<PAGE>

                                                                EXHIBIT 10.01(b)


                            SUBORDINATION AGREEMENT
                            -----------------------

     THIS SUBORDINATION AGREEMENT is made this 3rd day of September, 1999, by
MNP CORPORATION, a Michigan corporation ("Subordinated Creditor"), MERIDIAN
NATIONAL CORPORATION, a Delaware corporation ("MNC"), OTTAWA RIVER STEEL CO., an
Ohio corporation ("ORS"), ENVIRONMENTAL PURIFICATION INDUSTRIES COMPANY, an Ohio
general partnership ("EPIC", and together with MNC and ORS, the "Borrowers") and
NATIONAL BANK OF CANADA ("Lender").

                                   RECITALS
                                   --------

     A.  Borrowers, along with certain other subsidiaries of MNC (the "Other
Subsidiaries") have borrowed and will borrow monies from Lender, as evidenced by
a certain Amended and Restated Loan and Security Agreement, of even date
herewith, by and among Borrowers, the Other Subsidiaries and the Lender (the
"Credit Agreement").

     B.  Borrowers have entered into a Loan Agreement with Subordinated Creditor
dated  as of June 30, 1999 (the "MNP Loan Agreement") pursuant to which
Borrowers have issued two promissory notes payable to Subordinated Creditor,
each in the principal amount of One Million Five Hundred Thousand Dollars
($1,500,000) (collectively, the "Subordinated Notes").

     C.  In order to induce the Lender, its successors, assigns or transferees,
to extend the credits under the Credit Agreement (the "Loans"), and to grant
renewals, or extensions, modifications, or amendments to the Loans, as the
Lender may deem advisable, Subordinated Creditor desires to subordinate the
indebtedness evidenced by the Subordinated Notes to any and all indebtedness,
obligations and liabilities now or hereafter owing by Borrowers to the Lender in
accordance with the provisions of the Credit Agreement.

                                  AGREEMENTS
                                  ----------

     NOW, THEREFORE, in consideration of the foregoing and to induce the Lender
from time to time to make, extend or continue loans, credits or other financial
accommodations to Borrowers, Subordinated Creditor, Borrowers and Lender agree
as follows:

                                   ARTICLE 1

                                  DEFINITIONS

     SECTION 1.1  Specific Definitions.
                  --------------------

     As used in this Agreement, the term:

     "Bankruptcy Code" means The Bankruptcy Code of 1978, as amended from time
to time (11 U.S.C. Sections 101 et seq.), and any replacement or successor act
which has a substantially similar purpose.
<PAGE>

     "Borrowers" has the meaning set forth in the initial paragraph to this
Agreement.

     "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State are authorized or required to close.

     "Collateral" means all property and interests in property now owned or
hereafter acquired by Borrowers in or upon which a security interest, lien or
mortgage is granted to Lender or Subordinated Creditor under the Credit
Documents (as defined in the Credit Agreement) or the Subordinated Security
Documents, respectively, including without limitation all property of Borrowers
defined as Collateral in the Credit Agreement and the Security Agreement dated
as of June 30, 1999 given by Borrowers to Subordinated Creditor, all proceeds
and products thereof, but specifically excluding the Intervale Property, the EPI
Property,  and all proceeds or insurance proceeds thereto or thereof.

     "Credit Agreement" shall have the meaning set forth in the Recitals to this
Agreement.

     "Enforcement Action" means, collectively or individually for one or both of
Lender and/or Subordinated Creditor, to make demand for payment or accelerate
the obligations of Borrowers, or any of them, repossess any of the Collateral,
the Intervale Property or the EPI Property or commence the judicial enforcement
of any of the rights and remedies under the Credit Documents, the Subordinated
Security Documents or applicable law.

     "Enforcement Notice" means a written notice delivered by either
Subordinated Creditor or Lender stating that an Event of Default has occurred
and is continuing and that an Enforcement Action will be taken by the party
providing such notice.

     "EPI Property" means the real property described on Exhibit "D", together
with all buildings and other real property and interests in real property, and
all proceeds or insurance proceeds thereto or thereof.

     "Financing Documents" means the collective reference to each and every
note, instrument, security agreement, pledge agreement, guaranty agreement,
mortgage, deed of trust, indemnity deed of trust, loan agreement, hypothecation
agreement, indemnity agreement, letter of credit application, assignment, or any
other document (whether similar or dissimilar to any of the foregoing)
previously, simultaneously or hereafter executed and delivered by Borrowers or
any other Person, singly or jointly with another Person or Persons, in
connection with any of the Senior Indebtedness, including, without limitation,
the "Credit Documents" as defined in the Credit Agreement, all as amended,
modified, restated, substituted, extended and renewed at any time and from time
to time.

