Document:

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                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                                CREDIT AGREEMENT

                                      AMONG

                             METAL MANAGEMENT, INC.
                                       AND
                    THOSE OF ITS SUBSIDIARIES PARTIES HERETO
                                  AS BORROWERS

                           THE FINANCIAL INSTITUTIONS
                        FROM TIME TO TIME PARTIES HERETO
                                   AS LENDERS,

                             METAL MANAGEMENT, INC.,
                             AS FUNDS ADMINISTRATOR

                                       AND

                        LASALLE BANK NATIONAL ASSOCIATION
                                    AS AGENT

                                      WITH

              PNC BANK NATIONAL ASSOCIATION AS CO-SYNDICATION AGENT
             U.S. BANK, NATIONAL ASSOCIATION AS CO-SYNDICATION AGENT
                    SOVEREIGN BANK AS CO-DOCUMENTATION AGENT
           NATIONAL CITY BANK OF THE MIDWEST AS CO-DOCUMENTATION AGENT

                            DATED AS OF JUNE 28, 2004

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                                TABLE OF CONTENTS

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ARTICLE I      DEFINITIONS..................................................................................     1

        1.1    General Definitions..........................................................................     1

        1.2    Accounting Terms and Determinations..........................................................    23

        1.3    Other Terms; Headings........................................................................    23

ARTICLE II     REVOLVING LOANS..............................................................................    24

        2.1    Commitments..................................................................................    24

        2.2    Borrowing of Revolving Loans.................................................................    24

        2.3    Notice of Request for Lender Advances........................................................    25

        2.4    Periodic Settlement of Agent Advances; Interest and Fees; Statements.........................    25

        2.5    Sharing of Payments..........................................................................    26

        2.6    Defaulting Lenders...........................................................................    26

        2.7    Allocation of Revolving Loans and Expenses...................................................    27

        2.8    Increase in Revolving Credit Commitments.....................................................    28

ARTICLE III    LETTERS OF CREDIT............................................................................    29

        3.1    Letters of Credit............................................................................    29

        3.2    Maximum Letter of Credit Obligations; Final Maturities.......................................    30

        3.3    Letter of Credit Requests....................................................................    30

        3.4    Letter of Credit Participations..............................................................    31

        3.5    Agreement to Repay Letter of Credit Drawings.................................................    33

        3.6    Capital Adequacy.............................................................................    34

ARTICLE IV     COMPENSATION, REPAYMENT AND  REDUCTION OF COMMITMENTS........................................    35

        4.1    Interest on Revolving Loans..................................................................    35

        4.2    Unused Line Fee..............................................................................    36

        4.3    Letter of Credit Fees........................................................................    36

        4.4    Interest and Letter of Credit Fees After Event of Default....................................    36

        4.5    [This Section Intentionally Left Blank]......................................................    36

        4.6    [This Section Intentionally Left Blank]......................................................    36

        4.7    Expenses.....................................................................................    36
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        4.8    Mandatory Payment of Revolving Loans; Reductions of Commitments..............................    37

        4.9    Maintenance of Loan Account, Statements of Account...........................................    37

        4.10   Payment Procedures...........................................................................    37

        4.11   Collection of Accounts.......................................................................    37

        4.12   Distribution and Application of Collections and Other Amounts................................    38

        4.13   Calculations.................................................................................    38

        4.14   Special Provisions Relating to LIBOR Rate Loans..............................................    38

        4.15   Indemnification in Certain Events............................................................    41

        4.16   Substitution of Lenders......................................................................    42

        4.17   Taxes........................................................................................    42

ARTICLE V      CONDITIONS PRECEDENT.........................................................................    45

        5.1    Conditions Precedent to Initial Revolving Loan and Letter of Credit..........................    45

        5.2    Conditions Precedent to All Revolving Loans and Letters of Credit............................    47

ARTICLE VI     REPRESENTATIONS AND WARRANTIES...............................................................    47

        6.1    Organization and Qualification...............................................................    48

        6.2    Authority....................................................................................    48

        6.3    Enforceability...............................................................................    48

        6.4    No Conflicts.................................................................................    48

        6.5    Consents And Filings.........................................................................    48

        6.6    Government Regulation........................................................................    49

        6.7    Solvency.....................................................................................    49

        6.8    Rights in Collateral; Priority of Liens......................................................    49

        6.9    Financial Data...............................................................................    49

        6.10   Locations of Offices, Records and Inventory..................................................    49

        6.11   Subsidiaries; Ownership of Equity............................................................    50

        6.12   No Judgments or Litigation...................................................................    50

        6.13   No Defaults..................................................................................    50

        6.14   Labor Matters................................................................................    50

        6.15   Compliance With Law..........................................................................    51

        6.16   ERISA........................................................................................    51

        6.17   Compliance with Environmental Laws...........................................................    51

        6.18   Intellectual Property........................................................................    52
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        6.19   Licenses and Permits.........................................................................    52

        6.20   Taxes and Tax Returns........................................................................    52

        6.21   Material Contracts...........................................................................    52

        6.22   Accuracy and Completeness of Information.....................................................    52

        6.23   No Change....................................................................................    53

ARTICLE VII    AFFIRMATIVE COVENANTS........................................................................    53

        7.1    Financial Reporting..........................................................................    53

        7.2    Collateral Reporting.........................................................................    54

        7.3    Notification Requirements....................................................................    55

        7.4    Corporate Existence..........................................................................    56

        7.5    Books and Records; Inspections...............................................................    56

        7.6    Insurance....................................................................................    57

        7.7    Taxes........................................................................................    57

        7.8    Compliance with Laws.........................................................................    58

        7.9    Use of Proceeds..............................................................................    58

        7.10   Fiscal Year..................................................................................    58

        7.11   Maintenance of Property......................................................................    58

        7.12   ERISA Documents..............................................................................    58

        7.13   Environmental and Other Matters..............................................................    59

        7.14   Further Actions..............................................................................    59

        7.15   Deposit of Collections and Other Proceeds of Collateral......................................    59

        7.16   Additional Collateralization.................................................................    59

        7.17   OFAC; BSA....................................................................................    60

ARTICLE VIII   NEGATIVE COVENANTS...........................................................................    60

        8.1    Financial Covenants..........................................................................    60

        8.2    Capital Expenditures.........................................................................    61

        8.3    Additional Indebtedness......................................................................    61

        8.4    Liens........................................................................................    62

        8.5    Contingent Obligations.......................................................................    63

        8.6    Sale of Assets...............................................................................    63

        8.7    Restricted Payments..........................................................................    64

        8.8    Investments and Acquisitions.................................................................    64
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        8.9    Affiliate Transactions.......................................................................    65

        8.10   Bank Accounts................................................................................    65

        8.11   Additional Negative Pledges..................................................................    65

        8.12   Merger.......................................................................................    66

        8.13   Sale and Leaseback Transactions and Other Off-Balance Sheet Liabilities......................    66

ARTICLE IX     EVENTS OF DEFAULT AND REMEDIES...............................................................    66

        9.1    Events of Default............................................................................    66

        9.2    Acceleration, Termination of Commitments and Cash Collateralization..........................    68

        9.3    Rescission of Acceleration...................................................................    68

        9.4    Remedies.....................................................................................    68

        9.5    Right of Setoff..............................................................................    69

        9.6    License of Use of Software and Other Intellectual Property...................................    69

        9.7    Application of Proceeds; Surplus, Deficiencies...............................................    69

ARTICLE X      THE AGENT....................................................................................    69

        10.1   Appointment of Agent.........................................................................    69

        10.2   Nature of Duties of Agent....................................................................    70

        10.3   Lack of Reliance on Agent....................................................................    70

        10.4   Certain Rights of the Agent..................................................................    70

        10.5   Reliance by Agent............................................................................    71

        10.6   Indemnification of Agent.....................................................................    71

        10.7   The Agent in its Individual Capacity.........................................................    71

        10.8   Holders of Revolving Notes...................................................................    71

        10.9   Successor Agent..............................................................................    71

        10.10  Collateral Matters...........................................................................    72

        10.11  Actions with Respect to Defaults.............................................................    73

        10.12  Delivery of Information......................................................................    73

        10.13  Designation of Co-Syndication Agents and Co-Documentation Agents.............................    73

ARTICLE XI     MISCELLANEOUS................................................................................    74

        11.1   Governing Law................................................................................    74

        11.2   Submission to Jurisdiction...................................................................    74

        11.3   Service of Process...........................................................................    74

        11.4   Jury Trial...................................................................................    75
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        11.5   Limitation of Liability......................................................................    75

        11.6   Delays.......................................................................................    75

        11.7   Notices......................................................................................    75

        11.8   Assignments and Participations...............................................................    75

        11.9   Confidentiality..............................................................................    77

        11.10  Indemnification..............................................................................    78

        11.11  Amendments and Waivers.......................................................................    78

        11.12  Counterparts and Effectiveness...............................................................    79

        11.13  Severability.................................................................................    79

        11.14  Maximum Rate.................................................................................    79

        11.15  Entire Agreement; Successors and Assigns.....................................................    80

        11.16  Joint and Several Liability of Borrowers.....................................................    80

        11.17  Customer Identification - USA Patriot Act Notice.............................................    82
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                                     ANNEXES

Annex I        List of Lenders; Commitment Amounts;  Applicable Lending Offices
Annex II       Pricing Schedule

                                    SCHEDULES

Schedule A                     Closing Document List
Schedule B                     Disclosure Schedules
Schedule B, Part 1.1           Existing Letters of Credit
Schedule B, Part 6.1           States In Which Qualified
Schedule B, Part 6.9           Contingent Obligations And Other Liabilities
Schedule B, Part 6.10(a)       Chief Executive Offices
Schedule B, Part 6.10(b)       Locations Of Collateral
Schedule B, Part 6.11          Subsidiaries
Schedule B, Part 6.12          Pending Judgments, Litigation And  Other Claims
Schedule B, Part 6.14          Labor Matters
Schedule B, Part 6.15          Compliance With Laws Matters
Schedule B, Part 6.16          ERISA Matters
Schedule B, Part 6.17          Environmental Matters
Schedule B, Part 6.20          Tax Matters; Tax Sharing Agreements
Schedule B, Part 6.21          Defaults Under Material Contracts
Schedule B, Part 8.3           Existing Indebtedness
Schedule B, Part 8.4           Existing Liens
Schedule B, Part 8.8(f)        Existing Investments
Schedule B, Part 8.10          Bank Accounts

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                                    EXHIBITS

Exhibit A         Form Of Notice Of Borrowing
Exhibit B         Form Of Revolving Note
Exhibit C         Form Of Letter of Credit Request
Exhibit D         Form Of Notice Of Continuation
Exhibit D-1       Form Of Notice Of Conversion
Exhibit E         Form Of Compliance Certificate
Exhibit F         Form Of Assignment And Assumption Agreement
Exhibit G         Form Of Commitment Amount Increase Request

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      THIS CREDIT AGREEMENT is entered into as of June 28, 2004, among each of
the Borrowers; each financial institution identified on Annex I (together with
its successors and permitted assigns, hereinafter referred to individually as a
"Lender" and collectively as the "Lenders"); MTLM, acting in its capacity as
borrowing agent and funds administrator for the Borrowers (in such capacity, the
"Funds Administrator"); and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, hereinafter referred to as
"LaSalle Bank"), acting in its capacity as agent for the Lenders pursuant to
Article X hereof.

                                    ARTICLE I

                                   DEFINITIONS

      1.1   General Definitions.

      "Account" has the meaning set forth in the Security Agreement.

      "Acquisition" means any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which any of the
Borrowers or any of their Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
of voting power) of the outstanding ownership interests of a partnership or
limited liability company.

      "Additional Collateral Date" means the date that Borrowers have delivered
a compliance certificate as set forth in Section 7.1.5 hereof indicating that an
Additional Collateral Event has occurred, or, if earlier, the date upon which
the Agent has determined, which determination shall be conclusive absent
demonstrable error, that an Additional Collateral Event has occurred.

      "Additional Collateral Event" means that the average Excess Availability
as of the last Business Day of any two (2) consecutive months is less than
$10,000,000.

      "Additional Collateral Notice" has the meaning set forth in Section 7.16.

      "Affiliate" of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.

      "Agent" means LaSalle Bank in its capacity as contractual representative
of the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.

      "Agent Advances" has the meaning set forth in Section 2.2.

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      "Allocation Account" has the meaning set forth in Section 2.7(b).

      "Applicable Lending Office" means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Base Rate Loan.

      "Applicable Margin" means, with respect to a Revolving Loan of any Type at
any time, the percentage rate per annum which is applicable at such time with
respect to Revolving Loans of such Type as set forth in the Pricing Schedule.

      "Arizona LLC" means Metal Management Arizona, L.L.C., an Arizona limited
liability company.

      "Assignment and Assumption Agreement" has the meaning set forth in Section
11.8(b).

      "Auditors" means a nationally recognized firm of independent public
accountants selected by the Borrowers and reasonably satisfactory to the Agent.

      "Base Rate" means, for any day, a fluctuating rate of interest per annum
equal to the higher of (a) the Prime Rate for such day, and (b) the sum of (i)
the Federal Funds Rate for such day and (ii) one-half of one percent (0.5%) per
annum.

      "Base Rate Loan" means a Revolving Loan that bears interest as provided in
Section 4.1(a) hereof.

      "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.

      "Borrowers" means, collectively, (1) Arizona LLC, (2) CIM, (3) MacLeod,
(4) MTLM, (5) MTLM New Haven, (6) MTLM Aerospace, (7) MTLM Alabama, (8) MTLM
Arizona, (9) MTLM Connecticut, (10) MTLM Gulf Coast, (11) MTLM Indiana, (12)
MTLM Memphis, (13) MTLM Midwest, (14) MTLM Mississippi, (15) MTLM Northeast,
(16) MTLM Ohio, (17) MTLM Pittsburgh, (18) MTLM Realty, (19) MTLM Services, (20)
MTLM Stainless & Alloy, (21) MTLM West, (22) MTLM West Coast Holdings, (23)
Proler, (24) Reserve, and (25) S&A Holdings.

      "Borrowing" means a borrowing of Revolving Loans by the Funds
Administrator for the joint and several account of the Borrowers from each of
the Lenders (or, in the case of Agent Advances, Agent on behalf of each of the
Lenders) on a pro rata basis on a given date (whether pursuant to Section 2.2 or
resulting from continuations or conversions of Revolving Loans on a given date
pursuant to Sections 4.14(a) and (b), respectively) having, in the case of LIBOR
Rate Loans, the same Interest Period.

      "Borrowing Base" means, at any time, the sum at such time of (a)
eighty-five percent (85%) of Eligible Accounts Receivable, plus (b) the lesser
of $65,000,000 and seventy percent (70%) of Eligible Inventory; provided,
however, that in no event shall more than forty percent (40%) of the total
Borrowing Base be derived from Eligible Inventory. In addition, in the

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exercise of its Permitted Discretion, upon one Business Day's prior written
notice to the Funds Administrator, the Agent may (i) establish and increase or
decrease reserves against Eligible Accounts Receivable and Eligible Inventory,
(ii) reduce the advance rates provided for in this definition, or restore such
advance rates to any level equal to or below the advance rates in effect as of
the date of this Credit Agreement, and (iii) impose additional restrictions (or
eliminate the same) to the standards of eligibility set forth in the definitions
of "Eligible Accounts Receivable" and "Eligible Inventory."

      "Borrowing Base Certificate" means a certificate of the Funds
Administrator concerning the Borrowing Base, in each case provided under Section
7.2 and in form and substance reasonably satisfactory to the Agent.

      "Business Day" means any day that is neither a Saturday nor a Sunday nor a
day on which commercial banks in Chicago, Illinois or New York, New York are
required or permitted by law to be closed. When used in connection with any
Letter of Credit, the term "Business Day" means any day other than a Saturday,
Sunday or legal holiday on which commercial banks in the domicile of the
applicable Issuing Bank are generally closed or authorized to close.

      "Capital Expenditures" means, for any Person for any period, the sum of
all expenditures which have been, or should have been, capitalized by such
Person for financial statement purposes in accordance with GAAP during such
period (whether payable in cash or other property or accrued as a liability),
including the capitalized portion of capital leases and that portion of
Investments made by such Person allocable to property, plant or equipment.
Capital Expenditures shall exclude proceeds of a casualty loss applied to the
repair or replacement of the property affected by such casualty loss. "Casualty
loss," as used herein, means, for any Person, (i) the loss, damage, or
destruction of any asset or property owned or used by such Person, (ii) the
condemnation, confiscation, or other taking, in whole or in part, of any such
asset or property, or (iii) the diminishment of the use of any such asset or
property so as to render impracticable or unreasonable the use thereof for its
intended purpose.

      "Cash Equivalents" means either of the following: (i) securities issued,
guarantied or insured by the United States, or any of its agencies and having
maturities of not more than one year; (ii) time deposits or certificates of
deposit having maturities of not more than one year issued by any Lender or a
United States national or state chartered commercial bank of recognized standing
whose combined capital and unimpaired surplus is in excess of $250,000,000 and
whose short-term commercial paper rating, or that of its parent holding company,
is at least "A-1" or the equivalent by S&P and at least "Prime-1" or the
equivalent by Moody's; (iii) shares of money market or similar funds which
comply with Rule 2a-7 or any successor rule of the SEC; (iv) repurchase
agreements with any Lender or any commercial bank satisfying the requirements of
clause (ii) of this definition with respect to securities described in clause
(i) of this definition.

      "CIM" means CIM Trucking, Inc., an Illinois corporation.

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      "Change of Control" shall mean one or more of the following events:

            (a)   less than a majority of the members of the Board of Directors
      of MTLM shall be persons who either (i) were serving as directors on the
      Closing Date or (ii) were nominated as directors and approved by the vote
      of the majority of the directors who are directors referred to in clause
      (i) above or this clause (ii); or

            (b)   the stockholders of any Credit Party shall approve any plan or
      proposal for the liquidation or dissolution of such Credit Party; or

            (c)   a Person or group of Persons acting in concert (other than the
      direct or indirect beneficial owners of the equity Securities of MTLM as
      of the Closing Date) shall, as a result of a tender or exchange offer,
      open market purchases, privately negotiated purchases or otherwise, have
      become the direct or indirect beneficial owner (within the meaning of Rule
      13d-3 under the Securities Exchange Act of 1934, as amended from time to
      time) of equity Securities of MTLM representing more than thirty-five
      percent (35%) of the combined voting power of the outstanding voting
      equity Securities or other ownership interests for the election of
      directors or shall have the right to elect a majority of the Board of
      Directors of MTLM; or

            (d)   MTLM shall cease to be the direct or indirect legal and
      beneficial owner of one hundred percent (100%) of the equity securities,
      membership interests, partnership interests or ownership interests, as
      applicable, of each of the other Borrowers.

      "Closing Date" means the date of execution and delivery of this Credit
Agreement by all of the parties hereto or, if later, the date on which the
initial Revolving Loan is made or the initial Letter of Credit is issued
hereunder, whichever occurs earlier.

      "Closing Document List" has the meaning set forth in Section 5.1(a).

      "Code" has the meaning set forth in Section 1.3.

      "Collateral" means all Accounts, Inventory and other property and assets
of any kind, whether now owned or hereafter acquired by any of the Borrowers;
provided, however, that until such time, if any, that an Additional Collateral
Notice has been delivered to the Funds Administrator in accordance with Section
7.16 hereof, the Collateral shall not include any Equipment, Fixtures or Real
Property.

      "Collateral Access Agreement" means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, or a consignee of
Inventory, acknowledges the Liens of the Agent and, in the case of any such
agreement with a mortgagee or lessor, permits the Agent access to and use of
such real property for a reasonable amount of time following the occurrence and
during the continuance of an Event of Default to assemble, complete and sell any
Collateral stored or otherwise located thereon.

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      "Collateral Documents" means, collectively, the Security Agreement and all
other agreements, instruments and documents executed in connection with this
Agreement that are intended to create or evidence Liens to secure the
Obligations and the Rate Management Obligations, including, without limitation,
all security agreements, mortgages, deeds of trust, loan agreements, notes,
guarantees, subordination agreements, pledges, powers of attorney, consents,
assignments, contracts, fee letters, notices, leases, financing statements and
all other written matter whether heretofore, now, or hereafter executed by or on
behalf of any of the Borrowers or other Credit Parties and delivered to the
Agent or any of the Lenders, together with all agreements and documents referred
to therein or contemplated thereby.

      "Collection Account" has the meaning set forth in Section 4.11.

      "Collection Account Triggering Event" means (a) the occurrence of an Event
of Default, or (b) Excess Availability shall be equal to or less than
$10,000,000.

      "Collection Banks" has the meaning set forth in Section 4.11.

      "Collections" means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts of
any Borrower.

      "Commitment" of a Lender means such Lender's commitment, on the terms and
subject to the conditions set forth herein, to make Revolving Loans and to
participate in Letters of Credit, up to the amount set forth below its name on
Annex I (as amended from time to time pursuant to Section 2.8 or Section
11.8(b)), as such amount may be reduced from time to time in accordance with the
terms and provisions of this Credit Agreement.

      "Commitment Amount Increase" has the meaning set forth in Section 2.8.

      "Commitment Amount Increase Request" means a Commitment Amount Increase
Request in the form of Exhibit G hereto.

      "Consolidated EBITDA" means, for any fiscal period of the Consolidated
Entity, Consolidated Net Income (excluding extraordinary and non-recurring
items) for such period, plus (a) all Interest Expense (net of interest income),
amortization or writeoff of debt discount and issuance costs and other fees and
charges associated with Indebtedness, income tax expense, depreciation and
amortization (including amortization of any goodwill or other intangibles) for
such period; plus or minus (without double counting) (b) gains and losses
attributable to any fixed asset sales; plus or minus (c) any other non-cash
charges or gains (including, without limitation, stock based compensation and
joint venture income) which have been subtracted or added in calculating such
Consolidated Net Income.

      "Consolidated Entity" means MTLM and each of its consolidated Subsidiaries
and shall include in any event each Borrower.

      "Consolidated Fixed Charge Coverage Ratio" means, as determined as of any
date for any period ending on such date, the ratio of (a) Consolidated EBITDA
for such period minus aggregate Capital Expenditures made during such period (to
the extent permitted pursuant to Section 8.2), and minus dividends or
distributions paid during such period by any Borrower to

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any Person other than a member of the Consolidated Entity (to the extent
permitted pursuant to Section 8.7), to (b) the sum of the following, in each
case of the Consolidated Entity, as determined without duplication in accordance
with GAAP for such period, (i) income tax expense paid in cash, (ii) Interest
Expense paid or payable in cash, and (iii) regularly scheduled payments of
principal on Indebtedness (other than repayments in the ordinary course of the
Revolving Loans which do not permanently reduce the aggregate Commitments).

      "Consolidated Net Income" means, with reference to any period, the
consolidated net income of the Consolidated Entity for such period, as
determined in accordance with GAAP applied on a basis consistent with the
audited Financial Statements as of March 31, 2004.

      "Consolidated Tangible Net Worth" means at any time the stockholders'
equity of the Consolidated Entity as of such time, minus the book value of all
Intangible Assets as of such time, all as determined in accordance with GAAP
applied on a basis consistent with the audited Financial Statements as of March
31, 2004.

      "Contingent Obligation" means, with respect to any Person, any direct or
indirect guaranty or obligation of such Person for the Indebtedness of another
Person, except for endorsements in the ordinary course of business.

      "Credit Agreement" means this Credit Agreement, as amended, restated,
supplemented, extended or otherwise modified and in effect from time to time.

      "Credit Documents" means, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, each of the Collateral Documents,
documents evidencing Rate Management Transactions, and all other documents,
agreements and instruments now or hereafter executed in connection herewith or
therewith, in each case as amended, restated, supplemented, extended or
otherwise modified from time to time.

      "Credit Party Information" has the meaning set forth in Section 11.9(a).

      "Credit Parties" means, collectively, the Borrowers, the Funds
Administrator, any Subsidiary of any Borrower and each other party to any of the
Credit Documents (other than the Lenders, the Agent or any Issuing Bank).

      "Default" means an event, condition or default which with the giving of
notice, the passage of time or both would be an Event of Default.

      "Defaulting Lender" has the meaning set forth in Section 2.6(a).

      "Depositary Account Agreements" has the meaning set forth in Section 4.11.

      "Disbursement Account" means the operating account of the Funds
Administrator maintained with the Disbursement Account Bank.

      "Disbursement Account Bank" means LaSalle Bank or any other financial
institution selected from time to time by the Agent and reasonably acceptable to
the Funds Administrator.

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      "Dollar" and "$" means the lawful currency of the United States of
America.

      "Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" on Annex I, as such annex
may be amended from time to time pursuant to Section 11.8(b), which office shall
in any event be located in the United States.

      "Drawing" has the meaning set forth in Section 3.5(b).

      "Eligible Accounts Receivable" means Accounts of the respective Borrowers
deemed by the Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the face amount of such Accounts shall be reduced by
the amount of all returns, discounts, deductions, claims, credits, charges, or
other allowances. Unless otherwise approved in writing by the Agent, no Account
of any Borrower shall be deemed to be an Eligible Account Receivable if:

            (a)   it arises out of a sale made by such Borrower to an Affiliate
      of such Borrower or to any other Borrower; or

            (b)   its payment terms are longer than 60 days from date of
      invoice; or

            (c)   it is unpaid (i) more than 60 days after the original payment
      due date on payment terms of 30 days or less from date of invoice, or (ii)
      more than 30 days after the original payment due date on payment terms of
      or more than 30 days from date of invoice; or

            (d)   it is from the same account debtor or its Affiliate and fifty
      percent (50%) or more of all Accounts from that account debtor (and its
      Affiliates) are ineligible under (c) above; or

            (e)   when aggregated with all other Accounts of an account debtor,
      the Account exceeds fifty percent (50%) in face value of all Accounts of
      all Borrowers then outstanding, to the extent of such excess, unless
      supported by an irrevocable letter of credit satisfactory to the Agent (as
      to form, substance and issuer) and assigned to and directly drawable by
      the Agent; or

            (f)   the account debtor for the Account is a creditor of such
      Borrower, has or has asserted a right of setoff against such Borrower, has
      disputed its liability or made any claim with respect to the Account or
      any other Account which has not been resolved, but in each of the
      foregoing cases, solely to the extent of the amount of such actual or
      asserted credit, right of setoff, or the amount of such dispute or claim,
      as the case may be; or

            (g)   except to the extent otherwise consented to in writing by the
      Agent, the account debtor is (or the assets of the account debtor are) the
      subject of an Insolvency Event; or

                                       7
<PAGE>

            (h)   the Account is not payable in United States Dollars or the
      account debtor for the Account is located outside the United States or
      Canada (other than the Northwest Territories and the Provinces of
      Newfoundland and Quebec), unless the Account is supported by (i) an
      irrevocable letter of credit satisfactory to the Agent (as to form,
      substance and issuer) and assigned to and directly drawable by the Agent
      or (ii) credit insurance satisfactory to the Agent and assigned and
      payable to the Agent; or

            (i)   the sale to the account debtor is on a guaranteed sale,
      sale-and-return, sale on approval or consignment basis or made pursuant to
      any other written agreement providing for repurchase or return; or

            (j)   the Agent determines by its own credit analysis in the
      exercise of its Permitted Discretion that collection of the Account is
      uncertain or the Account may not be paid; or

            (k)   the account debtor is the United States of America or any
      department, agency or instrumentality thereof, unless such Borrower duly
      assigns its rights to payment of such Account to the Agent pursuant to the
      Assignment of Claims Act of 1940, as amended (31 U.S.C. Sections 3727 et
      seq.); or

            (l)   the goods giving rise to such Account have not been shipped
      and delivered to and accepted by the account debtor, the services giving
      rise to such Account have not been performed and accepted or the Account
      otherwise does not represent a final sale; or

            (m)   the Account does not comply with all Requirements of Law with
      respect to such Borrower, including, without limitation, the Federal
      Consumer Protection Act, the Federal Truth-in-Lending Act and Regulation
      Z; or

            (n)   the Account is subject to any adverse security deposit,
      progress payment or other similar advance made by or for the benefit of
      the applicable account debtor; or

            (o)   the Account is not subject to a valid and perfected first
      priority Lien in favor of the Agent or does not otherwise conform to the
      representations and warranties with respect thereto contained in the
      Credit Documents.

      "Eligible Inventory" means the aggregate amount of Inventory of the
respective Borrowers deemed by the Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with the Borrowers' current
and historical accounting practice. Unless otherwise approved in writing by the
Agent, no Inventory of any Borrower shall be deemed Eligible Inventory if:

            (a)   it is not owned solely by such Borrower or such Borrower does
      not have good and valid title thereto; or

            (b)   it is not located in the United States; or

                                       8
<PAGE>

            (c)   it is not located on property owned by a Borrower or by a
      third party that has executed and delivered a Collateral Access Agreement
      and, in the case of Inventory located on property owned by such a third
      party, it is segregated or otherwise separately identifiable from goods of
      others, if any, stored on such property; or

            (d)   it is not subject to a valid and perfected first priority Lien
      in favor of the Agent, except, with respect to such Inventory stored at
      locations other than locations owned by a Borrower, for Liens for unpaid
      rent or normal and customary warehousing charges; or

            (e)   it consists of goods returned or rejected by such Borrower's
      customers or goods in transit to third parties (other than to warehouse
      sites covered by a Collateral Access Agreement); or

            (f)   it could not reasonably be expected to be sold within twelve
      (12) months after the date of its initial processing, or does not
      otherwise conform to the representations and warranties contained in the
      Credit Documents;

      provided, however, that notwithstanding the foregoing, Inventory of any
Borrower which has been sold and shipped to the applicable account debtor but
with respect to which such account debtor has not yet been invoiced shall be
deemed Eligible Inventory until issuance of such invoice, provided, further that
such Inventory constituted Eligible Inventory immediately prior to such sale.

      "Equipment" has the meaning set forth in the Security Agreement.

      "ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.

      "ERISA Affiliate" means any entity required to be aggregated with any
Borrower or any Subsidiary of any Borrower under Sections 414 (b) or (c) of the
Internal Revenue Code (or, for purposes of Section 412 of the Internal Revenue
Code, Sections 414 (m) or (o) of the Internal Revenue Code).

      "Event of Default" has the meaning set forth in Article IX.

      "Excess Availability" means, at any time of determination thereof, an
amount (which may be a negative number) equal at such time to (i) the Borrowing
Base, minus (ii) the aggregate amount outstanding with respect to the Revolving
Loans (including Fees, Expenses, interest and principal), minus (iii) the Letter
of Credit Obligations.

      "Exchange Act" means the Securities and Exchange Act of 1934, amendments
thereto, successor statutes, and regulations or guidance promulgated thereunder.

      "Excluded Taxes" means, in the case of each Lender or Applicable Lending
Office and the Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender
or Agent is incorporated or organized or any

                                       9
<PAGE>

subdivision or taxing authority thereof, or (ii) the jurisdiction in which the
Agent's or Lender's principal executive office or such Lender's Applicable
Lending Office is located or in which, other than as a result of the transaction
evidenced by this Credit Agreement, the Agent or Lender otherwise is, or at any
time was, engaged in business.

      "Existing Letters of Credit" means those certain Letters of Credit issued
and outstanding on the Closing Date and set forth on Schedule B, Part 1.1.

      "Expenses" means all reasonable costs and expenses of the Agent incurred
in connection with the Credit Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of conducting record
searches, examining collateral, opening bank accounts and lockboxes, depositing
checks, and receiving and transferring funds (including charges for checks for
which there are insufficient funds), (ii) the reasonable fees and expenses of
legal counsel and paralegals (including the allocated cost of internal counsel
and paralegals), accountants, appraisers and other consultants, experts or
advisors retained by the Agent, (iii) reasonable fees and expenses of legal
counsel incurred in connection with the documentation of assignments of or sales
of participations in the Revolving Loans, (iv) after the occurrence of an
Additional Collateral Event, the cost of title insurance premiums and real
estate survey costs, (v) fees and taxes in connection with the filing of
financing statements, and (vi) the costs of preparing and recording Collateral
Documents, releases of Collateral, and waivers, amendments, and terminations of
any of the Credit Documents. Expenses also means all reasonable costs and
expenses (including the reasonable fees and expenses of legal counsel and other
professionals) paid or incurred in connection with the Credit Documents and the
transactions contemplated therein, (a) by the Agent during the continuance of an
Event of Default and (b) by the Agent and any Lender in (i) enforcing or
defending its respective rights under or in respect of this Credit Agreement,
the Credit Documents or any other document or instrument now or hereafter
executed and delivered in connection herewith or therewith, (ii) collecting the
Revolving Loans, (iii) foreclosing or otherwise collecting upon the Collateral
or any part thereof and (iv) obtaining any legal, accounting or other advice in
connection with any of the foregoing.

      "Expiration Date" means the earlier of (i) June 28, 2008 and (ii) the date
on which this Credit Agreement is terminated pursuant to Section 9.2(b).

      "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum for each day during such period equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations, at approximately
10:00 a.m. (Chicago time) for such day on such transactions received by the
Agent from three Federal Funds brokers of recognized standing selected by the
Agent in its sole discretion.

      "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.

                                       10
<PAGE>

      "Fee Letter" means the fee letter agreement dated as of April 19, 2004
between LaSalle Bank and the Borrowers providing for the payment of certain fees
in connection with this Credit Agreement.

      "Fees" means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the Issuing Bank Fees and all fees payable by Borrower under the Fee
Letter.

      "Financial Statements" means the consolidated and consolidating balance
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the Consolidated Entity for the period
specified, prepared in accordance with GAAP and consistently with prior
practices.

      "Fixtures" has the meaning set forth in the Security Agreement.

      "Funds Administrator" has the meaning set forth in the Preamble.

      "GAAP" means generally accepted accounting principles in the United States
as in effect from time to time.

      "Governing Documents" means certificates or articles of incorporation,
certificates or articles of formation, by-laws, operating agreements and any
other similar organizational or governing documents.

      "Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

      "Highest Lawful Rate" means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate that at any time or from time to time may be contracted for, taken,
reserved, charged or received on such Obligations, under the laws of the State
of Illinois (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and any of
the other Credit Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher maximum nonusurious
interest rate than under the State of Illinois' (or such other jurisdiction's)
law, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Credit
Agreement and any other Credit Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions.

      "Indebtedness" of a Person means, without duplication, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (b) obligations
under capital leases, (c) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, whether drawn or undrawn,
(d) liabilities, as determined by the Agent, under any Rate Management
Transaction, (e) Contingent Obligations and (f) Indebtedness secured by any Lien
on any property of that Person, even if that Person has not assumed such
Indebtedness.

