Document:

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                                                                  EXHIBIT 10(vi)

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                                  CO-STEEL INC.

                        --------------------------------
                           Second Amended and Restated
                                 Note Agreement
                        --------------------------------

                           DATED AS OF APRIL 30, 2002

         $45,000,000 SERIES A SENIOR SECURED NOTES DUE JANUARY 15, 2004
           $75,000,000 SERIES B SENIOR SECURED NOTES DUE JULY 15, 2006

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                                TABLE OF CONTENTS

<TABLE>
<S>      <C>      <C>                                                                                             <C>

1.       PRELIMINARY STATEMENT                                                                                     1

         1A.      Prior Issuances                                                                                  1
         1B.      Form of Notes                                                                                    2

2.       AMENDMENT AND RESTATEMENT OF EXISTING AGREEMENTS; CLOSING CONDITIONS; POST-CLOSING DELIVERIES             2

         2A.      The Exchange of Existing Notes                                                                   2
         2B.      Accrued Interest                                                                                 3
         2C.      Fees                                                                                             3
         2D.      Certain Documents                                                                                3
         2E.      Representations and Warranties; No Default                                                       5
         2F.      Exchange Permitted by Applicable Laws                                                            5
         2G.      Payment of Special Counsel Fees                                                                  5
         2H.      Payment of Significant Share Offering Proportion                                                 5
         2I.      Insurance                                                                                        6
         2J.      Certificate of Status/Compliance                                                                 6
         2K.      Compliance with Financial Covenants                                                              6
         2L.      Post-Closing Deliveries                                                                          6

3.       INTEREST RATE                                                                                            10

         3A.      Applicable Rates                                                                                10
         3B.      Default Rate                                                                                    10
         3C.      Computation of Interest                                                                         11
         3D.      Interest Act (Canada)                                                                           11

4.       PREPAYMENTS                                                                                              12

         4A.      Scheduled Prepayments                                                                           12
         4B.      Required Prepayments                                                                            13
         4C.      Optional Prepayment With Yield-Maintenance Amount                                               14
         4D.      Notice of Prepayment                                                                            15
         4E.      Application of Prepayments                                                                      15
         4F.      Application of Partial Payments                                                                 16
         4G.      Retirement of Notes                                                                             16

5.       AFFIRMATIVE COVENANTS                                                                                    16

         5A.      Financial Statements; Business Plans                                                            16
         5B.      Information Required by Rule 144A                                                               20
         5C.      Inspection of Property                                                                          20
         5D.      Covenant to Secure Notes Equally                                                                21
         5E.      Maintenance of Insurance                                                                        21
         5F.      Compliance with Environmental Laws                                                              21
</TABLE>

                                       i

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<TABLE>
<S>      <C>      <C>                                                                                             <C>
         5G.      Other Laws, Regulations etc.                                                                    22
         5H.      ERISA Notices                                                                                   22
         5I.      Payment of Taxes and Claims                                                                     23
         5J.      Maintenance of Properties and Books                                                             23
         5K.      Corporate Existence, Etc.                                                                       24
         5L.      Business                                                                                        24
         5M.      Guarantors                                                                                      24
         5N.      Intellectual Property Rights                                                                    24
         5O.      Benefit and Pension Plans                                                                       25
         5P.      Environmental Reporting                                                                         25
         5Q.      Incorporated Provisions                                                                         26
         5R.      Approved Financings                                                                             26
         5S.      Additional Restructuring Fee                                                                    27
         5T.      Inventory                                                                                       27
         5U.      Accounts Receivable                                                                             27
         5V.      English Finance Structure Companies                                                             27
         5W.      Material Contracts and Material Licenses                                                        28
         5X.      Jurisdictions                                                                                   28
         5Y.      Notices                                                                                         29
         5Z.      Maintenance of Bank Accounts                                                                    30
         5AA.     Asset Monetization Program                                                                      31
         5BB.     Collateral Audit                                                                                31
         5CC.     Computer Systems                                                                                31
         5DD.     Biennial Collateral Opinion                                                                     31
         5EE.     Bi-Annual Auditor's Report                                                                      32

6.       NEGATIVE COVENANTS                                                                                       32

         6A.      Current Ratio                                                                                   32
         6B.      Current Assets                                                                                  33
         6C.      Ratio of Consolidated Total Net Debt to Normalized Consolidated EBITDA                          33
         6D.      Ratio of Normalized Consolidated EBITDA Net of Capex to Consolidated Net Interest Expense       33
         6E.      Tangible Net Worth                                                                              34
         6F.      Cumulative Consolidated EBITDA                                                                  34
         6G.      Incurrence of Indebtedness                                                                      34
         6H.      Other Indebtedness and Agreements                                                               35
         6I.      Payments to other Senior Lenders                                                                35
         6J.      Negative Pledge                                                                                 36
         6K.      Material Contracts and Material Licenses                                                        36
         6L.      Sale of Assets                                                                                  36
         6M.      Sale and Leaseback Transactions                                                                 37
         6N.      Acquisitions                                                                                    37
         6O.      Loans, Investments, etc.                                                                        37
</TABLE>

                                       ii

<PAGE>
<TABLE>
<S>      <C>      <C>                                                                                             <C>
         6P.      Dividends, etc.                                                                                 38
         6Q.      No Reduction of Capital                                                                         38
         6R.      No Issue of Capital                                                                             38
         6S.      Capital Expenditures                                                                            38
         6T.      Accounting Changes                                                                              39
         6U.      Transactions with Affiliates                                                                    39
         6V.      Fundamental Changes                                                                             39
         6W.      Hedging Contracts                                                                               40
         6X.      Inconsistent Agreements                                                                         40
         6Y.      Announcements                                                                                   40
         6Z.      Industrial Bonds                                                                                40
         6AA.     English Finance Structure Companies                                                             40
         6BB.     Intentionally Deleted                                                                           41
         6CC.     Co-Steel C.S.M. Corp.                                                                           41
         6DD.     Financial Covenants on and after January 15, 2004                                               41
         6EE.     Investments                                                                                     41
         6FF.     Payment of Intercompany Indebtedness                                                            42

7.       EVENTS OF DEFAULT                                                                                        42

         7A.      Acceleration                                                                                    42
         7B.      Rescission of Acceleration                                                                      48
         7C.      Notice of Acceleration or Rescission                                                            49
         7D.      Other Remedies                                                                                  49

8.       REPRESENTATIONS, COVENANTS AND WARRANTIES                                                                49

         8A.      Binding Obligation                                                                              49
         8B.      Reaffirmation                                                                                   50
         8C.      No Default                                                                                      50
         8D.      No Conflict, Breach, etc.                                                                       50
         8E.      No Violation of Law or Regulations                                                              50
         8F.      Authorization, Consent, etc.                                                                    50
         8G.      Full Disclosure                                                                                 51
         8H.      Organization and Ownership of Shares of Subsidiaries                                            51
         8I.      Litigation; Observance of Statutes and Orders                                                   52
         8J.      Title to Property; Leases                                                                       52
         8K.      Existing Indebtedness                                                                           53
         8L.      Solvency                                                                                        53
         8M.      Intent                                                                                          54
         8N.      Environmental Matters                                                                           54
         8O.      Liens                                                                                           54
         8P.      Ownership of Inventories Retained on Leased Properties                                          55
         8Q.      Ownership of Third Party Accounts Receivable                                                    55
         8R.      Contracts Affected by Change of Control                                                         55
         8S.      Material Contracts and Material Licenses                                                        55
</TABLE>

                                      iii

<PAGE>
<TABLE>
<S>      <C>      <C>                                                                                             <C>
         8T.      Restricted Subsidiaries                                                                         56
         8U.      Bank Accounts                                                                                   56
         8V.      Intercompany Indebtedness                                                                       57
         8W.      Computer Systems                                                                                57
         8X.      Intellectual Property Rights                                                                    57
         8Y.      Licenses, Agency and Distribution Agreements                                                    57
         8Z.      Insurance                                                                                       58
         8AA.     Financial Statements                                                                            58
         8BB.     Special Purpose Financial Statements                                                            58
         8CC.     Financial Forecast                                                                              59
         8DD.     Asset Monetization Program                                                                      59
         8EE.     Employment Disputes                                                                             59
         8FF.     Benefit and Pension Plans                                                                       59
         8GG.     Pension Plans                                                                                   60
         8HH.     N.J.S.C. Investment Co., Inc.                                                                   60
         8II.     English Finance Structure Companies                                                             60
         8JJ.     Hungarian Finance Structure Companies                                                           60
         8KK.     Co-Steel C.S.M. Corp.                                                                           60

9.       REPRESENTATIONS OF THE PURCHASERS                                                                        61

10.      DEFINITIONS                                                                                              61

         10A.     Yield-Maintenance Amount Terms                                                                  61
         10B.     Other Terms                                                                                     63
         10C.     Accounting Principles, Terms and Determinations                                                 88

11.      MISCELLANEOUS                                                                                            88

         11A.     Note Payments                                                                                   88
         11B.     Expenses                                                                                        88
         11C.     Consent to Amendments                                                                           89
         11D.     Form, Registration, Transfer and Exchange of Notes; Lost Notes                                  90
         11E.     Persons Deemed Owners; Participations                                                           90
         11F.     Currency Equivalent                                                                             91
         11G.     Judgment                                                                                        91
         11H.     Tax Indemnity                                                                                   92
         11I.     Survival of Representations and Warranties; Entire Agreement                                    93
         11J.     Survival of Notes and Payment Obligations                                                       93
         11K.     Successors and Assigns                                                                          93
         11L.     Disclosure to Other Persons                                                                     93
         11M.     Notices                                                                                         94
         11N.     Payments Due on Non-Business Days                                                               94
         11O.     Satisfaction Requirement                                                                        94
         11P.     Jurisdiction; Service of Process                                                                95
         11Q.     Governing Law                                                                                   95
</TABLE>

                                     iv
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<TABLE>
<S>      <C>      <C>                                                                                             <C>
         11R.     Severability                                                                                    96
         11S.     Descriptive Headings                                                                            96
         11T.     Counterparts                                                                                    96
         11U.     Certain Conflicts                                                                               96
</TABLE>

                                      v
<PAGE>

                             SCHEDULES AND EXHIBITS

PURCHASER SCHEDULE

<TABLE>
<S>               <C>      <C>

SCHEDULE 2L(d)    --       Co-Steel Hungary
SCHEDULE 5V       --       English Finance Structure Companies Transaction
SCHEDULE 5X       --       Jurisdictions
SCHEDULE 6AA      --       Business of English Finance Structure Companies
SCHEDULE 6DD      --       Financial Covenants after January 15, 2004
SCHEDULE 8C       --       Waived Defaults and Events of Default
SCHEDULE 8H       --       Organization and Ownership of Shares of Subsidiaries
SCHEDULE 8I       --       Certain Litigation
SCHEDULE 8J(a)    --       Owned Properties (Including New Jersey and Ontario  Properties)
SCHEDULE 8J(b)    --       Significant U.S. Leased Properties
SCHEDULE 8N       --       Environmental Matters
SCHEDULE 8S-1     --       Material Contracts
SCHEDULE 8S-2     --       Material Licenses
SCHEDULE 8U       --       Bank Accounts
SCHEDULE 8V       --       Intercompany Indebtedness
SCHEDULE 8X       --       Intellectual Property
SCHEDULE 8Y       --       Licenses, Agency and Distribution Agreements
SCHEDULE 8CC      --       Financial Forecast
SCHEDULE 8GG      --       Pension Plans
SCHEDULE 8II      --       Assets and Liabilities of English Finance Structure Companies
SCHEDULE 8JJ      --       Assets and Liabilities of Hungarian Finance Structure Companies
SCHEDULE 8KK      --       Assets of Co-Steel C.S.M. Corp.
SCHEDULE 10B-2    --       Mortgages

EXHIBIT A-1       --       Form of Series A Senior Secured Note

EXHIBIT A-2       --       Form of Series B Senior Secured Note

EXHIBIT B         --       Form of Intercreditor Agreement

EXHIBIT C         --       Intentionally Deleted

EXHIBIT D         --       Asset Monetization Program

EXHIBIT E         --       Form of Guarantee
</TABLE>

                                       vi

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                                  CO-STEEL INC.
                              Hopkins Street South
                             Whitby, Ontario L1N5T1
                                     Canada

                                                            As of April 30, 2002

To the Purchasers Named in the
  Purchaser Schedule Attached Hereto

Ladies and Gentlemen:

         The undersigned, Co-Steel Inc., an Ontario, Canada corporation (herein
called the "COMPANY"), hereby agrees with the purchasers named in the Purchaser
Schedule attached hereto (herein called the "PURCHASERS") as follows:

1.   PRELIMINARY STATEMENT

     1A.  PRIOR ISSUANCES.

          (a) SERIES A NOTES. The Company has heretofore issued its 8.57% senior
     promissory notes due January 15, 2004 (collectively, as in effect
     immediately prior to the Restructuring Date, the "EXISTING SERIES A NOTES")
     in the original aggregate principal amount of $100,000,000 pursuant to that
     certain Note Agreement, dated as of January 10, 1994, as amended by the
     Amended and Restated Note Agreement dated as of February 4, 2000 and as
     further amended prior to the Restructuring Date (the "EXISTING 1994
     AGREEMENT"), between the Company and The Prudential Insurance Company of
     America (as the purchaser thereunder). The outstanding principal amount of
     the Existing Series A Notes as of the date hereof is $45,000,000 (prior to
     giving effect to any payments on the Restructuring Date).

          (b) SERIES B NOTES. The Company has heretofore issued its 9.09% senior
     promissory notes due July 15, 2006 (collectively, as in effect immediately
     prior to the Restructuring Date, the "EXISTING SERIES B NOTES," and
     together with the Existing Series A Notes, the "EXISTING NOTES") in the
     original aggregate principal amount of $75,000,000 pursuant to that certain
     Note Agreement, dated as of February 20, 1997, as amended by the Amended
     and Restated Note Agreement dated as of February 4, 2000 and as further
     amended prior to the Restructuring Date (the "EXISTING 1997 AGREEMENT," and
     together with the Existing 1994 Agreement, the "EXISTING

<PAGE>

     AGREEMENTS"), among the Company and The Prudential Insurance Company of
     America and U.S. Private Placement Fund (as the purchasers thereunder). The
     entire original principal amount of the Series B Notes remains outstanding
     as of the date hereof (prior to giving effect to any payments on the
     Restructuring Date). As amended and restated hereby, the Existing
     Agreements, together with this Second Amended and Restated Note Agreement,
     are herein referred to, collectively, and as it may from time to time be
     amended or supplemented, this "AGREEMENT." As amended and restated, the
     Existing Series A Notes are herein referred to as the "SERIES A NOTES" and
     the Existing Series B Notes are herein referred to as the "SERIES B NOTES."
     The Series A Notes and the Series B Notes are referred to herein,
     collectively, as the "NOTES."

     1B   FORM OF NOTES.

     The Series A Notes and the Series B Notes shall be substantially in the
form set out in Exhibit A-1 and Exhibit A-2, respectively, with such changes
therefrom, if any, as may be approved by the Purchasers and the Company.
References to a "Schedule" or an "Exhibit" are, unless otherwise specified,
references to a Schedule or an Exhibit attached to this Agreement; references to
Sections or paragraphs are, unless otherwise specified, references to Sections
and paragraphs of this Agreement.

2.   AMENDMENT AND RESTATEMENT OF EXISTING AGREEMENTS; CLOSING CONDITIONS;
     POST-CLOSING DELIVERIES

     The parties hereto hereby agree and consent to amend, restate and combine
the Existing Agreements in their entirety as provided herein, effective as of
April 30, 2002 (the "RESTRUCTURING DATE"), subject to the following conditions:

     2A.  THE EXCHANGE OF EXISTING NOTES.

     Subject to the terms and conditions of this Agreement, the Company hereby
agrees to issue to the Purchasers and, subject to the terms and conditions
herein set forth, the Purchasers agree to accept from the Company in exchange
for the Existing Notes, one or more Series A Note(s) or Series B Note(s) in the
form attached hereto as Exhibit A-1 or Exhibit A-2, as the case may be, in the
principal amounts set forth on the Purchaser Schedule hereto. Such exchange
shall occur at the offices of McCarthy Tetrault, Toronto Dominion Bank Tower,
Toronto, Ontario, at 10:00 a.m., local time, at a closing (the "CLOSING") on the
Restructuring Date. THE PARTIES AGREE AND CONFIRM THAT THE ISSUANCE OF THE
SERIES A NOTES AND THE SERIES B NOTES, THE EXCHANGE OF THE EXISTING NOTES FOR
SUCH NEW NOTES AND THE ENTERING INTO OF THIS AGREEMENT SHALL IN NO WAY EVIDENCE
A NEW DEBT

                                       2
<PAGE>
ENTERED INTO BETWEEN THE PARTIES OR A NOVATION OF THE ORIGINAL DEBT BUT RATHER
THE DEBT CREATED PURSUANT TO THE EXISTING AGREEMENT IS CONTINUED IN FULL FORCE
AND EFFECT, AS AMENDED BY THIS AGREEMENT.

     2B.  ACCRUED INTEREST.

     The Company shall pay to the Purchasers, on or prior to the Restructuring
Date, the amounts listed in Attachment 1 to the Purchaser Schedule, which
amounts represent additional accrued but unpaid interest on the Existing Notes
from the last scheduled interest payment date in respect thereof through April
29, 2002, payable as provided in Attachment 1 to the Purchaser Schedule.

     2C.  FEES.

     The Company shall pay a fee to the Purchasers, on or prior to the
Restructuring Date, in the aggregate amount of $600,000, payable as provided in
Attachment 1 to the Purchaser Schedule.

     2D.  CERTAIN DOCUMENTS.

