF FISCAL  YEARS;  FISCAL  QUARTERS9.15  END OF FISCAL  YEARS;
FISCAL QUARTERS.  Each Borrower shall, for financial reporting  purposes,  cause
its,  and each of its  Subsidiaries=  (a) fiscal  years to end on December 31 of
each  year  and (b)  fiscal  quarters  to end on or  about  March  31,  June 30,
September 30 and December 31 of each year.


<PAGE>


         9.16  CHANGE IN BUSINESS9.16 CHANGE IN BUSINESS.

               (a) Timet and the Restricted Subsidiaries shall not engage in any
business other than the businesses of Timet and its Restricted  Subsidiaries  on
the  date  hereof  and  any   businesses   reasonably   related,   ancillary  or
complimentary  to the businesses in which Timet and its Restricted  Subsidiaries
are engaged on the date hereof.

               (b)  TIMET  Real  Estate  Corporation  shall  not  engage  in any
business or commercial activity or own or hold any material assets or properties
other than the undeveloped vacant land consisting of approximately 54.5603 acres
located in Hamblen  County,  Tennessee,  which it owns as of the date hereof and
such  activities  and assets as are  incidental  to the  ownership of such land.
TIMET  Colorado  Corporation  shall not  engage in any  business  or  commercial
activity or own or hold any assets or properties, other than the making of loans
to employees or former  employees of Timet the proceeds of which are used solely
for the purchase by such  employee or former  employee of Capital Stock of Timet
or BUCS  consistent  with the current  policies and practices of TIMET  Colorado
Corporation  as of the date hereof (and solely to the extent  permitted  herein)
and  such  activities  as are  incidental  to the  making  of such  loans.  TMCA
International,  Inc. shall not engage in any business or commercial  activity or
own or hold any assets or  properties  other than the Capital  Stock of Loterios
SpA  that  it  owns  as of the  date  hereof,  which  upon  the  liquidation  or
dissolution  of TMCA  International,  Inc. (to the extent  permitted  hereunder)
shall be transferred and assigned to Timet and promptly  thereafter  transferred
and  assigned  to Timet UK  Limited or one of its  Subsidiaries.  TFMC shall not
engage in any  business  or  commercial  activity  or own or hold any  assets or
properties  other  than the SMC  Stock  and the  Indebtedness  owing by  certain
Subsidiaries  of Timet to TFMC as set forth on  Schedule  9.9  hereof or arising
after the date hereof (to the extent such INDEBTEDNESS IS PERMITTED  HEREUNDER),
PROVIDED, THAT, any funds received by TFMC in respect of such Indebtedness shall
be promptly  used by TFMC to make loans,  dividends,  capital  contributions  or
other payments to a Borrower (in each case to the extent  permitted  hereunder).
Timet  Millbury  Corporation  shall not  engage in any  business  or  commercial
activity or own or hold any material assets or properties other than the Capital
Stock of Timet Castings Corporation and certain existing owned equipment located
in Millbury, Massachusetts as of the date hereof.


<PAGE>


         9.17 LIMITATION OF RESTRICTIONS  AFFECTING RESTRICTED  SUBSIDIARIES9.17
LIMITATION OF  RESTRICTIONS  AFFECTING  RESTRICTED  SUBSIDIARIES.  Each Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any consensual  encumbrance or restriction which prohibits or limits the ability
of any Restricted Subsidiary of such Borrower to (a) pay dividends or make other
distributions  or pay any  Indebtedness  owed to such Borrower or any Restricted
Subsidiary of such Borrower;  (b) make loans or advances to such Borrower or any
Restricted Subsidiary of such Borrower, or (c) transfer any of its properties or
assets to such Borrower or any  Restricted  Subsidiary  of such Borrower  (other
than any  restrictions  contained  in  security  agreements  related  to secured
Indebtedness  permitted  under  this  Agreement  limiting  the  transfer  of the
collateral  subject to such security  agreements),  other than  encumbrances and
restrictions  arising  under (i)  applicable  law,  (ii) this  Agreement,  (iii)
customary  provisions  restricting  transfer or  assignment  of a  contract,  or
subletting  or assignment  of any lease  governing a leasehold  interest of such
Borrower or Restricted  Subsidiary,  (iv) customary restrictions on dispositions
of real  property  interests  found in  reciprocal  easement  agreements of such
Borrower or its Restricted  Subsidiary,  (v) any agreement relating to permitted
Indebtedness  incurred by a Restricted  Subsidiary of such Borrower prior to the
date on which such  Restricted  Subsidiary  was  acquired by such  Borrower  and
outstanding on such acquisition  date, and (vi) the extension or continuation of
contractual  obligations  in EXISTENCE ON THE DATE HEREOF;  PROVIDED,  THAT, any
such  encumbrances or  restrictions  contained in such extension or continuation
are no less favorable to Lender than those  encumbrances and restrictions  under
or pursuant to the contractual obligations so extended or continued.

         9.18  ADJUSTED NET  WORTH9.18  ADJUSTED  NET WORTH.  At any time on and
after  Excess  Availability  (which for  purposes of this  Section 9.18 shall be
determined  without  regard  to the  Maximum  Credit)  is equal to or less  than
$35,000,000,  Timet shall, at all times, maintain Adjusted Net Worth of not less
than $347,000,000.

         9.19 AFTER ACQUIRED REAL PROPERTY9.19 AFTER ACQUIRED REAL PROPERTY.  If
a Borrower hereafter acquires any Real Property,  fixtures or any other property
that is of the kind or nature described in the Mortgages and such Real Property,
fixtures or other  property at any one  location  has a fair market  value in an
amount equal to or greater than  $1,000,000 (or if an Event of Default,  or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default  exists,  then  regardless  of the fair market value of such
assets),  without limiting any other rights of Lender,  or duties or obligations
of such Borrower, upon Lender's request, such Borrower shall execute and deliver
to Lender a  mortgage,  deed of trust or deed to  secure  debt,  as  Lender  may
determine,  in form and substance  substantially similar to the Mortgages and as
to any provisions  relating to specific state laws satisfactory to Lender and in
form appropriate for recording in the real estate records of the jurisdiction in
which such Real Property or other property is located granting to Lender a first
and only lien and  mortgage  on and  security  interest  in such Real  Property,
fixtures or other property (except as such Borrower would otherwise be permitted
to incur  hereunder  or under the  Mortgages  or as  otherwise  consented  to in
writing by Lender)  and such other  agreements,  documents  and  instruments  as
Lender may require in connection therewith.


