Document:

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                                                                   EXHIBIT 10.26

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY
     FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
     DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
     HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
     REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
     SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS
     NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
     APPLICABLE STATE SECURITIES LAWS.

                                  CASH WARRANT

No. 1                                                            August 27, 1997

                  To Purchase 95,625 Shares of Common Stock of
                     Metal Management, Inc. (the"Company")

1.   Number of Shares; Exercise Price; Term. This certifies that The William T.
     Proler and Gaile Proler Management Trust (the "Warrantholder"), is
     entitled, upon the terms and subject to the conditions hereinafter set
     forth, at any time after August 27, 2000, and at or prior to 11:59 Central
     Time, on August 27, 2002 (the "Expiration Time"), but not thereafter, to
     acquire from the Company, up to an aggregate of 95,625 fully paid and
     nonassessable shares (the "Shares") of common stock, $.01 par value,
     ("Common Stock") of the Company at a purchase price of $6.00 per Share, as
     may be adjusted pursuant to Section 12 hereof (the "Exercise Price"). The
     number of Shares, type of security and Exercise Price are subject to
     adjustment as provided herein, and all references to "Common Stock" and
     "Exercise Price" are subject to adjustment as provided herein, and all
     references to "Common Stock" and "Exercise Price" herein shall be deemed to
     include any such adjustment or series of adjustments.

2.   Exercise of Warrant. The purchase rights represented by this Warrant are
     exercisable by the Warrantholder, as to one-third of the Shares beginning
     on each of the third, fourth and fifth years from the date hereof and prior
     to the Expiration Time by the surrender of this Warrant and Notice of
     Exercise annexed hereto, all duly completed and executed on behalf of the
     Warrantholder, at the office of the Company in Chicago, Illinois (or such
     other office or agency of the Company as it may designate by notice in
     writing to the Warrantholder at the address of the Warrantholder appearing
     on the books of the Company), and upon payment of the Exercise Price for
     the Shares thereby purchased (by cash, certified or cashier's check or wire
     transfer payable to the order of the Company, at the time of exercise in an
     amount equal to the purchase price of the Shares thereby purchased or by
     cancellation of all or part of the principal amount due and owing by the
     Company to the Warrantholder on any promissory note payable by the Company
     to the Warrantholder or by electing to have the Company withhold shares of
     Common Stock issuable upon exercise of the Warrant (in the latter case
     only, a "cashless exercise") based on the average of the closing price of
     such shares on the Nasdaq National Market for the five (5) trading days
     prior to the time of

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     exercise). Thereupon, the Warrantholder as the holder of this Warrant,
     shall be entitled to receive from the Company a stock certificate in proper
     form representing the number of Shares so purchased, and a new Warrant in
     substantially identical form and dated as of the date of such exercise for
     the purchase of that number of Shares equal to the difference, if any,
     between the number of Shares subject hereto and the number of Shares as to
     which this Warrant is so exercised.

     Notwithstanding the foregoing, the Company may reject a request from the
     Warrantholder for a cashless exercise if either the Company has a
     registration statement in effect covering the resale of the shares of
     Common Stock issuable to the Warrantholder upon exercise of this Warrant or
     the Company advises the Warrantholder that it will file a registration
     statement with the Securities and Exchange Commission within sixty (60)
     days to register the sale of such shares of Common Stock to be issued upon
     exercise of this Warrant. If no such registration statement has been filed
     within said 60 day period or declared effective within 60 days after the
     filing of any such registration statement with the Securities and Exchange
     Commission, the Warrantholder may effect a cashless exercise.

3.   Issuance of Shares. Certificates for Shares purchased hereunder shall be
     delivered to the Warrantholder within a reasonable time after the date on
     which this Warrant shall have been exercised in accordance with the terms
     hereof. The Company hereby represents and warrants that all Shares issued
     upon the exercise of this Warrant will, upon such exercise, be duly and
     validly authorized and issued, fully paid and nonassessable and free from
     all taxes, liens and charges in respect of the issuance thereof (other than
     liens or charges created by or imposed upon the Warrantholder as the holder
     of the Warrant or taxes in respect of any transfer occurring
     contemporaneously or otherwise specified herein). The Company agrees that
     the Shares so issued shall be and shall for all purposes be deemed to have
     been issued to the Warrantholder as the record owner of such Shares as of
     the close of business on the date on which this Warrant shall have been
     exercised or converted in accordance with the terms hereof.