     Each of the Purchasers shall have received the following, each dated the
Restructuring Date:

          (a) the Series A Note(s) and the Series B Note(s) to be issued to the
     purchasers as indicated in the Purchaser Schedule in exchange for the
     Existing Notes held by such Purchasers;

          (b) Collateral Documents duly executed by each party thereto and in
     forms satisfactory to the Purchasers;

          (c) Guarantee duly executed by the Initial Guarantors;

          (d) Intercreditor Agreement duly executed by each party thereto and
     substantially in the form attached hereto as Exhibit B;

          (e) fully executed Bank Agreement in a form reasonably acceptable to
     the Purchasers;

          (f) fully executed PNC Credit Agreements in a form reasonably
     acceptable to the Purchasers;

          (g) a certificate of a senior officer of the Company certifying that
     the conditions specified in paragraph 2.E. of this Agreement have been
     fulfilled;

                                      3
<PAGE>
          (h) a certificate of the Secretary or an Assistant Secretary and one
     other officer of the Company certifying the names and true signatures of
     the officers of the Company authorized to sign this Agreement, the Series A
     Notes, the Series B Notes, the Collateral Documents and the other documents
     to be delivered by the Company hereunder;

          (i) a certificate of the Secretary or an Assistant Secretary and one
     other officer of each Initial Guarantor certifying the names and true
     signatures of the officers of each Initial Guarantor authorized to sign the
     Guarantee, each Pledge Agreement and the other documents to be delivered by
     any Initial Guarantor hereunder;

          (j) a favorable opinion of (i) Goodmans LLP, special Canadian counsel,
     and (ii) Wilentz, Goldman & Spitzer, special U.S. counsel, for the Company
     and the Initial Guarantors and such opinions shall be in form and substance
     satisfactory to the Purchasers. The Company hereby directs each counsel to
     deliver such opinions and understands and agrees that the Purchasers will
     and are hereby authorized to rely on such opinions;

          (k) a favorable opinion from Bingham Dana LLP, Purchasers' special
     counsel in connection with such transactions covering matters incident to
     such transactions as the Purchasers may reasonably request;

          (l) a Business Plan in respect of fiscal years 2002 and 2003 (without
     duplication for those items included in the Financial Forecast for fiscal
     year 2002), which shall be in form and substance satisfactory to the
     Purchasers in their sole and absolute discretion;

          (m) an Asset Monetization Program as substantially set forth in the
     form attached hereto as Exhibit D;

          (n) a certified complete and correct copy of each Material Contract;

          (o) a certified complete and correct copy of each Material Licenses;

          (p) written evidence of the acceptance by Corporation Service Company,
     located at 80 State Street, Albany, New York, of its appointment by the
     Company, the Initial Guarantors (other than U.S. Guarantors) as agent for
     service of process in the State of New York;

          (q) from each Initial Guarantor subject to any financial assistance
     restriction, a certificate respecting solvency matters, in form and
     substance satisfactory to the Purchasers;

                                      4
<PAGE>
          (r) monthly financial statements of the Company pursuant to paragraph
     5A(d) for the month ended March 31, 2002; and

          (s) additional documents, certificates or legal opinions with respect
     to legal matters or corporate or other proceedings related to Documents and
     the transactions contemplated hereby as may be reasonably requested by any
     Purchaser, including copies of all documents, reports and certificates
     delivered to the Banks or PNC.

     2E.  REPRESENTATIONS AND WARRANTIES; NO DEFAULT.

     The representations and warranties contained in paragraph 8 shall be true
on and as of the Restructuring Date, except to the extent of changes caused by
the transactions herein contemplated; there shall exist on the Restructuring
Date no Event of Default or Default; and the Company shall each have delivered
to the Purchasers an Officer's Certificate, dated the Restructuring Date, to
both such effects.

     2F.  EXCHANGE PERMITTED BY APPLICABLE LAWS.

     The exchange of the Existing Notes for the Series A Notes and the Series B
Notes, as applicable, by the Purchasers (including the use of the proceeds
originally received by the Company for the Existing Notes) shall not violate any
applicable law or governmental regulation (including, without limitation,
section 5 of the Securities Act or Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and shall not subject such Purchaser to
any tax (other than any income taxes arising from such Purchaser's ownership of
any Notes), penalty, liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and Purchasers shall have
received such certificates or other evidence as it may request to establish
compliance with this condition.

     2G.  PAYMENT OF SPECIAL COUNSEL FEES.

     Without limiting the provisions of paragraph 11B, the Company shall have
paid on or before the Restructuring Date the fees, charges and disbursements of
your special counsel, Bingham Dana LLP to the extent reflected in a statement of
such counsel rendered to the Company at least one Business Day prior to the
Restructuring Date.

     2H.  PAYMENT OF SIGNIFICANT SHARE OFFERING PROPORTION.

     The Company shall pay to the Purchasers, on or prior to the Restructuring
Date, each such Purchaser's ratable portion of $7,412,192.22 (as provided in
Attachment 1 to the Purchaser Schedule) received by the Company in respect of
the March 2002 Significant Share Offering.

                                       5
<PAGE>
     2I.  INSURANCE.

     A Security Agent shall have received certificates of insurance or binders
with respect to all insurance policies of each Obligor, which policies shall:
(a) show a Security Agent on behalf of the Purchasers as loss payee as its
interests may appear; or (b) in the case of liability policies, show a Security
Agent on behalf of the Purchasers as additional insured; and (c) in the case of
any insurance maintained with respect to the Owned Property, shall be endorsed
with a standard mortgagee clause.

     2J.  CERTIFICATE OF STATUS/COMPLIANCE.

     To the extent available, the Company shall have delivered to each Purchaser
a recently dated certificate of status with respect to itself and each Initial
Guarantor.

     2K.  COMPLIANCE WITH FINANCIAL COVENANTS.

     Each Purchaser shall have received a Responsible Officer's certificate
demonstrating, and including calculations to evidence, compliance with each of
the covenants contained in paragraphs 6A through 6F at March 31, 2002.

     2L.  POST-CLOSING DELIVERIES.

          (a) On or prior to 20 Business Days following the Restructuring Date,
     the Company shall have delivered to the Purchasers the annual financial
     statements of the Company required to be delivered pursuant to paragraph
     5A(b) for the year ended December 31, 2001.

          (b) On or prior to June 15, 2002, the Company shall have delivered to
     the Purchasers a Business Plan in respect of fiscal years 2002 and 2003
     (without duplication for those items included in the Financial Forecast for
     fiscal year 2002), which shall be in form and substance satisfactory to the
     Purchasers in their sole and absolute discretion; and

          (c) On or prior to 10 Business Days of the general resumption of
     public services in the Province of Ontario, the Company shall cause to be
     delivered to the Purchasers and their counsel:

               (i) all registrations necessary or advantageous to preserve the
          priority of the Liens granted to the Purchasers pursuant to the
          Collateral Documents;

               (ii) search results showing personal property security
          registrations, bulk sales and executions with respect to the Company

                                      6
<PAGE>
          and each Restricted Subsidiary which has tangible personal property or
          place of business in the Province of Ontario as well as post-filing
          searches to confirm a first perfected Lien in favor of the Purchasers;

               (iii) a currently dated certificate of status for the Company and
          each Guarantor incorporated under the laws of the Province of Ontario;

               (iv) opinion of Ontario counsel respecting customary matters that
          would have been included in the opinion of Ontario counsel delivered
          on the Restructuring Date but for the public service employee strike
          in the Province of Ontario, in form and substance satisfactory to the
          Purchasers; and

               (v) such other further agreements, instruments and other
          documents as the Purchasers may reasonably require in respect of
          customary closing matters not completed on or prior to the
          Restructuring Date because of the public service employee strike in
          the Province of Ontario.

          (d) The Company shall cause to be delivered to the Purchasers, or
     where indicated to a Security Agent, at the option of the Company, either
     the documents specified in paragraph 2L(d)(i) (collectively, the "HUNGARIAN
     GUARANTEE DOCUMENTS") or the documents specified in paragraph 2L(d)(ii)
     (collectively, the "HUNGARIAN LOAN REORGANIZATION DOCUMENTS") in accordance
     with the provisions of paragraph 2L(d)(iii):

               (i) HUNGARIAN GUARANTEE DOCUMENTS. The Company, if it chooses
          this option, shall deliver the following Hungarian Guarantee
          Documents:

                    (1) a guarantee by Co-Steel Hungary of all of the
               obligations of the Company to the Purchasers, in form and
               substance reasonably satisfactory to the Required Holders which
               Guarantee shall include, without limitation, a pledge of the
               Hungarian Loan Notes in favor of the U.S. Security Agent (the
               "HUNGARIAN GUARANTEE");

                    (2) certified copies of the articles of incorporation,
               by-laws and resolutions (or in each case the Hungarian
               equivalent) authorizing the actions taken under the Hungarian
               Guarantee and the incumbency of the officers signing the
               Hungarian Guarantee;

                                       7
<PAGE>
                    (3) the original Hungarian Loan Notes delivered to the U.S.
               Security Agent and duly endorsed in favor of the U.S. Security
               Agent.

                    (4) evidence of registration of the Hungarian Guarantee in
               all offices, if any, in which, in the opinion of the Required
               Holders and their counsel, registration is necessary or of
               advantage to preserve the priority of the Liens intended to be
               created by the Hungarian Guarantee together with duplicate copies
               of security instruments bearing or accompanied by appropriate
               endorsements or certificates of registration with respect to the
               Hungarian Guarantee;

                    (5) copies of all approvals and all consents of all
               Governmental Authorities which are required to be obtained by the
               Company or Co-Steel Hungary in order to complete the transactions
               contemplated by the Hungarian Guarantee and perform its
               obligations under the Hungarian Guarantee;

                    (6) a legal opinion of Hungarian counsel in form and
               substance reasonably satisfactory to the Required Holders in
               respect of the Hungarian Guarantee; and

                    (7) such further agreements, instruments and other documents
               as the Required Holders may reasonably request in respect of the
               foregoing.

               (ii) HUNGARIAN LOAN REORGANIZATION DOCUMENTS. The Company may
          deliver the following Hungarian Loan Reorganization Documents to the
          U.S. Security Agent in respect of the transactions described in
          Schedule 2L(d):

                    (1) certified copies of the articles of incorporation,
               by-laws and resolutions of 1102590 Ontario Limited, Co-Steel
               (U.S.) Ltd., New Holdco, Co-Steel C.S.M. Corp., Co-Steel USA
               Holdings, Inc., Co-Steel Sayreville, Inc. and Co-Steel Hungary
               authorizing the actions taken under Schedule 2L(d) and the
               incumbency of the officers signing the documents contemplated in
               Schedule 2L(d);

                    (2) the original New Subordinated Loan Notes delivered to a
               Security Agent and duly endorsed in favor of such Security Agent;

                                       8
<PAGE>
                    (3) evidence of registration of all the security described
               in Schedule 2L(d) in all offices, if any, in which, in the
               opinion of the Required Holders and its counsel, registration is
               necessary or of advantage to preserve the priority of the Liens
               intended to be created by the security described in Schedule
               2L(d) together with duplicate copies of security instruments
               bearing or accompanied by appropriate endorsements or
               certificates of registration with respect to such security;

                    (4) copies of all approvals and all consents of all
               Governmental Authorities which are required to be obtained by the
               Company or any Subsidiary in order to complete the transactions
               contemplated by Schedule 2L(d) and perform its obligations under
               Schedule 2L(d);

                    (5) such opinions of counsel in form and substance
               reasonably satisfactory to the Required Holders in respect of the
               transactions described in Schedule 2L(d); and

                    (6) such further agreements, instruments, tax rulings and
               other documents as the Required Holders may reasonably request in
               respect of the foregoing.

               (iii) If the Company fails to deliver either the Hungarian
          Guarantee Documents or the Hungarian Loan Reorganization Documents
          within 90 days following the Restructuring Date, the Applicable Rate
          shall, in lieu of interest at the default rate stated in paragraph 3B,
          be increased by 20 basis points and 120 days thereafter by a further
          15 basis points, all until such time as the Company has caused to be
          completed either the Hungarian Guarantee Documents or the Hungarian
          Loan Reorganization Documents. For greater certainty, the transactions
          contemplated by the Hungarian Guarantee Documents or the Hungarian
          Loan Reorganization Documents may be completed notwithstanding any
          restriction in paragraphs 5 or 6. In the event of a margin increase
          under this paragraph 2L(d), the Applicable Rate shall revert to the
          otherwise Applicable Rate upon the delivery of either the Hungarian
          Guarantee Documents or the Hungarian Loan Reorganization Documents.

          (e) If the Company has not sold the land and buildings located at 100
     Bayview Avenue, Keasby, New Jersey by July 31, 2002, it shall on or before
     August 15, 2002, provide to the Purchasers a policy of title insurance from
     an insurer and with reinsurance reasonably satisfactory to and, together
     with such endorsements as are reasonably required, by the Required

                                       9
<PAGE>
     Holders, and insuring, among such other matters that the Required Holders
     may reasonably request, that Co-Steel Sayreville, Inc. has good and
     marketable title to such property and the mortgage of the U.S. Security
     Agent in respect of such property is a valid first lien.

          (f)  On or before June 1, 2002, the Required Holders shall receive:

               (i) the Standstill Agreement duly executed by Co-Steel (UK)
          Limited; and

               (ii) an opinion of counsel in a form and substance reasonably
          satisfactory to the Required Holders in respect of the Standstill
          Agreement.

3.   INTEREST RATE

     3A.  APPLICABLE RATES.

          (a) SERIES A NOTES. From January 1, 1999 through and including January
     17, 2000, the Company paid interest on the Series A Notes at a rate per
     annum equal to the Initial Rate minus 50 basis points. From January 18,
     2000 to (but excluding) the Restructuring Date, the Company shall pay
     interest on the Series A Notes at a rate per annum equal to the Initial
     Rate. From (and including) the Restructuring Date and thereafter, the
     Company shall pay interest on the Series A Notes at a rate per annum equal
     to the Applicable Rate.

          (b) SERIES B NOTES. From January 1, 1999 through and including January
     14, 2000, the Company paid interest on the Series B Notes at a rate per
     annum equal to the Initial Rate minus 50 basis points. From January 15,
     2000 to (but excluding) the Restructuring Date, the Company shall pay
     interest on the Series B Notes at a rate per annum equal to the Initial
     Rate. From (and including) the Restructuring Date and thereafter, the
     Company shall pay interest on the Series B Notes at a rate per annum equal
     to the Applicable Rate.

     3B.  DEFAULT RATE.

     During the existence of an Event of Default, the outstanding principal
amount of the Notes, including any overdue Yield-Maintenance Amount, if any, or
any other amount due pursuant to this Agreement or the Notes shall bear
interest, payable on demand at a rate per annum equal to the greater of

          (a) the Applicable Rate plus two percent (2%), or

                                       10
<PAGE>
          (b) 2% over the rate of interest publicly announced by Morgan Guaranty
     Trust Company of New York from time to time in New York City as its Prime
     Rate.

     3C.  COMPUTATION OF INTEREST.

     Interest payable on the Notes shall be computed on the basis of a 360 day
year of twelve 30 day months on the unpaid principal balance thereof and shall
be payable, in arrears, in cash on the 15th day of each month in each year,
until the principal amount thereof shall be due and payable for each respective
Series.

     3D.  INTEREST ACT (CANADA).

     For purposes of any legislation respecting statement of interest rates
(including without limitation, the Interest Act (Canada)), the yearly rate that
can be stated to be equivalent to the rate calculated and payable as set out
above is that with interest accruing daily, such daily amount being determined
on the basis of a 365- or 366-day year, as the case may be, and the amount of
interest payable on an interest payment date determinable as follows:

          (a) the interest accrued for each complete calendar monthly period
     during the period for which an interest payment is being determined shall
     be the rate per annum specified above:

               (i) multiplied by the actual number of days in the year in which
          such monthly period falls and divided by the actual number of days in
          such complete monthly period, and

               (ii) multiplied by 30 and divided by 360, and

          (b) the interest accrued for each part of a calendar monthly period
     during the period for which an interest payment is being determined shall
     be the rate per annum specified above:

               (i) multiplied by the actual number of days in the year in which
          such partial period falls and divided by the actual number of days in
          such partial period, and

               (ii) multiplied by the actual number of days in the partial
          period and divided by 360, and interest payable on the interest
          payment date is calculable as the total of the determinations for each
          such complete monthly period and the determinations for each such
          partial period. The monthly period for calculation of the accrual of
          such interest commences on the date hereof if no interest has been
          paid hereon and otherwise on the last interest payment date to which

                                       11
<PAGE>
          payment has been made. The rate of interest applicable in respect of
          any part of a complete monthly period, expressed as an annual rate of
          interest for the purposes of any legislation respecting statement of
          interest rates, shall be the rate otherwise stated hereunder,
          multiplied by 365 and divided by 360, unless the partial period falls
          in a year having 366 days in which case the rate shall be multiplied
          by 366 and divided by 360.

4.   PREPAYMENTS

     The Notes shall be subject to prepayment with respect to the required
prepayments specified in paragraphs 4A and 4B and the optional prepayments
permitted by paragraph 4C.

     4A.  SCHEDULED PREPAYMENTS.

          (a) SERIES A NOTES. Until the Series A Notes shall be paid in full,
     the Company shall apply to the prepayment of the Series A Notes, without
     premium, the sum of $15,000,000 on January 15, in each of the years 2002
     and 2003 (such payment due in 2003, together with the payment of
     $15,000,000 due on January 15, 2002 pursuant to the Existing 1994 Note
     Agreement (which was not paid when due), being hereby deemed to be deferred
     until, and payable on, January 15, 2004, and being herein referred to as
     the "DEFERRED SERIES A AMOUNTS"), and such principal amount of the Series A
     Notes, together with interest thereon to the prepayment date, shall become
     due on such prepayment date. The entire outstanding principal amount of the
     Series A Notes (if not previously paid pursuant to paragraphs 4B, 4C or
     7A), together with interest accrued thereon, shall become due and payable
     on January 15, 2004.

          (b) SERIES B NOTES. Until the Series B Notes shall be paid in full,
     the Company shall apply to the prepayment of the Series B Notes, without
     premium, the sum of $12,500,000 on July 15, in each of the years 2002 to
     2005, inclusive (such payments due in 2002 and 2003, together with the
     payment of $12,500,000 due on July 15, 2001 pursuant to the Existing 1997
     Note Agreement (which was not paid when due), being hereby deemed to be
     deferred until, and payable on, January 15, 2004, and being herein referred
     to as the "DEFERRED SERIES B AMOUNTS"), and such principal amounts of the
     Series B Notes, together with interest thereon to the prepayment dates,
     shall become due on such prepayment dates. The entire outstanding principal
     amount of the Series B Notes (if not previously paid pursuant to paragraphs
     4B, 4C or 7A), together with interest accrued thereon, shall become due and
     payable on July 15, 2006.

                                       12
<PAGE>
     4B.  REQUIRED PREPAYMENTS.

          (a)  Prepayments from Asset Sales and other Activities.

               (i) Asset Monetization Program. There shall be paid, in
                   --------------------------
          accordance with Section 2 of the Intercreditor Agreement, in respect
          of the principal amount of the Notes held by each holder, such
          holder's ratable share of the Net Cash Proceeds received by any member
          of the Restricted Group under the Asset Monetization Program.

               (ii) Approved Asset Sales. There shall be paid, in accordance
                    --------------------
          with Section 2 of the Intercreditor Agreement, in respect of the
          principal amount of the Notes held by each holder, such holder's
          ratable share of the Net Cash Proceeds received by any member of the
          Restricted Group from Approved Asset Sales or the Disposal of other
          assets where the Net Cash Proceeds are in excess of Cdn.$1,000,000 (or
          its equivalent) in any one or more series of transactions or
          Cdn.$5,000,000 (or its equivalent) in the aggregate for all such
          Disposals completed in the same year.

