METAL MANAGEMENT INC, S-3/A, 1998-01-13

METAL MANAGEMENT INC
S-3/A, 1998-01-13
MISC DURABLE GOODS

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<PAGE> 1

As filed with the Securities and Exchange Commission on January 13, 1998.
Registration No. 333-43423

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

PRE-EFFECTIVE
AMENDMENT NO. 1 TO

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
METAL MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-2835068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
(312) 645-0700
(Address including zip code, and telephone number, including area code,
of registrant's principal executive offices)

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

GERARD M. JACOBS
Chief Executive Officer
METAL MANAGEMENT, INC.
500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
(312) 645-0700
(Name and address, including zip code, and telephone number,
including area code, of agents for service)

With a Copy to:
MICHAEL J. CHOATE, ESQ.
SHEFSKY & FROELICH LTD.
444 North Michigan Avenue, Suite 2500
Chicago, Illinois 60611
(312) 527-4000

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

Approximate date of commencement of proposed
sale to the public: As soon as practicable after this
Registration Statement has become effective.

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

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. |X|

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
|_|

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE
$0.01 PER SHARE 15,896,858 (1) $ 240,174,669 $ 70,852

================================================================================================================================
</TABLE>

(1) PURSUANT TO RULE 457(C), SOLELY FOR THE PURPOSE OF CALCULATING THE
AMOUNT OF THE REGISTRATION FEE. THE AVERAGE OF THE HIGH AND LOW
PRICES REPORTED ON THE NASDAQ STOCK MARKET WAS $15.09 ON DECEMBER 19,
1997 AND WAS $15.625 ON JANUARY 12, 1998.

(2) A REGISTRATION FEE OF $68,344 WAS PAID IN CONNECTION WITH THE
REGISTRATION OF 15,352,779 SHARES OF COMMON STOCK ON
DECEMBER 29, 1997. AN ADDITIONAL 544,079 SHARES ARE BEING REGISTERED
UNDER THIS PRE-EFFECTIVE AMENDMENT RESULTING IN AN ADDITIONAL FEE OF
$ 2,508 FOR A TOTAL REGISTRATION FEE OF $ 70,852.

(3) THIS REGISTRATION STATEMENT ALSO RELATES, TO THE EXTENT PERMITTED BY
RULE 416, TO AN INDETERMINATE AMOUNT OF SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF CERTAIN PREFERRED SHARES, CONVERSION OF A
NOTE PAYABLE INTO COMMON STOCK AND THE EXERCISE OF WARRANTS DESCRIBED
HEREIN TO PREVENT DILUTION RESULTING FROM STOCK SPLITS, STOCK
DIVIDENDS OR SIMILAR EVENTS OR BY REASON OF CHANGES IN THE CONVERSION
PRICE OF THE PREFERRED SHARES IN ACCORDANCE WITH THE TERMS OF THE
CERTIFICATE OF DESIGNATION GOVERNING THE PREFERRED SHARES OR THE
EXERCISE PRICE OF THE WARRANTS IN ACCORDANCE WITH THE DOCUMENTS
GOVERNING EACH WARRANT.

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 ANY 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.

PROSPECTUS SUBJECT TO COMPLETION JANUARY 13, 1998

15,896,858 SHARES

METAL MANAGEMENT, INC.

COMMON STOCK

This Prospectus relates to the resale of up to an aggregate of
15,896,858 shares (the "Shares") of common Stock, par value $.01 per share (the
"Common Stock"), of Metal Management, Inc., a Delaware corporation (the
"Company"), which may be offered (the "Offering") for sale by persons
(individually a "Selling Stockholder," collectively the "Selling Stockholders")
described in this Prospectus. The Shares that were issued, or are issuable by
the Company consist of the following: (i) 6,547,288 Shares issued by the Company
in connection with business combination transactions; (ii) 2,045,673 Shares
issuable upon exercise of warrants granted by the Company in business
combination transactions or to employees, advisors or other agents of the
Company; (iii) up to 2,614,331 Shares issuable on conversion of 23,000 shares of
Series A Convertible Preferred Stock (the "Series A Preferred Stock") by the
holders of such Series A Preferred Stock; (iv) up to 1,939,998 Shares issuable
upon conversion of 20,000 shares of Series B Convertible Preferred Stock (the
"Series B Preferred Stock") by the holders of such Series B Preferred Stock; (v)
1,885,000 Shares owned by individuals who purchased such Shares in other
transactions exempt from the registration requirements of federal and state law;
(vi) 182,087 shares issuable on conversion of a note payable granted by the
Company in connection with a business combination transaction; and (vii)
682,481 Shares which are not otherwise covered by (i)-(vi) above.

The Shares may be offered for sale from time to time by or for the
account of the Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest in the open market, on the Nasdaq
National Market, in the over-the-counter market, in privately negotiated
transactions, or a combination of these methods, at market prices prevailing at
the time of sale, at prices related to the prevailing market prices or at
negotiated prices. The Shares are intended to be sold through one or more
broker-dealers or directly to purchasers. These broker-dealers may receive
compensation in the form of commissions, discounts or concessions from the
Selling Stockholders or purchasers of the Shares for whom the broker-dealer may
act as agent, or to whom the Selling Shareholders may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary concessions). The Selling Stockholders and any broker-dealers who act
in connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act") and any commissions received by them and the proceeds of any
resale of the Shares may be deemed to be underwriting discounts and commissions
under the Securities Act.

Of the 15,896,858 Shares offered hereby, a total of: (i) 9,114,769
Shares are presently outstanding; (ii) 2,045,673 Shares are issuable upon
exercise of warrants; (iii) 182,087 Shares are issuable upon conversion of a
note payable; and (iv) up to 4,554,329 Shares are issuable upon conversion of
the Series A Preferred

<PAGE> 3

Stock and Series B Preferred Stock. The conversion price of the Series A
Preferred Stock is equal to the lesser of (A) the price determined by
multiplying (x) the average of the "Closing Bid Prices" (as defined in the
Certificate of Designation for the Series A Preferred Stock) for the five (5)
trading days immediately prior to (but not including) the purchase date times
(y) 85%; and (B) $18.30. The conversion price for the Series B Preferred Stock
is equal to the lesser of: (A) the price determined by multiplying (x) the
average of "Closing Bid Price" (as defined in the Certificate of Designation
for the Series B Preferred Stock) for the Common Stock on the five (5) trading
days occurring immediately prior to, but not including, the date of conversion
times (y) 92.5%; (B) the price determined by multiplying (x) the "Closing Bid
Price" for the Common Stock for the five (5) trading days immediately prior to
(but not including) the purchase date of the Series B Preferred Stock times (y)
120%; or (C) the price equal to the lowest traded price of a share of Common
Stock during any period in which the Common Stock is no longer listed for
quotation on the Nasdaq National Market, the New York Stock Exchange or such
other national securities exchange. The exercise price and the number of shares
issuable upon exercise of warrants or conversion of the Series A or Series B
Preferred Stock (and offered for sale pursuant to this Prospectus) are subject
to adjustment to the extent permitted under Rule 416 of the Securities Act to
prevent dilution resulting from stock splits, stock dividends or similar
events, or by reason of changes in the conversion price in accordance with the
terms of the certificate of designation governing the Series A or Series B
Preferred Stock. If all of the warrants referred to in (ii) above are
exercised, the Company will receive proceeds of $11,342,249 although in certain
instances the documents governing the warrants permit the holder thereof to
exercise the warrants in a "cashless" manner. A "cashless" exercise will reduce
the number of shares ultimately issued but will also reduce the proceeds
payable to the Company from such issuance. The Company will receive no portion
of the proceeds from the sale of the Shares offered hereby and will bear
certain expenses incident to their registration. See "Selling Stockholders" and
"Plan of Distribution."

The Common Stock is currently traded on The Nasdaq Stock Market --
National Market ("Nasdaq") under the symbol "MTLM." On January 12, 1998, the
last reported price for the Common Stock as reported by Nasdaq was $ 15.875 per
share. As of January 13, 1998, the Company had a total of 29,948,829 shares of
Common Stock outstanding.

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS
SET FORTH UNDER THE CAPTION "RISK FACTORS" BEGINNING ON
PAGE 8 OF THIS PROSPECTUS.

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

January __, 1998

<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, and, in accordance therewith, files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy and
information statements and other information concerning the Company 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; and at
the Commission's regional offices located at Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661 and at Seven World Trade Center,
Suite 1300, New York, New York, 10048. Copies of such material can also be
obtained from the Commission at prescribed rates through its Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The Common Stock is
currently traded on Nasdaq. Information filed by the Company with Nasdaq may be
inspected through EDGAR, the Commission's on-line filing service.

The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act with respect to the Shares offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto can be inspected and copied through EDGAR,
the Commission's on-line filing service.

<PAGE> 5

THE COMPANY

GENERAL

The Company and its wholly-owned subsidiaries are engaged in the
business of dismantling, processing, marketing, brokering and recycling both
ferrous and non-ferrous metals with the goal of becoming one of the largest
recyclers of scrap metal in North America. The Company operates, or participates
in joint ventures operating, thirty-eight recycling centers in ten states and
resells processed scrap metal and other materials to domestic and foreign
customers. The Company intends to continue its expansion principally through
acquisitions. The Company believes that the scrap metal recycling industry is
highly fragmented, and that no single company is a significant processor of
scrap metal on a national scale, although certain companies are significant
processors on a local or regional scale.

The Company entered the scrap metal recycling industry on April 11,
1996, through its merger with EMCO Recycling Corp. ("EMCO"), headquartered in
Phoenix, Arizona. As part of the strategic redirection, in April 1996 management
announced plans to exit its Spectra*Star printer and consumables business. On
July 16, 1996, the inventory and related production equipment of this business
was sold for approximately $1.3 million in cash and an agreement by the
purchaser to pay the Company a percentage of revenues royalties on future sales
of Spectra*Star printers and related consumables. The Company discontinued and
sold its VideoShow and related products lines business ("VideoShow") in December
1996 for consideration substantially in the form of royalties on future sales of
VideoShow equipment in an amount which the Company does not expect will be
material.

The Company was founded in 1981 and re-incorporated in Delaware in June
1986. Prior to April 11, 1996, the Company was called General Parametrics
Corporation. On April 9, 1996, the Company's stockholders approved an amendment
to its Certificate of Incorporation to change the name to Metal Management, Inc.
Effective April 15, 1996, the Company changed its Nasdaq Stock symbol to "MTLM".
On April 25, 1996, the Board of Directors of the Company approved a change in
the Company's fiscal year-end from October 31 to March 31, effective April 1,
1996.

RECENT DEVELOPMENTS
The Company has recently completed a number of acquisitions
which are summarized below (the "Completed Acquisitions").

- HOUSTON COMPRESSED STEEL CORP. Houston Compressed Steel Corp.
("HCS") was founded in 1941 and has been operated for several
years by the Segal family. HCS operates one processing
facility in Houston, Texas. The Company completed the
acquisition of HCS on January 8, 1998.

- COZZI. Cozzi Iron & Metal, Inc. ("Cozzi") was founded in 1945
by the Cozzi family. Cozzi is headquartered in Chicago,
Illinois and has a network of processing facilities located in
Chicago, Illinois; East Chicago, Indiana; and the Pittsburgh,
Pennsylvania area as well as joint venture interests (50%) in
entities operating in Memphis, Tennessee and Phoenix, Arizona.
The Company completed the acquisition of Cozzi on December 1,
1997. Cozzi acquired all of the stock of Kankakee Scrap
Corp., Kankakee, Illinois ("Kankakee"), on December 18, 1997.

<PAGE> 6

- PROLER. Proler Southwest Inc. and Proler Steelworks L.L.C.
(collectively, "Proler"), were founded in 1992 and 1994,
respectively, principally by William and Ronald Proler. Proler
operates a facility in Houston, Texas and a site in Jackson,
Mississippi. The Company completed the acquisition of Proler
on August 28, 1997.

- THE ISAAC GROUP. The Isaac group of companies (collectively,
"Isaac"), founded in 1899 by the Isaac family, operates four
processing facilities located in Defiance, Bryan, Cleveland
and Dayton, Ohio. The Company completed the acquisition of
Isaac on June 23, 1997.

- RESERVE IRON & METAL, L.P. Reserve Iron & Metal, L.P.
("Reserve"), founded in 1978 and acquired in 1990 by the
Joseph family, operates two processing facilities located in
Cleveland, Ohio and Chicago, Illinois and has a 50% interest
in a joint venture which operates a processing facility
located in Attalla, Alabama. The Company completed the
acquisition of Reserve on May 1, 1997.

- HOUTEX METALS COMPANY, INC. HouTex Metals Company, Inc.
("HouTex"), founded in 1979 by the Melnik family, operates one
processing facility on the Houston Ship Channel. The Company
completed the acquisition of HouTex on January 7, 1997.

- THE MACLEOD GROUP. The "MacLeod Group" of companies
("MacLeod"), founded in 1969 by Ian MacLeod, operates four
processing facilities in Southern California. The Company
completed the acquisition of MacLeod on January 1, 1997.

- EMCO RECYCLING CORP. EMCO Recycling Corp. ("EMCO"), formed in
1993 by the combination of three companies, Empire Metals,
Inc., Valley Steel and Copperstate Metals, Inc., operates
processing facilities at ten sites in Phoenix, Arizona and two
other sites in the State of Arizona. The Company completed the
acquisition of EMCO on April 11, 1996.

From time to time the Company engages in discussions with third parties
regarding potential acquisitions of companies or businesses in the same or
substantially similar lines of business as the Company. If the parties are able
to agree generally on the nature, terms and conditions of a transaction,
including the purchase price and form of consideration, a letter of intent is
prepared to reflect this understanding. In many cases, these letters of intent
are structured as "binding intents" to purchase the business, although each
letter is still subject to a number of terms and conditions including but not
limited to negotiation and execution of definitive purchase agreements. In
addition, each potential acquisition may be subject to additional contingencies
specific to that acquisition. There can be no assurance that any such potential
acquisition will result in execution of a definitive agreement or that these
acquisition(s) will be completed on terms and conditions acceptable to the
Company, if at all. The Company

<PAGE> 7

has entered into letters of intent to purchase the companies or businesses
described below (the "Potential Acquisitions"):

- SUPERIOR FORGE, INC. The Company entered into a binding letter
of intent on July 23, 1997 to acquire Superior Forge, Inc.
("Superior"). Superior, founded and owned by Ian Albert, uses
and generates aluminum and aluminum scrap in its forging
operations, located in Huntington Beach, California.

- SALT RIVER RECYCLING, L.L.C. The Company entered into a
binding letter of intent on August 4, 1997 to purchase Newell
Phoenix, L.L.C.'s 50% membership interest in Salt River
Recycling, L.L.C. ("Salt River"), an Arizona limited liability
company with one facility in Phoenix, Arizona. The Company
currently owns a 50% interest in Salt River.

- GOLDIN INDUSTRIES, INC. The Company entered into a binding
letter of intent on August 5, 1997 to acquire certain scrap
metal operations and assets of Goldin Industries, Inc., Goldin
Industries Louisiana, Inc. and Goldin of Alabama, Inc.
("Goldin"). Goldin, founded and owned by the Goldin family,
operates five processing facilities, including two in
Gulfport, Mississippi, one in Harvey, Louisiana and two in
Mobile, Alabama.

- PERLCO, L.L.C. The Company entered into a binding letter of
intent on August 6, 1997 to acquire: (i) FPX, Inc. ("FPX"),
which has a 50% ownership interest in PerlCo, L.L.C.
("PerlCo"), a Tennessee limited liability company with one
facility in Memphis, Tennessee; and (ii) Southern Tin Compress
Corporation ("Southern Tin"), which owns the real estate and
certain equipment associated with the PerlCo operations. The
Company currently owns a 50% interest in PerlCo.

- AEROSPACE METALS. The Company entered into a binding letter of
intent on August 28, 1997 to purchase substantially all of the
assets and business of, and to lease the real property used
by, Aerospace Metals, Inc., Aerospace Parts Security, Inc. and
The Suisman Titanium Corporation (collectively, "Aerospace").
Aerospace, founded and owned by Michael Suisman, operates one
facility located in Hartford, Connecticut.

- ATLAS RECYCLING LIMITED PARTNERSHIP. The Company entered into
a binding letter of intent on August 28, 1997 to purchase all
of the scrap metal related business operations and assets of
Atlas Recycling Limited Partnership ("Atlas"). Atlas

<PAGE> 8

operates two processing facilities in Texas, including one in
Corpus Christi and one outside of Del Rio.

- YONACK IRON & METAL CO. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Yonack
Iron & Metal Co. ("Yonack Iron"). Yonack, owned by Robert P.
Yonack, operates five processing facilities, including four in
Dallas, Texas and one in Lonoke, Arkansas.

- YONACK SERVICES, INC. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Yonack
Services, Inc. ("Yonack Services"), a Texas corporation.
Yonack Services operates one processing facility located in
Forney, Texas.

- GOLD METAL RECYCLERS, INC. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of Gold
Metal Recyclers, Inc. ("Gold"), a Texas corporation. Gold,
owned by Kenneth E. Goldberg and Neil A. Goldberg, operates
one processing facility located in Dallas, Texas.

- SPECTRUM METAL RECYCLING. The Company entered into a binding
letter of intent on August 28, 1997 to acquire all of the
scrap metal related business operations and assets of GMY
Corp., d/b/a Spectrum Metal Recycling ("Spectrum"), a Texas
corporation. Spectrum operates one processing facility located
in Houston, Texas.

- ACCURATE IRON & METAL CO. The Company entered into a binding
letter of intent on December 11, 1997 to purchase
certain assets of Accurate Iron & Metal Co., an Illinois
corporation, headquartered in Franklin Park, Illinois.

- 138 SCRAP INC. The Company entered into a letter of intent on
December 12, 1997 to purchase substantially all of the assets
of 138 Scrap Inc. and of Katrick Inc., Illinois corporations
headquartered in Riverdale, Illinois.

The Company has recently completed a $25,000,000 private equity
placement to an affiliate of investor Sam Zell. In the transaction, Samstock,
L.L.C., ("Samstock") an affiliate of Sam Zell's Equity Group Investments, Inc.,
received 1,470,588 shares of the Company's common stock, and warrants to
purchase an additional 400,000 shares of common stock at $20 per share and
200,000 shares at $23 per share. The warrants are subject to mandatory
exercise under certain circumstances. In addition to the equity investment,
Rod Dammeyer of Equity Group Investments, Inc. will join the Company's Board of
Directors.

The Common Stock is traded on the Nasdaq Stock Market under the trading
symbol "MTLM." The Company's principal executive offices are located at 500
North Dearborn Street, Suite 405, Chicago, Illinois 60610, and its telephone
number is (312) 645-0700.

<PAGE> 9

RISK FACTORS

An investment in the Shares being offered hereby involves a significant
degree of risk. In addition to the other information set forth in this
Prospectus, prospective purchasers of the Shares should consider carefully the
following factors which may adversely affect the business, financial condition,
results of operations and future prospects of the Company, and the prevailing
market price and performance of the Company's Common Stock. Certain statements
and information contained or incorporated by reference herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements.

Inability to Control or Manage Growth or to Successfully Integrate
Acquired Businesses. The Company intends to actively pursue acquisitions and
mergers in the scrap metal recycling industry. There can be no assurance that
the Company will be successful in acquiring other entities or that it will be
able to effectively manage these acquired entities. The Company's ability to
achieve its expansion objectives and to manage its growth effectively depends on
a variety of factors, including the ability to identify appropriate acquisition
targets and to negotiate acceptable terms for their acquisition, the integration
of new businesses into the Company's operations, the achievement of cost savings
and the availability of capital. The inability to control or manage growth
effectively or to successfully integrate future new businesses into the
Company's operations would have a material adverse effect on the Company's
results of operations and financial condition. Depending on the nature and size
of these transactions, if any, the Company may experience working capital and
liquidity shortages. There can be no assurance that additional financing will be
available on terms and conditions acceptable to the Company, if at all.

Recent Change in Strategic Direction and Limited Operating History. The
Company has undergone a significant change in strategic direction and emphasis
in the last twelve to eighteen months. Given this substantial change, past
financial performance should not be considered a reliable indicator of future
performance and historical trends should not be used to anticipate results or
trends in future periods. Prior to the merger with EMCO in April 1996, the
Company had no history of operations in the scrap metal recycling industry. Due
to the limited experience of management in effecting a consolidation strategy,
there can be no assurance that the Company will be able to successfully effect
its strategy even if the Company is able to acquire other entities on acceptable
terms and conditions. In addition, until being acquired by the Company, none of
the Completed Acquisitions, the Potential Acquisitions nor, in some cases,
potential future acquisitions have or will have previously operated as
subsidiaries of a public holding company subject to formal accounting and
reporting requirements. The Company will be required to continue devoting
additional management time and capital to enhance information systems and to
improve and monitor internal controls, as well as to recruit managers with
appropriate skills to insure the timeliness and accuracy of financial reports.
Further, the Company's management has limited experience in executing
consolidation strategies on the scale being pursued by the

<PAGE> 10

Company. The success of the consolidation strategy depends in part on the
ability of the Company's management to oversee diverse operations and to
successfully integrate processing, marketing and other resources.

Inability to Complete Potential Acquisitions. From time to time the
Company engages in discussions with third parties regarding potential
acquisitions of companies or businesses in the same or substantially similar
lines of business as the Company. If the parties are able to agree generally on
the nature, terms and conditions of a transaction, a letter of intent is
prepared to reflect this understanding. In many cases, these letters of intent
are structured as "binding intents" to purchase the business, although each
letter is still subject to a number of terms and conditions including but not
limited to negotiation and execution of definitive purchase agreements. In
addition, each potential acquisition may be subject to additional contingencies
specific to that acquisition. There can be no assurance that any such potential
acquisition will result in execution of a definitive agreement or that such
acquisition will be completed on terms and conditions acceptable to the Company,
if at all.

Lack of Capital and Leverage. Implementing the Company's aggressive
acquisition strategy requires substantial amounts of capital. For example, to
complete the Potential Acquisitions, the Company needs to fund the cash portions
of the purchase considerations, approximately $44.1 million. There can be no
assurance that sufficient funds for these acquisitions will become available on
acceptable terms, if at all. Failure to raise sufficient capital when required
or needed could adversely affect the Company's results of operations and
financial condition.

The Company intends to continue its strategy of financing its
acquisitions in part by incurring indebtedness to sellers of acquired entities.
This may require the Company to agree to certain restrictions on its operations
which may adversely effect the Company's ability to integrate the acquired
entities into the Company's structure. For example, in connection with the
Isaac acquisition, the Company incurred short-term indebtedness to the sellers
of Isaac. This indebtedness restricts the Company's ability to unilaterally
direct or control the operations of Isaac until the notes are repaid. Failure
to repay these notes or similar notes that the Company may issue in the future
would have a material adverse effect on the Company's results of operations and
financial condition and could cause the Company to cede control in or ownership
of the acquired entity. As of September 30, 1997, the Company had approximately
$154.7 million of total liabilities, including approximately $48.6 million of
indebtedness owed in connection with the acquisitions of MacLeod, Reserve,
Isaac and Proler. The degree to which the Company is leveraged could have
adverse consequences to the Company including the following: (i) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other
purposes may be impaired; (ii) a substantial portion, if not all, of the
Company's cash flow will be required to pay principal and interest; and (iii)
the Company will be more vulnerable to an economic downturn in the scrap metal
recycling industry which has historically been sensitive to changes in general
economic conditions.

<PAGE> 11

Comprehensive Regulatory Requirements. The Company is subject to
significant government regulation including stringent environmental laws and
regulations. Among other things, these laws and regulations impose comprehensive
local, state, federal, foreign and supranational statutory and regulatory
requirements concerning, among other matters, the treatment, acceptance,
identification, storage, handling, transportation and disposal of industrial
by-products, hazardous and solid waste materials, waste water, storm water
effluent, air emissions, soil contamination, surface and ground water pollution,
employee health and safety, operating permit standards, monitoring and spill
containment requirements, zoning, and land use, among others. Various laws and
regulations set prohibitions or limits on the release of contaminants into the
environment. Such laws and regulations also require permits to be obtained and
manifests to be completed and delivered in connection with any shipment of
prescribed materials so that the movement and disposal of such material can be
traced and the persons responsible for any mishandling of such material can be
identified. This regulatory framework imposes significant compliance burdens,
costs and risks on the Company. Violation of such laws and regulations may give
rise to significant liability to the Company, including fines, damages, fees and
expenses.

Releases of certain industrial by-products and waste materials are
subject to particular laws and regulations. Although the specific provisions of
laws and regulations related to such releases vary among jurisdictions, such
laws and regulations typically require that the relevant authorities be notified
promptly, that the release be cleaned up promptly, and that remedial action be
taken by the responsible party and/or owner of the site to restore the
environment to levels protective of human health and the environment. Generally,
the governmental authorities are empowered to act to clean up and remediate
releases and environmental damage and to charge the costs of such cleanup to one
or more of the owners of the property, the person responsible for the spill, the
generator of the contaminant and certain other parties or to direct the
responsible party to take such action. These authorities may also impose a tax
or other liens to secure the parties' reimbursement obligations. Environmental
laws and regulations impose strict operational requirements on the performance
of certain aspects of hazardous or toxic substances remedial work. These
requirements specify complex methods for identification, monitoring, storage,
treatment and disposal of waste materials managed during a project. Failure to
meet these requirements could result in substantial fines and other penalties.

Environmental legislation and regulations have changed rapidly in
recent years, and it is likely that the Company will be subject to even more
stringent environmental standards in the future. For example, the ultimate
effect on the Company of the regulations to be implemented under the Clean Air
Act Amendments of 1990 (the "Clean Air Act"), and the actual amount of any
capital expenditures required thereby, will depend on how the Clean Air Act is
interpreted and implemented pursuant to regulations that are currently being
developed and on additional factors such as the evolution of environmental
control technologies and the economic viability of these technologies. For
these reasons, future capital expenditures for environmental control facilities
cannot be predicted with accuracy; however, one may expect that environmental
control standards will become increasingly stringent and that the expenditures
necessary to comply with them could increase substantially.

<PAGE> 12

Local, state, federal, foreign and supranational governments and
agencies have also from time to time proposed or adopted other types of laws,
regulations or initiatives with respect to the scrap metal recycling industry,
including laws, regulations and initiatives intended to ban or restrict the
intrastate, interstate or international shipment of wastes, to impose higher
taxes or fees on certain shipments of waste, or to classify or reclassify
certain categories of non-hazardous wastes as hazardous. Certain local, state,
federal, foreign and international governments and agencies have promulgated
"flow control" or other regulations, which attempt to require that all waste
(or certain types of waste) generated within the jurisdiction in question must
go to certain disposal sites. From time to time legislation is considered that
would enable or facilitate such laws, regulations or initiatives. Due to the
complexity of regulation of the industry and to public and political pressure,
implementation of existing or future laws, regulations or initiatives by
different levels of governments may be inconsistent and are difficult to
foresee.

