Document:

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                                                                    EXHIBIT 10.1

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                                  $150,000,000

                                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

                                      WITH

                             METAL MANAGEMENT, INC.,
                             AS FUNDS ADMINISTRATOR

                                       AND

                             BANKERS TRUST COMPANY,
                                    AS AGENT

                            DATED AS OF JUNE 29, 2001

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                                Table of Contents

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ARTICLE 1.  DEFINITIONS.....................................................................1
      1.1     General Definitions...........................................................1
      1.2     Accounting Terms and Determinations..........................................20
      1.3     Other Terms; Headings........................................................20
ARTICLE 2.  REVOLVING LOANS................................................................21
      2.1     Commitments..................................................................21
      2.2     Borrowing of Revolving Loans.................................................21
      2.3     Notice of Request for Lender Advances........................................22
      2.4     Periodic Settlement of Agent Advances; Interest and Fees; Statements.........22
      2.5     Sharing of Payments..........................................................23
      2.6     Defaulting Lenders...........................................................24
      2.7     Allocation of Revolving Loans and Expenses...................................25
ARTICLE 3.  LETTERS OF CREDIT..............................................................26
      3.1     Letters of Credit............................................................26
      3.2     Maximum Letter of Credit Obligations; Final Maturities.......................27
      3.3     Letter of Credit Requests....................................................27
      3.4     Letter of Credit Participations..............................................28
      3.5     Agreement to Repay Letter of Credit Drawings.................................30
      3.6     Increased Costs..............................................................31
ARTICLE 4.  COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS...........................31
      4.1     Interest on Revolving Loans..................................................31
      4.2     Unused Line Fee..............................................................32
      4.3     Letter of Credit Fees........................................................33
      4.4     Interest and Letter of Credit Fees After Event of Default....................33
      4.5     Collateral Monitoring Fee....................................................33
      4.6     Additional Fees..............................................................33
      4.7     Expenses.....................................................................34
      4.8     Mandatory Payment of Revolving Loans; Reductions of Commitments..............34
      4.9     Maintenance of Loan Account; Statements of Account...........................34
      4.10    Payment Procedures...........................................................35
      4.11    Collection of Accounts.......................................................35
      4.12    Distribution and Application of Collections and other Amounts................35
      4.13    Calculations.................................................................36
      4.14    Special Provisions Relating to LIBOR Rate Loans..............................36
      4.15    Indemnification in Certain Events............................................39
      4.16    Substitution of Lenders......................................................40
ARTICLE 5.  CONDITIONS PRECEDENT...........................................................40
      5.1     Conditions Precedent to Initial Revolving Loan and Letter of Credit..........40
      5.2     Conditions Precedent to All Revolving Loans and Letters of Credit............41
ARTICLE 6.  REPRESENTATIONS AND WARRANTIES.................................................42
      6.1     Organization and Qualification...............................................42
      6.2     Authority....................................................................42
      6.3     Enforceability...............................................................43
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                                Table of Contents
                                   (continued)

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      6.4     No Conflicts.................................................................43
      6.5     Consents and Filings.........................................................43
      6.6     Government Regulation........................................................43
      6.7     Solvency.....................................................................43
      6.8     Rights in Collateral Priority of Liens.......................................44
      6.9     Financial Data...............................................................44
      6.10    Locations of Offices, Records and Inventory..................................44
      6.11    Subsidiaries; Ownership of Equity............................................45
      6.12    No Judgments or Litigation...................................................45
      6.13    No Defaults..................................................................45
      6.14    Labor Matters................................................................45
      6.15    Compliance with Law..........................................................46
      6.16    ERISA........................................................................46
      6.17    Compliance with Environmental Laws...........................................46
      6.18    Intellectual Property........................................................47
      6.19    Licenses and Permits.........................................................47
      6.20    Taxes and Tax Returns........................................................47
      6.21    Material Contracts...........................................................47
      6.22    Accuracy and Completeness of Information.....................................48
      6.23    No Change....................................................................48
      6.24    Bankruptcy Matters...........................................................48
ARTICLE 7.  AFFIRMATIVE COVENANTS..........................................................48
      7.1     Financial Reporting..........................................................48
      7.2     Collateral Reporting.........................................................50
      7.3     Notification Requirements....................................................51
      7.4     Corporate Existence..........................................................52
      7.5     Books and Records; Inspections...............................................52
      7.6     Insurance....................................................................52
      7.7     Taxes........................................................................53
      7.8     Compliance with Laws.........................................................53
      7.9     Use of Proceeds..............................................................54
      7.10    Fiscal Year..................................................................54
      7.11    Maintenance of Property......................................................54
      7.12    ERISA Documents..............................................................54
      7.13    Environmental and Other Matters..............................................55
      7.14    Further Actions..............................................................55
      7.15    Deposit of Collections and Other Proceeds of Collateral......................55
ARTICLE 8.  NEGATIVE COVENANTS.............................................................55
      8.1     Financial Covenants..........................................................55
      8.2     Capital Expenditures.........................................................56
      8.3     Additional Indebtedness......................................................56
      8.4     Liens........................................................................57
      8.5     Contingent Obligations.......................................................59
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                                Table of Contents
                                   (continued)

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      8.6     Sale of Assets...............................................................59
      8.7     Restricted Payments..........................................................59
      8.8     Investments..................................................................60
      8.9     Affiliate Transactions.......................................................60
      8.10    Bank Accounts................................................................61
      8.11    Additional Negative Pledges..................................................61
      8.12    Junior Secured Notes.........................................................61
ARTICLE 9.  EVENTS OF DEFAULT AND REMEDIES.................................................61
      9.1     Events of Default............................................................61
      9.2     Acceleration, Termination of Commitments and Cash Collateralization..........63
      9.3     Recission of Acceleration....................................................63
      9.4     Remedies.....................................................................63
      9.5     Right of Setoff..............................................................64
      9.6     License of Use of Software and Other Intellectual Property...................64
      9.7     Application of Proceeds; Surplus, Deficiencies...............................64
ARTICLE 10. THE AGENT......................................................................64
      10.1    Appointment of Agent.........................................................64
      10.2    Nature of Duties of Agent....................................................65
      10.3    Lack of Reliance on Agent....................................................65
      10.4    Certain Rights of the Agent..................................................66
      10.5    Reliance by Agent............................................................66
      10.6    Indemnification of Agent.....................................................66
      10.7    The Agent in its Individual Capacity.........................................66
      10.8    Holders of Revolving Notes...................................................67
      10.9    Successor Agent..............................................................67
      10.10   Collateral Matters...........................................................67
      10.11   Actions with Respect to Defaults.............................................68
      10.12   Delivery of Information......................................................69
ARTICLE 11. MISCELLANEOUS..................................................................69
      11.1    GOVERNING LAW................................................................69
      11.2    SUBMISSION TO JURISDICTION...................................................69
      11.3    SERVICE OF PROCESS...........................................................69
      11.4    JURY TRIAL...................................................................70
      11.5    LIMITATION OF LIABILITY......................................................70
      11.6    Delays.......................................................................71
      11.7    Notices......................................................................71
      11.8    Assignments and Participations...............................................71
      11.9    Confidentiality..............................................................72
      11.10   Indemnification..............................................................73
      11.11   Amendments and Waivers.......................................................74
      11.12   Counterparts and Effectiveness...............................................74
      11.13   Severability.................................................................75
      11.14   Maximum Rate.................................................................75
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                                Table of Contents
                                   (continued)

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      11.15   Entire Agreement; Successors and Assigns.....................................75
      11.16   Joint and Several Liability of Borrowers.....................................76
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                                     ANNEXES

ANNEX I                       List of Lenders; Commitment Amounts;
                              Applicable Lending Offices

                                     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

                              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

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     THIS CREDIT AGREEMENT is entered into as of June 29, 2001, 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 BANKERS TRUST COMPANY, a New York banking
corporation (in its individual capacity, hereinafter referred to as "BTCO"),
acting in its capacity as agent for the Lenders pursuant to ARTICLE 10 (in such
capacity, together with its successors in such capacity, hereinafter referred to
as the "AGENT").

                            ARTICLE 1. DEFINITIONS.

     1.1  GENERAL DEFINITIONS.

     ACCOUNT has the meaning set forth in the Security Agreement.

     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 has the meaning set forth in the Preamble.

     AGENT ADVANCES has the meaning set forth in SECTION 2.2.

     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 Prime Rate Loan.

     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;
PROVIDED, THAT for purposes of this Credit Agreement, the firm of
PricewaterhouseCoopers L.L.P. shall be deemed to be satisfactory to the Agent.

     BANKRUPTCY CODE means Title 11 of the U.S. Code (11 U.S.C.ss.ss.101 et
seq.), as amended from time to time, and any successor statute.

     BANKRUPTCY COURT means the United States Bankruptcy Court for the State of
Delaware.

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     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) Firma, (4)
Firma Plastic, (5) MacLeod, (6) Metals Recycling, (7) MTLM, (8) MTLM.com, (9)
MTLM Aerospace, (10) MTLM Alabama, (11) MTLM Arizona, (12) MTLM Connecticut,
(13) MTLM Gulf Coast, (14) MTLM Indiana, (15) MTLM Memphis, (16) MTLM Midwest,
(17) MTLM Mississippi, (18) MTLM Northeast, (19) MTLM, Ohio, (20) MTLM
Pittsburgh, (21) MTLM Realty, (22) MTLM Services, (23) MTLM Stainless & Alloy,
(24) MTLM West, (25) MTLM West Coast Holdings, (26) Proler, (27) Reserve, (28)
S&A Holdings and (29) Trojan.

     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)  the Fixed Asset Sublimit, which may be a negative number, PLUS

          (b)  the Supplemental Availability Sublimit, PLUS

          (c)  eighty-five percent (85%) of Eligible Accounts Receivable, PLUS

          (d)  the lesser of $65,000,000 and seventy percent (70%) of Eligible
     Inventory.

In addition, in the 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.

     BT ACCOUNT has the meaning set forth in Section 4.11.

     BTCO has the meaning set forth in the Preamble.

     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"

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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.

     CASES means the respective cases commenced under Chapter 11 of the
Bankruptcy Code as a result of the voluntary petitions filed by the respective
Borrowers for relief under Chapter 11 of the Bankruptcy Code with the Bankruptcy
Court on November 20, 2000.

     CASH EQUIVALENTS means either of the following, so long as the same are
maintained in accounts in which the Agent has a perfected security interest: (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.

     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 (after giving effect to the Reorganization Plan) 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, after giving effect to the Reorganization Plan) shall, as
     a result of a tender or exchange offer,

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     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 the Parent 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 legal and beneficial owner of one
     hundred percent (100%) of the Securities of each Borrower; or

          (e)  the occurrence of a "Change of Control" (as such term is defined
     in the Junior Secured Note Indenture).

     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).

     CLOSING FEE has the meaning set forth in SECTION 4.6(a).

     CODE has the meaning set forth in SECTION 1.3.

     COLLATERAL means the Accounts, Inventory, Equipment and other real,
personal and mixed property identified in the Collateral Documents as security
for any or all of the Obligations.

     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.

     COLLATERAL DOCUMENTS means, collectively, the Security Agreement and all
other documents, agreements and instruments pursuant to which Liens are now or
hereafter granted to the Agent to secure any or all of the Obligations.

     COLLATERAL MONITORING FEE has the meaning set forth in SECTION 4.5.

     COLLECTION ACCOUNT has the meaning set forth in SECTION 4.11.

     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.

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     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 11.8(b)), as such
amount may be reduced from time to time in accordance with the terms and
provisions of this Credit Agreement.

     CONFIRMATION ORDER means an order entered by the Bankruptcy Court on June
18, 2001, confirming the Reorganization Plan pursuant to section 1129 of the
Bankruptcy Code.

     CONSOLIDATED ENTITY means MTLM and each of its consolidated Subsidiaries
and shall include in any event each Borrower.

     CONSOLIDATED NET INCOME means the consolidated net income of the
Consolidated Entity.

     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 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 BTCo or any other financial institution
selected from time to time by the Agent and reasonably acceptable to the Funds
Administrator.

     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

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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).

     EBITDA means, for any period, Consolidated Net Income (excluding
extraordinary, reorganization and non-recurring items) for such period, plus (a)
all Interest Expense, 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 which have been subtracted or added in
calculating such Consolidated Net Income.

     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 forty percent (40%) 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 right
     of setoff, or the amount of such dispute or claim, as the case may be; or

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          (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

          (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 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.ss.ss.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

                                       7
<PAGE>   14

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

          (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.ss.ss.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 9.