     "Insolvency Proceeding" means any receivership, conservatorship, general
meeting of creditors, insolvency or bankruptcy proceeding, assignment for the
benefit of creditors, or any proceeding or action by or against a Borrower for
any relief of debtors, readjustment of indebtedness, reorganization,
dissolution, liquidation, compositions or extensions, or the appointment of any
receiver, intervenor or conservator of, or trustee, or similar officer for
Borrower or any substantial part of its properties or assets, including, without
limitation,

                                      -2-
<PAGE>

proceedings under the Bankruptcy Code, or under other federal, state
or local statute, laws, rules and regulations, all whether now or hereafter in
effect.

     "Intervale Mortgage" means the Second Mortgage from ORS to Subordinated
Creditor dated as of June 30, 1999, pursuant to which ORS has granted
Subordinated Creditor a mortgage and security interest in the Intervale
Property.

     "Intervale Property" means (a) the real property described on Exhibit "B",
together with all buildings, fixtures and other property and interests in
property defined as the "Premises" in the Intervale Mortgage and (b) the
machinery and equipment located on the Intervale Property as described in
Exhibit C.

     "Lender" has the meaning set forth in the initial paragraph to the
Agreement.

     "Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, financing
statement, lien or charge of any kind, whether perfected or unperfected,
avoidable or unavoidable, consensual or non-consensual including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.

     "Person" means an individual, a corporation, a partnership, a joint
venture, a trust, an unincorporated association, a government or political
subdivision or agency thereof or any other entity.

     "Security" means any security agreement, pledge, pledge agreement, guaranty
agreement, mortgage, deed of trust, deed to secure debt, trust deed, land trust,
indenture, indemnity deed of trust, indemnification agreement, proceeding in
                                                                          --
rem, reimbursement agreement, financing statement, purchase agreement,
---
conditional sales contract, installment sales contract, collateral agreement,
financing lease, letter of credit, bond, loan agreement, hypothecation
agreement, deposit, financing statement or assignment, and also means any
agreement, document, security device or arrangement, document, statutory lien,
lien arising by operation of law, judgment or other lien, right of setoff,
encumbrance, proceeding or other document or right, in whatever form or however
arising, whether similar or dissimilar to the foregoing which directly or
indirectly secures or enforces payment or performance of any Person against, or
otherwise encumbers or gives notice of an encumbrance upon, the real property,
personal property, rights or assets of any Person.

     "Senior Indebtedness" means all indebtedness, liabilities and obligations
of Borrowers or any of them to the Lender of every kind and nature whatsoever,
whether now existing or hereafter arising or created at any time including,
without limitation, the "Obligations" as defined in the Credit Agreement and,
further including, without limitation, such indebtedness, liabilities and
obligations of Borrowers to the Lender (and to any Person which replaces
financing provided by the Lender) (i) which are direct, indirect, contingent,
primary, secondary alone, jointly with others, acquired directly or by
assignment, due, to become due, unsecured, secured, future advances, incurred or
assumed, (ii) which relate to or arise from the issuance of letters of credit,

                                      -3-
<PAGE>

or guaranties, indemnifications or other similar agreements in favor of third
parties made by the Lender at the request or for the benefit of any Borrower,
(iii) which are claims of subrogation, indemnification, reimbursement or
contribution of the Lender against any Borrower or any other Person relating in
any manner to obligations of any such Borrower or the Security, (iv) which are
claims of whatever nature and whenever arising on account of the avoidance of
payments or other transfers to or for the benefit of the Lender in Insolvency
Proceedings or otherwise, or (v) which are claims (including, without
limitation, claims arising or accruing after the commencement of Insolvency
Proceedings by or against any Borrower or any assets of any Borrower, whether or
not such claims are allowed) for principal, interest, expense payments,
liquidation costs, and attorneys' fees and expenses, all of the foregoing
whether arising under contract, by tort, at law, in equity or otherwise.

     "State" means the State of Ohio.

     "Subordinated Creditor" shall have the meaning set forth in the initial
paragraph to this Agreement.

     "Subordinated Indebtedness" means any and all existing and future
indebtedness, liabilities and obligations of Borrowers to Subordinated Creditor
of every kind and nature whatsoever, with respect to the indebtedness evidenced
by the Subordinated Notes or secured by the Subordinated Security Documents.

     "Subordinated Notes" means Borrowers' promissory notes described in EXHIBIT
A to this Agreement.

     "Subordinated Security Documents"  means the MNP Loan Agreement, the
Security Agreement among Borrowers and Subordinated Creditor dated as of June
30, 1999, the Subordinated Notes in favor of Subordinated Creditor, the Second
Mortgage dated June 30, 1999 from ORS to Subordinated Creditor, all as described
in EXHIBIT A to this Agreement and related documents and financing statements.

