EXECUTION COPY



                                           FIFTH AMENDMENT, dated as of March 5,
                                    1998 to the  Credit  Agreement,  dated as of
                                    December  19, 1995 (as amended  prior to the
                                    date hereof, the "Credit Agreement"),  among
                                                      ----------------
                                    International   Mill   Service,    Inc.,   a
                                    Pennsylvania  corporation (the  "Borrower"),
                                                                     --------
                                    EnviroSource,  Inc., a Delaware  corporation
                                    (the "Parent"),  the several banks and other
                                          ------
                                    financial  institutions parties thereto (the
                                    "Lenders"),     NationsBank,     N.A.,    as
                                     -------
                                    administrative  agent  for the  Lenders  (in
                                    such capacity, the "Administrative  Agent"),
                                                        ---------------------
                                    and Credit Lyonnais New York Branch, the New
                                    York   branch  of  a  banking   organization
                                    organized  under the laws of the Republic of
                                    France,   as   syndication   agent  for  the
                                    Lenders.


         PRELIMINARY STATEMENTS:

         (1) The Borrower has  requested  that the Lenders agree to make various
changes in the Credit Agreement.

         (2) The parties hereto have agreed, subject to the terms and conditions
hereof,  to grant the requests of the Borrower and to amend the Credit Agreement
as provided herein.

         (3) Capitalized  terms used and not otherwise defined herein shall have
the  meanings  assigned  to such  terms  in the  Credit  Agreement  (the  Credit
Agreement,  as amended  by, and  together  with,  this Fifth  Amendment,  and as
hereinafter  amended,  modified,  extended or restated from time to time,  being
called the "Amended Agreement").
            -----------------

         Accordingly, the parties hereto hereby agree as follows:

         SECTION  1.01.  AMENDMENT  TO SECTION  1.1.  Section  1.1 of the Credit
                         --------------------------
Agreement is hereby amended by deleting the definition of "L/C  Commitment"  and
substituting in lieu thereof the following:

                  ""L/C Commitment":  $25,000,000."
                    --------------

         SECTION  1.02.  AMENDMENTS  TO SECTION 3. Section  3.1(b) of the Credit
                         ------------------------
Agreement  is hereby  amended by  deleting  subparagraph  (i)  therefrom  in its
entirety and substituting in lieu thereof the following:

                  "(i) be  denominated  in  Dollars  and shall be  either  (A) a
         standby letter of credit issued to support obligations of the Parent or
         any of its  Subsidiaries,  as the case may be, contingent or otherwise,

<PAGE>

         (I)  to  provide  credit  support  for  workers'  compensation,   other
         insurance programs and other corporate  purposes,  including to support
         Existing Letters of Credit or (II) for the account of the Parent or any
         of its Subsidiaries  and for the benefit of the regional  administrator
         of the  United  States  Environmental  Protection  Agency  or the state
         agency  responsible for, or having authority over, the waste management
         facility  operated by the Parent or any of its  Subsidiaries to provide
         assurance  that funds will be available in the event of closure  and/or
         post-closure  care of any waste  management  facility  operated  by the
         Parent or any of its  Subsidiaries  (any such standby  letter of credit
         described  in this clause  (A), a "Standby  Letter of Credit") or (B) a
                                            -------------------------
         commercial  letter of credit issued in respect of the purchase of goods
         or services by the Parent or any of its  Subsidiaries  in the  ordinary
         course of business (a "Commercial Letter of Credit");"
                                ---------------------------

         SECTION  1.03.  AMENDMENTS  TO  SECTION 4.  Section  4.16 is amended by
                         -------------------------
deleting clause (c) therefrom and substituting in lieu thereof the following:

                  "(c) Letters of Credit will be used solely to support  various
         financial  and other  performance  obligations  of the  Parent  and its
         Subsidiaries  incurred in the ordinary  course of business  (including,
         without  limitation,  to provide assurance that funds will be available
         in  the  event  of  closure  and/or  post-closure  care  of  any  waste
         management facility operated by the Parent or any such Subsidiary)."