     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.

     EXCESS CASH FLOW means, for any period, the following, in each case for the
Consolidated Entity, determined in accordance with GAAP for such period: (a)
EBITDA; MINUS (b) the sum of (i) Interest Expense, (ii) income taxes paid in
cash, (iii) principal payments on or mandatory redemptions of Indebtedness, to
the extent expressly permitted hereunder (other than

                                       8
<PAGE>   15

repayments of Revolving Loans in the ordinary course of business which do not
result in a permanent reduction of the Commitments), (iv) scheduled reductions
in the Fixed Asset Sublimit and Supplemental Availability Sublimit,
respectively, (v) Capital Expenditures, to the extent expressly permitted under
this Credit Agreement and (vi) non-recurring items, to the extent paid in cash
during such period (including fees paid in connection with consummation of the
transactions contemplated by the Reorganization Plan).

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

     EXISTING LETTERS OF CREDIT means those certain Letters of Credit issued and
outstanding on the Closing Date under the Pre-Petition Credit Agreement and
Post-Petition Credit Agreement, respectively, 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) the cost of title insurance
premiums, real estate survey costs, and fees and taxes in connection with the
filing of financing statements, and (v) 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 29, 2003 and (ii) the date on
which this Credit Agreement is terminated pursuant to SECTION 9.2(b).

     FACILITY FEE has the meaning set forth in SECTION 4.6(b).

     FACILITY FEE TEST DATE has the meaning set forth in SECTION 4.6(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

                                       9
<PAGE>   16

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 for
such day on such transactions received by the Agent from three Federal Funds
brokers of recognized standing selected by the Agent.

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

     FEES means, collectively, the Closing Fee, the Facility Fee, Unused Line
Fee, the Letter of Credit Fees, the L/C Facing Fee, the Issuing Bank Fees and
the Collateral Monitoring Fee.

     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.

     FIRMA means Firma, Inc., a California corporation.

     FIRMA PLASTIC means Firma Plastic Co., Inc., a California corporation.

     FIXED ASSET SUBLIMIT means an amount equal to $41,134,706; PROVIDED, that
the Fixed Asset Sublimit shall be automatically and permanently reduced (i) on
July 1, 2001 and the first business day of each calendar quarter ending
thereafter, in each case by an amount equal to $2,400,000; (ii) after reduction
of the Supplemental Availability Sublimit to zero, on each date on which Net
Proceeds of Sale are received by or for the account of any Borrower (other than
from any other Borrower), by an amount equal to such Net Proceeds of Sale, to
the extent not otherwise applied to reduce the Supplemental Availability
Sublimit; and (iii) after the reduction of the Supplemental Availability
Sublimit to zero, on the date which is ninety (90) days after the end of the
period commencing on the Closing Date and ending on March 31, 2002 and the end
of each fiscal year of the Consolidated Entity ending thereafter, in each case
by an amount equal to fifty percent (50%) of Excess Cash Flow for such period or
fiscal year, as the case may be, to the extent not otherwise applied to reduce
the Supplemental Availability Sublimit.

     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

                                       10
<PAGE>   17

laws of the State of New York (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 New York's (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 Interest Rate Agreement, (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.

     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.

     INTEREST COVERAGE RATIO means, for any period, the ratio of (i) EBITDA to
(ii) Interest Expense, in each case for the Consolidated Entity for such period.

     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

                                       11
<PAGE>   18

expense but excluding in any event the Facility Fee and the Closing Fee), (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, the period commencing on
the date of such Borrowing and ending on the last day of the period selected by
the Funds Administrator pursuant to the provisions below. The duration of each
such Interest Period shall be one, two, three or six months, in each case as the
Funds Administrator may, in an appropriate Notice of Borrowing, Notice of
Continuation or Notice of Conversion, select; PROVIDED, THAT the Funds
Administrator may not select any Interest Period that ends after the Expiration
Date. Whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; PROVIDED, THAT if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day.

     INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.

     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. 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 BTCo, Deutsche Bank AG, New York Branch, 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).

     JUNIOR SECURED NOTE DOCUMENTS means, collectively, the Junior Secured
Notes, the Junior Secured Note Indenture and all other agreements, instruments
and documents executed and/or delivered by any Credit Party pursuant thereto or
in connection therewith.

     JUNIOR SECURED NOTE INDENTURE means the Amended and Restated Indenture
dated as of the date hereof among MTLM, as issuer, the other Borrowers, as
guarantors, and BNY Midwest Trust Company, as Trustee.

                                       12
<PAGE>   19

     JUNIOR SECURED NOTES means the 12 3/4 Secured Notes due 2004 of MTLM in an
aggregate principal amount not exceeding $34,000,000, issued pursuant to the
Junior Secured Note Indenture.

     L/C FACING FEE has the meaning set forth in SECTION 4.3(a).

     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 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 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).

     LETTERS OF CREDIT means (i) the Existing Letters of Credit and (ii) all
letters of credit issued for the account of any Borrower under ARTICLE 3, 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 hereunder and the Junior Secured
Notes as of such date, to (b) EBITDA for the twelve (12) month period ending on
such date.

     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 MARGIN shall mean three percent (3.00%); PROVIDED, that:

          (a)  if EBITDA, as determined as of March 31, 2002 for the nine-month
     period ending on such date, as determined by the Agent based on the
     financial statements of the Consolidated Entity with respect to such period
     delivered to the Agent pursuant to this Credit Agreement, is greater than
     $42,000,000, the LIBOR Margin shall be two and three-quarters percent
     (2.75%) for the ninety (90) day period commencing on the first day

                                       13
<PAGE>   20

     of the calendar month immediately following the calendar month in which
     such financial statements are delivered; and

          (b)  if EBITDA, as determined as of the last day of any fiscal quarter
     of the Consolidated Entity (commencing with such fiscal quarter ending as
     of June 30, 2002) for the twelve-month period ending on such day, as
     determined by the Agent based on the financial statements of the
     Consolidated Entity with respect to such twelve-month period delivered to
     the Agent pursuant to this Credit Agreement, is greater than $56,000,000,
     the LIBOR Margin shall be two and one-half percent (2.50%) for the ninety
     (90) day period commencing on the later to occur of (i) the first day of
     the calendar month immediately following the calendar month in which such
     financial statements are delivered or (ii) the day immediately following
     the last day of an immediately preceding ninety (90) day period, if any,
     during which the LIBOR Margin in effect was two and one-half percent
     (2.50%);

     PROVIDED, that, notwithstanding the foregoing, (i) upon the occurrence and
     during the continuance of an Event of Default, the LIBOR Margin shall be
     three percent (3.00%); and (ii) if the Consolidated Entity fails to satisfy
     the criterion set forth in CLAUSE (b) above with respect to any period, the
     LIBOR Margin for the succeeding ninety (90) day period shall be three
     percent (3.00%).

     LIBOR RATE means, with respect to any Interest Period for each LIBOR Rate
Loan comprising part of the same Borrowing, an interest rate per annum equal to
the rate (rounded upward to the nearest whole multiple of one-sixteenth (1/16)
of one percent (1.00%) per annum, if such rate is not such a whole multiple of
one-sixteenth (1/16) of one percent (1.00%)) of the offered quotation, if any,
to first class banks in the London (U.K.) interbank market by BTCo for United
States dollar deposits of amounts in immediately available funds comparable to
the principal amount of the LIBOR Rate Loan of BTCo for which the LIBOR Rate is
being determined with maturities comparable to the Interest Period for which
such LIBOR Rate will apply as of approximately 10:00 a.m. Chicago time two (2)
Business Days prior to the commencement of 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 the aggregate revolving line of credit extended
pursuant to this Credit Agreement by the Lenders to the Borrowers for Revolving
Loans and Letters of Credit, in an amount up to $150,000,000, as such amount may
be reduced from time to time pursuant to the terms and provisions hereof.

     LOAN ACCOUNT has the meaning set forth in SECTION 4.9.

                                       14
<PAGE>   21

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

     MAJORITY LENDERS means those Lenders holding in the aggregate more than
fifty percent (50%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty percent (50%) of the Revolving
Loans and Letter of Credit Obligations then outstanding.

     MATERIAL ADVERSE EFFECT means a material adverse effect on (i) the
business, prospects, 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.

     METALS RECYCLING means California Metals Recycling, Inc., a California
corporation.

     MOODY'S means Moody's Investors Services, Inc., or any successor thereto.

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

     MTLM.COM means metals.com, 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 NORTHEAST means Metal Management Northeast, Inc., a New Jersey
corporation.

                                       15
<PAGE>   22

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

     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.

     NET PROCEEDS OF SALE means proceeds (including any notes, Securities,
warrants and other non-cash items and money paid into escrow accounts, together,
with or reduced by, all interest paid thereon and capital gains, or capital
losses, realized in connection with the investment thereof) received as
consideration by a Borrower or any Subsidiary of a Borrower (to the extent of
such Borrower's ownership interest in such Subsidiary) from the sale, lease,
transfer or other disposition of any fixed asset, net of (a) the cost of such
sale, lease, transfer or other disposition, taxes payable as a result thereof
and reasonable reserves associated therewith, (b) amounts applied to the
repayment of Indebtedness (other than Obligations) secured by a Lien on the
fixed asset disposed of and (c) amounts expressly permitted to be used
hereunder, and in fact used, to purchase a replacement asset. For the purposes
hereof, all proceeds of insurance coverage paid or other recoveries or awards of
compensation for any such fixed asset, or group of fixed assets, taken by
condemnation or eminent domain shall be deemed proceeds of the disposition of
that fixed asset.

     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(a).

     NOTICE OF CONVERSION has the meaning set forth in SECTION 4.14(b).

     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

                                       16
<PAGE>   23

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.

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

     PAYMENT OFFICE means the office of the Agent located at 130 Liberty Street,
New York, New York 10006, 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.

     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) the financial and
business climate of any Borrower's industry, (ii) changes in collection history
and dilution with respect to the Accounts of any Borrower, (iii) demand for, and
pricing of, Inventory of any Borrower, (iv) changes in any concentration of risk
with respect to Accounts and Inventory of any Borrower, and (v) 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.

     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.

     POST-PETITION CREDIT AGREEMENT means that certain Post-Petition Credit
Agreement dated as of November 20, 2000, as amended, among the Borrower, as
debtors-in-possession, MTLM as borrowing agent and funds administrator for the
Borrowers thereunder, the Lenders and BT Commercial Corporation, as agent for
the Lenders thereunder.

     POST-PETITION OBLIGATIONS means the "Obligations" (as such term is defined
in the Post-Petition Credit Agreement.

     PRE-PETITION CREDIT AGREEMENT means that certain Credit Agreement dated as
of March 31, 1998, as amended, among the Borrowers (and certain predecessors in
interest thereof), MTLM, as borrowing agent and funds administrator for the
Borrowers thereunder, the Lenders and BT Commercial Corporation, as agent for
the Lenders thereunder.

     PRIME LENDING RATE means the rate which Deutsche Bank AG, New York Branch,
announces as its prime lending rate, from time to time. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.

                                       17
<PAGE>   24

Deutsche Bank AG, New York Branch, BTCo and each of the other Lenders may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.

     PRIME RATE LOAN means a Revolving Loan that bears interest as provided in
SECTION 4.1(a) hereof.

     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).

     REGISTER has the meaning set forth in SECTION 11.8(c).

     REGULATION D means Regulation D of the Federal Reserve Board, as in effect
from time to time.

     REGULATION U means Regulation U of the Federal Reserve Board, as in effect
from time to time.

     REGULATION Z means Regulation Z of the Federal Reserve Board, as in effect
from time to time.

     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).

     REORGANIZATION PLAN means the First Amended Joint Plan of Reorganization of
Metal Management, Inc. and its Subsidiary Debtors, dated as of May 4, 2001,
without giving effect to any amendments, restatements or modifications thereof
or supplements thereto, except for any of the foregoing previously consented to
in writing by the Agent.

     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.

     RESPONSIBLE OFFICER means, with respect to any Person, the president, chief
executive officer, chief financial officer, any vice president or treasurer of
such Person.

                                       18
<PAGE>   25

     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.

     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.

     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 Junior Secured Notes, the Revolving Notes
or any other evidence of the Obligations.

     SECURITY AGREEMENT means the General Security Agreement of even date
executed by each of the Borrowers in favor of the Agent for the benefit of the
Agent and the Lenders.

     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.