               (iii) Investment Capital; Share Offerings. There shall be paid,
                     -----------------------------------
          in accordance with Section 2 of the Intercreditor Agreement, in
          respect of the principal amount of the Notes held by each holder, such
          holder's ratable share of the Net Cash Proceeds received by any member
          of the Restricted Group from any Investment Capital or Share Offering;
          provided, however, in respect of any Significant Share Offering, there
          shall be paid in respect of the principal amount of the Notes held by
          each holder, such holder's ratable portion of the Significant Share
          Offering Proportion.

               (iv) Gallatin Receipts. There shall be paid, in accordance with
                    -----------------
          Section 2 of the Intercreditor Agreement, in respect of the principal
          amount of the Notes held by each holder, such holder's ratable share
          of 100% of the Company's share of cash or other property received from
          the business operations of Gallatin.

               (v) Settlement Amounts. There shall be paid, in accordance with
                   ------------------
          Section 2 of the Intercreditor Agreement, in respect of the principal
          amount of the Notes held by each holder, such holder's ratable share
          of 100% of all Settlement Amounts received by any member of the
          Restricted Group.

               (vi) Insurance Proceeds. There shall be paid, in accordance with
                    ------------------
          Section 2 of the Intercreditor Agreement, in respect of the principal
          amount of the Notes held by each holder, such holder's

                                       13
<PAGE>
          ratable share of the Net Cash Proceeds from all Insurance Proceeds
          received by any Obligor which are required to be paid to a Security
          Agent or received by a Security Agent directly from the insurer. All
          Insurance Proceeds paid directly to a Security Agent by an insurer
          that constitute a prepayment pursuant to the Intercreditor Agreement
          shall be deemed a prepayment hereunder upon receipt by such Security
          Agent.

          For greater certainty, any transaction that is in accordance with
     paragraph 2L(d) and 5V shall not be considered a prepayment obligation
     under this paragraph 4B(a). All prepayments to be made by the Company under
     this paragraph 4B shall be made to a Security Agent as provided in the
     Intercreditor Agreement. Once so received by the Managing Security Agent
     (as such term is defined in the Intercreditor Agreement), the Company shall
     have discharged its obligations in respect thereof. The Company shall
     deliver to the Managing Security Agent and the holders of Notes a Specified
     Transaction Certificate together with each prepayment under this paragraph
     4B. The Company shall specify, pursuant to the Specified Transaction
     Certificate, the Notes of each Series against which to apply such
     prepayment and shall specify the additional information required by
     paragraph 4D. For greater certainty, the Company shall not deduct any cost
     of converting from one currency to another from a prepayment hereunder and
     any conversions from United States Dollars shall be made to the Equivalent
     Amount of Canadian Dollars and any conversions from Canadian Dollars shall
     be made to the Equivalent Amount of United States Dollars.

          (b) EXCESS REVOLVER PAYDOWN. There shall be paid, in accordance with
     Section 2 of the Intercreditor Agreement, in respect of the principal
     amount of the Notes held by each holder, such holder's ratable share of the
     Excess Revolver Paydown.

     4C.  OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.

     The Notes shall be subject to prepayment, in whole at any time or from time
to time in part, pro rata among Notes of all Series in accordance with the
respective principal amounts thereof (in a minimum amount of $1,000,000 and
increments of $100,000), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date, together with
the Yield-Maintenance Amount, if any, with respect to each Note. Any such
payment shall be made ratably based on Series and shall be applied in accordance
with paragraph 4E.

                                       14
<PAGE>
     4D.  NOTICE OF PREPAYMENT.

     The Company shall give the holder of each Note irrevocable written notice
by telecopier (receipt telephonically confirmed) of any prepayment pursuant to
paragraph 4B or 4C not less than 5 Business Days prior to the prepayment date,
specifying such prepayment date and the principal amount of the Notes of each
Series, and of the Notes held by such holder, to be prepaid on such date and
stating that such prepayment is to be made pursuant to paragraph 4B or 4C.
Notice of prepayment having been given as aforesaid, the principal amount of the
Notes specified in such notice, together with interest thereon to the prepayment
date and together with the Yield-Maintenance Amount, if any, with respect
thereto, shall become due and payable on such prepayment date. The Company
shall, on or before the day on which it gives written notice of any prepayment
pursuant to paragraph 4B or 4C, give telephonic notice of the principal amount
of the Notes of each Series to be prepaid and the prepayment date to each
Significant Holder which shall have designated a recipient of such notices in
the Purchaser Schedule attached hereto or by notice in writing to the Company.

     4E.  APPLICATION OF PREPAYMENTS.

     Each payment made pursuant to paragraph 4B or 4C shall be applied to the
prepayment of the principal amount of the Notes, ratably based on Series, at
100% of the principal amount so prepaid plus interest thereon to the prepayment
date together with the Yield-Maintenance Amount, if any, due with respect to
each such Note. Any partial prepayment of the Notes pursuant to paragraph 4B or
4C shall be applied with respect to each Series first to the Deferred Principal
Amounts with respect to such Series in the chronological order of the original
due date of the payments of such Deferred Principal Amounts within each such
Series until all of the Deferred Principal Amounts with respect to such Series
shall have been fully repaid and second, in satisfaction of required payments of
principal with respect to such Series in inverse order of their scheduled due
dates. To the extent that any payment constitutes a payment of a Deferred
Principal Amount being paid prior to the date such payment would otherwise have
been due in the absence of the deferral of payments provided by paragraph 4A,
then to such extent a Yield-Maintenance Amount shall be calculated on such
payment and the original due date of such payment shall be used in such
calculation as the due date of such payment. To the extent that any payment
constitutes a payment of a Deferred Principal Amount being paid after the date
such payment would otherwise have been due in the absence of the deferral of
payments provided by paragraph 4A, then to such extent the Yield-Maintenance
Amount shall be deemed to be zero.

                                       15
<PAGE>
     4F.  APPLICATION OF PARTIAL PAYMENTS.

     Upon any partial prepayment of the Notes of any Series pursuant to
paragraph 4A, 4B or 4C, the principal amount so prepaid shall be allocated to
all Notes of such Series, ratably in accordance with the respective principal
amounts thereof.

     4G.  RETIREMENT OF NOTES.

     The Company shall not, and shall not permit any of its Subsidiaries or
Affiliates to, prepay or otherwise retire or acquire in whole or in part prior
to their stated final maturity (other than by prepayment pursuant to, paragraphs
4A, 4B or 4C or upon acceleration of such final maturity pursuant to paragraph
7A), or purchase, directly or indirectly, Notes held by any holder unless the
Company or such Subsidiary or Affiliate shall have offered to prepay or
otherwise acquire, retire or purchase, as the case may be, the same proportion
of the aggregate principal amount of Notes held by each other holder of Notes at
the time outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise acquired, retired or purchased by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose
under this Agreement.

5.   AFFIRMATIVE COVENANTS

     5A.  FINANCIAL STATEMENTS; BUSINESS PLANS.

     The Company covenants that it will deliver to each Significant Holder in
quadruplicate:

          (a) promptly upon availability and in any event within 45 days after
     the end of each quarterly period (other than the last quarterly period) in
     each fiscal year, its unaudited quarterly Special Purpose Financial
     Statements and unaudited quarterly financial statements (including a
     balance sheet and statements of profit and loss and cash flow) for such
     quarterly fiscal period, prepared on a consolidated basis and separately
     for the Company and each of its Lasco, Raritan, Sayreville, Recycling and
     Corporate operating units, in each case in accordance with GAAP, setting
     forth in comparative form the corresponding figures for the corresponding
     period of the preceding fiscal period, and the corresponding figures for
     the corresponding period set forth in the Financial Forecast all in
     reasonable detail and accompanied by a management discussion and analysis
     of variances between actual results and the Financial Forecast, and of
     significant matters, including, without limitation of labor negotiations,
     pending and current litigation and general market conditions, and market
     positioning of the Company;

                                       16
<PAGE>
          (b) promptly upon availability and in any event within 90 days after
     the end of each fiscal year, its annual audited financial statements
     (including a balance sheet and statements of profit and loss and cash flow
     for such fiscal year) prepared on a consolidated basis and annual unaudited
     financial statements prepared separately for the Company and each of its
     Subsidiaries, in each case in accordance with GAAP, and setting forth in
     comparative form the corresponding figures for the corresponding period of
     the preceding fiscal period, all in reasonable detail, together with in the
     case of the Company's audited financial statements, an Auditor's report to
     directors, shareholders or lenders, as appropriate, thereon, which report
     shall contain no qualifications;

          (c) promptly upon availability and in any event within 90 days after
     the end of its fiscal year, its annual audited Special Purpose Financial
     Statements, setting forth in comparative form, if applicable, the
     corresponding figures for the corresponding period of the preceding fiscal
     period and the corresponding figures for the corresponding period set forth
     in the Financial Forecast, all in reasonable detail, together with an
     Auditor's report to directors or lenders, as appropriate, thereon, which
     report shall be substantially in the form delivered to the Purchasers under
     the Existing Agreements and shall otherwise contain no qualifications;

          (d) promptly upon availability and in any event within 25 days after
     the end of each month (other than December and within 45 days after the end
     of each December), its (i) unaudited monthly financial statements
     (including a balance sheet and statements of profit and loss and cash flow)
     for such month for each of the Company's Lasco, Raritan, Sayreville and
     Recycling operating units, in each case in accordance with GAAP, setting
     forth in comparative form the corresponding figures for the corresponding
     period of the preceding fiscal period, and the corresponding figures for
     the corresponding period set forth in the Financial Forecast, all in
     reasonable detail and accompanied by a management discussion and analysis
     of variances between actual results and the Financial Forecast and of
     significant matters, including, without limitation, labor negotiations,
     pending and current litigation, pension and trade cases and general market
     conditions and market positioning of the Company; (ii) an unaudited
     consolidated earnings summary for the Company; (iii) a summary of cash
     balances, accounts receivable, accounts payable, inventory and capital
     expenditures for such month, in form and substance satisfactory to the
     holders of Notes; and (iv) a summary of aged accounts receivable and
     accounts payable (not aged) for the twenty largest customers/vendors with
     detailed aged accounts receivable and accounts payable trial balances by
     customer/vendor to be made available upon request of the Required Holders;

                                       17
<PAGE>
          (e) promptly upon availability and in any event within 25 days after
     the end of each month (other than December and within 45 days after the end
     of each December), a roll-forward summary, satisfactory in form and content
     to the holders of Notes, of the Company's monthly back-order log segregated
     by individual operating unit, indicating year to date sales and commitments
     by fiscal quarter in which sales occurred or commitments are to be
     fulfilled and showing volume and average price by major product category;

          (f) promptly upon availability and in any event within 25 days after
     the end of each month (other than December and within 45 days after the end
     of each December), an operating report for the Company, satisfactory in
     form and content to the holders of Notes, providing details of, among other
     matters, (i) tons produced, utilization at the melt shops and bar mills,
     major production downtimes, significant changes in component input costs
     and supply contracts, (ii) significant events related to environmental and
     safety matters, and (iii) progress made, to the date of such report, in
     effecting the Asset Monetization Program, effecting approved capital
     expenditures and in implementing the Strategic Plan;

          (g) promptly upon availability (i) unaudited quarterly and audited
     annual financial statements of Gallatin (including a balance sheet and
     statements of profit and loss and cash flow), for such fiscal period,
     prepared in accordance with GAAP, setting forth in comparative form the
     corresponding figures for the corresponding period of the preceding fiscal
     year; (ii) all reports, of any nature, delivered from time to time in
     respect of Gallatin, that are not subject to a confidentiality obligation;
     and (iii) a list of all other reports, of any nature, delivered from time
     to time in respect of Gallatin respecting which the Company will use its
     best efforts to obtain a release of any confidentiality obligation and
     provide same to the holders of Notes if so requested by the Required
     Holders;

          (h) on or before September 30 in each year, its Business Plan for the
     next two fiscal years together with quarterly updates which shall be
     delivered with the financial statements described in clause (a) of this
     paragraph 5A (the first such update to be delivered no later than June 15,
     2002);

          (i) promptly, and in any event within at least 24 hours after the
     transmission thereof, all notices provided to any of the Banks or PNC,
     other than notices requesting a draw down of funds under the Bank Agreement
     or the PNC Credit Agreements;

          (j) promptly upon transmission thereof, (i) copies of all such
     financial statements, proxy statements, notices and reports as the Company

                                       18
<PAGE>
     shall send to its public stockholders, (ii) copies of all registration
     statements (without exhibits) and all reports, if any, which the Company
     files with the Securities and Exchange Commission (or any governmental body
     or agency succeeding to the functions of the Securities and Exchange
     Commission), the Ontario Securities Commission (or any governmental body or
     agency succeeding to the functions of the Ontario Securities Commission) or
     any other provincial securities commission having jurisdiction over the
     Company, and (iii) all press releases concerning material developments in
     the business of the Company or any of its Subsidiaries;

          (k) promptly upon receipt thereof, a copy of each management letter
     submitted to the Board of Directors, (or any committee thereof) of the
     Company by the independent public accountants of the Company in connection
     with any annual, interim or special audit made by them of the books of the
     Company or any of its Subsidiaries;

          (l) on or before July 31, 2002 and on each anniversary of such date
     thereafter, a five-year Strategic Plan for the Company and its Subsidiaries
     including all reports from time to time received that will form a part of
     the Strategic Plan as well as all drafts and interim versions of such
     reports together with any notice of engagement of any consultant or
     professional advisor engaged to give strategic advice to the Company and
     copies of any agreements relating to any such engagement, and copies of all
     work product produced by such consultants or professional advisors;

          (m) with reasonable promptness, such other financial data as such
     Significant Holder may reasonably request, including, without limitation,
     notice of any report prepared by any third party for the benefit of the
     Company or any of its Subsidiaries; and

          (n) on or before 5 Business Days following the end of each of the
     Company's fiscal quarters, the Company shall deliver a certificate of a
     Responsible Officer setting forth a calculation of the amount of the Excess
     Revolver Paydown, if any.

     Together with each delivery of financial statements required by clauses (a)
through (c) above, the Company will deliver to each Significant Holder an
Officer's Certificate (i) demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of paragraphs
6A, 6B, 6C, 6D, 6E and 6F, (ii) stating that there exists no Event of Default or
Default, or, if any Event of Default or Default exists, specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto and (iii) if any of the Subsidiaries included in such
statements shall not be Restricted Subsidiaries, listing all Subsidiaries,
identifying each as an Unrestricted

                                       19
<PAGE>
Subsidiary, Restricted Subsidiary or Wholly-Owned Restricted Subsidiary and
specifying the adjustments which are necessary to permit the holders of the
Notes to confirm the foregoing calculations. Together with each delivery of
financial statements required by clauses (b) and (c) above, the Company will
deliver to each Significant Holder a certificate of such accountants stating
that, in making the audit necessary for their report on such financial
statements, they have obtained no knowledge of any Event of Default or Default
or, if they have obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted auditing
standards. The Company also covenants that promptly after any Responsible
Officer obtains knowledge of an Event of Default or Default, it will deliver to
each Significant Holder an Officer's Certificate specifying the nature and
period of existence thereof and what action the Company proposes to take with
respect thereto.

     5B.  INFORMATION REQUIRED BY RULE 144A.

     The Company covenants that it will, upon the request of the holder of any
Note, provide such holder, and any qualified institutional buyer designated by
such holder, the information required to be delivered pursuant to Rule 144(d)(4)
under the Securities Act in order to permit compliance with the information
requirements of Rule 144A under the Securities Act in connection with the resale
of Notes, except at such times as the Company is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act or exempt from reporting
pursuant to Rule 12g3-2(b) under the Exchange Act. For the purpose of this
paragraph 5B, the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act.

     5C.  INSPECTION OF PROPERTY.

     The Company covenants that it will permit any Person designated by any
Significant Holder:

          (a) if no Default or Event of Default then exists, at such Significant
     Holder's expense, to visit and inspect any of the Properties of the Company
     and its Restricted Subsidiaries, to examine the corporate books and
     financial records of the Company and its Restricted Subsidiaries and make
     copies thereof or extracts therefrom and to discuss the affairs, finances
     and accounts of any of such corporations with the principal officers of the
     Company and, with the consent of the Company (which consent will be not be
     unreasonably withheld) its independent public accountants, all at such
     reasonable times,

                                       20
<PAGE>
     upon reasonable prior notice and as often as such Significant Holder may
     reasonably request; and

          (b) if a Default or Event of Default then exists, at the Company's
     expense, to visit and inspect any of the Properties of the Company and its
     Restricted Subsidiaries, to examine the corporate books and financial
     records of the Company and its Restricted Subsidiaries and make copies
     thereof or extracts therefrom and to discuss the affairs, finances and
     accounts of any such corporation with the principal officers of the Company
     and its independent public accountants (and by this provision the Company
     authorizes said accountants to discuss the affairs, finances and accounts
     of the Company and its subsidiaries), all at such times, and as often as
     such Significant Holder may request.

     5D.  COVENANT TO SECURE NOTES EQUALLY.

     The Company covenants that, if it or any of its Restricted Subsidiaries
shall create or assume any Lien upon any of its Property whether now owned or
hereafter acquired, other than Liens permitted by the provisions of paragraph 6J
(unless prior written consent to the creation or assumption thereof shall have
been obtained pursuant to paragraph 11C), it will make or cause to be made
effective provision whereby the Notes will be secured by such Lien equally and
ratably with any and all other Indebtedness thereby secured so long as any such
other Indebtedness shall be so secured.

     5E.  MAINTENANCE OF INSURANCE.

     The Company covenants that it will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
Properties and business and the Properties and business of its Restricted
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar business
and similarly situated, of such types, covering such Properties and in such
amounts as are customarily carried under similar circumstances by such other
corporations.

     5F.  COMPLIANCE WITH ENVIRONMENTAL LAWS.

     The Company will, and will cause each of its Subsidiaries and each of its
Affiliates that are controlled by the Company or its Subsidiaries to, comply
with, or operate pursuant to valid waivers of, applicable Environmental Laws and
Environmental Permits, on time schedules required by such laws or permits or the
agencies administering them, including, without limitation, to the extent
required by applicable Environmental Laws or Environmental Permits, conducting,
on a timely basis, periodic tests and monitoring for contamination of ground
water, surface water, air and land and for biological toxicity and completing
proper,

                                       21
<PAGE>
thorough and effective clean-up, removal, remediation and/or restoration, in
each case, as required by or under the aforesaid laws and permits, except to the
extent that failure so to comply with any Environmental Law or Environmental
Permit does not have a Material Adverse Effect, and, in addition except that,
with respect to any testing, monitoring, clean-up, removal, remediation or other
such action required pursuant to such law or permits, neither the Company nor
any of its Subsidiaries shall be required to perform any such action if the
applicability or validity thereof is being contested in good faith by
appropriate proceedings and adequate reserves have been established in
accordance with GAAP.

