MMI PRODUCTS INC, S-4/A, 1997-07-24

MMI PRODUCTS INC
S-4/A, 1997-07-24
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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As filed with the Securities and Exchange Commission on July 24, 1997
REGISTRATION NO. 333-29141

===============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-4

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

MMI PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3315 74-1622891

(State or other jurisdiction of (Primary Standard Industrial) (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>

515 WEST GREENS ROAD, SUITE 710
HOUSTON, TEXAS 77067
(281) 876-0080
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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

JULIUS S. BURNS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MMI PRODUCTS, INC.
515 WEST GREENS ROAD, SUITE 710
HOUSTON, TEXAS 77067
(281) 876-0080
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

COPY TO:
MICHAEL A. SASLAW
BAKER & BOTTS, L.L.P.
2001 ROSS AVENUE
DALLAS, TEXAS 75201

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this registration statement becomes
effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

===============================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 24, 1997

PROSPECTUS

MMI PRODUCTS, INC.

OFFER TO EXCHANGE ITS SERIES B 11 1/4% SENIOR
SUBORDINATED NOTES DUE 2007 FOR ANY AND ALL OF ITS
OUTSTANDING SERIES A 11 1/4% SENIOR SUBORDINATED NOTES DUE 2007

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997, UNLESS EXTENDED.

MMI Products, Inc., a Delaware corporation, (the "Company"), hereby offers
(the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its Series B
11 1/4% Senior Subordinated Notes due 2007 (the "Exchange Notes"), which will
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this
prospectus is a part, for each $1,000 principal amount of its outstanding
Series A 11 1/4% Senior Subordinated Notes due 2007 (the "Old Notes"), of which
$120,000,000 principal amount is outstanding. The form and terms of the
Exchange Notes are the same as the form and term of the Old Notes (which they
replace) except that the Exchange Notes will bear a Series B designation and
will have been registered under the Securities Act and, therefore, will not
bear legends restricting their transfer and will not be entitled to
registration rights or other rights under the Registration Rights Agreement (as
defined herein). See "The Exchange Offer." The Exchange Notes will evidence
the same debt as the Old Notes (which they replace) and will be issued under
and be entitled to the benefits of the Indenture (the "Indenture") dated April
16, 1997 between the Company and U.S. Trust Company of Texas, N.A., as Trustee
(the "Trustee"), governing the Old Notes. See "The Exchange Offer" and
"Description of Exchange Notes."

Interest on the Exchange Notes will be payable semi-annually in arrears on
April 15 and October 15 of each year, commencing October 15, 1997. The Exchange
Notes will mature on April 15, 2007. The Exchange Notes will be redeemable at
the option of the Company, in whole or in part, at any time on or after April
15, 2002 at the redemption prices set forth herein, plus accrued and unpaid
interest to the redemption date. Notwithstanding the foregoing, on or prior to
April 15, 2000, the Company may redeem at any time or from time to time up to
35% of the aggregate principal amount of the Exchange Notes originally issued
at a redemption price equal to 111.25% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages (as defined herein), if any,
thereon to the redemption date, with the net cash proceeds of one or more
Public Equity Offerings (as defined herein); provided, however, that at least
$78.0 million aggregate principal amount of Exchange Notes remains outstanding
following each such redemption. Upon the occurrence of a Change of Control (as
defined herein), the Company will be required to make an offer to repurchase
all or any part of the Exchange Notes at a price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase. See "Description of
Exchange Notes."

(Cover text continued on next page)

SEE "RISK FACTORS" ON PAGE 12 FOR A DESCRIPTION OF CERTAIN RISKS TO BE
CONSIDERED BY HOLDERS WHO TENDER THEIR NOTES IN THE EXCHANGE OFFER.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

The date of this Prospectus is ___, 1997

<PAGE> 3

The Exchange Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined herein) of the Company, including all obligations of the Company
under the Credit Facility (as defined herein), and senior to or pari passu with
all existing and future subordinated indebtedness of the Company. As of March
29, 1997, on a pro forma basis after giving effect to the Old Notes Offering
(as defined herein) and the use of proceeds therefrom, the Company would have
had outstanding approximately $3.7 million of Senior Indebtedness. The Exchange
Notes, like the Old Notes, will not be guaranteed by the Company's parent
corporation or by any other person or entity. See "Description of Exchange
Notes -- Subordination." The Indenture pursuant to which the Exchange Notes
will be issued permits the Company to incur additional indebtedness, including
Senior Indebtedness, subject to certain limitations. See "Description of
Exchange Notes -- Certain Covenants."

The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York time, on , 1997,
unless extended by the Company in its sole discretion (the "Expiration Date").
Notwithstanding the foregoing, the Company will not extend the Expiration Date
beyond , 1997. Tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m. on the Expiration Date. The Exchange Offer is
subject to certain customary conditions. The Old Notes were sold by the
Company on April 16, 1997 to the Initial Purchaser (as defined herein) in a
transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act. The Initial Purchaser subsequently placed
the Old Notes with qualified institutional buyers in reliance upon Rule 144A
under the Securities Act and with a limited number of institutional accredited
investors that agreed to comply with certain transfer restrictions and other
conditions. Accordingly, the Old Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder in order to satisfy the obligations of the Company under the
Registration Rights Agreement entered into by the Company in connection with
the offering of the Old Notes. See "The Exchange Offer."

Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the Exchange Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and such holder has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer" and "The Exchange Offer --
Resale of the Exchange Notes." Each broker-dealer (a "Participating
Broker-Dealer") that receives Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
as a result of market-making activities or other trading activities. The
Company has agreed that, for a period of 180 days after the Expiration Date, it
will make this Prospectus available to any Participating Broker-Dealer for use
in connection with any such resale. See "Plan of Distribution."

Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Company
will pay all the expenses incurred by it incident to the Exchange Offer. See
"The Exchange Offer."

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<PAGE> 4
There has not previously been any public market for the Old Notes or the
Exchange Notes. Although the Initial Purchaser has informed the Company that
it currently intends to make a market in the Exchange Notes, it is not
obligated to do so, and any such market-making activities with respect to the
Exchange Notes may be discontinued at any time without notice. Accordingly,
the Company does not intend to list the Exchange Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system.

Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the rights and will be subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the holders of Old Notes will continue to be subject to the
existing restrictions upon transfer thereof and the Company will have no
further obligation to such holders to provide for registration under the
Securities Act of the Old Notes held by them. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Notes could be adversely affected. See "Risk Factors --
Exchange Offer Procedures" and "Exchange Offer -- Consequences of Failure to
Exchange."

The Exchange Notes will be available initially only in book-entry form.
The Company expects that the Exchange Notes issued pursuant to this Exchange
Offer will be issued in the form of one or more Global Notes (as defined
herein), which will be deposited with, or on behalf of, The Depository Trust
Company (the "Depositary") and registered in its name or in the name of Cede &
Co., its nominee. Beneficial interests in a Global Note representing the
Exchange Notes will be shown on, and transfers thereof will be effected
through, records maintained by the Depositary and its participants. After the
initial issuance of the Global Notes, Exchange Notes in certificated form will
be issued in exchange for a Global Note only on the terms set forth in the
Indenture. See "Description of Exchange Notes -- Book Entry, Delivery and
Form."

THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.

This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Notes as of , 1997.

The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. No dealer-manager is being used in connection
with this Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."

The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of the Old Notes in any jurisdiction in which the
making of the Exchange Offer or acceptance thereof would not be in compliance
with the laws of such jurisdiction or would otherwise not be in compliance with
any provision of any applicable security law.

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AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act, and the rules and regulations promulgated thereunder, covering
the Exchange Notes being offered hereby. This Prospectus does not contain all
of the information set forth in the Exchange Offer Registration Statement. For
further information with respect to the Company and the Exchange Offer,
reference is made to the Exchange Offer Registration Statement. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Exchange Offer
Registration Statement, reference is made to the exhibit for a more complete
description of the document or matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. The Exchange Offer
Registration Statement, including the exhibits thereto, can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at the Regional Offices
of the commission at 75 Park Place, New York, New York 10007 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Additionally, the Commission maintains a web site
(http:www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission including the Company.

As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Company will become subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith will be required to file periodic reports
and other information with the Commission. The obligation of the Company to
file periodic reports and other information with the Commission will be
suspended if the Exchange Notes are held of record by fewer than 300 holders as
of the beginning of any fiscal year of the Company other than the fiscal year
in which the Exchange Offer Registration Statement is declared effective. The
Company will nevertheless be required to continue to file reports with the
Commission if the Exchange Notes are listed on a national securities exchange.
Under the Indenture, the Company shall file with the Trustee annual, quarterly
and other reports within 15 days after it files such reports with the
Commission (or within 15 days after it would have been required to file such
reports with the Commission, in the event the Company is no longer subject to
the informational requirements of the Exchange Act). Annual reports delivered
to the Trustee and the holders of Exchange Notes will contain financial
information that has been examined and reported upon, with an opinion expressed
by an independent certified public accountant. The Company will also furnish
such other reports as may be required by law.

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION, CERTAIN STATEMENTS UNDER THE
"PROSPECTUS SUMMARY," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO
ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS,
INCLUDING WITHOUT LIMITATION IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS
INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN
AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS
ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS. SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF
THE EXCHANGE ACT EXPRESSLY PROVIDE THAT THE SAFE HARBOR PROVIDED FOR THEREIN
DOES NOT APPLY TO STATEMENTS MADE IN CONNECTION WITH A COMPANY'S INITIAL PUBLIC
OFFERING.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more
detailed information and the Company's financial statements, including the
notes thereto, appearing elsewhere in this Prospectus. Unless the context
otherwise requires, and except as used in "Description of Exchange Notes,"
references in this Prospectus to the "Company" include the Company and any
subsidiaries of the Company that may exist in the future. All references in
this Prospectus to "fiscal year" refer to the Company's fiscal year which ends
on the Saturday closest to December 31 of that calendar year. For example,
fiscal year 1996 refers to the fiscal year ended December 28, 1996.

THE COMPANY

The Company is a leading manufacturer and distributor of products used
in the residential, commercial and infrastructure construction industries. The
Company sells its products along three principal product lines: fence, wire
mesh and concrete accessories. The Company has established leading market
positions for each of these product lines by combining efficient manufacturing,
high quality products, broad product offerings and extensive distribution
capabilities. In addition, the Company benefits from substantial raw material
purchasing efficiencies because the products in each of its three principal
product lines are produced primarily from the same raw material, steel rod. In
fiscal year 1996, the Company generated net sales of $283.4 million.

Sales of fence, wire mesh and concrete accessories accounted for
approximately 58%, 29% and 13%, respectively, of the Company's net sales in
fiscal year 1996. The Company's fence product line includes chain link fence
fabric, fittings and other related products which are manufactured and
distributed by the Company, as well as wood, vinyl, aluminum and ornamental
iron fence products which are manufactured by third parties and distributed by
the Company. The Company believes that it is the largest manufacturer of chain
link fence products in the United States and the second largest distributor of
fence products in the United States. The Company's wire mesh product line
includes various classes of wire mesh, which serve as a structural reinforcing
grid for concrete construction, including concrete pipe, roads, bridges,
runways and sewage and drainage projects. The Company believes that it is the
largest manufacturer and distributor of wire mesh products in the United
States, with a market share of approximately 29% for fiscal year 1996. The
Company's concrete accessories product line consists of over 2,000 specialized
accessories used in concrete construction, including products used to position
and install steel reinforcing bar and wire mesh reinforcing grid. The Company
believes that it is the second largest manufacturer and distributor of concrete
accessories in the United States.

The Company has developed an extensive and well positioned
distribution network, consisting of 55 Company-operated distribution centers,
located in 28 states. The Company's distribution network services over 3,900
customers, including construction contractors, fence wholesalers, industrial
manufacturers, highway construction contractors and fabricators of concrete
reinforcing bar. The Company believes that its extensive distribution network
provides a competitive advantage by allowing it to better serve its customers
through increased responsiveness and reduced freight costs. In addition to
serving customers nationwide, the Company's distribution centers and production
facilities are well positioned to serve areas of high population and
construction growth. The Company currently has manufacturing or distribution
facilities in each of the ten states with the largest projected increases in
population from 1995 through 2025.

The Company has developed a reputation in its markets as a
service-oriented, cost-efficient manufacturer of high quality products. The
Company manufactures its products at 15 principal facilities, which are
strategically located throughout the United States. The Company achieves cost
efficiencies by combining state-of-the-art and traditional production methods
to suit specific product applications, hiring and training skilled employees,
reducing materials usage and implementing standard process controls and other
productivity improvements. In addition, while the Company's manufacturing
facilities are geared primarily toward high-volume, standardized production to
promote efficiencies, many of the Company's manufacturing facilities are
capable of producing customized products in response to specific customer
requirements or applications that are unique to particular geographic regions
of the United States.

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construction industries, which historically have been less seasonal and less
cyclical than the residential construction industry. Although the Company
estimates that approximately 50% of its fence sales in fiscal year 1996 were
attributable to each of the commercial and residential construction industries,
the Company has implemented strategies designed to further increase the
percentage of its fence sales to the commercial construction industry.
Specifically, the Company is emphasizing its "authorized dealer program"
pursuant to which leading fence contractors throughout the country have agreed
to purchase at least half of their fence requirements from the Company. As a
result, the number of dealers participating in the Company's program has
increased from approximately 150 in fiscal year 1994 to approximately 300 in
fiscal year 1996. In addition, the Company's wire mesh and concrete accessories
product lines, which have been increasing as a percentage of the Company's
total net sales, are marketed primarily to the commercial and infrastructure
construction industries, rather than the residential construction industry. The
Company estimates that approximately 73% of its wire mesh sales in fiscal year
1996 were attributable to the commercial and infrastructure construction
industries (with sales to the infrastructure and commercial construction
industries representing approximately 66% and 7%, respectively). The Company
estimates that substantially all of its concrete accessories sales in fiscal
year 1996 were attributable to the commercial and infrastructure construction
industries (with sales to each of the commercial and infrastructure
construction industries representing approximately 50%). In addition, the
Company anticipates that demand for the products in its wire mesh and concrete
accessories product lines is likely to increase as the level of infrastructure
development activity increases. The Company expects spending for infrastructure
projects to continue to increase over the next decade, as major elements of the
nation's infrastructure require replacement or substantial improvement.

The Company, which was organized in 1953, was acquired by Citicorp
Venture Capital, Ltd. ("CVC") and members of the Company's management in 1986.
The Company manufactured and distributed only the fence product line until 1989
when the Company acquired the wire mesh and concrete accessories product lines.
The Company's principal executive offices are located at 515 West Greens Road,
Suite 710, Houston, Texas 77067, and its telephone number at that location is
(281) 876-0080.

BUSINESS STRATEGY

The Company intends to enhance its position as a leading national
supplier of products used in the residential, commercial and infrastructure
construction industries by pursuing the following strategies:

INTRODUCE NEW PRODUCTS. The Company intends to further expand its product
offerings in each of its primary product lines to better serve its customers
and promote customer loyalty by providing "one-stop shopping." The Company
believes that its extensive distribution network provides a platform for
introducing new products manufactured by the Company or third parties as well
as for new products that the Company acquires through acquisitions. The Company
recently expanded its concrete accessories product line to include reinforcing
bar splicing products and welded dowel assemblies. The Company also expanded
its wire mesh product line to include galvanized strand wire as a result of its
purchase of certain assets from Atlantic Steel Industries, Inc. ("Atlantic
Steel") in July 1996. In addition, the Company expanded its fence product line
to include wood, vinyl, aluminum and ornamental iron fence, which products are
manufactured by third parties and distributed by the Company. Sales of
third-party products, which represented an estimated 42% of the Company's net
sales in fiscal year 1996, allow the Company to utilize its distribution
network to increase sales and cash flow without making significant capital
investments.

BROADEN DISTRIBUTION NETWORK. The Company intends to further expand its
extensive distribution network. Since 1989, the Company has opened or acquired
22 distribution centers for its fence product line and two distribution centers
for its concrete accessories product line. By continuing to expand its
distribution network, the Company expects to increase sales and cash flow by
accessing new regional customers and by further penetrating its existing
customer base.

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cost of goods sold (approximately 32% in fiscal year 1996), the Company
believes that such cost savings provide a significant competitive advantage.
The Company intends to continue to capitalize on its purchasing power to take
advantage of raw material acquisition costs that it believes are lower than
industry standard.

EXPAND APPLICATIONS FOR EXISTING PRODUCTS. The Company actively develops and
markets new applications for its products. For example, the Company is
actively promoting structural wire mesh as a cost-effective alternative to
steel reinforcing bar for certain types of concrete construction, such as
roads, bridges and other heavy construction projects. Although structural mesh
has a higher initial cost to the customer than does steel reinforcing bar, the
Company believes that the overall construction cost generally is lower if
structural mesh is utilized. The Company believes that the market for
structural mesh, which offers the Company relatively high margins compared to
the Company's other wire mesh products, presents a significant growth
opportunity.

FOCUS ON INFRASTRUCTURE AND COMMERCIAL CONSTRUCTION INDUSTRIES. The Company has
positioned itself to take advantage of the anticipated increase in
infrastructure construction spending. Demand for the wire mesh and concrete
accessories product lines is dependent, to a significant extent, on
infrastructure development projects, including roads, bridges, runways and
sewage and drainage projects. Infrastructure construction spending is
anticipated to increase as major components of the nation's infrastructure are
replaced or substantially improved. In addition, the Company will continue to
focus on increasing its sales to the commercial and infrastructure construction
industries, which historically have been less seasonal and less cyclical than
the residential construction industry.

GROW THROUGH STRATEGIC ACQUISITIONS. In addition to internal growth, the
Company intends to continue to grow through strategic acquisitions. The markets
in which the Company competes have a large number of relatively small, regional
manufacturers and, consequently, offer consolidation opportunities. The Company
seeks acquisitions that broaden its distribution network, complement or extend
its existing product lines or increase its production capacity. The Company
believes that it has been able to achieve synergies in its acquisitions through
economies of scale in purchasing, manufacturing, marketing and distribution.

RECENT ACQUISITIONS

Since 1989, the Company has completed eight acquisitions, including
four since the beginning of fiscal year 1995, which have substantially
increased the Company's net sales and cash flow. Four of these acquisitions
(including 11 facilities) related to fence products, two of these acquisitions
(including four facilities) related to wire mesh and two of these acquisitions
(including two facilities) related to concrete accessories.

On March 31, 1995, the Company acquired eight distribution centers for
the fence product line from Semmerling Fence and Supply, Inc. and Pioneer Fence
& Pipe Supply, Inc. (the "Semmerling/Pioneer Acquisition"). The
Semmerling/Pioneer Acquisition strengthened the Company's market position by
adding additional distribution centers and expanding its fence product line
with the addition of a new line of vinyl coated pipe and tubing.

On July 31, 1996, the Company acquired three operating plants and
certain equipment from Atlantic Steel (the "Atlantic Steel Acquisition"). The
Atlantic Steel Acquisition broadened the Company's wire mesh distribution
network, increased the Company's wire mesh production capacity and expanded its
wire mesh product line through the addition of galvanized strand wire, which is
sold to a diversified group of manufacturers and processors of wire products.

In October 1996, the Company further broadened its distribution
network and increased its production capacity for certain wire mesh and
concrete accessories products through two acquisitions. On October 14, 1996,
the Company acquired a concrete accessories manufacturing and distribution
facility in Chicago, Illinois from Gateway Construction Company (the "Gateway
Acquisition"). The Gateway Acquisition increased the Company's production
capacity for steel reinforcing bar supports and strengthened the Company's
presence in the concrete accessories market in the Midwestern United States. In
addition, on October 31, 1996, the Company acquired a wire mesh production
facility in North Miami Beach, Florida from DSM Corporation (the "Florida Wire
Acquisition"). The Florida Wire Acquisition enhanced the

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Company's ability to capitalize on demand for wire mesh created by the
relatively high level of construction activity in Florida and other areas of
the Southeastern United States.

RECENT DEVELOPMENTS

On April 16, 1997, the Company issued $120,000,000 aggregate principal
amount of Old Notes (the "Old Notes Offering"). The net proceeds of the Old
Notes Offering were used by the Company to (i) repay the Company's indebtedness
under the term loan portion of its senior credit facility (the "Credit
Facility") of approximately $11.4 million, (ii) reduce the Company's borrowings
under the revolving loan portion of the Credit Facility by approximately $37.7
million, (iii) repay the $10.0 million principal amount of, plus accrued and
unpaid interest on, the Company's existing senior subordinated indebtedness
(the "Mannesmann Senior Subordinated Debt") outstanding to Mannesmann Pipe &
Steel Corporation ("Mannesmann"), and (iv) distribute approximately $57.0
million to the Company's parent corporation, Merchants Metals Holding Company
("Holding") for the redemption by Holding of certain of its equity interests.

THE OLD NOTES OFFERING

Old Notes . . . . . . . . . . . . . . . The Old Notes were sold by the
Company on April 16, 1997 to
Bear, Stearns & Co. Inc. (the
"Initial Purchaser") pursuant to
a Purchase Agreement dated April
11, 1997 (the "Purchase
Agreement"). The Initial
Purchaser subsequently resold
the Old Notes to qualified
institutional buyers pursuant to
Rule 144A under the Securities
Act and to a limited number of
institutional accredited
investors that agreed to comply
with certain transfer
restrictions and other
conditions.

Registration Rights Agreement . . . . . Pursuant to the Purchase
Agreement, the Company and the
Initial Purchaser entered into a
Registration Rights Agreement
dated April 16, 1997 (the
"Registration Rights
Agreement"), which grants the
holders of the Old Notes certain
exchange and registration
rights. The Exchange Offer is
intended to satisfy such
exchange rights, which terminate
upon the consummation of the
Exchange Offer.

THE EXCHANGE OFFER

Securities Offered . . . . . . . . . . $120,000,000 aggregate principal
amount of Series B 11 1/4%
Senior Subordinated Notes due
2007 (the "Exchange Notes").

4
<PAGE> 11
The Exchange Offer . . . . . . . . . . $1,000 principal amount of the
Exchange Notes in exchange for
each $1,000 principal amount of
Old Notes. As of the date
hereof, $120,000,000 aggregate
principal amount of Old Notes
are outstanding. The Company
will issue the Exchange Notes to
holders on or promptly after the
Expiration Date.

Based on an interpretation by
the staff of the Commission set
forth in no-action letters
issued to third parties, the
Company believes that Exchange
Notes issued pursuant to the
Exchange Offer in exchange for
Old Notes may be offered for
resale, resold and otherwise
transferred by any holder
thereof (other than any such
holder which is an "affiliate"
of the Company within the
meaning of Rule 405 under the
Securities Act) without
compliance with the registration
and prospectus delivery
provisions of the Securities
Act, provided that such Exchange
Notes are acquired in the
ordinary course of such holder's
business and that such holder
does not intend to participate
and has no arrangement or
understanding with any person to
participate in the distribution
of such Exchange Notes.

Each Participating Broker-Dealer
that receives Exchange Notes for
its own account pursuant to the
Exchange Offer must acknowledge
that it will deliver a
prospectus in connection with
any resale of such Exchange
Notes. The Letter of
Transmittal states that by so
acknowledging and by delivering
a prospectus, a Participating
Broker-Dealer will not be
deemed to admit that it is an
"underwriter" within the meaning
of the Securities Act. This
Prospectus, as it may be amended
or supplemented from time to
time, may be used by a
Participating Broker-Dealer in
connection with resales of
Exchange Notes received in
exchange for Old Notes where
such Old Notes were acquired by
such Participating Broker-Dealer
as a result of market-making
activities or other trading
activities (other than a resale
of an unsold allotment from the
original sale of Old Notes). The
Company has agreed that, for a
period of 180 days after the
Exchange Offer Registration
Statement is declared effective,
it will make this Prospectus
available to any Participating
Broker-Dealer for use in
connection with any such resale.
See "Plan of Distribution."

Any holder who tenders in the
Exchange Offer with the
intention to participate, or for
the purpose of participating, in
a distribution of the Exchange
Notes could not rely on the
position of the staff of the
Commission enunciated in
no-action letters and, in the
absence of an exemption
therefrom, must comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection
with any resale transaction.
Failure to comply with such
requirements in such instance
may result in such holder
incurring liability under the
Securities Act for which the
holder is not indemnified by the
Company.

Expiration Date . . . . . . . . . . . . 5:00 p.m., New York time, on
______, 1997 unless the Exchange
Offer is extended, in which case
the term "Expiration Date" means
the latest date and time to
which the Exchange Offer is
extended.

5
<PAGE> 12
Accrued Interest on the Exchange Notes
and the Old Notes . . . . . . . . . . . Each Exchange Note will bear
interest from the most recent
date to which interest has been
paid or duly provided for on the
Old Note surrendered in exchange
for such Exchange Note or, if no
interest has been paid or duly
provided for on such Old Note,
from April 16, 1997. Interest
on the Exchange Notes is payable
semi-annually on each April 15
and October 15, commencing on
October 15, 1997.

Holders of Old Notes whose Old
Notes are accepted for exchange
will not receive accrued
interest on such Old Notes for
any period from and after the
last date to which interest has
been paid or duly provided for
on the Old Notes prior to the
original issue date of the
Exchange Notes or, if no such
interest has been paid or duly
provided for, will not receive
any accrued interest on such Old
Notes, and will be deemed to
have waived, the right to
receive any interest on such Old
Notes accrued from and after the
last date to which interest has
been paid or duly provided for
on the Old Notes or, if no such
interest has been paid or duly
provided for, from and after
April 16, 1997.

Conditions to the Exchange Offer . . . The Exchange Offer is subject to
certain customary conditions,
which may be waived by the
Company. See "The Exchange
Offer -- Conditions."

Procedures for Tendering Old Notes . . Each holder of Old Notes wishing
to accept the Exchange Offer
must complete, sign and date the
accompanying Letter of
Transmittal, or a facsimile
thereof, in accordance with the
instructions contained herein
and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with the Old Notes and
any other required documentation
to the Exchange Agent (as
defined herein) at the address
set forth in the Letter of
Transmittal. By executing the
Letter of Transmittal, each
holder will represent to the
Company that, among other
things, the Exchange Notes
acquired pursuant to the
Exchange Offer are being
obtained in the ordinary course
of business of the person
receiving such Exchange Notes,
whether or not such person is
the holder, that neither the
holder nor any such other person
has any arrangement or
understanding with any person to
participate in the distribution
of such Exchange Notes and that
neither the holder nor any such
other person is an "affiliate,"
as defined under Rule 405 of the
Securities Act. See "The
Exchange Offer -- Purpose and
Effect of the Exchange Offer"
and "The Exchange Offer --
Procedures for Tendering."

Untendered Old Notes . . . . . . . . . Following the consummation of
the Exchange Offer, holders of
Old Notes eligible to
participate but who do not
tender their Old Notes will not
have any further exchange rights
and such Old Notes will continue
to be subject to certain
restrictions on transfer.
Accordingly, the liquidity of
the market for such Old Notes
could be adversely affected.

6
<PAGE> 13
Consequences of Failure
to Exchange . . . . . . . . . . . . . . The Old Notes that are not
exchanged pursuant to the
Exchange Offer will remain
restricted securities.
Accordingly, such Old Notes may
be resold only (i) to the
Company, (ii) pursuant to Rule
144A or Rule 144 under the
Securities Act, (iii) pursuant
to some other exemption under
the Securities Act (and based on
an opinion of counsel, if the
Company so requests), (iv)
outside the United States to a
foreign person pursuant to the
requirements of Rule 904 under
the Securities Act, or (v)
pursuant to an effective
registration statement under the
Securities Act. See "The
Exchange Offer -- Consequences
of Failure to Exchange."

Shelf Registration Statement . . . . . In the event that (i) the
Exchange Offer is not available
to any holder or may not be
consummated because, in either
case, it would violate
applicable securities laws or
because the applicable
interpretations of the staff of
the Commission would not permit
the Company to effect the
Exchange Offer, or (ii) for any
other reason the Exchange Offer
is not consummated within 165
days after the completion of the
Old Notes Offering, the Company
will use its reasonable best
efforts to cause to be filed
with the Commission, no later
than 195 days after the
completion of the Old Notes
Offering, a shelf registration
statement (the "Shelf
Registration Statement"). The
Company will use its reasonable
best efforts to cause the Shelf
Registration Statement to be
declared effective on or before
the 75th day after the required
filing date. The Company has
agreed to maintain the
effectiveness of the Shelf
Registration Statement, under
certain circumstances, for a
maximum of two years following
the date of the completion of
the Old Notes Offering.

Special Procedures for Beneficial
Owners . . . . . . . . . . . . . . . . Any beneficial owner whose Old
Notes are registered in the name
of a broker, dealer, commercial
bank, trust company or other
nominee and who wishes to tender
should contact such registered
holder promptly and instruct
such registered holder to tender
on such beneficial owner's
behalf. If such beneficial
owner wishes to tender on such
owner's own behalf, such owner
must, prior to completing and
executing the Letter of
Transmittal and delivering its
Old Notes, either make
appropriate arrangements to
register ownership of the Old
Notes in such owner's name or
obtain a properly completed bond
power from the registered
holder. The transfer of
registered ownership may take
considerable time. The Company
will keep the Exchange Offer
open for not less than twenty
days in order to provide for the
transfer of registered
ownership.

Guaranteed Delivery Procedures . . . . Holders of Old Notes who wish to
tender their Old Notes and whose
Old Notes are not immediately
available or who cannot deliver
their Old Notes, the Letter of
Transmittal or any other
documents required by the Letter
of Transmittal to the Exchange
Agent (or comply with the
procedures for book-entry
transfer) prior to the
Expiration Date must tender
their Old Notes according to the
guaranteed delivery procedures
set forth in "The Exchange Offer
-- Guaranteed Delivery
Procedures."

Withdrawal Rights . . . . . . . . . . . Tenders may be withdrawn at any
time prior to 5:00 p.m., New
York time, on the Expiration
Date.

7
<PAGE> 14
Acceptance of Notes and Delivery of
Exchange Notes . . . . . . . . . . . . The Company will accept for
exchange, subject to the
conditions described under "The
Exchange Offer -- Conditions,"
any and all Old Notes which are
properly tendered in the
Exchange Offer prior to 5:00
p.m., New York time, on the
Expiration Date. The Exchange
Notes issued pursuant to the
Exchange Offer will be delivered
promptly following the
Expiration Date. See "The
Exchange Offer -- Terms of the
Exchange Offer."

Use of Proceeds . . . . . . . . . . . . There will be no cash proceeds
to the Company from the exchange
pursuant to the Exchange Offer.

Exchange Agent . . . . . . . . . . . . U.S. Trust Company of Texas,
N.A.

THE EXCHANGE NOTES

General . . . . . . . . . . . . . . . . The form and terms of the
Exchange Notes are the same as
the form and terms of the Old
Notes (which they replace)
except that (i) the Exchange
Notes bear a Series B
designation, (ii) the Exchange
Notes have been registered under
the Securities Act and,
therefore, will not bear legends
restricting the transfer
thereof, and (iii) the holders
of Exchange Notes will not be
entitled to certain rights under
the Registration Rights
Agreement, including the
provisions providing for an
increase in the interest rate on
the Old Notes in certain
circumstances relating to the
timing of the Exchange Offer,
which rights will terminate when
the Exchange Offer is
consummated. See "The Exchange
Offer -- Purpose and Effect of
the Exchange Offer." The
Exchange Notes will evidence the
same debt as the Old Notes and
will be entitled to the benefits
of the Indenture. See
"Description of Exchange Notes."
The Old Notes and the Exchange
Notes are referred to herein
collectively as the "Notes."

Securities Offered . . . . . . . . . . $120,000,000 aggregate principal
amount of Series B 11 1/4% Notes
due 2007 of the Company.

Maturity Date . . . . . . . . . . . . . April 15, 2007.

Interest Payment Dates . . . . . . . . Interest on the Exchange Notes
will be payable semi-annually in
arrears on April 15 and October
15 of each year, commencing
October 15, 1997.

Ranking . . . . . . . . . . . . . . . . The Exchange Notes will be
general unsecured obligations of
the Company, subordinated in
right of payment to all existing
and future Senior Indebtedness
of the Company, including
borrowings under the Credit
Facility. As of March 29, 1997,
on a pro forma basis after
giving effect to the Old Notes
Offering and the use of proceeds
therefrom, (i) the Company would
have had outstanding
approximately $3.7 million of
Senior Indebtedness and (ii) the
Company would have been able to
incur, under the most
restrictive covenants contained
in the Indenture and the Credit
Facility, approximately $49.2
million of additional Senior
Indebtedness. The Exchange
Notes, like the Old Notes, will
not be guaranteed by Holding or
by any other person or entity.
The Indenture permits the
Company to incur additional
Indebtedness, including Senior
Indebtedness, subject to certain
limitations. See
"Capitalization," "Description
of Exchange Notes --
Subordination" and "Description
of Exchange Notes -- Certain
Covenants -- Limitation on
Incurrence of Indebtedness and
Issuance of Disqualified Stock."

8
<PAGE> 15
Optional Redemption . . . . . . . . . . The Exchange Notes will be
redeemable at the option of the
Company, in whole or in part, at
any time on or after April 15,
2002, at the redemption prices
set forth herein, plus accrued
and unpaid interest to the
redemption date. See
"Description of Exchange Notes
-- Optional Redemption."
Notwithstanding the foregoing,
on or prior to April 15, 2000,
the Company may redeem at any
time or from time to time up to
35% of the aggregate principal
amount of the Exchange Notes at
a redemption price equal to
111.25% of the principal amount
thereof, plus accrued and unpaid
interest to the redemption date,
with the net cash proceeds of
one or more Public Equity
Offerings; provided, however,
that at least $78.0 million in
aggregate principal amount of
Exchange Notes remains
outstanding following each such
redemption.

Change of Control . . . . . . . . . . . Upon the occurrence of a Change
of Control, the Company will be
required to make an offer to
repurchase all or any part of
the Exchange Notes at a price
equal to 101% of the principal
amount thereof, plus accrued and
unpaid interest to the date of
repurchase. See "Description of
Exchange Notes -- Repurchase at
the Option of Holders -- Change
of Control."

Certain Covenants . . . . . . . . . . . The Indenture contains certain
covenants that, among other
things, limit the ability of the
Company and any future
Restricted Subsidiaries (as
defined herein) to incur
additional Indebtedness, pay
dividends or make other
distributions, repurchase any
capital stock or subordinated
Indebtedness (as defined
herein), make certain
investments, create certain
liens, enter into certain
transactions with affiliates,
sell assets, including capital
stock of Restricted
Subsidiaries, or enter into
certain mergers and
consolidations. See "Description
of Exchange Notes -- Certain
Covenants."

For additional information regarding the Exchange Notes, see "Description of
Exchange Notes."

RISK FACTORS

Holders of the Old Notes should carefully consider the specific
matters set forth under "Risk Factors" as well as this Prospectus prior to
tendering their Old Notes in the Exchange Offer.

9
<PAGE> 16
SUMMARY FINANCIAL DATA

The following table sets forth summary historical financial data for
the Company for each of the three fiscal years in the period ended December 28,
1996 and for the three month periods ended March 30, 1996 and March 29, 1997
and summary pro forma financial data for the fiscal year ended December 28,
1996 and the three month period ended March 29, 1997. The summary historical
financial data for the three fiscal years in the period ended December 28, 1996
and the balance sheet data as of December 28, 1996 were derived from the
audited financial statements of the Company which have been audited by Ernst &
Young LLP, independent auditors. The summary historical financial information
for the three month periods ended March 30, 1996 and March 29, 1997 and the
balance sheet data as of March 29, 1997, have been derived from the unaudited
interim financial statements of the Company and include, in the opinion of the
Company, all adjustments (consisting only of normal recurring accruals)
necessary to fairly present the data for such periods. The summary pro forma
financial data below reflect adjustments to the historical financial statements
of the Company to give effect to the consummation of the Old Notes Offering and
the application of proceeds therefrom, as if each had occurred on December 31,
1995 (the beginning of fiscal year 1996). The summary pro forma financial data
are not necessarily indicative of either future results of operations or the
results that might have occurred had the transactions actually been consummated
as of December 31, 1995. This information should be read in conjunction with
the "Selected Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's financial
statements, including the notes thereto, appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
----------------------------------- --------------------------------
1994 1995(1) 1996(2) MARCH 30, 1996 MARCH 29, 1997
--------- --------- --------- -------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales ............................................... $ 197,617 $ 233,284 $ 283,402 $ 51,777 $ 69,587

Cost of sales ........................................... 163,473 196,123 238,439 44,182 60,426
--------- --------- --------- -------------- --------------
Gross profit ............................................ 34,144 37,161 44,963 7,595 9,161
Selling, general and administrative expenses ............ 17,098 19,196 23,143 5,368 6,315
Nonrecurring expenses -- stock options(3) ............... -- -- 3,106 -- --
Other expenses (income), net ............................ 419 166 721 (34) (42)
Interest expense ........................................ 6,237 7,395 7,429 1,774 1,502
--------- --------- --------- -------------- --------------
Income before income taxes .............................. 10,390 10,404 10,564 487 1,386
Provision for income taxes .............................. 2,878 4,058 4,227 196 554
--------- --------- --------- -------------- --------------
Net income .............................................. $ 7,512 $ 6,346 $ 6,337 $ 291 $ 832
========= ========= ========= ============== ==============

Cash Flow Data:
Net cash provided by (used in) operating activities ..... $ 11,516 $ 12,745 $ 15,491 $ (71) $ (5,216)
Net cash used in investing activities ................... (2,452) (14,741) (24,314) (250) (1,149)
Net cash provided by (used in) financing activities ..... (8,891) 3,681 6,894 (1,630) 7,084

Other Financial Data:
Adjusted EBITDA(4) ...................................... $ 19,997 $ 21,613 $ 28,047 $ 3,198 $ 4,194
Depreciation and amortization ........................... 3,370 3,814 4,448 937 1,306
Capital expenditures .................................... 2,470 2,246 3,545 268 1,158
Ratio of earnings to fixed charges(5) ................... 2.5x 2.3x 2.3x 1.3x 1.8x

Pro Forma Financial Data:
Cash interest expense(6) ................................ -- -- $ 15,470 -- $ 3,633
Ratio of Adjusted EBITDA to cash interest expense(7) .... -- -- 1.8x -- --
Ratio of total long-term debt to Adjusted EBITDA(7) ..... -- -- 4.4x -- --
Ratio of earnings to fixed charges(5) ................... -- -- 1.1x -- --
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 29, 1997
---------------------------------
AT DECEMBER 28, 1996 HISTORICAL AS ADJUSTED(8)
-------------------- --------------- ---------------
Balance Sheet Data: (UNAUDITED)
<S> <C> <C> <C>
Working capital ......................................... $ 33,149 $ 41,729 $ 44,129
Total assets ............................................ 135,263 146,858 150,758
Total long-term debt, including current maturities ...... 55,278 62,834 123,701
Stockholder's equity (deficit) .......................... 28,534 29,461 (27,506)
</TABLE>

10
<PAGE> 17
- ---------

(1) Includes historical results of operations of the assets acquired in
March 1995 pursuant to the Semmerling/Pioneer Acquisition for the
period from April 1, 1995 through December 30, 1995.

(2) Includes historical results of operations of the net assets acquired
pursuant to the Atlantic Steel Acquisition for the period from August
1, 1996 through December 28, 1996.

(3) In fiscal year 1996, the Company recorded nonrecurring expenses
resulting from the modification of stock options granted in previous
years as part of the Recapitalization (as defined herein) of the
Company and Holding. See Note 2 to the audited financial statements
included elsewhere in this Prospectus.

(4) Adjusted EBITDA is defined as the sum of (i) income before interest,
income taxes, depreciation and amortization, and certain nonrecurring
expenses (see footnote (3) above) ("EBITDA") and (ii) for fiscal year
1996 the contribution to EBITDA of the net assets acquired pursuant to
the Atlantic Steel Acquisition effective July 31, 1996 on a pro forma
basis as if the Atlantic Steel Acquisition had occurred on December
31, 1995 (the beginning of fiscal year 1996). The pro forma
contribution to EBITDA for the Atlantic Steel Acquisition of $2.5
million is based on actual revenues, for the first six months of
fiscal year 1996, adjusted for the Company's costs of materials and
operating costs, which was consistent with actual results for the five
months of operations since August 1, 1996. EBITDA is presented because
it is a widely accepted financial indicator of a company's ability to
service and incur debt. EBITDA should not be considered in isolation
from or as a substitute for net income or cash flow measures prepared
in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.

(5) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases (estimated
to be representative of an interest factor), and amortization of
deferred financing costs. For the pro forma three months ended March
29, 1997, pro forma earnings were insufficient to cover pro forma
fixed charges by approximately $873,000.

(6) Pro forma cash interest expense represents pro forma total interest
expense less $579,000 and $128,000 of amortization of deferred
financing costs for the fiscal year ended December 28, 1996 and the
three months ended March 29, 1997, respectively. Pro forma cash
interest expense has been calculated based on the 11.25% rate on the
Old Notes.

(7) The ratio for the three months ended March 29, 1997 is not presented
as the Company does not believe it is indicative of the ratio that may
be expected for the fiscal year ended January 3, 1998.

(8) Adjusted to give effect to the Old Notes Offering and the application
of the proceeds therefrom as if they had occurred on March 29, 1997.
The reduction in retained earnings results from a distribution of
approximately $57.0 million to Holding used to redeem certain of
Holding's equity interests.

11
<PAGE> 18
RISK FACTORS

Prospective investors should carefully review the information set
forth below, in addition to the other information contained in this Prospectus,
in evaluating an investment in the Exchange Notes offered hereby.

LEVERAGE

The Company is highly leveraged. As of March 29, 1997, on a pro forma
basis after giving effect to the Old Notes Offering and the use of proceeds
therefrom, the Company would have had outstanding long-term indebtedness
(including current maturities) of approximately $123.7 million and would have
had an outstanding stockholder's deficit of approximately $27.5 million. The
degree to which the Company is leveraged could have important consequences to
holders of Exchange Notes, including: (i) impairment of the Company's ability
to obtain additional financing in the future; (ii) reduction of funds available
to the Company for its operations or for capital expenditures as a result of
the dedication of a substantial portion of the Company's net cash flow from
operations to the payment of principal of and interest on the Company's
indebtedness, including indebtedness under the Exchange Notes; (iii) the
possibility of an event of default under covenants contained in the Company's
debt instruments, including the Indenture and the Credit Facility, which, if
not cured or waived, could have a material adverse effect on the Company; (iv)
a relative competitive disadvantage if the Company is substantially more
leveraged than its competitors; and (v) an inability to adjust to rapidly
changing market conditions and consequent vulnerability in the event of a
downturn in general economic conditions or its business because of the
Company's reduced financial flexibility. The Company's ability to make
scheduled payments or to refinance its indebtedness depends on its financial
and operating performance, which, in turn, is subject to prevailing economic
conditions and to financial, business and other factors beyond its control.
Although the Company's cash flow from operations has historically been
sufficient to meet its debt service obligations, there can be no assurance that
the Company's operating results will continue to be sufficient for payment of
the Company's indebtedness, including indebtedness under the Exchange Notes.
See "Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

SUBORDINATION OF EXCHANGE NOTES

The Exchange Notes will be general unsecured obligations of the
Company, subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including borrowings under the Company's Credit
Facility. As of March 29, 1997, on a pro forma basis after giving effect to the
Old Notes Offering and the use of proceeds therefrom, the Company would have
had outstanding Senior Indebtedness of approximately $3.7 million and
additional availability to incur Senior Indebtedness under the Credit Facility.
Subject to certain limitations, the Indenture permits the Company to incur
additional indebtedness, including Senior Indebtedness. See "Description of
Exchange Notes -- Certain Covenants -- Limitation on the Incurrence of
Indebtedness and Issuance of Disqualified Stock." In addition, the Exchange
Notes will be effectively subordinated to liabilities of the Company's
subsidiaries, if any are created or acquired in the future. As a result of the
subordination provisions contained in the Indenture, in the event of a
liquidation or insolvency of the Company, the assets of the Company will be
available to pay obligations on the Exchange Notes and any remaining Old Notes
only after all Senior Indebtedness has been paid in full, and therefore there
may not be sufficient assets remaining to pay amounts due on any or all of the
Exchange Notes then outstanding. In addition, substantially all of the assets
of the Company are pledged to secure other indebtedness of the Company. See
"Description of Exchange Notes" and "Description of Credit Facility."

RESTRICTIONS IMPOSED BY THE CREDIT FACILITY

The Credit Facility requires the Company to maintain specified
financial ratios and to meet certain financial tests. In addition, the Credit
Facility restricts, among other things, the Company's ability to incur
additional indebtedness, make acquisitions or asset dispositions, create or
incur liens on any of the Company's assets, make certain payments and dividends
or merge or consolidate. A failure to comply with the restrictions contained in
the Credit Facility could lead to an event of default thereunder, which could
result in an acceleration of such indebtedness. Such acceleration would
constitute an Event of Default (as defined herein) under the Indenture. There
can be no assurance that the Company would have sufficient resources or have
access to sufficient resources to pay its obligations under the Credit Facility
or the Exchange Notes if such indebtedness is accelerated. See "Description of
Credit Facility" and "Description of Exchange Notes."

12
<PAGE> 19
REPURCHASE OF EXCHANGE NOTES UPON CHANGE OF CONTROL

Upon the occurrence of a Change of Control, the Company will be
required to offer to repurchase all or any part of the Exchange Notes at a
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest to the date of repurchase. Certain events involving a Change of
Control may result in an event of default under the Credit Facility and other
indebtedness of the Company that may be incurred in the future. An event of
default under the Credit Facility or other future indebtedness could result in
an acceleration of such indebtedness, in which case the subordination
provisions of the Exchange Notes would require payment in full (or provision
therefor) of all Senior Indebtedness before the Company may repurchase or make
other payments in respect of the Exchange Notes. See "Description of Exchange
Notes -- Repurchase at the Option of Holders -- Change of Control,"
"Description of Exchange Notes -- Subordination" and "Description of Credit
Facility." There can be no assurance that the Company would have sufficient
resources to repurchase the Exchange Notes or pay its obligations if the
indebtedness under the Credit Facility or other future Senior Indebtedness were
accelerated upon the occurrence of a Change of Control. Further, the provisions
of the Indenture may not afford holders of Exchange Notes protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving the Company that may adversely affect holders
of Exchange Notes, if such transaction does not result in a Change of Control.
In addition, the Credit Facility prohibits the Company from repurchasing any
Exchange Notes at the time of a Change of Control. There can be no assurance
that the Company will be able to obtain the consent of the lenders under the
Credit Facility to enable it to repurchase the Exchange Notes. The inability to
repurchase all of the tendered Exchange Notes would constitute an Event of
Default under the Indenture. These provisions may be deemed to have
anti-takeover effects and may delay, defer or prevent a merger, tender offer or
other takeover attempt. No assurance can be given that the terms of any future
indebtedness will not contain cross default provisions based upon Change of
Control or other defaults under such debt instruments.

FRAUDULENT CONVEYANCE

Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance law, if the
Company, at the time it issued the Old Notes, (a) incurred such indebtedness
with the intent to hinder, delay or defraud creditors, or (b)(i) received less
than reasonably equivalent value or fair consideration for the issuance of the
Old Notes and (ii)(A) was insolvent at the time of the incurrence, (B) was
rendered insolvent by reason of such incurrence (and the application of
proceeds therefrom, including the distribution of funds to Holding from such
proceeds), (c) was engaged or was about to engage in a business or transaction
for which the assets remaining with the Company constituted unreasonably small
capital to carry on its business, or (D) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they mature, then,
in each such case, a court of competent jurisdiction could avoid, in whole or
in part, the Old Notes or, in the alternative, subordinate the Old Notes to
existing and future indebtedness of the Company. The measure of insolvency for
purposes of the foregoing will vary depending upon the law applied in such
case. Generally, however, the Company would be considered insolvent if the sum
of its debts, including contingent liabilities, was greater than all of its
assets at fair valuation or if the present fair saleable value of its assets
was less than the amount that would be required to pay the probable liability
on its existing debts, including contingent liabilities, as they become
absolute and matured.

The Company believes that, for purposes of the United States
Bankruptcy Code and state fraudulent transfer or conveyance laws, the Old Notes
were issued without the intent to hinder, delay or defraud creditors and for
proper purposes and in good faith, and that the Company, after the issuance of
the Old Notes and the application of proceeds therefrom, is solvent, has
sufficient capital for carrying on its business and is able to pay its debts as
they mature. There can be no assurance, however, that a court passing on such
questions would agree with the Company's view.

13
<PAGE> 20
CYCLICALITY

Demand for the Company's fence product line is heavily dependent on
the level of residential and commercial construction activity in the United
States. Construction activity is cyclical and is affected by the strength of
the general economy, by the strength of the regional economies in areas the
Company serves and by other factors beyond the Company's control, including
governmental expenditures, changes in interest rates and changes in banking and
tax laws.

Demand for the Company's wire mesh product line is substantially
dependent on infrastructure projects, including roads, bridges, runways and
sewage and drainage projects. The Company estimates that approximately 66% of
its sales of wire mesh in fiscal year 1996 was attributable to the
infrastructure construction industry. Demand for the Company's concrete
accessories product line also is dependent to a significant extent on the
infrastructure construction industry. The Company estimates that approximately
50% of its sales of concrete accessories in fiscal year 1996 was attributable
to the infrastructure construction industry. The infrastructure construction
industry is largely dependent on levels of government spending for such
projects, which in turn is subject to a variety of factors, including factors
inherent in the political process and limitations imposed by budgetary
considerations.

Demand for the Company's concrete accessories product line also is
dependent to a significant extent on the commercial construction industry. The
Company estimates that approximately 50% of its sales of concrete accessories
in fiscal year 1996 was attributable to the commercial construction industry.
Although the Company believes that the commercial construction industry is
somewhat less cyclical than the residential construction industry, the
commercial construction industry has experienced periods of sharp decline, as
evidenced by the severe decline that confronted the entire construction
industry during the early 1990s.

SEASONALITY

Sales of the Company's fence products have historically reflected
significant seasonality, with a substantial portion of the fence product line's
sales occurring in the period from mid-February through July. The Company
believes that this seasonality is significantly more pronounced in the
residential fence market than in the commercial fence market. The Company
estimates that approximately 50% of its fence product sales in fiscal year 1996
was allocable to each of the commercial and residential construction
industries. With the exception of January and February, which typically have
represented "slow" months for the wire mesh and concrete accessories product
lines, the Company's sales of wire mesh and concrete accessories have tended to
be distributed fairly evenly throughout the year. Although the Company believes
that the wire mesh and concrete accessories product lines, which focus on the
commercial and infrastructure construction industries, are less seasonal than
the fence product line even in the country's coldest regions, the Company's
wire mesh and concrete accessories product lines may exhibit somewhat more
pronounced characteristics of seasonality as the Company expands its
distribution network, through acquisitions and openings, into areas of colder
climates.

AVAILABILITY AND PRICE OF STEEL ROD

The Company's principal raw material is steel rod. The Company
purchases over 350,000 tons of steel rod annually. More than 50% of the
Company's supply of steel rod is obtained from overseas. The Company's ability
to continue to acquire steel rod from overseas on favorable terms may be
adversely affected by fluctuations in currency exchange rates, foreign taxes,
duties, tariffs, trade embargoes and other import limitations. The Company
purchases all of the steel rod that it acquires from overseas through
Mannesmann. Although the Company believes that it would be able to effectively
replace Mannesmann as a source of supply if the need were to arise, there can
be no assurance that it would be able to do so. Because steel rod comprises a
substantial portion of the Company's cost of goods sold (32% in fiscal year
1996), any increase in steel rod cost could have a significant effect on the
Company's cost of goods sold. Although the Company has in the past been able
to pass along increases in steel rod prices to its customers, there can be no
assurance that it will be successful in doing so in the future.

COMPETITION

The industries in which the Company operates are highly competitive.
The Company competes against national and regional competitors, some of whom
have substantially greater financial resources than the Company. The uniformity

14
<PAGE> 21
of products among competitors results in substantial pressure on pricing and
profit margins. While the Company believes that its purchasing power, its
nationwide distribution network and marketing capabilities and its
manufacturing efficiency allow it to competitively price the Company's
products, there can be no assurance that the Company will be able to maintain
or increase its current market share for its products or compete successfully
in the future.

ACQUISITIONS AND INTEGRATION OF ADDITIONAL BUSINESSES

The Company's ability to increase revenues and operating cash flow
over time depends, in part, on its success in consummating future acquisitions
upon satisfactory terms and integrating the acquired companies or assets into
the Company's operations. Although the Company frequently engages in
discussions with various parties regarding possible acquisitions, there can be
no assurance that acquisition opportunities will continue to be available or
that, if available, such acquisitions can be financed or consummated on terms
acceptable to the Company. In addition, future acquisitions will place
increasing demands on the Company's management and operational resources. The
Company's future performance will depend, in part, on its ability to manage
expanding operations and to adapt its operational systems to such expansions.
There can be no assurance that the Company will succeed at effectively and
profitably managing the integration of any future acquisitions. See "Business
- -- Business Strategy -- Broaden Distribution Network" and "Business -- Business
Strategy -- Grow Through Strategic Acquisitions."

INFLUENCE BY PRINCIPAL STOCKHOLDERS IN MANAGEMENT DECISIONS

All of the outstanding capital stock of the Company is owned by
Holding. More than 98% of the capital stock of Holding is owned by MMI
Products, L.L.C. ("Parent"). CVC, together with certain of its employees and
certain other persons affiliated or otherwise associated with CVC
(collectively, the "Citicorp Holders"), own common units of Parent ("Parent
Common Units") representing approximately 49% of the total voting power of all
outstanding Parent Common Units. In addition, the Parent Common Units owned
by the Citicorp Holders are convertible, at the election of the Citicorp
Holders, into another class of Parent Common Units representing approximately
84% of the total voting power of all outstanding Parent Common Units. See
"Security Ownership."

Pursuant to the limited liability company agreement of Parent (the
"Limited Liability Company Agreement"), the LLC must vote the shares of Holding
capital stock owned by the LLC in such manner as to ensure that one of the
three members of the Board of Directors of Holding is selected by CVC, one
member is the Chief Executive Officer of Holding and one member is selected
jointly by CVC and the members of Parent who are at such time executive
officers of Holding. In addition, the Limited Liability Company Agreement
provides that certain key actions on the part of Parent or any of its
subsidiaries (including the Company) require the prior consent of CVC.

As a result of such ownership in Parent and such provisions of the
Limited Liability Company Agreement, the Citicorp Holders, and CVC in
particular, exercise a significant amount of influence over the management of
the Company.

DEPENDENCE ON KEY PERSONNEL

The Company's success will depend, in large part, on the efforts,
abilities and experience of its executive officers, including Julius S. Burns,
the Company's President and Chief Executive Officer, and other key employees of
the Company. The loss of the services of one or more of such individuals could
have a material adverse effect on the Company's business. The Company and Mr.
Burns have entered into the Amended and Restated Put Agreement (as defined
herein) pursuant to which Mr. Burns' estate will have, upon satisfaction of
certain conditions, the option during the 90 day period following his death to
cause Holding (or its designee) to repurchase such shares of Holding Common
Stock held by Mr. Burns at such time of his death as have a fair market value
of up to $2.0 million (the "Put Right"). The $2.0 million purchase price to be
paid by Holding upon exercise of the Put Right will be payable through the
application of proceeds payable under certain life insurance contracts
purchased by the Company. Mr. Burns' wife is the beneficiary under such life
insurance contracts. However, upon receipt of such proceeds, Mrs. Burns must
elect whether to return the $2.0 million in proceeds to the Company or retain
such proceeds and transfer to the Company the shares of Holding Common Stock
held by Mr. Burns at such time of his death as have a fair market value of $2.0
million. For a more complete description of the Amended and Restated Put
Agreement, see "Management - Put Agreement."

IMPACT OF ENVIRONMENTAL LAWS

The Company is subject to extensive and changing federal, state and
local environmental laws (including common law) and regulations ("Environmental
Laws") which govern among other things the discharge of pollutants into the air
and water as well as the handling and disposal of hazardous materials and could
impose liability for remediation costs or result in civil or criminal penalties
in cases of non-compliance. Compliance with Environmental Laws increases the
Company's costs of doing business. Additionally, Environmental Laws have been
subject to frequent change; therefore, the Company is unable to predict the
future costs or other future impact of Environmental Laws on its operations.
There can be no

15
<PAGE> 22
assurance that the Company will not incur material liability related to the
Company's operations and properties under Environmental Laws. See "Business --
Regulation -- Environmental Regulation."

LACK OF PUBLIC MARKET

Prior to the Exchange Offer, there has not been any public market for
the Old Notes. The Old Notes have not been registered under the Securities Act
and will be subject to restrictions on transferability to the extent that they
are not exchanged for Exchange Notes by holders who are entitled to participate
in the Exchange Offer. The holders of Old Notes (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who are not eligible to participate in the Exchange Offer are
entitled to certain registration rights, and the Company is required to file a
Shelf Registration Statement with respect to such Old Notes. The Exchange
Notes will constitute a new issue of securities with no established trading
market. The Exchange Notes will not be listed on any securities exchange and
the Company will not seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Company has
been advised by the Initial Purchaser that it intends to make a market in the
Exchange Notes; however, the Initial Purchaser is not obligated to do so, and
any such market making activities may be discontinued at any time without
notice. In addition, such market making activity may be subject to the limits
imposed by the Securities Act and the Exchange Act and may be limited during
the Exchange Offer and the pendency of the Shelf Registration Statement.
Therefore, there can be no assurance that an active market for the Exchange
Notes will develop or as to liquidity of a trading market for the Exchange
Notes.

Depending on prevailing interest rates, the market for similar
securities and other factors, including the financial condition of the Company,
the Exchange Notes may trade at a discount from their principal amount.

EXCHANGE OFFER PROCEDURES

Issuance of the Exchange Notes in exchange for the Old Notes pursuant
to the Exchange Offer will be made only after a timely receipt by the Company
of such Old Notes, a properly completed and duly executed Letter of Transmittal
and all other required documents. Therefore, holders of the Old Notes desiring
to tender such Old Notes in exchange for Exchange Notes should allow sufficient
time to ensure timely delivery. The Company is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof and, upon
consummation of the Exchange Offer, registration rights under the Registration
Rights Agreement generally will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transactions. Each Participating Broker-Dealer that receives Exchange
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. See "Plan of
Distribution." To the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Old Notes could be adversely affected. See "The Exchange Offer."

16
<PAGE> 23
USE OF PROCEEDS

The Company will not receive any cash proceeds from the issuance of
the Exchange Notes offered hereby. The Exchange Offer is intended to satisfy
certain of the Company's obligations under the Registration Rights Agreement.

The net proceeds to the Company from the Old Notes Offering were
approximately $116.1 million, after deducting discounts and commissions to the
Initial Purchaser and estimated offering expenses. The Company used the net
proceeds to (i) repay the Company's existing indebtedness under the term loan
portion of the Credit Facility of approximately $11.4 million, (ii) reduce the
Company's borrowings under the revolving loan portion of the Credit Facility by
approximately $37.7 million, (iii) repay the $10.0 million principal amount of,
plus accrued and unpaid interest on, the Mannesmann Senior Subordinated Debt
and (iv) distribute approximately $57.0 million to Holding for the redemption
by Holding of certain of its equity interests.

Indebtedness under the Credit Facility currently bears interest at a
floating rate (which weighted average rate was 8.53% at March 29, 1997). Prior
to the Old Notes Offering, the final maturity date of the Credit Facility was
December 12, 1999. In connection with the Old Notes Offering, the final
maturity date of the Credit Facility's revolving loan facility was extended to
December 12, 2001. See "Capitalization" and "Description of Credit Facility."

The Mannesmann Senior Subordinated Debt was terminated upon the
Company's payment thereof in full with proceeds from the Old Notes Offering.
The interest rate on the Mannesmann Senior Subordinated Debt was a floating
rate (which rate was 9.25% at March 29, 1997) and the Mannesmann Senior
Subordinated Debt was due and payable on December 13, 1999. The aggregate
principal amount of the Mannesmann Senior Subordinated Debt was increased from
$5.0 million to $10.0 million in December 1996. Proceeds from the additional
$5.0 million of Mannesmann Senior Subordinated Debt were used to repay
borrowings under the Credit Facility. See "Capitalization."

17
<PAGE> 24
CAPITALIZATION

The following table sets forth the actual cash and cash equivalents
and capitalization of the Company at March 29, 1997 and as adjusted to give
effect to the Old Notes Offering and the use of proceeds therefrom. This table
should be read in conjunction with "Use of Proceeds," "Selected Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Company's financial statements, including the notes
thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 29, 1997
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE
AMOUNTS)
<S> <C> <C>
Cash and cash equivalents ............................................... $ 953 $ 953
========= =========
Long-term debt, including current maturities:
Credit Facility:
Revolving credit facility(1) ....................................... $ 37,763 $ 230
Term loan facility(2) .............................................. 11,600 --
Mannesmann Senior Subordinated Debt ................................... 10,000 --
11 1/4% Notes due 2007 ................................................ -- 120,000
Capital lease obligations ............................................. 3,471 3,471
--------- ---------
Total long-term debt, including current
maturities .................................................. 62,834 123,701
Stockholder's equity (deficit):
Common stock, $1 par value; 500,000 shares authorized;
252,000 shares issued and outstanding .............................. 252 252
Additional paid-in capital ............................................ 14,695 14,695
Retained earnings (deficit)(3) ........................................ 14,514 (42,453)
--------- ---------
Total stockholder's equity (deficit) .......................... 29,461 (27,506)
--------- ---------
Total capitalization ..................................... $ 92,295 $ 96,195
========= =========
</TABLE>

- ---------

(1) As of April 15, 1997 (the day prior to the consummation of the Old
Notes Offering), the revolving credit facility had an outstanding
principal balance of $41.0 million. The increase in the amount
outstanding on such date over the amount outstanding as of March 29,
1997 was due primarily to seasonal borrowings. The Credit Facility
provides for total revolving credit facility borrowings of up to $48.5
million outstanding at any time subject to a maximum borrowing base
limit. If the Old Notes Offering had been consummated on March 29,
1997, the Company would have had available borrowing capacity of
$43.5 million under the revolving credit portion of the Credit
Facility.

(2) The principal balance of the term loan portion of the Credit Facility
as of April 15, 1997 was approximately $11.4 million, based on the
scheduled monthly mandatory principal payments of $200,000 beginning
February 1, 1997. The term loan facility was terminated with the
consummation of the Old Notes Offering and the application of proceeds
therefrom.

(3) The reduction in retained earnings results from a distribution of
approximately $57.0 million to Holding used to redeem certain of
Holding's equity interests.

18
<PAGE> 25
SELECTED FINANCIAL DATA

The following table sets forth selected historical financial data for
the Company for each of the three fiscal years in the period ended December 28,
1996 and for the three month periods ended March 30, 1996 and March 29, 1997
and selected pro forma financial data for the fiscal year ended December 28,
1996 and the three month period ended March 29, 1997. The selected historical
financial data for the three fiscal years in the period ended December 28, 1996
and the balance sheet data as of December 28, 1996 were derived from the
audited financial statements of the Company which have been audited by Ernst &
Young LLP, independent auditors. The selected historical financial
information for the three month periods ended March 30, 1996 and March 29, 1997
and the balance sheet data as of March 29, 1997, have been derived from the
unaudited interim financial statements of the Company and include, in the
opinion of the Company, all adjustments (consisting only of normal recurring
accruals) necessary to fairly present the data for such periods. The selected
pro forma financial data below reflect adjustments to the historical financial
statements of the Company to give effect to the consummation of the Old Notes
Offering and the application of proceeds therefrom, as if each had occurred on
December 31, 1995 (the beginning of fiscal year 1996). The selected pro forma
financial data are not necessarily indicative of either future results of
operations or the results that might have occurred had the transactions
actually been consummated as of December 31, 1995. This information should be
read in conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's financial statements,
including the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
--------------------------------------------------------- ---------------------
MARCH 30, MARCH 29,
1992 1993 1994 1995(1) 1996(2) 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales ................................... $ 152,435 $ 166,731 $ 197,617 $ 233,284 $ 283,402 $ 51,777 $ 69,587
Cost of sales ............................... 129,433 141,614 163,473 196,123 238,439 44,182 60,426
--------- --------- --------- --------- --------- --------- ---------
Gross profit ................................ 23,002 25,117 34,144 37,161 44,963 7,595 9,161
Selling, general and administrative
expenses .................................. 16,168 16,397 17,098 19,196 23,143 5,368 6,315
Nonrecurring expenses(3) .................... -- 1,031 -- -- 3,106 -- --
Other expenses (income), net ................ 347 230 419 166 721 (34) (42)
Interest expense ............................ 6,923 6,144 6,237 7,395 7,429 1,774 1,502
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes ........... (436) 1,315 10,390 10,404 10,564 487 1,386
Provision for income taxes .................. 120 499 2,878 4,058 4,227 196 554
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) ........................... $ (556) $ 816 $ 7,512 $ 6,346 $ 6,337 $ 291 $ 832
========= ========= ========= ========= ========= ========= =========

Cash Flow Data:
Net cash provided by (used in) operating
activities ................................ $ 2,281 $ (145) $ 11,516 $ 12,745 $ 15,491 $ (71) $ (5,216)
Net cash used in investing activities ....... (1,448) (1,049) (2,452) (14,741) (24,314) (250) (1,149)
Net cash provided by (used in) financing
activities ................................ (516) 665 (8,891) 3,681 6,894 (1,630) 7,084
Other Financial Data:
Adjusted EBITDA(4) .......................... $ 9,481 $ 11,531 $ 19,997 $ 21,613 $ 28,047 $ 3,198 $ 4,194
Depreciation and amortization ............... 2,994 3,041 3,370 3,814 4,448 937 1,306
Capital expenditures ........................ 1,464 1,100 2,470 2,246 3,545 268 1,158
Cash dividends(5) ........................... 176 -- 308 -- -- -- --
Ratio of earnings to fixed charges(6) ....... -- 1.2x 2.5x 2.3x 2.3x 1.3x 1.8x

Pro Forma Financial Data:
Cash interest expense(7) .................... -- -- -- -- $ 15,470 -- $ 3,633
Ratio of Adjusted EBITDA to cash
interest expense(8) ....................... -- -- -- -- 1.8x -- --
Ratio of long-term debt to Adjusted
EBITDA(8) ................................. -- -- -- -- 4.4x -- --
Ratio of earnings to fixed charges(6) ....... -- -- -- -- 1.1x -- --
</TABLE>

19
<PAGE> 26
<TABLE>
<CAPTION>
FISCAL YEAR MARCH 29,
---------------------------------------------------- --------
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data (at period end):
Working capital ............................. $ 17,831 $ 24,982 $ 29,222 $ 36,563 $ 33,149 $ 41,729
Total assets ................................ 74,434 77,058 86,498 103,856 135,263 146,858
Total long-term debt, including current
maturities ................................ 50,907 51,935 44,454 49,485 55,278 62,834
Stockholder's equity ........................ 1,240 2,056 9,260 15,606 28,534 29,461
</TABLE>

- ---------

(1) Includes historical results of operations of the assets acquired in
March 1995 pursuant to the Semmerling/Pioneer Acquisition for the
period from April 1, 1995 through December 30, 1995.

(2) Includes historical results of operations of the net assets acquired
pursuant to the Atlantic Steel Acquisition for the period from August
1, 1996 through December 28, 1996.

(3) In fiscal year 1996, the Company recorded nonrecurring expenses
resulting from the modification of stock options granted in previous
years as part of the Recapitalization of the Company and Holding. See
Note 2 to the audited financial statements included elsewhere in this
Prospectus. In fiscal year 1993, the Company recorded nonrecurring
expense of $1.0 million relating to the write-down of certain
intangible assets.

(4) Adjusted EBITDA is defined as the sum of (i) income before interest,
income taxes, depreciation and amortization, and certain nonrecurring
expenses (see footnote (3) above) ("EBITDA") and (ii) for fiscal year
1996 the contribution to EBITDA of the net assets acquired in the
Atlantic Steel Acquisition effective July 31, 1996 on a pro forma
basis as if the Atlantic Steel Acquisition had occurred on December
31, 1995 (the beginning of fiscal year 1996). The pro forma
contribution to EBITDA for the Atlantic Steel Acquisition of $2.5
million is based on actual revenues, for the first six months of
fiscal year 1996, adjusted for the Company's costs of materials and
operating costs, which was consistent with actual results for the five
months of operations since August 1, 1996. EBITDA is presented because
it is a widely accepted financial indicator of a company's ability to
service and incur debt. EBITDA should not be considered in isolation
from or as a substitute for net income or cash flow measures prepared
in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.

(5) Cash dividends in fiscal years 1992 and 1994 represent amounts
required to redeem the equity interests in Holding held by former
stockholders which had received equity interests in Holding upon the
sale to the Company of certain assets acquired for the fence product
line.

(6) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness plus the
interest portion of rental expense on noncancelable leases (estimated
to be representative of an interest factor), and amortization of
deferred financing costs. For fiscal year 1992 and the pro forma three
months ended March 29, 1997, earnings were insufficient to cover fixed
charges by approximately $436,000 and $873,000, respectively.

(7) Pro forma cash interest expense represents pro forma total interest
expense less $579,000 and $128,000 of amortization of deferred
financing costs for the fiscal year ended December 28, 1996 and the
three months ended March 29, 1997, respectively. Pro forma cash
interest expense has been based on the 11.25% rate on the Old Notes.

(8) The ratio for the three months ended March 29, 1997 is not presented
as the Company does not believe it is indicative of the ratio that may
be expected for the fiscal year ended January 3, 1998.

20
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following is an analysis of the financial condition and results of
operations of the Company. This analysis should be read in conjunction with the
Company's financial statements, including the notes thereto, appearing
elsewhere in this Prospectus.

GENERAL

Product Lines

The Company's fence product line includes chain link fence fabric,
fittings and other related products which are manufactured and distributed by
the Company, as well as wood, vinyl, aluminum and ornamental iron fence
products which are manufactured by third parties and distributed by the
Company.

The Company's wire mesh product line consists of various classes of
wire mesh, which serves as a structural reinforcing grid for concrete
construction, including concrete pipe, roads, bridges, runways and sewage and
drainage projects. As a result of the Atlantic Steel Acquisition, the Company
also produces galvanized strand wire.

The Company's concrete accessories product line consists of over 2,000
specialized accessories used in concrete construction, including products used
to position and install steel reinforcing bar and wire mesh reinforcing grid.

The following table sets forth net sales by product line for the
periods indicated:

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
---------------------------------------------------- --------------------------------
1994 1995 1996 MARCH 30, 1996 MARCH 29, 1997
---------------- ---------------- ---------------- --------------- ---------------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fence ...................... $ 117.2 59.3% $ 145.0 62.1% $ 165.0 58.2% $ 30.5 58.9% $ 33.4 48.0%
Wire mesh .................. 55.9 28.3 58.0 24.9 82.9 29.3 13.6 26.2 27.9 40.1
Concrete accessories ....... 24.5 12.4 30.3 13.0 35.5 12.5 7.7 14.9 8.3 11.9
-------- ----- -------- ----- -------- ----- ------- ----- ------- -----

Net sales .................. $ 197.6 100.0% $ 233.3 100.0% $ 283.4 100.0% $ 51.8 100.0% $ 69.6 100.0%
</TABLE>

Cyclicality

The Company's products are used in the residential, commercial and
infrastructure construction industries. These industries are both cyclical and
seasonal, and changes in demand for construction services have a material
impact on the Company's sales and profitability. Except for infrastructure
construction, the entire construction industry suffered a decline from 1990
through 1991 due to the combined impact of a cyclical recession and other
factors. The Company's net sales decreased 11.4% from $154.4 million in fiscal
year 1989 to $136.8 million in fiscal year 1991 and operating income declined
12.0% from $7.0 million in fiscal year 1989 to $6.2 million in fiscal year
1991. The Company's decline in net sales and operating income during this
period was exacerbated by management changes and a reorganization of the
Company's operations. Despite this downturn, the Company continued its ongoing
strategy of acquiring smaller competitors who were unable to withstand the
downturn, especially in the fence business. In addition to these acquisitions,
the Company opened distribution centers in new geographic markets. In 1992, the
construction industry began to recover and the Company's financial performance
began to improve.

