KENTUCKY ELECTRIC STEEL, INC.
SALARY CONTINUATION AGREEMENT

	This Agreement is entered into between Kentucky Electric Steel Inc., 
a corporation having its principal office in Ashland, Kentucky, (herein 
called the "Company"), and ___________________ (herein called the 
"Executive").

WITNESSETH

	WHEREAS, Executive is employed by the Company in the capacity of 
________________________________________________ and by reason thereof has 
acquired experience and knowledge of considerable value to the Company; and

	WHEREAS, the Company wishes to offer an inducement to Executive to 
remain in its employ by compensating him beyond his regular salary for 
service which he had rendered or will hereafter render; and

	WHEREAS, the Company and the Executive executed a Salary Continuation 
Agreement effective September 22, 1994 ("Agreement"); and

	WHEREAS, the parties desire to amend and restate the Agreement to 
modify certain terms and conditions; and  

	NOW, THEREFORE, the Agreement is amended and restated in its entirety 
to read as follows:

(1) If Executive remains in the continuous employ of the Company he shall 
retire from active employment with the Company on his sixty-second 
(62nd) birthday, unless by action of the Board of Directors his period 
of active employment shall be shortened, or, with his consent, 
extended.

(2) Upon said retirement the Company, commencing with the first day of the 
month following the date of such retirement, shall pay Executive 
$____________ per month to age 85, and $________ per month thereafter 
for life; provided that if less than one hundred twenty (120) such 
monthly payments shall be made prior to the death of the Executive 
the Company shall continue such monthly payment of $_____________ to 
whomever the Executive shall have designated, on the most recent 
Salary Continuation Agreement Designation of Beneficiary form filed 
with the Company, until the full number of one hundred twenty (120) 
monthly payments have been made.

(3) In the event Executive should die while in the active employ of the 
Company, the Company and the Executive have entered into a Split 
Dollar Life Insurance Agreement that will provide benefits to the 
Executive's designated beneficiary, as provided for on the most 
recent Salary Continuation Agreement Designation of Beneficiary 
form filed with the Company.

(4) In the event Executive terminates employment on account of permanent 
and total disability (as determined by the Board of Directors), he 
shall receive 100% of the benefit described in Section 2 commencing 
at age 62.  In the event Executive terminates employment on account 
of permanent and total disability (as determined by the Board of 
Directors) and dies prior to attainment of age 62, Executive's 
designated beneficiary, as provided for on the most recent Salary 
Continuation Agreement Designation of Beneficiary form filed with the 
Company, shall receive the benefits described in Section 3.

(5) Executive agrees that he will not, during or after his employment 
under this Agreement, engage in competitive activity, as it is 
defined in Section V of the Executive's Employment Agreement with the 
Company, directly or indirectly, or, without the specific authority 
of the Company's Board of Directors, serve as a director or employee 
of any corporation or business entity so engaged.  Executive further 
agrees that he will not, either during or after his employment under 
this Agreement, disclose to anyone not legally entitled thereto any 
confidential information relative to the business of the Company.
 
(6) Executive agrees that if he shall breach any covenant of Section 5 of 
this Agreement, and shall continue to breach such covenant for a 
period of thirty (30) days after the Company shall have requested him 
to desist from such breach, then, any of the provisions hereof to the 
contrary notwithstanding, no further payments shall be due or payable 
by the Company hereunder either to the Executive or to his wife or 
other designee, and the Company shall have no further liability 
hereunder.

(7) It is agreed that neither Executive, nor his wife, nor any other 
designee, shall have any right to sell, assign, transfer, or 
otherwise convey the right to receive any payments hereunder which 
payments and the right thereto are expressly declared to be non-
assignable or transfer, the Company shall have no further liability 
hereunder.

(8) If the Company shall acquire an insurance policy or any other asset 
in connection with the liabilities assumed by it hereinunder it is 
expressly agreed that neither Executive nor any beneficiary of 
Executive shall have any right with respect to, or claim against, 
such policy or other asset above or beyond the rights conveyed in any 
existing split dollar agreement.  Such policy or asset shall not be 
deemed to be held in trust for the benefit of Executive or his 
beneficiaries or to be held in any way as collateral security for the 
fulfilling of the obligations of the Company under this Agreement 
except as may be expressly provided by the terms of such policy or 
title to such other asset.  It shall be, and remain, a general, 
unrestricted asset of the Company.  Executive's rights to payment 
hereinunder shall be not greater than those of an unsecured general 
creditor of the Company.

(9) The Company agrees that it will not merge or consolidate with any 
other company or organization, or permit its business activities to 
be taken over by any other organization unless and until the 
succeeding or continuing company or other organization shall 
expressly assume all obligations and liabilities herein set forth.

(10) This Agreement may be revoked or amended in whole or in part only by 
mutual consent of the parties hereto. 


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed 
this 1st day of  September, 1998.



ATTEST: 					KENTUCKY ELECTRIC STEEL, INC.

______________________		      By:__________________________
Secretary						


______________________	            By:___________________________
Witness
						








<TABLE>
Kentucky Electric Steel, Inc.
Supplemental Schedule for Exhibit 10.12
Salary Continuation Agreement
<CAPTION>


Monthly 



Retirement 
Benefit
Monthly 


(Ten Year 
Certain)
Retirement 
Benefit
Name
Title
Age 62 to Age 85
After Age 85 for 
Life
<S>
<C>
<C>
<C>
Charles C.
 Hanebuth
President and
Chief 
   Executive Officer
$13,518.00
$6,200.00
William J. 
 Jessie
Vice President,
Chief Financial
Officer
$6,636.00
$0.00
Joseph E.
 Harrison
Vice President,
Sales and
Marketing
$5,750.00
$0.00
William H. Gerak
Vice President,
Administration
$5,495.00
$0.00
</TABLE>