     5G.  OTHER LAWS, REGULATIONS ETC.

     The Company shall conduct its business and operations in material
compliance with its articles of incorporation and by-laws and all Applicable
Laws and, whether or not having the force of law, all applicable official
directives, rules, consents, approvals, authorizations, guidelines, orders and
policies of any Governmental Authorities or Persons having authority over it or
them, including health, safety, environmental protection, employment standards
and labor codes of all applicable Governmental Authorities and all applicable
stock exchange and securities commission rules and obtain and maintain in good
standing all material licenses, permits and approvals from any and all
Governmental Authorities and all applicable stock exchanges and securities
commissions required in respect of its and their operations and the listing of
its securities.

     5H.  ERISA NOTICES.

     The Company covenants that it shall deliver to each Significant Holder,
promptly upon the Company or its Restricted Subsidiaries:

          (a) giving or being required to give notice to the PBGC of any
     "reportable event" (as defined in section 4043 of ERISA) with respect to
     any Plan which might constitute grounds for a termination of such Plan
     under Title IV of ERISA by the PBGC, or becoming aware that any plan
     administrator of any Plan has given or is required to give notice of any
     such "reportable event", a copy of the notice of such reportable event
     given or which should have been given to the PBGC;

          (b) receiving notice of the Company's or an ERISA Affiliate's complete
     or partial withdrawal liability under Title IV of ERISA, or notice that any
     Multiemployer Plan is in reorganization, is insolvent or has been
     terminated, a copy of such notice;

          (c) receiving notice from the PBGC under Title IV of ERISA of an
     intent to terminate, impose liability (other than for premiums under
     section

                                       22
<PAGE>
     4007 of ERISA) in respect of, or appoint a trustee to administer any Plan,
     a copy of such notice;

          (d) applying for a waiver of the minimum funding standard under
     section 412 of the Code, a copy of such application;

          (e) giving notice of intent to terminate any Plan under section 4041
     (c) of ERISA, a copy of such notice and other information filed with the
     PBGC;

          (f) giving notice of withdrawal from any Plan pursuant to section 4063
     of ERISA, a copy of such notice; or

          (g) failing to make any required payment or required contribution to
     any Plan or Multiemployer Plan or making any amendment to any Plan which
     has resulted in the posting of a bond or other security, a certificate of
     the chief financial officer or the chief accounting officer of the Company
     setting forth details as to such occurrence and the action, if any, which
     the Company is required to take.

     5I.  PAYMENT OF TAXES AND CLAIMS.

     The Company covenants that it shall pay or discharge, or cause to be paid
or discharged, before the same shall become delinquent (a) all taxes,
assessments and governmental charges (including claims of the Internal Revenue
Service (U.S.), the PBGC and any other Canadian, British or United States
federal, state, provincial, regional or local agency or authority and claims
made at the insistence of the PBGC) levied or imposed upon it or any ERISA
Affiliate or any Code Affiliate or upon its or their income, profits or
Property, (b) all lawful claims for labor, materials and supplies, which, if
unpaid, might by law become a Lien upon its or its Subsidiaries' Properties, and
(c) all required installments under section 412(m) of the Code and all other
required payments under section 412 of the Code with respect to any Plan
maintained by the Company or any ERISA Affiliate; provided, however, that, in
the case of clause (a) and (b) above, the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim, the applicability or validity of which is being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP.

     5J.  MAINTENANCE OF PROPERTIES AND BOOKS.

     The Company shall keep and maintain and cause each of its Restricted
Subsidiaries to keep and maintain proper and separate books and accounts all in
accordance with generally accepted accounting principles of the applicable
jurisdiction. Except where the failure to do so would not materially adversely
affect

                                       23
<PAGE>
the business, condition (financial or other), prospects or operations of
the Company and its Restricted Subsidiaries, taken as a whole, the Company will
cause all Properties of material value used or useful in the conduct of its
business or the business of any Restricted Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.

     5K.  CORPORATE EXISTENCE, ETC.

     Except as otherwise provided in paragraph 6V, the Company will at all times
preserve and keep in full force and effect its corporate existence and that of
its Restricted Subsidiaries, if any, and rights and franchises material to its
business, and those of each of its Restricted Subsidiaries and will qualify, and
cause each of its Restricted Subsidiaries to qualify to do business in any
jurisdiction where the failure to do so would have a material adverse effect on
the business, condition (financial or other), Properties, prospects or
operations of the Company and its Restricted Subsidiaries, taken as a whole.

     5L.  BUSINESS.

     The Company shall and shall cause each of its Subsidiaries to conduct and
operate a business substantially of the same nature as that engaged in by it or
any Subsidiary, as applicable, on the date of this Agreement.

     5M.  GUARANTORS.

     The Company shall cause each Subsidiary having Net Tangible Assets in
excess of Cdn.$5,000,000, to execute and deliver a Guarantee to the holders of
Notes. The Company shall not permit the aggregate Net Tangible Assets of all of
its Subsidiaries which have not executed Guarantees (other than Co-Steel C.S.M.
Corp., 1062316 Ontario Limited and their Subsidiaries) to exceed Cdn.$10,000,000
at any time.

     5N.  INTELLECTUAL PROPERTY RIGHTS.

     The Company shall:

          (a) maintain all registrations and applications for registration for
     any Intellectual Property Rights in good standing for so long as such
     Intellectual Property Rights remain material to its business, including
     without limitation paying all fees and making all such filings as may be
     required from time to time;

                                       24
<PAGE>
          (b) promptly notify the Purchasers if it knows, or has reason to know,
     of any application or registration, relating to any patent or trademark
     material to its business that may expire, become abandoned or dedicated to
     the public domain, or of any material adverse determination or development
     (including the institution of, or any such determination or development in,
     any proceeding in the Canadian or U.S. Patent and Trademark Office or any
     court or tribunal in any other country) regarding its ownership of any
     material Intellectual Property Right or its right to register the same or
     to keep and maintain the same; and

          (c) report to the Purchasers any application for the registration of
     any trademark material to its business with the Canadian or U.S. Patent and
     Trademark Office and any application for any patent material to its
     business with the Canadian or U.S. Patent and Trademark Office, in each
     case within 30 days after the last day of the fiscal quarter in which any
     application occurs (whether the application is made by itself or through
     any agent, employee, licensee or designee).

     5O.  BENEFIT AND PENSION PLANS.

     The Company shall comply with all Applicable Laws in respect of its
employees' benefit and pension plans, including, but not limited to, payment of
all contributions and premiums to be paid thereunder, and it shall ensure that
all premiums and payments relating to employee benefits and pensions are paid as
due.

     5P.  ENVIRONMENTAL REPORTING.

     The Company shall immediately provide to the Purchasers written notice of
any of the following events of which it becomes aware if such event could
reasonably be expected to have a Material Adverse Effect:

          (a) any proceeding or order of any Governmental Authority requiring it
     or any Subsidiary to comply with or take action under any Environmental
     Laws;

          (b) the receipt of any written notice to the effect that it or any
     Subsidiary is liable to any Person as a result of the Release or threatened
     Release of any Contaminant into the Environment;

          (c) receipt of any written notice that it or any Subsidiary is subject
     to investigation by any Governmental Authority evaluating whether any
     remedial action by it is needed to respond to the Release or threatened
     Release of any Contaminant into the Environment;

                                       25
<PAGE>
          (d) receipt of any written notice of, or its obtaining knowledge of, a
     condition with respect to any property which it or any Subsidiary owns,
     leases, occupies or has control of, or owned, leased, occupied or had
     control of, which might reasonably be expected to result in a notice of
     violation by it of any Environmental Law;

          (e) receipt of any written notice of the commencement of any judicial
     or administrative proceeding alleging a violation of any Environmental Law
     with respect to any property which it or any Subsidiary owns, leases,
     occupies or has control of, or owned, leased, occupied or had control of;
     or

          (f) the undertaking of any activities as a result of new or proposed
     changes to any existing Environmental Law (whether or not having the force
     of law) that could reasonably be expected to have a Material Adverse Effect
     upon it or any of its Subsidiaries.

     In addition, the Company shall notify the Purchasers upon receipt of any
report with respect to environmental audits conducted by or on behalf of, or
provided to, the Company or any Subsidiary, and upon request shall forthwith
provide copies of same to the Purchasers.

     5Q.  INCORPORATED PROVISIONS.

     Neither the Company nor any Restricted Subsidiary will enter into, amend or
supplement any agreement of Indebtedness in any manner if the effect thereof
would be to increase interest rates or amend or add covenants or defaults, the
effect of which are not substantially provided for in this Agreement or, in the
case of covenants or defaults, are more restrictive on the Company and its
Subsidiaries than are the covenants and defaults contained herein (the
"ADDITIONAL PROVISIONS"), unless the Company shall execute and deliver to the
holders of the Notes an instrument in writing supplementing this Agreement and
extending the benefit of such Additional Provisions to the holders of the Notes.
Once incorporated in this Agreement, no waiver or consent under or amendment or
termination of the agreement of Indebtedness containing the Additional
Provisions shall have any effect on the Additional Provisions as incorporated
herein.

     5R.  APPROVED FINANCINGS.

     The Company and its Subsidiaries shall have entered into Approved
Financings on or before January 15, 2004, and on such date there shall be no
Default or Event of Default in respect of any of the Replacement Covenants when
compliance therewith is calculated as if such covenants were in effect on
December 31, 2003.

                                       26
<PAGE>
     5S.  ADDITIONAL RESTRUCTURING FEE.

     The Company shall pay a fee to the Purchasers, on or prior to August 30,
2002, in the aggregate amount of $300,000, payable as provided in Attachment 1
to the Purchaser Schedule.

     5T.  INVENTORY.

     The Company shall maintain contractual relationships, in form and substance
satisfactory to the Required Holders, to ensure that the title to all Inventory
located on Leased Properties located in Canada is held in the name of Co-Steel
Distribution Canada Limited and that all Inventory located on Leased Properties
located in the United States is held in the name of Co-Steel USA Distribution,
Inc.

     5U.  ACCOUNTS RECEIVABLE.

     The Company shall ensure that Co-Steel Distribution Canada Limited has
title to all Accounts Receivable in respect of the sale of Inventory payable by
arm's length Account Debtors of any member of the Restricted Group located in
Canada (other than Accounts Receivable relating to the Company's recycling
division), that the Company has title to all Accounts Receivable relating to the
Company's recycling division and that Co-Steel USA Distribution, Inc. has title
to all Accounts Receivable in respect of the sale of Inventory payable by arm's
length Account Debtors of any member of the Restricted Group located in the
United States.

     5V.  ENGLISH FINANCE STRUCTURE COMPANIES.

          (a) On or prior to June 30, 2002, the Company shall document the
     intercompany loan between Co-Steel (UK) Limited and the Company in a form
     approved by the Required Holders.

          (b) The Company shall use its commercially reasonable efforts to
     complete the transaction described in Schedule 5V on or prior to December
     31, 2002. For greater certainty the transactions described in Schedule 5V
     may be completed notwithstanding any restriction in paragraph 5 or
     paragraph 6 and no step in such transactions shall constitute an Event of
     Default under paragraphs 7A (h), (i) or (j).

          (c) On or prior to December 31, 2002, if there is any inter-company
     Indebtedness from the Company or any Restricted Subsidiary to any English
     Finance Structure Company or successor thereto, the Company shall either
     (x) (1) continue or incorporate a Subsidiary pursuant to the Ontario
     Business Corporations Act that will be the sole holder of any intercompany
     Indebtedness formerly held by any of the English Finance Structure

                                       27
<PAGE>
     Companies; (2) cause each such new Subsidiary to provide to the holders of
     Notes a Guarantee and to provide the Canadian Security Agent a Security
     Agreement; and (3) deliver to the Required Holders customary evidence of
     perfection of the security interests granted by the foregoing Security
     Agreement together with a customary opinion of counsel in respect of the
     same in form and substance reasonably satisfactory to the Required Holders;
     or (y) provide such other security, together with customary legal opinions
     in respect of same, in form and substance reasonably requested by the
     Required Holders in respect of the English Finance Structure Companies.

     5W.  MATERIAL CONTRACTS AND MATERIAL LICENSES.

     The Company shall and shall cause each Guarantor to:

          (a) perform all of its duties and obligations under, comply with all
     the terms of, and enforce its rights under, the Material Contracts and
     Material Licenses all in accordance with prudent business practice;

          (b) deliver to the holders of Notes true and complete copies of each
     Material Contract or Material License and each other contract which has
     been requested by the Required Holders, and, if requested by the Required
     Holders, execute and deliver to the holders of Notes a specific assignment
     of each contract in favor of the holders of Notes and use reasonable
     commercial efforts to obtain the consent to assignment of the other party
     or parties to each Material Contract or Material License in a form
     acceptable to the Required Holders;

          (c) promptly upon request by the Required Holders, provide the holders
     of Notes with all information regarding contractual relations of the
     Company of a material nature which is requested by the Required Holders;
     and

          (d) use reasonable commercial efforts to obtain and deliver to the
     holders of Notes the consent of any party that the Required Holders request
     with respect to the Lien on any Material Contract or Material License in
     favor of the holders of Notes, such consent to be in form and substance
     acceptable to the Required Holders.

     5X.  JURISDICTIONS.

     The Company shall advise the holders of Notes of any change in the location
at which the Company or any of its Restricted Subsidiaries' assets may be
located from the location disclosed on Schedule 5X and any additional
jurisdictions in which it is carrying on business of a material nature or any
change in the jurisdiction of incorporation of it or any of its Restricted
Subsidiaries (including, without

                                       28
<PAGE>
limitation, the Hungarian Finance Structure Companies and N.J.S.C. Investment
Co., Inc.).

     5Y.  NOTICES.

     The Company shall deliver to each Significant Holder immediate written
notice of the commencement or occurrence of any of the following events of which
it becomes aware:

          (a) the commencement of any proceeding for the condemnation,
     expropriation or other taking of any of its or any Restricted Subsidiary's
     property;

          (b) the issuance by any Governmental Authority of any injunction,
     order or decision involving it or any Restricted Subsidiary or any of its
     or any Restricted Subsidiary's property in respect of any matter which
     could reasonably be expected to have a Material Adverse Effect;

          (c) the filing or commencement of any action, suit or proceeding
     against or affecting it or a Restricted Subsidiary or any of its or any
     Restricted Subsidiary's property, whether at law or equity or by or before
     any court or any Governmental Authority or any arbitrator where the amount
     claimed is in excess of Cdn.$5,000,000 (or its equivalent) or the aggregate
     amount claimed under all such actions, suits or proceedings which are
     unresolved is in excess of Cdn.$10,000,000 (or its equivalent) in the
     aggregate, and any such notice shall specify the nature of such action,
     suit or proceeding and its Restricted Subsidiary's proposed response and
     shall from time to time provide all information requested by the Required
     Holders respecting any action, suit or proceeding;

          (d) the imposition of any Lien which is not a Permitted Lien against
     any of its or any Restricted Subsidiary's property;

          (e) any change in the amount and/or terms of any credit arrangement
     made with other lenders or any action taken by another lender to recover
     amounts outstanding with such other lender;

          (f) any claim, demand or action impairing title to any of its or any
     Restricted Subsidiary's property with a value in excess of Cdn.$5,000,000
     (or its equivalent);

          (g) any development in its or any of its Subsidiaries' business or
     affairs which has had or which is likely to have a Material Adverse Effect
     on its or any of its Subsidiaries' business, properties, operations or
     condition, financial or otherwise;

                                       29
<PAGE>
          (h) any Leased Property, other than the North York Property or the
     Significant U.S. Leased Properties becoming material to the business of the
     Company or any of its Restricted Subsidiaries;

          (i) its entry into any contract or undertaking not in the ordinary
     course of its business containing cumulative obligations of the Company or
     any of its Subsidiaries in excess of Cdn.$5,000,000 (or its equivalent);

          (j) its, or any Obligor's, acquisition of any property that is not
     subject to the Collateral Documents, or any other event or condition that
     may require additional action of any nature in order to preserve the
     effectiveness and perfected status of the Liens of either Security Agent
     with respect to the Collateral Documents;

          (k) the preparation of any financial or strategic report by any third
     party for the benefit of the Company or any Subsidiary other than Gallatin,
     and with respect to Gallatin, any such financial or strategic report not
     subject to a confidentiality obligation of the Company or Gallatin;

          (l) any other adverse action by or notice from any Governmental
     Authority with respect to it, any Restricted Subsidiary or any Hungarian
     Finance Structure Company or any of its, any Restricted Subsidiary's or any
     Hungarian Finance Structure Company's property which, if determined
     adversely, would have a Material Adverse Effect; or

          (m) any condition or event which constitutes an Event of Default or a
     Default or a default under any other agreement for borrowed money with the
     notice specifying the nature and occurrence of the Event of Default,
     Default or other default and the action it has taken or proposes to take
     with respect to the Event of Default, Default or other default.

     5Z.  MAINTENANCE OF BANK ACCOUNTS.

     The Company shall and shall cause each Subsidiary to maintain each of its
bank accounts with either the administration agent under the Bank Agreement or
PNC or shall be subject to a Blocked Account Agreement; provided however that
(a) Acierco S.A. may maintain, up to the lesser of $1,000,000 and its then
contingent tax liability in the account with Banque de Luxembourg in Luxembourg,
identified in Schedule 8U, (b) Lake Ontario Steel Company Inc. may maintain up
to $500,000 in the account with Manufacturers and Traders Trust Company in
Buffalo, New York identified in Schedule 8U, and (c) Co-Steel C.S.M. Corp. and
any of its Subsidiaries may maintain any bank account from time to time. In
addition, with the consent of the Required Holders, the Company or any
Subsidiary may retain deposits in any bank account with respect to which a
Security Agent has been provided with a duly executed Blocked Account Agreement
from the bank

                                       30
<PAGE>
maintaining such account and may retain amounts individually less than
Cdn.$150,000 (or equivalent) and less than Cdn.$600,000 (or equivalent) in the
aggregate in bank accounts that do not meet any of the foregoing criteria.
Notwithstanding the foregoing, in connection with loans and advances permitted
pursuant to paragraph 6O, up to U.S. $10,200,000 may be transferred to and
retained for up to three Business Days in the bank account of Co-Steel Hungary
at HSBC London, England identified in Schedule 8U and the bank account of
Acierco S.A. at Banque de Luxembourg in Luxembourg and identified in Schedule
8U.

     5AA. ASSET MONETIZATION PROGRAM.

     The Company shall use its commercially reasonable efforts to implement and
adhere to the timetable set forth in the Asset Monetization Program, and shall,
if necessary, and as soon as practical, revise the Asset Monetization Program
based on the Strategic Plan and each Collateral Audit. Any revision to the Asset
Monetization Program shall be subject to the approval of the Required Holders
and shall be approved by the Company's Board of Directors.