     SECTION 1.2  Other Definitional Provisions.  Unless otherwise defined
                  -----------------------------
herein, all terms used herein which are defined by the Ohio Commercial Code
shall have the meanings as assigned to them by this Agreement.  The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, subsection, schedule and exhibit
references are references to sections or subsections of, or schedules or
exhibits to, as the case may be, this Agreement unless otherwise specified.  As
used herein, the singular number shall include the plural, the plural the
singular and the use of the masculine, feminine or neuter gender shall include
all genders, as the context may require.  Reference to any one or more of the
Financing Documents and any of the Financing Documents shall mean the same as
the foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified.

                                      -4-
<PAGE>

                                   ARTICLE 2

                                 SUBORDINATION

     SECTION 2.1  Subordinated Indebtedness.
                  -------------------------

     2.1.1    Except as set forth in Section 2.1.2, Subordinated Creditor hereby
subordinates and postpones the payment and the time of payment of all of the
Subordinated Indebtedness to and in favor of the indefeasible and full payment
in cash and the time of payment of all of the Senior Indebtedness. Subordinated
Creditor and Borrowers represent and warrant to the Lender that all existing
Subordinated Indebtedness is described in EXHIBIT A attached hereto and made a
part hereof.

     2.1.2    Until all of the Senior Indebtedness has been fully and
indefeasibly paid in cash and there is no agreement between Borrowers and the
Lender under which the Lender is required to or may make loans or provide other
financial accommodations, Subordinated Creditor shall not, without the prior
written consent of the Lender, ask, demand, accelerate (unless the Lender has
accelerated the Senior Indebtedness), declare a default under, sue for, set off,
accept or receive any payment of all or any part of the Subordinated
Indebtedness; provided, however, that unless (i) there is an Event of Default
under any of the Credit Documents (as defined in the Credit Agreement), (ii) any
Borrower or its assets is the subject of Insolvency Proceedings, or (iii) such
payment would reduce the Borrowers' Subordinated Indebtedness to Subordinated
Creditor to an amount less than $1,500,000, Subordinated Creditor may receive
and retain payments made by Borrowers pursuant to the Subordinated Notes; and
provided further than upon an "Event of Default" as defined in the Intervale
Mortgage, Subordinated Creditor may exercise or otherwise enforce its rights
with respect to the Intervale Property and the EPI Property under the Intervale
Mortgage and any mortgage related to the EPI Property and may receive and retain
any proceeds from the sale, distribution or other application of the Intervale
Property or the EPI Property in accordance with Section 3.3 hereof.

     2.1.3    Subordinated Creditor and Borrowers agree and warrant that any
instrument, agreement, security or other writing now or hereafter evidencing all
or any portion of the Subordinated Indebtedness shall bear on its face a clear
and conspicuous legend that it is subject to the terms of this Agreement.  Until
all Senior Indebtedness has been indefeasibly paid in full in cash, Borrowers
shall not issue any instrument, security or other writing (other than those, if
any, described in EXHIBIT A) evidencing any part of the Subordinated
Indebtedness or amend or modify in any respect any such instrument, security or
other writing without the prior written consent of Lender.

     SECTION 2.2  Security.
                  --------

     2.2.1    Subordinated Creditor and Borrowers agree, represent and warrant
that the Subordinated Indebtedness is not, and shall not be secured in any way
directly or indirectly by any Security, except the Subordinated Debt Documents
and any mortgage in favor of Subordinated Creditor with respect to the EPI
Property.

                                      -5-
<PAGE>

     2.2.2     Subordinated Creditor hereby subordinates the lien and priority
of Subordinated Creditor's existing and future Liens and other interests, if
any, in and to the Collateral to the Lender's existing and future interest in
the Collateral notwithstanding the time of attachment of the interests of the
Lender or Subordinated Creditor or the time the Senior Indebtedness or the
Subordinated Indebtedness is incurred.  Notwithstanding anything to the contrary
contained in this Agreement, under applicable law or otherwise, in the event
that the  Liens of the Lender are at any time unperfected with respect to any or
all of the Collateral, the lack of perfection by the Lender as to any such
Collateral shall not affect the validity, enforceability or priority of any Lien
on the Collateral in favor of Subordinated Creditor.  In any event, the Liens of
Subordinated Creditor shall have priority over any and all other Liens in favor
of any third party with respect to the Collateral (including, but not limited to
any trustee under the Bankruptcy Code), and the Lender hereby appoints and
constitutes Subordinated Creditor as the Lender's agent and bailee for purposes
of perfection of the Liens of the Lender in the Collateral such that the Lien in
favor of Subordinated Creditor shall be held by Subordinated Creditor for the
benefit of the Lender and the proceeds of any disposition of the Collateral
shall be and are in all respects subject to the priority of right to payment and
satisfaction of first the Senior Indebtedness and then the Subordinated
Indebtedness.  The lien priorities provided in this Section shall not be altered
or otherwise affected by any amendment, modification, supplement, extension,
renewal, restatement or refinancing of either the Senior Indebtedness or the
Subordinated Indebtedness, nor by any action or inaction which the Lender or
Subordinated Creditor may take or fail to take in respect of the Collateral,
except as otherwise provided above in this subsection.