<PAGE>


         9.20 COSTS AND EXPENSES9.20 COSTS AND EXPENSES.  Borrowers shall pay to
Lender on demand all costs,  expenses,  filing fees and taxes paid or payable in
connection with the preparation,  negotiation,  execution,  delivery, recording,
administration,   collection,  liquidation,   enforcement  and  defense  of  the
Obligations,  Lender's  rights  in the  Collateral,  this  Agreement,  the other
Financing  Agreements  and  all  other  documents  related  hereto  or  thereto,
including  any  amendments,  supplements  or  consents  which may  hereafter  be
contemplated  (whether or not  executed) or entered  into in respect  hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing  statement filing taxes and fees,  documentary
taxes,  intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance  premiums,  environmental  audits,
surveys,  assessments,  engineering reports and inspections,  appraisal fees and
search fees,  costs and expenses of remitting loan proceeds,  collecting  checks
and other  items of  payment,  and  establishing  and  maintaining  the  Blocked
Accounts,  together  with  Lender's  customary  charges  and fees  with  respect
thereto;  (c)  charges,  fees or  expenses  charged  by any  bank or  issuer  in
connection with the Letter of Credit  Accommodations;  (d) costs and expenses of
preserving  and  protecting  the  Collateral;  (e)  costs and  expenses  paid or
incurred in connection with obtaining payment of the Obligations,  enforcing the
security interests and liens of Lender,  selling or otherwise realizing upon the
Collateral,  and otherwise  enforcing the  provisions of this  Agreement and the
other  Financing  Agreements or defending any claims made or threatened  against
Lender  arising  out  of  the  transactions   contemplated  hereby  and  thereby
(including preparations for and consultations  concerning any such matters); (f)
all out-of-pocket  expenses and costs heretofore and from time to time hereafter
incurred  by Lender  during the course of  periodic  field  examinations  of the
Collateral  and a Borrower's  operations,  plus a per diem charge at the rate of
$650 per person per day for Lender's  examiners in the field and office; and (g)
the fees and disbursements of counsel  (including legal assistants) to Lender in
connection with any of the foregoing.

         9.21  FURTHER  ASSURANCES9.21  FURTHER  ASSURANCES.  At the  request of
Lender at any time and from time to time,  each Borrower  shall, at its expense,
duly  execute and deliver,  or cause to be duly  executed  and  delivered,  such
further agreements,  documents and instruments,  and do or cause to be done such
further acts as may be necessary  or proper to evidence,  perfect,  maintain and
enforce the security interests and the priority thereof in the Collateral and to
otherwise  effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Lender may at any time and from time to time request
a certificate  from an officer of a Borrower  representing  that all  conditions
precedent to the making of Loans and providing  Letter of Credit  Accommodations
contained herein are satisfied.  In the event of such request by Lender,  Lender
may,  at its  option,  cease to make any  further  Loans or provide  any further
Letter of Credit  Accommodations until Lender has received such certificate and,
in addition,  Lender has determined  that such  conditions are satisfied.  Where
permitted by law, each Borrower hereby authorizes Lender to execute and file one
or more UCC financing statements signed only by Lender.

SECTION 10.   EVENTS OF DEFAULT AND REMEDIES
SECTION 10.   EVENTS OF DEFAULT AND REMEDIES

         10.1  EVENTS  OF  DEFAULT10.1  EVENTS OF  DEFAULT.  The  occurrence  or
existence  of any one or more of the  following  events are  referred  to herein
individually as an "Event of Default", and collectively as "Events of Default":


<PAGE>


               (a) (i) any Borrower fails to pay any of the  Obligations  within
three (3) days after the due date thereof or (ii) any Borrower or Obligor  fails
to perform any of the covenants contained in Sections 9.3, 9.4, 9.6, 9.14, 9.15,
9.16,  9.17,  9.19 or 9.20 of this Agreement and such failure shall continue for
ten (10) days;  PROVIDED,  THAT, such ten (10) day period shall not apply in the
case of: (A) any  failure to observe any such  covenant  which is not capable of
being  cured at all or  within  such ten (10) day  period  or which has been the
subject of a prior failure  within a six (6) month period or (B) an  intentional
breach by any Borrower or Obligor of any such  covenant or (iii) any Borrower or
Obligor fails to perform,  or otherwise breaches or violates,  any of the terms,
covenants,  conditions or provisions  contained in this  Agreement or any of the
other  Financing  Agreements  (or  any  other  default  under  any of the  other
Financing  Agreements  shall  occur),  other than those  DESCRIBED  IN  SECTIONS
10.1(A)(I)  AND  10.1(A)(II)  ABOVE,   PROVIDED,   THAT,  without  limiting  the
obligation of Borrowers to notify Lender of any such event under Section  9.6(b)
hereof, any such failure,  breach or violation  described in Section 10.1(a)(ii)
or this  Section  10.1(a)(iii)  shall  only  constitute  an Event of  Default at
Lender's  option upon  notice at any time by Lender to Timet that  Lender  deems
such failure, breach or violation to constitute an Event of Default;

               (b) any  representation,  warranty or statement of fact made by a
Borrower to Lender in this  Agreement,  the other  Financing  Agreements  or any
other agreement, schedule,  confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;

               (c) any Obligor  revokes,  terminates  or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee,  endorsement or
other agreement of such party in favor of Lender;

               (d) any judgment  for the payment of money is rendered  against a
Borrower or any Obligor in excess of  $2,500,000 in any one case or in excess of
$5,000,000  in the aggregate  and shall remain  undischarged  or unvacated for a
period  in excess of  thirty  (30)  days or  execution  shall at any time not be
effectively  stayed,  or any  judgment  other than for the payment of money,  or
injunction,  attachment, garnishment or execution is rendered against a Borrower
or any Obligor or any of their assets;