     5BB. COLLATERAL AUDIT.

     The Company shall assist a consultant of the Required Holders' choice in
the preparation of a detailed collateral audit and/or appraisal of accounts
receivable, inventory, accounts payable, cash and related systems, machinery,
equipment and real estate of the Company and each Subsidiary (the "COLLATERAL
AUDIT"), and such report shall be dated as of August 31, 2003.

     5CC. COMPUTER SYSTEMS.

     The Company shall take commercially reasonable steps to ensure, so far as
reasonably possible, that all computer systems used in its business and material
to its business and owned or leased by it, including hardware and software,
remain free from viruses and disabling codes and devices and shall maintain in
place appropriate disaster recovery plans, procedures and facilities and to take
steps and implement all procedures necessary to safeguard and restrict
unauthorized access to its computer systems.

     5DD. BIENNIAL COLLATERAL OPINION.

     The Company shall have delivered, on a biennial basis, an opinion of
counsel in respect of the Collateral and the Collateral Documents as required by
Section 10 of the Intercreditor Agreement.

                                       31
<PAGE>
     5EE. BI-ANNUAL AUDITOR'S REPORT.

          (a) On or prior to June 15, 2002, the Company shall deliver the
     Bi-Annual Auditor's Report in respect of year-end 2001, which shall be in
     form and substance satisfactory to the Required Holders in their sole and
     absolute discretion; and

          (b) The Company shall twice annually, on or before 60 days following,
     (i) March 31, and (ii) September 30, provide to each holder of Notes from
     auditors acceptable to the Required Holders an audit report of the
     Company's and its Subsidiaries' accounts receivable, inventory, accounts
     payable, cash and related systems (the "BI-ANNUAL AUDITOR'S REPORT"). Such
     report shall be satisfactory in form and content to the Required Holders.

6.   NEGATIVE COVENANTS

          The Company covenants that so long as any of the Notes are
     outstanding:

     6A.  CURRENT RATIO.

     The Company shall ensure that the ratio of Consolidated Current Assets to
Consolidated Current Liabilities, calculated at the end of each fiscal quarter
of the Company, commencing on December 31, 2001, is not less than:

          (a)  as at December 31, 2001, 1.8:1;

          (b)  as at March 31, 2002, 1.7:1;

          (c)  as at June 30, 2002, 1.6:1;

          (d)  as at September 30, 2002, 1.7:1;

          (e)  as at December 31, 2002, 1.6:1;

          (f)  as at March 31, 2003, 1.6:1;

          (g)  as at June 30, 2003, 1.7:1;

          (h)  as at September 30, 2003, 1.6:1; and

          (i)  as at December 31, 2003, 1.6:1.

                                       32
<PAGE>
     6B.  CURRENT ASSETS.

     The Company shall ensure that Consolidated Current Assets, for any fiscal
period, are not less than 85% of the Consolidated Current Assets projected for
such fiscal period in the Financial Forecast, tested quarterly commencing on
December 31, 2001.

     6C.  RATIO OF CONSOLIDATED TOTAL NET DEBT TO NORMALIZED CONSOLIDATED
          EBITDA.

     The Company shall ensure that the ratio of Consolidated Total Net Debt to
Normalized Consolidated EBITDA at the end of each of the following fiscal
quarters of the Company does not exceed:

          (a)  as at December 31, 2001, 14.0:1;

          (b)  as at March 31, 2002, 14.3:1;

          (c)  as at June 30, 2002, 13.5:1;

          (d)  as at September 30, 2002, 12.2:1;

          (e)  as at December 31, 2002, 9.1:1;

          (f)  as at March 31, 2003, 7.3:1;

          (g)  as at June 30, 2003, 6.0:1;

          (h)  as at September 30, 2003, 5.0:1; and

          (i)  as at December 31, 2003, 4.5:1.

     For the purposes of determining compliance with this covenant only, the
exchange rate for the calculation of Indebtedness in effect on the Restructuring
Date included in Consolidated Total Net Debt shall be Cdn.$1.55 = US$1.

     6D.  RATIO OF NORMALIZED CONSOLIDATED EBITDA NET OF CAPEX TO CONSOLIDATED
          NET INTEREST EXPENSE.

     The Company shall ensure that the ratio of Normalized Consolidated EBITDA
Net of Capex to Consolidated Net Interest Expense at the end of each of the
following fiscal quarters of the Company is not less than:

          (a)  as at December 31, 2001, 0.2:1;

          (b)  as at March 31, 2002, 0.1:1;

                                       33
<PAGE>
          (c)  as at June 30, 2002, 0.1:1;

          (d)  as at September 30, 2002, 0.3:1;

          (e)  as at December 31, 2002, 0.7:1;

          (f)  as at March 31, 2002, 0.9:1;

          (g)  as at June 30, 2003, 1.3:1;

          (h)  as at September 30, 2003, 1.5: 1; and

          (i)  as at December 31, 2003, 1.6:1.

     6E.  TANGIBLE NET WORTH.

     The Company shall ensure that Tangible Net Worth: (a) exceeds Cdn.$390
million on September 30, 2002, minus the amount of write-downs of assets
resulting from Approved Asset Sales as of such date; and (b) exceeds Cdn.$380
million on December 31, 2002 and as at the end of each fiscal quarter of the
Company thereafter, minus the amount of write-downs of assets resulting from
Approved Asset Sales as of each such date.

     6F.  CUMULATIVE CONSOLIDATED EBITDA.

     The Company shall ensure that Cumulative Consolidated EBITDA, tested at
each quarter end, is greater than or equal to:

<TABLE>
<CAPTION>
($Cdn.000's)
     -------------------------------------------------------------------------
     Quarter Ending on the last day of     2001          2002           2003
     -------------------------------------------------------------------------
     <S>                                   <C>          <C>           <C>
     March                                   n/a        10,288         71,632
     June                                    n/a        24,725         98,473
     September                               n/a        38,192        122,437
     December                              3,418        53,312        143,020
</TABLE>

     6G.  INCURRENCE OF INDEBTEDNESS.

     The Company shall not and shall not permit any Restricted Subsidiary or
Pledgor to create, incur, assume or permit to exist any Indebtedness except:

          (a)  Indebtedness in favor of the administration agent and the Banks
     under the Bank Agreement;

          (b)  Indebtedness pursuant to the Notes;

                                       34
<PAGE>
          (c)  Indebtedness pursuant to the Convertible Unsecured Subordinated
     Debentures;

          (d)  Indebtedness pursuant to the PNC Credit Agreements;

          (e)  Indebtedness pursuant to Permitted Intercompany Indebtedness;

          (f)  Indebtedness pursuant to Permitted Parent Guarantees;

          (g)  unsecured indemnities incurred in the ordinary course of
     business;

          (h)  unsecured accounts payable and accrued liabilities owed to
     Persons other than an Affiliate which are incurred in the normal course of
     business or accrued pension liabilities;

          (i)  deferred revenue classified as a liability;

          (j)  deferred taxes;

          (k)  unsecured Indebtedness arising under one or more outstanding
     judgments being appealed in good faith (except where their existence would
     give rise to an Event of Default);

          (l)  Capitalized Lease Obligations and Indebtedness secured by
     purchase money security interests in an aggregate amount outstanding at any
     time not greater than Cdn.$5,000,000 (or its equivalent); and

          (m)  any unsecured Indebtedness as endorsee under negotiable
     instruments received in payment of Accounts Receivable and endorsed for
     deposit in the ordinary course of business.

     6H.  OTHER INDEBTEDNESS AND AGREEMENTS.

     The Company shall not and shall not permit any Restricted Subsidiary or
Pledgor to make any amendment or modification to any indenture, note or other
agreement evidencing or governing any of its Indebtedness, or directly or
indirectly voluntarily prepay (other than as may be provided in the
Intercreditor Agreement), defease or in substance defease, purchase, redeem,
retire or otherwise acquire any other Indebtedness in advance of the Notes other
than as required by paragraph 5R.

     6I.  PAYMENTS TO OTHER SENIOR LENDERS.

     Other than as permitted pursuant to the terms of the Intercreditor
Agreement or as required by paragraph 5R, no Obligor or Pledgor shall make any

                                       35
<PAGE>
payment of any kind to any Bank or PNC. Notwithstanding the foregoing, provided
no Default or Event of Default has then occurred, the Company may from time to
time pay interest as required pursuant to the terms of the Bank Agreement, and
each of Co-Steel Raritan, Inc. and Co-Steel Sayreville, Inc. may from time to
time pay interest as required pursuant to the terms of its respective PNC Credit
Agreement.

     6J.  NEGATIVE PLEDGE.

     The Company shall not and shall not permit any Restricted Subsidiary to
create, assume or permit to exist over all or any part of its or their business
or assets, whether now owned or hereafter acquired, any Lien (whether prior or
junior to or pari passu with any Lien in favor of the Security Agents) other
than Permitted Liens.

     6K.  MATERIAL CONTRACTS AND MATERIAL LICENSES.

     The Company shall not and shall not permit any Guarantor to:

          (a) allow any circumstances to arise which would allow any Material
     Contract or Material License to lapse or be terminated during its term;
     provided that, for greater certainty, termination of a Material Contract at
     the end of its term, in the ordinary course of business, is not prohibited
     hereby;

          (b) amend any Material Contract or Material License if such amendment
     could reasonably be expected to have a Material Adverse Effect; or

          (c) assign any Material Contract or Material License, except for
     assignment to a Security Agent pursuant to the Collateral Documents.

     6L.  SALE OF ASSETS.

     Other than Permitted Asset Sales or sales pursuant to the Asset
Monetization Program, the Company shall not and shall not permit any Subsidiary
to sell, lease, license, transfer, assign or otherwise dispose of any of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible (including, without limitation, shares of stock and
indebtedness of Subsidiaries, receivables and leasehold interests), whether in
one or a series of transactions, except on terms and conditions approved by the
Required Holders (each such asset sale so approved, an "APPROVED ASSET SALE").

                                       36
<PAGE>
     6M.  SALE AND LEASEBACK TRANSACTIONS.

     Other than as permitted by the Asset Monetization Program or in connection
with the incurrence of a Capitalized Lease Obligation permitted under paragraph
6G(l), the Company shall not and shall not permit any Restricted Subsidiary to
become or remain liable in any way, whether directly or by assignment or as a
guarantor or other contingent obligor, for the obligations of the lessee or user
under any lease or contract for the use of any Property if such Property is
owned on the date of this Agreement or thereafter acquired by the Company or any
of its Affiliates and has been or is to be sold or transferred to any other
Person and was, is or shall be used by the Company or any of its Affiliates for
substantially the same purpose as such Property was used by the Property or such
Affiliate prior to such sale or transfer.

     6N.  ACQUISITIONS.

     The Company shall not and shall not permit any Restricted Subsidiary to (a)
acquire or incorporate any Subsidiary; or (b) acquire all or a substantial part
of, in one or a series of transactions (whether by way of amalgamation (other
than pursuant to paragraph 6V), merger, share purchase, asset purchase or
otherwise) the assets, shares or any other equity interests of any Person.
Provided that the foregoing shall not prevent the Company or any Restricted
Subsidiary from receiving equity of an arm's length Person as part of a
compromise of such arm's length Person's debt in connection with a bankruptcy or
similar proceeding affecting such Person or from acquiring Permitted
Investments.

     6O.  LOANS, INVESTMENTS, ETC.

         Other than Key Employee Loans not to exceed Cdn.$5,000,000 at any time,
the Company shall not and shall not permit any Restricted Subsidiary to:

          (a) directly or indirectly make any loan or advance to, or make any
     investment in the debt obligations of, or guarantee, or otherwise undertake
     to perform or warrant or ensure performance of any Indebtedness or
     obligation of, or enter into any agreement that has the effect of assuming
     the payment or performance of any Indebtedness or obligation of, any Person
     (other than, in each case, to another member of the Restricted Group); or

          (b) directly or indirectly subordinate or postpone any claim which it
     has against any Person, except the extension of credit in the ordinary
     course of business to trade debtors in accordance with customary trade
     terms.

     Notwithstanding the foregoing, (i) Co-Steel (U.S.) Ltd. shall be permitted
to make loans or advances to Co-Steel C.S.M. Corp., provided that the Equivalent
Amount (net of up to Cdn.$100,000 for operating expenses) of such loans or

                                       37
<PAGE>
advances is received by the Company, immediately prior thereto, or
contemporaneously therewith and further provided that each previous payment
under this subsection (i) has been duly received by the Company; (ii) provided
that at the time of, and immediately after giving effect to, such loan or
advance, no Default or Event of Default, or equivalent event under any Gallatin
credit facility, would exist, the Company may from time to time make loans or
advances to Gallatin totaling per annum up to the lesser of (x) Cdn.$3,000,000
and (y) the amount by which the Notes, the Indebtedness pursuant to the Bank
Agreement and the Indebtedness pursuant to the PNC Credit Agreements have been
prepaid pursuant to payments of the nature described in paragraph 4B(a)(iv), and
(iii) the Company or any Restricted Subsidiary may make investments from time to
time as permitted under paragraph 6EE.

     6P.  DIVIDENDS, ETC.

     The Company shall not declare any dividends from, or set apart any sum for
the payment of any dividends on, or make any other distribution (by reduction of
capital or otherwise) in respect of, any of the Company's shares.

     6Q.  NO REDUCTION OF CAPITAL.

     The Company shall not, and shall ensure that no Restricted Subsidiary shall
(as applicable), apply any of its assets to the purchase, redemption or other
acquisition or retirement of any shares in the Company's capital or otherwise
reduce the Company's issued or paid up capital in respect of any of its shares.

     6R.  NO ISSUE OF CAPITAL.

     Other than pursuant to a Significant Share Offering, the Company shall not,
and shall not permit any other Obligor to, without the consent of the Required
Holders, issue any new capital by way of equity or subordinated debt offering or
otherwise, other than by issuance of common shares pursuant to stock options
granted to employees or former employees, or pursuant to a redemption or a
conversion of the Convertible Unsecured Subordinated Debentures in accordance
with their terms. Notwithstanding the foregoing, any Guarantor may issue new
capital by way of equity provided that such new equity is subject to the Lien of
a Stock Pledge Agreement, and the certificates representing such new capital are
forthwith delivered to a Security Agent.

     6S.  CAPITAL EXPENDITURES.

     In each fiscal year the Restricted Group shall not make, or enter into any
agreement which would require them cumulatively to make any Capital Expenditures
(including by way of Capitalized Lease Obligations) in excess of those provided
for in the Financial Forecast; provided that the foregoing shall not restrict

                                       38
<PAGE>
the Restricted Group from making Capital Expenditures in any fiscal year in
amounts up to 20% of the amounts otherwise provided for in the Financial
Forecast but only if such Capital Expenditures are in respect of insurance
deductibles for insured losses, the Insurance Proceeds with respect to which are
payable to the Company.

     6T.  ACCOUNTING CHANGES.

     The Company shall not make and shall not permit any Subsidiary to make any
changes in accounting treatment and reporting practices except as permitted by
GAAP and disclosed to the holders of Notes; and the Company shall not change its
financial year end.

     6U.  TRANSACTIONS WITH AFFILIATES.

     Except as otherwise permitted in this paragraph 6, the Company shall not
and shall not permit any Restricted Subsidiary to:

          (a) enter into any transaction with any Affiliate, including, without
     limitation, any transaction for the purchase, sale or exchange of Property,
     the rendering of any services, the making or obtaining of any loans or
     advances, and the entering into of any contracts, except that it may enter
     into a transaction or contract with an Affiliate which is in the ordinary
     course of its business and which is upon fair and reasonable terms no less
     favorable to it than it would obtain in a comparable arm's-length
     transaction with a Person who is not an Affiliate; or

          (b) pay any fees or expenses to, or reimburse or assume any obligation
     for the reimbursement of any expenses incurred by any Affiliate, except
     payments to reimburse Affiliates for reasonable out-of-pocket expenses
     incurred in good faith in the conduct of its business.

     6V.  FUNDAMENTAL CHANGES.

     The Company shall not and shall not permit any Restricted Subsidiary to
enter into any corporate transaction (or series of transactions), whether by way
of reconstruction, arrangement, reorganization, consolidation, amalgamation,
merger or otherwise, whereby all or substantially all of its or their
undertaking and assets would become the property of any other Person or in the
case of any amalgamation, the property of the continuing corporation resulting
from the amalgamation. Notwithstanding the foregoing, if at the time of and
immediately after giving effect to any amalgamation, no Default shall have
occurred:

          (a) any Guarantor may amalgamate with any other Guarantor; or

                                       39
<PAGE>
          (b) any Guarantor may sell, transfer, lease or otherwise dispose of
     its assets to the Company or another Guarantor,

     provided that such Guarantor provides the holders of Notes with prior
notice of any such transaction and upon any amalgamation, the resulting company
delivers to the applicable Security Agent the Collateral Documents to which each
predecessor entity was party and an assumption agreement pursuant to which the
amalgamated company confirms its assumption of all of the obligations of the
amalgamating companies under the Documents to which each predecessor entity was
party and such other security, certificates and opinions as may be required by
the Required Holders including, if applicable, a pledge of the amalgamated
company's shares.

     6W.  HEDGING CONTRACTS.

     The Company shall not and shall not permit any of its Subsidiaries to
engage in currency trading, convert Notes from one currency into another or
enter into any currency or interest rate hedge for speculative reasons.

     6X.  INCONSISTENT AGREEMENTS.

     The Company shall not and shall not permit any of its Subsidiaries to enter
into any agreement containing any provision which would be violated or breached
by this Agreement or any of the transactions contemplated by this Agreement by
its or their performance of the obligations in connection therewith.

     6Y.  ANNOUNCEMENTS.

     Except as required by Applicable Law, neither the Company nor any
Restricted Subsidiary or any Pledgor shall make or permit any press release or
other public announcement to be made by or on its behalf which mentions any
Purchaser without each Purchaser's prior written approval of the press release
or public announcement.

     6Z.  INDUSTRIAL BONDS.

     The Company shall not permit Co-Steel Dofasco LLC to sell the Gallatin
County Industrial Revenue Bonds except to another Affiliate or Subsidiary of the
Company.

     6AA. ENGLISH FINANCE STRUCTURE COMPANIES.

     Except as set forth in Schedule 6AA, the Company shall not (a) permit any
of the English Finance Structure Companies to carry on any business other than
the current business activities of providing financing to related companies, (b)
permit

                                       40
<PAGE>
and shall not permit any of its Subsidiaries to transfer any assets to
any of the English Finance Structure Companies, and (c) permit any of the
English Finance Structure Companies to incur additional liabilities.

     6BB. INTENTIONALLY DELETED.

     6CC. CO-STEEL C.S.M. CORP.