                                       11
<PAGE>

      "Insolvency Event" means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, (b) the voluntary commencement of any proceeding
or the filing of any petition under any bankruptcy, insolvency or similar law,
(c) the seeking of dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to effect a plan or other arrangement with
its creditors, (d) the filing of any answer admitting the jurisdiction of the
court and the material allegations of an involuntary petition filed against it
in any bankruptcy, insolvency or similar proceeding, (e) the making by such
Person of a general assignment for the benefit of its creditors, or the consent
to, or acquiescence in the appointment of, a receiver, trustee, custodian or
liquidator for a substantial portion of such Person's property, assets or
business. Insolvency Event shall also mean, with respect to any Person, the
occurrence of any of the following: an involuntary proceeding or involuntary
petition shall be commenced or filed against such Person under any bankruptcy,
insolvency or similar law seeking the dissolution or reorganization of it or the
appointment of a receiver, trustee, custodian or liquidator for it or of a
substantial part of its property, assets or business, or any writ, judgment,
warrant of attachment, execution or similar process shall be issued or levied
against a substantial part of its property, assets or business, and such
proceedings or petitions shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement, filing, or levy, as the
case may be, or any order for relief shall be entered in any such proceeding.

      "Intangible Assets" means all assets properly classified as "intangible
assets" in accordance with GAAP, including, without limitation, all good will,
patents, trade names, trade marks, copyrights, franchises, deferred taxes,
experimental expense, organization expense, unamortized debt discount and
expense, deferred assets other than prepaid insurance and prepaid taxes and the
excess of cost of shares acquired over book value of related assets.

      "Interest Expense" means, for any period, the aggregate consolidated cash
expense of the Consolidated Entity for interest on Indebtedness for such period,
including, without limitation, (i) amortization of original issue discount, (ii)
incurrence fees (to the extent included in interest expense but excluding in any
event any fees payable by the Borrowers pursuant to the Fee Letter and other
fees paid or payable to the Lenders), (iii) the interest portion of any deferred
payment obligation and (iv) the interest component of any capital lease
obligation.

      "Interest Period" means, for any LIBOR Rate Loan, a period of one, two,
three or six months commencing on a Business Day selected by the Funds
Administrator in accordance with this Agreement. Such Interest Period shall end
on but exclude the day which corresponds numerically to such date one, two,
three or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month or such other succeeding period, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding month or such
other succeeding period. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.

                                       12
<PAGE>

      "Internal Revenue Code" means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance promulgated
thereunder.

      "Inventory" has the meaning set forth in the Security Agreement.

      "Investment" means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person, including, without limitation, all expenditures made and liabilities
incurred (contingently or otherwise) for or in connection with any Acquisition.
In determining the aggregate amount of Investments outstanding at any particular
time, (i) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and
outstanding; (ii) there shall be deducted in respect of each such Investment
amounts received in cash as a return of capital or as earnings on such
Investment, whether as dividends, interest or otherwise; and (iii) there shall
not be deducted from the aggregate amount of Investments any decrease in the
market value thereof.

      "Issuing Bank" means LaSalle Bank, an Affiliate of LaSalle Bank, or any
Lender or other financial institution that is acceptable to the Agent and the
Funds Administrator which may at any time issue or be requested to issue a
Letter of Credit for the account of any Borrower.

      "Issuing Bank Fees" has the meaning set forth in Section 4.3(b).

      "LaSalle Bank" has the meaning set forth in the Preamble.

      "LaSalle Bank Account" has the meaning set forth in Section 4.11.

      "LC Participant" has the meaning ascribed to that term in Section 3.4.

      "LC Supportable Obligations" means (a) obligations of any Borrower or any
Subsidiary of any Borrower with respect to workers' compensation, surety bonds
and other similar statutory obligations, (b) such other obligations of any
Borrower or any Subsidiary of any Borrower as are reasonably acceptable to the
Agent and (c) any obligations supported by an Existing Letter of Credit.

      "Lender" and "Lenders" have the respective meanings set forth in the
Preamble.

      "Lender Advances" has the meaning set forth in Section 2.2.

      "Letter of Credit Fee" has the meaning set forth in Section 4.3(a).

      "Letter of Credit Fee Rate" means the percentage rate per annum applicable
to Letters of Credit from time to time as set forth in the Pricing Schedule.

      "Letter of Credit Obligations" means, without duplication, the sum of the
aggregate Stated Amount of all Letters of Credit outstanding, plus the aggregate
amount of all Drawings for which the Borrowers have not reimbursed any Issuing
Bank, plus the aggregate amount of all

                                       13
<PAGE>

payments made by the Lenders to any Issuing Bank for their participations in
Letters of Credit for which the Borrowers have not reimbursed the Lenders.

      "Letter of Credit Request" has the meaning ascribed to that term in
Section 3.3(a).

      "Letter of Credit" means all letters of credit issued for the account of
any Borrower under Article III, and all amendments, renewals, extensions or
replacements thereof.

      "Leverage Ratio" means, as of any date of determination thereof, the ratio
of (a) Indebtedness of the Consolidated Entity as of such date, to (b)
Consolidated EBITDA for the twelve (12) month period ending on such date.

      "LIBOR Base Rate" means, with respect to a LIBOR Rate Loan for the
relevant Interest Period, the applicable London interbank offered rate for
deposits in Dollars as displayed on the Bloomberg Financial Markets System as of
11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, if the Bloomberg Financial Markets System rate is not available for any
reason, the applicable LIBOR Base Rate for the relevant Interest Period shall
instead be the applicable British Bankers' Association Interest Settlement Rate
for deposits in Dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period. Any LIBOR Base Rate
determined on the basis of the rate displayed on Bloomberg Financial Markets
System in accordance with the foregoing provisions of this subparagraph shall be
subject to corrections, if any, made in such rate and displayed on the Bloomberg
Financial Markets System within one hour of the time when such rate is first
displayed by such service.

      "LIBOR Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "LIBOR Lending Office" on Annex I, as such annex
may be amended from time to time pursuant to Section 11.8(b) (or, if no such
office is specified, its Domestic Lending Office).

      "LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period.

      "LIBOR Rate Loan" means a Revolving Loan that bears interest as provided
in Section 4.1(b) hereof.

      "Lien" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.

      "Line Of Credit" means, at any time, an amount equal to the aggregate
Commitments of all Lenders at such time, which amount shall not exceed
$150,000,000, except as otherwise permitted by Section 2.8.

                                       14
<PAGE>

      "Loan Account" has the meaning set forth in Section 4.9.

      "Mac Leod" means Mac Leod Metals Co., a California corporation.

      "Material Adverse Effect" means a material adverse effect on (i) the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Credit Parties taken as a whole, (ii) the
ability of any Credit Party to perform its obligations under the Credit
Documents to which it is a party, or on the ability of the Agent or the Lenders
to enforce the Obligations or realize upon the Collateral, or (iii) the value of
the Collateral taken as a whole.

      "Material Contract" means any contract or other arrangement (i) to which a
Credit Party or any Subsidiary of a Credit Party is a party (other than the
Credit Documents) or by which the property or assets of any Credit Party or any
Subsidiary of a Credit Party are bound and (ii) which is material to the
business, assets, properties or prospects of the Consolidated Entity.

      "Moody's" means Moody's Investors Service, Inc., or any successor thereto.

      "MTLM" means Metal Management, Inc., a Delaware corporation.

      "MTLM Aerospace" means Metal Management Aerospace, Inc., a Delaware
corporation.

      "MTLM Alabama" means Metal Management Alabama, Inc., a Delaware
corporation.

      "MTLM Arizona" means MTLM Arizona, Inc., an Arizona corporation.

      "MTLM Connecticut" means Metal Management Connecticut, Inc., a Delaware
corporation.

      "MTLM Gulf Coast" means Metal Management Gulf Coast, Inc., a Delaware
corporation.

      "MTLM Indiana" means Metal Management Indiana, Inc., an Illinois
corporation.

      "MTLM Memphis" means Metal Management Memphis, L.L.C., a Tennessee limited
liability company.

      "MTLM Midwest" means Metal Management Midwest, Inc., an Illinois
corporation.

      "MTLM Mississippi" means Metal Management Mississippi, L.L.C., a Delaware
limited liability company.

      "MTLM New Haven" means Metal Management New Haven, Inc., a Delaware
corporation.

      "MTLM Northeast" means Metal Management Northeast, Inc., a New Jersey
corporation.

      "MTLM Ohio" means Metal Management Ohio., Inc., an Ohio corporation.

                                       15
<PAGE>

      "MTLM Pittsburgh" means Metal Management Pittsburgh, Inc., a Delaware
corporation.

      "MTLM Realty" means Metal Management Realty, Inc., an Arizona corporation.

      "MTLM Services" means Metal Management Services, Inc., a Delaware
corporation.

      "MTLM Stainless & Alloy" means Metal Management Stainless & Alloy, Inc., a
Delaware corporation.

      "MTLM West" means Metal Management West, Inc., a Colorado corporation.

      "MTLM West Coast Holdings" means Metal Management West Coast Holdings,
Inc., a Delaware corporation.

      "Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which a Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed within the past six years or with respect to
which a Borrower or any Subsidiary of a Borrower could reasonably be expected to
incur any liability.

      "Notice of Borrowing" means an irrevocable and binding notice delivered by
the Funds Administrator to the Agent either by telephone or by facsimile
transmission (and if by telephone, promptly confirmed in writing) of the request
by the Funds Administrator, for and on behalf of the Borrowers, for a Borrowing,
which notice shall be substantially in the form of Exhibit A.

      "Notice of Continuation" has the meaning set forth in Section 4.14.1.

      "Notice of Conversion" has the meaning set forth in Section 4.14.2.

      "Obligations" means unpaid principal and interest hereunder (including
interest accruing on or after the occurrence of an Insolvency Event) in respect
of Revolving Loans, reimbursement obligations in respect of Letters of Credit,
Fees, Expenses and all other obligations and liabilities of any kind whatsoever
of the Borrowers to the Agent, the Issuing Bank or any of the Lenders under this
Credit Agreement, the Revolving Notes and any of the other Credit Documents.

      "Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(ii) any liability under any Sale and Leaseback transaction which is not a
capitalized lease in accordance with GAAP, or (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person or similar
off-balance sheet financing arrangement.

      "Payment Office" means the office of the Agent located at 135 S. LaSalle
Street, Chicago Illinois 60603 or such other office of the Agent as shall be
specified by the Agent from time to time in a notice to the Funds Administrator
and each of the Lenders.

      "PBGC" means the Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions.

                                       16
<PAGE>

      "Perfection Certificate" means that certain Perfection Certificate dated
as of even date herewith executed and delivered by the Borrowers and the Funds
Administrator to the Agent.

      "Permitted Acquisition" means any Acquisition that satisfies the following
requirements:

            (i)   no Default or Event of Default shall have occurred and be
                  continuing or would result from or in connection with such
                  Acquisition;

            (ii)  the businesses being acquired shall be substantially similar
                  to the businesses or activities engaged in by the Borrowers on
                  the Closing Date;

            (iii) the aggregate amount of consideration and transaction expenses
                  incurred by Borrowers in connection with such Acquisition does
                  not exceed $20,000,000 for any single such Acquisition and
                  does not exceed $40,000,000 in the aggregate for all such
                  Acquisitions during any fiscal year, as certified to Agent and
                  Lenders by the chief financial officer of the Funds
                  Administrator;

            (iv)  effective as of the date of each such Acquisition (taking into
                  account the effect of such Acquisition and any Indebtedness
                  incurred in connection therewith), the Excess Availability
                  shall not be less than $30,000,000 and the Borrowers shall be
                  in compliance with the financial covenants set forth in
                  Sections 8.1 and 8.2 hereof, all as demonstrated by a
                  certificate and supporting financial information delivered to
                  the Agent on behalf of the Lenders from the chief financial
                  officer of the Funds Administrator, demonstrating such
                  compliance to the satisfaction of the Agent on a pro forma
                  basis using historical audited (if any) or reviewed unaudited
                  financial statements obtained from the seller(s) in respect of
                  each such Acquisition as if the Acquisition and such
                  incurrence of Indebtedness had occurred on the first day of
                  the twelve-month period ending on the last day of the
                  Borrower's most recently completed fiscal quarter;

            (v)   the Acquisition is consummated pursuant to a negotiated
                  acquisition agreement on a non-hostile basis and approved by
                  the target company's board of directors or equivalent body
                  (and shareholders or equivalent equity holders, if necessary)
                  prior to the consummation of the Acquisition, and the
                  Borrowers shall have delivered or caused to be delivered to
                  the Agent all Collateral Documents necessary or requested by
                  the Agent for the creation and perfection of a first priority
                  security interest in the Collateral to be acquired and all of
                  the equity interests of the entity to be acquired, together
                  with copies of all acquisition documents, collateral
                  assignments of rights under acquisition documents, lien

                                       17
<PAGE>

                  searches, opinions of counsel, title insurance policies,
                  reliance letters, certificates and other documents,
                  instruments and agreements as requested by the Agent in order
                  to confirm, create, perfect and protect all rights of the
                  Agent and the Lenders in and to the Collateral and under and
                  in connection with the Credit Documents, in each case in form
                  and substance reasonably acceptable to the Agent;

            (vi)  in the case of an Acquisition of the capital stock or other
                  equity, ownership or partnership interests of a Person, as
                  applicable, either (x) the Acquisition results in Borrowers
                  owning 100% of such capital stock or other equity, ownership
                  or partnership interests, as applicable, of such Person, or
                  (y) if the Acquisition results in Borrowers owning less than
                  100% of such capital stock or other equity, ownership or
                  partnership interests, as applicable, of such Person (a
                  "non-wholly owned acquisition"), the consideration paid and
                  transaction costs incurred by Borrowers for such non-wholly
                  owned acquisition, together with the consideration paid and
                  transaction costs incurred by Borrowers for all other
                  non-wholly owned acquisitions and all Permitted Investments In
                  Non-Majority Interests during the term of this Agreement, as
                  certified to Agent and Lenders by the chief financial officer
                  of the Funds Administrator, does not exceed $10,000,000; and

            (vii) if the Acquisition results in a new Subsidiary of any
                  Borrower, such Subsidiary shall join and agree to be bound by
                  and perform the terms of this Credit Agreement in the capacity
                  as a "Borrower" hereunder and the terms of each other Credit
                  Document in a similar capacity, and such Subsidiary, the other
                  Borrowers and the Funds Administrator shall execute and
                  deliver to the Agent such joinders, consents, certificates,
                  opinions of counsel, collateral documents, and other
                  agreements, instruments and documents as the Agent may request
                  in connection therewith.

      "Permitted Discretion" means the Agent's judgment exercised in good faith
and not in an irrational manner based upon its consideration of any factor which
the Agent believes in good faith could affect the value of any Collateral,
including any Inventory or Accounts of any Borrower, or the amount which the
Agent and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such factors
which are already included in or tested by the definition of Eligible Accounts
Receivable or Eligible Inventory, as well as any of the following: (i) changes
in collection history and dilution with respect to the Accounts of any Borrower,
(ii) demand for, and pricing of, Inventory of any Borrower, (iii) changes in any
concentration of risk with respect to Accounts and Inventory of any Borrower,
and (iv) any other factors that change the credit risk of lending to the
Borrowers on the security of the Accounts, Inventory and other property of the
Borrowers.

                                       18
<PAGE>

      "Permitted Investment In Non-Majority Interest" means an Investment by any
Borrower resulting in the acquisition by such Borrower of less than the majority
(in number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) or less than a majority
of the voting or equity interests of a partnership, limited liability company or
joint venture, in each case satisfying the following conditions:

            (i)   no Default or Event of Default shall have occurred and be
                  continuing or would result from or in connection with such
                  Investment;

            (ii)  the corporation, partnership, limited liability company or
                  other entity in which such Investment is made engages in
                  business which is substantially similar to the businesses or
                  activities engaged in by the Borrowers on the Closing Date;

            (iii) effective as of the date of such Investment (taking into
                  account the effect of such Investment and any Indebtedness
                  incurred in connection therewith), the Excess Availability
                  shall not be less than $30,000,000 and the Borrowers shall be
                  in compliance with the financial covenants set forth in
                  Sections 8.1 and 8.2 hereof, all as demonstrated by a
                  certificate and supporting financial information delivered to
                  the Agent on behalf of the Lenders from the chief financial
                  officer of the Funds Administrator, demonstrating such
                  compliance to the satisfaction of the Agent;

            (iv)  the Investment is consummated on a non-hostile basis and
                  approved by the target company's board of directors or
                  equivalent body (and shareholders or equivalent equity
                  holders, if necessary) prior to the consummation of the
                  Investment, and the Borrowers shall have delivered or caused
                  to be delivered to the Agent all Collateral Documents
                  necessary or requested by the Agent for the creation and
                  perfection of a first priority security interest in the equity
                  interests of the entity to be acquired, together with copies
                  of all other documents and instruments reasonably requested by
                  Agent, in each case in form and substance reasonably
                  acceptable to the Agent; and

            (v)   the consideration paid and transaction costs incurred by
                  Borrowers for such Investment, together with the consideration
                  paid and transaction costs incurred by Borrowers for all other
                  such Investments and all non-wholly owned acquisitions (as
                  such term is defined in the definition of Permitted
                  Acquisition) during the term of this Agreement, as certified
                  to Agent and Lenders by the chief financial officer of the
                  Funds Administrator, does not exceed $10,000,000.

                                       19
<PAGE>

      "Permitted Liens" means the Liens referred to in clauses (a) through (m)
of Section 8.4.

      "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.

      "Pricing Schedule" means the Schedule identifying the Applicable Margin,
the Letter of Credit Fee Rate and the Unused Line Fee Rate attached hereto as
Annex II.

      "Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by LaSalle Bank or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.

      "Proler" means Proler Southwest, Inc., a Texas corporation.

      "Proportionate Share" of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or, if the
Commitments are terminated, by dividing its then outstanding Revolving Loans and
Letter of Credit participations by the then outstanding aggregate Revolving
Loans and Letter of Credit Obligations.

      "Purchase Money Liens" has the meaning set forth in Section 8.3(e).

      "Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

      "Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
MTLM or the other Borrowers, on one hand, and the Agent or any Lender or
Affiliate thereof, on the other hand, with respect to or in connection with all
or any portion of the Revolving Loans or this Credit Agreement, which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions) or
any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.

      "Real Property" means all real property owned by Borrowers as of the date
hereof or hereafter acquired.

      "Register" has the meaning set forth in Section 11.8(c).

                                       20
<PAGE>

      "Regulation D" means Regulation D of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board.

      "Regulation U" means Regulation U of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board relating to the extension of credit by banks,
non-banks and non-broker lenders for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve Board.

      "Regulation X" means Regulation X of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board relating to the extension of credit by foreign
lenders for the purpose of purchasing or carrying margin stock (as defined
therein).

      "Regulation Z" means Regulation Z of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board.

      "Reportable Event" means any of the events described in Section 4043 of
ERISA and the regulations thereunder (other than any such event for which the
notice requirement under ERISA has been waived).

      "Required Lenders" means those Lenders holding in the aggregate more than
fifty-one percent (51%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty-one percent (51%) of the
Revolving Loans and Letter of Credit Obligations then outstanding.

      "Requirement of Law" means, with respect to any Person, (a) the Governing
Documents of such Person, (b) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.

      "Reserve" means Reserve Iron & Metal Limited Partnership, a Delaware
limited partnership.

      "Reserve Requirement" means the maximum aggregate reserve requirement
(including all basic supplemental, marginal and other reserves), stated as a
decimal, as prescribed by the Federal Reserve Board (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Rate Loans is determined or category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents.

      "Responsible Officer" means, with respect to any Person, the president,
chief executive officer, chief financial officer, any vice president or
treasurer of such Person.

      "Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by Section 601 of ERISA.

                                       21
<PAGE>

      "Revolving Loan" has the meaning set forth in Section 2.1.

      "Revolving Note" has the meaning set forth in Section 2.1.

      "S&A Holdings" means Metal Management S & A Holdings, Inc., a Delaware
corporation.

      "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.

      "Sale And Leaseback Transaction" means any sale or other transfer of
property by any Credit Party with the intent to lease such property as lessee.

      "SEC" means the Securities and Exchange Commission, and any Governmental
Authority succeeding to any or all of its functions.

      "Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of Indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities," or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Revolving Notes or any other evidence of
the Obligations.

      "Security Agreement" means the Security Agreement of even date herewith
executed by each of the Borrowers in favor of the Agent for the benefit of the
Agent and the Lenders, as amended, restated, supplemented, extended or otherwise
modified and in effect from time to time.

      "Settlement Date" has the meaning set forth in Section 2.4.

      "Stated Amount" of each Letter of Credit means, at any, time, the maximum
amount available to be drawn thereunder at such time (in each case determined
without regard to whether any conditions to drawing could then be met).

      "Subsidiary" of a Person means a corporation or other Person in which that
Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.

      "Taxes" means any present or future stamp or documentary taxes or other
excise or property taxes, charges or similar levies which arise from any payment
made under this Credit Agreement, any Revolving Note or any other Credit
Document, or from the execution or delivery of, or otherwise with respect
thereto, and any other present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, but excluding in any case Excluded Taxes.

      "Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section

                                       22
<PAGE>

4001(a) (2) of ERISA); (iii) the providing of notice of intent to terminate a
Benefit Plan in a distress termination (as described in Section 4041 (c) of
ERISA); (iv) the institution by the PBGC of proceedings to terminate a Benefit
Plan or Multiemployer Plan; (v) any event or condition (a) which could
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (b) that would result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of a
Borrower, any Subsidiary of a Borrower or any ERISA Affiliate from a
Multiemployer Plan.

      "Type" means a LIBOR Rate Loan or a Base Rate Loan.

      "Unused Line Fee" has the meaning set forth in Section 4.2.

      "Unused Line Fee Rate" means the percentage rate per annum applicable from
time to time as set forth in the Pricing Schedule.

      1.2   Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms used in this Credit Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the Financial Statements referred to in Section 6.9. All
accounting determinations for purposes of determining compliance with the
financial covenants contained in Article VIII shall be made in accordance with
GAAP as in effect on the Closing Date and applied on a basis consistent in all
material respects with the audited Financial Statements delivered to the Agent
on or before the Closing Date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records, shall be
prepared or maintained, as the case may be, in accordance with GAAP. If GAAP
shall change from the basis used in preparing the audited Financial Statements
delivered to the Agent on or before the Closing Date, the certificates required
to be delivered pursuant to Section 7.1 demonstrating compliance with the
covenants contained herein shall include, at the election of the Borrowers or
upon the request of the Required Lenders, calculations setting forth the
adjustments necessary to demonstrate that the Borrowers are in compliance with
the financial covenants based upon GAAP as in effect on the Closing Date.

      1.3   Other Terms; Headings. Terms used herein and not otherwise defined
in Article I that are defined in the Uniform Commercial Code in effect from time
to time in the State of Illinois (the "Code") shall have the meanings given in
the Code. Each of the words "hereof," "herein," and "hereunder" refer to this
Credit Agreement as a whole. An Event of Default shall "continue" or be
"continuing" until such Event of Default has been waived in accordance with
Section 11.11 hereof. References to Articles, Sections, Annexes, Schedules, and
Exhibits are internal references to this Credit Agreement, and to its
attachments, unless otherwise specified. The headings and the Table of Contents
are for convenience only and shall not affect the meaning or construction of any
provision of this Credit Agreement.

                                       23
<PAGE>

                                   ARTICLE II

                                 REVOLVING LOANS

      2.1   Commitments. Subject to the terms and conditions set forth in this
Credit Agreement, and in reliance on the representations and warranties of the
Borrowers set forth herein, on and after the Closing Date and to but excluding
the Expiration Date, each Lender severally agrees to make loans and advances to
the Borrowers (each a "Revolving Loan") in an amount not to exceed at any time
its Proportionate Share of the lesser at such time of (a) the Line of Credit and
(b) the Borrowing Base, minus, in the case of both clauses (a) and (b) above,
the then outstanding Letter of Credit Obligations. The Revolving Loans shall be
evidenced by a Revolving Note substantially in the form of Exhibit B, dated as
of the Closing Date, issued to each Lender and executed by each of the Borrowers
in the amount of such Lender's Commitment (each a "Revolving Note").

      2.2   Borrowing of Revolving Loans. Revolving Loans may be made available
to the Funds Administrator for the account of the Borrowers directly by the
Lenders ("Lender Advances") or, in the circumstances described in Section 2.2.2,
from the Agent acting on behalf of the Lenders ("Agent Advances").

            2.2.1 Lender Advances. Subject to the determination by the Agent and
the Lenders that the conditions for borrowing contained in Section 5.2 are
satisfied, upon receipt of a Notice of Borrowing from the Funds Administrator
received by the Agent before 12:00 noon Chicago time on a Business Day, Lender
Advances of Revolving Loans shall be made to the extent of each Lender's
Proportionate Share of the requested Borrowing.

            2.2.2 Agent Advances. The Agent is authorized by the Lenders, but is
not obligated, to make Agent Advances upon a receipt of any Notice of Borrowing
received by the Agent before 3:00 p.m. Chicago time on a Business Day. Agent
Advances shall be subject to periodic settlement with the Lenders under Section
2.4. Agent Advances may be made only in the following circumstances:

            (a)   Normal Course Agent Advances. For administrative convenience,
      the Agent may, but is not obligated, to make Agent Advances up to the
      amount available for borrowing under Section 2.1 in reliance upon the
      actual or deemed representations of the Borrowers under Section 5.2 that
      the conditions for borrowing are satisfied.

            (b)   Other Agent Advances. When the conditions for borrowing under
      Section 5.2 cannot be fulfilled, and notwithstanding the Borrowing Base
      limitation of Section 2.1, the Agent may, but is not obligated to,
      continue to make Agent Advances for seven (7) Business Days or until
      sooner instructed by the Required Lenders to cease, in an aggregate amount
      at any time not to exceed $5,000,000.

            2.2.3 Disbursement of Revolving Loans. The proceeds of Revolving
Loans shall be transmitted by the Agent or Lenders, as the case may be, to the
Disbursement Account.

            2.2.4 Notices of Borrowing. Notices of Borrowing may be given under
this Section by telephone or facsimile transmission, and, if by telephone,
promptly shall be confirmed

                                       24
<PAGE>

in writing. The Funds Administrator shall specify in each Notice of Borrowing
whether the conditions for the requested Borrowing are satisfied. The Borrowers
may request one or more Borrowings of Revolving Loans constituting Base Rate
Loans on the same Business Day. Each Notice of Borrowing for LIBOR Rate Loans
shall be given not later than 12:00 noon Chicago time on the third Business Day
prior to the proposed Borrowing. Each Notice of Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving Loans of
the same Type and, if such Borrowing is to consist of LIBOR Rate Loans, shall be
in an aggregate amount of not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. The right of the Borrowers to choose LIBOR Rate
Loans is subject to the provisions of Section 4.14. Once given, a Notice of
Borrowing is irrevocable and binding on the Borrowers. The Funds Administrator
shall provide to the Agent a list, with specimen signatures, of officers and
other Persons, if any, authorized to request Revolving Loans. The Agent is
entitled to rely upon such list until it is replaced by the Funds Administrator.

      2.3   Notice of Request for Lender Advances. Subject to the last sentence
of this Section, the Agent shall give each Lender prompt notice by telephone or
facsimile transmission of a Notice of Borrowing that is received pursuant to
Section 2.2(a) and is to be satisfied by Lender Advances. No later than 3:00
p.m. Chicago time on the date of receipt of such notice, each Lender shall make
available for the account of its Applicable Lending Office to an account
specified by the Agent for deposit into the Disbursement Account, its
Proportionate Share of such Borrowing in immediately available funds. Unless the
Agent receives contrary written notice prior to any such Borrowing, it is
entitled to assume that each Lender will make available its Proportionate Share
of the Borrowing and in reliance upon that assumption, but without any
obligation to do so, may advance such Proportionate Share on behalf of the
Lender, without the necessity of giving daily notice to each Lender of the
receipt of a Notice of Borrowing.

      2.4   Periodic Settlement of Agent Advances; Interest and Fees;
Statements.

            2.4.1 The Settlement Date; Allocation of Interest and Fees. The
amount of each Lender's Proportionate Share of Revolving Loans shall be computed
weekly (or more frequently in the Agent's discretion) and shall be adjusted
upward or downward based on all Revolving Loans (including Agent Advances) and
repayments received by the Agent as of 5:00 p.m. Chicago time on the last
Business Day of the period specified by the Agent (such date, the "Settlement
Date").

            2.4.2 Summary Statements; Settlements. The Agent shall deliver to
each of the Lenders promptly after the Settlement Date a summary statement of
the current account activity, if any, of outstanding Revolving Loans (including
Agent Advances) for the period, the amount of repayments received for the
period, and the amount allocated to each Lender of the interest and Unused Line
Fee for the period. After application of payments under Section 4.12, as
reflected on the summary statement, (i) the Agent shall transfer to each Lender
its allocated share of interest and Unused Line Fee, and its Proportionate Share
of repayments received by the Agent in respect of the period covered by such
summary statement; and (ii) each Lender shall transfer to the Agent, or the
Agent shall transfer to each Lender, such amounts as are necessary to insure
that, after giving effect to all such transfers, the amount of Revolving Loans
made by each Lender shall be equal to such Lender's Proportionate Share of the
aggregate amount of Revolving Loans outstanding as of such Settlement Date. If
the summary statement requires

                                       25
<PAGE>

transfers to be made to the Agent by the Lenders and is received by the Lenders
prior to 12:00 noon Chicago time on a Business Day, such transfers shall be made
in immediately available funds no later than 3:00 p.m. Chicago time that day;
and, if received after 12:00 noon Chicago time, then no later than 3:00 p.m.
Chicago time on the next Business Day. The obligation of each Lender to transfer
such funds is irrevocable, unconditional and without recourse to or warranty by
the Agent.

            2.4.3 Distribution of Interest and Unused Line Fees. Interest on the
Revolving Loans (including Agent Advances) and the Unused Line Fee shall be
allocated by the Agent to each Lender (i) in the case of interest, in accordance
with the Revolving Loans actually advanced by and repaid to such Lender and (ii)
in the case of the Unused Line Fee, in accordance with the Proportionate Share
of such Lender. Interest shall accrue from and including the date Revolving
Loans are advanced and to but excluding the date such Revolving Loans are either
repaid by the Borrowers or, if later, actually settled under this Section.
Promptly after the date of each such scheduled payment, the Agent shall
distribute to each Lender its portion, allocated as provided above, of interest
and Unused Line Fee which has been received by the Agent.

      2.5   Sharing of Payments. If any Lender shall obtain any payment (whether
made voluntarily or involuntarily, or through the exercise of any right of
set-off, or otherwise) on account of the Revolving Loans made by it or its
participations in the Letter of Credit Obligations in excess of its
Proportionate Share of payments on account of the Revolving Loans or Letter of
Credit Obligations obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Revolving Loans made
by them or in their participation in Letters of Credit as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each other Lender
shall be rescinded and each such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such other Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so recovered.
The Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.5, to the fullest extent permitted by law, may
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.

      2.6   Defaulting Lenders.

            (a)   A Lender who fails to pay the Agent its Proportionate Share of
      any Revolving Loans (including Agent Advances) made available by the Agent
      on such Lender's behalf, or who fails to pay any other amounts owing by it
      hereunder to the Agent, is a "Defaulting Lender." The Agent is entitled to
      recover from such Defaulting Lender all such amounts owing by such
      Defaulting Lender on demand. If the Defaulting Lender does not pay such
      amounts on the Agent's demand, the Agent shall promptly notify the Funds
      Administrator and the Borrowers shall pay such amounts to the Agent (to
      the extent the Agent has made such amounts available to or for the account
      of the Borrowers) within 5 Business Days of the receipt by the Funds
      Administrator of such

                                       26
<PAGE>

      notice. In addition, the Defaulting Lender or the Borrowers shall pay to
      the Agent for its own account interest on such amount for each day from
      the date it was made available by the Agent to the Borrowers to the date
      it is recovered by the Agent at a rate per annum equal to (x) the
      overnight Federal Funds Rate if paid by the Defaulting Lender, or (y) the
      then applicable rate of interest calculated under Section 4.1, if paid by
      the Borrowers; plus, in each case, the Expenses and losses, if any,
      incurred as a result of the Defaulting Lender's failure to perform its
      obligations. Nothing herein shall be deemed to relieve any Lender of its
      obligation to fulfill its commitments hereunder or to prejudice any rights
      which the Borrowers may have against any Lender as a result of any default
      by such Lender hereunder, including, without limitation, the right of the
      Borrowers to seek reimbursement from any Defaulting Lender for any amounts
      paid by the Borrowers under clause (y) above on account of such Defaulting
      Lender's default.

            (b)   The failure of any Lender to fund its Proportionate Share of a
      Revolving Loan shall not relieve any other Lender of its obligation to
      fund its Proportionate Share of a Revolving Loan. Conversely, no Lender
      shall be responsible for the failure of another Lender to fund its
      Proportionate Share of a Revolving Loan.

            (c)   The Agent shall not be obligated to transfer to a Defaulting
      Lender any payment made by the Borrowers to the Agent for the Defaulting
      Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing
      of any payment hereunder. Amounts payable to a Defaulting Lender shall
      instead be paid to or retained by the Agent. The Agent may hold and, in
      its discretion, re-lend to the Borrowers the amount of all such payments
      received by it for the account of such Lender. For purposes of voting or
      consenting to matters with respect to the Credit Documents and determining
      Proportionate Shares, such Defaulting Lender shall be deemed not to be a
      "Lender" and such Lender's Commitment shall be deemed to be zero (-0-).
      This Section shall remain effective with respect to such Lender until (x)
      the Obligations shall have been declared or shall have become immediately
      due and payable or (y) the Required Lenders, the Agent and the Borrowers
      shall have waived such Lender's default in writing. The operation of this
      Section shall not be construed to increase or otherwise affect the
      Commitment of any Lender, or relieve or excuse the performance by the
      Borrowers of their respective duties and obligations hereunder.

      2.7   Allocation of Revolving Loans and Expenses.

            (a)   The Borrowers maintain an integrated cash management system
      reflecting their interdependence on one another and the mutual benefits
      shared among them as a result of their respective operations. In order to
      efficiently fund and operate their respective businesses and minimize the
      number of Borrowings which they will make under this Credit Agreement and
      thereby reduce the administrative costs and record keeping required in
      connection therewith, including the necessity to enter into and maintain
      separately identified and monitored borrowing facilities, the Borrowers
      have requested, and the Agent and the Lenders have agreed that, subject to
      Section 11.16, (i) all Revolving Loans will be advanced to and for the
      account of the Borrowers on a joint and several basis to the Disbursement
      Account and (ii) all Letters of Credit will be issued pursuant to an
      application therefor executed by the Funds Administrator on behalf and for

                                       27
<PAGE>

      the account of the Borrower or Borrowers specified by the Funds
      Administrator in such application. Each of the Borrowers hereby
      acknowledges that it will be receiving a direct benefit from each
      Revolving Loan made and each Letter of Credit issued pursuant to this
      Credit Agreement.