               (e) any Borrower or Obligor dissolves or suspends or discontinues
doing business (except to the extent permitted under this Agreement);

               (f) any Borrower or Obligor becomes insolvent (however defined or
evidenced),  makes an assignment  for the benefit of  creditors,  makes or sends
notice of a bulk  transfer  or calls a meeting  of its  creditors  or  principal
creditors;

               (g) a case or proceeding  under the bankruptcy laws of the United
States  of  America  now  or  hereafter  in  effect  or  under  any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed  against  any  Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed  within  forty-five
(45) days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;

               (h) a case or proceeding  under the bankruptcy laws of the United
States  of  America  now  or  hereafter  in  effect  or  under  any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any  jurisdiction now or hereafter in effect (whether at a law
or  equity)  is filed by any  Borrower  or Obligor or for all or any part of its
property;


<PAGE>


               (i) any default by any Borrower or Obligor  under any  agreement,
document or instrument  relating to any Indebtedness for borrowed money owing to
any person other than Lender (including the Subordinated  Debenture Agreements),
or any Capital Leases,  contingent Indebtedness in connection with any guarantee
(including the BUCS Guarantee),  letter of credit,  indemnity or similar type of
instrument in favor of any person other than Lender, in any case in an amount in
excess of $5,000,000;

               (j) the failure of Timet UK Limited to make any payment under the
financing  arrangements of Timet UK Limited with Lloyds TSB Bank plc when due or
any other  default  under the  financing  arrangements  of Timet UK Limited with
Lloyds  TSB Bank plc which  results  in any  notice  thereof  by or on behalf of
Lloyds TSB Bank plc to Timet UK Limited or any agent or  representative of Timet
UK Limited or the acceleration of the Indebtedness or other obligations of Timet
UK Limited under such financing arrangements;

               (k)  an  ERISA  Event  shall  occur  which  results  in or  could
reasonably  be expected  to result in  liability  of a Borrower in an  aggregate
amount in excess of $2,500,000;

               (l)   any Change of Control;

               (m) the indictment by any  Governmental  Authority,  or as Lender
may reasonably  and in good faith  determine,  the threatened  indictment by any
Governmental  Authority  of a Borrower  of which a Borrower  or Lender  receives
notice,  in either  case,  as to which there is a reasonable  possibility  of an
adverse  determination,  in the good faith  determination  of Lender,  under any
criminal  statute,  or  commencement  or threatened  commencement of criminal or
civil proceedings by any Governmental Authority against such Borrower,  pursuant
to which statute or  proceedings  the penalties or remedies  sought or available
include  forfeiture of (i) any of the  Collateral or (ii) any other  property of
Borrower which is necessary or material to the conduct of its business; or

               (n) there  shall be a material  adverse  change in the  business,
assets or financial condition of Timet and its Restricted  Subsidiaries taken as
a whole after the date hereof.

         10.2  REMEDIES.2 REMEDIES.

               (a) At any time an Event of Default exists or has occurred and is
continuing,  Lender  shall  have  all  rights  and  remedies  provided  in  this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any  Borrower or  Obligor,  except as such notice or consent is
expressly  provided  for  hereunder or required by  applicable  law. All rights,
remedies  and  powers  granted  to  Lender  hereunder,  under  any of the  other
Financing  Agreements,  the Uniform Commercial Code or other applicable law, are
cumulative,   not   exclusive   and   enforceable,   in   Lender's   discretion,
alternatively,  successively,  or concurrently on any one or more occasions, and
shall include,  without limitation,  the right to apply to a court of equity for
an injunction  to restrain a breach or  threatened  breach by a Borrower of this
Agreement or any of the other Financing  Agreements.  Lender may, at any time or
times,  proceed  directly  against  any  Borrower  or  Obligor  to  collect  the
Obligations without prior recourse to the Collateral.


<PAGE>


               (b)  Without  limiting  the  foregoing,  at any  time an Event of
Default exists or has occurred and is continuing,  Lender may, in its discretion
and without limitation, (i) accelerate the payment of all OBLIGATIONS AND DEMAND
IMMEDIATE PAYMENT THEREOF TO LENDER (PROVIDED,  THAT, upon the occurrence of any
Event of Default  described  in Sections  10.1(g) and 10.1(h),  all  Obligations
shall  automatically  become immediately due and payable),  (ii) with or without
judicial process or the aid or assistance of others,  enter upon any premises on
or in which any of the  Collateral  may be located  and take  possession  of the
Collateral  or  complete  processing,  manufacturing  and  repair  of all or any
portion of the Collateral,  (iii) require Borrowers,  at Borrowers'  expense, to
assemble and make  available to Lender any part or all of the  Collateral at any
place  and  time  designated  by  Lender,  (iv)  collect,  foreclose,   receive,
appropriate,  setoff and realize upon any and all Collateral,  (v) remove any or
all of the  Collateral  from any premises on or in which the same may be located
for the purpose of effecting the sale,  foreclosure or other disposition thereof
or for any other  purpose,  (vi)  sell,  lease,  transfer,  assign,  deliver  or
otherwise dispose of any and all Collateral  (including  entering into contracts
with respect thereto,  public or private sales at any exchange,  broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing  being free from any right or equity of redemption of
a Borrower,  which right or equity of redemption is hereby  expressly waived and
released by a Borrower  and/or (vii)  terminate  this  Agreement.  If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations  shall not be reduced as a result thereof until payment therefor
is finally  collected  by Lender.  If notice of  disposition  of  Collateral  is
required by law, ten (10) days prior notice by Lender to a Borrower  designating
the time and place of any public sale or the time after  which any private  sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable  notice  thereof and each Borrower  waives any other  notice.  In the
event Lender institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, each Borrower waives the posting of
any bond which might otherwise be required.

               (c) For the purpose of enabling Lender to exercise the rights and
remedies  hereunder,  each  Borrower  hereby  grants to  Lender,  to the  extent
assignable,  an irrevocable,  non-exclusive license (exercisable without payment
of  royalty or other  compensation  to  Borrowers)  to use,  assign,  license or
sublicense any of the trademarks,  service-marks,  trade names,  business names,
trade styles,  designs, logos and other source of business identifiers and other
Intellectual Property and general intangibles now owned or hereafter acquired by
such  Borrower,  wherever  the same maybe  located,  including  in such  license
reasonable  access  to all  media  in which  any of the  licensed  items  may be
recorded or stored and to all  computer  programs  used for the  compilation  or
printout thereof.

