Document:

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                                                                     EXHIBIT 4.2

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                             JEFFERIES GROUP, INC.,

                                     Issuer

                                       and

                              THE BANK OF NEW YORK,

                                     Trustee

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

                          FIRST SUPPLEMENTAL INDENTURE

                                       To

                                    INDENTURE

                           Dated as of March 12, 2002

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

                                Senior Securities

                            Dated as of July 15, 2003

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                  This FIRST INDENTURE SUPPLEMENTAL, dated July 15, 2003 (the
"First Indenture Supplemental"), to the INDENTURE, dated as of March 12, 2002
(the "Original Indenture"), between Jefferies Group, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Company"), having its principal office at 520 Madison Avenue, 12th Floor,
New York, NY 10022 and The Bank of New York, a New York banking corporation, as
Trustee (herein called the "Trustee").

                             RECITALS OF THE COMPANY

                  The Company has duly authorized the execution and delivery of
this First Indenture Supplemental to amend certain terms of the Original
Indenture pursuant to Section 9.1(5) of the Original Indenture.

                  All things necessary to make this First Indenture Supplemental
a valid and legally binding agreement of the Company, in accordance with its
terms, have been done.

                  NOW THEREFORE, in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually agreed, for
the equal and proportionate benefits of all Holders of the Securities or of
Series thereof, as follows:

                                   ARTICLE I

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

Section 1.1

                  All terms which are defined in Article I of the Original
Indenture shall have the same meanings in this First Indenture Supplemental as
such terms are given in Article I of the Original Indenture. In addition to the
words and terms defined in the Original Indenture, the terms set forth below
shall have the following meanings:

                  "Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 3.01(17) and (18) and Section 15.11, shares
issuable on conversion of Securities shall include only shares of the class
designated as Common Stock of the Company at the date of this instrument or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

                                       -1-
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Section 1.2

Section 1.13 of the Original Indenture is amended and restated to read as
follows:

                  "In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) or conversion of the
Securities need not be made at such Place of Payment on such date, but may be
made on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity, or on such last day for conversion, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be."

                                   ARTICLE II

                                 SECURITY FORMS

Section 2.1

Section 2.03 of the Original Indenture is amended and restated to read as
follows:

                  "This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of _______________ __, 2002 (herein
called the "Indenture"), between the Company and The Bank of New York, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof [if applicable insert --, limited in aggregate
principal amount to $___________].

                  [If applicable, insert -- Subject to and upon compliance with
the provisions of the Indenture, the Holder of this Security is entitled, at his
option, at any time on or before the close of business on __________, or in case
this Security or a portion hereof is called for redemption, then in respect of
this Security or such portion hereof until and including, but (unless the
Company defaults in making the payment due upon redemption) not after, the close
of business on the 10th calendar day before the Redemption Date, to convert this
Security (or any portion of the principal amount hereof which is $1,000 or an
integral multiple thereof), at the principal amount hereof, or of such portion,
into fully paid and non-assessable shares (calculated as to each conversion to
the nearest 1/100 of a share) of Common Stock of the Company at a conversion
price per share of Common Stock equal to $_____ per each share of Common Stock
(or at the current adjusted conversion price if an adjustment has been made as
provided in the Indenture) by surrender of this Security, duly endorsed or
assigned to the Company or in blank,

                                       -2-
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to the Company at its office or agency in _________, accompanied by written
notice to the Company that the Holder hereof elects to convert this Security, or
if less than the entire principal amount hereof is to be converted, the portion
hereof to be converted, and, in case such surrender shall be made during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(unless this Security or the portion thereof being converted has been called for
redemption on a Redemption Date within such period), also accompanied by payment
in funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment and, in the case of
a conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest (with certain exceptions provided in
the Indenture), no payment or adjustment is to be made on conversion for
interest accrued hereon or for dividends on the Common Stock issued on
conversion. No fractions of shares or scrip representing fractions of shares
will be issued on conversion, but instead of any fractional interest the Company
shall pay a cash adjustment as provided in the Indenture. The conversion price
is subject to adjustment as provided in the Indenture. In addition, the
Indenture provides that in case of certain consolidations or mergers to which
the Company is a party or the transfer of substantially all of the assets of the
Company, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger or transfer by a holder of the number
of shares of Common Stock into which this Security might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares).]

                  [If applicable insert -- The Securities are subject to
redemption at the election of the Holders thereof, in whole or in part, and in
limited circumstances at the election of the Company, in whole, following the
occurrence of a Designated Event and a Rating Decline. Such redemptions will be
made at a Redemption Price equal to 100% of the principal amount, together with
accrued interest to the Redemption Date, as provided for in Article XIII of the
Indenture. [The Securities are not otherwise subject to redemption prior to
maturity and no sinking fund is provided for the Securities.]]

                  [If applicable insert -- The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, [if
applicable, insert -- (1) on ___________ in any year commencing with the year
______ and ending with the year ______ through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [if applicable insert on or after ___________, 20__], as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [if
applicable insert -- on or before _______________, __%, and if redeemed] during
the 12-month period beginning _____________ of the years indicated,

                                       -3-
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<TABLE>
<CAPTION>
Year     Redemption Price     Year     Redemption Price
----     ----------------     ----     ----------------
<S>     <C>                   <C>      <C>
</TABLE>

and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.

                  [If applicable, insert -- The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, (1) on
____________ in any year commencing with the year ____ and ending with the year
____ through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below, and (2) at
any time [if applicable, insert -- on or after ____________], as a whole or in
part, at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning _____________ of the years indicated,

<TABLE>
<CAPTION>
                                                                             Redemption
                          Redemption Price                              Price For Redemption
                       For Redemption Through                          Otherwise Than Through
Year                Operation of the Sinking Fund                   Operation of the Sinking Fund
----               ------------------------------                  -------------------------------
<S>                <C>                                             <C>
</TABLE>

and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]

                  [If applicable, insert -- Notwithstanding the foregoing, the
Company may not, prior to ____________ redeem any Securities of this series as
contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph
as a part of, or in anticipation of, any refunding

                                       -4-
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operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than _____% per annum.]

                  [If applicable, insert -- The sinking fund for this series
provides for the redemption on ____________ in each year beginning with the year
_______ and ending with the year _____ of [if applicable, insert -- not less
than $____________ "mandatory sinking fund") and not more than] $________
aggregate principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Company otherwise than through (if
applicable, insert -- mandatory] sinking fund payments [if applicable, insert
and Securities surrendered for conversion] may be credited against subsequent
[if applicable, insert -- mandatory] sinking fund payments otherwise required to
be made [if applicable, insert -- in the inverse order in which they become
due).]

                  [If the Security is subject to redemption of any kind, insert
-- In the event of redemption or conversion of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.]

                  [If applicable, insert -- The Indenture contains provisions
for defeasance at any time of (l) the entire indebtedness of this Security or
(2) certain restrictive covenants and Events of Default with respect to this
Security, in each case upon compliance with certain conditions set forth in the
Indenture.]

                  [If the Security is not an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.]

                  [If the Security is an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture. Such amount shall be equal to insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest all of the
Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]

                  The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by

                                       -5-
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the Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

                  As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed or to convert this Security as provided in
the Indenture.

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

                  The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company or the Security Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name

                                       -6-
<PAGE>

this Security is registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.

                  All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture."

                           [FORM OF CONVERSION NOTICE]

To: JEFFERIES GROUP, INC.

                  The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Jefferies Group, Inc., in accordance with the terms of the Indenture
referred to in this Security, and directs that the shares issuable and
deliverable upon the conversion, together with any check in payment for
fractional shares and any Securities, representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.

Dated:

Fill in for registration
of shares of Common Stock and Securities
if to be issued otherwise than to
the registered holder.
                                                  Principal Amount to be
                                                  converted (in an integral
                                                  multiple of $1,000, if
                                                  less than all):

_______________________________                 $
Name

_______________________________
Address

_______________________________                  _______________________________
(Please print name and                                Signature
 address, including zip code
 number)

SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING                      [SIGNATURE GUARANTEED --
NUMBER                                         required only if Common

                                       -7-
<PAGE>

                                   Common Stock and Securities are to be
                                   issued and delivered to other than registered
                                   holder]
[_____________________________]

                                   ARTICLE III

                                 THE SECURITIES

Section 3.1

Section 3.01 of the Original Indenture is amended and restated to read as
follows:

                  "The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

                  The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution and, subject to
Section 3.03, set forth, or determined in the manner provided, in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series,

                  (1)      the title of the Securities of the series, including
         CUSIP Numbers (which shall distinguish the Securities of the series
         from Securities of any other series);

                  (2)      any limit upon the aggregate principal amount of the
         Securities of the series which may be authenticated and delivered under
         this Indenture (except for Securities authenticated and delivered upon
         registration of transfer of, or in exchange for, or in lieu of, other
         Securities of the series pursuant to Section 3.04, 3.05, 3.06, 9.06 or
         11.07 and except for any Securities which, pursuant to Section 3.03,
         are deemed never to have been authenticated and delivered hereunder);

                  (3)      the Person to whom any interest on a Security of the
         series shall be payable, if other than the Person in whose name that
         Security (or one or more Predecessor Securities) is registered at the
         close of business on the Regular Record Date for such interest;

                  (4)      the date or dates on which the principal of the
         Securities of the series is payable;

                  (5)      the rate or rates at which the Securities of the
         series shall bear interest, if any, the date or dates from which such
         interest shall accrue, the Interest Payment Dates on which any such
         interest shall be payable and the Regular Record Date for any interest
         payable on any Interest Payment Date;

                  (6)      the place or places where the principal of and any
         premium and interest on Securities of the series shall be payable;

                                       -8-
<PAGE>

                  (7)      the period or periods within which, the price or
         prices at which and the terms and conditions upon which Securities of
         the series may be redeemed, in whole or in part, at the option of the
         Company;

                  (8)      the obligation, if any, of the Company to redeem or
         purchase Securities of the series pursuant to any sinking fund or
         analogous provisions or at the option of a Holder thereof and the
         period or periods within which, the price or prices at which and the
         terms and conditions upon which Securities of the series shall be
         redeemed or purchased, in whole or in part, pursuant to such
         obligation;

                  (9)      if other than denominations of $1,000 and any
         integral multiple thereof, the denominations in which Securities of the
         series shall be issuable;

                  (10)     the currency, currencies or currency units in which
         payment of the principal of and any premium and interest on any
         Securities of the series shall be payable if other than the currency of
         the United States of America and the manner of determining the
         equivalent thereof in the currency of the United States of America for
         purposes of the definition of "Outstanding" in Section 1.01;