The Company requires, and must comply with, various permits and
licenses to conduct its operations. Government agencies continually monitor
compliance with these permits or licenses and the Company's facilities are
subject to periodic unannounced inspection by local, state and federal
authorities. Violations of any permit or license, if not remedied, could result
in the Company incurring substantial fines, suspension of operations or closure
of a site.

Governmental authorities have a wide variety of powerful administrative
enforcement actions and remedial orders available to cause compliance with
environmental laws or to remedy or punish violations of such laws. Such orders
may be directed to various parties, including present or former owners or
operators of the concerned sites, or parties that have or had control over the
sites. In certain instances, fines and treble damages may be imposed. In the
event that administrative actions fail to cure a perceived problem or where the
relevant regulatory agency so desires, an injunction or temporary restraining
order or damages may be sought in a court proceeding. Some laws give private
parties the right, in addition to existing common laws claims, to file claims
for injunctive relief or damages against the owners or operators of the site.

The Company believes that with heightened legal, political and citizen
awareness and concerns, all companies in the scrap metal recycling industry may
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend substantial funds for capital projects,
remedial work and operating activities, such as environmental contamination
monitoring, soil removal, groundwater treatment, creation of engineered
barriers, establishing institutional controls and related activities. Regulatory
or technological developments relating to the environment may require companies
engaged in the scrap metal recycling industry to modify, supplement or replace
equipment and facilities at costs which may be substantial. Because the scrap
metal recycling industry has the potential for discharge of materials into the
environment, a material portion of the capital expenditures by the Company is
expected to relate, directly or indirectly, to such equipment and facilities.
Moreover, it is possible that future developments, such as increasingly strict
requirements of environmental laws and regulations, and enforcement policies
will require even more significant capital investments in this regard.

<PAGE> 13

Due to the nature of the scrap metal recycling business, it is possible
that inquiries or claims based upon environmental laws may be made in the future
by governmental bodies or individuals against the Company and any other scrap
metal recycling entities that the Company may acquire. The location of the
Company's facilities in large urban areas may increase the risk of scrutiny and
claims. The Company is unable to predict whether any such future inquiries or
claims will in fact arise or the outcome of such matters. Additionally, it is
not possible to predict the total size of all capital expenditures or the amount
of any increases in operating costs or other expenses that may be incurred by
the Company to comply with the environmental requirements applicable to the
Company and its operations, or whether these costs can be passed on to customers
through product price increases. Moreover, environmental legislation has been
enacted, and may in the future be enacted, to create liability for past actions
that were lawful at the time taken but that have been found to affect the
environment and to create public rights of action for environmental conditions
and activities. As is the case with scrap recyclers in general, if damage to
persons or the environment has been caused, or is in the future caused, by
hazardous materials activities of the Company, the Company may be fined and held
liable for such damage. In addition, the Company may be required to remedy such
conditions and/or change procedures. Thus, there can be no assurance that
potential liabilities, expenditures, fines and penalties associated with
environmental laws and regulations will not be imposed on the Company in the
future or that such liabilities, expenditures, fines or penalties will not have
a material adverse effect on the Company's results of operations and financial
condition.

In addition, public interest groups, local citizens, local
municipalities and other persons or organizations may have a right to seek
judicial relief for purported violations of law. In some jurisdictions, recourse
to the courts by individuals under common law principles such as trespass or
nuisance have been or may be enhanced by legislation providing members of the
public with statutory rights of action to protect the environment. In such
cases, even if a scrap metal recycling facility is operated in full compliance
with applicable laws and regulations, local citizens and other persons and
organizations may seek compensation for damages allegedly caused by the
operation of the facility. In some cases, the operation of scrap metal recycling
facilities is subjected to heightened public scrutiny because of residential or
other non-industrial property uses that have developed around such facilities.
So-called "Not In My Backyard" ("NIMBY") grass roots community opposition to
such facilities can materially interfere with such facilities' on-going
operations and growth.

Significant Potential Environmental Liability. The Company is subject
to potential liability and may also be required from time to time to clean up
or take certain remedial action with regard to sites currently or formerly used
in connection with its operations. Furthermore, the Company may be required to
pay for all or a portion of the costs to clean up or remediate sites the
Company never owned or on which it never operated if it is found to have
arranged for transportation, treatment or disposal of pollutants or hazardous or
toxic substances on or to such sites. The Company also is subject to potential
liability for environmental damage that their assets or operations may cause
nearby landowners, particularly as a result of any contamination of drinking
water sources or soil, including damage resulting from conditions existing prior
to the acquisition of such assets or operations. Any substantial liability for

<PAGE> 14

environmental damage could materially adversely affect the operating results and
financial condition of the Company, and could materially adversely affect the
marketability and price of the Company's stock.

Incompleteness of Site Investigations. As part of its pre-transaction
"due diligence" investigations, the Company typically hires an environmental
consulting firm to conduct transaction screen reviews, or Phase I and/or Phase
II site assessments of the sites owned or leased by particular acquisition or
merger candidates (the "Pre-Transaction Site Assessments"). However, such
Pre-Transaction Site Assessments have not covered (and will not in the future
cover) all of the sites owned or leased by the companies which are acquired by
or merge with the Company. Moreover, such Pre-Transaction Site Assessments which
have occurred have not been designed or expected (and will not in the future be
designed or expected) to disclose all material contamination or liability that
may be present. For example, the Company does not include soil sampling or core
borings as a standard part of its Pre-Transaction Site Assessments, even though
such sampling and core borings might increase the chances of finding
contamination on a particular site. Failure to conduct soil sampling and core
borings on a particular site could result in the Company failing to identify a
seriously contaminated site prior to an acquisition or merger, and could
materially adversely affect the Company.

Likelihood of Contamination at Some Sites. Pre-Transaction Site
Assessments of the Company's current sites conducted by independent
environmental consulting firms have revealed that some soil, surface water
and/or groundwater contamination is likely at certain of these sites, and have
recommended that certain additional investigations and remediation be conducted.
Based upon its review of these reports, the Company believes that it is likely
that contamination exists at certain of its sites and that it is likely that
additional investigation, monitoring and remediation will be required at some of
the sites. Also based upon its review of these reports, the Company believes
that such contamination is likely to include, but not be limited to:
polychlorinated biphenyls (PCBs); total petroleum hydrocarbons; volatile organic
compounds (VOCs); antimony; arsenic; cadmium; copper; lead; mercury; silver;
zinc; waste oil; toluene; meta-and para-xylenes; baghouse dust; and/or aluminum
dross. The ultimate extent of such contamination cannot be stated with any
certainty at this point, and there can be no assurance that the cost of
remediation will be immaterial. The existence of such contamination could result
in federal, state, local or private enforcement or cost recovery actions against
the Company, possibly resulting in disruption of Company operations, the need
for proactive remedial measures, and substantial fines, penalties, damages,
costs and expenses being imposed against the Company.

The Company expects to require future cash outlays as it incurs costs
relating to the remediation of environmental liabilities. The incurrence of
these costs may have a material adverse effect on the Company's results of
operation and financial condition.

Uncertain Costs of Environmental Compliance and Remediation. Many
factors affect the level of expenditures the Company will be required to make in
the future to comply with environmental requirements, including: (i) new local,
state and federal laws and regulations; (ii) the developing nature of
administrative standards promulgated under Superfund and other

<PAGE> 15

environmental laws, and changing interpretations of such laws; (iii) uncertainty
regarding adequate control levels, testing and sampling procedures, new
pollution control technology and cost benefit analysis based on market
conditions; (iv) the incompleteness of information regarding the condition of
certain sites; (v) the lack of standards and information for use in the
apportionment of remedial responsibilities; (vi) the numerous choices and costs
associated with diverse technologies that may be used in remedial actions at
such sites; (vii) the possible ability to recover indemnification or
contribution from third parties; and (viii) the time periods over which eventual
remediation may occur. The estimated costs, and the timing of such costs, for
future environmental compliance (capital expenditures or increases in operating
costs or other expenditures) and remediation cannot be accurately predicted and
are necessarily imprecise; however, such costs could be material to future
quarterly or annual results of operations of the Company. In addition, it is not
possible to predict whether or not such costs can be passed on to customers
through price increases.

Lack of Environmental Impairment Insurance. The Company does not carry
environmental impairment liability insurance. The Company operates under general
liability insurance policies which does not cover environmental damage. If the
Company were to incur significant liability for environmental damage not covered
by environmental impairment insurance, or for other claims in excess of its
general liability insurance and umbrella coverage, the Company's results of
operations and financial condition could be materially adversely affected.

Risks Associated With Certain By-Products. Although the majority of the
Company's metal products are currently exempt from applicable solid waste
regulations, the Company's scrap metal recycling operations produce significant
amounts of by-products. Heightened environmental risk is associated with certain
of these by-products. For example, certain of the Company's subsidiaries operate
shredders for which the primary feed materials are automobile hulks and obsolete
household appliances. Approximately 20% of the weight of an automobile hulk
consists of material (shredder fluff) which remains after the segregation of
ferrous and saleable non-ferrous metals. Federal environmental regulations
require shredder fluff to pass a toxic leaching test to avoid classification as
a hazardous waste. The Company endeavors to have hazardous contaminants removed
from the feed material prior to shredding and as a result the Company believes
the shredder fluff generated is properly not considered a hazardous waste.
Should the laws, regulations or testing methods change with regard to shredder
fluff disposal, the Company may incur additional significant expenditures.

Potential Superfund Liabilities. (a) The Company's Reserve, Cozzi and
Kankakee subsidiaries have received notices from the United States
Environmental Protection Agency (the "EPA") that Reserve, Cozzi and Kankakee
and numerous other parties are considered potentially responsible parties (a
"PRP") and may be obligated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("Superfund" or "CERCLA") to pay a
portion of the cost of remedial investigation, feasibility studies and
ultimately remediation to correct alleged releases of hazardous substances at
the Standard Scrap Metal/Chicago International Exporting Removal Action Site.
Superfund may impose joint and several liability for the costs of remedial
investigations and actions on the

<PAGE> 16
entities that arranged for disposal of certain wastes, the waste transporters
that selected the disposal sites, and the owners and operators of such sites.
Responsible parties (or any one of them) may be required to bear all of such
costs regardless of fault, legality of the original disposal, or ownership of
the disposal site. Based upon their analysis of the situation, the managements
of Reserve, Cozzi and Kankakee currently do not expect their aggregate
potential liability to be in excess of $175,000. There can be no assurance,
however, that their aggregate potential liability may not be greater than
$175,000.

(b) Cozzi has received a notice from the EPA that Cozzi is a PRP under
Superfund in regard to the site referred to as H&H Recycling in Gary, Indiana.
Cozzi is not currently in a position to determine its potential liability in
regard to this site. There can be no assurance that such potential liability
will not be material.

(c) Cozzi was served in a private cost recovery action alleging that
Cozzi is a PRP under Superfund in regard to the site referred to as Gould
Battery Site in Pennsylvania. Based upon its analysis of the situation,
including transaction documentation and indemnifications, Cozzi currently
expects that its ultimate liability in regard to this matter will be de
minimus, but there can be no assurance this will be the case.

Underground Storage Tanks. Underground storage tanks (UST's) exist at
several of the Company's sites. UST's are subject to various federal, state and
local laws on their operation. In the event a release of regulated product has
occurred, the Company may incur significant costs to investigate and remediate
the release.

Employee Health and Safety Issues. The Company's operations are also
subject to regulation by federal, state and local agencies responsible for
employee health and safety, including the Occupational Safety and Health Act
(the "OSHA"). A total of four accidental deaths of, and two serious accidental
injuries to, employees have occurred at the Company's Cozzi, HouTex and Reserve
subsidiaries during the past three years. Cozzi and Reserve have been fined by
OSHA in regard to such incidents. HouTex has also been cited and fined by OSHA
for alleged failure to establish energy control procedures and employee
training in regard to mobile shearing equipment. No assurance can be given that
potential liabilities of the Company in regard to such death and injuries, or
in regard to any future deaths of or injuries to the Company's employees will
not be material.

Recommendations of Environmental Consultants. Environmental consultants
to the Company have recommended that a variety of remedial actions be
undertaken, including: the sampling of soil, surface and ground water at its
various facilities; the remediation of any existing contamination under
applicable regulations; the development of Spill Prevention Control and
Countermeasure Plans ("SPCC"); the completion of certain actions in regard to
Storm Water Pollution Prevention Plans; the timely completion and/or filing of
certain annual reports and summaries required by governmental agencies; the
completion of Oil Discharge and Response Plans; and the remediation of certain
materials suspected of containing asbestos. If the Company fails to follow these
recommendations for an indefinite period of time, one or more of the sites
might, potentially, be subject to a governmental enforcement action, the
imposition of fines,

15
<PAGE> 17

penalties and damages, and/or require remediation at some future time at a cost
which may have an adverse effect on the Company's results of operations and
financial condition.

Compliance History. The Company has, in the past, been found not to be
in compliance with certain environmental laws and regulations, and has incurred
fines associated with such violations which have not been material in amount
and may in the future incur additional fines associated with such violations.
The Company has also paid a portion of the costs of certain remediation actions
at certain sites. No assurance can be given that material fines, penalties,
damages and expenses resulting from additional compliance issues and liabilities
will not be imposed on the Company in the future.

Lack of Management Depth and Experience. Due to the limited experience
of the Company's senior management in the scrap metal recycling business, the
Company relies substantially on the experience of the management team at each
subsidiary on day-to-day operating matters. There can be no assurance that these
individuals will continue to serve the subsidiaries. The loss of a significant
number of managers could have a material adverse effect on the Company's ability
to successfully implement its consolidation strategy.

Ability of Certain Individuals to Impact Ownership and Governance of
the Company. Pursuant to a stockholder's agreement (the "Stockholders
Agreement"), between Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi
(collectively, the "Cozzi Shareholders"), Samstock, L.L.C. ("Samstock"), T.
Benjamin Jennings, Gerard M. Jacobs, and the Company, the Company's Board of
Directors is comprised of five directors nominated by the Cozzi Shareholders
and five directors nominated by Messrs. Jacobs and Jennings, and one director
nominated by Samstock. Further, the Cozzi Shareholders, Samstock and Messrs.
Jacobs and Jennings own approximately 47% of the Company's issued and
outstanding shares of Common Stock. The Cozzi Shareholders, Samstock and
Messrs. Jacobs and Jennings have significant influence on the outcome of all
matters (including the election of directors and future mergers, acquisitions
or sale of assets) and may be deemed to have effective control over the
affairs and management of the Company. This influence may not be consistent
with the interests of the Stockholders. Further, the changes made in the
Company's governance structure to effect the merger with Cozzi and the private
equity placement to Samstock are examples of the Company's willingness to
rapidly change the management and governance of the Company if necessary or
desirable. There can be no assurance that recent changes in management and
governance or those that may occur in connection with subsequent acquisitions
or mergers will be favorable and in the best interests of the Stockholders.

The parties to the Stockholders Agreement also have agreed to vote for
proposals, if and when presented by the Company, to amend the Company's
organizational documents to require the approval of at least two-thirds of the
Board of Directors to, among other things: (i) amend the Company's certificate
of incorporation or bylaws; (ii) liquidate or merge the Company; (iii) sell
substantially all of the Company's assets; (iv) elect or remove officers; (v)
adopt an annual budget; (vi) borrow funds, sell assets or make capital
expenditures exceeding $5 million; (vii) issue or register the Company's
securities; or (viii) declare or pay any dividends or distributions. If the
Company's organizational documents are amended to reflect these restrictions,
and the Directors cannot agree on the Company's strategic direction, a minority
of four dissenting Directors could prevent the Company from taking any of the
actions listed above.

<PAGE> 18
Should the Board be unable to act because a minority of dissenting Directors
prevents the Board from taking a significant action, this could have a material
adverse effect on the Company's results of operations and financial condition.

Cyclicality of Operating Results/Operating Losses. The operating
results of the scrap metal recycling processing industry in general, and the
Company's operations specifically, are highly cyclical in nature as they tend to
reflect and be amplified by general economic conditions. In periods of national
recession or periods of minimal economic growth, the operations of scrap metal
recycling processing companies have been materially adversely affected. For
example, during recessions or periods of minimal economic growth, the automobile
and construction industries typically experience major cutbacks in production,
resulting in decreased demand for steel, copper and aluminum and significant
fluctuations in demand and pricing for the Company's products. Future economic
downturns in the national economy would materially and adversely affect the
Company's results of operations and financial condition. The ability of the
Company to withstand significant economic downturns in the future will depend in
part on the level of the Company's capital and liquidity.

The Company's EMCO subsidiary has incurred operating losses and
required capital infusions since its merger with the Company in April 1996.
There can be no assurance that the Company will not be required to provide
additional funding to EMCO. Further, there can be no assurance that existing or
future subsidiaries will not require similar infusions, or that the Company will
be able to provide such fundings if needed. The need to provide this funding or
the inability to do so could have a material adverse effect on the Company's
results of operations and financial condition.

Failure to Acquire Joint Venture Interests. The Company is a member of,
with a 50% interest in, two limited liability companies, one with operations in
Phoenix, Arizona (Salt River) and the other in Memphis, Tennessee (PerlCo). The
Company has binding signed letters of intent to acquire the remaining 50%
interest in each of these joint ventures. However, there can be no assurance
that the Company will acquire these remaining interests. If the Company is
unable to acquire either of these joint venture interests, then the Company may
be unable to realize some of the operational efficiencies anticipated in
connection with the merger with Cozzi and may be prohibited by the agreements
governing the joint ventures from taking actions with respect to the joint
ventures' assets or liabilities that may be in the Company's best interest.

Dependence on Scrap Suppliers. The profitability of the Company's scrap
recycling operations depends, in part, on the availability of an adequate source
of supply. The Company acquires its scrap inventory from numerous sources. These
suppliers typically are not bound by long-term contracts and have no obligation
to continue sending scrap materials to the Company. Decisions by a substantial
number of scrap suppliers to cease sending scrap materials to the Company would
have a material adverse effect on the Company's results of operations and
financial condition.

<PAGE> 19

Concentration of Customers and Credit Risk. On a proforma basis giving
effect to the Completed Acquisitions, the Company's five largest customers
represented approximately 31% of revenues for the twelve months ended March 31,
1997 and the six months ended September 30, 1997, respectively. Accounts
receivable balances from these customers represented approximately 30% of
accounts receivable at September 30, 1997. The Company's largest customer, David
J. Joseph and Company accounted for approximately 12% and 13% of revenues for
the twelve months ended March 31, 1997 and six months ended September 30, 1997,
respectively, and accounted for approximately 17% of accounts receivable at
September 30, 1997. The loss of any one of the Company's significant customers
could adversely affect the Company's results of operations and financial
condition.

In connection with the sale of the Company's products, the Company
generally does not require collateral as security for customer receivables.
Certain of the Company's subsidiaries have significant balances owing from
customers that operate in cyclical industries and under leveraged conditions
that may impair the collectibility of these receivables. Failure to collect
amounts due on these receivables could have a material adverse effect on the
Company's results of operations and financial condition.

Potential Substantial Dilution to Existing Stockholders; Registration
Rights. The Company's Amended Certificate of Incorporation authorizes the
issuance of: (i) 80,000,000 shares of common stock, of which 29,948,829 are
issued and outstanding as of the date hereof; (ii) 4,000,000 of preferred stock,
of which 59,000 have been designated as either Series A or Series B Preferred
Stock and 45,000 of which are issued and outstanding as of the date hereof. The
Company's board of directors has the authority to issue additional shares of
common or preferred shares, or securities convertible or exercisable into such
shares such as options or warrants, as the case may be for a variety of purposes
including as consideration for additional acquisitions. These additional shares
may be issued, or be subject to exercise, at prices below prevailing market
prices of the Common Stock or at prices below the Company's book value. Common
Stock sold at such a discount would result in dilution to the then-existing
Stockholders of the Company as well as reduce each Stockholders' percentage
interest in the Company. Further, the Company may issue additional shares of
preferred stock on terms and conditions which may discourage, impede or prevent
a merger, tender offer or proxy contest even though such an event may be
favorable to the interest of stockholders as a whole. The effectiveness of
this Form S-3 Registration Statement, and of any subsequent registration
statements relating to the Company's common stock, will increase substantially
the number of shares available for sale in the public market and may have an
adverse impact on the market price of the Common Stock.

Volatility of Trading Price. The trading price of the Common Stock has
been, and in the future is expected to be, volatile and subject to market
fluctuation as a result of a number of factors, including, but not limited to,
merger and acquisition announcements and developments, current and anticipated
results of operations, execution of private or public equity or debt placements,
filing and effectiveness of registration statements relating to the Company's
common stock, future product offerings by the Company or its competitors and
factors unrelated to the operating performance of the Company. The trading
price of the Company's Common Stock may also vary as a result of changes in the
business, operations, prospects or financial results of the Company, general
market and economic conditions, additional future proposed acquisitions by the
Company and other factors. Failure in any fiscal quarter to meet the investment
community's revenues or earnings expectations, if any, could have an adverse
impact on the trading price of the Common Stock, as could sales of large

<PAGE> 20

amounts of Common Stock by existing Stockholders. In addition, sales of
substantial amounts of the Company's Common Stock in the public market could
adversely affect the market price of the Company's Common Stock. In the event
the market price of Common Stock were adversely affected by such sales, the
Company's access to equity capital markets could be adversely affected and
issuances of Common Stock in connection with acquisitions, or otherwise, could
dilute future earnings per share. Management believes that the Company's Stock
price reflects an assumption that the Potential Acquisitions will be completed.
Completion of each Potential Acquisition is, however, subject to a number of
conditions. There can be no assurance that these conditions will be satisfied.
If the Potential Acquisitions are not completed, the trading price of the Common
Stock could be adversely affected.

Potential Restrictions on Mergers and Other Actions. Section 203 of the
Delaware General Corporation Law (the "Delaware Business Combination Statute")
prohibits, under certain circumstances, "business combinations" between a
Delaware corporation whose stock is publicly-traded and an "interested
stockholder" of such corporation. The provisions prohibiting "business
combinations" could delay or frustrate the removal of incumbent directors or a
change in control of the Company. The provisions could also discourage, impede,
or prevent a merger, tender offer or proxy contest, even if such an event would
be favorable to the interest of stockholders. In addition, the Company's
certificate of incorporation authorizes the issuance of 4,000,000 shares of
undesignated preferred Stock (the "Preferred Stock"), which the Board of
Directors may cause the Company to issue in one or more series. The Board of
Directors has designated 36,000 and 23,000 shares, respectively, of the
Preferred Stock for issuance as Series A Convertible Preferred Stock ("Series A
Preferred Stock") and Series B Convertible Preferred Stock ("Series B Preferred
Stock"). The Board of Directors has the authority to fix the number of shares of
Preferred Stock and determine or alter for each series, the voting powers,
designations, preferences and rights of such shares. If the Company should ever
issue Preferred Stock in addition to the Convertible Preferred Stock, such
Preferred Stock could contain voting or other rights which could discourage,
impede, or prevent a merger, tender offer or proxy contest which could be
favorable to the interests of the stockholders.

So long as shares of Series A or Series B Preferred Stock are
outstanding, the Company is required to obtain the prior approval of the holders
of at least a majority of all shares of the applicable Series of Preferred Stock
outstanding at the time before: (i) increasing the authorized number of shares
of such Series of Preferred Stock; (ii) altering or changing the rights,
preferences or privileges of such Series of Preferred Stock or any other capital
Stock of the Company so as to adversely affect such Series of Preferred Stock;
or (iii) creating any new class or series of capital Stock having a preference
over such Series of Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Company. This restriction could
prevent the Company from taking actions which could be favorable to the
interests of the stockholders.

<PAGE> 21

USE OF PROCEEDS

This Prospectus relates to Shares being offered and sold for the
accounts of the Selling Stockholders. The Company will not receive any proceeds
from the sale of the Shares but will receive proceeds of $11,342,249 if all the
warrants referred to herein are exercised although in certain instances the
documents governing the warrants permit the holder thereof to exercise the
warrants in a "cashless" manner. A "cashless" exercise will reduce the number of
shares ultimately issued but will also reduce the proceeds payable to the
Company from such issuance. There can be no assurance that any of the warrants
will be exercised or that the Company will receive any proceeds on exercise
thereof. The Company has agreed to pay all expenses related to the registration
of the Shares. See "Plan of Distribution."

SELLING STOCKHOLDERS

The following table sets forth the name of each Selling Stockholder,
the aggregate number of shares of Common Stock beneficially owned by
each Selling Stockholder as of January 13, 1998 (including Shares that are
issuable on exercise of options or warrants, the conversion of the Series A and
Series B Preferred Stock or conversion of a note payable), and the aggregate
number of shares of Common Stock registered hereby that each Selling
Stockholder may offer and sell pursuant to this Prospectus. Because the Selling
Stockholders may offer all of a portion of the Shares at any time and from time
to time after the date hereof, no estimate can be made of the number of Shares
that each Selling Stockholder may retain upon completion of the Offering.
However, assuming all of the Shares offered hereunder are sold by the Selling
Stockholders, then unless otherwise noted, after completion of the Offering,
none of the Selling Stockholders will own more than one percent of the shares
of Common Stock outstanding. Of the 15,896,858 shares offered hereby, 9,114,769
shares are issued and outstanding as of the date of this Prospectus, and an
aggregate of 6,782,089 shares have been reserved for issuance by the Company to
certain of the Selling Stockholders upon the conversion of the Series A and
Series B Preferred Stock, the exercise of warrants, and the conversion of a
note payable. The number of shares of Common Stock into which the Series A and
Series B Preferred Stock is convertible is not determinable until conversion.
Under the registration rights agreements entered into between the Company and
the holders of the Series A and Series B Preferred Stock, the Company is
required to register at least 175% of the number of shares of common stock
that would be issuable if each of the Series A and Series B Preferred Stock
was converted at a price equal to the "Closing Bid Price" over the five (5)
trading days immediately preceding but not including the purchase date times
85%. Therefore, for purposes of calculating the number of Shares beneficially
owned and offered hereby by the holders of the Series A and Series B Preferred
Stock, the number of Shares issuable upon conversion of the Series A or Series
B Preferred Stock has been calculated in accordance with the registration
rights agreement. Based on information provided to the Company by the Selling
Stockholders, no Selling Stockholder owns 1% or more except as indicated
below. Beneficial ownership after the Offering will depend on the number of
Shares sold by each Selling Stockholder. The table set forth below does not
include such additional number of Shares which may be issuable upon conversion
of the Series A or Series B Preferred Stock or exercise of warrants to prevent
dilution resulting from stock splits, stock

<PAGE> 22

dividends or similar events, or by reason of changes in the conversion price in
accordance with the terms of the certificate of designation governing the Series
A or Series B Preferred Stock, all of which Shares, to the extent permitted
under Rule 416 of the Securities Act, are offered being offered by this
Prospectus.