               (d) Lender may apply the cash  proceeds  of  Collateral  actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations,  in whole or in part and in such order
as Lender may elect,  whether or not then due. Each Borrower shall remain liable
to Lender for the payment of any  deficiency  with  interest at the highest rate
provided for herein and all costs and  expenses of  collection  or  enforcement,
including attorneys' fees and legal expenses.


<PAGE>


               (e) Without  limiting the  foregoing,  upon the  occurrence of an
Event of Default or an event  which with notice or passage of time or both would
constitute an Event of Default,  Lender may, at its option,  without notice, (i)
cease making Loans or arranging  for Letter of Credit  Accommodations  or reduce
the  lending  formulas  or amounts of Loans and Letter of Credit  Accommodations
available to a Borrower  and/or (ii)  terminate any provision of this  Agreement
providing for any future Loans or Letter of Credit  Accommodations to be made by
Lender to a Borrower.

SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

         11.1 GOVERNING  LAW;  CHOICE OF FORUM;  SERVICE OF PROCESS;  JURY TRIAL
WAIVER.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.

               (a)  The  validity,   interpretation   and  enforcement  of  this
Agreement and the other Financing  Agreements and any dispute arising out of the
relationship  between the parties hereto,  whether in contract,  tort, equity or
otherwise, shall be governed by the internal laws of the State of Texas (without
giving effect to principles of conflicts of law), except as otherwise  expressly
provided in the Mortgages.

               (b)  Borrower  and Lender  irrevocably  consent and submit to the
non-exclusive  jurisdiction  of the District Court of the State of Texas and the
United States  District  Court for the Northern  District of Texas and WAIVE ANY
OBJECTION  BASED ON VENUE OR FORUM NON  CONVENIENS  with  respect  to any action
instituted  therein  arising under this Agreement or any of the other  Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions  related hereto or thereto,  in each case whether
now existing or hereafter  arising,  and whether in  contract,  tort,  equity or
otherwise,  and agree that any dispute with respect to any such matters shall be
heard only in the courts  described  above  (except  that Lender  shall have the
right to bring any action or  proceeding  against a Borrower or its  property in
the courts of any other jurisdiction which Lender deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
a Borrower or its property).

               (c) Each Borrower hereby waives  personal  service of any and all
process  upon it and  consents  that all such  service of process may be made by
certified mail (return receipt  requested)  directed to its address set forth on
the  signature  pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's  option,  by service  upon a Borrower in any other  manner  provided
under the rules of any such courts.  Within thirty (30) days after such service,
such  Borrower  shall appear in answer to such process,  failing which  Borrower
shall be deemed in default and  judgment  may be entered by Lender  against such
Borrower for the amount of the claim and other relief requested.


<PAGE>


               (d) BORROWERS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY  CLAIM,  DEMAND,  ACTION  OR  CAUSE OF  ACTION  ARISING  UNDER  THIS
AGREEMENT OR ANY OF THE OTHER FINANCING  AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR  INCIDENTAL  TO THE  DEALINGS OF THE PARTIES  HERETO IN RESPECT OF
THIS  AGREEMENT OR ANY OF THE OTHER  FINANCING  AGREEMENTS  OR THE  TRANSACTIONS
RELATED  HERETO OR  THERETO  IN EACH CASE  WHETHER  NOW  EXISTING  OR  HEREAFTER
ARISING,  AND WHETHER IN CONTRACT,  TORT,  EQUITY OR  OTHERWISE.  BORROWERS  AND
LENDER EACH HEREBY  AGREES AND CONSENTS THAT ANY SUCH CLAIM,  DEMAND,  ACTION OR
CAUSE  OF  ACTION  SHALL  BE  DECIDED  BY COURT  TRIAL  WITHOUT  A JURY AND THAT
BORROWERS OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE PARTIES  HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

               (e) Lender shall not have any liability to a Borrower (whether in
tort,  contract,  equity or otherwise)  for losses  suffered by such Borrower in
connection  with,  arising out of, or in any way related to the  transactions or
relationships  contemplated  by this  Agreement,  or any act,  omission or event
occurring  in  connection  herewith,  unless  it is  determined  by a final  and
non-appealable  judgment or court order binding on Lender,  that the losses were
the  result  of acts or  omissions  constituting  gross  negligence  or  willful
misconduct.  In any such litigation,  Lender shall be entitled to the benefit of
the rebuttable  presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.

         11.2 WAIVER OF  NOTICES11.2  WAIVER OF NOTICES.  Each  Borrower  hereby
expressly waives demand,  presentment,  protest and notice of protest and notice
of  dishonor  with  respect to any and all  instruments  and  commercial  paper,
included in or evidencing any of the Obligations or the Collateral,  and any and
all other demands and notices of any kind or nature  whatsoever  with respect to
the Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on a Borrower which Lender may elect
to give shall entitle such Borrower to any other or further  notice or demand in
the same, similar or other circumstances.

         11.3  AMENDMENTS  AND WAIVERS.3  AMENDMENTS  AND WAIVERS.  Neither this
Agreement  nor any  provision  hereof  shall be  amended,  modified,  waived  or
discharged  orally  or by  course of  conduct,  but only by a written  agreement
signed by an authorized officer of Lender, and as to amendments,  as also signed
by an  authorized  officer of a Borrower.  Lender shall not, by any act,  delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
rights, powers and/or remedies unless such waiver shall be in writing and signed
by an authorized officer of Lender. Any such waiver shall be enforceable only to
the  extent  specifically  set forth  therein.  A waiver by Lender of any right,
power and/or  remedy on any one  occasion  shall not be construed as a bar to or
waiver of any such right,  power and/or remedy which Lender would otherwise have
on any future occasion, whether similar in kind or otherwise.

