KENTUCKY ELECTRIC STEEL, INC.
	EXECUTIVE SEVERANCE PLAN


		The Kentucky Electric Steel, Inc. Executive Severance Plan
(the "Plan"), effective June 7, 1994, is a Plan which provides eligible
Executives of Kentucky Electric Steel, Inc. (the "Company") with
certain benefits if the individual's employment with the Company is
terminated under defined circumstances.  The details and purpose of the
Plan are more fully explained below.

		Section 1.  PURPOSE

		The purpose of the Plan is to reduce an Executive's
concerns about the disruption of income and certain benefits due to the
possibility of unexpected job loss in the event of a termination of
employment, without cause (as defined as any termination of employment
other than for death, disability, retirement or for "Cause"), by the
Company.  It is important that each Executive be able to focus his or
her full attention and energy toward the goals and objectives of the
Company at all times without such concern.

		Section 2.  ADMINISTRATION

		Kentucky Electric Steel, Inc. shall be the Plan
Administrator.  Any determinations made by the President and CEO and/or
the Board of Directors of the Company in carrying out, administering,
or interpreting this Plan shall be final and binding for all purposes
and upon all interested persons and their heirs, successors, and
personal representatives.  All costs associated with the Plan shall be
borne by the Company.

		Section 3.  ELIGIBILITY

		Executives in the following positions are eligible for
coverage under the Plan:

		President and Chief Executive Officer
		Vice President, Administration
		Vice President, Secretary, Treasurer and Chief
			Financial Officer
		Vice President, Sales and Marketing

		Section 4.  CONDITIONS FOR BENEFIT PAYMENTS

		An Executive shall be eligible for benefits under this Plan
if his or her employment is terminated by the Company for any reason
other than for death, disability, retirement, resignation or for
"Cause," but only as long as the Executive complies with the covenants
under Sections 6 and 7.  For the purpose of this Plan, "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 material violation by the
Elective and his duties or responsibilities which is demonstrably
willful and deliberate on the Executive's part and which results in
material injury to the Company.

		Section 5.  AMOUNT OF BENEFITS

		A.	In return for the Executive's covenants under
Sections 6 and 7, he shall be entitled to be paid on a continuing
basis, at the intervals already established by the Company, an amount
equal to his or her regular base salary at the time of severance from
the Company, for the Relevant Number of Years (as defined in Section 6)
following his or her termination of employment.

		B.	The Executive shall be eligible to receive a Prorata
Share of any incentive bonus plan compensation earned but not yet paid.
"Prorata Share" shall be equal to a fraction, the numerator of which is
the number of days of the bonus period in question the Executive worked
as an active employee of the Company and in denominator of which is the
actual number of days in the bonus period in question.  The payment of
any Prorata Share will be made after the end of the bonus period when
the incentive bonus payment would normally be made to Executive had his
or her employment continued.

		C.	At the sole expense of the Company, the Executive
shall be entitled to the continuation of his or her medical, dental,
group life insurance and Long Term Disability insurance benefits for
the earlier of (i) twelve (12) months following participant's
termination of employment of (ii) until receipt of equivalent benefits
from a new employer.

		D.	Pay an amount equal to the value of all vacation
earned but not used by the Executive.

		E.	The Executive shall be reimbursed for reasonable
legal fees or expense incurred by the Executive to successfully enforce
the payment of Plan benefits within ten (10) business days of providing
copies of applicable invoices to the Company.

		F.	Within ten (10) business days of the Executive's
termination of employment, without "Cause," the Company shall provide,
at no cost to the participant, individual outside assistance in finding
other employment.  Such obligation may be fulfilled by the Company
through the retention of an executive outplacement service for use by
the participant.

		Section 6.  COVENANT NOT TO COMPETE AND CONSULTATION

		A.	For the Relevant Number of Years (as defined below)
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" and
shall make himself available for reasonable consultation services with
the Company. 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.

		The term "Relevant Number of Years" shall be determined as
follows:

		For the:				Relevant Number of Years

		President and				     3
		Chief Executive Officer

		Vice President, Administration	     2

		Vice President, Secretary,
		Treasury and Chief Financial Officer     2

		Vice President, Sales and Marketing	     2

		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.  By accepting severance payment, 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 also 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.

		Section 7.  CONFIDENTIAL INFORMATION

		The Executive agrees, by acceptance of the benefits
provided in Section 5 hereof, to protect all confidential information
concerning the business activities of the Company which were acquired
in connection with or as a result of the performance of service for the
Company.