                  (11)     if the amount of payments of principal of or any
         premium or interest on any Securities of the series may be determined
         with reference to an index, the manner in which such amounts shall be
         determined;

                  (12)     if the principal of or any premium or interest on any
         Securities of the series is to be payable, at the election of the
         Company or a Holder thereof, in one or more currencies or currency
         units other than that or those in which the Securities are stated to be
         payable, the currency, currencies or currency units in which payment of
         the principal of and any premium and interest on Securities of such
         series as to which such election is made shall be payable, and the
         periods within which and the terms and conditions upon which such
         election is to be made;

                  (13)     if other than the principal amount thereof, the
         portion of the principal amount of Securities of the series which shall
         be payable upon declaration of acceleration of the Maturity thereof
         pursuant to Section 5.02;

                  (14)     the applicability, nonapplicability, or variation, of
         Article XIII with respect to the Securities of such Series;

                  (15)     if applicable, that the Securities of the series
         shall be subject to either or both of Defeasance or Covenant Defeasance
         as provided in Article XIV; provided that no series of Securities that
         is convertible into Common Stock as provided in Article XV or
         convertible into or exchangeable for any other securities pursuant to
         Section 3.1(18) shall be subject to Defeasance pursuant to Section
         14.2;

                  (16)     if and as applicable, that the Securities of the
         series shall be issuable in whole or in part in the form of one or more
         Global Securities and, in such case, the Depositary or Depositaries for
         such Global Security or Global Securities and any circumstances other
         than those set forth in Section 3.05 in which any such Global

                                       -9-
<PAGE>

         Security may be transferred to, and registered and exchanged for
         Securities registered in the name of, a Person other than the
         Depositary for such Global Security or a nominee thereof and in which
         any such transfer may be registered;

                  (17)     the terms and conditions, if any, pursuant to which
         the Securities are convertible into Common Stock of the Company
         pursuant to Article XV, and any variation thereof;

                  (18)     the terms and conditions, if any, pursuant to which
         the Securities are convertible into or exchangeable for any other
         securities;

                  (19)     any addition to or change in the covenants set forth
         in Article X which applies to Securities of the series; and

                  (20)     any other terms of the series (which terms shall not
         be inconsistent with the provisions of this Indenture, except as
         permitted by Section 9.01(5)).

                  All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to above and (subject to Section
3.03) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.

                  If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.

                  The Company may, from time to time, by adoption of a Board
Resolution and subject to compliance with any other applicable provisions of
this Indenture, without the consent of the Holders, create and issue pursuant to
this Indenture additional securities of any series of Securities ("Add On
Securities") having terms and conditions identical to those of such series of
Outstanding Securities, except that such Add On Securities:

                  (i)      may have a different issue date from such series of
Outstanding Securities;

                  (ii)     may have a different amount of interest payable on
the first Interest Payment Date after issuance than is payable on such series of
Outstanding Securities; and

                  (iii)    may have terms specified in such Board Resolution for
such Add On Securities making appropriate adjustments to this Article III
applicable to such Add On Securities in order to conform to and ensure
compliance with the Securities Act (or applicable securities laws) which are not
adverse in any material respect to the Holder of any Outstanding Securities
(other than such Add On Securities) and which shall not affect the rights or
duties of the Trustee."

                                      -10-
<PAGE>

Section 3.2

Section 3.07 of the Original Indenture is amended and restated to read as
follows:

                   "Except as otherwise provided as contemplated by Section 3.01
with respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.

                  Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:

                  (1)      The Company may elect to make payment of any
         Defaulted Interest to the Persons in whose names the Securities of such
         series (or their respective Predecessor Securities) are registered at
         the close of business on a Special Record Date for the payment of such
         Defaulted Interest, which shall be fixed in the following manner. The
         Company shall notify the Trustee in writing of the amount of Defaulted
         Interest proposed to be paid on each Security of such series and the
         date of the proposed payment, and at the same time the Company shall
         deposit with the Trustee an amount of money equal to the aggregate
         amount proposed to be paid in respect of such Defaulted Interest or
         shall make arrangements satisfactory to the Trustee for such deposit
         prior to the date of the proposed payment, such money when deposited to
         be held in trust for the benefit of the Persons entitled to such
         Defaulted Interest as in this Clause provided. Thereupon the Trustee
         shall fix a Special Record Date for the payment of such Defaulted
         Interest which shall be not more than 15 days and not less than 10 days
         prior to the date of the proposed payment and not less than 10 days
         after the receipt by the Trustee of the notice of the proposed payment.
         The Trustee shall promptly notify the Company of such Special Record
         Date and, in the name and at the expense of the Company, shall cause
         notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor to be mailed, first-class postage prepaid,
         to each Holder of Securities of such series at his address as it
         appears in the Security Register, not less than 10 days prior to such
         Special Record Date. Notice of the proposed payment of such Defaulted
         Interest and the Special Record Date therefor having been so mailed,
         such Defaulted Interest shall be paid to the Persons in whose names the
         Securities of such series (or their respective Predecessor Securities)
         are registered at the close of business on such Special Record Date and
         shall no longer be payable pursuant to the following Clause (2).

                  (2)      The Company may make payment of any Defaulted
         Interest on the Securities of any series in any other lawful manner not
         inconsistent with the requirements of any securities exchange on which
         such Securities may be listed, and upon such notice as may be required
         by such exchange, if, after notice given by the Company to the Trustee
         of the proposed payment pursuant to this Clause, such manner of payment
         shall be deemed practicable by the Trustee.

                                      -11-
<PAGE>

                  Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security."

                  Subject to the provisions of Section 15.02, in the case of any
Security which is converted after any Regular Record Date and on or prior to the
next succeeding Interest Payment Date, interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on such Regular Record Date. Except as otherwise expressly provided in
the immediately preceding sentence in the case of any Security which is
converted, interest whose Stated Maturity is after the date of conversion of
such Security, shall not be payable."

Section 3.3

Section 3.09 of the Original Indenture is amended and restated to read as
follows:

                  "All Securities surrendered for payment, redemption,
registration of transfer or exchange or conversion or for credit against any
sinking fund payment shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be disposed of by
the Trustee in its customary manner."

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

Section 4.1

Section 4.01 of the Original Indenture is amended and restated to read as
follows:

                  "This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of conversion, registration of
transfer or exchange of Securities herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when

                  (1)      either

                                      -12-
<PAGE>

                           (A)      all Securities theretofore authenticated and
                  delivered (other than (i) Securities which have been
                  destroyed, lost or stolen and which have been replaced or paid
                  as provided in Section 3.06 and (ii) Securities for whose
                  payment money has theretofore been deposited in trust or
                  segregated and held in trust by the Company and thereafter
                  repaid to the Company or discharged from such trust) have been
                  delivered to the Trustee for cancellation; or

                           (B)      all such Securities not theretofore
                  delivered to the Trustee for cancellation

                                    (i)      have become due and payable, or

                                    (ii)     will become due and payable at
                           their Stated Maturity within one year, or

                                    (iii)    are to be called for redemption
                           within one year under arrangements satisfactory to
                           the Trustee for the giving of notice of redemption by
                           the Trustee in the name, and at the expense, of the
                           Company,

                  and the Company, in the case of (i), (ii) or (iii) above, has
                  deposited or caused to be deposited with the Trustee as trust
                  funds in trust for the purpose an amount sufficient to pay and
                  discharge the entire indebtedness on such Securities not
                  theretofore delivered to the Trustee for cancellation, for
                  principal and any premium and interest to the date of such
                  deposit (in the case of Securities which have become due and
                  payable) or to the Stated Maturity or Redemption Date, as the
                  case may be;

                  (2)      the Company has paid or caused to be paid all other
         sums payable hereunder by the Company; and

                  (3)      the Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent herein provided for relating to the satisfaction and
         discharge of this Indenture have been complied with.

                  Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 6.07,
and, if money shall have been deposited with the Trustee pursuant to subclause
(B) of Clause (1) of this Section, the obligations of the Trustee under Section
4.02 shall survive such satisfaction and discharge."

                                      -13-
<PAGE>

                                    ARTICLE V

                                    REMEDIES

Section 5.1

Section 5.08 of the Original Indenture is amended and restated to read as
follows:

"Section 5.08 Unconditional Right of Holdings to Receive Principal, Premium and
Interest and to Convert.

                  Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium and
(subject to Section 3.07) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to convert such Security in accordance with Article XV and
to institute suit for the enforcement of any such payment and right to convert,
and such rights shall not be impaired without the consent of such Holder."

Section 5.2

Section 5.14 of the Original Indenture is amended and restated to read as
follows:

                  "In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided that neither this Section nor the Trust
Indenture Act shall apply to any suit instituted by the Trustee, to any suit
instituted by any Holders of the Securities, or group of Holders of the
Securities, holding in the aggregate more than 10% of principal amount of the
Outstanding Securities of any series, or to any suit instituted by any Holder of
the Outstanding Securities for the enforcement of the payment of principal of or
interest on any Outstanding Securities held by such Holder, on or after the
respective due dates expressed in such Outstanding Securities, and provided,
further, that neither this Section nor the Trust Indenture Act shall be deemed
to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to convert any Security in accordance with Article XV."

                                      -14-
<PAGE>

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

Section 9.1

Section 9.01 of the Original Indenture is amended and restated to read as
follows:

                  "Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

                  (1)      to evidence the succession of another Person to the
         Company and the assumption by any such successor of the covenants of
         the Company herein and in the Securities; or

                  (2)      to add to the covenants of the Company for the,
         benefit of the Holders of all or any series of Securities (and if such
         covenants are to be for the benefit of less than all series of
         Securities, stating that such covenants are expressly being included
         solely for the benefit of such series) or to surrender any right or
         power herein conferred upon the Company; or

                  (3)      to add any additional Events of Default; or

                  (4)      to add to or change any of the provisions of this
         Indenture to such extent as shall be necessary to permit or facilitate
         the issuance of Securities in bearer form, registrable or not
         registrable as to principal, and with or without interest coupons, or
         to permit or facilitate the issuance of Securities in uncertificated
         form; or

                  (5)      to add to, change or eliminate any of the provisions
         of this Indenture in respect of one or more series of Securities,
         provided that any such addition, change or elimination (A) shall
         neither (i) apply to any Security of any series created prior to the
         execution of such supplemental indenture and entitled to the benefit of
         such provision nor (ii) modify the rights of the Holder of any such
         Security with respect to such provision or (B) shall become effective
         only when there is no such Security Outstanding; or

                  (6)      to secure the Securities pursuant to the requirements
         of Article X or otherwise; or

                  (7)      to establish the form or terms of Securities of any
         series as permitted by Sections 2.01 and 3.01; or

                  (8)      to evidence and provide for the acceptance of
         appointment hereunder by a successor Trustee with respect to the
         Securities of one or more series and to add to or change any of the
         provisions of this Indenture as shall be necessary to provide for or
         facilitate the administration of the trusts hereunder by more than one
         Trustee, pursuant to the requirements of Section 6.11;

                                      -15-
<PAGE>

                  (9)      to make provisions with respect to the conversion
         rights of Holders pursuant to the requirements of Article XV; or

                  (10) to cure any ambiguity, to correct or supplement any
         provision herein which may be defective or inconsistent with any other
         provision herein, or to make any other provisions with respect to
         matters or questions arising under this Indenture, provided that such
         action pursuant to this clause (9) shall not adversely affect the
         interests of the Holders of Securities of any series in any material
         respect."