         11.4 WAIVER OF COUNTERCLAIMS.4  WAIVER OF COUNTERCLAIMS.  Each Borrower
waives all rights to interpose any claims, deductions,  setoffs or counterclaims
of any nature (other then compulsory  counterclaims) in any action or proceeding
with respect to this Agreement,  the  Obligations,  the Collateral or any matter
arising therefrom or relating hereto or thereto.


<PAGE>


         11.5 INDEMNIFICATION.5  INDEMNIFICATION.  Each Borrower shall indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities,  costs or expenses
imposed on,  incurred by or asserted  against any of them in connection with any
litigation,  investigation,  claim or proceeding commenced or threatened related
to the negotiation,  preparation, execution, delivery, enforcement,  performance
or  administration  of this Agreement,  any other Financing  Agreements,  or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act,  omission,  event  or  transaction  related  or  attendant  thereto,
including amounts paid in settlement,  court costs, and the fees and expenses of
counsel, except for losses, claims, damages, liabilities,  costs and expenses as
a result of the gross  negligence  or wilful  misconduct of Lender as determined
pursuant to a final,  non-appealable order of a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this  Section  may be  unenforceable  because it  violates  any law or public
policy, each Borrower shall pay the maximum portion which it is permitted to pay
under applicable law to Lender in satisfaction of indemnified matters under this
Section.  The foregoing  indemnity  shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.

SECTION 12.   TERM OF AGREEMENT; MISCELLANEOUS
SECTION 12.   TERM OF AGREEMENT; MISCELLANEOUS

         12.1  TERM   12.1     TERM.

               (a) This  Agreement  and the  other  Financing  Agreements  shall
become  effective  as of the date set forth on the first  page  hereof and shall
continue  in full force and effect for a term ending on the date three (3) years
from the date hereof (the  "Renewal  Date"),  and from year to year  thereafter,
unless sooner terminated  pursuant to the terms hereof.  Lender or Borrowers may
terminate this  Agreement and the other  Financing  Agreements  effective on the
Renewal Date or on the  anniversary of the Renewal Date in any year by giving to
the other party at least ninety (90) days prior written  notice and in addition,
Borrowers may, at any time,  upon ten (10) BUSINESS DAYS PRIOR WRITTEN NOTICE TO
LENDER,  TERMINATE THIS AGREEMENT;  PROVIDED, THAT, in each case, this Agreement
and all other Financing Agreements must be terminated  simultaneously.  Upon the
effective  date of  termination  or  non-renewal  of the  Financing  Agreements,
Borrowers shall pay to Lender,  in full, all outstanding and unpaid  Obligations
and shall furnish cash collateral to Lender in such amounts as Lender determines
are reasonably  necessary to secure Lender from loss,  cost,  damage or expense,
including attorneys' fees and legal expenses,  in connection with any contingent
Obligations,  including issued and outstanding  Letter of Credit  Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which  Lender  has not yet  received  final and  indefeasible  payment.  Such
payments in respect of the Obligations and cash collateral  shall be remitted by
wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its  discretion,  designate in writing to Borrowers for such  purpose.  Interest
shall be due until and  including  the next business day, if the amounts so paid
by Borrower to the bank account  designated  by Lender are received in such bank
account later than 12:00 noon, Dallas time.


<PAGE>


               (b) No  termination  of this  Agreement  or the  other  Financing
Agreements  shall  relieve or  discharge  a Borrower of its  respective  duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all  Obligations  have been fully and  finally  discharged  and paid,  and
Lender's  continuing  security  interest  in the  Collateral  and the rights and
remedies  of  Lender  hereunder,   under  the  other  Financing  Agreements  and
applicable  law,  shall  remain in effect until all such  Obligations  have been
fully and finally discharged and paid.

               (c) If for any reason this  Agreement is terminated  prior to the
end of the then current term or renewal term of this  Agreement,  in view of the
impracticality  and extreme  difficulty of  ascertaining  actual  damages and by
mutual agreement of the parties as to a reasonable  calculation of Lender's lost
profits as a result  thereof,  each Borrower  agrees to pay to Lender,  upon the
effective date of such  termination,  an early termination fee in the amount set
forth below if such termination is effective in the period indicated:

<TABLE>

<CAPTION>

                                   AMOUNT                                    PERIOD

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

           <S>       <C>                                <C>

           (i)        One (1%) percent of                From the date hereof to and including the
                      the Maximum Credit                 first anniversary of the date hereof

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

           (ii)       One-half (1/2%) percent            From the first anniversary of the date hereof
                      of the Maximum Credit              to and including the second anniversary of the

                                                         date hereof

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

           (iii)      One-quarter (1/4%) of              From the second anniversary of the date hereof
                      the Maximum Credit                 to but not including the third anniversary of

                                                         the date hereof.

</TABLE>

Such  early  termination  fee shall be  presumed  to be the  amount  of  damages
sustained by Lender as a result of such early  termination  and Borrower  agrees
that it is reasonable under the circumstances  currently existing.  In addition,
Lender shall be entitled to such early  termination  fee upon the  occurrence of
any Event of Default  described in Sections 10.1(g) and 10.1(h) hereof,  even if
Lender does not exercise its right to terminate this Agreement,  but elects,  at
its  option,  to  provide  financing  to a  Borrower  or permit  the use of cash
collateral under the United States  Bankruptcy  Code. The early  termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.


<PAGE>


               (d)  Notwithstanding  anything to contrary  contained  in Section
12.1(c)  above,  in the event of the  termination of this Agreement by Borrowers
prior to the end of the then current term or renewal term of this  Agreement and
the full and final repayment of all of the Obligations and the receipt by Lender
of cash  collateral  all as provided  in Section  12.1(c)  with the  proceeds of
initial loans and advances to Borrowers  pursuant to a revolving credit facility
provided  by First Union  National  Bank or its  Affiliates  (or for which First
Union  National  Bank is acting as agent) to Borrowers to replace the  financing
arrangements  provided for herein, and as to which Lender shall not be acting on
behalf of First Union National Bank,  Borrowers shall not be required to pay the
early termination fee provided for above.