     SUPPLEMENTAL AVAILABILITY SUBLIMIT means an amount equal to $14,300,000;
PROVIDED, that the Supplemental Availability Sublimit shall be automatically and
permanently reduced, (i) on the date which is ninety (90) days after the end of
the period commencing on the effective date of the Reorganization Plan and
ending on March 31, 2002, and the end of each fiscal year of the Consolidated
Entity ending thereafter, in each case by an amount equal to fifty percent (50%)
of Excess Cash Flow for such period or fiscal year, as the case may be; (ii) on
October 1, 2001 and on each successive ninetieth (90th) day thereafter, in each
case by an amount equal to $1,250,000; and (iii) on each date on which Net
Proceeds of Sale are received by or for the account of any Borrower (other than
from any other Borrower), in the amount of such Net Proceeds of Sale.

                                       19
<PAGE>   26

     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 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.

     TROJAN means Trojan Trading Co., a California corporation.

     TYPE means a LIBOR Rate Loan or a Prime Rate Loan.

     UNUSED LINE FEE has the meaning set forth in SECTION 4.2.

     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 8 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 Majority 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 1 that are defined
in the Uniform Commercial Code in effect from time to time in the State of New
York (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

                                       20
<PAGE>   27
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Credit Agreement.

                           ARTICLE 2. 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 on a
joint and several basis (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(b), from the Agent acting on behalf
of the Lenders ("AGENT ADVANCES").

                  (a) 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.

                  (b) 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:

                           (i) 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.

                           (ii) 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

                                       21
<PAGE>   28

                  Majority Lenders to cease, in an aggregate amount at any time
                  not to exceed $5,000,000.

                  (c) 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.

                  (d) 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 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 Prime
         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.

                  (a) 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").

                                       22
<PAGE>   29

                  (b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall deliver
         to each of the Lenders promptly after the Settlement Date a summary
         statement of the account 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 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.

                  (c) 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 end of each month, the Agent shall distribute to
         each Lender its portion, allocated as provided above, of the interest
         and Unused Line Fee which has been received by the Agent during such
         month.

         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

                                       23
<PAGE>   30

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 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 Majority 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

                                       24
<PAGE>   31

         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 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.

                                       25
<PAGE>   32

                         ARTICLE 3. 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. Notwithstanding anything to the contrary
         contained in this Credit Agreement or any of the other Credit
         Documents, all Existing Letters of Credit shall for all purposes
         constitute and be deemed and construed to be Letters of Credit issued
         under this Credit Agreement and each of the Borrowers hereby expressly
         assumes all Letter of Credit Obligations in respect thereof.

                  (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 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

                                       26
<PAGE>   33

         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 3.

         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 $10,000,000, 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 (x) 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), and (y) in the
case of trade Letters of Credit, on or before the date which occurs 120 days
after the date of issuance thereof.

         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 3. 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. 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. With regard to trade
         Letters of Credit, the Issuing Bank shall, on the first Business Day of
         each week, provide the Agent with a report, by facsimile transmission,
         of the daily aggregate outstanding trade Letters of

                                       27
<PAGE>   34

         Credit during the previous week. Upon receipt of such report, the Agent
         shall provide the LC Participants with the contents of such report.
         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
         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 (New York 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

                                       28
<PAGE>   35

         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;

                           (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);

                                       29
<PAGE>   36

                           (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
         Prime Lending Rate in effect from time to time PLUS one and one-half
         percent (1.50%); 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 Prime Lending
         Rate in effect from time to time PLUS one and one-half percent (1.50%)
         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 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).

                                       30
<PAGE>   37

         3.6 INCREASED COSTS.

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

                     ARTICLE 4. COMPENSATION, REPAYMENT AND
                            REDUCTION OF COMMITMENTS.

         4.1 INTEREST ON REVOLVING LOANS.

                  (a) Interest on the unpaid principal amount of the Revolving
         Loans which are Prime 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 Prime Lending Rate.

                                       31
<PAGE>   38

                  (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 Prime
         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 LIBOR
         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 Board of Governors of
         the Federal Reserve System 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 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 three-eighths of
one percent (0.375%) per annum of the unused portion of the Line of Credit (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.

                                       32
<PAGE>   39

         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 LIBOR Margin in effect from time to
         time of the Stated Amount of Letters of Credit outstanding during the
         immediately preceding month. In addition, the Agent shall be entitled
         to charge to the account of the Funds Administrator on the first
         Business Day of each month, for the account of the Agent, a fee (the
         "L/C FACING FEE") in an amount equal to one-half percent (0.5%) per
         annum (or a minimum of US$500.00 per year per Letter of Credit) of 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 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, LC Facing 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 COLLATERAL MONITORING FEE.

         On July 1, 2001 and the first day of each calendar month ending
thereafter, the Borrowers shall pay to the Agent, for its own account, a
non-refundable monthly collateral monitoring fee (the "COLLATERAL MONITORING
FEE") in the amount of $15,000.

         4.6 ADDITIONAL FEES.

                  (a) The Borrowers shall pay to the Agent on the Closing Date
         for the ratable benefit of the Lenders a non-refundable closing fee
         (the "CLOSING FEE") in the amount of $1,000,000.

                                       33
<PAGE>   40

                  (b) FACILITY FEE. The Borrowers shall pay to the Agent for the
         ratable benefit of the Lenders a non-refundable facility fee (the
         "FACILITY FEE") in the amount of $2,000,000. The Facility Fee shall be
         fully earned and payable on the first anniversary of the Closing Date;
         provided that no Facility Fee shall be payable by the Borrowers on such
         date if:

                           (i) EBITDA, as determined as of the last day of the
                  month ending immediately prior to the first anniversary of the
                  Closing Date (the "FACILITY FEE TEST DATE") for the
                  twelve-month period ending on such date, is at least
                  $45,000,000;

                           (ii) the ratio of Indebtedness of the Consolidated
                  Entity as of the Facility Fee Test Date, to EBITDA, for the
                  twelve-month period ending on such date, is no greater than
                  4.75 to 1.00; and

                           (iii) Excess Availability, as determined as of the
                  Facility Fee Test Date, is greater than $25,000,000.

         4.7 EXPENSES.

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

         4.8 MANDATORY PAYMENT OF REVOLVING LOANS; REDUCTIONS OF COMMITMENTS.

                  (a) Except during the period described in SECTION 2.2(b)(ii),
         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 Line of Credit 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

                                       34
<PAGE>   41

received in the BT 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. 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.

         Until instructed otherwise by the Agent, each Borrower shall be
entitled to receive Collections directly from account debtors in accordance with
its historical practices. On or prior to the Closing Date, each Borrower, the
Agent and financial institutions selected by such Borrower and reasonably
acceptable to the Agent (the "COLLECTION BANKS") shall enter into agreements in
form and substance satisfactory to Agent (the "DEPOSITARY ACCOUNT AGREEMENTS"),
which among other things shall provide for the opening of an account for the
deposit of Collections (a "COLLECTION ACCOUNT") at a Collection Bank. 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. Upon the terms and subject to the conditions set forth in the
Depositary Account Agreements, all available amounts held in each Collection
Account shall be wired each Business Day into an account (the "BT ACCOUNT")
maintained by the Agent at BTCo. Amounts received in the BT 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

                                       35
<PAGE>   42

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, or, if such computation would
cause the interest and Fees chargeable hereunder to exceed the Highest Lawful
Rate, 365/366 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

                  (a) CONTINUATION. With respect to any Borrowing consisting of
         LIBOR Rate Loans, the Borrowers may, subject to the provisions of
         SECTION 4.14(c), 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 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(a). 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(a), such
         Revolving Loans will automatically, on the last day of the then
         existing Interest Period therefor, convert into Prime Rate Loans. The
         Agent shall give each Lender prompt notice by telephone or facsimile
         transmission of each Notice of Continuation.

                  (b) 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(c), 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 Prime 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 Prime Rate Loans into
         LIBOR Rate Loans, the Borrowers shall pay

                                       36
<PAGE>   43

         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 Prime 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.

                  (c) 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:

                           (i) 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 Prime Rate Loan.

                           (ii) If the Majority 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
                  Prime Rate Loan.

                           (iii) 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

                                       37
<PAGE>   44

                  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 Prime
                  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 Prime Rate
                  Loan.

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

                           (v) no more than five (5) Interest Periods with
                  respect to LIBOR Rate Loans may be in effect at any time.

                           (vi) 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.

                  (d) COMPENSATION.

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

                           (ii) 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.

                                       38
<PAGE>   45

                           (iii) Calculation of all amounts payable to a Lender
                  under this SECTION 4.14(d) shall be made as though such Lender
                  elected to fund all LIBOR Rate Loans by purchasing United
                  State dollar deposits in its LIBOR Lending Office's interbank
                  eurodollar market.

         4.15 INDEMNIFICATION IN CERTAIN EVENTS.

                  (a) 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, Deutsche
         Bank, AG 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 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(a), 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,

                                       39
<PAGE>   46

         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.

                  (b) 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 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 on 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.

                        ARTICLE 5. 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:

                  (a) 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").

                                       40
<PAGE>   47

                  (b) FEES AND EXPENSES. All Fees and Expenses payable by the
         Borrowers hereunder on or before the Closing Date shall have been paid
         in full.

                  (c) POST-PETITION OBLIGATIONS; EXISTING LETTERS OF CREDIT. (i)
         All Post-Petition Obligations (other than such Obligations in respect
         of Existing Letters of Credit) shall have been (or concurrently with
         the initial advance under this Credit Agreement shall be) repaid and
         the commitments thereunder shall have been terminated, and (ii) all
         Post-Petition Obligations in respect of Existing Letters of Credit
         shall have been assumed by the Borrowers hereunder.

                  (d) EFFECTIVENESS OF BORROWERS' REORGANIZATION PLAN. The
         Bankruptcy Court shall have entered the Confirmation Order confirming
         the Reorganization Plan and authorizing the Borrowers to enter into and
         consummate the transactions contemplated by the Reorganization Plan,
         including, without limitation, execution and delivery of this Credit
         Agreement and each of the other Credit Documents.

                  (e) CONFIRMATION ORDER. The Confirmation Order shall not have
         been stayed, reversed, vacated or materially modified without the
         Agent's written consent.

                  (f) 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, and the other transactions contemplated by the
         Reorganization Plan shall have been obtained and shall be in full force
         and effect.

                  (g) EXCESS AVAILABILITY. Excess Availability shall be no less
         than $7,500,000, after giving effect to payment of all amounts due and
         payable by the respective Borrowers on the Closing Date pursuant to the
         Confirmation Order and the Reorganization Plan.

                  (h) OTHER DOCUMENTS. Borrowers shall have delivered or caused
         to be delivered to the Agent, in each case in form and substance
         satisfactory to Agent, (i) all information required pursuant to SECTION
         7.2 and (ii) such other business and/or financial and data and other
         information as the Agent shall reasonably request.

                  (i) OFFICER'S CERTIFICATE. The Agent shall have received a
         certificate dated the Closing Date signed on behalf of the Funds
         Administrator and each of the Borrowers by a Responsible Officer of the
         Funds Administrator stating that all of the conditions set forth in
         SECTIONS 5.2(a) and (b) have been satisfied on and as of such date.

         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

                                       41
<PAGE>   48

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 6. 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 Borrowers hereby represents and warrants to the
Agent and the Lenders that the representations and warranties contained in this
ARTICLE 6 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.

                                       42
<PAGE>   49

         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, except as contemplated herein and as contemplated by Section 4.12 of the
Junior Secured Note Indenture, 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.

         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.

                                       43
<PAGE>   50

         6.8 RIGHTS IN COLLATERAL PRIORITY OF LIENS.

         All property constituting Collateral 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. Upon the proper filing of the UCC financing
and termination statements, in each case listed in the Closing Document List,
the security interests granted pursuant to the Credit Documents constitute 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 such
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, 2000, (ii) unaudited Financial Statements as of March 31,
         2001 and (iii) unaudited Financial Statements as of April 30, 2001. 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
         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.

                                       44
<PAGE>   51

         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, (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 or (iii) the Cases.

         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, except for any such defaults that will be cured
upon payment of the respective amounts required to be paid in connection with
the assumption of any such indenture, contract, lease, agreement, instrument or
commitment pursuant to Section 7.3 of the Reorganization Plan. 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 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.

                                       45
<PAGE>   52

         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.

                                       46
<PAGE>   53

         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 and
except for any such defaults that will

                                       47
<PAGE>   54

be cured upon payment of the respective amounts required to be paid in
connection with the assumption of any such Material Contract pursuant to Section
7.3 of the Reorganization Plan) 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 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 April 30, 2001, no event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect.