            (b)   In order to track more precisely the respective recipients of
      the proceeds of each Revolving Loan and the Borrower receiving the primary
      benefit from the issuance of each Letter of Credit, and to assist the
      Funds Administrator, the Borrowers, the Agent and the Lenders in
      administering the Revolving Loans and the Letters of Credit, each of the
      Borrowers has agreed with the Agent and the Lenders to cause the Funds
      Administrator to establish and maintain, and the Funds Administrator
      hereby agrees to establish and maintain, accounts with respect to each
      Borrower (each Borrower's "Allocation Account") in which the Funds
      Administrator shall record its good faith allocation to each of the
      Borrowers of (w) the proceeds, if any, of each Revolving Loan received by
      or for the account of such Borrower, (x) payments made to the Agent on
      account of the Obligations of such Borrower, (y) the aggregate face amount
      of all outstanding Letters of Credit covering goods which such Borrower
      will receive and (z) all previously unallocated Expenses.

            (c)   As soon as available, but not later than fifteen (15) Business
      Days after the last Business Day of each month ending after the Closing
      Date, the Funds Administrator shall deliver to the Agent and each Borrower
      a report prepared by or under the supervision of the chief financial
      officer of the Funds Administrator, and certified by such officer, setting
      forth with respect to each Borrower the balance of the Allocation Account
      of such Borrower as of the end of, and all activity occurring in such
      Allocation Account during, such month. Absent demonstrable error, each
      such monthly statement shall be final, conclusive and binding on the
      respective Borrowers.

      2.8   Increase in Revolving Credit Commitments. So long as no Default or
Event of Default shall have occurred and be continuing, the Funds Administrator
may, on any Business Day prior to the Expiration Date, with the written consent
of the Agent (which consent shall not be unreasonably withheld or delayed),
increase the aggregate amount of the Commitments by delivering a Commitment
Amount Increase Request at least ten (10) Business Days prior to the desired
effective date of such increase (the "Commitment Amount Increase") identifying
an additional Lender or Lenders (or additional Commitments for existing
Lender(s)) and the amount of its Commitment(s) (or additional amount of its
Commitment(s)); provided, however, that (i) any increase of the aggregate amount
of the Commitments to an amount in excess of $200,000,000 will require the
approval of all the Lenders, and (ii) any increase of the aggregate amount of
the Commitments shall be in an amount not less than $10,000,000. The effective
date of the Commitment Amount Increase shall be agreed upon by the Borrower and
the Agent. Upon the effectiveness thereof, the new Lender(s) (or, if applicable,
existing Lender(s)) shall advance Revolving Loans in an amount sufficient such
that after giving effect to its Revolving Loans each Lender shall have
outstanding its Proportionate Share of Revolving Loans. It shall be a condition
to such effectiveness that (i) either (A) no LIBOR Rate Loans be outstanding on
the date of such effectiveness, (B) such date of effectiveness shall coincide
with the last day of the Interest Period of all LIBOR Rate Loans outstanding, or
(C) any LIBOR Rate Loans outstanding shall be prepaid and reborrowed on such
effective date and the Borrowers shall have

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<PAGE>

paid to the Lenders pursuant to Section 4.14.4 all costs and expenses associated
with such prepayment and reborrowing, and (ii) the Borrower shall not have
terminated any portion of the Commitments pursuant to Section 4.8(c) hereof. The
Borrower agrees to pay any reasonable expenses of the Agent relating to any
Commitment Amount Increase. Upon the effectiveness of any such increase in the
Commitments, the Agent is hereby authorized to issue an amended Annex I to this
Agreement reflecting such revised Commitments. Notwithstanding anything herein
to the contrary, no Lender shall have any obligation to increase its Commitment
and no Lender's Commitment shall be increased without its consent thereto, and
each Lender may at its option, unconditionally and without cause, decline to
increase its Commitment.

                                   ARTICLE III

                                LETTERS OF CREDIT

      3.1   Letters of Credit.

            (a)   Subject to and upon the terms and conditions set forth herein,
      the Funds Administrator may, for and on behalf of any Borrower, at any
      time and from time to time on and after the Closing Date, request the
      Agent either to (i) direct an Issuing Bank to issue for the account of the
      Funds Administrator and for the benefit of (a) any holder (or any trustee,
      agent or other similar representative for any such holders) of LC
      Supportable Obligations of any Borrower, an irrevocable standby letter of
      credit, in a form customarily used by such Issuing Bank or in such other
      form as has been approved by such Issuing Bank, and (b) sellers of goods
      to any Borrower, an irrevocable trade letter of credit, or (ii) approve
      the issuance by an Issuing Bank of an irrevocable trade letter of credit
      upon application made by any Borrower directly to such Issuing Bank
      pursuant to an application procedure previously approved by the Agent, in
      each case in a form customarily used by such Issuing Bank or in such other
      form as has been approved by such Issuing Bank (provided, that, in the
      event of any conflict between the terms of this Credit Agreement and such
      form, the terms of this Credit Agreement shall govern and control). All
      Letters of Credit shall be denominated in United States Dollars and shall
      be issued on a sight basis only.

            (b)   Subject to and upon the terms and conditions set forth herein,
      the Agent agrees that it will, at any time and from time to time on and
      after the Closing Date, following its receipt of the respective Letter of
      Credit Request, direct the applicable Issuing Bank to issue (or approve
      the issuance for the account of Borrowers of), one or more Letters of
      Credit as are permitted to remain outstanding hereunder without giving
      rise to a Default or an Event of Default, provided, that the Agent shall
      not be under any obligation to direct any Issuing Bank to issue (or to
      approve the issuance by any Issuing Bank of) any Letter of Credit if at
      the time of such issuance any order, judgment or decree of any
      Governmental Authority or arbitrator shall purport by its terms to enjoin
      or restrain such Issuing Bank from issuing such Letter of Credit or any
      Requirement of Law applicable to such Issuing Bank or any request or
      directive (whether or not having the force of law) from any Governmental
      Authority with jurisdiction over such Issuing Bank shall prohibit, or
      request that such Issuing Bank refrain from, the issuance of letters of
      credit generally or such Letter of Credit in particular or shall impose
      upon such Issuing

                                       29
<PAGE>

      Bank with respect to such Letter of Credit any restriction or reserve or
      capital requirement (for which such Issuing Bank is not otherwise
      compensated hereunder) not in effect with respect to such Issuing Bank on
      the date hereof, or any unreimbursed loss, cost or expense which was not
      applicable or in effect with respect to such Issuing Bank as of the date
      hereof and which such Issuing Bank reasonably and in good faith deems
      material to it. The transmittal by the Funds Administrator on behalf of
      any Borrower or Borrowers of any Letter of Credit Request shall be deemed
      to be a representation and warranty made by all Borrowers, both at the
      time of such transmittal and at the time of the issuance of the requested
      Letter of Credit, that the Letter of Credit may be issued in accordance
      with and will not violate any of the requirements of this Credit
      Agreement, including, without limitation, this Article III.

      3.2   Maximum Letter of Credit Obligations; Final Maturities.
Notwithstanding anything to the contrary contained in this Credit Agreement, (a)
no Letter of Credit shall be issued if (x) the Stated Amount thereof, when added
to the Letter of Credit Obligations outstanding at such time, would exceed
$20,000,000, or (y) after giving effect to such issuance, the sum of the
Revolving Loans plus the Letter of Credit Obligations, in each case outstanding
at such time would exceed the lesser at such time of (i) the Line of Credit and
(ii) the Borrowing Base; and (b) each Letter of Credit shall by its terms
terminate on or before (A) in the case of standby Letters of Credit, the date
which occurs 12 months after the date of the issuance thereof (although any such
standby Letter of Credit may be extendible for successive periods of up to 12
months on terms acceptable to the Agent and the Issuing Bank) but in no event
later than 25 Business Days prior to the Expiration Date, and (B) in the case of
trade Letters of Credit, on or before the date which occurs 120 days after the
date of issuance thereof but in no event later than 25 Business Days prior to
the Expiration Date.

      3.3   Letter of Credit Requests.

            (a)   Whenever the Funds Administrator, for and on behalf of any
      Borrower, desires the Agent to direct or approve the issuance of a Letter
      of Credit for the account of the Funds Administrator (or to amend or
      modify any existing Letter of Credit), the Funds Administrator shall give
      the Agent at least five Business Days' (or such shorter period as is
      acceptable to the Agent) written notice thereof (including by way of
      facsimile). Each such notice shall be given to Agent in the form of
      Exhibit C hereto (each a "Letter of Credit Request").

            (b)   The making of each Letter of Credit Request shall be deemed to
      be a representation and warranty by Borrowers to Agent and the Lenders
      that such Letter of Credit may be issued in accordance with, and will not
      violate the requirements of, this Credit Agreement, including, without
      limitation, this Article III. Upon receipt by the Agent of a Letter of
      Credit Request, then the Agent shall, subject to the terms and conditions
      of this Credit Agreement, either direct an Issuing Bank to issue (or amend
      or modify, as the case may be), or, approve the issuance of (or the
      amendment or modification of, as the case may be), the requested Letter of
      Credit for the account of the Funds Administrator in accordance with such
      Issuing Bank's usual and customary practices. The issuance or modification
      of any Letter of Credit by the applicable Issuing Bank shall, in addition
      to the conditions precedent set forth in this Agreement (the

                                       30
<PAGE>

      satisfaction of which the applicable Issuing Bank shall have no duty to
      ascertain), be subject to the conditions precedent that such Letter of
      Credit shall be satisfactory to the applicable Issuing Bank and that the
      Borrowers shall have executed and delivered such application agreement
      and/or such other instruments and agreements relating to such Letter of
      Credit as the applicable Issuing Bank shall have reasonably requested
      (including, with respect to any Letter of Credit issued by LaSalle Bank or
      its Affiliates, in its capacity as an Issuing Bank, the LBNA Master Letter
      of Credit Agreement). Upon the issuance or modification of, or amendment
      to, any standby Letter of Credit, the Issuing Bank shall promptly provide
      written confirmation of such issuance, amendment or modification, as the
      case may be, to the Funds Administrator and the Agent, and such notice
      shall be accompanied by a copy of such issuance, modification or
      amendment, as the case may be. Upon receipt of such notice, the Agent
      shall promptly provide written notice to the LC Participants of such
      issuance, modification or amendment, and if requested, the Agent shall
      provide such LC Participant, with copies of any such issuance,
      modification or amendment. Notwithstanding anything to the contrary
      contained in this Credit Agreement, in the event that any Lender is a
      Defaulting Lender, no Issuing Bank shall be required to issue any Letter
      of Credit unless such Issuing Bank has entered into arrangements
      satisfactory to it and the Borrowers to eliminate such Issuing Bank's risk
      with respect to the participation in Letters of Credit by such Defaulting
      Lender, including by cash collateralizing such Defaulting Lender's
      Proportionate Share of the Letter of Credit Obligations.

      3.4   Letter of Credit Participations.

            (a)   Immediately upon the issuance by an Issuing Bank of any Letter
      of Credit, such Issuing Bank shall be deemed to have sold and transferred
      to each Lender (other than such Issuing Bank in its capacity (if any) as a
      Lender) and each such Lender (in its capacity under this Section 3.4, an
      "LC Participant"), shall be deemed irrevocably and unconditionally to have
      purchased and received from such Issuing Bank, without recourse or
      warranty, an undivided interest and participation, to the extent of such
      LC Participant's Proportionate Share, in such Letter of Credit, each
      Drawing or payment made thereunder and the joint and several obligations
      of the respective Borrowers under this Credit Agreement with respect
      thereto, and any security therefor or guaranty pertaining thereto. Upon
      any change in the Commitments or Proportionate Shares of the respective
      Lenders pursuant to the terms of this Credit Agreement, it is hereby
      agreed that, with respect to all Letter of Credit Obligations, there shall
      be an automatic adjustment to the participations pursuant to this Section
      3.4 to reflect the new Proportionate Shares of the assignor and assignee
      Lender, as the case may be.

            (b)   In determining whether to pay under any Letter of Credit, no
      Issuing Bank shall have any obligation relative to the Lenders other than
      to confirm that any documents required to be delivered under such Letter
      of Credit appear to have been delivered and that they appear to
      substantially comply on their face with the requirements of such Letter of
      Credit. Any action taken or omitted to be taken by an Issuing Bank under
      or in connection with any Letter of Credit issued by it shall not create
      for such Issuing Bank any resulting liability to any Borrower, any other
      Credit Party, any Lender or any other Person unless such action is taken
      or omitted to be taken with gross negligence or willful

                                       31
<PAGE>

      misconduct (as determined by a court of competent jurisdiction in a final
      and non-appealable decision).

            (c)   In the event that any Issuing Bank makes any payment under any
      Letter of Credit issued by it, such Issuing Bank shall promptly notify the
      Agent, which shall promptly notify each LC Participant of such failure,
      and each LC Participant shall promptly and unconditionally pay to such
      Issuing Bank the amount of such LC Participant's Proportionate Share of
      such unreimbursed payment in United States Dollars and in same day funds.
      If the Agent so notifies, prior to 12:00 Noon (Chicago time) on any
      Business Day, any LC Participant required to fund a payment under a Letter
      of Credit, such LC Participant shall make available to such Issuing Bank
      in United States Dollars such LC Participant's Proportionate Share of the
      amount of such payment on such Business Day in same day funds. If and to
      the extent such LC Participant shall not have so made its Proportionate
      Share of the amount of such payment available to the Issuing Bank, such LC
      Participant agrees to pay to such Issuing Bank, forthwith on demand such
      amount, together with interest thereon, for each day from such date until
      the date such amount is paid to such Issuing Bank at the overnight Federal
      Funds Rate for the first 3 days and at the interest rate applicable to
      Revolving Loans for each day thereafter. The failure of any LC Participant
      to make available to an Issuing Bank its Proportionate Share of any
      payment under any Letter of Credit shall not relieve any other LC
      Participant of its obligation hereunder to make available to such Issuing
      Bank its Proportionate Share of any payment under any Letter of Credit on
      the date required, as specified above, but no LC Participant shall be
      responsible for the failure of any other LC Participant to make available
      to such Issuing Bank such other LC Participant's Proportionate Share of
      any such payment.

            (d)   Whenever an Issuing Bank receives a payment of a reimbursement
      obligation as to which it has received any payments from the LC
      Participants pursuant to clause (c) above, such Issuing Bank shall pay to
      each such LC Participant which has paid its Proportionate Share thereof,
      in United States Dollars and in same day funds, an amount equal to such LC
      Participant's share (based upon the proportionate aggregate amount
      originally funded by such LC Participant to the aggregate amount funded by
      all LC Participants) of the principal amount of such reimbursement
      obligation and interest thereon accruing after the purchase of the
      respective participations.

            (e)   Upon the request of any LC Participant, each Issuing Bank
      shall furnish to such LC Participant such documentation as may reasonably
      be requested by such LC Participant.

            (f)   The obligations of the LC Participants to make payments to any
      Issuing Bank with respect to Letters of Credit issued by it shall be
      irrevocable and not subject to any qualification or exception whatsoever
      and shall be made in accordance with the terms and conditions of this
      Credit Agreement under all circumstances, including, without limitation,
      any of the following circumstances:

                  (i)   any lack of validity or enforceability of this Credit
                        Agreement or any of the other Credit Documents;

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<PAGE>

                  (ii)  the existence of any claim, setoff, defense or other
                        right which any Credit Party or any Subsidiary of any
                        Credit Party may have at any time against a beneficiary
                        named in a Letter of Credit, any transferee of any
                        Letter of Credit (or any Person for whom any such
                        transferee may be acting), the Agent, any LC
                        Participant, or any other Person, whether in connection
                        with this Credit Agreement, any Letter of Credit, the
                        transactions contemplated herein or any unrelated
                        transactions (including any underlying transaction
                        between any Credit Party or any Subsidiary of any Credit
                        Party and the beneficiary named in any such Letter of
                        Credit);

                  (iii) any draft, certificate or any other document presented
                        under any Letter of Credit proving to be forged,
                        fraudulent, invalid or insufficient in any respect or
                        any statement therein being untrue or inaccurate in any
                        respect;

                  (iv)  surrender or impairment of any security for the
                        performance or observance of any of the terms of any of
                        the Credit Documents; or

                  (v)   the occurrence of any Default or Event of Default.

      3.5   Agreement to Repay Letter of Credit Drawings.

            (a)   Borrowers jointly and severally agree to reimburse each
      Issuing Bank, by making payment to the Agent in immediately available
      funds, for any payment or disbursement made by such Issuing Bank under any
      Letter of Credit issued by it, not later than one Business Day following
      receipt by the Funds Administrator of notice from the Agent of such
      payment or disbursement, with interest on the amount so paid or disbursed
      by such Issuing Bank, to the extent not reimbursed prior to 12:00 Noon on
      the date of such payment or disbursement, from and including the date paid
      or disbursed to but excluding the date such Issuing Bank is reimbursed
      therefor at a rate per annum equal to the Base Rate in effect from time to
      time plus the Applicable Margin for Base Rate Loans; provided, that, to
      the extent such amounts are not reimbursed prior to 12:00 Noon on the
      third Business Day following the receipt by the Funds Administrator of
      notice of such payment or disbursement or following the occurrence and
      during the continuance of a Default or an Event of Default, interest shall
      thereafter accrue on the amounts so paid or disbursed by the Issuing Bank
      (and until reimbursed by Borrowers) at a rate per annum equal to the Base
      Rate in effect from time to time plus the Applicable Margin for Base Rate
      Loans plus two percent (2.00%), with such interest to be payable on
      demand. The Issuing Bank shall give the Funds Administrator prompt written
      notice of each Drawing under any Letter of Credit issued by it; provided,
      that the failure to give any such notice shall in no way affect, impair or
      diminish any Borrower's obligations hereunder.

            (b)   The joint and several obligations of the Borrowers under this
      Section 3.5 to reimburse the Issuing Bank with respect to drawings under
      Letters of Credit issued by it (each a "Drawing") (including, in each
      case, interest thereon) shall be absolute and

                                       33
<PAGE>

      unconditional under any and all circumstances and irrespective of any
      setoff, counterclaim or defense to payment which any Borrower or any
      Subsidiary of any Borrower may have or have had against any Lender
      (including in its capacity as an Issuing Bank or as a LC Participant),
      including, without limitation, any defense based upon the failure of any
      Drawing under a Letter of Credit to conform to the terms of the Letter of
      Credit or any nonapplication or misapplication by the beneficiary of the
      proceeds of such Drawing; provided, that Borrowers shall not be obligated
      to reimburse any Issuing Bank for any wrongful payment made by such
      Issuing Bank under a Letter of Credit issued by it as a result of acts or
      omissions constituting willful misconduct or gross negligence on the part
      of such Issuing Bank (as determined by a court of competent jurisdiction
      in a final and non-appealable decision).

      3.6   Capital Adequacy. If, at any time after the Closing Date, the
introduction of or any change in any applicable law, rule, regulation, order,
guideline or request or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Issuing Bank or any LC Participant with any
request or directive by any such Governmental Authority (whether or not having
the force of law), shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued by such Issuing Bank or participated in by such LC Participant, or
(ii) impose on such Issuing Bank or such LC Participant any other conditions
relating, directly or indirectly, to this Credit Agreement or any Letter of
Credit; and the result of any of the foregoing is to increase the cost to such
Issuing Bank or such LC Participant of issuing, maintaining or participating in
any Letter of Credit, or reduce the amount of any sum received or receivable by
such Issuing Bank or such LC Participant hereunder or reduce the rate of return
on its capital with respect to Letters of Credit (except for changes in the rate
of tax on, or determined by reference to, the net income or profits of such
Issuing Bank or such LC Participant pursuant to the laws of the jurisdiction in
which it is organized or in which its principal office or applicable lending
office is located or any subdivision thereof or therein), then, upon the
delivery at any time within 180 days after the date on which an officer of the
Issuing Bank or LC Participant, as the case may be, responsible for overseeing
this Credit Agreement knows or has reason to know of its right to additional
compensation under this Section 3.6, of the certificate referred to below to the
Funds Administrator by such Issuing Bank or such LC Participant, as the case may
be (a copy of which certificate shall be sent by such Issuing Bank or such LC
Participant to the Agent), Borrowers jointly and severally agree to pay to such
Issuing Bank or such LC Participant such additional amount or amounts as will
compensate such Issuing Bank or such LC Participant for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital; provided, that if such Issuing Bank or such LC Participant, as the case
may be, fails to deliver such demand within such 180-day period, such entity
shall only be entitled to additional compensation for any such costs incurred
from and after the date that is 180 days prior to the date the Borrowers
received such demand. Any Issuing Bank or any LC Participant, upon determining
that any additional amounts will be payable pursuant to this Section 3.6, will
give prompt written notice thereof to the Funds Administrator, which notice
shall include a certificate submitted to the Funds Administrator by the Issuing
Bank or such LC Participant (a copy of which certificate shall be sent by such
Issuing Bank or such LC Participant to the Agent), setting forth in reasonable
detail the basis for the calculation of such additional amount or amounts
necessary to compensate such Issuing Bank or such LC Participant. Any
certificate required to

                                       34
<PAGE>

be delivered pursuant to this Section 3.6 shall, absent demonstrable error, be
final and conclusive and binding on Borrowers.

                                   ARTICLE IV

              COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS

      4.1   Interest on Revolving Loans.

            (a)   Interest on the unpaid principal amount of Revolving Loans
      which are Base Rate Loans shall be payable monthly in arrears on the first
      Business Day of each month, at an interest rate per annum equal to the
      Base Rate in effect from time to time plus the Applicable Margin, in
      effect from time to time, for such Loans.

            (b)   Interest on the unpaid principal amount of Revolving Loans
      which are LIBOR Rate Loans shall be payable on the earliest to occur of
      (i) the last day of each Interest Period with respect to such LIBOR Rate
      Loans, (ii) ninety (90) days following the commencement of the applicable
      Interest Period for such LIBOR Rate Loans, (iii) the date of conversion of
      such LIBOR Rate Loans (or a portion thereof) to a Base Rate Loan (on the
      portion so converted) and (iv) the maturity of such LIBOR Rate Loans, at
      an interest rate per annum equal during the Interest Period for such LIBOR
      Rate Loans to the LIBOR Rate for the Interest Period in effect for such
      LIBOR Rate Loans plus the Applicable Margin, in effect from time to time,
      with respect to such Loans. After maturity of such LIBOR Rate Loans
      (whether by acceleration or otherwise), interest shall be payable upon
      demand. The Agent upon determining the LIBOR Rate for any Interest Period
      shall promptly notify the Funds Administrator and the Lenders by telephone
      (confirmed promptly in writing) or in writing thereof.

            (c)   Each determination by the Agent of an interest rate hereunder
      shall be conclusive and binding for all purposes, absent demonstrable
      error.

            (d)   Notwithstanding the provisions of Section 4.1(b), the
      Borrowers shall pay to each Lender, so long as and to the extent such
      Lender shall be required under regulations of the Federal Reserve Board to
      maintain reserves with respect to liabilities or assets consisting of or
      including Eurocurrency liabilities (as defined in Regulation D),
      additional interest on the unpaid principal amount of each Revolving Loan
      comprised of LIBOR Rate Loans of such Lender, from the date of such LIBOR
      Rate Loan until such principal amount is paid in full, at an interest rate
      per annum equal at all times to the remainder obtained by subtracting (i)
      the LIBOR Rate for the applicable Interest Period for such LIBOR Rate Loan
      from (ii) the rate obtained by dividing such LIBOR Rate by a percentage
      equal to 1 minus the stated maximum rate (stated as a decimal) applicable
      two (2) Business Days before the first day of such Interest Period of all
      reserves, if any, required to be maintained against Eurocurrency
      liabilities as specified in Regulation D (or against any other category of
      liabilities which includes deposits by reference to which the interest
      rate on LIBOR Rate Loans is determined or any category of extensions of
      credit or other assets which includes loans by a non-United States office
      of any Lender to United States residents) having a term equal to the
      Interest Period applicable to such

                                       35
<PAGE>

      LIBOR Rate Loan. Such Lender shall as soon as practicable provide notice
      to the Agent and the Funds Administrator of any such additional interest
      arising in connection with such LIBOR Rate Loan, which notice shall be
      conclusive and binding, absent demonstrable error.

      4.2   Unused Line Fee. The Borrowers shall pay to the Agent, for the
ratable benefit of the Lenders, a non-refundable fee (the "Unused Line Fee")
equal to the Unused Line Fee Rate in effect from time to time multiplied by the
unused portion of the aggregate Commitments of all Lenders (with any outstanding
Letters of Credit constituting usage of the Line of Credit). The Unused Line Fee
shall accrue daily from the Closing Date until the Expiration Date, and shall be
due and payable monthly in arrears, on the first Business Day of each month and
on the Expiration Date.

      4.3   Letter of Credit Fees.

            (a)   The Agent, for the ratable benefit of the LC Participants,
      shall be entitled to charge to the account of the Funds Administrator on
      the first Business Day of each month, a fee (the "Letter of Credit Fee")
      in an amount equal to the Letter of Credit Fee Rate in effect from time to
      time multiplied by the Stated Amount of Letters of Credit outstanding
      during the immediately preceding month.

            (b)   In addition to the above described fees, the Borrowers agree
      to pay to the Issuing Bank, for the account of the Issuing Bank, such
      bank's charges, fees, costs and expenses in connection with the issuance,
      transfer, amendment and payment of any Letter of Credit (the "Issuing Bank
      Fees"). Each Issuing Bank shall be entitled to request the Agent to charge
      the account of the Borrowers for Issuing Bank Fees incurred by such
      Issuing Bank. Such charges, fees, costs and expenses shall be payable as
      and when incurred by the Issuing Bank. Each determination by the Agent or
      the Issuing Bank, as the case may be, of the Letter of Credit Fees,
      Issuing Bank Fees and other fees, costs and expenses charged under this
      Section shall be conclusive and binding for all purposes, absent
      demonstrable error.

      4.4   Interest and Letter of Credit Fees After Event of Default. From the
date of occurrence of an Event of Default (after giving effect to any applicable
grace period) until the earlier of the date upon which (i) all Obligations shall
have been paid and satisfied in full or (ii) such Event of Default shall have
been cured or waived, interest on the Revolving Loans and Letter of Credit Fees
on Letter of Credit Obligations shall each be payable on demand at a rate per
annum equal to, with respect to the Revolving Loans, the rate in effect under
Section 4.1, plus two percent (2%), and with respect to the Letter of Credit
Obligations, the rate at which Letter of Credit Fees are charged pursuant to the
first sentence of Section 4.3(a), plus two percent (2%).

      4.5   [This Section Intentionally Left Blank]

      4.6   [This Section Intentionally Left Blank]

      4.7   Expenses. The Borrowers shall reimburse the Expenses of the Agent or
any Lender, as the case may be, promptly upon demand.

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<PAGE>

      4.8   Mandatory Payment of Revolving Loans; Reductions of Commitments.

            (a)   Except during the period described in Section 2.2.2(b), the
      aggregate outstanding principal amount of Revolving Loans plus Letter of
      Credit Obligations at any time in excess of the lesser at such time of (i)
      the aggregate Commitments of the Lenders or (ii) the Borrowing Base, shall
      be immediately due and payable without the necessity of any demand.

            (b)   On the Expiration Date, the Commitment of each Lender shall
      automatically reduce to zero (-0-).

            (c)   The Borrowers may reduce or terminate the Line of Credit in
      whole, or in part at any time and from time to time; provided, that each
      such reduction must be in an amount not less than $5,000,000 (and in
      increments of $1,000,000 in excess thereof). Once reduced, no portion of
      the Line of Credit may be reinstated. If the Borrowers seek to reduce the
      Line of Credit to less than $25,000,000, then the Line of Credit shall be
      automatically and permanently reduced to zero ($0).

      4.9   Maintenance of Loan Account, Statements of Account. The Agent shall
maintain an account on its books in the name of the Borrowers (the "Loan
Account") in which the Borrowers will be charged with all loans and advances
made by the Lenders to the Borrowers or for the account of the Borrowers,
including the Revolving Loans and all Letter of Credit Obligations, the Fees,
the Expenses and any other Obligations, as and when such payments become due.
The Loan Account will be credited with all payments received by the Agent from
the Borrowers or for the account of the Borrowers, including all amounts
received in the LaSalle Bank Account from the Collection Banks. After the end of
each month, the Agent shall send the Funds Administrator a monthly statement
accounting for the charges, loans, advances and other transactions occurring
among and between the Agent, the Lenders and the Borrowers during that month,
provided, that the failure of the Agent to send such statement to the Funds
Administrator shall not relieve the Borrowers of any Obligations. Absent
demonstrable error, each monthly statement shall be an account stated and shall
be final, conclusive and binding on the Borrowers.

      4.10  Payment Procedures. Payments of Fees, principal of and interest on
the Revolving Loans and Expenses payable to the Agent or any Lender shall be
made in each case not later than 2:00 p.m. Chicago time on the day when due, in
immediately available United States Dollars, to the Payment Office. If any such
payment becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day, and with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. The Borrowers hereby authorize the Agent
to charge the Loan Account with the amount of all payments to be made hereunder
and under the other Credit Documents, including all Fees and Expenses, as and
when such payments become due. The joint and several obligations of the
Borrowers to the Lenders with respect to such payments shall be discharged by
making such payments to the Agent pursuant to this Section or, at the Agent's
option, by the charging of the Loan Account by the Agent.

      4.11  Collection of Accounts. Each Borrower shall be entitled to receive
Collections directly from account debtors in accordance with its historical
practices. Borrowers shall from

                                       37
<PAGE>

time to time establish accounts for the deposit of Collections (each, a
"Collection Account") at financial institutions selected by such Borrowers and
reasonably acceptable to the Agent (the "Collection Banks") and shall enter
into, and cause the Collection Banks to enter into, agreements in form and
substance satisfactory to Agent (the "Depositary Account Agreements"), in each
case (i) within 60 days of the date such Collection Account is established for
Collection Accounts established after the Closing Date, and (ii) within 60 days
of the Closing Date for Collection Accounts in existence as of the Closing Date
and maintained for more than 60 days thereafter. All Collections and other
amounts received by each Borrower from any account debtor, in addition to all
other cash received by any Borrower in respect of any other Collateral, shall
upon receipt be deposited into a Collection Account. Termination of such
arrangements shall also be subject to prior written approval by the Agent. The
Agent may by notice to the applicable Collection Bank given in the Agent's sole
and absolute discretion at any time following the occurrence of a Collection
Account Triggering Event, require that thereafter all available amounts held in
each Collection Account shall be wired each Business Day into an account (the
"LaSalle Bank Account") maintained by the Agent at LaSalle Bank. Amounts
received in the LaSalle Bank Account from the Collection Banks shall be credited
to the Loan Account and distributed and applied as set forth in Section 4.12.

      4.12  Distribution and Application of Collections and Other Amounts. All
Collections received by the Agent, and all other amounts received by the
Borrowers and delivered to the Agent, shall be credited to the Loan Account;
provided, that if an Event of Default has occurred and is continuing, all
Collections and other amounts received by Agent shall be distributed and applied
in the following order: first, to the payment of any Fees, Expenses or other
Obligations due and payable to the Agent under any of the Credit Documents,
including Agent Advances and any other amounts advanced by the Agent on behalf
of the Lenders; second, to the payment of any Fees, Expenses or other
Obligations due and payable to any Issuing Bank under any of the Credit
Documents; third, to the ratable payment of any Fees, Expenses or other
Obligations due and payable to the Lenders under any of the Credit Documents
other than those Obligations specifically referred to in this Section; fourth,
to the ratable payment of interest due on the Revolving Loans; and, fifth, to
the ratable payment of principal due on the Revolving Loans.

      4.13  Calculations. All calculations of (i) interest hereunder and (ii)
Fees, including, without limitation, Unused Line Fees and Letter of Credit Fees,
shall be made by the Agent, on the basis of a year of 360 days, in each case for
the actual number of days elapsed (including the first day but excluding the
last day) occurring in the period for which such interest or Fees are payable.
Each determination by the Agent of an interest rate, Fee or other payment
hereunder shall be conclusive and binding for all purposes, absent demonstrable
error.

      4.14  Special Provisions Relating to LIBOR Rate Loans.

            4.14.1 Continuation. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrowers may, subject to the provisions of Section
4.14.3, elect to maintain such Borrowing or any portion thereof as consisting of
LIBOR Rate Loans by selecting a new Interest Period for such Borrowing, which
new Interest Period shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by notice
given not later than noon Chicago time on the third Business Day prior to the
date of any such continuation relating to LIBOR Rate Loans, by the Funds
Administrator to the Agent. Such

                                       38
<PAGE>

notice by the Funds Administrator of a continuation (a "Notice of Continuation")
shall be by telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of Exhibit D, in each case
specifying (i) the date of such continuation, (ii) the aggregate amount of
Revolving Loans subject to such continuation and (iii) the duration of the
selected Interest Period. The Borrowers may elect to maintain more than one
Borrowing consisting of LIBOR Rate Loans by combining such Borrowings into one
Borrowing and selecting a new Interest Period pursuant to this Section 4.14.1.
If the Borrowers shall fail to select a new Interest Period for any Borrowing
consisting of LIBOR Rate Loans in accordance with this Section 4.14.1, such
Revolving Loans will automatically, on the last day of the then existing
Interest Period therefor, convert into Base Rate Loans. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of each Notice
of Continuation.

            4.14.2 Conversion. The Borrowers may on any Business Day (so long as
no Default or Event of Default has occurred and is continuing), upon notice
(each such notice, a "Notice of Conversion") given to the Agent, and subject to
the provisions of Section 4.14.3, convert the entire amount of or a portion of
all Revolving Loans of one Type comprising the same Borrowing into Revolving
Loans of the other Type; provided, that any conversion of any LIBOR Rate Loans
into Base Rate Loans shall be made on, and only on, the last day of an Interest
Period for such LIBOR Rate Loans and, upon conversion of any Base Rate Loans
into LIBOR Rate Loans, the Borrowers shall pay accrued interest to the date of
conversion on the principal amount converted. Each such Notice of Conversion
shall be given not later than noon Chicago time on the Business Day prior to the
date of any proposed conversion into Base Rate Loans and on the third Business
Day prior to the date of any proposed conversion into LIBOR Rate Loans. Subject
to the restrictions specified above, each Notice of Conversion shall be by
telephone or facsimile transmission, and if by telephone, promptly confirmed in
writing, substantially in the form of Exhibit D-1, in each case specifying (i)
the requested date of such conversion, (ii) the Type of Revolving Loans to be
converted, (iii) the portion of such Type of Revolving Loan to be converted,
(iv) the Type of Revolving Loans such Revolving Loans are to be converted into
and (v) if such conversion is into LIBOR Rate Loans, the duration of the
Interest Period of such Revolving Loan. Each conversion shall be in an aggregate
amount of not less than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof. The Borrowers may elect to convert the entire amount of or a
portion of all Revolving Loans of one Type comprising more than one Borrowing
into Revolving Loans of another Type by combining such Borrowings into one
Borrowing; provided, that if the Borrowings so combined consist of LIBOR Rate
Loans, such Loans shall have Interest Periods ending on the same date.

