Document:

<PAGE>
                                                                   EXHIBIT 10.21

                              FORBEARANCE AGREEMENT

     This Forbearance Agreement (the "Agreement"), made this 8th day of
November, 2002, by and among Bank One, N.A., formerly known as American National
Bank & Trust Company of Chicago (the "BANK"), and M-Wave, Inc., a Delaware
corporation, and Poly Circuits, Inc., an Illinois corporation (M-Wave, Inc. and
Poly Circuits Inc. hereinafter collectively referred to as the "BORROWER").

                                   WITNESSETH:

          WHEREAS, Borrower has entered into a Loan Agreement, dated as of July
1, 2001 (as amended from time to time, the "LOAN AGREEMENT") with the Illinois
Development Finance Authority (the "ISSUER"), a public body corporate and
politic, pursuant to which Loan Agreement the Issuer has agreed to lend to the
Borrower $8,100,000.00 to finance the costs of the Project (as defined in the
Loan Agreement), which loan is evidenced by the PROMISSORY NOTE (as defined in
the Loan Agreement).

          WHEREAS, the Issuer entered into a Trust Indenture, dated as of July
1, 2001 (as amended from time to time, the "INDENTURE"), naming American
National Bank and Trust Company of Chicago, an Illinois banking corporation, now
known as Bank One, N.A., as trustee (together with any successor trustee under
the Indenture, the "TRUSTEE").

          WHEREAS, Pursuant to the Loan Agreement and the Indenture, the Issuer
issued its $8,100,000 Variable Rate Demand Industrial Development Revenue Bonds
(M-Wave Inc. Project), Series 2001 (the "BONDS");

     WHEREAS, to provide for payment of the Bonds, the Bank issued the
Irrevocable Letter of Credit in the amount of $8,199,864 dated July 26, 2001 in
favor of American National Bank and Trust Company of Chicago, as Trustee (the
"LETTER OF CREDIT");

     WHEREAS, Borrower is obligated to reimburse the Bank for draws under the
Letter of Credit pursuant to the Reimbursement Agreement dated as of July 26,
2001 between Bank and Borrower (the "REIMBURSEMENT AGREEMENT");

     WHEREAS, Borrower is in default under the Reimbursement Agreement because
of its failure to comply with the financial ratios set forth in Section 7.5
thereof;

     WHEREAS, Borrower has requested that Bank forbear from exercising certain
of its remedies under the Reimbursement Agreement, and Bank is willing to do so
subject to the terms and conditions hereof.

     NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings herein set forth, the parties hereto agree as follows:

<PAGE>

     1. Recitals. The foregoing recitals are incorporated by reference into this
Agreement and shall be binding upon the parties.

     2. Forbearance. Provided Borrower complies with all of the terms and
conditions hereof in the time provided therefor, Bank agrees to forbear for the
period from the date hereof to December 31, 2002 from pursuing its rights under
the Reimbursement Agreement to give written notice to the Trustee as provided in
Section 601 of the Indenture to accelerate the maturity of the Bonds in
accordance with Section 602 of the Indenture, and to declare all of the
Obligations (as defined in the Reimbursement Agreement) immediately payable at
the Default Rate (as defined in Section 3.1(b) of the Reimbursement Agreement.
Nothing herein or in any negotiations in connection herewith shall be deemed to
be a waiver of any other or future default by Borrower, nor shall any cure by
Borrower of the current defaults terminate or invalidate any of the provisions
hereof.

     3. Covenants of Borrowers. Borrower agrees that:

(a)  Borrower shall not request and agrees that from the date hereof it shall
     not be entitled to any disbursement from the Project Fund for Costs of the
     Project or any other purpose without the prior written consent of the Bank,
     which consent shall be at Bank's sole discretion, whether or not an Event
     of Default (as defined in the Reimbursement Agreement) exists at the time
     of any request for such consent.

(b)  Borrower shall take all action necessary to cause the Project Fund to be
     and remain pledged to Bank to secure the Obligations of Borrower to Bank
     under the Reimbursement Agreement, including executing a Pledge Agreement
     in form and substance satisfactory to Bank.

(c)  No other Event of Default shall occur under the Reimbursement Agreement.