4.   No Fractional Shares or Scrip. No fractional Shares or scrip representing
     fractional Shares shall be issued upon the exercise of this Warrant. In
     lieu of any fractional Share to which the Warrantholder as the holder would
     otherwise be entitled, the Warrantholder shall be entitled, at his option,
     to receive either (i) a cash payment equal to the excess of fair market
     value for such fractional Share above the Exercise Price for such
     fractional share (as determined in good faith by the Company) or (ii) a
     whole Share if the Warrantholder tenders the Exercise Price for one whole
     share.

5.   No Rights as Shareholders. This Warrant does not entitle the Warrantholder
     as a holder hereof to any voting rights or other rights as a shareholder of
     the Company prior to the exercise hereof.

6.   Charges, Taxes and Expenses. Certificates for Shares issued upon exercise
     of this Warrant shall be issued in the name of the Warrantholder as the
     holder of this Warrant. Issuance of certificates for Shares upon the
     exercise of this Warrant shall be made without charge to the

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     Warrantholder for any issue or transfer tax or other incidental expense in
     respect of the issuance of such certificates, all of which taxes and
     expenses shall be paid by the Company.

7.   No Transfer. This Warrant and any rights hereunder are not
     transferable by the Warrantholder as the holder hereof, in whole or in
     part.

8.   Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
     surrender hereof by the Warrantholder as the registered holder at the
     above-mentioned office or agency of the Company, for a new Warrant on
     substantially identical form and dated as of such exchange. The Company
     shall maintain at the above-mentioned office or agency a registry showing
     the name and address of the Warrantholder as the registered holder of this
     Warrant. This Warrant may be surrendered for exchange or exercise, in
     accordance with its terms, at the office of the Company, and the Company
     shall be entitled to rely in all respects, prior to written notice to the
     contrary, upon such registry.

9.   Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
     Company of evidence reasonably satisfactory to it of the loss, theft,
     destruction or mutilation of this Warrant, and in the case of loss, theft
     or destruction, of indemnity or security reasonably satisfactory to it, and
     upon reimbursement to the Company of all reasonable expenses incidental
     thereto, and upon surrender and cancellation of this Warrant, if mutilated,
     the Company will make and deliver a new Warrant of like tenor and dated as
     of such cancellation and reissuance, in lieu of this Warrant.

10.  Saturdays, Sundays, Holidays, etc.. If the last or appointed day for the
     taking of any action or the expiration of any right required or granted
     herein shall be a Saturday or a Sunday or shall be a legal holiday, then
     such action may be taken or such right may be exercised on the next
     succeeding day not a Saturday or a Sunday or a legal holiday.

11.  Change of Control. If at any time there shall be a "change of control" (as
     such term is defined in Sections 13(d) and 14(d) of the Securities Exchange
     Act of 1934, as then in effect) of the Company, then the Warrantholder as
     the holder of this Warrant, upon such change of control of the Company and
     upon payment of the aggregate Exercise Price then in effect, shall be
     entitled to acquire the Shares; provided, however, the acquisition by the
     Company of Cozzi Iron & Metal, Inc. shall not be deemed a "change of
     control" for purposes of this Agreement.

12.  Adjustments and Termination of Rights. The purchase price per Share and the
     number of Shares purchasable hereunder are subject to adjustment from time
     to time as follows:

     (a)  Merger or Consolidation. If at any time there shall be a merger or a
          consolidation of the company with or into another corporation when the
          Company is not the surviving corporation, then, as part of such merger
          or consolidation, lawful provision shall be made so that the
          Warrantholder as the holder of this Warrant shall thereafter be
          entitled to receive upon exercise of this Warrant, during the period
          specified herein and upon payment of the aggregate Exercise Price then
          in effect, the number of

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     shares of stock or other securities or property (including cash) of the
     successor corporation resulting from such merger or consolidation, to which
     the Warrantholder as the holder of the stock deliverable upon exercise of
     this Warrant would have been entitled in such merger or consolidation if
     this Warrant had been exercised immediately before such merger or
     consolidation. In any such case, appropriate adjustment shall be made in
     the application of the provisions of this Warrant with respect to the
     rights and interests of the Warrantholder as the holder of this Warrant
     after the merger or consolidation. This provision shall apply to successive
     mergers or consolidations.

(b)  Reclassification, Recapitalization, etc. If the Company at any time shall,
     by subdivision, combination or reclassification of securities,
     recapitalization, automatic conversion, or other similar event affecting
     the number or character of outstanding Shares, or otherwise, change any of
     the securities as to which purchase rights under this Warrant exist into
     the same or a different number of securities of any other class or classes,
     this Warrant shall thereafter represent the right to acquire such number
     and kind of securities as would have been issuable as the result of such
     change with respect to the securities that were subject to the purchase
     rights under this Warrant immediately prior to such subdivision,
     combination, reclassification or other change, and the Exercise Price shall
     be adjusted accordingly.