SHARES SHARES TO BE
BENEFICIALLY PERCENTAGE OFFERED FOR THE
OWNED PRIOR TO OWNED SELLING
SELLING THE PRIOR TO STOCKHOLDER'S
STOCKHOLDERS OFFERING OFFERING(1) ACCOUNT
------------ -------------- ----------- ---------------
<S> <C> <C> <C>
Advantage Fund Limited 1,849,319(2) 5.82% 1,849,319
Isiah Anderson, Jr. 500(3) * 500
Alfredo Bautista 1,000 * 1,000
Neal Bidwill 27,600 * 27,600
Charles Booker 1,000(4) * 1,000
Capital Ventures 969,999(5) 3.14% 969,999
International
Adolfo Castellanos 1,000 * 1,000
Juan Castillo 250(6) * 250
Charles A. Isaac 303,296 1.01% 303,296
Revocable Trust
Erhard Chorle 70,000(7) * 70,000
Clend Investment 835,260(8) 2.79% 735,260
Holdings LTD
Copperstate Metals, Inc. 305,587(9) 1.02% 303,617
Ernesto Corrales 1,000 * 1,000
Carol Cox 8,334(10) * 8,334
Irene Cozzi 95,238 * 95,238
James R. Debord 69,000 * 69,000
Gloria Durand 750 * 750
Gail G. Ellis 92,000 * 92,000
Sam Ellis 500(11) * 500
Empire Metals 2,573,050(12) 8.43% 1,997,194
Cesar Franco 1,000 * 1,000
Betsy Katherine Franco 1,000 * 1,000
Mary B. Galvin 91,863 * 91,863
</TABLE>

<PAGE> 23

<S> <C> <C> <C>
Guadalupe Garcia 500 (13) * 500
Jose Garcia 250 (14) * 250
Jose L. Garcia 750 (15) * 750
Roger Greene 19,234 (16) * 9,234
Robert Hale 12,500 (17) * 12,500
Deerwood Harrell, Jr 500 (18) * 500
Thomas H. Harrell 3,088 (19) * 3,000
David G. Hauldren 15,000 * 15,000
Charles Hays 100,000 * 100,000
Joel Douglas Helton 103,750 (20) * 103,750
Johnnie Henderson 1,000 (21) * 1,000
Joe Hernandez 500 (22) * 500
David Hochberg 16,078 (23) * 12,500
Linda Hochberg 25,221 (24) * 25,000
George A. Isaac III 1,080,279 (25) 3.54% 76,923
Second Revocable Trust
J&B Associates 47,548 (26) * 47,548
Mario Jaimez 750 (27) * 750
Jeffrey Johnson 250 (28) * 250
Paul D. Joseph 949,253 (29) 3.07% 949,253
</TABLE>

<PAGE> 24

<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY PERCENTAGE OFFERED FOR THE
OWNED PRIOR TO OWNED SELLING
SELLING THE PRIOR TO STOCKHOLDER'S
STOCKHOLDERS OFFERING OFFERING(1) ACCOUNT
------------ -------- ----------- -------

<S> <C> <C> <C>
Scott Joseph 316,417 (30) 1.05% 316,417
Steven C. Joseph 316,417 (31) 1.05% 316,417
James Kedzieski 1,000 (32) * 1,000
Nathan King 3,000 (33) * 3,000
William Lambert 1,000 * 1,000
Helen Lambert 1,000 * 1,000
Karen Lambert 1,000 * 1,000
James Levy 13,800 * 13,800
Chris Lim 10,000 * 10,000
Lynn A. Isaac Second 340,856 1.14% 340,856
Revocable Trust
Leonel Macedo 250 (34) * 250
Ian MacLeod 1,064,250 (35) 3.53% 175,000
MacLeod Family Trust 864,250 (36) 2.89% 864,250
Byron McBride 500 (37) * 500
Dawn Meiners 92,000 * 92,000
Mike Melnik 146,289 * 146,289
Zalman Melnik 105,933 * 105,933
Kenneth A. Merlau 148,231 * 137,931
Frank Miller, Jr 500 (38) * 500
Carlos Molina 1,000 * 1,000
Jovita Molina 1,000 * 1,000
Donald F. Moorehead, Jr 913,643 (39) 3.02% 347,404
George O. Moorehead 870,996 (40) 2.87% 327,202
Anthony C. Newton 250 (41) * 250
William D. Niemeyer 73,972 * 68,972
Daniel G. Pappano 60,000 (42) * 50,000
</TABLE>

<PAGE> 25

<S> <C> <C> <C>
Frank M. Paris 13,800 * 13,800
Peer Pederson 47,113 (43) * 47,113
Noe Pena 500 (44) * 500
Jeffrey Plonski 25,300 (45) * 25,000
Cristopher Proler 8,333 (46) * 8,333
Proprietary Convertible 1,547,911 (47) 4.91% 1,547,911
Investment Group, Inc.
Jeffrey J. Puglisi 20,000 * 20,000
Richard G. Isaac 454,553 1.52% 454,553
Revocable Trust
Robert Rivas 500 (48) * 500
Willie Roberts 250 (49) * 250
Lolita A. Romano 76,865 * 74,865
Ronald I. Romano 76,865 * 74,865
Ronald T. Romano 2,635 * 2,635
Ryan E. Romano 2,635 * 2,635
Harold Rubenstein 2,758,883 (50) 9.19% 70,000
Rafael Ruiz 750 (51) * 750
Dennis Rusher 3,000 (52) * 3,000
Saba Salloum 25,000 (53) * 25,000
David Schechter 27,800 * 13,800
Howard S. Segal 88,294 (54) * 63,294
Nathan J. Segal 209,882 (55) * 189,882
Leslie Smith 8,333 (56) * 8,333
Robert F. Smith 1,328,329 (57) 4.43% 1,048,329
</TABLE>

<PAGE> 26

<S> <C> <C> <C>
Timothy Smith 25,000 (58) * 25,000
Billy Sonnier 750 (59) * 750
David Wayne Sonnier 105,750 (60) * 103,750
Angel Sosa 500 (61) * 500
David J. Steinmann 1,000 * 1,000
Daniel B. Steinmann 1,000 * 1,000
Eric H. Steinmann 1,000 * 1,000
Jordan A. Steinmann 1,000 * 1,000
Kayla M. Steinmann 1,000 * 1,000
Taylor E. Steinmann 1,000 * 1,000
Hal Tolin 30,000 (62) * 25,000
Catherine H. Upton 500 (63) * 500
Stefanie Vaught 25,000 (64) * 25,000
Jose Luis Villalobos 1,000 * 1,000
Ellis White, Jr. 1,000 * 1,000
Ellis White, Sr. 11,000 (65) * 1,000
Jacqueline B. White 1,000 * 1,000
Terry White 500 (66) * 500
Katrina Whitman 2,250 (67) * 2,250
Thomas Oscar Whitman 106,576 (68) * 103,750
William M. Isaac 303,296 1.01% 303,296
Revocable Trust
Albert Williams 250 (69) * 250
Management Trust
David M. Zack 301,862 (70) 1.0% 99,355
Gerald Zack 301,862 (71) 1.0% 99,355
Raymond F. Zack 385,196 (72) 1.28% 99,355
---------- ----------
TOTAL 23,359,374 15,896,858
</TABLE>

*less than 1%

<PAGE> 27

- ----------------------------
1. Share amounts and percentages shown for each person or entity are adjusted
to give effect to shares of the Company's common stock that are not
outstanding but may be acquired by a person or entity upon exercise of
all options and warrants exercisable by such person or entity, conversion of
a note payable into common stock owned by such person, or conversion
of Series A or Series B Preferred Stock owned by such person or entity.
These shares of common stock are not, however, deemed to be outstanding
for the purpose of computing the percentage of outstanding shares
beneficially owned by any other person or entity.

2. Consists of 1,849,319 Shares issuable upon conversion of the Series A
Preferred Stock.

3. Consists of Warrants to purchase 500 Shares.

4. Consists of Warrants to purchase 1,000 Shares.

5. Consists of 969,999 Shares issuable upon conversion of the Series B
Preferred Stock. The Series B Preferred Stock provides that no holder may
convert such preferred stock to the extent that the shares to be received
by such holder upon such conversion would cause such holder to own more
than 4.9% of the outstanding shares of Common Stock. Therefore the number
of shares reported herein may exceed the number of shares Capital Venture
International is deemed to beneficially own under Section 13(d) of the
Securities Exchange Act of 1934, as amended.

6. Consists of Warrants to purchase 250 Shares.

7. Consists of Warrants to purchase 70,000 Shares; Mr. Chorle is a shareholder
of the law firm which has provided and continues to provide legal services
to the Company.

8. Consists of Warrants to purchase 100,000 Shares, 372,779 Shares issued to
Clend Investment Holdings Ltd. in connection with the Company's acquisition
of HouTex, 182,481 Shares issued on the conversion of a note payable, and
180,000 Shares issued upon the exercise of Warrants.

9. Consists of 305,587 unregistered Shares issued in connection with the
Company's acquisition of EMCO.

10. Consists of Warrants to purchase 8,334 Shares.

11. Consists of Warrants to purchase 500 Shares.

12. Consists of Warrants to purchase 562,900 Shares and 2,010,150 Shares issued
to Empire Metals in connection with the Company's acquisition of EMCO.

13. Consists of Warrants to purchase 500 Shares.

14. Consists of Warrants to purchase 250 Shares.

15. Consists of Warrants to purchase 750 Shares.

16. Consists of 19,234 Shares purchased by Mr. Greene.

17. Consists of Warrants to purchase 12,500 Shares.

18. Consists of Warrants to purchase 500 Shares.

19. Consists of Warrants to purchase 3,000 Shares and 88 Shares purchased by
Mr. Harrell.

20. Consists of Warrants to purchase 16,250 Shares and 87,500 Shares issued to
Mr. Helton in connection with the

<PAGE> 28

Company's acquisition of Proler.

21. Consists of Warrants to purchase 1,000 Shares.

22. Consists of Warrants to purchase 500 Shares.

23. Consists of Warrants to purchase 12,500 Shares and 3,578 Shares purchased
by Mr. Hochberg.

24. Consists of Warrants to purchase 25,000 Shares and 221 Shares purchased by
Mrs. Hochberg.

25. George A. Isaac III is a Director and Executive Vice President of the
Company; consists of Warrants to purchase 539,423 Shares and 540,856
Shares issued to the George A. Isaac III Second Revocable Trust in
connection with the Company's acquisition of Isaac.

26. Consists of 47,548 Shares issuable upon conversion of the Series A
Preferred Stock.

27. Consists of Warrants to purchase 750 Shares.

28. Consists of Warrants to purchase 250 Shares.

29. Consists of Warrants to purchase 840,000 Shares and 109,253 shares
issuable upon the conversion of a note payable.

30. Consists of Warrants to purchase 280,000 Shares and 36,417 shares
issuable upon the conversion of a note payable.

31. Consists of Warrants to purchase 280,000 Shares and 36,417 shares
issuable upon the conversion of a note payable.

32. Consists of Warrants to purchase 1,000 Shares.

33. Consists of Warrants to purchase 3,000 Shares.

34. Consists of Warrants to purchase 250 Shares.

35. Consists of Warrants to purchase 175,000 Shares, 25,000 Shares purchased by
Mr. & Mrs. MacLeod and 864,250 Shares beneficially owned by the MacLeod
Family Trust.

36. Consists of 725,000 Shares issued in connection with the Company's
acquisition of MacLeod and 139,250 Shares issued on the conversion of a
note payable.

37. Consists of Warrants to purchase 500 Shares.

38. Consists of Warrants to purchase 500 Shares.

39. Director and Vice Chairman of the Board of the Company, consists of
Warrants to purchase 251,933 Shares, 44,110 Shares issuable upon conversion
of the Series A Preferred Stock, 300,000 Shares purchased by Mr. Moorehead,
25,000 Shares issued to Mr. Moorehead in a private offering, 280,100 Shares
issued to Mr. Moorehead in connection

<PAGE> 29

with the Company's acquisition of EMCO, and options to purchase 12,500
Shares.

40. Consists of Warrants to purchase 351,833 Shares, 40,000 Shares purchased by
Mr. Moorehead, 25,000 Shares issued to Mr. Moorehead in a private
offering, 304,163 Shares issued to Mr. Moorehead in connection with the
Company's Acquisition of EMCO and options to purchase 150,000 Shares.

41. Consists of Warrants to purchase 250 Shares.

42. Consists of Warrants to Purchase 50,000 Shares; and 10,000 Shares purchased
by Mr. Pappano; Mr. Pappano is a shareholder of the law firm which has
provided and continues to provide legal services to the Company.

43. Consists of 47,113 Shares issuable upon conversion of the Series A Preferred
Stock.

44. Consists of Warrants to purchase 500 Shares.

45. Consists of Warrants to purchase 25,000 Shares and 300 Shares purchased by
Mr. Plonski.

46. Consists of Warrants to purchase 8,333 Shares.

47. Consists of 577,912 Shares issuable upon conversion of the Series A
Preferred Stock and 969,999 Shares issuable upon conversion of the
Series B Preferred Stock. The Series B Preferred Stock provides that no
holder may convert such preferred stock to the extent that the shares to
be received by such holder upon such conversion would cause such holder
to own more than 4.9% of the outstanding shares of Common Stock. Therefore
the number of shares reported herein may exceed the number of shares
Proprietary Convertible Investment Group, Inc. is deemed to beneficially
own under Section 13(d) of the Securities Exchange Act of 1934, as amended.

48. Consists of Warrants to purchase 500 Shares.

49. Consists of Warrants to purchase 250 Shares.

50. Director of the Company; consists of Warrants to purchase 83,333 Shares,
32,500 Shares purchased by Mr. Rubenstein, 70,000 Shares issued to
Mr. Rubenstein in a private offering and 2,573,050 Shares beneficially owned
by Empire Metals.

51. Consists of Warrants to purchase 750 Shares.

52. Consists of Warrants to purchase 3,000 Shares.

53. Consists of Warrants to purchase 25,000 Shares.

54. Consists of options to purchase 25,000 Shares and 63,294 Shares issued to
Mr. Segal in connection with the Company's acquisition of Houston
Compressed Steel Corp.

55. Consists of options to purchase 20,000 Shares and 189,882 Shares issued to
Mr. Segal in connection with the Company's acquisition of Houston Compressed
Steel Corp.

56. Consists of Warrants to purchase 8,333 Shares.

57. Consists of 48,329 Shares issuable upon conversion of the Series A Stock,
1,000,000 Shares issued to Mr. Smith in a private offering and 280,000
Shares purchased by Mr. Smith.

58. Consists of Warrants to purchase 25,000 Shares.

59. Consists of Warrants to purchase 750 Shares.

60. Consists of Warrants to purchase 16,250 Shares, 2,000 Shares purchased by
Mr. Sonnier and 87,500 Shares issued to Mr. Sonnier in connection with
the Company's acquisition of Proler.

61. Consists of Warrants to purchase 500 Shares.

<PAGE> 30

62. Consists of Warrants to purchase 25,000 Shares and 5,000 Shares purchased
by Mr. Tolin.

63. Consists of Warrants to purchase 500 Shares.

64. Consists of Warrants to purchase 25,000 Shares.

65. Consists of Warrants to purchase 10,000 Shares and 1,000 Shares owned by
Mr. Ellis White, Sr.

66. Consists of Warrants to purchase 500 Shares.

67. Consists of Warrants to purchase 2,250 Shares.

68. Consists of Warrants to purchase 16,250 Shares, 2,826 Shares purchased by
Mr. Whitman and 87,500 Shares issued to Mr. Whitman in connection with the
Company's acquisition of Proler.

69. Consists of Warrants to purchase 250 Shares.

70. Consists of Warrants to purchase 100,000 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,862
Shares owned by Copperstate Metals, Inc.

71. Consists of Warrants to purchase 100,000 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,862
Shares owned by Copperstate Metals, Inc.

72. Consists of Warrants to purchase 183,333 Shares, 100,000 Shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO and 101,863
Shares owned by Copperstate Metals, Inc.

There are no material relationships between any of the Selling
Stockholders and the Company or any of its predecessors or affiliates, nor have
any such material relationships existed within the past three years, except as
follows:

On April 11, 1996, the Company and Harold Rubenstein, a Director of the
Company, entered into a five-year consulting agreement. Under this Agreement,
Mr. Rubenstein provides the Company with consulting and management assistance
with respect to operations, strategic planning and other aspects of the
Company's business. Fees paid for these services amounted to $84,000 for the
year ended March 31, 1997.

The Company has issued a promissory note due April 11, 1999 bearing
interest at 9% per year with a balance outstanding as of March 31, 1997 of
$547,000, to H&S Broadway, an entity principally owned by Harold Rubenstein. The
Company has also issued a promissory note due April 11, 1999 with a balance as
of March 31, 1997 of $403,000 to Harold Rubenstein. During the fiscal year ended
March 31, 1997, the Company paid $78,000 of interest to H&S Broadway and Harold
Rubenstein. Mr. Rubenstein also is a 9.91% shareholder of Waste Manufacturing
and Leasing, a company that leases equipment to EMCO and from which EMCO
purchases manufactured containers.

<PAGE> 31

The Company has entered into various transactions with Ellis Metals,
Inc. ("Ellis Metals") and Empire Metals ("Empire"), which are principally owned
by Harold Rubenstein. On April 11, 1996, the Company entered into a five year
exclusive supply agreement with Ellis Metals, which requires Ellis Metals to
sell all of its inventory to EMCO or to EMCO's customers through a direct
shipment arrangement. In the latter arrangement, EMCO receives a brokerage fee.
In consideration for entering into this agreement, Ellis Metals receives a fee
of $2,500 per month. During the 1997 fiscal year, the Company paid Ellis Metals
$30,000 under the terms of this agreement. The Company also has advanced
$300,000 to Ellis Metals under an unsecured note which bears interest at the
rate of 9% per annum and matures on April 11, 2006. The Company purchases
inventory from Empire, from time to time, at prices equivalent to
market value. During the 1997 fiscal year, the Company purchased $3.9 million
and $.3 million of inventory from Ellis Metals and Empire, respectively, and
also had sales of $.3 million to Ellis Metals. As of March 31, 1997, the
Company had accounts payable of $93,000 and $84,000 to Ellis Metals and Empire,
respectively.

The Company also leases certain land to Ellis Metals. During the 1997
fiscal year, the Company received $78,000 in rent payments from Ellis Metals.
The Company has a five year option, beginning June 1, 1999, to purchase certain
assets of Ellis Metals for $1.364 million, subject to certain adjustments.

To facilitate a loan to the Company from a commercial bank, on January
7, 1997, Gerard M. Jacobs, T. Benjamin Jennings, Donald F. Moorehead, Jr.,
George O. Moorehead, Harold Rubenstein and Raymond F. Zack, each of whom is or
was a Director at the time of issuance, provided personal guarantees to the
bank. In consideration of the guarantees, the Company issued warrants to these
individuals (the "Guaranty Warrants") to purchase an aggregate of 500,000 shares
of Common Stock at $4.00 per share (subject to certain restrictions). The
Guaranty Warrants expire on or about January 7, 2002.

The Company and George O. Moorehead, formerly a Director and Executive
Vice President of the Company, have entered into two agreements, a Separation
Agreement and a Stock Warrant Settlement Agreement, resolving all outstanding
issues between the Company and Mr. Moorehead. Pursuant to the Separation
Agreement, Mr. Moorehead resigned from his employment with the Company, and
EMCO and resigned as a director of EMCO and delivered a Non-Compete,
Non-Solicitation and Confidentiality Covenant and Agreement in return for which
the Company: (a) paid Mr. Moorehead $250,000; (b) agreed to provide Mr.
Moorehead certain insurance and other benefits during a five-year period
beginning on December 1, 1997; (c) agreed to pay certain legal fees to Mr.
Moorehead's counsel; and (d) agreed to permit Mr. Moorehead to exercise any
options or warrants to acquire Common Stock previously granted to him, on a
"net cashless" basis, subject to the Company's right to refuse "net cashless"
exercises under certain circumstances. Pursuant to the Stock Warrant Settlement
Agreement, the Company issued to Mr. Moorehead warrants to purchase 200,000
shares of Common Stock at $12.00 per share, exercisable for a period of five
years, and agreed to pay Mr. Moorehead amounts totalling $665,000. Mr.
Moorehead would be permitted to exercise the warrants issued under this
Agreement on a "net cashless" basis subject to the Company's right to refuse
"net cashless" exercises under certain circumstances.

MacLeod leases certain land from Ian MacLeod, a Selling Stockholder
under a five-year lease (subject to three five-year extensions) providing for an
annual base rent of $48,000. The Company owns the real property on which
MacLeod's principal activities are performed.

<PAGE> 32

Isaac leases certain property from a company in which George A. Isaac
III, a Director of the Company, is a shareholder. The property is subject to a
lease which commenced with the acquisition of Isaac as of June 23, 1997. The
annual base rent for the property is approximately $317,000.

HouTex leases a 45 acre processing facility located in Houston, Texas
from a limited partnership affiliated with Mike Melnik, a Selling Stockholder
for an annual rent of $228,000.

Kenneth Merlau, a Selling Stockholder received from Isaac consulting
fees of approximately $230,000 in connection with the acquisition of Isaac.

George A. Isaac III, William M. Isaac, Lynn A. Isaac, Richard G. Isaac,
and Charles A. Isaac were the primary shareholders of the Isaac Group which was
acquired by the Company on June 23, 1997, and received an aggregate of
1,942,857 Shares and warrants to purchase 826,923 Shares in connection with the
acquisition. Copperstate Metals, Inc., David M. Zack, Gerald Zack, Raymond F.
Zack, Harold Rubenstein, George O. Moorehead and Donald F. Moorehead, Jr. were
the ultimate primary shareholders of EMCO Recycling Corp. which was acquired by
the Company on April 11, 1996, and received an aggregate of 3,500,000 Shares
and warrants to purchase 1,000,000 Shares in connection with the acquisition.
Ian MacLeod was the primary shareholder of the MacLeod Group of Companies which
was acquired by the Company on January 1, 1997, and received 885,000 Shares and
warrants to purchase 175,000 Shares in connection with the acquisition. Paul D.
Joseph, Scott Joseph and Steven C. Joseph were the primary shareholders of
Reserve Iron & Metal, L.P. which was acquired by the Company on May 1, 1997,
and received warrants to purchase an aggregate of 1,400,000 Shares and a note
payable convertible into 182,087 Shares in connection with the acquisition.
Mike Melnik and Zalman Melnik were the primary shareholders of HouTex Metals
Company, Inc. which was acquired by the Company on January 7, 1997, and
received an aggregate of 252,222 Shares in connection with the acquisition.

PLAN OF DISTRIBUTION

The Shares may be sold or distributed from time to time by the Selling
Stockholders, or by pledgees, donees or transferees of, or other successors in
interest to, the Selling Stockholders, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agents or may acquire Shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. The
distribution of the Shares may be effected by one or more of the following
methods: (i) ordinary brokers' transactions, which may include long or short
sales; (ii) transactions involving cross or block trades or otherwise on the
Nasdaq National Market; (iii) purchases by brokers, dealers or underwriters as
principals and resale by such purchasers for their own accounts pursuant to this
Prospectus; (iv) "at the market" to or through market makers or into an existing
market for the Common Stock; (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise), or (vii) any combination of
the foregoing, or by any other legally available means. In addition, the Selling
Stockholders or their successors in interest may enter into hedging transactions
with broker-dealers who may engage in short sales of Common Stock in the course
of hedging the positions they assume with the Selling Stockholders. The Selling
Stockholders or their

<PAGE> 33

successors in interest may also enter into option or other transactions with
broker-dealers that require the delivery to such broker-dealers of the Shares,
which Shares may be resold thereafter pursuant to this Prospectus. Shares to be
sold hereunder may be issued upon conversion of the Series A or Series B
Preferred Stock in accordance with its terms, or in other transactions with the
Company involving the Series A or Series B Preferred Stock, including, without
limitation, issuance of Shares in exchange for shares of Series A or Series B
Preferred Stock and issuance of Shares pursuant to modification of the terms of
the Series A or Series B Preferred Stock, or in settlement of claims with
respect to rights of holders of Series A or Series B Preferred Stock.

Brokers, dealers, underwriters or agents participating in the
distribution of the Shares as agent may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders (and, if
they act as agent for the purchaser of such Shares, from such purchaser). Such
discounts, concessions or commissions as to a particular broker, dealer,
underwriter or agent might be greater or less than those customary in the type
of transaction involved.

The Selling Stockholders and any such brokers, dealers or other agents
that participate in such distribution may be deemed to be "underwriters" within
the meaning of the Securities Act, and any discounts, commissions or concessions
received by the Selling Stockholders and any such brokers, dealers or other
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Neither the Company nor the Selling Stockholders can presently
estimate the amount of any such compensation. The Company knows of no existing
arrangements between any Selling Stockholder and any other Selling Stockholder,
broker, dealer or other agent relating to the sale or distribution of the
Shares.

Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the Shares may not simultaneously
engage in market activities with respect to the Common Stock for the applicable
period under Regulation M prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation Rules 10b-5 and Regulation
M, which may limit the timing of purchases and sales of any of the Shares by the
Selling Stockholders. All of the foregoing may affect the marketability of the
Common Stock.

The Company will pay substantially all of the expenses incident to this
Offering of the Shares by the Selling Stockholders other than commissions,
concessions and discounts of brokers, dealers or other agents. Each Selling
Stockholder may indemnify any broker, dealer, or other agent that participates
in transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act. The Company has agreed
to indemnify certain Selling Stockholders and any such statutory "underwriter"
and controlling persons of such "underwriter" against certain liabilities,
including certain liabilities under the Securities Act.

In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers.

