EMPLOYMENT AGREEMENT


		THIS AGREEMENT made this 1st day of September, 1998, by and 
between Kentucky Electric Steel, Inc., with its principal office in 
Ashland, Kentucky (the "Company"), and ________________________, residing 
at_______________________ (hereinafter called the "Executive").
	WITNESSETH
		WHEREAS, the Company and the Executive executed an Employment 
Agreement effective as of June 7, 1994 ("Agreement"); and
		WHEREAS, the parties desire to amend and restate the 
Agreement to define the term "Change of Control" as if included in the 
original Agreement;
		NOW, THEREFORE, the Agreement is amended and restated in its 
entirety to read as follows:
		I.	Employment Duties and Term
			A.	Beginning on the Commencement Date (as 
hereinafter defined) the Company agrees to employ the Executive at not 
lower than the office held on the Commencement Date and the Executive 
agrees to faithfully and to the best of his ability discharge the 
responsibilities of said office and perform such duties and services of 
an executive, administrative and managerial nature as shall be specified 
and designated from time to time by the Board of Directors of the Company 
in connection with the business and activities of the Company.  The 
Executive's duties and responsibilities shall be those normally 
associated with such office.  The Executive's duties may be reasonably 
modified from time to time following the Commencement Date by the Board 
of Directors, but there shall be no significant change in his duties, 
position, title, job responsibility and authority, office facilities, 
support staff, growth potential and opportunity, or job location without 
his specific written agreement.
    The Executive agrees that during the Employment Period (as 
defined in Section I, B hereof), he shall devote substantially all his 
professional time and effort to the performance of his duties hereunder 
except for (i) time spent in managing his personal investments and 
services on corporate, civic or charitable boards or committees, in each 
case not significantly interfering with the performance of such duties, 
and (ii) periods of vacation and sick leave to which he is entitled.  
Furthermore, the Executive agrees that during the Employment Period, he 
shall refrain from engaging on his own behalf or on behalf of a third 
party, including without limitation, any customer or supplies of the 
Company, in any line of activities or business in which he knows or has 
reason to know that the Company is or is considering becoming engaged 
during the Employment Period or in any related activities or business 
without the express written consent of the Board of Directors of the 
Company.
B.	The term of the Executive's employment under this Agreement 
(the "Employment Period") shall commence on the effective date of a 
Change of Control (as hereinafter defined) ("Commencement Date") and 
shall be for an initial period commencing on the Commencement Date and 
ending on the third anniversary hereof (the "Initial Term"), plus all 
Renewal Periods, if applicable.  After the Initial Term, this Agreement 
shall be automatically renewed for subsequent three (3) year periods 
(each such three (3) year period being referred to herein as a "Renewal 
Period") unless, no later than (i) one (1) year prior to the expiration 
of the Initial Term, or, (ii) if during a Renewal Period, one (1) year 
prior to the expiration of such Renewal Period, either party gives 
written notice of cancellation to the other party.  After timely notice 
of cancellation has been given as required above, the Employment Period 
shall continue until the expiration of the Initial Term or the then 
current Renewal Period, as applicable, and the term "Termination Date," 
as used herein, shall be the last day of the Initial Term, or such 
Renewal Period, as applicable.
		The provisions of this Agreement shall not apply if, for any 
reason (other than as set forth in the following sentence), the Executive 
is not employed by the Company on the Commencement Date.  The provisions 
of this Agreement shall apply in the event the Executive's employment is 
terminated prior to, but in connection with, a Change of Control, by the 
Company's Board of Directors in the exercise of its fiduciary duties as 
part of a negotiation with a third party that requires such termination 
of employment as a condition of consummating a transaction resulting in a 
Change of Control.
		II.	Compensation and Termination
			A.	During the Employment Period, the Company shall 
pay to the Executive, and the Executive agrees to accept as compensation 
for his services hereunder, a base annual salary in the amount of not 
less than the level in effect on the Commencement Date, payable in the 
manner and at the times the Company pays its senior executives.  Such 
base annual salary shall be increased on each anniversary of the 
Commencement Date by an amount not less than that which is substantially 
similar, on a percentage basis, to the average percentage increase in 
base salary for all corporate officers of the Company during the 
preceding twelve (12) months.  "Base Salary" at any time shall mean the 
Executive's base annual salary as adjusted by the Board of Directors and 
as in effect at the time in question.
		In addition to his Base Salary, the Executive shall be 
entitled to participate in and receive compensation pursuant to the 
Company's Incentive Bonus Plan, the Company's 1993 Incentive Stock Option 
Plan and all other benefit, bonus and stock plans that now exist or as 
may exist in the future (collectively, the "Benefit Plans").