     2.2.3     Except as expressly permitted under the terms of Section 2.1.2
or 3.3 of this Agreement, until the Senior Indebtedness has been fully and
indefeasibly paid in cash and there exists no agreement between Borrowers and
the Lender under which the Lender is required to or may make loans or provide
other financial accommodations, Subordinated Creditor shall not, without the
prior written consent of the Lender, ask, demand, assign, declare a default
under, sue for, liquidate, sell, foreclose, set off, collect, accept a
surrender, receive any proceeds, petition, commence or otherwise initiate any
Insolvency Proceedings (or join any other Person in so doing) against any
Borrower or its assets or otherwise realize or seek to realize upon all or any
part of the Collateral.

     2.2.4     In the event the Lender may from time to time execute releases,
partial releases, terminations, reconveyances, subordinations or other documents
releasing or otherwise limiting the Lender's interests in the Collateral,
Subordinated Creditor agrees to execute and deliver at the same time such
further documents as the Lender may require to effect a corresponding change to
Subordinated Creditor's position in the same Collateral, but only in the
following circumstances:

               (a) Borrowers are disposing of the Collateral in the ordinary
     course of its business;

               (b) Borrowers are disposing of the Collateral outside of the
     ordinary course of business for reasonably equivalent value which shall be
     applied (i) to the Senior Indebtedness, or (ii) to the acquisition of
     Collateral which shall secure both the Senior Indebtedness and the
     Subordinated Indebtedness; and

                                      -6-
<PAGE>

               (c) the Lender is disposing of the Collateral pursuant to the
     Uniform Commercial Code or other applicable laws and the proceeds are
     applied to the Senior Indebtedness.

     SECTION 2.3  Further Representations and Warranties. Subordinated Creditor
                  --------------------------------------
represents and warrants to the Lender that:

               (a) Subordinated Creditor is the exclusive legal and beneficial
     owner of the Subordinated Indebtedness and no part thereof has been
     assigned to or subordinated or subjected to any other security interest in
     favor of anyone other than the Lender;

               (b) true, correct and complete copies of all documents relating
     to the Subordinated Indebtedness in effect as of the date hereof have been
     furnished to the Lender;

               (c) the execution, delivery and performance of this Agreement is
     within the corporate powers of Subordinated Creditor, has been duly
     authorized by all necessary corporate action of Subordinated Creditor, and
     does not contravene any law, any provision of the certificate of
     incorporation or the by-laws of Subordinated Creditor or any agreement to,
     or any law, rule, order or regulation, which Subordinated Creditor is a
     party or by which it or its properties are bound; and

               (d) this Agreement has been properly executed and delivered and
     constitutes the valid and legally binding obligations of Subordinated
     Creditor and is fully enforceable against Subordinated Creditor in
     accordance with its terms.

     SECTION 2.4  Further Documents.  Subordinated Creditor and Borrowers agree
                  -----------------
they shall promptly execute such further documents and acknowledgments
(including, without limitation, amendments to and releases of financing
statements and other documents of record) as the Lender may reasonably require
to confirm or evidence their respective obligations and the Lender's rights
under this Agreement.

                                   ARTICLE 3

  DISTRIBUTIONS AND RECEIPTS; RIGHTS OF SUBORDINATED CREDITOR WITH RESPECT TO
                      INTERVALE PROPERTY AND EPI PROPERTY

     SECTION 3.1  Distributions, etc.
                  -------------------

     3.1.1     Except as otherwise expressly provided under the terms of
Section 3.3 of this Agreement, in the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of any Borrower or the proceeds
thereof to creditors of such Borrower or to any indebtedness, liabilities and
obligations of such Borrower, by reason of liquidation, dissolution or other
winding up of

                                      -7-
<PAGE>

such Borrower or such Borrower's business, or in the event of any sale or
Insolvency Proceedings with respect to such Borrower or its assets, then in any
                                                                    ----
such event, any payment, distribution or benefit or any kind whatsoever or
character, either in cash, securities or other property, whether or not on
account of the Collateral, which shall be payable, deliverable or receivable
upon or with respect to all or any part of the Subordinated Indebtedness shall
be paid or delivered directly to the Lender for application to the Senior
Indebtedness (whether due or not due and in such order and manner as the Lender
may elect; and including, without limitation any interest accruing subsequent to
the commencement of any such event or Insolvency Proceedings) until the Senior
Indebtedness shall have been fully and indefeasibly paid in cash and satisfied.