Although the Company believes that another cyclical downturn is
inevitable, the Company has implemented strategies which it believes will
mitigate the impact of any such downturn on its future operating results and
liquidity. First,

21
<PAGE> 28
the Company has increased its focus on products used in the commercial and
infrastructure construction industries, which historically have been less
cyclical than the residential construction industry. Second, the Company has
positioned its wire mesh and concrete accessories product lines to benefit from
anticipated increases in infrastructure spending. Third, the Company has
expanded its distribution network to serve diverse areas of high population and
construction growth, as well as to limit the effects of any regional economic
downturns.

Certain Acquisitions

On March 31, 1995, the Company strengthened its market position by
adding eight additional fence distribution centers and expanding its fence
product line with the addition of a new line of vinyl coated pipe and tubing
pursuant to the Semmerling/Pioneer Acquisition. The Semmerling/Pioneer
Acquisition contributed $21.3 million to the Company's net sales of fence
products for the nine month period ended December 30, 1995 and resulted in
increased sales to customers in locations served by pre-existing Company
distribution centers. In fiscal year 1996, the Company's fence sales benefited
from the inclusion of the Semmerling/Pioneer Acquisition for a full 12 months.
The Midwestern markets served by the distribution centers acquired in the
Semmerling/Pioneer Acquisition, together with the Company's existing
distribution centers in the Midwestern United States contributed $11.1 million
to the fence product line's $20.0 million increase in net sales in fiscal year
1996.

On July 31, 1996, the Company broadened its wire mesh distribution
network, increased its wire mesh production capacity and expanded its wire mesh
product line pursuant to the Atlantic Steel Acquisition, whereby the Company
acquired operating plants in Baltimore, Maryland, Tampa, Florida and Oregon,
Ohio, along with certain equipment. The Atlantic Steel Acquisition
significantly increased the Company's wire mesh production capacity and
expanded its wire mesh product line through the addition of galvanized strand
wire, which is sold to a diversified group of manufacturers and processors of
wire products. The Atlantic Steel Acquisition contributed $25.3 million of net
sales in fiscal year 1996.

The following table sets forth certain operating results as a
percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
----------------------- ------------------------------
1994 1995 1996 MARCH 30,1996 MARCH 29, 1997
----- ----- ----- ------------- --------------
(UNAUDITED)
(PERCENTAGE OF NET SALES)
<S> <C> <C> <C> <C> <C>
Net sales ......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales ..................................... 82.7 84.1 84.1 85.3 86.8
----- ----- ----- ----- -----
Gross profit ...................................... 17.3 15.9 15.9 14.7 13.2
Selling, general and administrative (SG&A)
expenses......................................... 8.7 8.2 8.2 10.4 9.1
Nonrecurring expenses -- stock options ............ -- -- 1.1 -- --
Other expenses, net ............................... 0.2 0.1 0.3 (0.1) (0.1)
----- ----- ----- ----- -----
Income before interest expense and income taxes ... 8.4 7.6 6.3 4.4 4.2
Interest expense .................................. 3.1 3.2 2.6 3.4 2.2
----- ----- ----- ----- -----
Income before income taxes ........................ 5.3 4.4 3.7 1.0 2.0
Provision for income taxes ........................ 1.5 1.7 1.5 0.4 0.8
----- ----- ----- ----- -----
Net income ........................................ 3.8% 2.7% 2.2% 0.6% 1.2%
===== ===== ===== ===== =====
EBITDA margin(1) .................................. 10.1% 9.3% 9.0%(2) 6.2% 6.0%
</TABLE>

- ---------

(1) EBITDA is a widely accepted financial indicator of a company's ability
to service and incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income or cash flow measures
prepared in accordance with generally accepted accounting principles
or as a measure of a company's profitability or liquidity. EBITDA
margin is defined as (i) the sum of income before interest, income
taxes, depreciation and amortization, and nonrecurring expenses,
divided by (ii) net sales.

(2) EBITDA margin for fiscal year 1996 excludes the pro forma effect of
the Atlantic Steel Acquisition for months preceding the date of
acquisition.

22
<PAGE> 29
COMPARISON OF THREE MONTHS ENDED MARCH 29, 1997 AND MARCH 30, 1996

Net Sales. Net sales increased 34% or $17.8 million in the first
quarter of fiscal year 1997 over the first quarter of fiscal year 1996.
Approximately 81% or $14.4 million of the fiscal year 1997 sales increase is
attributable to the Atlantic Steel Acquisition which occurred on July 31, 1996
and the Florida Wire and Gateway Acquisitions, which occurred in the fourth
quarter of fiscal year 1996. The Company currently is not a party to any
agreement pertaining to any business acquistions that would cause continued
high growth in net sales. It is an essential element of the Company's
strategy, however, to identify, and where justified by market and economic
forces, acquire businesses at a valued price. The remaining increase of
approximately $3.4 million resulted from increased sales activity in wood and
vinyl fence systems and bulk sales of tubing.

Gross Profit. Gross profit in the first quarter of fiscal year 1997
increased approximately $1.6 million, or 21%, over the first quarter of fiscal
year 1996 due to the increase in net sales. Gross margin percentages declined
by approximately 1.5% due primarily to increased sales in lower margin mesh
products as a result of the Atlantic Steel and Florida Wire Acquisitions. Also
contributing to the lower gross margin percentages were start-up costs of a new
concrete accessories product line manufacturing facility placed into operation
during the first quarter of fiscal year 1997.

SG&A Expenses. Selling, general and administrative expenses increased
approximately $1.0 million but declined as a percentage of net sales during the
first quarter of fiscal year 1997 from 9% as compared to 10% in the first
quarter of fiscal year 1996. The gross margin percentage decline due to the
Atlantic Steel and Florida Wire Acquisitions was offset by the relatively low
levels of selling expense required for these mesh and wire products which are
generally sold in truckload quantities direct from the manufacturing plant to
the customer. No distribution center sales force is required for mesh and wire
products as is required in the fence and concrete accessories product lines.

Interest Expense. Interest expense declined $272,000, or 15%, during
the first quarter of fiscal year 1997 as compared to the first quarter of
fiscal year 1996. Although borrowing levels were higher during the first
quarter of fiscal year 1997 than in fiscal year 1996 as a result of acquisition
activity in the latter part of fiscal year 1996, these increases were more than
offset by: (a) lower rates and administrative fees under the Credit Facility;
(b) redemption in December 1996 of subordinated notes payable to affiliates of
$14.8 million that incurred interest at an average rate of 13.5% in 1996; and
(c) reduction in interest for inventory purchases financed by a supplier. If
the proceeds of the Old Notes Offering had been available at the beginning of
the three months ended March 29, 1997, pro forma interest expense would have
been $3.8 million, an increase of $2.3 million over the $1.5 million actually
incurred. Pro forma interest expense is based on the 11.25% rate on the Old
Notes plus the amortization of deferred financing costs over the life of the
debt.

Net Income. Net income increased 186% in the first quarter of fiscal
year 1997 to $832,000, up $541,000 over the first quarter of fiscal year 1996.
The improvement was due primarily to increased sales and gross profits of mesh
products, the introduction of galvanized wire and steeltex mesh sales resulting
from the Atlantic Steel Acquisition in fiscal year 1996, and lower interest
expense. If the proceeds of the Old Notes Offering had been available at the
beginning of the three months ended March 29, 1997, pro forma net loss would
have been $524,000, a decrease of $1,356,000 from the $832,000 net income
actually reported. The Company currently is not a party to any agreement
pertaining to any business acquisitions that would cause continued high growth
in net income.

COMPARISON OF FISCAL YEARS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995

Net Sales. The Company's net sales increased to $283.4 million in
fiscal year 1996, an increase of $50.1 million, or 21.5%, over fiscal year
1995. The wire mesh product line, which contributed $24.9 million of the
increase, benefitted from the Atlantic Steel Acquisition, which added $25.3
million of net sales in fiscal year 1996, and new business. Partially
offsetting these increases was the mid-year loss of a customer due to price
competition. The fence product line, which contributed $20.0 million of the
total net sales increase, benefitted in fiscal year 1996 from the full twelve
month impact of the Semmerling/Pioneer Acquisition. The fence product line also
benefitted from the opening of a new fence distribution center in Raleigh,
North Carolina and Olympics-related construction activity in the Atlanta,
Georgia area. The concrete accessories product line, which contributed $5.2
million of the increase in net sales, benefitted primarily from continued
increases in sales of paving products and the opening of three new distribution
centers. The Company currently is not a party to any agreement pertaining to
any business acquisitions that would cause continued high growth in net sales.
It is an essential element of the Company's strategy, however, to identify, and
where justified by market and economic forces, acquire businesses at a valued
price.

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<PAGE> 30
Gross Profit. The Company's gross profit increased to $45.0 million in
fiscal year 1996, an increase of $7.8 million, or 21.0%, over fiscal year 1995.
Gross profit margin was 15.9% in both years. The increase in gross profit was
primarily related to higher sales volume. The Atlantic Steel Acquisition
contributed $2.9 million of the gross profit increase for the five months of
operations included in fiscal year 1996. The fence product line contributed
$2.7 million of the gross profit increase, $1.7 million of which was from
Midwestern distribution centers benefiting from a full 12 months impact of the
Semmerling/Pioneer Acquisition.

SG&A Expenses. The Company's SG&A expenses increased to $23.1 million
in fiscal year 1996, an increase of $3.9 million, or 20.6%, from fiscal year
1995. SG&A expense as a percentage of net sales did not change in fiscal year
1996 versus fiscal year 1995. Acquisitions and openings of new distribution
centers across all product lines contributed to the increase as well as higher
provisions for uncollectible accounts receivable and incentive compensation
expense as compared to fiscal year 1995.

Nonrecurring Expenses -- Stock Options. During fiscal year 1996, the
Company incurred certain nonrecurring expenses relating to Holding stock
options granted in previous years to employees and a supplier of the Company.
The aggregate effect of these expenses was $3.1 million (see Note 2 to the
financial statements included elsewhere in this Offering Memorandum).

Other Expenses, Net. Other expenses, net, increased $0.6 million in
fiscal year 1996 to $0.7 million as compared to fiscal year 1995. Approximately
$0.3 million of the increase was due to net gains of $0.1 million on disposals
of fixed assets in fiscal year 1995 compared to net losses on disposals of $0.2
million in fiscal year 1996. Charges relating to closure of a concrete
accessories manufacturing facility during fiscal year 1996 and tornado damage
at a wire mesh facility, contributed $0.2 million to the increase.

Interest Expense. Interest expense was $7.4 million in both fiscal
year 1996 and fiscal year 1995. In fiscal year 1996, the Company's interest
expense decreased due to the repayment of deferred interest on subordinated
debt obligations (the deferral of interest payments had previously resulted in
higher rates) and lower rates on the Company's revolving loan portion of its
Credit Facility. These reductions were offset by the Company's higher level of
debt which increased primarily to finance acquisitions.

Provision for Income Taxes. The Company's effective tax rate in fiscal
year 1996 of 40% was one percentage point higher than the rate for fiscal year
1995 as a result of the Company being subject to a higher statutory federal
income tax rate and the expansion of operations in states with higher effective
income tax rates.

Net Income. Net income was $6.3 million in both fiscal year 1996 and
fiscal year 1995. Higher income was offset primarily by the $3.1 million of
nonrecurring expenses ($1.9 million net of tax) relating to Holding stock
options.

COMPARISON OF FISCAL YEARS ENDED DECEMBER 30, 1995 AND DECEMBER 31, 1994

Net Sales. Net sales increased to $233.3 million in fiscal year 1995,
an increase of $35.7 million, or 18.0%, over fiscal year 1994. The fence
product line contributed $27.8 million to the increase. The eight fence
distribution centers acquired in the Semmerling/Pioneer Acquisition contributed
$21.3 million to this increase. The concrete accessories product line
contributed $5.8 million to the increase in net sales due primarily to
increased concrete construction activity, increased sales of concrete paving
products, and price increases. Net sales of wire mesh increased $2.1 million,
or 3.8%, in fiscal year 1995 compared to fiscal year 1994.

Gross Profit. The Company's gross profit increased to $37.2 million in
fiscal year 1995, an increase of $3.0 million or 8.8% over fiscal year 1994,
due to higher sales volumes and price increases from the concrete accessories
product line. Gross profit margin decreased to 15.9% in fiscal year 1995 from
17.3% in fiscal year 1994, due primarily to unusually low

24
<PAGE> 31
raw material costs in fiscal year 1994 (steel rod acceptable for producing
non-critical wire mesh products was acquired at below market prices) and the
addition in 1995 of fixed costs for the fence distribution centers and vinyl
coating operation acquired pursuant to the Semmerling/Pioneer Acquisition,
without an immediate corresponding increase in net sales.

SG&A Expenses. SG&A expenses increased to $19.2 million in fiscal year
1995, an increase of $2.1 million or 12.3% over fiscal year 1994, due primarily
to the increased sales force for the distribution centers acquired in the
Semmerling/Pioneer Acquisition, and the amortization of intangibles relating to
that acquisition. SG&A expense as a percentage of net sales decreased to 8.2%
in fiscal year 1995 from 8.7% in fiscal year 1994. A decrease in the provision
for incentive compensation coupled with consolidation efficiencies in financial
and administrative functions relating to the Semmerling/Pioneer Acquisition
accounted for the majority of the improvement. Minimal additional financial and
administrative expense was incurred in fiscal year 1995 despite revenue growth
of $35.7 million over fiscal year 1994.

Interest Expense. Interest expense increased from $6.2 million in
fiscal year 1994 to $7.4 million in fiscal year 1995 due primarily to the
financing of higher levels of raw material purchases, other working capital
needs and the Semmerling/Pioneer Acquisition.

Provision for Income Taxes. Although income before income taxes in
both fiscal years 1995 and 1994 was $10.4 million, the provision for income
taxes increased to $4.1 million (an effective tax rate of 39.0%) in fiscal year
1995, an increase of $1.2 million over fiscal year 1994. The fiscal year 1994
provision of $2.9 million (an effective tax rate of 27.7%) benefited from the
carry forward of net operating losses from previous years. No further
significant carry forwards were available for the fiscal year 1995 provision.

Net Income. The Company's net income of $6.3 million in fiscal year
1995 decreased $1.2 million or 15.5% from $7.5 million for fiscal year 1994.
The decrease was primarily the result of unusually high fiscal year 1994 gross
profits, and net operating loss carry forwards no longer being available to
reduce the fiscal year 1995 income tax provision.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash needs have historically been for operating
expenses, working capital, interest payments, capital expenditures for ongoing
operations and business acquisitions. In fiscal year 1996, the Company's
primary sources of capital to finance such needs included bank borrowings and
cash flow from operations. In addition, in fiscal year 1996, the Company repaid
$14.8 million of subordinated notes payable primarily to affiliates, plus
accrued interest. To finance the repayment (i) Holding made a capital
contribution to the Company of approximately $3.5 million in cash and loaned
the Company approximately $5.8 million and (ii) the Company borrowed an
additional $5.0 million of Mannesmann Senior Subordinated Debt and an
additional $1.0 million of bank debt.

During the first quarter of 1997, $5.2 million of cash was used for
operating expenses and working capital as compared to $71,000 in the comparable
period of 1996. The first quarter 1997 increase in accounts receivable
decreased cash flow from operations by almost $2.2 million more than the first
quarter of 1996 due to higher sales levels primarily as a result of the
Atlantic Steel Acquisition. Additional cash of $2.3 million was also utilized
during the first quarter of 1997 to redeem certain equity interests in Holding.
Capital expenditures increased in the first quarter of 1997 over the comparable
1996 period due primarily to investments in leasehold improvements and
equipment for a new concrete accessories product line manufacturing facility.
Investments in capital equipment during the three months ended March 30, 1996
and March 29, 1997 were $0.3 million and $1.2 million, respectively. Funds for
operating and investing activities were provided during the first quarter of
1997 through the Credit Facility.

Net cash provided by operating activities in fiscal year 1996 was
$15.5 million as compared to $12.7 million in fiscal year 1995. The increase of
$2.8 million was due primarily to increased fiscal year 1996 income after
excluding non-cash charges of $3.1 million ($1.9 million net of tax) relating
to stock options. Cash provided by operating activities

25
<PAGE> 32
increased from $11.5 million in fiscal year 1994 to $12.7 million in fiscal
year 1995 due primarily to working capital reductions in fiscal year 1995
compared to working capital increases in fiscal year 1994.

Although EBITDA should not be considered in isolation from or as a
substitute for cash flow measures prepared in accordance with generally
accepted accounting principles or as a measure of a company's liquidity, it is
a widely accepted financial indicator of a Company's ability to incur and
service debt. EBITDA is defined as the sum of income before interest, income
taxes, depreciation and amortization, and non-recurring expenses. For the
quarters ended March 29, 1997, and March 30, 1996, EBITDA was $4.2 million and
$3.2 million, respectively. The increase in sales and income resulting from the
Atlantic Steel Acquisition, which occurred on July 31, 1996 and the Florida
Wire and Gateway Acquisitions, which occurred in the fourth quarter of fiscal
year 1996 was the primary cause of the increase in EBITDA. The Company's
EBITDA of $25.5 million for fiscal year 1996 was $3.9 million or 18.2% higher
than the $21.6 million of EBITDA for fiscal year 1995. EBITDA contributed by
the Atlantic Steel Acquisition in fiscal year 1996 was $2.5 million. The
Company's EBITDA of $21.6 million for fiscal year 1995 increased $1.6 million or
8.1% over the $20.0 million in EBITDA for fiscal year 1994 due primarily to
sales growth in the fence product line (mostly from the Semmerling/Pioneer
Acquisition) and price increases from the concrete accessories product line.

The Company invested $2.5 million, $2.2 million and $3.5 million in
capital expenditures during fiscal years 1994, 1995, and 1996, respectively.
When the value of equipment acquired under capital lease obligations is
included, the total investment in each of the three fiscal years was $3.6
million, $3.5 million and $5.0 million, respectively. The Company's capital
expenditures generally relate to the replacement or refurbishment of machinery
and equipment. Approximately $4.0 million of fiscal year 1997 budgeted capital
expenditures of $5.4 million reflects replacement and refurbishment
expenditures. The remaining $1.4 million is primarily for the expansion of wire
mesh product line manufacturing capabilities.

The Company has pursued and intends to continue to pursue a strategy
of business acquisitions that will broaden its distribution network, complement
or extend its existing product lines or increase its production capacity. Such
acquisitions utilized cash of $20.9 million and $13.7 million in fiscal year
1996 and fiscal year 1995, respectively.

The Company expects that anticipated cash flows from operations (net
of increased interest costs) and the incurrence of additional lease obligations
will, absent acquisitions, result in minimal, if any, borrowings under the
Company's revolving loan portion of its Credit Facility for the foreseeable
future. The revolving loan portion of the Company's Credit Facility is also
expected to be available to finance future acquisitions. It is possible that,
depending upon the Company's future operating cash flows and the size of
potential acquisitions, the Company will seek additional sources of financing
subject to limitations set forth in the Indenture.

Although interest expense will be higher as a result of the Old Notes
Offering, the Company will no longer be required to fund Holding's dividend
obligations to holders of its preferred stock and preferred stock options,
which were redeemed with proceeds from the Old Notes Offering. The projected
cash outflow for the higher level of interest expense when mitigated by income
tax deductions will be less than the sum of previous interest expense and the
obligations to fund non-deductible preferred stock dividends to Holding.

EFFECT OF INFLATION

The impact of inflation on the Company's operations has not been
significant in recent years. There can be no assurance, however, that a high
rate of inflation in the future will not have an adverse effect on the
Company's operating results.

SEASONALITY

Sales of the Company's products in the fence product line have
historically reflected significant elements of seasonality with a substantial
portion of the Company's fence product line sales occurring in the period from
mid- February through July. Fence sales can remain strong into the early autumn
if weather conditions remain favorable. With the exception of January and
February, which typically have represented "slow" months for the wire mesh and
concrete accessories product lines, the Company's sales for wire mesh and
concrete accessories have tended to be distributed fairly evenly throughout the
year. Although the Company believes that the wire mesh and concrete accessories
businesses, which focus on the commercial and infrastructure construction
industries, are less seasonal than the fence business even in the country's
coldest regions, the Company's wire mesh and concrete accessories product lines
may exhibit somewhat more pronounced characteristics of seasonality as the
Company expands its distribution network, through acquisitions and openings
into areas of colder climates in an effort to further expand its distribution
network.

26
<PAGE> 33
BUSINESS

GENERAL

Demand for the Company's products is subject to trends in the
residential, commercial and infrastructure construction industries. The Company
is increasing its focus on products used in the commercial and infrastructure
construction industries, which historically have been less seasonal and less
cyclical than the residential construction industry. Although the Company
estimates that approximately 50% of its fence sales in fiscal year 1996 were
attributable to each of the commercial and residential construction industries,
the Company has implemented strategies designed to further increase the
percentage of its fence sales to the commercial construction industry.
Specifically, the Company is emphasizing its "authorized dealer program"
pursuant to which leading fence contractors throughout the country have agreed
to purchase at least half of their fence requirements from the Company. As a
result, the number of dealers participating in the Company's program has
increased from approximately 150 in fiscal year 1994 to approximately 300 in
fiscal year 1996. In addition, the Company's wire mesh and concrete accessories
product lines, which have been increasing as a percentage of the Company's
total net sales, are marketed primarily to the commercial and infrastructure

27
<PAGE> 34
construction industries, rather than the residential construction industry. The
Company estimates that approximately 73% of its wire mesh sales in fiscal year
1996 was attributable to the commercial and infrastructure construction
industries (with sales to the infrastructure and commercial construction
industries representing approximately 66% and 7%, respectively). The Company
estimates that substantially all of its concrete accessories sales in fiscal
year 1996 were attributable to the commercial and infrastructure construction
industries (with sales to each of the commercial and infrastructure
construction industries representing approximately 50%). In addition, the
Company anticipates that demand for the products in its wire mesh and concrete
accessories product lines is likely to increase as the level of infrastructure
development activity increases. The Company expects spending for infrastructure
projects to continue to increase over the next decade, as major elements of the
nation's infrastructure require replacement or substantial improvement.

BACKGROUND

The Company, which was organized in 1953, was acquired by CVC and
members of the Company's management in 1986. The Company's products consisted
solely of the fence product line until 1989 when the Company acquired the wire
mesh and concrete accessories lines. Since 1989, the Company has grown through
strategic acquisitions to become a leading national supplier of construction
related products.

BUSINESS STRATEGY

INTRODUCE NEW PRODUCTS. The Company intends to further expand its product
offerings in each of its primary product lines to better serve its customers
and promote customer loyalty by providing "one-stop shopping." The Company
believes that its extensive distribution network provides a platform for
introducing new products manufactured by the Company or third parties as well
as for new products that the Company acquires through acquisitions. The Company
recently expanded its concrete accessories product line to include reinforcing
bar splicing products and welded dowel assemblies. The Company also expanded
its wire mesh product line to include galvanized strand wire as a result of its
purchase of certain assets from Atlantic Steel in July 1996. In addition, the
Company expanded its fence product line to include wood, vinyl, aluminum and
ornamental iron fence, which products are manufactured by third parties and
distributed by the Company. Sales of third-party products, which represented
an estimated 42% of the Company's net sales in fiscal year 1996, allow the
Company to utilize its distribution network to increase sales and cash flow
without making significant capital investments.

CAPITALIZE ON RAW MATERIALS PURCHASING POWER. The Company benefits from
significant raw material purchasing economies since all of the products that it
manufactures are produced primarily from steel rod. The Company is able to buy
raw material in significantly larger quantities than would be the case if each
of the Company's product lines were part of separate stand-alone enterprises.
Because of such large volume purchases, the Company believes that it typically
purchases steel rod at a cost of up to 5% below industry standard. Since steel
rod cost comprises a substantial portion of the Company's cost of goods sold
(approximately 32% in fiscal year 1996), the Company believes that such cost
savings provide a significant competitive advantage. The Company intends to
continue to capitalize on its purchasing power to take advantage of raw
material acquisition costs that it believes are lower than industry standard.

28
<PAGE> 35
FOCUS ON INFRASTRUCTURE AND COMMERCIAL CONSTRUCTION INDUSTRIES. The Company has
positioned itself to take advantage of the anticipated increase in
infrastructure construction spending. Demand for the wire mesh and concrete
accessories product lines is dependent, to a significant extent, on
infrastructure development projects, including roads, bridges, runways and
sewage and drainage projects. Infrastructure construction spending is
anticipated to increase as major components of the nation's infrastructure are
replaced or substantially improved. In addition, the Company will continue to
focus on increasing its sales to the commercial and infrastructure construction
industries, which historically have been less seasonal and less cyclical than
the residential construction industry.

ACQUISITIONS

On July 31, 1996, the Company broadened its wire mesh distribution
network, increased its wire mesh production capacity and expanded its product
line through the Atlantic Steel Acquisition. Pursuant to the Atlantic Steel
Acquisition, the Company acquired operating plants in Baltimore, Maryland,
Tampa, Florida and Oregon, Ohio, along with certain equipment. The Atlantic
Steel Acquisition significantly increased the Company's wire mesh production
capacity and expanded its wire mesh product line through the addition of
galvanized strand wire, which is sold to a diversified group of manufacturers
and processors of wire products.

On October 14, 1996, the Company expanded its concrete accessories
distribution network and increased its production capacity for concrete
accessories pursuant to the Gateway Acquisition. The Gateway Acquisition
increased the Company's production capacity for steel reinforcing bar support
and strengthened the Company's presence in the Midwestern United States.

In addition, on October 31, 1996, the Company further broadened its
wire mesh distribution network and increased its wire mesh production capacity
with the Company's acquisition of a wire mesh production facility in North
Miami Beach, Florida pursuant to the Florida Wire Acquisition. The Florida Wire
Acquisition enhanced the Company's ability to capitalize on demand for wire
mesh created by the relatively high level of construction activity in Florida
and other areas of the Southeastern United States.

PRINCIPAL PRODUCTS

The Company manufactures and distributes its products along three
principal product lines: fence, wire mesh and concrete accessories. All of the
products manufactured by the Company are produced primarily from steel rod. The
Company has established leading market positions for each of its principal
product lines by, among other things, offering a wide variety of high quality
products that serve a broad range of functions for the residential, commercial
and infrastructure construction industries. Sales of fence, wire mesh and
concrete accessories accounted for approximately 58%, 29% and 13%,
respectively, of the Company's $283.4 million of net sales during fiscal year
1996.

29
<PAGE> 36
Fence

The Company manufactures and distributes a full line of high quality
fence products. The Company believes that it is the largest manufacturer of
chain link fence products in the United States and the second largest
distributor of fence products in the United States.

The Company manufactures fence products at six principal manufacturing
facilities. Such products include chain link fence fabric, a full line of
aluminum die cast and galvanized pressed steel fittings, PVC color coated wire
and vinyl coated colored pipe, tubing and fittings.

The Company also distributes a variety of fence products that it
purchases from third parties. Such products include pipe, tubing, wood, vinyl,
aluminum and ornamental iron fence products, gates, hardware and other related
products. In addition, the Company assembles wooden fence panels at several of
its facilities from wood materials purchased by the Company for use in the
installation of residential wood fences.

The Company's fence products are used in a variety of applications.
The Company's chain link fence products primarily serve as security fencing at
residential, commercial and governmental facilities, including manufacturing
and other industrial facilities, warehouses, schools, airports, correctional
institutions, military facilities, recreational facilities, swimming pools and
dog kennels. The Company's PVC color coated wire, together with vinyl coated
colored pipe, tubing and fittings, are used primarily for tennis courts and
other residential applications. The Company's other fence products are used
primarily in the construction of wood, vinyl, aluminum or ornamental iron fence
systems, and in the construction of all sizes and styles of fence gates for the
residential and commercial markets.

In fiscal year 1996, approximately 38% of the Company's sales of fence
products represented products manufactured by the Company. The remaining fence
products were purchased as finished goods from third parties for distribution
by the Company. The Company purchases the substantial majority of its finished
fence products from domestic manufacturers. The Company believes that its full
line of fence products provides a competitive advantage by enabling it to
provide "one-stop shopping" to its customers, thereby promoting customer
loyalty.

Wire Mesh

The Company manufactures and distributes one of the largest lines of
wire mesh in the United States. The Company believes that it is the largest
manufacturer and distributor of wire mesh products in the United States, with a
market share of approximately 29% for fiscal year 1996. The Company also
manufactures galvanized strand wire that is sold to other manufacturers of wire
products.

The Company manufactures three principal classes of wire mesh,
consisting of commodity building mesh (Class B-2), pipe mesh (Class C) and
structural mesh (Class D). The Company's wire mesh is produced from wire that
ranges in size from 1/8-inch diameter to 3/4-inch diameter, in both smooth and
deformed patterns. The Company believes that it is the only company that
provides this broad range of wire diameters in its wire mesh products. In
addition, the Company recently acquired production capacity for a line of
galvanized strand wire pursuant to the Atlantic Steel Acquisition.

Class B-2 mesh is a commodity building mesh used in housing and light
commercial construction, including driveways, slab foundations and concrete
walls. Class B-2 mesh accounted for approximately 24% of the Company's wire
mesh product line sales in fiscal year 1996. Class C mesh is used to construct
reinforced concrete pipe for, among other things, drainage and sewage systems
and water treatment facilities. The Company has been producing pipe mesh for
over 40 years and has been a leader in this market since the early 1970's. This
class of mesh accounted for approximately 33% of the Company's wire mesh
product line sales in fiscal year 1996. Class D mesh is a structural wire mesh
that is designed as an alternative to steel reinforcing bar for certain types
of concrete construction, including roads, bridges and other heavy construction
projects. The Company markets its structural mesh as a cost-effective
alternative to steel reinforcing bar. Although structural mesh has a higher
initial cost to the customer than does steel reinforcing bar, the Company
believes that the overall construction cost to the customer is generally lower
if structural mesh is utilized. This class of mesh accounted for approximately
31% of the Company's wire mesh product line sales in fiscal year 1996.
Galvanized strand wire is used

30
<PAGE> 37
by manufacturers and processors of all types of wire products, including
shelving, household and automotive products. Galvanized strand wire accounted
for approximately 11% of the Company's wire mesh product line sales in fiscal
year 1996.

The Company believes that its wire mesh product line provides a number
of competitive advantages. The Company's broad range of wire diameters in its
wire mesh product line provides a competitive advantage by permitting the
Company to produce a wide range of custom wire mesh products in a cost
effective manner. In addition, the Company's many years of experience as a
producer of pipe mesh have permitted it to become an industry leader in
innovations such as deformed fabric (which provides stronger bonding of the
concrete to the wire) and higher tensile strength (which reduces the amount of
steel required to reinforce concrete pipe). The Company also believes that the
market for structural wire mesh, which offers the Company relatively high
margins compared to other classes of wire mesh, presents a significant growth
opportunity.

Concrete Accessories

The Company manufactures and distributes a full line of high quality
concrete accessories, consisting of over 2,000 individual products. The Company
believes that it is the second largest manufacturer and distributor of concrete
accessories in the United States.

The Company's concrete accessories include supports for steel
reinforcing bars and wire mesh, form ties and related products, basket
assemblies (including welded and loose dowel basket assemblies) and anchors and
inserts (including imbedded attachments and lifting devices, composite
structural wire members and prestress strand hold down anchors). Sales of
supports for steel reinforcing bars and wire mesh, form ties and related
products, basket assemblies, and anchors and inserts are estimated by the
Company to be approximately 45%, 20%, 20% and 8%, respectively, of the
Company's concrete accessories product line sales in fiscal year 1996. Although
the Company manufactures most of its concrete accessories products, certain
products, such as plastic supports for steel reinforcing bar and certain types
of form ties, are purchased from third parties for distribution by the Company.
The Company continually introduces new products to its concrete accessories
product line in its efforts to provide a full line of concrete accessories to
its customers.

The Company's concrete accessories are used in a variety of
applications. The Company's supports for steel reinforcing bars and wire mesh
are used to position and install steel reinforcing bars and wire mesh in the
construction of roads, bridges and other heavy construction projects. The
Company's welded and loose dowel basket assemblies are used to reinforce joints
between concrete pieces in the paving of roads, highways and runways. The
Company's anchors and inserts are used to fasten and lift precast panels and
floor panels in the construction of, among other things, commercial buildings.

In fiscal year 1996, the Company estimates that approximately 80% of
the Company's sales of concrete accessories represented products manufactured
by the Company. The remaining 20% of concrete accessories was purchased as
finished goods for resale by the Company through its 15 regional distribution
facilities. The Company generally purchases its finished concrete accessories
from domestic manufacturers.

PRODUCTION PROCESS

The Company manufactures its products at 15 principal facilities,
which are strategically located throughout the United States. Of the Company's
principal manufacturing facilities, six produce chain link fence fabric and
related products, six produce wire mesh and three produce concrete accessories.
The Company employs a combination of state-of-the-art and traditional
production methods to achieve cost efficiencies in its manufacturing processes.
In addition, while the Company's manufacturing facilities are geared primarily
toward high-volume, standardized production to promote efficiencies, many of
the Company's manufacturing facilities are capable of producing customized
products in response to specific customer requirements or applications that are
unique to particular geographic regions of the United States. Consequently,
each plant is configured to serve as both a high-volume producer of standard
products and a job lot producer of specialty products.

31
<PAGE> 38
Fence

The Company manufacturers its fence products at six principal
manufacturing facilities, which generally operate 16 to 20 hours a day, five
days a week. In April, May and June, the busier months of the year, the
Company's manufacturing facilities often operate 24 hours a day, five to six
days a week.

The Company's chain link fence manufacturing process is virtually the
same at each of its fence manufacturing facilities. The dominant manufacturing
process, which is known as "GAW" or "galvanized after weaving," involves three
steps. The first step, wire drawing, transforms steel rod into steel wire,
primarily ranging in thickness from 12.5 gauge (.095 inches) to 6.0 gauge
(.0192 inches). In the second step, the wire is woven into chain link fabric by
automated fabric weaving machines pre-set to a specific width (which ranges
from three to 20 feet) of chain link fence fabric and to a specific "diamond"
size ranging from 3/8-inch to 2 3/8 inches. The third step consists of the
galvanizing process, which involves coating the surface of the steel wire with
zinc to provide, among other things, corrosion protection.

The Company also produces other types of coated wire fabric, including
polyvinyl chloride or "PVC" coated, aluminum coated and galvanized before
weaving ("GBW"). In addition, the Company manufactures a full line of aluminum
die cast and galvanized pressed steel fittings.

The Company's principal fence manufacturing facilities contain a total
of 16 wire drawing machines, 120 weaving machines, five hot-dipped galvanizing
lines, seven aluminum die cast machines, nine forming and stamping machines and
35 miscellaneous forming and coating machines.

Wire Mesh

The Company manufacturers its wire mesh products at six manufacturing
facilities, which generally operate 24 hours a day, five days a week.

The Company manufactures wire mesh with wire that ranges in size from
1/8-inch diameter to 3/4-inch diameter, in both smooth and deformed patterns.
The Company's wire mesh is manufactured from low-carbon steel rod, which is
cleaned by removing "mill scale" by passing the rod through a series of pulleys
that mechanically descales the rod. The rod is then pulled through a die that
reduces the area of the rod approximately 30 percent. This "cold working"
process produces wire that is clean, uniform in diameter and nearly 100 per
cent stronger than the original rod. The wire is then processed into the
finished product using automatic welding machines. This method of welding,
known as electrical resistance welding, produces a very strong welded joint
without weakening the steel as much as electrode welding.

Certain aspects of the production process vary depending on the class
of mesh being produced. Commodity building mesh generally is produced in roll
and sheet form and is made with small diameter wire. Pipe mesh generally is
custom-made to customer specifications. Additional steps in the process of
producing structural wire mesh often include bending the mesh to precise
shapes, cutting to exact sizes and preparing the surface to allow for the
application of special coatings.

The Company's principal wire mesh manufacturing facilities contain a
total of 65 wire drawing machines, 52 automatic mesh welders, one 35 strand
galvanizing line and 50 miscellaneous wire straightening and forming machines.

Concrete Accessories

The Company manufacturers its concrete accessories at three principal
manufacturing facilities, which generally operate 16 to 20 hours a day, five
days a week.

The Company's manufacturing process for concrete accessories consists
primarily of drawing steel rod into wire and then feeding coils of wire into
automatic forming and resistance welding machines which produce the finished
product. Additional manufacturing processes include various punch press
operations, threading, machining, painting and plastic and epoxy coating of
products, as well as numerous manually welded and assembled items. In addition
to steel rod, which is the primary raw material for concrete accessories, the
Company uses other raw materials such as round bar stock, slit steel coils,
reinforcing steel bars and paints, plastisol and epoxy powder used for various
coatings.

32
<PAGE> 39
The Company's principal concrete accessories manufacturing facilities
contain a total of four wire drawing machines, 37 automatic bar support
machines and over 200 miscellaneous cutting, forming, threading, welding and
coating machines.

RAW MATERIALS

The products in each of the Company's principal product lines are
manufactured primarily from steel rod. Because each of the Company's principal
product lines require large quantities of the same raw material, the Company
purchases steel rod in significantly larger quantities than would be the case
if the Company's product lines were part of separate stand-alone enterprises.
Because of such large volume purchases, the Company believes that it typically
purchases steel rod at a cost of up to 5% below industry standard. Since steel
rod cost comprises a substantial portion of the Company's cost of goods sold
(approximately 32% in fiscal year 1996), the Company believes such cost savings
provide a significant competitive advantage.

In recent years, more than 50% of the steel rod purchased by the
Company has been produced overseas. The Company, however, also purchases a
substantial amount of domestically produced steel rod. All of the Company's
purchases of foreign steel rod are made through Mannesmann, which arranges the
importation of rod from various overseas sources. The Company's major
suppliers of steel rod in the United States include Ameristeel, North Star
Steel, Keystone Steel and Raritan.

In the case of both domestic and foreign steel rod, the Company
negotiates quantities and pricing on a quarterly basis. Because all agreements
for the purchase of steel rod, whether foreign or domestic, are denominated in
United States dollars, the Company is not exposed to significant risks of
fluctuations in exchange rates for foreign currency with respect to such
agreements.

SALES AND MARKETING; PRINCIPAL CUSTOMERS

The Company distributes its products to customers in the residential,
commercial and infrastructure construction industries through its 55
Company-operated distribution centers, its authorized dealers or shipments of
truckload quantities from the plant. The Company believes that its extensive
distribution network provides a competitive advantage by allowing it to better
serve its customers through increased responsiveness and reduced freight costs.
The Company has over 3,900 customers, none of whom individually accounted for
more than 10% of the Company's revenues in fiscal year 1996. The Company
employs approximately 75 salespeople who have primary responsibility for
contacting, taking orders from, and maintaining the Company's relationship with
its customers. In addition, members of senior management have frequent contact
with many of the Company's customers to ensure that it is meeting the
customer's needs. Each distribution center also has dedicated customer service
representatives who assist customers on a daily basis with any questions or
concerns regarding the Company's products or customer orders. The Company
believes that it differentiates itself from its competitors by providing a
superior level of service and overall customer satisfaction.

Fence

The Company sells fence products principally to fence wholesalers and
residential and commercial contractors. Although the Company also sells some
fence products through home centers, such sales are not a primary focus of the
Company's sales efforts.

The Company's dedicated sales force for its fence product line
consists of approximately 48 employees whose sales territories cover the 48
contiguous states. Members of the fence sales force are paid a base salary plus
a bonus, a portion of which bonus is based on the profitability of the members'
respective sales territories and a portion of which is based on the overall
profitability of the fence product line. Sales generally are made through the
Company's 40 regional fence distribution centers (six of which are located at
the Company's fence manufacturing facilities), which are located in 28 states.
Because fence customer orders typically require rapid turn-around time, the
Company's distribution centers are strategically located near customers'
facilities. The Company also distributes its fence products through a network
of approximately 300 authorized dealers located throughout the country.

33
<PAGE> 40
Wire Mesh

The Company sells wire mesh products principally to construction
products distributors, industrial manufacturers (such as pre-casters of
concrete products), lumber yards and manufacturers and processors of all types
of wire products, including shelving, household and automotive products.

The Company's specialized sales force for the wire mesh product line
consists of approximately 13 employees whose sales territories cover the 48
contiguous states. Members of the wire mesh sales force generally have
engineering backgrounds which permit them to consult with customers regarding
product specifications. Members of the wire mesh sales force are paid a base
salary plus a bonus, a portion of which bonus is based on the profitability of
the members' respective sales territories and a portion of which is based on
the overall profitability of the wire mesh product line. Because orders for
wire mesh products typically do not require the quick turn-around time that is
required for fence products and concrete accessories, the Company's wire mesh
products are shipped directly from one of the Company's six wire mesh
manufacturing facilities to the customer, generally in truckload quantities.
The Company produces most of its wire mesh in response to particular customer
orders. The Company's light wire mesh used for residential construction,
however, generally is produced in standard patterns in anticipation of customer
orders.

Concrete Accessories

The Company sells its concrete accessories principally to large
reinforcing bar fabricators, commercial building supply dealers and
construction contractors.

The Company has a dedicated sales force for its concrete accessories
product line consisting of approximately 16 employees whose sales territories
cover the 48 contiguous states. Members of the sales force generally are paid a
base salary plus a bonus, a portion of which bonus is based on the
profitability of the members' sales territories and a portion of which is based
on the overall profitability of the concrete accessories product line. The
Company's concrete accessories are distributed primarily through 15 regional
distribution centers (three of which are located at the Company's concrete
accessories manufacturing facilities). Because orders for concrete accessories
typically require rapid turn-around time, these distribution centers are
strategically located near customers' facilities.

COMPETITION

Fence

The Company's major national competitor for fence products is
Master-Halco, Inc., which has a more extensive local distribution network than
does the Company. The Company believes, however, that the Company's more
extensive fence manufacturing capabilities provide an advantage to major
accounts. The Company also competes with two strong regional competitors for
fence products, one of which operates primarily on the East Coast, with
particular emphasis on Florida, and one of which operates only manufacturing
facilities (with no internal distribution network) primarily east of the Rocky
Mountains. The Company's remaining competitors for fence products are smaller
regional manufacturers and wholesalers.

Although the ability to sell fence products at a competitive price is
an important competitive factor, the Company believes that other factors, such
as perceived quality of product and service and ability to deliver products to
customers quickly, are also important to its fence customers. The Company
believes that its reputation for quality and service and its ability to deliver
product quickly due to the locations of its 40 fence distribution centers,
enable the Company to obtain a slight premium in its sales price for fence
products, as compared to its principal competitors.

Wire Mesh

The Company's major competitor for wire mesh is Insteel Wire Products,
Inc. The Company faces strong regional competitors in the Midwestern,
Southeastern and Mid-Atlantic states. The Company also faces competition from
smaller regional manufacturers and wholesalers of wire mesh products.

34
<PAGE> 41
The Company believes that its ability to produce a greater variety of
products in a wider geographical area provides an advantage to major accounts.
The Company believes that its willingness and ability to provide custom-made
products that fit its customers' individual needs provides the Company with a
significant competitive advantage. In addition, the Company believes that its
raw material costs (which the Company believes are lower than many of its
competitors) enhance the Company's ability to compete effectively with respect
to product price in the wire mesh market.

Concrete Accessories

The concrete accessories product line faces competition from several
significant competitors. Dayton-Superior Corporation is the leading full line
national participant in the concrete accessories market, with a market share
greater than that of the Company. The Company also faces strong full line
competition from a regional competitor and from two other significant
competitors, who offer a more limited number of products.

The Company believes that price, product selection and ability to
deliver product quickly are the principal competitive factors in the concrete
accessories market. The Company believes that its raw material costs (which the
Company believes are lower than many of its competitors) enhance the Company's
ability to compete effectively with respect to product price in the concrete
accessories market. The Company also believes that its extensive concrete
accessories product line enables it to compete effectively. In addition, the
Company believes that its ability to deliver its concrete accessories products
quickly as a result of the locations of its regional distribution facilities is
a competitive advantage for the Company.

REGULATION

Environmental Regulation

The Company is subject to extensive and changing federal, state and
local Environmental Laws including laws and regulations that relate to air and
water quality, impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage and disposal of
toxic and hazardous wastes. Stringent fines and penalties may be imposed for
non-compliance with these Environmental Laws. In addition, Environmental Laws
could impose liability for costs associated with investigating and remediating
contamination at the Company's facilities or at third-party facilities at
which the Company has arranged for the disposal treatment of hazardous
materials.

Although no assurances can be given, the Company believes that the
Company and its operations are in compliance in all material respects with all
Environmental Laws and the Company is not aware of any non-compliance or
obligation to investigate or remediate contamination that could reasonably be
expected to result in material liability. This being said, Environmental Laws
continue to be amended and revised to impose stricter obligations. The Company
cannot predict the effect such future requirements, if enacted, would have on
the Company although the Company believes that such regulations would be
enacted over time and would affect the industry as a whole.

Health and Safety Matters

The Company's facilities and operations are governed by laws and
regulations, including the federal Occupational Safety and Health Act, relating
to worker health and workplace safety. The Company believes that appropriate
precautions are taken to protect employees and others from workplace injuries
and harmful exposure to materials handled and managed at its facilities. While
it is not anticipated that the Company will be required in the near future to
expend material amounts by reason of such health and safety laws and
regulations, the Company is unable to predict the ultimate cost of compliance
with these changing regulations.

PROPERTIES

The following chart contains certain information regarding each of the
Company's manufacturing and distribution facilities as of April 26, 1997.

35
<PAGE> 42
<TABLE>
<CAPTION>
SIZE
LOCATION USE LEASED/OWNED (SQ. FT.)(1)
-------- --- ------------ ------------
<S> <C> <C> <C>
Corporate Headquarters
Houston, Texas Administrative (Corporate Leased 10,689
Headquarters)

Fence Product Line
Whittier, California Distribution/Manufacturing Owned 28,910
Tacoma, Washington Distribution Leased 7,440
Riverside, California Distribution Leased 19,700
Murray, Utah (Salt Lake City)(2) Distribution Leased 11,282
Houston, Texas Distribution/Manufacturing Owned 140,190
Dallas, Texas Distribution Leased 10,000
Denver, Colorado Distribution Leased 9,600
Jacksonville, Florida(2) Distribution Leased 9,000
New Orleans, Louisiana Distribution Leased 15,860
Statesville, North Carolina Distribution/Manufacturing Owned 73,829
Forest Park, Georgia (Atlanta) Distribution Leased 3,675
Hyattsville, Maryland Distribution Leased 10,560
Charlotte, North Carolina(2) Distribution Leased 17,666
Nashville, Tennessee Distribution Leased 6,500
Birmingham, Alabama Distribution Leased 7,300
Richmond, Virginia Distribution Leased 2,000
Columbia, South Carolina Distribution Leased 11,200
Lawrenceville, Georgia (Atlanta) Distribution Leased 3,500
Raleigh, North Carolina Distribution Leased 6,834
Pennsauken, New Jersey Distribution Leased 3,834
New Paris, Indiana Distribution/Manufacturing Owned(3) 61,313
Berkeley, Missouri (St. Louis) Distribution Leased 7,500
Indianapolis, Indiana Distribution Leased 36,608
Westfield, Massachusetts Distribution Owned 50,000
Kansas City, Missouri Distribution Leased 35,000
Columbus, Ohio Distribution Leased 10,430
Louisville, Kentucky Distribution Leased 16,000
Davie, Florida(2) Distribution Leased 18,543
Strongsville, Ohio (Cleveland) Distribution Leased 10,943
Brighton, Michigan (Detroit) Distribution/Manufacturing Leased 65,890
Wheeling, Illinois (Chicago) Distribution Leased 35,713
Markham, Illinois (Chicago) Distribution Leased 12,524
Milwaukee, Wisconsin Distribution Leased 4,200
Brooklyn Park, Minnesota (Minneapolis) Distribution Leased 15,000
Johnston, Iowa (Des Moines) Distribution Leased 4,900
Tonawanda, New York (Buffalo) Distribution Leased 26,000
Pittsburgh, Pennsylvania Distribution Leased 5,500
Harrison, Arkansas Distribution/Manufacturing Owned 72,881
Tampa, Florida(2) Distribution Owned 70,142

Wire Mesh Product Line
Houston, Texas Manufacturing Owned(3) 130,922
Jacksonville, Florida Manufacturing Owned 145,846
Baltimore, Maryland Manufacturing Owned 235,000
</TABLE>

36
<PAGE> 43
<TABLE>
<CAPTION>
SIZE
LOCATION USE LEASED/OWNED (SQ. FT.)(1)
-------- --- ------------ ------------
<S> <C> <C> <C>
Oregon, Ohio (Toledo) Manufacturing Leased 90,000
Tampa, Florida Manufacturing Owned (3) 21,450
North Miami Beach, Florida (Miami) Manufacturing Owned 43,500

Concrete Accessories Product Line
Houston, Texas Distribution Leased 14,560
New Orleans, Louisiana Distribution Leased 10,000
Hackensack, New Jersey Distribution Leased 15,000
Newington, Virginia Distribution Leased 21,645
Decatur, Georgia Distribution Leased 4,000
Anaheim, California Distribution Leased 19,000
Ft. Worth, Texas Distribution/Manufacturing Leased/Owned 161,520
Davie, Florida (4) Distribution Leased 18,543
Phoenix, Arizona Distribution Leased 8,871
Hazelton, Pennsylvania Distribution/Manufacturing Leased 76,800
Chicago, Illinois Distribution Leased 69,425
Tampa, Florida (4) Distribution/Manufacturing Owned 70,142
Jacksonville, Florida (4) Distribution Leased 9,000
Charlotte, North Carolina (4) Distribution Leased 17,666
Murray, Utah, (Salt Lake City) (4) Distribution Leased 11,282
</TABLE>

- ---------

(1) Does not include square footage of outside storage and other outdoor
areas.
(2) This property also contains a distribution center and/or manufacturing
facility for concrete accessories.
(3) A portion of the property is also leased.
(4) This property also contains a distribution center for fence products.

The Company believes that its existing facilities provide adequate
manufacturing and distribution capacity for its needs. The Company also
believes that all of the leases were entered into on market terms.

The lenders under the Credit Facility have first mortgages on each of
the Company's owned manufacturing facilities and distribution centers.

LEGAL PROCEEDINGS

The Company is involved in various claims and lawsuits incidental to
its business. The Company does not believe that these claims and lawsuits in
the aggregate will have a material adverse affect on the Company's business,
financial condition and results of operations.

A former stockholder of Holding (the "Dissenting Stockholder") has
exercised its statutory appraisal rights pursuant to the Delaware General
Corporation Law (the "DGCL") with respect to the merger of a "shell"
corporation into Holding (the "Recapitalization Merger") which occurred as part
of a recapitalization of the Company and Holding that occurred on December 13,
1996. On February 4, 1997, the Dissenting Stockholder filed a petition with the
Delaware Court of Chancery requesting that such court determine the fair value
of the Dissenting Stockholder's shares of common stock of Holding ("Holding
Common Stock") as of the time of the Recapitalization Merger (the "Appraisal
Proceeding"). With respect to the Appraisal Proceeding, the Company has
recorded a liability to Holding in an amount equal to $3.7 million (which is
equal to the amount the Dissenting Stockholder would have received for its
Holding Common Stock if it had not exercised its statutory appraisal rights).
Although management believes that the value that the Recapitalization Merger
provided to be paid to the holders of Holding Common Stock was fair to such
holders, there can be no assurance that the Delaware Court of Chancery will
agree.

37
<PAGE> 44
EMPLOYEES

As of April 26, 1997, the Company had approximately 1,750 employees,
all of whom were full time employees. The Company is a party to seven
collective bargaining agreements with five unions, of which a total of
approximately 270 employees are members. Such collective bargaining agreements
cover employees of the Baltimore, Maryland, Tampa, Florida, Whittier,
California, Hackensack, New Jersey, Chicago, Illinois, and Oregon, Ohio
facilities. The Company considers its relations with its employees to be good.

38
<PAGE> 45
MANAGEMENT

The following table sets forth certain information regarding the
Company's directors, and executive officers, including their respective ages.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Julius S. Burns . . . . . . . . . . . . 65 President and Chief Executive Officer; Director
Thomas F. McWilliams . . . . . . . . . 54 Director
Carl L. Blonkvist . . . . . . . . . . . 60 Director
Robert N. Tenczar . . . . . . . . . . . 47 Vice President, Chief Financial Officer and Secretary
James M. McCall . . . . . . . . . . . . 54 Vice President -- General Manager -- Mesh
Davy J. Wilkes . . . . . . . . . . . . 59 Vice President -- General Manager -- Concrete Accessories
</TABLE>

Julius S. Burns has been President and Chief Executive Officer and a
director of the Company since February 1989. At the present time, Mr. Burns is
also acting general manager of the fence product line of the Company. Prior to
February 1989, Mr. Burns served as President and General Manager of Ivy Steel &
Wire Company, Inc., a predecessor to the Company, for 13 years. Mr. Burns has
31 years of related industry experience.

Thomas F. McWilliams has been a director of the Company since 1992.
Mr. McWilliams is Managing Director of CVC, a small business investment
company, and has been affiliated with CVC since 1983. Mr. McWilliams is a
member of CVC's three-person investment committee. Mr. McWilliams is a director
of Chase Brass Industries, Inc., a metals processing company, Ergo Science
Corporation, a pharmaceutical product development company and various other
private companies.

Carl L. Blonkvist has been a director of the Company since April 1997.
Mr. Blonkvist is Senior Vice President of Operations for the Brinkmann
Corporation, and has been affiliated with the Brinkmann Corporation since June
1996. Mr. Blonkvist was Senior Vice President of Coca-Cola Foods from January
1994 to April 1996, and was a Senior Partner of Computer Science Corporation, a
consulting firm, from 1991 to 1994. In 1984, Mr. Blonkvist formed Paragon
Consulting Group, a consulting firm specializing in operations strategy, which
was purchased by Computer Science Corporation in 1991. From 1965 to 1984, Mr.
Blonkvist served in various management positions of increasing responsibility
at Booz, Allen & Hamilton, a consulting firm.

Robert N. Tenczar has been Vice President, Chief Financial Officer and
Secretary of the Company since May 1993. From 1985 to 1993, Mr. Tenczar was
employed by Baker Hughes Incorporated, Houston, Texas, most recently as Vice
President -- Finance of its Envirotech Controls division.

James M. McCall has been employed with the Company and its
predecessors in various management positions of increasing responsibility since
1975, most recently as the Company's Vice President -- General Manager -- Mesh
since 1989. Mr. McCall has 33 years of related industry experience.

Davy J. Wilkes has been employed by the Company and its predecessors
since 1974, most recently as the Company's Vice President -- General Manager --
Concrete Accessories. Mr. Wilkes has 37 years of related industry experience.

Each director holds office until the next annual meeting of
stockholders of the Company or until their successor is duly elected and
qualified. All officers are elected annually and serve at the direction of the
Board of Directors. The bylaws of the Company provide for a three member Board
of Directors. Directors of the Company are reimbursed for all expenses actually
incurred for each Board meeting which they attend. Directors do not receive a
fee for any meetings they attend. The executive officers of the Company are
elected by the Board of Directors to serve at the discretion of the Board.

39
<PAGE> 46
OTHER KEY EMPLOYEES

The Company believes that the following non-executive officers, who
are responsible for management of key regional divisions, are expected to make
significant contributions to the business of the Company.

Michael W. Babcock has been employed by the Company and its
predecessors since 1973, most recently as the Company's Vice President and/or
General Manager of the Fence Midwest region. Prior to that, Mr. Babcock was
Sales Manager of the Midwest region from 1977 to December 1984. Mr. Babcock is
50 years old.

Michael W. Weaver has been Vice President and General Manager of the
Fence Southwest region since January 1991. Mr. Weaver was Sales Manager of the
Fence Eastern region from 1983 to 1990. He has served the Company and
predecessor businesses since 1971. Mr. Weaver is 50 years old.

John Amos has been Vice President and General Manager of the Fence
Western region since September 1988. Prior to that, Mr. Amos was Vice President
and Chief Operating Officer of the Anchor Post Products Division of PPA
Industries, a predecessor to the Company. Mr. Amos had been with the Anchor
Post Products division of PPA Industries and its predecessor companies in
various positions of increasing responsibility since 1946. Mr. Amos is 70 years
old.

William H. Stewart has been Vice President and/or General Manager of
the Fence Eastern region since August 1987. Prior to his promotion to General
Manager, Mr. Stewart served on various management positions of increasing
responsibility with the Company and its predecessors since 1969. Mr. Stewart
has 27 years of related industry experience. Mr. Stewart is 50 years old.

EXECUTIVE COMPENSATION

The following table sets forth the compensation for fiscal year 1996
awarded to or earned by the chief executive officer of the Company and the
three other most highly compensated executive officers of the Company whose
salary and bonus exceeded $100,000 for services rendered in all capacities.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
------------------------ ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
--------------------------- ---------- ---------- ------------
<S> <C> <C> <C>
Julius S. Burns
President and Chief Executive Officer . . . . . . . . . . . . $ 250,020 $ 400,000 $ 24,063(2)
James M. McCall
Vice President -- General Manager -- Mesh . . . . . . . . . . 139,860 99,495 9,217(3)
Robert N. Tenczar
Vice President and Chief Financial Officer . . . . . . . . . 114,600 83,700 4,861(4)
Davy J. Wilkes
Vice President -- General Manager -- Concrete Accessories . . 111,600 53,100 11,700(5)
</TABLE>

- ---------

(1) The named executive officers did not receive annual compensation not
properly categorized as salary or bonus, except for certain
perquisites and other personal benefits which are not shown because
the aggregate amount of such compensation for each of the named
executive officers during the fiscal year did not exceed the lesser of
$50,000 or 10% of total salary and bonus reported for such executive
officer.
(2) Represents a $1,344 annual contribution to the 401(k) Plan (as defined
herein) and a $22,719 annual contribution to the Pension Plan (as
defined herein).
(3) Represents a $600 annual contribution to the 401(k) Plan and a $8,617
annual contribution to the Pension Plan.
(4) Represents a $716 annual contribution to the 401(k) Plan and a $4,145
annual contribution to the Pension Plan.
(5) Represents a $842 annual contribution to the 401(k) Plan and a $10,858
annual contribution to the Pension Plan.

40
<PAGE> 47
None of the executive officers named in the Summary Compensation table
were granted options to purchase any capital stock of Holding during fiscal
year 1996.

The table below sets forth information concerning each exercise of
options for Series A Junior Preferred Stock, par value $.01 per share, of
Holding (the "Holding Series A Junior Preferred Stock"), during fiscal year
1996 by the executive officers named in the Summary Compensation Table, the
number of exercisable and unexercisable options for Holding Series A Junior
Preferred Stock held by them and the fiscal year-end value of such exercisable
and unexercisable options.

AGGREGATED HOLDING OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(1) AT FISCAL YEAR-END(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Julius S. Burns ... -- -- 8,900.10 -- $778,010 --
James M. McCall ... -- -- 2,205.16 -- 192,766 --
Davy J. Wilkes .... -- -- 1,350.91 -- 118,091 --
</TABLE>

- ---------

(1) All outstanding options for Holding Series A Junior Preferred Stock
were terminated in April 1997 in connection with the consummation of
the Old Notes Offering. The number of shares of Holding Series A
Junior Preferred Stock for which such options were exercisable
increased from time to time as dividends accrued with respect to
shares of outstanding Holding Series A Junior Preferred Stock (whether
or not such dividends were paid).

MERCHANTS METALS HOLDING COMPANY 1988 STOCK OPTION PLAN

Certain eligible employees and non-employee directors of the Company
and Holding may be granted options to purchase up to an aggregate of 30,000
Holding Class A Common Stock (as defined herein) pursuant to the Merchant
Metals Holding Company 1988 Stock Option Plan (the "Holding Stock Option
Plan"). The Holding Stock Option Plan is administered by the Administration
Committee, the members of which are appointed by the Board of Directors of
Holding. Presently, the members of the Administration Committee consists of
the current members of the Board of Directors of Holding (which are the same
persons who constitute the Board of Directors of the Company).

The Administration Committee has the ability to determine, among other
things, which individuals will be granted options under the Holding Stock
Option Plan and such committee has the ability to determine the exercise price,
term (up to ten years) and vesting schedule of the options granted under the
Holding Stock Option Plan.

Any unexpired and unexercised options (or portion thereof) will be
forfeited if an employee ceases to be in the employ of the Company for any
reason other than disability, death or retirement. If an employee ceases to be
in the employ of the Company by reason of disability or upon retirement, any
unexercised options (or portions thereof) shall terminate on the date that is
three months from the date of such employee's termination by reason of
disability or retirement, as applicable (unless such option expires by its
terms on an earlier date).

In the event an employee dies while in the employ of the Company, any
option granted to such employee pursuant to the Holding Stock Option Plan will
be exercisable during the three month period commencing on the date following
the date of his death (unless it expires sooner under its terms). Such options
will terminate at the end of such three month period to the extent such options
were not exercised during such three month period.

As of June 1, 1997, there were outstanding options to purchase 17,890
shares of Holding Class A Common Stock at an exercise price of $1.00 per share.
Options for an additional 12,110 shares of Holding Class A Common Stock are
available for issuance under the Holding Stock Option Plan.

41
<PAGE> 48
401(k) PLAN

The Company maintains the MMI Products Inc. 401(k) Savings Plan (the
"401(k) Plan") under Section 401(k) of the Internal Revenue Code of 1986 (the
"Code"). All Company employees are eligible to participate in the 401(k) Plan
after one year of employment. Employees may elect to make pre-tax contributions
to the 401(k) Plan, subject to applicable statutory maximum limits. The Company
makes matching contributions (subject to statutory limits) in an amount equal
to 25% of the participant's contributions on the first 2% of compensation
contributed by an employee under the 401(k) Plan. In addition, the Company may
make additional contributions in such amounts as it may elect. Company
contributions vest 25% per year of the participant's service with the Company.

PENSION PLAN

The Company maintains the MMI Products, Inc. Pension Plan (the
"Pension Plan"), which is a money purchase defined contribution plan. The
Pension Plan, which is intended to be qualified under Section 401(a) of the
Code, is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). Employees of the Company (other than employees covered
by a collective bargaining agreement) generally are eligible to participate in
the Pension Plan after one year of employment. The Company makes annual
contributions to the Pension Plan for each eligible employee in accordance with
a formula that is based on the participant's age and level of compensation. The
Pension Plan provides for one time 100% vesting after five years of service.

EMPLOYMENT AGREEMENT

Julius S. Burns, the Company's President and Chief Executive Officer,
has entered into an employment agreement with the Company that will expire
(unless renewed) on December 31, 1999. The agreement provides for a base salary
of $250,000 per year, which may be increased annually in the discretion of the
Board of Directors, and a discretionary annual bonus based on performance
criteria established from time to time by the Board of Directors.

If Mr. Burns' employment is terminated as a result of his death or
total disability, then Mr. Burns (or his estate in the event of his death)
shall be entitled to receive Mr. Burns' base salary accrued through the date of
termination plus bonus payment prorated to the date of termination based on Mr.
Burns' bonus for the previous year.

If Mr. Burns' employment is terminated by the Company for Cause (as
defined therein), Mr. Burns will be entitled to receive only his base salary
accrued through the date of termination. If Mr. Burns' employment is terminated
by the Company other than for Cause, Mr. Burns will be entitled to receive, as
a lump sum payment, the amounts to which he (or his estate) would have been
entitled in the event of his death or total disability, plus monthly severance
equal to his base salary for the lesser of twelve months or the remaining term
of the employment agreement.

If Mr. Burns' employment is terminated by the Company within one year
following a "change in control," then, in addition to the compensation to which
Mr. Burns would be entitled in the event of termination other than for Cause
(and in lieu of any other bonus payment), Mr. Burns will be entitled to receive
a bonus payment prorated for the lesser of 12 months or the remaining term of
the Employment Agreement.

PUT AGREEMENT

Upon Julius S. Burns' death, any Parent Common Units that Mr. Burns
owns will automatically be exchanged for a like number of shares of Holding
Common Stock. Mr. Burns has entered into the Amended and Restated Put
Agreement (the "Burns Put Agreement") pursuant to which Mr. Burns' estate will
have, upon satisfaction of certain conditions, the option during the 90 day
period following his death to cause Holding (or its designee) to repurchase
Holding Common Stock held by Mr. Burns at such time of his death as have a fair
market value of up to $2.0 million (the "Put Right"). The Put Right may be
exercised only if at the time of Mr. Burns' death: (a) Mr. Burns was an
employee of Holding or any of its subsidiaries; (b) Mr. Burns had either (i)
retired at or after age 67, (ii) voluntarily terminated his employment with
Holding or any of its subsidiaries for Good Reason (as defined therein) within
six months following a Change in Control (as defined therein), (iii) been
terminated by Holding or any of its subsidiaries without Cause (as defined
therein) or (iv)

42
<PAGE> 49
otherwise retired with the consent of the Board of Directors of Holding; or (c)
Mr. Burns was no longer employed by Holding due to a disability recognized by
the Board of Directors of Holding.

The purchase price to be paid by Holding upon the exercise of the Put
Right shall be payable through the application of proceeds payable under
certain life insurance contracts purchased by the Company (with a maximum
aggregate premium of up to $100,000) to provide funds to pay the maximum
purchase price of $2,000,000. The Burns Put Agreement will terminate on
December 31, 2000, unless earlier terminated in accordance with its terms.
Holding, in its sole discretion, may elect to terminate the Burns Put
Agreement, at any time prior to Mr. Burns' death, if Mr. Burns is in material
default of his obligations under that certain Non-Competition Agreement dated
as of December 31, 1994, between Mr. Burns and the Company.

NON-COMPETITION AGREEMENT

Julius S. Burns has entered into a Non-Competition Agreement with the
Company under which he has agreed not to: (i) disclose, during or after the
term of his employment, any of the Confidential Information (as defined
therein) to any person or entity for any reason or purpose whatsoever, (ii)
solicit or induce for a period of two years following termination any person
employed by, or the agent of, the Company to terminate his contract of
employment or agency with the Company and (ii) compete with the Company in any
business in which the Company is engaged in at the date of termination in any
state in the United States of America in which the Company has made sales
during the 12 months immediately preceding termination for a period of two
years following termination. If Mr. Burns is terminated by the Board of
Directors of the Company by written or oral notice, Mr. Burns' non-competition
restriction will apply only for a period of one year, plus the number of months
the Company elects to pay monthly severance payments to Mr. Burns after the
expiration of such one year period.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors of the Company is responsible for determining
executive officer compensation. Julius S. Burns currently serves as both a
director and the President and Chief Executive Officer of the Company.

43
<PAGE> 50
SECURITY OWNERSHIP

The Company is a wholly owned subsidiary of Holding. More than 98% of
the capital stock of Holding is owned by Parent. No director or named
executive officer owns shares of Holding Securities (as defined herein). The
following table and the accompanying footnotes set forth, as of June 12, 1997,
the beneficial ownership of Parent's equity interests by (i) each person who is
known to the Company to own beneficially more than 5% of either class of
Parent's outstanding Common Units, (ii) each director and named executive
officer, and (iii) all directors and officers as a group. On all matters
submitted to a vote of the members of Parent, holders of Parent Class A Common
Units and Parent Class B Common Units (as defined herein) are entitled to cast,
in the aggregate, (i) 50.5% of the total number of votes and (ii) 49.5% of the
total number of votes, respectively, entitled to be cast by holders of all of
the Parent Common Units then outstanding.

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF CLASS
COMMON UNITS OF COMMON UNITS
--------------------- -------------------- PERCENT OF TOTAL
NAME AND ADDRESS CLASS A CLASS B(1) CLASS A CLASS B VOTING POWER(2)
- -------------------------- ------- ---------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Julius S. Burns ....................... 58,902 -- 52.2% -- 26.3%
c/o MMI Products, Inc.
515 West Greens Rd., Ste. 710
Houston, Texas 77067
Thomas F. McWilliams .................. -- 17,014(3) -- 2.6% 1.3%
c/o Citicorp Venture Capital Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, New York 10043
Robert N. Tenczar ..................... 7,500 -- 6.6% -- 3.4%
c/o MMI Products, Inc.
515 West Greens Rd., Ste. 710
Houston, Texas 77067
James M. McCall ....................... 13,850 -- 12.3% -- 6.2%
c/o MMI Products, Inc.
515 West Greens Rd., Ste. 710
Houston, Texas 77067
Davy J. Wilkes ........................ 10,450 -- 9.3% -- 4.7%
c/o Meadow Steel Products
5110 Santa Fe Road
Tampa, Florida 33619
Citicorp Venture Capital Ltd .......... -- 497,473(4) -- 76.3% 37.8%
399 Park Avenue
14th Floor, Zone 4
New York, New York 10043
CCT Partners III ...................... -- 87,789(5) -- 13.5% 6.7%
c/o Citicorp Venture Capital Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, New York 10043
William T. Comfort .................... -- 34,154 -- 5.2% 2.6%
c/o Citicorp Venture Capital Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, New York 10043
Michael W. Babcock .................... 7,520 -- 6.7% -- 3.4%
c/o Merchants Metals
71347 CR 23
New Paris, Indiana 46553
Michael Weaver ........................ 9,160 -- 8.1% -- 4.1%
4901 Langley Road
Houston, Texas
All Directors and Executive
Officers as a Group ................. 90,702 17,014 80.3% 2.6% 41.8%
</TABLE>

44
<PAGE> 51
- ---------
* Less than one percent (1%).
(1) Each Parent Class B Common Unit is convertible at any time, at the
option of the holder, into one Parent Class A Common Unit.
(2) Represents the total voting power represented by the Parent Class A
Common Units or Parent Class B Common Units held by each of the
indicated persons.
(3) Includes 4,006 Parent Class B Common Units owned of record by Alchemy,
L.P., an affiliate of Mr. McWilliams.
(4) Does not include 87,789 Parent Class B Common Units held by CCT
Partners III, an affiliate of CVC, as to which CVC disclaims
beneficial ownership.
(5) Does not include 497,473 Parent Class B Common Units held by CVC, an
affiliate of CCT Partners III, as to which CCT Partners III disclaims
beneficial ownership.

INDEMNIFICATION OF DIRECTORS

The Company has entered into Indemnification Agreements with certain
of its directors and executive officers pursuant to which it will indemnify
such persons against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement incurred as a result of the fact that such person,
in his or her capacity as a director or officer, is made or threatened to be
made a party to any suit or proceeding. Such persons will be indemnified to the
fullest extent now or hereafter permitted by the DGCL. The Indemnification
Agreements also provide for the advancement of certain expenses to such
directors and officers in connection with any such suit or proceeding.

45
<PAGE> 52
CERTAIN TRANSACTIONS

REDEMPTION OF HOLDING PREFERRED STOCK AND REPURCHASE OF STOCK OPTIONS

A portion of the proceeds of the Old Notes Offering was used to
distribute to Holding sufficient funds to permit Holding to redeem all of the
outstanding Holding Series A Junior Preferred Stock and the Series B Senior
Preferred Stock, par value $.01 per share, of Holding (the Holding Series B
Senior Preferred Stock," and together with the Holding Series A Junior
Preferred Stock, the "Holding Preferred Stock"), and to repurchase certain
options held by Mannesmann and members of the Company's management that were
exercisable for shares of Holding Series A Junior Preferred Stock. The number
of shares of Holding Series A Junior Preferred Stock for which such options
were exercisable increased automatically as dividends accrued with respect to
shares of outstanding Holding Series A Junior Preferred Stock. Upon completion
of the Old Notes Offering, Thomas F. McWilliams, Julius S. Burns, James M.
McCall, Davy J. Wilkes, CVC, CCT Partners III, William T. Comfort, Michael W.
Babcock, and Michael Weaver received in the aggregate approximately $1,170,000,
$2,281,000, $539,000, $411,000, $40,545,000, $7,155,000, $1,287,000, $288,000
and $143,000, respectively, for their shares of Holding Preferred Stock and
their options.