 			B.	In the event the Company terminates Executive's 
employment Without Cause (as defined in this Section II B below), the 
Company's obligation to pay Executive the compensation set forth herein 
shall nevertheless continue until the Termination Date.  For the purposes 
of this Agreement, a termination "Without Cause" shall mean a termination 
by the Company for any reason other than for Cause (as defined in 
Section II C hereof) or Disability, and the Executive's employment with 
the Company shall be deemed terminated Without Cause by the Company in 
the event of a termination resulting from a change in duties, position, 
title, job responsibility and authority, office facilities, support 
staff, growth potential and opportunity, compensation, job location, or 
senior management of the Company which, in the reasonable judgement of 
the Executive, would have a material adverse impact on the Executive or 
the nature of work performed by the Executive, or which would require him 
to change the location of his residence to avoid a commuting distance 
greater than the greater of (i) his commuting distance prior to the 
change and (ii) thirty (30) miles.
			C.	In the event that the Company terminates the 
Executive's employment under this Agreement for "Cause" (as hereinafter 
defined), except as provided in Section III, the Executive shall cease to 
receive compensation as of the date of termination of his employment.  
For the purpose of this Agreement, "Cause" shall mean (i) an act or acts 
of dishonesty on the Executive's part which are intended to result in the 
Executive's substantial personal enrichment at the expense of the Company 
or (ii) any gross misconduct by the Executive in the performance of his 
duties or responsibilities set forth in Section I hereof which is 
demonstrably willful and deliberate on the Executive's part and which 
results in material injury to the Company after written demand to cease 
such misconduct by the Board of Directors of the Company is delivered to 
the Executive.  "Cause" shall not include any mistake of fact or opinion 
made in good faith with respect to the Company's business.
III.  Change of Control
		A.	1.	In the event of a Change of Control (as 
hereinafter defined) which causes this Agreement to commence, Executive 
may terminate his employment hereunder at any time during the period 
commencing six (6) months following the Change of Control and ending 
thirty-six (36) months following the Change of Control.  If (a) the 
Executive shall terminate his employment during such period for any 
reason other than death or Disability, (b) the Company shall terminate 
the Executive's employment during the Change of Control Period (as 
hereinafter defined) for any reason, or (c) the Executive terminates his 
employment during the first six (6) months of the Change of Control 
Period for Good Reason as hereinafter defined, the Company shall pay to 
the Executive upon such termination of employment, in a single lump cash 
sum, an amount equal to One Dollar ($1.00) less than 300% of Employee's 
Base Amount as hereinafter defined.  Such payment shall be in lieu of 
further Base Salary payments under Section II except as otherwise 
provided in Section II-B.  Notwithstanding anything to the contrary 
contained herein, nothing in this Agreement shall relieve the Company of 
its obligation of providing the Executive with all benefits in accordance 
with the terms of the Benefit Plans in which the Executive participates.
		2.	In addition to the foregoing, if requested by the 
Executive, the Company will purchase the Executive's principal residence 
at any time requested by the Executive within a period of two (2) years 
following termination of employment; provided, however, that the purchase 
price of the residence shall be the fair market value of such residence 
as established by the average of appraisals submitted by three (3) 
independent appraisers mutually selected by the Executive and the 
Company.  
		B.	1.	The term "Good Reason" shall mean the failure of 
the company to comply with the following requirement:  During the Change 
of Control Period, (i) the Executive's Base Salary, position (including 
status, offices, titles and reporting requirements), authority, duties 
and responsibilities shall be at least commensurate in all material 
respects with the most significant of those held or exercised by or 
assigned to the Executive at any time during the 90-day period 
immediately preceding the date of the Change of Control and (ii) 
Executive's services shall be performed at the location where Executive 
was employed immediately preceding the date of the Change of Control.
		2.	The term "Base Amount" shall mean Executive's average 
annual compensation from the Company (as reported on Form W-2) for the 
five consecutive calendar years (or such lesser period as constitutes 
Executive's total years of employment with the Company) ending with the 
calendar year immediately preceding the Change of Control.