            4.14.3 Certain Limitations on LIBOR Rate Loans. The right of the
Borrowers to maintain, select, continue or convert LIBOR Rate Loans shall be
limited as follows:

            (a)   If the Agent is not offering United States Dollar deposits (in
      the applicable amounts) in the London interbank market, or the Agent
      determines that adequate and fair means do not otherwise exist for
      ascertaining the LIBOR Rate or LIBOR Rate Loans comprising any requested
      Borrowing, continuation or conversion, the right of the Borrowers to
      select or maintain LIBOR Rate Loans for such Borrowing or any subsequent
      Borrowing shall be suspended until the Agent shall notify the Funds
      Administrator and the Lenders that the circumstances causing such
      suspension no longer exist, and each Revolving Loan shall be made as a
      Base Rate Loan.

                                       39
<PAGE>

            (b)   If the Required Lenders shall, at least two (2) Business Days
      before the date of any requested Borrowing, continuation or conversion,
      notify the Agent that the LIBOR Rate for Revolving Loans comprising such
      Borrowing will not adequately reflect the cost to such Lenders of making
      or funding their respective Revolving Loans for such Borrowing, the right
      of the Borrowers to select LIBOR Rate Loans for such Borrowing shall be
      suspended until the Agent shall notify the Funds Administrator and the
      Lenders that the circumstances causing such suspension no longer exist,
      and each Revolving Loan comprising such Borrowing and each other Borrowing
      requested during such period of suspension shall be made as a Base Rate
      Loan.

            (c)   If at any time any Lender determines (which determination
      shall, absent demonstrable error, be conclusive and binding on all
      parties) that the making, continuation or conversion of any Revolving Loan
      as a LIBOR Rate Loan by such Lender has become unlawful or impermissible
      by reason of compliance by that Lender with any law, governmental rule,
      regulation or order of any Governmental Authority (whether or not having
      the force of law), then, and in any such event, such Lender may give
      notice of that determination in writing, to the Agent and the Funds
      Administrator and the Agent shall promptly transmit the notice to each
      other Lender. Until such Lender gives notice otherwise, the right of the
      Borrowers to select LIBOR Rate Loans from that Lender shall be suspended
      and each Revolving Loan made by that Lender, notwithstanding the Type of
      Revolving Loan made by the other Lenders, shall be a Base Rate Loan and
      each LIBOR Rate Loan outstanding from that Lender shall automatically, on
      the last day of the existing Interest Period therefor (or earlier, if so
      required under such law, rule, regulation or order), convert to a Base
      Rate Loan.

            (d)   No Agent Advance shall be made as a LIBOR Rate Loan.

            (e)   No more than eight (8) Interest Periods with respect to LIBOR
      Rate Loans may be in effect at any time.

            (f)   No Revolving Loans may be made, continued or converted as or
      to LIBOR Rate Loans at any time that a Default or Event of Default shall
      have occurred and be continuing.

            4.14.4 Compensation.

            (a)   Each Notice of Continuation and Notice of Conversion shall be
      irrevocable by and binding on the Borrowers. In the case of any Borrowing,
      continuation or conversion that the related Notice of Borrowing, Notice of
      Continuation or Notice of Conversion specifies is to be comprised of LIBOR
      Rate Loans, the Borrowers shall indemnify each Lender against any loss,
      cost or expense incurred by such Person as a result of any failure to
      fulfill, on or before the date for such Borrowing, continuation or
      conversion specified in such Notice of Borrowing, Notice of Continuation
      or Notice of Conversion, the applicable conditions set forth in Article V,
      including, without limitation, any loss (excluding loss of anticipated
      profits), cost or expense incurred by reason of the liquidation or
      re-employment of deposits or other funds acquired by such Lender to fund

                                       40
<PAGE>

      the Revolving Loan to be made by such Lender as part of such Borrowing,
      continuation or conversion.

            (b)   If any payment of principal of, or conversion or continuation
      of, any LIBOR Rate Loan is made other than on the last day of the Interest
      Period for such Loan as a result of a payment, prepayment, conversion or
      continuation of such Loan or acceleration of the maturity of the Revolving
      Notes or for any other reason, the Borrowers shall, upon demand by any
      Lender (with a copy of such demand to the Agent), pay to the Agent for the
      account of such Lender any amounts required to compensate such Lender for
      any additional losses, costs or expenses which it may reasonably incur as
      a result of such payment, including, without limitation, any loss
      (excluding loss of anticipated profits), cost or expense incurred by
      reason of the liquidation or re-employment of deposits or other funds
      acquired by any Lender to fund or maintain such Loan.

            (c)   Calculation of all amounts payable to a Lender under this
      Section 4.14.4 shall be made as though such Lender elected to fund all
      LIBOR Rate Loans by purchasing United States Dollar deposits in its LIBOR
      Lending Office's interbank eurodollar market.

      4.15  Indemnification in Certain Events.

            4.15.1 Increased Costs. If after the Closing Date, either (i) any
change in or in the interpretation of any law or regulation is introduced,
including, without limitation, with respect to reserve requirements applicable
to the Agent, to any of the Lenders or any other affiliated banking or financial
institution from whom any of the Lenders borrows funds or obtains credit (a
"Funding Bank"), or (ii) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank or other
Governmental Authority proposed or promulgated after the date of the Agreement
or (iii) the Agent, a Funding Bank or any of the Lenders reasonably determines
that the adoption of any applicable law, rule or regulation regarding capital
adequacy or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof announced after
the date of this Credit Agreement has or would have the effect described below,
or the Agent, a Funding Bank or any of the Lenders complies with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency announced after the date
of this Credit Agreement and in the case of any event set forth in this clause
(iii), such adoption, change or compliance has or would have the effect of
reducing the rate of return on any of such Person's capital as a consequence of
its obligations hereunder to a level below that which such Person could have
achieved but for such adoption, change or compliance (taking into consideration
such Person's policies with respect to capital adequacy) by an amount reasonably
deemed by such Person to be material, and any of the foregoing events described
in clauses (i), (ii) or (iii) increases the cost to the Agent, or any of the
Lenders of (A) funding or maintaining any Commitment or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or reduces the amount receivable in
respect thereof by the Agent or any Lender, then the Borrowers shall upon demand
by the Agent at any time within 180 days after the date on which

                                       41
<PAGE>

an officer of the Agent, such Funding Bank or such Lender, as the case may be,
responsible for overseeing this Credit Agreement knows or has reason to know of
its right to additional compensation under this Section 4.15.1, pay to the
Agent, for the account of such Lender or, as applicable, the Agent or a Funding
Bank, additional amounts sufficient to reimburse the Agent, such Funding Bank
and such Lender against such increase in cost or reduction in amount receivable;
provided, however, that if the Agent or any such Lender or Funding Bank, as the
case may be, fails to deliver such demand within such 180-day period, such
entity shall only be entitled to additional compensation for any such costs
incurred from and after the date that is 180 days prior to the date the
Borrowers received such demand; and provided further, however, that before
making any such demand, the Agent and each Lender agree to use reasonable
efforts (consistent with such Person's internal policy and legal and regulatory
restrictions) to mitigate or avoid such increased costs, including, without
limitation, designating a different Applicable Lending Office if the making of
such a designation would avoid the need for, or reduce the amount of, such
increased cost and so long as such efforts would not, in the reasonable judgment
of such Person, be otherwise disadvantageous to such Person. A certificate as to
the amount of such increased cost, and setting forth in reasonable detail the
calculation thereof, shall be submitted to the Funds Administrator by the Agent,
or the applicable Lender or Funding Bank, and shall be conclusive absent
demonstrable error.

            4.15.2 Notification of Increased Costs. Each Lender will promptly
notify the Agent, and the Agent will promptly notify the Funds Administrator, of
any event of which it has knowledge that would entitle such entity to additional
compensation under this Section 4.15. Neither the Agent nor any Lender shall
request any additional compensation under this Section 4.15 unless it is
generally making similar requests of other borrowers similarly situated, and the
Agent and each Lender agrees to use a reasonable basis for calculating amounts
allocable to its commitment to lend or its Revolving Loans and Letter of Credit
Obligations, if any, hereunder.

      4.16  Substitution of Lenders. In the event the Borrowers become obligated
to pay additional amounts to any Lender pursuant to Section 4.15, or any Lender
is a Defaulting Lender, the Funds Administrator may designate another Lender
(with such other Lender's consent) reasonably acceptable to the Agent (such
other Lender herein called a "Replacement Lender") to purchase the Loans and
other Obligations of such Lender and such Lender's rights hereunder, without
recourse to or warranty by, or expense to, such Lender for a purchase price
equal to the outstanding principal amount of the Loans owing to such Lender plus
any accrued but unpaid interest on such Loans and other Obligations and accrued
but unpaid Unused Line Fees in respect of such Lender's Commitment and any other
amounts payable to such Lender under this Credit Agreement, and to assume all
the obligations of such Lender hereunder and, upon such purchase, such Lender
shall no longer be a party hereto or have any rights hereunder (other than
indemnities and other similar rights applicable to such Lender prior to the date
of such assignment and assumption) and shall be relieved from all obligations to
the Borrowers hereunder, and the Replacement Lender shall succeed to the rights
and obligations of such Lender hereunder.

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<PAGE>

      4.17  Taxes.

            (a)   All payments by the Borrowers to or for the account of any
      Lender, any Issuing Bank or the Agent hereunder or under any other Credit
      Document shall be made free and clear of and without deduction for any and
      all Taxes. If the Borrowers shall be required by law to deduct any Taxes
      from or in respect of any sum payable hereunder to any Lender, any Issuing
      Bank or the Agent, (a) the sum payable shall be increased as necessary so
      that after making all required deductions (including deductions applicable
      to additional sums payable under this Section 4.17), such Lender, such
      Issuing Bank or the Agent (as the case may be) receives an amount equal to
      the sum it would have received had no such deductions been made, (b) the
      Borrowers shall make all required deductions, (c) the Borrowers shall pay
      the full amount deducted to the relevant authority in accordance with
      applicable law, and (d) the Borrowers shall furnish to the Agent the
      original or certified copy of a receipt evidencing payment thereof, or, if
      such receipt is not obtainable, other evidence of payment reasonably
      satisfactory to the applicable Lender, Issuing Bank or Agent, within
      thirty (30) days after such payment is made. The Borrowers hereby agree to
      indemnify the Agent, each Issuing Bank and each Lender for the full amount
      of any Taxes (including, without limitation, any Taxes imposed on amounts
      payable under this Section 4.17) paid by the Agent, such Issuing Bank or
      such Lender and any liability (including penalties, interest and expenses)
      arising therefrom or with respect thereto (without duplication of such
      amounts to which such Person is entitled to indemnification under any
      other provisions of this Agreement and except to the extent it is finally
      and judicially determined to have resulted from such Person's own willful
      misconduct). Payments due under this indemnification shall be made within
      thirty (30) days of the date the Agent, such Issuing Bank or such Lender
      makes written demand therefor. The obligations of the Borrowers under this
      Section 4.17 shall survive payment of the Obligations and termination of
      this Agreement.

            (b)   Each Lender, Agent or Issuing Bank that is not a United States
      person (as such term is defined in Section 7701(a)(30) of the Internal
      Revenue Code) (a "Non-U.S. Lender") shall submit to the Funds
      Administrator and the Agent on or before the date the initial Borrowing is
      made hereunder or, if later, the date such Non-U.S. Lender becomes a party
      to this Agreement (or in the case of an assignment, including any
      assignment to a new Applicable Lending Office, on or before the date of
      such assignment), two duly completed and signed copies of (i) either
      Internal Revenue Service Form W-8 BEN or W-8 ECI (or successor applicable
      form), as the case may be, certifying in each case that such Non-U.S.
      Lender is entitled to a complete exemption from withholding under the
      Internal Revenue Code on all amounts to be received by such Non-U.S.
      Lender, including fees, pursuant to the Credit Documents) or (ii) solely
      if such Non-U.S. Lender is claiming exemption from United States
      withholding tax under Section 871(h) or 881(c) of the Internal Revenue
      Code with respect to payments of "portfolio interest," a Form W-8 BEN, or
      any successor form prescribed by the Internal Revenue Service, and a
      certificate representing that such Non U.S. Lender is not a bank for
      purposes of Section 881(c) of the Internal Revenue Code, is not a
      10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
      Internal Revenue Code) of any of the Borrowers and is not a controlled
      foreign corporation related to the Borrowers (within the meaning of
      Section 864(d)(4) of the Internal Revenue Code). Thereafter and from time
      to time, each Non U.S. Lender shall submit to the Funds Administrator and
      the Agent such additional duly completed and signed copies of one or the
      other of such Forms (or such

                                       43
<PAGE>

      successor forms as shall be adopted from time to time by the relevant
      United States taxing authorities) and such other certificates as may be
      (i) requested by the Funds Administrator in a written notice, directly or
      through the Agent, to such Non U.S. Lender and (ii) required under
      then-current United States law or regulations to avoid or reduce United
      States withholding taxes on payments in respect of all amounts to be
      received by such Non U.S. Lender, including fees, pursuant to the Credit
      Documents. Upon the request of the Funds Administrator or the Agent, each
      Lender that is a United States person (as such term is defined in Section
      7701(a)(30) of the Internal Revenue Code) shall submit to the Funds
      Administrator and the Agent a certificate to the effect that it is such a
      United States person. For any period during which a Non-U.S. Lender has
      failed to provide the Funds Administrator with an appropriate form or
      certificate pursuant to this subsection (unless such failure is due to a
      change in treaty, law or regulation, or any change in the interpretation
      or administration thereof by any governmental authority, occurring
      subsequent to the date on which a form originally was required to be
      provided), then notwithstanding anything to the contrary in this Section
      4.17, such Non-U.S. Lender shall not be entitled to additional amounts or
      indemnification under this Section 4.17 with respect to Taxes imposed by
      the United States; provided that, should a Non-U.S. Lender which is
      otherwise exempt from or subject to a reduced rate of withholding tax
      become subject to Taxes because of its failure to deliver a form required
      under this subsection, the Borrowers shall take such steps as such
      Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to
      recover such Taxes.

            (c)   To the extent reasonably possible, each Lender, Issuing Bank
      or Agent claiming any additional amounts payable pursuant to this Section
      4.17 shall use reasonable efforts (consistent with such Person's internal
      policies and legal and regulatory restrictions) to file any certificate or
      document reasonably requested by Borrowers or to designate a different
      Applicable Lending Office, if the making of such a filing or change in
      designation would avoid the need for or reduce the amount of any amounts
      which would be payable by Borrowers under the terms of this Section 4.17
      and would not, in the reasonable determination of such Lender, Issuing
      Bank or Agent, as applicable, be otherwise disadvantageous to such Person.

            (d)   If a Lender, Agent or Issuing Bank determines, in its sole
      discretion, that it has received a refund in respect of any Taxes as to
      which it has been indemnified by any Borrower or with respect to which any
      Borrower has paid additional amounts pursuant to this Section 4.17, it
      shall pay over such refund to such Borrower (but only to the extent of the
      indemnity payments made, or additional amounts paid, by such Borrower
      under this Section 4.17 with respect to the Taxes giving rise to such
      refund), net of all out-of-pocket expenses of such Person and without
      interest (other than interest paid by the relevant Governmental Authority
      with respect to such refund); provided, however, that such Borrower, upon
      the request of such Lender, Agent or Issuing Bank, agrees to repay the
      amount paid over to such Borrower (plus penalties, interest or other
      charges) to such Person in the event such Person is required to repay such
      refund to such Governmental Authority. Nothing contained in this Section
      4.17 shall require any Lender, Agent or Issuing Bank to make available any
      of its tax returns (or any other information that it deems to be
      confidential or proprietary).

                                       44
<PAGE>

            (e)   If the U.S. Internal Revenue Service or any other Governmental
      Authority of the United States or any other country or any political
      subdivision thereof asserts a claim that the Agent did not properly
      withhold tax from amounts paid to or for the account of any Lender
      (because the appropriate form was not delivered or properly completed,
      because such Lender failed to notify the Agent of a change in
      circumstances which rendered its exemption from withholding ineffective,
      or for any other reason), such Lender shall indemnify the Agent fully for
      all amounts paid, directly or indirectly, by the Agent as tax, withholding
      therefor, or otherwise, including penalties and interest, and including
      taxes imposed by any jurisdiction on amounts payable to the Agent under
      this subsection, together with all costs and expenses related thereto
      (including reasonable attorneys' fees). The obligations of the Lenders
      under this subsection shall survive the payment of the Obligations and
      termination of this Agreement.

                                    ARTICLE V

                              CONDITIONS PRECEDENT

      5.1   Conditions Precedent to Initial Revolving Loan and Letter of Credit.
The obligation of each Lender to fund its Proportionate Share of the initial
Borrowing (or, if it shall occur earlier, the obligation of the Agent to cause
the issuance by the Issuing Bank of the initial Letter of Credit and of each
Lender to purchase a participation therein) is in each case subject to the
satisfaction or waiver of the following conditions precedent:

            5.1.1 Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate in accordance with Section 7.2.1 hereof detailing the
Borrowing Base as of May 30, 2004.

            5.1.2 Excess Availability. Excess Availability shall be no less than
$10,000,000 after giving effect to payment of all amounts due and payable by the
respective Borrowers on the Closing Date.

            5.1.3 Notice of Borrowing. The Agent shall have received a written
Notice of Borrowing in accordance with the terms of Section 2.3 hereof for such
initial Borrowing.

            5.1.4 Closing Documents. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the List of Closing Documents
attached hereto as Schedule A (the "Closing Document List"), including, without
limitation, the following:

                  (i)   Charter Documents; Borrowing Resolutions; Etc. Certified
                        resolutions (corporate or otherwise) of each Borrower,
                        certificate(s) of good standing, foreign qualification
                        or full force and effect for each Borrower from such
                        Borrower's state of incorporation, organization or
                        formation and each other state in which such Borrower is
                        qualified to do business, incumbency certificates for
                        each Borrower, and certified copies of the Governing
                        Documents of each Borrower;

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<PAGE>

                  (ii)   Financing Statements. Evidence that such Uniform
                         Commercial Code Financing Statements as may be required
                         by the Agent in connection with Agent's security
                         interest in the Collateral have been filed in the
                         appropriate filing offices and jurisdictions;

                  (iii)  Lien Searches. UCC-11 lien searches (including tax and
                         judgment lien searches) from such filing offices and
                         jurisdictions as the Agent shall specify, evidencing
                         that on the Closing Date, the Liens granted to the
                         Agent in connection herewith shall have a first
                         priority over any other Liens reflected in such lien
                         searches, except for Permitted Liens, and that there
                         are no other Liens on the assets or properties of any
                         of the Borrowers, except for Permitted Liens;

                  (iv)   Evidence of Insurance. Evidence of the insurance as
                         required under this Agreement naming the Agent as a
                         lender's loss payee or additional insured, as the case
                         may be, in form and substance satisfactory to the
                         Agent;

                  (v)    Collateral Access Agreements. Collateral Access
                         Agreements from each mortgagee or lessor of real
                         property on which Collateral is stored or otherwise
                         located and each warehouseman, processor, cosignee or
                         other bailee of Inventory;

                  (vi)   Opinion Letters. Opinions of counsel in form and
                         substance satisfactory to the Agent and the Lenders;

                  (vii)  Updated Field Audit Report. An updated field audit
                         report with respect to the Borrowers prepared by a
                         nationally recognized accounting firm, which shall be
                         satisfactory to the Agent and the Lenders.

                  (viii) Closing Certificate. A certificate dated as of the
                         Closing Date by a Responsible Officer of each of the
                         Borrowers stating that (i) no Default or Event of
                         Default has occurred and is continuing as of such date,
                         (ii) all of the representations and warranties in
                         Article VI hereof and in the other Credit Documents are
                         true and correct as of such date, and (iii) all of the
                         conditions set forth in Sections 5.1 and 5.2 have been
                         satisfied on and as of such date; and

                  (ix)   Compliance Certificate. A certificate from the chief
                         financial officer of the Funds Administrator on behalf
                         of the Borrowers with attached schedule of calculations
                         demonstrating compliance with the financial covenants
                         set forth in Article VIII as of March 31, 2004.

            5.1.5 Fees and Expenses. All Fees and Expenses payable by the
Borrowers hereunder and under the Fee Letter on or before the Closing Date shall
have been paid in full.

                                       46
<PAGE>

            5.1.6 Material Consents and Approvals. All governmental and material
third party approvals necessary or, in the sole discretion of the Agent,
advisable in connection with this Credit Agreement and other Credit Documents
shall have been obtained and shall be in full force and effect.

            5.1.7 Payoff of Existing Credit Agreement. All Indebtedness under or
in connection with that certain Amended and Restated Credit Agreement dated as
of August 13, 2003 among Metal Management, Inc. and its Subsidiaries, the
Lenders named therein, and Deutsche Bank Trust Company Americas, as Agent, as
amended, shall have been paid and discharged in full (other than letters of
credit issued by Deutsche Bank Trust Company Americas or its Affiliates existing
as of the Closing Date, if any, and remaining outstanding after the Closing Date
under terms and conditions satisfactory to Agent), and all Liens securing such
Indebtedness shall have been, or will, on the Closing Date, be terminated and
the Agent and the Lenders shall have received such payoff letters and other
evidence of such payment in full and termination of Liens satisfactory to the
Agent and the Lenders.

            5.1.8 Other Documents. Such other documents as any Lender or its
counsel may have reasonably requested.

      5.2   Conditions Precedent to All Revolving Loans and Letters of Credit.
The obligation of each Lender to fund its Proportionate Share of any requested
Revolving Loan (or of the Agent to cause the Issuing Bank to issue any requested
Letter of Credit and of each LC Participant to purchase a participation therein)
is in each case subject to the satisfaction of the conditions precedent set
forth below. Each Notice of Borrowing, each Letter of Credit Request and each
issuance by any Borrower of a check drawn against, or request for transfer from,
the Disbursement Account shall constitute a representation and warranty to the
Agent and each Lender by the Borrowers that such conditions are satisfied.

            (a)   All representations and warranties contained in this Credit
      Agreement and the other Credit Documents are true and correct in all
      material respects on and as of the date of such Notice of Borrowing,
      Letter of Credit Request, or issuance of a check drawn against, or request
      for transfer from, the Disbursement Account both before and after giving
      effect thereto and to the application of the proceeds thereof, in each
      case as if then made, other than representations and warranties that
      expressly relate solely to an earlier date (in which case such
      representations and warranties shall have been true and accurate in all
      material respects on and as of such earlier date); and

            (b)   No Default or Event of Default shall have occurred and be
      continuing or could reasonably be expected to result from the making of
      the requested Revolving Loan or the issuance of the requested Letter of
      Credit.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

      To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Loans and other financial accommodations
described herein, each of the

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<PAGE>

Borrowers hereby represents and warrants to the Agent and the Lenders that the
representations and warranties contained in this Article VI are true and
correct. Such representations and warranties, and all other representations and
warranties made by the Borrowers in any other Credit Documents, shall survive
the execution and delivery of this Credit Agreement and such other Credit
Documents.

      6.1   Organization and Qualification. Each Credit Party and each
Subsidiary of each Credit Party (i) are corporations, limited partnerships or
limited liability companies, as the case may be, duly organized, validly
existing and in good standing under the laws of the respective states or other
jurisdictions of their formation, (ii) have the power and authority to own their
respective properties and assets and to transact their respective businesses in
which they presently are, or propose to be, engaged and (iii) are duly qualified
and are authorized to do business and are in good standing in each of the
respective jurisdictions where they presently are, or propose to be, engaged in
business, in each case, except where any failures to be so qualified, authorized
and in good standing could not reasonably be expected singly or in the aggregate
to have a Material Adverse Effect. Schedule B, Part 6.1 lists all jurisdictions
in which each Credit Party and each Subsidiary of each Credit Party are
qualified to do business as foreign corporations, limited partnerships or
limited liability companies, as the case may be.

      6.2   Authority. Each Credit Party and each Subsidiary of each Credit
Party has the requisite power and authority to execute, deliver and perform the
respective Credit Documents to which they are parties. All corporate,
partnership, limited liability company, or similar action necessary for the
execution, delivery and performance of any of the Credit Documents by each
Credit Party and each Subsidiary of each Credit Party which is a party thereto
has been taken.

      6.3   Enforceability. This Credit Agreement and each of the other Credit
Documents are the legal, valid and binding obligations of each Credit Party and
each Subsidiary of each Credit Party which are parties thereto, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency or similar laws affecting creditors'
rights generally, and (ii) general principles of equity.

      6.4   No Conflicts. The execution, delivery and performance of each Credit
Document by each Credit Party and each Subsidiary of each Credit Party which are
parties thereto are not in contravention of (i) the Governing Documents of such
Persons, or (ii) any Requirement of Law, or (iii) any indenture, contract,
agreement or instrument or other commitment to which any or all of such Persons
are parties or by which any of such Persons or any of its properties are bound,
and will not result in the imposition of any Liens upon any of the properties of
any of such Persons.

      6.5   Consents And Filings. No consent, authorization, permit or filing is
required in connection with the execution, delivery and performance of this
Credit Agreement or any other Credit Document by any Credit Party or any
Subsidiary of any Credit Party which are parties thereto, or in connection with
the continuing operations of such Persons, except (i) those that have been
obtained or made and (ii) filings necessary to create, perfect or retain the
perfection of Liens granted by the respective Credit Parties in favor of the
Agent on the Collateral.

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<PAGE>

      6.6   Government Regulation. No Borrower nor any Subsidiary of any
Borrower is subject to regulation under the Public Utility Holding Company Act
of 1935, the Investment Company Act of 1940, the Federal Power Act or any other
similar Requirement of Law that limits the respective abilities of such Persons
to incur indebtedness or consummate the transactions contemplated in this Credit
Agreement and the other Credit Documents.

      6.7   Solvency. The present fair saleable value of the assets of each
Borrower exceeds all its probable liability on its existing debts as they become
absolute and matured, including those to be incurred pursuant to this Credit
Agreement and the other Credit Documents. No Borrower (i) has unreasonably small
capital in relation to the business in which it is or proposes to be engaged and
(ii) has incurred and believes that it will incur, after giving effect to the
transactions contemplated by this Credit Agreement, debts beyond its ability to
pay as such debts become due.

      6.8   Rights in Collateral; Priority of Liens. All real and personal
property of any kind of the Borrowers is owned or leased by the respective
Borrowers, free and clear of any and all Liens in favor of third parties, other
than Permitted Liens. The Collateral Documents create, as security for the
Obligations and the Rate Management Obligations, valid and enforceable first,
prior (subject to Permitted Liens) and perfected Liens on the Collateral, to the
extent such Liens can be perfected by the filing of financing statements.

      6.9   Financial Data.

            (a)   The Borrowers have provided or caused to be provided to the
      Agent and each of the Lenders complete and accurate copies of the
      following Financial Statements: (i) audited Financial Statements as of
      March 31, 2003, (ii) unaudited internally prepared Financial Statements as
      of March 31, 2004, and (iii) unaudited internally prepared Financial
      Statements as of April 30, 2004. All such Financial Statements have been
      prepared in accordance with GAAP consistently applied throughout the
      periods involved and fairly present the respective consolidated financial
      positions, results of operations and cash flows of Persons indicated for
      each of the periods covered subject, in the case of interim Financial
      Statements, to normal year-end audit adjustments and the absence of
      footnotes.

            (b)   The Consolidated Entity has no material Contingent Obligation
      (or any other material liability which was not incurred in the ordinary
      course of business) which is not reflected in such Financial Statements or
      the footnotes thereto (or Forms 10-K and 10-Q of which such Financial
      Statements form a part), or is not otherwise disclosed on Schedule B, Part
      6.9.

      6.10  Locations of Offices, Records and Inventory.

            (a)   The address of the principal place of business and, if there
      is more than one principal place of business, the chief executive office,
      of each Credit Party is set forth on Schedule B, Part 6.10(a), as the same
      may be amended after the Closing Date in accordance with Section 11.11.
      The books and records of each Credit Party, and all its

                                       49
<PAGE>

      chattel paper, if any, and records of Accounts, are maintained exclusively
      at one or more of such locations.

            (b)   There is no location in which any Borrower has any Collateral
      (except for vehicles and Inventory in transit), other than those locations
      identified on Schedule B, Part 6.10(a) and on Schedule B, Part 6.10(b), as
      the same may be amended after the Closing Date in accordance with Section
      11.11. A complete list of the legal name and address of each warehouse,
      processor or other bailee location at which Inventory of any Borrower is
      stored is set forth on Schedule B, Part 6.10(b), as the same may be
      amended after the Closing Date in accordance with Section 11.11. None of
      the receipts received and to be received by any Borrower from any
      warehouseman state that the Inventory covered thereby is to be delivered
      to bearer or to the order of a named Person or to a named Person and such
      named Person's assigns, in each case other than such Borrower.

      6.11  Subsidiaries; Ownership of Equity. As of the Closing Date, (i) the
only direct or indirect Subsidiaries of the respective Credit Parties are those
listed on Schedule B, Part 6.11, (ii) each Credit Party is the record and
beneficial owner of all of the respective equity Securities of each of its
Subsidiaries listed on Schedule B, Part 6.11, (iii) there are no proxies,
irrevocable or otherwise, with respect to such equity Securities and, no equity
Securities of any of such equity Subsidiaries are or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or equity Securities or
rights convertible into or exchangeable for equity Securities of any such equity
Subsidiary, and (iv) there are no contracts, commitments, understandings or
arrangements by which any such Subsidiary is or may become bound to issue
additional equity Securities or equity Securities convertible into or
exchangeable therefor. All of such equity Securities so owned by any Credit
Party are owned by such Credit Party free and clear of any Liens other than
Liens in favor of the Agent.

      6.12  No Judgments or Litigation. No judgments, orders, writs or decrees
are outstanding against any Credit Party or any Subsidiary of any Credit Party,
nor is there now pending or, to any Credit Party's knowledge, threatened, any
litigation, contested claim, investigation, arbitration, or governmental
proceeding by or against any Credit Party or any Subsidiary of any Credit Party
other than (i) as of the Closing Date, as set forth on Schedule B, Part 6.12, or
(ii) with respect to matters arising after the Closing Date, that singly or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

      6.13  No Defaults. No Credit Party nor any Subsidiary of any Credit Party
is in default under any term of any other indenture, contract, lease, agreement,
instrument or commitment to which any of them is a party or by which any of them
is bound, defaults under which singly or in the aggregate could reasonably be
expected to have a Material Adverse Effect. No Credit Party knows of any
disputes regarding any such indenture, contract, lease, agreement, instrument or
other commitment which singly or in the aggregate could reasonably be expected
to have a Material Adverse Effect.

      6.14  Labor Matters. Schedule B, Part 6.14 accurately sets forth all labor
union contracts to which any Borrower or any Subsidiary of any Borrower is a
party as of the Closing Date (including their respective dates of expiration).
There are no existing or, to the knowledge

                                       50
<PAGE>

of any Borrower, threatened strikes, lockouts or other disputes relating to any
collective bargaining or similar agreement to which any Borrower or any
Subsidiary of any Borrower is a party that singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect.

      6.15  Compliance With Law. Except as set forth on Schedule B, Part 6.15,
no Credit Party nor any Subsidiary of any Credit Party has violated or failed to
comply in any material respect with any Requirements of Law, the violation of or
failure to comply with which could singly or in the aggregate reasonably be
expected to have a Material Adverse Effect.

      6.16  ERISA. No Borrower, no Subsidiary of any Borrower and no ERISA
Affiliate maintains or contributes to any Benefit Plan other than those listed
on Schedule B Part 6.16. Each Benefit Plan has been and is maintained and funded
in all material respects in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Internal Revenue Code. Each Borrower,
each Subsidiary of a Borrower and each ERISA Affiliate has fulfilled all
contribution obligations for each Benefit Plan (including obligations related to
the minimum funding standards of ERISA and the Internal Revenue Code). No
Termination Events have occurred which singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect. No Borrower, no
Subsidiary of a Borrower and no ERISA Affiliate is required to provide security
to any Benefit Plan under Section 401(a)(29) of the Internal Revenue Code.

      6.17  Compliance with Environmental Laws. Except for matters disclosed on
Schedule B, Part 6.17 and for matters arising after the Closing Date, in each
case none of which matters could singly or in the aggregate reasonably be
expected to have a Material Adverse Effect, (i) the operations of each Borrower
and each Subsidiary of each Borrower comply in all material respects with all
applicable federal, state and local environmental, health and safety statutes,
regulations, directions, ordinances, criteria and guidelines; (ii) no Borrower
has received notice that any of the operations of such Borrower or any of its
Subsidiaries is the subject of any judicial or administrative proceeding
alleging the violation of any federal, state or local environmental, health or
safety statute, regulation, direction, ordinance, criteria or guideline; (iii)
none of the operations of such Borrower or any of its Subsidiaries is the
subject of any federal or state investigation evaluating whether such Borrower
or any of its Subsidiaries disposed of any hazardous or toxic waste, substance
or constituent or other substance at any site that may require remedial action,
or any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any hazardous or toxic waste, substance or
constituent or other substance into the environment; (iv) no Borrower nor any
Subsidiary of any Borrower has filed any notice under any federal or state law
indicating past or present treatment, storage or disposal of a hazardous or
toxic waste, substance or constituent or reporting a spill or release of a
hazardous or toxic waste, substance or constituent or other substance into the
environment; and (v) no Borrower nor any Subsidiary of any Borrower has any
contingent liability of which the Borrower has knowledge, or reasonably should
have knowledge, in connection with any release or potential release of any
hazardous or toxic waste, substance or constituent or other substance into the
environment, nor has the Borrower or any of its Subsidiaries received any
notice, letter or other indication of potential liability arising from the
disposal of any hazardous or toxic waste, substance or constituent or other
substance into the environment.

                                       51
<PAGE>

      6.18  Intellectual Property. Each Borrower and each Subsidiary of each
Borrower possesses such assets, licenses, patents, patent applications,
copyrights, service marks, trademarks and trade names as are necessary or
advisable to continue to conduct their respective present and proposed business
activities.

      6.19  Licenses and Permits. Each Borrower and each Subsidiary of each
Borrower has obtained and holds in full force and effect, all franchises,
licenses, leases, permits, certificates, authorizations, qualifications,
easements, rights of way and other rights and approvals which are necessary or
advisable for the operation of its business as presently conducted and as
proposed to be conducted, except for such licenses, permits, authorizations,
qualifications, easements, rights of way and other rights the failure to obtain
or hold in full force and effect could not reasonably be expected singly or in
the aggregate to have a Material Adverse Effect.

      6.20  Taxes and Tax Returns.

            (a)   Except as set forth on Schedule B, Part 6.20, all income tax
      returns required to be filed by each Credit Party and each Subsidiary of
      each Credit Party have been timely filed (or extensions with respect to
      such filings have been timely obtained). The information filed is complete
      and accurate in all material respects.