         SECTION  1.04.  AMENDMENTS  TO SECTION 7. (a) Section 7.1 of the Credit
                         ------------------------
Agreement  is hereby  amended by  deleting  subclause  (c) in its  entirety  and
substituting the following in lieu thereof:

                  "(c) Debt Service Coverage. Permit the ratio of (i) EBITDA for
                       ---------------------
         the Reference Period with respect to the last day of any fiscal quarter
         of the Parent referred to below,  plus any income tax refunds  received
                                           ----
         by the Parent and its Subsidiaries  during such Reference Period,  plus
                                                                            ----
         (without  duplication)  IU Cash Inflows  received by the Parent and its
         Subsidiaries during such Reference Period,  less (without  duplication)
                                                     ----
         IU Cash  Outflows  from the Parent  and its  Subsidiaries  during  such
         Reference  Period,  less Cash  Taxes for such  Reference  Period,  less
                             ----                                           ----
         (without   duplication)   Landfill  Permit   Expenditures  during  such
         Reference  Period,   less  Closure  Trust  Fund  Payments  during  such
                              ----
         Reference  Period  to  (ii)  Consolidated  Interest  Expense  for  such
         Reference Period,  plus scheduled principal payments under Indebtedness
                            ----
         of the Parent and its Subsidiaries for such Reference Period to be less
         than the ratio set forth below opposite such fiscal quarter:

                  Fiscal Quarter                                       Ratio
                  --------------                                       -----

         Fiscal quarters from and including fourth
         quarter of fiscal 1997 through and including
         third quarter of fiscal 1998                                1.05:1.00

<PAGE>


         Fiscal quarters from and including fourth
         quarter of fiscal 1998 through and including
         first quarter of fiscal 1999                                1.45:1.00

         Second quarter of fiscal 1999                               1.75:1.00

         Third quarter of fiscal 1999                                1.85:1.00

         Fourth quarter of fiscal 1999                               1.95:1.00

         First quarter of fiscal 2000 and all fiscal
         quarters thereafter                                         2.00:1.00"


                  (b) Section 7.1 of the Credit  Agreement is hereby  amended by
         deleting  subclause (d) in its entirety and  substituting the following
         in lieu thereof:


                  "(d)  Debt  to  EBITDA   Ratio.   Permit   the  ratio  of  (i)
                        ------------------------
         Consolidated Total Debt as of the last day of any fiscal quarter of the
         Parent  referred to below to (ii) EBITDA for the Reference  Period with
         respect to such day to be more than the ratio set forth below  opposite
         such fiscal quarter:

                  Fiscal Quarter                                       Ratio
                  --------------                                       -----

         Fourth quarter of fiscal 1997                               5.75:1.00

         First quarter of fiscal 1998                                5.70:1.00

         Second quarter of fiscal 1998                               5.60:1.00

         Third quarter of fiscal 1998                                5.40:1.00

         Fiscal quarters from and including fourth
         quarter of fiscal 1998 through and including
         second quarter of fiscal 1999                               5.00:1.00

         Fiscal quarters from and including third
         quarter of fiscal 1999 through and including
         fourth quarter of fiscal 1999                               4.75:1.00

         First quarter of fiscal 2000 and all fiscal
         quarters thereafter                                         4.50:1.00"

<PAGE>


         SECTION  1.05.  REPRESENTATIONS  AND  WARRANTIES.  The  Parent and the
                         --------------------------------
     Borrower hereby represent and warrant to each Lender that:

                  (a) The  representations and warranties set forth in Section 4
         of the Amended Agreement, and in each other Loan Document, are true and
         correct in all  material  respects  on and as of the date hereof and on
         and as of the Fifth  Amendment  Effective  Date (as  defined in Section
         1.06) with the same  effect as if made on and as of the date  hereof or
         the Fifth  Amendment  Effective Date, as the case may be, except to the
         extent such  representations and warranties  expressly relate solely to
         an earlier  date (in which  case such  representations  and  warranties
         shall have been true and correct in all material  respects on and as of
         such earlier date).

                  (b) Each of the Loan  Parties  is in  compliance  with all the
         terms and  conditions  of the  Amended  Agreement  and the  other  Loan
         Documents  on its part to be  observed or  performed  and no Default or
         Event of Default has occurred or is continuing.

                  (c) The  execution,  delivery and  performance  by each of the
         Borrower  and the  Parent  of  this  Fifth  Amendment  have  been  duly
         authorized by such party.

                  (d) This Fifth  Amendment  constitutes  the  legal,  valid and
         binding obligation of each of the Borrower and the Parent,  enforceable
         against  it in  accordance  with  its  terms,  except  as  affected  by
         bankruptcy,   insolvency,   fraudulent   conveyance,    reorganization,
         moratorium or similar laws affecting creditors' rights generally.