<PAGE> 34

DESCRIPTION OF CAPITAL STOCK

The Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation") authorizes capital stock consisting of
80,000,000 shares of Common Stock, par value $.01 per share, and 4,000,000
shares of preferred stock without designation, par value $0.01 per share
("Preferred Stock"). There were 29,948,829 shares of Common Stock issued and
outstanding as of January 13, 1998. Additionally, the Board of Directors has
designated 36,000 shares of Preferred Stock as "Series A Preferred Stock," face
amount of $1,000 per share, 25,000 shares of which are outstanding as of
January 13, 1998, and 23,000 shares of Preferred Stock as "Series B Preferred
Stock," face amount of $1,000 per share, 20,000 shares of which are outstanding
as of January 13, 1998. The following summary description of the capital stock
of the Company is qualified in its entirety by reference to the Certificate of
Incorporation and Bylaws of the Company.

Common Stock. Each share of Common Stock is entitled to one vote. There
are no preemptive, subscription, conversion or redemption rights pertaining to
the shares of Common Stock. Stockholders are entitled to receive dividends as
declared by the Board of Directors out of assets legally available therefor and
to share ratably in the assets of the Company available upon liquidation.

Preferred Stock. The Company's certificate of incorporation grants the
Board of Directors the right to cause the Company to issue, from time to time,
all or part of the preferred stock remaining undesignated in one or more series,
and to fix the number of shares of preferred stock remaining undesignated and
determine or alter for each series, the voting powers, full, limited, or none,
and other designations, preferences, or relative, participating, optional or
other special rights and such qualifications, limitations, or restrictions
thereof. On August 8, 1997, the Company designated 36,000 shares of preferred
stock as "Series A Convertible Preferred Stock," par value $.01 per share
(Stated Value of $1,000 per share). On November 20, 1997, the Company designated
23,000 shares of preferred Stock as "Series B Convertible Preferred Stock," par
value $.01 per share (Stated Value of $1,000 per share).

The Series A Preferred Stock has a "Liquidation Preference" equal to
$1,000 per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series A Preferred
Stock are entitled to receive payment of the Liquidation Preference on a pro
rata basis based on the Liquidation Preference of the preferred stock held by
each holder before any payment is made to holders of Common Stock or any stock
of the Company junior to the Series A Preferred Stock.

Dividends on the Series A Preferred Stock accrue at an annual rate of
6% of the Stated Value and are payable in cash or, at the Company's option, and
upon satisfaction of certain conditions, in additional shares of Series A
Preferred Stock. The holders of Series A Preferred Stock are able to convert the
shares of Series A Preferred Stock into Common Stock at a price equal to the
lower of: (i) $18.30 (to be adjusted to reflect stock splits, stock dividends or
similar events); or (ii) 85% of the average closing bid price for the common
stock for the five trading days prior to the conversion date.

If the conversion of the Series A Preferred Stock would result in the
holders receiving more than 2,500,000 shares of Common Stock, then the Company
may redeem any shares of Series A Preferred Stock in excess of 2,500,000 shares
at a redemption price equal to: (i) 117% of the Stated Value of the shares; plus
(ii) any accrued and unpaid dividends on such shares. Any shares of Series A
Preferred Stock which have not been converted on or before August 8, 2000 (the
"Maturity Date") will automatically be converted to shares of Common Stock at
the Maturity Date. However, if, at the Maturity Date any of the

<PAGE> 35

"Mandatory Conversion Conditions" are not satisfied, then the Company will be
required to pay the holders of Series A Preferred Stock cash in an amount equal
to the Liquidation Preference for each share of Series A Preferred Stock owned
by the holder. "Mandatory Conversion Conditions" include: (i) a registration
statement covering the resale of all of the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock is effective, or such resale
may be made under Rule 144(k) under the Securities Act.

The Series A Preferred Stock does not grant holders voting rights
except that, so long as the Series A Preferred Stock is outstanding, without the
prior approval of the holders of at least a majority of all shares of the Series
A Preferred Stock outstanding at the time, the Company may not: (i) increase the
number of shares of Series A Preferred Stock which the Company is authorized to
issue; (ii) alter or change the rights, preferences or privileges of the Series
A Preferred Stock or any other capital stock of the Company so as to adversely
affect the Series A Preferred Stock; or (iii) create any new class or series of
capital stock having a preference over the Series A Preferred Stock as to
distribution of assets upon liquidation, dissolution or winding up of the
Company. Approval of holders of the Series A Preferred Stock as to actions
described in (ii) and (iii) above will not be required if the average closing
price for the Common Stock on the five trading days immediately preceding the
effective date of such a change is equal to or exceeds $27.45 per share.

The Series B Preferred Stock has a liquidation preference equal to
$1,000 per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series B Preferred
Stock are entitled to receive payment of the liquidation preference on a pro
rata basis based on the Liquidation Preference of the stock held by each holder
before any payment is made to holders of Common Stock or any stock of the
Company junior to the Series B Preferred Stock.

Dividends on the Series B Preferred Stock accrue, whether or not
declared by the Board of Directors, at an annual rate of 4.5% of the Stated
Value of each outstanding share of Series B Preferred Stock. Dividends and are
payable in cash or, at the Company's option, and upon satisfaction of certain
conditions, in additional shares of Series B Preferred Stock.

The holders of Series B Preferred Stock may convert shares of Series B
Preferred Stock into Common Stock at a price equal to the lowest of: (i) 120% of
the closing bid price for the Common Stock on the date of purchase of the Series
B Preferred Stock (to be adjusted to reflect stock splits, stock dividends or
similar events) (the "Fixed Conversion Price"); (ii) 92.5% of the average
closing bid price for the Common Stock for the five trading days prior to the
date of the conversion notice; or (iii) if applicable, the lowest traded price
of the Common Stock during the time when the Common Stock is not listed on the
Nasdaq National Market or listed on the New York Stock Exchange or other
national securities exchange.

If the conversion of the Series B Stock would result in the holders
receiving more than 2,000,000 Shares of Common Stock, then the Company may
redeem any shares of Series B Stock in excess of

<PAGE> 36

2,000,000 shares at a redemption price equal to: (i) 117% of the Stated Value of
the shares; plus (ii) any accrued and unpaid dividends on such shares. Any
shares of Series B Preferred Stock which have not been converted within three
years from the date of purchase will automatically be converted to shares of
Common Stock at the maturity date of the Series B Preferred Stock. However, if,
at the maturity date, a registration statement covering the resale of all of the
shares of Common Stock issuable upon conversion of the Series B Preferred Stock
is not effective, and resale may not be made under Rule 144(k) under the
Securities Act, then the Company will be required to pay to the holders of
Series B Preferred Stock cash in an amount equal to the liquidation preference
for the shares of Series B Preferred Stock owned by the holder.

The Series B Preferred Stock does not grant holders voting rights
except that, so long as shares of Series B Preferred Stock are outstanding,
without the prior approval of the holders of at least a majority of all shares
of the Series B Preferred Stock outstanding at the time, the Company may not:
(i) increase the number of shares of Series B Preferred Stock which the Company
is authorized to issue; (ii) alter or change the rights, preferences or
privileges of the Series B Preferred Stock or any other capital stock of the
Company so as to adversely affect the Series B Preferred Stock; or (iii) create
any new class or series of capital stock having a preference over the Series B
Preferred Stock as to distribution of assets upon liquidation, dissolution or
winding up of the Company. Approval of holders of the Series B Preferred Stock
as to actions described in (ii) and (iii) above will not be required if the
average closing price for the Common Stock on the five trading days immediately
preceding the effective date of such a change is equal to or exceeds 150% of the
Fixed Conversion Price.

Certificate of Incorporation and Bylaws. The Company's Certificate of
Incorporation was amended on April 9, 1996 to change the Company's corporate
name to Metal Management, Inc. The directors of the Company are elected each
year at the annual meeting of the stockholders for terms of one year and until
their successors are elected and qualified; existing directors may nominate and
elect qualified persons to fill vacancies on the Board of Directors.

Stockholders' Agreement. Albert A. Cozzi, Frank J. Cozzi and Gregory P.
Cozzi (collectively, the "Cozzi Stockholders"), Samstock, L.L.C. ("Samstock")
and Messrs. Jacobs and Jennings (collectively, the "MTLM Stockholders") and the
Company entered into a stockholders agreement dated as of December 19, 1997 and
having a term of ten years, unless renewed or extended (the "Stockholders
Agreement"). Under the Stockholders Agreement, the Cozzi Stockholders, Samstock
and the MTLM Stockholders have agreed that each group will act in a manner to
cause the nomination of the directors slated for election at each annual
meeting of the Company, five of whom shall be selected by the Cozzi
Stockholders and five of whom shall be selected by the MTLM Stockholders
(provided that each group has agreed to nominate one individual, independent and
unaffiliated from each group or the Company, as part of its slate) and one of
whom shall be selected by Samstock. The Stockholders Agreement further requires
each group to vote for the other group's nominees for election to the Board and
to vote for proposals, if and when presented by the Company, to amend the
Company's organizational documents to require the approval of at least
two-thirds of the Board of Directors to, among other things: (i) amend the
Company's certificate of incorporation or bylaws; (ii) liquidate or merge the
Company; (iii) sell substantially all of the Company's assets; (iv) elect or
remove officers; (v) adopt an annual budget; (vi) borrow funds, sell assets or
make capital expenditures exceeding $5 million; (vii) issue or register the
Company's securities; or (viii) declare or pay any dividends or distributions.
The Stockholders Agreement is attached as an exhibit to this Report.

Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Common Stock is LaSalle National Bank of Chicago.

<PAGE> 37

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Shefsky & Froelich Ltd., Chicago, Illinois. Certain attorneys
employed by Shefsky & Froelich Ltd. beneficially own, or have the right to
acquire through exercise of warrants or options granted to such individuals, an
aggregate of approximately 133,000 shares of the Company's Common Stock as of
the date hereof. Certain members of the firm have also received compensation in
the form of warrants for non-legal services partly in connection with certain
financings completed by the Company.

EXPERTS

The consolidated balance sheets and the related consolidated statements
of operations, of cash flows and of changes in stockholders' equity of the
Company and its subsidiaries at March 31, 1997 and October 31, 1995, and the
results of their operations and their cash flows for the year ended March 31,
1997, the five months ended March 31, 1996 and for each of the two years in the
period ended October 31, 1995, incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K (as amended) for the fiscal year ended
March 31, 1997, and the Company's Proxy Statement dated November 20, 1997 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The consolidated balance sheets of Cozzi Iron & Metal, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996, incorporated in this Prospectus by
reference from the Company's Proxy Statement, dated November 20, 1997, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

The balance sheets of The Isaac Corporation and Ferrex Trading
Corporation at December 31, 1996 and 1995 and the related statements of
income, shareholders' equity and cash flows for the years ended December 31,
1994, 1995 and 1996, incorporated in this Prospectus by reference to the
Company's current report on Form 8-K dated June 23, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
incorporated herein in reliance upon such reports given upon the authority of
such firm as experts in auditing and accounting.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company incorporates by reference herein the following documents
filed pursuant to the Exchange Act under the Company's Exchange Act File No.
0-14836: (i) the Company's Annual Report on Form 10-K (as amended) for the
fiscal year ended March 31, 1997; (ii) the Company's Quarterly Reports on Form
10-Q for the periods ended June 30, 1997 and September 30, 1997; (iii) the
Company's Amended Quarterly Report on Form 10-QA for the period ended September
30, 1997; (iv) the Company's Current Report on Form 8-K dated May 1, 1997
(relating to the Reserve acquisition and including historical and proforma
financial statements of Reserve); (v) the Company's Current Report on Form 8-K
dated June 23, 1997 (relating to the Isaac acquisition and including historical
and pro forma financial statements of Isaac); (vi) the Company's Current Report
on Form 8-K dated August 28, 1997 (relating to the Proler acquisition); (vii)
the Company's Current Report on Form 8-K dated October 24, 1997 (relating to the
reclassification of amounts received from the sale of the Series A

<PAGE> 38

Preferred Stock); (viii) the Company's Proxy Statement dated November 20, 1997;
(ix) the Company's Current Report on Form 8-K dated December 1, 1997 (relating
to the acquisition of Cozzi Iron & Metal, Inc.); and (x) the Company's Current
Report on Form 8-K dated December 18, 1997 (relating to the private equity
placement to Samstock).

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document or information
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document that also is,
or is deemed to be, incorporated herein by reference, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The making of a modifying or superseding statement shall not be deemed
an admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.

The Company hereby undertakes to provide without charge to each person
including any beneficial owner to whom a copy of this Prospectus has been
delivered, upon written or oral request of the person, a copy of any or all of
the foregoing documents or information referred to above that has been
incorporated herein by reference in this Prospectus (other than exhibits to
documents, unless these exhibits are specifically incorporated by reference into
the documents). Requests for these documents should be made to Mr. Robert C.
Larry at the Company's principal executive offices located at 500 North Dearborn
Street, Suite 405, Chicago, Illinois 60610; telephone number (312) 645-0700.

<PAGE> 39

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.

TABLE OF CONTENTS

P A G E
-------
Available Information.....................................................3
The Company...............................................................4
Risk Factors..............................................................8
Use of Proceeds..........................................................20
Selling Stockholders.....................................................20
Plan of Distribution.....................................................31
Description of Capital Stock.............................................33
Legal Matters............................................................36
Experts..................................................................36
Incorporation of Certain Documents
by Reference...........................................................36

METAL MANAGEMENT, INC.

-------------------
PROSPECTUS
-------------------

15,896,858

SHARES OF
COMMON STOCK
($.01 Par Value)

<PAGE> 40

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses payable by the
Registrant in connection with the filing of this Registration Statement. All of
such expenses, other than the filing fee for the Commission, are estimates.

<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................................................... $ 70,852
Printing and Engraving Expenses.................................................................. $ 10,000*
Legal Fees and Expenses.......................................................................... $ 25,000*
Accounting Fees and Expenses..................................................................... $ 35,000*
Blue Sky Fees and Expenses....................................................................... $ 0
--------
Total ............................................................................... $140,852
========
</TABLE>

* estimated for purposes of this filing

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to the provisions of Section 145(a) of the Delaware General
Corporation Law, the Company has the power to indemnify anyone made or
threatened to be made a party 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 the Company) because such person is
or was a director or officer of the Company against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in the defense or settlement of such action, suit, or
proceeding, provided that (i) such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interest and
(ii) in the case of a criminal proceeding such person had no reasonable cause to
believe his conduct was unlawful.

With respect to an action or suit by or in the right of the Company to
procure a judgment in its favor, Section 145(b) of the Delaware General
Corporation Law provides that the Company shall have the power to indemnify
anyone who was, is, or is threatened to be made a party to a threatened,
pending, or completed action or suit brought by or in the right of the Company
to procure a judgment in its favor because such person is or was a director or
officer of the Company against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, provided that such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interests,
except that no indemnification shall be made in a case in which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall have determined upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses.

Indemnification as described above shall only be granted in a specific
case upon a determination that indemnification is proper under the circumstances
using the applicable standard of conduct which is made by (a) a majority of a
quorum of directors who were not parties to such proceeding, (b) independent

S-1

<PAGE> 41

legal counsel in a written opinion if such quorum cannot be obtained or if a
quorum of disinterested directors so directs, or (c) the shareholders of the
Company.

Section 145(g) of the Delaware General Corporation Law permits the
purchase and maintenance of insurance to indemnify directors and officers
against any liability asserted against or incurred by them in any such capacity,
whether or not the Company itself would have the power to indemnify any such
director or officer against such liability. The Company has purchased this type
of insurance, has paid and intends to continue paying the premiums thereon.

The Company's Amended Certificate of Incorporation provides for the
indemnification of directors and officers of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as the same
may be amended or supplemented. The Certificate of Incorporation further
provides that the indemnification provided for therein shall not be exclusive of
any rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.

The Amended Certificate of Incorporation also contains a provision that
eliminates the personal liability of the Company's directors to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director. The provision does not limit a director's liability for (i) breaches
of duty of loyalty to the Company or its shareholders, (ii) acts or omissions
not in good faith, involving intentional misconduct or involving knowing
violations of law, (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions under Section 174 of the Delaware General Corporation
Law, or (iv) transactions in which the director received an improper personal
benefit. Depending on judicial interpretation, the provision may not affect
liability for violations of the federal securities laws.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the 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.

The Company understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws. The Company is not aware of any material threatened or ongoing
litigation or proceeding that may result in a claim for such indemnification.

ITEM 16. EXHIBITS

The following exhibits are filed as part of this Registration
Statement:

S-2

<PAGE> 42

NUMBER EXHIBIT DESCRIPTION
- ------ -------------------

3.1 Amended Certificate of Incorporation of Metal Management, Inc.
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-Q dated December 31, 1996 and Exhibit 3.1 to
the Registrant's current report on Form 8-K dated December 15,
1997).

3.2 Amended and restated Bylaws as amended through May 24, 1997
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-K for the year ended March 31, 1997).

4.1 Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of the Company dated August 7,
1997 and filed with the Secretary of State of Delaware on
August 7, 1997 (incorporated by reference to Exhibit 3.3 of
the Company's current report on Form 8-K dated October 24,
1997).

4.2 Certificate of Designations, Preferences and Rights of Series
B Convertible Preferred Stock of the Company dated November
20, 1997 and filed with the Secretary of State of Delaware on
November 20, 1997 (incorporated by reference to Exhibit 3.2 of
the Company's current report on Form 8-K dated December 15,
1997).

4.3 Registration Rights Agreement dated as of June 23, 1997, by
and between Registrant, and the George A. Isaac, III Second
Revocable Trust (incorporated by reference to Exhibit 2.1 of
the Registrant's report on Form 8-K dated June 23, 1997).

4.4 Warrant To Purchase 462,500 Shares dated June 23, 1997, by and
among Registrant, Isaac Acquisition Corporation, the Isaac
Corporation and Ferrex Trading Corporation, Paulding Recycling
Inc., Briquetting Corporation of America and all of their
shareholders, George A. Isaac, III Trustee of the George A.
Isaac, III Second Revocable Trust (incorporated by reference
to Exhibit 2.1 of the Registrant's report on Form 8-K dated
June 23, 1997).

4.5 Warrant To Purchase 105,000 Shares dated May 1, 1997, by and
between Registrant and Paul D. Joseph (incorporated by
reference to Exhibit 2.2 of the Registrant's report on Form
8-K dated May 15, 1997).

4.6 Declaration of Registration Rights dated December 31, 1996, by
Registrant for the benefit of shareholders of Ian MacLeod
(incorporated by reference to Exhibit 2.1 of the Registrant's
report on Form 8-K dated January 1, 1997).

4.7 Declaration of Registration Rights dated as of January 7, 1997
by the Registrant, for the benefit of shareholders of HouTex
Metals Company, Inc. (incorporated by reference to Exhibit 2.2
of the Registrant's report on Form 8-K dated January 7, 1997).

4.8 Amended and Restated Stockholders' Agreement, dated December
19, 1997, by an among T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, Samstock,
L.L.C. and the Company, (incorporated by reference to Exhibit
10.2 of the Registrant's report on Form 8-K dated December
18, 1997)

4.9 Shelf Registration Rights Agreement, dated December 19, 1997,
by and between the Registrant and Samstock, L.L.C.
(incorporated by reference to Exhibit 4.2 of the Registrant's
report on Form 8-K dated December 18, 1997).

4.10 Registration Rights Agreement, dated December 18, 1997, by
and among the Company and Ronald I. Romano, Lolita A. Romano,
Ronald T. Romano and Ryan E. Romano (incorporated by
reference to Exhibit 4.4 of the Registrant's report on Form
8-K dated December 18, 1997).

4.11* Agreement and Plan of Merger dated December 11, 1997 by and
among Metal Management, Inc., HCS Acquisition, Inc., Houston
Compressed Steel Corp. and the Shareholders of Houston
Compressed Steel Corp.

5.1* Opinion of Shefsky & Froelich Ltd. as to the validity of the
Shares.

23.1* Consent of Shefsky & Froelich Ltd. (included in Exhibit 5.1
above).

23.2* Consent of Price Waterhouse LLP.

23.3* Consent of Deloitte & Touche LLP.

23.4* Consent of Ernst & Young LLP.

* Filed herewith.
S-3
<PAGE> 43

ITEM 17. UNDERTAKINGS

(1) The undersigned Registrant hereby undertakes:

(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:

(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this
Registration Statement;

(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a
post-effective amendment by these paragraphs is contained in periodic
reports filed with or furnished by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by reference in
this Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the Offering.

(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of
1934 (and where applicable each filing of an employee
benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration
Statement shall be deemed to be a new registration
statement relating to the securities offered

S-4

<PAGE> 44

therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.

(h) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, 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 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.

S-5

<PAGE> 45

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on January 13, 1998.

METAL MANAGEMENT, INC.

By: /s/ T. Benjamin Jennings
----------------------------------------------------
T. Benjamin Jennings
Director, Chairman of the Board, Member of Executive
Committee and Chief Development Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement or amendment thereto has been signed by the
following persons in the capacities indicated on January 13, 1998.

S-6

<PAGE> 46

/s/ T. Benjamin Jennings Director, Chairman of the Board, Member of
- --------------------------------- Executive Committee and Chief Development
T. Benjamin Jennings Officer

/s/ Gerard M. Jacobs Director, Member of Executive Committee and
- --------------------------------- Chief Executive Officer
Gerard M. Jacobs

/s/ Donald F. Moorehead, Jr. Director and Vice Chairman of the Board
- ---------------------------------
Donald F. Moorehead, Jr.

/s/ Albert A. Cozzi President and Chief Operating Officer,
- --------------------------------- Director and Member of Executive Committee.
Albert A. Cozzi

/s/ Frank J. Cozzi Vice President and Director
- ---------------------------------
Frank J. Cozzi

/s/ Gregory P. Cozzi Director
- ---------------------------------
Gregory P. Cozzi

/s/ George A. Isaac, III Director, Member of Executive Committee and
- --------------------------------- Executive Vice President
George A. Isaac, III

/s/ William T. Proler Director
- ---------------------------------
William T. Proler

/s/ Harold Rubenstein Director
- ---------------------------------
Harold Rubenstein

/s/ Christopher G. Knowles Director
- ---------------------------------
Christopher G. Knowles

/s/ Robert C. Larry Vice President, Finance, Treasurer and Chief
- --------------------------------- Financial Officer
Robert C. Larry

S-7

<PAGE> 47

EXHIBIT INDEX

NUMBER EXHIBIT DESCRIPTION
- ------ -------------------

3.2 Amended and restated Bylaws as amended through May 24, 1997
(incorporated by reference to Exhibit 3.1 to the Registrant's
Report on Form 10-K for the year ended March 31, 1997).

4.8 Amended and Restated Stockholders' Agreement dated December
19, 1997, by an among T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi,
Samstock, L.L.C. and the Company (incorporated by reference
to Exhibit 10.2 of the Registrant's report on Form 8-K dated
December 18, 1997)

5.1* Opinion of Shefsky & Froelich Ltd. as to the validity of the
Shares.

23.1* Consent of Shefsky & Froelich Ltd. (included in Exhibit 5.1
above).

23.2* Consent of Price Waterhouse LLP.

23.3* Consent of Deloitte & Touche LLP.

23.4* Consent of Ernst & Young LLP.

* Filed herewith.

S-8

<PAGE> 1
Exhibit 4.11

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

METAL MANAGEMENT, INC.

HCS ACQUISITION, INC.

HOUSTON COMPRESSED STEEL CORP.

AND

THE SHAREHOLDERS OF
HOUSTON COMPRESSED STEEL CORP.

DATED DECEMBER 11, 1997

<PAGE> 2

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "Agreement") is dated as of
December 11, 1997, by and among Metal Management, Inc., a Delaware corporation
("MTLM"), HCS Acquisition, Inc., a Texas corporation ("Acquisition"), Houston
Compressed Steel Corp., a Texas corporation (the "Company"), and the
shareholders of the Company set forth on the signature page hereof
(collectively the "Shareholders").

W I T N E S S E T H:

WHEREAS, the Shareholders are holders of all of the issued and outstanding
common stock of the Company ("Company Common Stock");

WHEREAS, MTLM proposes to acquire the Company through a merger of
Acquisition, its wholly-owned subsidiary corporation, with and into the Company
(the "Merger") pursuant to which the shares of Common Stock of the Company
would be converted into Common Stock of MTLM ("Common Stock"), on the terms and
conditions set forth herein;

WHEREAS, the parties hereto wish to set forth the representations,
warranties, agreements and conditions under which a merger (the "Merger") of
Acquisition with and into the Company will occur; and

WHEREAS, the parties intend for the Merger to be a tax-free reorganization
under Section 368(a)(2)(E) of the Code.

NOW, THEREFORE, in consideration of the premises, the representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

I.
THE MERGER AND RELATED MATTERS

A. MERGER

1. Upon the terms and subject to the conditions of this
Agreement, Acquisition shall be merged with and into the Company in accordance
with the Texas Business Corporation Act ("TBCA"). The Company shall be the
surviving corporation in the Merger (the "Surviving Corporation"). The
Surviving Corporation shall continue its corporate existence under and be
organized under and be governed by the TBCA and possess all the rights and
assets of Acquisition and the Company and be subject to all of

<PAGE> 3

the liabilities and obligations of Acquisition and the Company in accordance
with the provisions of the TBCA.

1. The Articles of Incorporation and the Bylaws of Acquisition, as
in effect immediately prior to the date and time when the Merger shall
become effective (the "Effective Time"), shall be the Articles of Incorporation
and Bylaws, respectively, of the Surviving Corporation until thereafter
amended, except that Article One of the Articles of Incorporation of
Acquisition shall be amended to change the name of Acquisition to "Houston
Compressed Steel Corp."

1. The directors of Acquisition immediately prior to the Effective
Time shall be the directors of the Surviving Corporation and the officers
of the Company immediately prior to the Effective Date shall be the officers of
the Surviving Corporation, each to hold office from the Effective Time until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Bylaws of the Surviving Corporation, or as otherwise
provided by law.

1. The Merger shall have the effects set forth in the TBCA. If at
any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further assignments or assurances in law or
otherwise are necessary or desirable to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, all rights, title and interests in all
personal property and all privileges, powers and franchises of the Company and
Acquisition, the Surviving Corporation and its proper officers and directors,
in the name and on behalf of the Company and Acquisition, shall execute and
deliver all such proper assignments and assurances in law and do all things
necessary and proper to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of the Company or otherwise to
take any and all such action. It is acknowledged and agreed that prior to the
Merger, the Company may, without notice or consent, transfer all of its real
property, improvements, fixtures and its interest in Heights Armature Works to
a third party (or related party), such that the Surviving Corporation shall
have no interest in any such assets.