         6.24 BANKRUPTCY MATTERS.

                  (a) The Confirmation Order is a "Final Order" (as such term is
         defined in the Reorganization Plan);

                  (b) no motion, request or application seeking relief from or
         revocation of the Confirmation Order has been filed under Rule 59 or 60
         of the Federal Rules of Civil Procedure, or any analogous Federal Rule
         of Bankruptcy Procedure, or under 11 U.S.C. ss.1144; and

                  (c) but for the occurrence of the initial Revolving Loans, all
         conditions precedent to the occurrence of the "Effective Date" (as such
         term is defined in the Reorganization Plan) have occurred or have been
         waived in accordance with the terms and provisions of the
         Reorganization Plan.

                       ARTICLE 7. 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:

                  (a) 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

                                       48
<PAGE>   55

         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.

                  (B) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
         later than 90 days after each fiscal year end (or, in the case of such
         Financial Statements for the fiscal year ended March 31, 2001, 120 days
         after such 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 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 8.

                  (c) MONTHLY AND ANNUAL PROJECTIONS. Not later than 30 days
         prior to each fiscal year end, beginning with the fiscal year ended
         March 31, 2002, 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
         consolidating balance sheets, statements of operations, statements of
         cash flows and statements of changes in shareholders' equity.

                  (d) 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 8.

                  (e) 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): (A) 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; (B) a comparison to the
         balance sheet, statement of operations and statement of cash flows for
         the same periods in the prior

                                       49
<PAGE>   56

         year; (C) 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 (D) 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 8.

                  (f) 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(C).

                  (g) 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:

                  (a) WEEKLY AND MONTHLY BORROWING BASE CERTIFICATES. Weekly,
         before 12:00 noon on the third Business Day of each week (except the
         last week of each month), 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, 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 such officer 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.

                  (b) APPRAISALS. When requested by the Agent, (i) so long as an
         Event of Default shall not 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.

                                       50
<PAGE>   57

                  (c) 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:

                  (a) 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.

                  (b) 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.

                  (c) 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 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.

                  (d) 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.

                                       51
<PAGE>   58

                  (e) 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.

                  (f) 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.

         7.4 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, (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, PROVIDED, that the

                                       52
<PAGE>   59

         Agent acknowledges that the insurance coverage maintained by the
         Borrowers and disclosed in writing to the Agent, in each case on or
         prior to the Closing Date, satisfies the foregoing requirements. 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.

         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.

                                       53
<PAGE>   60

         7.9 USE OF PROCEEDS.

         The initial Loans made to the Borrowers hereunder shall be used by the
Borrowers to (a) repay in full all Post-Petition Obligations outstanding on the
Closing Date, (b) pay other allowed administrative expenses and claims in
accordance with the Reorganization Plan and (c) 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 4
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, 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 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.

                                       54
<PAGE>   61

         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 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 BT Account
in the identical form in which such payment was made, whether by cash or check.

                         ARTICLE 8. 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.

                  (a) LEVERAGE RATIO. The Borrower shall not permit the Leverage
         Ratio, as determined as of each date set forth below, for the twelve
         (12) month period ending on such date, to be greater than the ratio set
         forth below opposite such date:

                          DATE                        MINIMUM RATIO
                          ----                        -------------
                          03/31/02                    5.30 to 1.00
                          06/30/02                    5.25 to 1.00
                          09/30/02                    4.90 to 1.00

                                       55
<PAGE>   62

                        12/31/02                                   4.65 to 1.00
                        03/31/03 and the last day of each fiscal
                        quarter of the Consolidated Entity
                        ending thereafter                          4.25 to 1.00

                  (b) MINIMUM INTEREST COVERAGE RATIO. (i) The Borrowers shall
         not permit the Interest Coverage Ratio to be less than 1.70 to 1.00, as
         determined as of: (A) June 30, 2001, for the three (3) month period
         ending as of such date; (B) September 30, 2001 , for the six (6) month
         period ending as of such date; and (C) December 31, 2001 for the nine
         (9) month period ending as of such date; and (ii) the Borrowers shall
         not permit the Interest Coverage Ratio, as determined as of each date
         set forth below, for the twelve (12) month period ending on such date,
         to be less than the ratio set forth below opposite such date:

                   DATE                                  MINIMUM RATIO
                   ----                                  -------------
                   03/31/02                              1.85 to 1.00
                   06/30/02                              1.90 to 1.00
                   09/30/02                              2.00 to 1.00
                   12/31/02 and the last day of each
                   fiscal quarter of the Consolidated
                   Entity ending thereafter              2.10 to 1.00

         8.2 CAPITAL EXPENDITURES.

         The Borrowers shall not permit Capital Expenditures for the
Consolidated Entity to exceed $16,000,000 during any fiscal year of the
Consolidated Entity.

         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 Interest Rate Agreements, 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;

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<PAGE>   63

                  (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 evidenced by the Junior Secured Notes (and
         guaranties thereof by Subsidiaries of MTLM) in an aggregate original
         principal amount not exceeding $34,000,000;

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

                  (h) Indebtedness consisting of obligations under capital
         leases entered into after the Closing Date in an outstanding principal
         amount not exceeding at any time $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; and

                  (k) Indebtedness of the Consolidated Entity in respect of
         Critical Vendor Claims and General Trade Claims (each as defined in the
         Reorganization Plan), to the extent permitted by the Reorganization
         Plan.

         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 granted to the Agent and Liens granted pursuant to
         the Junior Secured Note Documents in favor of the trustee under the
         Junior Secured Note Indenture, to the extent such Liens secure
         Indebtedness permitted pursuant to SECTION 8.3(f);

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

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<PAGE>   64

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

                  (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;

                  (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) Liens, defects and other matters specifically disclosed on
         the title insurance policies previously delivered to and accepted by
         the Agent in connection with the owned real properties of the
         respective Borrowers subjected to a mortgage Lien in favor of the Agent
         on the Closing Date;

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

                  (l) 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; 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.

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         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; (e) real property, to the extent the
disposition thereof has been expressly approved prior to the Closing Date
pursuant to an order of the Bankruptcy Court; and (f) 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 (f) above, (i) such dispositions are for fair value, (ii) 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 $2,500,000
in the aggregate for any fiscal year of the Consolidated Entity.

         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; (b) make any optional payment of principal of, or any optional
prepayment of principal of, or redemption (including, without limitation, by
making payments to a sinking or analogous fund) or repurchase of, Indebtedness
evidenced by any Junior Secured Note; or (c) 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; and

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<PAGE>   66

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

         8.8 INVESTMENTS.

         No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, 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) 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);

                  (b) Loans, investments and advances between a Borrower and any
         other Borrower;

                  (c) Cash Equivalents;

                  (d) 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;

                  (e) 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;

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

                  (g) 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.

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         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 $1,000,000, 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
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, (b) the Junior Secured Note Indenture and the other Junior
Secured Note Documents and (c) 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 JUNIOR SECURED NOTES.

                  (a) NO CHANGE. MTLM shall not amend or otherwise change in any
         material respect any of the respective terms of any of the Junior
         Secured Note Documents.

                  (b) NOTICES. MTLM shall deliver to Agent (i) a copy of each
         notice or other communication delivered by or on behalf of such
         Borrower to the trustee under the Junior Secured Note Documents, such
         delivery to be made at the same time and by the same means as such
         notice or other communication is delivered to such trustee, and (ii) a
         copy of each notice or other communication received by MTLM from such
         trustee, such delivery to be made promptly after such notice or other
         communication is received by such Borrower.

                   ARTICLE 9. 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:

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<PAGE>   68

                  (a) 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.

                  (b) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail to
         comply with any covenant contained in ARTICLE 7 (other than SECTION
         7.4(i), 7.8, 7.9, 7.12, 7.13 and 7.14) or ARTICLE 8.

                  (c) 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.

                  (d) 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(b), and
         such failure shall continue for 10 days after the Funds Administrator
         receives notice of such failure from Agent.

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

                  (f) INSOLVENCY EVENT. Any Credit Party shall become the
         subject of an Insolvency Event.

                  (g) CHANGE OF CONTROL. A Change of Control shall occur.

                  (h) CROSS DEFAULT. (i) An "Event of Default" (as such term is
         defined in the Junior Secured Note Indenture) shall occur (and continue
         beyond any applicable grace period); or (ii) 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.

                  (i) 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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<PAGE>   69

         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:

                  (a) ACCELERATION. Upon the written request of the Majority
         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(f), in which case all Obligations shall automatically become
         immediately due and payable without the necessity of any request of the
         Majority 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.

                  (b) TERMINATION OF COMMITMENTS. Upon the written request of
         the Majority 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(f)), in which case all of the
         Commitments shall automatically and immediately terminate without the
         necessity of any request of the Majority 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.

                  (c) CASH COLLATERALIZATION. On demand of the Agent or the
         Majority 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 RECISSION 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 Majority 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(c). (This
Section is intended only to bind all of the Lenders to a decision of the
Majority Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Majority 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 Majority Lenders, the Agent
may exercise any rights and remedies available to it under applicable law
(including under the Code) and under the Collateral

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<PAGE>   70

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.

         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 10. THE AGENT.

         10.1 APPOINTMENT OF AGENT.

                  (a) Each Lender hereby designates BTCo 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.

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<PAGE>   71

         The Agent may perform any of its duties hereunder by or through its
         agents or employees.

                  (b) Other than rights of the Credit Parties under SECTION
         10.9, the provisions of this ARTICLE 10 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.

         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.

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         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 9 hereof without
the consent of any of the Lenders unless otherwise directed by the Majority
Lenders in writing and will, at the direction of the Majority Lenders, give any
such notice required under ARTICLE 9.

         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 Notes 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," "Lenders,"
"Majority 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,

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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 5 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 Majority 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 Majority 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 10 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

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         Majority Lenders in accordance with the provisions of this Credit
         Agreement and the other Credit Documents, and the exercise by the
         Majority 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 Majority 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 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. The Agent agrees to conduct
         or cause to be conducted at least one audit of the Collateral during
         each year that this Credit Agreement shall remain in effect.

         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 Majority
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.

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         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.

                           ARTICLE 11. MISCELLANEOUS.

         11.1 GOVERNING LAW.

         THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
AND EACH OF THE REVOLVING NOTES SHALL, PURUSANT TO NEW YORK GENERAL OBLIGATIONS
LAW SECTION 5-1401, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK.

         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 NEW YORK, NEW YORK, 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

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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 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.

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         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 Bankers Trust Company, 233 South
Wacker Drive, Chicago, Illinois 60606, Attention: Credit Department, if to the
Funds Administrator or any other Credit Party, then to Metal Management, Inc.,
500 North Dearborn Street, Chicago, Illinois 60610, Attention: Robert C. Larry,
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) 993-8096 and if to the Funds Administrator or any other Credit Party at
(312) 645-0714. 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.

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

             (b) 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 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 $10,000,000 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.)

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             (c) 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.

             (d) 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 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
         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

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         such party should have access to such information, (ii) as has become
         generally available to the public, (iii) as may be required in any
         report, statement or testimony submitted to any Governmental Authority
         having or claiming to have jurisdiction over such Lender, (iv) as may
         be required in response to any summons or subpoena or in connection
         with any litigation, (v) in order to comply with any Requirement of
         Law, and (vi) 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.

         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 litigations, 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

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         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 Majority 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 (c) OR (d) of the definition of
         the term Borrowing Base, (ii) increase the Fixed Asset Sublimit or
         Supplemental Availability Sublimit, respectively, or (iii) amend or
         waive this SECTION 11.11(a);

             (b) the consent of all the Lenders is required to (i) 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 Majority Lenders to take any action hereunder, (v)
         amend or waive this SECTION 11.11(b), or change the definition of
         Majority 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 any 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.

         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 10 (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. 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 Majority Lenders.

         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

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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 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.

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         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) 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

                                       76
<PAGE>   83
         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

                      (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.

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

                                       77
<PAGE>   84

         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 in its
                                            individual capacity as a Borrower

                                            By:     /s/ Robert C. Larry
                                               ---------------------------------
                                            Name:     Robert C. Larry
                                                 -------------------------------
                                            Title:  Chief Financial Officer
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   85

                                      BORROWERS:

                                      CALIFORNIA METALS RECYCLING, INC.
                                      CIM TRUCKING, INC.
                                      FIRMA, INC.
                                      FIRMA PLASTIC CO., INC.
                                      MAC LEOD 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 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.
                                      METALS.COM, INC.
                                      PROLER SOUTHWEST INC.
                                      TROJAN TRADING CO.