Section 9.2

Section 9.02 of the Original Indenture is amended and restated to read as
follows:

                  "With the consent of the Holders of not less than a majority
in principal amount of the Outstanding Securities of each series affected by
such supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,

                  (1)      change the Stated Maturity of the principal of, or
         any installment of principal of or interest on, any Security, or reduce
         the principal amount thereof or the rate of interest or the time of
         payment of interest thereon or any premium payable upon the redemption
         thereof, or reduce the amount of the principal of an Original Issue
         Discount Security that would be due and payable upon a declaration of
         acceleration of the Maturity thereof pursuant to Section 5.02, or
         change any Place of Payment where, or the coin or currency in which,
         any Security or any premium or interest thereon is payable, or impair
         the right to institute suit for the enforcement of any such payment on
         or after the Stated Maturity thereof (or, in the case of redemption, on
         or after the Redemption Date), or adversely affect the right to convert
         any Security as provided in Article XV, or modify the provisions of
         this Indenture with respect to the subordination of the Securities in a
         manner adverse to the Holders, or

                  (2)      reduce the percentage in principal amount of the
         Outstanding Securities of any series, the consent of whose Holders is
         required for any such supplemental indenture, or the consent of whose
         Holders is required for any waiver (of compliance with certain
         provisions of this Indenture or certain defaults hereunder and their
         consequences) provided for in this Indenture, or

                  (3)      modify any of the provisions of this Section or
         Section 5.13, except to increase any such percentage or to provide that
         certain other provisions of this Indenture cannot be modified or waived
         without the consent of the Holder of each Outstanding Security affected
         thereby, provided, however, that this clause shall not be deemed to
         require the consent of any Holder with respect to changes in the
         references to "the

                                      -16-
<PAGE>

         Trustee" and concomitant changes in this Section, or the deletion of
         this proviso, in accordance with the requirements of Sections 6.11 and
         9.01(8),

                  (4)      change any obligation of ours to maintain an office
         or agency, or

                  (5)      change any obligation of ours to pay additional
         amounts, or

                  (6)      adversely affect the right of repayment or repurchase
         at the option of the Holder, or

                  (7)      reduce or postpone any sinking fund or similar
         provision.

A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof."

                                    ARTICLE X

                                    COVENANTS

Section 10.2

Section 10.02 of the Original Indenture is amended and restated to read as
follows:

                  "The Company shall maintain in the Place of Payment for any
series of Securities, an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange where Securities of any
series that is convertible may be surrendered for conversion, and where notices
and demands to or upon the Company in respect of the Securities of that series
and this Indenture may be served. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office.

                  The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of any series for
such purposes. The Company shall give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency. The Company

                                      -17-
<PAGE>

hereby initially designates the principal corporate trust office of the Trustee
as such office of the Company."

                                   ARTICLE XI

                            REDEMPTION OF SECURITIES

Section 11.1

Section 11.03 of the Original Indenture is amended and restated to read as
follows:

                  "If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series and of a specified tenor
are to be redeemed), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less than
all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.

                  If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed shall
be treated by the Trustee as Outstanding for the purpose of such selection.

                  The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.

                  For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed."

Section 11.2

Section 11.04 of the Original Indenture is amended and restated to read as
follows:

                  "Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.

                  All notices of redemption shall state:

                                      -18-

<PAGE>

                  (1)      the Redemption Date,

                  (2)      the Redemption Price,

                  (3)      if less than all the Outstanding Securities of any
         series are to be redeemed, the identification (and, in the case of
         partial redemption of any Securities, the principal amounts) of the
         particular Securities to be redeemed,

                  (4)      that on the Redemption Date the Redemption Price will
         become due and payable upon each such Security to be redeemed and, if
         applicable, that interest thereon will cease to accrue on and after
         said date,

                  (5)      in the case of any Securities that are convertible
         pursuant to Article XV, the conversion price or rate, the date on which
         the right to convert the principal of the Securities to be redeemed
         will terminate and the place or places where such Securities may be
         surrendered for conversion,

                  (6)      the place or places where such Securities are to be
         surrendered for payment of the Redemption Price,

                  (7)      that the redemption is for a sinking fund, if such is
         the case, and

                  (8)      applicable CUSIP Numbers.

Notice of redemption of Securities to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company and shall be irrevocable."

Section 11.5

Section 11.05 of the Original Indenture is amended and restated to read as
follows:

                  "Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date other than any Securities called for redemption on that date which
have been converted prior to the date of such deposit.

                  If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.07) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust."

                                      -19-

<PAGE>

                                   ARTICLE XII

                                  SINKING FUNDS

Section 12.1

Section 12.02 of the Original Indenture is amended and restated to read as
follows:

                  "The Company (1) may deliver Outstanding Securities of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of a series which have been converted pursuant to Article XV
or which have been redeemed either at the election of the Company pursuant to
the terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Securities of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly."

Section 13.1

The Original Indenture is hereby amended to add a new Article XV to read as
follows:

                                   "ARTICLE XV

                            CONVERSION OF SECURITIES

Section 15.01 Applicability; Conversion Privilege and Conversion Price.

                  Securities of any series which are convertible into Common
Stock of the Company shall be convertible in accordance with their terms and
(except as otherwise specified as contemplated by Section 3.01 for Securities of
any series) in accordance with this Article.

                  Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Security or any portion of the
outstanding principal amount thereof which is $1,000 or an integral multiple of
$1,000 may be converted at the principal amount thereof, or of such portion
thereof, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock of the Company at
the conversion price, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall expire at the close of business on
the date specified for Securities of such series. In case a Security or portion
thereof is called for redemption at the election of the Company, such conversion
right in respect of the Security or portion so called shall expire at the close
of business on the 10th calendar day before the Redemption Date, unless the
Company defaults in making the payment due upon redemption.

                  The price at which shares of Common Stock shall be delivered
upon conversion (herein called the "conversion price") shall be the price
specified in relation to Securities of such

                                      -20-

<PAGE>

series pursuant to Section 3.01, as it shall be adjusted in certain instances as
provided in this Article.

Section 15.02 Exercise of Conversion Price.

                  In order to exercise the conversion privilege, the Holder of
any Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 10.02, accompanied by written
notice to the Company (which shall be substantially in the form set forth in
Section 2.03) at such office or agency that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted. Securities surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date shall (except in the case of Securities or portions
thereof which have been called for redemption on a Redemption Date within such
period) be accompanied by payment in funds acceptable to the Company of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of Securities being surrendered for conversion. Subject to the
provisions of Section 3.07 relating to the payment of Defaulted Interest by the
Company, the interest payment with respect to a Security called for redemption
on a Redemption Date during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date shall be payable on such Interest Payment Date to
the Holder of such Security at the close of business on such Regular Record Date
notwithstanding the conversion of such Security after such Regular Record Date
and prior to such Interest Payment Date, and the Holder converting such Security
need not include a payment of such interest payment amount upon surrender of
such Security for conversion. Except as provided in the preceding sentence and
subject to the final paragraph of Section 3.07, no payment or adjustment shall
be made upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.

                  Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 15.03.

                  In the case of any Security which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Security or Securities of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security.

                                      -21-

<PAGE>

Section 15.03 Fractions of Shares.

                  No fractional shares of Common Stock shall be issued upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the daily closing
price per share of Common Stock (consistent with Section 15.04(6) below) at the
close of business on the day of conversion.

Section 15.04 Adjustment of Conversion Price.

                  (1)      In case the Company shall pay or make a dividend or
         other distribution on any class of capital stock of the Company in
         Common Stock, the conversion price in effect at the opening of business
         on the day following the date fixed for determination of stockholders
         entitled to receive such dividend or other distribution shall be
         reduced by multiplying such conversion price by a fraction of which the
         numerator shall be the number of shares of Common Stock outstanding at
         the close of business on the date fixed for such determination and the
         denominator shall be the sum of such number of shares and the total
         number of shares constituting such dividend or other distribution, such
         reduction to become effective immediately after the opening of business
         on the day following the date fixed for such determination. For the
         purposes of this paragraph (1), the number of shares of Common Stock at
         any time outstanding shall not include shares held in the treasury of
         the Company but shall include shares issuable in respect of scrip
         certificates issued in lieu of fractions of shares of Common Stock. The
         Company will not pay any dividend or make any distribution on shares of
         Common Stock held in the treasury of the Company.

                  (2)      In case the Company shall issue rights or warrants to
         all holders of its Common Stock entitling them to subscribe for or
         purchase shares of Common Stock at a price per share less than the
         current market price per share (determined as provided in paragraph (6)
         of this Section) of the Common Stock on the date fixed for the
         determination of stockholders entitled to receive such rights or
         warrants (other than pursuant to a dividend reinvestment plan), the
         conversion price in effect at the opening of business on the day
         following the date fixed for such determination shall be reduced by
         multiplying such conversion price by a fraction of which the numerator
         shall be the number of shares of Common Stock outstanding at the close
         of business on the date fixed for such determination plus the number of
         shares of Common Stock which the aggregate of the offering price of the
         total number of shares of Common Stock so offered for subscription or
         purchase would purchase at such current market price and the
         denominator shall be the number of shares of Common Stock outstanding
         at the close of business on the date fixed for such determination plus
         the number of shares of Common Stock so offered for subscription or
         purchase, such reduction to become effective immediately after the
         opening of business on the day following the date fixed for such

                                      -22-

<PAGE>

         determination. For the purposes of this paragraph (2), the number of
         shares of Common Stock at any time outstanding shall not include shares
         held in the treasury of the Company but shall include shares issuable
         in respect of scrip certificates issued in lieu of fractions of shares
         of Common Stock. The Company will not issue any rights or warrants in
         respect of shares of Common Stock held in the treasury of the Company.