               (e) Notwithstanding anything to the contrary contained in Section
12.1(c)  above,  in  the  event  that  Lender  shall  decrease  the  percentages
applicable  to  Eligible  Accounts  or  Eligible  Inventory  set  forth  in  the
definition of the term  Borrowing  Base pursuant to Section 2.1(b) hereof and/or
shall  establish  new  Reserves  after THE DATE HEREOF  PURSUANT TO SECTION 1.82
HEREOF (OTHER THAN THE RESERVES SET FORTH ON EXHIBIT C HERETO,  PROVIDED,  THAT,
any  increase in the amount of the  Reserves set forth in Exhibit C shall not be
considered a new Reserve), such that after giving effect to such decrease in the
percentages  and/or the  establishment  of such new  Reserves  the amount of the
Borrowing Base immediately after giving effect thereto is decreased by more than
twelve (12%) percent of the Maximum Credit from the amount of the Borrowing Base
immediately  prior to  giving  effect to such  decrease  and/or  Reserves,  then
Borrowers may terminate this Agreement and shall not be required to pay an early
termination fee if each of the following conditions is satisfied:  (i) Borrowers
shall have notified Lender of their intention to terminate this Agreement within
thirty (30) days of the earlier of (A) such decrease in such percentages  and/or
establishment  of such Reserves or (B) the date of the notice by Lender to Timet
of Lender's intention to so decrease the percentages or establish such Reserves,
(ii) Lender shall have received full and final  repayment of all Obligations and
cash  collateral as provided in Section  12.1(a) above within one hundred twenty
(120) days after the date of the receipt by Lender of the notice from  Borrowers
to Lender of the intention of Borrowers to terminate  this Agreement as a result
of such decrease in percentages or establishment of such Reserves,  (iii) Lender
shall not have sent any notice of its intention to terminate  this  Agreement in
accordance  with its  rights  hereunder,  and (iv) no Event of  Default  or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing.


<PAGE>


               (f) Notwithstanding anything to the contrary contained in Section
12.1(c)  above,  in the event that  Participants  with  interests  in the Loans,
either singly or in the aggregate, which exceed twenty-five (25%) percent of the
Maximum  Credit  shall only be able to  provide  funds to be used for Prime Rate
Loans as a result  of events  described  in  Sections  3.6(a)(i)  or  3.6(a)(ii)
hereof, and as a result Eurodollar Rate Loans which would otherwise be available
to Borrowers are converted to Prime Rate Loans and  thereafter  Eurodollar  Rate
Loans for more than twenty-five  (25%) percent of all outstanding  Loans are not
available  for a period  of more than  thirty  (30)  days,  then  Borrowers  may
terminate this  Agreement and shall not be required to pay an early  termination
fee if each of the following  conditions is satisfied:  (i) Borrowers shall have
notified  Lender of their  intention to terminate this  Agreement  within thirty
(30) days after the end of the thirty (30) day period  referred  to above,  (ii)
Lender shall have received full and final  repayment of all Obligations and cash
collateral as provided in Section  12.1(a) above within one hundred twenty (120)
days after the date of the  receipt by Lender of the notice  from  Borrowers  to
Lender of the intention of Borrowers to terminate  this Agreement as a result of
such conversion of Eurodollar Rate Loans and the continuing lack of availability
thereof,  (iii) the events described in Section 3.6(a)(i) and 3.6(a)(ii) are not
applicable  generally to banks and other  financial  institutions  comparable to
Lender and/or  Reference Bank in the United  States,  (iv) Lender shall not have
sent any notice of its intention to terminate this Agreement in accordance  with
its rights  hereunder,  and (v) no Event of Default or act,  condition  or event
which  with  notice or  passage  of time or both  would  constitute  an Event of
Default shall exist or have occurred and be continuing.

         12.2  INTERPRETATIVE PROVISIONS  12.2  INTERPRETATIVE PROVISIONS.

               (a) All terms  used  herein  which are  defined  in  Article 1 or
Article 9 of the Uniform  Commercial  Code shall have the meanings given therein
unless otherwise defined in this Agreement.

               (b) All  references  to the  plural  herein  shall  also mean the
singular  and to the  singular  shall  also mean the plural  unless the  context
otherwise requires.

               (c) All  references  to a  Borrower  and Lender  pursuant  to the
definitions  set forth in the recitals  hereto,  or to any other person  herein,
shall include their respective successors and assigns.

               (d) 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.

               (e) The word  "including"  when used in this Agreement shall mean
"including, without limitation".

               (f) An Event of Default  shall exist or continue or be continuing
until  such Event of Default is waived in  accordance  with  Section  11.3 or is
cured in a manner satisfactory to Lender, if such Event of Default is capable of
being cured as determined by Lender.

               (g) Any accounting term used in this Agreement shall have, unless
otherwise  specifically  provided  herein,  the  meaning  customarily  given  in
accordance with GAAP, and all financial computations hereunder shall be computed
unless  otherwise  specifically  provided  herein,  in  accordance  with GAAP as
consistently  applied and using the same method for inventory  valuation as used
in the  preparation  of the  financial  statements  of Borrowers  most  recently
received by Lender prior to the date hereof.

               (h) In the  computation  of periods of time from a specified date
to a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding"  and the word "through"  means "to
and including".


<PAGE>


               (i) Unless otherwise  expressly  provided herein,  (i) references
herein to any agreement,  document or instrument  shall be deemed to include all
subsequent  amendments,   modifications,   supplements,   extensions,  renewals,
restatements or replacements  with respect  thereto,  but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and  (ii)  references  to any  statute  or  regulation  are to be  construed  as
including all  statutory  and  regulatory  provisions  consolidating,  amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.

               (j)  The  captions  and  headings  of  this   Agreement  are  for
convenience  of reference only and shall not affect the  interpretation  of this
Agreement.

               (k) This Agreement and other Financing Agreements may use several
different  limitations,  tests or  measurements  to regulate the same or similar
matters.  All such limitations,  tests and measurements are cumulative and shall
each be performed in accordance with their terms.

               (l) This  Agreement and the other  Financing  Agreements  are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties.  Accordingly, this Agreement
and the other Financing  Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.