THE RECAPITALIZATION

On December 13, 1996, the Company and Holding effected a
recapitalization transaction (the "Recapitalization") pursuant to which the
indebtedness of the Company and the equity of Holding were significantly
restructured. Pursuant to the Recapitalization, the Company repaid (i)
approximately $192,000 of the Company's subordinated indebtedness (plus accrued
but unpaid interest) held by Thomas F. McWilliams, a director of the Company,
and (ii) approximately $14,250,000 of the Company's subordinated indebtedness
(plus accrued but unpaid interest) held by CVC and an affiliate of CVC.

Also pursuant to the Recapitalization, as a result of the
Recapitalization Merger, the capital stock of Holding outstanding prior to the
Recapitalization Merger was converted into the right to receive cash. As a
result, (i) CVC became entitled to receive approximately $37,355,000, (ii)
Thomas F. McWilliams became entitled to receive approximately $822,000, (iii)
Julius S. Burns, the Company's President and Chief Executive Officer and a
director of the Company, became entitled to receive approximately $1,749,000,
(iv) James M. McCall and Davy J. Wilkes, who are executive officers of the
Company, became entitled to receive approximately $485,000 and $373,000,
respectively, and (v) Michael W. Babcock and Michael Weaver, each of whom owns
in excess of 5% of the Holding Class A Common Stock, became entitled to receive
approximately $182,000 and $63,000, respectively.

Immediately following the Recapitalization Merger, pursuant to the
Recapitalization, (i) CVC and an affiliate of CVC purchased shares of Holding
Common Stock and Holding Preferred Stock for an aggregate of approximately
$46,709,000 and (ii) Messrs. McWilliams (together with an affiliated limited
partnership), Burns, Tenczar, McCall, Wilkes, Babcock, Weaver and Comfort
purchased shares of Holding Common Stock and Holding Preferred Stock for
aggregate purchase prices of approximately $1,149,000, $1,487,000, $8,000,
$342,000, $289,000, $150,000, $72,000 and $1,279,000, respectively.

CONTRIBUTION OF HOLDING COMMON STOCK TO PARENT

On June 12, 1997, in connection with the formation of Parent, holders
of Holding Common Stock representing more than 98% of the voting power of
Holding contributed (the "Contribution") all of their respective shares of
Holding Common Stock to Parent in exchange for the same number of Parent Common
Units. As a result of the Contribution, Parent owns more than 98% of Holding
Common Stock (representing more than 98% of the voting power of Holding).

46
<PAGE> 53
THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

The Old Notes were originally sold by the Company on April 16, 1997 to
the Initial Purchaser pursuant to the Purchase Agreement. The Initial
Purchaser subsequently resold the Old Notes to qualified institutional buyers
in reliance on Rule 144A under the Securities Act and to a limited number of
institutional accredited investors that agreed to comply with certain transfer
restrictions and other conditions. As a condition to the completion of the Old
Notes Offering, the Company entered into the Registration Rights Agreement with
the Initial Purchaser pursuant to which the Company agreed to use its best
efforts to cause to be filed with the Commission the Exchange Offer
Registration Statement on the appropriate form under the Securities Act with
respect to an offer to exchange the Old Notes for Exchange Notes. The Exchange
Notes will be substantially identical to the Old Notes, except that the
Exchange Notes will bear a Series B designation and will have been registered
under the Securities Act and, therefore will not contain terms with respect to
transfer restrictions (other than those that might be imposed by state
securities laws) and will not be entitled to registration rights or other
rights under the Registration Rights Agreement. In the event that (i) the
Exchange Offer is not available to any holder or may not be consummated
because, in either case, it would violate applicable securities laws or because
the applicable interpretations of the staff of the Commission would not permit
the Company to effect the Exchange Offer, or (ii) for any other reason the
Exchange Offer is not consummated within 165 days of the Closing Date, the
Company will use its reasonable best efforts to cause to be filed with the
Commission, no later than 195 days after the completion of the Old Notes
Offering, the Shelf Registration Statement. The Company will use its best
efforts to cause the Shelf Registration Statement to be declared effective on
or before the 75th day after the required filing date.

Under existing interpretations of the staff of the Commission, the
Exchange Notes would, in general, be freely transferable after the Exchange
Offer without further registration under the Securities Act. However, any
purchaser of Old Notes who is an "affiliate" of the Company or intends to
participate in the Exchange Offer for the purpose of distributing the Exchange
Notes (i) will not be able to rely on the interpretations of the staff of the
Commission, (ii) will not be able to tender its Old Notes in the Exchange Offer
and (iii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or transfer of
the Old Notes, unless such sale or transfer is made pursuant to an exemption
from such requirements.

Each holder who wishes to exchange such Old Notes for Exchange Notes
in the Exchange Offer will be required to make certain representations,
including representations that (i) it is not an affiliate of the Company, (ii)
it is not engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of the
Exchange Notes and (iii) it is acquiring the Exchange Notes in its ordinary
course of business. In addition, broker-dealers receiving Exchange Notes in
the Exchange Offer will have a prospectus delivery requirement with respect to
resales of Exchange Notes. The Commission has taken the position that such
broker-dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of Old Notes) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Registration Rights Agreement, the Company
is required to allow such broker-dealers to use the prospectus contained in the
Exchange Offer Registration Statement in connection with the resale of such
Exchange Notes for a period of 180 days after the Exchange Offer Registration
Statement is declared effective.

The Registration Rights Agreement provides that, to the extent not
prohibited by any applicable law or Commission policy, (i) the Company will
cause to be filed with the Commission an Exchange Offer Registration Statement
on or prior to 60 days after the completion of the Old Notes Offering, (ii) the
Company will use its best efforts to have such Exchange Offer Registration
Statement declared effective under the Securities Act by the Commission on or
prior to 135 days after the completion of the Old Notes Offering, (iii) the
Company shall have commenced the Exchange Offer and shall use its best efforts
to cause the Exchange Offer to be consummated on or prior to 165 days after the
completion of the Old Notes Offering, and (iv) the Company, if it is obligated
to cause the Shelf Registration Statement to be filed with the Commission, will
cause to be filed with the Commission the Shelf Registration Statement, no
later than 195 days after the completion of the Old Notes Offering, and use
its reasonable best efforts to cause the Shelf Registration Statement to be
declared effective by the Commission. The Company shall use its best efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended until the second anniversary of the completion of the Old Notes
Offering or such

47
<PAGE> 54
shorter period that will terminate when all the securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement.

If (i) the Company fails to file any of the registration statements
required by the Registration Rights Agreement on or prior to the date specified
for such filing, (ii) any of such registration statements are not declared
effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
consummate the Exchange Offer on or prior to 30 days after the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement (if the
Company is required by the Registration Rights Agreement to complete the
Exchange Offer), or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (i) through (iv) above, a
"Registration Default"), then the Company will be required to pay Liquidated
Damages to each holder affected by such Registration Default on each interest
payment date. Liquidated Damages shall accrue from and after the date of each
Registration Default, and shall continue to accrue thereafter until such
Registration Default has been cured or waived as set forth in the Registration
Rights Agreement, at a rate equal to 0.25% per annum of the principal amount of
Old Notes during the first 90-day period immediately following the occurrence
of such Registration Default, which rate shall increase by an additional 0.25%
per annum on the first day of each subsequent 90-day period up to a maximum
rate equal to 1.0% per annum.

The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Registration Rights Agreement, a
copy of which is filed as an exhibit to the Exchange Offer Registration
Statement of which this Prospectus is a part.

Following the consummation of the Exchange Offer, holders of the Old
Notes who were eligible to participate in the Exchange Offer but who did not
tender their Old Notes will not have any further registration rights and such
Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and
all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York
time, on the Expiration Date. The Company will issue $1,000 principal amount
of Exchange Notes in exchange for each $1,000 principal amount of outstanding
Old Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000.

The form and terms of the Exchange Notes are the same as the form and
terms of the Old Notes except that (i) the Exchange Notes bear a Series B
designation and a different CUSIP Number from the Old Notes, (ii) the Exchange
Notes have been registered under the Securities Act and hence will not bear
legends restricting the transfer thereof and (iii) the holders of the Exchange
Notes will not be entitled to certain rights under the Registration Rights
Agreement, including the provisions providing for an increase in the interest
rate on the Old Notes in certain circumstances relating to the timing of the
Exchange Offer, all of which rights generally will terminate when the Exchange
Offer is terminated. The Exchange Notes will evidence the same debt as the Old
Notes and will be entitled to the benefits of the Indenture.

As of the date of this Prospectus, $120,000,000 aggregate principal
amount of Old Notes were outstanding. The Company has fixed the close of
business on _______________, 1997 as the record date for the Exchange Offer for
purposes of determining the persons to whom this Prospectus and the Letter of
Transmittal will be mailed initially.

Holders of Old Notes do not have any appraisal or dissenters rights
under the General Corporation Law of Delaware or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.

48
<PAGE> 55
The Company shall be deemed to have accepted validly tendered Old
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Exchange Notes from the Company.

If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.

Holders who tender Old Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Old Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer. See " -- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York time, on
_________,1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange offer is extended. Notwithstanding the
foregoing, the Company will not extend the Expiration Date beyond
___________________, 1997.

In order to extend the Exchange Offer, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
time, on the next business day after the previously scheduled expiration date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under " -- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.

INTEREST ON THE EXCHANGE NOTES

The Exchange Note will bear interest from the most recent date to
which interest has been paid or duly provided for on the Old Note surrendered
in exchange for such Exchange Note or, if no interest has been paid or duly
provided for on such Old Note, from April 16, 1997. Interest on the Exchange
Notes is payable semi-annually on each April 15 and October 15, commencing on
October 15, 1997.

Holders of Old Notes whose Old Notes are accepted for exchange will
not receive accrued interest on such Old Notes for any period from and after
the last date to which interest has been paid or duly provided for on the Old
Notes prior to the original issue date of the Exchange Notes or, if no such
interest has been paid or duly provided for will not receive any accrued
interest on such Old Notes, and will be deemed to have waived, the right to
receive any interest on such Old Notes accrued from and after the last date to
which interest has been paid or duly provided for on the Old Notes or, if no
such interest has been paid or duly provided for, from and after April 16,
1997.

PROCEDURES FOR TENDERING

For a holder of Old Notes to tender Old Notes validly pursuant to the
Exchange Offer, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantee, or (in the case
of a book-entry transfer), an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be received by the Exchange
Agent at the address set forth in the Letter of Transmittal prior to 5:00 p.m.,
New York time, on the Expiration Date. In addition, prior to 5:00 p.m., New
York time, on the Expiration Date, either (a) certificates for tendered Old
Notes must be received by the Exchange Agent at such address or (b) such Old
Notes must be transferred pursuant to the procedures for book-entry transfer
described below (and a confirmation of such tender received by the Exchange
Agent, including an Agent's Message if the tendering holder has not delivered a
Letter of Transmittal).

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<PAGE> 56
The term "Agent's Message" means a message transmitted by the
Depository, received by the Exchange Agent and forming part of the confirmation
of a book-entry transfer, which states that the Depository has received an
express acknowledgment from the participant in the Depository tendering Old
Notes which are the subject of such book-entry confirmation that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such
participant. In the case of an Agent's Message relating to guaranteed
delivery, the term means a message transmitted by the Depository and received
by the Exchange Agent, which states that the Depository has received an express
acknowledgment from the participant in the Depository tendering Old Notes that
such participant has received and agrees to be bound by the Notice of
Guaranteed Delivery.

By tendering Old Notes pursuant to the procedures set forth above,
each holder will make to the Company the representations set forth above in the
third paragraph under the heading " -- Purpose and Effect of the Exchange
Offer."

The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.

THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. see "Instruction
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Owner" included with the Letter of Transmittal.

Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by an Eligible Institution (as defined
below) unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of the Medallion System (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.

If the Letter of Transmittal or any Old Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to the Company of their authority to so act must be submitted with
the Letter of Transmittal.

The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect
to the Old Notes at the book-entry transfer facility, The Depository Trust
Company ("DTC" or the "Book-Entry Transfer Facility"), for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing such
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee, or, in the case of a book-entry transfer, an Agent's Message in lieu
of the

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<PAGE> 57
Letter of Transmittal and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at its address
set forth in the Letter of Transmittal on or prior to the Expiration Date, or,
if the guaranteed delivery procedures described below are complied with, within
the time period provided under such procedures. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.

The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange Offer
by causing DTC to transfer Old Notes to the Exchange Agent in accordance with
DTC's ATOP procedures for transfer. DTC will then send an Agent's Message to
the Exchange Agent.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends, to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available, (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent or (iii)
who cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:

(a) the tender is made through an Eligible Institution;

(b) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the
holder, the certificate number(s) of such Old Notes and the principal
amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five New York Stock Exchange
trading days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the
Old Notes (or a confirmation of book-entry transfer of such Old Notes
into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and

(c) such properly completed and executed Letter of
Transmittal (of facsimile thereof), as well as the certificates
representing all tendered Old Notes in proper form for transfer (or a
confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility), and all
other documents required by the Letter of Transmittal are received by
the Exchange Agent upon five New York Stock Exchange trading days
after the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery
will be sent to holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above.

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<PAGE> 58
WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York time, on the Expiration
Date.

To withdraw a tender of Old Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received
by the Exchange Agent at its address set forth in the Letter of Transmittal
prior to 5:00 p.m., New York time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number(s) and principal amount of such Old
Notes, or, in the case of Old Notes transferred by book-entry transfer, the
name and number of the account at the Book-Entry Transfer Facility to be
credited), (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Old Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes which have been tendered but which are not accepted
for exchange will be returned to the holder thereof without cost to such holder
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Old Notes may be retendered by
following one of the procedures described above under " -- Procedures for
Tendering" at any time prior to the Expiration Date.

CONDITIONS

Notwithstanding any other term of the Exchange offer, the Company
shall not be required to accept for exchange, or exchange Exchange Notes for,
any Old Notes, and may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Old Notes, if:

(a) any action or proceeding is instituted or threatened
in any court or by or before any governmental agency with respect to
the Exchange Offer which, in the Company's reasonable discretion,
might materially impair the ability of the Company to proceed with the
Exchange Offer or any material adverse development has occurred in any
existing action or proceeding with respect to the Company or any of
its subsidiaries; or

(b) any law, statute, rule, regulation or interpretation
by the staff of the Commission is proposed, adopted or enacted, which,
in the Company's reasonable discretion, might materially impair the
ability of the Company to proceed with the Exchange offer or
materially impair the contemplated benefits of the Exchange offer to
the Company; or

(c) any governmental approval has not been obtained,
which approval the Company shall, in the Company's reasonable
discretion, deem necessary for the consummation of the Exchange Offer
as contemplated hereby; or

(d) there shall have occurred (1) any general suspension
of, or limitation on prices for, trading in securities in the United
States securities or financial markets, (2) any significant adverse
change in the price of the Old Notes or in the United States
securities or financial markets, (3) a material impairment in the
trading market for debt securities, (4) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (5) any limitation (whether
or not mandatory) by a government authority, or other event that, in
the reasonable judgment of the Company, might affect the extension of
credit by banks or other lending institutions in the United States; or

(e) a commencement of war, armed hostilities or other
national or international crisis directly or indirectly involving the
United States.

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<PAGE> 59
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of holders to withdraw such
Old Notes (see "-- Withdrawal of Tenders"), or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn.

EXCHANGE AGENT

United States Trust Company of Texas, N.A. (the "Exchange Agent") has
been appointed as Exchange Agent for the Exchange Offer. Questions and
requests for assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for Notice of Guaranteed Delivery
should be directed to the Exchange Agent at the address indicated in the Letter
of Transmittal. Delivery to an address other than as set forth in the Letter
of Transmittal will not constitute a valid delivery.

FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.

ACCOUNTING TREATMENT

The Exchange Notes will be recorded at the same carrying value as the
Old Notes, which is face value, as reflected in the Company's accounting
records on the date of exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by the Company. The expenses of the Exchange Offer
will be expensed over the term of the Exchange Notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

The Old Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Old
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) so long as the Old Notes are eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller reasonably
believes is a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act in a transaction meeting the requirements of Rule
144A, in accordance with Rule 144 under the Securities Act, (iii) pursuant to
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel, if the Company so requests), (iv) outside the
United States to a foreign person in a transaction meeting the requirements of
Rule 904 under the Securities Act, or (v) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States.

RESALE OF THE EXCHANGE NOTES

With respect to resales of Exchange Notes, based on interpretations by
the staff of the Commission set forth in no-action letters issued to third
parties (for example, the letters of the commission to (i) Exxon Capital
Holdings Corporation, available May 13, 1988, (ii) Morgan Stanley & Co., Inc.
available June 5, 1991 and (iii) Shearson & Sterling, available July 2, 1993),
the Company believes that a holder or other person (other than a person that is
an affiliate of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Old Notes in the

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<PAGE> 60
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes, will be allowed to
resell the Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires Exchange Notes in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Exchange
Notes, such holder cannot rely on the position of the staff of the Commission
enunciated in such no-action letters or any similar interpretive letters, and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Further, each Participating
Broker-Dealer that receives Exchange Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes.

Each holder of Old Notes who wishes to exchange Old Notes for Exchange
Notes in the Exchange Offer will be required to represent that (i) it is not an
affiliate of the Company, (ii) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes and (iii) it is acquiring
the Exchange Notes in its ordinary course of business. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Notes for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the Division
of Corporation Finance of the Commission in the interpretive letters referred
to above, the Company believes that Participating Broker-Dealers who acquired
Old Notes for their own accounts as a result of market-making activities or
other trading activities may fulfill their prospectus delivery requirements
with respect to the Exchange Notes received upon exchange of such Old Notes
(other than Old Notes which represent an unsold allotment from the original
sale of the Old Notes) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such Exchange Notes. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
Exchange Notes received in exchange for Old Notes where such Old Notes were
acquired by such Participating Broker-Dealer for its own account as a result of
market-making or such other trading activities. Subject to certain provisions
set forth in the Registration Rights Agreement, the Company has agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such
Exchange Notes for a period ending 180 days after the date on which the
Exchange Offer Registration Statement is declared effective. However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Notes received in exchange for Old Notes pursuant
to the Exchange Offer must notify the Company, or cause the Company to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one
of the addresses set forth in the Letter of Transmittal. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.

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<PAGE> 61
DESCRIPTION OF EXCHANGE NOTES

GENERAL

The Old Notes were issued and the Exchange Notes will be issued
pursuant to the Indenture dated April 16, 1997 (the "Indenture") between the
Company and U.S. Trust Company of Texas, N.A., as trustee (the "Trustee"). The
terms of the Exchange Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Exchange Notes are subject to all such
terms, and holders of Exchange Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. Although the following summary
contains all of the material terms and provisions of the Exchange Notes and the
Indenture, it does not purport to be complete and is qualified in its entirety
by reference to the Exchange Notes and the Indenture, including the definitions
therein of certain terms used below. Copies of the Indenture will be made
available to prospective purchasers of Exchange Notes as set forth below under
" -- Additional Information." The definitions of certain terms used in the
following summary are set forth below under " -- Certain Definitions."
Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture.

The Old Notes are, and the Exchange Notes will be, general unsecured
obligations of the Company, limited to $200.0 million aggregate principal
amount outstanding at any given time of which $120.0 million aggregate
principal amount was issued in the Old Notes Offering. Additional amounts may
be issued in one or more series from time to time subject to the limitations
set forth under " -- Certain Covenants -- Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock" and restrictions contained in
the Credit Facility. The Exchange Notes will rank pari passu with any Old Notes
that remain outstanding following the Exchange Offer. The Notes will be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the Company and senior or pari passu in right of payment to all
existing and future subordinated Indebtedness of the Company, in each case,
whether outstanding on the date of the Indenture or incurred thereafter. See "
- -- Subordination." The Exchange Notes, like the Old Notes, will not be
guaranteed by Holding or by any other person or entity. The Exchange Notes will
be issued only in fully registered form, without coupons, in denominations of
$1,000 and any integral multiple thereof. No service charge will be made for
any registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Initially, the Trustee will act as paying
agent and registrar for the Exchange Notes. The form and terms of the Exchange
Notes are the same as the form and terms of the Old Notes except that (i) the
Exchange Notes bear a Series B designation, (ii) the Exchange Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, and (iii) the holders of the Exchange Notes
will not be entitled to certain rights under the Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Old Notes in certain circumstances relating to the timing of the Exchange
Offer, which rights will terminate when the Exchange Offer is consummated.

The Company does not currently have any Subsidiaries. If, in the
future, the Company creates or acquires any Subsidiaries, it will be permitted
to designate Subsidiaries as either "Restricted Subsidiaries," which will be
subject to all the provisions of the Indenture, or as "Unrestricted
Subsidiaries," which generally will not be subject to the provisions of the
Indenture (other than certain provisions, such as those establishing the
requirements that must be met in order for a Subsidiary to be treated as an
Unrestricted Subsidiary and the provisions described under the "Limitation on
Restricted Payments" and "Transactions with Affiliates" covenants and the
related definitions, which will limit the Company's ability to make investments
in, or otherwise engage in transactions with, Unrestricted Subsidiaries). The
following Description of Exchange Notes has been prepared as though the Company
currently has Subsidiaries that have been designated as Restricted
Subsidiaries.

PRINCIPAL, MATURITY AND INTEREST

The Exchange Notes will mature on April 15, 2007. Interest on the
Exchange Notes will accrue at the rate of 11.25% per annum and will be payable
semi-annually in arrears on April 15 and October 15 of each year, commencing on
October 15, 1997, to holders of record on the immediately preceding April 1 and
October 1. Interest on the Exchange Notes will accrue from the most recent date
to which interest has been paid or duly provided for on the Old Note
surrendered in exchange for such Exchange Note or, if no interest has been paid
or duly provided for on such Old Note, from April 16, 1997. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.

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<PAGE> 62
The Exchange Notes will be payable as to principal, premium, if any,
interest and Liquidated Damages, if any, thereon at the office or agency of the
Company maintained for such purpose within the City and State of New York or,
at the option of the Company, payment of interest and Liquidated Damages, if
any, thereon may be made by check mailed to the holders of the Exchange Notes
at their respective addresses set forth in the register of holders of the
Notes; provided that all payments with respect to Global Notes will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the holders thereof. Until otherwise designated by the Company,
the Company's office or agency in New York will be the office of the Trustee
maintained for such purpose.

The Trustee is Paying Agent and Registrar under the Indenture. The
Company may act as Paying Agent or Registrar under the Indenture, and the
Company may change the Paying Agent or Registrar without notice to the holders
of the Exchange Notes.

OPTIONAL REDEMPTION

The Notes will not be redeemable at the Company's option prior to
April 15, 2002. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on April 15 of the years
indicated below:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . 105.625%
2003 . . . . . . . . . . . . . . . 103.750%
2004 . . . . . . . . . . . . . . . 101.875%
2005 and thereafter . . . . . . . . 100.000%
</TABLE>

Notwithstanding the foregoing, on or prior to April 15, 2000, the
Company may, at its option, redeem at any time or from time to time up to 35%
of the aggregate original principal amount of the Notes (including, for this
purpose, one or more series of notes issued under the Indenture after the
Closing Date) issued at a redemption price equal to 111.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the redemption date, with the net cash proceeds of one or more
Public Equity Offerings; provided, however, that at least $78.0 million in
aggregate principal amount of Notes remains outstanding following each such
redemption; provided, further, that notice of such redemption shall be given
not later than 30 days, and such redemption shall occur not later than 60 days,
after the date of the closing of any such Public Equity Offering.

SELECTION AND NOTICE

If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate, unless otherwise provided in the Indenture, provided that no Notes
of $1,000 principal amount or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail to each holder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that relates to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the
holder thereof upon cancellation of the original Note. On and after the
redemption date (unless the Company shall default in the payment of the
redemption price, together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date), interest will cease to accrue
on Notes or portions thereof called for redemption.

MANDATORY REDEMPTION

Except as set forth below under " -- Repurchase at the Option of
Holders," the Company is not required to make mandatory redemption or sinking
fund payments with respect to the Exchange Notes.

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REPURCHASE AT THE OPTION OF HOLDERS

Change of Control

Upon the occurrence of a Change of Control, each holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at a repurchase price in
cash equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase (the "Change of Control Payment Date"). Notice of a Change of
Control Offer shall be prepared by the Company and shall be mailed by the
Company with a copy to the Trustee or, at the option of the Company and at the
expense of the Company, by the Trustee within 30 days following a Change of
Control to each holder of the Notes and such Change of Control Offer must
remain open for at least 30 and not more than 40 days (unless otherwise
required by applicable law). In addition, the Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities
laws, rules and regulations thereunder to the extent such laws, rules and
regulations are applicable in connection with the repurchase of the Notes in
connection with a Change of Control.

On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all Notes or portions thereof so
tendered, and (iii) deliver or cause to be delivered to the Trustee the Notes
so accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof accepted for payment by the
Company. The Paying Agent will promptly mail to each holder of Notes so
accepted the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book-entry) to
each holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

With respect to the sale of assets referred to in the definition of
"Change of Control," the phrase "all or substantially all" as used in the
Indenture varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under New York law (which
governs the Indenture) and is subject to judicial interpretation. Accordingly,
in certain circumstances there may be a degree of uncertainty in ascertaining
whether a particular transaction would involve a disposition of "all or
substantially all" of the assets of a person and therefore it may be unclear
whether a Change of Control has occurred and whether the Notes are subject to a
Change of Control Offer.

The Credit Facility prohibits the Company from purchasing any Notes at
the time of a Change of Control. In addition, the Credit Facility provides that
certain Change of Control events (among other things) with respect to the
Company will constitute a default thereunder. An event of default under the
Credit Facility could result in an acceleration of the indebtedness thereunder,
in which case the subordination provisions of the Notes would require payment
in full (or provision therefor) of such Senior Indebtedness of the Company
before repurchase or other payments in respect of the Notes. Any future credit
agreements or other agreements relating to Senior Indebtedness to which the
Company becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In each
case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture, which would, in turn, constitute a
default under the Credit Facility. In such circumstances, the subordination
provisions in the Indenture would likely restrict payments to the holders of
Notes. None of the provisions relating to a repurchase upon a Change of
Control are waivable by the Board of Directors of the Company or the Trustee.

The foregoing provisions will not prevent the Company from entering
into transactions of the types described above with management or their
affiliates. In addition, such provisions may not necessarily afford the
holders of the Exchange Notes protection in the event of a highly leveraged
transaction, including a reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect the holders because
such transactions may not involve a shift in voting power or beneficial
ownership, or even if they do, may not involve a shift of the magnitude required
under the definition of Change of Control to trigger the provisions.
Nonetheless, such provisions may have the effect of deterring certain mergers,
tender offers, takeover attempts or similar transactions by increasing the cost
of such a transaction and may limit the Company's ability to obtain additional
equity financing in the future.

Asset Sales

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, engage in any Asset Sale, unless: (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
disposed of; and (ii) except in the case

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of Permitted Asset Swaps, at least 75% of the consideration therefor received
by the Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents; provided, however, that the amount of (a) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto) of the Company or such Restricted Subsidiary
(other than liabilities that are by their terms subordinated in right of
payment to the Notes) that are assumed by the transferee of any such assets,
and (b) any notes or other obligations received by the Company or such
Restricted Subsidiary from such transferee that are immediately converted by
the Company or such Restricted Subsidiary into cash (to the extent of the cash
so received), shall be deemed to be cash for purposes of this provision.

Within 360 days after the receipt of the Net Proceeds from an Asset
Sale, the Company shall apply the Net Proceeds from such Asset Sale to: (i)
permanently reduce Senior Indebtedness; (ii) permanently reduce Indebtedness of
the Restricted Subsidiary that sold properties or assets in the Asset Sale; or
(iii) acquire properties and assets to replace the properties and assets that
were the subject of the Asset Sale or properties and assets that will be used
in the same or a similar line of business as the Company was engaged in on the
date of the Indenture or reasonable extensions, developments or expansions
thereof or activities ancillary thereto. Pending the final application of any
such Net Proceeds, the Company may invest such Net Proceeds in any manner that
is not prohibited by the Indenture. Any Net Proceeds from the Asset Sale that
are not applied as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate cumulative amount of
Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all
holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company may use such
deficiency for general corporate purposes in any manner provided by the
Indenture. If the aggregate principal amount of Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero. The Asset Sale
Offer must be commenced within 30 days following the first date on which the
Company has cumulative Excess Proceeds of at least $5.0 million and remain open
for at least 30 and not more than 40 days (unless otherwise required by
applicable law). The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws, rules and regulations
thereunder to the extent such laws, rules and regulations are applicable in
connection with the repurchase of Notes pursuant to Asset Sale Offer. The
agreements governing certain outstanding Senior Indebtedness of the Company
will require that the Company and its Subsidiaries apply all proceeds from
asset sales to repay in full outstanding obligations under such Senior
Indebtedness prior to the application of such proceeds to repurchase
outstanding Notes.

SUBORDINATION

The payment of principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full of all Senior
Indebtedness, whether outstanding on the date of the Indenture or thereafter
incurred.

Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Indebtedness of the Company will
be entitled to receive payment in full in cash or Cash Equivalents of all
Obligations due in respect of such Senior Indebtedness of the Company
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Indebtedness instrument of the Company)
before the holders of Notes will be entitled to receive any payment of
principal of, premium, if any, interest and Liquidated Damages, if any, on the
Notes, and until all Obligations with respect to Senior Indebtedness of the
Company are paid in full in cash or Cash Equivalents, any distribution to which
the holders of Notes would be entitled shall be made to the holders of Senior
Indebtedness of the Company; provided that notwithstanding the foregoing,
holders of Notes may receive: (i) Capital Stock (other than Disqualified
Stock); (ii) securities that are subordinated at least to the same extent as
the Notes to Senior Indebtedness of the Company and to any securities issued in
exchange for Senior Indebtedness of the Company; and (iii) payments made from
the trust described under " -- Legal Defeasance and Covenant Defeasance."

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The Company also may not make any payment of principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes (except in such
subordinated securities or from such trust) if: (i) a default in the payment of
the principal of, premium, if any, and interest on Designated Senior
Indebtedness of the Company occurs and is continuing beyond any applicable
period of grace; or (ii) any other default occurs and is continuing with
respect to Designated Senior Indebtedness of the Company that permits holders
of the Designated Senior Indebtedness of the Company as to which such default
relates to accelerate its maturity and the Trustee receives a written notice of
such default ("Payment Blockage Notice") from the holders of such Designated
Senior Indebtedness of the Company. Payments on the Notes may and shall be
resumed (i) in the case of a payment default, upon the date on which such
default is cured or waived or otherwise has ceased to exist and (ii) in case of
any other default, the earlier of the date on which such other default is cured
or waived or otherwise has ceased to exist or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless, in the case of
either clause (i) or (ii), the maturity of any Designated Senior Indebtedness
of the Company has been accelerated, and such acceleration remains in full
force and effect. No new period of payment blockage may be commenced within 360
days after the receipt by the Trustee of any prior Payment Blockage Notice. No
non-payment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice. Following the expiration of any period
during which the Company is prohibited from making payments on the Notes
pursuant to a Payment Blockage Notice, the Company will be obligated to resume
making any and all required payments in respect of the Notes, including,
without limitation, any missed payments, unless the maturity of any Designated
Senior Indebtedness has been accelerated, and such acceleration remains in full
force and effect.

The Indenture requires that the Company promptly notify holders of
Senior Indebtedness in accordance with the notice provisions of the applicable
agreements of the Company if payment of the Notes is accelerated because of an
Event of Default.

As a result of the subordination provisions described above, in the
event of a liquidation or insolvency, holders of Notes may recover less,
ratably, than creditors of the Company who are holders of Senior Indebtedness.
As of March 29,1997, after giving effect to the Old Notes Offering and the use
of proceeds therefrom, (i) the Company would have had outstanding approximately
$3.7 million of Senior Indebtedness and (ii) the Company would have been able
to incur, under the most restrictive covenants contained in the Indenture and
the Credit Facility, approximatley $49.2 million of additional Senior
Indebtedness. The Indenture limits, subject to certain financial tests, the
amount of additional Indebtedness, including Senior Indebtedness, that the
Company and its Restricted Subsidiaries can incur. See " -- Certain Covenants
- -- Limitation on the Incurrence of Indebtedness and Issuance of Disqualified
Stock."

CERTAIN COVENANTS

Limitation on Restricted Payments

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of Equity Interests, other
than (x) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or (y) dividends or distributions payable to
the Company or a Wholly Owned Subsidiary of the Company that is a Restricted
Subsidiary; (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Affiliate of the Company (other than any
such Equity Interests owned by the Company or a Wholly Owned Subsidiary of the
Company that is a Restricted Subsidiary); (iii) purchase, redeem, repay,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated in right of payment to the Exchange Notes; (iv) make any
Investment (other than a Permitted Investment); or (v) make any payment of any
amount currently recorded by the Company as payable to Holding in respect of
the undistributed merger consideration relating to the Recapitalization (all
such payments and other actions set forth in clauses (i) through (v) above
being collectively referred to as "Restricted Payments"), unless, at the time
of and after giving effect to such Restricted Payment:

(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;

(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test

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set forth in the first paragraph of the covenant described below under
the caption " -- Limitation on the Incurrence of Indebtedness and
Issuance of Disqualified Stock;" and

(c) such Restricted Payment (the amount of any such
payment, if other than cash, to be determined in good faith by the
Board of Directors, whose determination shall be conclusive and
evidenced by a resolution in an Officers' Certificate delivered to the
Trustee), together with the aggregate of all other Restricted Payments
made by the Company and its Restricted Subsidiaries after the date of
the Indenture (including Restricted Payments permitted by the next
succeeding paragraph other than pursuant to clause (iii) and clause
(vii) thereof), shall not exceed the sum of (w) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) commencing on the first day of the Company's second
fiscal quarter in fiscal year 1997 and ending on the last day of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit as a negative number), plus (x) 100% of
the aggregate net cash proceeds received by the Company from the
issuance or sale since the date of initial issuance of the Notes of
Equity Interests of the Company or of debt securities of the Company
that have been converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a Subsidiary of the
Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (y) the aggregate cash
received by the Company as capital contributions to the Company after
the date of initial issuance of the Notes (other than from a
Subsidiary), plus (z) any cash received by the Company after the date
of initial issuance of the Notes as a dividend or distribution from
any of its Unrestricted Subsidiaries or from the sale of any of its
Unrestricted Subsidiaries less the cost of disposition and taxes, if
any (but in each case excluding any such amounts included in
Consolidated Net Income).

The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company, or the defeasance, redemption or
repurchase of subordinated Indebtedness in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of Equity Interests of the Company (other than any Disqualified Stock)
or out of the net proceeds of a substantially concurrent cash capital
contribution received by the Company; provided that the amount of any such
proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (x) of the
preceding paragraph; (iii) the repayment, defeasance, redemption or repurchase
of subordinated Indebtedness with the net proceeds from an incurrence of
Refinancing Indebtedness in a Permitted Refinancing; (iv) the purchase,
redemption or retirement by the Company of shares of its common stock held by
an employee or former employee of the Company or any of its Restricted
Subsidiaries issued under the Management Plans pursuant to the terms of such
Management Plans; provided that (a) the purchase, redemption or retirement
results from the retirement, termination of employment, death or disability (as
defined in the relevant Management Plan) of the employee or former employee and
(b) the amount of any such payments does not exceed $2.0 million in the
aggregate; (v) the payment of dividends to Holding in an amount equal to the
amount required by Holding to pay federal, state and local income taxes to the
extent such income taxes are attributable to the income of the Company; (vi)
distributions of up to $500,000 annually to Holding to pay its bona fide
operating expenses; (vii) distributions to Holding from the proceeds of the Old
Notes Offering in an amount sufficient to permit Holding to consummate the
transactions described under "Use of Proceeds" in the Offering Memorandum;
(viii) payments to purchase a life insurance policy, and the use of the
proceeds therefrom, to fund the Company's obligations pursuant to the Burns Put
Agreement; (ix) distributions to Holding of an amount equal to such amounts as
may be necessary to fund a final judgment, final arbitration or mediation award
or final settlement of pending litigation of Holding related to the
Recapitalization (and to pay reasonable expenses, including legal fees, in
connection therewith); (x) any Investment made with the proceeds of a
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of Capital Stock of the Company (other than Disqualified Stock);
provided, however, the proceeds of such sale shall not be (and have not been)
included in clause (c) of the immediately preceding paragraph; (xi) the
repayment in full of all Obligations in respect of the Mannesmann Senior
Subordinated Debt outstanding as of the date of the Indenture; or (xii) other
restricted payments of up to $1.0 million; provided, further, however, that at
the time of, and after giving effect to, any Restricted Payment permitted under
clauses (i), (ii), (iii) and (iv) no Default or Event of Default shall have
occurred and be continuing; provided, further, that the Restricted Payments
described in clauses (vii), (viii), (ix) and (xi) shall not be counted in
computing the aggregate amount of all Restricted Payments made pursuant to the
Indenture.

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For purposes of the foregoing calculations, the amount of any
Investment that constitutes a Restricted Payment shall be equal to the greater
of (i) the net book value of such Investment and (ii) the fair market value of
such Investment (in each case as certified by a resolution of the independent
directors of the Company if the book value or fair market value of such
investment exceeds $1.0 million).

Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Limitation on Restricted Payments" were
computed, which calculations may be based upon the Company's latest available
financial statements.

Limitation on the Incurrence of Indebtedness and Issuance of Disqualified Stock

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable with
respect to (collectively, "incur" and, correlatively, "incurred" and
"incurrence") any Indebtedness (including, without limitation, Acquired Debt)
and that the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred, determined on a pro
forma basis in accordance with Article 1 of Regulation S-X under the Securities
Act, or any successor provision, as if the additional Indebtedness had been
incurred at the beginning of such four-quarter period, would have been greater
than 2.00 to 1.00.

The foregoing limitations will not apply to:

(i) Indebtedness incurred by the Company under the Credit
Facility in an aggregate principal amount not to exceed the Borrowing
Base Amount;

(ii) additional Indebtedness incurred by the Company in
respect of Capital Lease Obligations or Purchase Money Obligations in
an aggregate principal amount not to exceed $10.0 million at any time
outstanding;

(iii) Existing Indebtedness outstanding on the date of the
Indenture;

(iv) Indebtedness represented by the Notes and the
Indenture;

(v) Hedging Obligations; provided that the notional
principal amount of any Interest Rate Agreement does not exceed the
principal amount of the Indebtedness to which such agreement relates;
provided, further, that any Currency Agreement does not increase the
outstanding loss potential or liabilities other than as a result of
fluctuations in foreign currency exchange rates;

(vi) Indebtedness of the Company to any of its Wholly
Owned Subsidiaries that is a Restricted Subsidiary, and Indebtedness
of any Wholly Owned Subsidiary of the Company that is a Restricted
Subsidiary to the Company or any of its Wholly Owned Subsidiaries that
is a Restricted Subsidiary (the Indebtedness incurred pursuant to this
clause (vi) being hereinafter referred to as "Intercompany
Indebtedness"); provided that in the case of Indebtedness of the
Company such obligations shall be unsecured and subordinated in all
respects to the Company's obligations pursuant to the Notes; provided,
further, that an incurrence of Indebtedness shall be deemed to have
occurred upon (a) any sale or other disposition of Intercompany
Indebtedness to a Person other than the Company or any of its
Restricted Subsidiaries, (b) any sale or other disposition of Equity
Interests of any Restricted Subsidiary of the Company which holds
Intercompany Indebtedness such that such Restricted Subsidiary ceases
to be a Restricted Subsidiary after such sale or other disposition or
(c) designation of a Restricted Subsidiary as an Unrestricted
Subsidiary;

(vii) in addition to Indebtedness specified in clauses (i)
through (vi) above and clause (viii) below, additional Indebtedness in
an aggregate principal amount not to exceed $15.0 million at any time
outstanding; and

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(viii) the incurrence by the Company of Indebtedness issued
in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, defease or refund Indebtedness incurred
pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of this covenant or pursuant to clauses (iii) or (iv)
of this covenant in whole or in part (the "Refinancing Indebtedness");
provided, however, that (A) the aggregate principal amount of such
Refinancing Indebtedness shall not exceed the aggregate principal
amount of Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded; (B) the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (c) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded is pari passu with or subordinated in right of payment to
the Notes, the Refinancing Indebtedness shall be pari passu with or
subordinated, as the case may be, in right of payment to the Notes on
terms at least as favorable to the holders of Notes as those contained
in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded (any such
extension, refinancing, renewal, replacement, defeasance or refunding
being referred to as a "Permitted Refinancing").

Limitation on Liens

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset now owned or hereafter acquired
or on any income or profits therefrom or assign or convey any right to receive
income therefrom, except Permitted Liens.

Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to: (i)
pay dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (a) on its Capital Stock or (b) with respect to any
other interest or participation in, or measured by, its profits; (ii) pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries; (iii)
make loans or advances to the Company or any of its Restricted Subsidiaries; or
(iv) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of the
Indenture, (b) the Indenture and the Notes, (c) applicable law, (d) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
(e) customary nonassignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (f) Purchase Money
Obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iv) above on the
property so acquired, or (g) Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are no more restrictive with respect to the provisions set forth
in clauses (i), (ii), (iii) and (iv) above than those contained in the
agreements governing the Indebtedness being refinanced.

Limitation on Merger, Consolidation or Sale of Assets

The Indenture provides that the Company may not consolidate or merge
with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person or entity unless: (i) the Company is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and the Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately before or
immediately after giving effect to such transaction no Default or Event of
Default shall have occurred

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and be continuing; and (iv) the Company or any Person formed by or surviving
any such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made will, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant
entitled "Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock."

Limitation on Transactions with Affiliates

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, sell, lease,
license, transfer or otherwise dispose of any of its properties or assets to,
or purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless: (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in
a comparable arms' length transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction involving aggregate
payments in excess of $1.0 million, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and such Affiliate Transaction is approved by a
majority of the disinterested members, if any, of the Board of Directors and
(b) with respect to any Affiliate Transaction involving aggregate payments in
excess of $5.0 million, an opinion as to the fairness to the Company or such
Restricted Subsidiary from a financial point of view issued by a nationally
recognized independent financial advisor; provided, however, that (i) any
reasonable fees and compensation provided to, and indemnity provided on behalf
of, officers, directors and employees of the Company and its Restricted
Subsidiaries as determined in good faith by the Board of Directors of the
Company, (ii) transactions between or among the Company and its Wholly Owned
Subsidiaries that are Restricted Subsidiaries, (iii) Restricted Payments
permitted by the covenant entitled "Limitation on Restricted Payments," (iv)
loans in aggregate amount not to exceed $1,000,000 at any time outstanding to
employees of the Company and its Restricted Subsidiaries in the ordinary course
of business which are approved by the Board of Directors of the Company, and
(v) the consummation of the transactions described under the caption "Use of
Proceeds" in the Offering Memorandum, in each case, shall not be deemed to be
Affiliate Transactions.

Limitation on Guarantees by Subsidiaries

The Company will not permit any Restricted Subsidiary, directly or
indirectly, by way of the pledge of any intercompany note or otherwise, to
assume, guarantee or in any other manner become liable with respect to any
Indebtedness of any Person other than Indebtedness under the Credit Facility or
Indebtedness incurred pursuant to Hedging Obligations incurred pursuant to the
"Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock"
covenant unless: (i) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the Indenture, providing a guarantee of
payment of the Securities by such Restricted Subsidiary in the form required by
the Indenture (the "Guarantee"); and (ii) (a) if any such assumption, guarantee
or other liability of such Restricted Subsidiary is provided in respect of
Senior Indebtedness, the guarantee or other instrument provided by such
Restricted Subsidiary in respect of such Senior Indebtedness may be superior to
the Guarantee pursuant to subordination provisions no less favorable to the
holders of the Notes than those contained in the Indenture, and (b) if such
assumption, guarantee or other liability of such Subsidiary is provided in
respect of Indebtedness that is expressly subordinated to the Notes, the
guarantee or other instrument provided by such Restricted Subsidiary in respect
of such subordinated Indebtedness shall be subordinated to the Guarantee
pursuant to subordination provisions not less favorable to the holders of the
Notes than those contained in the Indenture.

Notwithstanding the foregoing, any such Guarantee of the Notes by a
Restricted Subsidiary shall provide by its terms that it shall be automatically
and unconditionally released and discharged, without any further action
required on the part of the Trustee or any holder, upon: (i) the unconditional
release of such Restricted Subsidiary from its liability in respect of the
Indebtedness in connection with which such Guarantee was executed and delivered
pursuant to the preceding paragraph; or (ii) any sale or other disposition (by
merger or otherwise) to any Person which is not a Restricted Subsidiary of the
Company, of all of the Company's Capital Stock in, or all or substantially all
of the assets of, such Restricted Subsidiary; provided that (a) such sale of
disposition of such Capital Stock or assets is otherwise in compliance with the

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terms of the Indenture and (b) such assumption, guarantee or other liability of
such Subsidiary has been released by the holders of the other Indebtedness of
the Company or its Restricted Subsidiaries so guaranteed.

Limitation on Layering Debt

The Indenture provides that the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness of the
Company and senior in any respect in right of payment to the Notes.

Limitation on Issuance and Sale of Stock of Restricted Subsidiaries

The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries, to (a) transfer, convey, sell or otherwise
dispose of any shares of Capital Stock of any Restricted Subsidiary of the
Company (other than to the Company or a Wholly Owned Subsidiary that is a
Restricted Subsidiary of the Company), except that the Company and its
Restricted Subsidiaries may, in any single transaction, sell all, but not less
than all, of the issued and outstanding Capital Stock of a Restricted
Subsidiary to any Person, subject to complying with the provisions of the
Indenture described under "Repurchase at Option of Holders -- Asset Sales"
above and (b) issue shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares), or securities convertible into, or
warrants, rights or options to subscribe for or purchase shares of, Capital
Stock of a Restricted Subsidiary of the Company to any Person other than to the
Company or a Wholly Owned Subsidiary that is a Restricted Subsidiary of the
Company.

Reports

The Indenture provides that whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the
Company will furnish to the holders of Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results
of operations of the Company and its Subsidiaries and, with respect to the
annual information only, a report thereon by the Company's independent auditor
and (ii) all reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports, all such reports to
be delivered to the holders and the Trustee not more than 15 days after the
date on which the related Form would be required to be filed with the
Commission. In addition, whether or not required by the rules and regulations
of the Commission, the Company will file a copy of all such information with
the Commission for public availability (unless the Commission will not accept
such a filing) and make such information available to investors or prospective
investors who request it in writing. In addition, the Company has agreed that,
for as long as any Old Notes remain outstanding, the Company will furnish to
the holders or beneficial holders of Old Notes and prospective purchasers of
Old Notes designated by the holders of Old Notes, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

Payments for Consent

The Indenture prohibits the Company and each of its Subsidiaries from,
directly or indirectly, paying or causing to be paid any consideration, whether
by way of interest, fee or otherwise, to any holder of any Notes for or as an
inducement to any consent, waiver or amendment of any terms or provisions of
the Notes unless such consideration is offered to be paid or agreed to be paid
to all holders of the Notes which so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such consent, waiver
or agreement.

EVENTS OF DEFAULT AND REMEDIES

The Indenture provides that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, any of the Notes, whether or not
prohibited by the subordination provisions of the Indenture; (ii) default in
payment when due (whether at maturity, upon redemption or repurchase, or
otherwise) of the principal of or premium, if any, on any of the Notes, whether
or not prohibited by the subordination provisions of the Indenture; (iii)
failure by the Company to comply with the provisions described under the

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covenants "Change of Control," "Asset Sales" and "Merger, Consolidation or Sale
of Assets;" (iv) failure by the Company or any Restricted Subsidiary for 30
days after notice to comply with any of its covenants or agreements in the
Indenture or the Notes other than those referred to in clauses (i), (ii) and
(iii) above; (v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of such Indebtedness when due and prior to the
expiration of the grace period provided in such Indebtedness (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case described in clauses (a) and (b) of this
subsection (v), the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been
a Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days
after their entry; and (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Restricted Subsidiaries.

If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all of the principal amount of the Notes, accrued and unpaid interest
thereon and all other Obligations thereunder to be due and payable immediately;
provided, however, that such declaration of acceleration may be rescinded under
certain circumstances specified in the Indenture. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or its Restricted
Subsidiaries, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal, premium, interest or Liquidated Damages, if any) if the Trustee
determines that withholding such notice is in their interest.

In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
April 15, 2002, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to such date, then the premium
specified in the Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.

The holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the holders of all
of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of
Default in the payment of principal, premium, interest or Liquidated Damages,
if any, on the Notes.

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon its
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

No past, present or future director, officer, employee, agent or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder of Notes by accepting Notes waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.

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LEGAL DEFEASANCE AND COVENANT DEFEASANCE

The Company may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on such Notes when such payments are due, (ii) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (iii) the rights, powers, trusts, duties and immunities
of the Trustee, and the Company's obligations in connection therewith, and (iv)
the Legal Defeasance provisions of the Indenture. In addition, the Company may,
at its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including nonpayment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants, to pay the principal of, premium, if any,
interest and Liquidated Damages, if any, on the outstanding Notes on the Stated
Maturity or on the applicable redemption date, as the case may be; (ii) in the
case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel from nationally recognized tax counsel reasonably acceptable
to the Trustee confirming that (a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (b) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel from nationally recognized tax counsel reasonably acceptable to the
Trustee confirming that the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound; (vi) the Company shall have delivered to the
Trustee an opinion of counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (vii) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the holders of Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company; and (viii) the Company shall have
delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that the Company has complied with all conditions precedent
provided for relating to the Legal Defeasance or the Covenant Defeasance.

TRANSFER AND EXCHANGE

A holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Note selected for redemption. Also, the Company is not required to transfer
or exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.

The registered holder of a Note will be treated as its owner for all
purposes.

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AMENDMENT, SUPPLEMENT AND WAIVER

Except as provided in the next succeeding paragraphs and in the
Indenture, the Indenture or the Notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes).

Without the consent of each holder affected, an amendment or waiver
may not (with respect to any Notes held by a non-consenting holder of Notes):
(i) reduce the principal amount of Notes whose holders must consent to an
amendment, supplement or waiver; (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions relating to the covenant
described above under "Asset Sales") or reduce the prices at which the Company
shall offer to purchase such Notes (pursuant to the covenants described under
"Repurchase at the Option of Holders"); (iii) reduce the rate of or change the
time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, interest or
Liquidated Damages, if any, on the Notes (except a rescission of acceleration
of the Notes by the holders of at least a majority in aggregate principal
amount of the Notes and a waiver of the payment default that resulted from such
acceleration); (v) make any Note payable in money other than that stated in the
Notes; (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Notes to receive payments
of principal of or premium, if any, interest or Liquidated Damages, if any, on
the Notes; (vii) waive a redemption payment with respect to any Note; (viii)
make any change to the subordination provisions of the Indenture that adversely
affects holders of Notes; or (ix) make any change in the foregoing amendment
and waiver provisions.

Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to holders of the Notes
in the case of a merger or consolidation, to make any change that would provide
any additional rights or benefits to the holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.

THE TRUSTEE

The Trustee under the Indenture has been appointed by the Company as
Registrar and Paying Agent with respect to the Notes and as Exchange Agent with
respect to the Exchange Offer.

The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.

The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case a Default or an Event
of Default shall occur (which shall not be cured), the Trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.

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"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person; and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.

"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities (or the
equivalents) of a Person shall be deemed to be control.

"Asset Sale" means any sale, transfer or other disposition (including,
without limitation, by merger, consolidation or sale-and-leaseback transaction)
of (i) shares of Capital Stock of a Subsidiary of the Company (other than
directors' qualifying shares), or (ii) property or assets of the Company or any
Restricted Subsidiary of the Company other than in the ordinary course of
business; provided, however, that an Asset Sale shall not include (a) any sale,
transfer or other disposition of shares of Capital Stock, property or assets by
a Restricted Subsidiary of the Company to the Company or to any Restricted
Subsidiary that is a Wholly Owned Subsidiary of the Company, (b) any sale,
transfer or other disposition of defaulted receivables for collection or any
sale, transfer or other disposition of property of assets in the ordinary
course of business, (c) any isolated sale, transfer or other disposition that
does not involve aggregate consideration in excess of $500,000 individually,
(d) the grant in the ordinary course of business of any non-exclusive license
of patents, trademarks, registrations therefor and other similar intellectual
property, (e) any Lien (or foreclosure thereon) securing Indebtedness to the
extent that such Lien is granted in compliance with the covenant set forth
under " -- Limitation on Liens" above, (f) any Restricted Payment permitted by
the covenant set forth under " -- Limitation on Restricted Payments" above,
(g) any disposition of assets or property in the ordinary course of business to
the extent such assets are obsolete, worn-out or no longer useful in the
Company's or any Restricted Subsidiaries' business, (h) the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company as permitted by the covenant set forth under " -- Limitation on
Merger, Consolidation or Sale of Assets" above; provided, that the assets not
so sold, leased, conveyed, disposed of or otherwise transferred shall be deemed
an Asset Disposition or (i) any disposition that constitutes a Change of
Control.

"Borrowing Base Amount" means, as to the Company, the sum of (x) 50%
of Finished Goods Inventory plus (y) 65% of Raw Materials Inventory plus (z)
85% of Receivables, determined on a consolidated basis in accordance with GAAP.

"Burns Put Agreement" means that certain Amended and Restated Put
Agreement dated as of December 13, 1996, by and between Julius S. Burns and
Holding, as in effect on the date of the Indenture.

"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be so required to be capitalized on the balance
sheet in accordance with GAAP.

"Capital Stock" means (i) any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (ii) in the case of a partnership, partnership interests (whether
general or limited) and (iii) any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and Eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500 million, (iv) repurchase

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obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition and (vi) shares of any
money market mutual fund, or similar fund, in each case having assets in excess
of $500 million, which invests solely in investments of the types described in
clauses (i) through (v) above.

"Change of Control" means the occurrence of any of the following
(whether or not otherwise permitted by the Indenture): (i) the sale, lease,
transfer, conveyance or other disposition, in one transaction or a series of
related transactions, directly or indirectly, of all or substantially all of
the assets of the Company and its Restricted Subsidiaries to any Person or
group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act or
any successor provisions thereto) (a "Group"); (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company; (iii) any Person or
Group, other than Permitted Holders, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor
provisions thereto, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the
Voting Stock of the Company (or of the Company's successor in the event of a
merger or consolidation); or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.

"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Restricted Subsidiaries designed to protect the Company or any of
its Restricted Subsidiaries against fluctuations in the price of commodities
actually used in the ordinary course of business of the Company and its
Restricted Subsidiaries.

"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus (i) an
amount equal to any extraordinary, non-recurring or unusual loss plus any net
loss realized in connection with an Asset Sale, to the extent such losses were
deducted or otherwise excluded in computing Consolidated Net Income, plus (ii)
provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent such provision for taxes
was deducted or otherwise excluded in computing Consolidated Net Income, plus
(iii) Consolidated Interest Expense of such Person less consolidated interest
income for such period, to the extent such amount was deducted or otherwise
excluded in computing Consolidated Net Income, plus (iv) depreciation and
amortization (including amortization of goodwill, amortization of deferred debt
expense and other intangibles and amortization of deferred compensation in
respect of non-cash compensation but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges of such
Person and its Restricted Subsidiaries for such period, to the extent such
depreciation and amortization were deducted or otherwise excluded in computing
Consolidated Net Income, plus (v) an amount equal to all premiums on
prepayments of debt, in each case, for such period without duplication on a
consolidated basis and determined in accordance with GAAP.

Notwithstanding the foregoing, the provision for taxes, and the
depreciation and amortization and other non- cash charges of, a Restricted
Subsidiary shall be added to Consolidated Net Income to compute Consolidated
Cash Flow only to the extent (and in the same proportion) the Net Income of
such Restricted Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be distributed by dividend to such Person by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statues, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.

"Consolidated Interest Expense" means, with respect to any Person for
any period, the aggregate consolidated interest, whether expensed or
capitalized, paid, accrued or scheduled to be paid or accrued, of such Person
and its Restricted Subsidiaries for such period (including (i) amortization of
original issue discount and deferred financing costs and non-cash interest
payments and accruals, (ii) the interest portion of all deferred payment
obligations, calculated in accordance with the effective interest method, and
(iii) the interest component of any payments associated with Capital Lease
Obligations and net payments (if any) pursuant to Hedging Obligations, in each
case, to the extent attributable to such period, but excluding (x) commissions,
discounts and other fees and charges incurred with respect to letters of credit
and bankers' acceptances financing and (y) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person

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or secured by a Lien on assets of such Person) determined in accordance with
GAAP. Consolidated Interest Expense of the Company shall not include any
prepayment premiums or amortization of original issue discount or deferred
financing costs, to the extent such amounts are incurred as a result of the
prepayment on the date of the Indenture of any Indebtedness of the Company with
the proceeds of the Notes.

"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP, adjusted to exclude (only to the extent included and without
duplication): (i) all gains which are extraordinary, unusual or are
non-recurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of capital
stock); (ii) all gains resulting from currency or hedging transactions; (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition; (iv) depreciation,
amortization or other expenses recorded as a result of the application of
purchase accounting in accordance with Accounting Principles Board Opinion Nos.
16 and 17; and (v) the cumulative effect of a change in accounting principles;
provided that (a) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of cash dividends or cash distributions actually paid
to the referent Person or a Wholly Owned Subsidiary thereof that is a
Restricted Subsidiary and (b) the Net Income of any Person that is an
Unrestricted Subsidiary shall be included only to the extent of the amount of
cash dividends or cash distributions paid to the referent Person or a
Restricted Subsidiary thereof.

"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the Indenture, (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election, or (iii) is a designee of CVC or its Related
Persons or Affiliates.

"Credit Facility" means the Amended and Restated Loan and Security
Agreement, dated as of December 13, 1996, by and among the Company, Fleet
Capital Corporation, as a lender and collateral agent, and Transamerica
Business Credit Corporation, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced
or refinanced from time to time.

"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
the Company or any of its Restricted Subsidiaries in the ordinary course of
business against fluctuation in the values of the currencies of the countries
(other than the United States) in which the Company or its Restricted
Subsidiaries conduct business.

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

"Designated Senior Indebtedness" means (i) the Obligations of the
Company with respect to the Credit Facility and (ii) any other Senior
Indebtedness of the Company permitted under the Indenture the principal amount
of which at original issuance is $5.0 million or more (other than Senior
Indebtedness that is comprised of Hedging Obligations owing to a Person that is
not a party to the Credit Facility).

"Disqualified Stock" means any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable or is convertible or exchangeable for Indebtedness at the option of
the holder thereof, in whole or in part, on or prior to April 15, 2007;
provided that any Capital Stock that would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require such
Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
the Exchange Notes shall not constitute Disqualified Stock if (i) the "asset
sale" or "change of control" provisions applicable to such Capital Stock are no
more favorable to the holders of such Capital Stock than the provisions in
favor of holders of Notes set forth under the "Asset Sale" and "Change of
Control" covenants, as the case may be, (ii) such Capital Stock specifically
provides that such Person will not repurchase or redeem any such stock pursuant
to such provision prior to the Company's repurchase of such Exchange Notes as
are required to be repurchased pursuant to

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the "Asset Sale" and "Change of Control" covenants and (iii) such Capital Stock
is redeemable within 90 days of the "asset sale" or "change of control" events
applicable to such Capital Stock.

"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Credit Facility) in existence on the date of the
Indenture, until such amounts are repaid.

"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that the Fair Market Value of
any such asset or assets shall be determined by the Board of Directors of the
Company, acting in good faith and by unanimous resolution, and which
determination shall be evidenced by an Officers' Certificate delivered to the
Trustee.

"Finished Goods Inventory" means, with respect to the Company, the
consolidated finished goods inventory of the Company, net of reserves,
determined in accordance with GAAP.

"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees
or redeems any Indebtedness (other than revolving credit borrowings) or if the
Company issues or redeems any preferred stock, in each case subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date of the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the "Transaction Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable reference period. For purposes of making the
computation referred to above, acquisitions (including all mergers and
consolidations), dispositions and discontinuances of operations that have been
made by the Company or any of its Restricted Subsidiaries during the reference
period or subsequent to such reference period and on or prior to the
Transaction Date shall be calculated on a pro forma basis assuming that all
such acquisitions, dispositions and discontinuances of operations had occurred
on the first day of the reference period; provided, however, that Fixed Charges
shall be reduced by amounts attributable to operations that are so disposed of
or discontinued only to the extent that the obligations giving rise to such
Fixed Charges would no longer be obligations contributing to the Company's
Fixed Charges subsequent to the Transaction Date. Calculations of pro forma
amounts in accordance with this definition shall be done in accordance with
Article 11 of Regulation S-X under the Securities Act or any successor
provision.

"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) Consolidated Interest Expense, (ii)
commissions, discounts and other fees and charges incurred with respect to
letters of credit and bankers' acceptances financing, (iii) any interest
expense on Indebtedness of another Person that is Guaranteed by such Person or
secured by a Lien on assets of such Person and (iv) the product of (a) all cash
or non-cash dividend payments on any series of preferred stock of any
Restricted Subsidiary of such Person (other than preferred stock of such
Person) times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, determined, in each
case, on a consolidated basis and in accordance with GAAP.

"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect in the United States on the
date of the Indenture.

"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) Interest Rate Agreements, (ii) Currency
Agreements and (iii) Commodity Agreements.

"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, 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 bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee of any Indebtedness of such Person or any
other Person.

"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement entered into by the Company or any of its Restricted
Subsidiaries designed to protect the Company or any of its Restricted
Subsidiaries in the ordinary course of business against fluctuations in
interest rates.

"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.

"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.)

"Liquidated Damages" means all liquidated damages then owing pursuant
to the Registration Rights Agreement.

"Management Holders" means any current or past full-time members of
senior management of the Company who acquire stock of the Company through
management stock purchase or option plans.

"Management Plans" means the Merchant Metals Holding Company 1988
Stock Option Plan, as such plan may be amended from time to time, or such other
similar compensation plans which may be adopted by the Company or Holding.

"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any sale of assets (including, without
limitation, dispositions pursuant to sale/leaseback transactions) or (b) the
disposition of any securities or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain
(but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).

"Net Proceeds" means the aggregate amount of consideration received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
in the form of cash or Cash Equivalents (including, without limitation, any
cash received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of the direct costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
fees, and sales commissions) and any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements),
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets (including Equity Interests) the subject of such
Asset Sale and any reserve for adjustment in respect of the sale price of such
asset or assets.

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"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of the Company or any of its Restricted Subsidiaries.

"Obligations" means any principal, premium, interest (including
post-petition interest), penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.

"Officers' Certificate" means, with respect to any Person, a
certificate signed by (i) the Chief Executive Officer or President and (ii) the
Chief Financial Officer or chief accounting officer of such Person.

"Permitted Asset Swap" means any one or more transactions in which the
Company or any of its Restricted Subsidiaries exchanges assets for
consideration consisting of cash and/or assets used or useful in the business
of the Company and conducted on the date of the Indenture or reasonable
extensions, developments or expansions thereof or activities ancillary thereto
or other assets in an amount less than 15% of the fair market value of such
transaction or transactions.

"Permitted Holders" means CVC and its Related Persons and Affiliates
and the Management Holders and their Related Persons and Affiliates.

"Permitted Investments" means (i) any Investment in the Company or in
a Wholly Owned Subsidiary of the Company that is a Restricted Subsidiary; (ii)
any Investment in Cash Equivalents; (iii) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (a) such Person becomes a Wholly Owned Subsidiary of the Company
that is a Restricted Subsidiary or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary of
the Company that is a Restricted Subsidiary; (iv) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was
made in compliance with the covenant set forth under " -- Repurchase at the
Option of Holders -- Asset Sales".

"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens
securing Senior Indebtedness of the Company that was permitted to be incurred
pursuant to the Indenture; (iii) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company, provided that such Liens were not created
in contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or such Restricted Subsidiary; (iv) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted Subsidiary of the
Company; provided that such Liens were not created in contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing on the date of
the Indenture; (vii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made therefor; (viii) Liens imposed by
law, such as mechanics', carriers', warehousemen's, materialmen's and vendors'
Liens, incurred in good faith in the ordinary course of business with respect
to amounts not yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, shall be
required by GAAP shall have been made therefor; (ix) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property or minor irregularities of title incident thereto that do not, in the
aggregate, materially detract from the value of the property or the assets of
the Company or impair the use of such property in the operation of the
Company's business; (x) judgment Liens to the extent that such judgments do not
cause or constitute a Default or an Event of Default; (xi) Liens to secure the
payment of all or a part of the purchase price of property or assets acquired
or constructed in the ordinary course of business on or after the date of the
Indenture, provided that (a) such property or assets

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are used in the same or a similar line of business as the Company was engaged
in on the date of the Indenture, (b) at the time of incurrence of any such
Lien, the aggregate principal amount of the obligations secured by such Lien
shall not exceed the cost of the assets or property (or portions thereof) so
acquired or constructed, (c) each such Lien shall encumber only the assets or
property (or portions thereof) so acquired or constructed and shall attach to
such property within 120 days of the purchase or construction thereof and (d)
any Indebtedness secured by such Lien shall have been permitted to be incurred
under the "Limitation on the Incurrence of Indebtedness and Issuance of
Disqualified Stock" covenant; and (xii) precautionary filings of any financial
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction made in connection with Capital Lease Obligations permitted to be
incurred under the "Limitation on the Incurrence of Indebtedness and Issuance
of Disqualified Stock" covenant, provided that such Lien does not violate
clauses (a), (b) and (c) of clause (xi) hereof; and (xiii) Liens incurred in
the ordinary course of business securing assets having a fair market value not
in excess of $500,000 in the aggregate.

"Person" means an individual, limited or general partnership,
corporation, limited liability company, association, unincorporated
organization, trust, joint stock company or joint venture, or a government or
any agency or political subdivision thereof.

"Public Equity Offering" means a bona fide underwritten sale to the
public of Common Stock of the Company pursuant to a registration statement
(other than on Form S-8 or any other form relating to securities issuable under
any benefit plan of the Company) that is declared effective by the Commission.

"Purchase Money Obligations" of any Person means any obligations of
such Person or any of its Restricted Subsidiaries to any seller or any other
Person incurred or assumed in connection with the purchase of real or personal
property to be used in the business of such Person or any of its subsidiaries
within 180 days of such incurrence or assumption.

"Raw Materials Inventory" means, with respect to the Company, the
consolidated, raw materials and work-in-process inventory of the Company, net
of reserves, determined in accordance with GAAP.

"Recapitalization" means that certain recapitalization transaction
relating to Holding and the Company consummated on December 13, 1996.

"Receivables" means the consolidated trade receivables of the Company,
net of the allowance for doubtful accounts, as determined in accordance with
GAAP.

"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date of the Indenture, between the Company and the
Initial Purchaser.

"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the
equity interests in such Person) or (b) 5% or more of the combined voting power
of the Voting Stock of such Person.

"Restricted Subsidiary" means (i) any Subsidiary of the Company (other
than a Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary)
organized or acquired after the date of the Indenture, unless such Subsidiary
shall have been designated as an Unrestricted Subsidiary by resolution of the
Board of Directors as provided in and in compliance with the definition of
"Unrestricted Subsidiary"; and (ii) any Unrestricted Subsidiary which is
designated as a Restricted Subsidiary by the Board of Directors of the Company;
provided that immediately after giving effect to the designation referred to in
clause (ii), no Default or Event of Default shall have occurred and be
continuing and the Company could incur at least $1.00 of additional
Indebtedness under the first paragraph under the "Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock" covenant. The Company shall
evidence any such designation to the Trustee by promptly filing with the
Trustee an Officers' Certificate certifying that such designation has been made
and stating that such designation complies with the requirements of the
immediately preceding sentence.

"Senior Indebtedness" means, with respect to the Company, (i) the
Obligations of the Company with respect to the Credit Facility, and (ii) any
other Indebtedness permitted to be incurred by the Company under the terms of
the

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Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is pari passu with or subordinated in right of
payment to the Notes. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include (aa) any obligation of the
Company to, in respect of or imposed by any environmental, landfill, waste
management or other regulatory governmental agency, statute, law or court
order, (bb) any liability for federal, state, local or other taxes owed or
owing by the Company, (cc) any Indebtedness of the Company to any of the
Company's Subsidiaries or other Affiliates, (dd) any trade payables or (ee) any
Indebtedness that is incurred in violation of the Indenture on or after the
date of the Indenture.

"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Persons or one or more Subsidiaries
of such Person or any combination thereof.

"Unrestricted Subsidiary" means, until such time as any of the
following shall be designated as a Restricted Subsidiary of the Company by the
Board of Directors of the Company as provided in and in compliance with the
definition of "Restricted Subsidiary," (i) any Subsidiary of the Company or of
a Restricted Subsidiary of the Company organized or acquired after the date of
the Indenture that is designated concurrently with its organization or
acquisition as an Unrestricted Subsidiary by resolution of the Board of
Directors of the Company, (ii) any Subsidiary of any Unrestricted Subsidiary
and (iii) any Restricted Subsidiary of the Company that is designated as an
Unrestricted Subsidiary by resolution of the Board of Directors of the Company,
provided that (a) immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing, (b) any such
designation shall be deemed, at the election of the Company at the time of such
designation, to be either (but not both) (x) the making of a Restricted Payment
at the time of such designation in an amount equal to the Investment in such
Subsidiary subject to the restrictions contained in the "Limitation on
Restricted Payments" covenant or (y) the making of an Asset Sale at the time of
such designation in an amount equal to the Investment in such Subsidiary
subject to the restrictions contained in the "Asset Sales" covenant, and (c)
such Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of, or own or hold any Lien on any property of, the Company or any
other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to
be so designated. A Person may be designated as an Unrestricted Subsidiary only
if and for so long as such Person (i) has no Indebtedness other than
Non-Recourse Debt; (ii) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests or (b) to make any payment to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (iii) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries. The Company
shall evidence any designation pursuant to clause (i) or (iii) of the first
sentence hereof to the Trustee by filing with the Trustee within 45 days of
such designation an Officers' Certificate certifying that such designation has
been made and, in the case of clause (iii) of the first sentence hereof, the
related election of the Company in respect thereof.

"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers,
general partners or trustees of any Person (irrespective of whether or not, at
the time, Capital Stock of any other class or classes shall have, or might
have, voting power by reasons of the happening of any contingency) or, with
respect to a partnership (whether general or limited), any general partner
interest in such partnership.

"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.

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"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person 100% of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall be at the time
beneficially owned by such Person either directly or indirectly through Wholly
Owned Subsidiaries.

BOOK-ENTRY, DELIVERY AND FORM

Except as set forth in the next paragraph, the Exchange Notes will
initially be issued in the form of one or more Global Notes (the "Global
Notes"). The Global Notes will be deposited on the date of the closing of the
sale of the Notes offered hereby (the "Closing Date") with, or on behalf of,
the Depositary and registered in the name of Cede & Co., as nominee for the
Depositary (such nominee being referred to herein as the "Global Note Holder").

Exchange Notes that are issued as described below under " --
Certificated Securities" will be issued in registered form (the "Certificated
Securities"). Upon the transfer of Certificated Securities, such Certificated
Securities may, unless the Global Notes have previously been exchanged for
Certificated Securities, be exchanged for an interest in a Global Note
representing the principal amount of Notes being transferred.

The Depositary is a limited-purpose trust company which was created to
hold securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchaser), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or the "Depositary's
Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Persons who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.