     4. Waiver and Release of Claims. Borrower represents to the Bank that it
has no defenses, setoffs, claims or counterclaims of any kind or nature
whatsoever against the Bank in connection with the Bonds, the Letter of Credit,
the Reimbursement Agreement or any of the Loan Documents (as defined in the
Reimbursement Agreement), or any action taken or not taken by the Bank with
respect thereto. Without limiting the generality of the foregoing, and in
consideration of Bank's agreements hereunder, Borrower hereby releases and
forever discharges the Bank, its affiliates and each of their officers, agents,
employees, attorneys, insurers, successors and assigns (collectively the
"Released Parties"), from and against any and all liabilities, rights, claims,
losses, expenses or causes of action, known or unknown, arising out of any
action or inaction by any of the Released Parties to the date hereof with
respect to the Bonds, the Indenture, the Letter of Credit, the Reimbursement
Agreement or any of the Loan Documents (as defined in the Reimbursement
Agreement), or this Agreement, no matter in any way related thereto or arising
in conjunction therewith. The Borrower also

<PAGE>

waives, releases and forever discharges the Released Parties and each of them
from and against any and all known or unknown rights to setoff, defenses,
claims, counterclaims, causes of action, and any other bar to the enforcement of
this Agreement, the Bonds, the Indenture, the Letter of Credit, the
Reimbursement Agreement or any of the Loan Documents (as defined in the
Reimbursement Agreement).

     5. Disclaimer of Reliance. Borrower expressly disclaims any reliance on any
oral representation made by the Released Parties or any of them in respect to
the subject matter of this Agreement. Borrower acknowledges and agrees that the
Bank is specifically relying upon the representations, warranties, releases and
agreements contained herein, and that this Agreement is being executed by
Borrower and delivered to the Bank as an inducement to the Bank to forbear from
exercising remedies available to the Bank.

     6. Notice. All notices and demands under and with respect to this
Agreement, if any, shall be in writing and shall be given as provided in the
reimbursement Agreement, except that notices to Bank shall be directed to:

                           Bank One, N.A.
                           120 South LaSalle Street
                           Chicago, Illinois 60603
                           Attn.: Peter J. Flory
                                  Sixth Floor

     IN WITNESS WHEREOF, the parties named below have caused this Agreement to
be executed as of the day and year first above written.

                           LENDER:

                                BANK ONE, N.A.

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

                           BORROWERS:

                                M-WAVE, INC.

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

<PAGE>

                                POLY CIRCUITS, INC.

                                By:
                                   --------------------------------
                                Name:
                                     ------------------------------
                                Title:
                                      -----------------------------<PAGE>
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, effective as of July 1, 2001 (the "Effective Date"), by
and between Robert C. Larry (the "Executive") and Metal Management, Inc., a
Delaware corporation (the "Company");

                                WITNESSETH THAT:

         WHEREAS, the parties desire to enter into this Agreement pertaining to
the employment of the Executive by the Company;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Executive and the
Company as follows:

1.       Performance of Services. The Executive's employment with the Company
shall be subject to the following:

         (a) Subject to the terms of this Agreement, the Company hereby agrees
to employ the Executive as its Executive Vice President, Finance and Chief
Financial Officer ("CFO") during the Agreement Term (as defined below), and the
Executive hereby agrees to remain in the employ of the Company during the
Agreement Term.

         (b) During the Agreement Term, while the Executive is employed by the
Company, the Executive shall devote his full time, energies and talents to
5serving as its CFO.

         (c) The Executive agrees that he shall perform his duties as CFO
faithfully and efficiently subject to the directions of the Chief Executive
Officer of the Company (the "CEO"). The Executive shall have such authority,
power, responsibilities and duties as are inherent in his positions (and the
undertakings applicable to his positions) and necessary to carry out his
responsibilities and the duties required of him hereunder, subject to reasonable
limitation or modification by the Board of Directors of the Company (the
"Board") from time to time.

         (d) Notwithstanding the foregoing provisions of this paragraph 1,
during the Agreement Term, the Executive may devote reasonable time to
activities other than those required under this Agreement, including the
supervision of his personal investments, and activities involving professional,
charitable, community, educational, religious and similar types of
organizations, to the extent that such other activities do not, in the judgement
of the CEO, inhibit or prohibit the performance of the Executive's duties under
this Agreement, or conflict in any material way with the business of the
Company.

         (e) Subject to the terms of this Agreement, the Executive shall not be
required to perform services under this Agreement during any period that he is
Disabled. The Executive shall be considered Disabled during any period in which
he has a physical or mental disability which renders him incapable, after
reasonable accommodation, of performing his duties under this Agreement. In the
event of a dispute as to whether the Executive is Disabled, the Company may
refer the same to a licensed practicing physician of the Company's choice, and
the Executive agrees to submit to such tests and examinations as such physician
shall deem

<PAGE>

appropriate. During the period in which the Executive is Disabled,
the Company may appoint a temporary replacement to assume the Executive's
responsibilities.