     3.1.2    In connection with any Insolvency Proceedings, Subordinated
Creditor agrees to take such steps as may be necessary to preserve Subordinated
Creditor's claim with respect to the Subordinated Indebtedness. Subordinated
Creditor hereby irrevocably authorizes and empowers the Lender, and irrevocably
appoints the Lender Subordinated Creditor's attorney-in-fact, in the event that
the Lender has reasonable cause to believe that Subordinated Creditor is not
acting diligently so to preserve its claim, to (i) demand, sue for, collect and
receive every such payment or distribution and give acquittance therefor, (ii)
enforce claims comprising Subordinated Indebtedness in the name of the Lender,
or the name of Subordinated Creditor, by proof of debt, proof of claim suit or
otherwise; (iii) collect any assets of any Borrower (other than the Intervale
Property or EPI Property or proceeds thereof) distributed, dividend applied by
way of dividend or payment, or any such securities issued, on or account of
Subordinated Indebtedness and apply the same, or proceeds of any realization
upon the same, to Senior Indebtedness (whether due or not due in such order and
manner as the Lender may elect) until all Senior Indebtedness shall have been
indefeasibly paid in full in cash; (iv) vote claims compromising Subordinated
Indebtedness to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension; (v) take generally any
action which Subordinated Creditor might otherwise take; and (vi) take such
other actions in the Lender's own name or in the name of Subordinated Creditor
or otherwise, as the Lender may deem necessary or advisable to carry out the
provisions of this Agreement.

     3.1.3    Subordinated Creditor hereby agrees to execute and deliver to the
Lender such assignments, endorsements, releases, other documents or other
instruments onto as may be reasonably requested by the Lender in order to enable
the Lender to collect and receive any and all payments or distributions which
may be payable or deliverable at any time upon or with respect to the
Subordinated Indebtedness and/or the Collateral, except for those payments which
Subordinated Creditor is expressly permitted to receive and retain under the
terms of Section 2.1.2 or 3.3 of this Agreement.

     SECTION 3.2  Receipts by Subordinated Creditor.  Should any payment or
                  ---------------------------------
distribution not permitted by the provisions of this Agreement or property or
proceeds thereof be received by Subordinated Creditor upon or with respect to
all or any part of the Subordinated Indebtedness and/or the Collateral prior to
the full payment and satisfaction of the Senior Indebtedness, the Subordinated
Creditor will immediately deliver the same to the Lender in precisely the form
received (except for the endorsement or assignment of Subordinated Creditor when
the Lender deems appropriate), for application to the Senior Indebtedness
(whether due or not due and in such order and manner as the Lender may elect),
and, until so delivered, the same shall be held in

                                      -8-
<PAGE>

trust by Subordinated Creditor as property of the Lender. In the event of the
failure of Subordinated Creditor to make any such endorsement or assignment, the
Lender, or any of its officers or employees on behalf of the Lender, is hereby
irrevocably authorized in its own name or in the name of Subordinated Creditor
to make the same, and is hereby appointed Subordinated Creditor's attorney-in-
fact for those purposes, that appointment being coupled with an interest and
irrevocable.


     SECTION 3.3  Intervale Property; EPI Property.  Lender acknowledges and
                  --------------------------------
agrees that (a) Subordinated Creditor has a lien on the Intervale Property and
all proceeds thereof, including insurance proceeds relating thereto, (b)
Subordinated Creditor intends to put a lien on the EPI Property, and (c)
Subordinated Creditor may make all determinations and take or omit to take all
actions and exercise or refrain from exercising all rights and remedies
Subordinated Creditor is permitted to make or take under (i) the Intervale
Mortgage or by law with respect to the Intervale Property and (ii) any mortgage
on the EPI Property or by law with respect to the EPI Property, all without any
participation or joinder by Lender and without liability to Lender.
Notwithstanding the foregoing, Subordinated Creditor agrees that it will not
take an Enforcement Action with respect to the Intervale Property or the EPI
Property without giving Lender an Enforcement Notice at least 30 days prior to
the date such Enforcement Action is or will be taken.  Subordinated Creditor
further agrees that during the 180 day period after Lender gives Subordinated
Creditor an Enforcement Notice, Subordinated Creditor with allow the Lender to
utilize any part of the Intervale Property or EPI Property necessary to finish
work on any work-in -process or existing customer orders at such time to the
extent permitted by applicable law.  The Lender shall compensate Subordinated
Creditor for all utility, insurance and overhead costs and expenses directly
incident to such use which may have otherwise  been paid by Subordinated
Creditor.  Notwithstanding such use by Lender, Subordinated Creditor shall be
permitted access to the Intervale Property and the EPI Property being used by
the Lender at all reasonable times.  To the extent Subordinated Creditor is
otherwise in possession or control of any or all of the Intervale Property or
EPI Property following the occurrence of any Event of Default, whether  pursuant
to an exercise of its rights and remedies under the Intervale Mortgage, any
mortgage related to the EPI Property or otherwise, upon reasonable notice to
Subordinated Creditors, Subordinated Creditors shall permit the Lender to enter
upon the Intervale Property and the EPI Property to the extent permitted by
applicable law for purposes of removing any or all of the Collateral located
thereat.