     Other than its duties as a partner in Gallatin, the Company shall not
permit Co-Steel C.S.M. Corp. to carry on any business and the Company shall not
and shall not permit any of its Subsidiaries to transfer any assets to, or incur
any Indebtedness in respect of, Co-Steel C.S.M. Corp. Notwithstanding the
foregoing, the Company may and may permit its Subsidiaries to transfer funds to
Co-Steel C.S.M. Corp. (a) pursuant to its regular tax planning if (x) no Default
or Event of Default then exists or would occur because of such transfer, and (y)
an amount equivalent to the amount so transferred by the Company or such
Subsidiary is received by the Company or a Guarantor on the same Business Day as
such transfer or (b) if otherwise permitted pursuant to paragraph 6O.

     6DD. FINANCIAL COVENANTS ON AND AFTER JANUARY 15, 2004.

     Commencing with January 15, 2004 and thereafter, this Agreement shall be
amended to delete the financial covenants contained in paragraphs 6A through 6F
hereof and there shall be substituted therefor the financial covenants contained
in paragraphs 6A through 6F as set forth in Schedule 6DD attached hereto (the
"REPLACEMENT COVENANTS").

     6EE. INVESTMENTS.

     Except as expressly permitted by paragraph 6O, the Company shall not at any
time purchase, acquire or own any stock, bonds, notes, or securities of, or any
partnership interest (whether general or limited) in, or any other interest in,
or make any capital contribution to, any other Person, or become a joint venture
partner in any joint venture, or agree, become or remain liable to do any of the
foregoing, except for the following "PERMITTED INVESTMENTS":

          (a) debt securities having a maturity of not more than one year issued
     or guaranteed by the United States or Canadian government or by an agency
     or instrumentality thereof;

          (b) certificates of deposit, bankers acceptances and time deposits,
     which in each case mature within one year from the date of purchase thereof
     and which are issued by a Qualified Bank;

                                       41
<PAGE>
     (c) commercial paper maturing in 270 days or less from the date of issuance
which, at the time of acquisition by the Company either (A) is accorded the
highest rating by Standard and Poor's Rating Group, a division of McGraw Hill,
Inc. or Moody's Investors Service, Inc. or (B) is issued by any Bank or an
affiliate of any Bank;

     (d) direct obligations of the United States of America or Canada or any
agency or instrumentality of the United States of America, the payment or
guarantee of which constitutes a full faith and credit obligation of the United
States of America or Canada, in each case maturing in twelve (12) months or less
from the date of acquisition;

     (e) ownership of the capital stock of Subsidiaries and ASW Holdings
existing on the Restructuring Date or as otherwise provided herein; and

     (f) money market funds or income funds that invest solely in the
investments identified in clauses (a) to (d), inclusive, of this definition.

     6FF. PAYMENT OF INTERCOMPANY INDEBTEDNESS.

     The Company shall not permit any Restricted Subsidiary to make any payment
on account of principal or interest in respect of the Permitted Intercompany
Indebtedness described in Schedule 8V. Notwithstanding the foregoing, so long as
no Default or Event of Default exists or would occur because of such a payment
and provided that each previous payment pursuant to this sentence has been duly
received by a Restricted Subsidiary, it may twice annually permit payment by a
Restricted Subsidiary of up to U.S. $10,200,000 in respect of interest on
Permitted Intercompany Indebtedness described in Schedule 8V, if the amount of
such interest (net of up to Cdn.$100,000 for operating expenses) is received by
a Restricted Subsidiary within three Business Days of such payment.

7.   EVENTS OF DEFAULT

     7A.  ACCELERATION.

     If any of the following events shall occur and be continuing for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):

          (a) the Company defaults in the payment of any principal of or
     Yield-Maintenance Amount payable with respect to any Note when the same
     shall become due, either by the terms thereof or otherwise as herein
     provided; or

                                       42
<PAGE>
          (b) the Company defaults in the payment of any interest on any Note or
     any fee or other amount not referred to in (a) above which is payable under
     this Agreement for more than 3 Business Days after the date due; or

          (c) the Company or any Subsidiary defaults (whether as primary obligor
     or as guarantor or other surety) in any payment of principal of or interest
     on any other obligation for money borrowed (or any Capitalized Lease
     Obligation, any obligation under a conditional sale or other title
     retention agreement, any obligation issued or assumed as full or partial
     payment for Property whether or not secured by a purchase money mortgage or
     any obligation under notes payable or drafts accepted representing
     extensions of credit) beyond any period of grace provided with respect
     thereto, or the Company or any Restricted Subsidiary fails to perform or
     observe any other agreement, term or condition contained in any agreement
     under which any such obligation is created (or if any other event
     thereunder or under any such agreement shall occur and be continuing) and
     the effect of such failure or other event is to cause, or to permit the
     holder or holders of such obligation (or a trustee on behalf of such holder
     or holders) to cause, such obligation to become due (or to be repurchased
     by the Company or any Restricted Subsidiary) prior to any stated maturity,
     provided, that, the aggregate amount of all obligations as to which such a
     payment default shall occur and be continuing or such a failure or other
     event causing or permitting acceleration (or resale to the Company on any
     Subsidiary) shall occur and be continuing exceeds Cdn.$5,000,000 (or its
     equivalent); or

          (d) any representation or warranty made by any Obligor herein or in
     any other Document or by any Obligor or any of its officers in any writing
     furnished in connection with or pursuant to any Document shall be false in
     any material respect on the date as of which made; or

          (e) the Company fails to perform or observe any term, condition or
     covenant contained in paragraph 6A, 6B, 6C, 6D, 6E or 6F of this Agreement
     or the Company or any Guarantor fails to perform or observe the covenants
     set forth in paragraphs 2L (other than 2L(d)), 6O and 6FF within the time
     limits set forth therein; or

          (f) the Company or any Guarantor fails to perform or observe any other
     agreement, term or condition contained herein or in the other Documents and
     such failure shall not be remedied within 15 days after the earlier of any
     Responsible Officer obtaining actual knowledge or receiving written notice
     from any holder of Notes of such failure; or

          (g) the Company or any Subsidiary makes an assignment for the benefit
     of creditors; or

                                       43
<PAGE>
          (h) any decree or order for relief in respect of the Company or any
     Subsidiary is entered under any bankruptcy, reorganization, compromise,
     arrangement, insolvency, readjustment of debt, composition, winding up,
     dissolution or liquidation or similar law, whether now or hereafter in
     effect (herein called the "BANKRUPTCY LAW"), of any jurisdiction; or

          (i) the Company or any Subsidiary petitions or applies to any tribunal
     for, or consents to, the appointment of, or taking possession by, a
     trustee, receiver, custodian, liquidator or similar official of the Company
     or any Subsidiary, of any substantial part of the assets of the Company or
     any Subsidiary, or commences a voluntary case under the Bankruptcy Law of
     the United States or any proceedings (other than proceedings for the
     voluntary liquidation and dissolution of a Subsidiary) relating to the
     Company or any Subsidiary under the Bankruptcy Law of any other
     jurisdiction or takes any corporate action to authorize any of the actions
     described in this paragraph 7A(i); or

          (j) any such petition or application is filed, or any such proceedings
     are commenced, against the Company or any Subsidiary and the Company or
     such Subsidiary by any act indicates its approval thereof, consent thereto
     or acquiescence therein, or an order, judgment or decree is entered
     appointing any such trustee, receiver, custodian, liquidator or similar
     official, or approving the petition in any such proceedings, and such
     order, judgment or decree remains unstayed and in effect for more than 60
     days; or

          (k) the Company ceases carrying on business permanently; or

          (l) an encumbrancer takes possession of or a receiver manager is
     appointed over all or substantially all of the assets or revenues of the
     Company or any Subsidiary; or

          (m) any order, judgment or decree is entered in any proceedings
     against the Company decreeing the dissolution of the Company and such
     order, judgment or decree remains unstayed and in effect for more than 60
     days; or

          (n) any order, judgment or decree is entered in any proceedings
     against the Company or any Subsidiary decreeing a split-up of the Company
     or such Subsidiary which requires the divestiture of assets representing a
     substantial part, or the divestiture of the stock of a Subsidiary whose
     assets represent a substantial part, of the consolidated assets of the
     Company and its Subsidiaries (determined in accordance with GAAP) or which
     requires the divestiture of assets, or stock of a Subsidiary, which shall
     have contributed a substantial part of the consolidated net income of the
     Company and its

                                       44
<PAGE>
     Subsidiaries (determined in accordance with GAAP) for any of the three
     fiscal years then most recently ended, and such order, judgment or decree
     remains unstayed and in effect for more than 60 days; or

          (o) a final judgment, exceeding, either singly or together with other
     then outstanding final unstayed and undischarged judgments, in the
     aggregate Cdn.$5,000,000 (or its equivalent), is rendered against the
     Company or any Subsidiary and, within 30 days after entry thereof, such
     judgment is not discharged or execution thereof stayed pending appeal, or
     within 30 days after the expiration of any such stay, such judgment is not
     discharged; or

          (p) any "reportable event" as such term is defined in section 4043 of
     ERISA occurs in connection with any Plan or trust created thereunder for
     which the thirty day notice requirement has not been waived under
     applicable regulations, or any event occurs requiring the Company or any
     ERISA Affiliate to provide security to a Plan under section 401(a)(29) of
     the Code; any "prohibited transaction" occurs, as such term is defined in
     section 4975 of the Code or in section 406 of ERISA, in connection with any
     Plan or any trust created thereunder; any notice of intent to terminate a
     Plan or Plans is filed under Title IV of ERISA by the Company or any ERISA
     Affiliate, any Plan administrator or any combination of the foregoing; any
     proceedings are instituted by the PBGC to terminate or to cause a trustee
     to be appointed to administer any Plan; any partial or complete withdrawal
     is made by the Guarantor or an ERISA Affiliate from any Multiemployer Plan;
     any proceedings are instituted by a fiduciary of any Plan against the
     Company or any Code Affiliate to enforce section 515 of ERISA and such
     proceeding shall not have been dismissed within 30 days thereafter; the
     Company or a Code Affiliate fails to make a required installment under
     section 412(m) of the Code or to pay any amount or amount which it shall
     have become liable to pay to the PBGC or to a Plan under Title IV of ERISA
     on or before the due date; any application is filed by the Company or a
     Code Affiliate for a waiver of the minimum funding standard under section
     412 of the Code or section 302 of ERISA; or any "reorganization" (as
     defined in section 418 of the Code or Title IV ERISA) of any Plan which is
     a Multiemployer Plan occurs; and each such instance individually, or any
     two or more such instances in the aggregate, would result in liability of
     the Company or any Code Affiliate or ERISA Affiliate to the Internal
     Revenue Service, the PBGC or a Plan in an aggregate amount exceeding
     $1,000,000 (or its equivalent); or

          (q) one or more encumbrancers shall take possession of any Property or
     assets valued in excess of Cdn.$5,000,000 (or its equivalent) of the
     Company or any Subsidiary of the Company or a distress or execution or

                                       45
<PAGE>
     any similar process is levied or enforced against any property or assets
     valued in excess of Cdn.$5,000,000 (or its equivalent) of the Company or
     any Subsidiary of the Company and remains unsatisfied for the shorter of a
     period of 10 days or the period that would permit that property or those
     assets to be sold in accordance with Applicable Law;

          (r) any provision in this Agreement or any other Document shall
     terminate or cease to be legally valid, binding and enforceable against the
     Company, any Guarantor or any Pledgor, as applicable, or if the Company,
     any Guarantor or any Pledgor, as applicable, contests in any manner, the
     legality, validity, binding nature or enforceability of this Agreement or
     any other Document;

          (s) the Company shall fail to pay any amount owing by it under any
     Hedging Contract and the failure to pay continues for the duration of the
     grace period (if any) allowable under the Hedging Contract and an early
     termination date under the Hedging Contract has occurred;

          (t) other than as a result of the conversion or redemption of the
     Convertible Unsecured Subordinated Debentures to common shares of the
     Company in accordance with their terms, a change in Control of the Company
     from that which existed on the Restructuring Date shall have occurred;

          (u) any consent, license or authorization of any Governmental
     Authority or any other Person which is required to make this Agreement, any
     Material Contract, any Material License or any other Document legal, valid,
     binding and enforceable or is required in order to enable the Company, any
     Guarantor or any other party thereto to perform its obligations hereunder
     or thereunder shall be withdrawn or ceases to be in full force and effect;

          (v) the Company or any Subsidiary of the Company shall (i) change the
     nature or scope of its business or (ii) (other than pursuant to an Approved
     Asset Sale or as contemplated by paragraph 6AA, cease to carry on business;

          (w) all or a material part of the assets of the Company or any
     Subsidiary of the Company shall be lost or destroyed and the resulting
     losses are not fully covered by insurance subject to applicable
     deductibles;

          (x) the institution of any steps by any US Guarantor, any member of
     its Controlled Group or any other Person to terminate a Plan if, as a
     result of such termination, such US Guarantor or any such member could be
     required to make a contribution to such Plan, or could reasonably expect to
     incur a liability or obligation to such Plan, in excess of Cdn.$1,000,000
     (or its equivalent);

                                       46
<PAGE>
          (y) a contribution failure occurs with respect to any Pension Plan
     sufficient to give rise to a Lien under section 302(f) of ERISA;

          (z) any Release of a Contaminant shall occur or is discovered or any
     environmental complaint shall be filed by any Person that has, or is
     reasonably likely to have, a Material Adverse Effect; or

          (aa) in the sole, absolute and unfettered opinion of the Required
     Holders there shall occur any Material Adverse Effect; or

          (bb) the Company and its Subsidiaries shall have failed to enter into
     Approved Financings as required by paragraph 5R or shall have refinanced
     the Bank Agreement and/or the PNC Credit Agreements without the written
     consent of the Required Holder(s); or

          (cc) PNC exercise its rights or declare a default pursuant to Article
     7 of the PNC Credit Agreements or Article 5 of the PNC Parent Guaranty; or

          (dd) the Banks exercise their rights or declare a default pursuant to
     section 11.01 of the Bank Agreement; or

          (ee) the Banks or PNC shorten the maturity of the Indebtedness under
     the Bank Agreement or the PNC Credit Agreements, as the case may be, so
     that such Indebtedness matures sooner than January 15, 2004; or

          (ff) in the sole judgment of the Required Holders, any Collateral
     Document shall cease to be a valid and perfected first priority security
     interest against third parties (other than in respect of Permitted Priority
     Liens), and the Company is unable to rectify the problem to the
     satisfaction of the Required Holders within 14 days after the Required
     Holders or a Security Agent gives notice to the Company of the problem; or

          (gg) any Obligor shall default in any material respect under any
     Material Contract and the Obligor has not, within 30 days of the occurrence
     of that default, taken steps to remedy, cure or otherwise respond to the
     default in a manner satisfactory to the Required Holders; or

          (hh) other than as permitted by paragraph 6V, if the Company or any
     Restricted Subsidiary shall effect or pass an effective resolution
     authorizing (i) its consolidation, merger or amalgamation with any Person,
     or (ii) the sale, transfer or other disposition of all, or a material part
     of, its assets to one or more Persons whether in one transaction or a
     series of transactions, related or not; or

                                       47
<PAGE>
          (ii) any consent, license or authorization of any Governmental
     Authority or any other Person which is required to make any Material
     Contract or any Material License legal, valid, binding and enforceable or
     is required in order to enable the Company or any Guarantor or any other
     party thereto to perform its obligations hereunder or thereunder shall be
     withdrawn or ceases to be in full force and effect; or

          (jj) any consent, license or authorization of any Governmental
     Authority or any other Person which is required to make this Agreement or
     any other Document legal, valid, binding and enforceable or is required in
     order to enable the Company or any Guarantor to perform its obligations
     hereunder or thereunder shall be withdrawn or ceases to be in full force
     and effect,

     then (i) if such event is an Event of Default specified in any of clauses
(g) to (l), inclusive, of this paragraph 7A, all of the Notes at the time
outstanding shall automatically become immediately due and payable; (ii) if such
event is an any Event of Default specified in clause (a) or clause (b) of this
paragraph 7A, any holder or holders of Notes at the time outstanding affected by
such Event of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them to be
immediately due and payable, and (iii) if such event is an Event of Default
specified in any other clause of this paragraph 7A, the Required Holder(s) may,
at its or their option, by notice in writing to the Company, declare all of the
Notes to be, and all of the Notes shall thereupon be and become, immediately due
and payable. Upon any Notes becoming due and payable under this paragraph 7A,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Yield-Maintenance Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of a Yield-Maintenance Amount by the Company in the event
that any Note is prepaid or accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right under such
circumstances.

     7B.  RESCISSION OF ACCELERATION.

     At any time after any or all of the Notes shall have been declared
immediately due and payable pursuant to paragraph 7A, the Required Holder(s)
may, by notice in writing to the Company, rescind and annul such declaration and
its consequences if (a) the Company shall have paid all overdue interest on the

                                       48
<PAGE>
Notes, the principal of and Yield-Maintenance Amount, if any, payable with
respect to any Notes which have become due otherwise than by reason of such
declaration, and interest on such overdue interest and overdue principal and
Yield-Maintenance Amount, (b) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (c) all Events of Default
and Defaults, other than non-payment of amounts which have become due solely by
reason of such declaration, shall have been cured or waived pursuant to
paragraph 11C, and (d) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.

     7C.  NOTICE OF ACCELERATION OR RESCISSION.

     Whenever any Note shall be declared immediately due and payable pursuant to
paragraph 7A or any such declaration shall be rescinded and annulled pursuant to
paragraph 7B, the Company shall forthwith give written notice thereof to the
holder of each Note at the time outstanding.

     7D.  OTHER REMEDIES.

     If any Event of Default or Default shall occur and be continuing, the
holder of any Note may proceed to protect and enforce its rights under this
Agreement and such Note by exercising such remedies as are available to such
holder in respect thereof under Applicable Law, either by suit in equity or by
action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.

8.   REPRESENTATIONS, COVENANTS AND WARRANTIES

     The Company represents, covenants and warrants, as of the Restructuring
Date, as follows:

     8A.  BINDING OBLIGATION.

     This Agreement and each other Document that the Company is party to
constitutes the legal, valid, and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms.

                                       49
<PAGE>
     8B.  REAFFIRMATION.

     All representations and warranties made in the Existing Agreements by the
Company were true as of the dates of execution of the Existing Agreements.

     8C.  NO DEFAULT.

     Except as disclosed on Schedule 8C with respect to the Existing Agreements
(it being agreed hereto that all such existing Defaults and Events of Default on
such Schedule 8C are hereby waived by the Purchasers as of the effectiveness of
this Agreement), immediately prior to the effectiveness of this Agreement, no
Default or Event of Default had occurred and was continuing under the Existing
Agreements, and immediately after the effectiveness of this Agreement, no
Default or Event of Default will have occurred and be continuing.