The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants with portions of the principal amount of the Global
Notes and (ii) ownership of the Notes evidenced by the Global Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of some
states require that certain Persons take physical delivery in definitive form
of securities that they own. Consequently, the ability to transfer Exchange
Notes evidenced by the Global Notes will be limited to such extent. For certain
other restrictions on the transferability of the Exchange Notes, see "Notice to
Investors."

So long as the Global Note Holder is the registered owner of any
Exchange Notes, the Global Note Holder will be considered the sole owner or
holder of such Exchange Notes outstanding under the Indenture. Beneficial
owners of Exchange Notes evidenced by the Global Note will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. The ability of a Person having a beneficial interest in
Exchange Notes represented by a Global Note to pledge such interest to Persons
or entities that do not participate in the Depositary's system or to otherwise
take actions in respect of such interest, may be affected by the lack of a
physical certificate evidencing such interest.

None of the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Exchange Notes by the Depositary, or for maintaining, supervising or
reviewing any records of the Depositary relating to such Exchange Notes.

Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Exchange Notes registered in the name of a
Global Note Holder on the applicable record date will be payable by the Trustee
to or at the direction of such Global Note Holder in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee may treat the Persons in whose names the Exchange
Notes, including the Global Notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, none of the Company nor the Trustee has or will have
any responsibility or liability for the

76
<PAGE> 83
payment of such amounts to beneficial owners of Exchange Notes (including
principal, premium, if any, interest and Liquidated Damages, if any).

The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and
the Depositary's Indirect Participants to the beneficial owners of Exchange
Notes will be governed by standing instructions and customary practice and will
be the responsibility of the Depositary's Participants or the Depositary's
Indirect Participants.

CERTIFICATED SECURITIES

Subject to certain conditions, any Person having a beneficial interest
in a Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Exchange Notes in the form of Definitive Notes. Upon
any such issuance, the Trustee is required to register such Exchange Notes in
the name of, and cause the same to be delivered to, such Person or Persons. In
addition, if (i) the Company notifies the Trustee in writing that the
Depositary is no longer willing or able to act as a depositary and the Company
is unable to appoint a qualified successor within 90 days or (ii) the Company,
at its option, notifies the Trustee in writing that it elects to cause the
issuance of Exchange Notes in the form of Definitive Notes under the Indenture,
then, upon surrender by the relevant Global Note Holder of its Global Note,
Exchange Notes in such form will be issued to each Person that the Depositary
identifies as the beneficial owner of the related Exchange Notes.

Neither the Company nor the Trustee shall be liable for any delay by
the Depositary in identifying the beneficial owners of the related Exchange
Notes and each such Person may conclusively rely on, and shall be protected in
relying on, instructions from the Depositary for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Exchange Notes to be issued).

ADDITIONAL INFORMATION

Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to MMI Products, Inc., 515 West Greens Road, Suite
710, Houston, Texas 77067, Attn: Robert N. Tenczar.

77
<PAGE> 84
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes certain United States federal income
tax considerations to holders of the Exchange Notes who are subject to U.S. net
income tax with respect to the Exchange Notes ("U.S. persons") and who will
hold the Exchange Notes as capital assets. There can be no assurance that the
U.S. Internal Revenue Service (the "IRS") will take a similar view of the
purchase, ownership or disposition of the Exchange Notes. This summary is
based upon the Internal Revenue Code of 1986, as amended, and regulations,
rulings and judicial decisions now in effect, all of which are subject to
change. It does not include any discussion of the tax laws of any state,
local or foreign governments or any estate or gift tax considerations that may
be applicable to the Exchange Notes or holders thereof; nor does it discuss all
aspects of U.S. federal income taxation that may be relevant to a particular
investor under his particular circumstances or to investors subject to special
treatment under the U.S. federal income tax laws (for example, dealers in
securities or currencies, S corporations, life insurance companies, tax-exempt
organizations, taxpayers subject to the alternative minimum tax and non-U.S.
persons) and also does not discuss Exchange Notes held as a hedge against
currency risks or as part of a straddle with other investments or as part of a
"synthetic security" or other integrated investment (including a "conversion
transaction") comprising an Exchange Note and one or more other investments, or
situations in which the functional currency of the holders is not the U.S.
dollar.

Holders of Old Notes contemplating acceptance of the Exchange Offer
should consult their tax advisors with respect to their particular
circumstances and with respect to the effects of state, local or foreign tax
laws to which they may be subject.

EXCHANGE OF NOTES

The exchange of Old Notes for Exchange Notes should not be a taxable
event to holders for federal income tax purposes. The exchange of Old Notes
for the Exchange Notes pursuant to the Exchange Offer should not be treated as
an "exchange" for federal income tax purposes, because the Exchange Notes
should not be considered to differ materially in kind or extent from the Old
Notes. Accordingly, the Exchange Notes should have the same issue price as the
Old Notes, and a holder should have the same adjusted basis and holding period
in the Exchange Notes as it had in the Old Notes immediately before the
exchange.

INTEREST ON EXCHANGE NOTES

A holder of an Exchange Note will be required to report as ordinary
interest income for U.S. federal income tax purposes interest earned on the
Exchange Note in accordance with the holder's method of tax accounting.

DISPOSITION OF EXCHANGE NOTES

A holder's tax basis for an Exchange Note generally will be the
holder's purchase price for the Old Note. Upon the sale, exchange, redemption,
retirement or other disposition of an Exchange Note, a holder will recognize
gain or loss equal to the difference (if any) between the amount realized and
the holders' tax basis in the Exchange Note. Such gain or loss will be
long-term capital gain or loss if the Exchange Note has been held for more than
one year and otherwise will be short-term capital gain or loss (with certain
exceptions to the characterization as capital gain if the Exchange Note was
acquired at a market discount).

BACKUP WITHHOLDING

A holder of an Exchange Note may be subject to backup withholding at
the rate of 31% with respect to interest paid on the Exchange Note and proceeds
from the sale, exchange, redemption or retirement of the Exchange Note, unless
such holder (a) is a corporation or comes within certain other exempt
categories and, when required, demonstrates that fact or (b) provides a correct
taxpayer identification number, certifies as to no loss of exemption from
backup withholding and otherwise complies with applicable requirements of the
backup withholding rules. A holder of an Exchange Note who does not provide
the Company with his correct taxpayer identification number may be subject to
penalties imposed by the IRS.

78
<PAGE> 85
A holder of an Exchange Note who is not a U.S. person will generally
be exempt from backup withholding and information reporting requirements, but
may be required to comply with certification and identification procedures in
order to obtain an exemption from backup withholding and information reporting.

Any amount paid as backup withholding will be creditable against the
holder's U.S. federal income tax liability.

79
<PAGE> 86
DESCRIPTION OF CREDIT FACILITY

The information relating to the Credit Facility is qualified in its
entirety by reference to the complete text of the documents entered into.
Borrowings under the Credit Facility will be secured by first priority liens on
substantially all of the Company's assets.

The Credit Facility provides for a revolving credit facility not to
exceed $48.5 million. Borrowings under the Credit Facility are subject to
various conditions precedent and are subject to a borrowing base equal to the
sum of 50% of eligible finished goods inventory plus 65% of eligible raw
materials inventory plus 85% of eligible receivables.

Borrowings under the Credit Facility bear interest, at the option of
the Company, at either (i) the base rate (as announced from time to time by
Fleet National Bank) plus 0.25% or (ii) the Eurodollar Base Rate (as defined
therein) for the applicable Eurodollar Interest Period (as defined therein)
plus 2.00%. The Company is required to pay certain fees in connection with the
Credit Facility, including a commitment fee of 0.50% of the undrawn portion of
the revolving credit facility commitment.

The Credit Facility contains customary representations, warranties and
events of default and requires compliance by the Company with certain
covenants, including, among other things, (i) limitations on incurrence of
indebtedness, imposition of liens on assets of the Company, capital
expenditures, mergers and consolidations, disposition of assets, acquisition of
assets and payment of dividends and other distributions, (ii) a requirement
that the Company maintain EBITDA for each rolling 12 month period of not less
than $20.0 million and (iii) a requirement that the Company maintain a coverage
ratio of EBITDA to cash interest expense of not less than 1.5 to 1.0.

DESCRIPTION OF EQUITY INTERESTS

COMPANY CAPITAL STOCK

The authorized capital stock of the Company consists of 500,000 shares
of common stock, par value $1.00 per share (the "Company Common Stock"). There
currently are 252,000 shares of the Company Common Stock outstanding, all of
which are owned of record and beneficially by Holding.

HOLDING CAPITAL STOCK

The authorized capital stock of Holding consists of 3,000,000 shares
of Holding Common Stock and 4,000,000 shares of Holding Preferred Stock. Of
the authorized shares, (i) 2,000,000 shares of Class A Common Stock, par value
$.01 per share (the "Holding Class A Common Stock"), of which 115,402 shares
are issued and outstanding; (ii) 1,000,000 shares of Class B Common Stock, par
value $.01 per share (the "Holding Class B Common Stock"), of which 658,982
shares are issued and outstanding; (iii) 1,500,000 shares of Series A Junior
Preferred Stock, none of which are issued and outstanding; and (iv) 1,500,000
shares of Series B Senior Preferred Stock, none of which are issued and
outstanding. Parent owns of record and beneficially more than 98% of the
Holding Common Stock (representing more than 98% of the voting power of
Holding).

Certain Company Repurchase Rights

Upon the death of any member of management who holds Parent Common
Units (or upon the termination of any such person's employment with the
Company), such Parent Common Units will automatically be exchanged for a like
number of shares of Holding Class A Common Stock. Such members of management
have granted to Holding the right to repurchase (the "Repurchase Agreements")
such persons' Holding Class A Common Stock in the event that such persons cease
for any reason to be employed by the Company prior to the fourth anniversary of
the completion of the Recapitalization.

The repurchase price initially is $1.00 per share. However, on each of
the first through third anniversaries of the completion of the
Recapitalization, the repurchase price for 25% of the Holding Class A Common
Stock of such person

80
<PAGE> 87
will become an amount equal to the fair value of such shares of Holding Class A
Common Stock (as determined in good faith by the Board of Directors of Holding)
as of the time of any exercise of Holding's repurchase right.

Holding Stockholders Agreement

Certain stockholders of the Company have entered into the Holding
Stockholders Agreement (the "Holding Stockholders Agreement"). The Holding
Stockholders Agreement provides for, among other things, the following: (i)
the delivery by Holding to CVC of certain financial statements and information
so long as CVC holds any Holding Common Stock or Holding Preferred Stock
(collectively, the "Holding Securities") or any option, warrant or right to
acquire any of the Holding Securities; (ii) an agreement among the stockholders
to vote the Holding Common Stock of the Company such that the Board of
Directors will consist of a CVC designee, the Chief Executive Officer of the
Company and a joint CVC-management designee; and (iii) certain demand and
incidental registration rights on the part of the stockholders.

LIMITED LIABILITY COMPANY INTERESTS OF PARENT

The equity interests of Parent consists of (i) 112,922 Parent Class A
Common Units, and (ii) 652,066 Parent Class B Common Units.

81
<PAGE> 88
PLAN OF DISTRIBUTION

Each Participating Broker-Dealer that receives Exchange Notes for its
own account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by Participating Broker-Dealers during the period referred to below in
connection with resales of Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such Participating Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities (other than a resale of an unsold allotment from the original sale
of Old Notes). The Company has agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Notes for a period
ending 180 days from the date on which the Exchange Offer Registration
Statement is declared effective. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of Exchange Notes
received in exchange for Old Notes pursuant to the Exchange Offer must notify
the Company, or cause the Company to be notified, on or prior to the Expiration
Date, that it is a Participating Broker-Dealer. Such notice may be given in
the space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth in the Letter
of Transmittal. See "The Exchange Offer -- Resales of Exchange Notes."

The Company will not receive any proceeds from the issuance of the
Exchange Notes offered hereby. Exchange Notes received by Participating
Broker-Dealers for their own accounts in connection with the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the
Exchange Notes or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Notes. Any Participating Broker-Dealer that
resells Exchange Notes that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates
in a distribution of such Exchange Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any profit on any such resale of
Exchange Notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Securities Act. The
Letter of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

For a period ending 180 days from the date on which the Exchange Offer
Registration Statement is declared effective, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any Participating Broker-Dealer that requests such documents in
the Letter of Transmittal.

82
<PAGE> 89
LEGAL MATTERS

The legality of the securities being offered hereby will be passed
upon for the Company by Baker & Botts, L.L.P., Dallas, Texas.

EXPERTS

The financial statements and schedule of MMI Products, Inc. at
December 28, 1996 and December 30, 1995, and for each of the three fiscal years
in the period ended December 28, 1996, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.

83
<PAGE> 90
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Audited Financial Statements
Balance Sheets as of December 30, 1995 and December 28, 1996 . . . . . . . . . . . . . . . . F-3
Statements of Income for fiscal years 1994, 1995 and 1996 . . . . . . . . . . . . . . . . . . F-5
Statements of Stockholder's Equity for fiscal years 1994, 1995 and 1996 . . . . . . . . . . . F-6
Statements of Cash Flows for fiscal years 1994, 1995 and 1996 . . . . . . . . . . . . . . . . F-7
Notes to Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8

Unaudited Financial Statements
Balance Sheet as of March 29, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17
Statements of Income for the three months ended March 30, 1996 and March 29, 1997 . . . . . . F-18
Statements of Cash Flows for the three months ended March 30, 1996 and March 29, 1997 . . . . F-19
Notes to Unaudited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20
</TABLE>

F-1
<PAGE> 91
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholder
MMI Products, Inc.

We have audited the accompanying balance sheets of MMI Products, Inc.,
as of December 30, 1995 and December 28, 1996, and the related statements of
income, stockholder's equity and cash flows for each of the three fiscal years
in the period ended December 28, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of MMI Products, Inc.
at December 30, 1995 and December 28, 1996, and the results of its operations
and its cash flows for each of the three fiscal years in the period ended
December 28, 1996, in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Houston, Texas
March 10, 1997

F-2
<PAGE> 92

MMI PRODUCTS, INC.

BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
(NOTE 1)
PRO FORMA
DECEMBER 30, DECEMBER 28, DECEMBER 28,
1995 1996 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ............................... $ 2,163 $ 234 $ 234
Accounts receivable, net of allowance for doubtful
accounts of $1,701 ($1,314 in 1995) .................. 27,772 35,637 35,637
Inventories ............................................. 32,331 41,687 41,687
Prepaid expenses ........................................ 2,643 1,315 1,315
Deferred income taxes ................................... 1,301 3,722 3,722
-------- -------- --------
Total current assets ............................ 66,210 82,595 82,595
Property, plant and equipment:
Land .................................................... 3,734 4,814 4,814
Buildings and improvements .............................. 11,610 15,465 15,465
Machinery and equipment ................................. 32,839 46,639 46,639
-------- -------- --------
48,183 66,918 66,918
Less accumulated depreciation ........................... 18,710 22,046 22,046
-------- -------- --------
29,473 44,872 44,872
Intangible assets ......................................... 6,518 6,105 6,105
Deferred charges and other assets ......................... 1,655 1,691 1,691
-------- -------- --------
Total assets .................................... $103,856 $135,263 $135,263
======== ======== ========
</TABLE>

See accompanying notes.

F-3
<PAGE> 93

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
(NOTE 1)
PRO FORMA
DECEMBER 30, DECEMBER 28, DECEMBER 28,
1995 1996 1996
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current liabilities:
Accounts payable ........................................ $ 20,186 $ 29,114 $ 29,114
Accrued liabilities ..................................... 7,773 10,405 10,405
Accrued income taxes .................................... 718 1,090 1,090
Due to Holding .......................................... -- 5,810 5,810
Distribution payable to Holding (Note 1) ................ -- -- 57,000
Current maturities of long-term debt, including
capital lease obligations ............................ 970 3,027 3,027
--------- --------- ---------
Total current liabilities ....................... 29,647 49,446 106,446
Long-term debt, including capital lease obligations ....... 33,715 52,251 52,251
Subordinated notes payable -- affiliates .................. 14,800 -- --
Deferred interest payable -- affiliates ................... 6,389 -- --
Deferred income taxes ..................................... 3,699 5,032 5,032
Commitments and contingencies
Stockholder's equity (deficit):
Common stock, $1 par value; 500,000 shares authorized;
252,000 shares issued and outstanding ................ 252 252 252
Additional paid-in capital .............................. 8,008 14,599 14,599
Retained earnings (deficit) (Note 1) .................... 7,346 13,683 (43,317)
--------- --------- ---------
Total stockholder's equity (deficit) ............ 15,606 28,534 (28,466)
--------- --------- ---------
Total liabilities and stockholder's equity
(deficit) ..................................... $ 103,856 $ 135,263 $ 135,263
========= ========= =========
</TABLE>

See accompanying notes.

F-4
<PAGE> 94

MMI PRODUCTS, INC.

STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEAR
------------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales ........................................... $197,617 $233,284 $283,402
Cost of sales ....................................... 163,473 196,123 238,439
-------- -------- --------
Gross profit ...................................... 34,144 37,161 44,963
Selling, general and administrative expenses ........ 17,098 19,196 23,143
Nonrecurring expenses -- stock options (Note 2) ..... -- -- 3,106
Other expenses, net ................................. 419 166 721
-------- -------- --------
Income before interest and income taxes ............. 16,627 17,799 17,993
Interest expense:
Affiliates ........................................ 2,223 2,223 2,046
Other ............................................. 4,014 5,172 5,383
-------- -------- --------
Income before income taxes .......................... 10,390 10,404 10,564
Provision for income taxes .......................... 2,878 4,058 4,227
-------- -------- --------
Net income ................................ $ 7,512 $ 6,346 $ 6,337
======== ======== ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 95

MMI PRODUCTS, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL RETAINED TOTAL
COMMON PAID-IN EARNINGS STOCKHOLDER'S
STOCK CAPITAL (DEFICIT) EQUITY
-------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1994 ...................... $ 252 $ 8,008 $ (6,204) $ 2,056
Net income .................................... -- -- 7,512 7,512
Dividends ..................................... -- -- (308) (308)
-------- -------- -------- --------
Balance at December 31, 1994 .................... 252 8,008 1,000 9,260
Net income .................................... -- -- 6,346 6,346
-------- -------- -------- --------
Balance at December 30, 1995 .................... 252 8,008 7,346 15,606
Net income .................................... -- -- 6,337 6,337
Contribution of capital -- Recapitalization ... -- 3,485 -- 3,485
Contribution of capital -- stock options ...... -- 3,106 -- 3,106
-------- -------- -------- --------
Balance at December 28, 1996 .................... $ 252 $ 14,599 $ 13,683 $ 28,534
======== ======== ======== ========
</TABLE>

See accompanying notes.

F-6
<PAGE> 96
MMI PRODUCTS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................................. $ 7,512 $ 6,346 $ 6,337
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ............................. 3,370 3,814 4,448
Nonrecurring expenses -- stock options .................... -- -- 3,106
Provision for losses on accounts receivable ............... 725 448 879
Deferred income taxes ..................................... 1,085 1,313 (1,088)
(Gain) loss on sale of property, plant and equipment ...... (18) (100) 193
Changes in operating assets and liabilities, net of
effects of acquired businesses:
Increase in accounts receivable ........................ (2,169) (5,585) (8,339)
(Increase) decrease in inventories ..................... (5,869) 1,034 (1,668)
Decrease in prepaid expenses and other assets .......... 351 551 2,068
Increase in accounts payable and accrued
liabilities .......................................... 4,761 6,868 9,762
Decrease in deferred interest
payable -- affiliates ................................ -- (648) (6,389)
Increase in due to Holding ............................. -- -- 5,810
Increase (decrease) in accrued income taxes ............ 1,768 (1,296) 372
--------- --------- ---------
Net cash provided by operating activities ......... 11,516 12,745 15,491
INVESTING ACTIVITIES
Purchases of property, plant and equipment .................. (2,470) (2,246) (3,545)
Proceeds from sale of property, plant and equipment ......... 18 1,219 89
Cash paid for acquired businesses ........................... -- (13,714) (20,858)
--------- --------- ---------
Net cash used in investing activities ....................... (2,452) (14,741) (24,314)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issue costs ....... 55,957 88,421 122,033
Payments on long-term debt, including capital lease
obligations ............................................... (64,540) (84,740) (103,824)
Payments on subordinated notes payable -- affiliates ........ -- -- (14,800)
Contribution of capital from Holding ........................ -- -- 3,485
Dividends paid .............................................. (308) -- --
--------- --------- ---------
Net cash provided by (used in) financing activities ......... (8,891) 3,681 6,894
--------- --------- ---------
Increase (decrease) in cash and cash equivalents ............ 173 1,685 (1,929)
Cash and cash equivalents at beginning of year .............. 305 478 2,163
--------- --------- ---------
Cash and cash equivalents at end of year .................... $ 478 $ 2,163 $ 234
========= ========= =========
</TABLE>

See accompanying notes.

F-7
<PAGE> 97

MMI PRODUCTS, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 28, 1996

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

MMI Products, Inc. (the Company), is a wholly-owned subsidiary of
Merchants Metals Holding Company (Holding). The Company is a manufacturer and
distributor of products used in the residential, commercial and infrastructure
construction industries. The Company sells its products along three principal
product lines: fence, wire mesh and concrete accessories. Each of the Company's
product lines is primarily produced from the same raw material, steel rod. The
Company's customers include contractors, fence wholesalers, industrial
manufacturers, highway construction contractors and fabricators of concrete
reinforcing bar. The Company operates in one business segment.

On December 13, 1996, the Company and Holding completed a
recapitalization transaction (the Recapitalization). Pursuant to the
Recapitalization, (i) Holding made an additional capital contribution to the
Company of approximately $3.5 million in cash and loaned the Company
approximately $5.8 million, (ii) the Company borrowed an additional $5 million
in senior subordinated secured notes payable from a supplier and an additional
$1 million in other long-term debt, and (iii) the Company repaid the full
amount of subordinated notes payable to affiliates of $14.8 million plus
accrued interest.

The Company intends to make a Rule 144A offering (the Offering) of
$120 million of Notes due 2007 (the Notes) in April 1997. The net proceeds from
the sale of the Notes are estimated to be approximately $116.1 million. The
Company intends to use the net proceeds (i) to distribute $57 million to
Holding to permit the redemption of Holding's preferred stock and options to
acquire preferred stock, including dividends in arrears, held primarily by
Holding's common stockholders, (ii) to repay the entire $10 million principal
amount, plus accrued but unpaid interest, on the senior subordinated secured
note payable, (iii) to repay the Company's existing indebtedness under the term
loan facility which totaled $12.0 million as of December 28, 1996, (iv) to
reduce the Company's indebtedness under the revolving credit facility which
totaled $30.1 million as of December 28, 1996 and (v) to the extent of
remaining net proceeds from the Offering, for general corporate purposes.

The accompanying pro forma balance sheet as of December 28, 1996
reflects the planned distribution to Holding and corresponding decrease in
retained earnings as if the Offering closed as of December 28, 1996.

Fiscal Year

In 1994, the Company adopted a 52-53 week fiscal year ending on the
Saturday closest to December 31st. The change had no effect on net income for
any fiscal year presented. The 1994, 1995 and 1996 fiscal years refer to the
fifty-two week periods ended December 31, 1994, December 30, 1995 and December
28, 1996.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-8
<PAGE> 98

Cash and Cash Equivalents

The Company considers all demand deposits and time deposits with
original maturities of three months or less to be cash equivalents.

Inventories

Inventories are valued at the lower of average cost or market.

Property, Plant and Equipment

Property, plant and equipment are stated at historical cost except for
assets acquired in business combinations which are recorded at fair market
value at the date of acquisition. Depreciation is computed on the straight-line
method using rates based on the estimated useful lives of the related assets.
Estimated useful lives used for depreciation purposes are as follows:

<TABLE>
<S> <C>
Buildings and improvements . . . . . . . 10 to 31 years
Machinery and equipment . . . . . . . . . 2 to 20 years
</TABLE>

Major capital upgrades are capitalized. Maintenance, repairs and minor
upgrades are expensed as incurred.

The Company leases certain machinery and equipment under capital
leases. Assets recorded under capital leases are amortized over the lives of
the respective leases. Assets under these obligations, totaling $2,426,000 and
$2,784,000 (net of accumulated amortization of $744,000 and $1,356,000) at
December 30, 1995 and December 28, 1996, respectively, are included in
property, plant and equipment in the accompanying balance sheets.

Intangible Assets

The excess of the purchase price over the estimated fair values of net
assets acquired is accounted for as goodwill and is amortized on a
straight-line basis over periods not exceeding 40 years (the period when
benefits are expected to be derived). Other intangible assets, consisting
primarily of customer lists arising from acquisitions, are amortized on a
straight-line basis over their respective estimated lives, generally three to
five years.

Impairment of Long-Lived Assets

The carrying value of long-lived assets, principally identifiable
intangibles, property, plant and equipment and any related goodwill, is
reviewed for potential impairment when events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable, as
determined based on the undiscounted cash flows over the remaining amortization
periods. In such a case, the carrying value of the related assets is reduced by
the estimated shortfall of discounted cash flows.

Fair Value of Financial Instruments

The Company considers the recorded value of its monetary assets and
liabilities, which consist primarily of cash and cash equivalents, accounts
receivable, accounts payable and long-term debt, to approximate their
respective fair values at December 30, 1995 and December 28, 1996.

Reclassifications

Certain reclassifications have been made to the 1994 and 1995
financial information in order to conform to the 1996 presentation.

F-9
<PAGE> 99

2. NONRECURRING EXPENSES -- STOCK OPTIONS

Effective December 13, 1996 in connection with the Recapitalization,
the Company incurred nonrecurring charges relating to Holding's stock options
granted in previous years to employees and a supplier of the Company. The
aggregate effect of these expenses was $3.1 million for fiscal year 1996.

Under Holding's 1988 Stock Option Plan, certain employees of the
Company received noncompensatory stock options for shares of Holding common
stock. The options expire generally 10 years from the date of grant. No options
were granted or exercised in fiscal years 1994 and 1995. Effective December 13,
1996, Holding amended the 1988 Stock Option Plan to convert the outstanding
options for common stock into options for a total of 22,895 shares of Holding's
junior series preferred stock. As a result of the amendment, which changed the
underlying securities of the options and resulted in a new measurement date,
the Company recorded $2.1 million in compensation expense in 1996.

In 1989, in connection with issuing a senior subordinated secured note
to a supplier, Holding granted the supplier stock options for shares of Holding
common stock which were to expire December 31, 1996. None of these options were
exercised. Effective December 13, 1996, Holding amended the supplier's option
agreement in connection with the Recapitalization to extend the expiration date
of the options three years and to convert the options for common stock into
options for 9,893 shares of Holding's junior series preferred stock. As a
result, the Company recognized $964,000 in expense in 1996.

3. ACQUISITIONS OF BUSINESSES

During fiscal years 1995 and 1996, the Company made the acquisitions
set forth below, each of which has been accounted for as a purchase. The
financial statements include the operating results of each business from the
date of the acquisition. Pro forma results of operations have not been
presented because the effects of these acquisitions were not significant.

Effective July 31, 1996, the Company acquired certain net assets,
consisting primarily of fixed assets and inventories, of Atlantic Steel
Industries, Inc. through its Sivaco/National Wire Group (National Wire) for a
total cost of $17.3 million. Liabilities assumed and acquisition expenses
incurred totaled $2,083,000. The purchase price approximated the preliminary
fair market value of the assets acquired. National Wire is engaged in the
manufacturing and wholesale distribution of wire mesh products.

During October 1996, the Company acquired certain assets and assumed
certain liabilities of two other companies for $3.6 million in cash.

In 1995, the Company purchased certain tangible assets, consisting
primarily of fixed assets and inventories, of Semmerling Fence and Supply, Inc.
and Pioneer Fence and Pipe Supply, Inc. for a total cost of approximately $13.7
million in cash. The excess of the purchase price over the fair values of the
net assets acquired was $4.2 million and is being amortized over 20 years.

4. INVENTORIES

Inventories consist of the following at December 30, 1995 and December
28, 1996:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials ................ $ 4,263 $ 9,854
Work-in-process .............. 254 312
Finished goods ............... 27,814 31,521
------- -------
$32,331 $41,687
======= =======
</TABLE>

The Company entered into a procurement agreement in 1989 (which was
subsequently amended on December 13, 1996) with a supplier whereby the Company
appointed the supplier as its sole and exclusive agent for import purchases of
the Company's primary raw materials. The agreement requires the Company to
purchase from the supplier a specified

F-10
<PAGE> 100

volume of raw materials annually for a three-year term. At December 28, 1996,
these purchase commitments are approximately $50 million per year. During
fiscal years 1994, 1995 and 1996, the Company purchased 73%, 75% and 63%,
respectively, of its raw material purchases from this supplier.

5. INTANGIBLE ASSETS

Intangible assets at December 30, 1995 and December 28, 1996 are
comprised of the following:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Goodwill ...................................... $ 6,486 $ 6,486
Customer lists and other ...................... 4,195 4,233
------- -------
10,681 10,719
Less accumulated amortization ................. 4,163 4,614
------- -------
Intangible assets at cost less amortization ... $ 6,518 $ 6,105
======= =======
</TABLE>

Total amortization expense for the fiscal years 1994, 1995 and 1996
was $311,000, $476,000 and $451,000, respectively.

6. ACCRUED LIABILITIES

Accrued liabilities at December 30, 1995 and December 28, 1996 consist
of the following:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued compensation ............... $ 2,669 $ 3,533

Accrued insurance .................. 2,071 2,134
Accrued retirement benefits ........ 866 1,611
Other accrued liabilities .......... 2,167 3,127
------- -------
$ 7,773 $10,405
======= =======
</TABLE>

7. LONG-TERM DEBT, INCLUDING CAPITAL LEASE OBLIGATIONS

At December 30, 1995 and December 28, 1996, long-term debt, including
capital lease obligations, consists of:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revolving credit facility ................................. 27,138 30,058

Term loan facility ........................................ -- 12,000
Senior subordinated secured note payable .................. 5,000 10,000

14% subordinated notes payable to affiliates .............. 8,000 --
13% subordinated note payable to affiliate ................ 6,800 --
Capital lease obligations ................................. 2,547 3,220
------- -------
49,485 55,278
Less current maturities ................................... 970 3,027
------- -------
Long-term debt, including capital lease obligations ....... $48,515 $52,251
======= =======
</TABLE>

On December 13, 1996, in connection with the Recapitalization, the
Company repaid its subordinated notes payable to affiliates and amended its
revolving credit and term loan facilities and senior subordinated secured note
payable.

Revolving Credit Facility and Term Loan Facility (the Credit Facility)
- -- The Company's Credit Facility provides for a revolving credit facility (due
December 1999) not to exceed $60.5 million less the outstanding term loan
facility, with interest payable on both facilities at the bank's base rate plus
1/4% or Eurodollar rate plus 2 3/4% at December 28, 1996 (the bank's base rate
plus 3/4% or LIBOR plus 3 1/4% at December 30, 1995). As of December 28,
1996, the interest rate was 8.5%. A commitment fee of .50% per annum is paid on
the unused portion of the commitments. The term loan facility is due in
installments in varying amounts through December 1999.

F-11
<PAGE> 101

The Credit Facility is secured by all assets and stock of the Company
and guaranteed by Holding. The Credit Facility is to be used for working
capital purposes. Loans under the revolving credit facility plus outstanding
letters of credit are further restricted to a borrowing base formula of 85% of
eligible receivables plus 65% of eligible raw material and 50% of eligible
finished goods inventories. As of December 28, 1996, the formulas yielded a
maximum borrowing base of $47.6 million. At December 30, 1995 and December 28,
1996, outstanding letters of credit (which cannot exceed $5 million) totaled
$527,000 and $750,000, respectively. The term loan facility requires mandatory
monthly payments of $200,000, commencing on February 1, 1997, with the
remaining balance due December 1999. In addition, semiannual mandatory
prepayments in the amount of 25% of the last twelve months' excess cash flow,
as defined, beginning May 1, 1997, are required. The terms of the Credit
Facility contain, among other provisions, requirements for maintenance of
certain minimums for net worth, liquidity, fixed charge coverage, and capital
expenditures and place certain restrictions on dividend payments.

Senior subordinated secured note payable -- The Company has a senior
subordinated secured note payable to a supplier, with interest at prime plus 1%
(9.25% as of December 28, 1996), due December 1999, secured by a second
mortgage on certain real estate (subordinated only to the Credit Facility).

Subordinated notes payable to affiliates -- The Company's 13%
subordinated note and 14% subordinated notes with certain affiliates were
repaid in full in connection with the Recapitalization, including accrued
interest of $425,000. Interest of $2,223,000, $2,871,000, and $8,436,000 was
paid on the subordinated notes payable to affiliates for the fiscal years ended
1994, 1995 and 1996, respectively.

Scheduled maturities of long-term debt, including capital lease
obligations, are as follows (see Note 1 for proposed early repayments):

<TABLE>
<CAPTION>
LONG-TERM CAPITAL
DEBT LEASES
--------- --------
(IN THOUSANDS)
<S> <C> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,200 $ 1,053
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 972
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,458 764
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 500
2001 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 501
-------- --------
52,058 3,790
Less amount representing interest . . . . . . . . . . . . . . . . . . . . . -- 570
-------- --------
Long-term debt and present value of future lease payments . . . . . . . . . $ 52,058 $ 3,220
======== ========
</TABLE>

The Company paid interest of $6,053,000, $7,739,000 and $13,530,000
for the fiscal years ended 1994, 1995 and 1996, respectively.

The Company entered into $1,094,000, $1,282,000 and $1,443,000 in
capital leases during the fiscal year ending 1994, 1995 and 1996, respectively.

F-12
<PAGE> 102

8. OPERATING LEASES

The Company leases warehouse and office space and certain machinery
and equipment under operating leases. Future minimum payments on noncancelable
operating leases are as follows (in thousands):

<TABLE>
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,820
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,879
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,264
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,028
2001 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,015
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,006
========
</TABLE>

Total rental expense for the fiscal years 1994, 1995 and 1996 was
$2,551,000, $3,035,000 and $3,572,000, respectively.

9. EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

The Company has defined-contribution plans that cover eligible
employees of the Company. Company contributions to the plans are based on
employee contributions or compensation. The Company's contributions for the
fiscal years 1994, 1995 and 1996 were $801,000, $900,000 and $1,042,000,
respectively.

Defined Benefit Plans

In connection with the 1996 National Wire acquisition (see Note 3),
the Company assumed the liability for a retirement plan which covers certain
employees under a collective bargaining agreement. Plan benefits are based
primarily on years of service. It is the policy of the Company to fund this
plan currently based upon actuarial determinations, and applicable regulations.

A summary of the components of net periodic pension cost included in
earnings since the date of the acquisition is as follows (in thousands):

<TABLE>
<S> <C>
Service cost ........................................ $ 58
Interest cost on projected benefit obligation ....... 140
Actual return on plan assets ........................ (69)
Net amortization and deferral ....................... 15
----
Net periodic pension cost ......................... $144
====
</TABLE>

The following table presents the funded status of the plan as of
December 28, 1996 (in thousands):

<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of accumulated benefit obligations:
Vested ................................................... $ 1,741
Nonvested ............................................... 76
-------
Total ........................................... $ 1,817
=======
Actuarial present value of projected benefit obligation ... $ 1,817
Plan assets at fair value ................................. 1,178
-------
Projected benefit obligation ............................ $ (639)
=======
Assumptions:
Discount rate ........................................... 7.50%
Expected long-term rate of return on assets ............. 8.50%

</TABLE>

F-13
<PAGE> 103

The Company also contributes to certain multi-employer, defined
benefit plans covering certain employees under other collective bargaining
agreements. Total expenses for these plans were $55,000, $46,000 and $125,000
for fiscal years 1994, 1995 and 1996, respectively.

STOCK OPTIONS

On December 13, 1996, Holding issued noncompensatory options for
17,890 shares of Holding common stock to certain employees of the Company.
These options, exercisable for $1 per share, the fair market value of the
common stock at the date of grant, vest over a four-year period and expire five
years from the date of grant. No such options were granted in 1994 or 1995.
(See Note 2.)

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123). SFAS
123 establishes alternative methods of accounting and disclosure for employee
stock-based compensation arrangements. The Company has elected to use the
intrinsic value method of accounting as prescribed by Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations, for Holding's stock options granted to the Company's
employees. This method does not result in the recognition of compensation
expense when employee stock options are granted if the exercise price of the
option equals or exceeds the fair market value of the stock at the date of
grant.

If the accounting provisions of the new Statement had been adopted as
of the beginning of fiscal year 1995, the effect on fiscal year 1995 and 1996
earnings would not have been material. Further, based on current and
anticipated use of stock options by Holding, it is not envisioned that the
impact of the Statement's accounting provisions would be material in any future
period.

10. INCOME TAXES

As of December 31, 1994 and December 30, 1995, the Company had minimum
tax credit carry forwards of $1,274,000 and $1,031,000, respectively, which
were available to reduce future federal regular income taxes. At December 28,
1996, these minimum tax credit carryforwards were fully utilized.

Significant components of the provision for income taxes are as
follows for fiscal years 1994, 1995 and 1996:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal ................................................... $ 1,575 $ 1,904 $ 4,206
State and local ........................................... 218 841 1,109
------- ------- -------
1,793 2,745 5,315
Deferred:
Federal ................................................... 535 1,140 (845)
State and local ........................................... 550 173 (243)
------- ------- -------
1,085 1,313 (1,088)
------- ------- -------
Total ............................................. $ 2,878 $ 4,058 $ 4,227
======= ======= =======
</TABLE>

F-14
<PAGE> 104

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets as
of December 30, 1995 and December 28, 1996 are as follows:

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation .................................. $4,397 $4,258
Other ....................................................... 555 812
------ ------
Total deferred tax liabilities ................................ 4,952 5,070
Deferred tax assets:
Stock options ............................................... -- 1,186
Minimum tax credit carryforwards ............................ 1,031 --
Inventory valuation ......................................... 432 1,209
Allowance for doubtful accounts ............................. 436 601
Self-insurance accruals ..................................... 297 463
Book over tax amortization .................................. 192 29
Other ....................................................... 166 272
------ ------
Total deferred tax assets ........................... 2,554 3,760
------ ------
Net deferred tax liabilities ........................ $2,398 $1,310
====== ======
</TABLE>

The reconciliation of income tax computed at U.S. federal statutory
tax rates to income tax expense is as follows for fiscal years 1994, 1995 and
1996:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax at U.S. statutory rates ........................ $ 3,533 $ 3,537 $ 3,697
State and local income taxes, net of federal
benefit........................................... 507 669 512
Reduction in valuation allowance ................... (1,809) -- --
Other, net ......................................... 647 (148) 18
------- ------- -------
$ 2,878 $ 4,058 $ 4,227
======= ======= =======
</TABLE>

The Company paid income taxes of $165,000, $4,043,000, and $4,938,000
for the fiscal years 1994, 1995 and 1996, respectively.

11. CONTINGENCIES

A former stockholder of Holding has exercised its appraisal rights and
filed a lawsuit against Holding with respect to the value of the common and
preferred stock redeemed in connection with the Recapitalization. Subsequent to
December 28, 1996, Holding paid the stockholder with respect to the value of
the preferred stock for $2.2 million, the original value offered in the
Recapitalization. The Company has recorded a liability to Holding for $3.7
million which is equal to the amount the stockholder would have received for
its common stock if it had not exercised its appraisal rights. Although
management believes the value that the Recapitalization provided to be paid to
holders of Holding common stock was fair to such holders, there can be no
assurance that the court will agree. Any difference resulting from the
settlement of the value of the common stock would be recorded as an adjustment
to the contribution of capital from Holding and would therefore have no effect
on the operating results of the Company.

The Company is involved in a number of legal actions arising in the
ordinary course of business. The Company believes that the various asserted
claims and litigation in which it is involved will not materially affect its
financial position or future operating results, although no assurance can be
given with respect to the ultimate outcome of any such claim or litigation.

F-15
<PAGE> 105

12. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
1995 (BY FISCAL QUARTER)
-------------------------------------
1 2 3 4
------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales ......................... $49,149 $66,736 $62,306 $55,093
Gross profit ...................... 8,132 11,473 9,787 7,769
Net income ........................ 1,198 2,345 2,002 801
</TABLE>

<TABLE>
<CAPTION>
1996 (BY FISCAL QUARTER)
-----------------------------------------
1 2 3 4
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales ......................... $ 51,777 $ 76,426 $ 82,593 $ 72,606
Gross profit ...................... 7,595 13,049 13,430 10,889
Nonrecurring expenses(a) .......... -- -- -- 3,106
Net income (loss) ................. 291 3,393 3,316 (663)
</TABLE>

- ---------
(a) In the fourth quarter, the Company recorded
nonrecurring expenses resulting from the modification of stock options
granted in previous years as part of the Recapitalization of the
Company and Holding (see Note 2).

F-16
<PAGE> 106

MMI PRODUCTS, INC.
BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED )

ASSETS

<TABLE>
<CAPTION>
MARCH 29, 1997
--------------
<S> <C>
Current assets:
Cash and cash equivalents .................................. $ 953
Accounts receivable, net of allowance for doubtful
accounts of $1,718 ...................................... 40,842
Inventories ................................................ 47,365
Prepaid expenses ........................................... 1,347
Deferred income taxes ...................................... 3,618
--------
Total current assets .......................................... 94,125
Property, plant and equipment
Land ....................................................... 4,814
Buildings and improvements ................................. 15,551
Machinery and equipment .................................... 48,085
--------
68,450
Less accumulated depreciation ............. 23,166
--------
45,284
Intangible assets ............................................. 6,03
Deferred charges and other assets ............................. 1,415
--------
Total assets ................................. $146,858
========

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable ........................................... $ 35,768
Accrued liabilities ........................................ 9,144
Accrued income taxes ....................................... 696
Due to Holding ............................................. 3,482
Current maturities of long-term debt, including
capital lease obligations ................................ 3,306
--------
Total current liabilities ...................... 52,396
Long-term debt, including capital lease obligations ........... 59,528
Deferred income taxes ......................................... 5,111
Other long-term liabilities ................................... 362

Commitments and contingencies

Stockholder's equity:
Common stock, $1 par value; 500,000 shares
authorized; 252,000 shares issued and outstanding ....... 252
Additional paid-in capital ................................. 14,695
Retained earnings .......................................... 14,514
--------
Total stockholder's equity .......................... 29,461
--------
Total liabilities and stockholder's equity .................... $146,858
========
</TABLE>

See accompanying notes.

F-17
<PAGE> 107

MMI PRODUCTS, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
-------- --------
<S> <C> <C>
Net sales ...................................... $ 69,587 $ 51,777
Cost of sales .................................. 60,426 44,182
-------- --------
Gross profit ................................... 9,161 7,595
Selling, general and administrative expenses ... 6,315 5,368
Other income, net .............................. (42) (34)
-------- --------
Income before interest and income taxes ........ 2,888 2,261
Interest expenses .............................. 1,502 1,774
-------- --------
Income before income taxes ..................... 1,386 487
Provision for income taxes ..................... 554 196
-------- --------
Net income ..................................... $ 832 $ 291
======== ========
</TABLE>

See accompanying notes.

F-18
<PAGE> 108

MMI PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 29, MARCH 30,
1997 1996
-------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income .............................................. $ 832 $ 291
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization ........................ 1,306 937
Other ................................................ 281 206
Changes in operating assets and liabilities:
Increase in accounts receivable ...................... (5,211) (3,054)
Increase in inventories .............................. (5,678) (6,853)
Increase in accounts payable and
accrued liabilities ............................... 5,755 8,739
Decrease in deferred interest payable - affiliates ... - (1,111)
Decrease in due to Holding ........................... (2,328) -
Other ................................................ (173) 774
-------- --------
Cash used in operating activities ....................... (5,216) (71)

INVESTING ACTIVITIES
Purchase of property, plant and equipment ............... (1,158) (268)
Other ................................................... 9 18
-------- --------
Cash used in investing activities ....................... (1,149) (250)

FINANCING ACTIVITIES
Proceeds from long-term debt ............................ 25,772 15,865
Payments on long-term debt, including capital
lease obligations .................................... (18,688) (17,495)
-------- --------
Cash provided by (used in) financing activities ......... 7,084 (1,630)
-------- --------
Increase (decrease) in cash and
cash equivalents ..................................... $ 719 $ (1,951)
======== ========
</TABLE>

See accompanying notes.

F-19
<PAGE> 109

MMI PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 29, 1997 are not necessarily indicative of the results that may be
expected for the fiscal year ended January 3, 1998. For further information,
refer to the audited financial statements and notes thereto included elsewhere
in this Prospectus.

2. INVENTORIES

Inventories consist of the following at March 29, 1997:

<TABLE>
<CAPTION>
1997
-------
(In Thousands)
<S> <C>
Raw materials ............................... $ 8,642
Work-in-process ............................. 307
Finished goods .............................. 38,416
-------
$47,365
-------
</TABLE>

3. SUBSEQUENT EVENTS

On April 16, 1997, MMI Products, Inc. (the Company) issued $120 million of
senior subordinated notes due 2007. The net proceeds of $116.1 million, after
estimated fees and expenses, were used (i) to distribute $57 million to
Merchants Metals Holding Company (Holding), the sole owner of the Company's
common stock, to permit the redemption of certain of Holding's equity
interests, (ii) to repay the entire $10 million principal amount, plus accrued
but unpaid interest, on a senior subordinated secured note payable, (iii) to
repay the Company's remaining indebtedness under a term loan facility of $11.4
million and (iv) to reduce the Company's indebtedness under its revolving
credit facility.

On April 15, 1997, the Company's revolving credit facility of $48.5 million was
amended to extend it through December 2001 with interest payable at the bank's
base rate plus 1/4% or Eurodollar rate plus 2%. The terms of the revolving
credit facility contain, among other provisions, requirements for maintenance
of certain minimums for liquidity and capital expenditures and place certain
restrictions on dividend payments.

4. CONTINGENCIES

A former stockholder of Holding has exercised its appraisal rights and filed a
lawsuit against Holding with respect to the value of the common and preferred
stock redeemed in connection with a recapitalization transaction (the
Recapitalization) which occurred on December 13, 1996. In January 1997,
Holding paid the stockholder $2.2 million with respect to the value of the
preferred stock, the original value offered in the Recapitalization. The
Company has recorded a liability to Holding for $3.7 million which is equal to
the amount the stockholder would have received for its common stock if it had
not exercised its appraisal rights. Although management believes the value
that the Recapitalization provided to be paid to holders of Holding common
stock was fair to such holders, there can be no assurance that the court will
agree. Any difference resulting from the settlement of the value of the common
stock would be recorded as an adjustment to the

F-20
<PAGE> 110

contribution of capital from Holding and would therefore have no effect on the
operating results of the Company.

The Company is involved in a number of legal actions arising in the ordinary
course of business. The Company believes that the various asserted claims and
litigation in which it is involved will not materially affect its financial
position or future operating results, although no assurance can be given with
respect to the ultimate outcome of any such claim or litigation.

F-21
<PAGE> 111
===============================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN
THE EXCHANGE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE EXCHANGE NOTES TO ANYONE OR BY
ANYONE IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT WOULD BE
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE INFORMATION SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

_______________

TABLE OF CONTENTS
_______________

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management's Discussion and Analysis Of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . 21
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Security Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of Exchange Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Certain United States Federal Income Tax
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Description of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . 80
Description of Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . 80
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

UNTIL ,1997 (90 DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE
OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
===============================================================================

===============================================================================

MMI PRODUCTS, INC.

OFFER TO EXCHANGE
ITS 11 1/4% SENIOR SUBORDINATED
NOTES DUE 2007 (SERIES B)
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES
DUE 2007 (SERIES A)

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

PROSPECTUS

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

, 1997
-------------

===============================================================================
<PAGE> 112
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is incorporated under the laws of the State of Delaware.
Section 145 of the Delaware General Corporation Law (the "DGCL"), inter alia,
("Section 145") provides that a Delaware corporation may indemnify any persons
who were, are or are threatened to be made, parties to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was illegal.

A Delaware corporation may indemnify any persons who are, were or are
threatened to be made, a party to any threatened, pending or completed action
or suit by or in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the corporation's best interests, provided that no
indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.

Article VIII of the Company's Restated Certificate of Incorporation
(the "Restated Certificate") provides for the indemnification of directors,
officers, employees and agents of the Company to the fullest extent permitted
by the DGCL, as it currently exists or may hereafter be amended. In addition,
the Restated Certificate provides that to the fullest extent permitted by the
DGCL, as it currently exists or may hereafter be amended, no director of the
Company will be liable to the Company or its stockholders for monetary damages
arising from a breach of fiduciary duty owed to the Company.

The foregoing statements are subject to the detailed provisions of
Section 145 of the DGCL and the Restated Certificate.

II-1
<PAGE> 113
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS.

3.1* Restated Certificate of Incorporation of MMI Products, Inc.
3.2* Amended and Restated By-laws of MMI Products, Inc.
4.1* Indenture dated as of April 16, 1997 between MMI Products,
Inc. and U.S. Trust Company of Texas, N.A.
4.2* Registration Rights Agreement dated as of April 16, 1997 among
MMI Products, Inc. and Bear, Stearns & Co. Inc.
5.1** Opinion and consent of Baker & Botts, L.L.P.
10.1** Amended and Restated Loan and Security Agreement dated as of
December 13, 1996 among MMI Products, Inc., Fleet Capital
Corporation, as a lender and collateral agent, and
Transamerica Business Credit Corporation, as amended.
10.2* Stockholders Agreement dated as of December 13, 1996 by and
among Merchant Metals Holding Company and certain of its
stockholders.
10.3* Employment Agreement dated as of December 31, 1994 by and
among MMI Products, Inc. and Julius S. Burns, as amended.
10.4* MMI Products, Inc. Pension Plan, as amended.
10.5* Amended and Restated Put Agreement dated as of June 11, 1997,
between Merchants Metals Holding Company and Julius S. Burns.
10.6* Procurement Agreement dated as of December 13, 1996 between
MMI Products, Inc. and Mannesmann Pipe & Steel Corporation, as
amended.
10.7* The Merchants Metals Holding Company 1988 Stock Option Plan
dated as of December 12, 1988, as amended.
10.8* The MMI Products, Inc. 401(k) Savings Plan, as amended.
10.9* Non-Competition Agreement dated as of December 31, 1994
between MMI Products, Inc. and Julius S. Burns.
10.10* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and Julius S. Burns.
10.11* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and Carl L. Blonkvist.
10.12* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and Thomas. F. McWilliams.
10.13* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and James M. McCall.
10.14* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and Davy J. Wilkes.
10.15* Indemnification Agreement dated as of April 16, 1997 between
MMI Products, Inc. and Robert N. Tenczar.
10.16* Purchase Agreement dated as of April 11, 1997 among MMI
Products, Inc. and Bear, Stearns & Co. Inc.
10.17* Limited Liability Company Agreement of MMI Products, L.L.C.
10.18* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and Julius S.
Burns.
10.19* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and Robert N.
Tenczar.
10.20* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and James M.
McCall.
10.21* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and Davy J.
Wilkes.
10.22* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and William T.
Stewart.
10.23* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and Michael W.
Babcock.

II-2
<PAGE> 114

10.24* Amended and Restated Repurchase Agreement dated as of June 12,
1997 between Merchants Metals Holding Company and Michael
Weaver.
12.1* Statement of Computation of Ratios of Earnings to Fixed
Charges.
21.1* Subsidiaries of MMI Products, Inc.
23.1** Consent of Ernst & Young LLP, independent auditors.
23.2** Consent of Baker & Botts, L.L.P. (included in Exhibit 5.1).
24.1* Powers of Attorney (included in signature page).
25.1* Statement of Eligibility of Trustee on Form T-1.
27.1* Financial Data Schedule.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Tender Instructions.

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

* Previously filed.
** Filed herewith.

(B) FINANCIAL STATEMENT SCHEDULES.

Schedule No. Description
------------ -----------
Schedule II Valuation and Qualifying Accounts

All other Schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are inapplicable and
therefore have been omitted.

II-3
<PAGE> 115
ITEM 22. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.

(2) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.

(3) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of the
registrant pursuant to the provision described under Item 20 or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

II-4
<PAGE> 116
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Houston, State of Texas, on July 24, 1997.

MMI PRODUCTS, INC.

By: /s/ ROBERT N. TENCZAR
---------------------------------------
Robert N. Tenczar
Vice President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons on July 24, 1997 in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
* President and Chief Executive Officer, Director
- -------------------------------------------- (principal executive officer)
Julius S. Burns

/s/ Robert N. Tenczar Vice President, Chief Financial Officer
- -------------------------------------------- (principal financial officer and accounting officer)
Robert N. Tenczar

* Director
- --------------------------------------------
Thomas F. McWilliams

* Director
- --------------------------------------------
Carl L. Blonkvist

*By: /s/ ROBERT N. TENCZAR
- --------------------------------------------
Robert N. Tenczar
Attorney-in-fact
</TABLE>

<PAGE> 117
REPORT OF INDEPENDENT AUDITORS
ON FINANCIAL STATEMENT SCHEDULE

We have audited the financial statements of MMI Products, Inc. as of
December 28, 1996 and December 30, 1995, and for each of the three fiscal years
in the period ended December 28, 1996, and have issued our report thereon dated
March 10, 1997 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedule listed in Item 21(B) of this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

Houston, Texas
March 10, 1997

S-1
<PAGE> 118
SCHEDULE II

MMI PRODUCTS, INC.
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning Costs and Deductions End of
of Period Expenses Describe Period
----------- -------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fiscal Year Ended December 28, 1996:
Allowance for Doubtful Accounts $1,314 $ 879 $ (492)(1) $1,701
Reserve for damaged and slow-moving
inventory 417 1,558 (142)(2) 1,833

Fiscal Year Ended December 30, 1995:
Allowance for Doubtful Accounts $1,546 $ 448 $ (680)(1) $1,314
Reserve for damaged and slow-moving
inventory 123 623 (329)(2) 417

Fiscal Year Ended December 31, 1994:
Allowance for Doubtful Accounts $1,213 $ 725 $ (392)(1) $1,546
Reserve for damaged and slow-moving
inventory 50 76 (3)(2) 123
</TABLE>

________________________
(1) Uncollectible accounts written off, net of recoveries.
(2) Write off of inventory.

S-2
<PAGE> 119
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
3.1* Restated Certificate of Incorporation of MMI Products, Inc.
3.2* Amended and Restated By-laws of MMI Products, Inc.
4.1* Indenture dated as of April 16, 1997 between MMI Products, Inc. and U.S. Trust Company of Texas, N.A.
4.2* Registration Rights Agreement dated as of April 16, 1997 among MMI Products, Inc. and Bear, Stearns &
Co. Inc.
5.1** Opinion and consent of Baker & Botts, L.L.P.
10.1** Amended and Restated Loan and Security Agreement dated as of December 13, 1996 among MMI Products,
Inc., Fleet Capital Corporation, as a lender and collateral agent, and Transamerica Business Credit
Corporation, as amended.
10.2* Stockholders Agreement dated as of December 13, 1996 by and among Merchant Metals Holding Company and
certain of its stockholders.
10.3* Employment Agreement dated as of December 31, 1994 by and among MMI Products, Inc. and Julius S. Burns,
as amended.
10.4* MMI Products, Inc. Pension Plan, as amended.
10.5* Amended and Restated Put Agreement dated as of June 11, 1997, between Merchants Metals Holding Company
and Julius S. Burns.
10.6* Procurement Agreement dated as of December 13, 1996 between MMI Products, Inc. and Mannesmann Pipe &
Steel Corporation, as amended.
10.7* The Merchants Metals Holding Company 1988 Stock Option Plan dated as of December 12, 1988, as amended.
10.8* The MMI Products, Inc. 401(k) Savings Plan, as amended.
10.9* Non-Competition Agreement dated as of December 31, 1994 between MMI Products, Inc. and Julius S. Burns.
10.10* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and Julius S. Burns.
10.11* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and Carl L. Blonkvist.
10.12* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and Thomas. F.
McWilliams.
10.13* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and James M. McCall.
10.14* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and Davy J. Wilkes.
10.15* Indemnification Agreement dated as of April 16, 1997 between MMI Products, Inc. and Robert N. Tenczar.
10.16* Purchase Agreement dated as of April 11, 1997 among MMI Products, Inc. and Bear, Stearns & Co. Inc.
10.17* Limited Liability Company Agreement of MMI Products, L.L.C.
10.18* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and Julius S. Burns.
10.19* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and Robert N. Tenczar.
10.20* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and James M. McCall.
10.21* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and Davy J. Wilkes.
10.22* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and William T. Stewart.
</TABLE>

<PAGE> 120

<TABLE>
<S> <C>
10.23* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and Michael W. Babcock.
10.24* Amended and Restated Repurchase Agreement dated as of June 12, 1997 between Merchants Metals Holding
Company and Michael Weaver.
12.1* Statement of Computation of Ratios of Earnings to Fixed Charges.
21.1* Subsidiaries of MMI Products, Inc.
23.1** Consent of Ernst & Young LLP, independent auditors.
23.2** Consent of Baker & Botts, L.L.P. (included in Exhibit 5.1).
24.1* Powers of Attorney (included in signature page).
25.1* Statement of Eligibility of Trustee on Form T-1.
27.1* Financial Data Schedule.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Tender Instructions.
</TABLE>

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

* Previously filed.
** Filed herewith.

<PAGE> 1
EXHIBIT 5.1

BAKER & BOTTS, L.L.P.
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2980
(214) 953-6500

July 24, 1997

MMI Products, Inc.
515 West Greens Road
Suite 710
Houston, Texas 77067

Ladies and Gentleman:

Reference is made to the registration by MMI Products, Inc., a Delaware
corporation (the "Company"), in connection with the offering by the Company of
an aggregate of $120,000,000 principal amount of 11 1/4% Senior Subordinated
Notes due 2007 (the "Exchange Notes") in exchange for the Company's 11 1/4%
Senior Subordinated Notes due 2007 (the "144A Notes") issued in a private
placement pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), as contemplated by the Company's Registration Statement
on Form S-4 filed with the Securities and Exchange Commission, as amended (the
"Registration Statement"). As set forth in the Registration Statement, certain
legal matters in connection with the Exchange Notes are being passed on for you
by us. At your request, this opinion is being furnished for filing as Exhibit
5.1 to the Registration Statement.

We have acted as counsel for the Company in connection with the
registration and proposed exchange by the Company of the Exchange Notes as
described in the Registration Statement. In such capacity, we have familiarized
ourselves with the Certificate of Incorporation and Bylaws, each as amended to
date, of the Company; the corporate proceedings as furnished to us by the
Company with respect to the issuance of the Exchange Notes and the execution of
the Indenture dated as of April 16, 1997 (the "Indenture"), among the Company
and U.S. Trust Company of Texas, N.A., as Trustee, pursuant to which the
Exchange Notes are to be issued; the Indenture; the proposed form of Exchange
Note; and the Registration Statement. We have also examined the originals or
copies certified or otherwise identified, of corporate records of the Company,
certificates of public officials or representatives of the Company, statutes
and other records, instruments and documents as a basis for the opinions
hereafter expressed.

<PAGE> 2

In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or photostatic copies. As to various questions of fact
material to this opinion, we have relied upon the accuracy of certificates and
oral statements of officers and representatives of the Company and of public
officials.

On the basis of the foregoing, and subject to the additional comments,
assumptions, limitations, qualifications and exceptions hereinafter set forth,
we are of the opinion that:

1. The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware.

2. The Exchange Notes have been duly authorized by all necessary
corporate action on the part of the Company.

3. Subject to the Registration Statement becoming effective under the
Securities Act, to the Indenture being qualified under the Trust Indenture
Act of 1939, as amended, to compliance with any applicable state
securities laws, and to the Exchange Notes being executed by the Company
and authenticated by the Trustee in accordance with the terms of the
Indenture, the Exchange Notes proposed to be exchanged by the Company for
the 144A Notes pursuant to the terms of the exchange offer described in
the Registration Statement have been duly authorized for issuance and,
when issued and delivered in exchange for the 144A Notes in accordance
with the terms and provisions of the exchange offer as described in the
Registration Statement and the Indenture, will be entitled to the benefits
of the Indenture and will be valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms,
except (a) as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws relating to or affecting creditors' rights generally and (b)
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

Our opinion is further subject to the qualification that certain of the
waivers and remedies in the Indenture and the Exchange Notes may be
unenforceable under, or may be limited by, the laws (including judicial
decisions) of the State of New York and the United States. However, the
unenforceability or limitation of such covenants, waivers and remedies will
not, in our opinion, prevent the realization by the holders thereof of the
practical benefits intended to be provided by the Indenture and the Exchange
Notes, except for the economic consequences of any delay that may result from
such enforceability or limitation.

We express no opinion with respect to any laws other than those of the
State of Texas, the State of New York, the Federal laws of the United States
and the General Corporation Law of the State of Delaware.

<PAGE> 3

In rendering the opinions set forth in paragraph 1 above with respect to
the existence and good standing of the Company, this firm has relied solely on
the certificate(s) of authorities in the state of the Company's formation.

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under "Legal Matters" in the
Prospectus forming a part of the Registration Statement.

This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.

Very truly yours,

/s/ BAKER & BOTTS, L.L.P.

BAKER & BOTTS, L.L.P.

<PAGE> 1

EXHIBIT 10.1

===============================================================================

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

BY AND AMONG

MMI PRODUCTS, INC.,
AS BORROWER

AND

FLEET CAPITAL CORPORATION,
AS A LENDER AND AS COLLATERAL AGENT

AND

TRANSAMERICA BUSINESS CREDIT CORPORATION,
AS A LENDER

DATED AS OF DECEMBER 13, 1996

===============================================================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
1. GENERAL DEFINITIONS ............................................... 2
1.1 Defined Terms .............................................. 2
1.2 Accounting and Other Terms ................................. 20
1.3 Certain Matters of Construction ............................ 20

2. CREDIT FACILITY ................................................... 20
2.1 Revolving Credit Facility .................................. 20
2.2 Term Loan Facility ......................................... 22
2.3 Letters of Credit .......................................... 23
2.4 Manner of Borrowing Revolving Credit Loans ................. 23
2.5 All Loans to Constitute One Obligation ..................... 24
2.6 Loan Account ............................................... 25

3. INTEREST, FEES, TERM AND REPAYMENT ................................ 25
3.1 Interest ................................................... 25
3.2 Fees and Charges ........................................... 27
3.3 Term of Agreement .......................................... 28
3.4 Early Termination by Borrower .............................. 29
3.5 Payments ................................................... 30
3.6 Application of Payments and Collections .................... 31
3.7 Statements of Accounts ..................................... 31
3.8 Pro Rata Treatment ......................................... 31
3.9 Sharing of Payments, Etc ................................... 32
3.10 Cost Protection ............................................ 32
3.11 Additional Provisions Regarding Eurodollar Loans ........... 34
3.12 Yield Protection ........................................... 36

4. COLLATERAL: GENERAL TERMS ......................................... 36
4.1 Security Interest in Collateral ............................ 36
4.2 Lien on Realty ............................................. 37
4.3 Representations, Warranties and Covenants -- Collateral .... 38
4.4 Lien Perfection ............................................ 38
4.5 Real Property Lien Documentation ........................... 39
4.6 Location of Collateral ..................................... 39
4.7 Insurance of Collateral .................................... 39
4.8 Protection of Collateral ................................... 40
</TABLE>

<PAGE> 3

<TABLE>
<S> <C> <C>
4.9 Audits ..................................................... 40

5. PROVISIONS RELATING TO ACCOUNTS ................................... 40

5.1 Representations, Warranties and Covenants .................. 40
5.2 Assignments of Accounts .................................... 41
5.3 Administration of Accounts ................................. 42
5.4 Collection of Accounts ..................................... 42
5.5 Notice Regarding Disputed Accounts ......................... 43

6. PROVISIONS RELATING TO INVENTORY .................................. 43
6.1 Representations, Warranties and Covenants .................. 43
6.2 Inventory Reports .......................................... 44
6.3 Returns of Inventory ....................................... 44

7. PROVISIONS RELATING TO EQUIPMENT .................................. 44

7.1 Representations, Warranties and Covenants .................. 44
7.2 Evidence of Ownership of Equipment ......................... 45
7.3 Records and Schedules of Equipment ......................... 45
7.4 Dispositions of Equipment .................................. 45

8. REPRESENTATIONS AND WARRANTIES .................................... 45
8.1 General Representations and Warranties ..................... 45
8.2 Reaffirmation and Survival of Representations .............. 50

9. COVENANTS AND CONTINUING AGREEMENTS ............................... 51
9.1 Affirmative Covenants ...................................... 51
9.2 Negative Covenants ......................................... 57
9.3 Specific Financial Covenants ............................... 61

10. CONDITIONS PRECEDENT ............................................. 63
10.1 Documentation .............................................. 63
10.2 Other Conditions ........................................... 66

11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT ................ 67
11.1 Events of Default .......................................... 67
11.2 Acceleration of the Obligations ............................ 69
11.3 Remedies ................................................... 69
</TABLE>

<PAGE> 4
<TABLE>
<S> <C> <C>
11.4 Remedies Cumulative; No Waiver ............................. 71

12. THE COLLATERAL AGENT .............................................. 71
12.1 Appointment and Authorization .............................. 71
12.2 Note Holders ............................................... 71
12.3 Consultation with Counsel .................................. 71
12.4 Documents .................................................. 72
12.5 Resignation or Removal of Collateral Agent ................. 72
12.6 Responsibility of Collateral Agent ......................... 72
12.7 Notices of Event of Default ................................ 73
12.8 Independent Investigation .................................. 73
12.9 INDEMNIFICATION ............................................ 73
12.10 Benefit of Section 12 ...................................... 74

13. MISCELLANEOUS ..................................................... 74
13.1 Power of Attorney .......................................... 74
13.2 INDEMNITY .................................................. 74
13.3 Modification of Agreement .................................. 75
13.4 Reimbursement of Expenses .................................. 75
13.5 Indulgences Not Waivers .................................... 76
13.6 Severability ............................................... 76
13.7 Successors and Assigns; Participations by Lenders .......... 76
13.8 Cumulative Effect; Conflict of Terms ....................... 77
13.9 Execution in Counterparts .................................. 77
13.10 Notice ..................................................... 77
13.11 Collateral Agent's or Lender' Consent ...................... 78
13.12 Time of Essence ............................................ 78
13.13 Entire Agreement ........................................... 79
13.14 Interpretation ............................................. 79
13.15 Nonapplicability of Article 5069-15.01 et seq .............. 79
13.16 No Preservation or Marshaling .............................. 79
13.17 GOVERNING LAW; CONSENT TO FORUM ............................ 79
13.18 WAIVERS BY BORROWER ........................................ 80
13.19 WAIVER OF CONSUMER RIGHTS .................................. 81
13.20 ORAL AGREEMENTS INEFFECTIVE ................................ 81
13.21 RELEASE .................................................... 81
13.22 AMENDMENT, RESTATEMENT, RENEWAL AND EXTENSION .............. 82
</TABLE>

iii

<PAGE> 5

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made this 13th
day of December, 1996, by and among MMI PRODUCTS, INC., a Delaware corporation
("Borrower"), FLEET CAPITAL CORPORATION, a Rhode Island corporation ("Fleet"),
successor by merger to Fleet Capital Corporation, a Connecticut corporation,
formerly known as Shawmut Capital Corporation, a Connecticut corporation,
successor in interest to Barclays Business Credit, Inc., a Connecticut
corporation, by assignment and TRANSAMERICA BUSINESS CREDIT CORPORATION, a
Delaware corporation ("Transamerica") (Fleet and Transamerica are collectively
referred to as "Lenders" or each individually a "Lender"), and Fleet, as
collateral agent for Lenders to the extent and in the manner provided in
Section 12 below ("Collateral Agent").

RECITALS

A. Borrower, Anchor Die Cast, Inc., a Delaware corporation ("ADC"),
Lenders and Collateral Agent entered into that certain Loan and Security
Agreement, dated as of August 20, 1992, as amended by that certain First
Amendment to Loan and Security Agreement, dated March 26, 1993, that certain
Second Amendment to Loan and Security Agreement, dated as of March 8, 1995,
that certain Third Amendment to Loan and Security Agreement dated as of March
31, 1995, that certain Fourth Amendment to Loan and Security Agreement dated as
of February 29, 1996, that certain Fifth Amendment to Loan and Security
Agreement dated July 31, 1996 and that certain Sixth Amendment to Loan and
Security Agreement dated October 31, 1996 (as amended, the "Original Loan
Agreement"; the Original Loan Agreement and all other documents evidencing,
governing, securing or otherwise pertaining to the loans under the Original
Loan Agreement are hereinafter referred to as the "Other Original Agreements").

B. ADC has merged with and into Borrower, with Borrower as the surviving
corporation, pursuant to the terms of (i) that certain Agreement and Plan of
Merger, dated June 30, 1993, by and between Borrower and ADC and (ii) that
certain Certificate of Merger, dated March 22, 1994, to be effective as of
March 31, 1994, and filed of record with the Secretary of State of Delaware on
March 23, 1994.

C. Borrower, Lenders and Collateral Agent desire to amend, restate and
modify (but not extinguish) the Original Loan Agreement and the Other Original
Agreements as hereinafter set forth.

NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

<PAGE> 6

SECTION 1. GENERAL DEFINITIONS

1.1. Defined Terms. When used herein, the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):

Accounts - all accounts, contract rights, chattel paper, instruments and
documents, whether now owned or hereafter created or acquired by Borrower or in
which Borrower now has or hereafter acquires any interest.

Account Debtor - any Person who is or may become obligated under or on
account of an Account.

Accounts Payable Turnover - at any date means the quotient of (i) the
number of days in the Rolling Twelve-Month Period ending on such date divided
by (ii) (x) Borrower's cost of goods sold for such Rolling Twelve-Month Period
divided by (y) Borrower's accounts payable for the month ending on such date.

ADC - as defined in the recitals to this Agreement.

Adjusted Earnings From Operations - with respect to any fiscal period,
means the net earnings (or loss) after provision for income taxes for such
fiscal period of Borrower, plus provision for income taxes, Interest Expense,
depreciation, amortization and non-cash charges in connection with the
write-down or write-off of intangible assets or deferred charges for such
fiscal period of Borrower, all as reflected on the profit and loss statement
of Borrower supplied to Lender pursuant to Section 9.1(J) hereof, less:

(a) any gain or loss arising from the sale of capital assets;

(b) any gain arising from any write-up of assets;

(d) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by Borrower, realized by such
corporation prior to the date of such acquisition;

(e) net earnings of any business entity (other than a Subsidiary) in
which Borrower has an ownership interest unless such net earnings shall
have actually been received by Borrower in the form of cash
distributions;

(f) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to Borrower;

<PAGE> 7

(g) the earnings of any Person to which any assets of Borrower shall
have been sold, transferred or disposed of, or into which Borrower shall
have merged, or been a party to any consolidation or other form of
reorganization, prior to the date of such transaction;

(h) any gain arising from the acquisition of any Securities of
Borrower; and

(i) any gain arising from extraordinary or non-recurring items.

Adjusted Tangible Assets - all assets except: (a) any increase in the
value of any assets resulting from any write-up of such assets subsequent to
October 26, 1996; (b) deferred charges reflected on a Consolidated balance
sheet of a Person and its Subsidiaries, other than prepaid insurance and
prepaid taxes; (c) patents, copyrights, trademarks, trade names, non-compete
agreements, franchises and other similar intangibles; (d) goodwill, including
any amounts, however designated on a Consolidated balance sheet of a Person and
its Subsidiaries, representing the excess of the purchase price paid for assets
or stock over the value assigned thereto on the books of such Person; (e)
Restricted Investments; (f) unamortized debt discount and expense; (g) assets
located and notes and receivables due from obligors outside of the United
States of America (except, in the case of Accounts, where such Accounts are
backed by a letter of credit or acceptance reasonably acceptable to Collateral
Agent); and (h) Accounts, notes and other receivables due from Affiliates or
employees.