(c)  Split, Subdivision or Combination of Shares. If the Company at any time
     while this Warrant remains outstanding and unexpired shall split, subdivide
     or combine the securities as to which purchase rights under this Warrant
     exist, the Exercise Price shall be proportionately decreased in the case of
     a split or subdivision or proportionately increased in the case of a
     combination.

(d)  Common Stock Dividends. If the Company at any time while this Warrant is
     outstanding and unexpired shall pay a dividend with respect to Common Stock
     payable in Shares, or make any other distribution with respect to Common
     Stock of Shares, then the Exercise Price shall be adjusted, from and after
     the date of determination of the shareholders entitled to receive such
     dividend or distribution, to that price determined by multiplying the
     Exercise Price in effect immediately prior to such date of determination by
     a fraction (i) the numerator of which shall be the total number of Shares
     outstanding immediately prior to such dividend or distribution, and (ii)
     the denominator of which shall be the total number of Shares outstanding
     immediately after such dividend or distribution. This paragraph shall apply
     only if and to the extent that, at the time of such event, this Warrant is
     then exercisable for Common Stock.

(e)  Adjustment of Number of Shares. Upon each adjustment in the Exercise Price
     pursuant to 11 (c) or 11 (d) hereof, the number of Shares purchasable
     hereunder shall be adjusted, to the nearest whole Share, to the product
     obtained by multiplying the number of Shares purchasable immediately prior
     to such adjustment in the Exercise Price by a fraction (i) the numerator of
     which shall be the Exercise Price immediately

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          prior to such adjustment, and (ii) the denominator of which shall be
          the Exercise Price immediately after such adjustment.

13.  Notice of Adjustments; Notices. Whenever the Exercise Price or number
     or, type of securities issuable hereunder shall be adjusted pursuant to
     Section 11 hereof, the Company shall issue and provide to the
     Warrantholder as the holder of this Warrant a certificate signed by an
     officer of the Company setting forth, in reasonable detail, the event
     requiring the adjustment, the amount of the adjustment, the method by which
     such adjustment was calculated and the Exercise Price and number of Shares
     purchasable hereunder after giving effect to such adjustment.

14.  Governing Law. This Warrant shall be binding upon any successors or assigns
     of the Company. This Warrant shall constitute a contract under the laws of
     Texas and for all purposes shall be constructed in accordance with and
     governed by the laws of said state, without giving effect to the conflict
     of laws principles.

15.  Attorneys' Fees. In any litigation, arbitration or court proceeding between
     the Company and the Warrantholder as the holder of this Warrant relating
     hereto, the prevailing party shall be entitled to reasonable attorneys'
     fees and expenses incurred in enforcing this Warrant.

16.  Amendments. This Warrant may be amended and the observance of any term of
     this Warrant may be waived only with the written consent of the Company and
     the Warrantholder as the holder hereof.

17.  Notice.  All notices  hereunder  shall be in writing and shall be effective
     (a) on the day on which  delivered if delivered  personally or transmitted
     by telex or telegram or telecopier with evidence of receipt, (b) one
     business day after the date on which the same is  delivered  to a
     nationally  recognized  overnight  courier  service with evidence of
     receipt, or (c) five business days after the date on which the same is
     deposited,  postage prepaid, in the U.S. mail, sent by certified or
     registered mail,  return receipt  requested,  and addressed to the party to
     be notified at the address  indicated below for the Company,  or at the
     address for the  Warrantholder  as the holder set forth in the  registry
     maintained  by the  Company  pursuant  to Section 8, or at such other
     address  and/or telecopy or telex  number  and/or to the  attention of such
     other  person as the Company or the  Warrantholder  as holder may designate
     by ten-day advance written notice.

18.  Entire Agreement. This Warrant and the forms attached hereto contain the
     entire agreement between the parties with respect to the subject matter
     hereof and supersede all prior and contemporaneous arrangements or
     undertakings with respect thereto.

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     IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to be
executed by its duly authorized officer.

Dated: August 27, 1997

                                             METAL MANAGEMENT, INC.