                  (3)      In case outstanding shares of Common Stock shall be
         subdivided into a greater number of shares of Common Stock, the
         conversion price in effect at the opening of business on the day
         following the day upon which such subdivision becomes effective shall
         be proportionately reduced, and, conversely, in case outstanding shares
         of Common Stock shall each be combined into a smaller number of shares
         of Common Stock, the conversion price in effect at the opening of
         business on the day following the day upon which such combination
         becomes effective shall be proportionately increased, such reduction or
         increase, as the case may be, to become effective immediately after the
         opening of business on the day following the day upon which such
         subdivision or combination becomes effective.

                  (4)      In case the Company shall, by dividend or otherwise,
         distribute to all holders of its Common Stock evidences of its
         indebtedness or assets (including securities, but excluding any rights
         or warrants referred to in paragraph (2) of this Section, any dividend
         or distribution paid in cash out of the earned surplus of the Company
         and any dividend or distribution referred to in paragraph (1) of this
         Section), the conversion price shall be adjusted so that the same shall
         equal the price determined by multiplying the conversion price in
         effect immediately prior to the close of business on the date fixed for
         the determination of stockholders entitled to receive such distribution
         by a fraction of which the numerator shall be the current market price
         per share (determined as provided in paragraph (6) of this Section) of
         the Common Stock on the date fixed for such determination less the then
         fair market value (as determined by the Board of Directors, whose
         determination shall be conclusive and described in a Board Resolution
         filed with the Trustee) of the portion of the assets or evidences of
         indebtedness so distributed applicable to one share of Common Stock and
         the denominator shall all be such current market price per share of the
         Common Stock, such adjustment to become effective immediately prior to
         the opening of business on the day following the date fixed for the
         determination of stockholders entitled to receive such distribution.

                  (5)      The reclassification of Common Stock into securities
         other than Common Stock (other than any reclassification upon a
         consolidation or merger to which Section 15.11 applies) shall be deemed
         to involve (a) a distribution of such securities other than Common
         Stock to all holders of Common Stock (and the effective date of such
         reclassification shall be deemed to be "the date fixed for the
         determination of stockholders entitled to receive such distribution"
         and the "date fixed for such determination" within the meaning of
         paragraph (4) of this Section), and (b) a subdivision or combination,
         as the case may be, of the number of shares of Common Stock outstanding
         immediately prior to such reclassification into the number of shares of

                                      -23-

<PAGE>

         Common Stock outstanding immediately thereafter (and the effective date
         of such reclassification shall be deemed to be "the day upon which such
         subdivision becomes effective" or "the day upon which such combination
         becomes effective", as the case may be, such "the day upon which such
         subdivision or combination becomes effective" within the meaning of
         paragraph (3) of this Section).

                  (6)      For the purpose of any computation under paragraphs
         (2) and (4) of this Section, the current market price per share of
         Common Stock on any day shall be deemed to be the average of the daily
         closing prices for the five consecutive trading days (i.e., Business
         Days on which the Common Stock is traded) selected by the Board of
         Directors commencing not more than 20 trading days before, and ending
         not later than, the earlier of the day in question and the day before
         the "ex" date with respect to the issuance or distribution requiring
         such computation. For this purpose, the term "`ex' date", when used
         with respect to any issuance or distribution, shall mean the first date
         on which the Common Stock trades regular way on the applicable exchange
         or in the applicable market without the right to receive such issuance
         or distribution. The closing price for each day shall be the reported
         last sale price regular way or, in case no such reported sale takes
         place on such day, the average of the reported closing bid and asked
         prices regular way, in either case on the New York Stock Exchange or,
         if the Common Stock is not listed or admitted to trading on such
         Exchange, on the principal national securities exchange on which the
         Common Stock is listed or admitted to trading or, if not listed or
         admitted to trading on any national securities exchange, on the Nasdaq
         Stock Market or, if the Common Stock is not listed or admitted to
         trading on any national securities exchange or quoted on the Nasdaq
         Stock Market, the average of the closing bid and asked prices in the
         over-the-counter market as furnished by any New York Stock Exchange
         member firm selected from time to time by the Board of Directors for
         that purpose.

                  (7)      The Company may make such reductions in the
         conversion price, in addition to those required by paragraphs (1), (2),
         (3) and (4) of this Section, as it considers to be advisable in order
         to avoid or diminish any income tax to any holders of shares of Common
         Stock resulting from any dividend or distribution of stock or issuance
         of rights or warrants to purchase or subscribe for stock or from any
         event treated as such for income tax purposes or for any other reasons.
         The Company shall have the power to resolve any ambiguity or correct
         any error in this paragraph (7) and its actions in so doing shall be
         final and conclusive.

                  (8)      No adjustment in the conversion price shall be
         required unless such adjustment would require an increase or decrease
         of at least one percent in such conversion price; provided, however,
         that any adjustments which by reason of this paragraph (8) is not
         required to be made shall be carried forward and taken into account in
         any subsequent adjustment. All calculations under this Article shall be
         made to the nearest cent or to the nearest 1/100 of a share, as the
         case may be.

                                      -24-

<PAGE>

Section 15.05 Notice of Adjustments of Conversion Price.

Whenever the conversion price is adjusted as herein provided:

         (a)      the Company shall compute the adjusted conversion price in
                  accordance with Section 15.04 and shall prepare a certificate
                  signed by the Treasurer of the Company setting forth the
                  adjusted conversion price and showing in reasonable detail the
                  facts upon which such adjustment is based, and such
                  certificate shall forthwith be filed at each office or agency
                  maintained for the purpose of conversion of Securities
                  pursuant to Section 10.02; and

         (b)      a notice stating that the conversion price has been adjusted
                  and setting forth the adjusted conversion price shall
                  forthwith be required, and as soon as practicable after it is
                  required, such notice shall be mailed by the Company to all
                  Holders at their last addresses as they shall appear in the
                  Security Register.

Section 15.06 Notice of Certain Corporate Action.

         In case:

         (a)      the Company shall declare a dividend (or any other
                  distribution) on its Common Stock payable otherwise than in
                  cash out of its earned surplus; or

         (b)      the Company shall authorize the granting to the holders of its
                  Common Stock of rights or warrants to subscribe for or
                  purchase any shares of capital stock of any class or of any
                  other rights; or

         (c)      of any reclassification of the Common Stock of the Company
                  (other than a subdivision or combination of its outstanding
                  shares of Common Stock), or of any consolidation, merger or
                  share exchange to which the Company is a party and for which
                  approval of any stockholders of the Company is required, or of
                  the sale or transfer of all or substantially all of the assets
                  of the Company; or

         (d)      of the voluntary or involuntary dissolution, liquidation or
                  winding up of the Company; then the Company shall cause to be
                  filed at each office or agency maintained for the purpose of
                  conversion of Securities pursuant to Section 10.02, and shall
                  cause to be mailed to all Holders at their last addresses as
                  they shall appear in the Security Register, at least 20 days
                  (or 10 days in any case specified in clause (a) or (b) above)
                  prior to the applicable record or effective date hereinafter
                  specified, a notice stating (x) the date on which a record is
                  to be taken for the purpose of such dividend, distribution,
                  rights or warrants, or, if a record is not to be taken, the
                  date as of which the holders of Common Stock of record to be
                  entitled to such dividend, distribution, rights or warrants
                  are to be determined, or (y) the date on which such
                  reclassification, consolidation, merger, share exchange, sale,
                  transfer, dissolution, liquidation or winding up is expected
                  to become effective, and the date as of which it is expected
                  that holders of Common Stock of record shall be entitled to
                  exchange their shares of Common Stock for securities,

                                      -25-

<PAGE>

                  cash or other property deliverable upon such reclassification,
                  consolidation, merger, share exchange, sale, transfer,
                  dissolution, liquidation or winding up. Neither the failure to
                  give such notice nor any defect therein shall affect the
                  legality or validity of the proceedings described in clauses
                  (a) through (d) of this Section 15.06. If at the time the
                  Trustee shall not be the conversion agent, a copy of such
                  notice shall also forthwith be filed by the Company with the
                  Trustee.

                  Not less than seven days prior to any date fixed for the
                  determination of stockholders entitled to receive such
                  distribution, the Company shall cause to be filed at each
                  office or agency maintained for the purpose of conversion of
                  Securities pursuant to Section 10.02, and shall cause to be
                  mailed to all Holders at their last addresses as they shall
                  appear in the Security Register, a notice stating the date on
                  which the such determination is to be made, and briefly
                  describing the import thereof. If at the time the Trustee
                  shall not be the conversion agent, a copy of such notice shall
                  also forthwith be filed by the Company with the Trustee.

Section 15.07 Company to Reserve Common Stock.

                  The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock then
issuable upon the conversion of all Outstanding Securities.

Section 15.08 Taxes on Conversions.

                  The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Securities pursuant hereto. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Security or Securities to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.

Section 15.09 Covenant as to Common Stock.

                  The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 15.08, the Company will pay all
taxes, liens and charges with respect to the issue thereof.

Section 15.10 Cancellation of Converted Securities.

                  All Securities delivered for conversion shall be delivered to
the Trustee to be cancelled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.09.

                                      -26-

<PAGE>

Section 15.11 Provisions in Case of Consolidation, Merger or Sale of Assets.

                  In case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any sale or transfer of all or substantially all of the assets
of the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each convertible Security then outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified in Section
15.01, to convert such Security only into the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company into
which such Security might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common Stock of
the Company failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer is not the same for each share of Common Stock of the Company
in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article. The above provisions of this Section shall similarly apply to
successive consolidations, mergers, sales or transfers.

Section 15.12 Responsibility of Trustee.

                  Neither the Trustee nor any conversion agent shall at any time
be under any duty or responsibility to any Holder of Securities to determine
whether any fact exists which may require any adjustment of the conversion
price, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any conversion agent shall be accountable with respect to the registration,
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Security; and neither the Trustee nor any conversion agent
makes any representation with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue or
transfer or deliver any Common Stock or stock certificates or other securities
or property or to make any cash payment upon the surrender of any Security for
the purpose of conversion or to comply with any of the covenants of the Company
contained in this Article XV.

                  The Trustee makes no representations as to the validity or
sufficiency of this First Supplemental Indenture; the recitals and statements
herein are deemed to be those of the Company and not of the Trustee.

