KENTUCKYELECTRIC STEEL, INC.

2001 SHARE PLAN FOR NON-EMPLOYEE DIRECTORS


I. Name and Purpose of Plan

1.1       Establishment.  This plan created in accordance with the terms
hereof shall be known as the "Kentucky Electric Steel, Inc. 2001 Share
Plan for Non-Employee Directors" (the "Plan").

1.2       Purposes.  The purposes of this Plan are to encourage the Non-
Employee Directors of Kentucky Electric Steel, Inc. (the "Company") to
own shares of the Company's stock and thereby to align their interests
more closely with the interests of the other shareholders of the
Company, to encourage the highest level of director performance by
providing the Non-Employee Directors with a direct interest in the
Company's attainment of its financial goals, and to provide a financial
incentive that will help attract and retain the most qualified directors.

II. Definitions

2.1       Definitions.  The following terms shall have the meanings set
forth below:

(a) "Board" shall mean the Board of Directors of the Company.

(b)  "Non-Employee Director" shall mean an individual duly
elected or chosen as a member of the Board who is not an
employee of the Company.

(c) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

(d) "Fair Market Value" means the average of the highest sale
price and the lowest sale price of a Share on the date the
value of a Share is to be determined, as reported on the
NASDAQ System, and published in the Wall Street Journal,
or if no sale is reported for such date, then on the next
preceding date for which a sale is reported or, if the Shares
are no longer traded on the NASDAQ System, the
determination of such value shall be made by the Board.

(e) "Fees" shall mean the amount of the fees to be paid to each
Non-Employee Director for services as a director (including
all meetings of the full Board and all committee meetings)
for each fiscal quarter, as determined by the Board from time
to time.

(f) "Shares" shall mean the common stock, par value $.01 per
share, of the Company.

2.2       Gender and Number.  Except when otherwise indicated by the
context, the masculine gender shall also include the feminine gender,
and the definition of any term herein in the singular shall also include the
plural.

III. Stock Subject to the Plan

           A total of 100,000 Shares are authorized for issuance under this
Plan in accordance with the provisions of this Plan.  This authorization
may be increased from time to time by approval of the Board and by the
shareholders of the Company.

IV. Participation

           Each Non-Employee Director of the Company may receive
Shares pursuant to this Plan on the terms and conditions set forth herein.
Each Non-Employee Director shall, if required by the Board, enter in an
agreement with the Company, in such form as the Board shall determine
and which is consistent with the provisions of this Plan.  In any event of
any inconsistency between the provisions of this Plan and any such
agreement entered into hereunder, the provisions of this Plan shall
govern.

V. Stock Issuances

           Promptly following each Board meeting or meeting of a
committee of the Board during a fiscal quarter commencing on or after
January 1, 2001, the Company shall issue to each Non-Employee
Director the number of  Shares (rounded to the nearest whole number)
obtained by dividing the "Applicable Portion" of such Non-Employee
Director's Fees by the Fair Market Value of a Share on the date of the
applicable Board of committee meeting.  No fractional Share shall be
issued by the Company under this Plan.  The "Applicable Portion" shall
be 60% of the Fees payable with respect to the applicable meeting for
each Non-Employee Director, or such higher percentage that any
individual Non-Employee Director elects for himself, such election to be
filed in writing with the Chief Financial Officer of the Company prior to
the first day of the fiscal quarter during which the applicable meeting
occurs.

VI. General Provisions

6.1 Non-transferability.  No rights to the issuance of Shares pursuant
to this Plan shall be assigned, pledged, hypothecated or otherwise
transferred by a Non-Employee Director or any other person, voluntarily
or involuntarily, other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.

6.2 Investment Representations; Restricted Stock.  The Company may
require any Non-Employee Director to whom Shares are to be issued
pursuant to this Plan, as a condition of receiving such Shares, to given
written assurances in substance and form satisfactory to the Company
and its counsel to the effect that such person is acquiring the Shares for
his own account for investment and not with any present intention of
selling or otherwise distributing the same, that the Shares issued
pursuant to this Plan have not been registered pursuant to any applicable
securities law and can only be transferred upon compliance with such
laws, and to such other effects as the Company deems necessary or
appropriate in order to comply with federal and applicable state
securities laws.  The Shares issued pursuant to this Plan will bear an
appropriate legend.

6.3 Compliance with Laws.  (a)  Each issuance of Shares pursuant to
this Plan shall be subject to the requirement that, if at any time counsel
to the Company shall determine that the listing, registration or
qualification of the Shares upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, is necessary as a condition of, or in connection with, the
issuance of Shares thereunder, such Shares may not be issued unless
such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Board.

            (b)    This Plan and the issuance of Share pursuant to this Plan
are intended to comply with Rule 16b-3 promulgated under the
Exchange Act; and the Board shall interpret and administer the
provisions of this Plan in a manner consistent therewith.

            (c)    The  issuance of Shares and the payment of cash pursuant to
this Plan shall be subject to all applicable laws, rules and regulations.

VII. Plan Amendment and Termination

The Board may at any time terminate, and from time to time
amend or modify this Plan; provided, however, that no amendment or
modification may become effective without approval of the amendment
or modification by the shareholders if shareholder approval is required to
enable this Plan to satisfy any applicable statutory or regulatory
requirements, or if the Company, on the advice of counsel, determines
that shareholder approval is otherwise necessary or desirable.

VIII. Miscellaneous

8.1 Retention as Director.  Nothing contained in this Plan shall
interfere with or limit in any way the right of the shareholders or the
Directors of the Company to remove any Director from the Board
pursuant to the bylaws of the Company, nor confer upon any Director
any right to continue in the service of the Company.

8.2 Relationship to Other Plans.  The adoption of this Plan shall not
affect any other compensation plan in effect for the Company.
Furthermore, this Plan shall not preclude the Company from establishing
any other form of incentive or other compensation arrangement for
Directors of the Company.

8.3 Plan Binding on Successors.  This Plan shall be binding upon the
successors and assigns of the Company.

8.4 Governing Law.  The provisions of this Plan shall be governed by
and construed in accordance with the laws of the State of Delaware.

8.5 Headings.  Headings are given to the sections of this Plan solely
as a convenience to facilitate reference.  Such headings, numberings and
paragraphing shall not in any case be deemed in any way material or
relevant to the construction of this Plan or any provisions thereof.

IX. Effective Date

The effective date of this Plan shall be the date of its approval by
the shareholders of the Company.