            (b)   All taxes, assessments, fees and other governmental charges
      for periods beginning prior to the date hereof (other than such taxes,
      assessments, fees and other governmental charges that are not yet due and
      payable and taxes, assessments, fees and charges being contested in good
      faith and for which adequate reserves have been made in accordance with
      GAAP) have been timely paid and no Credit Party nor any Subsidiary of any
      Credit Party has any material liability for taxes in excess of the amounts
      so paid or reserves so established.

            (c)   Except as set forth on Schedule B, Part 6.20, no Credit Party
      nor any Subsidiary of any Credit Party has any obligation under any
      written tax sharing agreement or agreement regarding payments in lieu of
      taxes.

      6.21  Material Contracts. Schedule B, Part 6.21, contains a true, correct
and complete list of all the Material Contracts in effect on the Closing Date.
Except as described on Schedule B, Part 6.21, and, except to the extent that any
such restrictions singly or in the aggregate could not reasonably be expected to
have a Material Adverse Effect, no Material Contract contains any burdensome
restrictions on any Credit Party or any Subsidiary of any Credit Party or any of
their respective properties that singly or in the aggregate could reasonably be
expected to prevent such Credit Party or Subsidiary from conducting its business
as conducted on the Closing Date. As of the Closing Date, all of the Material
Contracts are in full force and effect, and no defaults currently exist
thereunder by any Credit Party or Subsidiary of a Credit Party that is a party
thereto (except for disputed claims set forth on Schedule B, Part 6.21) or, to
the knowledge of any Credit Party, any other party thereto.

      6.22  Accuracy and Completeness of Information. All factual information
(other than financial information or forecasts) furnished by or on behalf of any
Credit Party or any Subsidiary of any Credit Party in writing to the Agent or
any Lender for purposes of or in

                                       52
<PAGE>

connection with this Credit Agreement or any Credit Documents or any transaction
contemplated hereby or thereby, is or will be true and accurate in all material
respects on the date as of which such information is dated or certified and,
taken as a whole and in the context in which so furnished, is not incomplete by
omitting to state any material fact necessary to make such information not
misleading at such time.

      6.23  No Change. Since the last day of the fiscal year ended March 31,
2004, no event has occurred which has had or could reasonably be expected to
have a Material Adverse Effect.

                                   ARTICLE VII

                              AFFIRMATIVE COVENANTS

      Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder:

      7.1   Financial Reporting. The Borrowers shall timely deliver or cause to
be timely delivered to the Agent the following information:

            7.1.1 Letter to Auditors. No later than the date on which the
Auditors commence work on the preparation of the annual audited Financial
Statements, a copy of a letter delivered by MTLM to the Auditors notifying the
Auditors that (x) such Financial Statements will be delivered by MTLM to the
Agent (and thereafter by the Agent to each of the Lenders) under this Credit
Agreement, (y) it is a primary intention of MTLM in engaging the Auditors'
services in connection with its audit of the Financial Statements for such
fiscal year, to satisfy the financial reporting requirements set forth herein
and (z) stating that the Agent and each of the Lenders intend to rely thereon
with respect to the transactions which are the subject of this Agreement.

            7.1.2 Annual Financial Statements. As soon as available, but not
later than 90 days after each fiscal year end: (i) the annual Financial
Statements of the Consolidated Entity; (ii) a comparison in reasonable detail to
the prior year Financial Statements; (iii) the Auditors' unqualified opinion,
"Management Letter" (if any, and only upon receipt by MTLM) and statement
indicating whether the Auditors have obtained knowledge of the existence of any
Default or Event of Default during their audit; (iv) a narrative discussion of
the consolidated financial condition and results of operations and the
consolidated liquidity and capital resources of the Consolidated Entity for such
fiscal year, prepared by the chief financial officer of MTLM; and (v) a
compliance certificate substantially in the form of Exhibit E with an attached
schedule of calculations demonstrating compliance with the financial covenants
set forth in Article VIII and stating whether an Additional Collateral Event has
occurred.

            7.1.3 Monthly and Annual Projections. Not later than 15 days prior
to each fiscal year end, beginning with the fiscal year ended March 31, 2005,
monthly projections of the financial condition and results of operations of the
Consolidated Entity for the next succeeding year and annual projections for each
succeeding fiscal year thereafter, through and including the fiscal year in
which the Expiration Date will occur, in each case containing projected

                                       53
<PAGE>

consolidating balance sheets, statements of operations, statements of cash flows
and statements of changes in shareholders' equity.

            7.1.4 Quarterly Financial Statements. As soon as available, but not
later than 45 days after each end of each of the first three fiscal quarters in
any fiscal year (i) Financial Statements of the Consolidated Entity, as of the
fiscal quarter then ended, and for the fiscal year to date; (ii) a comparison in
reasonable detail to the Financial Statements for the corresponding periods of
the prior fiscal year; (iii) the certification of the chief executive officer,
chief financial officer or treasurer of MTLM that such Financial Statements have
been prepared in accordance with GAAP (subject to year-end audit adjustments and
the absence of footnotes); (iv) a narrative discussion of the consolidated
financial condition and results of operations and the consolidated liquidity and
capital resources of the Consolidated Entity for such fiscal quarter and fiscal
year to date, prepared by the chief financial officer of MTLM; and (v) a
compliance certificate substantially in the form of Exhibit E with an attached
schedule of calculations demonstrating compliance with the financial covenants
set forth in Article VIII and stating whether an Additional Collateral Event has
occurred.

            7.1.5 Monthly Financial Statements. As soon as available, but not
later than 30 days after the end of each month (other than the last month in
each fiscal quarter of the Consolidated Entity): (i) a balance sheet for the
Consolidated Entity as at the end of such month and for the fiscal year to date
and statements of operations and cash flows for such month and for the fiscal
year to date; (ii) a comparison to the balance sheet, statement of operations
and statement of cash flows for the same periods in the prior year; (iii) a
certification by the chief executive officer, chief financial officer or
treasurer or MTLM that such balance sheet, statement of operations and statement
of cash flows have been prepared in accordance with GAAP (subject to year-end
audit adjustments and the absence of footnotes); and (iv) a certificate stating
whether an Additional Collateral Event has occurred.

            7.1.6 Monthly Comparison to Prior Projections. As soon as available,
but not later than 30 days after the end of each month (other than the last
month in each fiscal year of the Consolidated Entity), a comparison of actual
results of operations, cash flows and capital expenditures for the Consolidated
Entity for such month and for the period from the beginning of the current
fiscal year through the end of such month with amounts previously projected for
those periods in the most recent projections delivered pursuant to Section
7.1.3.

            7.1.7 Public Reporting. Promptly upon their becoming available,
copies of all regular and periodic reports, proxy statements and other
materials, if any, filed by any Borrower with the SEC, or with any national
securities exchange, or distributed to the public stockholders of MTLM.

      7.2 Collateral Reporting. The Borrowers shall timely deliver or cause to
be delivered to the Agent the following certificates and reports:

            7.2.1 Monthly Borrowing Base Certificates. Monthly, within 5
Business Days after the last Business Day of each month, and at any other time
reasonably requested by the Agent, a Borrowing Base Certificate, which shall be:
(i) in form and substance satisfactory to the Agent, detailing the Eligible
Accounts Receivable and Eligible Inventory as of the last Business

                                       54
<PAGE>

Day of such month, in each case of each of the Borrowers; and (ii) prepared by
or under the supervision of the chief executive officer or chief financial
officers of each Borrower and certified by the chief executive officer or chief
financial officer of the Funds Administrator on behalf of the Borrowers, subject
only to adjustment upon completion of the normal annual audit of physical
inventory. Each Borrowing Base Certificate shall have attached to it such
additional schedules and other information as the Agent may reasonably request,
including, without limitation, an aging of Accounts.

            7.2.2 Collateral Audits. When requested by the Agent, (i) so long as
no Event of Default shall have occurred and be continuing, not more than once in
any fiscal year of the Consolidated Entity and (ii) following the occurrence and
during the continuance of an Event of Default, at any time, a report of
Inventory of each Borrower, prepared on a test or cycle basis, which shall
describe each Borrower's Inventory by category and by item (in reasonable
detail) and report the then appraised value (at lower of cost or market) of such
Inventory.

            7.2.3 Further Assurances. When and as reasonably requested by the
Agent, any further information regarding the Collateral, business affairs and
financial condition of any Credit Party or any Subsidiary of any Credit Party.

      7.3 Notification Requirements. The Borrowers shall timely give to the
Agent and each of the Lenders the following notices:

            7.3.1 Notice of Defaults. Promptly, and in any event within 5
Business Days after becoming aware of the occurrence of a Default or Event of
Default, a certificate of the chief executive officer or chief financial officer
of the Funds Administrator specifying the nature thereof and the proposed
response of the Credit Parties with respect thereto, each in reasonable detail.

            7.3.2 Proceedings or Adverse Changes. Promptly, and in any event
within 5 Business Days after any Credit Party becomes aware of (i) any
proceedings being instituted or threatened to be instituted by or against such
Credit Party or any of its Subsidiaries in any federal, state, local or foreign
court or before any commission or other regulatory body (federal, state, local
or foreign) which, if adversely determined, singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect, (ii) any order,
judgment or decree in excess of $3,000,000 being entered against such Credit
Party or any of its Subsidiaries or any of their respective properties or assets
or (iii) any actual or prospective change, development or event which has had or
could reasonably be expected to have a Material Adverse Effect, a written
statement describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect thereto by such
Credit Party or such Subsidiary.

            7.3.3 ERISA Notices. (i) Promptly, and in any event within 10
Business Days after any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate knows that a Termination Event has occurred, a written statement of
the chief financial officer of Funds Administrator describing such Termination
Event and any action that is being taken with respect thereto by such Borrower,
such Subsidiary or such ERISA Affiliate, and any action taken or threatened by
the Internal Revenue Service, Department of Labor or PBGC; and (ii) promptly,
and in any event within 3 Business Days after the filing thereof with the
Internal Revenue

                                       55
<PAGE>

Service, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate with respect to such request.

            7.3.4 Environmental and Health and Safety Notices. Promptly, and in
any event within 10 Business Days after receipt by any Credit Party or any
Subsidiary of any Credit Party of any written notice, complaint or order
alleging any actual or prospective material violation of any environmental,
health or safety Requirement of Law or alleging responsibility for material
costs of a cleanup, together with a copy of such notice, complaint, or order and
a written statement describing any action being taken with respect thereto by
such Credit Party or Subsidiary.

            7.3.5 Material Contracts. Promptly, and in any event within 10
Business Days after any Material Contract of any Credit Party or any Subsidiary
of any Credit Party is terminated or amended or any new Material Contract is
entered into, a written statement describing such event, with copies of
amendments or new contracts, and an explanation of any actions being taken with
respect thereto.

            7.3.6 Collateral Matters. At least 15 Business Days' prior written
notice to the Agent of any additional location of any Collateral of any Borrower
or in the location of the chief executive office or places of business of any
Borrower or any Subsidiary of any Borrower from the respective locations
specified in Schedule B, Part 6.10. At least 10 Business Days prior to any such
change, the Borrowers shall cause to be executed and delivered to the Agent any
financing statements or other documents reasonably required by the Agent, all in
form and substance reasonably satisfactory to the Agent.

            7.3.7 Additional Collateral Event. Promptly, but in any event within
5 Business Days of the occurrence of an Additional Collateral Event, a
certificate of the chief financial officer of the Funds Administrator specifying
that an Additional Collateral Event has occurred.

      7.4 Corporate Existence. Each Borrower shall, and shall cause each of its
Subsidiaries to, (i) maintain its corporate existence (except that any Borrower
or any wholly-owned Subsidiary of any Borrower may merge with, or be dissolved
into, any other Borrower, provided, that the Agent receives 5 Business Days'
prior written notice thereof), (ii) except for failures to so maintain which
singly or in the aggregate could not reasonably be expected to have a Material
Adverse Effect, maintain in full force and effect all licenses, bonds,
franchises, leases, trademarks and qualifications to do business, and all
patents, contracts and other similar rights and (iii) continue in, and limit
their operations to, the same general lines of business as presently conducted
by them and other businesses in the metals industry.

      7.5 Books and Records; Inspections. Each Borrower agrees to maintain, and
to cause each of its Subsidiaries to maintain, books and records pertaining to
the Collateral in such detail, form and scope as is consistent with good
business practice. Each Borrower agrees that the Agent, or its agents, may enter
upon the premises of such Borrower or any of its Subsidiaries at any time and
from time to time, during normal business hours and upon reasonable advance
notice, and at any time at all upon the occurrence and during the continuance of
an Event of Default, for the purposes of (i) inspecting and verifying the
existence and value of the Collateral,

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(ii) inspecting and/or copying (at the expense of such Borrower) any and all
records pertaining thereto, and (iii) discussing the affairs, finances and
business of such Borrower with the Auditors or any Responsible Officer of such
Borrower, provided, that a Responsible Officer of MTLM shall have the right to
be present at any such discussions with the Auditors.

      7.6 Insurance.

            (a) Each Borrower agrees to maintain, and to cause each of its
      Subsidiaries to maintain, public liability insurance, fire and extended
      coverage insurance and replacement value insurance on the Collateral under
      such policies of insurance, with such insurance companies, in such amounts
      and covering such risks as are customarily maintained by Persons engaged
      in the same or similar businesses. All policies covering the Collateral
      are to name the Agent as an additional insured and/or the loss payee in
      case of loss, and are to contain such other provisions as the Agent may
      reasonably require to fully protect the Agent's interest in the Collateral
      and to any payments to be made under such policies.

            (b) UNLESS THE BORROWERS PROVIDE THE AGENT WITH EVIDENCE OF THE
      INSURANCE COVERAGE REQUIRED BY THIS CREDIT AGREEMENT, THE AGENT MAY
      PURCHASE INSURANCE AT THE BORROWERS' EXPENSE TO PROTECT THE AGENT'S
      INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE
      BORROWERS' INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY NOT PAY
      ANY CLAIM THAT THE BORROWERS MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST
      ANY BORROWER IN CONNECTION WITH THE COLLATERAL. THE BORROWERS MAY LATER
      CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER PROVIDING THE
      AGENT WITH EVIDENCE THAT THE BORROWERS HAVE OBTAINED INSURANCE AS REQUIRED
      BY THIS CREDIT AGREEMENT. IF THE AGENT PURCHASES INSURANCE FOR THE
      COLLATERAL, THE BORROWERS WILL BE RESPONSIBLE FOR THE COSTS OF THAT
      INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED IN
      CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE
      OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE
      INSURANCE MAY BE ADDED TO THE OBLIGATIONS. THE COSTS OF THE INSURANCE MAY
      BE MORE THAN THE COST OF INSURANCE THE BORROWERS MAY BE ABLE TO OBTAIN ON
      THEIR OWN.

      7.7 Taxes. Each Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed against such
Borrower, such Subsidiary or any of the Collateral before any penalty or
interest accrues thereon; provided, that, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Credit Party or such
Subsidiary, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.

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      7.8 Compliance with Laws. Each Borrower agrees to comply, and to cause
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law applicable to the Collateral or any part thereof, or to the
operation of its business or its assets generally, unless such Credit Party
contests any such Requirements of Law in a reasonable manner and in good faith.

      7.9 Use of Proceeds. The initial Revolving Loans made to the Borrowers
hereunder shall be used by the Borrowers to (a) repay in full the Indebtedness
outstanding on the Closing Date under that certain Amended and Restated Credit
Agreement dated as of August 13, 2003 among Metal Management, Inc. and its
Subsidiaries, the Lenders named therein, and Deutsche Bank Trust Company
Americas, as Agent, as amended, and (b) pay costs and expenses with respect to
the foregoing and this Credit Agreement, which are due and payable on the
Closing Date, including the Fees and Expenses payable pursuant to Article IV
hereof. The proceeds of subsequent Revolving Loans and other extensions of
credit made hereunder shall be used by the Borrowers solely for ongoing working
capital requirements and other general corporate purposes, including, without
limitation, Permitted Acquisitions and other Investments permitted pursuant to
Section 8.8. No Borrower shall use any portion of the proceeds of any Revolving
Loans for the purpose of purchasing or carrying any "margin stock" (as defined
in Regulation U) in any manner which violates the provisions of Regulation U or
X or of the terms and conditions of this Credit Agreement or any other Credit
Document.

      7.10 Fiscal Year. Each Borrower agrees to maintain, and to cause each of
its Subsidiaries to maintain, its fiscal year as a year ending March 31st.

      7.11 Maintenance of Property. Except to the extent otherwise expressly
permitted pursuant to Section 8.6, each Borrower agrees to keep, and to cause
each of its Subsidiaries to keep, all property useful and necessary to their
respective businesses in good working order and condition (ordinary wear and
tear excepted) in accordance with their past operating practices and not to
commit or suffer any waste with respect to any of their properties.

      7.12 ERISA Documents. Each Borrower will cause to be delivered to the
Agent, upon the Agent's request, each of the following: (i) a copy of each
Benefit Plan (or, where any such plan is not in writing, a complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof and
written descriptions thereof that have been distributed to employees or former
employees of such Borrower or any of its Subsidiaries; (ii) the most recent
determination letter issued by the Internal Revenue Service with respect to each
Benefit Plan; (iii) for the three most recent plan years, Annual Reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by such
Borrower or any ERISA Affiliate to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any information that
has been provided to such Borrower or any ERISA Affiliate regarding withdrawal
liability under any Multiemployer Plan; and (vii) the aggregate amount of the
most recent annual payments made to former employees of such Borrower or any
ERISA Affiliate under any Retiree Health Plan.

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      7.13 Environmental and Other Matters. Each Borrower shall, and shall cause
each of its Subsidiaries to, conduct their businesses so as to comply in all
material respects with all environmental, land use, occupational, safety or
health laws, regulations, directions, ordinances, criteria and guidelines in all
jurisdictions in which any of them is or may at any time be doing business,
except to the extent that such Borrower or such Subsidiary is contesting, in
good faith by appropriate legal proceedings, any such law, regulation,
direction, ordinance, criteria, guideline, or interpretation thereof or
application thereof; provided, that such Borrower and each of its Subsidiaries
shall comply with the order of any court or other Governmental Authority
relating to such laws unless such Borrower or such Subsidiary shall currently be
prosecuting an appeal or proceedings for review and shall have secured a stay of
enforcement or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review.

      7.14 Further Actions. Each Borrower shall take, and shall cause each of
its Subsidiaries to take, all such further actions and execute all such further
documents and instruments as the Agent may at any time reasonably determine to
be necessary or desirable to further carry out and consummate the transactions
contemplated by the Credit Documents, to cause the execution, delivery and
performance of the Credit Documents to be duly authorized and to evidence,
perfect or protect the Liens (and the priority status thereof) of the Agent on
the Collateral.

      7.15 Deposit of Collections and Other Proceeds of Collateral. From and
after the Closing Date, Borrowers shall cause all Collections on all Accounts of
Borrowers, and all other cash payments made for Inventory of Borrowers, and all
other payments of any kind constituting proceeds of Collateral received by or
for the account any Borrower from any Person, promptly upon receipt thereof to
be deposited into a Collection Account or the LaSalle Bank Account in the
identical form in which such payment was made, whether by cash or check.

      7.16 Additional Collateralization. Upon written notice from the Agent or
the Required Lenders to the Funds Administrator at any time on or after the
Additional Collateral Date (such notice, the "Additional Collateral Notice"),
each of the Borrowers shall as soon as practicable and in any case within thirty
(30) days after the date of the Additional Collateral Notice, cause all of their
respective right, title and interest in and to all Equipment, Fixtures and Real
Property, whether then owned or thereafter acquired, to be subject at all times
to a first-priority and perfected Lien in favor of the Agent as collateral
security for the Obligations and the Rate Management Obligations, subject only
to Permitted Liens (provided, however, that with respect to mortgages on Real
Property, if such mortgages and accompanying title policies, surveys and
associated documentation cannot be completed by Borrowers within such 30-day
period despite the diligent efforts of Borrowers, then Borrowers shall have up
to an additional 30-day period to complete such matters so long as Borrowers
continue to use diligent efforts with respect thereto). In connection with the
foregoing, the Borrowers shall cause to be delivered to the Agent such
documents, agreements, instruments and Collateral Documents as the Agent shall
request, including, without limitation, mortgages, deeds of trust, security
agreements, pledges, financing statements, lien searches, insurance (which shall
name the Agent as sole loss payee), necessary third party consents, real estate
title insurance policies, surveys, environmental indemnities, environmental
reports, copies of flood insurance policies where applicable (which shall name
the Agent as sole loss payee), landlord's waivers, certificates of title,
certified resolutions and other

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organizational and authorizing documents, and favorable opinions of counsel
(which shall cover, among other things, the legality, validity, binding effect
and enforceability of the documentation referred to above and the perfection of
the Agent's Liens thereunder), in each case in form and substance satisfactory
to the Agent and Agent shall be satisfied that it has a first priority perfected
Lien on the collateral referred to herein. Promptly upon the occurrence of an
Additional Collateral Date, the Borrowers shall deliver to the Agent (i) a list
of all real properties owned or leased by the Borrowers, (ii) a list of all
locations where any Equipment, Fixtures or other tangible property of a Credit
Party is located, and (iii) such other information and certificates concerning
the Equipment, Fixtures and Real Estate as the Agent may reasonably request. If,
subsequent to the Additional Collateral Date, any Borrower shall acquire any
right, title or interest in any Equipment, Fixtures or Real Estate which is not
then subject to the Lien in favor of the Agent hereunder, such Borrower shall
promptly but in any case within five (5) days notify Agent of the same and take
such actions (including the actions set forth in this Section 7.16) necessary or
reasonably requested by Agent to subject such assets at all times to a
first-priority and perfected Lien in favor of the Agent as collateral security
for the Obligations and the Rate Management Obligations, subject only to
Permitted Liens. Each Borrower authorizes the Agent to file all financing
statements that may be necessary or desirable in connection with the provisions
of this Section 7.16.

      7.17 OFAC; BSA. Each Borrower shall (a) ensure, and cause each other
Credit Party to ensure, that no person who owns a controlling interest in or
otherwise controls a Credit Party is or shall be (i) listed on the Specially
Designated Nationals and Blocked Person List maintained by the Office of Foreign
Assets Control ("OFAC"), Department of the Treasury, and/or any other similar
lists maintained by OFAC pursuant to any authorizing statute, Executive Order or
regulation or (ii) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar Executive Orders, and (b) comply, and cause each other
Credit Party to comply, with all applicable Bank Secrecy Act ("BSA") and
anti-money laundering laws and regulations.

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

      Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder, each Borrower shall comply with, and, where
required, shall cause each of its Subsidiaries to comply with, the following
covenants:

      8.1 Financial Covenants.

            8.1.1 Leverage Ratio. The Borrowers shall not permit the Leverage
Ratio to be greater than 2.50 to 1.00, as determined as of the last day of each
fiscal quarter of the Consolidated Entity, for the twelve (12) month period
ending on such date.

            8.1.2 Consolidated Fixed Charge Coverage Ratio. The Borrowers shall
not permit the Consolidated Fixed Charge Coverage Ratio to be less than 1.50 to
1.00, as determined as of the last day of each fiscal quarter of the
Consolidated Entity, for the twelve (12) month period ending on such date.

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            8.1.3 Minimum Tangible Net Worth. The Borrowers shall at all times
maintain Consolidated Tangible Net Worth of not less than the sum of (i)
$110,000,000 plus (ii) 25% of Consolidated Net Income (if positive) earned in
each fiscal quarter of the Consolidated Entity beginning with such fiscal
quarter ending June 30, 2004.

      8.2 Capital Expenditures. The Borrowers shall not permit Capital
Expenditures for the Consolidated Entity to exceed $20,000,000 during any
consecutive twelve (12) month period.

      8.3 Additional Indebtedness. No Borrower and no Subsidiary of any Borrower
shall directly or indirectly incur, create, assume or suffer to exist any
Indebtedness other than:

            (a) the Obligations;

            (b) unsecured Indebtedness in the ordinary course of business under
      Rate Management Transactions, in each case in form and substance
      reasonably satisfactory to the Agent;

            (c) Indebtedness of any Borrower to any other Borrower; provided,
      that if and to the extent any of such Indebtedness is evidenced by a
      promissory note or any other instrument, such note or other instrument
      shall be endorsed and delivered to the Agent as additional Collateral;

            (d) Indebtedness described on Schedule B, Part 8.3 and any
      refinancing of such Indebtedness, so long as the aggregate principal
      amount of the Indebtedness so refinanced shall not be increased and the
      refinancing shall be on terms and conditions no more restrictive than the
      terms and conditions of the Indebtedness to be refinanced;

            (e) Indebtedness secured by purchase money Liens on equipment
      acquired after the date of this Credit Agreement in an outstanding
      principal amount not exceeding at any time (when added to the aggregate
      imputed amount of all then outstanding capital leases of the Borrowers and
      their respective Subsidiaries which are entered into after the Closing
      Date pursuant to clause (h) below) $2,500,000 in the aggregate for all of
      the Credit Parties combined ("Purchase Money Liens"), so long as (i) each
      Purchase Money Lien shall attach only to the property to be acquired, (ii)
      a description shall have been furnished to the Agent for any item of
      equipment for which the purchase price is greater than $250,000 and (iii)
      the Indebtedness incurred shall not exceed one hundred percent (100%) of
      the purchase price of the item or items of equipment purchased;

            (f) Indebtedness in an outstanding principal amount not exceeding
      $3,000,000, incurred in connection with the purchase by Proler of certain
      real property currently leased by Proler and located on Japhet Street,
      Houston, Texas, so long as (i) the Lien granted in connection with such
      Indebtedness attaches only to such real property to be acquired and (ii)
      such Indebtedness shall be on such other terms and conditions satisfactory
      to the Agent;

            (g) Indebtedness consisting of Contingent Obligations permitted
      pursuant to Section 8.5;

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            (h) Indebtedness consisting of obligations under capital leases
      entered into after the Closing Date in an outstanding principal amount not
      exceeding at any time (when added to the aggregate imputed amount of all
      then outstanding Indebtedness secured by Purchase Money Liens of the
      Borrowers and their respective Subsidiaries which are entered into after
      the Closing Date pursuant to clause (e) above) $2,500,000 in the aggregate
      for all of the Credit Parties combined;

            (i) surety bonds and appeal bonds required in the ordinary course of
      business in an amount not exceeding at any time $1,500,000 in the
      aggregate for all of the Credit Parties combined;

            (j) Indebtedness incurred to finance the payment of insurance
      premiums in an amount not exceeding at any time the aggregate unpaid
      amount of all such premiums at such time for all of the Credit Parties
      combined;

            (k) Unsecured Indebtedness in respect of hedging agreements entered
      into by Borrowers in the ordinary course of business; and

            (l) additional unsecured Indebtedness in an aggregate principal
      amount not in excess of $15,000,000 at any time outstanding.

      8.4 Liens. No Borrower nor any Subsidiary of any Borrower shall directly
or indirectly create, incur, assume, or suffer to exist any Lien on any of its
property now owned or hereafter acquired except:

            (a) Liens on the Collateral granted to the Agent;

            (b) Liens existing on the Closing Date and set forth on Schedule B,
      Part 8.4;

            (c) Purchase Money Liens and the interests of lessors under capital
      leases, in each case to the extent permitted under Section 8.3(e);

            (d) Liens of warehousemen, mechanics, materialmen, workers,
      repairmen, common carriers or landlords and other similar Liens arising by
      operation of law, Liens for taxes, assessments or other governmental
      charges and other similar Liens arising by operation of law, in each case
      for amounts that are not yet due and payable or that are being diligently
      contested in good faith by a Borrower or a Subsidiary of a Borrower, so
      long as adequate reserves are maintained by such Person for their payment
      in accordance with GAAP;

            (e) Attachment or judgment Liens not to exceed an aggregate of
      $1,000,000 for the Borrowers and their Subsidiaries, excluding amounts (i)
      bonded to the reasonable satisfaction of the Agent or (ii) covered by
      insurance to the reasonable satisfaction of the Agent;

            (f) Deposits or pledges made in the ordinary course of business to
      secure obligations under workmen's compensation, social security or
      similar laws, under unemployment insurance, or to secure public or
      statutory obligations;

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            (g) Deposits or pledges made to secure bids, tenders, contracts
      (other than contracts for the payment of money), leases, statutory
      obligations, surety and appeal bonds and other obligations of like nature
      arising in the ordinary course of business not to exceed an aggregate of
      $2,000,000 for all Credit Parties combined;

            (h) Easements, rights-of-way, restrictions and other similar
      encumbrances on title to, or restrictions on the use of, real property,
      which, in the aggregate, do not materially detract from the value of the
      item of property subject thereto or materially interfere with the ordinary
      conduct of the business of any Borrower or any of its Subsidiaries;

            (i) retained interests of lessors under operating leases;

            (j) leases and subleases granted in the ordinary course of business;

            (k) Liens arising solely out of any statutory or common law
      provision consisting of banker's liens, rights of set-off or similar
      rights and remedies as to deposit accounts or other funds maintained with
      a depository institution;

            (l) Liens on certain real property located on Japhet Street,
      Houston, Texas, to the extent securing Indebtedness permitted under
      Section 8.3(f); and

            (m) Extensions, replacements and renewals of any of the foregoing so
      long as the aggregate amount of Indebtedness secured by such extended,
      replaced or renewed Liens is not increased and is on terms and conditions
      no more restrictive than the terms and conditions of the Indebtedness
      secured by such extended, replaced or renewed Liens.

      8.5 Contingent Obligations. No Borrower nor any Subsidiary of any Borrower
shall directly or indirectly incur, assume, or suffer to exist any Contingent
Obligation, excluding Contingent Obligations for Indebtedness permitted to be
incurred under Section 8.3, and Investments permitted under Section 8.8.

      8.6 Sale of Assets. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, sell, lease, assign, transfer or
otherwise dispose of any assets, other than: (a) Inventory in the ordinary
course of business; (b) redundant, obsolete or worn out property disposed of in
the ordinary course of business; (c) in connection with the merger or
dissolution of any Borrower or any wholly-owned Subsidiary of any Borrower into
any other Borrower; (d) assets of a Borrower or any Subsidiary of a Borrower
sold, leased, assigned or otherwise transferred to such or any other Borrower;
and (e) assets the disposition of which is not otherwise permitted under this
Section 8.6, provided, that, as to dispositions referred to in clauses (b)
(except for dispositions of redundant, obsolete or worn out equipment with a
value not exceeding $100,000 in the aggregate) and (e) above, (i) such
dispositions are for fair value, (ii) if an Additional Collateral Event has
occurred, at least seventy-five percent (75%) of the aggregate consideration is
paid in cash at the time of disposition and is thereupon delivered to the Agent
for application to the outstanding principal balance of the Revolving Loans and
(iii) the aggregate amount of all such dispositions does not exceed $10,000,000
in the aggregate for any fiscal year of the Consolidated Entity.

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      8.7 Restricted Payments. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend (other
than dividends payable solely in capital stock of such Person) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of capital stock of such Person or any warrants, options
or rights to purchase any such capital stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of such Person or
any of its Subsidiaries; or (b) make any optional or mandatory payment of
principal of or interest on, or any optional or mandatory prepayment of
principal of or interest on, or redemption (including, without limitation, by
making payments to a sinking or analogous fund) or repurchase of, in each case
any Indebtedness subordinated to the Obligations; provided, that,
notwithstanding the foregoing:

                  (i)   any Borrower and any Subsidiary of any Borrower may make
                        payments or prepayments on account of Indebtedness owing
                        to such or any other Borrower;

                  (ii)  any Subsidiary of any Borrower may declare and pay
                        dividends to such Borrower or any other Borrower; and

                  (iii) MTLM may declare and pay dividends or redeem, repurchase
                        or otherwise acquire or retire any of its capital stock
                        so long as, (A) before and after giving effect to all
                        payments in connection therewith, the Borrowers shall
                        have Excess Availability in excess of $30,000,000 and
                        shall be in compliance with the financial covenants
                        contained in Sections 8.1 and 8.2 hereof, as
                        demonstrated by a certificate of the chief executive
                        officer, chief financial officer or treasurer of MTLM
                        delivered to the Agent and the Lenders prior to such
                        payment; (B) no Default or Event of Default shall have
                        occurred and be continuing or would result from such
                        payments; and (C) the aggregate amount of all such
                        payments in any consecutive twelve (12) month period
                        does not exceed $10,000,000.

      8.8 Investments and Acquisitions. No Borrower shall, or shall permit any
of its Subsidiaries to, directly or indirectly, make any Acquisition of any
Person or make any Investment in any Person, whether in cash, Securities, or
other property of any kind including, without limitation, any Subsidiary or
Affiliate of any Credit Party, other than:

            (a) Permitted Acquisitions and Permitted Investments in Non-Majority
      Interests;

            (b) advances or loans made in the ordinary course of business not to
      exceed $2,500,000 in the aggregate for all Credit Parties combined
      outstanding at any one time (provided, that the aggregate amount of all
      advances and loans made to officers, directors, employees or other
      Affiliates of any Borrower or any Subsidiary of any Borrower outstanding
      at any one time shall not exceed $250,000);

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            (c) loans, investments and advances between a Borrower and any other
      Borrower;

            (d) Cash Equivalents;

            (e) Investments in account debtors received in connection with the
      bankruptcy or reorganization, or in settlement of delinquent obligations,
      of customers in the ordinary course of business and in accordance with
      applicable collection and credit policies established by such Borrower or
      such Subsidiary, as the case may be;

            (f) extensions of credit in the nature of accounts receivable or
      notes receivable arising from the sale or lease of goods and services in
      the ordinary course of business;

            (g) Investments existing on the Closing Date and set forth on
      Schedule 8.8(f); and

            (h) such other Investments as the Agent may approve in writing in
      the exercise of its sole discretion.

      8.9 Affiliate Transactions. No Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, enter into any transaction with
(including, without limitation, the purchase, sale or exchange of property or
the rendering of any service to) any Subsidiary or Affiliate of any Borrower,
except in the ordinary course of and pursuant to the reasonable requirements of
such Borrower's or such Subsidiary's business, as the case may be, and upon fair
and reasonable terms no less favorable in any material respect to such Borrower
or such Subsidiary than could be obtained in a comparable arm's-length
transaction with an unaffiliated Person, except for such transactions otherwise
expressly permitted under Sections 8.7 and 8.8, respectively.

      8.10 Bank Accounts. Except for accounts set forth on Schedule B, Part 8.10
and other accounts approved by the Agent, no Borrower shall, or shall permit any
of its Subsidiaries to, directly or indirectly, open, maintain or otherwise have
any checking, savings or other accounts at any bank or other financial
institution, or any other account where money is or may be deposited or
maintained with any Person, other than (a) the Disbursement Account, (b)
petty-cash accounts, provided, that the aggregate balance of funds in such
accounts shall not exceed at any time $2,000,000, and (c) payroll, imprest or
medical insurance disbursement accounts, provided, that the aggregate balance of
funds in each of such accounts shall not exceed at any time that amount which
the Borrower on whose behalf such account is maintained deems reasonably
necessary to satisfy ordinary course disbursements therefrom during the next ten
(10) Business Days.