         (f) The "Agreement Term" shall be the period beginning on the Effective
Date and ending on the third anniversary of the Effective Date. Thereafter, the
Agreement Term will be automatically extended for 12-month periods, unless one
party to this Agreement provides notice of non-renewal to the other at least 90
days before the last day of the Agreement Term.

2.       Compensation. Subject to the terms of this Agreement, during the
Agreement Term, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:

         (a) The Executive shall receive, for each 12-consecutive month period
beginning on the Effective Date and each anniversary thereof, in substantially
equal monthly or more frequent installments, an annual base salary of Two
Hundred and Sixty Thousand Dollars ($260,000.00) (the "Salary"). The Executive's
Salary rate shall be reviewed by the CEO while the Executive is employed by the
Company, to determine whether an increase in the amount of Salary is
appropriate.

         (b) The Executive shall be entitled to participate in the incentive
compensation plans that the Company may adopt from time to time; the amount of
such bonus, if any, which shall be earned and paid each Performance Period,
shall be determined by the Board taking into consideration whether the Executive
has met the performance targets that have been set by the Board for such year,
the relative contribution by the Executive to the business of the Company,
general economic conditions, and such other factors as the Board deems relevant.
For purposes of this paragraph, the term Performance Period shall mean the
period of time established by the Board, which is used for the calculation of
bonuses paid to other senior executives of the Company.

         (c) The Executive shall be eligible to participate in and receive
awards under any stock-based plans of the Company, in accordance with such plans
as shall be adopted by the Company from time to time, with any such awards to be
made in the sole discretion of the Board of Directors (or any committee
thereof).

         (d) The Executive shall be entitled to participate in all employee
pension and welfare benefit plans and programs made available to the Company's
senior level executives and to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be sponsored by the Company
from time to time, including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded. The Company, however, shall not
be required to provide a benefit under this paragraph (d) if such benefit would
duplicate (or otherwise be of the same type as) a benefit specifically required
to be provided under another provision of this Agreement. The Executive shall
complete all forms and physical examinations,

                                       2
<PAGE>

and otherwise take all other similar actions to secure coverage and benefits
described in this paragraph 2, to the extent determined to be necessary or
appropriate by the Company.

         (e) The Executive shall be entitled to paid vacations in accordance
with the policy of the Company applicable to senior level executives, as in
effect from time to time, subject to a minimum of Four (4) weeks per calendar
year. The Executive shall be entitled to paid holidays in accordance with the
Company's holiday policy that may be in effect from time to time.

         (f) The Executive shall be entitled to a $500.00 per month car
allowance and will be provided by the Company with a cellular phone and parking
space.

3.       Termination. The Executive's employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement only under the circumstances described in paragraphs
3(a) through 3(e):

         (a) Death. The Executive's employment hereunder will terminate upon his
death.

         (b) Permanent Disability. The Company may terminate the Executive's
employment during any period in which he is Permanently Disabled. The Executive
shall be considered "Permanently Disabled" during any period in which he is
Disabled; provided, however, that the Executive shall not be considered to be
"Permanently Disabled" until, for a period of 180 consecutive days, the
Executive, as a result of a physical or mental disability, is incapable, after
reasonable accommodation, of performing his duties under this Agreement on a
permanent, full-time basis, and is eligible for income replacement benefits
under the Company's long-term disability plan during such period of disability.
In the event of a dispute as to whether the Executive is Permanently Disabled,
the Company may refer the same to a mutually acceptable licensed practicing
physician, and the Executive agrees to submit to such tests and examination as
such physician shall deem appropriate.

         (c) Cause. The Company may terminate the Executive's employment
hereunder at any time for Cause. For purposes of this Agreement, the term
"Cause' shall mean:

             (i) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than any such failure
resulting from the Executive's being Disabled), within a reasonable period of
time, but not less than thirty (30) days, after a written demand for substantial
performance is delivered to the Executive by the Company, which demand
specifically identifies the manner in which the Company believes that the
Executive has not substantially performed his duties;

             (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise;
or

             (iii) the engaging by the Executive in misconduct involving serious
moral turpitude to the extent that, in the reasonable judgment of the Company,
the Executive's credibility and reputation no longer conform to the standard of
the Company's executives; or

                                       3
<PAGE>

             (iv) the Executive's conviction of (A) a felony, or (B) a
misdemeanor, where such misdemeanor materially impairs Executive's ability to
substantially perform his duties with the Company; or

             (v) the Executive's breach of any material provision of this
Agreement; provided however, if the breach is curable, only if it continues for
30 days after receipt of notice from the Company of such breach.