		3.	The term "Change of Control" shall mean (i) the 
consummation of (A) any consolidation or merger of the Company in which 
the Company is not the continuing or surviving corporation or pursuant to 
which shares of the Company's Common Stock would be converted into cash, 
securities or other property, other than a merger of the Company in which 
the holders of the Company's Common Stock immediately prior to the merger 
have substantially the same proportionate ownership of common stock of 
the surviving corporation immediately after the merger, or (B) any sale, 
lease, exchange or transfer (in one transaction or a series of related 
transactions) of all or substantially all the assets of the Company, or 
(ii) the approval by the shareholders of the Company of any plan or 
proposal for the liquidation or dissolution of the Company, other than in 
connection with a bankruptcy or reorganization proceeding of the Company 
under applicable federal or state bankruptcy laws, or (iii) any "person" 
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities 
Exchange Act of 1934, as amended (the "Exchange Act"), other than the 
Company or a subsidiary thereof or any employee benefit plan sponsored by 
the Company or a subsidiary thereof, becoming the beneficial owner 
(within the meaning of Rule 13d-3 under the Exchange Act) of securities 
of the Company representing 20% or more of the combined voting power of 
the Company's then outstanding securities ordinarily (and apart from 
rights accruing in special circumstances) having the right to vote in the 
election of directors, as a result of a tender or exchange offer, open 
market purchases, privately-negotiated purchases or otherwise, or (iv) at 
any time during a period of two (2) consecutive years, individuals who at 
the beginning of such period constituted the Board of Directors of the 
Company ceasing for any reason to constitute at least a majority thereof, 
unless the election or the nomination for election by the Company's 
shareholders of each new director during such two-year period was 
approved by a vote of at least two-thirds of the directors then still in 
office who were directors at the beginning of such two-year period.
		4.	The term "Change of Control Period" shall mean the 
period beginning on the date of the Change of Control and ending thirty-
six (36) months thereafter.
		C.	Notwithstanding anything else contained herein, if the 
aggregate of the payments to be made under this Agreement as a result of 
a Change of Control, either alone or together with other payments to 
which the Executive is entitled from the Company, would constitute an 
"excess parachute payment" (as defined in Section 280G of the Internal 
Revenue Code of 1986, as amended (the "Code")), such total payments shall 
be reduced to the largest amount as will result in no portion of the 
payments made hereunder being subject to the excise tax imposed by 
Section 4999 of the Code or being disallowed as a deduction by the 
Company under Section 280G of the Code.  The determination of any 
reduction in payments hereunder pursuant to the foregoing provisions 
shall be made by the Executive in good faith after consultation with the 
Company, and such determination shall be conclusive and binding on the 
Company.  The Company shall cooperate in good faith with the Executive in 
making such determination and providing the necessary information for 
this purpose.
		IV.	Executive's Rights Under Certain Plans and Policies
		The Company agrees that the benefits provided to the 
Executive herein are not in lieu of any rights and privileges to which 
the Executive may be entitled as an employee of the Company under 
retirement, pension, special salary continuation plan, disability, life 
insurance, hospitalization, vacation, business expense reimbursement or 
other plan or policy which may now or hereafter be in effect, it being 
understood that the Executive shall have no less than the same rights and 
privileges to participate in such plans, policies or benefits as any 
other employee of the Company.
		V.	Covenant Not to Compete and Consultation
		A.	For the period of two (2) years after the termination 
of the Executive's employment hereunder for any reason, the Executive 
shall not engage or attempt to engage on his own behalf or on behalf of a 
third party, in any "Competitive Activity".  The term "Competitive 
Activity" shall mean participation by the Executive, without the written 
consent of the Board of Directors of the Company, in the management of 
any business operation of any enterprise if such operation (a 
"Competitive Operation") engages in substantial and direct competition 
with any business operation activity conducted by the Company or its 
subsidiaries at the time of the termination of the Executive's 
employment.  A business operation shall be considered a Competitive 
Operation if such business operation's sales of any product or service 
competitive with any product or service of the Company amounts to thirty 
percent (30%) of that business operation's total sales and if the 
Company's sales of said product or service of its comparable business 
operation amounts to thirty percent (30%) of the Company's total sales.  
"Competitive Activity" shall not include (i) the mere ownership of 
securities in any enterprise, or (ii) participation in the management of 
any enterprise or any business operation thereof other than in connection 
with a Competitive Operation of such enterprise.  Without limiting the 
generality of the foregoing, Competitive Activity shall include becoming 
employed by or associated with, Stelco-McMaster Ltd., Slater Steels or 
Atlantic Steel Industries, Inc.  In addition, the Executive shall make 
himself available for reasonable consultation services with the Company 
for two (2) years after termination of employment.
		B.	If the restrictions set forth in the preceding 
paragraph or any part thereof should, for any reason whatsoever, be 
declared invalid by a court of competent jurisdiction, the validity or 
enforceability of the remainder of such restriction shall not thereby be 
adversely affected.  The Executive agrees that the foregoing territorial 
and time limitations are reasonable and properly required for the 
adequate protection of the business of the Company and that in the event 
that any such territorial or time limitation is deemed to be unreasonable 
by a court of competent jurisdiction, then the Executive agrees and 
submits to the reduction of either said territorial or time limitation to 
such an area or period as said court shall deem reasonable.  In the event 
that the Executive shall be in violation of the aforementioned 
restrictive covenants, then the time limitation thereof shall be extended 
for a period of time equal to the period of time during which such breach 
or breaches should occur.