                                      By:     /s/ Robert C. Larry
                                         ---------------------------------------
                                      Name:     Robert C. Larry
                                           -------------------------------------
                                      Title:  Chief Financial Officer
                                            ------------------------------------

Post-Confirmation Credit Agreement
<PAGE>   86

                                            RESERVE IRON & METAL LIMITED
                                            PARTNERSHIP

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

                                            By:     /s/ Robert C. Larry
                                               ---------------------------------
                                            Name:     Robert C. Larry
                                                 -------------------------------
                                            Title:  Chief Financial Officer
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   87

                                            AGENT:

                                            BANKERS TRUST COMPANY,
                                            as Agent

                                            By:   /s/ Frank Fazio
                                                --------------------------------
                                            Name:   Frank Fazio
                                                 -------------------------------
                                            Title:  Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   88

                                            LENDERS:

                                            BANKERS TRUST COMPANY

                                            By:   /s/ Frank Fazio
                                                --------------------------------
                                            Name:   Frank Fazio
                                                 -------------------------------
                                            Title:  Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   89

                                            CONGRESS FINANCIAL CORP. (CENTRAL)

                                            By:    /s/ Gerald Wordell
                                               ---------------------------------
                                            Name:    Gerald Wordell
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement

<PAGE>   90

                                            FINOVA CAPITAL CORPORATION

                                            By:   /s/ Bruce Mettel
                                               ---------------------------------
                                            Name:    Bruce Mettel
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   91

                                            FLEET CAPITAL CORPORATION

                                            By:   /s/ Lee LaBine
                                               ---------------------------------
                                            Name:   Lee LaBine
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   92
                                            HELLER FINANCIAL, INC.

                                            By:   /s/ Alfred Scoyni
                                               ---------------------------------
                                            Name:   Alfred Scoyni
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   93

                                            LASALLE BANK NATIONAL ASSOCIATION

                                            By:     /s/ John Mostofi
                                               ---------------------------------
                                            Name:    John Mostofi
                                                 -------------------------------
                                            Title:    Senior Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   94

                                            PNC BUSINESS CREDIT CORPORATION

                                            By:  /s/ James Steffy
                                               ---------------------------------
                                            Name:   James Steffy
                                                 -------------------------------
                                            Title:   Vice President
                                                 -------------------------------

Post-Confirmation Credit Agreement
<PAGE>   95

                                            IBJ WHITEHALL BUSINESS CREDIT
                                            CORPORATION

                                            By:   /s/ Edward Jesser
                                               ---------------------------------
                                            Name:    Edward Jesser
                                                 -------------------------------
                                            Title:    Senior Vice President
                                                 -------------------------------

Post-Confirmation Credit Agreement
<PAGE>   96
                                            NATIONAL BANK OF CANADA

                                            By:   /s/ Thomas W. Buda Jr.
                                               ---------------------------------
                                            Name:   Thomas W. Buda Jr.
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

                                            By:   /s/ Andrew Kosowsky
                                               ---------------------------------
                                            Name:   Andrew Kosowsky
                                                 -------------------------------
                                            Title:   Assistant Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   97
                                            FIRSTAR BANK N.A.

                                            By:   /s/ Susan Schubert
                                               ---------------------------------
                                            Name:  Susan Schubert
                                                  ------------------------------
                                            Title:    Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   98

                                            GUARANTY BUSINESS CORP.,
                                            d/b/a FIDELITY FUNDING

                                            By:  /s/ Harold J. Kesller
                                               ---------------------------------
                                            Name:  Harold J. Kessler
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

Post-Confirmation Credit Agreement
<PAGE>   99
                                     ANNEX I
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 29, 2001

                           LIST OF LENDERS; COMMITMENT
                       AMOUNTS; APPLICABLE LENDING OFFICES

1.       BANKERS TRUST COMPANY
         130 Liberty Street
         New York, NY 10006

         COMMITMENT AMOUNT:                            $19,002,000.00

2.       FLEET CAPITAL CORPORATION
         One South Wacker Drive
         Suite 1400
         Chicago, Illinois 60606

         COMMITMENT AMOUNT:                            $18,999,000.00

3.       LASALLE BANK NATIONAL
         ASSOCIATION
         135 South LaSalle Street
         Suite 305 SE
         Chicago, IL 60603

         COMMITMENT AMOUNT:                            $18,999,000.00

4.       CONGRESS FINANCIAL CORP.
         (CENTRAL)
         150 South Wacker Drive
         Suite 2200
         Chicago, IL 60606-4401

         COMMITMENT AMOUNT:                            $18,000,000.00

5.       HELLER FINANCIAL, INC.
         622 Third Avenue
         New York, NY 10017

         COMMITMENT AMOUNT:                            $15,000,000.00

<PAGE>   100

6.       FINOVA CAPITAL CORPORATION
         311 Wacker Drive
         Suite 4400
         Chicago, IL 60606-6618

         COMMITMENT AMOUNT:                            $12,000,000.00

7.       FIRSTAR BANK N.A.
         777 East Wisconsin Avenue
         Milwaukee, WI 53202

         COMMITMENT AMOUNT:                            $12,000,000.00

8.       PNC BUSINESS CREDIT CORPORATION
         Two PNC Plaza, 18th Floor
         620 Liberty Avenue
         Pittsburgh, PA 15222

         COMMITMENT AMOUNT:                            $12,000,000.00

9.       IBJ WHITEHALL BUSINESS CREDIT
         CORPORATION
         One State Street, 6th Floor
         New York, NY 10004

         COMMITMENT AMOUNT:                            $9,000,000.00

10.      NATIONAL BANK OF CANADA
         225 West Washington Street
         Suite 1100
         Chicago, IL  60606

         COMMITMENT AMOUNT:                            $9,000,000.00

11.      GUARANTY BUSINESS CREDIT CORP.
         8333 Douglas Avenue
         Suite 530
         Dallas, TX  75225

         COMMITMENT AMOUNT:                            $6,000,000.00

<PAGE>   101

                                   SCHEDULE A
                                       TO
                                CREDIT AGREEMENT
                            DATED AS OF JUNE 29, 2001

                              CLOSING DOCUMENT LIST

                                    Attached<PAGE>   1
                                                                    EXHIBIT 10.2

                             INTERCREDITOR AGREEMENT

         THIS INTERCREDITOR AGREEMENT (this "AGREEMENT") is entered into by and
between Agent and Trustee.

                                   BACKGROUND

         A. Metal Management, Inc., a Delaware corporation ("MTLM"), and its
wholly-owned subsidiaries set forth on SCHEDULE 1 attached hereto and by this
reference made a part hereof (MTLM and such subsidiaries are sometimes
hereinafter referred to, individually, as a "CREDIT PARTY" and, collectively, as
"CREDIT PARTIES") are jointly and severally indebted to Senior Lenders pursuant
to the Senior Credit Documents. All Senior Indebtedness is secured by a first
priority continuing Lien on all Senior Lender Collateral.

         B. The Credit Parties are indebted to the Noteholders pursuant to the
Note Documents. All Note Indebtedness is secured by a second priority continuing
Lien on all Senior Lender Collateral to the extent and at such times as shall be
required pursuant to the Note Documents.

         C. Agent and Trustee have entered into this Agreement to set forth,
among other things, the relative priority of their respective Liens on the
Senior Lender Collateral and Note Collateral.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are each hereby acknowledged, Agent and Trustee hereby
agree as follows:

         SECTION 1. CERTAIN DEFINITIONS. The following terms shall have the
following meanings for purposes of this Agreement (including the premises and
background recitals hereto):

                  "AGENT" means Bankers Trust Company, a New York banking
         corporation, acting in its capacity as Agent for the benefit of itself
         and each Senior Lender under the Senior Credit Agreement, together with
         its successors in such capacity.

                  "BANKRUPTCY CODE" means Chapter 11 of Title 11 of the United
         States Code (11 U.S.C. ss. 101 et seq.), as amended from time to time,
         and any successor statute, and all rules and regulations promulgated
         thereunder.

                  "INDEBTEDNESS" means, with respect to any Person, any
         indebtedness, whether or not contingent, in respect of borrowed money
         or evidenced by bonds, notes, debentures or similar instruments or
         letters of credit (or reimbursement agreements in respect thereof) or
         representing the deferred and unpaid balance of the purchase price of
         any Property (including any deferred and unpaid balance under a capital
         lease), except any such balance that constitutes an accrued expense or
         a trade payable, if and to the extent any of the foregoing indebtedness
         would appear as a liability upon a balance sheet of

                                       1
<PAGE>   2

         such Person prepared on a consolidated basis in accordance with
         generally accepted accounting principles in effect from time to time,
         and shall also include, to the extent not otherwise included, any
         direct or indirect guaranty by such Person of any items included
         within this definition.

                  "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.

                  "NOTE COLLATERAL" means all Senior Lender Collateral with
         respect to which the Trustee (for its benefit and the benefit of the
         Noteholders) has been granted a Lien pursuant to the provisions of the
         applicable Note Documents to the extent and at such times as may be
         required pursuant to the Note Documents.

                  "NOTE DOCUMENTS" means and includes the Note Indenture, the
         Notes and all security agreements, guarantees, pledge agreements,
         mortgages, deeds of trust and other agreements, documents and
         instruments now or at any time hereafter entered into or delivered by
         any Credit Party or other Person pursuant thereto, or evidencing any
         replacement, substitution, refunding, renewal or refinancing of or for
         all or any part of, the Note Indebtedness, in each case as amended,
         restated, supplemented or otherwise modified and in effect from time to
         time, to the extent permitted pursuant to the terms hereof.

                  "NOTE INDEBTEDNESS" means all Indebtedness, liabilities and
         other obligations of any and every kind and nature now existing or
         hereafter arising, contingent or otherwise, of any Credit Party or any
         other Person under, in connection with, or evidenced or secured by the
         Note Indenture and the other Note Documents, in each case including,
         without limitation, obligations to pay (I) principal, (II) interest or
         premium (including interest accruing after the commencement of any
         Proceeding, whether or not constituting an allowed claim in such
         Proceeding), (III) fees, (IV) costs, expenses and other amounts related
         to any indemnity against loss, damage or liability, and (V) any other
         monetary obligation.

                  "NOTE INDENTURE" means that certain Amendment and Restated
         Indenture date as of June 29, 2001, among Credit Parties and Trustee.

                  "NOTEHOLDER" has the meaning ascribed to the term "Holder" (as
         defined in the Note Indenture).

                  "NOTES" has the meaning ascribed to the term "Notes" (as
         defined in the Note Indenture).

                  "PERSON" means any natural person, corporation, general or
         limited partnership, limited liability company, firm, trust,
         association, government, governmental agency or other entity, whether
         acting in an individual, fiduciary or other capacity.

                                       2
<PAGE>   3

                  "PROCEEDING" means, with respect to any Person, any (a)
         insolvency, bankruptcy, receivership, liquidation, reorganization,
         readjustment, composition or other similar proceeding relating to such
         Person or its Property or creditors in such capacity, (b) proceeding
         for any liquidation, dissolution or other winding-up of such Person,
         voluntary or involuntary, whether or not involving insolvency or
         proceedings under the Bankruptcy Code, whether partial or complete and
         whether by operation of law or otherwise, (c) assignment for the
         benefit of creditors of such Person or (d) other marshaling of the
         assets of such Person.

                  "PROPERTY" means, with respect to any Person, all property and
         interests in property of such Person, whether real, personal or mixed,
         whether now owned or existing or hereafter acquired or arising and
         wheresoever located.

                  "SENIOR COMMITMENT" has the meaning ascribed to the term
         "Commitment" (as defined in the Senior Credit Agreement).

                  "SENIOR CREDIT AGREEMENT" means that certain Credit Agreement
         dated as of June 29, 2001, among Credit Parties, Agent and Senior
         Lenders.

                  "SENIOR CREDIT DOCUMENTS" means and includes the Senior Credit
         Agreement, all notes issued thereunder or in connection therewith and
         all security agreements, guaranties, pledge agreements, mortgages,
         deeds of trust and other agreements, documents and instruments now or
         at any time hereafter entered into or delivered by any Credit Party or
         other Person pursuant thereto, or evidencing any replacement,
         substitution, refunding, renewal or refinancing of or for all or any
         part of, the Senior Indebtedness, in each case as amended, restated,
         supplemented or otherwise modified and in effect from time to time, to
         the extent permitted pursuant to the terms hereof.