                                      -27-

<PAGE>

                  This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

                           (Signature Page to Follow)

                                      -28-

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this First
Indenture Supplemental to be duly executed as of the day and year first above
written.

                                             JEFFERIES GROUP, INC.

                                             By: __________________________
                                                 Name:
                                                 Title:

                                             THE BANK OF NEW YORK

                                             By: __________________________
                                                 Name:
                                                 Title:

                                      -29-<PAGE>

                                                                 EXHIBIT 10.1

                          RELIANCE STEEL & ALUMINUM CO.

                              RSAC MANAGEMENT CORP.

                                 THIRD AMENDMENT
                               TO CREDIT AGREEMENT

                  This THIRD AMENDMENT TO CREDIT AGREEMENT (this "THIRD
AMENDMENT") is dated as of July 1, 2003 and entered into by and among Reliance
Steel & Aluminum Co., a California corporation ("RSA"), RSAC Management Corp., a
California corporation ("RSAC MANAGEMENT" and together with RSA, jointly and
severally, the "BORROWERS" and individually, a "BORROWER") the financial
institutions listed on the signature pages hereof (the "LENDERS") and Bank of
America, N.A., as administrative agent for Lenders (the "ADMINISTRATIVE AGENT"),
and, for purposes of Section 5 hereof, the Guarantors (as defined in Section 5
hereof) listed on the signature pages hereof, and is made with reference to that
certain Credit Agreement dated as of October 24, 2001, as amended by the First
Amendment to Credit Agreement dated as of April 1, 2002 and the Second Amendment
to Credit Agreement dated as of February 19, 2003 (as amended, the "CREDIT
AGREEMENT"), by and among the Borrowers, Lenders and Administrative Agent.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS, the Borrowers and the Lenders desire to amend the
Credit Agreement as set forth below upon satisfaction of the conditions
precedent set forth in Section 2 herein;

                  WHEREAS, in exchange for amending the Credit Agreement as
provided herein, the Obligations of the Borrowers will be secured by the
Collateral pursuant to the Security Agreement;

                  NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:

SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

         1.1      AMENDMENTS TO SECTION 1: DEFINITIONS AND ACCOUNTING TERMS.

                  A.       Subsection 1.1 of the Credit Agreement is hereby
         amended by adding thereto the following definitions, which shall be
         inserted in proper alphabetical order:

         "CAPITAL STOCK" means the capital stock or other equity interests of a
Person.

<PAGE>

         "COLLATERAL" means, collectively, all of the personal property
(including all of the Capital Stock of Material Domestic Subsidiaries) in which
Liens are purported to be granted by the Security Agreement.

         "COLLATERAL AGENT" shall mean Bank of America, N.A, or its successors
under the Intercreditor Agreement.

         "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or similar
account maintained with a Person engaged in the business of banking, including a
savings bank, savings and loan association, credit union or trust company.

         "INTERCREDITOR AGREEMENT" means the Collateral Agency and Intercreditor
Agreement dated as of July 1, 2003, substantially in the form of Exhibit H to
this Agreement, among the holders of the Senior Notes, the Lenders, the
Administrative Agent and the Collateral Agent, as amended from time to time.

         "LEVERAGE RATIO EVENT" shall mean the earliest to occur of (i) the date
financial statements and a Compliance Certificate are delivered pursuant to
Section 6.1 for the Fiscal Year ending December 31, 2004 if the Borrowers'
Leverage Ratio for each of the Fiscal Quarters ending September 30, 2004 and
December 31, 2004 is less than 3.00 to 1.00 or (ii) thereafter the date on which
financial statements and a Compliance Certificate are delivered pursuant to
Section 6.1 showing that the Borrowers' Leverage Ratio has been less than 3.00
to 1.00 for the two previous consecutive Fiscal Quarters.

         "SECURITY AGREEMENT" means the Security Agreement dated as of July 1,
2003 among the Collateral Agent, the Company, the Subsidiary Grantors as defined
and listed therein, and any Additional Grantors, as defined therein, from time
to time party thereto, substantially in the form of Exhibit G to this Agreement,
as the same may be amended, supplemented and modified from time to time.

         "SENIOR NOTES" mean, collectively, those senior notes issued pursuant
to those Note Purchase Agreements dated November 1, 1996, September 15, 1997,
October 15, 1998, and July 1, 2003 and those senior notes to be issued from time
to time subsequent to the date hereof in compliance with Section 7.3(f).

         "THIRD AMENDMENT" shall mean that certain Third Amendment to Credit
Agreement dated as of July 1, 2003 by and among the Borrowers, Lenders and
Administrative Agent.

         "THIRD AMENDMENT EFFECTIVE DATE" has the meaning set forth in the Third
Amendment.

                  B.       Subsection 1.1 of the Credit Agreement is hereby
         amended by deleting the definition of "Loan Documents" in its entirety
         and substituting the following therefor:

                  "LOAN DOCUMENTS" means, collectively, this Agreement, the
Committed Loan Notes, the Letters of Credit, the Master Subsidiary Guaranty, the
Security Agreement, the Swing Line Documents, any Request for Extension of
Credit, any Letter of Credit

                                       2

<PAGE>

Application, any Compliance Certificate, and any other agreements of any type or
nature hereafter executed and delivered by Borrowers or any of their respective
Subsidiaries or Affiliates to Administrative Agent, the Issuing Lender or to any
Lender in any way relating to or in furtherance of this Agreement, in each case
either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated, extended or replaced."

                  C.       Subsection 1.1. of the Credit Agreement is hereby
         amended by deleting the definition of "Material Domestic Subsidiary" in
         its entirety and substituting the following therefor:

         "MATERIAL DOMESTIC SUBSIDIARY" means, at any time, each Subsidiary of
RSA which is created, organized or domesticated in the United States or under
the laws of the United States or any state thereof, and either (i) is a
first-tier Subsidiary of RSA or (ii) the aggregate amount of its Assets exceeds
$1,000,000."

                  D.       Subsection 1.1 of the Credit Agreement is hereby
         amended by deleting the definition of "Permitted Acquisition" in its
         entirety and substituting the following therefor:

                  "PERMITTED ACQUISITION" means the acquisition of Precision
Strip, Inc. and its related entities and an Acquisition with respect to which
all of the following conditions shall have been satisfied:

                           (a) no Default or Event of Default exists or will
         exist as a result of the Acquisition;

                           (b) the Acquisition shall not be a Hostile
         Acquisition;

                           (c) immediately after such Acquisition, Borrowers
         would be in compliance with the terms and conditions of this Agreement
         on a pro forma basis;

                           (d) the business of the Person to be acquired (the
         "TARGET") is substantially similar to the existing business of
         Borrowers and their respective Subsidiaries;

                           (e) immediately after such Acquisition, the sum of
         Borrowers' cash and cash equivalents plus unused Commitments under this
         Agreement is at least $40,000,000; and

                           (f) (i) for Acquisitions made during the period
         beginning on the Third Amendment Effective Date and ending upon the
         Leverage Ratio Event, the total cost of all such Acquisitions
         (including debt of the Target assumed by Borrowers or their
         Subsidiaries but excluding the value of any Capital Stock of RSA and
         warrants or options to acquire Capital Stock of RSA exchanged in
         connection with such Acquisition) of no more than $10,000,000 in the
         aggregate through March 31, 2004 and no more than $25,000,000 in the
         aggregate through December 31, 2004 or (ii) for all other Acquisitions
         subsequent to December 31, 2004, the total cost of the Acquisition
         (including debt of the Target assumed by Borrowers or their
         Subsidiaries

                                       3

<PAGE>

         but excluding the value of any Capital Stock of RSA and warrants or
         options to acquire Capital Stock of RSA exchanged in connection with
         such Acquisition) is less than $150,000,000;

         For all other Acquisitions, which shall require the approval of
Requisite Lenders, Borrowers shall provide Administrative Agent and Lenders with
the Requisite Information regarding the Acquisition. Upon receipt of all
Requisite Information, Lenders shall respond within two weeks of receiving such
information. If a Lender does not respond within such time period, then such
Lender shall be deemed to have approved the Acquisition. If Administrative Agent
reasonably requires additional material information regarding the proposed
Acquisition, Borrowers shall promptly provide such information to Administrative
Agent and Lenders and the two week time period to approve the Acquisition shall
be extended until all such information is received (at which time Lenders will
have five Business Days to respond). "REQUISITE INFORMATION" shall include a
brief business description of the Target, financial statements of the Target for
the preceding three years (to the extent available), pro forma financial
statements of Borrowers demonstrating pro forma covenant compliance, a brief
description of the proposed Acquisition (including the sources and uses of
funds), projections, and such other information as Borrowers deem relevant."

                  E.       Subsection 1.1 of the Credit Agreement is hereby
         amended by deleting the table in the definition of "Applicable Margin"
         in its entirety and substituting the following therefor:

<TABLE>
<CAPTION>
                                                                                        LETTERS OF CREDIT
PRICING                                                                                 -----------------
 LEVEL                 LEVERAGE RATIO                        COMMITMENT FEE             EURODOLLAR RATE +            BASE RATE +
--------------------------------------------------------------------------------------------------------------------------------
<S>             <C>                                          <C>                        <C>                          <C>
   1                     < or = 1.75:1                            17.5                         75.0                     0.00%
   2            < or = 2.25:1 but > 1.75:1                        20.0                        100.0                     0.00%
   3            < or = 2.75:1 but > 2.25:1                        22.5                        125.0                     0.00%
   4            < or = 3.25:1 but > 2.75:1                        25.0                        150.0                     0.00%
   5            < or = 3.75:1 but > 3.25:1                        37.5                        200.0                     0.50%
   6                        > 3.75:1                              50.0                        250.0                     1.00%
</TABLE>

         1.2      AMENDMENTS TO SECTION 6: AFFIRMATIVE COVENANTS. Section 6 of
the Credit Agreement is hereby amended by adding a new subsection 6.16 at the
end thereof as follows:

         "6.16    Execution of Security Agreement After the Closing Date. Prior
to the Leverage Ratio Event:

                  (a)      Cause any of their respective Material Domestic
Subsidiaries, within 30 days after becoming a Material Domestic Subsidiary, to
execute and deliver to the Administrative Agent a counterpart of the Security
Agreement and to take all such further actions and execute all such further
documents and instruments as may be necessary or, in the opinion of the
Administrative Agent, desirable to create in favor of the Administrative Agent,
for the benefit of the Lenders, a valid and perfected Lien on all of the
Collateral described in the Security Agreement. In addition, as provided in the
Security Agreement, RSA shall, or

                                       4

<PAGE>

shall cause the Material Domestic Subsidiary that owns the Capital Stock of such
Person, to execute and to deliver to Administrative Agent all certificates
representing such Capital Stock of such Person (accompanied by irrevocable
undated stock powers, duly endorsed in blank).