For purposes of this Agreement, no act, or failure to act, on the Executive's
part shall be deemed "willful" if done, or omitted to be done, by the Executive
in good faith and with reasonable belief that the Executive's action or omission
was in the best interest of the Company. "Cause" under this paragraph shall be
determined by the Board, acting in good faith and with reasonable basis in fact.

         (d) Termination by Executive. The Executive may terminate his
employment hereunder at any time for any reason by giving the Company prior
written Notice of Termination (as defined in paragraph 3(f)), which Notice of
Termination shall be effective not less than 30 days after it is given to the
Company, provided that nothing in this Agreement shall require the Executive to
specify a reason for any such termination.

         (e) Termination by Company. The Company may terminate the Executive's
employment hereunder at any time for any reason, by giving the Executive prior
written Notice of Termination, which Notice of Termination shall be effective
within thirty (30) days, or such later time as is specified in such notice. The
Company shall not be required to specify a reason for the termination under this
paragraph 3(e). Termination of this Agreement by the Company by delivery of
notice of non-renewal pursuant to paragraph 1(f) shall be treated for all
purposes of this Agreement as a Termination by the Company for reasons other
than Cause.

         (f) Notice of Termination. Any termination of the Executive's
employment by the Company or the Executive (other than a termination pursuant to
paragraph 3(a)) must be communicated by a written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
means a dated notice, which indicates the Date of Termination (not earlier than
the date on which the notice is provided).

         (g) Date of Termination. "Date of Termination" means the last day the
Executive is employed by the Company, provided that the Executive's employment
is terminated in accordance with the foregoing provisions of this paragraph 3.

         (h) Effect of Termination. If, on the Date of Termination, the
Executive holds any other position with the Company or any affiliate, including
but not limited to any employee benefit plan (other than the position described
in paragraph 1(a)), the Executive shall resign from all such positions as of the
Date of Termination.

4.       Rights and Payments Upon Termination.  The Executive's right to payment
and benefits under this Agreement for periods after his Date of Termination
shall be determined in accordance with the following provisions of this
paragraph 4:

                                       4
<PAGE>

         (a) If the Executive's Date of Termination occurs during the Agreement
Term for any reason, the Company shall pay to the Executive:

             (i) The Executive's Salary for the period ending on the Date of
Termination and any bonuses approved but not paid as of the Date of Termination.

             (ii) Payment for unused vacation days, as determined in accordance
with policy applicable to senior executives of the Company, as in effect on the
Date of Termination.

             (iii) Any other payments or benefits to be provided to the
Executive by the Company pursuant to any employee benefit plans or arrangements
adopted by the Company, to the extent such amounts are due from the Company.

Except as may otherwise be expressly provided to the contrary in this Agreement,
nothing in this Agreement shall be construed as requiring the Executive to be
treated as employed by the Company for purposes of any employee benefit plan or
arrangement following the date of the Executive's Date of Termination.

         (b) If the Executive's Date of Termination occurs during the Agreement
Term under circumstances described in paragraph 3(a) (relating to the
Executive's death), paragraph 3(b) (relating to the Executive's being
Permanently Disabled), paragraph 3(c) (relating to the Executive's termination
for Cause) or paragraph 3(d) (relating to the Executive's resignation), then,
except as otherwise expressly provided in this Agreement or otherwise agreed in
writing between the Executive and the Company, the Company shall have no
obligation to make payments under the Agreement for periods after the
Executive's Date of Termination.

         (c) If the Executive's Date of Termination occurs during the Agreement
Term, or during a renewal period, under circumstances described in paragraph
3(e) (relating to termination by the Company other than for Cause), then, in
addition to the amounts payable in accordance with paragraph 4(a):

             (i) The Executive shall receive from the Company within thirty (30)
days of termination, a lump sum payment in an amount equal to one twelfth of the
Executive's Salary as in effect on his Date of Termination, multiplied by the
number of months in the Severance Period. For purposes of this Agreement, the
Severance Period shall be equal to (i) in the event that the Date of Termination
occurs within the first month of the Agreement Term, twenty four (24) months,
and (ii) in the event that the Date of Termination occurs after the first month
of the Agreement Term, twenty four (24) months less one month for each full
month of the original Agreement Term that has lapsed prior to the Date of
Termination, but in no event less than twelve (12) months, such that if the Date
of Termination occurs after the first anniversary of the Effective Date, the
Severance Period shall be not less than twelve (12) months. The Company's
obligation to make payments under this paragraph (i) shall cease with respect to
periods after the earlier to occur of the date of the Executive's death, or a
date, if any, of the breach by the Executive of the provisions of paragraph 7 or
paragraph 8.