A. CLOSING AND EFFECTIVE TIME. Subject to the provisions of
Article VI and Article VII hereof, the closing (the "Closing") of the Merger
shall take place at 9:00 a.m., Houston time, on a date to be designated by all
parties hereto (at least three business days in advance), at the offices of
Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas, or if any of the
conditions set forth in Article VI or Article VII hereof have not been
satisfied, then as soon as practicable thereafter, or at such other time and
place or such other date as MTLM and the Company shall agree (the "Effective
Time"). The Merger shall be effective when properly executed Articles of
Merger (together with any other documents required by law to effectuate the
Merger) shall have been filed with the Secretary of State of the State of Texas
in accordance with the provisions of the TBCA, which filing shall be made as
soon as practical on or after the Effective Time.

<PAGE> 4

A. CONVERSION OF STOCK.

1. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any shares of Company Common Stock, the
four (4) shares of Company Common Stock outstanding immediately prior to the
Effective Time shall be converted into the right to receive, and shall be
immediately exchangeable for, upon the surrender to MTLM at the Closing of the
certificates formerly representing such shares, an aggregate number of shares
of MTLM Common Stock equal to 253,176 shares. The shares of MTLM Common Stock
to be issued to the Shareholders is herein called the "Merger Consideration"
and shall be issued and delivered to the Shareholders free and clear of all
Liens and claims. At the time of Closing, ten percent (10%) of the Merger
Consideration shall be placed in escrow pursuant to an Escrow Agreement (the
"Escrow Shares"), the form of which Escrow Agreement is attached hereto as
Exhibit A and made a part hereof.

1. No fractional shares of MTLM Common Stock shall be issued to any
holder of Company Common Stock in the Merger. To the extent the
application of the conversion rate to all shares of Company Common Stock held
by a Shareholder would result in a fractional number of shares of MTLM Common
Stock being issued to such holder in the Merger, the number of shares of MTLM
Common Stock issuable to such holder in respect of all such shares in the
Merger shall be rounded up to the next whole number of shares of MTLM Common
Stock.

1. Each share of Acquisition Common Stock outstanding immediately
prior to the Effective Time shall be converted into one share of stock in
the Surviving Corporation.

1. As of and after the Effective Time, no holder of any certificate
that immediately prior to the Effective Time represented shares of Company
Common Stock shall have any rights as a holder of Company Common Stock other
than to receive his pro rata part of the Merger Consideration issuable pursuant
to the Merger.

A. ESCROW.

The Escrow Shares will be held under the Escrow Agreement for a period of
one year, in accordance with the terms and provisions of the Escrow Agreement.

<PAGE> 5

A. EXCHANGE.

At the Closing, each Shareholder shall surrender to MTLM the certificates
for Company Common Stock owned by such Shareholder and each Shareholder shall
receive one or more certificates (with all appropriate legends) representing
such Shareholder's pro rata share of the Merger Consideration. Until so
surrendered, certificates for shares of Company Common Stock shall represent,
after the Effective Time, solely the right to receive the Merger Consideration
issuable in respect of such shares determined pursuant to Section 1.3 hereof.

REPRESENTATIONS AND WARRANTIES
OF MTLM AND ACQUISITION

As a material inducement to the Company and the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, MTLM and
Acquisition make the following representations and warranties to the Company
and the Shareholders:

A. CORPORATE STATUS. MTLM is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Acquisition is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas.

A. CORPORATE POWER AND AUTHORITY. MTLM and Acquisition have, or
will have at the time of Closing, the corporate power and authority to
execute and deliver this Agreement, to perform their obligations hereunder and
to consummate the transactions contemplated hereby. MTLM and Acquisition have,
or will have at the time of Closing, taken all action necessary to authorize
their execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby; including, without limitation, approval of their respective boards of
directors. MTLM and Acquisition each have the corporate power and authority to
own or lease their respective properties and to carry on their businesses as
now being conducted.

A. ENFORCEABILITY. This Agreement has been, or will have been at
the time of Closing, duly executed and delivered by MTLM and Acquisition
and constitutes a legal, valid and binding obligation of MTLM and Acquisition,
enforceable against them in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.

<PAGE> 6

A. NO COMMISSIONS. MTLM and Acquisition have incurred no
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.

A. SEC FILINGS AND FINANCIAL INFORMATION. MTLM has timely made
all filings required to be made by it with the SEC (as defined herein).
None of such filings contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements therein not misleading
in light of the circumstances in which they were made. Between the first and
second anniversary of the Closing, MTLM will use its best efforts to timely
file all SEC reports required to maintain trading of its shares under SEC Rule
144; provided, however, the sale of shares of MTLM Common Stock pursuant to
Rule 144 may be subject to necessary blackout periods for pending acquisitions
and other corporate events.

A. FINANCIAL INFORMATION. MTLM has delivered to the Company true
copies of the following: (i) its annual report on Form 10-K for the most
recent year end; (ii) all Form 8-K's for the past twelve months; (iii) its
quarterly reports on Form 10-Q for the three most recently ended calendar
quarters; (iv) its proxy statement dated November 20, 1997; and (v) all
exhibits filed with such documents. The foregoing documents, as of their
respective dates, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Since November 24, 1997 (the
"Report Date"), there has not been any material adverse change in the business,
properties, financial condition or prospects of MTLM. Acquisition has
conducted no business prior to the Effective Date.

A. RELATED PARTY MATTERS. All material Contracts between MTLM and
any of its Affiliates are disclosed in public SEC filings, except as set
forth on Schedule 2.7.

A. TAXATION. MTLM has prepared and filed with the appropriate
governmental agencies all federal, state and local tax returns required to
be filed by it and has paid all taxes shown thereon to be payable or which have
become due pursuant to any assessment, deficiency notice or similar notice
received by it. MTLM is not a party to any pending action or proceeding by any
governmental authority for assessment or collection of taxes and no claim
therefor has been asserted against it.

A. MTLM STOCK. The MTLM common stock to be issued pursuant to
Section 1.3, above, is validly issued and authorized and shall be issued and
delivered free and clear of all Liens, claims and encumbrances and MTLM is not
a party to any agreement creating rights in any person with respect to such
shares of stock (other than this Agreement) or relating to the voting thereof.
The registration rights given to the Shareholders in Article IX hereof are
enforceable according to their terms.

<PAGE> 7

A. FINANCIAL AND BUSINESS. Acquisition has no material assets or
liabilities other than the stock it is acquiring in the Company. All of
the issued and outstanding capital stock of Acquisition is owned by MTLM.

A. OTHER AGREEMENTS. Neither MTLM nor Acquisition is a party to,
bound by or otherwise subject to any contract or agreement which would
conflict with or violate any covenant of MTLM and/or Acquisition in this
Agreement or documents delivered in connection herewith; including, without
limitation, the provisions of Article IX hereof.

A. LITIGATION. Except as set forth on Schedule 2.12, there is no
action, suit or other legal or administrative proceeding or governmental
investigation, pending or, to the Knowledge of MTLM, threatened against, by or
affecting MTLM or any of its properties or assets, or which question the
validity or enforceability of this Agreement or the transactions contemplated
hereby, and there is no reasonable basis for any of the foregoing. There are
no outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which MTLM is or was a party which have not been
complied with in full or which continue to impose any material obligations on
MTLM.

A. NO VIOLATION. The execution and delivery of this Agreement by
MTLM and Acquisition and the performance of their obligations hereunder
will not (i) contravene any provision of their charter or bylaws, (ii) violate
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or (iii) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except any
SEC and other filings required to be made by MTLM.

REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS

As a material inducement to MTLM to enter into this Agreement and to
consummate the transactions contemplated hereby, each of the Shareholders
hereby jointly and severally make the following representations and warranties
to MTLM.

A. CORPORATE STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
The Company has the requisite power and authority to own or lease its property
and to carry on its business as now being conducted. The Company is legally
qualified to transact business in all jurisdictions where the nature of its
property and the conduct of its business requires such qualification (all of
which jurisdictions are listed on Schedule 3.1) and is in good standing in each
of the jurisdictions in which it is so qualified, except where the failure to

<PAGE> 8

be so qualified would not have a Material Adverse Effect on the Company. There
is no pending or, to the knowledge of the Shareholders, threatened proceeding
for the dissolution, liquidation, insolvency or rehabilitation of the Company.

A. POWER AND AUTHORITY. The Company and each of the Shareholders
has the power and authority to execute and deliver this Agreement, to perform
its and their respective obligations hereunder and to consummate the
transactions contemplated hereby. The Company has taken all action necessary
to authorize the execution and delivery of this Agreement, the performance of
its obligations hereunder and the consummation of the transactions contemplated
hereby. Each of the Shareholders is a resident of the State of Texas and has
the requisite competence to execute and deliver this Agreement and to perform
his obligations hereunder and to consummate the transactions contemplated
hereby.

A. ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and each of the Shareholders and constitutes
the legal, valid and binding obligation of each of them, enforceable against
them in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.

A. CAPITALIZATION. Schedule 3.4 sets forth, with respect to the
Company: (i) the number of authorized shares of each class of its capital
stock, (ii) the number of issued and outstanding shares of each class of its
capital stock, and (iii) the number of shares of each class of its capital
stock which are held in treasury. All of the issued and outstanding shares of
capital stock of the Company (i) have been duly authorized and validly issued
and are fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, and (iii) were not issued in
violation of any preemptive rights or rights of first refusal. No preemptive
rights or rights of first refusal exist with respect to the shares of capital
stock of the Company and no such rights arise by virtue of or in connection
with the transactions contemplated hereby. There are no outstanding or
authorized rights, options, warrants, convertible securities, subscription
rights, conversion rights, exchange rights or other agreements or commitments
of any kind that could require the Company to issue or sell any shares of its
capital stock (or securities convertible into or exchangeable for shares of its
capital stock). There are no outstanding stock appreciation, phantom stock,
profit participation or other similar rights with respect to the Company.
There are no proxies, voting rights or other agreements or understandings with
respect to the voting or transfer of the capital stock of the Company. The
Company is not obligated to redeem or otherwise acquire any of its outstanding
shares of capital stock.

<PAGE> 9

A. SHAREHOLDERS OF THE COMPANY. Schedule 3.5 sets forth, with
respect to the Company, (i) the name, address and federal taxpayer
identification number of, and the number of outstanding shares of each class of
its capital stock owned by each shareholder of record as of the close of
business on the date of this Agreement; and (ii) the name, address and federal
taxpayer identification number of, and number of shares of each class of its
capital stock beneficially owned by, each beneficial owner of outstanding
shares of capital stock (to the extent that record and beneficial ownership is
different). The Shareholders are the holders of all issued and outstanding
shares of capital stock of the Company and the Shareholders own such shares as
set forth on Schedule 3.5, free and clear of all Liens, restrictions and claims
of any kind, except as set forth on Schedule 3.5. Such shares are not subject
to any voting trust agreement, proxy or other Contract.

A. NO VIOLATION. Except as set forth on Schedule 3.6 and any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder (the "HSR
Act"), the execution and delivery of this Agreement by the Company and the
Shareholders, the performance by each of them of their respective obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (i) contravene any provision of the articles of
incorporation or bylaws of the Company, (ii) violate any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against the Company or the Shareholders; (iii)
result in any breach of, or constitute a default (or an event which would, with
the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against the Company or the Shareholders, (iv) result in or require the creation
or imposition of any Lien upon or with respect to any of the property or assets
of the Company, or (v) require the consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any SEC and other filings required to be
made by MTLM.

A. RECORDS. The copies of the respective articles of
incorporation and bylaws of the Company which were or will be provided
to MTLM are true and complete and reflect all amendments made through the date
of this Agreement. The minute books for the Company made available to MTLM for
review were true and complete as of the date of such review, no further entries
have been made through the date of this Agreement, such minute books contain
the true signatures of the persons purporting to have signed them, and such
minute books contain an accurate record of all material corporate actions of
the shareholders and directors (and any committees thereof) of the Company
taken by written consent or at a meeting since incorporation. All corporate
actions taken by the Company requiring board of directors' approval have been
duly authorized or ratified. All accounts, books, ledgers and official and
other records of the Company have been fully, properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained

<PAGE> 10

therein. The stock ledgers of the Company, as previously made available to
MTLM, contain accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of the Company.

A. SUBSIDIARIES. Except as set forth on Schedule 3.8, the Company
does not, as of the Closing, own, directly or indirectly, any outstanding
voting securities of or other interests in, or control, any other corporation,
partnership, joint venture or other business entity. Except as set forth on
Schedule 3.8, the Company does not have any liabilities or obligations, whether
accrued, absolute, contingent or otherwise, arising from its interest in the
entities set forth on such schedule.

A. FINANCIAL STATEMENTS. The Shareholders have delivered to MTLM
(i) the consolidated financial statements of the Company as of May 31, 1996 and
1995, including the notes thereto, audited by Hopkins, Alexander & Co., Inc.
and (ii) the May 31, 1997 consolidated financial statements including footnotes
of the Company, "reviewed" by Bickley, Prescott & Co., P.C., and the September
30, 1997 consolidated financial statement including footnotes of the Company
(collectively, the "Financial Statements"), copies of which are attached as
Schedule 3.9 hereto. The balance sheet dated as of September 30, 1997 included
in the Financial Statements is referred to herein as the "Current Balance
Sheet". The Financial Statements fairly present the consolidated financial
condition of the Company at each of the balance sheet dates and the results of
operations for the periods covered thereby, and have been prepared in
accordance with GAAP consistently applied for the periods indicated; provided,
however, the September 30, 1997 consolidated financial statement has not been
"reviewed" by the Company's independent accountants as to its compliance with
GAAP. The Financial Statements of the Company fairly reflect the transactions,
properties, assets and liabilities of the Company. There are no material
special or non-recurring items of income or expense during the periods covered
by the Financial Statements, and the balance sheets included in the Financial
Statements do not reflect any writeup or revaluation increasing the book value
of any assets, except as specifically disclosed in the notes thereto in
accordance with GAAP consistently applied throughout the periods indicated. The
Financial Statements reflect all adjustments necessary for a fair presentation
of the financial information contained therein.

<PAGE> 11

A. CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 3.10, or elsewhere in this Agreement, since the date
of the Current Balance Sheet, the Company has not (i) issued any capital stock
or other securities; (ii) made any distribution of or with respect to its
capital stock or other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of compensation of
any of its officers or salaried employees or amended any other terms of
employment of such persons; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (v) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (vi) made
any payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (vii) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $100,000, in the aggregate out of
the ordinary course of business, except for this Agreement and the transactions
contemplated hereby and the transactions relating to the refinancing of the
Company's debt from Texas Commerce Bank to Merchants Bank; (viii) suffered any
theft, damage, destruction or casualty loss, not covered by insurance and for
which a timely claim was filed, in excess of $50,000 in the aggregate; (ix)
suffered any extraordinary losses (whether or not covered by insurance); (x)
waived, canceled, compromised or released any rights having a value in excess
of $25,000 in the aggregate; (xi) made or adopted any change in its accounting
practice or policies; (xii) made any adjustment to its books and records other
than in respect of the conduct of its business activities in the ordinary
course consistent with past practice; (xiii) entered into any transaction with
any Affiliate other than intercompany transactions in the ordinary course of
business consistent with past practice; (xiv) entered into any employment
agreement; (xv) terminated, amended or modified any agreement involving an
amount in excess of $50,000; (xvi) imposed any security interest or other Lien
on any of its assets other than in the ordinary course of business consistent
with past practice; (xvii) delayed paying any accounts payable which is due and
payable except to the extent being contested in good faith and except in the
ordinary course of its business; (xviii) made or pledged any charitable
contribution other than in the ordinary course of business consistent with past
practice; (xix) entered into any other transaction or been subject to any event
which has or may have a Material Adverse Effect on the Company; or (xx) agreed
to do any of the foregoing.

A. LIABILITIES. Except as set forth on Schedule 3.11, the Company
does not have any liabilities or obligations, whether accrued, absolute,
contingent or otherwise, except (i) to the extent reflected or taken into
account in the Current Balance Sheet or any notes thereto and not heretofore
paid, discharged or otherwise satisfied, (ii) to the extent specifically set
forth in or incorporated by express reference in any of the Schedules attached
hereto, (iii) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Current Balance Sheet (none
of which relates to a breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit,
claim, governmental investigation or arbitration proceeding), (iv) normal
accruals, reclassifications, and audit adjustments which would

<PAGE> 12

be reflected on an audited financial statement and which would not be material
in the aggregate, and (v) liabilities incurred in the ordinary course of
business prior to the date of the Current Balance Sheet which, in accordance
with GAAP consistently applied, were not recorded thereon. The consolidated net
worth of the Company will be no less than a negative $300,000 as of the
Effective Time due to the Company's divestiture of all Company real estate and
Heights Armature Works.

A. LITIGATION. Except as set forth on Schedule 3.12, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation, pending or, to the Knowledge of the Company, threatened against,
by or affecting the Company or any of its properties or assets, or the
Shareholders, or which question the validity or enforceability of this
Agreement or the transactions contemplated hereby, and there is no reasonable
basis for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which
the Company is or was a party which have not been complied with in full or
which continue to impose any material obligations on the Company.

A. ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.13:

1. The Company is in material compliance with all Environmental,
Health and Safety Laws, including, without limitation, Environmental,
Health and Safety Laws with respect to discharges into the ground water,
surface water and soil, emissions into the ambient air, and generation,
accumulation, storage, treatment, transportation, transfer, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging, release or
disposal of Hazardous Substances (as defined herein), or other Waste (as
defined herein). The Company is not currently liable for any penalties, fines
or forfeitures for failure to comply with any Environmental, Health and Safety
Laws. The Company is in material compliance with all required notice, record
keeping and reporting requirements of all Environmental, Health and Safety
Laws, and has complied with all informational requests or demands arising under
applicable Environmental, Health and Safety Laws.

1. The Company has obtained, or caused to be obtained, and is in
material compliance with, all licenses, certificates, permits, approvals
and registrations (collectively "Licenses") required by applicable
Environmental, Health and Safety Laws for the ownership of its properties and
assets and the operation of its business as presently conducted, including,
without limitation, all air emission, water discharge, water use and solid
waste, hazardous waste and other Waste generation, transportation, transfer,
storage, treatment or disposal Licenses, and the Company is in material
compliance with all the terms, conditions and requirements of such Licenses,
and copies of such Licenses have been made available to MTLM. There are no
administrative or judicial investigations, notices, claims or other proceedings
pending or threatened by any Governmental Authority or third parties against
the Company, its business, operations, properties, or assets, which question
the validity or entitlement of the Company to any License required by the
Environmental, Health and Safety Laws for the ownership of each of the
respective

<PAGE> 13

properties and assets of the Company and the operation of its
business or wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect on the Company.

1. The Company has not received and is not aware of any
non-compliance order, warning letter, investigation, notice of violation,
claim, suit, action, judgment, or administrative or judicial proceeding pending
or threatened against or involving the Company, its business, operations,
properties, or assets, issued by any Governmental Authority or third party with
respect to any Environmental, Health and Safety Laws in connection with the
ownership of its properties or assets or the operation of its business, which
has not been resolved to the satisfaction of the issuing Governmental Authority
or third party, or which could have a Material Adverse Effect on the Company.

1. The Company is in compliance with, and is not in breach of or
default under any applicable writ, order, judgment, injunction, governmental
communication or decree issued pursuant to any Environmental, Health and Safety
Laws and no event has occurred or is continuing which, with the passage of time
or the giving of notice or both, would constitute such non-compliance, breach
or default thereunder, or affect the Owned Properties or Leased Premises.

1. The Company has not generated, manufactured, used, transported,
transferred, stored, handled, treated, spilled, leaked, dumped, discharged,
released or disposed, nor has it arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill, leak, dump,
discharge, release or dispose of, Hazardous Substances or other waste in an
amount so as to require remedial efforts to or at any location other than a
site permitted to receive such Hazardous Substances or other waste, nor has it
performed, arranged for or allowed by any method or procedure such generation,
manufacture, use, transportation, transfer, storage, treatment, spillage,
leakage, dumping, discharge, release or disposal in material contravention of
any Environmental, Health and Safety Laws except as necessary to the conduct of
the Company's business and then in compliance with applicable law. The Company
has not generated, manufactured, used, stored, handled, treated, spilled,
leaked, dumped, discharged, released or disposed of, or arranged for any third
parties to generate, manufacture, use, store, handle, treat, spill, leak, dump,
discharge, release or dispose of, any Hazardous Substances or other waste upon
property currently or previously owned or leased by it, except in compliance
with Environmental, Health and Safety Laws except as necessary to the conduct
of the Company's business and then in compliance with applicable law. For
purposes of this Section 3.13, the term "Hazardous Substances" shall include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation, chemicals,
compounds, metals, by-products, pesticides, asbestos containing materials,
petroleum or petroleum products, and polychlorinated biphenyls, the presence of
which requires remediation under any Environmental, Health and Safety Laws in
effect on the Closing Date, including, without limitation, the United

<PAGE> 14

States Department of Transportation Table (49 CFR 172, 101) or by the
Environmental Protection Agency as hazardous substances (40 CFR Part 302) and
any amendments thereto; the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (hereinafter
collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq. (hereinafter,
collectively "RCRA"); the Hazardous Materials Transportation Act, as amended,
49 U.S.C. Section 1801, et seq.; the Clean Water Act, as amended, 33 U.S.C.
Section 1311, et seq.; the Clean Air Act, as amended (42 U.S.C. Section
7401-7642); Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et
seq.; the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. Section 136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986 as amended, 42 U.S.C. Section 11001, et seq. (Title
III of SARA) ("EPCRA"); the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. Section 651, et seq. ("OSHA") (but excluding the very broad
definitions established under OSHA's hazard communication standard); any
similar state statute or regulations implementing such statutes, laws,
ordinances, codes, rules, regulations, orders, rulings, or decrees, or which
has been or shall be determined or interpreted at any time by any Governmental
Authority to be a hazardous or toxic substance regulated under any other
statute, law, regulation, order, code, rule, order, or decree. For purposes of
this Section 3.13, the term "Waste" shall include toxic agricultural wastes,
biomedical wastes, biological wastes, bulky wastes, construction and demolition
debris, garbage, household wastes, industrial solid wastes, liquid wastes,
recyclable materials, sludge, solid wastes, special wastes, used oils, white
goods, and yard trash; provided, however, the term "Waste" shall not include
scrap metal.

1. The Company has not caused a Release or Discharge of any
Hazardous Substance on, into or beneath the surface of any parcel of the
Owned Properties or the Leased Premises or to any properties adjacent thereto
except in compliance with applicable Environmental, Health and Safety Laws; and
there has not occurred, nor is there presently occurring, a Release or
Discharge, or threatened Release or Discharge, of any Hazardous Substance on,
into or beneath the surface of any parcel of the Owned Properties or the Leased
Premises or to any properties adjacent thereto. For purposes of this Section,
the terms "Release" and "Discharge" shall have the meanings given them in the
Environmental, Health and Safety Laws.

1. Except as necessary to the conduct of the Company's business
and then only in compliance with applicable law, the Company has not
generated, handled, manufactured, treated, stored, used, shipped, transported,
transferred, or disposed of, nor has it allowed or arranged, by contract,
agreement or otherwise, for any third parties to generate, handle, manufacture,
treat, store, use, ship, transport, transfer or dispose of, any material
quantity of Hazardous Substance or other Waste to or at a site which, pursuant
to CERCLA or any similar state law (i) has been placed on the National
Priorities List or its state equivalent; or (ii) the Environmental Protection
Agency or the relevant state agency has notified the Company that it has
proposed or is proposing to place on the National

<PAGE> 15

Priorities List or its state equivalent, except as disclosed on Schedule
3.13. Neither the Company nor the Shareholders have received notice or have
Knowledge of any facts which could give rise to any notice, that the Company is
a potentially responsible party for a federal or state environmental cleanup
site or for corrective action under CERCLA, RCRA or any other applicable
Environmental Health and Safety Laws. The Company has not submitted or was
required to submit any notice pursuant to Section 103(c) of CERCLA with respect
to the Leased Premises or the Owned Properties. The Company has not received
any written or, to the Knowledge of the Company, oral request for information
in connection with any federal or state environmental cleanup site, or in
connection with any of the real property or premises where the Company has
transported, transferred or disposed of other Wastes. The Company has not been
required to and has not undertaken any response or remedial actions or clean-up
actions at the request of any Governmental Authorities or at the request of any
other third party. The Company does not have any material liability under any
Environmental, Health and Safety Laws for personal injury, property damage,
natural resource damage, or clean up obligations.

1. Except as set forth on Schedule 3.13, the Company does not have
any Aboveground Storage Tanks or Underground Storage Tanks. For purposes
of this Section 3.13, the terms "Aboveground Storage Tanks" and "Underground
Storage Tanks" shall have the meanings given them in Section 6901 et seq., as
amended, of RCRA, or any applicable state or local statute, law, ordinance,
code, rule, regulation, order ruling, or decree, as in effect as of the Closing
Date, governing Aboveground Storage Tanks or Underground Storage Tanks.

1. The following have been made available to MTLM regardless of
their materiality, (i) all environmental audits, assessments or occupational
health studies of which the Company is aware undertaken by the Company or their
agents, or by the Shareholders, or by any Governmental Authority, or by any
third party, relating to the Company or any of the Leased Premises or the Owned
Properties; (ii) the results of which the Company is aware of any ground,
water, soil, air or asbestos monitoring undertaken by the Company or its
agents, or by the Shareholders, or by any Governmental Authority, or by any
third party, relating to the Company or any of the Leased Premises or the Owned
Properties; (iii) all written communications between the Company and any
Governmental Authority arising under or related to Environmental, Health and
Safety Laws; and (iv) all citations issued under OSHA, or similar state or
local statutes, laws, ordinances, codes, rules, regulations, orders, rulings,
or decrees, relating to or affecting the Company or any of the Leased Premises
or the Owned Properties.

1. Schedule 3.13 contains a list of the assets of the Company
which are known to contain "asbestos" or "asbestos-containing material" (as
such terms are identified under the Environmental, Health and Safety Laws).
Except as set forth in Schedule 3.13, the Company has operated and continues to
operate in material compliance with all Environmental, Health and Safety Laws
governing the handling, use and exposure to and disposal of asbestos or
asbestos-containing materials. Except as set forth in Schedule 3.13, there are
no claims, actions, suits, governmental investigations or

<PAGE> 16

proceedings before any Governmental Authority or third party pending, or
to the Shareholders' Knowledge, threatened against or directly affecting the
Company or any of its assets or operations relating to the use, handling or
exposure to and disposal of asbestos or asbestos-containing materials in
connection with their assets and operations.