       12.3  NOTICES  12.3NOTICES.  All notices,  requests and demands hereunder
shall be in writing and (a) made to Lender at its address set forth below and to
Borrowers  at their chief  executive  office set forth  below,  or to such other
address  as  either  party  may  designate  by  written  notice  to the other in
accordance  with this  provision,  and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram, facsimile
transmission, or electronic mail, immediately upon sending and upon confirmation
of  receipt;  if  by  nationally   recognized  overnight  courier  service  with
instructions  to deliver  the next  Business  Day,  one (1)  Business  Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.

       12.4 PARTIAL  INVALIDITY  12.4  PARTIAL  INVALIDITY.  If any provision of
this  Agreement  is held to be  invalid or  unenforceable,  such  invalidity  or
unenforceability  shall  not  invalidate  this  Agreement  as a whole,  but this
Agreement  shall be  construed  as  though  it did not  contain  the  particular
provision held to be invalid or unenforceable  and the rights and obligations of
the parties  shall be  construed  and  enforced  only to such extent as shall be
permitted by applicable law.


<PAGE>


      12.5  SUCCESSORS   12.5  SUCCESSORS.  This Agreement,  the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be  enforceable  by Lender,  Borrowers  and
their  respective  successors and assigns,  except that Borrowers may not assign
their rights under this Agreement,  the other Financing Agreements and any other
document  referred  to herein or therein  without the prior  written  consent of
Lender.  Lender may,  after notice to Timet,  assign its rights and delegate its
obligations under this Agreement and the other Financing  Agreements and further
may assign, or sell  participations in, all or any part of the Loans, the Letter
of Credit  Accommodations  or any other  interest  herein to  another  financial
institution or other person,  in which event, the assignee or participant  shall
have,  to the extent of such  assignment or  participation,  the same rights and
benefits as it would have if it were the Lender  HEREUNDER,  EXCEPT AS OTHERWISE
PROVIDED  BY THE TERMS OF SUCH  ASSIGNMENT  OR  PARTICIPATION,  PROVIDED,  THAT,
Lender shall not assign (or sell  participations in) the financing  arrangements
provided for herein so that the interests of Lender for its own account are less
than the lesser of  $20,000,000  or  twenty-five  (25%)  percent of the  Maximum
Credit,  or sell  participations  to more than twelve (12)  Participants or sell
participations  where the maximum AMOUNT OF THE  PARTICIPANT=S  INTEREST IS LESS
THAN $5,000,000,  EXCEPT THAT, notwithstanding the foregoing,  Lender may assign
or sell  participations  without such  limitations (a) to any of its present and
future Subsidiaries or Affiliates or (b) upon the merger,  consolidation,  sale,
transfer or other disposition of all or any substantial portion of its business,
loan  portfolio  or other  assets or (c) at any time  after an Event of  Default
shall exist or have  occurred or (d) with the consent of Timet,  which shall not
be unreasonably withheld, delayed or conditioned,

         12.6  CONFIDENTIALITY    12.6    CONFIDENTIALITY.

               (a) Lender shall use all reasonable efforts to keep confidential,
in  accordance   with  its  customary   procedures  for  handling   confidential
information  and safe and sound lending  practices,  any non-public  INFORMATION
SUPPLIED TO IT BY BORROWERS OR GUARANTORS PURSUANT TO THIS AGREEMENT,  PROVIDED,
THAT,   nothing  contained  herein  shall  limit  the  disclosure  of  any  such
information:  (i) to the extent required by statute, rule, regulation,  subpoena
or court order,  (ii) to bank examiners and other  regulators,  auditors  and/or
accountants, (iii) in connection with any litigation to which Lender is a party,
(iv) to any assignee or participant (or prospective  assignee or participant) so
long as such assignee or participant  (or  prospective  assignee or participant)
shall have first agreed in writing to treat such  information as confidential in
accordance  with  this  Section  12.6,  or  (v) to  counsel  for  Lender  or any
participant or assignee (or prospective participant or assignee).

               (b) In no event shall this Section 12.6 or any other provision of
this  Agreement  or  applicable  law be  deemed:  (i) to  apply  to or  restrict
disclosure of  information  that has been or is made public by a Borrower or any
third party without  breach of this Section 12.6 or otherwise  become  generally
available  to the public  other than as a result of a  disclosure  in  violation
hereof,  (ii) to apply to or  restrict  disclosure  of  information  that was or
becomes available to Lender on a non-confidential basis from a person other than
a  Borrower  or a  Guarantor,  (iii)  require  Lender  to return  any  materials
furnished  by  Borrowers to Lender or (iv)  PREVENT  LENDER FROM  RESPONDING  TO
ROUTINE  INFORMATIONAL  REQUESTS IN  ACCORDANCE  WITH THE CODE OF ETHICS FOR THE
EXCHANGE OF CREDIT  INFORMATION  promulgated by The Robert Morris  Associates or
other  applicable   industry  standards  relating  to  the  exchange  of  credit
information.  The  obligations of Lender under this Section 12.6 shall supersede
and replace the  obligations of Lender under any  confidentiality  letter signed
prior to the date hereof.

       12.7  PARTICIPANT'S   SECURITY   INTEREST 12.7   PARTICIPANT'S   SECURITY
INTEREST.  If any Participant  shall at any time  participate with Lender in the
Loans,  Letter of Credit  Accommodations  or other  Obligations,  each  Borrower
hereby grants to such Participant and such Participant  shall have and is hereby
given, a continuing lien on and security  interest in any money,  securities and
other   property  of  such  Borrower  in  the  custody  or  possession  of  such
Participant,  including the right of setoff,  to the extent of the Participant=s
participation in the Obligations,  and such Participant  shall be deemed to have
the same right of setoff to the extent of its  participation in the Obligations,
as it would have if it were a direct lender.


<PAGE>


12.8 PARTIAL  RELEASES OF COLLATERAL  BY LENDER FOR PERMITTED
SALES OR OTHER  DISPOSITION
12.8  PARTIAL  RELEASES OF  COLLATERAL BY LENDER FOR PERMITTED
SALES OR OTHER DISPOSITION.