		Section 8.  CLAIMS PROCEDURE

		A.	If any participant believes that he or she is
entitled to benefits provided under the Plan and has not received such
benefits within the time prescribed by the Plan, such participant may
submit a written claim for payment of such benefits to the Company.  If
such claim for benefits is wholly or partially denied, the Company
shall within thirty (30) business days after receipt of the claim,
notify the participant of the denial of the claim.  Such notice of
denial (i) shall be in writing, (ii) shall be written in a manner
calculated to be understood by the participant, and (iii) shall contain
(a) the specific reason or reasons for denial of the claim, (b) a
specific reference to the pertinent Plan provisions upon which the
denial is based, (c) a description of any additional material or
information necessary to perfect the claim, along with an explanation
of why such material or information is necessary, and (d) an
explanation of the claim review procedure, in accordance with the
provisions of this Section 8.

		B.	Within sixty (60) business days after the receipt by
the participant of a written notice of denial of the claim, or such
later time as shall be deemed reasonable taking into account the nature
of the benefit subject to the claim and any other attendant
circumstances, the participant may file a written request with the
Company that it conduct a full and fair review of the denial of the
claim for benefits.  As a part of such full and fair review, the
participant (or such participant's duly authorized representative) may
review and photocopy pertinent documents (including but not limited to
the participant's personal history file) and submit issues and comments
to the Company in writing.  The Company shall make its determination in
accordance with the documents governing the Plan insofar as such
documents are consistent with the provisions of the Employee Retirement
Income Security Act of 1974 (herein "ERISA").

		The Company shall promptly deliver to the participant its
written decision on the claim (in no event later than thirty (30)
business days after the receipt of the aforementioned request for
review, except that if there are special circumstances (such as a
conference with the participant or his or her representative) which
require an extension of time, the aforementioned thirty (30) business
day period shall be extended to a reasonable period of time not to
exceed sixty (60) business days).  Such decision shall (i) be written
in a manner calculated to be understood by the participant, (ii)
include the specific reason or reasons for the decision, and (iii)
contain a specific reference to the pertinent Plan provisions upon
which the decision is based.  If the decision on review is not
furnished within the time prescribed by this Section 8, the claim shall
be deemed granted on review.

		Section 9.  AMENDMENTS AND TERMINATION

		The right is reserved by the Board of Directors of the
Company to amend or terminate the Plan; however, no such amendment or
termination shall be made after a Change of Control or in connection
with negotiations with a third party resulting in a Change of Control.
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.  Unless there has
been a Change of Control or unless there are negotiations relating to a
possible Change of Control, the Plan shall terminate one (1) year after
its adoption unless the Board of Directors of the Company extends it
prior thereto.

		Section 10.  RIGHTS UNDER OTHER PLANS AND POLICIES

		The benefits payable hereunder are in addition to any other
benefits to which the participant may be entitled to under any other
plan or contract with the Company.

		Section 11.  NO MITIGATION REQUIRED

		Executive shall not be required to mitigate the amount
provided for in Section 5 hereof by seeking other employment or
otherwise, nor shall the amount of any payment provided for in Section
5 hereof be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of Termination,
or otherwise.

		Section 12.  SUCCESSORS BINDING AGREEMENT

		A.	The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company,
by agreement in form and substance satisfactory to eligible
participants, expressly to assume and agree to provide benefits
pursuant to this Plan in the same manner and to the same extent that
the Company would be required to perform its obligations under the Plan
if no such succession had taken place.  Failure of the Company to
obtain such an agreement prior to the effectiveness of any such
succession shall be a violation of this Plan and shall entitle eligible
participants to compensation from the company in the same amount and on
the same terms as the participant would be entitled pursuant to Section
5, except that for the purpose of implementing the foregoing, the date
on which any succession becomes effective shall be deemed the date of
the participant's termination of employment without "Cause."

		B.	This Plan shall inure to the benefits of and be
enforceable by a participant's personal or legal representatives,
executors, successors, administrators, heirs, distributees, devisees,
and legatees.  If a participant should die while any amounts would
still be payable to him or her hereunder if he or she had continued to
live, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Plan to such participant's
devisee, legatee, or other designee or, if there be so such designee,
to his or her estate.

		Section 13.  WITHHOLDING TAXES

		The Company is authorized to withhold any tax required to
be withheld from the amounts payable to a participant pursuant to this
Plan which are considered taxable compensation to the participant.

		Section 14.  LAWS

		This Plan shall be governed by the laws of the State of
Kentucky.

	    Section 15.  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.

		Section 16.  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 Plan is adopted and effective
immediately on the day and year first above written.

					KENTUCKY ELECTRIC STEEL, INC.

				    By:  /s/  Charles C. Hanebuth     6/7/94