             (ii) In the event that the Executive's Date of Termination under
this paragraph 4(c) occurs during the 12 month period immediately following a
Change in Control (defined below), the Executive shall be entitled to the
following:

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<PAGE>

             (A) In lieu of the payments to be made pursuant to paragraph
                 4(c)(i) above, an immediately payable lump sum amount equal to
                 one twelfth of the Executive's Salary in effect immediately
                 prior to the Date of Termination times the number of months in
                 the Severance period.

             (B) For the duration of the Severance Period, to the extent that
                 the Executive or any of his dependents is eligible for and
                 elects COBRA continuation coverage (as described in section
                 4980B of the Internal Revenue Code of 1986, as amended (the
                 "Code")) under any Company group health plan, the Company shall
                 pay 100% of the premiums necessary to maintain such COBRA
                 continuation coverage. The Company's obligation to make
                 payments under this paragraph (iii) shall cease with respect to
                 periods after the earlier to occur of the date of the
                 Executive's death, or a date, if any, of the breach by the
                 Executive of the provisions of paragraph 7 or paragraph 8.

             (C) In the event that Executive becomes entitled to the Severance
                 Payments, if it is determined that any of the Severance
                 Payments will be subject to the tax (the "Excise Tax") imposed
                 by Section 4999 of the Code (or any similar tax that may
                 hereafter be imposed), the Executive shall have the option, but
                 not the obligation, to reduce the amount of the Severance
                 Payments to an amount which will result in the Severance
                 Payments not being subject to the Excise Tax. The Corporation
                 will cooperate with Executive in every way possible to
                 restructure the Severance Payments to achieve such result.

             (D) For purposes of this paragraph 4(c) the term Change in Control
                 shall mean:

                    a. a change in control of a nature that would be required to
                    be reported in response to Item 6(e) of Schedule 14A of
                    Regulation 14A promulgated under the Securities Exchange Act
                    of 1934, as amended (the "Exchange Act"), whether or not the
                    Company is then subject to such reporting requirement, that
                    was not approved by the Board of Directors, provided that,
                    without limitation, a Change in Control shall be deemed to
                    have occurred if the following events occur without the
                    affirmative vote of the Board of Directors:

                    b. any "person" (as defined in Sections 13(d) and 14(d) of
                    the Exchange Act), is or becomes the "beneficial owner" (as
                    defined in Rule 13d-3 under the Exchange Act), directly or
                    indirectly, of securities of the Company representing thirty
                    percent (30%) or more of the combined voting power of the
                    Company's then outstanding securities computed on a fully
                    diluted basis (assuming the conversion of all outstanding
                    convertible securities of the Company and the exercise of
                    all options and warrants which, at the

                                       6
<PAGE>

                    time of determination, are vested and are exercisable at a
                    price less than the then market price of the Company's
                    Common Stock),

                    c. during any period of two (2) consecutive years (not
                    including any period prior to the execution of this
                    Agreement), there shall cease to be a majority of the Board
                    of Directors of the Company comprised as follows:
                    individuals who at the beginning of the Employment Period
                    constitute the Board of Directors and any new director(s)
                    whose election by the Board of Directors or nomination for
                    election by the Company's shareholders was approved by a
                    vote of at least two-thirds (2/3) of the directors then
                    still in office who either were directors at the beginning
                    of the Employment Period or whose election or nomination for
                    election was previously so approved, or

                    d. the shareholders of the Company (a) approve a merger or
                    consolidation of the Company or a subsidiary of the Company
                    with any other corporation, and other than a merger or
                    consolidation which would result in the voting securities of
                    the Company outstanding immediately prior thereto continuing
                    to represent (either by remaining outstanding or by being
                    converted into voting securities of the surviving entity) at
                    least sixty percent (60%) of the combined voting power of
                    the voting securities of the Company or such surviving
                    entity outstanding immediately after such merger or
                    consolidation; or (b) approve a plan of complete liquidation
                    of the Company or an agreement for the sale or disposition
                    by the Company of all or substantially all the Company's
                    assets (assets representing 60% or more of consolidated
                    assets).

             (E) The ownership of all warrants and options granted to the
                 Executive by the Company prior to the date of termination shall
                 be immediately and fully vested and shall remain exercisable
                 for the periods specified therein following termination of
                 employment.

         (d) Except as may be otherwise specifically provided in an amendment of
this paragraph (d) adopted in accordance with paragraph 12, the Executive's
rights under this paragraph 4 shall be in lieu of any benefits that may be
otherwise payable to or on behalf of the Executive pursuant to the terms of any
severance pay arrangement of the Company or any other, similar arrangement of
the Company providing benefits upon involuntary termination of employment.