     Notwithstanding anything in this Agreement to the contrary, Lender agrees
that Subordinated Creditor shall be entitled to receive all proceeds of the
Intervale Property and EPI Property derived through sale, liquidation,
foreclosure or otherwise and that any such proceeds received by Lender shall be
paid to Subordinated Creditor for application to the Subordinated Indebtedness
in accordance with the Intervale Mortgage and any mortgage relating to the EPI
Property.


                                   ARTICLE 4

                             ADDITIONAL AGREEMENTS

                                      -9-
<PAGE>

     SECTION 4.1  Consents, Waivers, etc.  Subordinated Creditor hereby consents
                  -----------------------
that at any time and from time to time and with or without consideration, the
Lender may, without further consent of or notice to Subordinated Creditor and
without in any manner affecting, impairing, lessening or releasing any of the
provisions of this Agreement, renew, extend, change the manner, time, place and
terms of payment of, sell, exchange, release, substitute, surrender, realize
upon, modify, waive, grant indulgences with respect to and otherwise deal with
in any manner: (a) all or any part of the Senior Indebtedness; (b) all or any of
the Financing Documents; (c) all or any part of any property at any time
included within the Collateral; and (d) any Person at any time primarily or
secondarily liable for all or any part of the Senior Indebtedness and/or any
collateral and security therefor, all as if this Subordination Agreement and any
interest which Subordinated Creditor has in the Collateral did not exist.
Except as expressly set forth in this Agreement and except as required under
Article 8 or Article 9 of the applicable Uniform Commercial Code, Subordinated
Creditor hereby waives demand, presentment for payment, protest, notice of
dishonor and of protest with respect to the Senior Indebtedness, the
Subordinated Indebtedness and/or the Collateral, notice of acceptance of this
Agreement, notice of making of any of the Senior Indebtedness and notice of
default under any of the Financing Documents.

     SECTION 4.2  Continuing Agreement.  This is a continuing Subordination
                  --------------------
Agreement until all of the Senior Indebtedness has been fully and indefeasibly
paid in cash, until all of the Senior Indebtedness and all of the Subordinated
Creditor's obligations to the Lender have been performed and satisfied, and
until the Lender has no obligation or agreement to allow further Senior
Indebtedness.  Without implying any limitation on the foregoing, if at any time
any payment, or portion thereof, made by, or for the account of, Borrower or any
other on account of any of the Senior Indebtedness is set aside by any court or
trustee having jurisdiction as a voidable preference or fraudulent conveyance or
must otherwise be restored or returned by the Lender to Borrower or any other
Person under any Insolvency Proceedings, Subordinated Creditor and Borrower
hereby agree that this Agreement shall continue and remain in full force and
effect or be reinstated, as the case may be, all as though any  such payment had
not been made and this Agreement had at all times remained in effect.
Notwithstanding the foregoing, in the event Subordinated Creditor has received
payment in full of the Subordinated Indebtedness and is entitled to retain such
payment under the terms of this Agreement, this Agreement shall terminate and
shall be of no further force or effect.

     SECTION 4.3  No Third Party Beneficiaries.  The provisions of this
                  ----------------------------
Agreement are solely for the benefit of the Lender, its successors and assigns,
and to any Person which, with the Senior Lenders' concurrence, or in accordance
with the terms of the Credit Agreement, replaces financing provided by any of
the Lender, and no other parties or Persons whatsoever (including, without
limitation, Borrowers and their respective successors and assigns) are intended
to be benefitted in any manner whatsoever by this Agreement.

     SECTION 4.4  Transfers by Subordinated Creditor.  Subordinated Creditor
                  ----------------------------------
agrees that it will not, without the prior written consent of the Lender,
subordinate, assign or transfer all or any part of the Subordinated Indebtedness
or the Collateral to any Person other than the Lender.

                                      -10-
<PAGE>

     SECTION 4.5  Transfer or Assignment of Senior Indebtedness.  If any of the
                  ---------------------------------------------
Senior Indebtedness should be transferred or assigned by the Lender, this
Agreement will inure to the benefit of the Lender's transferee or assignee to
the extent of such transfer or assignment, provided that the Lender shall
continue to have the unimpaired right to enforce this Agreement as to any of the
Senior Indebtedness not so transferred or assigned.