                  "SENIOR ENFORCEMENT ACTION" means any of the following: (a)
         acceleration by Senior Lenders of all or any part of the Senior
         Indebtedness; (b) commencement of any Proceeding with respect to any
         Credit Party; (c) initiation of any suit or action, including any
         Proceeding, against or with respect to any Credit Party or other Person
         to enforce payment of or to collect the whole or any part of the Senior
         Indebtedness, or to enforce any other rights, powers, privileges or
         remedies under the Senior Credit Documents; or (d) the taking by Agent
         of any action under the provisions of any state or federal law,
         including, without limitation, the Bankruptcy Code or the Uniform
         Commercial Code, to enforce, foreclose upon, take possession of or sell
         any Property of any Credit Party or any other Person on account of all
         or any part of the Senior Indebtedness, including, any Senior Lender
         Collateral.

                  "SENIOR INDEBTEDNESS" means all Indebtedness, liabilities and
         other obligations of any and every kind and nature now existing or
         hereafter arising, contingent or otherwise, of any Credit Party or any
         other Person under, in connection with, or evidenced or secured by the
         Senior Credit Agreement and the other Senior Credit Documents, in each
         case including, without limitation, obligations to pay (i) principal,

                                       3
<PAGE>   4

         (ii) interest or premium (including interest accruing after the
         commencement of any Proceeding, whether or not constituting an allowed
         claim in such Proceeding), (iii) fees, (iv) costs, expenses and other
         amounts related to any indemnity against loss, damage or liability, and
         (v) any other monetary obligation.

                  "SENIOR LENDER" has the meaning ascribed to the term "Lender"
         (as defined in the Senior Credit Agreement).

                  "SENIOR LENDER COLLATERAL" means all of each Credit Party's
         Property, whether now owned or existing or hereafter acquired or
         arising and wheresoever located, including, without limitation, (i) all
         of each Credit Party's accounts, machinery, equipment, fixtures,
         inventory, goods, chattel paper, general intangibles, investment
         property, instruments and documents, (ii) all real property and
         interests in real property (including leasehold interests) of each
         Credit Party, and (iii) all accessions to, substitutions for and
         replacements, products and proceeds of all of the foregoing Property.

                  "TRUSTEE" means BNY Midwest Trust Company, an Illinois banking
         corporation, acting in its capacity as Trustee for its benefit and for
         the benefit of the Noteholders under the Note Indenture and the other
         Note Documents, together with its successors in such capacity.

                  "UCC" means the Uniform Commercial Code, as in effect from
         time to time in any applicable jurisdiction.

         All terms used but not otherwise defined herein but defined in the UCC
shall have the respective meanings provided in the UCC.

         SECTION 2. LIEN PRIORITIES.

         2.1 ACKNOWLEDGMENT OF LIENS; SUBORDINATION.

         (a) Trustee hereby acknowledges that Agent has been granted Liens upon
all of the Senior Lender Collateral pursuant to the Senior Credit Documents.
Agent hereby acknowledges that the Trustee has been granted Liens upon all of
the Note Collateral pursuant to the Note Documents.

         (b) Notwithstanding the date, manner or order of grant, attachment or
perfection of the Liens on all or any part of the Senior Lender Collateral
granted to Agent and Trustee, and notwithstanding the provisions of the UCC or
any other applicable law or decision, or the terms or provisions of the Senior
Credit Documents or Note Documents, respectively, or any other circumstance
whatsoever, each of Agent and Trustee hereby agrees that (i) Agent on behalf of
Agent and the Senior Lenders shall have a first, prior, senior and continuing
Lien on all of the Senior Lender Collateral to secure the prompt and complete
payment, performance and observance of all Senior Indebtedness and (ii) any Lien
on all or any part of the Senior Lender Collateral now or hereafter held by
Trustee (on its behalf or on behalf of the Noteholders),

                                       4
<PAGE>   5

regardless of when or how acquired, whether by grant, statute, operation of law,
subrogation or otherwise, shall be in all respects and for all purposes subject
to, junior to and subordinate to all Liens on all or any part of the Senior
Lender Collateral granted to or held by Agent on behalf of Agent and the Senior
Lenders.

         (c) The relative priorities of the respective Liens described in this
SECTION 2.1 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement, replacement or
refinancing of the Senior Indebtedness or Note Indebtedness, respectively, or by
any action or inaction which either Agent or Trustee may take or fail to take in
respect of the Senior Lender Collateral or Note Collateral, respectively.

         2.2 PROHIBITION ON CONTESTING LIENS. Each of Agent and Trustee agrees
not to seek to challenge, to avoid, to subordinate or to contest or directly or
indirectly to support any other Person in challenging, avoiding or contesting in
any judicial or other proceeding, including, without limitation, any Proceeding,
the priority, validity, extent, perfection or enforceability of any Lien held by
Agent or Trustee, as the case may be, in all or any part of the Senior Lender
Collateral or Note Collateral, respectively; PROVIDED, that nothing in this
SECTION 2.1 is intended or shall be deemed or construed to limit in any way the
ability of Agent or Trustee to enforce all of the terms and provisions of this
Agreement. As between Agent and Trustee, the terms of this Agreement shall
govern even if part or all of the Note Indebtedness or Senior Indebtedness, as
the case may be, or the respective Liens securing payment, observance and
performance thereof are avoided, disallowed, set aside or otherwise invalidated
in any judicial proceeding or otherwise.

         SECTION 3. ENFORCEMENT.

         3.1 NO EXERCISE OF REMEDIES. Unless and until Agent and each Senior
Lender shall have received indefeasible payment in full in cash of all Senior
Indebtedness and the Senior Credit Documents and all Senior Commitments
thereunder shall have terminated pursuant to the respective terms and provisions
thereof, except as otherwise expressly permitted in SECTIONS 3.2 and 3.3 below,
neither Trustee nor any Noteholder shall ask, demand or sue for any right or
remedy in respect of all or any part of the Senior Lender Collateral and Trustee
and each Noteholder agree not to take or receive from any Credit Party, directly
or indirectly, in cash or other Property or by set-off or in any other manner,
whether pursuant to any enforcement, collection, execution, levy or foreclosure
proceeding or otherwise, all or any part of the Senior Lender Collateral.
Without limiting the generality of the foregoing, unless and until Agent and
each Senior Lender shall have received indefeasible payment in full in cash of
all Senior Indebtedness and the Senior Credit Documents and all Senior
Commitments thereunder shall have terminated pursuant to the respective terms
and provisions thereof, (i) neither Trustee nor any Noteholder shall exercise or
otherwise assert any right or remedy in respect of all or any part of the Senior
Lender Collateral or any Liens thereon; (ii) the sole right of Trustee with
respect to the Senior Lender Collateral shall be to hold a Lien thereon to the
extent granted pursuant to the Note Documents and to receive proceeds thereof
remaining after such payment and termination; and (iii) without the prior
written consent of Agent, neither Trustee nor any Noteholder shall exercise any
right Trustee may have under the Note Documents or under the Uniform Commercial
Code or other applicable law to deliver any notices to account debtors informing

                                       5
<PAGE>   6

them of Trustee's interest in any accounts of any Credit Party or directing such
account debtors to make payments in any particular manner of amounts due in
respect of any such account.

         3.2 COOPERATION. Trustee agrees that, unless and until Agent and each
Senior Lender shall have received indefeasible payment in full in cash of all
Senior Indebtedness and the Senior Credit Documents and all Senior Commitments
thereunder shall have terminated pursuant to the respective terms and provisions
thereof, Trustee will not commence, or join with any creditor other than Agent
in commencing, any enforcement, collection, execution, levy or foreclosure
proceeding with respect to any Lien held by it in, or otherwise with respect to,
all or any part of the Senior Lender Collateral, including, without limitation,
petitioning, filing or joining in any involuntary Proceeding pursuant to Section
303 of the Bankruptcy Code.

         3.3 CERTAIN EXERCISES. The provisions of this SECTION 3 are intended to
limit the enforcement of Trustee's rights and remedies with respect to the
Senior Lender Collateral or any Lien thereon for so long and to the extent set
forth in SUBSECTIONS 3.1 and 3.2 hereof. Nothing in this SECTION 3 is intended
or shall be deemed or construed to prohibit Trustee from making any demand for
payment or any declaration of acceleration with respect to the Notes or
commencing any judicial or other action to collect (without enforcement of any
of Trustee's rights and remedies with respect to all or any part of the Senior
Lender Collateral) the Note Indebtedness under the Notes and the Note Indenture.

         SECTION 4. LIQUIDATION; DISSOLUTION; BANKRUPTCY. In the event of any
Proceeding involving any Credit Party, or any sale, transfer or other
disposition of all or substantially all of the assets of any Credit Party:

         (a) Trustee agrees that Senior Lenders may consent to the use of cash
collateral or the provision of financing by Senior Lenders to Credit Parties on
such terms and conditions and in such amounts as Senior Lenders, in their sole
discretion, may decide and that, in connection with such cash collateral usage
or such financing, as the case may be, each Credit Party (or a trustee appointed
for the estate of any Credit Party) may grant to Agent, for the benefit of Agent
and Senior Lenders, Liens on all of such Credit Party's Property, which Liens
(i) shall secure payment, performance and observance of all Senior Indebtedness
(whether such Senior Indebtedness arose prior to the commencement of any
Proceeding or at any time thereafter); and (ii) shall be superior in priority to
the Liens in favor of Trustee on any Property of any Credit Party; PROVIDED,
HOWEVER, that Trustee does not hereby waive any rights to seek adequate
protection to the extent that holders of other Liens that are subject and
subordinate to the Liens of the Senior Indebtedness are entitled to and obtain
adequate protection. Trustee agrees that it will not object to or oppose a sale
or other disposition of any Property of any Credit Party securing all or any
part of the Senior Indebtedness free and clear of Liens or other claims of
Trustee under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code if Senior Lenders have consented to such sale or disposition and
the respective interests of Agent and Trustee attach to the proceeds thereof,
subject in any event to the provisions hereof. Trustee agrees to turn over any
"adequate protection" of Trustee's interest in any Senior Lender Collateral that
it receives in any Proceeding to Agent to the extent necessary to make whole
Agent and Senior Lenders and agrees that it will not seek to have the automatic
stay lifted with respect to any Senior Lender Collateral, to appoint a Chapter
11 trustee under Section 1104 of

                                       6
<PAGE>   7

the Bankruptcy Code or to convert or dismiss such Proceeding under Section 1112
of the Bankruptcy Code, in each case without the prior written consent of Agent
or unless Agent seeks such relief. Trustee waives in any Proceeding under the
Bankruptcy Code any claim it may now or hereafter have under Section 1111(b)(2)
of the Bankruptcy Code, including, without limitation, any such claim arising
out of the election by Senior Lenders of the application of Section 1111(b)(2)
of the Bankruptcy Code, and/or any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Code by any Credit Party, as debtor in
possession.

         (b) Each of Agent and Trustee agrees not to, directly or indirectly,
take any action or vote in any way that would be in violation of, or
inconsistent with, or result in a breach of, this Agreement or challenge or
contest in any Proceeding, or in connection with any other enforcement,
collection, execution, levy or foreclosure proceeding or otherwise, (i) the
validity, perfection, extent, priority or enforceability of any Liens held by
Agent or any Senior Lender, or by Trustee or any Noteholder, as the case may be,
to secure the payment, performance or observance of all or any part of the
Senior Indebtedness or Note Indebtedness, respectively, (ii) the rights of Agent
and Senior Lenders, or Trustee and Noteholders, as the case may be, set forth in
any of the Senior Credit Documents or Note Documents, as applicable, with
respect to such Liens, or (iii) the validity or enforceability of any of the
Senior Credit Documents or Note Documents, as the case may be, or any term,
condition or provision of this Agreement; PROVIDED, that nothing in this SECTION
4(b) is intended or shall be deemed or construed to limit in any way the ability
of Agent or Trustee, as the case may be, to enforce all of the terms and
provisions of this Agreement.

         (c) Subject to the limitations set forth in this Agreement, Trustee may
file proofs of claim and other pleadings and motions with respect to the Senior
Lender Collateral in such Proceeding. If a proper proof of claim has not been
filed in the form required in such Proceeding at least thirty (30) days prior to
the expiration of the time for filing thereof, the Agent shall have the right
(but not the duty) to file an appropriate claim for and on behalf of Trustee. In
furtherance of the foregoing, Trustee hereby appoints Agent as its
attorney-in-fact, with full authority in the place and stead of Trustee and full
power of substitution and in the name of Trustee or otherwise, to execute and
deliver any document or instrument which Trustee is required to deliver pursuant
to this SECTION 4(c), such appointment being coupled with an interest and
irrevocable.

