AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT


                  AMENDMENT  NO. 1 TO LOAN AND SECURITY  AGREEMENT,  dated as of
December  12, 2000,  among  International  Mill  Service,  Inc., a  Pennsylvania
corporation  ("IMS"), IMS Alabama,  Inc.  ("Alabama") (each, a "Borrower",  and,
together with IMS, the  "Borrowers"),  the financial  institutions  party hereto
from time to time (the "Lenders") and Bank of America, N.A. ("Bank of America"),
a national banking association, as agent for the Lenders (the "Agent").

                  WHEREAS,  the  Borrowers,  the Lenders and Bank of America are
parties to a Loan and Security  Agreement  dated as of November 16, 1999 (as the
same may be amended,  modified,  supplemented or restated from time to time, the
"Loan  Agreement";  unless otherwise  defined herein,  terms defined in the Loan
Agreement being used herein as therein defined);

                  WHEREAS,  the  parties  hereto  have  agreed to amend  certain
provisions of the Loan Agreement;

                  WHEREAS,  the  parties  hereto  have  agreed to waive  certain
provisions of the Loan Agreement;

                  NOW,  THEREFORE,  for good  and  valuable  consideration,  the
receipt of which is hereby acknowledged, the parties hereto agree as follows:

                  Section 1. Definitions.  Unless otherwise specifically defined
                             -----------
herein,  all capitalized terms used herein shall have the respective
meanings ascribed to such terms in the Loan Agreement.

                  Section  2.  Amendment  to  Loan  Agreement.  Subject  to  the
                               ------------------------------
conditions    as   to    effectiveness    set   forth   in    Paragraph   5   of
this  Amendment,  the  Loan  Agreement  is  hereby
amended as follows:

                           (a) Section  9.23(a) of the Loan  Agreement is hereby
         amended by deleting the words "would exceed  $25,000,000 for any Fiscal
         Year of Borrowers"  appearing therein and substituting the words "would
         exceed (i) $36,000,000  for the Borrowers'  Fiscal Year ending December
         31, 2000,  and (ii)  $25,000,000  for any Fiscal Year of the  Borrowers
         thereafter".

                           (b)  Section  9.24 of the Loan  Agreement  is  hereby
         amended by deleting  the words  "would  exceed  $18,000,000"  appearing
         therein and substituting the words "would exceed $16,000,000".

                  Section 3. Waiver  under Loan  Agreement.  The Lenders  hereby
                             -----------------------------
waive any existing  Default or Event of Default that arose solely as a result of
a breach under clause (a) of Section 9.23 of the Loan Agreement,  for the period
beginning on October 31, 2000 through the effective date of this Amendment.


<PAGE>

                  Section 4.  Representations  and  Warranties of the Borrowers.
                              -------------------------------------------------
The  Borrowers  hereby  represent  and  warrant as of the date hereof as follows
(which  representations  and warranties shall survive the execution and delivery
of this Amendment):

                           (a) All  representations  and warranties  made by the
         Borrowers in Article 8 of the Loan Agreement and each of the other Loan
         Documents are true and correct in all material  respects as of the date
         hereof  with the same force and effect as if made on such date  (except
         to  the  extent  that  any  such  representation  or  warranty  relates
         expressly   to  an  earlier  date  or  to  the  extent  that  any  such
         representation or warranty is expressly waived herein).

                           (b)  The  Borrowers  have  the  requisite   power  to
         execute,  deliver  and  carry  out the  terms  and  provisions  of this
         Amendment.

                           (c)  This   Amendment  has  been  duly  executed  and
         delivered and  constitutes the legal,  valid and binding  obligation of
         the Borrowers,  and is enforceable in accordance with its terms subject
         (i)  as  to   enforcement  of  remedies,   to  applicable   bankruptcy,
         insolvency, reorganization, moratorium and other similar laws affecting
         the enforcement of creditors'  rights  generally,  from time to time in
         effect, and (ii) to general principles of equity.

                           (d) Other than as  specified  and waived in Section 3
         of this  Amendment,  no event  has  occurred  and is  continuing  which
         constitutes or would  constitute a Default or an Event of Default under
         the Loan Agreement.

                  Section 5 Conditions  Precedent.  Notwithstanding  any term or
                            ---------------------
provision of this  Amendment to the contrary,  Sections 2 and 3 hereof shall not
become effective until:

                           (a) The Agent  shall have  received  counterparts  of
         this  Amendment,  duly  executed and delivered on behalf of the Lenders
         and the Borrowers.

                  Section 6 Continued  Effectiveness.  Nothing  herein  shall be
                            ------------------------
deemed to be a waiver of any covenant (except as contained in Section 3 herein),
or  agreement  contained  in, or any Default or Event of Default  under the Loan
Agreement  and each of the  parties  hereto  agrees  that,  as  amended  by this
Amendment, all of the covenants and agreements and other provisions contained in
the Loan Agreement and the other Loan  Documents  shall remain in full force and
effect from and after the date of this Amendment.

                  Section 7 Counterparts.  This Amendment may be executed in two
                            ------------
or more  counterparts,  each of which  shall be an  original,  and all of which,
taken together,  shall constitute a single  instrument.  Delivery of an executed
counterpart  of a  signature  page to this  Amendment  by  telecopier  shall  be
effective as delivery of a manually executed counterpart of this Amendment.


<PAGE>

                  SECTION 8 GOVERNING LAW. THIS AMENDMENT  SHALL BE CONSTRUED IN
                            -------------
ACCORDANCE  WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF NEW YORK (OTHER THAN
THE CONFLICTS OF LAWS PRINCIPLES THEREOF).



                            [Signature pages follow]


<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment  to be duly  executed  by their  respective  officers  thereunto  duly
authorized as of the day and year first above written.

BORROWER AND GUARANTOR:                       INTERNATIONAL MILL SERVICES, INC.


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

BORROWER AND GUARANTOR:                       IMS ALABAMA, INC.


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


LENDERS:                                      BANK OF AMERICA, N.A., AS A LENDER


                                              By: /s/ WALTER T. SHELLMAN
                                                  ----------------------
                                              Name: Walter T. Shellman
                                              Title: Vice President

                                              SOVEREIGN BANK, AS A LENDER


                                              By:  /s/MICHELE WALCOFF
                                                   ------------------
                                              Name: Michele Walcoff
                                              Title: Vice President

                                              FOOTHILL CAPITAL CORPORATION,
                                              AS A LENDER


                                              By:  /s/ EILEEN QUINN
                                                   ----------------
                                              Name: Eileen Quinn
                                              Title: Assistant Vice President

AGENT:                                        BANK OF AMERICA, N.A., AS AGENT


                                              By: /s/ WALTER T. SHELLMAN
                                                  ----------------------
                                              Name: Walter T. Shellman
                                              Title: Vice President