                  (e) The  execution,  delivery and  performance  by each of the
         Borrower  and the Parent of this Fifth  Amendment  (i) do not  conflict
         with or violate (A) any provision of law, statute,  rule or regulation,
         or of the  certificate of  incorporation  or by-laws of the Borrower or
         the  Parent,  (B) any order of any  Governmental  Authority  or (C) any
         provision of any indenture,  agreement or other instrument to which the
         Borrower or the Parent is a party or by which it or any of its property
         may be bound and (ii) do not require any  consents  under,  result in a
         breach  of or  constitute  (with  notice  or  lapse  of time or both) a
         default under any such indenture, agreement or instrument.

         SECTION  1.06.   EFFECTIVENESS.   This  Fifth  Amendment  shall  become
                          -------------
effective only upon  satisfaction  of the following  conditions  precedent on or
prior to March 5, 1998 (the first date upon  which each such  condition  ha
been satisfied being herein called the "Fifth Amendment Effective Date"):

                  (a) The Administrative Agent shall have received duly executed
         counterparts of this Fifth Amendment which,  when taken together,  bear
         the authorized signatures of the Borrower,  the Parent and the Required
         Lenders.

                  (b)  (i) The  representations  and  warranties  set  forth  in
         Section 1.05 shall be true and correct on and as of the Fifth Amendment
<PAGE>



         Effective  Date, (ii) no Default or Event of Default has occurred or is
         continuing  and (iii)  there  shall not be any  action  pending  or any
         judgment,  order or  decree in  effect  which is  likely  to  restrain,
         prevent or impose materially adverse conditions upon performance by any
         Loan Party of its obligations under the Loan Documents.

                  (c)  The  Borrower  shall  have  paid  in full  all  fees  and
         reasonable expenses payable as of the Fifth Amendment Effective Date in
         connection with the Amended  Agreement and the other Loan Documents and
         shall have paid an amendment fee of $62,500,  which amendment fee shall
         be  distributed  to the  Lenders  pro  rata in  accordance  with  their
         Revolving Credit Commitments.

                  (d) The Administrative  Agent shall have received from each of
         the Guarantors duly executed  Consents,  in the form attached hereto as
         Exhibit A, which bear the authorized signatures of such Guarantors.
         ---------

                  (e) The Administrative Agent shall have received an opinion of
         counsel to the Borrower,  the Parent and the other Loan Parties in form
         and substance satisfactory to the Administrative Agent.

                  (f) The  Administrative  Agent shall have  received such other
         documents,  legal opinions,  instruments  and  certificates as it shall
         reasonably   request  and  such  other   documents,   legal   opinions,
         instruments  and  certificates   shall  be  satisfactory  in  form  and
         substance to the  Administrative  Agent and its counsel.  All corporate
         and  other  proceedings  taken or to be taken in  connection  with this
         Fifth Amendment and all documents  incidental  thereto,  whether or not
         referred to herein,  shall be satisfactory in form and substance to the
         Administrative Agent and its counsel.

         SECTION  1.07.  APPLICABLE  LAW.  THIS FIFTH  AMENDMENT  SHALL BE
                         ---------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE  LAWS  OF  THE  STATE  OF NEW
YORK.

         SECTION  1.08.   Expenses.   The  Borrower  shall  pay  all  reasonable
                          --------
out-of-pocket   expenses   incurred  by  the  Agents  in  connection   with  the
preparation,  negotiation,  execution  and  delivery  and  the  Agents'  and the
Lenders' enforcement of this Fifth Amendment, including, but not limited to, the
reasonable fees and  disbursements of counsel.  The agreements set forth in this
Section  1.08 shall  survive the  termination  of this Fifth  Amendment  and the
Amended Agreement.

         SECTION 1.09.  Counterparts.  This Fifth  Amendment may be executed  in
                        ------------
any  number of counterparts,  each of which shall constitute an original but all
of which when taken together shall constitute but one agreement.

<PAGE>


         SECTION 1.10. Reference to and Effect on the Loan Documents. (a) On and
                       ---------------------------------------------
after  the  Fifth  Amendment  Effective  Date,  each  reference  in the  Amended
Agreement  to "this  Agreement",  "hereunder",  "hereof" or words of like import
referring  to the  Credit  Agreement,  and  each  reference  in the  other  Loan
Documents to "the Credit  Agreement",  "thereunder",  "thereof" or words of like
import referring to the Credit  Agreement,  shall mean and be a reference to the
Amended Agreement as amended by this Fifth Amendment.

                  (b) Each of the amendments  provided herein shall apply and be
         effective only with respect to the provisions of the Amended  Agreement
         specifically  referred  to by such  amendment.  Except as  specifically
         amended above,  the Amended  Agreement and the Revolving  Credit Notes,
         and all other  Loan  Documents,  are and shall  continue  to be in full
         force and effect and are hereby in all respects ratified and confirmed.