     8D.  NO CONFLICT, BREACH, ETC.

     Neither the execution nor delivery of this Agreement, nor fulfillment of
nor compliance with the terms and provisions hereof and of the Notes will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the Properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), any Material Contract, any Material License, the
leases for the North York Property or the Significant U.S. Leased Properties or
any order, judgment, decree, statute, law, rule or regulation to which the
Company or any of its Subsidiaries is subject.

     8E.  NO VIOLATION OF LAW OR REGULATIONS.

     The amendment and restatement of the Existing Agreements and the execution
and delivery of this Agreement shall not violate any applicable law or
governmental regulation (including, without limitation, Regulations T, U and X
of the Board of Governors of the Federal Reserve System).

     8F.  AUTHORIZATION, CONSENT, ETC.

     Neither the nature of the Company or of any Subsidiary, nor any of their
respective businesses or Properties, nor any relationship between the Company or
any Subsidiary and any other Person, nor any circumstance in connection with the
offering, issuance, sale or delivery of the Notes is such as to require any
authorization, consent, approval, exemption or other action by or notice to or
filing with any court or administrative or governmental body (other than routine
filings after the date of closing with the Securities and Exchange Commission
and/or state Blue Sky authorities) in connection with the execution and delivery
of this

                                       50
<PAGE>
agreement or fulfillment of or compliance with the terms and provisions hereof
or of the Notes.

     8G.  FULL DISCLOSURE.

     None of the financial statements and other certificates previously provided
to the holders of Notes pursuant to the provisions of the Existing Agreements
nor the statements made in this Agreement nor any other written statements
furnished by or on behalf of the Company or any of its Subsidiaries, including,
without limitation, the Asset Monetization Program, the Financial Forecasts and
the Business Plans, and other written statements furnished to the Purchasers in
connection with the proposal and negotiation of this Agreement, the other
Documents and the waivers contained in paragraph 8C, taken as a whole, contain
any untrue statement of a material fact or omit a material fact necessary to
make the statements contained therein and herein not misleading. There is no
fact relating to any event or circumstance that has occurred or arisen since
December 31, 2001 that the Company has not disclosed to the Purchasers in
writing that has had or, so far as the Company can now reasonably foresee, could
reasonably be expected to have, a Material Adverse Effect.

     8H.  ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.

          (a) Schedule 8H is (except as noted therein) a complete and correct
     list of the Company's Subsidiaries, showing, as to each Subsidiary, the
     correct name thereof, the jurisdiction of its organization, and the
     percentage of shares of each class of its capital stock or similar equity
     interests outstanding owned by the Company and each other Subsidiary.

          (b) All of the outstanding shares of capital stock or similar equity
     interests of each Subsidiary shown in Schedule 8H as being owned by the
     Company and its Subsidiaries have been validly issued, are fully paid and
     nonassessable and are owned by the Company or another Subsidiary free and
     clear of any Lien (except as otherwise disclosed in Schedule 8H).

          (c) Each Subsidiary identified in Schedule 8H is a corporation or
     other legal entity duly organized, validly existing and in good standing
     under the laws of its jurisdiction of organization, and is duly qualified
     as a foreign corporation or other legal entity and is in good standing in
     each jurisdiction in which such qualification is required by law, other
     than those jurisdictions as to which the failure to be so qualified or in
     good standing would not, individually or in the aggregate, reasonably be
     expected to have a Material Adverse Effect. Each such Subsidiary has the
     corporate or other power and authority to own or hold under lease the
     properties it purports to own or hold

                                       51
<PAGE>
     under lease and to transact the business it transacts and proposes to
     transact.

     8I.  LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.

          (a) Except as disclosed in Schedule 8I, there are no actions, suits or
     proceedings pending or, to the knowledge of the Company, threatened against
     or affecting the Company or any Subsidiary or any property of the Company
     or any Subsidiary in any court or before any arbitrator of any kind or
     before or by any Governmental Authority that, individually or in the
     aggregate, would reasonably be expected to have a Material Adverse Effect.

          (b) Neither the Company nor any Subsidiary is in default under any
     order, judgment, decree or ruling of any court, arbitrator or Governmental
     Authority or is in violation of any applicable law, ordinance, rule or
     regulation (including without limitation Environmental Laws) of any
     Governmental Authority, which default or violation, individually or in the
     aggregate, would reasonably be expected to have a Material Adverse Effect.

     8J.  TITLE TO PROPERTY; LEASES.

          (a) OWNED PROPERTIES. The Company and its Subsidiaries have good and
     sufficient title to their respective material Properties, including all
     such Properties reflected in the most recent audited balance sheet
     delivered to the Purchasers or purported to have been acquired by the
     Company or any Subsidiary after said date (except as sold or otherwise
     disposed of in the ordinary course of business), in each case free and
     clear of Liens prohibited by this Agreement, except for those defects in
     title and Liens that, individually or in the aggregate, would not have a
     Material Adverse Effect. Neither the Company nor any Restricted Subsidiary
     has any interest in any real property other than the Owned Properties and
     there are no agreements, options, contracts or commitments to sell,
     transfer or otherwise dispose of any Owned Property or which would restrict
     the transfer of the Owned Properties other than those in connection with a
     Permitted Asset Sale. The Ontario Properties and the New Jersey Properties
     (all as described in Schedule 8J(a) comprise all of the Owned Properties
     that in the reasonable good faith estimate of the Company have a value
     individually in excess of Cdn.$5,000,000 (or its equivalent).

          (b) LEASED PROPERTIES. The Company is not, nor is any of its
     Restricted Subsidiaries, bound by any agreement to lease any real property
     except the Leased Properties. The names of payees under the leases for the
     Leased Properties, the description of the Leased Properties and the term,
     rent and other amounts payable under the leases for the Leased Properties

                                       52
<PAGE>
     are accurately described in Schedule 8J(b). All rent and other payments and
     obligations required to be paid and performed pursuant to the leases for
     the Leased Properties have been duly paid and performed. Neither the
     Company nor any of its Restricted Subsidiaries, as applicable, is in
     default of any of its obligations under the leases for any of the Leased
     Properties. The North York Property and the Significant U.S. Leased
     Properties are the only Leased Properties that are material to the business
     of the Company or any of its Restricted Subsidiaries.

     8K.  EXISTING INDEBTEDNESS.

     Since March 31, 2002, there has been no material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. After giving effect to this
Agreement, neither the Company nor any Subsidiary will be in default in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition shall exist with respect to any
Indebtedness of the Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.

     8L.  SOLVENCY.

          (a) ASSETS GREATER THAN LIABILITIES. The fair value of the business
     and assets of the Company, taken as a whole, exceeds, as of the
     Restructuring Date, the liabilities of the Company, taken as a whole, as of
     such time.

          (b) MEETING LIABILITIES. After giving effect to this Agreement and the
     other Documents, each of the Company and its Subsidiaries

               (i) will not be engaged in any business or transaction, or about
          to engage in any business or transaction, for which the Company or
          such Subsidiary has unreasonably small assets or capital (within the
          meaning of the Uniform Fraudulent Transfer Act, the Uniform Fraudulent
          Conveyance Act and section 548 of the Federal Bankruptcy Code), and

               (ii) will be able to pay its debts as they mature.

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<PAGE>
     8M.  INTENT.

     The Company is entering into this Agreement and the other Documents to
which it is a party without any intent to hinder, delay, or defraud either
current creditors or future creditors of the Company.

     8N.  ENVIRONMENTAL MATTERS.

     Except as otherwise disclosed in Schedule 8N, the Company has no knowledge
of any claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against the Company, any of its Restricted
Subsidiaries or any of the English Finance Structure Companies or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Law, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.

          (a) the Company has no knowledge of any facts which would give rise to
          any claim, public or private, of violation of Environmental Law or
          damage to the Environment emanating from, occurring on or in any way
          related to real properties now or formerly owned, leased or operated
          by the Company, any of its Restricted Subsidiaries or any of the
          English Finance Structure Companies or to other assets or their use,
          except, in each case, such as could not reasonably be expected to
          result in a Material Adverse Effect;

          (b) neither the Company, any Restricted Subsidiary or any of the
          English Finance Structure Companies has stored any Hazardous Materials
          on real properties now or formerly owned, leased or operated by the
          Company, any of its Restricted Subsidiaries or any of the English
          Finance Structure Companies nor has disposed of any Hazardous
          Materials in a manner contrary to any Environmental Law in each case
          in any manner that could reasonably be expected to result in a
          Material Adverse Effect; and

          (c) all buildings on all real properties now owned, leased or operated
          by the Company, any of its Restricted Subsidiaries or any of the
          English Finance Structure Companies are in compliance with applicable
          Environmental Laws, except where failure to comply could not
          reasonably be expected to result in a Material Adverse Effect.

     8O.  LIENS.

     The Collateral Documents create in favor of the Security Agents for and on
behalf of the holders of Notes valid, binding and perfected (when registered)
Liens

                                       54
<PAGE>
on all right, title and interest in all of the Collateral which is the subject
matter of the Collateral Documents and those Liens have first priority for all
purposes over any other Liens on the Collateral, except for Permitted Priority
Liens. The Collateral Documents to which it is a party, including their attached
schedules (if any), contain accurate descriptions of all of its material assets
and the Collateral Documents to which each Guarantor is a party, including their
attached schedules (if any).

     8P.  OWNERSHIP OF INVENTORIES RETAINED ON LEASED PROPERTIES.

     The Company covenants that Co-Steel Distribution Canada Limited has good
and marketable title to all of the Inventory retained on Leased Properties
located in Canada and Co-Steel USA Distribution, Inc. has good and marketable
title to all of the Inventory retained on Leased Properties located in the
United States.

     8Q.  OWNERSHIP OF THIRD PARTY ACCOUNTS RECEIVABLE.

     The Company covenants that Co-Steel Distribution Canada Limited has good
and marketable title to all of the Accounts Receivable payable by arm's length
Account Debtors of any member of the Restricted Group located in Canada, (other
than Accounts Receivable relating to the Company's recycling division which are
owned by the Company), and Co-Steel USA Distribution, Inc. has good and
marketable title to all of the Accounts Receivable payable by arm's length
Account Debtors of any member of the Restricted Group located in the United
States. Substantially all of the Accounts Receivable are assignable as security
for the Notes without the consent of the related Account Debtor or any other
Person.

     8R.  CONTRACTS AFFECTED BY CHANGE OF CONTROL.

     The Company is not bound by any material contract or commitment which
requires prior approval of any transfer of the shares of any Person which are
pledged to a Security Agent for and on behalf of the holders of Notes pursuant
to the Stock Pledge Agreements.

     8S.  MATERIAL CONTRACTS AND MATERIAL LICENSES.

          (a) Schedule 8S-1 accurately sets out all Material Contracts and
     Schedule 8S-2 accurately sets out all Material Licenses.

          (b) A true and complete certified copy of each Material Contract and
     Material License has been delivered to the holders of Notes and each
     Material Contract and Material License is in full force and effect,
     unamended except as permitted under this Agreement.

                                       55
<PAGE>
          (c) No event has occurred and is continuing caused by any member of
     the Restricted Group or, to the best of the Company's knowledge, caused by
     any other party to a Material Contract or Material License which would
     constitute a material breach of or a default under any Material Contract or
     Material License.

          (d) Each Material Contract to which it is a party is binding upon it
     and, to its knowledge, is a binding agreement of each other Person who is a
     party to the Material Contract, in each case enforceable in accordance with
     its terms, subject to any bankruptcy, insolvency, reorganization,
     moratorium or similar laws affecting creditors' rights generally.

          (e) The Company has not made any prepayments to or received any
     prepayments from third parties under any Material Contract out of the
     ordinary course of its business.

          (f) Except as set forth on Schedules 8S-1 and 8S-2, no Material
     Contract or Material License is assignable without the consent of another
     party to such Material Contract or the issuer or grantor of such Material
     License.

     8T.  RESTRICTED SUBSIDIARIES.

     Other than the Guarantors, no Subsidiary has Net Tangible Assets in excess
of Cdn.$5,000,000 (or its equivalent).

     8U.  BANK ACCOUNTS.

     Schedule 8U accurately sets out each bank account maintained by the Company
and each of its Subsidiaries (other than Gallatin) and accurately sets forth the
institution and location where each such account is maintained. Other than as
permitted pursuant to paragraph 6FF, the bank account maintained by Acierco S.A.
with the Banque de Luxembourg will at no time hold deposits exceeding the lesser
of U.S.$1,000,000 and the then contingent tax liability of Acierco S.A. and the
bank account maintained by Lake Ontario Steel Company Inc. with Manufacturers
and Traders Trust Company in Buffalo, New York will at no time hold deposits
exceeding U.S.$500,000; and except as permitted by the foregoing provisions of
this sentence, each bank account of the Company or any Subsidiary (other than
Co-Steel C.S.M. Corp. and its Subsidiaries) shall be either maintained with the
administration agent under the Bank Agreement or PNC or shall be the subject of
a Blocked Account Agreement or if it does not meet any of the foregoing criteria
then it shall contain less than Cdn.$150,000 (or the Equivalent Amount in U.S.$)
and less than Cdn.$600,000 (or equivalent) in the aggregate for all such
accounts.

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<PAGE>
     8V.  INTERCOMPANY INDEBTEDNESS.

     Schedule 8V accurately describes each inter-company loan ("INTERCOMPANY
Indebtedness") between the Company and any of its Subsidiaries or between any of
its Subsidiaries and another Subsidiary and in each case sets forth the
principal amount of each such inter-company loan together with the interest rate
it bears and the term of each such inter-company loan.

     8W.  COMPUTER SYSTEMS.

     The Company makes commercially reasonable efforts to ensure that all
computer systems owned or leased by it or used in its businesses and material to
its business, including hardware and software, are, free from viruses and
disabling codes and devices, and it continues to take all steps and implement
all procedures necessary to ensure that those systems are free from viruses and
disabling codes and shall remain so. The Company has in place appropriate
disaster recovery plans, procedures and facilities and has taken all steps and
implemented all procedures necessary to safeguard and restrict unauthorized
access to its computer systems.

     8X.  INTELLECTUAL PROPERTY RIGHTS.

     The Company is the registered (if registration is possible) and beneficial
owner or licensee of, with good and marketable title to, all Intellectual
Property Rights. All Intellectual Property Rights which are material to its
business are accurately described in Schedule 8X, as amended by written notice
by the Company to the Required Holders from time to time. The Company has the
right to use the Intellectual Property Rights, all applications and
registrations in Canada, the United States and elsewhere, and the Intellectual
Property Rights are current, and the conduct of its business does not to its
knowledge infringe the intellectual property rights of any other Person.

     8Y.  LICENSES, AGENCY AND DISTRIBUTION AGREEMENTS.

     Schedule 8Y, as amended by written notice by the Company to the Required
Holders from time to time, accurately lists all material agreements to which it
is a party or by which it is bound under which the right to manufacture, use or
market any product, service, technology, information, data, computer hardware or
software or other Property has been granted, licensed or otherwise provided to
it or by it to any other Person, or under which it has been appointed or any
Person has been appointed by it as an agent, distributor, licensee or franchisee
for any of the foregoing. None of the agreements listed in Schedule 8Y grants to
any Person any authority to incur any liability or obligation to enter into any
agreement on behalf of the Company.

                                       57
<PAGE>
     8Z.  INSURANCE.

     The Company maintains all risks property insurance in connection with its
assets and business and other types of insurance, including business
interruption insurance and liability insurance with respect to claims for
personal injury, death or property damage, with respect to the operation of its
business, all with responsible and reputable insurance companies in such amounts
and with such deductibles as are customary in the case of businesses of
established reputation engaged in the same or similar businesses.

     8AA. FINANCIAL STATEMENTS.

     The annual audited consolidated financial statements of the Company for the
fiscal year ended December 31, 2001, furnished to the Purchasers are the most
recent annual audited financial statements of the Company and its Subsidiaries.
The Company's financial statements have been prepared on a consolidated basis
(which consolidation includes all of its Subsidiaries) and in accordance with
GAAP, except as stated in the financial statements or in the notes thereto. The
Company's audited financial statements (a) present fairly in all material
respects the consolidated financial positions and the consolidated results of
operations at the dates thereof and for the periods covered therein, and (b)
disclose all liabilities of the Company and its Subsidiaries, including
contingent or unmatured liabilities as of the date thereof, which are required
to be disclosed thereon, in each case in accordance with GAAP.

     8BB. SPECIAL PURPOSE FINANCIAL STATEMENTS.

     The Special Purpose Financial Statements of the Company for the fiscal year
most recently ended, furnished to the Purchasers are the most recent Special
Purpose Financial Statements of the Company and its Subsidiaries (other than the
Unrestricted Subsidiaries). The Special Purpose Financial Statements have been
prepared on a consolidated basis (which consolidation includes all of its
Subsidiaries (other than the Unrestricted Subsidiaries)), and in accordance with
GAAP, except as stated in the Special Purpose Financial Statements or in the
notes thereto. The Special Purpose Financial Statements (a) present fairly in
all material respects the Company's and its Subsidiaries' (other than the
Unrestricted Subsidiaries) financial positions and their results of operations
at the dates thereof and for the periods covered therein, and (b) disclose all
liabilities of the Company and its Subsidiaries (other than the Unrestricted
Subsidiaries) including contingent or unmatured liabilities as of the date
thereof, which are required to be disclosed thereon, in each case in accordance
with GAAP.

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<PAGE>
     8CC. FINANCIAL FORECAST.

     The Company has prepared the Financial Forecast and is responsible for
developing the assumptions on which the Financial Forecast is based. The
Financial Forecast is based on reasonable assumptions as to all legal and
factual matters material to the estimates set forth therein. With respect to the
Financial Forecast, each Purchaser acknowledges (a) that there are uncertainties
inherent in attempting to make such projections and forecasts, (b) it is
familiar with such uncertainties, and (c) and agrees that the Financial Forecast
are projections and the actual results will likely differ. The Financial
Forecasts have been approved by the Company's Board of Directors.

     8DD. ASSET MONETIZATION PROGRAM.

     The Company has prepared the Asset Monetization Program and is responsible
for developing the assumptions on which the Asset Monetization Program is based.
The Asset Monetization Program is based on reasonable assumptions as to all
legal and factual matters material to the estimates set forth therein. With
respect to the Asset Monetization Program, each Purchaser acknowledges (a) that
there are uncertainties inherent in attempting to make such a program, (b) it is
familiar with such uncertainties, and (c) and agrees that the Asset Monetization
Program may not be achieved in the time frame or in amounts projected. The Asset
Monetization Program has been approved by the Company's Board of Directors.

     8EE. EMPLOYMENT DISPUTES.

     There are no disputes pending or, to the Company's best knowledge after due
inquiry by its Responsible Officers, threatened, between the Company and any of
its employees which could reasonably be expected to have a Material Adverse
Effect upon it.