1. As used in this Agreement, "Environmental, Health and Safety
Laws" means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, and changes
or ordinances or judicial or administrative interpretations thereof, as in
effect on the Closing Date, any of which govern or relate to pollution,
protection of the environment, public health and safety, air emissions, water
discharges, hazardous or toxic substances, solid or hazardous waste or
occupational health and safety, as any of these terms are in such statutes,
laws, rules, regulations, codes, orders, plans, injunctions, decrees, rulings
and changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the
Clean Water Act, FIFRA, EPCRA and OSHA.

1. Schedule 3.13 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by
the Company on any of the Owned Properties or the Leased Premises which have
involved the generation, accumulation, storage, treatment, transportation,
labeling, handling, manufacturing, use, spilling, leaking, dumping,
discharging, release or disposal of any material quantities of Hazardous
Substances.

1. Schedule 3.13 identifies the locations to which the Company
has transferred, transported, hauled, moved, or disposed of Waste over
the past five years and the types and volumes of Hazardous Substances
(excluding saleable scrap metals) transferred, transported, hauled, moved, or
disposed of to each such location.

1. None of the Owned Properties or Leased Properties presently
includes, any "wetlands" as defined under applicable Environmental, Health
and Safety Laws, nor have any improvements on the Owned Properties or Leased
Properties been constructed upon any "wetlands" in violation of applicable
Environmental, Health and Safety Laws.

1. As used in this Section 3.13, the term "Company" is deemed to
refer to the Company or any of its subsidiaries, predecessors-in-interest
and other entities in which the Company has an ownership interest.

1. As used in Section 3.13(f) and (l), the terms "Owned Properties
" and "Leased Properties" are deemed to also refer to any properties
previously owned or leased by the Company.

<PAGE> 17

A. REAL ESTATE.

1. The Company does not own any real property or any interest
therein.

1. Except as set forth on Schedule 3.14(b), there are no material
leases, licenses or similar agreements ("Leases") to which the Company is a
party.

A. GOOD TITLE TO AND CONDITION OF ASSETS.

1. Except as set forth on Schedule 3.15, the Company has good and
indefeasible title to all of its Assets, free and clear of any Liens or
restrictions on use. For purposes of this Agreement, the term "Assets" means
all of the properties and assets owned by the Company, other than the Owned
Properties and the Leased Premises, whether personal or mixed, tangible or
intangible, wherever located.

1. The Fixed Assets currently in use for the business and
operations of the Company are in good operating condition, normal wear
and tear excepted and have been maintained in accordance with sound industry
practices. For purposes of this Agreement, the term "Fixed Assets" means all
vehicles, machinery, equipment, tools, supplies, leasehold improvements,
furniture and fixtures owned by the Company or set forth on the Current Balance
Sheet or acquired by the Company since the date of the Current Balance Sheet
and listed on Schedule 3.33 or acquired by the Company after 5-31-97, except
(i) any such item which is not material to the Company and (ii) any such item
listed on Schedule 3.15.

A. COMPLIANCE WITH LAWS.

1. The Company is in material compliance with all laws,
regulations and orders applicable to it, its respective business and
operations (as conducted by it now and in the past), the Assets, the Owned
Properties and the Leased Premises and any other properties and assets (in each
case owned or used by it now or in the past). Except as set forth on Schedule
3.16, the Company has not been, within the past five (5) years, cited, fined or
otherwise notified of any asserted past or current material failure to comply
with any laws, regulations or orders and no proceeding with respect to any such
material violation is pending or, to the Company's Knowledge, threatened.

1. The Company has not made any payment of funds in connection
with its business which is prohibited by law, and no funds have been set
aside to be used in connection with its business for any payment prohibited by
law.

1. The Company has complied with the terms and provisions of the
Immigration Reform and Control Act of 1986, as amended (the "Immigration
Act"). With respect to each Employee (as defined in 8 C.F.R. 274a.1(f)) of the
Company for

<PAGE> 18

whom compliance with the Immigration Act as employer is required,
the Company has on file a true, accurate and complete copy of (i) each
Employee's Form I-9 (Employment Eligibility Verification Form) and (ii) all
other records, documents or other papers prepared, procured and/or retained by
the Company pursuant to the Immigration Act. The Company has not, within the
past five (5) years, been cited, fined, served with a Notice of Intent to Fine
or with a Cease and Desist Order, nor has any action or administrative
proceeding been initiated or, to the Knowledge of the Company, threatened
against it, by the Immigration and Naturalization Service by reason of any
actual or alleged failure to comply with the Immigration Act.

1. Except as fully described on Schedule 3.16, the Company is not
subject to any Contract, decree or injunction which restricts the continued
operation of any business or the expansion thereof to other geographical areas,
customers and suppliers or lines of business.

A. LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of
each of the executives and key employees of the Company. The Company is not a
party to or bound by any collective bargaining agreement or any other agreement
with a labor union, and there have been no efforts by any labor union during
the 24 months prior to the date hereof to organize any employees of the Company
into one or more collective bargaining units. There is no pending or, to the
Company's Knowledge, threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company which may interfere
with its continued operations. The Company has not within the last 24 months
committed any unfair labor practice as defined in the National Labor Relations
Act, as amended, and there is no pending or, to the Company's Knowledge,
threatened charge or complaint against the Company by or with the National
Labor Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the employees of the Company during
the 24 months prior to the date hereof. The Shareholders have no Knowledge
that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with the Company as a result of this
Agreement or otherwise. There are no contracts, agreements or plans of the
following nature, whether formal or informal, and whether or not in writing, to
which the Company is a party or under which it has an obligation: (i)
employment agreements, (ii) noncompetition agreements, and (iii) consulting
agreements. The Company has complied in all material respects with applicable
laws, rules and regulations relating to employment, civil rights and equal
employment opportunities, including but not limited to, the Civil Rights Act of
1964, the Fair Labor Standards Act and the Worker Adjustment and Retraining
Notification Act of 1988, as in effect on the Closing Date.

A. EMPLOYEE BENEFIT PLANS.

1. Employee Benefit Plans. Schedule 3.18 contains a list setting
forth each employee benefit plan or arrangement of the Company, including
but not limited to

<PAGE> 19

employee pension benefit plans, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock option
plans, bonus plans, stock purchase plans, hospitalization, disability and other
insurance plans, severance or termination pay plans and policies, whether or
not described in Section 3(3) of ERISA, in which employees, their spouses or
dependents, of the Company participate ("Employee Benefit Plans") (true and
accurate copies of which, together with the most recent annual reports on Form
5500 and summary plan descriptions with respect thereto, were made available to
MTLM).

1. Compliance with Law. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects in compliance
with its terms and with all applicable laws, including, but not limited to,
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"); (ii) no
actions, suits, claims or disputes are pending, or threatened; (iii) no audits,
inquiries, reviews, proceedings, claims, or demands are pending with any
governmental or regulatory agency; (iv) to the Knowledge of the Company, there
are no facts which could give rise to any material liability in the event of
any such investigation, claim, action, suit, audit, review, or other
proceeding; (v) all material reports, returns, and similar documents required
to be filed with any governmental agency or distributed to any plan participant
have been duly or timely filed or distributed; and (vi) no "prohibited
transaction" has occurred within the meaning of the applicable provisions of
ERISA or the Code.

1. Qualified Plans. With respect to each Employee Benefit Plan
intended to qualify under Code Section 401(a) or 403(a) (i) the Internal
Revenue Service has issued a favorable determination opinion letter, true and
correct copies of which have been made available to MTLM, that such plans are
qualified and exempt from federal income taxes; (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs; (iii) all such contributions to the plans, and all payments
under the plans (except those to be made from a trust qualified under Section
401(a) of the Code) and all payments with respect to the plans (including,
without limitation, PBGC and insurance premiums) for any period ending before
the Closing Date that are not yet, but will be, required to be made are
properly accrued and reflected on the Current Balance Sheet or are disclosed on
Schedule 3.18; and (iv) no such plan is subject to Code Sections 312 or 302 of
Title IV of ERISA.

1. Welfare Plans. Other than as disclosed in Schedule 3.18, (i)
the Company is not obligated under any employee welfare benefit plan as
described in Section 3(1) of ERISA ("Welfare Plan"), whether or not disclosed
in Schedule 3.18, to provide medical or death benefits with respect to any
employee or former employee of the Company, or its predecessors after
termination of employment; (ii) each of the

<PAGE> 20

Company has complied with the notice and continuation coverage requirements
of Section 4980B of the Code and the regulations thereunder with respect to
each Welfare Plan that is, or was during any taxable year for which the statute
of limitations on the assessment of federal income taxes remains open by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(1) of the Code, and (iii) there are no reserves, assets, surplus or
prepaid premiums under any Welfare Plan which is an Employee Benefit Plan. The
consummation of the transactions contemplated by this Agreement will not
entitle any individual to severance pay, and, will not accelerate the time of
payment or vesting, or increase the amount of compensation, due to any
individual.

1. Controlled Group Liability. Neither the Company, nor any
entity that would be aggregated with it under Code Section 414(b), (c),
(m) or (o): (i) has ever terminated or withdrawn from an employee benefit plan
under circumstances resulting (or expected to result) in liability to the
Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the employee
benefit plan is funded, or any employee or beneficiary for whose benefit the
plan is or was maintained (other than routine claims for benefits); (ii) has
any assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has failed to pay premiums to
the PBGC when due; (iv) is subject to (or expected to be subject to) an excise
tax under Code Section 4971; or (v) has engaged in any transaction which would
give rise to liability under Section 4069 or Section 4212(c) of ERISA.

1. Other Liabilities. Except as set forth on Schedule 3.18 for
the listed plans, (i) none of the Employee Benefit Plans obligates the
Company to pay separation, severance, termination or similar benefits solely as
a result of any transaction contemplated by this Agreement or solely as a
result of a "change of control" (as such term is defined in Section 280G of the
Code), (ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals for
all periods ending prior to or as of the Closing Date shall have been made or
properly accrued on the Current Balance Sheet or will be properly accrued on
the books and records of the Company as of the Closing Date, and (iii) none of
the Employee Benefit Plans has any unfunded liabilities which are not reflected
on the Current Balance Sheet or the books and records of the Company.

A. TAX MATTERS. There are no Tax Returns required to be filed
prior to the date hereof with respect to the Company, or any of its income,
properties, franchises or operations which have not been filed, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true and complete in all respects.
All Taxes due and payable by or with respect to the Company have been paid or
accrued on the Current Balance Sheet or will be accrued on its books and
records as of the Closing. With respect to any open tax year: (i) no taxable
period has been audited by the relevant taxing authority; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority; (iii)
the Company has not consented to extend the time in which any Taxes may be
assessed or collected by any taxing authority;

<PAGE> 21

(iv) the Company has not requested or been granted an extension of the
time for filing any Tax Return to a date later than the Closing Date, other
than the current fiscal year federal income tax return for which an extension
has been granted to February 1998; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress, pending or,
to the Knowledge of the Company, threatened against or with respect to the
Company regarding Taxes; (vi) the Company has not made an election or filed a
consent under Section 341(f) of the Code (or any corresponding provision of
state, local or foreign law) on or prior to the Closing Date; (vii) there are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the Company, (viii) the Company will not be required (A) as a
result of a change in method of accounting for a taxable period ending on or
prior to the Closing Date, to include any adjustment under Section 481(c) of
the Code (or any corresponding provision of state, local or foreign law) in
taxable income for any taxable period (or portion thereof) beginning after the
Closing Date or (B) as a result of any "closing agreement," as described in
Section 7121 of the Code (or any corresponding provision of state, local or
foreign law), to include any item of income or exclude any item of deduction
from any taxable period (or portion thereof) beginning after the Closing Date;
(ix) the Company is not a party to or bound by any tax allocation or tax
sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (x) there is no basis for any
assessment, deficiency notice, 30-day letter or similar notice with respect to
any Tax to be issued to the Company with respect to any period on or before the
Closing Date; (xi) the Company has not made any payments, and is or will not
become obligated (under any contract entered into on or before the Closing
Date) to make any payments, that will be non-deductible under Section 280G of
the Code (or any corresponding provision of state, local or foreign law); (xii)
the Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code (or any corresponding
provision of state, local or foreign law) during the applicable period
specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xiii) no claim has ever been made
by a taxing authority in a jurisdiction where the Company does not file Tax
Returns that is or may be subject to Taxes assessed by such jurisdiction; and
(xiv) the Company does not have any permanent establishment in any foreign
country, as defined in the relevant tax treaty between the United States of
America and such foreign country; (xv) true and complete copies of all income
and sales Tax Returns filed by or with respect to the Company for the past two
years has been made available to MTLM; (xvi) the Company will not be subject to
any Taxes for the period ending at the Closing Date for any period for which a
Tax Return has not been filed imposed pursuant to Section 1374 or Section 1375
of the Code (or any corresponding provision of state, local or foreign law);
and (xvii) to the Knowledge of the Company, no sales or use tax or property
transfer tax (other than sales tax on aircraft, boats, mobile homes and motor
vehicles), non-recurring intangibles tax, documentary stamp tax or other excise
tax (or comparable tax imposed by any Governmental Authority) will be payable
by the Company by virtue of the transactions contemplated in this Agreement.

<PAGE> 22

A. INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by insurers covering its
properties, assets and business (the "Insurance Policies"). Such Insurance
Policies are in full force and effect, and all premiums due thereon have been
paid on or before the due date. As of the Closing Date each of the Insurance
Policies will be in full force and effect and the Company will assist MTLM in
having comparable coverage to be in place for the Surviving Corporation. The
Company has complied with the provisions of such Insurance Policies in all
material respects. Schedule 3.20 contains (i) a complete and correct list of
all Insurance Policies (copies of which have been made available to MTLM) and
(ii) a detailed description of each pending claim under any of the Insurance
Policies for an amount in excess of $5,000 that relates to loss or damage to
the properties, assets or business of the Company. The Company has not failed
to give, in a timely manner, any notice required under any of the Insurance
Policies to preserve its rights thereunder.

A. RECEIVABLES. All of the Receivables represent bona fide
transactions and arose in the ordinary course of business of the Company.
Ninety-Five Percent (95%) of the Receivables (subject to certain variances
described on Schedule 3.21) are good and collectible receivables, and will be
collected in full in accordance with the terms of such receivables (and in any
event within six months following the Closing), without set off or
counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the Current Balance Sheet as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business consistent with past
practice. For purposes of this Agreement, the term "Receivables" means all
receivables of the Company, including all trade account receivables arising
from the provision of services or sale of inventory, notes receivable, and
insurance proceeds receivable.

A. LICENSES AND PERMITS. The Company possesses all material
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for its business and operations,
including the operation of the Owned Properties and Leased Premises, which
Permits are listed on Schedule 3.22. All such Permits are valid and in full
force and effect, the Company is in material compliance with the requirements
thereof, and no proceeding is pending or, to the Knowledge of the Company,
threatened to revoke or amend any of them. Except as set forth on Schedule
3.22, none of such Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.

A. ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and
Leased Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company in the manner in which
and to the extent to which such business is currently being conducted. To the
Knowledge of the Company, no current supplier to the Company of items essential
to the conduct of its business will or, to the Knowledge of the Company, has
threatened to terminate its respective business

<PAGE> 23

relationship with it for any reason. The Company does not have any direct
or indirect interest in any customer, supplier or competitor of the Company, or
in any person from whom or to whom the Company leases real or personal property
(although all real property, improvements and fixtures used by the Company
prior to Closing will be owned by Heights Armature Works). Except as set forth
on Schedule 3.23, no officer, director or Shareholder of the Company, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with the Company or has any interest in any property used by the
Company.

A. INTELLECTUAL PROPERTY. The Company has full legal right,
title and interest in and to all trademarks, service marks, trade names,
copyrights, know-how, patents, trade secrets, licenses (including licenses for
the use of computer software programs), and other intellectual property used
in the conduct of its business (the "Intellectual Property"). The conduct of
the business of the Company as currently conducted, and the unrestricted
conduct and the unrestricted use and exploitation of the Intellectual Property,
does not infringe or misappropriate any rights held or asserted by any Person,
and no Person is infringing on the Intellectual Property. No payments are
required for the continued use of the Intellectual Property. None of the
Intellectual Property has ever been declared invalid or unenforceable, or is
the subject of any pending or, to the Knowledge of the Company, threatened
action for opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.

A. CONTRACTS. Schedule 3.25 sets forth a list of each Contract
to which the Company is a party or by which its properties and assets are
bound and which is material to its business, assets, properties or prospects
(the "Designated Contracts"), true and correct copies of which have been made
available to MTLM. The copy of each Designated Contract made available to MTLM
is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement.
Except as set forth on Schedule 3.25, the Company has not violated any of the
material terms or conditions of any Designated Contract or any term or
condition which would permit termination or material modification of any
Designated Contract, and, to the Knowledge of the Company, all of the covenants
to be performed to the date hereof by any other party thereto have been fully
performed and there are no asserted claims for breach or indemnification or
notice of default or termination under any Designated Contract. Except as set
forth on Schedule 3.25, no event has occurred which constitutes, or after
notice or the passage of time, or both, would constitute, a material default by
the Company under any Designated Contract, and, to the Knowledge of the
Company, no such event has occurred which constitutes or would constitute a
material default by any other party. The Company is not subject to any
material liability or payment resulting from renegotiation of amounts paid to
them under any Designated Contract (see Schedule 3.21). As used in this
Section, Designated Contracts shall include, without limitation, (a) loan
agreements, indentures, mortgages, pledges, hypothecations, deeds of trust,
conditional sale or title retention agreements, security

<PAGE> 24

agreements, equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any other
Person, or letters of intent or commitment letters with respect to same; (b)
contracts obligating the Company to purchase or sell products or services; (c)
leases of real property, and leases of personal property not cancelable without
penalty on notice of 60 days or less or calling for payment of an annual gross
rental exceeding $10,000.00; (d) distribution, sales agency or franchise or
similar agreements, or agreements providing for an independent contractor's
services, or letters of intent with respect to same; (e) employment agreements,
management service agreements, consulting agreements, confidentiality
agreements, noncompetition agreements and any other agreements relating to any
employee, officer or director of the Company; (f) licenses, assignments or
transfers of trademarks, trade names, service marks, patents, copyrights, trade
secrets or know how, or other agreements regarding proprietary rights or
intellectual property; (g) any Contract relating to pending capital
expenditures in excess of $10,000 by the Company; and (h) other material
Contracts or understandings, irrespective of subject matter and whether or not
in writing, not entered into in the ordinary course of business by the Company
and not otherwise disclosed on the Schedules.

A. CUSTOMER LISTS AND RECURRING REVENUE. At or before the
Closing, the Company will make available to MTLM a true, correct and
complete list of its 20 largest customers ("Material Customers") and suppliers
together with the applicable percentage of total sales or purchases, as
applicable. True, correct and complete copies of any agreements with such
customers or suppliers which are anticipated to endure beyond the Closing have
been furnished by the Shareholders to MTLM. Other than Material Customers, no
customer of the Company as of the date of this Agreement accounts for more than
1% of its combined annual revenue.

A. ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS. No
representation, restatement or information made or furnished by the
Shareholders to MTLM or any of MTLM's representatives including those contained
in this Agreement and the various Schedules attached hereto and the other
information and statements referred to herein and previously furnished by the
Company and the Shareholders, contains or shall contain any untrue statement of
a material fact or omits or shall omit any material fact necessary to make the
information contained therein not misleading. The Shareholders have provided
MTLM with true, accurate and complete copies of all documents listed or
described in the various Schedules attached hereto.

A. INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring his interest in the
Common Stock of MTLM for his own account for investment and not with a view to,
or for the sale in connection with, any distribution of his interest, except in
compliance with applicable state and federal securities laws. Each of the
Shareholders has been provided, to his satisfaction, the opportunity to discuss
the transactions contemplated hereby with MTLM and has had the opportunity to
obtain such information pertaining to MTLM as has been requested, including but
not limited to filings made by MTLM with the SEC under the

<PAGE> 25

Exchange Act. Each of the Shareholders is an "accredited investor" within
the meaning of Regulation D promulgated under the Securities Act. Each of the
Shareholders has such knowledge and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the Common Stock of MTLM, and is capable of bearing the economic risks of
such investment and is able to bear a complete loss of his investment in the
Common Stock of MTLM. Each of the Shareholders acknowledges that the Common
Stock of MTLM has not been registered under the Securities Act and understands
that the Common Stock of MTLM must be held indefinitely unless such shares are
subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement.

A. BUSINESS LOCATIONS. As of the date hereof, the Company does
not have any office or place of business other than 101 Yale, Houston,
Texas, 13031 Industrial Road, Houston, Texas, and ____ Interstate Drive,
Navasota, Texas and constitute all locations where the equipment, inventory,
chattel paper and books and records of the Company are located as of the date
hereof.

A. NAMES; PRIOR ACQUISITIONS. All of the names under which the
Company does business as of the date hereof are specified on Schedule 3.30.
Except as set forth on Schedule 3.30, the Company has not changed its name or
used any assumed or fictitious name, or been the surviving entity in a merger,
acquired any business or changed its principal place of business or chief
executive office, within the past 10 years.

A. NO COMMISSIONS. Other than certain potential claims as to
which MTLM has received notice, neither the Company nor the Shareholders have
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.

A. INVENTORY. All material Assets that consist of inventory
(including raw materials and work-in-progress): (i) were acquired in the
ordinary course of business consistent with past practice; (ii) are of a
quality, quantity, and condition useable or saleable in the ordinary course of
business within the Company's normal inventory turnover experience; and (iii)
are reflected on the books in accordance with GAAP. The Company does not have
any material liability with respect to the return or repurchase of any goods in
the possession of any customer outside the ordinary course of business.

A. IDENTIFICATION, ACQUISITION AND DISPOSITION OF ASSETS AND
LIABILITIES. Schedule 3.33 sets forth a listing of all of the material
depreciable and amortizable assets and properties (including real, personal and
mixed) owned by the Company as of September 30, 1997.

<PAGE> 26

A. RESTRICTIONS. There are no non-competition, non-solicitation,
confidentiality and other restrictive covenants to which the Company and/or
Shareholders is a party or otherwise bound (other than with MTLM, Hou-Tex
Metals, Robert Stuart [and Investment Banking Group Advisory] and Proler
Southwest, Inc.); see Schedule 3.25. Except as set forth on Schedule 3.34,
there are no contracts or other conditions, circumstances, events or agreements
which would in any way limit or restrict the rights of MTLM, or the Company
from engaging in any business anywhere in the world.

3.35 REAL PROPERTY. Notwithstanding any other provision of this Agreement
to the contrary, all parties hereto acknowledge and agree that all of the real
property and improvements heretofore used by the Company (excluding Heights
Armature Works, Inc.) at 101 Yale will be leased to the Surviving Corporation
by Heights Armature Works, Inc. (now owned directly by the Shareholders) in
accordance with Section 6.10(a) hereof.

CONDUCT OF BUSINESS PENDING THE CLOSING

A. CONDUCT OF BUSINESS OF THE COMPANY PENDING THE CLOSING .
Except as set forth on Schedule 4.1, the Company covenants and agrees that,
between the date of this Agreement and the Closing Date (which the parties
understand shall be the same date), the business of the Company shall be
conducted only in, and the Company shall not take any action except in, the
ordinary course of business, consistent with past practice and in material
compliance with all rules, regulations and laws. The Company shall use
commercially reasonable efforts to preserve and keep intact its business
organization, to keep available the services of its current officers, employees
and consultants, and to preserve its present relationships with customers,
suppliers and other persons with which it has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, or in the ordinary course of business, the Company shall not,
between the date of this Agreement and the Closing Date, directly or
indirectly, do or propose or agree to do any of the following without the prior
written consent of MTLM:

1. amend or otherwise change its articles of incorporation or
bylaws;

1. issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of
its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or, (ii) any of their respective assets, tangible or intangible, except
in the ordinary course of business consistent with past practice;

<PAGE> 27

1. declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock;

1. reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;

1. (i) acquire (including, without limitation, for cash or shares
of stock, by merger, consolidation, or acquisition of stock or assets) any
interest in any corporation, partnership or other business organization or
division thereof or any assets, or make any investment either by purchase of
stock or securities, contributions of capital or property transfer, or, except
in the ordinary course of business, consistent with past practice, purchase any
property or assets of any other Person, (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances, or (iii) enter into any Contract other
than in the ordinary course of business, consistent with past practice;

1. increase the compensation payable or to become payable to its
respective officers or directors, or, except as presently bound to do,
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any of its respective directors or officers, or
establish, adopt, enter into or amend or take any action to accelerate any
rights or benefits under any collective bargaining, bonus, profit sharing,
trust, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;

1. sell, pledge or otherwise dispose of any asset or the stock of
any subsidiary or take any other action other than in the ordinary course
of business and in a manner consistent with past practice with respect to
accounting policies or procedures;

1. pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;

1. increase or decrease prices charged to its respective
customers, except for previously announced price changes or except in the
ordinary course of business, or take any other action which might reasonably
result in any material increase in the loss of customers through non-renewal or
termination of contracts or other causes; or

<PAGE> 28

1. agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or
warranty in Article III untrue or incorrect.

Notwithstanding the provisions of this Section 4.1, it is acknowledged and
agreed that the Company may, without consent or notice to MTLM, transfer out of
the Company all real property, improvements and fixtures and the stock of
Heights Armature Works.

A. CONDUCT OF BUSINESS OF MTLM PENDING THE CLOSING. MTLM
covenants and agrees that, between the date of this Agreement and the Closing
Date, the business of MTLM shall be conducted only in the ordinary and usual
course, consistent with past practices, and MTLM will notify the Company of any
material developments. Notwithstanding the foregoing, the Company acknowledges
that the nature of the ordinary and usual course of MTLM's business includes
acquisitions in the line of business in which MTLM is engaged and related
businesses hereafter acquired. MTLM shall promptly provide the Company with a
copy of any of MTLM's press releases and, upon request of the Company, any of
its SEC filings. Furthermore, MTLM shall not declare a stock split, stock
dividend or similar transaction. In addition, MTLM will use its commercially
reasonable efforts to preserve and keep intact its business organization, to
keep available to MTLM the services of its current employees, including
officers, and to preserve the goodwill of the customers, suppliers, creditors
and others having business relations with MTLM.

ADDITIONAL AGREEMENTS

A. FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.

A. COMPLIANCE WITH COVENANTS. The Shareholders shall cause the
Company to comply with all of the respective covenants of the Company
under this Agreement.

A. COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of any exchange on which the MTLM Common
Stock is listed (the Nasdaq National Market) in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.