      8.11 Additional Negative Pledges. Except as otherwise disclosed on
Schedule B, Parts 8.3 or 8.4, respectively, no Borrower shall, or shall permit
any of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective, any prohibition or restriction (including
any agreement to provide equal and ratable security to any other Person in the
event a Lien is granted to or for the benefit of the Agent and the Lenders) on
the creation or existence of any Lien upon the assets of such Borrower or any of
its Subsidiaries, other than

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assets subject to capital leases or Purchase Money Liens, in each case permitted
hereunder, and other than pursuant to (a) this Credit Agreement and the other
Credit Documents, or (b) any contractual obligation (other than contractual
obligations arising in connection with Permitted Liens) which may restrict or
inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.

      8.12 Merger. No Borrower shall merge or consolidate with or into any other
Person, except (i) a Subsidiary of MTLM may merge into MTLM or a wholly-owned
Subsidiary of MTLM, and (ii) in connection with a Permitted Acquisition,
provided however in any such case, the Borrower or the applicable wholly-owned
Subsidiary must be the surviving entity and after giving effect thereto no
Default or Event of Default shall exist.

      8.13 Sale and Leaseback Transactions and Other Off-Balance Sheet
Liabilities. None of the Borrowers will, nor will they permit any Subsidiary to,
enter into or suffer to exist any Sale and Leaseback Transaction or any other
Off-Balance Sheet Liability.

                                   ARTICLE IX

                         EVENTS OF DEFAULT AND REMEDIES

      9.1 Events of Default. The occurrence of any of the following events shall
constitute an event of default (each an "Event of Default") hereunder:

            9.1.1 Failure to Pay. The Borrowers shall fail to pay any
Obligations in respect of principal or interest on the Revolving Loans, in each
case when the same shall become due and payable, or shall fail to pay, within
five (5) days after the same shall become due and payable, any other amount due
under this Credit Agreement or any of the other Credit Documents.

            9.1.2 Breach of Certain Covenants. Any Borrower shall fail to comply
with any covenant contained in Article VII (other than Section 7.4(i), 7.8, 7.9,
7.12, 7.13 and 7.14) or Article VIII.

            9.1.3 Breach of Representation or Warranty. Any representation or
warranty made or deemed to be made by any Credit Party in this Credit Agreement
or in any other Credit Document (and in any statement or certificate given under
this Credit Agreement or any other Credit Document), shall be false or
misleading in any material respect when made or deemed to be made.

            9.1.4 Breach of Other Covenants. Any Credit Party shall fail to
comply with any covenant contained in this Credit Agreement or any other Credit
Document, other than as set forth in Section 9.1.2, and such failure shall
continue for 10 days after the Funds Administrator receives notice of such
failure from Agent.

            9.1.5 Dissolution. Any Credit Party shall dissolve, wind up or
otherwise cease its business (other than pursuant to a transaction expressly
permitted hereunder).

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            9.1.6 Insolvency Event. Any Credit Party shall become the subject of
an Insolvency Event.

            9.1.7 Change of Control. A Change of Control shall occur.

            9.1.8 Cross Default. A default or event of default shall occur (and
continue beyond any applicable grace period) under any note, agreement or
instrument evidencing any other Indebtedness of any Credit Party or any
Subsidiary of any Credit Party, which default or event of default permits the
acceleration of its maturity, provided that the aggregate principal amount of
all such other Indebtedness for which the default or event of default has
occurred exceeds $5,000,000.

            9.1.9 Rate Management Obligation. Any Borrower or any Subsidiary of
any Borrower shall fail to pay any Rate Management Obligation when due or shall
breach any term, provision or condition contained in any Rate Management
Transaction, and such default shall continue after the applicable grace period,
if any.

            9.1.10 Judgments. Any judgment or judgments, writ or writs or
warrant or warrants of attachment, or any similar process or processes, shall be
entered or filed against any Borrower or any other Credit Party or any of their
respective properties in an aggregate amount in excess of $5,000,000 (except to
the extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing), and which remains undischarged, unvacated,
unbonded or unstayed for a period of thirty (30) days.

            9.1.11 Criminal Penalties. Any criminal or civil fines or penalties,
or settlement payments or judgments relating to any state or federal crime,
shall be paid by or imposed or assessed against, any of the Borrowers or any
other Credit Party or any of their respective assets, in an amount, together
with any other such fines, penalties and other amounts imposed, paid or assessed
during the term of this Agreement, in excess of $5,000,000 in the aggregate.

            9.1.12 ERISA. Any Borrower or any of its ERISA Affiliates or any
other Person institutes any steps to terminate or withdraw from a Benefit Plan
and, as a result of such termination or withdrawal, such Borrower or ERISA
Affiliate is or could reasonably be expected to be required to make a
contribution to such Benefit Plan in excess of $5,000,000 or such Borrower or
ERISA Affiliate fails to make a contribution to any Employee Benefit Plan which
failure would be sufficient to give rise to a Lien under Section 302(f) of ERISA
in an amount in excess of $5,000,000.

            9.1.13 Failure of Enforceability of Credit Documents; Security. Any
covenant, agreement or obligation of any Credit Party contained in or evidenced
by any of the Credit Documents shall cease to be enforceable, or shall be
determined by a court of competent jurisdiction to be unenforceable, in each
case in accordance with its terms (otherwise than pursuant to its terms or as
expressly permitted hereunder); any Credit Party shall deny or disaffirm its
obligations under any of the Credit Documents or any Liens granted in connection
therewith; or, any Liens granted on any of the Collateral shall be determined to
be void, voidable, invalid or unperfected, are subordinated or not given the
priority contemplated by this Credit Agreement.

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      9.2 Acceleration, Termination of Commitments and Cash Collateralization.
Upon the occurrence and during a continuance of any Event of Default, without
prejudice, to the rights of the Agent or any Lender to enforce its claims
against the Credit Parties:

            9.2.1 Acceleration. Upon the written request of the Required Lenders
and by delivery of written notice to the Funds Administrator from the Agent, all
Obligations shall be immediately due and payable (except with respect to any
Event of Default set forth in Section 9.1.6, in which case all Obligations shall
automatically become immediately due and payable without the necessity of any
request of the Required Lenders or notice or other demand to the Funds
Administrator or any of the Borrowers) without presentment, demand, protest or
any other action or obligation of the Agent or any Lender.

            9.2.2 Termination of Commitments. Upon the written request of the
Required Lenders, and by delivery of written notice to the Funds Administrator
from the Agent (except with respect to any Event of Default set forth in Section
9.1.6, in which case all of the Commitments shall automatically and immediately
terminate without the necessity of any request of the Required Lenders or notice
or other demand to the Funds Administrator or any of the Borrowers) the
Commitments shall be immediately terminated and, at all times thereafter, all
Revolving Loans made by any Lender pursuant to this Credit Agreement shall be at
such Lender's sole discretion, unless such Event of Default is waived in
accordance with Section 11.11, in which case the Commitments shall be
automatically reinstated.

            9.2.3 Cash Collateralization. On demand of the Agent or the Required
Lenders, the Borrowers shall immediately deposit with the Agent for each Letter
of Credit then outstanding, cash or Cash Equivalents in an amount equal to 110%
of the greatest amount drawable thereunder. Such deposit shall be held by the
Agent and used to reimburse the Issuing Bank for the amount of each drawing made
under such Letters of Credit, as and when each such drawing is made.

      9.3 Rescission of Acceleration. After acceleration of the maturity of all
or any part of the Obligations, if the Borrowers pay all accrued interest and
all principal due (other than by reason of the acceleration) and all Events of
Default are waived in accordance with Section 11.11, the Required Lenders may
elect in their sole discretion, to rescind the acceleration and return to the
Borrowers any cash collateral, if any, deposited with the Agent pursuant to
Section 9.2.3. (This Section is intended only to bind all of the Lenders to a
decision of the Required Lenders and not to confer any right on the Borrowers,
even if the described conditions for the Required Lenders' election may be met.)

      9.4 Remedies. Upon the occurrence and during the continuance of an Event
of Default, upon the written request and at the direction of the Required
Lenders, the Agent may exercise any rights and remedies available to it under
applicable law (including under the Code) and under the Collateral Documents.
The foregoing rights and remedies are not intended to be exhaustive and the full
or partial exercise of any right or remedy shall not preclude the full or
partial exercise of any other right or remedy available under this Credit
Agreement, any other Credit Document, at equity or at law.

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      9.5 Right of Setoff. In addition to and not in limitation of all rights of
offset that any Lender may have under applicable law, upon the occurrence and
during the continuance of any Event of Default, and regardless of whether any
Lender has made any demand or the Obligations of any Borrower have matured, each
Lender shall have the right to appropriate and apply to the payment of the
Obligations of such Borrower all deposits and other obligations then or
thereafter owing by such Lender to such Borrower. Each Lender exercising such
rights shall notify the Agent thereof and any amount received as a result of the
exercise of such rights shall be shared by the Lenders in accordance with
Section 2.5.

      9.6 License of Use of Software and Other Intellectual Property. Unless
expressly prohibited by the licensor thereof, if any, the Agent is hereby
granted a license to use all computer software programs, data bases, processes
and materials used by the Borrowers in connection with their respective
businesses or in connection with any Collateral. The Agent agrees not to use any
such license other than after the occurrence and during the continuance of an
Event of Default.

      9.7 Application of Proceeds; Surplus, Deficiencies. The net cash proceeds
resulting from the Agent's exercise of any of the foregoing rights against any
Collateral (after deducting all of the Agent's Expenses related thereto) shall
be applied by the Agent to the payment of the Obligations, whether due or to
become due, in the order set forth in Section 4.12. The Borrowers shall remain
jointly and severally liable to the Agent and the Lenders for any deficiencies,
and the Agent and the Lenders in turn agree to remit to the Borrowers or their
successors or assigns, any surplus resulting therefrom.

                                    ARTICLE X

                                    THE AGENT

      10.1 Appointment of Agent. Each Lender hereby designates LaSalle Bank as
Agent to act as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Revolving Note, by the acceptance of such Note, shall be
deemed irrevocably to authorize the Agent to take such action on its behalf
under the provisions of this Credit Agreement and the other Credit Documents and
any other instruments and agreements referred to herein and therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
shall hold all Collateral and all payments of principal, interest, Fees (other
than Fees that are exclusively for the account of the Agent), charges and
Expenses received pursuant to this Credit Agreement or any other Credit Document
for the ratable benefit of the Lenders. The Agent may perform any of its duties
hereunder by or through its agents or employees.

      Other than rights of the Credit Parties under Section 10.9, the provisions
of this Article X are for the benefit of the Agent and the Lenders only and none
of the Credit Parties or any other Persons shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Credit Agreement and the other Credit Documents, the Agent
shall act only for the Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Credit Party.

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      10.2 Nature of Duties of Agent. The Agent has no duties or
responsibilities except those expressly set forth in the Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of the Agent shall be mechanical and administrative in nature; the Agent shall
not have by reason of this Credit Agreement or any of the other Credit Documents
a fiduciary relationship in respect of any Lender or any participant of any
Lender; and nothing in this Credit Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Credit Agreement or any other
Credit Document, except as expressly set forth herein or therein.

      10.3 Lack of Reliance on Agent.

            (a) Independently and without reliance upon the Agent, each Lender,
      to the extent it deems appropriate, has made and shall continue to make
      (i) its own independent investigation of the financial or other condition
      and affairs of each Credit Party in connection with the taking or not
      taking of any action in connection herewith and (ii) its own appraisal of
      the creditworthiness of each Credit Party, and, except as expressly
      provided in this Credit Agreement, the Agent shall have no duty or
      responsibility, either initially or on a continuing basis, to provide any
      Lender with any credit or other information with respect thereto, whether
      coming into its possession before the making of the Revolving Loans or at
      any time or times thereafter.

            (b) The Agent shall not be responsible to any Lender for any
      recitals, statements, information, representations or warranties herein or
      in any document, certificate or other writing delivered in connection
      herewith or for the execution, effectiveness, genuineness, validity,
      enforceability, collectibility, priority or sufficiency of this Credit
      Agreement or any of the other Credit Documents or the financial or other
      condition of any Credit Party. The Agent shall not be required to make any
      inquiry concerning either the performance or observance of any other
      terms, provisions or conditions of this Credit Agreement or any of the
      other Credit Documents, or the financial condition of any Credit Party, or
      the existence or possible existence of any Default or Event of Default,
      unless specifically requested to do so in writing by any Lender.

      10.4 Certain Rights of the Agent. The Agent shall have the right to
request instructions from the Lenders by notice to each of such Lenders. If the
Agent shall request instructions from the Lenders with respect to any act or
action (including the failure to act) in connection with this Credit Agreement,
the Agent shall be entitled to refrain from such act or taking such action
unless and until the Agent shall have received instructions from such Lenders,
and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
requisite Lenders required to give such instructions hereunder. The Agent may
give any notice required under Article IX hereof without the consent of any of
the Lenders unless otherwise directed by the Required Lenders in writing and
will, at the direction of the Required Lenders, give any such notice required
under Article IX.

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      10.5 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, facsimile or telephone message believed
by it to be genuine and correct and to have been signed, sent or made by the
proper person. The Agent may consult with legal counsel (including counsel for
the Credit Parties with respect to matters concerning the Credit Parties),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.

      10.6 Indemnification of Agent. To the extent the Agent is not reimbursed
and indemnified by the Borrowers, each Lender will reimburse and indemnify the
Agent, in proportion to its respective Commitment, for and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, in any way relating to or
arising out of this Credit Agreement; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.

      10.7 The Agent in its Individual Capacity. With respect to its obligation
to lend under this Credit Agreement, the Revolving Loans made by it and the
Revolving Note issued to it and its participation in Letters of Credit issued
hereunder, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Revolving Note or participation interests and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "holders of Revolving Notes," or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, financial advisory or other business with any Credit Party or any
Affiliate of any Credit Party as if it were not performing the duties specified
herein, and may accept fees and other consideration from any Credit Party for
services in connection with this Credit Agreement and otherwise without having
to account for the same to the Lenders.

      10.8 Holders of Revolving Notes. The Agent may deem and treat the payee of
any Revolving Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder of any
Revolving Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Note or of any Revolving Note or
Revolving Notes issued in exchange therefor.

      10.9 Successor Agent.

            (a) The Agent may, upon 15 Business Days' notice to the Lenders and
      the Funds Administrator, resign at any time (effective upon the
      appointment of a successor Agent pursuant to the provisions of this
      Section 10.9) by giving written notice thereof to the Lenders and the
      Funds Administrator. Upon any such resignation, the Required

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      Lenders shall have the right, upon 5 days' notice and approval by the
      Credit Parties (which approval shall not be unreasonably withheld or
      delayed) to appoint a successor Agent. If no successor Agent shall have
      been so appointed by the Required Lenders and accepted such appointment,
      within 30 days after the retiring Agent's giving of notice of resignation,
      then the retiring Agent may, on behalf of the Lenders (and with the
      approval of the Funds Administrator, which approval shall not be
      unreasonably withheld or delayed), appoint a successor Agent, which shall
      be a bank or a trust company or other financial institution which
      maintains an office in the United States, or a commercial bank organized
      under the laws of the United States of America or of any State thereof, or
      any Affiliate of such bank or trust company or other financial institution
      which is engaged in the banking business, having a combined capital and
      surplus of at least $500,000,000.

            (b) Upon the acceptance of any appointment as Agent hereunder by a
      successor Agent, such successor Agent shall thereupon succeed to and
      become vested with all the rights, powers, privileges and duties of the
      retiring Agent, and the retiring Agent shall be discharged from its duties
      and obligations under this Credit Agreement and the other Credit
      Documents. After any retiring Agent's resignation hereunder as Agent, the
      provisions of this Article X shall inure to its benefit as to any actions
      taken or omitted to be taken by it while it was Agent under or in
      connection with this Credit Agreement.

      10.10 Collateral Matters.

            (a) Each Lender authorizes and directs the Agent to enter into the
      Collateral Documents for the benefit of the Lenders. Each Lender hereby
      agrees, and each holder of any Revolving Note by the acceptance thereof
      will be deemed to agree, that, except as otherwise set forth herein or in
      the other Credit Documents, any action taken by the Required Lenders in
      accordance with the provisions of this Credit Agreement and the other
      Credit Documents, and the exercise by the Required Lenders of the powers
      set forth herein or therein, together with such other powers as are
      reasonably incidental thereto, shall be authorized and binding upon all of
      the Lenders. The Agent is hereby authorized on behalf of all of the
      Lenders, without the necessity of any notice to or further consent from
      any Lender, from time to time so long as an Event of Default shall not
      then exist, to take any action with respect to any Collateral or
      Collateral Documents which may be necessary to perfect and maintain the
      perfection of the Liens upon the Collateral granted pursuant to the
      Collateral Documents.

            (b) The Lenders hereby authorize the Agent, at its option and in its
      discretion, to release any Lien granted to or held by the Agent upon any
      Collateral (i) upon termination of the Commitments and payment and
      satisfaction of all of the Obligations at any time arising under or in
      respect of this Credit Agreement or the other Credit Documents or the
      transactions contemplated hereby or thereby, (ii) if approved, authorized
      or ratified in writing by the Required Lenders, unless such release is
      required to be approved by all of the Lenders pursuant to Section 11.11;
      or (iii) constituting property sold or to be sold or disposed of as part
      of or in connection with any disposition thereof permitted hereunder. Upon
      request by the Agent at any time, the Lenders will

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      confirm in writing the Agent's authority to release particular types or
      items of Collateral pursuant to this Section 10.10.

            (c) The Agent shall have no obligation whatsoever to the Lenders or
      to any other Person to assure that the Collateral exists or is owned by
      any Borrower or is cared for, protected or insured or that the Liens
      granted to the Agent in or pursuant to any of the Collateral Documents
      have been properly or sufficiently or lawfully created, perfected,
      protected or enforced or are entitled to any particular priority, or to
      exercise or to continue exercising at all or in any manner or under any
      duty of care, disclosure or fidelity any of the rights, authorities and
      powers granted or available to the Agent in this Section 10.10 or in any
      of the Collateral Documents, it being understood and agreed that in
      respect of the Collateral, or any act, omission or event related thereto,
      the Agent may act in any manner it may deem appropriate, in its sole
      discretion, given the Agent's own interest in the Collateral as one of the
      Lenders and that the Agent shall have no duty or liability whatsoever to
      the Lenders, except for its gross negligence or willful misconduct.

      10.11 Actions with Respect to Defaults. In addition to the Agent's right
to take actions on its own accord as permitted under this Credit Agreement, the
Agent shall take such action with respect to a Default or Event of Default as
shall be directed by the Required Lenders; provided, that until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable and in the best interests
of the Lenders.

      10.12 Delivery of Information. The Agent shall not be required to deliver
to any Lender originals or copies of any documents, instruments, notices,
communications or other information received by the Agent from any of the Credit
Parties or any Subsidiary of any of the Credit Parties, any Lender or any other
Person under or in connection with this Credit Agreement or any other Credit
Document, except (i) as specifically provided in this Credit Agreement or any
other Credit Document and (ii) as specifically requested from time to time in
writing by any Lender with respect to a specific document, instrument, notice or
other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.

      10.13 Designation of Co-Syndication Agents and Co-Documentation Agents.
PNC Bank National Association and U.S. Bank, National Association are hereby
designated as co-syndication agents ("Co-Syndication Agents") hereunder.
Sovereign Bank and National City Bank of the Midwest are hereby designated as
co-documentation agents ("Co-Documentation Agents") hereunder. The
Co-Syndication Agents and the Co-Documentation Agents shall not have any rights,
powers or obligations of the Agent hereunder or under any other Credit Document,
nor shall the Co-Syndication Agents or the Co-Documentation Agents have any
right or claim to any funds, fees or payments due to the account of the Agent
hereunder or under any other Credit Document.

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                                   ARTICLE XI

                                  MISCELLANEOUS

      11.1 Governing Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
CREDIT AGREEMENT AND EACH OF THE REVOLVING NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS.

      11.2 Submission to Jurisdiction. ALL DISPUTES AMONG THE LENDERS AND THE
CREDIT PARTIES (OR THE AGENT OR FUNDS ADMINISTRATOR, RESPECTIVELY, ACTING ON
THEIR BEHALF), WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN COOK COUNTY, ILLINOIS AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT
THE AGENT ON BEHALF OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE FUNDS ADMINISTRATOR OR ANY
CREDIT PARTY OR THEIR RESPECTIVE PROPERTIES IN ANY LOCATION REASONABLY SELECTED
BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT. THE FUNDS
ADMINISTRATOR AND EACH OF THE OTHER CREDIT PARTIES WAIVE ANY OBJECTION THAT ANY
OF SUCH PERSONS MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT OR ANY
LENDER HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.

      11.3 Service of Process. EACH OF THE FUNDS ADMINISTRATOR AND THE OTHER
CREDIT PARTIES HEREBY WAIVES PERSONAL SERVICE UPON IT AND, AS ADDITIONAL
SECURITY FOR THE OBLIGATIONS, HEREBY IRREVOCABLY DESIGNATES AND APPOINTS ROBERT
C. LARRY, WITH AN OFFICE ON THE DATE HEREOF AT C/O METAL MANAGEMENT, INC., 500
NORTH DEARBORN STREET, CHICAGO, ILLINOIS 60610, AND SUCH OTHER PERSONS AS MAY
HEREAFTER BE SELECTED BY SUCH PERSON WHICH IRREVOCABLY AGREE IN WRITING TO SO
SERVE AS ITS AGENT, TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS ISSUED BY
ANY COURT IN ANY LEGAL ACTION OR OTHER PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
BY SUCH PERSON TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF
ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE FUNDS
ADMINISTRATOR AT ITS ADDRESS PROVIDED HEREIN EXCEPT THAT, UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY THE FUNDS
ADMINISTRATOR OR ANY OTHER CREDIT PARTIES REFUSES TO ACCEPT SERVICE, EACH SUCH
PERSON HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE AND EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL

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AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST THE FUNDS ADMINISTRATOR OR ANY OTHER CREDIT PARTY IN
THE COURTS OF ANY OTHER JURISDICTION.

      11.4 Jury Trial. THE FUNDS ADMINISTRATOR, EACH OF THE OTHER CREDIT
PARTIES, THE AGENT AND THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY.
INSTEAD, ANY DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.

      11.5 Limitation of Liability. NEITHER THE AGENT NOR ANY LENDER SHALL HAVE
ANY LIABILITY TO THE FUNDS ADMINISTRATOR OR ANY OTHER CREDIT PARTY (WHETHER
SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY ANY SUCH PERSON
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR
RELATIONSHIPS CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY OF THE OTHER CREDIT
DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER
BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS
OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

      11.6 Delays. No delay or omission of the Agent or the Lenders in
exercising any right or remedy hereunder shall impair any such right or operate
as a waiver thereof.

      11.7 Notices. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent or any of the Lenders, then to LaSalle
Bank National Association, 135 South LaSalle Street, Chicago, Illinois, 60603
Attention: Michael J. Vrchota, if to the Funds Administrator or any other Credit
Party, then to Metal Management, Inc., 500 North Dearborn Street, Chicago,
Illinois 60610, Attention: Chief Financial Officer, or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent, or any of the Lenders, at (312) 904-5483 and if to the Funds
Administrator or any other Credit Party at (312) 654-0714. All such notices and
correspondence shall be deemed given (i) if sent by certified or registered
mail, 3 Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is refused
and (iii) if sent by telex or facsimile transmission, when receipt of such
transmission is acknowledged; provided, that failure or delay in delivering
copies of any notices to any persons designated above to receive copies thereof
shall in no way adversely affect the effectiveness of such notice.

      11.8 Assignments and Participations.

            11.8.1 Borrower Assignment. Neither the Funds Administrator nor any
of the other Credit Parties shall have any right to assign this Credit Agreement
or any of the other

                                       75
<PAGE>

Credit Documents, or any rights or obligations hereunder or thereunder, without
the prior written consent of the Agent and the Lenders.

            11.8.2 Lender Assignments. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights and
obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents (which shall be of a constant and not a varying percentage of
the Loans and Commitment assigned), with the consent of the Agent (such consent
not to be unreasonably withheld or delayed) and upon execution and delivery to
the Agent, for its acceptance and recording in the Register, of an agreement in
substantially the form of Exhibit F (an "Assignment And Assumption Agreement"),
together with surrender of any Revolving Note or Revolving Notes subject to such
assignment and a processing and recordation fee of $5,000, such assignment shall
be effective and Annex I hereto shall be deemed to be modified accordingly. No
such assignment shall be for less than $5,000,000 of the Commitments unless it
is to another Lender or is an assignment of all of such Lender's rights and
obligations under this Credit Agreement. (This Section does not apply to
branches and Affiliates of a Lender, it being understood that a Lender may make,
carry or transfer Revolving Loans at or for the account of any of its branch
offices or Affiliates without consent of the Borrowers, the Agent or any other
Lender.)

            11.8.3 Agent's Register. The Agent shall maintain a register of the
names and addresses of the Lenders, their Commitments, and the principal amount
of their Revolving Loans (the "Register") at the address specified for the Agent
in Section 11.7. The Agent shall also maintain a copy of each Assignment and
Assumption Agreement delivered to and accepted by it, and modify the Register to
give effect to each Assignment and Assumption Agreement. Upon its receipt of
each Assignment and Assumption Agreement and surrender of the affected Revolving
Note or Revolving Notes, the Agent will give prompt notice thereof to the Funds
Administrator and deliver to the Funds Administrator a copy of the Assignment
and Assumption Agreement and the surrendered Revolving Note or Revolving Notes.
Within 5 Business Days after its receipt of such notice, the Borrowers shall
execute and deliver to the Agent a substitute Revolving Note or Revolving Notes
to the order of the assignee in the amount of the Commitment or Commitments
assumed by it and to the assignor in the amount of the Commitment or Commitments
retained by it, if any. Such substitute Revolving Note or Revolving Notes shall
re-evidence the Indebtedness outstanding under the surrendered Revolving Note or
Revolving Notes and shall be dated as of the Closing Date. The Agent shall be
entitled to rely upon the Register exclusively for purposes of identifying the
Lenders hereunder. The Register shall be available for inspection by the Credit
Parties and the Lenders (or any of them) at any reasonable time and from time to
time upon reasonable notice to the Agent.

            11.8.4 Participations. Each Lender may sell participations (without
the consent of the Agent, any Credit Party or any other Lender) to one or more
parties in or to all or a portion of its rights and obligations under this
Credit Agreement, the Revolving Notes and the other Credit Documents.
Notwithstanding a Lender's sale of a participation interest, its obligations
hereunder shall remain unchanged. The Credit Parties, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender. No
participant shall have rights to approve any amendment or waiver of this Credit
Agreement or any of the other Credit Documents except to the extent such
amendment or waiver would (i) increase the participant's

                                       76
<PAGE>

obligation in respect of the Commitment of the Lender from whom the participant
purchased its participation interest, (ii) reduce the principal of, or stated
rate or amount of interest on, the Revolving Loans subject to such
participation, (iii) postpone any maturity date fixed for final payment of
principal of the Revolving Loans subject to the participation interest and (iv)
release any guarantor of the Obligations or all or a substantial portion of the
Collateral, other than when otherwise permitted hereunder.

      11.9 Confidentiality.

            (a) Each Lender agrees that it will use its best efforts not to
      disclose to any Person, without the prior consent of the Funds
      Administrator, any information with respect to any of the Credit Parties
      or any Subsidiary of any of the Credit Parties which is furnished pursuant
      to this Credit Agreement and which is designated by the respective Credit
      Parties to the Lenders in writing as confidential (the "Credit Party
      Information"), provided, that, each Lender may disclose any such
      information (i) to its employees, auditors, or counsel, or to another
      Lender if the disclosing Lender or such disclosing Lender's holding or
      parent company in its sole discretion determines that any such party
      should have access to such information, (ii) to its Affiliates on a need
      to know basis, (iii) as has become generally available to the public,
      other than by disclosure thereof by such Lender, (iv) as may be required
      in any report, statement or testimony submitted to any Governmental
      Authority having or claiming to have jurisdiction over such Lender, (v) as
      may be required in response to any summons or subpoena or in connection
      with any litigation, (vi) in order to comply with any Requirement of Law,
      and (vii) to any actual or prospective transferee or participant in
      connection with any contemplated transfer or participation of any of the
      Revolving Notes or Commitments or any interest therein by such Lender, so
      long as prior to such disclosure such prospective or actual transferee or
      participant has agreed to preserve the confidentiality of such information
      on terms substantially similar to those set forth in this Section 11.9 or
      on terms otherwise satisfactory to the Funds Administrator.

            (b) In the event that the Agent or any Lender is requested or
      becomes legally compelled (by interrogatories, requests for information or
      documents, subpoena, civil investigative demand or similar process) to
      disclose any of the Credit Party Information, such Person will (i) provide
      the Funds Administrator with prompt written notice so that the Credit
      Parties may seek a protective order or other appropriate remedy and/or
      waive compliance with the provisions of this Section 11.9; (ii) unless the
      Credit Parties waive compliance by such Person with the provisions of this
      Section 11.9, make a timely objection to the request or compulsion to
      provide such Credit Party Information on the basis that such Credit Party
      Information is confidential and subject to the agreements contained in
      this Section 11.9; and (iii) take action as is necessary to preserve such
      confidentiality, such as seeking a protective order or other appropriate
      remedy.

      In the event that a protective order or other remedy is not obtained, or
the Credit Parties waive compliance with the provisions of this Section 11.9,
such Person will furnish only that portion of the Credit Party Information which
is legally required to be furnished and will exercise such Person's best efforts
to obtain reliable assurance that confidential treatment will be accorded to the
Credit Party Information.

                                       77
<PAGE>

      11.10 Indemnification. The Borrowers hereby jointly and severally
indemnify and agree to defend and hold harmless the Agent and each of the
Lenders and their respective directors, officers, agents, employees and counsel
from and against any and all losses, claims, damages, liabilities, deficiencies,
judgments or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from their own gross negligence
or willful misconduct) arising out of or by reason of (a) any litigation,
investigations, claims or proceedings which arise out of (i) this Credit
Agreement or the transactions contemplated hereby, (ii) the issuance of the
Letters of Credit, (iii) the failure of the Issuing Bank to honor a Drawing
under any Letter of Credit, as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
Governmental Authority, (iv) any actual or proposed use by any Borrower of the
proceeds of the Revolving Loans or (v) the Agent's or the Lenders' entering into
this Credit Agreement, the other Credit Documents or any other agreements and
documents relating hereto, including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or proceeding or any
advice rendered in connection with any of the foregoing and (b) any remedial or
other action taken by any of the Borrowers or any of the Lenders in connection
with compliance by any of the Borrowers or any Subsidiary of any of the
Borrowers, or any of their respective properties, with any federal, state or
local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines.

      11.11 Amendments and Waivers. No amendment or waiver of any provision of
this Credit Agreement, any part of Schedule B, or any other Credit Document
shall be effective unless in writing and signed by the Required Lenders (or by
the Agent on their behalf), except that:

            (a) the consent of all Lenders shall be required to (i) increase the
      advance rates set forth in clause (a) or (b) of the definition of the term
      Borrowing Base, or (ii) amend or waive this Section 11.11(a);

            (b) the consent of all the Lenders is required to (i) except as
      otherwise set forth in Section 2.8, increase the Commitments, (ii) reduce
      the principal of, or interest on, any Revolving Note, any Letter of Credit
      reimbursement obligations or any Fees hereunder (other than Fees that are
      exclusively for the account of the Agent), (iii) postpone any date fixed
      for any payment in respect of principal of, or interest on, any Revolving
      Note, any Letter of Credit reimbursement obligations or any Fees
      hereunder, (iv) change the percentage of the Commitments, or any minimum
      requirement necessary for the Lenders or the Required Lenders to take any
      action hereunder, (v) amend or waive this Section 11.11(b), or change the
      definition of Required Lenders or (vi) except as otherwise expressly
      provided in this Credit Agreement, and other than in connection with the
      financing, refinancing, sale or other disposition of any asset of a
      Borrower permitted under this Credit Agreement, release all or
      substantially all of the Liens in favor of the Agent on any of the
      Collateral; and

            (c) the consent of the Agent shall be required for any amendment,
      waiver or consent affecting the rights or duties of the Agent under any
      Credit Document, in addition to the consent of the Lenders otherwise
      required by this Section.

                                       78
<PAGE>

      Neither the consent of the Funds Administrator nor any other Credit Party
shall be required for any amendment, modification or waiver of the provisions of
Article X (other than Section 10.9). The Funds Administrator, the other Credit
Parties and the Lenders each hereby authorize the Agent to modify this Credit
Agreement by unilaterally amending or supplementing Annex I to reflect
assignments of the Commitments or any increases or decreases in the Commitments
in accordance with the terms of this Agreement. Notwithstanding the foregoing,
the Credit Parties may amend Schedule B, Parts 6.1, 6.10, 6.14, 6.16 and 8.10,
without the consent of the Required Lenders. Upon the occurrence of a Permitted
Acquisition which results in a new Subsidiary of any Borrower as permitted by
the terms of this Credit Agreement, the Agent is authorized to accept any
joinder or agreement of such Subsidiary to be bound as a "Borrower" hereunder
and in a similar capacity under the other Credit Documents without the further
consent of any Lender, Borrower or Funds Administrator, although each of the
Lenders, the other Borrowers and the Funds Administrator will promptly confirm
in writing, if requested by Agent, such joinder and agreement by such new
Subsidiary.

      11.12 Counterparts and Effectiveness. This Credit Agreement and any waiver
or amendment hereto may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Credit Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent.

      11.13 Severability. In case any provision in or obligation under this
Credit Agreement, the Revolving Notes or any of the other Credit Documents shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

      11.14 Maximum Rate. Notwithstanding anything to the contrary contained
elsewhere in this Credit Agreement or in any other Credit Document, the
Borrowers, the Agent, and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to the Borrowers and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied pursuant to the terms hereof to the reduction of the principal amount
then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the

                                       79
<PAGE>

Borrowers. All sums paid or agreed to be paid to the Agent or any Lender for the
use, forbearance, or detention of the Obligations and other Indebtedness of the
Borrowers to the Agent or any Lender, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread throughout the full term of
such Indebtedness, until payment in full thereof, so that the actual rate of
interest on account of all such Indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such Indebtedness. The terms and provisions
of this Section 11.14 shall control over every other provision of this Credit
Agreement, the other Credit Documents, and all agreements among the Borrowers,
the Agent and the Lenders.

      11.15 Entire Agreement; Successors and Assigns. This Credit Agreement and
the other Credit Documents constitute the entire agreement among the Credit
Parties, the Agent and the Lenders, supersede any prior agreements among them,
and shall bind and benefit each of such Persons and their respective successors
and permitted assigns.