Adjusted Tangible Net Worth - at any date means a sum equal to: (a) the
Adjusted Tangible Assets of a Person at such date, less (b) the amount at which
such Person's liabilities (other than capital stock, including redeemable
preferred stock, and surplus) would be shown on a balance sheet at such date in
accordance with GAAP, plus (c) the outstanding principal amount of the
Subordinated Debt.

Advance - the disbursement by a Lender (or by Collateral Agent on behalf
of Lenders) of a Loan to Borrower pursuant to this Agreement.

Affiliate - a Person (other than a Subsidiary): (a) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower; (b) which beneficially owns, legally or
beneficially, 10% or more of any class of the Voting Stock of Borrower; or (c)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is legally or
beneficially owned by Borrower or a Subsidiary of Borrower. For purposes
hereof, "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.

Agreement - this Amended and Restated Loan and Security Agreement, as
amended, renewed, extended, modified or restated from time to time.

<PAGE> 8

Applicable Annual Rate - as defined in Section 3.1(A) of this Agreement.

Applicable Test Period - with respect to any Distribution to enable Parent
to pay dividends on the New Preferred Stock, or with respect to calculating
Borrower's Excess Cash Flow for purposes of determining any mandatory
prepayment of the Term Loan required under Section 2.2(B)(ii) hereof, the
twelve-month period ending on the New Preferred Stock Distribution Test Date
immediately preceding the New Preferred Stock Distribution Date in question.

Average Daily Availability - the amount obtained by adding the difference
between the Borrowing Base and the unpaid balance of the aggregate outstanding
Revolving Credit Loans owing by Borrower to Lenders at the end of each day
during the period in question and by dividing such sum by the number of days in
such period.

Average Monthly Loan Balance - the amount obtained by adding the unpaid
balance of Revolving Credit Loans owing by Borrower to Lenders at the end of
each day for each day during the month in question and by dividing such sum by
the number of days in such month.

Bank - Fleet National Bank.

Base Rate - the rate of interest announced or quoted by Bank from time to
time as its base rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if the base
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.

Base Rate Loans - shall mean all Loans other than Eurodollar Loans.

Borrower - as defined in the preamble to this Agreement.

Borrowing - the combined Advances made to Borrower on a single date.

Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:

(A) the Revolving Credit Commitment minus the aggregate undrawn
portion of all Letters of Credit outstanding at such date; or

(B) an amount equal to:

(i) 85% (or such lesser percentage as Collateral Agent may,
consistent with its usual and customary practices applied to
borrowing base

<PAGE> 9

credits generally and, with the consent of Majority Lenders,
determine from time to time) of the net amount of Eligible Accounts
outstanding at such date;

PLUS

(ii) the lesser of (x) 65% (or such lesser percentage as
Collateral Agent may, consistent with its usual and customary
practices applied to borrowing base credits generally and, with the
consent of Majority Lenders, determine from time to time) of the
value of Eligible Inventory at such date consisting of raw
materials, calculated on the basis of the lower of cost or market
(as determined by Collateral Agent in its reasonable discretion)
with the cost of raw materials calculated on a first-in-first-out
or average cost basis, plus 50% (or such lesser percentage as
Collateral Agent may consistent with its usual and customary
practices applied to borrowing base credits generally and, with the
consent of Majority Lenders, determine from time to time) of the
value of Eligible Inventory at such date consisting of finished
goods, calculated on the basis of the lower of cost or market (as
determined by Collateral Agent in its reasonable discretion) with
the cost of finished goods calculated on a first-in-first-out or
average cost basis, or (y) an amount equal to clause (i) above;

MINUS (subtract from the sum of
clauses (i) and (ii) above)

(iii) an amount equal to the sum of (x) the aggregate undrawn
portion of all Letters of Credit outstanding at such date, and (y)
any amounts which Collateral Agent or any Lender has paid pursuant
to any of the Loan Documents for the account of Borrower, and which
have not been repaid to Collateral Agent or such Lender, as the
case may be.

For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less
any and all returns, rebates, discounts, (which may, at Collateral
Agent's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time.

Building Service Equipment - all fixtures, equipment, machinery, apparatus
and articles of personal property owned by Borrower now or hereafter attached
to or used or procured for use in connection with the operation or maintenance
of any building, structure or other improvement located on or included in any
Mortgaged Property or the conduct of any business thereon or therein,
including, but without limiting the generality of the foregoing, all antennas,
engines, furnaces, boilers, stokers, pumps, heaters, tanks, dynamos, motors,
generators, switchboards, electrical equipment, heating, plumbing, lifting and
ventilating apparatus, air-cooling and air-conditioning apparatus, gas and
electric fixtures, elevators, escalators, fittings, and machinery

<PAGE> 10

and all other equipment of every kind and description (except fixtures,
equipment, machinery, apparatus or articles of personal property owned by
sublessees or other legal occupants of said building or to persons other than
Borrower unless the same be abandoned by any such sublessee or other occupant
or person), together with any and all replacements thereof and additions
thereto.

Business Day - a day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Texas or is a day on which any
Lender's or Collateral Agent's business offices in such state are closed.

Capital Expenditures - expenditures made and liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life at the time of acquisition of more
than one year (except any such asset expensed in the ordinary course of
business in the year of its acquisition), including the direct or indirect
acquisition of such assets by way of increased product or service charges,
offset items or otherwise and the principal portion of payments with respect to
Capitalized Lease Obligations, but excluding expenditures with respect to
operating leases.

Capital Lease - as of any date, any lease of property, real or personal,
which would be capitalized on a balance sheet of the lessee prepared as of such
date in accordance with GAAP.

Capitalized Lease Obligation - any Indebtedness represented by
obligations under a Capital Lease, and the amount of such Indebtedness shall be
the capitalized amount of such obligations determined in accordance with GAAP.

CitiVent - Citicorp Venture Capital Ltd., a New York corporation.

Closing Date - the date on which all of the conditions precedent in
Section 10 are satisfied and the initial Loan is made hereunder, but in no
event later than December 13, l996.

Code - the Uniform Commercial Code as adopted and in force in the State of
Texas, as from time to time in effect.

Collateral - all of the Property and interests in Property described in
Section 4 hereof, and all other Property and interests in Property that now or
hereafter secure the payment and performance of any of the Obligations.

Collateral Agent - Fleet and any successor agent appointed pursuant to
Section 12 of this Agreement.

Commitment - the obligation of each Lender to extend credit to Borrower
under this Agreement in an aggregate principal amount not to exceed such
Lender's Committed Sum.

<PAGE> 11

Committed Sum - with respect to each Lender, an amount equal to such
Lender's Total Commitment Percentage multiplied by the Revolving Credit
Commitment.

Consolidated - the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.

Copyright Assignment - collectively, that certain Copyright Security
Agreement dated August 20, 1992, and any subsequent Copyright Security
Agreements, executed by Borrower in favor of Collateral Agent, for the benefit
of Lenders, and by which Borrower assigned to Collateral Agent, for the benefit
of Lenders, and granted to Collateral Agent, for the benefit of Lenders, a
security interest in, as security for the Obligations, all of Borrower's right,
title and interest in and to all of its copyrights, as any of the same may have
been or may be amended, supplemented or otherwise modified from time to time.

Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets on a balance
sheet at such date in accordance with GAAP, except that amounts due from
Affiliates and investments in Affiliates shall be excluded therefrom.

Current Liabilities - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP.
Notwithstanding the foregoing, the term "Current Liabilities" shall include the
outstanding principal amount of the Revolving Credit Loans and the current
maturities of any long-term Indebtedness (other than, with respect to Borrower,
the Indebtedness evidenced by the Mannesmann Renewal Note).

Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.

Default Rate - as defined in Section 3.1(B) of this Agreement.

Distribution - in respect of any corporation means and includes: (a) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (b) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds
of the sale of Securities.

Dominion Account - a special account of Lenders established by Borrower
pursuant to this Agreement at a bank selected by Borrower, but acceptable to
Collateral Agent, and over which Collateral Agent, for the benefit of Lenders,
shall have sole and exclusive access and control for withdrawal.

Eligible Account - an Account arising in the ordinary course of Borrower's
business from the sale of goods or rendition of services which Collateral
Agent, in its reasonable credit judgment applied in accordance with its usual
and customary practices to borrowing base credits

<PAGE> 12

generally, deems to be an Eligible Account. Without limiting the generality of
the foregoing, no Account shall be an Eligible Account if: (a) it arises out
of a sale made by Borrower to a Subsidiary or an Affiliate of Borrower or to a
Person controlled by an Affiliate of Borrower; or (b) with respect to Accounts
for which Borrower in the ordinary course of business allows payment terms of
30 days or less after the original invoice date, such Accounts are unpaid
more than 90 days after the original invoice date; or (c) with respect to
Accounts for which Borrower in the ordinary course of business allows payment
terms in excess of 30 days after the original invoice date, such Accounts are
unpaid more than 120 days after the original invoice date; provided, however,
that the portion of such Accounts unpaid more than 90 days but less than 120
days after the original invoice date deemed to be Eligible Accounts shall not
exceed $500,000, or (d) only 65% or less of the Accounts from the Account
Debtor are deemed Eligible Accounts hereunder; or (e) the total unpaid Accounts
of the Account Debtor exceed 20% of the net amount of all Accounts, to the
extent of such excess; or (f) any covenant, representation or warranty
contained in this Agreement with respect to such Account has been breached; or
(g) the Account Debtor is also Borrower's creditor or supplier, to the extent
of any amounts owing by Borrower to such creditor or supplier; or (h) the
Account Debtor has disputed liability with respect to such Account, or the
Account Debtor has made any claim with respect to any other Account due from
such Account Debtor to Borrower, or the Account otherwise is or may become
subject to any right of setoff by the Account Debtor, to the extent of any
offset, dispute or claim; or (i) the Account Debtor is also Borrower's
employee; or (j) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or if the Account Debtor has ceased to be
Solvent or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; or (k) it arises from a sale to an Account Debtor outside
the United States (unless such Account is backed by a letter of credit or
acceptance reasonably acceptable to Collateral Agent); or (l) it arises from a
sale to the Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or return basis; or (m)
the Account Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of such
Account to Collateral Agent, for the benefit of Lenders, in form and substance
reasonably satisfactory to Lenders, so as to comply with the Assignment of
Claims Act of l940, as amended (31 U.S.C. Subsection 203 et seq.); or (n) the
Account Debtor is located in the State of New Jersey, unless Borrower has filed
a Notice of Business Activities Report with the appropriate officials in such
state for the then current year; or (o) the Account is subject to a Lien other
than a Permitted Lien; or (p) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a final sale; or (q)
the Account is evidenced by chattel paper or an instrument of any kind, or has
been reduced to judgment; or (r) Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt payment and which
discounts or allowances are reflected in the calculation of the face value of
each

<PAGE> 13

invoice related to such Account; or (s) the Account arises from a retail sale
of goods to a Person who is purchasing same primarily for personal, family or
household purposes.

Eligible Inventory - such Inventory of Borrower which Collateral Agent, in
its reasonable credit judgment applied in accordance with its usual and
customary practices to borrowing base credits generally, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no Inventory
shall be Eligible Inventory unless, in Collateral Agent's opinion, it (a) is
finished goods or raw materials, (b) is in good and salable condition, (c) is
not obsolete or unmerchantable, (d) meets all material standards imposed by any
governmental agency or authority, (e) conforms in all material respects to the
warranties and representations set forth in Section 6.1 hereof, (f) is at all
times subject to Collateral Agent's duly perfected, first priority security
interest and is not subject to any other Lien except a Permitted Lien, (g) is
situated at a location in compliance with Section 4.6 hereof or is in transit
between any such locations and (h) is not subject to any landlords, mortgagees,
bailees or warehousemens Lien (unless such Lien has been waived in writing by
the applicable landlord, mortgagee, bailee or warehouseman pursuant to a lien
waiver in form and substance satisfactory to Collateral Agent in its sole
discretion).

Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety or environmental matters or to the
manufacture, processing, distribution, use, treatment, handling, storage,
disposal or transportation of Hazardous Waste, including, but not limited to,
the Resource Conservation and Recovery Act; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980; the Toxic Substances Control
Act, as amended; the Clean Water Act; the River and Harbor Act; Water Pollution
Control Act; the Marine Protection Research and Sanctuaries Act; the Deep-Water
Port Act; the Safe Drinking Water Act; the Superfund Amendments and
Reauthorization Act of 1986; the Federal Insecticide, Fungicide and Rodenticide
Act; the Mineral Lands and Leasing Act; the Surface Mining Control and
Reclamation Act; state and federal superlien and environmental cleanup programs
and laws; and U.S. Department of Transportation regulations.

Environmental Plan - as defined in Section 10.1(P) hereof.

Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or
hereafter acquired and wherever located, and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.

ERISA - the Employee Retirement Income Security Act of 1974, and all rules
and regulations from time to time promulgated thereunder.

Eurodollar Base Rate - with respect to a Eurodollar Loan for the relevant
Eurodollar Interest Period, a rate per annum equal to the quotient of the
following: (a) the rate at which

9
<PAGE> 14

deposits in U.S. dollars in immediately available funds are offered by Bank to
first-class banks in the London interbank market at approximately 11:00 a.m.
(London, England time) two (2) Business Days prior to the first day of such
Eurodollar Interest Period, in the approximate amount of the Eurodollar Loan
and having a maturity approximately equal to the Eurodollar Interest Period
divided by (b) the difference of 1.00 minus the Eurodollar Reserve Requirement.

Eurodollar Borrowing Notice - as defined in Section 3.11(A) of this
Agreement.

Eurodollar Interest Period - with respect to a Eurodollar Loan, a period
of one (1), two (2), three (3) or six (6) months commencing on a Business Day
selected by Borrower pursuant to this Agreement. Such Eurodollar Interest
Period shall end on (but exclude) the day which corresponds numerically to such
date one (1), two (2), three (3) or six (6) months thereafter, provided,
however, that if there is no such numerically corresponding day in such first
(1st), second (2nd), third (3rd) or sixth (6th) succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such first
(1st), second (2nd), third (3rd) or sixth (6th) succeeding month. If a
Eurodollar Interest Period would otherwise end on a day which is not a Business
Day, such Eurodollar Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a
new month, such Eurodollar Interest Period shall end on the immediately
preceding Business Day.

Eurodollar Loan - a Revolving Credit Loan or any portion of the Term Loan
which bears interest at the Eurodollar Base Rate.

Eurodollar Reserve Requirement - on any day, means that percentage
applicable to Lenders (expressed as a decimal fraction) which is in effect on
such day, as provided by the Board of Governors of the Federal Reserve System
(or any successor governmental body) applied for determining the maximum
reserve requirements (including without limitation, basic, supplemental,
marginal and emergency reserves) under Regulation D with respect to
"eurocurrency liabilities" as currently defined in Regulation D, or under any
similar or successor regulation with respect to eurocurrency liabilities or
eurocurrency funding. Each determination by Collateral Agent of the Eurodollar
Reserve Requirement shall, in the absence of manifest error, be conclusive and
binding.

Event of Default - as defined in Section 11.1 of this Agreement.

Excess - as defined in Section 3.1(D) of this Agreement.

Excess Cash Flow - with respect to any applicable period, means Adjusted
Earnings from Operations, less Unfinanced Capital Expenditures, less cash
payments of Interest Expense, less any Distributions made during such
applicable period (but (i) only to the extent that such Distributions were
permitted to be made under Section 9.2(I) hereof and (ii) excluding the
Distribution (if any) made on the second preceding New Preferred Stock
Distribution Date), less any income taxes actually paid during such applicable
period, less scheduled principal payments

<PAGE> 15

on the Funded Indebtedness (other than Subordinated Debt) during such
applicable period, and less all prepayments of the Funded Indebtedness during
such applicable period.

Fixed Charge Ratio - for Borrower for any period means the ratio of (i)
Adjusted Earnings From Operations to (ii) Interest Expense, plus Unfinanced
Capital Expenditures, plus scheduled principal payments on Funded Indebtedness
(other than Subordinated Debt) for the succeeding twelve-month period, plus any
Distributions actually made to Parent to the extent permitted under Section
9.2(I) hereof, plus taxes actually paid.

Fleet - as defined in the preamble to this Agreement.

Funded Indebtedness - means Indebtedness for Money Borrowed of Borrower
having a final maturity (or which is renewable or extendible at the option of
Borrower for a period ending) more than one year after the date of creation
thereof but shall not include any portion of the Revolving Credit Loan.

GAAP - generally accepted accounting principles, applied on a consistent
basis, as set forth in Opinions ("Opinions") of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
("Statements") of the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of the
date in question, provided that if Borrower is required to change the use or
application of any accounting method, practice or principle from the use or
application thereof as in effect on the Closing Date as a result of any Opinion
or Statement, and such change affects the financial covenants contained in
Section 9.3 or in Section 9.2(K) hereof, then an adjustment shall be made to
each affected financial covenant that is reasonably acceptable to Majority
Lenders. Accounting principles are applied on a "consistent basis" when the
accounting principles observed in a current period are comparable in all
material respects to those accounting principles applied in a preceding period
subject to mandatory changes therein as set forth in Opinions and/or
Statements.

General Intangibles - all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choices in action, causes of action, corporate or other
business records, deposit accounts, inventions, designs, patents, patent
applications, patent licenses, trademarks, trademark applications, trademark
licenses, trade names, trade secrets, goodwill, copyrights, copyright
applications, copyright registrations, copyright licenses, franchises, customer
lists, tax refund claims, computer programs, all claims under guaranties,
security interests or other security held by or granted to Borrower to secure
payment of any of the Accounts by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts). "General Intangibles" shall not include licenses or
leases which are subject to a valid and enforceable agreement prohibiting the
grant of a Lien thereon or therein.

Guarantor - Parent, and any other Person who may hereafter guarantee
payment or performance of the whole or any part of the Obligations.

<PAGE> 16

Guaranty Agreement - the Amended and Restated Unconditional Guaranty
Agreement which is to be executed by Guarantor in form and substance reasonably
satisfactory to Lenders, by which Guarantor shall unconditionally guarantee
payment of the Obligations, as the same may be amended, supplemented or
otherwise modified from time to time.

Hazardous Waste - all pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes and shall include, without limitation,
any flammable explosives, radioactive materials, oil, hazardous materials,
hazardous or solid wastes, hazardous or toxic substances or related materials
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act of 1976, the Hazardous and Solid Waste
Amendments of 1984, and the Hazardous Materials Transportation Act, as any of
the same are hereafter amended, and in the regulations adopted and publications
promulgated thereto; provided, in the event any of the foregoing Environmental
Laws is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment
and, provided, further, to the extent that the applicable laws of any state
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
material," "solid waste," or "toxic substance" which is broader than that
specified in any of the foregoing Environmental Laws, such broader meaning
shall apply.

Indebtedness - as applied to a Person means, without duplication (a) all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (b) all obligations of other Persons
which such Person has guaranteed and (c) in the case of Borrower, the
Obligations.

Interest Expense - for any period, the interest charge paid or accrued by
a Person during such period (including imputed interest on Capitalized Lease
Obligations, but excluding amortization of debt discount and expense) on
Indebtedness.

Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired, and wherever located, including, but not limited to, all goods
intended for sale or lease by Borrower, or for display or demonstration; all
goods returned to or repossessed by Borrower; all work in process; all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or
otherwise used or consumed in Borrower's business; and all documents evidencing
and General Intangibles relating to any of the foregoing.

Lenders - as defined in the preamble to this Agreement.

<PAGE> 17

Letter of Credit - a letter of credit approved by Lenders which is at any
time issued by any Lender or Collateral Agent or any affiliate of any Lender or
Collateral Agent for the account of Borrower.

Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.

Loan Account - the loan account established on the books of Collateral
Agent pursuant to Section 2.6 of this Agreement.

Loan Documents - this Agreement, the Other Agreements and the Security
Documents.

Loans - all loans and advances made by Lenders pursuant to this Agreement,
including, without limitation, all Revolving Credit Loans and the Term Loan.

Majority Lenders- as of any date, Lenders whose Total Commitment
Percentages total at least two-thirds (66.667%).

Mannesmann - Mannesmann Pipe & Steel Corporation, a New York corporation.

Mannesmann Consignment Agreement - the Consignment Agreement dated
December 13, 1996, between Mannesmann, the Company, and Parent, as originally
executed.

Mannesmann Mortgages - the mortgages (a) dated July 6, 1989, on Borrower's
real Property located in (i) Tarrant County and Harris County, Texas, (ii)
Duval County and Hillsborough County, Florida, (b) dated August 20, 1992, on
Borrower's real Property located in Elkhart County, Indiana, (c) dated March 8,
1995, on Borrower's real Property located in Harris County, Texas, and (d)
dated December 13, 1996, on Borrower's real Property located in Baltimore
County, Maryland, securing Borrower's obligations under the Mannesmann Renewal
Note.

Mannesmann Renewal Note - the Amended and Restated Senior Subordinated
Secured Promissory Note, dated December 13, 1996, issued by Borrower to
Mannesmann in the original principal amount of $10,000,000.

<PAGE> 18

Material Adverse Effect - (i) a material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole, or (ii) a material impairment
of the ability of Borrower to perform or of Lenders to enforce the Obligations.

Maximum Legal Rate - as defined in Section 3.1(C) of this Agreement.

Money Borrowed - as applied to Indebtedness, means (a) Indebtedness for
borrowed money; (b) Indebtedness, whether or not in any such case the same was
for borrowed money, (i) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (ii) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (iii) upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed (other than accounts payable) as full or partial
payment for Property; (c) Indebtedness that constitutes a Capitalized Lease
Obligation; and (d) Indebtedness under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (a) through (c)
hereof.

Mortgaged Property - the real Property of Borrower listed on Exhibit A
hereto.

Mortgages - the mortgages and/or deeds of trust, executed by Borrower on
August 20, 1992 or thereafter in favor of Collateral Agent, for the benefit of
Lenders, and by which Borrower granted and conveyed to Collateral Agent, for
the benefit of Lenders, as security for the Obligations, Liens upon the
Mortgaged Property, as the same may have been or may be amended, supplemented
or otherwise modified from time to time.

Multi-Employer Plans - has the meaning set forth in Section 4001(a)(3) of
ERISA.

Net Proceeds - means all cash proceeds from the sale of an asset minus all
reasonable out-of-pocket costs of such sale and provisions for any sales,
income or other tax associated with such sale.

New Mortgages - as defined in Section 4.2 of this Agreement.

New Preferred Stock-The Series A Junior Preferred Stock and Series B
Senior Preferred Stock of Parent, $.01 par value.

New Preferred Stock Distribution Date - at least five (5) Business Days
following the delivery by Borrower to Collateral Agent and Lenders of the
monthly financial statements required by Section 9.1 (J) (ii) hereof with
respect to the monthly accounting period ending on a New Preferred Stock
Distribution Test Date.

New Preferred Stock Distribution Test Date - the last day of Borrower's
fiscal accounting period for each March and September.

<PAGE> 19

Nonrevolving Portion - as defined in Section 2.1(A) of this Agreement.

Notes - the Revolving Credit Notes and the Term Notes executed by Borrower
and delivered pursuant to the terms of this Agreement and/or the Original Loan
Agreement, together with any amendments, renewals, extensions, restatements or
other modifications thereof.

Obligations - all Loans, all renewals, increases, extensions,
modifications, rearrangements or restatements thereof, all Letters of Credit,
and all other advances, debts, liabilities, obligations, covenants and duties
owing, arising, due or payable from Borrower to Lenders of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under or with respect to this Agreement or any of the other
Loan Documents (including, without limitation, the Original Loan Agreement and
the Other Original Agreements), whether direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising. The term includes, without limitation, all interest,
charges, expenses, fees, attorney's fees and any other sums chargeable to
Borrower under any of the Loan Documents.

Original Loan Agreement - as defined in the recitals to this Agreement.

Original Term - as defined in Section 3.3 of this Agreement.

OSHA - the Occupational Safety and Health Act and all rules and
regulations from time to time promulgated thereunder.

Other Agreements - any and all agreements, instruments and documents
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower and/or delivered to Collateral Agent and/or
Lenders in respect of the transactions contemplated by this Agreement,
including, without limitation, the Original Loan Agreement, the Other Original
Agreements and the Notes, all as amended, renewed, modified, extended or
restated from time to time.

Other Original Agreements - as defined in the recitals to this Agreement.

Parent - Merchants Metals Holding Company, a Delaware corporation.

Participating Lender - each Person who shall be granted the right by a
Lender to participate in any of the Loans described in this Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to such Lender.

Patent Assignment - collectively, that certain Patent Security Agreement
dated August 20, 1992, and any subsequent Patent Security Agreements, executed
by Borrower in favor of Collateral Agent, for the benefit of Lenders, and by
which Borrower assigned to Collateral Agent, for the benefit of Lenders, and
granted to Collateral Agent, for the benefit of Lenders, a security interest
in, as security for the Obligations, all of Borrower's right, title and

15
<PAGE> 20

interest in and to all of its patents, as any of the same may have been or may
hereafter be amended, supplemented or otherwise modified from time to time.

Permitted Business Acquisition - expenditures made and liabilities
incurred, not exceeding an aggregate of $2,500,000 during any calendar year,
for the acquisition by Borrower of all or substantially all of the assets of a
Person or of a business unit of a Person engaged in the same or similar
business as Borrower, but only if Revolving Credit Availability exceeds
$3,000,000 after giving effect to any such acquisition, and no Default or Event
of Default exists either before or after giving effect to such acquisition.

Permitted Liens - any Lien of a kind specified in subparagraphs (i)
through (xv) of Section 9.2(G) of this Agreement.

Person - an individual, partnership, corporation, limited liability
company, joint stock company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.

Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.

Program - as defined in Section 9.1(T) of this Agreement.

Prohibited Transaction - any transaction set forth in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986.

Projections - Borrower's forecasted consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements, and
(d) capitalization statements, all prepared on a basis consistent with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

Purchase Money Indebtedness - means and includes (a) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (b) Indebtedness (other than the Obligations) incurred at
the time of or within thirty (30) days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase price
thereof, and (c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.

Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.

<PAGE> 21

Put Agreement - the Put Agreement dated as of July 31, 1996, by and
between Julius S. Burns and Parent, as in effect on the Closing Date.

Refinancing Indebtedness - means Indebtedness (a) issued in exchange for,
or the proceeds from the issuance and sale of which are used to substantially
concurrently repay, redeem, refund, refinance, discharge or otherwise retire
for value, in whole or in part (collectively, "repay") or (b) constituting an
amendment, modification or supplement to, or a deferral or renewal of
(collectively, an "amendment") any Indebtedness permitted by Section 9.2(C) in
a principal amount (or, if such Refinancing Indebtedness provides for an amount
less than the principal amount thereof to be due and payable upon the
acceleration thereof, with an original issue price) not in excess of the
principal amount of the Indebtedness so refinanced (plus premiums, accrued
interest, and out-of-pocket fees and expenses). Refinancing Indebtedness of
Borrower that repays or constitutes an amendment to Indebtedness of Borrower
shall (i) not have an average life less than the Indebtedness to be so
refinanced at the time of such incurrence, (ii) not be secured by any assets of
Borrower that do not secure the Indebtedness to be so refinanced and (iii) have
subordination provisions, if any, no less favorable to Lenders than those
contained in the Indebtedness of Borrower to be refinanced. Notwithstanding
the foregoing, no amendments, modifications or alterations may be made to any
instrument or agreement evidencing or relating to any Subordinated Debt.

Rentals - as defined in Section 9.2(V) of this Agreement.

Reportable Event - any of the events set forth in Section 4043(b) or (c)
of ERISA requiring that notice be given to the Pension Benefit Guaranty
Corporation.

Required Amount - as defined in Section 9.3(A) of this Agreement.

Restricted Investment - any investment in cash or by delivery of Property
to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following: (a) investments in one or
more Subsidiaries of Borrower; (b) Property to be used in the ordinary course
of business; (c) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries; (d)
investments in direct obligations of the United States of America, or any
agency thereof or obligations guaranteed by the United States of America,
provided that such obligations mature within one year from the date of
acquisition thereof; (e) investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof having
capital surplus and undivided profits aggregating at least $100,000; (f)
investments in commercial paper given the highest rating by a national credit
rating agency and maturing not more than 180 days from the date of creation
thereof; (g) loans or advances to employees of Borrower or its Subsidiaries
which in the aggregate do not exceed $200,000 at any time outstanding; (h)
investments in Account Debtors acquired in exchange for any claim against such
Account Debtors and (i) Permitted Business Acquisitions.

17
<PAGE> 22

Revolving Credit Availability - at any point in time, the excess of the
Borrowing Base over the amount of the Revolving Credit Loans then outstanding.

Revolving Credit Commitment - $48,500,000. Notwithstanding the foregoing,
if the Revolving Credit Commitment is reduced by Borrower in accordance with
Section 2.1(C) hereof, the Revolving Credit Commitment shall thereafter be an
amount equal to the amount of the Revolving Credit Commitment, as reduced in
accordance with Section 2.1(C) hereof.

Revolving Credit Loan - a Loan made by a Lender as provided in Section 2.1
of this Agreement.

Revolving Credit Notes - the Amended and Restated Secured Promissory Notes
(Revolving) dated December 13, 1996, to be executed by Borrower in favor of
each Lender to evidence Borrower's indebtedness to such Lender for its
Revolving Credit Percentage, each of which shall be in the form of Exhibit B
attached hereto, as amended, renewed, modified, extended or restated from time
to time.

Revolving Credit Percentage - as defined in Section 2.1(A) of this
Agreement.

Revolving Portion - as defined in Section 2.1(A) of this Agreement.

Rolling Twelve-Month Period - for any date of determination, the
twelve-month period ending on the last accounting day for the calendar month
immediately preceding such determination date.

Schedule of Accounts - as defined in Section 5.2 of this Agreement.

Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.

Security Documents - the Guaranty Agreement, the Mortgages, the Stock
Pledge Agreement, the Patent Assignment, the Trademark Assignment, the
Copyright Assignment and all other instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations, all as
amended, renewed, modified, extended or restated from time to time.

Solvent - as to any Person, such Person (a) owns Property whose fair
salable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (b) is able to pay all of its
Indebtedness as such Indebtedness matures, and (c) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.

Stock Pledge Agreement - that certain Stock Pledge Agreement dated August
20, 1992, executed by Parent in favor of Collateral Agent by which Parent
granted to Collateral Agent, for

<PAGE> 23

the benefit of Lenders, a first priority security interest in all of the issued
and outstanding shares of capital stock of Borrower, as the same may have been
or may be amended, supplemented or otherwise modified from time to time.

Subject Year - as defined in Section 9.3(A) of this Agreement.

Subordinated Debt - Indebtedness of Borrower that is expressly
subordinated to the Obligations, including, without limitation, the
Indebtedness evidenced by the Mannesmann Renewal Note.

Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.

Successor Collateral Agent - as defined in Section 13.7 of this Agreement.

Successor Lender - as defined in Section 13.7 of this Agreement.

Tax Expense - for any period, the tax expense paid or accrued by a Person
during such period.

Term Loan - the Loan described in Section 2.2 of this Agreement.

Term Loan Percentage - each Lender's percentage of the Term Loan.

Term Notes - the Secured Promissory Notes (Term) to be executed by
Borrower in favor of each Lender to evidence Borrower's Indebtedness to such
Lender for its Term Loan Percentage each of which shall be in the form of
Exhibit C attached hereto, as amended, renewed, modified, extended or restated
from time to time.

Termination Amount - the sum of (a) the principal amount of the Term Loan
then outstanding, plus (b) an amount equal to the sum of the Average Monthly
Loan Balance for each month in the immediately preceding Rolling Twelve-Month
Period divided by twelve (12).

Total Commitment -- $60,500,000, minus the aggregate amount of any
principal payments made on the Term Loan.

Total Commitment Percentage - with respect to each Lender, the percentage
set forth opposite the signature of such Lender on the signature pages hereof.

Trademark Assignment - collectively, that certain Trademark Security
Agreement dated August 20, 1992, and any subsequent Trademark Security
Agreements, executed by Borrower in favor of Collateral Agent, for the benefit
of Lenders, and by which Borrower assigned to Collateral Agent, for the benefit
of Lenders, and granted to Collateral Agent, for the benefit of Lenders, a
security interest in, as security for the Obligations, all of Borrower's right,
title and

<PAGE> 24

interest in and to all of its trademarks, as any of the same may have been or
may be amended, supplemented or otherwise modified from time to time.

Transaction - collectively, the funding of the Loans, the grant of Liens
to Lenders pursuant to the Loan Documents, the issuance of the Notes, the
issuance of the Letters of Credit, the repayment of all Subordinated Debt
existing on the Closing Date other than the Mannesmann Renewal Note, and the
payment of all fees, costs and expenses associated with the foregoing.

Transamerica - as defined in the preamble to this Agreement.

Unfinanced Capital Expenditures - Capital Expenditures (including payments
on Capitalized Lease Obligations) by Borrower to the extent not financed
pursuant to Funded Indebtedness of Borrower (other than the Loans).

Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

Working Capital - at any date means Current Assets minus Current
Liabilities.

1.2. Accounting and Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with that
applied in preparation of the financial statements referred to in Section
9.1(J), and all financial data pursuant to the Agreement shall be prepared in
accordance with such principles. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the
Code to the extent the same are used or defined therein.

1.3. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles, table
of contents and list of exhibits appear as a matter of convenience only and
shall not affect the interpretation of this Agreement. All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including, without limitation, references to any of the Loan
Documents, shall include any and all modifications or amendments thereto and
any and all extensions or renewals thereof.

SECTION 2. CREDIT FACILITY

2.1. Revolving Credit Facility.

(A) Subject to the terms and conditions of this Agreement and the other
Loan Documents, Lenders agree, for so long as no Default or Event of Default
exists, to make Revolving Credit Loans to Borrower, from time to time, as
requested by Borrower in accordance

<PAGE> 25

with the terms of Section 2.4 hereof, up to a maximum principal amount at any
time outstanding equal to the lesser of the Revolving Credit Commitment or the
Borrowing Base at such time, as evidenced by Revolving Credit Notes; provided,
however, that (i) no Lender shall be obligated to make Advances in excess of
such Lender's Total Commitment Percentage of the Revolving Credit Commitment
(the "Revolving Credit Percentage"), and (ii) each Borrowing shall be made
ratably by all Lenders in accordance with their respective Revolving Credit
Percentages. The Revolving Credit Loans shall be made in two components, as
follows: a nonrevolving component comprising the first $8,000,000 of Advances
of the Revolving Credit Loans ("Nonrevolving Portion") and a revolving
component comprising all Advances of the Revolving Credit Loans following the
first $8,000,000 of Advances of the Revolving Credit Loans ("Revolving
Portion"). Collateral Agent shall not make Advances of the Nonrevolving
Portion following the first $8,000,000 of Advances of Revolving Credit Loans,
and payments by Borrower on the Revolving Credit Loans shall be credited to the
Nonrevolving Portion only if the principal balance of the Revolving Credit
Loans is equal to or less than $8,000,000. It is expressly understood and
agreed that Collateral Agent may use the Borrowing Base as a maximum ceiling on
Revolving Credit Loans outstanding to Borrower at any time. If the unpaid
balance of the Revolving Credit Loans should exceed the Borrowing Base, or any
other limitation set forth in this Agreement, such Revolving Credit Loans shall
nevertheless constitute Obligations that are secured by the Collateral and
entitled to all benefits thereof.

(B) Notwithstanding the provisions of Section 2.1(A), Collateral Agent
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Collateral Agent shall reasonably deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under Section 2.1(A), including, without limitation, with
respect to (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the ordinary
course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of
Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against
Borrower's Loan Account as Revolving Credit Loans under any section of this
Agreement; and (v) such other matters, events, conditions or contingencies as
to which Collateral Agent, in its reasonable credit judgment will be exercised
in accordance with its usual and customary practice applied to borrowing base
credits generally, determines reserves should be established from time to time
hereunder.

(C) Borrower may, no more than twice during any twelve-month period, upon
thirty (30) Business Days' prior written notice to the Collateral Agent, reduce
by $1,000,000 or an integral multiple thereof the unborrowed amount of the
Revolving Credit Commitment as in effect on the date of such notice; provided,
however, that in no event may the Revolving Credit Commitment be reduced to an
amount less than $20,000,000 pursuant to this Section 2.1(C). The effective
date of any such reduction shall occur at the end of a monthly period upon
which the fee described in Section 3.2(B) is computed. No reduction of the
Revolving Credit Commitment shall be subject to reinstatement and after a
request for a reduction of the Revolving Credit Commitment, the Revolving
Credit Commitment shall not thereafter increase as a result of principal
payments on the Term Loan.

<PAGE> 26

(D) The Revolving Credit Loans shall be used solely to refinance certain
existing subordinated Indebtedness of Borrower, to facilitate the
recapitalization of Parent (including, without limitation, to finance payments
to minority stockholders of Parent in connection with such recapitalization),
and for general corporate purposes of Borrower, all to the extent not
inconsistent with the provisions of this Agreement.

2.2. Term Loan Facility.

(A) Term Loan. Subject to the terms and conditions of this Agreement,
Lenders agree to make a term loan to Borrower in the aggregate principal amount
of $12,000,000 pursuant to the Term Notes. The Term Loan shall be funded on
the Closing Date. The proceeds of the Term Loan shall be used solely for
purposes for which the proceeds of the Revolving Credit Loans are authorized to
be used.

(B) Mandatory Prepayments.

(i) If Borrower sells any of the Equipment or real Property, or if
any of the Collateral is taken by condemnation, Borrower shall pay to
Collateral Agent, for the accounts of Lenders, unless otherwise agreed by
Lenders, as and when received by Borrower and as a mandatory prepayment
of the Term Loan, an amount equal to the greater of (a) the Net Proceeds
received by Borrower from such sale or condemnation or (b) the value of
such Equipment or real Property as of the Closing Date (according to
Collateral Agent's internal analysis), less the accumulated depreciation
allocated by Collateral Agent to such Equipment or real Property since
the Closing Date, but only to the extent that such amount exceeds, in the
aggregate, $50,000 during any calendar year. Each prepayment required
under this paragraph shall be applied to installments of principal due
under the Term Loan in the inverse order of their maturities.

(ii) Borrower shall pay to Collateral Agent, for the account of
Lenders, and as a mandatory prepayment of the Term Loan, an amount equal
to 25% of Borrower's Excess Cash Flow for each Applicable Test Period
(after giving effect to any Distribution permitted to be made under
Section 9.2(I) hereof on the date such mandatory prepayment is required
to be made under this paragraph). Prepayments of the Term Loan required
under this paragraph shall commence on the first New Preferred Stock
Distribution Date to occur after the Closing Date (i.e., May 1, 1997),
and shall continue to be made on each succeeding New Preferred Stock
Distribution Date until the Term Loan has been paid in full; provided,
however, if, on any date that a prepayment out of Excess Cash Flow would
otherwise be required under this paragraph, either (x) Revolving Credit
Availability after giving effect to such prepayment would be less than
$3,000,000 or (y) average Revolving Credit Availability for the
three-month period ending on such payment date would be less than
$3,000,000, then such prepayment shall be reduced to an amount that would
not deplete either Revolving Credit Availability or average Revolving
Credit Availability for the three-month period ending on such payment
date, as applicable, below $3,000,000. Further, to the extent that,
after giving effect to any prepayment required under this

<PAGE> 27

paragraph, Revolving Credit Availability exceeds $3,000,000, Borrower may
use remaining Excess Cash Flow, if any, for its general corporate
purposes and/or to make Capital Expenditures exceeding the limitations in
Section 9.2(K) hereof. Each prepayment required under this paragraph
shall be applied to installments of principal due under the Term Loan in
the inverse order of their maturities.

(C) Voluntary Prepayments. Borrower may voluntarily prepay the Term Loan,
without premium or penalty except as otherwise provided herein, in whole at any
time or in part from time to time, in each case upon ten days' prior written
notice to Collateral Agent, provided that each such voluntary prepayment shall
be made to Collateral Agent, for the benefit of Lenders, together with accrued
interest on the principal amount so prepaid at the prepayment date. All
partial prepayments pursuant to this Section 2.2(C) shall be applied to
installments of principal due under the Term Loan in the inverse order of their
maturities.

2.3. Letters of Credit. Upon written request made by Borrower and
received by Collateral Agent at least five (5) Business Days prior to the date
upon which a Letter of Credit is requested to be issued, Collateral Agent (on
behalf of Lenders, in accordance with their respective Revolving Credit
Percentages) may, in its sole discretion, issue or cause a Letter of Credit to
be issued for the account of Borrower, provided that the aggregate undrawn
portion of all Letters of Credit outstanding at any time shall not exceed
$5,000,000. Each Letter of Credit shall be issued pursuant to such
documentation as the issuer thereof may require, shall have an expiration date
no more than one (1) year from the date of issuance and shall, upon expiration,
be renewable for an additional period; provided, however, that no Letter of
Credit may have an expiration date that is after the last day of the Original
Term. Advances in respect of Letters of Credit shall be made ratably by each
Lender (or, at Collateral Agent's option, by Collateral Agent on behalf of each
Lender) in accordance with their respective Revolving Credit Percentages, and
all such amounts shall become part of the Obligations and shall be payable on
demand.

2.4. Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 2.1 hereof shall be as follows:

(A) Loan Request. Except as otherwise provided in Section 3.11, a request
for a Revolving Credit Loan shall be made, or shall be deemed to be made, in
the following manner: (i) Borrower may give Collateral Agent notice of its
intention to borrow, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date (which borrowing date may be
the same day if such notice is received by Collateral Agent prior to 11:00 A.M.
(Dallas, Texas time) on a Business Day); (ii) the becoming due of any amount
required to be paid under this Agreement or the Term Notes as interest shall be
deemed irrevocably to be a request for a Revolving Credit Loan on the due date
in the amount required to pay such interest; and (iii) the becoming due of any
other Obligations shall be deemed irrevocably to be a request for a Revolving
Credit Loan on the due date in the amount then so due.

<PAGE> 28

(B) Loan Disbursement. Borrower hereby irrevocably authorizes Collateral
Agent to disburse the proceeds of each Revolving Credit Loan requested, or
deemed to be requested, pursuant to this Section 2.4 as follows: (i) the
proceeds of each Revolving Credit Loan requested under Section 2.4(A)(i) shall
be disbursed by Collateral Agent in lawful money of the United States of
America in immediately available funds, in the case of the initial borrowing,
in accordance with the terms of the written disbursement letter from Borrower,
and in the case of each subsequent borrowing, by wire transfer to such bank
account as may be agreed upon by Borrower and Collateral Agent from time to
time; and (ii) the proceeds of each Revolving Credit Loan requested under
Section 2.4(A)(ii) or (iii) shall be disbursed by Collateral Agent by way of
direct payment of the relevant Obligation.

(C) Settlement. On or about 10:00 A.M. (Dallas, Texas time) on Friday of
each week during the term of this Agreement (or, if any such Friday is not a
Business Day, the next preceding Business Day), Collateral Agent shall notify
each Lender by telephone (confirmed immediately by facsimile or cable),
facsimile or cable of the terms and amount of Borrower's Borrowings during such
week and the amount of such Lender's Revolving Credit Percentage of such
Borrowings. Contemporaneously with the giving of such notice, Collateral Agent
shall deliver to each Lender an analysis of Borrower's Borrowing Base as of the
preceding Business Day. Each Lender shall, before 2:00 P.M. (Dallas, Texas
time) on the day of such notice, deposit with Collateral Agent the amount of
such Lender's Revolving Credit Percentage of such Borrowings in immediately
available funds. In the event of any failure by a Lender to make an Advance
required hereunder, the other Lenders may (but shall not be required to)
purchase (on a pro rata basis, according to their respective Revolving Credit
Percentages) such Lender's Revolving Credit Note. Upon the failure of a Lender
to make an Advance required to be made by it hereunder, Collateral Agent shall
use good faith efforts to obtain one or more banks, acceptable to the Lenders,
to replace such Lender, but neither Collateral Agent nor any other Lender shall
have any liability or obligation whatsoever as a result of the failure to
obtain a replacement for such Lender.

Collateral Agent may assume that each notified Lender will make such
Lender's Revolving Credit Percentage of the Borrowings available to Collateral
Agent in accordance with the terms of this Section 2.4(C) and Collateral Agent
may, in reliance upon such assumption, make available a corresponding amount to
or on behalf of Borrower on the requested date of each Borrowing. If and to
the extent any Lender shall not make its Revolving Credit Percentage of any
Borrowing available to Collateral Agent, Borrower agrees to repay to Collateral
Agent forthwith on demand such corresponding amount. Each Lender shall be
solely responsible for its Revolving Credit Percentage of any Borrowing
hereunder and in no event shall Collateral Agent or any Lender (including
Collateral Agent in its capacity as a Lender) bear any financial risk for the
failure of any other Lender to make an Advance required hereunder.

2.5. All Loans to Constitute One Obligation. All Loans shall constitute
one general obligation of Borrower, and shall be secured by Collateral Agent's
security interest, for the benefit of Lenders, in and Lien upon all of the
Collateral, and by all other security interests and

<PAGE> 29

Liens heretofore, now or at any time or times hereafter granted by Borrower to
Collateral Agent, for the benefit of Lenders to secure the Obligations.

2.6. Loan Account. Collateral Agent shall enter all Loans as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Lenders, and may record therein, in accordance with customary
accounting practice, all charges and expenses properly chargeable to Borrower
and any other Obligation.

SECTION 3. INTEREST, FEES, TERM AND REPAYMENT

3.1. Interest.

(A) Interest. Outstanding principal on the Loans shall bear interest,
calculated daily (computed on the actual number of days elapsed over a year of
360 days), at the following rates (individually called, as applicable, an
"Applicable Annual Rate"): (i) Eurodollar Loans shall bear interest at the
lesser of (a) the Maximum Legal Rate and (b) a rate per annum equal to two and
three-quarters percent (2.75%) above the Eurodollar Base Rate for the
Eurodollar Interest Period applicable thereto, and (ii) all other Loans shall
bear interest at the lesser of (a) the Maximum Legal Rate and (b) a fluctuating
rate per annum equal to one-quarter of one percent (0.25%) above the Base Rate.
Unless Borrower provides a Eurodollar Borrowing Notice to Collateral Agent in
accordance with Section 3.11(A) irrevocably electing that all or a portion of
the Loans are to bear interest at a Eurodollar Base Rate, all Loans shall bear
interest at the lesser of (a) the Maximum Legal Rate and (b) a fluctuating rate
per annum equal to one-quarter of one percent (0.25%) above the Base Rate. All
Base Rate Loans shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective.

(B) Default Rate of Interest. Upon and after the occurrence of an Event
of Default under Sections 11.1(A), 11.1(B) or 11.1(G) or an Event of Default
under Section 11.1(D) hereof to the extent arising due to Borrower's failure to
comply with Sections 5.2, 5.4(B), 9.1(J), 9.1(O), 9.1(P), 9.2(K), 9.2(X) or 9.3
hereof, at Majority Lenders' option, the principal amount of the Loans and
other Obligations shall bear interest, calculated daily (computed on the actual
days elapsed over a year of 360 days), at the lesser of (i) the Maximum Legal
Rate and (ii) two percent (2.00%) above the Applicable Annual Rate or other
applicable rate of interest (a "Default Rate"). If any such Event of Default
exists by reason of Borrower's failure to comply with any of the provisions
hereof and, thereafter, Borrower is again in compliance with such provisions
(e.g., Borrower shall fail to comply with a financial covenant at one point in
time and thereafter Borrower's financial performance improves so that it is
then in compliance with such financial covenant), such Event of Default shall
be deemed cured for purposes of this Section 3.l(B) and interest at the Default
Rate will not be payable by reason of such cured Event of Default.

<PAGE> 30

(C) Maximum Rate of Interest. Notwithstanding the foregoing, (i) if at
any time the amount of interest computed on the basis of an Applicable Annual
Rate or a Default Rate would exceed the amount of such interest computed upon
the basis of the maximum rate of interest permitted by applicable law in effect
from time to time hereafter (the "Maximum Legal Rate"), the interest payable
under this Agreement shall be computed upon the basis of the Maximum Legal
Rate, but any subsequent reduction in such Applicable Annual Rate or Default
Rate, as applicable, shall not reduce such interest thereafter payable
hereunder below the amount computed on the basis of the Maximum Legal Rate
until the aggregate amount of such interest accrued and payable under this
Agreement equals the total amount of interest which would have accrued if such
interest had been at all times computed solely on the basis of an Applicable
Annual Rate or Default Rate, as applicable; and (ii) unless preempted by
federal law, an Applicable Annual Rate or Default Rate, as applicable, from
time to time in effect hereunder may not exceed the "indicated ceiling rate"
from time to time in effect under Tex. Rev. Civ. Stat. Ann. art 5069-1.04(c)
(Vernon 1987). If the applicable law is amended in the future to allow a
greater rate of interest to be charged under this Agreement than is presently
allowed by applicable law, then the limitation of interest hereunder shall be
increased to the maximum rate of interest allowed by applicable law as amended,
which increase shall be effective hereunder on the effective date of such
amendment, and all interest charges owing to Lenders by reason thereof shall be
payable upon demand.

(D) Excess. No agreements, conditions, provisions or stipulations
contained in any Loan Documents or any other instrument, document or agreement
between Borrower, Collateral Agent and/or any Lender, or default of Borrower,
or the exercise by Lenders of the right to accelerate the payment of the
maturity of principal and interest, or to exercise any option whatsoever
contained in any Loan Documents or any other agreement between Borrower,
Collateral Agent and/or any Lender, or the arising of any contingency
whatsoever, shall entitle Collateral Agent or any Lender to contract for,
charge, or receive, in any event, interest exceeding the Maximum Legal Rate.
In no event shall Borrower be obligated to pay interest exceeding such Maximum
Legal Rate and all agreements, conditions or stipulations, if any, which may in
any event or contingency whatsoever operate to bind, obligate or compel
Borrower to pay a rate of interest exceeding the Maximum Legal Rate, shall be
without binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Legal Rate. In the event any interest is
contracted for, charged or received in excess of the Maximum Legal Rate
("Excess"), Borrower acknowledges and stipulates that any such contract,
charge, or receipt shall be the result of an accident and bona fide error, and
that any Excess received by Collateral Agent and/or any Lender shall be
applied, first, to reduce the principal then unpaid hereunder; second, to
reduce the other Obligations; and third, returned to Borrower, it being the
intention of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Borrower recognizes that, with fluctuations in
the Base Rate, the Eurodollar Base Rate and the Maximum Legal Rate, such a
result could inadvertently occur. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Collateral Agent and/or
any Lender, based in whole or in part upon contracting for, charging or
receiving of any interest in excess of the maximum authorized

<PAGE> 31

by applicable law. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by Collateral Agent and/or any
Lender, all interest at any time contracted for, charged or received by
Collateral Agent and/or any Lender in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Agreement.

(E) Incorporation by this Reference. The provisions of Section 3.1(D)
shall be deemed to be incorporated into every document or communication
relating to the Obligations which sets forth or prescribes any account, right
or claim or alleged account, right or claim of Collateral Agent and/or any
Lender with respect to Borrower (or any other obligor in respect of
Obligations), whether or not any provision of Section 3.1(D) is referred to
therein. All such documents and communications and all figures set forth
therein shall, for the sole purpose of computing the extent of the Obligations
and obligations of the Borrower (or other obligor) asserted by Collateral Agent
and/or any Lender thereunder, be automatically recomputed by any Borrower or
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by Section 3.1(D).

3.2. Fees and Charges.

(A) Closing Fee. Borrower shall pay to Collateral Agent, for the benefit
of Lenders in accordance with their respective Total Commitment Percentages, a
closing fee equal to $403,431, which shall be deemed fully earned and
nonrefundable on the Closing Date and shall be paid concurrently with the
execution of this Agreement by Borrower. Such fee shall compensate Lenders for
the costs associated with the structuring, processing, approving and closing of
the transactions contemplated by this Agreement, including, but not limited to,
administrative, out-of-pocket, general overhead and lost opportunity costs, but
not including any expenses for which Borrower has agreed to reimburse Lenders
pursuant to any other provisions of this Agreement or any of the other Loan
Documents, such as, by way of example, legal fees and expenses.

(B) Commitment Fee. Borrower agrees to pay to Collateral Agent, for the
account of Lenders in accordance with their respective Revolving Credit
Percentages, a monthly commitment fee, calculated at a rate equal to one-half
of one percent (0.50%) per annum (calculated on the basis of a year of 360 days
for actual number of days elapsed) of the amount by which the Revolving Credit
Commitment for each Lender for such month exceeds the Average Monthly Loan
Balance for each Lender for such month. Such commitment fee shall be payable
in arrears on the first Business Day of each month, commencing January 2, 1997,
during the term of this Agreement, and upon the termination hereof. In no
event, however, shall any charge be payable (i) for any month for which the
Average Monthly Loan Balance was less than the Revolving Credit Commitment by
reason of Lenders' declining to extend Loans to Borrower in amounts equal to
the Borrowing Base, to the extent of such refusal, or (ii) for any month during
which or after which (x) Lenders accelerate the maturity or demand payment of
the Obligations by reason of the occurrence of any Event of Default or (y)
Lenders or Borrower terminate the Revolving Credit Commitment in accordance
with the terms of this Agreement

<PAGE> 32

(provided that such commitment fee shall be payable until such time as the
Obligations have been paid in full in immediately available funds and all
Letters of Credit have expired, have been terminated or have been confirmed by
another lender).

(C) Letter of Credit Fees. As additional consideration for the issuance
of Letters of Credit for Borrower's account pursuant to Section 2.3 hereof, and
in addition to any other fees customarily charged by the issuer of the Letter
of Credit, Borrower agrees to pay Collateral Agent, for the account of Lenders
in accordance with their respective Revolving Credit Percentages, an amount
equal to two percent (2.00%) per annum of the aggregate face amount of Letters
of Credit outstanding from time to time, which fees shall be deemed fully
earned upon issuance of each Letter of Credit, shall be due and payable on the
first Business Day of each month and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. The foregoing
fee shall be shared by Lenders in accordance with their respective Revolving
Credit Percentages. In the event any draw under a Letter of Credit is made,
the Collateral Agent will so notify the other Lenders and such other Lenders
shall deposit their respective Revolving Credit Percentages of the funded
amount with Collateral Agent, all in accordance with the terms of Section
2.4(C).

(D) Administration Fee. Borrower agrees to pay to Collateral Agent, for
the account of Lenders in accordance with their respective Total Commitment
Percentages, an administration fee, payable in arrears, in equal monthly
installments and on the first Business Day of each month, commencing January 2,
1997, during the term of this Agreement and upon termination hereof. Each such
administration fee shall be in the amount of $4,166.67 per month. Upon demand
therefor by the Collateral Agent, Borrowers shall promptly reimburse Collateral
Agent for all out-of-pocket costs incurred by Collateral Agent in connection
with any and all collateral monitoring functions deemed necessary or
appropriate by Collateral Agent, in its sole discretion.

3.3 Term of Agreement. Subject to Lenders' right to cease making Loans to
Borrower at any time upon or after the occurrence of a Default or Event of
Default, this Agreement shall continue to be in effect through and including
December 12, 1999, provided, however, that if, on or before September 12, 1999,
Lenders receive satisfactory evidence that either (i) the maturity date of the
Mannesmann Renewal Note has been extended pursuant to instruments and documents
in form and substance satisfactory to Lenders to a date not earlier than
December 13, 2001, or (ii) the Indebtedness evidenced by the Mannesmann Renewal
Note has been refinanced with Refinancing Indebtedness having a maturity date
of not earlier than December 13, 2001, the term of this Agreement shall
automatically be extended for an additional two (2) year period through and
including December 12, 2001, provided that no Default or Event of Default
exists as of the date Lenders receive notice of such extension or refinancing
of the Mannesmann Renewal Note (in either such case, the "Original Term").
Lenders' commitment to make Revolving Credit Loans under Section 2.1 hereof
shall terminate, and all Revolving Credit Loans shall be due and payable, on
the last day of the Original Term.

<PAGE> 33

3.4. Early Termination by Borrower.

(A) Upon at least ninety (90) days prior written notice to Collateral
Agent, Borrower may, at its option, voluntarily terminate this Agreement;
provided, however, no such voluntary termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds and all
Letters of Credit have expired, have been terminated or have been confirmed by
another lender.

(B) Unless (i) Lenders are currently charging and have been charging for
at least ninety (90) days the Default Rate or (ii) Lenders request in writing
that Borrower secure financing from other lenders or otherwise make
arrangements to pay all of the Obligations and terminate this Agreement in
accordance with Section 3.4(A) hereof, at the effective date of any voluntary
termination by Borrower, Borrower shall pay to Collateral Agent, for the
benefit of Lenders in accordance with their Total Commitment Percentage (in
addition to the then outstanding principal, accrued interest and other charges
owing under the terms of this Agreement and any of the other Loan Documents),
as liquidated damages for the loss of the bargain and not as a penalty, an
amount equal to (i) three percent (3.0%) of the Termination Amount if such
voluntary termination occur during the first twelve-month period of the
Original Term (December 13, 1996 through December 12, 1997); (ii) two percent
(2.0%) of the Termination Amount if such voluntary termination occurs during
the second twelve-month period of the Original Term (December 13, 1997 through
December 12, 1998); and (iii) one percent (1%) of the Termination Amount if
such voluntary termination occurs during the third or (if applicable) fourth
twelve-month period of the Original Term (December 13, 1998 through December
12, 1999 or December 12, 2000, as the case may be). If termination occurs
during the period from December 13, 2000 through December 12, 2001, no
termination charge shall be payable. In addition, no termination charge shall
be payable if Borrower terminates this Agreement and pays the Obligations in
full in immediately available funds solely utilizing funds raised or received
by Borrower from (i) a public issuance by Borrower of its debt or equity
securities or (ii) a sale of all or substantially all of the capital stock or
assets of Borrower to a Person not an Affiliate of Borrower.

(C) All of the Obligations shall be forthwith due and payable upon any
termination of this Agreement. Except as otherwise expressly provided for in
this Agreement or the other Loan Documents, no termination or cancellation
(regardless of cause or procedure) of this Agreement or any of the other Loan
Documents shall in any way affect or impair the rights, powers or privileges of
Collateral Agent and/or Lenders or the obligations, duties or liabilities of
Borrower, Collateral Agent and/or Lenders in any way relating to (i) any
transaction or event occurring prior to such termination or cancellation or
(ii) any of the undertakings, agreements, covenants, warranties or
representations of Borrower contained in this Agreement or any of the other
Loan Documents. All such undertakings, agreements, covenants, warranties and
representations of Borrower shall survive such termination or cancellation and
Collateral Agent, for the benefit of Lenders, shall retain its Liens in the
Collateral and all of its rights and remedies under this Agreement and the
other Loan Documents notwithstanding such termination or cancellation until all
of the Obligations have been paid in full, in immediately available funds.

<PAGE> 34

(D) It is understood that Borrower may elect to terminate this Agreement
in its entirety only; no section or lending facility may be terminated singly.

3.5. Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.5 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable as follows (provided, however, that whenever any
payment hereunder or under said notes or instruments shall be stated to be due
on a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and interest or any fee, as the case may be, shall
continue to accrue during such extension):

(A) the principal amount of the Term Loan shall be payable by Borrower to
Collateral Agent, for the account of Lenders in accordance with their
respective Term Loan Percentage, on the dates and in the amounts hereinafter
set forth (to be adjusted to account for prepayments of the Term Loan in
accordance with Section 2.2(B) hereof):

(i) commencing on February 1, 1997, and continuing on the first day
of each calendar month thereafter to and including the first day of the
last month of the Original Term, principal payments in the amount of TWO
HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) each; and

(ii) on the last day of the Original Term, all remaining principal,
together with any and all accrued but unpaid interest, shall be due and
payable in full.

Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on the Term Loan shall be due and payable immediately upon the
earliest of (x) the occurrence of any Event of Default in consequence of which
Majority Lenders elect to accelerate the maturity and payment of the Loans or
(y) any termination of this Agreement pursuant to Section 3.4 hereof.

(B) principal payable on account of Revolving Credit Loans made by Lenders
to Borrower pursuant to Section 2.1 of this Agreement shall be payable by
Borrower to Collateral Agent, for the account of Lenders, immediately upon the
earliest of (i) the receipt by the Collateral Agent and/or Lenders or Borrower
of any proceeds of any of the Collateral, to the extent of said proceeds (and
to the extent said proceeds are not applied as a mandatory prepayment of the
Term Loan in accordance with Section 2.2(B) hereof), (ii) the occurrence of an
Event of Default in consequence of which Lenders elect to accelerate the
maturity and payment of such Loans, or (iii) termination of this Agreement
pursuant to Section 3.4 hereof; provided, however, that if the principal
balance of Revolving Credit Loans outstanding at any time shall exceed the
Borrowing Base, Borrower shall, on demand, repay the Revolving Credit Loans in
an amount sufficient to reduce the aggregate unpaid principal amount of such
Revolving Credit Loans by an amount equal to such excess;

<PAGE> 35

(C) interest accrued and unpaid on the Loans shall be due and payable to
Collateral Agent, for the benefit of Lenders, on the earliest of (i) the first
day of each month (for the immediately preceding month), computed through the
last calendar day of the preceding month, (ii) the occurrence of an Event of
Default in consequence of which Lenders elect to accelerate the maturity and
payment of the Obligations or (iii) termination of this Agreement pursuant to
Section 3.4 hereof; provided, however, that Borrower hereby irrevocably
authorizes Collateral Agent, in Collateral Agent's sole discretion, to advance
to Borrower, and to charge to Borrower's Loan Account hereunder as a Revolving
Credit Loan, a sum sufficient each month to pay all interest accrued on the
Obligations during the immediately preceding month;

(D) costs, fees and expenses payable pursuant to this Agreement shall be
payable by Borrower, on demand, to Collateral Agent or to any other Person
designated by Lenders in writing; and

(E) the balance of the Obligations requiring the payment of money, if any,
shall be payable by Borrower to Collateral Agent and/or Lenders as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is earlier.

3.6. Application of Payments and Collections. Upon the occurrence of a
Default or Event of Default and during the continuance thereof, Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Collateral Agent or
any Lender from or on behalf of Borrower, and Borrower does hereby irrevocably
agree that Collateral Agent and Lenders shall have the continuing exclusive
right to apply and reapply any and all such payments and collections received
at any time or times hereafter by Collateral Agent against the Obligations, in
such manner as Collateral Agent may deem advisable, notwithstanding any entry
by Collateral Agent or Lenders upon any of their books and records. If as the
result of collections of Accounts as authorized by Section 5.4 hereof a credit
balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrower, but shall be available to Borrower at any time
or times for so long as no Default or Event of Default exists. In no event
shall such credit balance be applied or be deemed to have been applied as a
prepayment of the Loans unless so requested by Borrower, but Collateral Agent
may offset such credit balance against the Obligations upon or after the
occurrence of an Event of Default.

3.7. Statements of Account. Collateral Agent will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Collateral Agent shall be deemed final,
binding and conclusive upon Borrower and Lenders unless Collateral Agent is
notified by Borrower or any Lender in writing to the contrary within one year
after the date each account is mailed. Such notice shall only be deemed an
objection to those items specifically objected to therein.

3.8. Pro Rata Treatment. Each payment and each prepayment received by
Collateral Agent for the account of Lenders shall be distributed to each Lender
entitled to share in such

<PAGE> 36

payment in accordance with the Term Loan Percentage or the Revolving Credit
Percentage, whichever is applicable, of such Lender. Unless Collateral Agent
shall have received notice from Borrower prior to the date on which any payment
is due to Lenders hereunder that Borrower will not make such payment in full,
Collateral Agent may assume that Borrower has made such payment in full to
Collateral Agent on such date and Collateral Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent Borrower shall
not have so made such payment in full to Collateral Agent, each Lender shall
repay to Collateral Agent forthwith on demand such amount distributed to such
Lender, together with interest thereon for each day from the date such amount
is distributed to such Lender until the date such Lender repays such amount to
Collateral Agent, at the rate applicable to such portion of the Obligations.

3.9. Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) in excess of such Lender's percentage of payments shared pro rata
by all Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such 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 of the total amount recovered. Borrower agrees
that any Lender purchasing a participation from another Lender pursuant to this
Section 3.9 may, to the fullest extent permitted by law, 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 Borrower
in the amount of such participation.

3.10. Cost Protection.

(A) If after the date hereof (i) the FDIC, (ii) Regulation D of the Board
of Governors of the Federal Reserve System ("Regulation D"), (iii) the adoption
of any law, (iv) any change in any law, (v) any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
(vi) compliance by Collateral Agent or any Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency,

(a) shall subject Collateral Agent or any Lender to any tax (other
than any withholding, income or equivalent tax or the rate thereof,
charged by any taxing authority), duty or other charge with respect to
any Loans or the Notes, or shall change the basis of taxation (other than
any withholding, income or equivalent tax or the rate thereof, charged by
any taxing authority) of payments to Collateral Agent or any Lender

<PAGE> 37
of the principal of or interest on any Loans or any other amounts due
under this Agreement;

(b) shall impose, modify or deem applicable any assessment or other
charge (including any assessment for insurance of deposits) against
assets of, deposits with or for the account of, or credit extended by,
Collateral Agent or any Lender;

(c) shall impose, modify or deem applicable any reserve (including
any reserve imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, Collateral
Agent or any Lender; or

(d) shall impose on Collateral Agent or any Lender any other
condition affecting this Agreement, any Loans or the Notes;

and the result of any of the foregoing is to increase the cost to Collateral
Agent or any Lender of making or maintaining any Loans, or Commitment
hereunder, or to reduce the amount of any sum received or receivable by
Collateral Agent or any Lender under this Agreement or under the Notes then,
within ten (10) days after demand by Collateral Agent or any Lender (which
demand shall be made promptly after Collateral Agent or any Lender becomes
aware of such conditions and shall be accompanied by a statement setting forth
the basis of such demand), Borrower shall pay directly to Collateral Agent and
each such Lender such additional amount or amounts (net of any tax savings to
Collateral Agent or such Lender resulting from any of the foregoing) as will
compensate Collateral Agent and each such Lender for that portion of such cost,
increased cost or such reduction which relates to Indebtedness of Borrower.

(B) If Collateral Agent or any Lender shall reasonably determine that the
application or adoption after the date hereof of any law, rule, regulation,
directive, interpretation, treaty or guideline regarding capital adequacy, or
any change therein or in the interpretation or administration thereof after the
date hereof, whether or not having the force of law (including application of
changes to Regulation H and Regulation Y of the Board of Governors of the
Federal Reserve System issued by said Board on January 19, 1989 and regulations
of the Office of the Comptroller of the Currency, 12 CFR Part 3, Appendix A,
issued by said Office on January 27, 1989) increases the amount of capital
required or expected to be maintained by Collateral Agent or such Lender, or
any corporation controlling Collateral Agent or such Lender, and such increase
is based upon the existence of Collateral Agent's or such Lender's obligations
hereunder, by an amount deemed by Collateral Agent or such Lender in its
reasonable discretion to be material, then from time to time, within 10 days
after demand from Collateral Agent or such Lender made promptly after
Collateral Agent or such Lender becomes aware of such conditions, Borrower
shall pay to Collateral Agent or such Lender such amount or amounts (net of any
tax savings to Collateral Agent or such Lender resulting from any of the
foregoing) as will fairly compensate Collateral Agent or such Lender on a good
faith basis for such increased capital requirement. The determination of any
amount to be paid by Borrower under this Section 3.10(B) shall take into
consideration the policies of Collateral Agent and each Lender, or any

<PAGE> 38

corporation controlling Collateral Agent or a Lender, with respect to capital
adequacy and shall be based upon any reasonable averaging, attribution and
allocation methods. A certificate of Collateral Agent or a Lender setting
forth the basis of amount or amounts as shall be necessary to compensate
Collateral Agent or such Lender as specified in this Section 3.10(B) shall be
delivered to Borrower.

(C) If Borrower shall receive notice pursuant to clause (A) or clause (B)
above from Collateral Agent or any Lender, Borrower shall have the right to
replace Collateral Agent or any such Lender with another lender (which lender
shall purchase 100% of the Obligations of the Collateral Agent or the Lender
being replaced, at par) within one hundred eighty (180) days of Borrower's
receipt of such notice.

(D) Collateral Agent and each Lender agrees that from time to time after
it becomes aware of the occurrence of an event or the existence of a condition
described in clause (A) or clause (B) above, it will use reasonable efforts to
notify Borrower of such event or condition and, to the extent not inconsistent
with Collateral Agent's or such Lender's internal policies, will use its best
efforts to make, fund or maintain the Loans of Collateral Agent or such Lender
out of a different lending office or branch if, as a result thereof, the
additional monies or taxes which would otherwise be required to be paid by
Borrower would be reduced and, if determined in good faith by Collateral Agent
or such Lender, the making, funding or maintaining of Loans through such other
lending office or branch would not otherwise materially adversely affect such
Loans, Collateral Agent or Lender.

3.11. Additional Provisions Regarding Eurodollar Loans.

(A) Manner of Borrowing a Eurodollar Loan. Borrower shall give Collateral
Agent notice of its intention to either (i) borrow a Eurodollar Loan or (ii)
designate a portion of the Base Rate Loans to bear interest based upon the
Eurodollar Base Rate, in the form of Exhibit U attached hereto (a "Eurodollar
Borrowing Notice"), in which notice Borrower shall specify (x) the aggregate
amount of such Eurodollar Loan, (y) the requested date of such Eurodollar Loan,
and (z) the Eurodollar Interest Period applicable thereto. Borrower shall give
Agent the Eurodollar Borrowing Notice at least two (2) Business Days prior to
the requested date of the Eurodollar Loan. With respect to such Eurodollar
Loans, (I) each Eurodollar Loan shall be in an integral multiple of $1,000,000,
(II) no more than six (6) Eurodollar Interest Periods may be in existence at
any one time, and (III) Borrower may not request a Eurodollar Loan if there
exists a Default or Event of Default. Borrower shall select Eurodollar
Interest Periods with respect to Eurodollar Loans so that no Eurodollar
Interest Period expires after the end of the Original Term. An outstanding
Revolving Credit Loan may be converted to a Eurodollar Loan at any time subject
to the provisions of this Section 3.11.

(B) Interest on Eurodollar Loans. Each Eurodollar Loan shall bear
interest from and including the first day of the Eurodollar Interest Period
applicable thereto (but not including the last day of such Eurodollar Interest
Period) at the interest rate determined as applicable to such Eurodollar Loan,
but interest on such Eurodollar Loan shall be payable as

<PAGE> 39

provided in Section 3.5(C). If at the end of a Eurodollar Interest Period for
an outstanding Eurodollar Loan, Borrower has failed to deliver to Lender a new
Eurodollar Borrowing Notice with respect to such Eurodollar Loan or to pay such
Eurodollar Loan, then such Eurodollar Loan shall be converted to a Base Rate
Loan, and shall be subject to all other terms and conditions of this Agreement
applicable to Base Rate Loans on and after the last day of such Eurodollar
Interest Period until paid or until the effective date of a new Eurodollar
Borrowing Notice with respect thereto.

(C) Availability of Eurodollar Loans. If Collateral Agent or any Lender
determines that maintenance of any Eurodollar Loans would violate any
applicable law, rule, regulation or directive, whether or not having the force
of law, Collateral Agent shall, upon receipt of notice of such violation,
suspend the availability of Eurodollar Loans and require any Eurodollar Loans
outstanding to be converted to a Base Rate Loan or otherwise repaid; or if
Collateral Agent or any Lender determines that (i) deposits of a type or
maturity appropriate to match fund Eurodollar Loans are not available or (ii)
the Eurodollar Base Rate does not accurately reflect the cost of making a
Eurodollar Loan, then Collateral Agent shall suspend the availability of
Eurodollar Loans after the date it receives notice of any such determination.