5.       Duties on Termination. Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice of
Termination, and ending on the Date of Termination, the Executive shall continue
to perform his duties as set forth in this Agreement, and shall also perform
such services for the Company as are reasonably necessary and appropriate for a
smooth transition to the Executive's successor, if any. Notwithstanding the
foregoing provisions of this paragraph 5, the Company may suspend the Executive
from

                                       7
<PAGE>

performing his duties under this Agreement following the delivery of a
Notice of Termination providing for the Executive's resignation, or delivery by
the Company of a Notice of Termination providing for the Executive's termination
of employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other purposes, and his
rights to compensation or benefits shall not be reduced by reason of the
suspension.

6.       Mitigation and Set-Off. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The amounts payable hereunder by the Company as a
result of the termination of the Employment Term shall be considered liquidated
damages and shall not be reduced by any amounts that the Executive earns through
other employment or otherwise, except that the Company's obligation to continue
medical, dental and life insurance benefits pursuant to paragraph 4, if any,
shall be reduced by the amount of any such benefits provided to the Executive by
any other employer; provided, however, that the Company shall be entitled to set
off against the amounts payable to the Executive under this Agreement any
amounts owed to the Company by the Executive as of the Date of Termination.

7.       Noncompetition.  While he is employed by the Company, and for a period
after termination of the Executive's employment with the Company for any reason
equal to the applicable Severance Period:

         (a) The Executive shall not, without the express written consent of the
Company, be employed by, serve as a consultant to, or otherwise assist or
directly or indirectly provide services to a Competitor (defined below) if: (i)
the services that the Executive is to provide to the Competitor are the same as,
or substantially similar to, any of the services that the Executive provided to
the Company, and such services are to be provided with respect to a 100 mile
radius of any location in which the Company had material operations during the
12-month period prior to the Date of Termination, or with respect to a 100 mile
radius of any location in which the Company had devoted material resources to
establishing operations during the 12-month period prior to the Date of
Termination, or (ii) confidential information, as defined in paragraph 8(d)
below (including, without limitation, confidential or proprietary methods), of
the Company to which the Executive had access could reasonably be expected to
benefit the Competitor if the Competitor were to obtain access to such secrets
or information. For purposes of this paragraph (a), services provided by others
shall be deemed to have been provided by the Executive if the Executive had
material supervisory responsibilities with respect to the provision of such
services.

         (b) The Executive shall not, without the express written consent of the
Company, solicit or attempt to solicit any party who is then or, during the
12-month period prior to such solicitation or attempt by the Executive was (or
was solicited to become), a customer or supplier of the Company, provided that
the restriction in this paragraph (c) shall not apply to any activity on behalf
of a business that is not a Competitor.

         (c) The Executive shall not, without the express written consent of the
Company, solicit, entice, persuade or induce any individual who is employed by
the Company (or was so employed within 90 days prior to the Executive's action)
to terminate or refrain from renewing or extending such employment or to become
employed by or enter into contractual relations with

                                       8
<PAGE>

any other individual or entity other than the Company, and the Executive shall
not approach any such employee for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other individual or entity.

         (d) The Executive shall not, without the express written consent of the
Company, directly or indirectly own an equity interest in any Competitor (other
than ownership of 1% or less of the outstanding stock of any corporation listed
on the New York Stock Exchange or the American Stock Exchange or included in the
NASDAQ System).

The term "Competitor" means any enterprise (including a person, firm or
business, whether or not incorporated) during any period in which it is
materially competitive in any way with any business in which the Company was
engaged during the 12-month period prior to the Executive's termination of
employment. Nothing in this paragraph 7 or paragraph 8 shall be construed as
limiting the Executive's duty of loyalty to the Company, or any other duty he
may otherwise have to the Company, while he is employed by the Company. Nothing
in paragraphs 7, 8 or 9 shall be construed to adversely affect the rights that
the Company would possess in the absence of the provisions of such paragraphs.

8.       Confidential Information.  The Executive agrees that:

         (a) Except as may be required by the lawful order of a court or agency
of competent jurisdiction, except as necessary to carry out his duties to the
Company, or except to the extent that the Executive has express authorization
from the Company, the Executive agrees indefinitely (i) to keep secret and
confidential all Confidential Information, (ii) to protect and safeguard
Confidential Information against unauthorized use, publication or disclosure,
(iii) not to directly or indirectly, in any way, reveal, report, publish,
disclose, transfer or otherwise use, any Confidential Information, (iv) not to
use any Confidential Information to compete or obtain advantage over the Company
in any commercial activity, and (v) to advise any person or entity that
Executive provides access, in any way, to any Confidential Information, that
such person or entity shall be strictly bound by this Confidential Information
provision, and upon the request of the Company, shall seek to have such person
or entity to execute the then in effect Company confidentiality agreement.