         (d) Trustee shall execute and deliver to Agent all such instruments and
other documentation confirming the above authorizations and all such proofs of
claim, assignments of claim and other instruments and documentation, and shall
take all such other action as may be reasonably requested by Agent to enforce
such claims and carry out the purpose of this SECTION 4.

         SECTION 5. INSURANCE AND CONDEMNATION. Unless and until Agent and each
Senior Lender shall have received indefeasible payment in full in cash of all
Senior Indebtedness and the Senior Credit Documents and all Senior Commitments
thereunder shall have terminated pursuant to the respective terms and provisions
thereof, (i) Trustee agrees that Agent shall have the sole and exclusive right
to adjust settlement with respect to any insurance coverage for any Senior
Lender Collateral and (ii) all proceeds of any insurance policy, and proceeds of
any

                                       7
<PAGE>   8

condemnation or similar proceeding, covering all or any part of the Senior
Lender Collateral shall be paid to Agent for application pursuant to the Senior
Credit Documents. If Senior Lenders allow any portion of any proceeds of any
insurance, condemnation or similar award with respect to any Senior Lender
Collateral to be used by any Credit Party to repair or replace the Senior Lender
Collateral affected, Trustee agrees to take promptly all action reasonably
requested by Agent to permit such use.

         SECTION 6. WHEN PROCEEDS MUST BE PAID OVER.

         (a) In the event any proceeds of Senior Lender Collateral are received
by Trustee or any Noteholder for application to the Note Indebtedness other than
as expressly permitted by the terms of this Agreement, such proceeds shall be
received by such Person in trust for the benefit of Agent and Senior Lenders and
such Person shall promptly turn over such proceeds to Agent (in the same form as
received, with any necessary non-recourse endorsement), for application (in the
case of cash) to, or as Senior Lender Collateral (in the case of non-cash
Property or securities) for, the payment or prepayment of the Senior
Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in accordance with its terms. In the event Trustee or any
Noteholder fails to provide any endorsement, as contemplated by the preceding
sentences, Agent, or any of its officers or employees, is hereby irrevocably
authorized to make the same (which authorization, being coupled with an
interest, is irrevocable).

         (b) All proceeds of Senior Lender Collateral received in connection
with any Senior Enforcement Action shall be paid to Agent for application to the
payment of Senior Indebtedness pursuant to the Senior Credit Agreement and the
other Senior Credit Documents. Upon indefeasible payment in full in cash of all
Senior Indebtedness and termination of the Senior Credit Documents and all
Senior Commitments thereunder, any remaining proceeds of Senior Lender
Collateral shall be delivered to Trustee and applied to the Note Indebtedness,
except as otherwise required pursuant to applicable law.

         SECTION 7. SUBROGATION. Trustee hereby waives all rights of subrogation
to the claims of Agent or any of the Senior Lenders against any Credit Party,
and waives all rights of recourse to any security for any Senior Indebtedness,
until such time as all Senior Indebtedness shall have been indefeasibly paid in
full in cash and the Senior Credit Documents and all Senior Commitments
thereunder shall have terminated pursuant to the respective terms and provisions
thereof; PROVIDED, that if any payment to Agent or any Senior Lender is
rescinded as a result of a Proceeding or otherwise, the subrogation of Trustee
as provided herein shall likewise be rescinded until all of the Senior
Indebtedness is indefeasibly paid in full in cash.

         SECTION 8. NO IMPAIRMENT OF SUBORDINATION. No right of Agent or any
Senior Lender to enforce the subordination of the Liens on Senior Lender
Collateral securing all or any part of the Note Indebtedness shall be impaired
by any act or failure to act by any Credit Party or by its failure to comply
with this Agreement. Without limiting the generality of the foregoing, the
rights of Agent and Senior Lenders under this Agreement shall remain in full
force and effect without regard to, and shall not be impaired by: (a) any act or
failure to act of any Credit Party, Trustee or Noteholder, or any noncompliance
by any Credit Party, Trustee or Noteholder with any agreement or obligation,
regardless of any knowledge thereof which Agent or any Senior

                                       8
<PAGE>   9

Lender may have or with which Agent or any Senior Lender may be charged, (b) the
validity or enforceability of any of the Senior Credit Documents, (c) any
extension or indulgence in respect of any payment or prepayment of the Senior
Indebtedness or any part thereof or in respect of any other amount payable to
Agent or any Senior Lender, (d) any amendment, modification or waiver of any of
the terms of the Senior Credit Documents or the Note Documents, (e) any
exercise, delayed exercise or non-exercise by Agent or any Senior Lender of any
right, power, privilege or remedy under or in respect of any Senior
Indebtedness, the Senior Lender Collateral or this Agreement, (f) any other
action of Agent or any Senior Lender permitted under the Senior Credit Documents
or this Agreement or (g) the absence of any notice to, or knowledge by, Trustee
or any Noteholder of the existence, creation or non-payment of all or any part
of the Senior Indebtedness, or the occurrence of any of the matters or events
set forth in the foregoing clauses (a) through (f), except as such notice shall
be specifically required pursuant to the terms hereof.

         SECTION 9. WAIVERS AND CONSENTS OF TRUSTEE.

         (a) All of the Senior Indebtedness shall be deemed to have been made or
incurred in reliance upon this Agreement and Trustee expressly waives (i) notice
of acceptance by Agent or any Senior Lender of this Agreement, (ii) notice of
the existence or creation or non-payment of all or any part of the Senior
Indebtedness, (iii) all diligence in collection or protection of or realization
upon all or any part of the Senior Indebtedness or any security therefor and any
requirement that Agent or any Senior Lender protect, secure, perfect or insure
any Lien or any Property subject thereto or exhaust any right or take any action
against any Credit Party or any other Person or any such Property, and (iv)
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Senior Indebtedness.

         (b) Trustee agrees and consents that Agent and Senior Lenders may each,
at any time and from time to time, in their sole discretion, without the consent
of or notice to Trustee (except to the extent such notice is specifically
required pursuant to the provisions of this Agreement) or any Noteholder,
without incurring responsibility to Trustee or any Noteholder, and without
impairing or releasing the subordination provided for herein or the obligations
of Trustee or any such Noteholder to Agent or any Senior Lender hereunder,
amend, restate, supplement or otherwise modify the Senior Credit Agreement or
any of the other Senior Credit Documents in any way whatsoever, including,
without limitation, the following: (i) shorten the final maturity of all or any
part of the Senior Indebtedness, (ii) modify the amortization of the principal
amount of all or any part of the Senior Indebtedness, (iii) increase the
principal amount of Senior Indebtedness, or otherwise provide for additional
advances, (iv) raise the standard or default per annum interest rates applicable
to all or any part of the Senior Indebtedness, (v) impose any additional fees or
penalties upon any Credit Party or increase the amount of or rate for any fees
or penalties provided for in the Senior Credit Documents, (vi) retain or obtain
a Lien on any Property to secure any of the Senior Indebtedness, (vii) enter
into new Senior Credit Documents with any Credit Party or any of its direct or
indirect subsidiaries, (viii) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, all or any of the Senior
Indebtedness or otherwise amend, restate, supplement or otherwise modify in any
manner, or grant any waiver or release with respect to, all or any part of the
Senior Indebtedness or any of the Senior Credit Documents, (x) retain or obtain
the primary or secondary obligation of any

                                       9
<PAGE>   10

other Person with respect to any of the Senior Indebtedness, (xi) release any
Person liable in any manner under or in respect of Senior Indebtedness or
release or compromise any obligation of any nature of any Person with respect to
any of the Senior Indebtedness, (xii) sell, exchange, not perfect or otherwise
deal with any Property at any time pledged, assigned or mortgaged to secure or
otherwise securing, all or any part of the Senior Indebtedness, (xiii) release
its security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any Property securing any Senior Indebtedness,
or release, compromise, alter or exchange any obligations of any nature of any
Person with respect to any such Property, (xiv) amend, or grant any waiver or
release with respect to, or consent to any departure from, any guaranty for all
or any of the Senior Indebtedness, (xv) exercise or refrain from exercising any
rights against and release from obligations of any type, any Credit Party or any
other Person, (xvi) apply any sums from time to time received to the Senior
Indebtedness in such manner such as such Person shall determine and (xvii)
otherwise manage and supervise the Senior Indebtedness in accordance with such
Person's usual practices, modified from time to time as such Person deems
appropriate under the circumstances.

         (c) In the event Agent releases or agrees to release any of its Liens
on all or any part of the Senior Lender Collateral in connection with the sale
or other disposition thereof at the request of any Credit Party or pursuant to
any Senior Enforcement Action or otherwise, Agent agrees to notify Trustee in
writing thereof with such notice stating the portion of the Senior Lender
Collateral to be sold or disposed of and further stating that such Senior Lender
Collateral will be sold free and clear of the Liens of Agent and Trustee
("RELEASE NOTICE"). Trustee acknowledges, confirms and agrees that upon Agent
giving such a Release Notice to Trustee in accordance with SECTION 15 below,
Trustee shall be deemed to consent to such sale or other disposition under the
Note Documents and the Lien of Trustee on such Senior Lender Collateral shall be
deemed to be, and shall be, automatically released and terminated
contemporaneously with the release by Agent of its Lien thereon. Trustee agrees
that no further act or documentation shall be necessary to evidence the release
and termination by Trustee of such Lien and the delivery of the Release Notice
to Trustee and the release by Agent of its Lien on the Senior Lender Collateral
shall be PRIMA FACIE evidence of Trustee's release and termination of its Lien
upon such Senior Lender Collateral. In the event that Agent requests Trustee to
execute and deliver any formal release or termination of its Lien upon such
Senior Lender Collateral, Trustee agrees to execute the same forthwith. In
furtherance of the foregoing, Trustee hereby appoints Agent as its
attorney-in-fact, with full authority in the place and stead of Trustee and full
power of substitution and in the name of Trustee or otherwise, to execute and
deliver any document or instrument which Trustee is required to deliver pursuant
to this SECTION 9(c), such appointment being coupled with an interest and
irrevocable.

         (d) Each of Trustee and Agent hereby agrees to use its best efforts to
give written notice to the other of any declaration of acceleration, event of
default declared in writing by it or, in the case of Agent, commencement of any
Senior Enforcement Action under the Note Documents or the Senior Credit
Documents, respectively; PROVIDED, that failure to give any such notice shall
not result in liability to Trustee or Agent, as the case may be, or modify in
any way the terms and provisions of this Agreement and the obligations of the
respective parties hereunder. No party hereto shall have any obligation to cure
any such default and any payment made or act done by any such party to cure any
such default shall not constitute an assumption of the Note Documents or the
Senior Credit Documents or of any of the respective obligations thereunder.

                                       10
<PAGE>   11

         (e) Notwithstanding anything to the contrary contained herein, in the
event that Agent releases its Liens on the Senior Collateral as a result of the
prior or concurrent indefeasible payment in full in cash of the Senior
Indebtedness and termination of the Senior Credit Documents and all Senior
Commitments thereunder, Trustee shall not be obligated to release its Liens (nor
be deemed to release its Liens as contemplated in SECTION 9(c) on any Senior
Lender Collateral remaining after giving effect to such payment and termination
(and any sale, transfer or other disposition of Senior Lender Collateral
occurring in connection therewith), if, at the time of such release, there shall
have occurred and be continuing any default under the Note Documents.

         SECTION 10. MARSHALING. Trustee hereby waives, to the fullest extent
permitted by applicable law, any rights it may have under applicable law to
assert the doctrine of marshaling or otherwise to require Agent or any Senior
Lender to marshall any Property of any Credit Party for the benefit of Trustee
or any Noteholder.

         SECTION 11. WAIVER OF RIGHTS. Trustee hereby waives, to the fullest
extent permitted by applicable law, any rights it may have to enjoin or
otherwise obtain a judicial or administrative order preventing Agent or any
Senior Lender from taking, or refraining from taking, any action with respect to
all or any part of the Senior Lender Collateral.

         SECTION 12. CONTINUATION OF SUBORDINATION; TERMINATION OF AGREEMENT.
This Agreement shall in all respects be a continuing agreement and shall remain
in full force and effect until Senior Lenders shall have received indefeasible
payment in full in cash of all Senior Indebtedness and all of the Senior Credit
Documents and the Senior Commitments thereunder shall have terminated pursuant
to the respective terms and provisions thereof; PROVIDED, that this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Senior Indebtedness is rescinded, avoided or must
otherwise be returned by Agent or any Senior Lender upon the insolvency,
bankruptcy or reorganization of any Credit Party, all as though such payment had
not been made.