(D) Funding Indemnification. If any payment of a Eurodollar Loan occurs
on a date which is not the last day of the applicable Eurodollar Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Loan is not made on the date specified by Borrower because Borrower
has not satisfied the conditions precedent to such Eurodollar Loan contained in
this Agreement or has otherwise breached the terms of this Agreement, BORROWER
WILL INDEMNIFY COLLATERAL AGENT AND LENDERS FOR ANY LOSS OR COST INCURRED BY
THEM RESULTING THEREFROM, INCLUDING WITHOUT LIMITATION ANY LOSS OR COST IN
LIQUIDATING OR EMPLOYING DEPOSITS ACQUIRED TO FUND OR MAINTAIN THE EURODOLLAR
LOAN.

(E) Lender Statements: Survival of Indemnity. Within sixty (60) days of
the date upon which Collateral Agent suspends the availability of Eurodollar
Loans under Section 3.11(C) hereof or learns of any loss or cost for which
Borrower has indemnified Collateral Agent and/or a Lender under Section 3.11(D)
hereof, Collateral Agent and/or such Lender shall deliver a written statement
as to the amount due under Section 3.11(C) or (D). Such written statement
shall set forth in reasonable detail the calculations upon which Collateral
Agent and/or such Lender determined such amount and shall be final, conclusive
and binding on Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurodollar Loan shall
be calculated as though Collateral Agent and/or such Lender funded its
Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurodollar
Base Rate applicable to such Eurodollar Loan whether in fact that is the case
or not. Unless otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by Borrower of the written
statement.

<PAGE> 40

3.12. Yield Protection. If either (i) the adoption of any applicable law,
rule or regulation, 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, or
compliance by a Lender with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
subject Lender to any tax (including without limitation any United States
interest equalization or similar tax, however named), duty or other charge with
respect to any Eurodollar Loan or a Lender's obligation to compute interest on
the principal balance of any Eurodollar Loan at a rate based upon the
Eurodollar Base Rate, or shall change the basis of taxation of payments to a
Lender of the principal of or interest on any Eurodollar Loan or any other
amounts due under this Agreement in respect of any Eurodollar Loan or a
Lender's obligation to compute the interest on the principal balance of any
Eurodollar Loan at a rate based upon the Eurodollar Base Rate, or (ii) any
governmental authority, central bank or other comparable authority shall at any
time impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, a Lender, or shall impose on
a Lender (or its eurodollar lending office) or any relevant interbank
eurodollar market any other condition affecting any Eurodollar Loan or a
Lender's obligation to compute the interest on the principal balance of any
Eurodollar Loan at a rate based upon the Eurodollar Base Rate; and the result
of any of the foregoing is to increase the cost to a Lender of maintaining any
Eurodollar Loans, or to reduce the amount of any sum received or receivable by
a Lender under this Agreement by an amount deemed by such Lender to be
material, then upon demand by such Lender, Borrower shall pay to such Lender
such additional amount or amounts (without duplication of any amounts payable
by Borrower to Collateral Agent or Lenders under Sections 3.10 or 3.11 hereof)
as will compensate such Lender for such increased cost or reduction. Such
Lender will promptly notify Borrower and Collateral Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section 3.11. A certificate of such
Lender claiming compensation under this Section 3.11 and setting forth the
additional amount or amounts to be paid to such Lender hereunder shall be
conclusive in the absence of manifest error.

SECTION 4. COLLATERAL: GENERAL TERMS

4.1. Security Interest in Collateral. To secure the prompt payment and
performance to Lenders of the Obligations, Borrower hereby grants to Collateral
Agent, for the benefit of Lenders, and ratifies and reaffirms its earlier grant
to Collateral Agent, for the benefit of Lenders, of, a continuing security
interest in and Lien upon all Property of Borrower, including all of the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:

(A) Accounts;

(B) Inventory;

36
<PAGE> 41

(D) General Intangibles;

(E) all investment property (as defined in Section 9.115 of the Code);

(F) all monies and other Property of any kind, now or at any time or times
hereafter, in the possession or under the control of Collateral Agent or any
Lender or a bailee of Collateral Agent or any Lender;

(G) all accessions to, substitutions for and all replacements, products
and cash and non-cash proceeds of (A), (B), (C), (D), (E) and (F) above,
including, without limitation, proceeds of and unearned premiums with respect
to insurance policies insuring any of the Collateral; and

(H) all books and records (including, without limitation, customer lists,
credit files, computer programs, print-outs, and other computer materials and
records) of Borrower pertaining to any of (A), (B), (C), (D), (E), (F) or (G)
above.

The security interests in the Collateral are given in renewal, extension
and modification of the security interests previously granted to Collateral
Agent by Borrower; such prior security interests are not extinguished hereby;
and the ranking, perfection and priority of such prior security interests shall
continue in full force and effect.

4.2. Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages upon all
real Property of Borrower described therein. If Borrower shall acquire at any
time or times hereafter any interest in other real Property, Borrower agrees
promptly to execute and deliver to Collateral Agent, as additional security and
Collateral for the Obligations, deeds of trust, security deeds, mortgages or
other collateral assignments reasonably satisfactory in form and substance to
Collateral Agent and its counsel (herein collectively referred to as "New
Mortgages") covering such real Property. The Mortgages and each New Mortgage
shall be duly recorded in each office where such recording is required to
constitute a valid Lien on the real Property covered thereby. Borrower shall
deliver to Collateral Agent, at Borrower's expense, mortgagee title insurance
policies issued by a title insurance company satisfactory to Lenders insuring
Collateral Agent, for the benefit of Lenders, as mortgagee; such policies shall
be in form and substance reasonably satisfactory to Collateral Agent and shall
insure a valid first Lien in favor of Collateral Agent, for the benefit of
Lenders, on the Property covered thereby, subject only to Permitted Liens and
those exceptions acceptable to Collateral Agent and its counsel. Borrower
shall deliver to Collateral Agent such other documents, including, without
limitation, as-built survey prints of the real Property, as Collateral Agent
and its counsel may reasonably request relating to the real Property subject to
the Mortgages.

<PAGE> 42

4.3 Representations, Warranties and Covenants -- Collateral. To induce
Collateral Agent and Lenders to enter into this Agreement, Borrower represents,
warrants, and covenants to Collateral Agent and Lenders:

(A) The Collateral (other than the capital stock of Borrower) is now and,
so long as any of the Obligations are outstanding, will continue to be owned
solely by Borrower. No other Person has or will have any right, title,
interest, claim, or Lien therein, thereof or thereto other than a Permitted
Lien.

(B) Except as specifically consented to in writing by Majority Lenders,
the Liens granted to Collateral Agent, for the benefit of Lenders, shall be
first and prior on the Collateral and as to the Accounts and proceeds,
including insurance proceeds, resulting from the sale, disposition, or loss
thereof. No further action need be taken to perfect the Liens granted to
Collateral Agent, for the benefit of Lenders, other than the filing of
continuation statements under the Code or other applicable law, continued
possession by Collateral Agent, for the benefit of Lenders, of that portion of
the Collateral constituting instruments or documents, the processing of Lien
notations on motor vehicle title certificates, the recording of the Mortgages
and the filing in the applicable federal office of the Patent Assignment,
Trademark Assignment and Copyright Assignment.

(C) All goods evidenced by the Collateral constituting chattel paper,
documents or instruments, the possession of which has been given to Collateral
Agent, are owned by Borrower and the same are free and clear of any prior Lien,
except Permitted Liens. Borrower further warrants and guarantees to the best
of its knowledge the value, quantities, sound condition, grades and qualities
of the goods and services described therein. Borrower shall pay and discharge
when due all taxes, levies, and other charges upon said Collateral and upon the
goods evidenced by any documents constituting Collateral (except and to the
extent that such taxes, levies, and other charges are being actively contested
in good faith and by appropriate proceedings, Borrower maintains adequate
reserves on its books therefor and the nonpayment thereof does not result in a
lien upon any of the Collateral other than a Permitted Lien) and BORROWER SHALL
DEFEND COLLATERAL AGENT AND LENDERS AGAINST AND SAVE EACH OF THEM HARMLESS FROM
ALL CLAIMS OF ANY PERSON WITH RESPECT TO THE COLLATERAL. THIS INDEMNITY SHALL
INCLUDE REASONABLE ATTORNEYS' FEES AND LEGAL EXPENSES.

4.4. Lien Perfection. Borrower agrees to execute the UCC-1 financing
statements provided for by the Code or otherwise together with any and all
other instruments, assignments or documents and shall take such other action as
may be required to perfect or to continue the perfection of Collateral Agent's
security interest, for the benefit of Lenders, in the Collateral, including,
without limitation, the execution at Collateral Agent's request of all
documents reasonably deemed necessary by Collateral Agent to cause Collateral
Agent's Lien, for the benefit of Lenders, to be noted on any motor vehicle
title certificates for motor vehicles forming a part of the Collateral. Unless
prohibited by applicable law, Borrower hereby authorizes Collateral Agent to
execute and file any such financing statement on Borrower's behalf. The

<PAGE> 43

parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.

4.5. Real Property Lien Documentation. Borrower agrees to execute for
Collateral Agent's and Lenders' benefit the Mortgages and such leasehold
mortgages, deeds of trust or other documents evidencing a collateral assignment
of Borrower's interest in the real Property and any additional real Property
now or hereafter owned or leased by Borrower as Collateral Agent may reasonably
request. Such documents shall be recorded, at the expense of Borrower, with
such filing offices as may be required to evidence Collateral Agent's Lien, for
the benefit of Lenders, upon the real Property owned or hereafter acquired by
Borrower.

4.6. Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrower at one or
more of the business locations set forth in Exhibit D and shall not, without
the prior written approval of Collateral Agent, be moved therefrom except,
prior to an Event of Default, for (A) sales of Inventory in the ordinary course
of business; (B) the storage of Inventory at locations within the continental
United States other than those shown on Exhibit D if (i) Borrower gives
Collateral Agent written notice of the new storage location at least thirty
(30) days prior to storing Inventory at such location, (ii) Collateral Agent's
security interest, for the benefit of Lenders, in such Inventory is and
continues to be a duly perfected, first priority Lien thereon, subject only to
Permitted Liens, (iii) neither Borrower's nor Collateral Agent's nor Lenders'
right of entry upon the premises where such Inventory is stored, or its right
to remove the Inventory therefrom, is in any way restricted, except by
operation of law, and (iv) all negotiable documents and receipts in respect of
any Collateral maintained at such premises are promptly delivered to Collateral
Agent; and (C) removals in connection with dispositions of Equipment that are
authorized by Section 7.4 hereof.

4.7. Insurance of Collateral. Borrower agrees to maintain and pay for
insurance upon all Collateral wherever located, in storage or in transit in
vehicles, including goods evidenced by documents, covering casualty, hazard,
flood, public liability and such other risks and in such amounts and with such
insurance companies as shall be reasonably satisfactory to Lenders to insure
Collateral Agent's and Lenders' interest in the Collateral. Borrower shall
deliver the originals of such policies to Collateral Agent with satisfactory
endorsements naming Collateral Agent, for the benefit of Lenders, as loss payee
and as mortgagee pursuant to a standard mortgagee clause. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Collateral Agent in the
event of cancellation of the policy for any reason whatsoever and a clause that
the interest of Collateral Agent and Lenders shall not be impaired or
invalidated by any act or neglect of Borrower or owner of the Property nor by
the occupation of the premises for purposes more hazardous than are permitted
by said policy. If Borrower fails to provide and pay for such insurance,
Collateral Agent may, at Borrower's expense, procure the same, but shall not be
required to do so. Borrower agrees to deliver to Collateral Agent, promptly as
rendered, true copies of all reports made in any reporting forms to insurance
companies. Borrower will maintain, with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including public liability, or
product liability

<PAGE> 44

insurance) and in such amounts as is customary in the business or as otherwise
required by Collateral Agent.

4.8. Protection of Collateral. All insurance expenses and all expenses of
protecting, storing, warehousing, insuring, handling, maintaining and shipping
the Collateral, any and all taxes imposed by any governmental authority on any
Collateral or in respect of the sale thereof shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof when due,
Collateral Agent may, at its option, but shall not be required to, pay the same
and charge the Loan Account therefor. Borrower agrees to reimburse Collateral
Agent promptly therefor with interest accruing thereon daily at the Default
Rate applicable to Base Rate Loans in accordance with Section 3.1(B) hereof.
All sums so paid or incurred by Collateral Agent for any of the foregoing and
all costs and expenses (including reasonable attorneys' fees, legal expenses,
and court costs) which Collateral Agent or any Lender may incur in enforcing or
protecting its Lien on or rights and interest in the Collateral or any of its
rights or remedies under any Loan Document or in respect of any of the
transactions to be had hereunto, together with interest at the Default Rate
applicable to Base Rate Loans, shall be considered Obligations hereunder
secured by all Collateral. Neither Collateral Agent nor any Lender shall be
liable or responsible in any way for the safekeeping of any Collateral or for
any loss or damage thereto (except for reasonable care in the custody thereof
while any Collateral is in Collateral Agent's or any Lender's actual
possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.

4.9. Audits. Lenders shall from time to time as is reasonable under the
circumstances, and upon notification to Borrower, conduct audits of any and all
Collateral and all the books and records of Borrower, and all out-of-pocket
costs of such audits by Lenders shall be reimbursed by Borrower within thirty
(30) days after the notification by Lenders to Borrower of the completion of an
audit.

SECTION 5. PROVISIONS RELATING TO ACCOUNTS

5.1. Representations, Warranties and Covenants. With respect to all
Accounts, Borrower represents and warrants to Collateral Agent and Lenders that
Collateral Agent and Lenders may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts, and, unless otherwise indicated in writing
to Collateral Agent and each Lender, that with respect to each Account:

(A) it is genuine and in all respects what it purports to be, and it is
not evidenced by a judgment;

(B) it arises out of a completed, bona fide sale and delivery of goods or
rendition of services by Borrower in the ordinary course of its business and in
accordance with

<PAGE> 45

the terms and conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between Borrower and the
Account Debtor;

(C) it is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which has been
furnished or is available to Collateral Agent;

(D) such Account, and Collateral Agent's security interest, for the
benefit of Lenders, therein, is not subject to any offset, Lien, deduction,
defense, dispute, counterclaim or any other adverse condition except for
Permitted Liens and disputes resulting in returned goods where the amount in
controversy is deemed by Collateral Agent in its reasonable discretion to be
immaterial, and each such Account is absolutely owing to Borrower and is not
contingent in any respect or for any reason;

(E) Borrower has made no agreement with any Account Debtor thereunder for
any deduction therefrom, except cash discounts taken by the Account Debtor or
allowances which are granted by Borrower in the ordinary course of its business
for prompt payment and which (other than cash discounts) are reflected in the
calculation of the net amount of each respective invoice related thereto;

(F) to the best of Borrower's knowledge, there are no facts, events or
occurrences which materially impair the validity or enforceability thereof or
tend materially to reduce the amount payable thereunder from the face amount of
the invoice and statements delivered to Collateral Agent with respect thereto;

(G) to the best of Borrower's knowledge, the Account Debtor thereunder (i)
is Solvent and (ii) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed; and

(H) Borrower has no knowledge of any fact or circumstance which would
impair the validity or collectability of the Account, and to the best of
Borrower's knowledge there are no proceedings or actions which are threatened
or pending against any Account Debtor thereunder which could reasonably be
expected to result in any material adverse change in such Account Debtor's
financial condition or the collectability of such Account.

5.2. Assignments of Accounts. Upon the occurrence of an Event of Default
and if requested to do so by Collateral Agent in its sole reasonable
discretion, Borrower shall execute and deliver to Collateral Agent formal
written assignments of all of its Accounts daily, together with copies of
invoices or invoice registers related thereto. Borrower shall keep accurate
and complete records of its Accounts and all payments and collections thereon
and, if so requested by the Collateral Agent in its reasonable discretion,
shall submit to Collateral Agent on a daily basis a sales and collections
report for the preceding day, in form satisfactory to Collateral Agent, in its
reasonable discretion. On or before the fifteenth day of each month from and
after the date hereof, each Borrower shall deliver to Collateral Agent, in form
satisfactory to Collateral Agent,

<PAGE> 46

in its reasonable discretion, a detailed aged trial balance of all Accounts
existing as of the last day of the preceding month, specifying the names, face
value and dates of invoices for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Collateral Agent's request therefor,
copies of proof of delivery and the original copy of all documents, including,
without limitation, repayment histories and present status reports relating to
the Accounts so scheduled and such other matters and information relating to
the status of then existing Accounts as Collateral Agent shall reasonably
request.

5.3. Administration of Accounts.

(A) Upon the granting of any discounts, allowances or credits by Borrower
that are not shown on the face of the invoice for the Account involved,
Borrower shall promptly report such discounts, allowances or credits, as the
case may be, to Collateral Agent and in no event later than the time of its
submission to Collateral Agent of the next Schedule of Accounts as provided in
Section 5.2. Upon the occurrence and during the continuation of an Event of
Default, Collateral Agent shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Collateral Agent may deem advisable, and to charge the deficiencies, costs and
expenses thereof, including reasonable attorney's fees, to Borrower.

(B) If an Account includes a charge for any tax payable to any
governmental taxing authority, Collateral Agent is authorized, in its sole
discretion, upon the occurrence and during the continuation of an Event of
Default, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge the Loan Account therefor. Borrower shall
notify Collateral Agent if any Account includes any tax due to any governmental
taxing authority and, in the absence of such notice, Collateral Agent, for the
benefit of Lenders, shall have the right to retain the full proceeds of the
Account and shall not be liable for any taxes to any governmental taxing
authority that may be due by Borrower by reason of the sale and delivery
creating the Account.

(C) Whether or not a Default or an Event of Default has occurred,
Collateral Agent's officers, employees or agents shall have the right, at any
time or times hereafter, in the name of Collateral Agent, any designee of
Collateral Agent or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, telegraph or otherwise.
Borrower shall cooperate fully with Collateral Agent in an effort to facilitate
and promptly conclude any such verification process.

5.4. Collection of Accounts.

(A) To expedite collection, Borrower shall endeavor in the first instance
to make collection of its Accounts for Collateral Agent and Lenders. All
remittances received by Borrower on account of Accounts shall be held as
Lenders' property by Borrower as trustee of an express trust for Lenders'
benefit and Borrower shall promptly deposit same in the Dominion Account.
Collateral Agent shall have the right at any time after the occurrence of an
Event of

<PAGE> 47

Default to notify Account Debtors that Accounts have been assigned to
Collateral Agent and Lenders, and to collect Accounts directly in its own and
Lenders' name and to charge the collection costs and expenses, including
reasonable attorneys' fees, to Borrower. Neither Collateral Agent nor any
Lender has any duty to protect, insure, collect or realize upon the Accounts or
preserve rights in them. For the purpose of computing interest hereunder, all
items of payment received by Collateral Agent shall be deemed applied by
Collateral Agent on account of the Obligations (subject to final payment of
such items) on the same Business Day as the receipt by Collateral Agent of such
items of payment in Chicago, Illinois in immediately available funds, if such
items of payment are received prior to 1:00 P.M. (Chicago, Illinois time) and
on the next Business Day if such items of payment are received after 1:00 P.M.
(Chicago, Illinois time).

(B) Borrower shall deposit all proceeds of the Collateral or cause the
same to be deposited in kind in a Dominion Account pursuant to a lockbox
arrangement with such banks as may be selected by Borrower and be acceptable to
Lenders. Borrower shall issue to any such bank, an irrevocable letter of
instruction directing such banks to deposit all payments or other remittances
received in the lockbox to the Dominion Account for application on account of
the Obligations. All funds deposited in the Dominion Account shall immediately
become the property of Lenders and Borrower shall obtain the agreement by such
banks to waive any offset rights against the funds so deposited. Lender
assumes no responsibility for such lockbox arrangement, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.

5.5. Notice Regarding Disputed Accounts. In the event any amounts due and
owing are in dispute in excess of $50,000 between Borrower and any Account
Debtor, Borrower shall provide Collateral Agent with written notice thereof at
the time of submission of the next Schedule of Accounts, explaining in detail
the reason for the dispute, all claims related thereto and the amount in
controversy.

SECTION 6. PROVISIONS RELATING TO INVENTORY

6.1. Representations, Warranties and Covenants. With respect to
Inventory, Borrower represents and warrants to Lenders and Collateral Agent
that Collateral Agent and Lenders may rely, in determining which items of
Inventory constitute Eligible Inventory, on all statements and representations
made by Borrower with respect to any Inventory and that:

(A) all Inventory is presently and will continue to be located at
Borrower's places of business listed on Exhibit D and will not be removed
therefrom except as authorized by Section 4.6 of this Agreement;

(B) no Inventory is now, nor shall any Inventory at any time or times
hereafter be, stored with a bailee, warehouseman or similar party without
Collateral Agent's prior written consent and, if Collateral Agent gives such
consent, Borrower will concurrently therewith cause any such bailee,
warehouseman, or similar party to issue and deliver to Collateral Agent, in
form

<PAGE> 48

and substance reasonably acceptable to Collateral Agent, warehouse receipts
therefor in Collateral Agent's name for the benefit of Lenders;

(C) no Inventory is or will be consigned to any Person without Collateral
Agent's prior written consent, and, if such consent is given, Borrower shall,
prior to the delivery of any Inventory on consignment, (i) provide Collateral
Agent with all consignment agreements to be used in connection with such
consignment, all of which shall be acceptable to Collateral Agent, (ii)
prepare, execute and file appropriate financing statements with respect to any
consigned Inventory, showing Collateral Agent, for the benefit of Lenders, as
assignee, (iii) conduct a search of all filings made against the consignee in
all jurisdictions in which any consigned Inventory is to be located and deliver
to Collateral Agent copies of the results of all such searches, and (iv)
notify, in writing, all the creditors of the consignee which are or may be
holders of Liens in the Inventory to be consigned that Borrower expects to
deliver certain Inventory to the consignee, all of which Inventory shall be
described in such notice by item or type; and

(D) no Inventory is or will be produced in violation of the Fair Labor
Standards Act.

6.2. Inventory Reports. On or before the fifteenth day of each month from
and after the date hereof, each Borrower shall deliver to Collateral Agent an
Inventory report which shall be in form and detail reasonably satisfactory to
Collateral Agent. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Collateral Agent a report based
on each such physical inventory promptly thereafter, together with such
supporting information as Collateral Agent shall reasonably request.

6.3. Returns of Inventory. If at any time or times hereafter any Account
Debtor returns any Inventory to Borrower the shipment of which generated an
Account on which such Account Debtor is obligated in excess of $50,000,
Borrower shall promptly notify Collateral Agent of the same, specifying the
reason for such return and the location and condition of the returned
Inventory. After the occurrence of an Event of Default, Borrower shall hold
all returned Inventory in trust for each Lender, shall segregate all returned
Inventory from all other Property owned by Borrower or in its possession and
shall conspicuously label such Inventory as the Property of Collateral Agent
and each Lender.

SECTION 7. PROVISIONS RELATING TO EQUIPMENT

7.1. Representations, Warranties and Covenants. With respect to the
Equipment, Borrower represents, warrants and covenants to and with Collateral
Agent and Lenders that:

(A) the Equipment is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted; and

<PAGE> 49

(B) Borrower will not permit any of the Equipment to become affixed to any
real Property leased to Borrower so that an interest arises therein under the
real estate laws of the applicable jurisdiction unless the landlord of such
real Property has executed a landlord waiver or leasehold mortgage in favor of
Collateral Agent, for the benefit of Lenders, and Borrower will not permit any
of the Equipment to become an accession to any personal Property other than
Equipment subject to first priority Liens in favor of Collateral Agent, for the
benefit of Lenders, subject to Permitted Liens.

7.2. Evidence of Ownership of Equipment. Immediately on request therefor
by Collateral Agent, Borrower shall deliver to Collateral Agent any and all
evidence of ownership, if any, of any of the Equipment (including, without
limitation, certificates of title and applications for title, if any).

7.3. Records and Schedules of Equipment. Borrower shall maintain accurate
records itemizing and describing the kind, type, quality, quantity and book
value of its Equipment and all dispositions made in accordance with Section 7.4
hereof, and shall furnish Collateral Agent with a current schedule containing
the foregoing information on at least an annual basis and more often if
reasonably requested by Collateral Agent.

7.4. Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lenders; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (A) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $200,000 or less, provided that all Net Proceeds thereof
are turned over to Collateral Agent, for the account of Lenders, (B) other
dispositions of Equipment with respect to which (i) Borrower either receives
comparable Equipment in exchange therefor or purchases comparable Equipment
within 30 days of such disposition, and (ii) the fair market value of the
Equipment received or purchased equals or exceeds the fair market value of the
Equipment disposed of by Borrower, or (C) replacements of Equipment that is
substantially worn, damaged or obsolete with Equipment of like kind, function
and value, provided that the replacement Equipment shall be acquired prior to,
concurrently with, or within sixty (60) days after any disposition of the
Equipment that is to be replaced, the replacement Equipment shall be free and
clear of Liens other than Permitted Liens, Borrower shall give Collateral Agent
at least five (5) days prior written notice of such disposition and Borrower
shall turn over to Collateral Agent, for the account of Lenders, all Net
Proceeds realized from any such disposition.

SECTION 8. REPRESENTATIONS AND WARRANTIES

8.1. General Representations and Warranties. To induce Collateral Agent
and Lenders to enter into this Agreement and to make Advances hereunder,
Borrower warrants, represents and covenants to Collateral Agent and Lenders as
follows:

<PAGE> 50

(A) Organization and Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; has duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all states and jurisdictions where the
character of its Properties or the nature of its activities make such
qualification necessary and where the failure to be so qualified could
reasonably be expected to cause a Material Adverse Effect; and has not been
known as or used any corporate, fictitious or trade names in the past seven (7)
years, except as disclosed on Exhibit E attached hereto and made a part hereof.

(B) Corporate Power and Authority. Borrower has the right and power and
is duly authorized to enter into, deliver and perform this Agreement and each
of the other Loan Documents to which it is a party. The execution, delivery
and performance of this Agreement and each of the other Loan Documents have
been duly authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the shareholders of Borrower; (ii)
contravene Borrower's charter, articles of incorporation or by-laws; (iii)
violate, or cause Borrower to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award in effect having applicability to Borrower; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower is a party or by which
it or its Properties may be bound or affected which could reasonably be
expected to cause a Material Adverse Effect; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by Borrower.

(C) Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of Borrower enforceable against it in accordance
with their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or by principles of equity pertaining to the
availability of equitable remedies.

(D) Use of Proceeds. Borrower's uses of the proceeds of any Loans
pursuant to this Agreement are, and will continue to be, legal and proper
corporate uses, duly authorized by its Board of Directors, and such uses will
not violate any applicable laws, including, without limitation, the Foreign
Assets Control Regulations, the Foreign Funds Control Regulations and the
Transaction Control Regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended).

(E) Margin Stock. Borrower is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(within the meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loans to Borrower
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or be

<PAGE> 51

used for any purpose which violates or is inconsistent with the provisions of
Regulation G, T, U or X of said Board of Governors.

(F) Governmental Consents. Borrower has, and is in good standing with
respect to, all governmental consents, approvals, authorizations, permits,
certificates, inspections, and franchises necessary to continue to conduct its
business as heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it where the failure so to
have or be could reasonably be expected to cause a Material Adverse Effect.

(G) Patents, Trademarks, Copyrights and Licenses. Borrower owns or
possesses all the patents, trademarks, service marks, trade names, copyrights
and licenses necessary for the present and planned future conduct of its
business without any known conflict with the rights of others. All such
patents, trademarks, service marks, trade names, copyrights, licenses and other
similar rights are listed on Exhibit F attached hereto and made a part hereof.

(H) Capital Structure. Exhibit G attached hereto and made a part hereof
states (i) the correct name of Borrower's Subsidiaries, the jurisdiction of
incorporation and the percentage of Voting Stock owned by Borrower, (ii) the
name of Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary of Borrower, and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower.
Borrower has good title to all of the shares it purports to own of the stock of
each Subsidiary, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
nonassessable. There are not outstanding any options to purchase, or any
rights or warrants to subscribe for, or any commitments or agreements to issue
or sell, or any Securities or obligations convertible into, or any powers of
attorney relating to, shares of the capital stock of Borrower. There are not
outstanding any agreements or instruments binding upon any of Borrower's
shareholders relating to the ownership of its shares of capital stock.

(I) Solvent Financial Condition. Borrower is now and, after giving effect
to the initial Loans to be made hereunder, at all times will be, Solvent.

(J) Restrictions. Borrower is not a party or subject to any contract,
agreement, or charter or other corporate restriction, which could reasonably be
expected to cause a Material Adverse Effect. Borrower is not a party or
subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, other than as set forth on Exhibit H attached hereto, none
of which prohibit the execution of or compliance with this Agreement by
Borrower. Neither Borrower nor any of its Subsidiaries has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its Property, whether now owned or hereafter acquired, to be
subject to a Lien that is not a Permitted Lien.

(K) Litigation. Except as set forth on Exhibit I attached hereto and made
a part hereof, there are no actions, suits, proceedings or investigations
pending, or to the

<PAGE> 52

knowledge of Borrower, threatened, against or affecting Borrower or any of its
Subsidiaries, or the business, operations, Properties, profits or condition of
Borrower or any of its Subsidiaries, in any court or before any governmental
authority or arbitration board or tribunal which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries is in default with respect to any
order, writ, injunction, judgment, decree or rule of any court, governmental
authority or arbitration board or tribunal.

(L) Title to Properties. Borrower and its Subsidiaries each has good and
marketable title to and fee simple ownership of all real Property owned by it
and valid and subsisting leasehold interests in all real Property leased by it,
and good title to all other Property owned by it, in each case, free and clear
of all Liens except Permitted Liens.

(M) Financial Statements; Fiscal Year. The Consolidated and consolidating
balance sheets of Borrower and such other Persons described therein (including
the accounts of all Subsidiaries for the respective periods during which a
Subsidiary relationship existed) as of October 26, 1996, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP (except for changes in application in which Borrower's independent
certified public accountants concur), and present fairly the financial
positions of Borrower and its Subsidiaries at such dates and the results of
Borrower's operations for such periods. Since October 26, 1996, there has been
no material change in the condition, financial or otherwise, of Borrower, its
Subsidiaries and such other Persons as shown on the Consolidated balance sheet
as of such date and no change in the aggregate value of Equipment and real
Property owned by Borrower or its Subsidiaries or such other Persons, except
changes in the ordinary course of business, none of which individually or in
the aggregate has been materially adverse. The fiscal year of Borrower and
each of its Subsidiaries ends on the Saturday closest to December 31 of each
year.

(N) Full Disclosure. The financial statements referred to in Section
8.1(M) above, do not, nor does this Agreement or any other written statement of
Borrower to Collateral Agent and/or any Lender (including, without limitation,
Borrower's filings, if any, with the Securities and Exchange Commission),
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which Borrower has failed to disclose to Collateral Agent or
any Lender which materially affects adversely or, so far as Borrower can now
foresee, will materially affect adversely the Properties, business, prospects,
profits, or condition (financial or otherwise) of Borrower or any of its
Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement.

(O) Pension Plans. Except as disclosed on Exhibit J attached hereto and
made a part hereof, neither Borrower nor any of its Subsidiaries has any Plan.
Neither Borrower nor any of its Subsidiaries has received any notice to the
effect that it is not in full compliance with any of the requirements of ERISA
and the regulations promulgated thereunder. No fact or

<PAGE> 53

situation that could have a Material Adverse Effect (including, but not limited
to, any Reportable Event or Prohibited Transaction) exists in connection with
any Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multi-Employer Plan.

(P) Taxes. Borrower's federal tax identification number is 74-1622891.
Borrower and its Subsidiaries each has filed all federal, state and local tax
returns and other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees and other
governmental charges that are due and payable, except and to the extent that
such taxes, assessments, fees and other governmental charges are being actively
contested in good faith by appropriate proceedings, Borrower maintains adequate
reserves on its books therefor in accordance with GAAP and the nonpayment
thereof will not result in a lien upon any Properties of Borrower other than a
Permitted Lien. The provision for taxes on the books of Borrower and its
Subsidiaries are adequate for all years not closed by applicable statutes, and
for its current fiscal year.

(Q) Labor Relations. Except as described on Exhibit K attached hereto and
made a part hereof, neither Borrower nor any of its Subsidiaries is a party to
any collective bargaining agreement, and there are no material grievances,
disputes or controversies with any union or any other organization of
Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.

(R) Environmental Matters; Compliance With Laws. Except as described in
writing by Borrower to Collateral Agent and Lenders, Borrower's operations and
Properties comply in all material respects with applicable Environmental Laws.
None of Borrower's operations or Properties are subject to any judicial or
administrative proceedings alleging violation of any applicable Environmental
Law, which violation is likely to result in a material obligation to pay money
or other remedial action or order which is likely to have a Material Adverse
Effect. To the best of Borrower's knowledge, none of Borrower's operations or
Properties are the subject of investigation by any governing authority
regarding the improper transportation, storage, disposal, generation or release
into the environment of any Hazardous Waste, the results of which are likely to
have a Material Adverse Effect. Mortgaged Property located in the State of
Indiana contains no facilities which are subject to reporting under Section
313 of the Federal Emergency Planning and Community Right-to-Know Act of 1986
(42 U.S.C. Section 11022), is not the site of any underground storage tanks
for which notification is required under 42 U.S.C. Section 6991a and IND. CODE
Section 13-7-20-13(8)(A), and is not listed on the Comprehensive Environmental
Response, Compensation and Liability Information System in accordance with
Section 116 of the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. With respect to compliance with
laws other than Environmental Laws, Borrower has duly complied in all material
respects with, and its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to Borrower, its Properties or
the conduct of its business and there have been no citations, notices or orders
of noncompliance issued to Borrower or any of its Subsidiaries under any such
law, rule or regulation in each case where the failure so to comply could
reasonably be expected to cause a Material Adverse Effect.

<PAGE> 54

(S) Surety Obligations. On the Closing Date, Borrower is not obligated as
surety or indemnitor under any surety or similar bond or other contract issued
or entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.

(T) No Defaults. Except as described on Exhibit Q attached hereto and
made a part hereof, no event has occurred and no condition exists which would,
upon the execution and delivery of this Agreement or Borrower's performance
hereunder, constitute a Default or an Event of Default. Neither Borrower nor
any of its Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed where such default could
reasonably be expected to cause a Material Adverse Effect.

(U) Brokers. There are no claims for brokerage commissions, finder's fees
or investment banking fees in connection with the transactions contemplated by
this Agreement.

(V) Business Locations; Agent for Process. During the preceding five (5)
year period, Borrower has had no office, place of business or agent for service
of process located in any state or county other than as shown on Exhibit D.

(W) Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of
Borrower, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely
Borrower or prevent Borrower from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.

(X) Leases. Exhibit L attached hereto is a complete listing of all
Capital Leases of Borrower in effect on the Closing Date and Exhibit M attached
hereto is a complete listing of all operating leases of Borrower in effect on
the Closing Date.

(Y) Investment Company Act. Borrower is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.

8.2. Reaffirmation and Survival of Representations. Each request for a
Loan made by Borrower pursuant to this Agreement or any of the other Loan
Documents shall constitute (A) an automatic representation and warranty by
Borrower to Collateral Agent and Lenders that there does not then exist any
Default or Event of Default, and (B) a reaffirmation as of the date of said
request of all of the representations and warranties of Borrower contained in
this Agreement and

<PAGE> 55

the other Loan Documents are true in all material respects, except for any
changes in the nature of Borrower's business or operations that would render
the information contained in any exhibit hereto either inaccurate or
incomplete, so long as Majority Lenders have consented to such changes or such
changes are not prohibited by this Agreement and have been reported by
Borrower. Borrower covenants, warrants and represents to Collateral Agent and
Lenders that all representations and warranties of Borrower contained in this
Agreement or any of the other Loan Documents shall be true at the time of
Borrower's execution of this Agreement and the other Loan Documents, and shall
survive the execution, delivery and acceptance thereof by the parties thereto
and the closing of the transactions described therein or related thereto.

SECTION 9. COVENANTS AND CONTINUING AGREEMENTS

9.1. Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Collateral Agent or any
Lender, Borrower covenants that, unless otherwise consented to by Lenders in
writing, it shall:

(A) Taxes and Liens. Pay and discharge, and cause each Subsidiary to pay
and discharge, all taxes, assessments and governmental charges upon it, its
income and Properties as and when such taxes, assessments and charges are due
and payable, except and to the extent only that such taxes, assessments and
charges are being actively contested in good faith and by appropriate
proceedings, Borrower maintains adequate reserves on its books therefor and the
nonpayment of such taxes, assessments and charges does not result in a Lien
upon any Properties of Borrower other than a Permitted Lien. Borrower shall
also pay and discharge any lawful claims which, if unpaid, could reasonably be
expected to become a Lien against any of Borrower's Properties except for
Permitted Liens.

(B) Tax Returns. File, and cause each Subsidiary to file, all federal,
state and local tax returns and other reports Borrower or such Subsidiary is
required by law to file and maintain adequate reserves for the payment of all
taxes, assessments, governmental charges, and levies imposed upon it, its
income, or its profits, or upon any Property belonging to it.

(C) Payment of Bank Charges. Pay to Collateral Agent and/or Lenders, on
demand, any and all usual and customary fees, costs or expenses which
Collateral Agent or any Lender or any Participating Lender pays to a bank or
other similar institution (including, without limitation, any fees paid by the
Lender to any Participating Lender) arising out of or in connection with (i)
the forwarding to Borrower or any other Person on behalf of Borrower, by any
Lender or any Participating Lender, proceeds of loans made by Lender to
Borrower pursuant to this Agreement and (ii) the depositing for collection, by
Lender or any Participating Lender, of any check or item of payment received or
delivered to Collateral Agent or any Lender or any Participating Lender on
account of the Obligations.

(D) Business and Existence. Except as permitted by Section 9.2(A) hereof,
preserve and maintain, and cause each Subsidiary to preserve and maintain, its
separate corporate existence and all rights, privileges, and franchises in
connection therewith, and maintain, and

<PAGE> 56

cause each Subsidiary to maintain, its qualification and good standing in all
states in which such qualification is necessary and where the failure to do so
could reasonably be expected to cause a Material Adverse Effect.

(E) Maintain Properties. Maintain, and cause each Subsidiary to maintain,
its Properties in good condition and make, and cause each Subsidiary to make,
all necessary renewals, repairs, replacements, additions and improvements
thereto. Borrower shall keep and maintain the Mortgaged Property and any
improvements thereon, in as good repair and condition as the same now is or may
hereafter be put (ordinary wear and tear excepted), shall make all such needful
and proper repairs, replacements, additions and improvements thereto as shall
be necessary for the proper conduct of its business thereon, and shall not
permit or commit waste on any Mortgaged Property. Borrower shall maintain all
Mortgaged Property in a rentable and tenantable state of repair, and will make
or cause to be made, as and when the same shall become necessary, all
structural and non-structural, exterior and interior, ordinary and
extraordinary, foreseen and unforeseen repairs, renewals and replacements
necessary to that end. Borrower shall not permit removal or alteration of
anything which constitutes a material part of any Mortgaged Property without
the consent of Collateral Agent. Borrower shall permit Collateral Agent or its
designee to enter the Mortgaged Property, at any reasonable time, to determine
whether Borrower is in compliance with its obligations under this Agreement.
All construction on the Mortgaged Property shall comply with, and each and
every part of the Mortgaged Property shall be maintained and used in accordance
with, all applicable federal, state and local laws and governmental
regulations, and any lawful private restrictions or other requirements or
provisions, relating to the maintenance or use thereof, except where such
failure of compliance, maintenance or use would have a Material Adverse Effect
on any of the Mortgaged Properties, in which case Borrower shall promptly
disclose to Collateral Agent such failure of compliance, maintenance or use.

Borrower shall have the right, at any time and from time to time, to
remove and dispose of Building Service Equipment which may have become obsolete
or unfit for use or which is no longer useful in the operation of the
improvements now or hereafter constituting a portion of any Mortgaged Property
or in the business conducted thereupon. Borrower agrees promptly to replace
with other Building Service Equipment, free of superior title liens or claims
except as permitted herein, not necessarily of the same character but of at
least equal usefulness and quality, any such Building Service Equipment so
removed or disposed of; except that, if by reason of technological or other
developments in the operation and maintenance of property of the general
character of the Building Service Equipment, no replacement of the property so
removed or disposed of is necessary or desirable in the proper operation or
maintenance of the Mortgaged Property or the business conducted thereupon,
Borrower shall not be required to replace the same.

(F) Compliance with Laws; Environmental Matters. Comply, and cause each
Subsidiary to comply, with all laws, ordinances, governmental rules and
regulations to which it is subject, including, without limitation, all
Environmental Laws, and obtain and keep in force any and all licenses, permits,
franchises, or other governmental authorizations necessary to the

<PAGE> 57

ownership of its Properties or to the conduct of its business, which violation
or failure to obtain could reasonably be expected to cause a Material Adverse
Effect. If Borrower shall (i) receive notice that any violation of any
Environmental Law may have been committed or is about to be committed by
Borrower, (ii) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against Borrower alleging
violations of any Environmental Law or requiring Borrower to take any action in
connection with the release of any Hazardous Waste into the environment, (iii)
receive any notice from a federal, state, or local governmental agency or
private party alleging that Borrower may be liable or responsible for costs
associated with a response to or cleanup of a release of Hazardous Waste into
the environment or any damages caused thereby, (iv) receive any notice that
Borrower is subject to federal, state or local investigation regarding the
release of any Hazardous Waste into the environment, or (v) receive any notice
that any Properties of Borrower are subject to a Lien in favor of any
governmental entity for any liability under Environmental Laws or damages
arising from or costs incurred by such governmental entity in response to a
release of Hazardous Waste into the environment, then Borrower shall promptly
provide Collateral Agent and Lenders with a copy of such notice, and in no
event later than five days from the Borrower's receipt thereof. Within ten
(10) Business Days of Borrower having learned of the enactment or promulgation
of any Environmental Law pertaining specifically to Borrower or Borrower's
industry, Borrower shall provide Collateral Agent and Lenders with notice
thereof.

(G) ERISA Compliance. (i) At all times make timely payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to each Plan; (ii) promptly after the filing thereof, furnish to
Collateral Agent copies of any annual report required to be filed pursuant to
ERISA in connection with each Plan of it and its Affiliates; (iii) notify
Collateral Agent as soon as practicable of any Reportable Event and of any
additional act or condition arising in connection with any Plan which Borrower
believes might constitute grounds for the termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States district court of a trustee to administer the Plan; and (iv) furnish to
Collateral Agent, promptly upon Collateral Agent's request therefor, such
additional information concerning any Plan or any other employee benefit plan
as may be reasonably requested.

(H) Business Records. Keep, and cause each Subsidiary to keep, adequate
records and books of account with respect to its business activities in which
proper entries are made in accordance with GAAP reflecting all its financial
transactions.

(I) Visits and Inspections. Permit representatives of Lenders, from time
to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of Borrower, inspect and
make extracts from its books and records, and discuss with its officers, its
employees and its independent accountants, Borrower's business, assets,
liabilities, financial condition, business prospects and results of operations.

(J) Financial Statements. Cause to be prepared and furnished to
Collateral Agent and each Lender the following (all to be kept and prepared in
accordance with GAAP

<PAGE> 58

applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein and such change is disclosed to Collateral Agent
and each Lender and is consistent with GAAP):

(i) as soon as possible, but not later than ninety (90) days after
the close of each fiscal year of Borrower, unqualified audited financial
statements of Borrower and its Subsidiaries as of the end of such year,
on a consolidated basis, certified by a firm of independent certified
public accountants of recognized national standing or otherwise
acceptable to Lender (except for a qualification for a change in
accounting principles with which the independent public accountant
concurs);

(ii) as soon as possible, but not later than thirty (30) days after
the end of each month hereafter, unaudited interim consolidated financial
statements of Borrower and its Subsidiaries as of the end of such month
and of the portion of Borrower's fiscal year then elapsed, on a
Consolidated basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not
contain notes;

(iii) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements or financial statements which Borrower
has made available to its shareholders and copies of any regular,
periodic and special reports or registration statements which Borrower
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange; and

(iv) such other data and information (financial and otherwise) as
Collateral Agent or Lenders, from time to time, may reasonably request,
bearing upon or related to the Collateral, Borrower's financial condition
or results of operations, including, without limitation, federal income
tax returns of Borrower, bank statements, accounts payable ledgers,
accounts payable agings, account concentration calculations, and such
accounts reconciliations as shall, from time to time, be requested.

Within sixty (60) days after the delivery of the financial statements
described in clause (i) of this Section 9.1(J), Borrower shall forward to
Collateral Agent and each Lender a copy of the accountants' letter to
Borrower's management that is prepared in connection with such financial
statements and also shall cause to be prepared and shall furnish to Collateral
Agent and each Lender a certificate of the aforesaid certified public
accountants calculating, as of such fiscal year-end, Borrower's compliance or
noncompliance with the financial covenants contained in Section 9.2(K) and
Section 9.3 hereof. Concurrently with the delivery of the financial statements
described in clauses (i) and (ii) of this Section 9.1(J), Borrower shall cause
to be prepared and furnished to Collateral Agent and each Lender a certificate
from the Chief Financial Officer of Borrower certifying to Collateral Agent and
each Lender that to the best of his or her knowledge,

<PAGE> 59

Borrower has kept, observed, performed and fulfilled each and every covenant,
obligation and agreement binding upon Borrower in this Agreement and the other
Loan Documents and that no Default or Event of Default has occurred, or, if
such Default or Event of Default has occurred, specifying the nature thereof.

(K) Notices to Collateral Agent and Lenders. Notify Collateral Agent and
each Lender in writing: (i) promptly after Borrower's learning thereof, of the
commencement of any litigation affecting Borrower or any of its Properties,
whether or not the claim is considered by Borrower to be covered by insurance,
and of the institution of any administrative proceeding, in each case where the
same could reasonably be expected to cause a Material Adverse Effect; (ii) at
least fifteen (15) days prior thereto, of Borrower's opening of any new office
or place of business or Borrower's closing of any existing office or place of
business; (iii) promptly after Borrower's learning thereof, of any labor
dispute to which Borrower may become a party, any strikes or walkouts relating
to any of its plants or other facilities, and the expiration of any labor
contract to which it is a party or by which it is bound; (iv) promptly after
Borrower's learning thereof, of any material default by Borrower under any
note, indenture, loan agreement, mortgage, lease, deed, guaranty or other
similar agreement relating to any Indebtedness of Borrower exceeding $100,000;
(v) promptly after the occurrence thereof, of any Default or Event of Default;
(vi) promptly after the occurrence thereof, of any default by any obligor under
any note or other evidence of Indebtedness payable to Borrower in excess of
$100,000; and (vii) promptly after the rendition thereof, of any judgment
rendered against Borrower or any of its Subsidiaries in excess of $100,000 (not
covered by insurance or contested as to such coverage).

(L) Landlord and Storage Agreements. Provide Collateral Agent with copies
of all agreements between Borrower and any landlord or warehouseman which owns
any premises at which any Inventory or other Collateral may, from time to time,
be kept.

(M) Subordinations. Provide Collateral Agent and each Lender with a debt
subordination agreement, in form and substance satisfactory to Lenders,
executed by Borrower and any Person who is an officer, director or Affiliate of
Borrower to whom Borrower is or hereafter becomes indebted for Money Borrowed,
subordinating in right of payment and claim all of such Indebtedness and any
future advances thereon to the full and final payment and performance of the
Obligations.

(N) Further Assurances. At Collateral Agent's request, promptly execute
or cause to be executed and deliver to Collateral Agent any and all documents,
instruments and agreements reasonably deemed necessary by Collateral Agent to
give effect to or carry out the terms or intent of this Agreement or any of the
other Loan Documents.

(O) Compliance Certificate. Concurrently with the delivery of the
financial statements described in clauses (i) and (ii) of Section 9.1(J), cause
the chief financial officer of Borrower to prepare and deliver to Collateral
Agent and each Lender a Compliance Certificate in the form of Exhibit O
attached hereto, with appropriate insertions, unless an Event of Default then
exists, in which event the provisions of Section 9.1(K)(v) shall apply.

<PAGE> 60

(P) Projections. As soon as available, and in any event no later than
thirty (30) days after the end of each fiscal year of Borrower, deliver to
Collateral Agent and each Lender Projections of Borrower for the forthcoming
three (3) years, year by year, and for the forthcoming fiscal year, month by
month.

(Q) Trade Credit. Maintain, at all times, a line of trade credit of not
less than $4,000,000 from Mannesmann or from such other Person or Persons who
supply Borrower with the same types of material currently supplied by
Mannesmann.

(R) Reports Regarding Environmental Plan. Concurrently with the delivery
of financial statements required under Section 9.1(J)(i) hereof for the last
month of each calendar quarter, deliver to Collateral Agent a written report,
in form and detail satisfactory to Collateral Agent, describing (i)
expenditures during such preceding quarter pursuant to the Environmental Plan,
reconciled with the estimated expenditures under the Environmental Plan, (ii)
testing and remediation performed during the preceding quarter, reconciled with
the testing and remediation called for under the Environmental Plan, and (iii)
any changes or other modifications to the Environmental Plan (including,
without limitation, changes to the estimated expenditures, testing, or
remediation called for under the Environmental Plan). Such report shall
contain certifications by an officer of Borrower, to the best of such
officer's knowledge, that, except as theretofore disclosed in writing by
Borrower to Collateral Agent and Lenders, Borrower is then in compliance in all
material respects with applicable Environmental Laws.

(S) Compliance with Environmental Plan and Environmental Laws. Advise all
relevant authorities, as required, of any failure to comply with Environmental
Laws, act in accordance with any requirements and time frames established by
such authorities, and act in a diligent manner to complete within a reasonable
time period all prescribed actions described in the Environmental Plan, as
modified from time to time.

(T) Environmental Compliance and Management Program. In addition to
Borrower's obligations under Sections 9.1(F), 9.1(R) and 9.1(S) hereof,
Borrower agrees to develop internally, and to adopt and implement on or before
December 31, 1996, and thereafter continually maintain an effective, systematic
and comprehensive Environmental Compliance and Management Program (the
"Program") as a means of ensuring that internal systems monitor, achieve and
maintain compliance of Borrower's owned and leased properties and wire mesh and
galvanized wire manufacturing operations with all Environmental Laws and with
all of Borrower's environmental materiality permits. The Program will include
at a minimum: (i) an assessment of the current level of compliance with
Environmental Laws and permits; (ii) a written statement of environmental
policy; (iii) written environmental procedures; (iv) periodic environmental
compliance audits by the Company's internal environmental officer; (v)
company-wide employee training programs; (vi) an employee reporting system for
noncompliances; (vii) management commitment through designation of a high level
officer with responsibility for development, implementation and oversight of
the Program; (viii) adequate financial and staffing resources for development
and implementation of an effective Program;

<PAGE> 61

(ix) systematic and periodic evaluation of Program policies and procedures, and
(x) voluntary disclosure of material environmental violations. Copies of the
Program documentation will be provided to Lenders prior to January 31, 1997.
Concurrently with the delivery of the financial statements required under
Section 9.1(J)(ii) hereof for the last month of each calendar quarter, Borrower
will deliver to Collateral Agent a report describing any instances of
noncompliance with Environmental Laws and actions which have been taken or are
proposed to be taken by Borrower to rectify such noncompliance.

9.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Collateral Agent or any
Lender, Borrower covenants that, unless Lenders have first consented thereto in
writing, it will not:

(A) Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary to merge or consolidate, with any Person, except a
consolidation or merger involving only Borrower and one or more wholly owned
Subsidiaries; nor acquire all or any substantial part of the Properties of any
Person, except Permitted Business Acquisitions and except acquisitions of
Equipment and other capital assets to the extent permitted by Section 9.2(K)
hereof; provided, however, Borrower shall provide Collateral Agent with (i) at
least fifteen (15) days prior written notice of any such Permitted Business
Acquisition, (ii) an opportunity to audit the assets acquired to determine
their eligibility for purposes of Revolving Credit Loans and, (iii) if required
by Collateral Agent, financing statements or other documentation, in form
satisfactory to Collateral Agent, to perfect or continue the perfection of
Collateral Agent's Lien, for the benefit of Lenders.

(B) Loans. Make, or permit any Subsidiary to make, any loans or other
advances of money (other than for salary, bonuses, travel advances, advances
against commissions and other similar advances in the ordinary course of
business) to any Person, including, without limitation, any of Borrower's
Affiliates, officers or employees, except for loans or advances which are
excluded from the definition of Restricted Investments.

(C) Total Indebtedness. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create incur or suffer to exist, any Indebtedness,
except: (i) Obligations owing to Collateral Agent and/or any Lender; (ii)
Subordinated Debt; (iii) Indebtedness of any Subsidiary to Borrower; (iv)
unsecured accounts payable to trade creditors which are incurred in the
ordinary course of business, and which are paid in the ordinary course of
business, or if not paid in the ordinary course of business, where the same are
actively being contested in good faith and by appropriate and lawful
proceedings and Borrower shall have set aside such reserves, if any, with
respect thereto as are required by GAAP and deemed adequate by Borrower and its
independent public accountants; (v) obligations to pay Rentals permitted by
Section 9.2(V); (vi) Purchase Money Indebtedness and Capitalized Lease
Obligations not exceeding an aggregate of $8,000,000 at any time; (vii)
contingent liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of
business; (viii) Indebtedness existing on the Closing Date and described on
Exhibit R attached hereto; (ix) Refinancing Indebtedness; (x) Indebtedness in
respect of taxes, assessments, governmental

<PAGE> 62

charges, claims for labor, materials or supplies, and liabilities under any
Plan, to the extent that payment thereof is not yet due or which are being
contested in good faith by Borrower, and for which adequate reserves are
maintained in accordance with GAAP; (xi) letters of credit issued by Persons
other than Collateral Agent or any Lender, if such letters of credit have been
approved by Collateral Agent and/or Lenders; (xii) surety and appeal bonds;
(xiii) guarantees of any permitted Indebtedness and of any permitted employee
Indebtedness; (xiv) Indebtedness incurred by Borrower to finance insurance
premiums which does not exceed at any time, in the aggregate, $1,000,000; and
(xv) Indebtedness not included in clauses (i) through (xiv) above which does
not exceed at any time, in the aggregate, the sum of $250,000.

(D) Affiliate Transactions. Enter into, or be a party to, or permit any
Subsidiary to enter into or be a party to, any transaction with any Affiliate
or stockholder, except (i) in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms and are no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or stockholder of Borrower or such Subsidiary, (ii) compensation arrangements
permitted under Section 9.2(P) hereof, (iii) the payment of Distributions
permitted by Section 9.2(I), and (iv) the transactions contemplated by the
recapitalization of Parent referred to in Section 2.1(D).

(E) Partnerships or Joint Ventures. Become or agree to become a general
or limited partner in any general or limited partnership or a joint venturer in
any joint venture.

(F) Guaranties. Guarantee, assume, endorse or otherwise, in any way,
become directly or contingently liable with respect to the Indebtedness of any
Person except (i) by endorsement of instruments or items of payment for deposit
or collection, or (ii) as expressly authorized by this Agreement.

(G) Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary to create or suffer to exist, any Lien upon any of its Property,
income or profits, whether now owned or hereafter acquired, except: (i) Liens
at any time granted in favor of Collateral Agent or Lenders; (ii) Liens for
taxes (excluding any Lien imposed pursuant to any of the provisions of ERISA)
not yet due or being contested as permitted by Section 9.1(A) hereof, but only
if in Collateral Agent's reasonable judgment such Lien does not affect
adversely Collateral Agent's or Lenders' rights or the priority of Collateral
Agent's Lien, for the benefit of Lenders, in the Collateral; (iii) Liens
securing the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons for labor, materials, supplies
or rentals incurred in the ordinary course of Borrower's business, but only if
such claims or demands are not yet due or the validity or amount of such claims
or demands are being actively contested in good faith and by appropriate
proceedings and, in any event, only if such Liens have been waived in writing
or are junior to the Liens in favor of Collateral Agent, for the benefit of
Lenders; (iv) Liens resulting from deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance,
social security and other like laws; (v) attachment, judgment and other similar
non-tax Liens arising in connection with court proceedings, but only if and for
so long as the execution or other enforcement of such Liens is and continues to
be

<PAGE> 63

effectively stayed and bonded on appeal in a manner reasonably satisfactory to
Lenders for the full amount thereof, the validity and amount of the claims
secured thereby are being actively contested in good faith and by appropriate
lawful proceedings and such Liens do not, in the aggregate, materially detract
from the value of the Property of Borrower or materially impair the use thereof
in the operation of Borrower's business; (vi) Purchase Money Liens securing
Purchase Money Indebtedness which is not incurred in violation of Section
9.2(C) of this Agreement; (vii) reservations, exceptions, easements, rights of
way, and other similar encumbrances affecting real Property, provided that, in
Lenders' reasonable judgment, they do not in the aggregate materially detract
from the value of said Properties or materially interfere with their use in the
ordinary conduct of Borrower's business; (viii) Liens securing Indebtedness of
a Subsidiary to Borrower or another Subsidiary; (ix) Liens in favor of
Mannesmann created by the Mannesmann Mortgages; (x) Liens in favor of
Mannesmann created pursuant to the Mannesmann Consignment Agreement; (xi) such
other Liens as appear on Exhibit N attached hereto; (xii) Liens associated with
Letters of Credit on goods and documents covered thereby; (xiii) leases,
subleases and licenses; (xiv) Liens for Refinancing Indebtedness; (xv) and such
other Liens as Majority Lenders may hereafter approve in writing.

(H) Subordinated Debt. Make, or permit any Subsidiary to make, any
prepayment of any part or all of any Subordinated Debt; or otherwise
repurchase, redeem or retire any instrument evidencing any such Subordinated
Debt prior to maturity; or enter into any agreement (oral or written) which
could in any way be construed to amend, modify, alter or terminate any one or
more instruments or agreements evidencing or relating to any Subordinated Debt,
other than the payment on the Closing Date of Subordinated Debt in connection
with the recapitalization of Parent referred to in Section 2.1(D).

(I) Distributions. Declare or make, or permit any Subsidiary to declare
or make, any Distributions (other than (i) dividends to Parent to facilitate
repurchases of capital stock of Parent, not to exceed an aggregate of $100,000
during the term of this Agreement, from Persons who will be, or are, no longer
employed by Parent or Borrower, (ii) annual dividends to Parent, not to exceed
an aggregate of $100,000 during the term of this Agreement, to facilitate the
purchase by Parent of life insurance contracts to provide Parent with funds to
honor its monetary obligations under the Put Agreement, and (iii) Distributions
made on the Closing Date in connection with the recapitalization of Parent
referred to in Section 2.1(D)); provided, however, that Borrower may declare
and make Distributions to Parent to enable Parent to pay dividends on the New
Preferred Stock if (i) Revolving Credit Availability on the date of such
Distribution exceeds $4,000,000 after giving effect to such Distribution, (ii)
average Revolving Credit Availability for the three months ending on the date
of such Distribution exceeds $4,000,000 after giving effect to such
Distribution, (iii) no Event of Default exists either before or after giving
effect to such Distribution, (iv) after giving effect to such Distribution,
Borrower has Excess Cash Flow of not less than $0.00 for the Applicable Test
Period, and (v) Borrower has delivered to Collateral Agent a New Preferred
Stock Distribution Compliance Certificate in the form of Exhibit T hereto,
demonstrating that the preceding conditions have been met.

<PAGE> 64

(J) Subsidiaries. Hereafter create or acquire any Subsidiary or divest
itself of any material assets by transferring them to any Subsidiary.

(K) Capital Expenditures. Make Capital Expenditures (including, without
limitation, the annual cash payments in respect of Capital Leases incurred
during the fiscal year in question, but excluding any expenses incurred by
Borrower pursuant to (i) the Environmental Plan which are capitalized or (ii)
Permitted Business Acquisitions) which, in the aggregate, as to Borrower and
its Subsidiaries, exceed $6,000,000 during any fiscal year of Borrower.

(L) Business Locations. Transfer its principal place of business or chief
executive office, or open new manufacturing plants, or maintain warehouses or
records with respect to Accounts or Inventory, to or at any locations other
than those at which the same are presently kept or maintained, as set forth on
Exhibit D hereto, except upon at least fifteen (15) days prior written notice
to Collateral Agent and after the delivery to Collateral Agent of financing
statements, if required by Collateral Agent, in form satisfactory to Collateral
Agent to perfect or continue the perfection of Collateral Agent's Lien, for the
benefit of Lenders.

(M) Change of Business. Engage in any business other than the business in
which any Borrower or any Subsidiary thereof is engaged on the Closing Date and
any other reasonably related businesses.

(N) Disposition of Assets. Sell, lease or otherwise dispose of any of its
Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of Borrower's business, (ii) a transfer of
Property to Borrower by a Subsidiary, or (iii) other dispositions expressly
authorized by this Agreement, including dispositions of Equipment authorized
under Section 7.4 hereof.

(O) Name of Borrower. Use any corporate name (other than its own) or any
fictitious name or "d/b/a" except for the names of individual products or
product lines and the names disclosed on Exhibit E attached hereto, as
supplemented from time to time by Borrower.

(P) Executive Compensation. Permit the total annual compensation
(including, without limitation, salaries, fees, bonuses, commissions and other
payments, whether direct or indirect, in money, or otherwise) of Borrower's
officers, shareholders and directors to exceed the amounts provided or
contemplated by (i) existing written employment agreements, compensation
agreements, benefit agreements, non-competition agreements and similar
agreements (including, without limitation, the Put Agreement), copies of which
have been provided to Lenders, including any revisions thereto considered and
approved in the reasonable judgment of the Board of Directors of Borrower from
time to time and (ii) other employment, compensation and benefit arrangements,
whether written or not, considered and approved in the reasonable judgment of
the Board of Directors of Borrower from time to time.

<PAGE> 65

(Q) Use of Collateral Agent's or a Lender's Name. Without the prior
written consent of Collateral Agent or such Lender, use the name of Collateral
Agent or a Lender or the name of any Affiliates of Collateral Agent or a Lender
in connection with any of Borrower's business or activities, except in
connection with internal business matters, as required in dealings with
governmental agencies and financial institutions and to trade creditors of
Borrower solely for credit reference purposes.

(R) Margin Securities. Own, purchase or acquire (or enter into any
contract to purchase or acquire) any "margin security" as defined by any
regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, Collateral Agent shall have received an
opinion of counsel satisfactory to Lenders to the effect that such purchase or
acquisition will not cause this Agreement to violate Regulations G, T, U or X
or any other regulation of the Federal Reserve Board then in effect.

(S) Restricted Investment. Make or have, or permit any Subsidiary to make
or have, any Restricted Investment.

(T) Fiscal Year. Change, or permit any Subsidiary to change, its fiscal
year, or permit any Subsidiary to have a fiscal year different from that of
Borrower.

(U) Stock of Subsidiary, Etc. Sell or otherwise dispose of any shares of
capital stock of any Subsidiary, except in connection with a transaction
permitted under Section 9.2(A), or permit any Subsidiary to issue any
additional shares of its capital stock except director's qualifying shares and
(ii) shares issued to such Subsidiary's parent.

(V) Leases. Become a lessee under any operating lease (other than a lease
under which Borrower is lessor) of Property if the aggregate Rentals payable
during any current or future period of twelve (12) consecutive months under the
lease in question and all other operating leases under which Borrower is then
lessee would exceed $6,000,000. The term "Rentals" means, as of the date of
determination, all payments characterized as rental expense in the financial
statements of Borrower.

(W) Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than a Subsidiary or Parent.

(X) Mannesmann Renewal Note Payments. Make any payment on the Mannesmann
Renewal Note, except interest payments as scheduled in the Mannesmann Renewal
Note as in effect on the date hereof to the extent permitted by Section 8
thereof.

9.3. Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Collateral Agent or any
Lender, Borrower covenants that, unless otherwise consented to by Lenders in
writing, it shall:

<PAGE> 66

(A) Minimum Adjusted Tangible Net Worth. As of the end of each month
during the periods set forth below, maintain, on a Consolidated basis, Adjusted
Tangible Net Worth of not less than the amount shown below for each period
corresponding thereto:

<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Closing Date through 7/31/97 $27,500,000
8/1/97 through 7/31/98 $32,500,000
8/1/98 through 7/31/99 $37,500,000
8/1/99 through 7/31/00 $42,500,000
8/1/00 through 7/31/01 $47,500,000
8/1/01 and thereafter $52,500,000
</TABLE>

(B) Maximum Leverage Ratio. As of the end of each month during the term
hereof, maintain, on a Consolidated basis, a ratio of (i) total Indebtedness to
(ii) Adjusted Tangible Net Worth of not more than the ratio shown below for the
month corresponding thereto:

<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Closing Date through 10/31/97 4.00 to 1.0
11/1/97 through 10/31/98 3.25 to 1.0
11/1/98 through 10/31/99 3.00 to 1.0
11/1/99 through 10/31/00 2.50 to 1.0
11/1/00 through 10/31/01 2.25 to 1.0
11/1/01 and thereafter 2.00 to 1.0
</TABLE>

(C) Minimum Adjusted Earnings From Operations. Maintain, on a
Consolidated basis, Adjusted Earnings From Operations of not less than the
amount set forth below for each Rolling Twelve-Month Period ending during the
corresponding periods set forth below:

<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Closing Date through 12/31/97 $22,500,000
1/1/98 through 12/31/98 $23,500,000
1/1/99 through 12/31/99 $24,500,000
1/1/00 through 12/31/00 $25,500,000
1/1/01 and thereafter $26,500,000
</TABLE>

(D) Fixed Charge Ratio. Maintain, on a Consolidated basis, a Fixed Charge
Ratio for Borrower of not less than the ratio set forth below for each Rolling
Twelve-Month Period ending during the corresponding periods set forth below:

<PAGE> 67

<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Closing Date through 4/30/97 1.25 to 1.0
5/1/97 through 10/31/97 1.10 to 1.0
11/1/97 through 10/31/99 1.00 to 1.0
11/1/99 through 10/31/00 1.05 to 1.0
11/1/00 and thereafter 1.10 to 1.0
</TABLE>

(E) Current Ratio. As of the end of each month during the term hereof,
maintain, on a Consolidated basis, a ratio of Current Assets to Current
Liabilities of not less than 1.0 to 1.0.

(F) Accounts Payable. As of the end of each month during the term hereof,
maintain an Accounts Payable Turnover of not more than sixty (60) days.

(G) Minimum Stockholders' Equity. Maintain, on a Consolidated basis, at
all times during the periods set forth below, a sum of (i) Stockholders' equity
(as defined in accordance with GAAP) and (ii) Indebtedness ranking junior in
right of payment to the Mannesmann Renewal Note, of not less than the amount
set forth below during the periods corresponding thereto:

<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Closing Date through 12/31/97 $27,500,000
1/1/98 and thereafter $33,000,000
</TABLE>

SECTION 10. CONDITIONS PRECEDENT

Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Collateral
Agent and Lenders under the other sections of this Agreement, it is understood
and agreed that Lenders shall be under no obligation to make Loans under
Section 2 of this Agreement unless and until each of the following conditions
has been and continues to be satisfied, all in form and substance satisfactory
to Collateral Agent and its counsel:

10.1. Documentation. Collateral Agent shall have received the following:

(A) certified copies of Borrower's casualty insurance policies, together
with endorsements naming Collateral Agent and Lenders as loss payee and as
mortgagee pursuant to a standard mortgagee clause, and certified copies of
Borrower's liability insurance policies, together with endorsements naming
Collateral Agent, for the benefit of Lenders, as co-insureds thereunder;

(B) copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Collateral Agent, for the benefit of Lenders, in the
Collateral and evidence that such Liens constitute valid and perfected security
interests and that the Liens of Collateral Agent, for the benefit of Lenders,
are prior to all other Liens in the Collateral, except for Permitted Liens;

<PAGE> 68

(C) landlord or warehouseman agreements with respect to all premises
leased by Borrower and which are disclosed on Exhibit P attached hereto;

(D) a copy of the Certificate of Incorporation of Borrower, and all
amendments thereto, certified within fifteen (15) days before the Closing Date
by the Secretary of State or other appropriate official of its jurisdiction of
incorporation;

(E) a copy of the bylaws of Borrower, and all amendments thereto,
certified as of the Closing Date by the Secretary of the Borrower;

(F) good standing certificates for Borrower, issued within fifteen (15)
days before the Closing Date by the Secretary of State or other appropriate
official of Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of Borrower's business activities or the ownership of its
Properties necessitates qualification;

(G) a closing certificate signed by the Chief Financial Officer of
Borrower dated the Closing Date, stating that (i) the representations and
warranties set forth in Section 8 hereof are true and correct on and as of such
date, (ii) Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement, (iii) on such date no Default or Event
of Default has occurred or is continuing and (iv) all conditions contained in
Section 10 hereof have been satisfied;

(H) a closing certificate signed by the Chief Financial Officer of the
Guarantor dated the Closing Date, stating that (i) the representations and
warranties set forth in Section 8.1 hereof are true and correct on and as of
such date; and (ii) on such date no Default or Event of Default has occurred or
is continuing.

(I) a stock certificate representing 252,000 shares of common stock of
Borrower owned by Parent, together with a stock power duly executed in blank;

(J) this Agreement and the other Loan Documents duly executed and
delivered by the parties thereto;

(K) the favorable, written opinion of Baker & Botts, L.L.P., counsel to
Borrower and Guarantor, regarding Borrower, Guarantor, the Loan Documents and
the transactions contemplated by the Loan Documents;

(L) fully paid mortgagee title insurance policies (or binding commitments
to issue title insurance policies, marked to Collateral Agent's satisfaction to
evidence the form of such policies to be delivered after the Closing Date), or
applicable endorsements to policies issued in connection with the Original Loan
Agreement, in form and substance reasonably acceptable to Majority Lenders,
issued by a title insurance company satisfactory to Collateral Agent, each in
an amount equal to not less than the fair market value of the real Property or

<PAGE> 69

leasehold interest, as the case may be, subject to the respective Mortgage,
insuring the Mortgages, as modified in connection with this Agreement, to
create a valid Lien on all real Property and valid Liens on the leasehold
interest described therein with no exceptions which Collateral Agent shall not
have approved in writing and no survey exceptions;

(M) a survey with respect to each parcel of real Property comprising a
part of the Collateral, which survey shall indicate the following: (i) an
accurate metes and bounds or lot, block and parcel description of such
Property; (ii) the correct location of all building, structures and other
improvements on such Property, including, without limitation, all streets,
easements, rights of way and utility lines; (iii) the location of ingress and
egress from such Property, and the location of any setback or other building
lines affecting such Property; and (iv) a certification by a registered land
surveyor, certifying to the accuracy and completeness of such survey and to
such other matters relating to such real Property and survey as Collateral
Agent shall require;

(N) written instructions from Borrower directing the application of
proceeds of the initial Loan made pursuant to this Agreement;

(O) a duly executed agreement establishing the Dominion Account with a
financial institution acceptable to Collateral Agent for the collection or
servicing of the Accounts;

(P) Phase I and Phase II hazardous waste and environmental audits, upon
which Lenders are expressly entitled to rely, from Blasland, Bouck & Lee
Engineers, P.C., or other firm satisfactory to Lenders, stating such firm's
(i) opinion as to Borrower's compliance with all Environmental Laws with
respect to all of Borrower's real Property, and (ii) estimation of costs
required to place Borrower in compliance with all Environmental Laws with
respect to all of Borrowers' real Property, together with a detailed plan
prepared by Borrower and acceptable to Lenders addressing the manner in which
Borrower intends to rectify any noncompliance with Environmental Laws
identified by such firm (the "Environmental Plan");

(Q) the Mannesmann Note shall have been amended, modified, extended and/or
restated on terms satisfactory to Lenders and their counsel, in their sole
discretion;

(R) ratifications of subordination agreements executed by Mannesmann, in
form and substance satisfactory to Lenders and their counsel, evidencing that
the Mortgages, as modified in connection with this Agreement, continue to
constitute first priority liens on the real Property covered by the Mannesmann
Mortgages;

(S) such certificates and documents reflecting that the Borrower is and
will be Solvent, after giving effect to the transactions contemplated by this
Agreement, as Majority Lenders shall find acceptable, including, without
limitation, pro forma balance sheets, forecasted financial statements
consisting of balance sheets, income statements and cash flow statements for
Borrower covering at least the four-year period commencing on the Closing Date,
prepared by Borrower showing that it is Solvent; and

<PAGE> 70

(U) a modification of each Mortgage in form and substance satisfactory to
Lenders reflecting the transactions contemplated hereby; and

(T) such other documents and information as Collateral Agent or Lenders
shall reasonably request.