               (a) To the extent of any sale or other  disposition of any assets
or properties of a Borrower or Restricted Subsidiary permitted under Section 9.7
hereof,  so long as each of the  conditions to any such sale as set forth in the
applicable  clauses of Section 9.7 are satisfied as determined by Lender,  as to
each such sale,  Lender shall promptly upon the written request of Timet, at the
expense of  Borrowers,  execute and deliver to Timet such partial  releases,  in
form and substance reasonably satisfactory to Lender, to evidence the release of
any such assets so sold or otherwise  disposed of by such Borrower or Restricted
Subsidiary  from the security  interests  granted by such Borrower or Restricted
Subsidiary  to Lender  under this  Agreement,  such release to only be effective
upon the consummation of such sale or other  disposition and the satisfaction of
each of the conditions with respect thereto set forth herein.

               (b) Upon the  written  request  of Timet,  Lender  shall,  at the
expense of Borrowers,  execute and deliver to Timet an authorization and request
for  partial  reconveyance  in  customary  and  appropriate  form  (including  a
provision  that no  obligations  are deemed to have been paid or  satisfied)  to
release from the Mortgage with respect to the Real Property in Henderson, Nevada
the portion of parcel 6 on the  vicinity  map  included in Schedule  1.99 hereto
constituting Treco Property upon the receipt by Lender of evidence,  in form and
substance  satisfactory to Lender, that all applicable laws and regulations have
been  complied  with in order to permit  the legal  and valid  transfer  of such
portion of parcel 6 by Timet to Treco LLC.  Concurrently  with the  request  for
partial reconveyance, including mutual obligations of repair and maintenance, of
such property or at any time thereafter,  upon Timet=s request,  Lender will (i)
consent  to the grant by Timet to Treco LLC of a  non-exclusive  right of access
and use or  easement  for the use of the  portion of the Real  Property of Timet
located in Henderson,  Nevada described as parcel 5 on the vicinity map included
in Schedule 1.99 hereto for access to the portion of parcel 6 constituting Treco
Property and (ii) execute and deliver to Timet a  subordination  of the interest
of Lender in the property subject to such easement.

      12.9 ENTIRE AGREEMENT   12.9 ENTIRE AGREEMENT.  This Agreement,  the other
Financing Agreements,  any supplements hereto or thereto, and any instruments or
documents  delivered  or to be  delivered  in  connection  herewith or therewith
represents the entire agreement and understanding  concerning the subject matter
hereof and thereof  between the parties  hereto,  and  supersede all other prior
agreements,  understandings,   negotiations  and  discussions,  representations,
warranties,  commitments, proposals, offers and contracts concerning the subject
matter  hereof,  whether  oral or  written.  In the  event of any  inconsistency
between the terms of this  Agreement  and any  schedule or exhibit  hereto,  the
terms of this Agreement shall govern.


<PAGE>


    12.10  NONAPPLICABILITY  OF CHAPTER 346; SELECTION OF OPTIONAL INTEREST RATE
CEILINGS     12.10  NONAPPLICABILITY  OF CHAPTER  346;  SELECTION  OF  OPTIONAL
INTEREST  RATE  CEILINGS.  Borrowers,  Guarantors  and Lender hereby agree that,
except for Section 346.004  thereof,  the provisions of Chapter 346 of the Texas
Finance Code (Vernon=s Texas Code  Annotated),  as amended from time to time (as
amended,  the ATexas  Finance Code@) shall not apply to this Agreement or any of
the other Financing Agreements.  To the extent that any of the optional interest
rate ceilings provided in Chapter 303 of the Texas Finance Code may be available
for  application to any loan(s) or  extension(s)  of credit under this Agreement
for the purpose of determining the maximum allowable interest hereunder pursuant
to the Texas Finance Code,  the  applicable  Amonthly  ceiling@ (as such term is
defined in Chapter  303 of the Texas  Finance  Code) from time to time in effect
shall  be  used to the  extent  that it is so  available,  and if such  Amonthly
ceiling@ at any time is not so available  then the applicable  Aweekly  ceiling@
(as such term is defined in Chapter 303 of the Texas  Finance Code) from time to
time in effect shall be used to the extent that it is so available.

   12.11 DTPA WAIVER 12.11 DTPA WAIVER.  BORROWERS AND GUARANTORS HEREBY WAIVE
ALL PROVISIONS OF THE DECEPTIVE TRADE PRACTICES -- CONSUMER PROTECTION ACT (TEX.
BUS. & COM. CODE ANN. ' 17.41 ET SEQ. AND EXPRESSLY WARRANTS AND REPRESENTS THAT
BORROWERS AND GUARANTORS EACH (a) HAVE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS  MATTERS THAT ENABLE BORROWERS TO EVALUATE THE MERITS AND RISKS OF THIS
TRANSACTION,  (b)  ARE  NOT IN A  SIGNIFICANTLY  DISPARATE  BARGAINING  POSITION
RELATIVE TO LENDER, AND (c) HAVE BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

      12.12 ORAL AGREEMENTS INEFFECTIVE 12.12 ORAL AGREEMENTS INEFFECTIVE.  THIS
AGREEMENT  AND THE OTHER  FINANCING  AGREEMENTS  REPRESENT  THE FINAL  AGREEMENT
BETWEEN THE PARTIES,  AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>


         IN WITNESS WHEREOF,  Lender and Borrowers have caused these presents to
be duly executed as of the day and year first above written.

LENDER                                       BORROWERS

CONGRESS FINANCIAL CORPORATION (SOUTHWEST)   TITANIUM METALS CORPORATION

BY: /S/ KEN SANDS                            BY: /S/ J. THOMAS MONTGOMERY, JR.

TITLE: EXECUTIVE V.P.                        TITLE: V.P. FINANCE



 ADDRESS:                                    CHIEF EXECUTIVE OFFICE:

                                             1999 Broadway

1201 Main Street                             Denver, Colorado 80202
Dallas, Texas  75202

                                             TITANIUM HEARTH TECHNOLOGIES, INC.

                                             BY: /S/ J. THOMAS MONTGOMERY, JR.

                                             TITLE:V.P. FINANCE

                                             CHIEF EXECUTIVE OFFICE:

                                             900 Hemlock Drive
                                             Morgantown, Pennsylvania  19543


<PAGE>



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