         SECTION 13. SPECIFIC PERFORMANCE. Agent and each Senior Lender, on the
one hand, and Trustee and each Noteholder, on the other hand, are hereby
authorized to demand specific performance of the provisions of this Agreement,
at any time when Trustee or any Noteholder, on the one hand, or the Agent or any
Senior Lender, on the other hand, shall have failed to comply with any term or
provision hereof. Each of Agent (on its behalf and on behalf of the Senior
Lenders), and Trustee (on its behalf and on behalf of the Noteholders) hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance.

         SECTION 14. FURTHER ASSURANCES. Each party hereto will, upon the
written request of the other party, from time to time execute and deliver or
cause to be executed and delivered such further instruments and agreements and
do or cause to be done such further acts as may be reasonably necessary or
proper to carry out more effectively the provisions of this

                                       11
<PAGE>   12

Agreement and to effectuate the terms of the Lien subordination and other
provisions contemplated hereby. Without limiting the generality of the foregoing
provisions of this SECTION 15, (a) upon the written request of Trustee, Agent
shall provide Trustee with copies of all material Senior Credit Documents and
(b) upon the written request of Agent, Trustee shall provide Agent with copies
of all material Note Documents, in each case in effect at the time of such
request.

         SECTION 15. NOTICES. Unless otherwise specifically provided herein, all
notices shall be in writing addressed to the respective parties as set forth
below and may be personally served, facsimilied or sent by overnight courier
service or United States mail and shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by facsimile transmission,
on the date of such transmission if transmitted on a business day before 4:00
p.m. (Chicago time) or, if not, on the next succeeding business day; (c) if
delivered by overnight courier, two days after delivery to such courier
correctly addressed; or (d) if by United States Mail, four business days after
deposit in the United States mail, with postage prepaid and properly addressed:

         If to Agent:               BANKERS TRUST COMPANY
                                    233 South Wacker Drive
                                    84th Floor - Sears Tower
                                    Chicago, Illinois  60606
                                    Attention: Credit Department
                                    FAX:  312/993-8096

         with a copy to:            KATTEN MUCHIN ZAVIS
                                    525 West Monroe Street
                                    Suite 1600
                                    Chicago, Illinois  60661
                                    Attention: Denise S. Burn, Esq.
                                    FAX:  312/902-1061

         If to Trustee:             BNY MIDWEST TRUST COMPANY
                                    2 North LaSalle Street
                                    Suite 1020
                                    Chicago, Illinois 60602
                                    Attention:  Indenture Trust Administration
                                    FAX: 312/827-8542

or to such other address as the party addressed shall have previously designated
by written notice to the serving party given in accordance with this SECTION 16.

         SECTION 16. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. AGENT AND
EACH SENIOR LENDER MAY ENFORCE ANY CLAIM ARISING OUT OF THIS AGREEMENT IN ANY
STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN THE
CITY OF CHICAGO, ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING

                                       12
<PAGE>   13

INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, TRUSTEE HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF SUCH COURTS. TRUSTEE HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF SUCH COURTS BY MAILING A COPY THEREOF, BY REGISTERED
MAIL, POSTAGE PREPAID, TO SUCH PERSON AT THE ADDRESS SET FORTH IN SECTION 15
HEREOF AND AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW, (i)
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH PERSON
IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (ii) SHALL BE TAKEN AND HELD TO BE
VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO SUCH PERSON. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHTS OF AGENT OR ANY SENIOR LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR PRECLUDE AGENT OR ANY SENIOR
LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER
COUNTRY, STATE OR PLACE HAVING JURISDICTION OVER SUCH ACTION. TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
SUCH PERSON NOW OR HEREAFTER MAY HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

         SECTION 17. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES HEREUNDER OR UNDER ANY AGREEMENT, DOCUMENT OR INSTRUMENT
DELIVERED OR WHICH MAY HEREAFTER BE DELIVERED IN CONNECTION HEREWITH, OR ARISING
FROM ANY RELATIONSHIP ARISING HEREUNDER, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

         SECTION 18. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding
upon and inure to the benefit of Agent, each Senior Lender, Trustee, each
Noteholder and each of their respective successors, transferees and assigns.

         (b) Each Senior Lender may, from time to time, without notice to or
consent of Trustee or any Noteholder, assign or transfer to any Person any or
all of the Senior Indebtedness or any interest therein, and notwithstanding any
such assignment or transfer, or any subsequent assignment or transfer thereof,
the Senior Indebtedness shall be and remain Senior Indebtedness for purposes of
this Agreement, and every immediate and successive assignee or transferee of any
of the Senior Indebtedness or of any interest therein shall, to the extent of
the interest of such assignee or transferee in the Senior Indebtedness, be
entitled to rely upon and be a third party beneficiary of the subordination
provided under this Agreement.

         (c) As used in this Agreement, the term "Credit Party" shall include
any receiver, trustee, custodian or debtor in possession which is a successor to
any Credit Party.

                                       13
<PAGE>   14

         SECTION 19. GOVERNING LAW. This Agreement shall be construed and
interpreted, and the rights of the parties shall be determined, in accordance
with the internal laws and decisions of the State of Illinois, without regard to
conflicts of laws principles.

         SECTION 20. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof. There are no other agreements between the parties hereto
in connection with the subject matter hereof except as specifically set forth
herein or contemplated hereby. No amendment, modification or waiver of any of
the provisions of this Agreement shall be binding unless executed in writing by
Agent and Trustee. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided. No delay on the part of Agent or any Senior Lender
in the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Agent or any Senior Lender of any right or remedy
shall preclude other or further exercise thereof or the exercise of any other
right or remedy. For the purposes of this Agreement, Senior Indebtedness shall
include all Senior Indebtedness, notwithstanding any right or power of any
Credit Party or other Person to assert any claim or defense as to the invalidity
or unenforceability of all or any part of the Senior Indebtedness, and no such
claim or defense shall affect or impair the agreements and obligations of the
respective parties hereto.

         SECTION 21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         SECTION 22. INVALIDITY. In the event one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision of this Agreement.

         SECTION 23. HEADINGS. The headings of the several sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

         SECTION 24. CONTRACTUAL REPRESENTATIVE FOR PERFECTION; ACTIONS WITH
RESPECT TO COLLATERAL. Trustee hereby appoints Agent as Trustee's contractual
representative solely for purposes of perfecting Trustee's Liens on Note
Collateral which is of a type such that perfection of a Lien thereon may be
accomplished only by possession thereof by Trustee. In the event (I) there shall
have occurred and shall be continuing any default under the Note Documents and
(II) all Senior Indebtedness shall have been indefeasibly paid in full in cash
and the Senior Credit Documents and all Senior Commitments thereunder shall have
been terminated pursuant to the respective terms and provisions thereof, Agent
shall deliver to Trustee all Senior Lender Collateral remaining in Agent's
possession.

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

                                       14
<PAGE>   15

         IN WITNESS WHEREOF, this Agreement has been made and delivered as of
June 29, 2001.

                                            BANKERS TRUST COMPANY,
                                            as Agent

                                            By: /s/ Sam A. Cardone
                                                --------------------------------
                                            Name:  Sam A. Cardone
                                                   -----------------------------
                                            Title: Director
                                                   -----------------------------

                                            BNY MIDWEST TRUST COMPANY,
                                            as Trustee

                                            By: /s/ D.G. Donovan
                                                --------------------------------
                                            Name: D.G. Donovan
                                                  ------------------------------
                                            Title: Assistant Vice President
                                                   -----------------------------

<PAGE>   16

                                   SCHEDULE 1
                                       TO
                             INTERCREDITOR AGREEMENT
                            DATED AS OF JUNE 29, 2000

                            ADDITIONAL CREDIT PARTIES

1.       CALIFORNIA METALS RECYCLING, INC.
2.       CIM TRUCKING, INC.
3.       FIRMA, INC.
4.       FIRMA PLASTIC CO., INC.
5.       MAC LEOD METALS CO.
6.       MTLM ARIZONA, INC.
7.       METAL MANAGEMENT AEROSPACE, INC.
8.       METAL MANAGEMENT ALABAMA, INC.
9.       METAL MANAGEMENT ARIZONA, L.L.C.
10.      METAL MANAGEMENT CONNECTICUT, INC.
11.      METAL MANAGEMENT INDIANA, INC.
12.      METAL MANAGEMENT GULF COAST, INC.
13.      METAL MANAGEMENT MEMPHIS, L.L.C.
14.      METAL MANAGEMENT MIDWEST, INC.
15.      METAL MANAGEMENT MISSISSIPPI, L.L.C.
16.      METAL MANAGEMENT NORTHEAST, INC.
17.      METAL MANAGEMENT OHIO, INC.
18.      METAL MANAGEMENT PITTSBURGH, INC.
19.      METAL MANAGEMENT REALTY, INC.
20.      METAL MANAGEMENT SERVICES, INC.
21.      METAL MANAGEMENT STAINLESS & ALLOY, INC.
22.      METAL MANAGEMENT WEST, INC.
23.      METAL MANAGEMENT WEST COAST HOLDINGS, INC.
24.      METAL MANAGEMENT S&A HOLDINGS, INC.
25.      METALS.COM, INC.
26.      PROLER SOUTHWEST INC.
27.      TROJAN TRADING CO.
28.      RESERVE IRON & METAL LIMITED PARTNERSHIP

<PAGE>   17

                           ACKNOWLEDGMENT AND CONSENT

         Each of the undersigned hereby (a) acknowledges receipt of a copy of
the foregoing Intercreditor Agreement (the "INTERCREDITOR AGREEMENT"), (b)
acknowledges and consents to all of the terms and provisions thereof, and (c)
agrees that, at any time prior to indefeasible payment in full in cash of all
Senior Indebtedness and termination of the Senior Credit Documents and all
Senior Commitments thereunder pursuant to the respective terms and provisions
thereof, (i) it shall not take any action which could reasonably be expected to
cause any Property to become Note Collateral, without first providing for Agent,
for the benefit of itself and each Senior Lender, to be granted a first, senior
and continuing Lien on such Property and (ii) it shall not cause any Property
(other than (1) any proceeds or products of Property which as of the date of the
Intercreditor Agreement does not constitute Note Collateral and (2) real
property, except to the extent required pursuant to the Note Document) to become
Senior Lender Collateral without also providing for the Trustee to be granted a
Lien thereon subordinate to Agent's Lien pursuant to the Intercreditor
Agreement.

         Each of the undersigned hereby agrees that (a) if the Majority Lenders
(as such term is defined in the Senior Credit Agreement) so elect, any breach of
the provisions of the Intercreditor Agreement by any Person (other than Agent or
any Senior Lender) shall constitute an Event of Default (as such term is defined
in the Senior Credit Agreement) and (b) if Noteholders holding a majority in
principal amount of the then outstanding Notes so elect, any breach of the
provisions of the Intercreditor Agreement by any Person (other than Trustee or
any Noteholder) shall constitute an Event of Default (as such term is defined in
the Note Indenture).

                                   METAL MANAGEMENT, INC., a Delaware
                                   corporation, in its individual capacity as a
                                   Credit Party and in its capacity as Funds
                                   Administrator

                                       By: /s/ David A. Carpenter
                                           -------------------------------------
                                       Name: David A. Carpenter
                                             -----------------------------------
                                       Title: Executive Vice President
                                              ----------------------------------

                                          BORROWERS:

                                          CALIFORNIA METALS RECYCLING, INC.
                                          CIM TRUCKING, INC.
                                          FIRMA, INC.
                                          FIRMA PLASTIC CO., INC.
                                          MAC LEOD METALS CO.
                                          MTLM ARIZONA, INC.
                                          METAL MANAGEMENT AEROSPACE, INC.
                                          METAL MANAGEMENT ALABAMA, INC.

<PAGE>   18

                                          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 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.
                                          METALS.COM, INC.
                                          PROLER SOUTHWEST INC.
                                          TROJAN TRADING CO.

                                          By: /s/ David A. Carpenter
                                              ----------------------------------
                                          Name:  David A. Carpenter
                                                 -------------------------------
                                          Title: Vice President
                                                 -------------------------------

<PAGE>   19

                                          RESERVE IRON & METAL LIMITED
                                          PARTNERSHIP

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

                                          By: /s/ David A. Carpenter
                                              ----------------------------------
                                          Name: David A. Carpenter
                                                --------------------------------
                                          Title: Vice President
                                                 -------------------------------

Dated as of June 29, 2001

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}]]