                  (c) Except as  specifically  provided  above,  the  execution,
         delivery and effectiveness of this Fifth Amendment shall not operate as
         a waiver of any right,  power or remedy of any Lender, any Agent or any
         Secured Party under any of the Loan Documents,  nor constitute a waiver
         of any provision of any of the Loan Documents.


<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed by their duly authorized officers,  all as of the date first
above written.


                                          INTERNATIONAL MILL SERVICE, INC.


                                          By: /s/William B. Davis
                                              ----------------------------------
                                             Title: Vice President & Treasurer
                                                    ----------------------------


                                          ENVIROSOURCE, INC.


                                          By: /s/William B. Davis
                                              ----------------------------------
                                             Title: Vice President & Treasurer
                                                    ----------------------------


                                          NATIONSBANK,  N.A., as  Administrative
                                          Agent, as Issuing Lender, as Swingline
                                          Lender and as a Lender


                                          By: /s/Thomas J. Kane
                                              ----------------------------------
                                             Title: Vice President
                                                    ----------------------------


                                          CREDIT LYONNAIS  NEW  YORK  BRANCH, as
                                          Syndication  Agent and  as a Lender


                                          By: /s/Attila Koc
                                              ----------------------------------
                                             Title: First Vice President
                                                    ----------------------------


                                          BANQUE PARIBAS, as a Lender


                                          By: /s/Christopher S. Goodwin
                                              ----------------------------------
                                             Title: Director
                                                    ----------------------------

                                          By: /s/Deanna C. Walker
                                              ----------------------------------
                                             Title: Assistant Vice President
                                                    ----------------------------
<PAGE>



                                          ROYAL BANK OF CANADA, as a Lender


                                          By: /s/Steven Yoon
                                              ----------------------------------
                                             Title: Senior Manager
                                                    ----------------------------


<PAGE>

                                                                       EXHIBIT A


                                     CONSENT

                            Dated as of March __, 1998


         Each of the  undersigned,  as a Guarantor  under one of the Guarantees,
dated as of December 19, 1995 (each,  a  "Guarantee")  in favor of the Agent for
                                          ---------
the Lenders parties to the Credit  Agreement  referred to in the foregoing Fifth
Amendment, hereby consents to the Fifth Amendment and hereby confirms and agrees
that (i) the Guarantee to which such Guarantor is a party is, and shall continue
to be, in full force and  effect and is hereby  ratified  and  confirmed  in all
respects except that, upon the  effectiveness  of, and on and after the date of,
the Fifth  Amendment,  each reference in such Guarantee to the Loan Documents or
any thereof, "thereunder", "thereof" or words of like import shall mean and be a
reference to the Loan  Documents or such Loan  Document as amended  prior to the
date of and by the Fifth  Amendment and (ii) the Security  Documents (as defined
in the Credit  Agreement  referred to in the foregoing Fifth Amendment) to which
such  Guarantor is a party and all of the Collateral  described  therein do, and
shall  continue  to,  secure the payment of all of the  Obligations  (as defined
therein).


                                            IMS STEEL SERVICES, INC.



                                            By:
                                                --------------------------------
                                               Title:
                                                      --------------------------


                                              CONVERSION SYSTEMS, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------
<PAGE>



                                              ENVIROSOURCE CONTRACT SERVICES,
                                                INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              ENVIROSOURCE MANAGEMENT CORP.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              ENVIROSOURCE TECHNICAL SERVICES,
                                                INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------

                                              ENVIROSAFE SERVICES OF IDAHO, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              ENVIROSAFE SERVICES OF NORTH
                                                AMERICA, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              ENVIROSAFE SERVICES OF OHIO, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------

                                              ENVIROSAFE SERVICES OF TEXAS, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              ENVIROSOURCE CORP.



                                             By:
                                                 -------------------------------
                                               Title:
                                                      --------------------------

                                              ENVIROSOURCE TECHNOLOGIES, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------

                                              ETDS, INC.



                                             By:
                                                 -------------------------------
                                               Title:
                                                      --------------------------

                                              FOX HUNT FARMS, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              IU INTERNATIONAL CORPORATION



                                             By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              IU NORTH AMERICA FINANCE, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              IU NORTH AMERICA, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------



                                              MARCUS HOOK PROCESSING, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              McGRAW CONSTRUCTION COMPANY, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              NEOAX INVESTMENT CORP.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------

                                              NOSROC CORP.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              SONCOR CORP.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------


                                              IMS WAYLITE, INC.



                                              By:
                                                  ------------------------------
                                               Title:
                                                      --------------------------