                  (b)      Deliver to Administrative Agent, together with such
counterpart of the Security Agreement, (i) certified copies of such Material
Domestic Subsidiary's Organizational Documents, together with, if such Material
Domestic Subsidiary is organized under the laws of the United States of America,
any state thereof or in the District of Columbia, a good standing certificate
from the Secretary of State of the jurisdiction of its organization and each
other state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate taxing
authority of each of such jurisdictions, each to be dated a recent date prior to
their delivery to Administrative Agent, (ii) a certificate executed by the
secretary or similar officer of such Material Domestic Subsidiary as to (a) the
fact that the attached resolutions of the Governing Body of such Material
Domestic Subsidiary approving and authorizing the execution, delivery and
performance of the Security Agreement are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Material Domestic Subsidiary executing such counterpart of the Security
Agreement, (iii) an executed supplement to the Security Agreement evidencing the
pledge of the Capital Stock of such Material Domestic Subsidiary by RSA or a
Subsidiary of RSA that owns such Capital Stock, accompanied by certificate
evidencing such Capital Stock, together with an irrevocable undated stock powers
duly endorsed in blank and reasonably satisfactory in form and substance to
Administrative Agent, and (iv) a favorable opinion of counsel to such Material
Domestic Subsidiary, in substantially the form attached as Exhibit I to the
Third Amendment."

         1.3      AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS.

                  A.       Subsection 7.3 of the Credit Agreement is hereby
         amended by deleting clause (f) thereof in its entirety and substituting
         the following therefor:

                  "(f)     Senior Notes of Borrowers (which may be guaranteed by
Subsidiaries of RSA which are party to the Master Subsidiary Guaranty), secured
ratably with the Loans and the Senior Notes outstanding on the date hereof,
pursuant to the Security Agreement and the Intercreditor Agreement, issued after
the Closing Date having in the aggregate a principal amount of not more than
$150,000,000 at any time; provided, however, that the documentation evidencing
such indebtedness shall contain covenants no more restrictive than in this
Agreement and shall be on terms and conditions (including the maturity date and
amortization schedule) acceptable to Administrative Agent; and"

                  B.       Subsection 7.11 of the Credit Agreement is hereby
         amended and restated in its entirety to read as follows:

                  "7.11    Net Worth. Permit Consolidated Net Worth, as of the
last day of any Fiscal Quarter, to be less than the sum of (a) $548,868,600 plus
(b) an amount equal to 50% of the Net Income earned in each Fiscal Quarter
ending after December 31, 2002 (with no

                                       5

<PAGE>

deduction for a net loss in any such Fiscal Quarter) plus (c) an amount equal to
100% of the aggregate increases in Shareholders' Equity of RSA and its
Subsidiaries after December 31, 2002 by reason of the issuance and sale of
capital stock of RSA or any Subsidiary thereof (including upon any conversion of
debt securities of RSA or any Subsidiary thereof into such capital stock)."

                  C.       Subsection 7.13 is hereby amended and restated in its
         entirety to read as follows:

                  "7.13    Leverage Ratio. Permit the Leverage Ratio at any time
(i) prior to December 31, 2002 to be greater than 3.25 to 1.00, (ii) during the
period beginning December 31, 2002 to the Third Amendment Effective Date to be
greater than 3.60 to 1.00, (iii) during the period beginning the Third Amendment
Effective Date to March 30, 2004 to be greater than 4.25 to 1.00, (iv) during
the period beginning March 31, 2004 to June 29, 2004 to be greater than 4.00 to
1.00, (v) during the period beginning on June 30, 2004 to September 29, 2004 to
be greater than 3.75 to 1.00, (vi) during the period beginning on September 30,
2004 to December 30, 2004 to be greater than 3.50 to 1.00 and (vii) thereafter,
to be greater than 3.25 to 1.00."

                  D.       Subsection 7.16 is hereby amended by deleting clause
         (c) thereof in its entirety and substituting the following therefor:

                  "(c)     cash dividends payable to RSA stockholders and
purchases, redemptions or other acquisitions of shares of RSA capital stock or
warrants, rights or options to acquire any such shares, for cash not exceeding
an amount equal to (i) in any Fiscal Year, 25% of Net Income earned in the
immediately preceding Fiscal Year, provided that for the purposes of this
subsection 7.16(c)(i), the Net Income for the Fiscal Year ended December 31,
2002 shall include a pro forma adjustment so that the net income of any
Subsidiary acquired in 2002 is included in Net Income for the full Fiscal Year
2002, but no more than $3,000,000 in any Fiscal Quarter or (ii) in any Fiscal
Quarter, so long as (x) EBITDA of RSA and its Subsidiaries on a consolidated
basis for the immediately preceding Fiscal Quarter was at least $30,000,000 and
(y) the Leverage Ratio as of the last day of the immediately preceding Fiscal
Quarter was less than 3.00 to 1.00, $3,000,000; provided that during the period
from January 1, 2003 to the Leverage Ratio Event, such amount shall not exceed
$2,250,000 in any Fiscal Quarter; provided further that if a dividend permitted
by this Section 7.16(c) to be paid in any Fiscal Quarter is declared but not
paid in such Fiscal Quarter, such dividend may be paid in the immediately
following Fiscal Quarter without reducing the amount otherwise permitted by this
Section 7.16(c) to be paid in such following Fiscal Quarter; provided further
that immediately after giving effect to any such proposed action, no Default or
Event of Default would exist."

         1.4      AMENDMENTS TO SECTION 8. EVENTS OF DEFAULT AND REMEDIES UPON
EVENT OF DEFAULT. Subsection 8.1 of the Credit Agreement is hereby amended by
deleting clause (g) thereof in its entirety and substituting the following
therefor:

                  "(g)     Any Loan Document, at any time after its execution
and delivery and for any reason other than the agreement or action (or omission
to act) of Lenders or

                                       6

<PAGE>

satisfaction in full of all the Obligations, ceases to be in full force and
effect or is declared by a court of competent jurisdiction to be null and void,
invalid or unenforceable in any respect which, in any such event in the
reasonable opinion of the Requisite Lenders, is materially adverse to the
interests of Lenders; or, prior to the Leverage Ratio Event, the Security
Agreement shall for any reason cease to be in full force and effect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof or any other termination of such Security Agreement in
accordance with the terms hereof or thereof ) or shall be declared null and
void, or the Collateral Agent shall not have or shall cease to have a valid and
perfected Lien on any Collateral purported to be covered thereby (subject to the
express limitations set forth in the Security Agreement); or any Borrower Party
thereto denies in writing that it has any or further liability or obligation
under any Loan Document, or purports to revoke, terminate or rescind same; or"

         1.5      AMENDMENTS TO SECTION 10. MISCELLANEOUS.

                  A.       Subsection 10.2 of the Credit Agreement is hereby
         amended by (i) deleting the "; or" at the end of clause (e) thereof and
         substituting therefor ";"; (ii) adding "or" at the end of clause (f);
         and (iii) adding a new clause (g) at the end thereof as follows:

                  "(g)     prior to the Leverage Ratio Event, release any Lien
granted in favor of Collateral Agent with respect to all or substantially all of
the Collateral other than in accordance with the terms of the Loan Documents;"

                  B.       Subsection 10.7 of the Credit Agreement is hereby
         amended by deleting clause (b) thereof in its entirety and substituting
         the following therefor:

                  "(b)     Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this subsection (b), participations in Letter of Credit Usage
and in Swing Line Loans) at the time owing to it); provided that (i) except in
the case of an assignment of the entire remaining amount of the assigning
Lender's Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Assumption (attached hereto as
Exhibit D) with respect to such assignment is delivered to Administrative Agent
or, if "Trade Date" is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000 unless each of Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrowers otherwise consent (each such consent not to be unreasonably withheld
or delayed), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, except that
this clause (ii) shall not apply to rights in respect of Swing Line Loans, (iii)
the parties to each assignment shall execute and deliver to Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500 and (iv) the assignee becomes party to the Intercreditor Agreement by
delivering to the Administrative

                                       7

<PAGE>

Agent a counterpart to the Intercreditor Agreement, duly executed by such
assignee. Subject to acceptance and recording thereof by Administrative Agent
pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.1 through 3.3 with respect to facts
and circumstances occurring prior to the effective date of such assignment).
Upon request, Borrowers (at their expense) shall execute and deliver new or
replacement Notes to the assigning Lender and the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (d) of this Section."

                  C.       Section 10 of the Credit Agreement is hereby amended
         by adding a new subsection 10.28 at the end thereof as follows:

         "10.28. RELEASE OF SECURITY INTEREST.

                  (a)      Prior to the Leverage Ratio Event, upon the proposed
sale or other Disposition of any Collateral that is permitted by this Agreement
or the Security Agreement for which the Borrowers or its Subsidiaries desires to
obtain a security interest release, the Borrowers or such Subsidiary, as
applicable, shall deliver an Officer's Certificate (i) stating that the
Collateral subject to such Disposition is being sold or otherwise disposed of in
compliance with the terms hereof and the Security Agreement and (ii) specifying
the Collateral being sold or otherwise disposed of in the proposed transaction.
Upon the receipt of such Officer's Certificate, so long as the Administrative
Agent has no reason to believe that the facts stated in such Officer's
Certificate are not true and correct, the Administrative Agent shall execute and
deliver such releases of its security interest in such Collateral as may be
reasonably requested by the Borrowers or its Subsidiaries. The security interest
created by the Security Agreement shall be automatically released with respect
to the applicable sold asset upon (i) the sale in the ordinary course of
business of inventory and (ii) the sale of equipment for cash not exceeding
$5,000,000 in the aggregate for all such transactions until the Leverage Ratio
Event.

                  (b)      Upon the occurrence of the Leverage Ratio Event, the
Administrative Agent shall take such actions as may be reasonably required to
terminate the security interest granted under the Security Agreement; provided
that the security interest for the benefit of the holders of the Senior Notes
shall be terminated simultaneously."