      11.16 Joint and Several Liability of Borrowers.

            (a) Each of the Borrowers shall be jointly and severally liable
      hereunder and under each of the other Credit Documents with respect to all
      Obligations, regardless of which of the Borrowers actually receives the
      proceeds of the Revolving Loans or the benefit of any other extensions of
      credit hereunder, or the manner in which the Funds Administrator, the
      Borrowers, the Agent or the Lenders account therefor in their respective
      books and records. Notwithstanding the foregoing, (i) each Borrower's
      obligations and liabilities with respect to proceeds of Revolving Loans
      which it receives or Letters of Credit issued for its account, and related
      fees, costs and expenses, and (ii) each Borrower's obligations and
      liabilities arising as a result of the joint and several liability of the
      Borrowers hereunder with respect to proceeds of Revolving Loans received
      by, or Letters of Credit issued for the account of, any of the other
      Borrowers, together with the related fees, costs and expenses, shall be
      separate and distinct obligations, both of which are primary obligations
      of such Borrower. Neither the joint and several liability of, nor the
      Liens granted to the Agent under the Collateral Documents by, any of the
      Borrowers shall be impaired or released by (A) the failure of Agent or any
      Lender, any successors or assigns thereof, or any holder of any Revolving
      Note or any of the Obligations to assert any claim or demand or to
      exercise or enforce any right, power or remedy against the Funds
      Administrator, any Borrower, any Subsidiary of any Borrower, any other
      Person, the Collateral or otherwise; (B) any extension or renewal for any
      period (whether or not longer than the original period) or exchange of any
      of the Obligations or the release or compromise of any obligation of any
      nature of any Person with respect thereto; (C) the surrender, release or
      exchange of all or any part of any property (including without limitation
      the Collateral) securing payment, performance and/or observance of any of
      the Obligations or the compromise or extension or renewal for any period
      (whether or not longer than the original period) of any obligations of any
      nature of any Person with respect to any such property; (D) any action or
      inaction on the part of the Agent or any Lender, or any other event or
      condition with respect to any other Borrower, including any such action or
      inaction or other event or condition, which might otherwise constitute a
      defense available to, or a discharge of, such other Borrower, or a
      guarantor or surety of or for any or all of the Obligations; and (E) any
      other act, matter or thing (other than payment or performance of the
      Obligations)

                                       80
<PAGE>

      which would or might, in the absence of this provision, operate to
      release, discharge or otherwise prejudicially affect the obligations of
      such or any other Borrower.

            (b) Each Borrower understands and acknowledges that, if the Agent
      forecloses judicially or nonjudicially against any Collateral consisting
      of real property, such foreclosure could impair or destroy any ability
      that such Borrower may have to seek reimbursement, contribution or
      indemnification from any other Borrower or Borrowers or from others based
      on any right such Borrower may have of subrogation, reimbursement,
      contribution or indemnification in respect of its joint and several
      liability hereunder. Each Borrower further understands and acknowledges
      that in the absence of this Section 11.16(b), such potential impairment or
      destruction of such Borrower's rights, if any, may entitle such Borrower
      to assert a defense to its joint and several liability hereunder based on
      Section 580d of the California Code of Civil Procedure as interpreted in
      Union Bank v. Gradsky, 265 Cal.App.2d 40 (1968). By executing this
      Agreement, each Borrower freely, irrevocably and unconditionally: (i)
      waives and relinquishes that defense and agrees that such Borrower will be
      fully liable hereunder and under the other Credit Documents even though
      the Agent may foreclose judicially or nonjudicially against any real
      property security for the Obligations; (ii) agrees that such Borrower will
      not assert that defense in any action or proceeding which the Agent or any
      of the Lenders may commence to enforce this Agreement; (iii) acknowledges
      and agrees that the rights and defenses waived by such Borrower hereunder
      include any right or defense that such Borrower may have or be entitled to
      assert based upon or arising out of any one or more of Sections 580a,
      580b, 580d or 726 of the California Code of Civil Procedure or Section
      2848 of the California Civil Code; and (iv) acknowledges and agrees that
      the Agent and each of the Lenders is relying on this waiver in making the
      Revolving Loans and other extensions of credit hereunder, and that this
      waiver is a material part of the consideration which the Agent and each
      Lender is receiving therefor.

            (c) Each Borrower waives any rights and defenses that are or may
      become available to such Borrower by reason of Sections 2787 to 2855,
      inclusive, of the California Civil Code.

            (d) Each Borrower waives all rights and defenses that such Borrower
      may have because the Revolving Loans and other Obligations are secured in
      part by real property. This means, among other things, that:

                  (i)   the Lenders may collect from such Borrower, without
                        first foreclosing on any real or personal property
                        Collateral pledged by such or any other Borrower or any
                        other Person; and

                  (ii)  if the Agent forecloses on any real property Collateral
                        pledged by any Borrower or any other Person:

                        (A)   the amount of the Obligations may be reduced only
                              by the price for which that Collateral is sold at
                              the foreclosure sale, even if the Collateral is
                              worth more than the sale price; and

                                       81
<PAGE>

                        (B)   Lenders may collect from such Borrower even if the
                              Agent, by foreclosing on the real property
                              Collateral, has destroyed any right such Borrower
                              may have to collect from any other Borrower or
                              Person.

      This Section 11.16(d) is an unconditional and irrevocable waiver of any
rights and defenses any Borrower may have because the Obligations are secured in
part by real property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.

      11.17 Customer Identification - USA Patriot Act Notice. Each Lender and
LaSalle Bank (for itself and not on behalf of any other party) hereby notifies
the Credit Parties that, pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56, signed into law October 26, 2001 (the "Act"), it is
required to obtain, verify and record information that identifies the Credit
Parties, which information includes the name and address of the Credit Parties
and other information that will allow such Lender or LaSalle Bank, as
applicable, to identify the Credit Parties in accordance with the Act.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

                                       82
<PAGE>

      IN WITNESS WHEREOF, the respective parties hereto have caused this Credit
Agreement to be executed and delivered by their duly authorized officers as of
the date first set forth above.

               METAL MANAGEMENT, INC.,
               as Funds Administrator and as Borrower

               By:  /s/ Robert C. Larry
                    ---------------------------------------
                    Name: Robert C. Larry
                    Title: Executive Vice President and Chief Financial Officer

               ADDITIONAL BORROWERS:

               CIM TRUCKING, INC.
               MACLEOD METALS CO.
               MTLM ARIZONA, INC.
               METAL MANAGEMENT AEROSPACE, INC.
               METAL MANAGEMENT ALABAMA, INC.
               METAL MANAGEMENT ARIZONA, L.L.C.
               METAL MANAGEMENT CONNECTICUT, INC.
               METAL MANAGEMENT INDIANA, INC.
               METAL MANAGEMENT GULF COAST, INC.
               METAL MANAGEMENT MEMPHIS, L.L.C.
               METAL MANAGEMENT MIDWEST, INC.
               METAL MANAGEMENT MISSISSIPPI, L.L.C.
               METAL MANAGEMENT NEW HAVEN, INC.
               METAL MANAGEMENT NORTHEAST, INC.
               METAL MANAGEMENT OHIO, INC.
               METAL MANAGEMENT PITTSBURGH, INC.
               METAL MANAGEMENT REALTY, INC.
               METAL MANAGEMENT SERVICES, INC.
               METAL MANAGEMENT STAINLESS & ALLOY, INC.
               METAL MANAGEMENT WEST, INC.
               METAL MANAGEMENT WEST COAST HOLDINGS, INC.
               METAL MANAGEMENT S&A HOLDINGS, INC.
               PROLER SOUTHWEST INC.

               By:  /s/ Robert C. Larry
                    ---------------------------------------
                    Name: Robert C. Larry
                    Title: Vice President

               RESERVE IRON & METAL LIMITED PARTNERSHIP

               By:  METAL MANAGEMENT OHIO, INC., its general partner

               By:  /s/ Robert C. Larry
                    ---------------------------------------
                    Name: Robert C. Larry
                    Title: Vice President

                           [Signature Page Continues]
<PAGE>
                     [Signature Page to Credit Agreement, Continued]

                     AGENT:

                     LASALLE BANK NATIONAL ASSOCIATION, as Agent

                     By:  /s/ Michael J. Vrchota
                          ----------------------------------
                          Name:  Michael J. Vrchota
                          Title: First Vice President

                     LENDERS:

                     LASALLE BANK NATIONAL ASSOCIATION

                     By:  /s/ Michael J. Vrchota
                          ----------------------------------
                          Name:  Michael J. Vrchota
                          Title: First Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     PNC BANK NATIONAL ASSOCIATION

                     By:  /s/ John Cunningham
                          ----------------------------------
                          Name:  John Cunningham
                          Title: Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     SOVEREIGN BANK

                     By   /s/ Robert E. Cook
                          ----------------------------------
                          Name:  Robert E. Cook
                          Title: Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     U.S. BANK, NATIONAL ASSOCIATION

                     By:  /s/ Matthew J. Schulz
                          ----------------------------------
                          Name: Matthew J. Schulz
                          Title: Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     NATIONAL CITY BANK OF THE MIDWEST

                     By:  /s/ James M. Kershner
                          ----------------------------------
                          Name:  James M. Kershner
                          Title: Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     FIFTH THIRD BANK

                     By:  /s/ Susan M. Kaminski
                          ----------------------------------
                          Name:  Susan M. Kaminski
                          Title: Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     KEYBANK NATIONAL ASSOCIATION

                     By:  /s/ Thomas J. Purcell
                          ----------------------------------
                          Name:  Thomas J. Purcell
                          Title: Senior Vice President

                             [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     RZB FINANCE LLC

                     By:  /s/ John A. Valiska
                          ----------------------------------
                          Name:  John A. Valiska
                          Title: Group Vice President

                     By:  /s/ Christoph Hoedl
                          ----------------------------------
                          Name:  Christoph Hoedl
                          Title: Vice President

                          [Signature Page Continues]

<PAGE>

                     [Signature Page to Credit Agreement, Continued]

                     CHARTER ONE BANK, N.A.

                     By:  /s/ William A. Almond, III
                          ----------------------------------
                          Name:  William A. Almond, III
                          Title: Vice President

<PAGE>

                           ANNEX I TO CREDIT AGREEMENT

             LIST OF LENDERS; COMMITMENT AMOUNTS; APPLICABLE LENDING
                                     OFFICES

<TABLE>
<CAPTION>
       LENDER AND LENDING OFFICE              COMMITMENT
       -------------------------              ----------
<S>                                           <C>
1.    LaSalle Bank National Association       $40,000,000
      135 South LaSalle Street
      Chicago, Illinois  60603

2.    PNC Bank National Association           $30,000,000
      One South Wacker Drive, Suite 2480
      Chicago, Illinois  60606

3.    Sovereign Bank                          $25,000,000
      75 State Street
      Boston, Massachusetts  02109

4.    U.S. Bank, National Association         $25,000,000
      777 East Wisconsin Avenue
      Milwaukee, Wisconsin  53202

5.    National City Bank of the Midwest       $24,000,000
      One North Franklin, Suite 3600
      Chicago, Illinois  60606

6.    Fifth Third Bank                        $14,000,000
      233 South Wacker, Suite 400
      Chicago, Illinois  60606

7.    KeyBank National Association            $14,000,000
      127 Public Square
      Cleveland, Ohio  44114

8.    RZB Finance LLC                         $14,000,000
      24 Grassy Plain Street
      Bethel, Connecticut  06801

9.    Charter One Bank, N.A.                  $14,000,000
      100 Addison Avenue
      Elmhurst, Illinois  60126
</TABLE>

                                      I-1
<PAGE>

                                    ANNEX II

                                PRICING SCHEDULE

      Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee Rate
under and in accordance with the terms of this Agreement shall mean, until the
first Pricing Date, the rates per annum shown opposite Level IV below, and
thereafter, from one Pricing Date to the next, the Applicable Margin, Unused
Line Fee Rate and Letter of Credit Fee Rate mean the rates per annum determined
in accordance with the following schedule:

<TABLE>
<CAPTION>
                                                                                           UNUSED      LETTER OF
               LEVERAGE RATIO          APPLICABLE MARGIN FOR      APPLICABLE MARGIN       LINE FEE      CREDIT
LEVEL      FOR SUCH PRICING DATE          BASE RATE LOANS:       FOR LIBOR RATE LOANS       RATE       FEE RATE
<S>       <C>                          <C>                       <C>                      <C>          <C>
  I       Greater than or equal to             0.750%                   2.250%             0.375%       2.250%
          2.0 to 1.0

 II       Less than 2.0 to 1.0,                0.500%                   2.000%             0.375%       2.000%
          but greater than or
          equal to 1.5 to 1.0

 III      Less than 1.5 to 1.0,                0.250%                   1.750%             0.350%       1.750%
          but greater than or
          equal to 1.0 to 1.0

 IV       Less than 1.0 to 1.0,                    0%                   1.500%             0.300%       1.500%
          but greater than or
          equal to 0.50 to 1.0

  V       Less than 0.50 to 1.0                    0%                   1.250%             0.250%       1.250%
</TABLE>

For purposes hereof, the term "Pricing Date" means, for any fiscal quarter of
MTLM ending on or after September 30, 2004, the date on which the Agent is in
receipt of the MTLM's most recent financial statements (and, in the case of the
year-end financial statements, audit report) for the fiscal quarter then ended,
pursuant to Section 7.1 of this Agreement. The Applicable Margin, Unused Line
Fee Rate and Letter of Credit Fee Rate shall be established based on the
Leverage Ratio for the most recently completed fiscal quarter, and the
Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee Rate
established on a Pricing Date shall remain in effect until the next Pricing
Date. If MTLM has not delivered its financial statements by the date such
financial statements (and, in the case of the year-end financial statements,
audit report) are required to be delivered under Section 7.1 of this Agreement,
then from and after the date such financial statements and audit report, as
applicable, are due until such financial statements and audit report are
delivered, the Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee
Rate shall be the highest Applicable Margin, Unused Line Fee Rate and Letter of
Credit Fee Rate (i.e., Level I shall apply). If MTLM subsequently delivers such
financial statements before the next Pricing Date, the Applicable Margin, Unused
Line Fee Rate and Letter of Credit Fee Rate established by such late delivered
financial statements shall take effect from the date of delivery until the next
Pricing Date. In all other circumstances, the Applicable Margin, Unused Line Fee

                                      II-1
<PAGE>

Rate and Letter of Credit Fee Rate established by such financial statements
shall be in effect from the Pricing Date that occurs immediately after the end
of the fiscal quarter covered by such financial statements until the next
Pricing Date. Each determination of the Applicable Margin, Unused Line Fee Rate
and Letter of Credit Fee Rate made by the Agent in accordance with the foregoing
shall be conclusive and binding on the Borrowers and the Lenders absent
demonstrable error.

                                      II-2
<PAGE>

                                   [SCHEDULES]

<PAGE>

                                    EXHIBIT A
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                           FORM OF NOTICE OF BORROWING

___________  ___, 200_

LASALLE BANK NATIONAL ASSOCIATION
as Agent for the Lenders
parties to the Credit
Agreement referred to below
135 South LaSalle Street
Chicago, Illinois 60603

Ladies and Gentlemen:

      The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 2.2.4 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "PROPOSED BORROWING") as
required by SECTION 2.2.4 of the Credit Agreement:

      (i)   The requested date of the Proposed Borrowing is ___________________.

      (ii)  The Type of Revolving Loans comprising the Proposed Borrowing are
            [BASE RATE] [LIBOR RATE] Loans.

      (iii) The aggregate amount of the Proposed Borrowing is $__________.

      (iv)  The Interest Period for each Revolving Loan comprising the Proposed
            Borrowing is _________. [ONLY IN THE CASE OF A PROPOSED BORROWING
            CONSISTING OF LIBOR RATE LOANS]

                                       A-1
<PAGE>

      The Funds Administrator, for and on behalf of the Borrowers, hereby (i)
represents and warrants that all of the conditions contained in SECTION 5.2 of
the Credit Agreement have been satisfied on and as of the date hereof, and will
continue to be satisfied on and as of the date of the Proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds thereof;
and (ii) reaffirms the continuance of Agent's Liens on the Collateral, for the
benefit of Agent and Lenders, pursuant to the Collateral Documents.

      If notice of this Proposed Borrowing has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by SECTION 2.2.4 of the Credit Agreement.

      IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Borrowing to be executed and delivered, for and on behalf of the Borrowers, by a
duly authorized officer of the Funds Administrator as of the date first set
forth above.

                        METAL MANAGEMENT, INC., a Delaware
                        corporation, in its capacity as Funds Administrator

                        BY:_____________________________________________________
                        NAME:___________________________________________________
                        TITLE:__________________________________________________

                                       A-2
<PAGE>

                                    EXHIBIT B
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                             FORM OF REVOLVING NOTE

$______________                                                 ______ ___, 2004

      FOR VALUE RECEIVED, each of the undersigned CIM TRUCKING, INC., an
Illinois corporation, MTLM ARIZONA, INC., an Arizona corporation, MAC LEOD
METALS CO., a California corporation, METAL MANAGEMENT AEROSPACE, INC., a
Delaware corporation, METAL MANAGEMENT ALABAMA, INC., a Delaware corporation,
METAL MANAGEMENT ARIZONA, L.L.C., an Arizona limited liability company, METAL
MANAGEMENT CONNECTICUT, INC., a Delaware corporation, METAL MANAGEMENT GULF
COAST, INC., a Delaware corporation, METAL MANAGEMENT, INC., a Delaware
corporation, METAL MANAGEMENT INDIANA, INC., an Illinois corporation, METAL
MANAGEMENT MEMPHIS, L.L.C., a Tennessee limited liability company, METAL
MANAGEMENT MIDWEST, INC., an Illinois corporation, METAL MANAGEMENT MISSISSIPPI,
L.L.C., a Delaware limited liability company, METAL MANAGEMENT NEW HAVEN, INC.,
a Delaware corporation, METAL MANAGEMENT NORTHEAST, INC., a New Jersey
corporation, METAL MANAGEMENT OHIO, INC., an Ohio corporation, METAL MANAGEMENT
PITTSBURGH, INC., a Delaware corporation, METAL MANAGEMENT REALTY, INC., an
Arizona corporation, METAL MANAGEMENT S&A HOLDINGS, INC., a Delaware
corporation, METAL MANAGEMENT SERVICES, INC., a Delaware corporation, METAL
MANAGEMENT STAINLESS & ALLOY, INC., a Delaware corporation, METAL MANAGEMENT
WEST, INC., a Colorado corporation, METAL MANAGEMENT WEST COAST HOLDINGS, INC.,
a Delaware corporation, PROLER SOUTHWEST INC., a Texas corporation, and RESERVE
IRON & METAL LIMITED PARTNERSHIP, a Delaware limited partnership (collectively,
the "BORROWERS"), jointly and severally promise to pay to the order of
[_____________________], at c/o LaSalle Bank National Association, in its
capacity as agent (in such capacity, the "AGENT"), 135 South LaSalle Street,
Chicago, Illinois 60603 (the "PAYMENT OFFICE"), in lawful money of the United
States of America and in immediately available funds, the principal amount of
[________________] AND [___]/100 DOLLARS ($______________), or such lesser
amount as may then constitute the unpaid aggregate principal amount of the
Revolving Loans made by such Person, on the Expiration Date or such earlier date
as this Revolving Note may become due in accordance with the terms of the Credit
Agreement referred to below. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned thereto in the Credit
Agreement.

                                       B-1
<PAGE>

      The Borrowers further agree to pay, on a joint and several basis, interest
at the Payment Office, in like money, on the unpaid principal amount owing
hereunder from time to time from the date hereof on the dates and at the rates
specified in and calculated pursuant to ARTICLE IV of the Credit Agreement.

      If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.

      This Revolving Note is a Revolving Note referred to in and executed and
delivered pursuant to that certain Credit Agreement dated as of June 28, 2004
(as the same may be amended, restated, supplemented, extended or otherwise
modified and in effect from time to time, the "CREDIT AGREEMENT"), among the
Borrowers, Metal Management, Inc., a Delaware corporation, in its capacity as
borrowing agent and funds administrator for the Borrowers, the Lenders and the
Agent, to which reference is hereby made for a statement of the terms and
conditions under which the Revolving Loans evidenced hereby are to be made and
repaid.

      This Revolving Note is secured by certain Collateral Documents. Reference
is made to such Collateral Documents and to the Credit Agreement for the terms
and conditions governing the Collateral which secures the Obligations.

      Each Borrower (and each endorser, guarantor or surety hereof) hereby
waives presentment, demand, protest and notice of any kind. No failure to
exercise and no delay in exercising any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.

      THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS REVOLVING NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS
OF THE STATE OF ILLINOIS.

      [Remainder of Page Intentionally Left Blank; Signature Page Follows]

                                       B-2
<PAGE>

      IN WITNESS WHEREOF, each Borrower has caused this Revolving Note to be
executed and delivered by such Borrower's duly authorized officer or similar
representative as of the date first set forth above.

                           CIM TRUCKING, INC.
                           MTLM ARIZONA, INC.
                           MAC LEOD METALS CO.
                           METAL MANAGEMENT AEROSPACE, INC.
                           METAL MANAGEMENT ALABAMA, INC.
                           METAL MANAGEMENT ARIZONA, L.L.C.
                           METAL MANAGEMENT CONNECTICUT, INC.
                           METAL MANAGEMENT GULF COAST, INC.
                           METAL MANAGEMENT, INC.
                           METAL MANAGEMENT INDIANA, INC.
                           METAL MANAGEMENT MEMPHIS, L.L.C.
                           METAL MANAGEMENT MIDWEST, INC.
                           METAL MANAGEMENT MISSISSIPPI, L.L.C.
                           METAL MANAGEMENT NEW HAVEN, INC.
                           METAL MANAGEMENT NORTHEAST, INC.
                           METAL MANAGEMENT OHIO, INC.
                           METAL MANAGEMENT PITTSBURGH, INC.
                           METAL MANAGEMENT REALTY, INC.
                           METAL MANAGEMENT S&A HOLDINGS, INC.
                           METAL MANAGEMENT SERVICES, INC.
                           METAL MANAGEMENT STAINLESS & ALLOY, INC.
                           METAL MANAGEMENT WEST, INC.
                           METAL MANAGEMENT WEST COAST HOLDINGS, INC.
                           PROLER SOUTHWEST INC.

                           By:___________________________________
                           Name:_________________________________
                           Title:________________________________

                           RESERVE IRON & METAL LIMITED PARTNERSHIP
                           By:  METAL MANAGEMENT OHIO, INC., its general partner

                           By:    __________________________________________
                           Name:  __________________________________________
                           Title: __________________________________________

                                      B-3
<PAGE>

                                    EXHIBIT C
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                        FORM OF LETTER OF CREDIT REQUEST

Dated: _____(1)_______

LASALLE BANK NATIONAL ASSOCIATION
as Agent for the Lenders
parties to the Credit
Agreement referred to below
135 South LaSalle Street
Chicago, Illinois 60603

Issuing Bank: [ ______________(2)/______________ ]
              [          Address                 ]

Ladies and Gentlemen:

      The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 3.3(A) of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests the
Agent to direct the Issuing Bank to issue a [trade] [standby] Letter of Credit
on ____(3)_____ in the aggregate Stated Amount of $_____(4)_____ for the account
of the Funds Administrator.

----------
(1)   Insert date of Letter of Credit Request.

(2)   Insert name/address of Issuing Bank.

(3)   Insert date of issuance which shall be a Business Day at least five (5)
      Business Days from the date of the Letter of Credit Request (or such
      shorter period as is acceptable to the Agent).

(4)   Insert aggregate initial Stated Amount of Letter of Credit.

                                      C-1
<PAGE>

      The beneficiary of the requested Letter of Credit will be ______(5)_______
and such Letter of Credit will be in support of _____________(6)___________ and
will have a stated expiration date of _______(7)________.

      The Funds Administrator, for and on behalf of the Borrowers, hereby (i)
represents and warrants that all of the conditions contained in SECTION 5.2 of
the Credit Agreement have been satisfied on and as of the date hereof, and will
continue to be satisfied on and as of the proposed date of issuance of the
requested Letter of Credit, before and after giving effect thereto and to the
application of the proceeds thereof; and (ii) reaffirms the continuance of
Agent's Liens on the Collateral, for the benefit of Agent and Lenders, pursuant
to the Collateral Documents

      Copies of all documentation with respect to the supported transaction are
attached hereto.

                                        METAL MANAGEMENT, INC., a Delaware
                                        corporation, as Funds Administrator

                                        By:    ________________________________
                                        Name:  ________________________________
                                        Title: ________________________________

----------
(5)   Insert name and address of beneficiary.

(6)   Insert brief description of supported transaction.

(7)   Insert last date upon which drafts may be presented, which may not be
later than (i) in the case of standby Letters of Credit, twelve (12) months
after the date of issuance and (ii) in the case of trade Letters of Credit, one
hundred twenty (120) days after the date of issuance.

                                       C-2
<PAGE>

                                    EXHIBIT D
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                         FORM OF NOTICE OF CONTINUATION

                               _____________, ____

LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
135 South LaSalle Street
Chicago, Illinois 60603

Ladies and Gentlemen:

            The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 4.14.1 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
continuation of a Borrowing consisting of LIBOR Rate Loans under the Credit
Agreement, and in that connection sets forth below the information relating to
such continuation (the "PROPOSED CONTINUATION") as required by SECTION 4.14.1 of
the Credit Agreement:

      (i)   The requested date of the Proposed Continuation is
            _______________________.

      (ii)  The aggregate amount of Loans subject to such Proposed Continuation
            is $______________.

                                       D-1
<PAGE>

      (iii) The duration of the new Interest Period for each Loan that is the
            subject of such Proposed Continuation is: ________________________.

      The Funds Administrator, for and on behalf of itself and each of the
Borrowers, hereby certifies that on the date hereof, and on the date of the
Proposed Continuation, the Proposed Continuation satisfies all applicable
limitations with respect thereto set forth in the Credit Agreement.

                 - Remainder of Page Intentionally Left Blank -
                            [Signature Page Follows]

                                       D-2
<PAGE>

      IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Continuation to be executed and delivered by a duly authorized officer of such
Funds Administrator as of the date first set forth above.

                                        METAL MANAGEMENT, INC., a Delaware
                                        corporation, as Funds Administrator

                                        By:    _______________________________
                                        Name:  _______________________________
                                        Title: _______________________________

                                       D-3
<PAGE>

                                   EXHIBIT D-1
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                          FORM OF NOTICE OF CONVERSION

                               _____________, ___

LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
135 South LaSalle Street
Chicago, Illinois 60603

Ladies and Gentlemen:

            The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 4.14.2 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
conversion of a Borrowing consisting of LIBOR Rate Loans under the Credit
Agreement, and in that connection sets forth below the information relating to
such conversion (the "PROPOSED CONVERSION") as required by SECTION 4.14.2 of the
Credit Agreement:

      (i)   The requested date of the Proposed Conversion is
            _______________________.

      (ii)  The aggregate amount of Loans subject to such Proposed Conversion is
            $______________.

      (iii) The duration of the new Interest Period for each Loan that is the
            subject of such Proposed Conversion is:
            ___________________.

                                      D-1/1
<PAGE>

      The Funds Administrator, for and on behalf of itself and each of the
Borrowers, hereby certifies that on the date hereof, and on the date of the
Proposed Conversion, the Proposed Conversion satisfies all applicable
limitations with respect thereto set forth in the Credit Agreement.

                 - Remainder of Page Intentionally Left Blank -
                            [Signature Page Follows]

                                      D-1/2
<PAGE>

      IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Conversion to be executed and delivered by a duly authorized officer of such
Funds Administrator as of the date first set forth above.

                                        METAL MANAGEMENT, INC., a Delaware
                                        corporation, as Funds Administrator

                                        By:    _______________________________
                                        Name:  _______________________________
                                        Title: _______________________________

                                      D-1/3
<PAGE>

                                    EXHIBIT E
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                         FORM OF COMPLIANCE CERTIFICATE

                               ______________, ____

LASALLE BANK NATIONAL ASSOCIATION
  Agent for the Lenders parties to the
  Credit Agreement referred to below
135 South LaSalle Street
Chicago, Illinois 60603

Ladies and Gentlemen:

      In order to assist you, as Agent, in the continuing evaluation of the
credit accommodations which the Lenders may extend to the Borrowers or for the
Borrowers' benefit, and pursuant to SECTION 7.1 of the Credit Agreement (as
hereinafter defined), I hereby certify to you on behalf of Metal Management,
Inc. a Delaware corporation ("MTLM"), individually as a Borrower and in its
capacity as the Funds Administrator, for and on behalf of the Borrowers, as
follows:

      (a)   I am the duly elected Chief Financial Officer of MTLM. Capitalized
            but undefined terms used in this Certificate shall have the meanings
            assigned to them in the Credit Agreement dated as of June 28, 2004
            (as the same may be amended, restated, supplemented, extended or
            otherwise modified from time to time, the "CREDIT AGREEMENT") among
            MTLM and certain of its affiliates, as borrowers thereunder
            ("BORROWERS"), the financial institutions from time to time parties
            thereto as lenders thereunder ("LENDERS"), LaSalle Bank National
            Association, a national banking association in its capacity as agent
            for the Lenders (in such capacity, the "AGENT") and MTLM in its
            capacity as borrowing agent and funds administrator (in such
            capacity, the "FUNDS ADMINISTRATOR").

      (b)   I have reviewed the terms of the Credit Agreement, and have made, or
            have caused to be made under my supervision, a review in reasonable
            detail of the respective transactions and the conditions of the
            Borrowers during the period commencing _____________ and continuing
            through the [FISCAL YEAR] [FISCAL QUARTER] ending _____________ (the
            "COMPLIANCE PERIOD").

      (c)   The review described in paragraph (b) above did not disclose the
            existence during or at the end of the Compliance Period, and I have
            no knowledge of the existence as of the date hereof, of any
            condition or event which constitutes an Event of Default or

                                       E-1
<PAGE>

            Default, except as hereinafter set forth. Described in a separate
            attachment to this Certificate are the exceptions, if any, to this
            paragraph (c) listing, in reasonable detail, the nature of the
            condition or event, the period during which it has existed and the
            action which the Borrowers have taken, are taking, or propose to
            take with respect to such condition or event.

            Based on the review described in paragraph (b) above, I further
            certify on behalf of the Funds Administrator and the Borrowers that,
            except as specifically described in subparagraph (xiv) below, at no
            time during or at the end of the Compliance Period:

                  (i)   did any material adverse change occur in any Borrower's
                        credit and collection policy;

                  (ii)  did any material adverse change occur relating to the
                        type, quantity or quality of the Inventory, Accounts or
                        any other material portion of the Collateral, nor did
                        any event occur which could have a Material Adverse
                        Effect on the value of such Collateral nor did any event
                        occur affecting the validity or priority of the security
                        interests granted to Agent and the Lenders in such
                        Collateral;

                  (iii) did any event occur which has had or could reasonably be
                        expected to have a Material Adverse Effect;

                  (iv)  did any casualty loss occur since the date of the last
                        Compliance Certificate delivered to the Agent;

                  (v)   were any new or additional locations of any Collateral
                        established at which locations Collateral is or will be
                        located which have not been previously disclosed to you;

                  (vi)  did any of the Borrowers change the location of their
                        respective chief executive offices or their respective
                        state of organization, organizational number, name or
                        type of entity;

                  (vii) did any of the Borrowers change their respective
                        corporate, limited liability company, partnership or
                        other names or conduct any material amount of business
                        under any corporate, limited liability company,
                        partnership or fictitious name other than the respective
                        names shown on their respective articles or certificate
                        of incorporation or other constituent documents, or as
                        previously disclosed to the Agent in writing;

                  (viii) did any Borrower (A) receive any notice that any of the
                        operations of such Borrower or any of its Subsidiaries
                        is the subject of any judicial or administrative
                        proceeding alleging the material violation of any
                        federal, state or local environmental, health or safety
                        statute, regulation, direction, ordinance, criteria or
                        guideline or (B) receive any notice that under any

                                       E-2
<PAGE>

                        federal or state law indicating past or present
                        treatment, storage or disposal of a hazardous or toxic
                        waste, substance or constituent or reporting a spill or
                        release of a hazardous or toxic waste, substance or
                        constituent or other substance into the environment;

                  (ix)  did any Borrower become aware of (A) any default under
                        any term or provision of any charter, by-law, mortgage,
                        indenture, agreement, instrument, statute, rule,
                        regulation, judgment, decree, order, writ, injunction,
                        contract, lease or other commitment to which any of them
                        is a party or by which any of them is bound such that
                        such violations or defaults singly or in the aggregate
                        could reasonably be expected to have a Material Adverse
                        Effect or (B) any dispute regarding any indenture,
                        contract, lease, agreement instrument or other
                        commitment which would individually, or when aggregated
                        with other such disputes, be reasonably likely to have a
                        Material Adverse Effect;

                  (x)   did any Borrower create, assume or suffer to exist any
                        Lien on any asset now owned or hereafter acquired by it
                        other than as specifically permitted in the Credit
                        Agreement;

                  (xi)  did any Borrower receive, obtain or enter into any of
                        the following:

                        (1)   any Documents, Chattel Paper, Instruments,
                              Securities or Investment Property constituting
                              Collateral;

                        (2)   any Commercial Tort Claim in excess of $50,000;

                        (3)   any Letter of Credit Rights in excess of $50,000;

                        (4)   any claim against the United States government or
                              any state or local government or any
                              instrumentality or agency thereof, in each case in
                              excess of $50,000, the assignment of which is
                              restricted by federal, state or municipal law;

                        (5)   any Patent, Trademark or Copyright, the loss of
                              which would reasonably be expected to have a
                              Material Adverse Effect;

                        (6)   any Material Contract; or

                        (7)   any negotiable Document with respect to any
                              Collateral;

                  (xii) did any Borrower enter into or make a Permitted
                        Acquisition or a Permitted Investment in Non-Majority
                        Interest;

                  (xiii) did an Additional Collateral Event occur;

                                       E-3
<PAGE>

                  (xiv) [LIST EXCEPTIONS, IF ANY, TO PARAGRAPHS (i) THROUGH
                        (xiii) ABOVE].

      (d)   I hereby certify and warrant to you that SCHEDULE I attached hereto
            is a true and correct computation for the Compliance Period of the
            ratios and/or financial restrictions contained in and pursuant to
            SECTIONS 8.1 and 8.2 of the Credit Agreement.

      The foregoing certifications are made and delivered this _____ day of
      ________, ____.