<PAGE> 29

A. ACCESS TO INFORMATION. From the date hereof to the Closing
Date, the Company and MTLM and Acquisition shall (and shall cause its
respective directors, officers, employees, auditors, and agents to) afford
each other and their officers, employees, auditors, counsel and agents
reasonable access at all reasonable times to its properties, offices, and other
facilities, to its officers and employees and to all books and records, and
shall furnish such persons with all financial, operating and other data and
information as may be requested. All financial statements, customer
information and other documents and material furnished in connection therewith
to MTLM and/or Acquisition shall be treated as confidential, except as
disclosed in the performance of this Agreement or as required by law, and if
the Closing shall not take place, all such financial statements, customer
information and other documents and materials and all copies thereof, if any,
shall be returned to the Company and shall not be used in any way detrimental
to the Company.

A. NOTIFICATION OF CERTAIN MATTERS. The Shareholders and MTLM
shall give prompt notice to the other of the occurrence or non-occurrence
of any event which would likely cause any representation or warranty contained
herein to be untrue or inaccurate, or any covenant, condition, or agreement
contained herein not to be complied with or satisfied.

A. TAX TREATMENT. Each party to this Agreement has sought and
received its own advice as to the tax treatment of the transactions
covered by this Agreement and is not relying on any representations of the
other parties or their respective advisers with respect thereto. All parties
hereto agree to fully and completely comply with the reporting requirements of
the Internal Revenue Service.

A. CONFIDENTIALITY; PUBLICITY. Before the Closing, none of the
parties hereto shall make any public release of information regarding the
matters contemplated herein except (i) that a joint press release in agreed
form may be issued by the parties after the execution of this Agreement and the
Closing, (ii) that the parties may each continue their own communications with
their respective employees, customers, suppliers, franchisees, lenders,
lessors, stockholders and other particular groups as may be legally required or
necessary or appropriate and not inconsistent with the best interests of the
other parties or the prompt consummation of this Agreement, and (iii) as
required by law.

A. NO OTHER DISCUSSIONS. Prior to September 30, 1997, the Company
shall not, nor shall it permit any of its subsidiaries or affiliates to,
nor shall it authorize or permit any officer, director, employee, investment
banker, attorney or other advisor or representative of the Company or any of
its subsidiaries to, (a) solicit, initiate or encourage the submission of any
merger proposal with respect to the Company, (b) enter into any agreement with
respect to any such proposal, or (c) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any merger
proposal

<PAGE> 30

with respect to the Company. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any executive officer of the Company or any of its subsidiaries or
affiliates or any investment banker or other advisor to any representative of
the Company, whether or not such person is purporting to act on behalf of the
Company or otherwise, shall be deemed to be a breach of this Section by the
Company. For this Agreement, "a merger proposal" means any proposal, other
than a proposal by MTLM or any of its affiliates, for a merger or other
business combination involving the Company or any proposal or offer, other than
a proposal or offer by MTLM or any of its affiliates, to acquire in any manner,
directly or indirectly, an equity interest in the Company, any voting
securities of the Company or a substantial portion of the assets of the
Company, taken as a whole.

A. TRADING IN MTLM'S COMMON STOCK. Except as otherwise expressly
consented to by MTLM, from the date of this Agreement until the Closing
Date, none of the Company, nor the Shareholders (nor any Affiliates thereof)
will directly or indirectly purchase or sell (including short sales) any shares
of the Common Stock of MTLM in any transactions effected on the Nasdaq National
Market or otherwise.

A. OTHER AGREEMENTS. Upon the Closing, each party hereto that is
a signatory to any Exhibits (the "Other Agreements") agrees to execute and
deliver such Other Agreements, as appropriate, to the other parties to such
Other Agreements, and each party who is a married individual shall cause his
spouse to execute all consents requested by MTLM to consummate the
transactions set forth herein.

A. HSR ACT COMPLIANCE. If required, the Company, the Shareholders
and MTLM will as promptly as practicable file or cause to be filed with
the United States Federal Trade Commission (the "FTC") and the United State
Department of Justice (the "DOJ") the notification and report form required for
the transactions contemplated hereby and any supplemental information requested
in connection therewith pursuant to the HSR Act. Any such notification and
report form and supplemental information will be in substantial compliance with
the requirements of the HSR Act. Each of MTLM, the Company and the
Shareholders will furnish to the others such necessary information and
reasonable assistance as the others may request in connection with the
preparation of any filing or submission which is necessary under the HSR Act.
Each of the Company, the Shareholders and MTLM will keep each other apprised of
the status of any communications with, and inquiries or requests for additional
information addressed to the entity that filed a notification and report form
as an acquired or acquiring person from, the FTC or the DOJ and shall comply or
cause its respective filing person to comply promptly with any such inquiry or
request. Each of the Company, the Shareholders and MTLM will use commercially
reasonable efforts to obtain any clearance required under the HSR Act for the
consummation of this Agreement.

A. CORPORATE AUTHORITY. MTLM, the Company and the Shareholders
agree to use their respective best efforts to obtain the authorizations

<PAGE> 31

required for each to execute and deliver this Agreement and to perform each of
their respective obligations hereunder and to consummate the transactions
contemplated hereby.

A. EMPLOYMENT AGREEMENTS. Each of the Shareholders agrees to
enter into an Employment Agreement substantially in the form of Exhibits B
and B-1 attached hereto and made a part hereof.

A. NO SOLICITATION OF EMPLOYEES. MTLM agrees that for the three-
year period after the date of this Agreement, MTLM will not, and will cause
its Affiliates to not, directly or indirectly, (i) solicit for employment by
any such person, its Affiliates or anyone else, any employee or then currently
active independent contractor of the Company or its Affiliates, or any person
who was an employee or then currently active independent contractor of the
Company or its Affiliates, within the six-month period immediately preceding
such solicitation of employment, other than such person (a) whose employment or
independent contractor relationship was terminated by either of the Company or
any Affiliate, or (b) who independently responded to a general solicitation for
employment by MTLM or its Affiliates; or (c) induce or attempt to induce, any
employee or independent contractor of the Company or its Affiliates, to
terminate such employee's employment or independent contractor's active
contractual relationship; provided, however, the foregoing shall not apply if
the foregoing does not occur due to a breach of this Agreement by the Company
or the Shareholders.

The Company agrees that for the three-year period after the date of this
Agreement, the Company will not, and will cause its Affiliates to not, directly
or indirectly, (i) solicit for employment by any such person, its Affiliates or
anyone else, any employee or then currently active independent contract of MTLM
or its Affiliates, or any person who was an employee or then currently active
independent contractor of MTLM or its Affiliates, within the six-month period
immediately preceding such solicitation of employment, other than such person
(a) whose employment or independent contractor relationship was terminated by
MTLM or its Affiliate, or (b) who independently responded to a general
solicitation for employment by the Company, or (ii) induce or attempt to
induce, any employee or independent contractor of MTLM or its Affiliates, to
terminate such employee's employment or independent contractor's active
contractual relationship.

CONDITIONS TO THE OBLIGATIONS OF MTLM

The obligations of MTLM hereunder shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, any or all of which
may be waived in whole or in part by MTLM:

<PAGE> 32

A. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct at and as of
the Closing Date with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. The Company and the Shareholders shall have performed
and complied with all of their respective obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
The Company and the Shareholders shall have delivered to MTLM a certificate,
dated as of the Closing Date, duly signed (in the case of the Company by its
chief executive officer and chief financial officer) stating that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.

A. NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between
the date hereof and the Closing Date, (i) there shall have been no
Material Adverse Change or Effect to the Company, (ii) there shall have been no
adverse federal, state or local legislative or regulatory change affecting in
any material respect the services, products or business of the Company, and
(iii) none of the properties and assets of the Company shall have been damaged
by fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Change or Effect thereon, and there shall have been delivered
to MTLM a certificate to that effect (with item [ii], above, qualified to the
Knowledge of the Shareholders), dated the Closing Date and signed by or on
behalf of the Company.

A. CORPORATE CERTIFICATE. The Shareholders shall have delivered
to MTLM (i) copies of resolutions adopted by the Board of Directors of the
Company and the Shareholders authorizing the transactions contemplated by this
Agreement, and (ii) certificate of good standing of the Company issued by the
State of Texas and each other state in which the Company is qualified to do
business as of a date not more than ten days prior to the Closing Date,
certified in each case as of the Closing Date by the Secretary as being true,
correct and complete.

A. OPINION OF COUNSEL. MTLM shall have received an opinion dated
as of the Closing Date from counsel for the Company and the Shareholders,
in form and substance acceptable to MTLM, to the effect that:

(i) the Company is validly existing and in good standing
under the laws of its state of incorporation, and has the power
and authority to carry on the business now conducted by it and to
own or lease the properties now owned or leased by it;

<PAGE> 33

(ii) the Company has obtained all necessary authorizations
and consents of its directors and Shareholders to effect the
transactions contemplated in this Agreement;

(iii) all issued and outstanding shares of capital stock of
the Company are owned as set forth on Schedule 3.5 hereto;

(iv) except as set forth in Schedule 3.12, such counsel has
no actual knowledge (without any independent investigation of any
sort) of any litigation, proceeding or investigation pending or
threatened which would result in any material adverse change in
the properties, or business or in the condition of the Company, or
which questions the validity of this Agreement; and

(v) each of this Agreement and the Escrow Agreement and all
other agreements executed and delivered by the parties hereto is a
valid and binding obligation of each of the Company and the
Shareholders, as the case may be, and enforceable against each of
them in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights
generally.

A. CONSENTS. MTLM shall have received written consents to the
transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of the Company from any Person from
whom such consent or waiver is required under any Designated Contract or
instrument as of a date not more than ten days prior to the Closing Date, or
who, as a result of the transactions contemplated hereby, would have such
rights to terminate or modify such Contracts or instruments, either by the
terms thereof or as a matter of law.

A. GOVERNMENTAL APPROVALS. All consents, authorizations and
approvals from, and all declarations, filings and registrations with any
governmental authority required to consummate the transactions contemplated by
this Agreement, including those set forth on Schedule 3.6, shall have been
obtained or made without the imposition of any material conditions, and all
applicable waiting periods, if any, under the HSR Act shall have expired or
terminated.

A. SECURITIES LAWS. MTLM shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of MTLM securities, in connection with the
transactions contemplated hereby.

A. COMPANY SECURITIES. At the Closing, the Shareholders shall have delivered
all certificates evidencing the Common Stock of the Company held by them,

<PAGE> 34

together with stock powers duly executed in blank, with signatures guaranteed,
and otherwise in form acceptable to MTLM.

A. NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Agreement or any other transaction contemplated
hereby, and which, in the judgment of MTLM, makes it inadvisable to proceed
with the Agreement and other transactions contemplated hereby.

A. OTHER CLOSING DELIVERIES. At Closing, MTLM shall have received:

1. an executed lease from the owners of the Company's Yale Street
property in Houston, Texas (excluding the approximately two acres on the
east side of Yale and the property with the building operating as Heights
Armature Works) in favor of MTLM or HCS in a form acceptable to MTLM and such
owners.

1. each Other Agreement executed by the Company and/or the
Shareholders, as the case may be, who is a party thereto;

1. the stock books, stock ledgers, minute books, corporate seal
and other books and records of the Company; and

1. all other previously undelivered agreements, certificates,
documents, instruments or writings required to be delivered by the Company
and/or the Shareholders at or prior to the Closing pursuant to this Agreement
or otherwise in connection herewith, duly executed by each of the Company
and/or the Shareholders, as the case may be, who is a party thereto.

A. LICENSES AND PERMITS. Each of the licenses and permits set
forth on Schedule 3.22 shall be in full force and effect.

CONDITIONS TO THE OBLIGATIONS
OF THE COMPANY AND THE SHAREHOLDERS

The obligations of the Company and each of the Shareholders hereunder
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in part by
the Company and the Shareholders:

A. ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of MTLM and Acquisition
contained in this Agreement shall be true and correct in all material respects
at and as of

<PAGE> 35

the Closing Date except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. MTLM shall have performed and complied with all
of their obligations required by this Agreement to be performed or complied in
all material respects with at or prior to the Closing Date. MTLM and
Acquisition shall have delivered to the Shareholders a certificate, dated as of
the Closing Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct in all material respects
and that all such obligations have been performed and complied with.

A. MTLM PURCHASE PRICE. At the Closing, MTLM shall have delivered
to the Shareholders the Merger Consideration.

A. NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Agreement or any of the transactions contemplated
hereby, and which in the judgment of the Shareholders makes it inadvisable to
proceed with the Agreement or any other transaction contemplated hereby.

A. OPINION OF COUNSEL. The Shareholders shall have received an
opinion dated as of the Closing Date from counsel for MTLM and Acquisition,
in form and substance acceptable to the Shareholders, to the effect that:

(i) MTLM and Acquisition are corporations validly existing
and in good standing under the laws of the State of Delaware and
Texas, respectively, and are authorized to carry on the business
now conducted by them and to own or lease the properties now owned
or leased by them;

(ii) MTLM and Acquisition have obtained all necessary
authorizations and consents of their Board of Directors and all
corporate acts required to be taken have been taken, to effect the
transactions contemplated in this Agreement;

(iii) such counsel has no actual knowledge (without any
independent investigation of any sort) of any litigation,
proceeding or investigation pending or threatened which would
result in any material adverse change in the properties, or
business or in the condition of MTLM, or which questions the
validity of this Agreement;

(iv) this Agreement is a valid and binding obligation of MTLM
and Acquisition, and enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency,

<PAGE> 36

reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally;

(v) the MTLM Common Stock (including the Escrow Shares) is
(1) duly authorized and validly issued and is listed for trading
on The Nasdaq National Market System; (2) not subject to any
preemptive rights; (3) free and clear of all Liens, claims and
encumbrances; and (4) represented by certificates which have all
appropriate legends therein which are required by law or any
agreements to which such shares or certificates are subject.

(vi) such counsel has no actual knowledge (without any
independent investigation of any sort) that any event has occurred
or state of facts exist which would constitute a breach of any of
the representations and warranties made by MTLM and/or Acquisition
pursuant to Article II of this Agreement;

(vii) no approval, consent or withholding of the objection on
the part of, or filing, registration or qualification with, any
governmental body, federal, state or local, is necessary in
connection with the performance by MTLM or Acquisition of any
matter required of MTLM or Acquisition thereunder;

(viii) based on the accuracy of the representations of the
Shareholders set forth in Section 3.28 hereof, the issuance and
delivery of the Common Stock is an exempt transaction under the
Securities Act of 1933, as amended (the "Act"), does not require
the registration thereof under the Act and will not violate any
federal or state securities laws; and

(ix) no preemptive rights of shareholders (or other purchase
rights) exist with respect to any of the MTLM Common Stock
(including the Escrow Shares) under applicable law, MTLM's
Articles of Incorporation or Bylaws, or any agreement or
instrument to which MTLM is a party.

A. NO MATERIAL ADVERSE CHANGE OR EFFECT OR DESTRUCTION OF
PROPERTY. Between the date hereof and the Closing Date, (i) there shall
have been no Material Adverse Change or Effect to MTLM (other than its
acquisition of other similar businesses), (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of MTLM, and (iii) none of
the properties and assets of MTLM shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of
insurance coverage for such damage) which damages may have a Material Adverse
Change or Effect thereon, and there shall have been delivered to the Company a
certificate to that effect, dated the Closing Date and signed by or on behalf
of MTLM.

<PAGE> 37

A. SHAREHOLDERS' EMPLOYMENT AGREEMENTS. The Shareholders and
other necessary parties shall have entered into the Employment Agreements
described in Section 5.13 hereof.

A. RELEASE OF GUARANTEES/COLLATERAL. MTLM shall have caused the
guarantees of the Shareholders for indebtedness of the Company to Merchants
Bank in Houston, Texas, together with any collateral belonging to the
Shareholders or Heights Armature Works (or any party other than the Company as
of the Closing) including all of the real property, to be released and the
Shareholders shall have received a consent from Merchants Bank to the
transactions contemplated under this Agreement.

7.8 GOVERNMENTAL APPROVALS. All consents, authorizations and approvals
from, and all declarations, filings and registrations with any governmental
authority required to consummate the transactions contemplated by this
Agreement, including those set forth on Schedule 3.6, shall have been obtained
or made without the imposition of any material conditions, and all applicable
waiting periods, if any, under the HSR Act shall have expired or terminated.

7.9 DELIVERY OF LEASE. At Closing, the Shareholders shall have received
an executed Lease from MTLM or HCS, as described in Section 6.10(a) above.

INDEMNIFICATION

A. AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The Shareholders
agree to severally indemnify, defend and hold MTLM harmless (with each
Shareholder's liability to MTLM being equal to such Shareholder's proportionate
share, as set forth in Schedule 3.1 hereto, of any Indemnifiable Damages,
subject to the limitations set forth in Section 8.1(e) below) from and against
the aggregate of all Indemnifiable Damages (as defined below).

1. For purposes of this Agreement, "Indemnifiable Damages" means,
without duplication, the aggregate of all actual expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by MTLM, on a
pre-tax consolidated basis to the extent (i) resulting from any breach of a
representation or warranty made by the Company or the Shareholders in or
pursuant to this Agreement, (ii) resulting from any breach of the covenants or
agreements made by the Company or the Shareholders pursuant to this Agreement,
(iii) resulting from any material inaccuracy in any certificate delivered by
the Company or any Shareholders pursuant to this Agreement or (iv) resulting
from any environmental matter listed on Schedule 3.12 or Schedule 3.13.

<PAGE> 38

1. Without limiting the generality of the foregoing, with respect
to the measurement of Indemnifiable Damages, MTLM shall have the right to be
put in the same pre-tax consolidated financial position as MTLM would have been
in had each of the representations and warranties of the Shareholders hereunder
been true and correct and had the covenants and agreements of the Company and
the Shareholders hereunder been performed in full.

1. Each of the covenants, representations and warranties made by
the Shareholders in this Agreement or pursuant hereto shall survive for a
period of 12 months after the Closing Date except the representations and
warranties of the Shareholders contained in Sections 3.1 through 3.5 shall not
expire, but shall continue indefinitely and the Shareholders shall be obligated
to indemnify MTLM for the environmental matters listed on Schedule 3.12 and
Schedule 3.13 for a period of ten (10) years from the Closing. No claim for
the recovery of Indemnifiable Damages or with respect to the representations
and warranties may be asserted by MTLM against the Shareholders after such
representations and warranties shall expire, provided, however, that claims for
Indemnifiable Damages first asserted within the applicable period shall not
thereafter be barred. Notwithstanding any knowledge of facts determined or
determinable by any party by investigation, each party shall have the right to
fully rely on the representations, warranties, covenants and agreements of the
other parties contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant and
agreement of the parties contained in this Agreement is independent of each
other representation, warranty, covenant and agreement.

1. If MTLM believes it is entitled to a claim for any
Indemnifiable Damages hereunder, MTLM shall promptly give written notice to
the Shareholders of such claim and the amount or the estimated amount of such
claim, and the basis for such claim. If the Shareholders do not pay the amount
of the claim for Indemnifiable Damages to MTLM within 10 days, then MTLM may
exercise its respective rights under Section 8.4 and/or take any action or
exercise any remedy available to it by appropriate legal proceedings to collect
the Indemnifiable Damages.

1. Notwithstanding anything to the contrary contained in this
Section 8.1, the Shareholders' liability for Indemnifiable Damages shall
be limited as follows:

a) MTLM shall have no claim for Indemnifiable Damages unless and
until all Indemnifiable Damages incurred by MTLM exceed an aggregate of
$200,000, in which event the Shareholders shall be liable for only such
Indemnifiable Damages in excess of $200,000;

a) the total amount of Indemnifiable Damages for which the
Shareholders shall be liable to MTLM shall not exceed the value of the
Merger Consideration, which shall be valued as provided in Section 8.4(a)(iv).

<PAGE> 39

1. The remedies set forth in this Section 8.1 shall be the
exclusive remedies of MTLM under this Agreement.

A. AGREEMENT BY MTLM TO INDEMNIFY. MTLM agrees to indemnify,
defend and hold the Shareholders harmless from and against the aggregate of all
Shareholders Indemnifiable Damages (as defined below).

1. For purposes of this Agreement, "Shareholders Indemnifiable
Damages" means, without duplication, the aggregate of all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
reasonable related counsel and paralegal fees and expenses) incurred or
suffered by the Shareholders, on a pre-tax consolidated basis, to the extent
(i) resulting from any breach of a representation or warranty made by MTLM or
Acquisition in or pursuant to this Agreement, or (ii) resulting from any breach
of the covenants or agreements made by MTLM or Acquisition in or pursuant to
this Agreement, (iii) resulting from any inaccuracy in any certificate
delivered by MTLM or Acquisition pursuant to this Agreement.

<PAGE> 40

1. Without limiting the generality of the foregoing, with respect
to the measurement of Shareholders Indemnifiable Damages, the Shareholders
have the right to be put in the same pre-tax consolidated financial position as
he, she or it would have been in had each of the representations and warranties
of MTLM hereunder been true and correct and had the covenants and agreements of
MTLM hereunder been performed in full.

1. Each of the covenants, representations and warranties made by
MTLM and Acquisition in this Agreement or pursuant hereto shall survive
for a period of one year after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of the Shareholders, except that
the representations and warranties of MTLM and Acquisition contained in
Sections 2.1 through 2.5 and 2.9 shall not expire but shall continue
indefinitely. No claim for the recovery of Shareholders Indemnifiable Damages
may be asserted by the Shareholders against MTLM after such representations and
warranties shall thus expire, provided, however, that claims for Shareholder
Indemnifiable Damages first asserted within the applicable period shall not
thereafter be barred. Notwithstanding any knowledge of facts determined or
determinable by any party by investigation, each party shall have the right to
fully rely on the representations, warranties, covenants and agreements of the
other parties contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant and
agreement of the parties contained in this Agreement is independent of each
other representation, warranty, covenant and agreement.

1. In the event that the Shareholders believe they are entitled
to a claim for any Shareholder Indemnifiable Damages hereunder, the
Shareholders shall promptly give written notice to MTLM of such claim and the
amount or the estimated amount of such claim, and the basis for such claim. If
MTLM does not pay the amount of the claim for Shareholders Indemnifiable
Damages to the Shareholders (according to each Shareholder's proportionate
share, as set forth in Schedule 3.1 hereof) within ten (10) days, then the
Shareholders, or either of them, may exercise any remedy available to them by
appropriate legal proceedings to collect the Shareholders Indemnifiable
Damages.

1. Notwithstanding anything to the contrary contained in this
Section 8.2, the Shareholders shall have no claim for Shareholder
Indemnifiable Damages unless and until all Shareholder Indemnifiable Damages
incurred by the Shareholders shall exceed an aggregate of $200,000, in which
event MTLM shall be liable for only such Shareholder Indemnifiable Damages in
excess of $200,000.

1. The remedies set forth in this Section 8.2 shall be the
exclusive remedies of the Shareholders under this Agreement.

<PAGE> 41

A. CONDITIONS OF INDEMNIFICATION. The obligations and liabilities
of the Shareholders and MTLM hereunder with respect to their respective
indemnities pursuant to this Article VIII resulting from any claim or other
assertion of liabilities by third parties (hereinafter called collectively
"Claims"), shall be subject to the following terms and conditions:

1. the party seeking indemnification (the "Indemnified Party")
must give the other party or parties, as the case may be (the "Indemnifying
Party"), notice of any such Claim 10 business days after the Indemnified Party
receives notice thereof;

1. the Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such
Claim; provided, however, if a Claim is made against MTLM, then MTLM shall have
the right to control the defense of the Claim, with MTLM's attorneys being
reasonably available for consultation with the Shareholders' counsel.

1. if the Indemnifying Party shall elect not to undertake such
defense, or within a reasonable time after notice of any such Claim from
the Indemnified Party shall fail to defend, the Indemnified Party (upon further
written notice to the Indemnifying Party) shall have the right to undertake the
defense, compromise or settlement of such Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of the Indemnifying Party (subject to the right of the Indemnifying Party to
assume defense of such Claim at any time prior to settlement, compromise or
final determination thereof);

1. anything in this Section 8.3 to the contrary notwithstanding,
(A) the Indemnified Party shall have the right, at its own cost and expense, to
have its own counsel to protect its own interests and participate in the
defense, compromise or settlement of the Claim, (B) the Indemnifying Party
shall not, without the Indemnified Party's written consent, settle or
compromise any Claim or consent to entry of any judgement which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect
of such Claim, and (C) the Indemnified Party, by counsel or other
representatives of its own choosing and at its sole cost and expense, shall
have the right to consult with the Indemnifying Party and its counsel or other
representatives concerning such Claim, and the Indemnifying Party and the
Indemnified Party and their respective counsel shall cooperate with respect to
such Claim.

A. ESCROW SHARES AND RIGHTS OF SETOFF TO SECURE THE SHAREHOLDERS'
INDEMNIFICATION OBLIGATION. As security for the agreement by the Shareholders
to indemnify and hold MTLM harmless as described in Section 8.1, at the
Closing, MTLM shall cause the certificates representing the Escrow Shares to be
held under the Escrow Agreement.

<PAGE> 42
1. MTLM may set off against the Escrow Shares (provided, however,
the Shareholders may elect to satisfy any indemnification obligation payable in
Escrow Shares by a payment in cash) for any Shareholder Indemnifiable Damages
for which Shareholders may be responsible pursuant to this Agreement, subject,
however, to the following terms and conditions:

a) MTLM shall give written notice to the Shareholders of any claim for
Shareholders Indemnifiable Damages hereunder, which notice shall set forth (i)
the amount of Shareholders Indemnifiable Damages, and (ii) the basis of such
claim;

a) Such set off shall be effected on the later to occur of the expiration of
10 business days from the date of such notice (the "Notice of Contest Period")
or, if such claim is contested, the date the dispute is resolved, and such set
off shall be charged proportionally (as to each Shareholder) against the Escrow
Shares;

a) If, prior to the expiration of the Notice of Contest Period, the
Shareholders shall notify MTLM in writing of an intention to dispute the claim
and if such dispute is not resolved within 30 days after expiration of such
period (the "Resolution Period"), then either MTLM or either of the
Shareholders may elect that such dispute shall be resolved by a committee of
three arbitrators (one appointed by the Shareholders, one appointed by MTLM and
one appointed by the two arbitrators so appointed), which shall be appointed
within 30 days after the expiration of the Resolution Period. The arbitrators
shall abide by the rules of the American Arbitration Association and their
decision shall be made within 45 days of being appointed and shall be final and
binding on all parties;

a) For purposes of this Section 8.4, the value for purposes of set off of the
Escrow Shares shall be the average of the closing bid and asked prices of
MTLM's common stock on The Nasdaq National Market System for the 20 business
days prior to the date of MTLM's claim for indemnification.