                                             By: /s/ Gerard M. Jacobs
                                                --------------------------------
                                             Name: Gerard M. Jacobs
                                             Title: President

                                       6<PAGE>   1
                                                                   EXHIBIT 10.27

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY
     FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
     DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
     HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
     REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
     SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS
     NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
     APPLICABLE STATE SECURITIES LAWS.

                               CONVERSION WARRANT

No. 1                                                            August 27, 1997

                  To Purchase 42,500 Shares of Common Stock of
                     Metal Management, Inc. (the "Company")

1.   Number of Shares: Exercise Price, Term. This certifies that The William T.
     Proler and Gaile Proler Management Trust (the "Warrantholder") is entitled,
     upon the terms and subject to the conditions hereinafter set forth, at any
     time after August 27, 1999, and at or prior to 11:59 Central Time, on
     August 27, 2002 (the "Expiration Time"), but not thereafter, to acquire
     from the Company, in whole or in part, from time to time, up to an
     aggregate of 42,500 fully paid and nonassessable shares (the "Shares") of
     common stock, $.01 par value, ("Common Stock") of the Company at a purchase
     price of $6.00 per Share, as may be adjusted pursuant to Section 12 hereof
     (the "Exercise Price"). The number of Shares, type of security and Exercise
     Price are subject to adjustment as provided herein, and all references to
     "Common Stock" and "Exercise Price" are subject to adjustment as provided
     herein, and all references to "Common Stock" and "Exercise Price" herein
     shall be deemed to include any such adjustment or series of adjustments.

2.   Exercise of Warrant. The purchase rights represented by this Warrant are
     exercisable by the Warrantholder, in whole or in part, at any time, or from
     time to time, after August 27, 1999 and prior to the Expiration Time by the
     surrender of this Warrant and Notice of Exercise annexed hereto, all duly
     completed and executed on behalf of the Warrantholder, at the office of the
     Company in Chicago, Illinois (or such other office or agency of the Company
     as it may designate by notice in writing to the Warrantholder at the
     address of the Warrantholder appearing on the books of the Company), and
     upon payment of the Exercise Price for the Shares thereby purchased (by
     cash, certified or cashier's check or wire transfer payable to the order of
     the Company, at the time of exercise in an amount equal to the purchase
     price of the Shares thereby purchased or by cancellation of all or part of
     the principal amount due and owing by the Company to the Warrantholder on
     any promissory note payable by the Company to the Warrantholder or by
     electing to have the Company withhold shares of Common Stock issuable upon
     exercise of the Warrant (in the latter case only, a "cashless exercise")
     based on the average of the closing price of such shares on the Nasdaq
     National Market for the five (5) trading days prior to the time of
     exercise). Thereupon, the
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     Warrantholder as the holder of this Warrant, shall be entitled to receive
     from the Company a stock certificate in proper form representing the number
     of Shares so purchased, and a new Warrant in substantially identical form
     and dated as of the date of such exercise for the purchase of that number
     of Shares equal to the difference, if any, between the number of Shares
     subject hereto and the number of Shares as to which this Warrant is so
     exercised.

     Notwithstanding the foregoing, the Company may reject a request from the
     Warrantholder for a cashless exercise if either the Company has a
     registration statement in effect covering the resale of the shares of
     Common Stock issuable to the Warrantholder upon exercise of this Warrant or
     the Company advises the Warrantholder that it will file a registration
     statement with the Securities and Exchange Commission within sixty (60)
     days to register the sale of such shares of Common Stock to be issued upon
     exercise of this Warrant. If no such registration statement has been filed
     within said 60 day period or declared effective within 60 days after the
     filing of any such registration statement with the Securities and Exchange
     Commission, the Warrantholder may effect a cashless exercise.

3.   Issuance of Shares. Certificates for Shares purchased hereunder shall be
     delivered to the Warrantholder within a reasonable time after the date on
     which this Warrant shall have been exercised in accordance with the terms
     hereof. The Company hereby represents and warrants that all Shares issued
     upon the exercise of this Warrant will, upon such exercise, be duly and
     validly authorized and issued, fully paid and nonassessable and free from
     all taxes, liens and charges in respect of the issuance thereof (other than
     liens or charges created by or imposed upon the Warrantholder as the holder
     of the Warrant or taxes in respect of any transfer occurring
     contemporaneously or otherwise specified herein). The Company agrees that
     the Shares so issued shall be and shall for all purposes be deemed to have
     been issued to the Warrantholder as the record owner of such Shares as of
     the close of business on the date on which this Warrant shall have been
     exercised or converted in accordance with the terms hereof.