10.2. Other Conditions. The following conditions have been and shall
continue to be satisfied:

(A) no Default or Event of Default shall exist;

(B) since October 26, l996, there shall not have occurred any material
adverse change in the business, financial condition or results of operations of
Borrower, or the existence or value of any Collateral, or any event, condition
or state of facts which would reasonably be expected materially and adversely
to affect the business, financial condition or results of operations of
Borrower;

(C) no action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain
damages in respect of, or which is related to or arises out of this Agreement
or the consummation of the transactions contemplated hereby or which, in
Lenders' reasonable judgment, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents;

(D) Borrower shall have paid all expenses of Collateral Agent and each
Lender pursuant to any invoices presented to Borrower related to the
negotiation, preparation and execution of the Loan Documents, including,
without limitation, attorneys' fees;

(E) All representations and warranties made by Borrower to Collateral
Agent and/or Lenders in the Loan Documents shall be true and correct in all
material respects as if made on the date of the request for a Borrowing
hereunder, except for changes in Borrower's business or operations that would
render the information inaccurate or incomplete, so long as Majority Lenders
have consented to such changes or such changes are not prohibited by this
Agreement and have been reported by Borrower;

(F) After giving effect to the Transaction, the Borrowing Base shall
exceed the amount of Revolving Loans to be made on the Closing Date by at least
$3,000,000, and Borrower shall have provided a Funding Date Borrowing Base
Certificate in the form of Exhibit S attached hereto to the foregoing effect;

(G) Borrower shall have paid to Lenders the first installment of the
annual administrative fee required by Section 3.2(D) of this Agreement; and

<PAGE> 71

(H) Borrower shall have paid to Lenders the closing fee required by
Section 3.2(A) of this Agreement.

SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

11.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":

(A) Payment of Notes. Borrower shall fail to pay any installment of
principal, interest or premium, if any, owing on any Note.

(B) Payment of Other Obligations. Borrower shall fail to pay any of the
Obligations that are not evidenced by the Notes on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise).

(C) Misrepresentations. Any warranty, representation, or other statement
made or furnished to Collateral Agent and/or Lenders by or on behalf of
Borrower or Guarantor or in any instrument, certificate or financial statement
furnished in compliance with or in reference to this Agreement or any of the
other Loan Documents proves to have been false or misleading in any material
respect when made or furnished and the result thereof causes a Material Adverse
Effect.

(D) Breach of Covenants. Borrower shall fail or neglect to perform, keep
or observe (i) any covenant contained in Sections 4.3, 4.4, 4.5, 4.6, 5.2,
5.4(B), 9.1(A), 9.1(F), 9.1(J), 9.1(O), 9.2 or 9.3 of this Agreement or (ii)
any other covenant, term, condition or agreement contained in this Agreement or
any other Loan Document (other than a covenant a default in the performance or
observance of which is dealt with specifically elsewhere in this Section 11.1)
and the breach of such other covenant, term, condition or agreement is not
cured to Lenders' satisfaction within 30 days after the sooner to occur of
Borrower's receipt of notice of such breach from Collateral Agent on behalf of
Lenders or the date on which such failure or neglect becomes known to any
officer of Borrower.

(E) Other Defaults. There shall occur any default or event of default on
the part of Borrower (including specifically, but without limitation, due to
nonpayment) under any agreement, document or instrument to which Borrower is a
party or by which Borrower or any of its Property is bound, creating or
relating to any Indebtedness for Money Borrowed (other than the Obligations)
having a principal amount individually or in the aggregate in excess of
$250,000, if the payment or maturity of such Indebtedness is accelerated in
consequence of such event of default or demand for payment of such Indebtedness
is made.

(F) Adverse Changes. There shall occur any material adverse change in the
financial condition or business prospects of Borrower or Guarantor and Majority
Lenders have provided written notice thereof to Borrower.

<PAGE> 72

(G) Insolvency, etc. Borrower or Guarantor shall cease to be Solvent or
shall suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of creditors, or any
petition for an order for relief shall be filed by or against Borrower or
Guarantor under the Bankruptcy Code (if against Borrower or Guarantor, the
continuation of such proceeding for more than 60 days), or Borrower or any
Guarantor shall make any offer of settlement, extension or composition to their
respective unsecured creditors generally.

(H) Business Disruption; Condemnation. There shall occur a cessation of a
substantial part of the business of Borrower for a period which significantly
affects Borrower's capacity to continue its business, on a profitable basis; or
Borrower suffers the loss or revocation of any license or permit now held or
hereafter acquired by Borrower which is necessary to the continued or lawful
operation of its business; or Borrower is enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its business affairs; or any material lease or agreement
pursuant to which Borrower leases, uses or occupies any Property is canceled or
terminated prior to the expiration of its stated term and is not replaced by a
comparable Lease or agreement within thirty (30) days after such cancellation
or termination; or any part of the Collateral is taken through condemnation or
the value of such Property is impaired through condemnation and any loss
resulting from such taking or impairment is not fully covered by insurance.

(I) Change of Ownership. Parent shall cease to own and control,
beneficially and of record, all of the issued and outstanding capital stock of
Borrower.

(J) ERISA. A Reportable Event shall occur which Lenders shall determine
in good faith constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or if any Plan shall be
terminated or any such trustee shall be requested or appointed, or if Borrower
is in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multi-Employer Plan resulting from Borrower's complete or partial
withdrawal from such Plan.

(K) Litigation. Borrower or Guarantor, or any Affiliate of either, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Collateral Agent, for the benefit of Lenders.

(L) Repudiation of or Default Under Guaranty Agreement. Guarantor shall
revoke or attempt to revoke the Guaranty Agreement signed by Guarantor, or
shall repudiate Guarantor's liability thereunder or shall be in default under
the terms thereof.

(M) Criminal Forfeiture. Borrower or Guarantor shall be convicted under
any criminal law that could lead to a forfeiture of any Property of Borrower or
any Guarantor.

<PAGE> 73

(N) Judgments. Any money judgment in excess of $500,000, or any writ of
attachment or similar process is entered or filed against Borrower or any of
its Property and results in the creation or imposition of any Lien securing an
amount in excess of $500,000 that is not a Permitted Lien.

(O) Environmental Matters. Borrower shall (a)(i) become obligated to pay
in excess of $1,500,000 for damages, costs or remedial actions arising from
Borrower's compliance with the Environmental Plan, and (ii) fail to secure
adequate financing from Persons other than Lenders to pay for all such excess
damages, costs or remedial actions, or (b) fail to comply with any material
portion of the Environmental Plan.

(P) Change of Ownership of Parent. (i) CitiVent and its affiliates shall
at any time in the aggregate own, directly or indirectly less than eighty
percent (80%) of the outstanding common stock of Parent owned by CitiVent and
its Affiliates, in the aggregate, on the Closing Date, or (ii) Parent issues or
sells its capital stock to any Person other than CitiVent or its Affiliates
resulting in the ownership by such Person of more than fifty percent (50%) of
the outstanding capital stock of Parent, determined on the basis of either
economic interest or voting power.

11.2. Acceleration of the Obligations. Without in any way limiting the
right of Collateral Agent and/or Lenders to demand payment of any portion of
the Obligations payable on demand in accordance with Section 3.5(C) and Section
3.5(D) hereof, upon and at any time after the occurrence of an Event of Default
(other than an Event of Default under Section 11.1(G) hereof), all or any
portion of the Obligations due or to become due from Borrower to Collateral
Agent and/or any Lender shall, at Majority Lenders' option (or in the case of
an Event of Default under Section 11.1(G) hereof, immediately upon the
occurrence thereof), become at once due and payable without presentment,
demand, protest, notice of dishonor, notice of default, notice of intent to
accelerate, notice of acceleration, or any other notice whatsoever, and
Borrower shall forthwith pay to Collateral Agent, for the account of Lenders,
in addition to any and all sums and charges due, the entire principal of and
interest accrued on the Obligations thereto. If, prior to the time that
Collateral Agent, on behalf of Lenders, shall have commenced to exercise
remedies under Section 11.3 hereof, all Events of Default that existed by
reason of Borrower's failure to comply with any of the provisions hereof would
cease to exist if measured at a later date by reason of Borrower then being in
compliance with such provisions (e.g., the example set forth in the last
sentence of Section 3.1(B) hereof) such Events of Default shall be deemed cured
for all purposes of this Agreement and any acceleration of the Obligations
shall be rescinded.

11.3. Remedies. Upon and after the occurrence of an Event of Default,
Collateral Agent on behalf of Lenders shall have and may exercise from time to
time the following rights and remedies:

(A) All of the rights and remedies of a secured party under the Code or
under other applicable law, and all other legal and equitable rights to which
Collateral Agent or any

<PAGE> 74

Lender may be entitled, all of which rights and remedies shall be cumulative,
and none of which shall be exclusive, and shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Loan
Documents.

(B) The right to take immediate possession of the Collateral, and (i) to
require Borrower to assemble the Collateral, at Borrower's expense, and make it
available to Collateral Agent at a place designated by Collateral Agent which
is reasonably convenient to both parties, and (ii) to enter any of the premises
of Borrower or wherever any of the Collateral shall be located, and to keep and
store the same on said premises until sold (and if said premises be the
Property of Borrower, Borrower agrees not to charge Collateral Agent for
storage thereof).

(C) The right to sell or otherwise dispose of all or any Inventory or
Equipment in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as
Collateral Agent, in its discretion, may deem advisable. Borrower agrees that
ten days written notice to Borrower of any public or private sale or other
disposition of any Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Collateral Agent may designate in said notice.
Collateral Agent shall have the right to conduct such sales on Borrower's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with applicable law. Collateral Agent shall have the right
to sell, lease or otherwise dispose of any Collateral, or any part thereof, for
cash, credit or any combination thereof, and Collateral Agent or any Lender may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may set-off
the amount of such price against the Obligations.

(D) Collateral Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Collateral Agent's and Lenders'
benefit.

(E) The proceeds realized from the sale of any Collateral may be applied,
after allowing two Business Days for collection, first to the costs, expenses
and reasonable attorneys' fees incurred by Collateral Agent in collecting the
Obligations, in enforcing Collateral Agent's and Lenders' rights under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any of the Collateral;
second, to interest due upon any of the Obligations; third, to the principal of
the Obligations; and fourth, any surplus of such proceeds shall be paid over to
Borrower to the extent permitted by applicable law. If any deficiency shall
arise, Borrower and Guarantor shall remain jointly and severally liable to
Collateral Agent and Lenders therefor.

(F) With respect to the undrawn portion of all Letters of Credit issued
and then outstanding, Collateral Agent may, at its option, require Borrower to
deposit with Collateral Agent funds equal to such face amount, and if Borrower
fails to promptly make such deposit,

<PAGE> 75

Collateral Agent may advance such amount as a Revolving Credit Loan. Any such
deposit or advance shall be held by Collateral Agent as a reserve to fund
future drawings against such Letters of Credit. At such time as all Letters of
Credit have been drawn upon or expired, any amounts remaining in such reserve
shall be applied against any outstanding Obligations, or to the extent all
Obligations have been indefeasibly paid in full, returned to Borrower.

11.4. Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Collateral Agent and/or any Lender or contained in
any other agreement between Borrower, Collateral Agent and/or any Lender
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or delay
of Collateral Agent or any Lender to exercise or enforce any rights, Liens,
powers or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
Liens, rights, powers and remedies, but all such Liens, rights, powers, and
remedies shall continue in full force and effect until all Loans and all other
Obligations shall have been fully satisfied. All Liens, rights, powers, and
remedies herein provided for are cumulative and none are exclusive.

SECTION 12. THE COLLATERAL AGENT

12.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Collateral Agent to take such action on its behalf and
to exercise such powers under the Loan Documents as are delegated to Collateral
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto. With respect to its Commitment, the Advances made by it,
and the Notes issued to it, Collateral Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not Collateral Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include the Collateral Agent in its
capacity as a Lender. The Collateral Agent and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, Borrower and its Affiliates, and any
Person which may do business with Borrower or its Affiliates, all as if
Collateral Agent were not Collateral Agent hereunder and without any duty to
account therefor to Lenders.

12.2. Note Holders. Collateral Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed with
it signed by such payee and in form satisfactory to Collateral Agent.

12.3. Consultation with Counsel. Lenders agree that Collateral Agent may
consult with legal counsel selected by it and shall not be liable for any
action taken or suffered in good faith by it in accordance with the reasonable
advice of such counsel.

<PAGE> 76

12.4. Documents. Collateral Agent shall not be under a duty to examine or
pass upon the validity, effectiveness, enforceability, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto or in connection therewith, and Collateral Agent shall be
entitled to assume that the same are valid, effective, enforceable and genuine
and what they purport to be.

12.5. Resignation or Removal of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
the Collateral Agent may resign at any time by giving written notice thereof to
Lenders and Borrower and the Collateral Agent may be removed at any time with
or without cause by any number of Lenders whose Total Commitment Percentages
total at least fifty-one percent (51%). Upon any such resignation or removal,
Lenders shall have the right to appoint a successor Collateral Agent reasonably
acceptable to Borrower. If no successor Collateral Agent shall have been so
appointed by Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Collateral Agent's giving of notice of resignation
or Lenders' removal of the retiring Collateral Agent, then the retiring
Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral
Agent reasonably acceptable to Borrower. Upon the acceptance by any Person of
any appointment as successor Collateral Agent hereunder, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Section 12 shall continue
in effect for its benefit with respect to any actions taken or omitted to be
taken by it while it was acting as Collateral Agent.

12.6. Responsibility of Collateral Agent. It is expressly understood and
agreed that the obligations of Collateral Agent under the Loan Documents are
only those expressly set forth in the Loan Documents and that Collateral Agent
shall be entitled to assume that no Default or Event of Default has occurred
and is continuing, unless Collateral Agent has actual knowledge of such fact or
has received notice from Borrower or a Lender that a Default or an Event of
Default has occurred and is continuing and specifying the nature thereof.
Neither Collateral Agent nor any of its directors, officers or employees shall
be liable for any action taken or omitted to be taken by it under or in
connection with the Loan Documents, except for its own gross negligence or
willful misconduct. Collateral Agent shall incur no liability under or in
respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything which it may do or refrain from doing in the reasonable exercise of
its judgment or discretion, or which may seem to it to be necessary or
desirable in the premises.

Collateral Agent shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in
any certificate or other document referred to or provided for in, or received
by any Lender under, this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any document
referred to or provided for herein or for any failure by Borrower to perform
any of its obligations hereunder. Collateral Agent may employ agents and
attorneys-in-fact and shall not

<PAGE> 77

be answerable, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.

The relationship between Collateral Agent and each of the Lenders is only
that of agent and principal and has no fiduciary aspects. Nothing in this
Agreement or elsewhere contained shall be construed to impose on Collateral
Agent any duties or responsibilities other than those for which express
provision is herein made. In performing its duties and functions hereunder,
Collateral Agent does not assume and shall not be deemed to have assumed, and
hereby expressly disclaims, any obligation or responsibility toward or any
relationship of agency or trust with or for Borrower. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), Collateral Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Lenders and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that
Collateral Agent shall not be required to take any action which exposes
Collateral Agent to personal liability or which is contrary to this Agreement
or applicable law.

12.7. Notices of Event of Default. In the event that Collateral Agent
shall have acquired actual knowledge of any Event of Default or of an event
which, with the giving of notice or the lapse of time, or both, would
constitute an Event of Default, Collateral Agent shall promptly give notice
thereof to the Lenders.

12.8. Independent Investigation. Each of the Lenders severally represents
and warrants to Collateral Agent that it has made its own independent
investigation and assessment of the financial condition and affairs of the
Borrower in connection with the making and continuation of its participation in
the Loans hereunder and has not relied exclusively on any information provided
to such Lender by Collateral Agent in connection herewith, and each Lender
represents, warrants and undertakes to Collateral Agent that it shall continue
to make its own independent appraisal of the creditworthiness of Borrower while
the Loans are outstanding or its Commitment hereunder is in force.

12.9. INDEMNIFICATION. LENDERS AGREE TO INDEMNIFY COLLATERAL AGENT (TO
THE EXTENT NOT REIMBURSED BY BORROWER), RATABLY ACCORDING TO THEIR TOTAL
COMMITMENT PERCENTAGES, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST COLLATERAL AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY COLLATERAL
AGENT UNDER THE LOAN DOCUMENTS, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,

<PAGE> 78

PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
RESULTING FROM COLLATERAL AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

12.10. Benefit of Section 12. The agreements contained in Section 12
hereof are solely for the benefit of Collateral Agent and Lenders, and are not
for the benefit of, or to be relied upon by, Borrower, or any third party.

SECTION 13. MISCELLANEOUS

13.1. Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Collateral Agent (and all Persons designated by
Collateral Agent) as Borrower's true and lawful attorney (and agent-in-fact)
and Collateral Agent, or Collateral Agent's agent, may, without notice to
Borrower and in either Borrower's or Collateral Agent's name, but at the cost
and expense of Borrower:

(A) At such time or times upon or after the occurrence and during the
continuance of an Event of Default, Collateral Agent or its agent may endorse
Borrower's name on any checks, notes, acceptances, drafts, money orders or any
other evidence of payment or proceeds of the Collateral which come into the
possession of Collateral Agent or any Lender or under Collateral Agent's or any
Lenders' control; and

(B) At such time or times upon or after the occurrence and during the
continuance of an Event of Default as Collateral Agent or its agent may
determine: (i) demand and enforce payment of the Accounts by legal proceedings
or otherwise and exercise generally all of Borrower's rights and remedies with
respect to the collection of the Accounts; (ii) settle, adjust, compromise,
discharge or release any of the Accounts or other Collateral or any legal
proceedings brought to collect any of the Accounts or other Collateral; (iii)
prepare, file and sign Borrower's name to a proof of claim in bankruptcy or
similar document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in connection with any
of the Collateral; (iv) receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Collateral Agent may designate; (v) endorse the name
of Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Lenders on account of the
Obligations; (vi) endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight bill, bill of lading or similar document
or agreement relating to the Accounts, Inventory and any other Collateral;
(vii) use Borrower's stationery and sign the name of Borrower to verifications
of the Accounts and notices thereof to Account Debtors; (viii) make and adjust
claims under policies of insurance; and (ix) do all other acts and things
necessary, in Collateral Agent's determination, to fulfill Borrower's
obligations under this Agreement.

13.2. INDEMNITY. BORROWER HEREBY AGREES TO INDEMNIFY COLLATERAL AGENT AND
LENDERS AND HOLD COLLATERAL AGENT AND

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LENDERS HARMLESS FROM AND AGAINST ANY LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR
PROCEEDING EVER SUFFERED OR INCURRED BY COLLATERAL AGENT OR ANY LENDER AS THE
RESULT OF BORROWER'S FAILURE TO OBSERVE, PERFORM OR DISCHARGE BORROWER'S DUTIES
HEREUNDER EXCEPT WHERE SUCH FAILURE RESULTED FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PERSON INDEMNIFIED HEREUNDER. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THIS INDEMNITY SHALL EXTEND TO ANY CLAIMS ASSERTED
AGAINST COLLATERAL AGENT OR ANY LENDER BY ANY PERSON UNDER ANY ENVIRONMENTAL
LAWS OR SIMILAR LAWS BY REASON OF BORROWER'S OR ANY OTHER PERSON'S FAILURE TO
COMPLY WITH LAWS APPLICABLE TO THE MANUFACTURE, PROCESSING, DISTRIBUTION, USE,
TREATMENT, HANDLING, STORAGE, DISPOSAL OR TRANSPORTATION OF ANY HAZARDOUS WASTE
ON, TO OR FROM ANY OF BORROWER'S PROPERTIES OR BY REASON OF THE PRESENCE OR
RELEASE OF ANY HAZARDOUS WASTE ON OR FROM ANY OF BORROWER'S PROPERTIES.
NOTWITHSTANDING ANY CONTRARY PROVISION IN THIS AGREEMENT, THE OBLIGATION OF
BORROWER UNDER THIS SECTION 13.2 SHALL SURVIVE THE PAYMENT IN FULL OF THE
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.

13.3. Modification of Agreement. All modifications, consents, amendments
or waivers of any provision of any Loan Document, or consent to any departure
by Borrower therefrom, shall be effective only if the same shall be in writing
and concurred in by Majority Lenders, and then shall be effective only in the
specific instance and for the purpose for which given.

13.4. Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
Collateral Agent or Lenders employ counsel for advice or other representation,
or incurs legal expenses or other costs or out-of-pocket expenses in
connection with: (A) the negotiation and preparation of this Agreement or any
of the other Loan Documents, any amendment of or modification of this Agreement
or any of the other Loan Documents (other than in connection with the sale or
attempted sale of any interest herein to a Participating Lender); (B) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Collateral Agent, any Lender, Borrower or any other Person) in any way relating
to the Collateral, this Agreement or any of the other Loan Documents or
Borrower's affairs (other than any litigation, contest, dispute, suit,
proceeding or action initiated by any Lender against any other Lender); (C) any
attempt to enforce any rights of Collateral Agent, any Lender or any
Participating Lender against Borrower or any other Person which may be
obligated to Collateral Agent or any Lender by virtue of this Agreement or any
of the other Loan Documents, including, without limitation, the Account
Debtors; or (D) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then, in any such event, the reasonable attorneys' fees arising
from such services and all out-of-pocket expenses, costs, charges and other
fees of such counsel or of Collateral Agent or relating to any of the events or
actions described in this Section 13.4 shall be due and payable, on demand, by

<PAGE> 80

Borrower to Collateral Agent, such Lender or such Participating Lender, as the
case may be, and shall be additional Obligations hereunder secured by the
Collateral; provided, however, that Lenders may retain the services of only one
law firm for each of the events or actions described in this Section 13.4.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; and expenses for out-of-town travel, lodging and food paid or incurred
in connection with the performance of such legal services. Additionally, if
any taxes (excluding taxes imposed upon or measured by the net income of
Collateral Agent or any Lender) shall be payable on account of the execution or
delivery of this Agreement, or the execution, delivery, issuance or recording
of any of the other Loan Documents, or the creation of any of the Obligations
hereunder, by reason of any existing or hereafter enacted federal or state
statute, Borrower will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold Collateral Agent
and/or Lenders harmless from and against liability in connection therewith.

13.5. Indulgences Not Waivers. Collateral Agent's and Lenders' failure,
at any time or times hereafter, to require strict performance by Borrower of
any provision of the Loan Documents shall not waive, affect or diminish any
right of Collateral Agent or any Lender thereafter to demand strict compliance
and performance therewith. Any suspension or waiver by Collateral Agent or
Lenders of an Event of Default by Borrower under any Loan Documents shall not
suspend, waive or affect any other Event of Default by Borrower under any Loan
Documents, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in any Loan Documents and
no Event of Default by Borrower under any Loan Documents shall be deemed to
have been suspended or waived by Collateral Agent and/or Lenders, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Collateral Agent
and directed to Borrower.

13.6. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

13.7. Successors and Assigns; Participations by Lenders. This Agreement
and the other Loan Documents shall be binding upon and inure to the benefit of
the successors and assigns of Borrower, Collateral Agent and Lenders; provided,
however, that Borrower may not sell, assign or transfer any interest in the
Loan Documents, or any portion thereof, including, without limitation,
Borrower's rights, title, interests, remedies, powers and duties hereunder or
thereunder. Any purported assignment by Borrower in violation of this Section
13.7 shall be void, without Collateral Agent's prior written consent. Borrower
hereby consents to Collateral Agent's and/or Lenders' participation, sale,
assignment, transfer or any other disposition, at any

<PAGE> 81

time or times hereafter, of the Loan Documents or any Obligations held by such
Person, or of any portion thereof, including, without limitation, Collateral
Agent's and Lenders' rights, title, interests, remedies, powers, and duties
hereunder or thereunder; provided, however, any such participant, purchaser,
assignee or transferee (a "Successor Lender" or a "Successor Collateral
Agent"), other than a purchaser, assignee or transferee of one hundred percent
(l00%) of the interest hereunder of Fleet or Transamerica, shall be reasonably
acceptable to Borrower. The participating, selling, assigning or transferring
Lender or Collateral Agent shall promptly notify Borrower in writing of the
proposed Successor Lender or Successor Collateral Agent and within ten (10)
days of Borrower's receipt thereof, Borrower shall notify such Lender or
Collateral Agent in writing of any reason(s) it disapproves of such Successor
Lender or Successor Collateral Agent. Borrower shall be deemed to have
approved of such Successor Lender or Successor Collateral Agent in the event it
fails to so respond within such five (5) day period. In the case of an
assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would have if it were the original
"Collateral Agent" or "Lender" (as the case may be) hereunder and such
Collateral Agent or Lender (as the case may be) shall be relieved of all
obligations hereunder upon any such assignment. In the case of a
participation, each Participating Lender shall be entitled to receive all
information received by Lenders regarding the creditworthiness of Borrower,
including, without limitation, information required to be disclosed to a
participant pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by
the Comptroller of the Currency (whether such Participating Lender is subject
to the circular or not). All costs incurred by a Lender in connection with the
sale or attempted sale of any interest herein to a Participating Lender shall
be paid by such Lender and not by Borrower.

13.8. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.5 of
this Agreement and except as otherwise provided in any of the other Loan
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the Other Agreements or the Security
Documents, the provision contained in this Agreement shall govern and control.

13.9. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument.

13.10. Notice. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon a party hereto shall be in writing,
and shall be deemed to have been validly served, given or delivered (A) if sent
by certified or registered mail against receipt, three (3) Business Days after
deposit in the mail, postage prepaid, or, if earlier, when delivered against
receipt, (B) if sent by telegraphic notice, when delivered to the telegraph
company, or (C) if sent by any other method, upon actual delivery, in each case
addressed as follows:

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If to Collateral Agent: Fleet Capital Corporation
2711 North Haskell
Suite 2100, LB 21
Dallas, Texas 75204
Attention: Loan Administration
Manager

w/ a courtesy copy to: Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attention: Larry A. Makel

If to Borrower: MMI Products, Inc.
515 W. Greens Road, Suite 710
Houston, Texas 77067
Attention: President

w/a courtesy copy to: Baker & Botts, L.L.P.
2001 Ross Avenue, Suite 700
Dallas, Texas 75201
Attention: Michael A. Saslaw, Esq.

If to Lenders: Fleet Capital Corporation
2711 North Haskell
Suite 2100, LB 21
Dallas, Texas 75204
Attention: Loan Administration
Manager

Transamerica Business Credit Corporation
Two Ravinia Road, Suite 700
Atlanta, Georgia 30346
Attention: T.W. Harris

or to such other address as each party may designate for itself by like notice
given in accordance with this Section 13.10; provided, however, that any
notice, request or demand to or upon Collateral Agent pursuant to Section 2.4
and Section 3.4 shall not be effective until received by Collateral Agent.

13.11. Collateral Agent's or Lenders' Consent. Whenever Collateral
Agent's or Lenders' consent is required to be obtained under any Loan Documents
as a condition to any action, inaction, condition or event, Collateral Agent or
Lenders shall be authorized to give or withhold such consent in its sole and
absolute discretion (unless otherwise expressly provided herein) and

<PAGE> 83

to condition its consent upon the giving of additional collateral security for
the Obligations, the payment of money or any other matter.

13.12. Time of Essence. Time is of the essence with respect to each of
the Loan Documents and payment and performance of the obligations thereunder.

13.13. Entire Agreement. The Loan Documents embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.

13.14. Interpretation. No provision in any of the Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party
having or being deemed to have structured, drafted or dictated such provision.

13.15. Nonapplicability of Article 5069-15.01 et seq. Borrower and
Lenders hereby agree that, except for Section 15.10(b) thereof, the provisions
of Tex. Rev. Civ. Stat. Ann. art. 5069-15.01 et seq. (Vernon 1987) (regulating
certain revolving credit loans and revolving tri-party accounts) shall not
apply to this Agreement or any of the other Loan Documents.

13.16. No Preservation or Marshaling. Borrower agrees that neither
Collateral Agent nor any Lender shall have any obligation to preserve rights to
the Collateral against prior parties or to marshal any Collateral for the
benefit of any Person.

13.17. GOVERNING LAW; CONSENT TO FORUM. THE LOAN DOCUMENTS HAVE BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
COLLATERAL AGENT'S AND LENDERS' LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT
OF COLLATERAL AGENT'S AND LENDERS' OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWER, COLLATERAL AGENT OR ANY LENDER, BORROWER HEREBY CONSENTS AND AGREES
THAT THE DISTRICT COURT OF DALLAS, TEXAS, OR, AT COLLATERAL AGENT'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND COLLATERAL AGENT OR ANY LENDER PERTAINING TO THE LOAN DOCUMENTS OR
TO ANY MATTER ARISING OUT OF OR RELATED THERETO. BORROWER EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO

<PAGE> 84

SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENT AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF COLLATERAL AGENT OR ANY LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY COLLATERAL AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED
IN SUCH FORUM OR THE TAKING OF ANY ACTION TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.

13.18. WAIVERS BY BORROWER. BORROWER WAIVES (A) THE RIGHT TO TRIAL BY
JURY (WHICH COLLATERAL AGENT AND LENDERS HEREBY ALSO WAIVE) IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY
OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (B) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT,
INTENT TO ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
COLLATERAL AGENT AND LENDERS ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER COLLATERAL AGENT OR ANY LENDER MAY DO IN
THIS REGARD; (C) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL
OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
COLLATERAL AGENT OR ANY LENDER TO EXERCISE ANY OF COLLATERAL AGENT'S OR
LENDERS' REMEDIES; (D) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; (E) ANY RIGHT BORROWER MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS
TO REQUIRE COLLATERAL AGENT AND/OR ANY LENDER TO TERMINATE ITS SECURITY
INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF BORROWER UNTIL
TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS AND THE EXECUTION BY
BORROWER, AND BY ANY PERSON WHOSE LOANS TO BORROWER IS USED IN WHOLE OR IN PART
TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING COLLATERAL AGENT AND

<PAGE> 85

LENDERS FROM ANY LOSS OR DAMAGE WHICH ANY OF THEM MAY INCUR AS THE RESULT OF
DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY COLLATERAL AGENT OR ANY
LENDER FROM BORROWER OR ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS; AND
(F) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO COLLATERAL AGENT'S AND LENDERS' ENTERING
INTO THIS AGREEMENT AND THAT COLLATERAL AGENT AND LENDERS ARE RELYING UPON THE
FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL
COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13.19. WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS UNDER
THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ.
BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF EACH BORROWER'S OWN
SELECTION, EACH BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. EACH BORROWER
EXPRESSLY WARRANTS AND REPRESENTS THAT SUCH BORROWER (A) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER, AND (B) HAS
BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

BORROWER HAS READ AND UNDERSTANDS

SECTION 13.19: RNT (INITIALS)

13.20. ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

13.21. RELEASE. BORROWER ACKNOWLEDGES AND AGREES THAT (A) IT HAS NO
CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE ORIGINAL AGREEMENT
AND THE OTHER ORIGINAL AGREEMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS
THEREUNDER, OR (B) IF IT HAS ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS
OR DEFENSES TO THE ORIGINAL LOAN DOCUMENTS AND/OR ANY TRANSACTION RELATED TO
THE ORIGINAL LOAN DOCUMENTS, SAME ARE HEREBY WAIVED, RELINQUISHED AND RELEASED

<PAGE> 86

IN CONSIDERATION OF EACH LENDER'S EXECUTION AND DELIVERY OF THIS AGREEMENT.

13.22 AMENDMENT, RESTATEMENT, RENEWAL AND EXTENSION. THIS AGREEMENT IS
GIVEN IN AMENDMENT, RESTATEMENT, RENEWAL AND EXTENSION (BUT NOT IN NOTATION) OF
THE ORIGINAL LOAN AGREEMENT AND THE OTHER ORIGINAL AGREEMENTS. BORROWER HEREBY
AGREES THAT, WITH RESPECT TO MATTERS RELATING TO THE PERIOD PRIOR TO THE DATE
HEREOF, ALL PROVISIONS OF THE ORIGINAL LOAN AGREEMENT AND THE OTHER ORIGINAL
AGREEMENTS ARE HEREBY RATIFIED AND CONFIRMED AND SHALL REMAIN IN FULL FORCE AND
EFFECT.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

<PAGE> 87

IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning hereof.

BORROWER

MMI PRODUCTS, INC.

By: /s/ ROBERT N. TENCZAR
---------------------------------
Robert N. Tenczar,
Chief Financial Officer

COLLATERAL AGENT

FLEET CAPITAL CORPORATION
as Collateral Agent

By: /s/ JOY L. BARTHOLOMEW
---------------------------------
Joy L. Bartholomew,
Vice President

TOTAL COMMITMENT
PERCENTAGE ON CLOSING DATE LENDERS

50% FLEET CAPITAL CORPORATION

By: /s/ JOY L. BARTHOLOMEW
---------------------------------
Joy L. Bartholomew,
Vice President

50% TRANSAMERICA BUSINESS CREDIT
CORPORATION

By: /s/ JEFFREY S. CARBERY
---------------------------------
Jeffrey S. Carbery,
Senior Account Executive

AGGREGATE TOTAL
COMMITMENT PERCENTAGES: 100%

<PAGE> 88

Exhibits

<TABLE>
<S> <C>
A - Mortgaged Properties
B - Form of Revolving Credit Note
C - Form of Term Note
D - Borrower's Business Locations
E - Corporate Names
F - Patent, Trademarks, Copyrights & License
G - Capital Structure
H - Contracts Restricting Borrower's Right to Incur Debt
I - Litigation
J - Pension Plans
K - Labor Contracts
L - Capital Leases
M - Operating Leases
N - Permitted Liens
O - Form of Monthly Compliance Certificate
P - Property Subject to Landlord or Warehouseman Agreements
Q - Defaults
R - Indebtedness
S - Funding Date Borrowing Base Certificate
T - Form of New Preferred Stock Distribution Compliance Certificate
U - Form of Eurodollar Borrowing Notice
</TABLE>

<PAGE> 89

EXHIBIT A

MORTGAGED PROPERTY

1. 12482 E. Putnam, Whittier, Los Angeles County, California

2. 3050 Melson, Jacksonville, Duval County, Florida

3. 5110 Santa Fe Road, Tampa, Hillsborough County, Florida

4. 71347 County Rd. #23, New Paris, Elkhart County, Indiana

5. Fowler Street Extension, Westfield, Hampden County, Massachusetts

6. Fanjoy Rd., Route 15, Box 194, Statesville, Iredell County, North
Carolina

7. 6931 Clinton Dr., Houston, Harris County, Texas

8. 4901 Langley Rd., Houston, Harris County, Texas

9. 7000 Will Rogers Blvd., Fort Worth, Tarrant County, Texas

10. 300 N. Industrial Park Rd., Harrison, Boone County, Arkansas

11. 8203 Fischer Road, Baltimore, Baltimore County, Maryland

12. 1314 31st Street, Tampa, Hillsborough County, Florida
<PAGE> 90

EXHIBIT B

AMENDED AND RESTATED SECURED PROMISSORY NOTE
(REVOLVING - ___________)

$24,250,000 December __, 1996
Dallas, Texas

For value received, the undersigned ("Borrower"), hereby promises to
pay to the order of _________________________, a ______________ corporation,
("Payee"), on or before the last day of the Original Term (as defined in the
Loan Agreement referred to below), the lesser of (i) TWENTY FOUR MILLION TWO
HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($24,250,000) or (ii) the unpaid
principal amount of all advances made by Payee to Borrower as "Revolving Credit
Loans" under the Loan Agreement referred to below.

Borrower also promises to pay interest on the unpaid principal amount
of this Note at the rates and at the times which shall be determined in
accordance with the provisions of the Amended and Restated Loan and Security
Agreement dated as of December 13, 1996, by and among Borrower, Payee and the
other "Lenders" and the "Collateral Agent" identified therein (said agreement,
as it may hereinafter be amended, restated, supplemented or otherwise modified
from time to time, being herein called the "Loan Agreement"). Capitalized
terms used herein without definition shall have the meanings set forth in the
Loan Agreement.

This Note is one of the "Revolving Credit Notes" issued pursuant to
Section 2.1 of, and is entitled to the benefits of, and subject to the
provisions of, the Loan Agreement to which reference is hereby made for a more
complete statement of the terms and conditions under which Revolving Credit
Loans evidenced hereby are made and are to be repaid.

All payments of principal and interest due in respect of this Note
shall be made without deduction, defense, set off or counterclaim, in lawful
money of the United States of America, and in same day funds and delivered to
Payee by wire transfer to Collateral Agent's account, ABA No. ______________,
Account No. ______________, at ________________________, Reference:
"___________________________," or at such other place as shall be designated by
notice for such purpose in accordance with the terms of the Loan Agreement.
<PAGE> 91
No agreements, conditions, provisions or stipulations contained in
this Note or any other Loan Documents or any other instrument, document or
agreement between Borrower, Collateral Agent and/or any Lender, or default of
Borrower, or the exercise by Lenders of the right to accelerate the payment of
the maturity of principal and interest, or to exercise any option whatsoever
contained in any Loan Documents or any other agreement between Borrower,
Collateral Agent and/or any Lender, or the arising of any contingency
whatsoever, shall entitle Collateral Agent or any Lender to contract for,
charge or receive, in any event, interest exceeding the Maximum Legal Rate. In
no event shall Borrower be obligated to pay interest exceeding such Maximum
Legal Rate and all agreements, conditions or stipulations, if any, which may in
any event or contingency whatsoever operate to bind, obligate or compel
Borrower to pay a rate of interest exceeding the Maximum Legal Rate, shall be
without binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Legal Rate. In the event any interest is
contracted for, charged or received in excess of the Maximum Legal Rate
("Excess"), Borrower acknowledges and stipulates that any such contract, charge
or receipt shall be the result of an accident and bona fide error, and that any
Excess received by Collateral Agent and/or any Lender shall be applied, first,
to reduce the principal then unpaid hereunder; second, to reduce the other
Obligations; and third, returned to Borrower, it being the intention of the
parties hereto not to enter at any time into a usurious or otherwise illegal
relationship. Borrower recognizes that, with fluctuations in the Base Rate and
the Maximum Legal Rate, such a result could inadvertently occur. By the
execution of this Note, Borrower covenants that (i) the credit or return of any
Excess shall constitute the acceptance by Borrower of such Excess, and (ii)
Borrower shall not seek or pursue any other remedy, legal or equitable, against
Collateral Agent and/or any Lender, based in whole or in part upon contracting
for, charging or receiving of any interest in excess of the maximum authorized
by applicable law. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by Collateral Agent and/or any
Lender, all interest at any time contracted for, charged or received by
Collateral Agent and/or any Lender in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Note.

Payee and any subsequent holder of this Note agrees that before
disposing of this Note or any part hereof it will make a notation hereon of all
principal payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a notation of
any payment made on this Note shall not limit or otherwise affect the
obligation of Borrower with respect to payments of principal or interest on
this Note.

This Note is subject to mandatory and voluntary prepayment by Borrower
as provided in the Loan Agreement.

THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
<PAGE> 92

Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Loan Agreement.

The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.

Borrower promises to pay pursuant to Section 13.4 of the Loan
Agreement all costs and expenses, including reasonable attorneys' fees,
incurred in the collection and enforcement of the Note. Borrower and endorsers
of this Note hereby consent to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waive diligence, presentment,
protest, demand and notice of every kind, including, without limitation,
notices of default, intent to accelerate and acceleration (except such notices
as may be required under the Loan Agreement).

This Note is given in increase, renewal, extension and modification
(and not in extinguishment or novation) of that certain Amended and Restated
Secured Promissory Note, in the stated principal sum of $24,250,000, dated
March 31, 1995, executed by Borrower and payable to the order of
___________________, which note was given in increase,, renewal, extension and
modification (and not in extinguishment or novation) of that certain Secured
Promissory Note, in the stated principal sum of $19,500,000, dated August 20,
1992, executed by Borrower and Anchor Die Cast, Inc., a Delaware corporation,
and payable to the order of _________________________________.

IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first written
above.

MMI PRODUCTS, INC.

By:
Name:
Title:

<PAGE> 93

EXHIBIT C

FORM OF SECURED PROMISSORY NOTE
(TERM - ________)

$6,000,000 December _____, 1996
Dallas, Texas

For value received, the undersigned ( "Borrower"), hereby promises to
pay to the order of ______________________________, ("Payee"), on or before
the last day of the Original Term (as defined in the Loan Agreement referred to
below), the lesser of (i) SIX MILLION AND NO/100 DOLLARS ($6,000,000) or (ii)
the unpaid principal amount of all advances made by Payee to Borrower as a
portion of the "Term Loan" under the Loan Agreement referred to below.

Borrower also promises to pay interest on the unpaid principal amount
of this Note at the rates and at the times which shall be determined in
accordance with the provisions of the Amended and Restated Loan and Security
Agreement dated as of the date hereof, by and among Borrower, Payee and the
other "Lenders" and the "Collateral Agent" identified therein (said agreement,
as it may hereinafter be amended, restated, supplemented or otherwise modified
from time to time, being herein called the "Loan Agreement"). Capitalized
terms used herein without definition shall have the meanings set forth in the
Loan Agreement.

Borrower shall make principal payments on this Note on such dates as
required pursuant to the terms of the Loan Agreement and in an amount
determined in accordance with the provisions thereof; provided that the last
such installment shall be in an amount sufficient to repay the entire unpaid
principal balance on this note, together with accrued unpaid interest thereon.

This Note is one of the "Term Notes" issued pursuant to Section 2.2
of, and is entitled to the benefits of, and is subject to the provisions of,
the Loan Agreement to which reference is hereby made for a more complete
statement of the terms and conditions under which the Term Loan, a portion of
which is evidenced hereby, is to be made and is to be repaid.

No agreements, conditions, provisions or stipulations contained in
this Note or any other Loan Documents or any other instrument, document or
agreement between Borrower, Collateral Agent and/or any Lender, or default of
Borrower, or the exercise by Lenders of the right to accelerate the payment of
the maturity of principal and interest, or to exercise any option whatsoever
contained in any Loan Documents or any other agreement between Borrower,
Collateral Agent and/or any Lender, or the arising of any contingency
whatsoever, shall entitle Collateral Agent or any Lender to contract for,
charge or receive, in any event, interest exceeding the Maximum Legal Rate. In
no event shall Borrower be obligated to pay interest exceeding such Maximum
Legal Rate and all agreements, conditions or stipulations, if any, which may in
any event or contingency whatsoever operate to bind, obligate or compel
Borrower to pay a rate of interest exceeding the Maximum Legal Rate, shall be
without binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Legal Rate. In the event any interest is
contracted for, charged or received in excess of the Maximum Legal Rate
("Excess"), Borrower acknowledges and stipulates that any such contract, charge
or receipt shall be the result of an accident and bona fide error, and that any
Excess received by Collateral Agent and/or any Lender shall be applied, first,
to reduce the principal then unpaid hereunder; second, to reduce the other
Obligations; and third, returned to Borrower, it being the intention of the
parties hereto not to enter at any time into a usurious or otherwise illegal
relationship. Borrower recognizes that, with fluctuations in the Base Rate and
the Maximum Legal Rate, such a result could inadvertently occur. By the
execution of this Note, Borrower covenants that (i) the credit or return of any
Excess shall constitute the acceptance by Borrower of such Excess, and (ii)
Borrower shall not seek or pursue any other remedy, legal or equitable, against
Collateral Agent and/or any Lender, based in whole or in part upon contracting
for, charging or receiving of any interest in excess of the maximum authorized
by applicable law. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by Collateral Agent and/or any
Lender, all interest at any time contracted for, charged or received by
Collateral Agent and/or any Lender in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Note.

This Note is subject to mandatory and voluntary prepayment by Borrower
as provided in the Loan Agreement.

<PAGE> 95

THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.

IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first written
above.

MMI PRODUCTS, INC.

By:
Name:
Title:

<PAGE> 96

EXHIBIT D

BORROWER'S BUSINESS LOCATIONS

(1) Borrower currently has the following business locations, and no
others:

Owned business locations:

(a) 12482 E. Putnam, Whittier, Los Angeles County, California

(b) 3050 Melson, Jacksonville, Duval County, Florida

(d) 71347 County Road #23, New Paris, Elkhart County, Indiana

(e) 24 Fowler Street Extension, Westfield, Hampden County,
Massachusetts

(f) 165 Fanjoy Road, Statesville, Iredell County, North Carolina

(g) 7000 Will Rogers Boulevard, Fort Worth, Tarrant County, Texas

(h) 6933 Clinton Drive (a/k/a 1520 Lathrop Street), Houston,
Harris County, Texas

(i) 4901 Langley Road, Houston, Harris County, Texas

(j) 300 North Industrial Park Road, Harrison, Boone County,
Arkansas

(k) 8203 Fischer Road, Baltimore, Baltimore County, Maryland

(l) 1314 31st Street, Tampa, Hillsborough County, Florida

Leased business locations:

(m) 4200 Jefferson Avenue, Birmingham, Jefferson County, Alabama

(n) 6466 Mission Boulevard, Riverside, Riverside County,
California

(o) 5454 North Washington, Building B, Denver, Adams County,
Colorado

(p) 3300 SW 50th Avenue, Davie, Broward County, Florida

1
<PAGE> 97

(q) 87 Royal Drive, Forest Park, Clayton County, Georgia

(r) 2995 E. Ponce De Leon Avenue, Decatur, DeKalb County, Georgia

(s) 4249 Michoud Boulevard, New Orleans, Orleans Parish.
Louisiana

(t) 4120 Poche Court West, New Orleans, Orleans Parish, Louisiana

(u) 5140 Lawrence Place, Hyattsville, Prince George's County,
Maryland

(v) 6575 Rorniss Court, Berkeley, St. Louis County, Missouri

(w) 19-26 Steinway Street, Long Island, Queens County, New York

(x) 4030 Halifax, Dallas, Dallas County, Texas

(y) 515 West Greens Road, Suite 710, Houston, Harris County, Texas

(z) 8192 Newington Road, Newington, Fairfax County, Virginia

(aa) 7601 Compton Street, Richmond, Henrico County, Virginia

(bb) 2102 South 109th Street, Tacoma, Pierce County, Washington

(cc) 3330 Service Street, Charlotte, Mecklenburg County, North
Carolina

(dd) 1101 Pasture Lane, Columbia, Richland County, South Carolina

(ee) 1079 East 5th Avenue, Columbus, Franklin County, Ohio

(ff) 6701 Bluff Road, Indianapolis, Marion County, Indiana

(gg) 5918-1 Lane Circle South, Jacksonville, Duval County, Florida

(hh) 3915 Fuller Avenue, Kansas City, Jackson County, Missouri

(ii) 300 Alba Boulevard, Lawrenceville, Gwinnett County, Georgia

(jj) 1203 Outer Loop, Louisville, Jefferson County, Kentucky

(kk) 3564 Dickerson Road, Nashville, Davidson County, Tennessee

2
<PAGE> 98

(ll) 12137 Prospect Road, Strongsville, Cuyahoga County, Ohio

(mm) 3611 East La Palma Avenue. Anaheim. Orange County,
California

(nn) 700 North Wolf Road, Wheeling, Cook County, Illinois

(oo) 800 Whitney Street, Brighton, Livingston County, Michigan

(pp) 2950 West 167th Street, Markham, Cook County, Illinois

(qq) 6194 North Sherman, Milwaukee, Milwaukee County, Wisconsin

(rr) 4105 85th Avenue North, Brooklyn Park, Hennepin County,
Minnesota

(ss) 5170 Northwest Beaver, Johnston, Polk County, Iowa

(tt) 4000 River Road, Tonawanda, Erie County, New York

(uu) 1360 River Avenue, Pittsburgh, Allegheny County, Pennsylvania

(vv) 6512 Mt. Herman Road, Durham, Wake County, North Carolina

(ww) 2014 South Brazos, San Antonio, Bexar County, Texas

(xx) 131 Stover Drive, Carlisle, Cumberland County, Pennsylvania

(yy) Road 869, Building 15, Barrio Palmas, Catano, Puerto Rico

(zz) 3740 West Van Buren, Suite 103, Phoenix, Maricopa County,
Arizona

(aaa) 4555 Airline Drive, Suite 100, Houston, Harris County, Texas

(bbb) 832 North Lallendorf Road, Oregon, Lucas County, Ohio

(ccc) 6931 Clinton Drive, Houston, Harris County, Texas (same as
owned busisness location 6933 Clinton Drive)

(ddd) 3rd Avenue & 31st Street, Tampa, Hillsborough County, Florida
(same as owned business location 1314 31st Street)

(eee) 4255 South 300 West, Murray, Salt Lake County, Utah

3
<PAGE> 99

(fff) 71211 County Road #23, New Paris, Elkhart County, Indiana
(same as owned business location as 71347 County Road #23)

(ggg) 3233 West Grand Avenue, Chicago, Cook County, Illinois

(hhh) 3001 NE 185th Street, North Miami Beach, Dade County, Florida

(iii) 43 Oak Ridge Road, Luzerne County, Pennsylvania

(2) Borrower maintains its books and records relating to Accounts and
General Intangibles at:

4901 Langley Road, Houston, Harris County, Texas

(3) During the preceding five-year period, Borrower has had no office,
place of business or agent for process located in any county other
than set forth above, except:

(a) 10707 North Lombard, Portland, Multnomah County, Oregon

(b) 429-1/2 South 96th Street, Seattle, King County, Washington

(d) 21064 Cabot Boulevard, Hayward, Alameda County, California

(e) 2000 South 31st Avenue, Hallandale, Broward County, Florida

(f) 2901 Interstate Street, Charlotte, Mecklenburgh County, North
Carolina

(g) 2465 South 19th Avenue, Suite C-2, Phoenix, Maricopa County,
Arizona

(h) 510 North Wildwood Road, Irving, Dallas County, Texas

(i) 12762 Monarch Street, Garden Grove, Orange County, California

(j) 5079 West Beaver Street, Jacksonville, Duval County, Florida

(k) 1736 W. Epler Avenue, Indianapolis, Marion County, Indiana

(l) 6400 East 35th Street, Kansas City, Jackson County, Missouri

(m) 150 Nashua Road, Londonderry, Rockingham County, New Hampshire

4
<PAGE> 100

(n) 2900 Griffith Street, Charlotte, Mecklenburg County, North
Carolina

(o) 3420 Dickerson Road, Nashville, Davidson County, Tennessee

(p) 15243 Northeast Countryside Drive, Wilsonville County, Oregon

(q) 4555 Homestead Road, Suite 602, Houston, Harris County, Texas

(r) 1215 Indiana Drive, Humble, Harris County, Texas

(s) 3552-3624 East 5th Avenue, Columbus, Franklin County, Ohio

(t) 4073 Taylorsville Road, Dayton, Montgomery County, Ohio

(u) 17703 Storage Drive, Omaha, Sarpy County, Nebraska

(v) Route 150 and Harrison, Goodfield, Woodford County, Illinois

(w) 540 Old Brookpark Road, Cleveland, Cuyahoga County, Ohio

(x) 4656 Poplar Level Road, Louisville, Jefferson County, Kentucky

5
<PAGE> 101

EXHIBIT E

CORPORATE NAMES

(1) Borrower's correct corporate name, as registered with the
Secretary of State of the State of Delaware, is:

MMI Products, Inc.

(2) During the preceding five-year period, Borrower has used the
following names:

Anchor Die Cast (a/k/a "ADC")
Ivy Steel and Wire
Meadow Steel Products (a/k/a "Medco")
Merchants Metals (a/k/a "MMI")
MMI Products, Inc.

<PAGE> 102

EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Date Application Application
Title Inventor Patent No. Issued Serial No. Filing Date
----- -------- ---------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C>
(1)Borrower has no patents, except:

Void plug lift Richard C. Mess 4,679,362 07/14/87
insert assembly for cast
concrete product

Method for inserting Bill C. Capers 4,338,715 07/13/82
void plug into lift insert
for concrete product

Econ 0 Kennel Stanley Broski 4,422,622 12/23/87
Prefabrication panel con
struction for dog kennels and
the like. Patent allowed to
lapse 6/27/95.

Wac-A-Brac Walter I. Boyanton 3,524,627 08/18/70
Device for attaching wooden Robert J. McAllister
rail to metal fence post. Joe H. Rhodes
Patent has expired.

Retaining Wall Anchor System Boyd Grayson 4,952,098 08/28/90

Precast Panel Lifting Insert Boyd Grayson 5,242,249 09/07/93

Apparatus for attaching a lifting Boyd Grayson 5,244,243 09/14/93
mechanism to a load Richard Beck
</TABLE>

1
<PAGE> 103

EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

Tuf Link 1,231,633 03/22/83 07/31/81
Product Application: Brand
name applied to general line
of light gauge chain link
fence fabric sold to national
accounts for resale in D.I.Y.
industry.

Metric link 1,063,140 04/22/77 02/01/76
Product Application: Originally
established to define chain link
fabric made to metric standards and
sold to Sears. Trade name is no
longer used.

Woodlink 1,456,119 09/08/87 12/24/86
Product Application: Brand name for
Merchants Metals line of privacy chain
link fence which incorporates redwood
slats pre-installed in the chain link
fence fabric.

Medo Mesh 1,639,102 03/26/91 03/27/89
Product Application: Brand name given
to reinforcing bar restrainers for
earthquake load resistance. Sold
through Meadow Steel and Ivy Steel.

MMI Pro Set 1,740,463 12/15/92 01/03/92
Product Application: Brand name given
to cementitious product used as
admixture and curing excellerator for
concrete. Distributed through
Merchants Metals.

Tuf Wood 1,763,694 04/06/93 04/02/91
Product Application: Brand name given
to Merchants Metals line of wood fence
materials, not currently being used.

Tuf Wood "Plus" (See Above) (See Above) 02/31/92
Product Application: Brand name given
to pressure treated water repellant
line of wood fence material sold
through Merchants, not currently being
used.

MMI Pro Mix 1,847,368 07/26/94 04/19/93
Product Application: Brand name given
to fast setting concrete mixture.
Distributed through Merchants Metals'
national accounts.
</TABLE>

2
<PAGE> 104
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Application Application Registration Registration Date First
Trademark Name Serial No. Filing Date Number Date Used
-------------- ---------- ----------- ------ ---- ----
<S> <C> <C> <C> <C> <C>
Priva/link 1,452,914 08/18/87 12/17/86
Product Application: Brand name for
Merchants Metals line of privacy vinyl
coated chain link fence which
incorporates vinyl slats pre-installed
in the chain link fence fabric.

Landscaper 1,831,357 04/19/94 12/92
For: Non-metal fence panels and fence
posts, in Class 19 (U.S. CL.12).

Armacolor 1,886,512 03/28/95 05/93
For: vinyl coated metal fencing
systems comprising fabric, framework
posts, gates and fittings therefor in
Class 6 (U.S. CL.12).

Colorbond 739,904 10/30/62 04/21/61
For: Chain link Fence in Class 13.
For Pipe and fence fittings in Class 776,472 09/08/64 11/20/63
13.

Vintage Square 1,667,345 12/10/91 02/89
For: Ornamental metal fencing in Class
6 (U.S. CL.12).

Vintage Square Ornamental Fencing and 1,660,512 10/15/91 02/89
design trademark
For: Ornamental metal fencing in Class
6 (U.S. C.L.12).

TimberCraft & design trademark 1,671,760 01/14/92 02/19/89
For: Wooden fences, decks and gazebos
in Class 19 (U.S. CL.12).

Semmerling 1,545,111 06/27/89 1960
For: Metal fencing, gates and hardware
fittings therefor, in Class 6 (US
CL.13). Trade mark allowed to lapse
on 6/27/95.

Semmerling 58804 (IL) 08/05/86 1969
For: Fencing materials including metal
casted and forged chain link fence
fittings, posts, anchors and fabric.
T-14 metal and metal castings and
forgings. Trademark allowed to lapse
on 10/5/96.

Semmerling 59120 (II) 11/09/86 1960
700 N. Wolf Road
Wheeling, Il 60090
For: Non metal fencing products. T-50
merchandise not otherwise classified.
Trademark allowed to lapse on 10/9/96.
</TABLE>

3
<PAGE> 105
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Application Application Registration Registration Date First
Trademark Name Serial No. Filing Date Number Date Used
-------------- ---------- ----------- ------ ---- ----
<S> <C> <C> <C> <C> <C>
Naturelink and design trademark 1,724,979 10/20/92 02/89
For: Vinyl coated chain link fencing
system comprising fittings.
Framework, fabric, posts and gates:
and vinyl coating therefor, all sold
as a unit, in Class 6 (U.S. CLS. 12,
13 and 16).

Doxie and design trademark 1,086,807 03/07/78 1963
For: Metal fencing parts and
fittings and kennels in Class
6 (U.S. CL.14).

For: Nonmetal fencing parts
and fittings in Class 19
(U.S. CL.12).

For: Metal fencing ports and 1,085,878 02/21/78 1963
fittings and kennels in Class
6 (U.S. CL.13).

For: Nonmetal fencing parts
and fittings in Class 19
(U.S. CL.12).

For: Metal fencing products and 46009 (IL) 08/10/77 05/01/60
kennels. T-14 metals and metal
castings and forgings.

For: Non-metal fencing products. 46010 (IL) 08/10/77 1963
T-50 merchandise not otherwise
classified.

For: Metal fencing products and 46005 (IL) 08/10/77 05/01/60
kennels. T-14 metals and metal
castings and forgings.

For: Nonmetal fencing products. T-50 46006 (IL) 08/10/70 1963
merchandise not otherwise classified.

For: Fence Materials. T-14 metals 56455(IL) 04/23085 05/01/60
and metal castings and forgings.

For: Metal fencing and parts thereof; 1,660,513 11/15/91 12/88
and metal kennels, in Class 6 (U.S.
CLS. 12 and 13).

For: Non-metal fencing and parts
thereof, in Class 19 (U.S. CL. 12).
</TABLE>

4
<PAGE> 106
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Application Application Registration Registration Date First
Trademark Name Serial No. Filing Date Number Date Used
-------------- ---------- ----------- ------ ---- ----
<S> <C> <C> <C> <C> <C>
Doxie Alumicoat and design trademark 1,724,980 10/20/92 12/88
For: Aluminum coated chain link
fencing system comprising fittings,
framework, fabric, posts, mesh and
gates; and aluminum coating therefor,
all sold as a unit, in Class 6 (U.S.
CLS. 12, 13 and 16).

Easy link and design trademark 1,660,514 10/15/91 10/80
For: Metal casted and forged chain
link fencing systems comprising
fittings, framework, posts, fabric,
anchors and gates, in Class 6 (U.S.
CLS. 12 and 13).

For: Metal casted and forged chain 49168 (IL) 10/10/80 10/10/80
linked fence fittings, posts, anchors
and fabric. T-14 metals and metal
castings and forgings.

Armalume 1,923,284 10/03/95 05/93
For: Metal fencing systems
comprising fabric, framework,
posts, gates, and fittings
therefor, in Class 6, (U.S.
CL.12).

National Mesh 747,449 04/02/63 09/27/55
For: Welded wire concrete
reinforcing fabrics, in Class
19, (U.S. CL.12).

N National Mesh and design trademark 704,813 09/27/60 08/25/59
For: Welded wire concrete reinforcing
fabrics in Class 19, (U.S. CL.12)

Steeltex and design trademark 236,844 12/27/27 06/15/27
For: Reinforcement material for
plaster and cement, including wire
fabric having a paper backing in Class
19, (U.S. CL.12).

National Mesh 929,765 06/17/83 05/19/90
For: Construction materials in Class (FL)
19, (U.S. CL.12).

National Mesh and design trademark 5,391 (MD) 06/17/83 05/19/90
For: Welded wire, concrete
reinforcement fabrics and masonry
reinforcements in CLS. 6 & 19, (U.S.
CLS. 12, 13, 14 and 25).
</TABLE>

5
<PAGE> 107
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Application Application Registration Registration Date First
Trademark Name Serial No. Filing Date Number Date Used
-------------- ---------- ----------- ------ ---- ----
<S> <C> <C> <C> <C> <C>
National Mesh 734,414 06/03/73 09/27/55
For: Welded wire concrete (MD)
reinforcement fabrics CL.19, (U.S.
CL.12).

Merchants Metals The First 1,927,697 10/17/95 11/15/93
Name In Fence and design trademark
For: Additive for cement; metal
fences, posts and gates; and wooden
fences, in CLS. 1, 6 and 19 (U.S. CLS.
6012).

Zig-Zag and design trademark 1,933,116 11/07/95 12/90
For: Metal supports for reinforcing
mesh, mats or bars in concrete, in
Class 6, (U.S. CLS. 2, 12, 13, 14,
23, 25 and 50).

Fence Pro (Rights assigned to MMI in perpetuity by Dickson Nail 7/31/92.
Product Application: Brand name given Merchants Metals agreed to return rights to Dickson Nail 03/10/94.)
to line of hand set nails for wood
fence installers.

Safe-T-load 802,588 12/20/66 12/06/65

Gateway Bee-Hive & Design 640,929 04/29/58 07/13/57

Bee-Hive & Design 172,900 11/20/70
(CAN)

Safe-T-Load 172,901 11/20/70
(CAN)

BEE 172,175 11/20/70
(CAN)
</TABLE>

mmi\patents

Revised: December 11, 1996

6
<PAGE> 108
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

<TABLE>
<CAPTION>
Application Application Registration Registration Date First
Service Mark Serial No. Filing Date Number Date Used
------------ ---------- ----------- ------ ---- ----
<S> <C> <C> <C> <C> <C>
(3) Borrower has no service marks, except:

Doxie and design service mark 46011 (IL) 08/10/77 1963
For: Retail outlet and distributor
services for metal and nonmetal
fencing products and kennels. S-101
advertising and business.

For: Construction and assembly 46012 (IL) 08/10/77 1963
services for metal and non-metal
fencing products and kennels. S-103
construction and repair.

For: Retail outlet, and distributor 46007 (IL) 08/10/77 1963
services for metal and nonmetal
fencing products and kennels. S-101
advertising and business.

Doxie 46008 (IL) 08/10/77 1963
For: Construction and assembly
services for metal and nonmetal
fencing products and kennels. S103
construction and repair.

For: Construction of metal and 1,096,97 07/18/78 1959
non-metal fencing parts and fittings
and metal kennels to the order and/or
specifications of others;
installation of metal and non-metal
fencing parts and fittings and metal
kennels, in Class 37 (U.S. CL. 103).

For: Retail out and distributorship
services for metal and non-metal
fencing products and kennels, in Class
42 (U.S. CL. 101).

Semmerling 1,545,657 06/27/89 1960
For: Construction and installation of
metal and nonmetal fencing, parts and
fittings, and metal kennels to the
order and specification of others, in
Class 37 (U.S. CL. 103). Service mark
allowed to lapse on 6/27/95.

Semmerling 59121 (IL) 11/09/86 1960
700 N. Wolf Road
Wheeling, Il 60090
For: Retail outlet and distributors
services for metal and nonmetal
fencing products and kennels. S-101
advertising and business. Service
mark allowed to lapse on 10/9/96.
</TABLE>

7
<PAGE> 109
EXHIBIT F

PATENTS, TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND LICENSES

Semmerling 59122 (IL) 11/09/86 1960
700 N. Wolf Road
Wheeling, Il 60090
For: Construction and assembly
services for setal and nonmetal
products and kennels. S103
construction and repair. Service mark
allowed to lapse on 10/9/96.

Copywriter Name
---------------

(4) Borrower has no copyrights, except: VA 509-859 08/02/92 10/22/91
Standard Fence Details

Production Application: Book of
standard fence details supplied
through Merchants Metals to dealers
who are part of the Authorized Dealer
Program.

(5) Borrower has no licenses, other than routine business licenses, authorizing them to transact business in local
jurisdictions.
</TABLE>

8
<PAGE> 110

EXHIBIT G

CAPITAL STRUCTURE

(i) Subsidiaries: None

(ii) Corporate or Joint Venture Affiliates:

The following Persons beneficially own Voting Stock representing 10%
or more of the voting power of all Voting Stock of Parent, which owns all of
the issued and outstanding capital stock of Borrower:

(a) Citicorp Venture Capital Ltd., a New York corporation

(b) Julius S. Burns, President and Chief Executive Officer of
Borrower and Parent

(iii) Outstanding Securities of Borrower

(a) 252,000 shares of Common Stock, par value $1.00 per share,
held by Parent

(iv) Authorized, Issued and Treasury Shares of Borrower

(a) 500,000 shares of Common Stock, par value $1.00 per share,
authorized

(b) 252,000 shares of Common Stock, par value $1.00 per share,
issued

<PAGE> 111
EXHIBIT H

CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBT

Amended and Restated Senior Subordinated Secured Promissory Note dated as of
December 13, 1996 from MMI Products, Inc., a Delaware corporation as maker, to
Mannesmann Pipe and Steel Corporation, as payee.

<PAGE> 112
EXHIBIT I

LITIGATION

None.

Notice of Exercise of Appraisal Rights, in connection with the merger of MMHC
Merger Company with and into Merchants Metals Holding Company (the "Company"),
received from Paulos Investments, Ltd., dated as of November 18, 1996,
regarding shares of the following securities of the Company: Class B Common
Stock, par value $.01 per share, 14% Preferred Stock and Series M Preferred
Stock.

<PAGE> 113

EXHIBIT J

PENSION PLANS

Revised Pension Plan Agreement of MMI Products, Inc. and United Steel Workers
of America Local Union #5861

<PAGE> 114

EXHIBIT K

LABOR CONTRACTS

Borrower has no agreements with any organization of its employees, except the
following:

(a) Merchants Metals - Whittier, California;
Shopmen's Local Union #509 of the International Association of Bridge,
Structural and Ornamental Iron Workers

(b) Meadow Steel Products - Long Island City, New York;
Truck Drivers Local Union #807

(d) Ivy Steel & Wire - Tampa, Florida;
United Steelworkers of America Local Union #6813

(e) Ivy Steel & Wire - Oregon, Ohio;
Teamsters, Chauffeurs, & Warehousemen Local #20

(f) Meadow Steel Products - Chicago, Illinois;
Currently being negotiated with Teamsters, Chauffeurs, & Warehousemen
Local #786 for the driver's bargaining unit at this location

(g) Meadow Steel Products - Chicago, Illinois;
Currently being negotiated with International Brotherhood of
Electrical Workers Local #134 for the production employee's bargaining
unit at this location
<PAGE> 115

EXHIBIT L

CAPITAL LEASES

Borrower has the following capital leases:

Real Property

(1) Lease dated January 6, 1972, Amendment to Lease dated January
6, 1972, and Second Amendment to Lease dated May 1, 1992, between Channel
National Associates, successor in interest by assignment to Ohio Limited
Partnership, as lessor, and the Company (assumed from Atlantic Steel
Industries, Inc.) covering property located at 832 North Lallendorf Road,
Oregon, Lucas County, Ohio.

Personal Property

(1) Capital Lease Agreements between AMI Leasing and the Company
dated March 1, 1993, covering certain vehicles.

(2) Capital Lease Agreements between Hyster Credit and the Company
dated May and July 1993, covering certain Hyster Forklifts.

(3) Capital Lease Agreements between USL Capital and the Company
dated June 2, 1994, covering certain vehicles.

(4) Capital Lease Agreements between Dana Commercial Credit and
the Company dated December 30, 1993, covering computer printers and hardware.

(5) Capital Lease Agreements between Amplicon Financial and the
Company dated April 19, 1995, covering certain forklifts.

(6) Capital Lease Agreements between Sieman's ROLM and the Company
dated June 6, 1995, covering a telephone system and system upgrade.

(7) Capital Lease Agreements between Mita Financial Services and
the Company dated September 27, 1995, covering certain Mita copiers.
<PAGE> 116

EXHIBIT M

OPERATING LEASES

Borrower has the following operating leases:

Real Property

(1) Lease dated March 13, 1989, as renewed February 7, 1992, May
1, 1993, and March 14, 1996, between BMH Properties and the Company covering
premises located at 4120 Poche Court West, New Orleans, Orleans Parish,
Louisiana.

(2) Lease dated November 8, 1979, as extended by letters dated
August 7, 1984, September 8, 1989, September 28, 1994, September 26, 1995, and
October 28, 1996 between Joseph Alizio, as lessor, and the Company covering
premises located at 19-26 Steinway Street, Long Island City, Queens County, New
York.

(3) Lease dated August 1, 1986, as extended by a letter dated July
31, 1989, a First Addendum dated August 5, 1992, Second Addendum dated July 7,
1995, and a Third Addendum dated July 31, 1996 between Newington Joint Venture
and the Company covering premises located at 8192 Newington Road, Newington,
Fairfax County, Virginia.

(4) Lease dated January 2, 1979, as amended April 23, 1988, and as
extended by letter August 13, 1993, between 2995 Ponce, LLC, successor in
interest by assignment to Moreland Avenue Corporation and the Company covering
premises located at 2995 East Ponce de Leon Avenue, Decatur, DeKalb County,
Georgia.

(5) Lease dated July 27, 1990, between Sign Builders, Inc. and the
Company covering premises located at 4200 Jefferson Avenue, Birmingham,
Jefferson County, Alabama.

(6) Lease dated January 15, 1983, as extended and renewed by
agreements dated November 2, 1984, October 24, 1985, September 10, 1986,
December 21, 1987, May 17, 1989, September 11, 1989, December 27, 1993, between
Alvaro I. Santos and the Company covering premises located at 5140 Lawrence
Place, Hyattsville, Prince George's County, Maryland.

(7) Lease dated January 15, 1992, and renewed by agreement on
November 15, 1996 between Food 'n Fun, Inc. and the Company covering premises
located at 6575 Romiss Court, Gemini Park Subdivision, Berkeley, St. Louis
County, Missouri.

(8) Lease dated December 17, 1991, as extended by a letters dated
December 14, 1993, and November 22, 1994 between Merchants of Texas, Inc. and
the Company covering premises located at 4030 Halifax Street, Dallas, Dallas
County, Texas.
<PAGE> 117
(9) Lease dated May 1, 1991, and renewed May 1, 1994, between
Alexander A. Bomareto and LaMarr M. Bomareto, as lessors, as assigned to
FirstBank of Westland, N.A. by agreement dated February 28, 1992, and the
Company covering premises located at 5454 Washington. Building B, Denver,
Adams County, Colorado.

(10) Lease dated December 17, 1986, as extended by letter November
26, 199 1, between J. S. Donegan and R. F. Donegan, as lessors, and the
Company covering premises located at 87 Royal Drive, Forest Park, Clayton
County, Georgia.

(11) Lease dated May 1, 1989, with addendum dated April 3, 1991,
and second addendum dated April 20, 1994, between Harlan Harris and Marjorie M.
Harris, as lessors, as assigned to Bernard J. and Dearlena Kimber by agreement
dated September 25, 1996 and the Company covering premises located at 2101
South 109th Street, Tacoma, Pierce County, Washington.

(12) Lease dated April 8, 1988, with addendum dated September 29,
1992, and second addendum dated October 14, 1994, between Loomis Enterprises,
Inc. formerly known as Allen Supply Corporation and the Company covering
premises located at 6466 Mission Boulevard, Riverside, Riverside County,
California.

(13) Lease dated September 25, 1990, with addendums dated August 8,
1995 between Timothy Mowrey and Laura Mowrey, as lessors, and the Company
covering premises located at 3300 S.W. 50th Avenue, Davie, Broward County,
Florida.