     SECTION 4.6  Actions Upon Breach.
                  -------------------

     4.6.1      If Subordinated Creditor, contrary to this Agreement, commences
or participates in any action or proceeding against any Borrower or the
Collateral, Borrowers may interpose as a defense or dilatory plea the making of
this Agreement, and Lender may intervene and interpose such defense or plea in
the Lender's name or in the name of such Borrowers.  Should Subordinated
Creditor, contrary to this Agreement, in any way attempt to enforce payment of
the Subordinated Indebtedness or any part thereof or to realize upon the
Collateral or any part thereof, either Lender (in its own name or in the name of
Borrowers), Borrowers themselves, or Lender and Borrowers, may restrain
Subordinated Creditor from so doing, it being understood and agreed by
Subordinated Creditor that (i) the Lender's and/or Borrower's damages from its
actions may at that time be difficult to ascertain and may be irreparable, and
(ii) Subordinated Creditor waives any defense that Borrowers and/or that the
Lender cannot demonstrate damage and/or can be made whole by the awarding of
damages.  Subordinated Creditor hereby irrevocably authorizes and empowers the
Lender, and irrevocably appoints the Lender Subordinated Creditor's attorney-in-
fact for the purpose of executing and delivering such assignments, endorsements,
releases, other instruments and other documents which  Subordinated Creditor is
or may be required to execute and deliver under the terms of this Agreement.

     4.6.2      If any one or more of Subordinated Creditor or Borrowers
contrary to this Agreement, makes, attempts to or threatens to make or receive
any payment, take any action with respect to the security or take any action
contrary to this Agreement, or fails to take any action required by this
Agreement, the Lender may obtain relief by injunction, specific performance
and/or other appropriate equitable relief, it being understood and agreed by
Subordinated Creditor and Borrowers that (i) the damages of the Lender from its
actions at the time may be difficult to ascertain and may be irreparable and
(ii) Subordinated Creditor and Borrowers waive any defense or claim that
Borrowers and/or the Lender cannot demonstrate damage and/or can be made whole
by the awarding of damages.

     SECTION 4.7  Statement of Debt.  Subordinated Creditor and Borrowers will,
                  -----------------
at any time or times upon the reasonable request of the Lender, promptly furnish
to the Lender a true, correct and complete statement of the outstanding
Subordinated Indebtedness.

     SECTION 4.8  Lender Agreements.
                  -----------------

     4.8.1      The Lender agrees to provide to Subordinated Creditor, promptly
after sending to Borrowers, copies of written notices advising Borrowers of
events of default under or acceleration of the Senior Indebtedness.

                                      -11-
<PAGE>

     4.8.2      In the event the Lender has in its possession any proceeds of
Collateral following the indefeasible repayment of the Senior Indebtedness, such
proceeds shall be remitted to Subordinated Creditor for application to the
Subordinated Indebtedness, unless the Lender is directed otherwise by court
order.

     SECTION 4.9   Subrogation.  The Subordinated Creditor shall not be
                   -----------
subrogated to, or be entitled to any assignment of any Senior Indebtedness or
evidence of any evidence of Senior Indebtedness or any Collateral until all
Senior Indebtedness is indefeasibly paid and satisfied in full.

     SECTION 4.10  Bankruptcy Financing.  If any Borrower shall become subject
                   --------------------
to a proceeding under the Bankruptcy Code and if the Lender desires to permit
the use of cash collateral and/or to provide financing to such Borrower under
either Section 363 or Section 364 of the Bankruptcy Code, Subordinated Creditor
agrees as follows: (a) adequate notice to the Subordinated Creditor shall be
deemed to have been given to Subordinated Creditor if Subordinated Creditor
receives actual notice two (2) business days prior to the entry of the order
approving such financing, and (b) no objection will be raised by Subordinated
Creditor to any such financing on the ground of a failure to provide "adequate
protection" for Subordinated Creditor's junior lien on the Collateral or any
other grounds, provided Subordinated Creditor retains a lien on and security
interest in the post-petition Collateral to the extent and with the same
priority as existed prior to the commencement of the proceeding under the
Bankruptcy Code.

                                   ARTICLE 5

                                 MISCELLANEOUS

     SECTION 5.1   Additional Senior Indebtedness.  Nothing herein contained
                   ------------------------------
shall obligate the Lender to grant credit to, or continue financing arrangements
with, any Borrower.