1. Except with respect to shares transferred pursuant to the
foregoing right of set off (and in the case of such shares, until the same
are transferred), all Escrow Shares shall be deemed to be owned by the
Shareholders and the Shareholders shall be entitled to vote the same; provided,
however, that there shall also be deposited with the Escrow Agreement subject
to the terms of this Section 8.4, all shares of MTLM Common Stock issued to the
Shareholders as a result of any stock dividend or stock split and all cash
issuable to the Shareholders as a result of any cash dividend, with respect to
the Escrow Shares. All stock and cash issued or paid upon Escrow Shares shall
be distributed to the person or entity entitled to receive such Escrow Shares
together with such Escrow Shares.

<PAGE> 43

SECURITIES LAW MATTERS

The Parties agree as follows with respect to the sale or other disposition
after the Closing Date of MTLM securities and related matters:

A. DISPOSITION OF MTLM SECURITIES. Each of the Shareholders
represents and warrants that Common Stock of MTLM being acquired by him
hereunder is being acquired and will be acquired for his own account and will
not be sold or otherwise disposed of, except pursuant to (i) an exemption from
the registration requirements under the Securities Act, which does not require
the filing by MTLM with the SEC of any registration statement, offering
circular or other document, in which case the Shareholders shall first supply
to MTLM an opinion of counsel (which counsel and opinions shall be satisfactory
to MTLM) that such exception is available, or (ii) an effective registration
statement filed by MTLM with the SEC under the Securities Act.

A. PIGGYBACK REGISTRATION RIGHTS.

1. If, at any time after the date hereof, MTLM proposes to
register under the Securities Act any shares of MTLM Common Stock for sale
by it pursuant to an underwritten public offering of the MTLM Common Stock or
other equity securities for sale by it (except with respect to registration
statements filed on Form S-4 or such other forms as shall be prescribed under
the Securities Act for the same purposes as such form), it will at each such
time, prior to the filing of any such registration statement, give written
notice to the Shareholders who then hold shares of MTLM Common Stock of its
intention so to do and, upon the written request (which must specify the number
of shares of MTLM Common Stock to participate in such underwritten offering) of
any of the Shareholders delivered to MTLM within five business days of receipt
of MTLM's notice, MTLM will use its best efforts to cause any MTLM Common Stock
issued to such requesting Shareholder pursuant to the Merger as to which
registration shall have been so requested to be included in the securities to
be covered by the registration statement proposed to be filed by MTLM for sale
by it in such offering, all to the extent requisite to permit the sale or other
disposition (in accordance with the written request of the Shareholders as
aforesaid) by such of the Shareholders of such MTLM Common Stock in such
offering as have so requested such registration. Nothing contained in this
Section 9.2 shall, however, limit MTLM's right to cancel, postpone or withdraw
any such proposed registration for any reason.

<PAGE> 44

1. If the request by the Shareholders to MTLM is a response in
connection with a sale of MTLM Common Stock or other equity securities pursuant
to a public underwriting, it shall be on the same terms and conditions as the
shares of MTLM Common Stock to be registered, if any, and sold through
underwriters under such registration; provided, however, that as a condition to
such inclusion the requesting Shareholders shall execute an underwriting
agreement acceptable to the underwriters and, if requested, a custody agreement
having such customary terms as the underwriters shall request, including
indemnification, and if the managing underwriter determines and advises in
writing that the inclusion in the underwriting of all MTLM Common Stock
proposed to be included by the requesting Shareholders and any other shares of
MTLM Common Stock sought to be registered by any other stockholder of MTLM
exercising rights comparable to those of the Shareholders under this Agreement
(the "Other Common Stock") would, in its reasonable and good faith judgment,
interfere with the successful marketing of the securities proposed to be
registered for underwriting by MTLM or by any holder of MTLM Common Stock
having the right to require MTLM to file a registration statement to register
such MTLM Common Stock, then the number of shares of MTLM Common Stock and
Other Common Stock requested to be included in the underwriting shall be
reduced pro rata among the stockholders of MTLM and the holders of Other Common
Stock requesting such registration and inclusion in the underwriting and may,
in the determination of such managing underwriter and consistent with pro rata
reduction, be reduced to zero.

1. If and whenever MTLM is obligated by the provisions of this
Agreement to effect the registration of any MTLM Common Stock pursuant to
subparagraph (a) above, MTLM will, subject to the provisions of this Section
9.2:

a) as expeditiously as reasonably practicable, prepare and file
with the SEC a registration statement on the appropriate form with respect to
such MTLM Common Stock and seek to cause such registration statement to become
and remain effective;

a) as expeditiously as reasonably practicable, prepare and file
with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of such MTLM Common Stock
covered by such registration statement in accordance with the intended method
of distribution set forth in such registration statement;

a) as expeditiously as reasonably practicable, furnish to each of
the Shareholders selling MTLM Common Stock registered, or to be registered
under the Securities Act, such number of copies of prospectuses and preliminary
prospectuses in conformity with requirements of the Securities Act, and such
other documents as such Shareholders may reasonably request, in order to
facilitate the public sale or other disposition of such MTLM Common Stock owned
by such Shareholders; provided, however, that the obligation of MTLM to deliver
copies of prospectuses or preliminary prospectuses to

<PAGE> 45

such Shareholders shall be subject to the receipt by MTLM of reasonable
assurances from such Shareholders that they will comply with the applicable
provisions of the Securities Act and of such other securities laws as may
be applicable in connection with any use by it of any prospectuses or
preliminary prospectuses;

a) as expeditiously as reasonably practicable, furnish, at the request of the
Shareholders requesting registration pursuant to this Agreement, on the date
that such MTLM Common Stock is to be delivered to the underwriters for sale
pursuant to such registration or, if such MTLM Common Stock is not being sold
through underwriters, on the date the registration statement with respect to
such MTLM Common Stock becomes effective an opinion, dated such date, of the
independent counsel representing MTLM for the purposes of such registration,
addressed to the underwriters, if any, and to the Shareholders making such
request, stating that such registration statement became effective under the
Securities Act and the (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness of such registration statement has been instituted
or is pending or contemplated under the Securities Act; (B) the registration
statement, the related prospectus, and each amendment or supplement thereto,
including all documents incorporated by reference therein, comply as to form in
all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the SEC thereunder (except that such
counsel need express no opinion as to financial statements or other financial
or statistical or reserve date contained or incorporated by reference therein);
and (C) no facts have come to the attention of such counsel that caused such
counsel to believe (with customary qualifications) that either the registration
statement or the final prospectus, or any amendment or supplement thereto,
including all documents incorporated by reference therein, in light of the
circumstances under which they were made, contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (except that such
counsel need express no belief as to financial statements or other financial or
statistical or reserve data contained or incorporated by reference therein or
as to any information provided by the Shareholders or any underwriter for
inclusion therein); and (ii) a letter, dated such date, from the independent
certified public accountants of MTLM, addressed to the underwriters, if any,
and to the Shareholders making such request, stating that they are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants, the financial statements and other
financial data of MTLM included in the registration statement or the
prospectus, or any amendment or supplement thereto, including all documents
incorporated by reference therein, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act. Such letter
from the independent certified public accountants shall additionally cover such
other customary financial matters (including information as to the period
ending not more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
such underwriters, if any, or the Shareholders making such request may
reasonably request;

<PAGE> 46

a) as expeditiously as reasonably practicable, use its best efforts to
register or qualify MTLM Common Stock covered by such registration statement
under such other securities laws of such United States jurisdictions as the
Shareholders making such request shall reasonably request (considering the
nature and size of the offering) and do any and all other acts and things
which may be necessary or desirable to enable the Shareholders making such
request to consummate the public sale or other disposition in such
jurisdictions of MTLM Common Stock owned by such Shareholders; provided,
however, that MTLM shall not be required to qualify to transact business as a
foreign corporation in any jurisdiction in which it would otherwise not be
required to be so qualified or to take any action which would subject it to
general service of process in any jurisdiction in which it is not then so
subject;

a) bear all Registration Expenses (as defined below) in connection with all
registrations hereunder; provided, however, that all Selling Expenses (as
defined below) of MTLM Common Stock held by the Shareholders and all fees and
disbursements of counsel for the Shareholders in connection with each
registration pursuant to this Agreement shall be borne by such Shareholders pro
rata in proportion to the number of shares of MTLM Common Stock covered thereby
being sold or in such proportion as they may agree. For purposes of this
Section 9.2, expenses incurred by MTLM in complying with this Agreement,
including, without limitation: (i) all registration and filing fees; (ii) all
printing expenses; (iii) all fees and disbursements of counsel for MTLM; (iv)
all blue sky fees and expenses; and (v) all fees and expenses of accountants
for MTLM are herein referred to as "Registration Expenses." All underwriting
fees and discounts and brokerage and selling commissions and fees and expenses
of the counsel for the Shareholders and any underwriter's counsel applicable to
the sales in connection with any such registration are herein referred to as
"Selling Expenses."

<PAGE> 47

1. In the event of a registration of any MTLM Common Stock under
the Securities Act pursuant to this Agreement, MTLM will indemnify and hold
harmless each of the Shareholders and any other Person, if any, who controls
such Shareholders within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Shareholders or such controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities or actions in respect thereof arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained, on
the effective date thereof, in any registration statement under which such MTLM
Common Stock was registered under the Securities Act, any preliminary
prospectus distributed with the consent of MTLM or final prospectus contained
therein, or any amendment thereof or supplement thereto, including all
documents incorporated by reference therein, or arise out of or are upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each of such Shareholders and each such controlling Person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that MTLM will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary prospectus, such final
prospectus or such amendment or supplement, including all documents
incorporated by reference therein, in reliance upon and in conformity with
written information furnished to MTLM by or on behalf of any of the
Shareholders or a controlling Person of any of the Shareholders specifically
for use in the preparation thereof.

<PAGE> 48

In the event of any registration of any MTLM Common Stock under the
Securities Act pursuant to this Agreement, each of the selling
Shareholders of such MTLM Common Stock will severally indemnify and hold
harmless MTLM and each Person, if any, who controls MTLM within the
meaning of Section 15 of the Securities Act, each officer of MTLM who
signs the registration statement, each director of MTLM and each
underwriter (if any) and each Person who controls any underwriter (if
any) within the meaning of Section 15 of the Securities Act, against any
and all such losses, claims, damages, liabilities or actions which MTLM
or such officer, director, underwriter (if any) or controlling Person may
become subject under the Securities Act or otherwise, and will reimburse
MTLM, each such officer, director, underwriter (if any) and controlling
Person for any legal or any other expenses reasonably incurred by such
party in connection with investigating or defending any such loss, claim,
damage, liability or action, if (a) any such loss, claim, damage,
liability or action in respect thereof arises out of or is based upon any
untrue statement or alleged untrue statement of any material fact
contained in any such registration statement or any such prospectus, or
any amendment thereof or supplement thereto, or arises out of or is based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading which was furnished by such selling Shareholder and (b)
any such statement or omission of a material fact was made in reliance
upon and in conformity with information furnished to MTLM by or on behalf
of the Shareholders specifically for use in connection with the
preparation of such registration statement or prospectus. In connection
with any transaction contemplated by Section 4.2 hereof, the Shareholders
also agree to indemnify each such underwriter and each Person who
controls any such underwriter as set forth above within the meaning of
Section 15 of the Securities Act as may reasonably and customarily be
requested by the underwriters in connection with any underwritten
offering of such MTLM Common Stock.

Promptly after receipt by any indemnified Person of notice of any
claim or commencement of any action in respect of which indemnity is to
be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall promptly notify the indemnifying Person in
writing of such claim or of the commencement of such action, and, subject
to provisions hereinafter stated, in case any such action shall be
brought against an indemnified Person and such indemnifying Person shall
have been notified of the same, such indemnifying Person shall be
entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified Person, and after notice from the indemnifying Person to such
indemnified Person of its election to assume the defense thereof, such
indemnifying Person shall not be liable to such indemnified Person in
connection with the defense thereof; provided, however, if there exists
or will exist a conflict of interest which would make it inappropriate in
the reasonable judgment of the

<PAGE> 49

indemnified Person for the same counsel to represent both the indemnified
Person and such indemnifying Person then such indemnifying Person shall be
entitled to retain its own counsel at the expense of such indemnifying
Person; provided further, however, the indemnifying Person shall not be
required to pay for more than one separate counsel for all of the
indemnified Persons in addition to any local counsel.

1. If Rule 144 or Rule 145 as promulgated under the Securities Act
or any successor or similar rule or statute shall permit the sale of the
shares of MTLM Common Stock received by the Shareholders in compliance with the
conditions thereof and the provisions thereof, the rights of the Shareholders
as to registration provided for in this Agreement as to such MTLM Common Stock
shall terminate immediately.

A. LEGEND. Each of the MTLM Common Stock certificates shall bear
the following legend:

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF
1933, AS AMENDED WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

MTLM may, unless a registration statement is in effect covering MTLM
Securities, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.

DEFINITIONS

A. DEFINED TERMS. As used herein, the following terms shall have
the following meanings:

"Aboveground Storage Tanks" defined in Section 3.13 (h).

"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date hereof.

"Asbestos" or "Asbestos-containing material" defined in Section
3.13 (j).

<PAGE> 50

"Assets" defined in Section 3.15 (a).

"CERCLA" defined in Section 3.13 (e).

"Claims" defined in Section 8.3.

"Closing" defined in Section 1.2.

"Code" defined in Section 3.18 (b).

"Common Stock" means shares of MTLM's common stock, $.01 par value.

"Company" means, unless the context indicates otherwise, the
Company.

"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will,
trust, commitment, obligation or other contract, agreement or
instrument, whether written or oral.

"Current Balance Sheet" defined in Section 3.9.

"Designated Contracts" defined in Section 3.25.

"Discharge" defined in Section 3.13 (f).

"Employee Benefit Plans" defined in Section 3.18 (a).

"Environmental Assessment" defined in Section 5.9.

"Environmental, Health and Safety Laws" defined in Section 3.13
(k).

"EPCRA" defined in Section 3.13 (e).

"ERISA" defined in Section 3.18 (a).

"Escrow Agreement" referred to in Section 1(a)(i) and attached as
Exhibit A.

"Escrow Shares" defined in Section 1(a)(i).

"Exchange Act" means the Securities Exchange Act of 1934, as
amended.

"FIFRA" defined in Section 3.13 (e).

<PAGE> 51

"Financial Statements" defined in Section 3.9.

"Fixed Assets" defined in Section 3.15 (b).

"GAAP" means generally accepted accounting principles in
effect in the United States of America for the period indicated.

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

"Hazardous Substances" defined in Section 3.13 (e).

"Immigration Act" defined in Section 3.16 (c).

"Indemnifiable Damages" defined in Section 8.1 (a).

"Indemnified Party" defined in Section 8.3 (a).

"Insurance Policies" defined in Section 3.20.

"Intellectual Property" defined in Section 3.24.

"Knowledge" means (a) in the case of an individual, actual,
conscious knowledge of information by such individual or (b) in the case
of a corporation, limited liability company or similar entity, actual,
conscious knowledge by a current officer thereof who devotes substantive
attention to matters of such nature in the ordinary course of his
employment with such corporation, limited liability company or other
entity.

"Leased Premises" defined in Section 3.14 (b).

"Leases" defined in Section 3.14 (b).

"Licenses" defined in Section 3.13 (b).

"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not
limited to, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in
connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).

<PAGE> 52
"Material Adverse Change (or Effect)" means a change (or effect),
in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects which
change (or effect) individually or in the aggregate, is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, business or prospects.

"Material Customers" defined in Section 3.26.

"Merger Consideration" defined in Section 1.2(a).

"MPPA Plan" defined in Section 3.18 (d).

"Other Agreements" defined in Section 5.12.

"OSHA" defined in Section 3.13 (e).

"Owned Properties" defined in Section 3.14 (a).

"Permits" defined in Section 3.22.

"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other
entity, of whatever nature.

"PBGC" defined in Section 3.18 (f).

"RCRA" defined in Section 3.13 (e).

"Receivables" defined in Section 3.21.

"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with
the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.

"Release" defined in Section 3.13 (f).

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as
amended.

"Shareholders" defined in the introductory paragraph of this
Agreement.

"Shareholders Indemnifiable Damages" defined in Section 8.2 (a).

<PAGE> 53

"Tax Return" means any federal, state or local tax return,
filing or information statement required to be filed in connection
with or with respect to any Taxes; and

"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and
unemployment taxes imposed by any federal, state, local or foreign
governmental agency, and any interest or penalties related
thereto.

"Underground Storage Tanks" defined in Section 3.13 (h).

"Waste" defined in Section 3.13 (e).

A. OTHER DEFINITIONAL PROVISIONS.

1. All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.

1. Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.

1. All matters of an accounting nature in connection with this
agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.

As used herein, the neuter gender shall also denote the masculine and
feminine, and the masculine gender shall also denote the neuter and feminine,
where the context so permits.

TERMINATION, AMENDMENT AND WAIVER

A. TERMINATION. This Agreement may be terminated:

1. at any time prior to the Closing Date, by mutual written
consent of all of the parties hereto at any time prior to the Closing;

1. at any time prior to the Closing Date, by MTLM in the event of
a material breach by the Company or the Shareholders of any provision of
this Agreement;

<PAGE> 54

1. at any time prior to the Closing Date, by the Shareholders or
the Company in the event of a material breach by MTLM of any provision of this
Agreement;

1. at any time prior to the Closing Date, by any of MTLM or the
Shareholders or the Company if the Closing shall not have occurred by December
31, 1997; provided, however, that neither MTLM, nor the Shareholders nor the
Company shall be entitled to terminate this Agreement pursuant to this Section
11.1(d), if such party's knowing or willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby.

A. EFFECT OF TERMINATION. Except as provided in Article VI, in
the event of termination of this Agreement pursuant to Section 11.1, this
Agreement shall forthwith become void; provided, however, that nothing herein
shall relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, so long as a claim for such liability is made within ninety (90)
days after such termination.

GENERAL PROVISIONS

A. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):

1. IF TO MTLM TO:

Metal Management, Inc.
500 N. Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Gerard Jacobs
Telecopy No.: (312) 645-0714

<PAGE> 55
WITH A COPY TO:

Vinson & Elkins L.L.P.
1001 Fannin
Houston, Texas 77002
Attn: Robert H. Whilden, Jr.
Telecopy No.: (713) 758-2346

1. IF TO THE COMPANY OR THE SHAREHOLDERS TO:

Jack Segal
Howard Segal
Houston Compressed Steel Corp.
101 Yale Street
Houston, TX 77007
Telecopy No.: (713) 869-4157

WITH A COPY TO:

Warren A. Hoffman
Dow, Cogburn & Friedman, P.C.
Nine Greenway Plaza, Suite 2300
Houston, TX 77046
Telecopy No.: (713) 940-6099

A. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) and the other documents delivered at the Closing
pursuant hereto supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter.
The Exhibits and Schedules constitute a part hereof as though set forth in
full above.

A. EXPENSES. Except as otherwise provided herein, MTLM shall pay
its own fees and expenses, including its own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby, and the
Company shall pay its own fees and expenses, including its own counsel fees in
connection with this Agreement or any transaction contemplated hereby. Fees
and expenses attributable to the Shareholders shall be paid by the
Shareholders.

A. AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor

<PAGE> 56

shall any waiver be implied from any course of dealing between the parties.
No extension of time for performance of any obligations or other acts hereunder
or under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. Except as otherwise
provided herein, the rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.

A. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other Person any legal or equitable rights
hereunder. Except as expressly provided herein, the rights and obligations of
this Agreement may not be assigned by any of the Shareholders without the prior
written consent of MTLM or by MTLM without the prior written consent of the
Shareholders.

A. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.

A. INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the Schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the Schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.

A. GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of
the State of Texas applicable to contracts executed and to be wholly performed
within such State.

A. ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.

<PAGE> 57

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

METAL MANAGEMENT, INC.

By:
Daniel B. Burgess
Executive Vice President

HCS ACQUISITION, INC.

By:
William T. Proler
President

HOUSTON COMPRESSED STEEL CORP.

By:
Jack Segal
President

Jack Segal
Shareholder

Howard Segal
Shareholder

<PAGE> 58

INDEX OF SCHEDULES

<TABLE>
<S> <C>
Schedule 2.7 Related Party Matters
Schedule 2.12 Litigation
Schedule 3.1 Jurisdictions in which Qualified to do Business
Schedule 3.4 Capitalization
Schedule 3.5 Shareholders of the Company
Schedule 3.6 Violations; Conflicts; etc.
Schedule 3.8 Subsidiaries
Schedule 3.9 Financial Statements
Schedule 3.10 Changes since the Current Balance Sheet Date
Schedule 3.11 Liabilities
Schedule 3.12 Litigation
Schedule 3.13 Environmental Matters
Schedule 3.14(a) Owned Real Estate
Schedule 3.14(b) Leases
Schedule 3.15 Title to and Condition of Assets
Schedule 3.16 Compliance with Laws
Schedule 3.17 Labor and Employment Matters
Schedule 3.18 Employee Benefit Plans
Schedule 3.20 Insurance
Schedule 3.21 Billing and Receivable Variances
Schedule 3.22 Licenses and Permits
Schedule 3.23 Relationship with Customers & Suppliers
Schedule 3.25 Contracts
Schedule 3.30 D/B/A
Schedule 3.33 Asset Update Schedule
Schedule 3.34 Restrictions
Schedule 4.1 Conduct of Business Pending Closing
</TABLE>
<PAGE> 59

INDEX OF EXHIBITS

<TABLE>
<S> <C>
Exhibit A Form of Escrow Agreement
Exhibit B Form of Employment Agreement with Jack Segal
Exhibit B-1 Form of Employment Agreement with Howard Segal
</TABLE>

<PAGE> 1
EXHIBIT 5.1

LAW OFFICES
SHEFSKY & FROELICH LTD.
444 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60611
__________

TELEPHONE (312) 527-4000
FACSIMILE (312) 527-5921
E-MAIL [email protected]

January 13, 1998

Metal Management, Inc.
500 North Dearborn
Suite 405
Chicago, Illinois 60610

Gentlemen:

We have acted as your special counsel in connection with the
preparation and filing of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). The Registration Statement relates to an aggregate of
15,896,858 shares of the Company's common stock, par value $0.01 per share, a
total of 9,114,769 of which are outstanding on the date hereof, and a total of
6,782,089 shares which are issuable upon conversion of Series A Preferred Stock
and Series B Preferred Stock (each as defined in the Registration Statement),
conversion of a note payable and exercise of warrants previously granted by
the Company.

In rendering this opinion, we have examined such corporate records,
documents, instruments and certificates of the Company, have received and
reviewed representations from the officers and directors of the Company and have
reviewed those questions of law as we have deemed necessary, relevant or
appropriate to enable us to render the opinion expressed herein. In our
examination, we have assumed the genuineness of all signatures and authenticity
of all documents, instruments, records and certificates submitted to us as
originals, the genuineness of all signatures on documents reviewed by us and the
legal capacity of natural persons executing such documents, instruments, records
and certificates.

We are admitted to practice law in the State of Illinois and,
accordingly, we do not purport to be experts on the laws of any other
jurisdiction nor do we express an opinion as to the laws or jurisdictions other
than the laws of the State of Illinois, and the Delaware General Corporation
Law, all as currently in effect.

We call your attention to the fact that certain attorneys employed by
our firm beneficially own, or have the right to acquire through the exercise of
warrants or options granted to such individuals, an aggregate of 133,000 shares
of the Company's common stock. In addition, certain

<PAGE> 2
SHEFSKY & FROELICH LTD.

Metal Management, Inc.
January 13, 1998
Page 2

members of the firm have received compensation in the form of warrants for
non-legal services in connection with certain issuances of securities by the
Company.

Based upon our examination and review and upon the representations made
to us by the officers and directors of the Company, we are of the opinion that:
(i) the Shares currently outstanding and offered for sale on the terms and
conditions set forth in the Registration Statement have been duly and validly
authorized and are validly issued, fully-paid and nonassessable; and (ii) the
Shares issuable upon exercise of options or warrants or upon conversion of
Series A Preferred Stock and Series B Preferred Stock (the options, warrants,
Series A Preferred Stock and Series B Preferred Stock are collectively referred
to herein as the "Derivative Securities") have been duly authorized for issuance
and when issued in conformity with the documents governing the issuance of the
Derivative Securities will be validly issued, fully-paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving this consent we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act and the
Rules and Regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ SHEFSKY & FROELICH LTD.

SHEFSKY & FROELICH LTD.

MJC/SMS/gm

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on
Form S-3 (No. 333-43423) of the following: our report dated May 21, 1997,
except as to Notes 16 and 17 which are as of June 19, 1997, appearing on page
F-1 of Metal Management, Inc.'s Annual Report on Form 10-K for the year ended
March 31, 1997 and also appearing on page F-1 of Metal Management, Inc.'s Proxy
Statement dated November 20, 1997; our report dated March 14, 1997, except as
to Note 10 which is as of May 1, 1997, relating to the financial statements of
Reserve Iron and Metal Limited Partnership, appearing in Metal Management,
Inc.'s Current Report on Form 8-K dated May 2, 1997 and filed May 15, 1997;
and, our report dated April 17, 1997 relating to the financial statements of
Proler Southwest, Inc. and Proler Steelworks L.L.C. appearing on page F-52 of
Metal Management, Inc.'s Proxy Statement dated November 20, 1997. We also
consent to the reference to us under the heading "Experts" in such Prospectus.

PRICE WATERHOUSE LLP

Chicago, Illinois

January 13, 1998

<PAGE> 1
EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement No. 333-43423 of Metal Management, Inc. on Form S-3 of
our report on the Cozzi Iron & Metal, Inc. financial statements dated
April 22, 1997, appearing in the Proxy Statement of Metal Management, Inc.
dated November 20, 1997. We also consent to the reference to us under the
heading "Experts" in such Prospectus.

Deloitte & Touche LLP
Chicago, Illinois

January 13, 1998

<PAGE> 1
EXHIBIT 23.4

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference in Amendment No 1 to the Registration
Statement (Form S-3 No. 333-43423) and related Prospectus of Metal Management,
Inc. for the registration of 15,896,858 shares of its common stock of our
report dated February 28, 1997 (except Note 8, as to which the date is June 23,
1997) with respect to the financial statements of The Isaac Corporation and of
our report dated February 28, 1997 (except Note 9, as to which the date is June
23, 1997) with respect to the financial statements of Ferrex Trading
Corporation, included as Exhibits 99.1 and 99.2 in Metal Management, Inc.'s
Current Report on form 8-K dated June 23, 1997, filed with the Securities and
Exchange Commission.

ERNST & YOUNG LLP

Toledo, Ohio

January 12, 1998