         1.6      AMENDMENTS TO EXHIBITS TO THE CREDIT AGREEMENT.

                  A.       The Exhibits to the Credit Agreement are hereby
         amended by adding thereto a new Exhibit G, Form of Security Agreement,
         in the form of Annex I

                                       8

<PAGE>

         attached hereto and Exhibit H, Form of Intercreditor Agreement, in the
         form of Annex II attached hereto.

                  B.       The Exhibits to the Credit Agreement are hereby
         amended by deleting Exhibit C, Form of Committed Loan Note, thereto in
         its entirety and substituting therefor a new Exhibit C, Form of
         Committed Loan Note, in the form of Annex III attached hereto.

         1.7      AMENDMENTS TO ISSUED COMMITTED LOAN NOTES. Each original
Committed Loan Note issued pursuant to the Credit Agreement prior to the Third
Amendment Closing Date shall hereby be deemed to include the following
amendments: (i) the following sentence shall be deemed to be inserted at the end
of the fifth paragraph of each such Note: "This Note is secured by the Security
Agreement and is guaranteed by the Subsidiary Guarantors pursuant to Master
Subsidiary Guaranty;" and (ii) the following legend shall be deemed to be added
at the top of each such Committed Loan Note:

         "THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT THAT, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY FOR THIS NOTE AND THE
SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED IN
THE COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT). AS A CONDITION TO TRANSFER,
ANY TRANSFEREE OF A NOTE MUST BECOME A PARTY TO THE COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT. COPIES OF SUCH COLLATERAL AGENCY AND INTERCREDITOR
AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON REQUEST TO RELIANCE
STEEL & ALUMINUM CO. AND RSAC MANAGEMENT CORP."

SECTION 2.        CONDITIONS TO EFFECTIVENESS

         Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "THIRD AMENDMENT
EFFECTIVE DATE"):

         2.1      REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers in the Loan Documents shall be correct when made and
at the time of the Third Amendment Effective Date.

         2.2      PERFORMANCE; NO DEFAULT. Each Borrower Party shall have
performed and complied with all agreements and conditions contained in the Loan
Documents required to be performed or complied with by it prior to or on the
Third Amendment Effective Date and no Default or Event of Default shall have
occurred and be continuing.

         2.3      CHANGES IN CORPORATE STRUCTURE. Except as set forth in Annex
IV hereof, the Borrowers shall not have changed their respective jurisdictions
of incorporation or been party to any merger or consolidation and shall not have
succeeded to all or any substantial

                                       9

<PAGE>

part of the liabilities of any other entity, at any time following the date of
the most recent financial statements referred to in Section 6.1 of the Credit
Agreement.

         2.4      OFFICER'S CERTIFICATE. The Borrowers shall have delivered to
Administrative Agent an Officer's Certificate, dated as of the Third Amendment
Effective Date, certifying that the conditions specified in Sections 2.1, 2.2
and 2.3 above have been fulfilled.

         2.5      OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion in form and substance reasonably satisfactory to the
Administrative Agent, dated the Third Amendment Effective Date from Kay Rustand,
general counsel of the Borrowers and their respective Subsidiaries, covering the
matters set forth in Annex III, together with copies of all factual certificates
and legal opinions upon which such counsel has relied.

         2.6      SECURITY INTERESTS IN PERSONAL PROPERTY. The Administrative
Agent shall have received satisfactory evidence that the Borrowers and their
respective Subsidiaries shall have taken or caused to be taken all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described in
clauses B, C and D below) that may be necessary or, in the Administrative
Agent's reasonable opinion, desirable in order to create in favor of the
Collateral Agent, for the benefit of the Lenders, a valid and (upon such filing
and recording) perfected security interest in the personal property Collateral.
Such actions shall include the following:

                  A.       Stock Certificates and Instruments. Delivery to the
         Collateral Agent of (a) certificates (which certificates shall be
         accompanied by irrevocable undated stock powers, duly endorsed in blank
         and otherwise reasonably satisfactory in form and substance to
         Administrative Agent) representing all Capital Stock pledged pursuant
         to the Security Agreement and (b) promissory notes or other instruments
         in favor of Borrowers or any Material Domestic Subsidiary (duly
         endorsed, where appropriate, in a manner reasonably satisfactory to
         Administrative Agent) evidencing any Collateral, to the extent delivery
         is so required under the Security Agreement;

                  B.       Lien Searches and UCC Termination Statements.
         Delivery to the Collateral Agent of (a) the results of a recent search,
         by a Person reasonably satisfactory to the Collateral Agent, of all
         effective UCC financing statements and fixture filings and all judgment
         and tax lien filings which may have been made with respect to any
         personal or mixed property of any Borrower Party, together with copies
         of all such filings disclosed by such search, and (b) UCC termination
         statements duly executed by all applicable Persons for filing in all
         applicable jurisdictions as may be necessary to terminate any effective
         UCC financing statements or fixture filings against the Collateral
         disclosed in such search (other than any such financing statements or
         fixture filings in respect of Permitted Liens and other Liens permitted
         to remain outstanding pursuant to the terms of this Agreement);

                  C.       UCC Financing Statements. Delivery to the Collateral
         Agent of UCC financing statements duly executed by each applicable
         Borrower Party (if required) with respect to all personal property
         Collateral of such Borrower Party, for filing in all

                                       10

<PAGE>

         jurisdictions as may be necessary or, in the opinion of Administrative
         Agent, desirable to perfect the security interests created in such
         Collateral pursuant to the Security Agreement; and

         2.7      BORROWER PARTY DOCUMENTS. On or before the Third Amendment
Effective Date, the Borrowers shall, and shall cause each other Borrower Party
and each Material Domestic Subsidiary that is not presently a Borrower Party to,
deliver to Lenders (or to Administrative Agent with sufficient originally
executed copies, where appropriate, for each Lender) the following with respect
to the Borrowers or such Borrower Party, as the case may be, each, unless
otherwise noted, dated the Third Amendment Effective Date:

                  A.       Copies of the Organizational Documents of such
         Person, certified by the Secretary of State of its jurisdiction of
         organization or, if such document is of a type that may not be so
         certified, certified by the secretary or similar officer of the
         applicable Borrower Party, together with a good standing certificate
         from the Secretary of State of its jurisdiction of organization and
         each other state in which such Person is qualified to do business and,
         to the extent generally available, a certificate or other evidence of
         good standing as to payment of any applicable franchise or similar
         taxes from the appropriate taxing authority of each of such
         jurisdictions, each dated a recent date prior to the Third Amendment
         Effective Date;

                  B.       Resolutions of the Governing Body of such Borrower
         Party approving and authorizing the execution, delivery, and
         performance of this Amendment and the Loan Documents executed by such
         Borrower Party in connection herewith, certified as of the Third
         Amendment Effective Date by the secretary or similar officer of such
         Borrower Party as being in full force and effect without modification
         or amendment;

                  C.       Signature and incumbency certificates of its officers
         executing this Amendment and the Loan Documents executed by each
         Borrower Party in connection herewith; and

                  D.       Executed originals of this Amendment, the Security
         Agreement, a counterpart to the Master Subsidiary Guaranty (if
         applicable) and the Intercreditor Agreement.

         2.8      PAYMENT OF FEES. On or prior to the Third Amendment Effective
Date, the Borrowers shall have paid to the Administrative Agent certain fees in
the amounts and at the times separately agreed upon in a side letter between the
Borrowers and the Administrative Agent in connection with the execution and
delivery of this Amendment and the Security Agreement.

         2.9      ACQUISITION OF PRECISION STRIP, INC.; FINANCING. On or before
the Third Amendment Effective Date, the Borrowers shall have satisfied the
following conditions:

                  A.       Approval of Purchase Agreement. The Borrowers shall
have delivered to Administrative Agent and Lenders a fully executed purchase
agreement (the "PURCHASE AGREEMENT") providing for the acquisition of Precision
Strip, Inc. and its related entities (the

                                       11

<PAGE>

"PRECISION STRIP ACQUISITION"), reasonably satisfactory in form and substance to
the Administrative Agent and Requisite Lenders;

                  B.       Consummation of Precision Strip Acquisition.

                           (i)      All conditions to the Precision Strip
         Acquisition set forth in the Purchase Agreement shall have been
         satisfied or waived (which waiver shall be reasonably satisfactory to
         the Administrative Agent and the Requisite Lenders);

                           (ii)     Borrowers shall have provided evidence
         reasonably satisfactory to the Administrative Agent and Requisite
         Lenders demonstrating that RSA has circled new Senior Notes in a
         private placement for a minimum principal amount of $100,000,000, with
         no amortization or maturity dates prior to the Maturity Date and with
         representations, warranties, covenants and events of default no more
         restrictive than those contained in the Credit Agreement,

                           (iii)    The aggregate cash consideration for the
         Precision Strip Acquisition shall not have exceeded $220,000,000 and
         assumed debt shall not have exceeded $26,000,000;

                           (iv)     Immediately after the Precision Strip
         Acquisition, the sum of Borrowers' cash and cash equivalents plus
         unused Commitments under the Credit Agreement is at least $40,000,000;
         and

                           (v)      Borrowers shall have delivered to the
         Administrative Agent an Officer's Certificate to the effect set forth
         in clauses (i) through (iv) above.

                  C.       Consent of Holders of Senior Notes; Amendment of
Senior Note Documents. Borrowers shall have provided evidence satisfactory to
the Administrative Agent and Requisite Lenders that (i) the holders of the
senior notes issued pursuant to those Note Purchase Agreements dated November 1,
1996, September 15, 1997, and October 15, 1998 (collectively, the "Senior Note
Purchase Agreements") have consented to the Precision Strip Acquisition and (ii)
the Senior Note Purchase Agreements have been amended in a manner reasonably
satisfactory to the Administrative Agent and Requisite Lenders.

SECTION 3.        BORROWERS' REPRESENTATIONS AND WARRANTIES

                  In order to induce Lenders to enter into this Third Amendment
and to amend the Credit Agreement in the manner provided herein, the Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:

         3.1      CORPORATE POWER AND AUTHORITY. Each Borrower Party has all
requisite corporate power and authority to enter into this Third Amendment and
the Loan Documents to which it is party, and to carry out the transactions
contemplated thereby, and to perform its respective obligations under the
applicable Loan Documents and the Credit Agreement as amended by this Third
Amendment (the "AMENDED AGREEMENT").

                                       12

<PAGE>

         3.2      AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Third Amendment and the Loan Documents, and the performance of the Amended
Agreement and the other Loan Documents to which it is a party, have been duly
authorized by all necessary corporate action on the part of each Borrower Party.