                        Very truly yours,

                        METAL MANAGEMENT, INC., a Delaware
                        corporation, individually and in its capacity as Funds
                        Administrator

                        By:   _______________________________
                        Name: _______________________________
                              Chief Financial Officer

                                       E-4
<PAGE>

                                    EXHIBIT F
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

                                                           _______________, ____

      Reference is made to the Credit Agreement described in ITEM 2 of ANNEX I
annexed hereto (as amended through the date hereof, the "CREDIT AGREEMENT").
[ASSIGNOR] (the "ASSIGNOR") and [ASSIGNEE] (the "ASSIGNEE") agree as follows:

      1. When capitalized and used herein, terms defined in the Credit Agreement
and not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement.

      2. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to all of
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof which represents the percentage interest specified in ITEM 4(b) of ANNEX
I of all outstanding rights and obligations under the Credit Agreement relating
to the facility set forth in ITEM 2 of ANNEX I, including, without limitation,
such interest in (i) the Assignor's Commitment, (ii) the Assignor's interest in
the Letters of Credit and (iii) the Revolving Loans owing to the Assignor
relating to such facilities. After giving effect to such sale and assignment,
the Assignee's Commitment and the amount of the Revolving Loans and obligations
in respect of Letters of Credit Outstanding owing to the Assignee will be as set
forth in ITEM 4 of ANNEX I.

      3. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
of the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, the Revolving Notes, or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any of the Borrowers or the performance or observance by any of the Borrowers
of any of such Borrower's obligations under the Credit Agreement, the Revolving
Notes, or any other instrument or document furnished pursuant thereto.

      4. The Assignee (i) represents that it is either (A) a Person organized
under the laws of the United States or a state thereof or (B) if it is a Person
organized under the laws of any jurisdiction other than the United States or any
state thereof (a "FOREIGN LENDER"), the information set forth in the documents
delivered pursuant to clause (vii) of this SECTION 4 is true and correct as

                                       F-1
<PAGE>

of the date hereof; (ii) confirms that it is either a commercial lender, other
financial institution or "accredited investor" (as defined in Regulation D
promulgated under the Securities Act of 1933, as amended) which makes loans or
purchases notes in the ordinary course of business and that it will make all
Loans under the Credit Agreement solely for its own account in the ordinary
course of business and not with a view to or for sale in connection with any
distribution of the Revolving Notes; PROVIDED, HOWEVER, that (x) the Assignee
shall not be deemed to have breached this representation by making assignments
or granting participations as permitted in the Credit Agreement and (y) the
disposition of the Revolving Notes, or other evidence of debt held by the
Assignee shall at all times be within its exclusive control; (iii) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (iv) agrees
that it will independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (v) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (vii) if it is a Foreign Lender, attaches two accurate and complete
original signed copies of forms prescribed by the Internal Revenue Service of
the United States certifying that such Foreign Lender is exempt from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement.

      5. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, it will be delivered to the Agent for acceptance
and recording by the Agent in the Register. The effective date of this
Assignment and Assumption Agreement shall be the date of execution and delivery
hereof to the Agent by the Assignor and the Assignee unless otherwise specified
on ITEM 6 of ANNEX I hereto (the "EFFECTIVE DATE").

      6. Upon such acceptance by the Agent and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Assumption Agreement, have the
rights and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Assumption Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement.

      7. Upon such acceptance by the Agent and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and fees (if applicable) with
respect thereto) to the Assignee. Upon the Effective Date, the Assignee shall
pay to the Assignor the principal amount of any outstanding Loans under the
Credit Agreement which are being assigned hereunder, net of any closing costs.
The Assignor and the Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves on the Effective Date.

                                       F-2
<PAGE>

      8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the internal laws (as opposed to conflict of laws
provisions) of the State of Illinois.

      9. This Assignment and Assumption Agreement and any waiver or amendment
hereto may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.

                 - REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
                            [SIGNATURE PAGE FOLLOWS]

                                       F-3
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement and ANNEX I hereto be executed by their respective officers
thereunto duly authorized, as of the date first above written.

                                        [NAME OF ASSIGNOR], as Assignor

                                        By:    _____________________________
                                        Name:  _____________________________
                                        Title: _____________________________

                                        [NAME OF ASSIGNEE], as Assignee

                                        By:    _____________________________
                                        Name:  _____________________________
                                        Title: _____________________________

Accepted:

LASALLE BANK NATIONAL ASSOCIATION,
as Agent

By:    _____________________________
Name:  _____________________________
Title: _____________________________

                                       F-4
<PAGE>

                                     ANNEX I

<TABLE>
<CAPTION>
<S>                                            <C>
1.    Borrowers:                               METAL MANAGEMENT, INC., a Delaware
                                               corporation, and certain of its
                                               subsidiaries

2.    Name and Date of  Credit                 Credit Agreement dated as of June 28,
      Agreement:                               2004 among Borrowers, Metal Management,
                                               Inc, as borrowing agent and funds
                                               administrator for the Borrowers, each
                                               of the financial institutions initially
                                               a signatory thereto as a lender
                                               thereunder, together with those
                                               assignees thereof pursuant to SECTION
                                               11.8,  and LaSalle  Bank  National
                                               Association,  as Agent.

3.    Date of Assignment Agreement:            __________, __

4.    Amounts (as of Date in Item #3 above):

      a.    Commitment                         $_________

      b.    Assigned Percentage                __________%

      c.    Amount of Assigned Commitment      $_________

      d.    Aggregate Amounts Outstanding as   $_________
            of the Assignment Effective Date
           (of Assignor)

      e.    Aggregate Amounts Assigned to      $_________
            Assignee

5.    Assignee's Commitment Amount:            $_________

6.    Effective Date:                          __________, __

7.    Notice and Payment Instructions:
</TABLE>

      ASSIGNOR:

<TABLE>
<CAPTION>
          PAYMENT                                            NOTICE
          -------                                            ------
<S>                                            <C>
_____________________________                  _________________________________

_____________________________                  _________________________________

_____________________________                  _________________________________
</TABLE>

                                      F-5
<PAGE>

      Attention:                               Attention:
      Reference:                               Telephone:
                                               Facsimile:
                                               Reference:

      ASSIGNEE:

          PAYMENT                                            NOTICE
_____________________________                  _________________________________

_____________________________                  _________________________________

_____________________________                  _________________________________

      Attention:                               Attention:
      Reference:                               Telephone:
                                               Facsimile:
                                               Reference:

Accepted and Agreed:

[NAME OF ASSIGNEE]                             [NAME OF ASSIGNOR]

By: _____________________                      By: _____________________
Name: ____________________                     Name: ____________________
Title: _________________                       Title: _________________

                                      F-6
<PAGE>

                                    EXHIBIT G
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 28, 2004

                   FORM OF COMMITMENT AMOUNT INCREASE REQUEST

                                                            _______________, ___

LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
135 S. LaSalle Street
Chicago, Illinois 60603

      Re: Credit Agreement dated as of June 28, 2004 (as the same may be
      amended, restated, supplemented, extended or otherwise modified from time
      to time, the "CREDIT AGREEMENT") among Metal Management, Inc., a Delaware
      Corporation ("MTML") and certain of its affiliates, as borrowers
      thereunder ("BORROWERS"), the financial institutions from time to time
      parties thereto as lenders thereunder ("LENDERS"), LaSalle Bank National
      Association, a national banking association in its capacity as agent for
      the Lenders (in such capacity, the "AGENT") and MTLM in its capacity as
      borrowing agent and funds administrator (in such capacity, the "FUNDS
      ADMINISTRATOR").

Ladies and Gentlemen:

      In accordance with the Credit Agreement, the Funds Administrator hereby
requests that the Agent consent to an increase in the aggregate Commitments (the
"COMMITMENT AMOUNT INCREASE"), in accordance with Section 2.8 of the Credit
Agreement, to be effected by [AN INCREASE IN THE COMMITMENT OF [NAME OF EXISTING
LENDERS] [THE ADDITION OF [NAME OF NEW LENDER] (THE "NEW LENDER") AS A LENDER
UNDER THE TERMS OF THE CREDIT AGREEMENT]. Capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.

      After giving effect to such Commitment Amount Increase, the Commitment of
the [LENDERS] [NEW LENDER] shall be $_____________.

                    [INCLUDE PARAGRAPHS 1-4 FOR A NEW LENDER]

      1. The New Lender hereby confirms that it has received a copy of the
Credit Documents and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the

                                       G-1
<PAGE>

Revolving Loans and any other extensions of credit thereunder. The New Lender
acknowledges and agrees that it has made and will continue to make,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, its own credit
analysis and decisions relating to the Credit Agreement. The New Lender further
acknowledges and agrees that the Agent has not made any representations or
warranties about the credit worthiness of the Borrowers or any other party to
the Credit Agreement or any other Credit Document or with respect to the
legality, validity, sufficiency or enforceability of the Credit Agreement or any
other Credit Documents or the value of any security therefor.

      2. Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent, the New Lender (i) shall be deemed
automatically to have become a party to the Credit Agreement and have all the
rights and obligations of a "Lender" under the Credit Agreement as if it were an
original signatory thereto and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an original signatory
thereto.

      3. The New Lender hereby advises you of the following administrative
details with respect to its Revolving Loans and Commitments:

      (A)   Notices:
            Institution Name:_________________
            Address: _________________________
                     _________________________

            Telephone: ________________________
            Facsimile: ________________________
      (B)   Payment Instructions:

      [4. THE NEW LENDER HAS DELIVERED, IF APPROPRIATE, TO THE BORROWERS AND THE
AGENT (OR IS DELIVERING TO THE BORROWERS AND THE AGENT CONCURRENTLY HEREWITH)
THE TAX FORMS REFERRED TO IN SECTION 4.18 OF THE CREDIT AGREEMENT.]*

      THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS.

      The Commitment Amount Increase shall be effective when the executed
consent of the Agent is received or otherwise in accordance with Section 2.8 of
the Credit Agreement, but not in any case prior to ___________________, ____. It
shall be a condition to the effectiveness of the Commitment Amount Increase that
all expenses referred to in Section 2.8 of the Credit Agreement shall have been
paid.

----------
*  Insert bracketed paragraph if New Lender is organized under the law of a
   jurisdiction other than the United States of America or a state thereof. The
   Borrower hereby certifies that no Default or Event of Default has occurred
   and is continuing.

                                      G-2
<PAGE>

      The Borrower hereby certifies that no Default or Event of Default has
occurred and is continuing.

      Please indicate the Agent's consent to such Commitment Amount Increase by
signing the enclosed copy of this letter in the space provided below.

Very truly yours,

                                        METAL MANAGEMENT, INC., a Delaware
                                        corporation, as Funds Administrator

                                        By     _________________________________
                                               Name:  __________________________
                                               Title: __________________________

                                        [NEW BANK/BANK INCREASING
                                        COMMITMENTS]

                                        By:    _________________________________
                                               Name:  __________________________
                                               Title: __________________________

The undersigned hereby consents
on this __ day of _____________,
_____ to the above-requested Commitment
Amount Increase.

LASALLE BANK NATIONAL ASSOCIATION,
  as Agent

By: ________________________________
Name:   ____________________________
Title:  ____________________________

                                      G-3<PAGE>

                                                                     EXHIBIT 4.2

                         INSURANCE AUTO AUCTIONS, INC.
                          EMPLOYEE STOCK PURCHASE PLAN
                   (AMENDED AND RESTATED AS OF JUNE 16, 2004)

1. PURPOSE

     The purpose of the Insurance Auto Auctions, Inc. Employee Stock Purchase
Plan (the "Plan") is to promote the overall financial objectives of the Company
and its shareholders by motivating Participants in the Plan to achieve long-term
growth in shareholders' equity in the Company. The Plan is designed to qualify
as an employee stock purchase plan under Section 423 of the Code. The adoption
of the Plan, as amended and restated effective as of June 16, 2004, is expressly
conditioned upon the approval of the Plan by the shareholders of the Company.

2. DEFINITIONS

     For purposes of administration of the Plan, the following terms shall have
the meanings indicated:

     "Account" means the bookkeeping account established on behalf of a
Participant to which shall be credited all contributions paid for the purposes
of purchasing Common Stock under the Plan, and to which shall be charged all
purchases of Common Stock pursuant to the Plan.

     "Base Salary" means the regular basis earnings paid to a Participant by one
or more Participating Companies during such individual's period of participation
in the Plan, plus any pre-tax contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Company or any Corporate Affiliate.
There shall be excluded from the calculation of Base Salary (i) all overtime
payments, bonuses, commissions, profit sharing distributions and other
incentive-type payments and (ii) all contributions (other than Code Section
401(k) or Code Section 125 contributions) made on the Participant's behalf by
the Company or one or more Corporate Affiliates under any employee benefit or
welfare plan now or hereafter established.

     "Board" means the Board of Directors of the Company.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

     "Common Stock" means shares of the Company's common stock.

     "Company" means Insurance Auto Auctions, Inc., an Illinois corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of Insurance Auto Auctions, Inc. which shall adopt the Plan by appropriate
action.

     "Corporate Affiliate" means any parent or subsidiary corporation of the
Company (as determined in accordance with Code Section 424), including any
parent or subsidiary corporation which becomes such after the Effective Date.

     "Effective Date" means the first day of the initial Purchase Period under
the Plan, which is scheduled to commence upon the later of (i) July 1, 1993 or
(ii) the effective date of the S-8 Registration Statement covering the shares of
Common Stock issuable under the Plan. However, for any Corporate Affiliate which
becomes a Participating Company in the Plan after the first day of such initial
Purchase Period, a subsequent Effective Date shall be designated with respect to
participation by its Eligible Employees.

     "Eligible Employee" means any person who is engaged, on a regularly
scheduled basis of more than twenty (20) hours per week for more than five (5)
months per calendar year, in the rendition of personal services to the Company
or any other Participating Company for earnings considered wages under Section
3121(a) of the Code.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

<PAGE>

     "Participant" means any Eligible Employee of a Participating Company who is
actively participating in the Plan.

     "Participating Company" means the Company and any Corporate Affiliate or
Affiliates now existing or at any time hereafter created or acquired.

     "Plan Year" means the calendar year, provided that the initial Plan Year
begins with the Effective Date and ends December 31, 1993.

     "Securities Act" means the Securities Act of 1933, as amended, and the
regulations promulgated pursuant thereto.

     "Service" means the period during which an individual is in the employ of
the Company or any Corporate Affiliate and shall be measured from the later of
(i) his or her hire date or (ii) the date of the Company's acquisition of that
Corporate Affiliate.

3. ADMINISTRATION

     The Plan shall be administered by a committee (the "Plan Administrator")
comprised of two or more non-employee Board members appointed from time to time
by the Board. A majority of the members of the committee acting as Plan
Administrator shall constitute a quorum at any meeting thereof (including
telephone conferences) and the acts of a majority of the members present, or
acts unanimously approved in writing by all members without a meeting, shall be
the acts of the Plan Administrator. A member shall be considered for this
purpose only if, at the time he exercises discretion in administering the Plan,
he is a "disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act. The Board shall have the authority to remove, replace or fill any
vacancy of any member of the committee acting as Plan Administrator upon notice
to such committee and the affected member. Any member of the committee acting as
Plan Administrator may resign upon notice to the President of the Company or to
the Board. The Plan Administrator may delegate such duties and responsibilities
as it deems appropriate. Subject to the provisions of the Plan, the Plan
Administrator shall have the full and final authority in its discretion to:

          (a) determine from time to time whether a person is an Eligible
     Employee;

          (b) determine the number of shares of Common Stock available as of the
     beginning of any Purchase Period or subject to each Purchase Right (defined
     in Section VII below);

          (c) provide for the acceleration of the right to exercise a Purchase
     Right (or portion thereof);

          (d) determine what securities law requirements are applicable to the
     Plan, Purchase Rights and the issuance of shares of Common Stock hereunder
     and request of a Participant that appropriate action be taken;

          (e) cancel, with the consent of the holder or as otherwise provided in
     the Plan Agreement, outstanding Purchase Rights;

          (f) require as a condition of the exercise of a Purchase Right or the
     issuance or transfer of a certificate of Common Stock, the withholding from
     a Participant of the amount of any federal, state or local taxes as may be
     required by law;

          (g) determine the restrictions or limitations on the transfer of
     Common Stock;

          (h) determine whether a Purchase Right is to be adjusted, modified or
     purchased, or become fully exercisable under Section VI. B. of the Plan;

          (i) appoint and compensate agents, counsel, auditors or other
     specialists to aid in the discharge of its duties;

          (j) correct any defect, supply any omission or reconcile any
     inconsistency in the Plan relating to a Purchase Right, in such manner and
     to the extent the Plan Administrator shall determine in order to carry out
     the purposes of the Plan; and

                                       2
<PAGE>

          (k) construe and interpret this Plan, and take all other actions and
     make all other determinations and take all other actions deemed necessary
     or advisable for the administration of this Plan.

     A member of the committee acting as Plan Administrator shall not exercise
any discretion respecting himself under the Plan. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan.

4. PURCHASE PERIODS

     A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive periods ("Purchase Periods") until such time as
(i) the maximum number of shares of Common Stock available for issuance under
the Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated in accordance with Section IX.

     B. The Plan shall be implemented in a series of successive Purchase
Periods, each of a duration of six (6) months. The initial Purchase Period will
begin upon the later of (i) July 1, 1993 or (ii) the effective date of the S-8
Registration Statement covering the shares of Common Stock issuable under the
Plan and will end on the last business day in December 1993. Subsequent Purchase
Periods shall run from the first business day in January to the last business
day in June and from the first business day in July to the last business day in
December each year.

     C. Under no circumstances shall any Purchase Period commence under the
Plan, nor shall any shares of Common Stock be issued hereunder, until such time
as (i) the Plan shall have been approved by the Company's shareholders and (ii)
the Company shall have complied with all applicable requirements of the
Securities Act, all applicable listing requirements of any securities exchange
on which shares of the Common Stock are listed and all other applicable
statutory and regulatory requirements.

     D. The Participant shall be granted a separate Purchase Right for each
Purchase Period in which he or she participates. The Purchase Right shall be
granted on the start date of the Purchase Period and shall be automatically
exercised on the last day of that period.

     E. The acquisition of Common Stock through plan participation during any
Purchase Period shall neither limit nor require the acquisition of Common Stock
by the Participant in any subsequent Purchase Period.

5. ELIGIBILITY AND PARTICIPATION

     A. Each Eligible Employee of a Participating Company shall be eligible to
participate in the Plan on the start date of any Purchase Period beginning on or
after his or her completion of the number of months of Service specified from
time to time by the Plan Administrator. Unless otherwise specified by the Plan
Administrator, there shall be no minimum eligibility requirements for
participation in the Plan. The Plan Administrator may increase or decrease the
eligibility period to be effective at the start of the next Purchase Period.

     B. To participate for a particular Purchase Period, the Eligible Employee
must complete the enrollment forms prescribed by the Plan Administrator
(including a purchase agreement and a payroll deduction authorization) and file
such forms with the Plan Administrator (or its designate) on or before the start
date of that Purchase Period.

     C. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during the Purchase
Period, up to a maximum of fifteen percent (15%). The deduction rate so
authorized shall continue in effect for the entire Purchase Period and for each
successive Purchase Period under the Plan, except to the extent such rate is
changed in accordance with the following guidelines:

     - The Participant may, at any time during the Purchase Period, reduce his
       or her rate of payroll deduction. Such reduction shall become effective
       as soon as possible following the filing of the requisite

                                       3
<PAGE>

       reduction form with the Plan Administrator (or its designate), but the
       Participant may not effect more than one such reduction per Purchase
       Period.

     - The Participant may, prior to the commencement of any new Purchase
       Period, increase or decrease the rate of his or her payroll deduction by
       filing the appropriate form which the Plan Administrator (or its
       designate). The new rate (which may not exceed the fifteen percent (15%)
       maximum) shall become effective as of the start date of the new Purchase
       Period.

Payroll deduction will automatically cease upon the termination of the
Participant's Purchase Right in accordance with the applicable provisions of
Section VII below.

6. STOCK SUBJECT TO PLAN

     A. The Common Stock purchasable under the Plan shall, solely in the
discretion of the Plan Administrator, be made available from either authorized
but unissued shares of Common Stock or from shares of Common Stock reacquired by
the Company, including shares of Common Stock purchased on the open market. The
total number of shares which may be issued under the Plan shall not exceed
250,000 shares (subject to adjustment under Section VI. B. below).

     B. In the event any change is made to the outstanding Common Stock by
reason of any stock dividend, stock split, combination of shares or other change
affecting such Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments shall be made by the Plan Administrator
to (i) the class and maximum number of securities issuable over the term of the
Plan, (ii) the class and maximum number of securities purchasable per
Participant during any one Purchase Period and (iii) the class and number of
securities and the price per share in effect under each Purchase Right at the
time outstanding under the Plan. Such adjustments shall be designed to preclude
the dilution or enlargement of rights and benefits under the Plan.

7. PURCHASE RIGHTS

     A. Purchase Rights of Eligible Employees.  An Eligible Employee who
participates in the Plan for a particular Purchase Period shall have the right
to purchase shares of Common Stock upon the terms and conditions set forth in
this Section VII ("Purchase Rights") and shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.

     B. Purchase Price.  Common Stock shall be issuable at the end of each
Purchase Period at a Purchase Price equal to eighty-five percent (85%) of the
lower of (i) the fair market value per share on the start date of the Purchase
Period or (ii) the fair market value per share on the purchase date at the end
of that Purchase Period (the "Purchase Price").

     C. Valuation.  For purposes of the Plan, the fair market value per share of
Common Stock on any relevant date shall be the closing selling price per share
on that date, as officially quoted on the Nasdaq National Market. If there is no
quoted selling price for such date, then the closing selling price per share of
Common Stock on the next preceding day for which there does exist such a
quotation shall be determinative of fair market value.

                                       4
<PAGE>

     D. Number of Purchasable Shares.

          (i) The number of shares purchasable per Participant during the
     Purchase Period shall be the number of whole shares obtained by dividing
     the amount collected from the Participant through payroll deductions during
     that period by the Purchase Price in effect for such period.

          (ii) In addition, the following limitations shall be in effect for the
     initial Purchase Period beginning July 1, 1993 and ending December 31,
     1993: (a) Participants subject to the short-swing profit rules of the
     federal securities laws may not purchase more than One Thousand Seven
     Hundred Fifty (1,750) shares of Common Stock in the aggregate and (b) all
     Participants as a group may not purchase more than Forty-Three Thousand
     Five Hundred (43,500) shares of Common Stock.

          (iii) Under no circumstances shall Purchase Rights be granted under
     the Plan to any Eligible Employee if such individual would, immediately
     after the grant, own (within the meaning of Code Section 424(d)) or hold
     outstanding options or other rights to purchase, stock possessing five
     percent (5%) or more of the total combined voting power or value of all
     classes of stock of the Company or any Corporate Affiliate.

     E. Payment.  Payment for the Common Stock purchased under the Plan shall be
effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the start date of the Purchase Period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of the Purchase Period. The amounts so
collected shall be credited to the Participant's Account under the Plan, but no
interest shall be paid on the balance from time to time outstanding in such
Account. The amounts collected from a Participant may be commingled with the
general assets of the Company and may be used for general corporate purposes.

     F. Termination of Purchase Right.  The following provisions shall govern
the termination of outstanding Purchase Rights:

          (i) A Participant may, at any time prior to the last five (5) business
     days of the Purchase Period, terminate his or her outstanding Purchase
     Right under the Plan by filing the prescribed notification form with the
     Plan Administrator (or its designate). No further payroll deductions shall
     be collected from the Participant with respect to the terminated Purchase
     Right and, at the Participant's election, any payroll deductions collected
     to date during the Purchase Period shall be immediately refunded or held
     for the purchase of shares at the end of the Purchase Period. If no such
     election is made, then the collected deductions shall be refunded as soon
     as possible after the end of the Purchase Period.

          (ii) The termination of such Purchase Right shall be irrevocable, and
     the participant may not subsequently rejoin the Purchase Period for which
     the terminated Purchase Right was granted. In order to resume participation
     in any subsequent Purchase Period, such individual must re-enroll in the
     Plan (by making a timely filing of a new purchase agreement and payroll
     deduction authorization) on or before the start date of the new Purchase
     Period.

          (iii) If the Participant ceases to remain an Eligible Employee while
     his or her Purchase Right remains outstanding, then such Purchase Right
     shall immediately terminate, and the Participant (or the personal
     representative of the Participant's estate in the event of his or her
     death) shall have the following election, exercisable up until the end of
     the Purchase Period in which such cessation of Eligible Employee status
     occurs:

             (a) to withdraw all of the Participant's payroll deductions for
        that Purchase Period; or

             (b) to have such funds held for the purchase of shares at the end
        of that Purchase Period.

     If no such election is made, then the collected deductions shall be
refunded as soon as possible after the end of the Purchase Period. In no event,
however, may any additional payroll deductions be made on the Participant's
behalf following his or her cessation of status as an Eligible Employee.

                                       5
<PAGE>

     G. Stock Purchase.  On the last day of the Purchase Period, shares of
Common Stock shall automatically be purchased on behalf of each Participant
(other than Participants whose payroll deductions have previously been refunded
in accordance with the Termination of Purchase Right provisions in Section VII.
F. above). The purchase shall be effected by applying each Participant's payroll
deductions for the Purchase Period to the purchase of whole shares of Common
Stock (subject to the foregoing limitations on both the maximum and aggregate
number of purchasable shares) at the Purchase Price in effect for that Purchase
Period. However, any payroll deductions not applied to the purchase of Common
Stock by reason of (i) the limitation on the maximum number of shares
purchasable by the Participant during the Purchase Period or (ii) the maximum
number of shares purchasable in the aggregate during the initial Purchase Period
shall be promptly refunded to the Participant.

     H. Proration of Purchase Rights.  Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding Purchase Rights
on any particular date exceed the number of shares then available for issuance
under the Plan (including the limitation on issuances for the initial Purchase
Period), the Plan Administrator shall make a pro-rata allocation for the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
Purchase Price payable for the Common Stock pro-rated to such individual, shall
be refunded to such Participant.

     I. Rights as Shareholder.  A Participant shall have no shareholder rights
with respect to the shares subject to his or her outstanding Purchase Right
until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase. A Participant shall be entitled to receive,
as soon as practicable after the end of the Purchase Period, a stock certificate
for the number of shares purchased on the Participant's behalf. Such certificate
may, upon the Participant's request, be issued in the names of the Participant
and his or her spouse as community property or as joint tenants with right of
survivorship.

     J. Assignability.  No Purchase Right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the Purchase Right shall be exercisable only by the
Participant.

     K. Change in Control.  If there is a Change in Control of the Company (as
defined herein) or the Plan Administrator reasonably anticipates a Change in
Control is likely to occur then (1) the Plan Administrator may cause each
Purchase Right to be immediately exercisable; (2) the Plan Administrator may
provide that upon such Change in Control each Purchase Right may be purchased by
the Company in an amount equal to the excess, if any, of the aggregate fair
market value per share of Common Stock subject to the Purchase Right (or portion
thereof) over the aggregate Purchase Price of the shares subject to the Purchase
Right (or portion thereof) which the Plan Administrator determines to purchase;
or (3) the Company may provide for any combination of (1) and (2) above. For
purposes of this Section VII. K., the aggregate fair market value per share of
Common Stock subject to the Purchase Right that the Plan Administrator
determines to purchase shall be determined by the Plan Administrator by
reference to the cash or fair market value of the securities, property or other
consideration receivable pursuant to the Change in Control described in this
Section VII. K. The aggregate Purchase Price of the Common Stock shall be
determined by multiplying the number of such shares by the Purchase Price. In
the event of a Change in Control, and if the Purchase Right is unexercised and
the Plan Administrator does not exercise its discretion hereunder to purchase
the Purchase Right, then the Purchase Right shall be regarded as the right to
receive the securities, property, cash or other consideration receivable by
stock holders of the Company immediately prior to the Change in Control. The
provisions of this Section VII. K. shall be construed consistently with the
terms of conditions of any regulation or ruling respecting the status of
Purchase Rights under Section 423 of the Code and the receipt of cash or other
consideration coincident with the cancellation of such Purchase Rights, and in
order to provide the Participant the economic benefit of the Purchase Right
without incurring liability under Section 16(b) of the

                                       6
<PAGE>

Exchange Act. A "Change in Control" shall be deemed to have occurred on the
first to occur of any of the following events:

          (i) An acquisition by any individual, entity or group (within the
     meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
     of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
     the Exchange Act) of twenty-five percent (25%) or more of either (1) the
     then outstanding shares of Common Stock of the Company or (2) the combined
     voting power of the then outstanding voting securities of the Company
     entitled to vote generally in the election of directors (the "Outstanding
     Company Voting Securities"); excluding, however, the following: (1) any
     acquisition directly from the Company, other than an acquisition by virtue
     of the exercise of a conversion privilege unless the security being so
     converted was itself acquired directly from the Company, (2) any
     acquisition by the Company; (3) any acquisition by any employee benefit
     plan (or related trust) sponsored or maintained by the Company or any
     corporation controlled by the Company; or (4) any acquisition by any Person
     pursuant to a transaction which complies with clauses (1), (2) and (3) of
     subsection (iii) of this Section VII. K.; or

          (ii) Within any period of 24 consecutive months, a change in the
     composition of the Board such that the individuals who, immediately prior
     to such period, constituted the Board (such board shall be hereinafter
     referred to as the "Incumbent Board") cease for any reason to constitute at
     least a majority of the Board; provided, however, for purposes of this
     Section VII. K., that any individual who becomes a member of the Board
     during such period, whose election, or nomination for election by the
     Company's shareholders, was approved by a vote of at least a majority of
     those individuals who are members of the Board and who were also members of
     the Incumbent Board (or deemed to be such pursuant to this proviso) shall
     be considered as though such individual were a member of the Incumbent
     Board; but, provided further, that any such individual whose initial
     assumption of office occurs as a result of either an actual or threatened
     election contest (as such terms are used in Rule 14a-11 of Regulation 14A
     promulgated under the Exchange Act) or other actual or threatened
     solicitation of proxies or consents by or on behalf of a Person other than
     the Board shall not be so considered as a member of the Incumbent Board; or

          (iii) The approval by the shareholders of the Company of a
     reorganization, merger or consolidation or sale or other disposition of all
     or substantially all of the assets of the Company ("Corporate
     Transaction"); excluding, however, such a Corporate Transaction pursuant to
     which (1) all or substantially all of the individuals and entities who are
     the beneficial owners, respectively, of the outstanding Common Stock and
     Outstanding Company Voting Securities immediately prior to such Corporate
     Transaction will beneficially own, directly or indirectly, more than
     seventy-five percent (75%) of, respectively, the outstanding shares of
     Common Stock, and the combined voting power of the then Outstanding Voting
     Securities entitled to vote generally in the election of directors, as the
     case may be, of the corporation resulting from such Corporate Transaction
     (including, without limitation, a corporation which as a result of such
     transaction owns the Company or all or substantially all of the Company's
     assets, either directly or through one or more subsidiaries) in
     substantially the same proportions as their ownership, immediately prior to
     such Corporate Transaction, of the outstanding Common Stock and Outstanding
     Company Voting Securities, as the case may be, (2) no Person (other than
     the Company, any employee benefit plan (or related trust) sponsored or
     maintained by the Company, by any corporation controlled by the Company, or
     by such corporation resulting from such Corporate Transaction) will
     beneficially own, directly or indirectly, more than twenty-five percent
     (25%) of, respectively, the outstanding shares of Common Stock of the
     corporation resulting from such corporate Transaction or the combined
     voting power of the outstanding voting securities of such corporation
     entitled to vote generally in the election of directors, except to the
     extent that such ownership existed with respect to the Company prior to the
     Corporate Transaction, and (3) individuals who were members of the Board
     immediately prior to the approval by the shareholders of the Company of
     such Corporate Transaction will constitute at least a majority of the
     members of the board of directions of the corporation resulting from such
     Corporate Transaction; or

                                       7
<PAGE>

          (iv) The approval by the shareholders of the Company of a complete
     liquidation or dissolution of the Company, other than to a corporation
     pursuant to a transaction which would comply with clauses (1), (2) and (3)
     of subsection (iii) of this Section VII. K., assuming for this purpose that
     such transaction were a Corporate Transaction.

8. ACCRUAL LIMITATIONS

     A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any Purchase Right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other Purchase Right outstanding under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company or its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Company or any Corporate Affiliate (determined on the basis of the
fair market value of such stock on the date or dates such rights are granted the
Participant) for each calendar year such rights are at any time outstanding.

     B. For purposes of applying such accrual limitations, the right to acquire
Common Stock purchase to each Purchase Right outstanding under the Plan shall
accrue as follows:

          (i) The right to acquire Common Stock under each such Purchase Right
     shall accrue as and when the Purchase Right first becomes exercisable on
     the last business day of the Purchase Period for which such right is
     granted.

          (ii) No right to acquire Common Stock under any outstanding Purchase
     Right shall accrue to the extent the Participant has already accrued in the
     same calendar year the right to acquire $25,000 worth of Common Stock
     (determined on the basis of the fair market value on the date or dates of
     grant) pursuant to one or more Purchase Rights held by the Participant
     during such calendar year.

          (iii) If by reason of such accrual limitations, any Purchase Right of
     a Participant does not accrue on the last business day of a particular
     Purchase Period, then the payroll deductions which the Participant made
     during that Purchase Period shall be promptly refunded.

     C. In the event there is any conflict between the provisions of this
Section VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Section VIII shall be controlling.

9. AMENDMENT AND TERMINATION

     A. Except as described below, the Board may at any time amend, waive,
discharge or terminate the Plan even with prejudice to a Participant. The Board
or the Plan Administrator may amend, waive, discharge, terminate, modify,
extend, replace or renew an outstanding Purchase Right, even with prejudice to a
Participant, provided such a change does not cause the Plan to fail to be a plan
as described in Section 423 of the Code. However, the Board may not, without the
approval of the Company's shareholders:

          (i) materially increase the number of shares issuable under the Plan,
     except that the Plan Administrator shall have the authority, exercisable
     without shareholder approval, to effect adjustments to the extent necessary
     to reflect changes in the Company's capital structure pursuant to Section
     VI. B.;

          (ii) alter the Purchase Price formula so as to reduce the Purchase
     Price payable for the shares issuable under the Plan; or

          (iii) materially increase the benefits accruing to Participants under
     the Plan or materially modify the requirements for eligibility to
     participate in the Plan.

10. GENERAL PROVISIONS

     A. The Plan shall become effective on the designated Effective Date,
provided that no Purchase Period shall commence, and no shares of Common Stock
shall be issued hereunder until (i) the Plan shall have been

                                       8
<PAGE>

approved by the shareholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which shares of
the Common Stock are listed and all other applicable requirements established by
law or regulation. In the event such shareholder approval is not obtained, or
such Company compliance is not effected, within twelve (12) months after the
date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect.

     B. All costs and expenses incurred in the administration of the Plan shall
be paid by the Company.

     C. Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in the employ of the Company or any of its Corporate Affiliates
for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.

     D. The provisions of the Plan shall be governed by the laws of the state of
Illinois without resort to that state's conflict-of-laws rules.

                                       9

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