     SECTION 5.2   Delay in Enforcement, etc. No delay or failure on the part of
                   --------------------
the Lender to exercise any of its rights or remedies hereunder or now or
hereafter existing at law or in equity or by statute or otherwise, or any
partial or single exercise thereof, shall constitute a wavier thereof. All such
rights and remedies are cumulative and may be exercised singly or concurrently
and the exercise of any one or more of them will not be a waiver of any other.
No waiver of any of the Lender's rights and remedies under this Agreement, and
no modification or amendment of this Agreement shall be deemed to be made by the
Lender unless the same shall be in writing, duly signed on behalf of the Lender,
and each such waiver, if any, shall apply only with respect to the specific
instance involved and shall in no way impair the rights and remedies of the
Lender hereunder in any other respect at any other time.

     SECTION 5.3   Successors and Assigns.  This Agreement shall be binding upon
                   ----------------------
Subordinated Creditor and Borrowers and Subordinated Creditor's and Borrowers'
successors and assigns and shall inure to the benefit of Lender and its
successors and assigns, other holders or obligees under the Senior Indebtedness
and any Person which, with the Lender's concurrence,

                                      -12-
<PAGE>

or in accordance with the terms of the Credit Agreement, replaces financing
provided by the Lender.

     SECTION 5.4  Headings.  The paragraph headings of this Agreement are for
                  --------
convenience only, and shall not limit or otherwise affect any of the terms
hereof.

     SECTION 5.5  Applicable Law.  The parties to this Agreement acknowledge and
                  --------------
agree that this Agreement shall be governed by the laws of the State, as if this
Agreement had been executed, delivered, administered and performed solely within
the State even though for the convenience and at the request of the Subordinated
Creditor or Borrowers, this Agreement may be executed elsewhere.

     SECTION 5.6  Notices.  All notices, requests and demands to or upon the
                  -------
parties to this Agreement shall be in writing and shall be deemed to have been
given or made when delivered by hand on a Business Day, or five (5) days after
the date when deposited in the mail, postage prepaid by registered or certified
mail, return receipt requested, or when sent by overnight courier, on the
Business Day next following the day on which the notice is delivered to such
overnight courier, addressed as follows:

          Borrowers:          Meridian National Corporation
                              805 Chicago Street
                              Toledo, Ohio  43611
                              Attention:  Jim Rosino

          with a copy to:     Shumaker, Loop & Kendrick, LLP
                              1000 Jackson Street
                              Toledo, Ohio 43624
                              Attention:  John W. Hilbert II

          Lender:             National Bank of Canada
                              One Cleveland Center, Suite 2430
                              1375 East Ninth Street
                              Cleveland, Ohio  44114
                              Attention:  Jack Jankovic

          with a copy to:     Arter & Hadden LLP
                              1100 Huntington Building
                              925 Euclid Avenue
                              Cleveland, Ohio  44115
                              Attention:  Eugene M. Killeen, Esq.

          Subordinated
          Creditor:           MNP Corporation
                              44225 Utica Road
                              Utica, Michigan  48317
                              Attention:   Craig L. Stormer

                                      -13-
<PAGE>

          with a copy to:     Jacob & Weingarten
                              2301 W. Big Beaver Road, Suite 777
                              Troy, Michigan 48084
                              Attention:  Steve Schubiner

By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course of any Business Day.

     IN WITNESS WHEREOF, the signatures and seals of Subordinated Creditor and
of Borrowers are subscribed to this Agreement as of the date first written
above.



                                        MNP CORPORATION,
                                        a Michigan corporation

                                        By:  /s/ Craig L. Stormer
                                             ---------------------------------
                                             Craig L. Stormer
                                             Its:  Vice President
<PAGE>

                                   MERIDIAN NATIONAL CORPORATION,
                                   a Delaware corporation

                                   By:  /s/ James L. Rosino
                                        ----------------------------------
                                        James L. Rosino,
                                        Its:  Vice President - Finance

                                   OTTAWA RIVER STEEL CO.,
                                   an Ohio corporation

                                   By:  /s/ James L. Rosino
                                        ----------------------------------
                                        James L. Rosino,
                                        Its:  Vice President - Finance

                                   ENVIRONMENTAL PURIFICATION INDUSTRIES
                                   COMPANY,
                                   an Ohio general partnership

                                   By:  National Purification, Inc.,
                                        General Partner

                                   By:  /s/ James L. Rosino
                                        ----------------------------------
                                        James L. Rosino
                                        Its:  Vice President - Finance

                                   AND

                                   By:  MEPI Corp.,
                                        General Partner

                                   By:  /s/ James L. Rosino
                                        ----------------------------------
                                        James L. Rosino
                                        Its:  Vice President - Finance

                                   NATIONAL BANK OF CANADA

                                   By:  /s/ Jack Jankovic
                                        ----------------------------------
                                        Jack Jankovic
                                        Its:  Vice President