         (b) To the extent that any court or governmental agency seeks to have
the Executive disclose Confidential Information, he shall promptly inform the
Company, and he shall take such reasonable steps to prevent disclosure of
Confidential Information until the Company has been informed of such requested
disclosure, and the Company has an opportunity to respond to such court or
agency. To the extent that the Executive obtains information on behalf of the
Company that may be subject to attorney-client privilege as to the Company's
attorneys, the Executive shall take reasonable steps to maintain the
confidentiality of such information and to preserve such privilege.

         (c) Nothing in the foregoing provisions of this paragraph 8 shall be
construed so as to prevent the Executive from using, in connection with his
employment for himself or an employer other than the Company, knowledge which
was acquired by him during the course of his employment with the Company, and
which is generally known or available to persons of his experience in the same
industry.

                                       9
<PAGE>

         (d) For purposes of this Agreement, the term "Confidential Information"
shall include all non-public information (including, without limitation,
information regarding litigation and pending litigation, strategic and
development plans, financial conditions, financial projections, business plans,
software, codeveloper identities, data, business records, customer lists,
project records, market reports, employee lists, business manuals, policies and
procedures and information relating to processes, technologies and theories)
concerning the Company which was acquired by or disclosed to the Executive
during the course of his employment with the Company, or during the course of
his consultation with the Company following his Date of Termination (regardless
of whether consultation is pursuant to paragraph 11). For purposes of this
Agreement, the term "Confidential Information" shall also include all non-public
information concerning any other company that was shared with the Company
subject to an agreement to maintain the confidentiality of such information.

         (e) This paragraph 8 shall not be construed to unreasonably restrict
the Executive's ability to disclose confidential information in an arbitration
proceeding or a court proceeding in connection with the assertion of, or defense
against any claim of breach of this Agreement in accordance with paragraph 10 or
any other litigation or arbitration in which the Executive and the Company are
adversary parties. If there is a dispute between the Company and the Executive
as to whether information may be disclosed in accordance with this paragraph
(e), the matter shall be submitted to the arbitrators or the court (whichever is
applicable) for decision.

9.       Assistance with Claims. The Executive agrees that, for the period
beginning on the Effective Date, and continuing for a reasonable period after
the Executive's Date of Termination, the Executive will provide reasonable
assistance to the Company in defense of any claims that may be made against the
Company, and will provide reasonable assistance to the Company in the
prosecution of any claims that may be made by the Company, to the extent that
such claims may relate to services performed by the Executive for the Company.
The Executive agrees to promptly inform the Company if he becomes aware of any
lawsuits involving such claims that may be filed against the Company. The
Company agrees to reimburse the Executive for all of the Executive's reasonable
out-of-pocket expenses associated with such assistance, including travel
expenses and any reasonable expenses of legal counsel individually retained by
the Executive in connection therewith. The Company agrees to defend and hold
harmless the Executive from liability adjudicated against the Executive from
services lawfully provided in good faith under this paragraph 9. The Executive,
to the extent he is permitted under law, also agrees to promptly inform the
Company if he is asked to assist in any investigation of the Company (or its
actions) that may relate to services performed by the Executive for the Company,
regardless of whether a lawsuit has then been filed against the Company with
respect to such investigation. Any required assistance under this paragraph,
shall be subject to the Executive's then current employment situation and all
other relevant personal factors as presented by the Executive in order to
determine what is reasonable in the given circumstances provided that the
Executive shall not be required to take any action which would materially
interfere with his then current employment.

10.      Equitable Remedies. The Executive acknowledges that the Company would
be irreparably injured by a violation of paragraph 7 or 8, and he agrees that
the Company, in addition to any other remedies available to it for such breach
or threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief,

                                       10
<PAGE>

restraining the Executive from any actual or threatened breach of either
paragraph 7 or paragraph 8. If a bond is required to be posted in order for the
Company to secure an injunction or other equitable remedy, the parties agree
that said bond need not be more than a nominal sum.

11.      Nonalienation. The interests of the Executive under this Agreement are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.

12.      Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.

13.      Applicable Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Illinois, without regard to the
conflict of law provisions of any state. All disputes shall be arbitrated or
litigated (whichever is applicable) in the closest possible proximity to the
then location of the Company's headquarters.