         3.3      NO CONFLICT. The execution and delivery by each Borrower Party
of this Third Amendment and the Loan Documents and the performance by each
Borrower Party of the Loan Documents to which it is a party do not and will not
(i) violate any provision of any law or any governmental rule or regulation
applicable to such Borrower Party, the Certificate or Articles of Incorporation
or Bylaws of such Borrower Party or any order, judgment or decree of any court
or other agency of government binding on such Borrower Party, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of such Borrower Party, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of such Borrower Party (other than Liens created or
permitted under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of such Borrower Party
that has not been obtained.

         3.4      GOVERNMENTAL CONSENTS. No authorization, consent, approval,
order, license or permit from, or filing, registration or qualification with,
any Governmental Authority is or will be required to authorize or permit under
applicable Laws the execution, delivery and performance by each Borrower Party
of this Third Amendment and the Loan Documents to which it is a party.

         3.5      BINDING OBLIGATION. This Third Amendment and each of the Loan
Documents to which a Borrower Party is a party will, when executed and delivered
by such party, constitute the legal, valid and binding obligation of such party,
enforceable against such party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.

         3.6      INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date to the same extent as
though made on and as of the Third Amendment Effective Date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.

         3.7      ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this Third
Amendment or any of the Loan Documents that would constitute an Event of Default
or a Potential Event of Default.

         3.8      CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Security Agreement by the Borrower Parties party thereto,
together with the actions taken

                                       13

<PAGE>

on or prior to the date hereof pursuant to Section 2.6 of this Amendment, are
effective to create in favor of the Collateral Agent for the benefit of the
Lenders, as security for the Loans, a valid First Priority Lien on all of the
Collateral, and all filings and other actions necessary or desirable to perfect
and maintain the perfection and First Priority status of such Liens have been
duly made or taken and remain in full force and effect, other than (i) the
filing of any UCC financing statements delivered to the Collateral Agent for
filing (but not yet filed) and (ii) the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of the
Collateral Agent.

SECTION 4.        MISCELLANEOUS

         4.1      Reference to and Effect on the Credit Agreement and the Other
Loan Documents.

                  A.       On and after the Effective Date, each reference in
         the Credit Agreement to "this Agreement", "hereunder", "hereof",
         "herein" 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.

                  B.       Except as specifically amended by this Third
         Amendment, the Credit Agreement and the other Loan Documents shall
         remain in full force and effect and are hereby ratified and confirmed.

                  C.       The execution, delivery and performance of this Third
         Amendment shall not, except as expressly provided herein, constitute a
         waiver of any provision of, or operate as a waiver of any right, power
         or remedy of Agent or any Lender under, the Credit Agreement or any of
         the other Loan Documents.

         4.2      FEES AND EXPENSES. Borrowers acknowledge that all costs, fees
and expenses as described in subsection 10.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Third Amendment and
the documents and transactions contemplated hereby shall be for the account of
Borrowers.

         4.3      HEADINGS. Section and subsection headings in this Third
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Third Amendment for any other purpose or be given any
substantive effect.

         4.4      APPLICABLE LAW. THIS THIRD AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF THE
STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

                                       14

<PAGE>

         4.5      COUNTERPARTS. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

SECTION 5.        ACKNOWLEDGEMENT AND CONSENT

                  Each guarantor listed on the signatures pages hereof (each, a
"GUARANTOR") hereby acknowledges and agrees that the Master Subsidiary Guaranty
to which it is a party or otherwise bound shall continue in full force and
effect and that all of its obligations thereunder shall be valid and enforceable
and shall not be impaired or limited by the execution or effectiveness of this
Third Amendment. Each Guarantor represents and warrants that all representations
and warranties contained in the Amended Agreement and the Loan Documents to
which it is a party or otherwise bound are true, correct and complete in all
material respects on and as of the Third Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.

                  Each Guarantor acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Third
Amendment, such Guarantor is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Third Amendment and (ii) nothing in the Credit
Agreement, this Third Amendment or any other Loan Document shall be deemed to
require the consent of such Guarantor to any future amendments to the Credit
Agreement.

                                       15

<PAGE>

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

                           RELIANCE STEEL & ALUMINUM CO.,
                           a California corporation

                           By:_________________________________________
                           Name:  David H. Hannah
                           Title: Chief Executive Officer

                           By:_________________________________________
                           Name:  Karla McDowell
                           Title: Executive Vice President and
                                  Chief Financial Officer

                           RSAC MANAGEMENT CORP.,
                           a California corporation

                           By:_________________________________________
                           Name:  David H. Hannah
                           Title: Chief Executive Officer

                           By:_________________________________________
                           Name:  Karla McDowell
                           Title: Executive Vice President and
                                  Chief Financial Officer

                                       S-1

<PAGE>

                           For the purposes of Section 5 hereof:

                           ALLEGHENY STEEL DISTRIBUTORS, INC.
                           ALUMINUM AND STAINLESS, INC.
                           AMI METALS, INC.
                           CCC STEEL, INC.
                           CENTRAL PLAINS STEEL CO.
                           CHATHAM STEEL CORPORATION
                           DURRETT SHEPPARD STEEL CO., INC.
                           PHOENIX CORPORATION
                           PACIFIC METAL COMPANY
                           PDM STEEL SERVICE CENTERS, INC.
                           TOMA METALS, INC.
                           VIKING MATERIALS, INC.

                           By:_________________________________________
                           Name:  Karla McDowell
                           Title: Vice President and Secretary of each of
                                  the foregoing

                           AMERICAN METALS CORPORATION
                           LIEBOVICH BROS., INC.
                           SISKIN STEEL & SUPPLY COMPANY, INC.

                           By:_________________________________________
                           Name:  Karla McDowell
                           Title: Vice President and Assistant Secretary of
                                  each of the foregoing

                                       S-2

<PAGE>

                           LUSK METALS
                           SERVICE STEEL AEROSPACE CORP.
                           VALEX CORP.

                           By:_________________________________________
                           Name:  Karla McDowell
                           Title: Chief Financial Officer and Secretary of
                                  each of the foregoing

                                       S-3

<PAGE>

                           BANK OF AMERICA, N.A.,
                           as Administrative Agent

                           By:
                           ____________________________________________
                           Name:  Ken Puro
                           Title: Vice President

                                       S-4

<PAGE>

                           BANK OF AMERICA, N.A.,
                           as Issuing Lender and a Lender

                           By:_________________________________________
                           Name:  Robert Troutman
                           Title: Senior Vice President

                                       S-5

<PAGE>

                           WACHOVIA BANK, NATIONAL
                           ASSOCIATION, formerly known as First
                           Union National Bank,
                           as Syndication Agent and as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                       S-6

<PAGE>

                           THE CHASE MANHATTAN BANK,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                       S-7

<PAGE>

                           UNION BANK OF CALIFORNIA, N.A.,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                       S-8

<PAGE>

                           COMERICA WEST INCORPORATED,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                       S-9

<PAGE>

                           CREDIT SUISSE FIRST BOSTON,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                      S-10

<PAGE>

                           THE NORTHERN TRUST COMPANY,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                      S-11

<PAGE>

                           U.S. BANK NATIONAL ASSOCIATION,
                           as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                      S-12

<PAGE>

                           MIZUHO CORPORATE BANK, LTD.,
                           formerly known as The Industrial Bank of
                           Japan, Limited, as a Lender

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                      S-13

<PAGE>

                                     ANNEX I
                                    EXHIBIT G
                           FORM OF SECURITY AGREEMENT

<PAGE>

                                    ANNEX II
                                    EXHIBIT H
                         FORM OF INTERCREDITOR AGREEMENT

<PAGE>

                                    ANNEX III

                                    EXHIBIT C

                           FORM OF COMMITTED LOAN NOTE

         THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A
            COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT THAT, AMONG
          OTHER THINGS, ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE
           SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF
             WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED IN THE
              COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT). AS A
          CONDITION TO TRANSFER, ANY TRANSFEREE OF A NOTE MUST BECOME A
           PARTY TO THE COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT.
               COPIES OF SUCH COLLATERAL AGENCY AND INTERCREDITOR
           AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON
                REQUEST TO RELIANCE STEEL & ALUMINUM CO. AND RSAC
                                MANAGEMENT CORP.

$_____________________                                          October 24, 2001

                  FOR VALUE RECEIVED, the undersigned ("BORROWERS"), hereby,
jointly and severally, promise to pay to the order of ("LENDER"), on the
Maturity Date (as defined in the Credit Agreement referred to below) the
principal amount of $[_____ ], or such lesser principal amount of Loans (as
defined in the Credit Agreement referred to below) payable by Borrowers to
Lender on such Maturity Date under that certain Credit Agreement dated as of
October 24, 2001, among Borrowers, the lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent and Issuing Lender (as
extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT;" the terms defined therein being used herein as therein defined).

                  Borrowers, jointly and severally, promise to pay interest on
the unpaid principal amount of each Loan from the date of such Loan until such
principal amount is paid in full, at such interest rates, and payable at such
times as are specified in the Credit Agreement.

                  All payments of principal and interest shall be made to
Administrative Agent for the account of Lender in United States dollars in
immediately available funds at Administrative Agent's Office.

                  If any amount is not paid in full when due hereunder, such
unpaid amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after judgment)
computed at the per annum rate set forth in the Credit Agreement.

                                      III-1

<PAGE>

                  This Note is one of the "Committed Loan Notes" referred to in
the Credit Agreement. Reference is hereby made to the Credit Agreement for
rights and obligations of payment and prepayment, events of default and the
right of Lender to accelerate the maturity hereof upon the occurrence of such
events. This Note is secured by the Security Agreement and is guaranteed by the
Subsidiary Guarantors pursuant to Master Subsidiary Guaranty.

                  Borrowers, for themselves, their successors and assigns,
hereby waive diligence, presentment, protest and demand and notice of protest,
demand, dishonor and non-payment of this Note.

                  Borrowers, jointly and severally, agree to pay all collection
expenses, court costs and Attorney Costs (whether or not litigation is
commenced) which may be incurred by Lender in connection with the collection or
enforcement of this Note.

                                      III-2

<PAGE>

                  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA.

                           RELIANCE STEEL & ALUMINUM CO.

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                           RSAC MANAGEMENT CORP.

                           By:_________________________________________
                           Name:_______________________________________
                           Title:______________________________________

                                      III-3

<PAGE>

                                    ANNEX IV
                         CHANGES IN CORPORATE STRUCTURE

                                      IV-1

<PAGE>

                                    EXHIBIT I

                                 FORM OF OPINION

                                       I-1

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