4.   No Fractional Shares or Scrip. No fractional Shares or scrip
     representing fractional Shares shall be issued upon the exercise of this
     Warrant. In lieu of any fractional Share to which the Warrantholder as the
     holder would otherwise be entitled, the Warrantholder shall be entitled, at
     his option, to receive either (i) a cash payment equal to the excess of
     fair market value for such fractional Share above the Exercise Price for
     such fractional share (as determined in good faith by the Company) or (ii)
     a whole Share if the Warrantholder tenders the Exercise Price for one whole
     share.

5.   No Rights as Shareholders. This Warrant does not entitle the Warrantholder
     as a holder hereof to any voting rights or other rights as a shareholder
     of the Company prior to the exercise hereof.

6.   Charges. Taxes and Expenses. Certificates for Shares issued upon exercise
     of this Warrant shall be issued in the name of the Warrantholder as the
     holder of this Warrant. Issuance of certificates for Shares upon the
     exercise of this Warrant shall be made without charge to the

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     Warrantholder for any issue or transfer tax or other incidental expense in
     respect of the issuance of such certificates, all of which taxes and
     expenses shall be paid by the Company.

7.   No Transfer. This Warrant and any rights hereunder are not transferable by
     the Warrantholder as the holder hereof, in whole or in part.

8.   Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
     surrender hereof by the Warrantholder as the registered holder at the
     above-mentioned office or agency of the Company, for a new Warrant on
     substantially identical form and dated as of such exchange. The Company
     shall maintain at the above-mentioned office or agency a registry showing
     the name and address of the Warrantholder as the registered holder of this
     Warrant. This Warrant may be surrendered for exchange or exercise, in
     accordance with its terms, at the office of the Company, and the Company
     shall be entitled to rely in all respects, prior to written notice to the
     contrary, upon such registry.

9.   Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
     Company of evidence reasonably satisfactory to it of the loss, theft,
     destruction or mutilation of this Warrant, and in the case of loss, theft
     or destruction, of indemnity or security reasonably satisfactory to it, and
     upon reimbursement to the Company of all reasonable expenses incidental
     thereto, and upon surrender and cancellation of this Warrant, if mutilated,
     the Company will make and deliver a new Warrant of like tenor and dated as
     of such cancellation and reissuance, in lieu of this Warrant.

10.  Saturdays, Sundays, Holidays etc. If the last or appointed day for the
     taking of any action or expiration of any right required or granted herein
     shall be a Saturday or a Sunday or shall be a legal holiday, then such
     action may be taken or such right may be exercised on the next succeeding
     day not a Saturday or a Sunday or a legal holiday.

11.  Change of Control. If at any time there shall be a "change of control" (as
     such term is defined in Sections 13(d) and 14(d) of the Securities Exchange
     Act of 1934, as then in effect) of the Company, then the Warrantholder as
     the holder of this Warrant, upon such change of control of the Company and
     upon payment of the aggregate Exercise Price then in effect, shall be
     entitled to acquire the Shares; provided, however, the acquisition by the
     Company of Cozzi Iron & Metal, Inc. shall not be deemed a "change of
     control" for purposes of this Agreement.

12.  Adjustments and Termination of Rights. The purchase price per Share and the
     number of Shares purchasable hereunder are subject to adjustment from time
     to time as follows:

     (a)      Merger or Consolidation. If at any time there shall be a
              merger or a consolidation of the Company with or into another
              corporation when the Company is not the surviving corporation,
              then, as part of such merger or consolidation, lawful
              provision shall be made so that the Warrantholder as the
              holder of this Warrant shall thereafter be entitled to receive
              upon exercise of this Warrant, during the period specified
              herein and upon payment of the aggregate Exercise Price then
              in effect, the number of

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          shares of stock or other securities or property (including cash) of
          the successor corporation resulting from such merger or consolidation,
          to which the Warrantholder as the holder of the stock deliverable upon
          exercise of this Warrant would have been entitled in such merger or
          consolidation if this Warrant had been exercised immediately before
          such merger or consolidation. In any such case, appropriate adjustment
          shall be made in the application of the provisions of this Warrant
          with respect to the rights and interests of the Warrantholder as the
          holder of this Warrant after the merger or consolidation. This
          provision shall apply to successive mergers or consolidations.