(14) Lease dated January 22, 1992, with renewal and extension dated
November 15, 1996 between American Wholesale Fence Co., Inc. and the Company
covering premises located at 4249 Michoud Boulevard, New Orleans, Orleans
Parish, Louisiana.

(15) Lease dated June 10, 1992, with addendum dated November 15,
1995 between The Estate of John William Ash and the Company covering premises
located at 7601 Compton Street, Richmond, Henrico County, Virginia.

(16) Lease dated July 24, 1989, with first amendment dated August
2, 1994, and second amendment dated July 29, 1996 between Brookdale Investors,
L.P., successor in interest by assignment to One Commerce Green - A Joint
Venture and the Company covering premises located at 515 W. Greens Road, Suite
710, Houston, Harris County, Texas.

(17) Lease dated September 12, 1994, between Steve Poole, as
lessor, and the Company covering premises located at 300 Alba Boulevard,
Lawrenceville, Gwinnet County, Georgia.

(18) Lease dated August 10, 1993, between Caltex Equities and the
Company covering premises located at 3611 East La Palma Avenue, Anaheim, Orange
County, California.
<PAGE> 118
(19) Lease dated February 1, 1993, between J & W Fence Supply
Company, Inc. and the Company covering premises located at 6701 Bluff Road,
Indianapolis, Marion County, Indiana.

(20) Lease dated May 6, 1994, between Broski Brothers, Inc. and the
Company covering premises located at 3915 Fuller Avenue, Kansas City, Jackson
County, Missouri.

(21) Lease dated March 1, 1994, with addendum dated May 1, 1994,
between Michael Kalinich, as lessor, and the Company covering premises located
at 12137 Prospect Road, Strongsville, Cuyahoga County, Ohio.

(22) Lease dated March 26, 1996, between Spangler Properties, Inc.
and the Company covering premises located at 3330 Service Street, Charlotte,
Mecklenburg County, North Carolina.

(23) Lease dated August 24, 1994, between Jax Truck and Equipment,
Inc. and the Company covering premises located at 5918 Lane Circle South,
Building #1, Jacksonville, Duval County, Florida.

(24) Lease dated February 19, 1993, between ESC Group, Inc. and the
Company covering premises located at 1203 Outer Loop, Louisville, Jefferson
County, Kentucky.

(25) Lease dated May 3, 1993, between Venture Properties and the
Company covering premises located at 1101 Pasture Lane, Columbia, Richland
County, South Carolina.

(26) Lease May 1, 1993, between James Scott Chambliss, Carl B.
Chambliss, James Earl Denny, James Steven Denny and Terry Russell Denny d/b/a
Chambliss & Denny Partnership, as lessor, and the Company covering premises
located at 3564 Dickerson Road, Nashville, Davidson County, Tennessee.

(27) Lease dated January 12, 1993, between Enterprise Investments,
formerly Dale V. Witt, and the Company covering premises located at 1079 East
Fifth Avenue, Columbus, Franklin County, Ohio.

(28) Lease dated September 23, 1996, between Arrowhead Capital
Corporation and the Company covering premises located at 4255 South 300 West,
Murray, Salt Lake County, Utah.

(29) Lease dated March 31, 1995, between Semmerling Fence & Supply,
Inc. and the Company covering premises located at 700 N. Wolf Road, Wheeling,
Cook County, Illinois.

(30) Lease dated March 31, 1995, between Semmerling Fence & Supply,
Inc. and the Company covering premises located at 800 Whitney Avenue, Brighton,
Livingston County, Michigan.
<PAGE> 119
(31) Lease dated March 31, 1995, between Semmerling Fence & Supply,
Inc. and the Company covering premises located at 2950 West 167th Street,
Markham, Cook County, Illinois.

(32) Lease dated March 31, 1995, between Semmerling Fence & Supply,
Inc. and the Company covering premises located at 6194 North Sherman,
Milwaukee, Milwaukee County, Wisconsin.

(33) Lease dated February 1, 1996, and with addendum dated March
12, 1996, between Niagara River World and the Company covering premises located
at 4000 River Road, Tonawanda, Eric County, New York.

(34) Lease dated January 1, 1995, between Roy L. Kumer, as lessor,
and the Company (assumed from Semmerling Fence & Supply, Inc. on March 31,
1995) covering premises located at 1360 River Avenue, Pittsburgh, Allegeny
County, Pennsylvania.

(35) Lease dated May 1, 1988, and renewed May 1, 1993, between
Raymond B. Rosen and Jerome Bloom, as lessors, and the Company (assumed from
Semmerling Fence & Supply, Inc. on March 31, 1995) covering premises located at
4073 Taylorsville Road, Dayton, Montgomery County, Ohio.

(36) Lease dated June 1, 1995, between Gerald A. Hulbert, as
lessor, and the Company covering premises located at 4105 85th Avenue North,
Minneapolis, Hennepin County, Minnesota.

(37) Lease dated August 2, 1996, between Douglas A. Ayers, as
lessor, and the Company covering premises located at 5170 NW Beaver, Johnston,
Polk County, Iowa.

(38) Lease dated January 16, 1996, between Union Stock Yards San
Antonio, Inc., as lessor, and the Company covering premises located at 2014
South Brazos, San Antonio, Bexar County, Texas.

(39) Lease dated October 15, 1995, between Arthur P. Flythe and
Rheba Y. Flythe, as lessors, and the Company covering premises located at 6512
Mt. Herman Road, Raleigh, Wake County, North Carolina.

(40) Lease dated July 1, 1995, between W. Dale Brougher, as lessor,
and the Company covering premises located at 131 Stover Drive, Carlisle,
Cumberland County, Pennsylvania.

(41) Lease dated March 8, 1996, between Norman Edward Roquette and
Ilyana Treen de Roquette, as lessors, and the Company covering premises located
at Road 869, Building 15, Barrio Palmas, Catano, Puerto Rico.
<PAGE> 120
(42) Lease dated March 5, between Security Capital Industrial
Trust, as lessor, and the Company covering premises located at 3740 W. Van
Buren, Suite 103, Phoenix, Maricopa County, Arizona.

(43) Lease dated May 21, 1996, between Board of Pension
Commissioners of the City of Los Angeles on behalf of the New System General
Pension Fund, as lessor, and the Company covering premises located at 4555
Airline Drive, Suite 100, Houston, Harris County, Texas.

(44) Lease dated February 14, 1992, between Meyer Grenader and
Associates, as lessor, and the Company covering premises located at 6931
Clinton Drive, Houston, Harris County, Texas.

(45) Lease dated June 1, 1993 between General Management and
Development Corp., as lessor, and the Company (assumed from Atlantic Steel
Industries, Inc.) covering property located at 3rd Avenue & 31st Street, Tampa,
Hillsborough County, Florida.

(46) Lease dated October 31, 1996 between Made Corporation, as
lessor, and the Company covering property at 3001 NE 185th Street, North Miami
Beach, Dade County, Florida.

(47) Lease dated October 14, 1996 between Gateway Construction
Company, as lessor, and the Company covering property at 3233 West Grand
Avenue, Cook County, Chicago, Illinois.

(48) Lease dated May 20, 1996 between Flagstone Exchange Corp., as
lessor, as assigned to Robert K. Mericle by agreement on or about August 30,
1996 and the Company covering property at 43 Humboldt Industrial Park, Oak
Ridge Road, Luzerne County, Pennsylvania

Personal Property

(1) Equipment Lease Agreements between Associates Leasing, Inc.
and the Company for Mitsubishi forklifts, Toyota forklifts, & Nissan forklifts.

(2) Equipment Lease Agreements between Copelco Capital, Inc. and
MMI Products, Inc. covering 5 copiers.

(3) Equipment Lease Agreements between Associates Commercial and
the Company for forklifts.

(4) Equipment Lease Agreements between Pitney Bowes Credit
Corporation and MMI Products, Inc. covering various office equipment.

(5) Storage Trailer Lease Agreements between McGrath RentCorp and
MMI Products, Inc. dated December 28, 1992.
<PAGE> 121
(6) Motor Vehicle Lease Agreement dated October 15, 1989, between
Cypress Truck Leasing Co., Inc. and the Company covering certain vehicles.

(7) Equipment Lease Agreement between U.S.L. Fleet Services and
MMI Products, Inc. dated February 15, 1984, covering certain vehicles.

(8) Equipment Lease Agreement between Arrowlift Systems and the
Company covering 4 forklifts.

(9) Equipment Lease Agreements between Ideal Leasing and MMI
Products, Inc. covering certain vehicles.

(10) Equipment Lease Agreement between Master Lease and MMI
Products, Inc. covering a WIN 24 telephone system.

(11) Equipment Lease Agreement between The New Telephone Company
and MMI Products, Inc. covering a telephone system.

(12) Storage Trailer Lease Agreement between STR, Inc. and MMI
Products, Inc. covering seven storage trailers.

(13) Equipment Lease Agreement between Toyota Motor Credit
Corporation and MMI Products, Inc. covering two Toyota forklifts.

(14) Equipment Lease Agreements between AT&T Credit Corporation and
MMI Products, Inc. covering telephone systems.

(15) Equipment Lease Agreement between Citicorp Dealer Finance and
MMI Products, Inc. covering a Mitsubishi forklift.

(16) Equipment Lease Agreements between J.1. Case Credit
Corporation and MMI Products, Inc. covering two Case forklifts.

(17) Vehicle Lease Agreements between R&M Auto Leasing, Inc. and
the Company (assumed from Semmerling Fence & Supply, Inc.) on March 31, 1995,
covering certain vehicles.

(18) Equipment Lease Agreement between Ameritel Financial and the
Company for certain telephone equipment.

(19) Long Term Rental Agreements between Caterpillar and the
Company (assumed from Semmerling Fence & Supply, Inc.) on March 31, 1995, dated
April 9, 1992, covering three lift trucks.
<PAGE> 122
(20) Truck Lease and Service Agreement between Ryder Truck Rental,
Inc. and the Company covering certain vehicles.

(21) Master Equipment Lease between Cargill Leasing Corporation and
the Company (assumed from Pioneer Fence & Pipe Supply, Inc.) on March 31, 1995,
dated February 7, 1994, and June 23,1994 covering a 1994 GMC flatbed.

(22) Equipment Lease Agreement dated July 11, 1994 between
Herc-U-Lift and the Company (assumed from Pioneer Semmerling Fence & Supply,
Inc.) on March 31, 1995, covering an Allis Chalmers forklift.

(23) Equipment Lease Agreement between CDP Equipment and the
Company (assumed from Pioneer/Semmerling) on March 31, 1995, dated March 11,
1994, covering a Minolta copier.

(24) Rental Agreement covering 3 copiers between GE Capital and the
Company,

(25) Rental Agreement covering 2 taxes and 1 copier between Ikon
Capital and the Company.

(26) Rental Agreement covering equipment between Minolta Business
Systems and the Company.

(27) Rental Agreement covering office equipment between Neopost
Leasing and the Company.

(28) Rental Agreement covering storage space between Record
Archives and the Company.

(29) Lease Agreements covering automobiles between ARI US and the
Company (assumed from National Wire on July 29, 1996).

(30) Lease Agreements covering phone equipment between AT&T and the
Company (assumed from National Wire on July 29, 1996).

(31) Lease Agreements covering forklifts between Caterpillar
Financial and the Company (assumed from National Wire on July 29, 1996).

(32) Lease Agreements covering forklifts between Citicorp Dealer
Finance and the Company (assumed from National Wire on July 29, 1996).

(33) Lease Agreement covering a forklift between Gregory Poole and
the Company (assumed from National Wire on July 29, 1996).
<PAGE> 123
(34) Lease Agreement covering a copier between Alpha Omega (Aloha
Leasing) and the Company (assumed from National Wire on July 29, 1996).

(35) Lease Agreement covering a truck between Hoffinan Green
Leasing and the Company (assumed from National Wire on July 29, 1996).

(36) Lease Agreements covering office equipment between Pitney
Bowes and the Company (assumed from National Wire on July 29, 1996).

(37) Lease Agreement covering a copier between Advanta Business
Services Corp and the Company (assumed from National Wire on July 29, 1996).

(38) Lease Agreement covering a transformer between Baltimore Gas &
Electric and the Company (assumed from National Wire on July 29, 1996).

(39) Lease Agreement covering a water cooler between Collingwood
Water Company and the Company (assumed from National Wire on July 29, 1996).

(40) Lease Agreement covering a truck between Ford Motor Credit and
the Company (assumed from National Wire on July 29, 1996).

(41) Lease Agreement covering a forklift between Brungart Equipment
and the Company.

(42) Lease Agreement covering a forklift between Chicagoland
Material Handling and the Company.

(43) Lease Agreement covering certain forklifts between Clarklift
of Chicago North, Inc, and the Company.

(44) Lease Agreement covering certain automobiles between
Corestates Bank and the Company.

(45) Lease Agreement covering office equipment between Dowling
Douglas and the Company.

(46) Lease Agreement covering mailing equipment between Evcor
Financial and the Company.

(47) Lease Agreement covering a copy machine between First United
Leasing and the Company.
<PAGE> 124
(48) Lease Agreement covering three postage meters between Friden
Neopost and the Company.

(49) Lease Agreement covering a Nissan truck between Hayes Leasing
and the Company.

(50) Lease Agreement covering three forklifts between Hyster Credit
Corp. and the Company.

(51) Lease Agreement covering a Minolta copy machine between Mita
Financial Serrvices and the Company.

(52) Lease Agreement covering a phone system between NEC America
and the Company.

(53) Lease Agreement covering a Vodavi Starplus phone system
between Resource Leasing and the Company.
<PAGE> 125

EXHIBIT N

PERMITTED LIENS

Borrower has the following permitted liens:

(1) Liens in favor of Associates Leasing, Inc. with respect to eight
forklifts.

(2) Lien in favor of Encore Financial with respect to mailing equipment.

(3) Liens in favor of Pitney Bowes Credit Corporation with respect to
mailing equipment, fax equipment and copy equipment.

(4) Lien in favor of McGrath Rent Corp with respect to portable storage
trailer.

(5) Liens in favor of Ikon Capital with respect to fax and copy equipment.

(6) Liens in favor of Tokai Financial Services with respect to telephone
equipment and fax equipment.

(7) Lien in favor of NEC America with respect to telephone equipment.

(8) Liens in favor of First United Leasing Corporation with respect to
copy equipment and fax equipment.

(9) Lien in favor of The New Telephone Company with respect to telephone
equipment.

(10) Liens in favor of Copelco Credit with respect to copy equipment.

(11) Liens in favor of Toyota Motor Credit Corporation with respect to two
forklifts.

(12) Lien in favor of Vanguard Financial Service Corp. with respect to fax
and copy equipment.

(13) Lien in favor of Aloha Leasing with respect to copy equipment.

(14) Liens in favor of GE Capital with respect to copy equipment.

(15) Liens in favor of AT&T Credit Corporation with respect to telephone
equipment.

(16) Liens in favor of Citicorp Dealer Finance with respect to three
forklifts.

(17) Lien in favor of J.I. Case Credit Corporation with respect to one
forklift.
<PAGE> 126
(18) Liens in favor of Neopost Leasing, formerly Friden Alcatel Leasing
with respect to mailing equipment.

(19) Liens in favor of Nationwide Lift Truck with respect to three
forklifts.

(20) Lien in favor of Arrowlift Systems with respect to four forklifts.

(21) Liens in favor of Dana Commercial Credit with respect to computer
equipment.

(22) Liens in favor of Hyster Credit Corporation with respect to eleven
forklifts.

(23) Lien in favor of Mita Financial Services with respect to copy
equipment.

(24) Lien in favor of Sieman's ROLM with respect to telephone equipment.

(25) Liens in favor of Mannesmann Pipe & Steel Corporation with respect to
second mortgage on certain real estate located in Harris, County,
Texas, Tarrant County, Texas, Hillsborough County, Florida, Duval
County, Florida, Elkhart County, Indiana, and Baltimore County,
Maryland.

(26) Liens in favor of Caterpillar Financial Services Corporation with
respect to twenty forklifts.

(27) Liens in favor of Associates Commercial Corp. with respect to
forklifts.

(28) Liens in favor of Ameritel Financial with respect to telephone
equipment.

(29) Liens in favor of Clarklift of Chicago North, Inc. with respect to
four forklifts.

(30) Lien in favor of Herc-U-Lift, Inc. with respect to Allis-Chalmers
forklift.

(31) Liens in favor of Amplicon Financial with respect to sixteen
forklifts.

(32) Liens in favor of USL Capital Corporation, formerly U S Leasing
International, Inc. with respect to thirty-five forklifts.

(33) Lien in favor of CDP Imaging with respect to copy equipment.

(34) Lien in favor of Master Lease with respect to telephone equipment.

(35) Lien in favor of Minolta Business Systems with respect to copy
equipment.

(36) Lien in favor of Gregory Poole with respect to forklift.

2
<PAGE> 127
(37) Lien in favor of Advanta Business Services with respect to office
equipment.

(38) Lien in favor of Brungart Equipment with respect to a forklift.

(39) Lien in favor of Chicago Material Handling with respect to a forklift.

(40) Lien in favor of Dowling Douglas with respect to office equipment.

(41) Lien in favor of Resource Leasing with respect to telephone equipment.

(42) Lien in favor of Clarklift of Minnesota with respect to a forklift.

3
<PAGE> 128
EXHIBIT O

FORM OF MONTHLY COMPLIANCE CERTIFICATE

Fleet Capital Corporation, as a Lender and as Collateral Agent
2711 Haskell Avenue, Suite LB 21
Dallas, Texas 75204
ATTN: Loan Administration Manager

Transamerica Business Credit Corporation
Two Ravinia Road, Suite 700
Atlanta, Georgia 30346
ATTN: T. W. Harris

MONTHLY COMPLIANCE CERTIFICATE

Pursuant to the terms and conditions of that certain Amended and
Restated Loan and Security Agreement ("Agreement") dated as of December 13,
1996 among MMI Products, Inc., a Delaware corporation ("Borrower"), Fleet
Capital Corporation, a Rhode Island corporation ("Fleet"), Transamerica
Business Credit Corporation, a Delaware corporation ("Transamerica") (Fleet and
Transamerica are collectively referred to as "Lenders"), and Fleet, as
collateral agent for Lenders, the attached financial statements for the period
ending ______________ have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and do fairly present the
financial position and results of operations of Borrower for such period.

Borrower further represents and warrants that the Borrower is in full
compliance with any and all covenants contained in the Agreement for such
period, except for ________________. Specific Financial Covenant compliance as
listed in Section 9.3 of the Agreement is as follows:

<TABLE>
<S> <C> <C>
(a) Adjusted Tangible Net Worth (on a Consolidated basis) is: $___________
Covenant (A) Satisfied (__________)
Covenant (A) Not Satisfied (__________)

(b) Total Indebtedness (on a Consolidated basis) is: $___________
Ratio of total Indebtedness (on a Consolidated basis) to
Adjusted Tangible Net Worth (on a Consolidated basis) is: _______ to 1.0
Covenant (B) Satisfied (__________)
Covenant (B) Not Satisfied (__________)

(c) Adjusted Earnings From Operations (on a Consolidated basis)
for the period from _________________, 199_____ to date
[Rolling Twelve-Month Period] (the "Period") is: $___________
------
</TABLE>
<PAGE> 129

<TABLE>
<S> <C> <C>
Covenant (C) Satisfied (__________)
Covenant (C) Not Satisfied (__________)

(d) Adjusted Earnings from Operations (on a Consolidated Basis)
for the Period is: $___________
Interest Expense (on a Consolidated Basis) for the Period is: $___________
Unfinanced Capitalized
Expenditures (on a Consolidated Basis) for the Period are: $___________
Scheduled principal payments on
Funded Indebtedness (other than Subordinated Debt)
(on a Consolidated Basis) for the succeeding
twelve-month period is: $___________
Distributions actually made to Parent during
the Period to the extent permitted under
Section 9.2(I) are: $___________
-------------
Taxes actually paid (on a Consolidated Basis)
for the Period are: $___________
Fixed Charge Ratio is: _______ to 1.0
Covenant (D) Satisfied (__________)
Covenant (D) Not Satisfied (____________)

(e) Current Assets (on a Consolidated basis) are: $___________
Current Liabilities (on a Consolidated basis) are: $___________
Current Ratio (on a Consolidated basis) is: _______ to 1.0
Covenant (E) Satisfied (___________)
Covenant (E) Not Satisfied (___________)

(f) Stockholders' Equity (on a Consolidated basis) is: $___________
Total Indebtedness (on a Consolidated basis)
ranking junior in right of payment to the
Mannesmann Renewal Note is: $___________
Sum of above is: $___________
</TABLE>
<PAGE> 130

Covenant (G) Satisfied (____________)
Covenant (G) Not Satisfied (____________)

For such month and year-to-date, Capital Expenditures (including
capitalized leases), on a Consolidated Basis, are $_____________________
(month) and $_____________________ (year-to-date). Depreciation and
amortization for the month are $_____________________.

For such month and year-to-date, Borrower's expenditures, on a
Consolidated Basis, in connection with its compliance with the Environmental
Plan are $_____________________ (month) and $_____________________
(year-to-date).

For the Rolling Twelve Month Period ending on the last day of such
month, on a Consolidated Basis, Borrower's cost of goods sold was
$_____________________, and as of the end of such month, Borrower's accounts
payable were $_____________________. As of the end of such month, Accounts
Payable Turnover was _____________________.

Capitalized terms used in this Certificate, unless otherwise defined
herein, shall have the meanings ascribed to them in the Agreement.

Very truly yours,

Signed:
----------------------------------
By:
---------------------------------------
Chief Financial Officer
MMI Products, Inc.
<PAGE> 131

EXHIBIT P

PROPERTY SUBJECT TO LANDLORD OR WAREHOUSEMAN AGREEMENTS

Borrower has obtained landlord's consents with respect to the following leased
premises:

(a) 4200 Jefferson Avenue, Birmingham, Jefferson County, Alabama

(b) 6466 Mission Boulevard, Riverside, Riverside County,
California

(d) 3300 SW 50th Avenue, Davie, Broward County, Florida

(e) 87 Royal Drive, Forest Park, Clayton County, Georgia

(f) 2995 E. Ponce De Leon Avenue, Decatur, DeKalb County, Georgia

(g) 4249 Michoud Boulevard, New Orleans, Orleans Parish, Louisiana

(h) 4120 Poche Court West, New Orleans, Orleans Parish, Louisiana

(i) 5140 Lawrence Place, Hyattsville, Prince George's County,
Maryland

(j) 6575 Romiss Court, Berkeley, St. Louis County, Missouri

(k) 19-26 Steinway Street, Long Island, Queens County, New York

(l) 4030 Halifax, Dallas, Dallas County, Texas

(m) 8192 Newington Road, Newington, Fairfax County, Virginia

(n) 7601 Compton Street, Richmond, Henrico County, Virginia

(o) 2102 South 109th Street, Tacoma, Pierce County, Washington

(p) 3330 Service Street, Charlotte, Mecklenburg County, North
Carolina

(q) 1101 Pasture Lane, Columbia, Richland County, South Carolina

(r) 1079 East 5th Avenue, Columbus, Franklin County, Ohio

(s) 6701 Bluff Road, Indianapolis, Marion County, Indiana

(t) 5918-1 Lane Circle South, Jacksonville, Duval County, Florida

(u) 3915 Fuller Avenue, Kansas City, Jackson County, Missouri

<PAGE> 132
(v) 300 Alba Boulevard, Lawrenceville, Gwinnett County, Georgia

(w) 1203 Outer Loop, Louisville, Jefferson County, Kentucky

(x) 3564 Dickerson Road, Nashville, Davidson County, Tennessee

(y) 12137 Prospect Road, Strongsville, Cuyahoga County, Ohio

(z) 3611 East La Palma Avenue, Anaheim, Orange County, California

(aa) 700 North Wolf Road, Wheeling, Cook County, Illinois

(bb) 800 Whitney Street, Brighton, Livingston County, Michigan

(cc) 2950 West 167th Street, Markham, Cook County, Illinois

(dd) 6194 North Sherman, Milwaukee, Milwaukee County, Wisconsin

(ee) 4105 85th Avenue North, Brooklyn Park, Hennepin County,
Minnesota

(ff) 5170 Northwest Beaver, Johnston, Polk County, Iowa

(gg) 4000 River Road, Tonawanda, Erie County, New York

(hh) 6512 Mt. Herman Road, Durham, Wake County, North Carolina

(ii) 2014 South Brazos, San Antonio, Bexar County, Texas

(jj) 131 Stover Drive, Carlisle, Cumberland County, Pennsylvania

(kk) 6931 Clinton Drive, Houston, Harris County, Texas (same as
owned business location 6933 Clinton Drive)

(ll) 3rd Avenue & 31st Street, Tampa, Hillsborough County, Florida
(same as owned business location 1314 31st Street)

(mm) 4255 South 300 West, Murray, Salt Lake County, Utah

(nn) 3233 West Grand Avenue, Chicago, Cook County, Illinois

(oo) 3001 NE 185th Street, North Miami Beach, Dade County, Florida

(pp) 43 Oak Ridge Road, Luzerne County, Pennsylvania

<PAGE> 133
EXHIBIT Q

DEFAULTS

None.

<PAGE> 134
EXHIBIT R

BALANCE SHEET - (Unaudited)

MMI PRODUCTS, INC.

October 26, 1996 and October 28, 1995

(In Thousands Except Share Data)

<TABLE>
<CAPTION>
1996
<S> <C>
LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities
Accounts payable $29,158

Intercompany payable 21

Accrued liabilities 10,426

Accrued interest payable to affiliates 694

Accrued Income taxes 2,743

Current maturities of long-term debt and capital leases 17,603

Total current liabilities 60,645

Deferred income taxes payable 3,699

Obligations under capital leases and other long-term liabilities 2,551

Long-term debt due after one year:
Revolving credit loans 37,934

Term loan 0

Subordinated notes payable 8,000

Deferred interest payable to affiliates 0

Shareholder's equity
Common stock, $1,00 par value, 500,00 shares
authorized, 252,000 shares issued and outstanding 252

Additional paid in capital 8,008

Retained earnings 15,537

Total shareholder's equity 23,797

$136,626
</TABLE>

<PAGE> 135

EXHIBIT S

FUNDING DATE BORROWING BASE CERTIFICATE

Borrowing Base Certificate
As of December 13, 1996

The undersigned hereby certifies that he is a duly authorized officer
of MMI Products, Inc., a Delaware corporation ("Borrower"), and that as such he
is authorized to execute this Borrowing Base Certificate on behalf of Borrower.
With reference to that certain Amended and Restated Loan and Security Agreement
dated as of December 13, 1996 (as amended, modified, increased, supplemented
and/or restated from time to time, the "Loan Agreement"), entered into among
Borrower, Fleet Capital Corporation, a Rhode Island corporation ("Fleet") and
Transamerica Business Credit Corporation, a Delaware corporation, as lenders
(together, "Lenders"), and Fleet as collateral agent for the Lenders, the
undersigned further certifies, represents and warrants that all of the
following statements and calculations are true and correct (each capitalized
term used herein having the same meaning given to it in the Loan Agreement
unless otherwise specified):

SECTION 1. MAXIMUM PERMITTED AGGREGATE PRINCIPAL
AMOUNT OF REVOLVING CREDIT LOANS
TO MMI

<TABLE>
<S> <C> <C>
I. Maximum commitment of Lenders to $ 48,500,000
------------
make Revolving Credit Loans to MMI

II. Aggregate undrawn portion of all
outstanding Letters of Credit $
------------

III. MAXIMUM PERMITTED AGGREGATE PRINCIPAL
AMOUNT OF REVOLVING CREDIT LOANS TO MMI (I, MINUS II) $
------------
</TABLE>
<PAGE> 136

SECTION 2. CALCULATION OF MMI
BORROWING BASE

<TABLE>
<S> <C> <C>
I. NET AMOUNT OF ELIGIBLE ACCOUNTS

A. Net Amount of Accounts Per Attached Accounts
Receivable Report $
------------

B. Net Amount of Ineligible Accounts $
------------

C. TOTAL NET AMOUNT OF ELIGIBLE ACCOUNTS
(A, MINUS B) $
------------

II. ELIGIBLE RAW MATERIALS INVENTORY

A. Raw Materials Per Attached
Inventory Report $
------------

B. Ineligible Raw Materials $
------------

C. TOTAL ELIGIBLE INVENTORY
COMPRISED OF RAW MATERIALS
(A, MINUS B) $
------------

III. ELIGIBLE FINISHED GOODS INVENTORY

A. Finished Goods Per Attached
Inventory Report $
------------

B. Ineligible Finished Goods $
------------

C. TOTAL ELIGIBLE INVENTORY
COMPRISED OF FINISHED GOODS
(A, MINUS B) $
------------
</TABLE>
<PAGE> 137

<TABLE>
<S> <C> <C>
IV. MMI BORROWING BASE:

A. Total Net Amount of Eligible Accounts
(Section 2.I.C.) $
------------

B. Portion of MMI Borrowing Base
comprised of Net Amount of Eligible Accounts
(85% of A) $
------------

C. Total Eligible Inventory
comprised of Raw Materials
(Section 2.II.C.) $
------------

D. Portion of MMI Borrowing Base
comprised of Raw Materials
(65% of C) $
------------

E. Total Eligible Inventory
comprised of Finished Goods
(Section 2.III.C.) $
------------
F. Portion of MMI Borrowing Base
comprised of Finished Goods
(50% of E) $
------------

G. Total Eligible Inventory
Borrowing Base (D, plus F) $
------------

H. Eighty-Five Percent (85%) of Total Net
Amount of Eligible Accounts
(Section 2.I.C.) $
------------

I. Aggregate undrawn portion of
all outstanding Letters of Credit
(Section 1.II) $
------------

J. Amounts paid by Collateral Agent
or any Lender for the account of
</TABLE>
<PAGE> 138

<TABLE>
<S> <C> <C>
Borrower pursuant to the Loan
Documents and not repaid $
------------

K. TOTAL MMI BORROWING BASE
(B, PLUS THE LESSER OF G OR H,
MINUS I AND MINUS J) $
------------
</TABLE>

SECTION 3. CALCULATION OF
MAXIMUM AGGREGATE AVAILABILITY
OF REVOLVING CREDIT LOANS TO MMI

<TABLE>
<S> <C> <C>
I. MAXIMUM PERMITTED AGGREGATE AMOUNT
OF REVOLVING CREDIT LOANS TO MMI
(SECTION 1.III) $
------------

II. TOTAL MMI BORROWING BASE
(SECTION 2.IV.K.) $
------------

III. MAXIMUM AGGREGATE AVAILABILITY
OF REVOLVING CREDIT LOANS TO MMI
(LESSER OF I OR II) $
------------
</TABLE>

SECTION 4. CALCULATION OF NET AVAILABILITY
OF REVOLVING CREDIT LOANS TO MMI

<TABLE>
<S> <C> <C>
I. MAXIMUM AGGREGATE AVAILABILITY OF
REVOLVING CREDIT LOANS TO MMI
(SECTION 3.III) $
------------

II. AGGREGATE OUTSTANDING PRINCIPAL
BALANCE OF REVOLVING CREDIT LOANS
TO MMI $
------------

III. NET AVAILABILITY (I, MINUS II) $
------------
</TABLE>
<PAGE> 139

EXECUTED AND DELIVERED as of this 13th day of December, 1996.

MMI PRODUCTS, INC.

By:
-----------------------------------
Martin E. Light
Assistant Secretary
Assistant Treasurer

<PAGE> 140

EXHIBIT T

NEW PREFERRED STOCK DISTRIBUTION
COMPLIANCE CERTIFICATE

____________________, 19___

TO: Fleet Capital Corporation, as Collateral Agent
2711 North Haskell Avenue
Suite 2100, LB 21
Dallas, Texas 75204
Attn: Loan Administration Manager

The undersigned, the chief financial officer of MMI Products, Inc., a
Delaware corporation ("MMI"), hereby gives this certificate to Fleet Capital
Corporation ("Fleet") pursuant to the requirements of Section 9.2(I) of that
certain Amended and Restated Loan and Security Agreement, dated as of December
13, 1996, by and among MMI, Fleet, Transamerica Business Credit Corporation
("Transamerica"), and Fleet, as Collateral Agent for itself and Transamerica,
as the same may be amended from time to time ("Loan Agreement"). Capitalized
terms used in this Certificate, unless otherwise defined herein, shall have the
meanings ascribed to them in the Loan Agreement:

The undersigned hereby certifies:

(1) This New Preferred Stock Distribution Compliance
Certificate relates to Distributions to be made to enable Parent to
pay dividends on the New Preferred Stock (the "Distributions") which
are to be paid on __________ (the "New Preferred Stock Distribution
Date");

(2) Revolving Credit Availability on the New Preferred
Stock Distribution Date exceeds $4,000,000 after giving effect to the
Distributions;

(3) average Revolving Credit Availability for the
three-month period ending on the New Preferred Stock Distribution Date
exceeds $4,000,000 after giving effect to the Distributions;
<PAGE> 141

(4) no Event of Default exists either before or after
giving effect to the Distributions;

(5) after giving effect to the Distributions, MMI has
Excess Cash Flow of not less than $0.00 for the Applicable Test
Period.

Very truly yours,

____________________________________
Chief Financial Officer of
MMI Products, Inc.

<PAGE> 142
EXHIBIT U

FORM OF EURODOLLAR BORROWING NOTICE

_____________, 19__

Fleet Capital Corporation
2711 N. Haskell, Suite 2100
Dallas, Texas 75204
Attention: Loan Administration Manager -- MMI Products, Inc.

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Loan and Security
Agreement dated as of December 13, 1996, by and among MMI Products, Inc.
("Borrower"), Fleet Capital Corporation, a Rhode Island corporation ("Fleet"),
and Transamerica Business Credit Corporation ("Transamerica"), as lenders
thereunder (collectively, the "Lenders"), and Fleet, as collateral agent
("Collateral Agent") (as amended from time to time, the "Loan Agreement").
Unless otherwise defined herein, all capitalized terms shall have the meaning
ascribed to them in the Loan Agreement.

The undersigned is an authorized officer of Borrower and is authorized to
make and deliver this request pursuant to the Loan Agreement on behalf of
Borrower.

In connection with the foregoing and pursuant to the terms and provisions
of the Loan Agreement, the undersigned hereby certifies that:

(i) No Default or Event of Default currently exists under the Loan
Agreement.

(ii) Attached hereto as Schedule 1 is a true, correct and complete
request for advance under the Loan Agreement or other transaction related
thereto and Borrower hereby requests that Collateral Agent, on behalf of
Lenders, initiate the transactions described therein.

MMI PRODUCTS, INC.

By:
Name:
Title:

<PAGE> 143
Schedule 1

Request for Interest Rate Option

Please use this correspondence as an official request on behalf of Borrower
to initiate the following transaction(s):

ADVANCES

Advance $__________ on __________ at the Eurodollar Base Rate of ________% plus
[2.75%] [3.25%] for a period of __________ months until maturity at
___________.

_____ credit this advance to account number __________ at __________.

_____ use this Advance to designate $________________ of the [Term
Loan] [Revolving Credit Loans] as Loans that bear interest based upon
the Eurodollar Base Rate.

READVANCES

Readvance to pay the principal amount currently outstanding under the
Eurodollar Loan which matures on __________ in the amount of $____________ by
initiating a Readvance of $____________ at the Eurodollar Base Rate of
__________% plus [2.75%] [3.25%] for a period of __________ months until
maturity on __________.

PAYDOWNS

__________ Payoff the Eurodollar Balance in the amount of $__________ which
matures on ____________.

Proceeds to initiate this paydown may be obtained by debiting the account
numbered __________ at _____________.

<PAGE> 144

December 13, 1996

MMI Products, Inc.
515 W. Greens Road, Suite 710
Houston, Texas 77067
Attention: Julius S. Burns

Re: LOANS TO MMI PRODUCTS, INC. ("BORROWER") FROM FLEET
CAPITAL CORPORATION ("FLEET") AND TRANSAMERICA
BUSINESS CREDIT CORPORATION ("TRANSAMERICA")

Dear Mr. Burns:

Reference is hereby made to that certain Amended and Restated
Loan and Security Agreement dated as of December 13, 1996 (the "Loan
Agreement") by and among Borrower, Fleet and Transamerica, as lenders
("Lenders"), and Fleet as collateral agent for Lenders ("Collateral Agent").
Capitalized terms used herein that are defined in the Loan Agreement and not
otherwise defined herein shall have the meanings assigned to them in the Loan
Agreement.

Notwithstanding any contrary provision of Section 9.2(I),
Lenders and Collateral Agent, at the request of Borrower, hereby agree that
Borrower may declare and make Distributions to Parent to enable Parent to make
payments to Persons who have exercised dissenters' rights with respect to the
recapitalization of Parent referred to in Section 2.1(D) of the Loan Agreement
if (i) the aggregate amount of such Distributions does not exceed $7,917,000,
(ii) with respect to any Distributions in excess of $5,917,000 in the
aggregate, Revolving Credit Availability on the date of any such Distribution
exceeds $8,000,000 after giving effect to the aggregate Distributions hereunder
and (iii) no Default or Event of Default exists either before or after giving
effect to any such Distribution.

For the purposes of the Loan Agreement, such Distributions
permitted hereunder shall not be deemed to be Distributions permitted under
Section 9.2(I).

If you are in agreement with the foregoing, please execute
this letter in the space provided below.

Sincerely,

FLEET CAPITAL CORPORATION,
as Collateral Agent and a Lender

By: /s/ JOY L. BARTHOLOMEW
-------------------------------------
Joy L. Bartholomew
Vice President

TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender

By: /s/ JEFFREY S. CARBERY
------------------------------------
Jeffrey S. Carbery
Senior Account Executive

ACCEPTED AND AGREED
as of the 13th day of
December, 1996 by:

MMI PRODUCTS, INC.

By: /s/ ROBERT N. TENCZAR
----------------------------------
Robert N. Tenczar
Chief Financial Officer

<PAGE> 145
FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("this Amendment") is entered into on the 15th day of April, 1997, to be
effective upon satisfaction of the conditions set forth herein, by and among
MMI PRODUCTS, INC., a Delaware corporation ("Borrower"), FLEET CAPITAL
CORPORATION, a Rhode Island corporation, successor by merger to Fleet Capital
Corporation, a Connecticut corporation, formerly known as Shawmut Capital
Corporation, a Connecticut corporation, successor in interest by assignment to
Barclays Business Credit, Inc., a Connecticut corporation ("Fleet"), and
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation
("Transamerica") (Fleet and Transamerica are collectively referred to as
"Lenders" and each individually as a "Lender"), and Fleet, as collateral agent
for Lenders ("Collateral Agent").

RECITALS

A. Borrower, Lenders and Collateral Agent have entered into that certain
Amended and Restated Loan and Security Agreement, dated as of December 13, 1996
(the "Loan Agreement").

B. Borrower desires to issue up to $120,000,000 of 11 1/4% Senior
Subordinated Notes due 2007 on the terms described in that certain Offering
Memorandum dated April 11, 1997 furnished by Borrower to Lenders (the "Senior
Subordinated Notes").

C. Borrower, Lenders and Collateral Agent desire to amend the Loan
Agreement and the Other Agreements to allow and provide for the issuance of the
Senior Subordinated Notes and to allow and provide for certain other matters,
all as hereinafter set forth.

ARTICLE I
DEFINITIONS

1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.

<PAGE> 146

ARTICLE II
AMENDMENTS

2.01 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; AMENDMENT OF CERTAIN
DEFINITIONS. Effective upon satisfaction of the conditions set forth in
Article III of this Amendment, the following definitions contained in Section
1.1 of the Loan Agreement are hereby amended as follows:

"Permitted Business Acquisition - expenditures made and
liabilities incurred for the acquisition by Borrower of all or
substantially all of the assets of a Person or of a business unit
of a Person engaged in the same or similar business as Borrower,
but only if Revolving Credit Availability exceeds $10,000,000
after giving effect to any such acquisition, and no Default or
Event of Default exists either before or after giving effect to
such acquisition."

"Subordinated Debt - Indebtedness of Borrower that is
expressly subordinated to the Obligations, including, without
limitation, the Indebtedness evidenced by (a) the Mannesmann
Renewal Note and (b) the Senior Subordinated Notes."

2.02 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; ADDITION OF CERTAIN
DEFINITIONS. Effective upon satisfaction of the conditions set forth in
Article III of this Amendment, Section 1.1 of the Loan Agreement is hereby
amended by adding the following new definition thereto in proper alphabetical
order:

"Senior Subordinated Notes - up to $120,000,000 of 11 1/4%
Senior Subordinated Notes due 2007 to be issued by Borrower on or
about April 16, 1997 substantially on the terms described in that
certain Offering Memorandum dated April 11, 1997 furnished by
Borrower to Lenders."

2.03 AMENDMENT TO SECTION 3.1(A) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 3.1(A) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(A) Interest. Outstanding principal on the Loans shall bear
interest, calculated daily (computed on the actual number of days
elapsed over a year of 360 days), at the following rates
(individually called, as applicable, an "Applicable Annual Rate"):
(i) Eurodollar Loans shall bear interest at the lesser of (a) the
Maximum Legal Rate and (b) a rate per annum equal to two percent
(2.00%) above the Eurodollar Base Rate for the Eurodollar Interest
Period applicable thereto, and (ii) all other Loans shall bear
interest at the lesser of (a) the Maximum Legal Rate and (b) a
fluctuating rate per annum equal to one-quarter of one percent
(0.25%) above the Base Rate. Unless Borrower provides a
Eurodollar Borrowing Notice to Collateral Agent in accordance with
Section 3.11(A) irrevocably electing that all or a portion of the
Loans are to bear interest at a

<PAGE> 147

Eurodollar Base Rate, all Loans shall bear interest at the lesser
of (a) the Maximum Legal Rate and (b) a fluctuating rate per annum
equal to one-quarter of one percent (0.25%) above the Base Rate.
All Base Rate Loans shall be increased or decreased, as the case
may be, by an amount equal to any increase or decrease in the Base
Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes
effective."

2.04 AMENDMENT TO SECTION 3.3 OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 3.3 of the Loan Agreement is hereby is hereby deleted in its entirety
and the following is inserted in lieu thereof:

"3.3 Term of Agreement. Subject to Lenders' right to cease
making Loans to Borrower at any time upon or after the occurrence
of a Default or Event of Default, this Agreement shall continue to
be in effect through and including December 12, 2001 (the
"Original Term"). Lenders' commitment to make Revolving Credit
Loans under Section 2.1 hereof shall terminate, and all Revolving
Credit Loans shall be due and payable, on the last day of the
Original Term."

2.05 AMENDMENT TO SECTION 3.4(D) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 3.4(D) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(D) It is understood that Borrower may elect to terminate
this Agreement in its entirety only; no section or lending
facility may be terminated singly; provided, however, that nothing
in this Section 3.4(D) shall prohibit or restrict Borrower from
voluntarily prepaying the Term Loan as permitted under Section
2.2(C) hereof."

2.06 AMENDMENT TO SECTION 9.2(H) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 9.2(H) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(H) Subordinated Debt. Make, or permit any Subsidiary to
make, any prepayment of any part or all of any Subordinated Debt;
or otherwise repurchase, redeem or retire any instrument
evidencing any such Subordinated Debt prior to maturity; or enter
into any agreement (oral or written) which could in any way be
construed to amend, modify, alter or terminate any one or more
instruments or agreements evidencing or relating to any
Subordinated Debt, other than (a) the payment on the Closing Date
of Subordinated Debt in connection with the recapitalization of
Parent referred to in Section 2.1(D) and (b) the prepayment, in
full, of the Mannesmann Renewal Note provided that the funds
utilized to make such prepayment consist solely of the proceeds of
the Senior Subordinated Notes."

<PAGE> 148

2.07 AMENDMENT TO SECTION 9.2(I) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 9.2(I) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(I) Distributions. Declare or make, or permit any
Subsidiary to declare or make, any Distributions (other than (i)
dividends to Parent to facilitate repurchases of capital stock of
Parent, not to exceed an aggregate of $2,000,000 during the term
of this Agreement, from Persons who will be, or are, no longer
employed by Parent or Borrower, provided that no Default or Event
of Default exists either before or after giving effect to such
Distributions, (ii) annual dividends to Parent, not to exceed an
aggregate of $100,000 during the term of this Agreement, to
facilitate the purchase by Parent of life insurance contracts to
provide Parent with funds to honor its monetary obligations under
the Put Agreement, and (iii) Distributions made on the Closing
Date in connection with the recapitalization of Parent referred to
in Section 2.1(D)); provided, however, that Borrower may declare
and make Distributions to Parent (a) to enable Parent to pay
dividends on the New Preferred Stock if (i) Revolving Credit
Availability on the date of such Distribution exceeds $4,000,000
after giving effect to such Distribution, (ii) average Revolving
Credit Availability for the three months ending on the date of
such Distribution exceeds $4,000,000 after giving effect to such
Distribution, (iii) no Event of Default exists either before or
after giving effect to such Distribution, (iv) after giving effect
to such Distribution, Borrower has Excess Cash Flow of not less
than $0.00 for the Applicable Test Period, and (v) Borrower has
delivered to Collateral Agent a New Preferred Stock Distribution
Compliance Certificate in the form of Exhibit T hereto,
demonstrating that the preceding conditions have been met, (b) to
enable Parent to redeem or repurchase all or any portion of the
New Preferred Stock so long as such Distribution is made solely
from the proceeds of the Senior Subordinated Notes, and (c) to
enable Parent to pay to Paulos Investments, Ltd. the amount of any
judgment or settlement relating to the litigation instituted by
Paulos Investments, Ltd. against Parent and more particularly
described on Exhibit I hereto, and related fees and expenses, if
(i) Revolving Credit Availability on the date of such Distribution
exceeds $10,000,000 after giving effect to such Distribution, and
(ii) no Default or Event of Default exists either before or after
giving effect to such Distribution."

2.08 AMENDMENT TO SECTION 9.2(Q) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 9.2(Q) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(Q) Use of Collateral Agent's or a Lender's Name. Without
the prior written consent of Collateral Agent or such Lender, use
the name of Collateral Agent or a Lender or the name of any
Affiliates of Collateral Agent or a Lender in connection with any
of Borrower's business or activities, except in connection with
internal business matters, as required in dealings with
governmental agencies

<PAGE> 149

and financial institutions (including, without limitation, the
Securities and Exchange Commission or any other federal or state
securities commission or regulatory authority) and to trade
creditors of Borrower solely for credit reference purposes."

2.09 AMENDMENT TO SECTION 9.2(X) OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 9.2(X) of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"(X) Mannesmann Renewal Note Payments. Make any payment on
the Mannesmann Renewal Note, except (a) interest payments as
scheduled in the Mannesmann Renewal Note as in effect on the date
hereof to the extent permitted by Section 8 thereof or (b) as
permitted under Section 9.2(H) hereof."

2.10 AMENDMENT TO SECTION 9.3 OF THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Section 9.3 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:

"9.3. Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations
to Collateral Agent or any Lender, Borrower covenants that, unless
otherwise consented to by Lenders in writing, it shall:

(A) Minimum Adjusted Earnings From Operations. As of the
last day of each fiscal quarter of Borrower, maintain, on a
Consolidated basis, Adjusted Earnings From Operations of not less
than $20,000,000 for the twelve-month period ending on such date.

(B) Interest Coverage Ratio. As of the last day of each
fiscal quarter of Borrower, maintain, on a Consolidated basis, a
ratio of (i) Adjusted Earnings From Operations to (ii) total
Interest Expense of not less than 1.50 to 1.00 for the
twelve-month period ending on such date."

2.11 AMENDMENT TO EXHIBIT I TO THE LOAN AGREEMENT. Effective upon
satisfaction of the conditions set forth in Article III of this Amendment,
Exhibit I to the Loan Agreement entitled "Litigation" is hereby deleted in its
entirety and replaced with the Exhibit I attached hereto as Annex A.

ARTICLE III
CONDITIONS PRECEDENT

3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lenders:

<PAGE> 150

(a) Collateral Agent shall have received on behalf of the
Lenders:

(i) this Amendment, duly executed by Borrower;

(ii) a consent, ratification and release executed by
Guarantor, in form and substance satisfactory to Lenders; and

(iii) such additional documents, instruments and
information as Collateral Agent, Lenders or their legal
counsel may request.

(b) The representations and warranties contained herein and in
the Loan Agreement and the Other Agreements, as each is amended
hereby, shall be true and correct as of the date hereof, as if made
on the date hereof;

(c) No Default or Event of Default shall have occurred and be
continuing, unless such Event of Default has been specifically
waived in writing by Lenders;

(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to Collateral Agent, Lenders and their legal counsel;
and

(e) The Senior Subordinated Notes shall have been issued on
the terms described in the Offering Memorandum dated April 11, 1997
furnished by Borrower to Lenders.

ARTICLE IV
LIMITED WAIVER

4.01 Upon Borrower's compliance with the terms and conditions in Article
III hereof, Collateral Agent and Lenders hereby consent to Borrower's issuance
of the Senior Subordinated Notes and hereby waive any Default or Event of
Default which would otherwise arise under the Loan Agreement solely by reason
of Borrower's issuance of the Senior Subordinated Notes. In addition to the
foregoing, Collateral Agent and Lenders hereby consent to Borrower's voluntary
prepayment of the Term Loan utilizing the proceeds of the Senior Subordinated
Notes, and hereby agree that Borrower may make any such prepayment without
giving Collateral Agent ten days' prior written notice (as would otherwise be
required under Section 2.2(c) of the Loan Agreement). Except as otherwise
specifically provided for in this Section 4.01, nothing contained herein shall
be construed as a waiver by Collateral Agent or Lenders of any covenant or
provision of the Loan Agreement, the Other Agreements, this Amendment, or of
any other contract or instrument between Borrower, Collateral Agent and/or
Lenders, and the failure of Collateral Agent or Lenders at any time or times
hereafter to require strict performance by

<PAGE> 151

Borrower of any provision thereof shall not waive, affect or diminish any right
of Collateral Agent or Lenders to thereafter demand strict compliance
therewith. Collateral Agent and Lenders hereby reserve all rights granted
under the Loan Agreement, the Other Agreements, this Amendment and any other
contract or instrument between Borrower, Collateral Agent and Lenders.

ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

5.01 RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Loan Agreement and the Other Agreements, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the Loan
Agreement and the Other Agreements are ratified and confirmed and shall
continue in full force and effect. Borrower, Collateral Agent and Lenders
agree that the Loan Agreement and the Other Agreements, as amended hereby,
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms.

5.02 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Collateral Agent and Lenders that (a) the execution, delivery and
performance of this Amendment and any and all Other Agreements executed and/or
delivered in connection herewith have been authorized by all requisite
corporate action on the part of Borrower and will not violate the Certificate
of Incorporation or Bylaws of Borrower; (b) the representations and warranties
contained in the Loan Agreement, as amended hereby, and any Other Agreement are
true and correct on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date; (c) no Default or
Event of Default under the Loan Agreement, as amended hereby, has occurred and
is continuing, unless such Default or Event of Default has been specifically
waived in writing by Collateral Agent and Lenders; (d) Borrower is in full
compliance with all covenants and agreements contained in the Loan Agreement
and the Other Agreements, as amended hereby; and (e) Borrower has not amended
its Certificate Incorporation or its Bylaws since the date of the Loan
Agreement, except for such amendments, if any, which are attached hereto as
Annex B.

ARTICLE VI
MISCELLANEOUS PROVISIONS

6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in the Loan Agreement or any Other Agreement, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the Other
Agreements, and no investigation by Collateral Agent or Lenders or any closing
shall affect the representations and warranties or the right of Collateral
Agent or Lenders to rely upon them.

<PAGE> 152

Agreement, as amended hereby, are hereby amended so that any reference in the
Loan Agreement and such Other Agreements to the Loan Agreement shall mean a
reference to the Loan Agreement as amended hereby.

6.03 EXPENSES OF COLLATERAL AGENT AND LENDERS. As provided in the Loan
Agreement, Borrower agrees to pay on demand all costs and expenses incurred by
Collateral Agent and Lenders in connection with the preparation, negotiation,
and execution of this Amendment and the Other Agreements executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of Collateral Agent's and
Lenders' legal counsel, and all costs and expenses incurred by Collateral Agent
and Lenders in connection with the enforcement or preservation of any rights
under the Loan Agreement, as amended hereby, or any Other Agreements,
including, without limitation, the costs and fees of Collateral Agent's and
Lenders' legal counsel.

6.04 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

6.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of Collateral Agent, Lenders and Borrower and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Collateral Agent.

6.06 COUNTERPARTS. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same instrument.

6.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Collateral Agent or Lenders to or for any breach of or deviation from any
covenant or condition by Borrower shall be deemed a consent to or waiver of any
other breach of the same or any other covenant, condition or duty.

6.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.

6.10 RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR

<PAGE> 153

ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM COLLATERAL AGENT
OR LENDERS. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER
DISCHARGES COLLATERAL AGENT AND LENDERS, THEIR PREDECESSORS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY,
ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST COLLATERAL AGENT
AND/OR LENDERS, THEIR PREDECESSORS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AMENDMENT.

6.11 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, EACH
AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE LOAN
AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
MAJORITY LENDERS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 154

IN WITNESS WHEREOF, this Amendment has been executed on the date first
above-written, to be effective upon satisfaction of the conditions set forth
herein.

"BORROWER"

MMI PRODUCTS, INC.

By: /s/ ROBERT N. TENCZAR
----------------------------------
Name: Robert N. Tenczar,
----------------------------------
Title: Chief Financial Officer
----------------------------------

"LENDERS"

FLEET CAPITAL CORPORATION

By: /s/ JOY L. BARTHOLOMEW
----------------------------------
Joy L. Bartholomew,
Vice President

TRANSAMERICA BUSINESS CREDIT
CORPORATION

By: /s/ JEFFREY S. CARBERY
----------------------------------
Name: Jeffrey S. Carbery,
----------------------------------
Title: Senior Account Executive
----------------------------------

"COLLATERAL AGENT"

FLEET CAPITAL CORPORATION

By: /s/ JOY L. BARTHOLOMEW
----------------------------------
Joy L. Bartholomew,
Vice President

<PAGE> 155

CONSENT, RATIFICATION AND RELEASE

The undersigned, hereby consents to the terms of the within and foregoing
Amendment, confirms and ratifies the terms of its guaranty agreement, and
acknowledges that its guaranty agreement is in full force and effect, that it
has no defense, counterclaim, set-off or any other claim to diminish its
liability under such document, that its consent is not required to the
effectiveness of the within and foregoing document, and that no consent by it
is required for the effectiveness of any future amendment, modification,
forbearance or other action with respect to the Loans, the Collateral, or any
of the Other Agreements. THE UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES COLLATERAL AGENT AND LENDERS, THEIR
PREDECESSORS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST
COLLATERAL AGENT OR LENDERS, THEIR PREDECESSORS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER
ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS,
OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.

"GUARANTOR"

MERCHANTS METALS HOLDING COMPANY

By: /s/ ROBERT N. TENCZAR
-----------------------------------
Name: Robert N. Tenczar
----------------------------------
Vice President and
Title: Chief Financial Officer
----------------------------------

<PAGE> 156

ANNEXES:

A - Exhibit I - Litigation
B - Amendments to Certificate of Incorporation and Bylaws

<PAGE> 157

ANNEX A

EXHIBIT I

LITIGATION

On December 13, 1996, as part of a recapitalization transaction involving
Merchants Metals Holding Company ("Holding"), MMHC Merger Company, a shell
company with no substantial assets, was merged with and into Holding (the
"Merger"), with Holding being the surviving corporation of the Merger.
Pursuant to the Merger, previously outstanding shares of capital stock of
Holding were converted into the right to receive cash. Prior to the Merger,
Paulos Investments, Ltd., a stockholder of Holding (the "Dissenting
Stockholder"), exercised its statutory appraisal rights pursuant to the
Delaware General Corporation Law with respect to the Merger.

On February 4, 1997, the Dissenting Stockholder filed a petition with
the Delaware Court of Chancery requesting that such court determine the fair
value of the Dissenting Stockholder's shares of common stock of Holding as of
the time of the Merger (the "Appraisal Proceeding"). If the Dissenting
Stockholder had not exercised its statutory appraisal rights, it would have
been entitled to receive approximately $3.7 million as a result of the Merger
in respect of the common stock of Holding that it owned immediately prior to
the Merger.

<PAGE> 158

ANNEX B

AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS

None.

<PAGE> 159
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT ("this Amendment") is entered into on the 11th day of June,
1997, to be effective upon satisfaction of the conditions set forth herein, by
and among MMI PRODUCTS, INC., a Delaware corporation ("Borrower"), FLEET
CAPITAL CORPORATION, a Rhode Island corporation, successor by merger to Fleet
Capital Corporation, a Connecticut corporation, formerly known as Shawmut
Capital Corporation, a Connecticut corporation, successor in interest by
assignment to Barclays Business Credit, Inc., a Connecticut corporation
("Fleet"), and TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation
("Transamerica") (Fleet and Transamerica are collectively referred to as
"Lenders" and each as a "Lender"), and Fleet, as collateral agent for Lenders
("Collateral Agent").

RECITALS

A. Borrower, Lenders and Collateral Agent have entered into that
certain Amended and Restated Loan and Security Agreement, dated as of December
13, 1996, as amended by the First Amendment to Amended and Restated Loan and
Security Agreement, dated as of April 15, 1997 (as amended, the "Loan
Agreement").

B. Borrower, Lenders and Collateral Agent desire to amend the Loan
Agreement and the Other Agreements in connection with the contribution by the
stockholders of Parent of the capital stock of Parent representing at least a
majority of the voting power of Parent to MMI Products, L.L.C. (the "LLC"), as
a result of which Parent shall become a subsidiary of the LLC.

ARTICLE I
DEFINITIONS

1.01 Capitalized terms used in this Amendment are defined in
the Loan Agreement, as amended hereby, unless otherwise stated.

ARTICLE II
AMENDMENTS

2.01 AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT; ADDITION
OF CERTAIN DEFINITIONS. Effective upon satisfaction of the conditions set forth
in Article III of this Amendment,

<PAGE> 160

Section 1.1 of the Loan Agreement is hereby amended by adding the following new
definitions thereto in proper alphabetical order:

"Contribution - The contribution by the stockholders of
Parent of the capital stock of Parent representing at least a majority of the
voting power of Parent to the LLC in exchange for equity interests in the LLC."

"LLC - MMI Products, L.L.C.."

2.02 AMENDMENT TO EXHIBIT G OF THE LOAN AGREEMENT; AMENDMENT
TO CAPITAL STRUCTURE. Effective upon satisfaction of the conditions set forth
in Article III of this Amendment, Exhibit G of the Loan Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:

"(i) Subsidiaries: None

(ii) Corporate or Joint Venture Affiliates:

(a) Parent, which owns all of the outstanding capital
stock of Borrower;

(b) LLC, which owns at least a majority of the voting
power of Parent;

(c) Citicorp Venture Capital Ltd., a New York
corporation, which beneficially owns equity
interests of the LLC representing 10% or more of the
voting power of the particular series of equity
interests of the LLC which possesses voting power
with respect to the LLC's investment in Parent and
Borrower; and

(d) Julius S. Burns, President and Chief Executive
Officer of Borrower and Parent, which beneficially
owns equity interests of the LLC representing 10% or
more of the voting power of the particular series of
equity interests of the LLC which possesses voting
power with respect to the LLC's investment in Parent
and Borrower.

(iii) Outstanding Securities of Borrower:

(a) 252,000 shares of Common Stock, par value $1.00 per
share, held by Parent.

(iv) Authorized, Issued and Treasury Shares of Borrower

(a) 500,000 shares of Common Stock, par value $1.00 per
share, authorized;

(b) 252,000 shares of Common Stock, par value $1.00 per
share, issued; and

<PAGE> 161

2.03 AMENDMENT TO SECTION 11.1(P) OF THE LOAN AGREEMENT.
Effective upon satisfaction of the conditions set forth in Article III of this
Amendment, Section 11.1(P) of the Loan Agreement is hereby amended by inserting
the following at the end of Section 11.1(P):

"For purposes of this Section 11.1(P), Citivent and its
affiliates shall be deemed to own shares of common stock of Parent that are
owned by the LLC if Citivent and its affiliates own in the aggregate a number
of common units of the particular series of the LLC which possesses voting
power with respect to the LLC's investment in Parent and Borrower that is equal
to at least to at least 80% of the number of shares of outstanding common stock
of Parent owned by Citivent and its Affiliates in the aggregate on the Closing
Date."

ARTICLE III
CONDITIONS PRECEDENT

3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent,
unless specifically waived in writing by Lenders:

(a) Collateral Agent shall have received on behalf of the Lenders:

(i) this Amendment, duly executed by Borrower;

(ii) a consent, ratification and release executed by
Guarantor, in form and substance satisfactory to
Lenders; and

(iii) such additional documents, instruments and
information as Collateral Agent, Lenders or
their legal counsel may reasonably request.

(b) The representations and warranties contained herein and in the
Loan Agreement and the Other Agreements, as each is amended hereby, shall be
true and correct as of the date hereof, as if made on the date hereof;

(c) No Default or Event of Default shall have occurred and be
continuing, unless such Event of Default has been specifically waived in
writing by Lenders; and

(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Collateral Agent,
Lenders and their legal counsel.

ARTICLE IV
LIMITED WAIVER

4.01 Upon Borrower's compliance with the terms and conditions
in Article III hereof, Collateral Agent and Lenders hereby consent to the
Contribution and hereby waive any

<PAGE> 162

Default or Event of Default which would otherwise arise under the Loan
Agreement solely by reason of the Contribution. Except as otherwise
specifically provided for in this Amendment, nothing contained herein shall be
construed as a waiver by Collateral Agent or Lenders of any covenant or
provision of the Loan Agreement, the Other Agreements, this Amendment, or of
any other contract or instrument between Borrower, Collateral Agent and/or
Lenders, and the failure of Collateral Agent or Lenders at any time or times
hereafter to require strict performance by Borrower of any provision thereof
shall not waive, affect or diminish any right of Collateral Agent or Lenders to
thereafter demand strict compliance therewith. Collateral Agent and Lenders
hereby reserve all rights granted under the Loan Agreement, the Other
Agreements, this Amendment and any other contract or instrument between
Borrower, Collateral Agent and Lenders.

ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

5.01 RATIFICATIONS. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Loan Agreement and the Other Agreements, and, except as
expressly modified and superseded by this Amendment, the terms and provisions
of the Loan Agreement and the Other Agreements are ratified and confirmed and
shall continue in full force and effect. Borrower, Collateral Agent and Lenders
agree that the Loan Agreement and the Other Agreements, as amended hereby,
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms.

5.02 REPRESENTATIONS AND WARRANTIES. Borrower hereby
represents and warrants to Collateral Agent and Lenders that (a) the execution,
delivery and performance of this Amendment and any and all Other Agreements
executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of Borrower and will not violate the
Certificate of Incorporation or Bylaws of Borrower; (b) the representations and
warranties contained in the Loan Agreement, as amended hereby, and any Other
Agreement are true and correct on and as of the date hereof and on and as of
the date of execution hereof as though made on and as of each such date; (c) no
Default or Event of Default under the Loan Agreement, as amended hereby, has
occurred and is continuing, unless such Default or Event of Default has been
specifically waived in writing by Collateral Agent and Lenders; (d) Borrower is
in full compliance with all covenants and agreements contained in the Loan
Agreement and the Other Agreements, as amended hereby; and (e) Borrower has not
amended its Certificate of Incorporation or its Bylaws since the date of the
Loan Agreement, except for the Restated Certificate of Incorporation which
merely restates and integrates, but does not further amend, the Certificate of
Incorporation, which is attached hereto as Annex A.

ARTICLE VI
MISCELLANEOUS PROVISIONS

6.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in the Loan Agreement or any Other
Agreement, including, without limitation, any document

<PAGE> 163

furnished in connection with this Amendment, shall survive the execution and
delivery of this Amendment and the Other Agreements, and no investigation by
Collateral Agent or Lenders or any closing shall affect the representations and
warranties or the right of Collateral Agent or Lenders to rely upon them.

6.02 REFERENCE TO LOAN AGREEMENT. Each of the Loan Agreement
and the Other Agreements, and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Loan Agreement, as amended hereby, are
hereby amended so that any reference in the Loan Agreement and such Other
Agreements to the Loan Agreement shall mean a reference to the Loan Agreement
as amended hereby.

6.03 EXPENSES OF COLLATERAL AGENT AND LENDERS. As provided in
the Loan Agreement, Borrower agrees to pay on demand all costs and expenses
incurred by Collateral Agent and Lenders in connection with the preparation,
negotiation, and execution of this Amendment and the Other Agreements executed
pursuant hereto and any and all amendments, modifications, and supplements
thereto, including, without limitation, the costs and fees of Collateral
Agent's and Lenders' legal counsel, and all costs and expenses incurred by
Collateral Agent and Lenders in connection with the enforcement or preservation
of any rights under the Loan Agreement, as amended hereby, or any Other
Agreements, including, without limitation, the costs and fees of Collateral
Agent's and Lenders' legal counsel.

6.04 SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

6.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon
and shall inure to the benefit of Collateral Agent, Lenders and Borrower and
their respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Collateral Agent.

6.06 COUNTERPARTS. This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts, each of
which when so executed shall be deemed to be an original, but all of which when
taken together shall constitute one and the same instrument.

6.07 EFFECT OF WAIVER. No consent or waiver, express or
implied, by Collateral Agent or Lenders to or for any breach of or deviation
from any covenant or condition by Borrower shall be deemed a consent to or
waiver of any other breach of the same or any other covenant, condition or
duty.

6.08 HEADINGS. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.

<PAGE> 164

6.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER AGREEMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO
BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

6.10 RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL, OR ANY PART
OF ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM COLLATERAL AGENT OR LENDERS. BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES COLLATERAL AGENT AND
LENDERS, THEIR PREDECESSORS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS
AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE
THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER
HAVE AGAINST COLLATERAL AGENT AND/OR LENDERS, THEIR PREDECESSORS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE
OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR
REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT
LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER
AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

6.11 FINAL AGREEMENT. THE LOAN AGREEMENT AND THE OTHER
AGREEMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS
EXECUTED. THE LOAN AGREEMENT AND THE OTHER AGREEMENTS, AS AMENDED HEREBY, MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND MAJORITY LENDERS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 165

IN WITNESS WHEREOF, this Amendment has been executed on the date first
above written, to be effective upon satisfaction of the conditions set forth
herein.

"BORROWER"

MMI PRODUCTS, INC.

By: /s/ ROBERT N. TENCZAR
-----------------------------------
Robert N. Tenczar,
Vice President and
Chief Financial Officer

"LENDERS"

FLEET CAPITAL CORPORATION

By: /s/ JOY L. BARTHOLOMEW
-----------------------------------
Joy L. Bartholomew,
Vice President

TRANSAMERICA BUSINESS CREDIT
CORPORATION

By: /s/ JEFFREY S. CARBERY
-----------------------------------
Name: Jeffrey S. Carbery
Title: Senior Account Executive

"COLLATERAL AGENT"

FLEET CAPITAL CORPORATION

By:

By: /s/ JOY L. BARTHOLOMEW,
-----------------------------------
Joy L. Bartholomew,
Vice President

<PAGE> 166

CONSENT, RATIFICATION AND RELEASE

The undersigned, hereby consents to the terms of the within and
foregoing Amendment, confirms and ratifies the terms of its guaranty agreement,
and acknowledges that its guaranty agreement is in full force and effect, that
it has no defense, counterclaim, set-off or any other claim to diminish its
liability under such document, that its consent is not required to the
effectiveness of the within and foregoing document, and that no consent by it
is required for the effectiveness of any future amendment, modification,
forbearance or other action with respect to the Loans, the Collateral, or any
of the Other Agreements. THE UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES COLLATERAL AGENT AND LENDERS, THEIR
PREDECESSORS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE UNDERSIGNED MAY NOW OR HEREAFTER HAVE AGAINST
COLLATERAL AGENT OR LENDERS, THEIR PREDECESSORS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER
ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS,
OR OTHERWISE, AND ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.

"GUARANTOR"

MERCHANTS METALS HOLDING COMPANY

By: /s/ ROBERT N. TENCZAR
-----------------------------------
Robert N. Tenczar,
Vice President and
Chief Financial Officer

<PAGE> 167

ANNEX A

<PAGE> 168
RESTATED CERTIFICATE OF INCORPORATION
OF
MMI PRODUCTS, INC.

MMI Products, Inc. (the "Corporation"), a corporation
organized and existing under the laws of the State of Delaware, hereby
certifies as follows:

FIRST: The current name of the Corporation is MMI Products,
Inc. The name under which the Corporation was originally incorporated was
Gibralter Fence Company. The original Certificate of Incorporation of the
Corporation (as amended, the "Certificate of Incorporation") was filed with the
Secretary of State of the State of Delaware on May 9, 1969.

SECOND: This Restated Certificate of Incorporation has been
duly adopted by the Board of Directors of the Corporation pursuant to Section
245 of the General Corporation Law of the State of Delaware. This Restated
Certificate of Incorporation restates and integrates the provisions of the
Corporation's Certificate of Incorporation as heretofore amended or
supplemented without further amending such provisions. There are no
discrepancies between the provisions of the Corporation's Certificate of
Incorporation as heretofore amended or supplemented and the provisions of this
Restated Certificate of Incorporation.

THIRD: The Certificate of Incorporation is hereby
superseded by this Restated Certificate of Incorporation, which shall
henceforth be the Certificate of Incorporation of the Corporation.

FOURTH: The text of the Corporation's Certificate
of Incorporation as heretofore amended or supplemented is hereby restated to
read in its entirety as follows:

ARTICLE I

The name of the Corporation is MMI Products, Inc.

ARTICLE II

The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Centre, 1209 Orange Street in the City
of Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.

<PAGE> 169

ARTICLE III

The purpose for which the Corporation is organized is to
engage in any and all lawful acts and activity for which corporations may be
organized under the General Corporation Law of Delaware. The Corporation will
have perpetual existence.

ARTICLE IV

The total number of shares of stock that the Corporation has
authority to issue is Five Hundred Thousand (500,000) shares of Common Stock,
with a par value of One Dollar ($1.00) per share.

ARTICLE V

Cumulative voting for the election of directors of the
Corporation is prohibited. Directors of the Corporation need not be elected by
written ballot unless the by-laws of the Corporation otherwise provide. The
number of directors of the Corporation shall be fixed from time to time by or
pursuant to the by-laws of the Corporation.

ARTICLE VI

The directors of the Corporation shall have the power to
adopt, amend, and repeal the by-laws of the Corporation.

ARTICLE VII

Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of the
Corporation.

ARTICLE VIII

The Corporation shall indemnify all officers and directors of
the Corporation to the fullest extent permitted by the Delaware General
Corporation Law, as amended from time to time. To the fullest extent permitted
by the Delaware General Corporation Law as it now exists or may hereafter be
amended, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages arising from a breach of fiduciary duty
owed to the Corporation.

The Corporation may additionally indemnify any employee or
agent of the Corporation to the fullest extent permitted by law.

-2-

<PAGE> 170

ARTICLE IX

The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation.

ARTICLE X

Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of creditors
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such a manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.

-3-

<PAGE> 171

IN WITNESS WHEREOF, MMI Products, Inc. has caused this
Restated Certificate of Incorporation to be executed by the undersigned, this
9th day of June, 1997.

MMI PRODUCTS, INC.

By:

-----------------------------------
Robert N. Tenczar, Vice President

-4-

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Summary Financial
Data", "Selected Financial Data", and "Experts" and to the use of our reports
dated March 10, 1997, in Amendment No. 1 to the Registration Statement (Form
S-4 No. 333-29141) and related Prospectus of MMI Products, Inc.

/s/ ERNST & YOUNG LLP

Houston, Texas
July 22, 1997