14.      Severability. It is mutually agreed and understood by the parties that
the invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and should any of the agreements and covenants contained herein be determined by
any court of competent jurisdiction to be invalid by virtue of being vague or
unreasonable, including but not limited to the provisions of Section 7, then the
parties hereto consent that this Agreement shall be amended retroactive to the
date of its execution to include the terms and conditions said court deems to be
reasonable and in conformity with the original intent of the parties and the
parties hereto consent that under such circumstances, said court shall have the
power and authority to determine what is reasonable and in conformity with the
original intent of the parties to the extent that said covenants and/or
agreements are enforceable.

15.      Waiver of Breach. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.

16.      Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business, and such
successor shall be substituted for the Company under this Agreement.

17.      Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or
prepaid overnight courier to the parties at the addresses set forth

                                       11
<PAGE>

below (or such other addresses as shall be specified by the parties by like
notice). Such notices, demands, claims and other communications shall be deemed
given:

         (a) in the case of delivery by overnight service with guaranteed next
day delivery, the next day or the day designated for delivery;

         (b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or

         (c) in the case of personal delivery, the date of such delivery;

provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service are to be delivered to
the addresses set forth below:

to the Company:

Metal Management, Inc.
500 North Dearborn Avenue
Suite 600
Chicago, IL  60610
Attention:  Chief Executive Officer

Robert C. Larry

All notices to the Company shall be directed to the attention of the CEO, with a
copy to the Secretary of the Company. Each party, by written notice furnished to
the other party, may modify the applicable delivery address, except that notice
of change of address shall be effective only upon receipt.

18.      Arbitration of All Disputes. Any controversy or claim arising out of or
relating to this Agreement (or the breach thereof) shall be settled by final,
binding and non-appealable arbitration, by one arbitrator, to be held in the
closest possible proximity to the then location of the Company's headquarters.
Except as otherwise expressly provided in this paragraph 18, the arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "Association") then in effect. If the
parties cannot agree on the arbitrator within 30 days of the request for
arbitration, then the arbitrator shall be appointed by the Association. This
paragraph 18 shall not be construed to limit the Company's right to obtain
relief under paragraph 10 with respect to any matter or controversy subject to
paragraph 10, and, pending a final determination by the arbitrator with respect
to any such matter or controversy, the Company shall be entitled to obtain any
such relief by direct application to a court of law, without being required to
first arbitrate such matter or controversy. Any and all proceedings, hearings,
findings or any other record of a dispute under this paragraph 18 shall be
private and shall be held in the strictest confidence of all parties so
involved, including but not limited to the parties to this Agreement and any
appointed arbitrators.

                                       12
<PAGE>

19.      Indemnification. The Company hereby agrees to indemnify the Executive
against all liabilities, costs, charges and expenses whatsoever incurred or
sustained by the Executive in connection with any threatened, pending or
completed action, suit or proceeding to which the Executive may be made a party
or may be threatened to be made a party by reason of the Executive's being or
having been a director, officer, employee, or agent of the Company or serving or
having served at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise to the fullest extent permitted by applicable law. The Company shall
advance all costs, charges and expenses, including legal fees, incurred by the
Executive in connection with the Executive's defense of any claim for which the
foregoing indemnity may apply. If it is subsequently determined that the
Executive was not entitled to such indemnification, the Executive will reimburse
the Company any amounts advanced pursuant to the foregoing sentence.

20.      Directors and Officers Insurance. The Executive shall be entitled to
the protection of any insurance policies the Company or any of its affiliates
from time to time maintains for the benefit of its senior executive officers and
directors (or substantially similar policies) respecting liabilities, costs,
charges, and expenses of any type whatsoever incurred or sustained by the
Executive in connection with any action, suit or proceeding to which the
Executive may be made a party or may be threatened to be made a party by reason
of the Executive's being or having been a director, officer, employee or agent
of the Company or serving or having served at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.

21.      Survival of Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive's employment with the Company.

22.      Entire Agreement. Except as otherwise noted herein or in any agreement
subsequently entered into by the Executive and the Company, this Agreement,
including any Exhibit(s) attached hereto, constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior and contemporaneous agreements, if any, between the parties relating to
the subject matter hereof.

                                    * * * * *

                                       13
<PAGE>

         IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the 9th day of September 2002.

                                               METAL MANAGEMENT, INC.

                                               By:
                                                  ------------------------------
                                               Its:
                                                   -----------------------------

                                               ---------------------------------
                                                        ROBERT C. LARRY

                                       14

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