     (b)  Reclassification, Recapitalization, etc. If the Company at any time
          shall, by subdivision, combination or reclassification of securities,
          recapitalization, automatic conversion, or other similar event
          affecting the number or character of outstanding Shares, or otherwise,
          change any of the securities as to which purchase rights under this
          Warrant exist into the same or a different number of securities of any
          other class or classes, this Warrant shall thereafter represent the
          right to acquire such number and kind of securities as would have been
          issuable as the result of such change with respect to the securities
          that were subject to the purchase rights under this Warrant
          immediately prior to such subdivision, combination, reclassification
          or other change, and the Exercise Price shall be adjusted accordingly.

     (c)  Split, Subdivision or Combination of Shares. If the Company at any
          time while this Warrant remains outstanding and unexpired shall split,
          subdivide or combine the securities as to which purchase rights under
          this Warrant exist, the Exercise Price shall be proportionately
          decreased in the case of a split or subdivision or proportionately
          increased in the case of a combination.

     (d)  Common Stock Dividends. If the Company at any time while this Warrant
          is outstanding and unexpired shall pay a dividend with respect to
          Common Stock payable in Shares, or make any other distribution with
          respect to Common Stock of Shares, then the Exercise Price shall be
          adjusted, from and after the date of determination of the shareholders
          entitled to receive such dividend or distribution, to that price
          determined by multiplying the Exercise Price in effect immediately
          prior to such date of determination by a fraction (i) the numerator of
          which shall be the total number of Shares outstanding immediately
          prior to such dividend or distribution, and (ii) the denominator of
          which shall be the total number of Shares outstanding immediately
          after such dividend or distribution. This paragraph shall apply only
          if and to the extent that, at the time of such event, this Warrant is
          then exercisable for Common Stock.

     (e)  Adjustment of Number of Shares. Upon each adjustment in the Exercise
          Price pursuant to 11(c) or 11(d) hereof, the number of Shares
          purchasable hereunder shall be adjusted, to the nearest whole Share,
          to the product obtained by multiplying the number of Shares
          purchasable immediately prior to such adjustment in the Exercise Price
          by a fraction (i) the numerator of which shall be the Exercise Price
          immediately

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                  prior to such adjustment, and (ii) the denominator of which
                  shall be the Exercise Price immediately after such adjustment.

13.  Notice of Adjustments; Notices. Whenever the Exercise Price or number or,
     type of securities issuable hereunder shall be adjusted pursuant to Section
     11 hereof, the Company shall issue and provide to the Warrantholder as the
     holder of this Warrant a certificate signed by an officer of the Company
     setting forth, in reasonable detail, the event requiring the adjustment,
     the amount of the adjustment, the method by which such adjustment was
     calculated and the Exercise Price and number of Shares purchasable
     hereunder after giving effect to such adjustment.

14.  Governing Law. This Warrant shall be binding upon any successors or assigns
     of the Company. This Warrant shall constitute a contract under the laws of
     Texas and for all purposes shall be constructed in accordance with and
     governed by the laws of said state, without giving effect to the conflict
     of laws principles.

15.  Attorneys' Fees. In any litigation, arbitration or court proceeding between
     the Company and the Warrantholder as the holder of this Warrant relating
     hereto, the prevailing party shall be entitled to reasonable attorneys'
     fees and expenses incurred in enforcing this Warrant.

16.  Amendments. This Warrant may be amended and the observance of any term of
     this Warrant may be waived only with the written consent of the Company and
     the Warrantholder as the holder hereof.

17.  Notice. All notices hereunder shall be in writing and shall be effective
     (a) on the day on which delivered if delivered personally or transmitted by
     telex or telegram or telecopier with evidence of receipt, (b) one business
     day after the date on which the same is delivered to a nationally
     recognized overnight courier service with evidence of receipt, or (c) five
     business days after the date on which the same is deposited, postage
     prepaid, in the U.S. mail, sent by certified or registered mail, return
     receipt requested, and addressed to the party to be notified at the address
     indicated below for the Company, or at the address for the Warrantholder as
     the holder set forth in the registry maintained by the Company pursuant to
     Section 8, or at such other address and/or telecopy or telex number and/or
     to the attention of such other person as the Company or the Warrantholder
     as holder may designate by ten-day advance written notice.

18.  Entire Agreement. This Warrant and the forms attached hereto contain the
     entire agreement between the parties with respect to the subject matter
     hereof and supersede all prior and contemporaneous arrangements or
     undertakings with respect thereto.

                                       5

<PAGE>   6
     IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to be
executed by its duly authorized officer.

Dated: August 27,1997

                                                   METAL MANAGEMENT, INC.

                                                   By: /s/ Gerard M. Jacobs
                                                      --------------------------
                                                   Name: Gerard M. Jacobs
                                                   Title: President

                                       6

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