		VI.	Confidential Information  
		The Executive agrees to receive Confidential Information (as 
defined in this Section VI below) of the Company in confidence, and not 
to disclose to others, assist others in the application of, or use for 
his own gain, such information, or any part thereof, unless and until it 
has become public knowledge or has come into the possession of such other 
or others by legal and equitable means, except in the ordinary course of 
the Company's business, without the express written consent of the Board 
of Directors of the Company.  The Executive further agrees that, upon 
termination of his employment with the Company, all documents, records, 
notebooks and similar repositories containing Confidential Information, 
including copies thereof, then in the Executive's possession, whether 
prepared by him or others, shall be left with the Company.  For the 
purpose of this Agreement, "Confidential Information" means information 
disclosed to the Executive or known by the Company, not generally known 
in the industry in which the Company is or may become engaged, about the 
Company's products, processes or services.
		VII.	Remedy for Violation of Noncompetition and Confidential 
Information Agreements

		The Executive acknowledges that the Company has no adequate 
remedy at law and would be irreparably harmed were the Executive to 
breach or threaten to breach the provisions of Section V or VI hereof, 
and, therefore, agrees that the Company shall be entitled to injunctive 
relief to prevent any breach or threatened breach of Section V or VI 
hereof, and to specific performance of the terms of each such sections in 
addition to any other legal or equitable remedy it may have.  The 
Executive further agrees that he shall not, in any equity proceeding 
involving him relating to the enforcement of Section V or VI hereof, 
raise the defense that the Company has an adequate remedy at law.  
Nothing in this Agreement shall be construed as prohibiting the Company 
from pursuing any other remedies at law or in equity that it may have or 
any other  rights that it may have under any other agreement.
		VIII.	Indemnification for Expense
		If litigation or other judicial or arbitrative proceedings 
shall be brought to enforce or interpret any provision contained herein, 
the Company, to the extent permitted by applicable law and the Company's 
Certificate of Incorporation and By-laws as in effect on the date hereof, 
hereby indemnifies the Executive for his reasonable expenses (including 
without limitation, attorneys' fees and disbursements) incurred in 
connection with such proceeding.  If so requested by the Executive, the 
Company shall pay to the Executive an amount equal to any and all such 
expenses within five (5) business days after the Executive's written 
request, which request shall be supported by reasonably adequate 
documentation.  
		IX.	Successors
			A.	The rights and obligations of the Company under 
this Agreement shall inure to the benefit of and shall be binding upon 
the Company, its successors and assigns, including without limitation, 
any person, partnership or corporation which may acquire all or 
substantially all of the Company's assets and business, or with or into 
which the Company may be consolidated or merged.  Any and all references 
to the Company in this Agreement shall be deemed to mean and include any 
successor or assignee.
			B.	This Agreement shall also inure to the benefit of 
and be binding on the Executive and his legal representatives, but being 
a contract for personal services, cannot be assigned by Executive.
	X.	Severability
		In the event that any provision or portion of this Agreement 
shall be determined to be invalid or unenforceable for any reason, in 
whole or in part, the remaining provisions of this Agreement shall be 
unaffected thereby and shall remain in full force and effect to the 
fullest extent permitted by law.
		XI.	Applicable Law
			The construction and interpretation of this Agreement 
shall be governed by the laws of the State of Kentucky applicable to 
agreements made and to be performed within Kentucky, without regard to 
Kentucky's conflict of laws rules.
		XII.	No Mitigation Required
			The Executive shall not be obligated to seek other 
employment in mitigation of the amounts payable or arrangements made 
under any provision of this Agreement, and the obtaining of any such 
other employment shall in no event effect any reduction of the Company's 
obligations to make the payments and arrangements required to be made 
under this Agreement.
	    XIII.	Notice
			All notices under this Agreement shall be made in 
writing and shall be duly sent if sent by registered mail or certified 
mail to the respective parties' address shown hereinabove or such other 
address as the parties may hereafter designate in writing for such 
purpose.
		XIV.	Captions and Titles
			Captions and titles have been used in this Agreement 
only for convenience, and in no way define, limit or describe the meaning 
of this Agreement or any part thereof.
		IN WITNESS WHEREOF, the parties have signed this Agreement on 
this 1st day of September, 1998 effective as if adopted on June 7, 1994.
						KENTUCKY ELECTRIC STEEL, INC.
						By: ________________________
						    ________________________	 
_______________________ 
WITNESS


This Agreement has been entered into between the Company and each of the 
named Executive Officers.

	Charles C. Hanebuth 	Chairman and President
	William J. Jessie		Vice President - Finance,
					  Chief Financial Officer,
					  Secretary and Treasurer
      Joseph E. Harrison	Vice President - Sales and Marketing
      William H. Gerak	      Vice President - Administration