     8FF. BENEFIT AND PENSION PLANS.

     The Company's benefit and pension plans are fully insured or otherwise
funded in accordance with Applicable Law and all premiums and other payments due
by the Company under its benefit and pension plans have been fully paid and all
benefits and pension payments due under its benefit and pension plans have been
paid. No Pension Plan that is subject to ERISA has incurred any "accumulated
funding deficiency" within the meaning of section 302 of ERISA or section 412 of
the Code and no Pension Plan that is subject to ERISA has applied for or
received a waiver of the minimum funding standards imposed by section 412 of the
Code. No Pension Plan that is subject to ERISA has been involved in any
transaction that (A) violates the fiduciary requirements of section 404 of ERISA
or
                                       59
<PAGE>
(B) is a "prohibited transaction" within the meaning of section 406(a) or
406(b) of ERISA or section 4975(c) of the Code.

     8GG. PENSION PLANS.

     Except as disclosed on Schedule 8GG during the twelve-consecutive-month
period prior to the Restructuring Date, no steps have been taken to terminate
any Pension Plan (other than a standard termination under section 4041(b) of
ERISA), and no contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which might result in the incurrence by any US Guarantor or any
member of the Controlled Group of any material liability, fine or penalty.

     8HH. N.J.S.C. INVESTMENT CO., INC.

     N.J.S.C. Investment Co., Inc. is inactive and is currently in the process
of being dissolved.

     8II. ENGLISH FINANCE STRUCTURE COMPANIES.

     Each of the English Finance Structure Companies carries on the business of
providing financing to related corporations or owns the shares of other
companies that are English Finance Structure Companies and carries on no other
business. The assets and liabilities of each of the English Finance Structure
Companies are summarized on Schedule 8II.

     8JJ. HUNGARIAN FINANCE STRUCTURE COMPANIES.

     Each of the Hungarian Finance Structure Companies carries on the business
of providing financing to related corporations or owns the shares of other
companies that are Hungarian Finance Structure Companies and carries on no other
business. The assets and liabilities of each of the Hungarian Finance Structure
Companies are summarized on Schedule 8JJ.

     8KK. CO-STEEL C.S.M. CORP.

     Co-Steel C.S.M. Corp. carries on its business as a partner in Gallatin and
carries on no other business. Gallatin is an active business which operates a
minimill in Kentucky specializing in the production of flat rolled steel. The
assets and liabilities of Co-Steel C.S.M. Corp. are summarized on Schedule 8KK.

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<PAGE>
9.   REPRESENTATIONS OF THE PURCHASERS

     The representations made by each Purchaser in the Existing Agreements in
respect of the Existing Notes were true as of the date of execution of each
Existing Agreement.

10.  DEFINITIONS

     For the purpose of this Agreement, the terms not defined in paragraph 10B
but otherwise defined in the introductory sentence and in Sections 1 and 2 shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified with respect thereto:

     10A. YIELD-MAINTENANCE AMOUNT TERMS.

     "CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4B or 4C or is declared to
be immediately due and payable pursuant to paragraph 7A, as the context
requires.

     "DISCOUNTED VALUE" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

     "REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the yield to maturity implied by:

          (a) the yields reported, as of 10:00 a.m. (New York City time) on the
     Business Day next preceding the Settlement Date with respect to such Called
     Principal, for actively traded U.S. Treasury securities having a maturity
     equal to the Remaining Average Life of such Called Principal as of such
     Settlement Date, on the Treasury Yield Monitor page of Standard & Poor's
     MMS-Treasury Market Insight (or, if Standard & Poor's shall cease to report
     such yields in MMS-Treasury Market Insight or shall cease to be Prudential
     Capital Group's customary source of information for calculating
     yield-maintenance amounts on privately placed notes, then such source as is
     then Prudential Capital Group's customary source of such information), or

          (b) if such yields shall not be reported as of such time or the yields
     reported as of such time shall not be ascertainable, the Treasury Constant
     Maturity Series yields reported, for the latest day for which such yields
     shall have been so reported as of the Business Day next preceding the
     Settlement

                                       61
<PAGE>
     Date with respect to such Called Principal, in Federal Reserve Statistical
     Release H.15 (519) (or any comparable successor publication) for actively
     traded U.S. Treasury securities having a constant maturity equal to the
     Remaining Average Life of such Called Principal as of such Settlement Date.

     Such implied yield shall be determined, if necessary in the Required
Holders' sole discretion, by (i) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and (ii)
interpolating linearly between yields reported for various maturities.

     "REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing:

          (a)  such Called Principal into

          (b)  the sum of the products obtained by multiplying

               (i) each Remaining Scheduled Payment of such Called Principal
          (but not of interest thereon) by

               (ii) the number of years (calculated to the nearest one-twelfth
          year) which will elapse between the Settlement Date with respect to
          such Called Principal and the scheduled due date of such Remaining
          Scheduled Payment.

     "REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon (calculated at the Initial Rate) that would be due on or after the
Settlement Date with respect to such Called Principal if no payment of such
Called Principal were made prior to its scheduled due date; provided that, if
such calculation is being made in connection with a payment in respect of a
True-Up Event (as defined in the Intercreditor Agreement), interest that would
be due for purposes of the calculation above shall be calculated at the
Applicable Rate.

     "SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or 4C or is declared to be immediately due and payable pursuant to
paragraph 7A , as the context requires.

     "YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of:

          (a)  such Called Principal, plus

                                       62
<PAGE>
          (b) interest accrued thereon as of (including interest due on) the
     Settlement Date with respect to such Called Principal.

     The Yield-Maintenance Amount shall in no event be less than zero.

     10B. OTHER TERMS.

     "ACCOUNT DEBTOR" shall mean any Person who is obligated to pay any Account
Receivable.

     "ACCOUNTS RECEIVABLE" shall mean any right of a Person to payment for goods
sold, leased or services rendered in the ordinary course of business, classified
as an account receivable in accordance with GAAP.

     "ADDITIONAL PROVISIONS" shall have the meaning specified in paragraph 5Q.

     "ADJUSTED COST BASE" shall mean the dollar amount by which the Unrestricted
Subsidiaries would be carried as at December 31, 1998 in the accounts of the
Company, if the Unrestricted Subsidiaries were accounted for, from inception, by
the equity method of accounting. Furthermore: (a) the Adjusted Cost Base will
have no further adjustments subsequent to December 31, 1998 for net income or
loss of, or unrealized gains or losses on, the Unrestricted Subsidiaries; (b)
consistent with the equity method of accounting all inter-company transactions
and balances would be eliminated; and (c) the Adjusted Cost Base will be
increased or decreased, as the case may be, for any amounts contributed or
received in the form of subscription for equity, contribution of surplus, or
receipt of dividends. For greater certainty, realized gains or losses on
disposals of Unrestricted Subsidiaries will be reflected in the Special Purpose
Financial Statements. For purposes of this definition, the Hungarian Finance
Structure Companies and N.J.S.C. Investment Co., Inc. shall be deemed to be
Restricted Subsidiaries.

     "AFFILIATE" shall mean:

          (a) as such term is used in paragraphs 6G(h) and 6U, as to any Person,
     any other Person which, directly or indirectly, is in control of, is
     controlled by, or is under common control with, such Person. A Person shall
     be deemed to control another Person if the controlling Person possesses,
     directly or indirectly, the power to direct or cause the direction of the
     management and policies of such other Person, whether through the ownership
     of voting securities or membership interests, by contract or otherwise);
     without limiting the foregoing, any Person which is an officer, director or
     a holder of 10% or more of the shares of any class of capital stock of the
     Company or any Subsidiary, or a member of the immediate family of any such
     officer, director or 10% or greater shareholder, shall be deemed to be an
     Affiliate of the Company; and

                                       63
<PAGE>
          (b) as used elsewhere in this Agreement, with respect to any Person,
     any of (i) a director or executive officer of the Person or any other
     Person described in clause (ii) below and (ii) any other Person which,
     directly or indirectly, through one or more intermediaries, Controls, is
     Controlled by, or is under common Control with the Person and, with respect
     to the Company, shall include each of its Subsidiaries.

     "AGREEMENT" shall have the meaning specified in paragraph 1A(b).

     "APPLICABLE LAW" shall mean, with respect to any Person, property,
transaction or event, all present or future applicable laws, statutes,
regulations, by-laws, treaties, judgments and decrees and all applicable
official directives if legally binding and all other legally binding
requirements of any Governmental Authority or Person having authority over such
Person, property, transaction or event.

     "APPLICABLE RATE" shall mean, for any interest payment date in respect of
the Series A Notes and the Series B Notes, the Initial Rate for such Series plus
the applicable margin set forth below, based upon the ratio of Consolidated
Total Net Debt to Normalized Consolidated EBITDA as in effect on such date:

<TABLE>
<CAPTION>
---------------------------------------------------------
Consolidated Total Net Debt to           Applicable
Normalized Consolidated EBITDA           Margin
---------------------------------------------------------
<S>                                      <C>
=<3:0                                          0%
---------------------------------------------------------
> 3:0, =<4:0                                 .50%
---------------------------------------------------------
> 4.0, =<5.0                                1.25%
---------------------------------------------------------
> 5.0, <=7.5                                1.75%
---------------------------------------------------------
>7.5                                        2.00%
---------------------------------------------------------
</TABLE>

For purposes of the foregoing, the rate per annum shall be determined and
adjusted on the date (the "RATE ADJUSTMENT DATE") one Business Day after the
unaudited quarterly financial statements and the related Officer's Certificate
required pursuant to paragraph 5A are delivered to the Purchasers. If the
Company fails to deliver the unaudited quarterly financial statements and
related Officer's Certificate as required pursuant to paragraph 5A, on or before
any Rate Adjustment Date, the rate per annum shall be adjusted to an amount
equal to the Initial Rate plus 2.00% from such Rate Adjustment Date until such
time that the unaudited financial statements and related Officer's Certificate
are delivered to the Purchasers, whereupon the rate per annum shall be adjusted
as provided above, until the next Rate Adjustment Date.

                                       64
<PAGE>
     "APPROVED ASSET SALE" shall have the meaning specified in paragraph 6L.

     "APPROVED FINANCINGS" shall mean refinancings of, or replacement facilities
for, each of the Bank Agreement and the PNC Credit Agreements, all on terms and
conditions and with documentation reasonably satisfactory to the Required
Holder(s).

     "ASSET MONETIZATION PROGRAM" shall mean the written plan and timetable for
divesting all non-core assets of the Company and its Subsidiaries, dated
February 25, 2002 and attached hereto as Exhibit D, as revised from time to time
pursuant to paragraph 5AA. The Asset Monetization Program shall be updated as
required by changes to the Strategic Plan, Collateral Audit and/or the Business
Plans and shall be approved by the Company's board of directors.

     "ASW HOLDINGS" shall mean ASW Holdings plc, a corporation incorporated
under the laws of England.

     "AUDITOR" shall mean (a) PricewaterhouseCoopers LLP, Chartered Accountants,
or (b) another nationally recognized firm of chartered accountants who at the
relevant time (i) are the duly appointed auditors of the Company and (ii) are in
fact independent of the Company.

     "BA EQUIVALENT NOTE" shall mean a non-interest bearing note, issued by the
Company in the amount and for the same term as the Bankers' Acceptance the Banks
would otherwise have been required to discount under the Bank Agreement, at a
purchase price calculated on the same basis as Bankers' Acceptances are
discounted by the administration agent under the Bank Agreement.

     "BANK AGREEMENT" shall mean that certain Credit Agreement, dated as of
April 30, 2002 (together with any amendment, modification, supplement thereto or
replacement thereof) by and among the Company, the various Guarantors party
thereto, The Toronto-Dominion Bank, as administration agent and the Banks.

     "BANKER'S ACCEPTANCE" shall mean a depository bill, as defined in the
Depository Bills and Notes Act (Canada) in Canadian dollars that is in the form
of a draft signed by the Company and accepted by a Bank or, for a Bank not
participating in clearing services as contemplated in that Act, a draft or other
bill of exchange in Canadian dollars that is drawn by the Company and accepted
by a Bank.

     "BANKRUPTCY LAW" shall have the meaning specified in clause (h) of
paragraph 7A.

     "BANKS" shall mean the Toronto Dominion Bank, The Bank of Nova Scotia and
other lenders from time to time party to the Bank Agreement.

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<PAGE>
     "BI-ANNUAL AUDITOR'S REPORT" shall have the meaning specified in paragraph
5EE.

     "BLOCKED ACCOUNT AGREEMENT" shall mean a blocked account agreement entered
into by a bank or other financial institution with which the Company or a
Subsidiary (other than Co-Steel C.S.M Corp and its Subsidiaries) maintains an
account, in form and substance acceptable to the Required Holders.

     "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City or Toronto, Ontario, are required or
authorized to be closed.

     "BUSINESS PLAN" shall mean, for each fiscal year, a detailed and
comprehensive 24-month business plan and forecast for the Company, which
includes a written management discussion, and shall be in form and substance
satisfactory to the Required Holder(s) and approved by the Company's board of
directors.

     "CANADIAN DOLLARS", "CDN. DOLLARS", AND "CDN.$" shall mean lawful currency
of Canada.

     "CANADIAN SECURITY AGENT" shall mean Computershare Trust Company of Canada
(and its permitted successors and assigns) in its capacity as Canadian security
agent for and on behalf of the administration agent and Banks under the Bank
Agreement, the holders of Notes and PNC pursuant to the Intercreditor Agreement.

     "CAPITAL EXPENDITURE" shall mean any expenditure made by any Person for the
purchase, lease or acquisition of capital assets (other than Current Assets)
required to be capitalized in accordance with GAAP, including, without
limitation, Capitalized Lease Obligations.

     "CAPITALIZED LEASE OBLIGATION" shall mean, with respect to any Person, at
any time, all liabilities of the Person as lessee in respect of all rentals
under any lease of (or other arrangement conveying the right to use) real or
personal property, which, in accordance with GAAP, have been or are required to
be capitalized on the books of such Person; the term "rentals" shall mean, all
payments which the lessee is required to make by the terms of any lease or other
arrangement.

     "CLOSING" shall have the meaning specified in paragraph 2A.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended.

                                       66
<PAGE>
     "CODE AFFILIATE" shall mean each Person which together with the Company or
any of its Subsidiaries is treated as a "single employer" under subsection (b),
(c), (m), (n) or (o) of section 414 of the Code.

     "COLLATERAL" shall mean all Property, of whatever nature or kind, which is
the subject of any Lien created by any Collateral Document.

     "COLLATERAL AUDIT" shall have the meaning specified in paragraph 5BB of
this Agreement.

     "COLLATERAL DOCUMENTS" shall mean each Mortgage and Leasehold Mortgage (and
Landlord Consents as necessary), each Security Agreement, any Blocked Account
Agreement, each Stock Pledge Agreement (including delivery to the applicable
Security Agent of original share certificates representing the capital stock in
each Initial Guarantor, ASW Holdings and the other pledged entities together
with duly executed stock transfer powers), each UCC-1 Financing Statement (and
other registrations) required to be filed to perfect the Security Agents'
interests in assets of the Company and the Guarantors, the Insurance
Assignments, the Debentures and each Moveable Hypothec.

     "COMPANY" shall have the meaning specified in the introductory paragraph of
this Agreement.

     "CONSOLIDATED CURRENT ASSETS" shall mean, for any period, the trade
accounts receivable (net of any allowance for doubtful accounts and prepaid
expenses) and inventory (net of obsolescence or valuation reserves) of the
Company which, at the date of determination, are, in accordance with GAAP,
classified as current on the balance sheet contained in the most recent Special
Purpose Financial Statements, but excluding cash and cash equivalents.

     "CONSOLIDATED CURRENT LIABILITIES" shall mean, for any period, the accounts
payable and accrued liabilities of the Company which, at the date of
determination, are, in accordance with GAAP, classified as current on the
balance sheet contained in the most recent Special Purpose Financial Statements,
but excluding bank indebtedness and the current portion of long-term
liabilities.

     "CONSOLIDATED EBITDA" shall mean for any period (a) the Consolidated Net
Income in the period; plus (b) Consolidated Net Interest Expense in the period;
plus (c) income taxes, whether paid or deferred, which are deducted in
determining Consolidated Net Income in the period, if any; plus (d) depreciation
and amortization expense for the period; minus (e) to the extent added in
determining Consolidated Net Income, extraordinary gains; plus (f) to the extent
deducted in determining Consolidated Net Income, non-cash extraordinary losses
(which for greater certainty shall include the non-cash Cdn.$13 million pension
curtailment charge from the third fiscal quarter of 2001); plus (g) all cash
receipts from Gallatin

                                       67
<PAGE>
that have been used by the Company and its Subsidiaries to permanently repay
Indebtedness to the holders of the Notes, PNC and the Banks; (h) to the extent
deducted in determining Consolidated Net Income, unrealized foreign exchange
losses; minus (i) the amount of loans or advances to Gallatin made pursuant to
paragraph 6O; minus (j) to the extent added in determining Consolidated Net
Income, unrealized foreign exchange gains; all as set forth on the Special
Purpose Financial Statements for such period, all as determined in accordance
with GAAP.

     "CONSOLIDATED NET INCOME" shall mean, with reference to any period, any net
earnings (or net loss) for such period as set forth on the Special Purpose
Financial Statements for such period.

     "CONSOLIDATED NET INTEREST EXPENSE" shall mean, for any period, the
aggregate of interest charges, finance charges and debt service charges, fees or
discounts for borrowed money, paid, payable or accrued in respect of
interest-bearing Indebtedness (including without limitation Bankers'
Acceptances) net of all interest and dividend income and specifically excluding
all fees (but not interest charges) payable under or in connection with this
Agreement for such period, all as set forth on the Special Purpose Financial
Statements for such period, plus, for greater certainty, all interest,
calculated on an accrual basis, on the equity component of the Convertible
Unsecured Subordinated Debentures before income taxes.

     "CONSOLIDATED TOTAL NET DEBT" shall mean, as of any date, the principal
amount of all outstanding interest bearing Indebtedness including, without
limitation, the principal amount of the Convertible Unsecured Subordinated
Debentures, the face amount of outstanding Bankers' Acceptances, Letters of
Credit, and the amount of Capitalized Lease Obligations (net of interest
component) but specifically excluding accounts payable and accrued liabilities,
and deducting cash and short term investments (rated R-1 (middle) or better by
Dominion Bond Rating Service), all as set forth on the Special Purpose Financial
Statements as of such date plus the face amount of all guarantees provided by
any Restricted Subsidiary for the benefit of any Unrestricted Subsidiary
(excluding, for greater certainty, the guarantee by the Company of the
obligations of Co-Steel (UK) Limited pursuant to the share purchase agreement
dated December 23, 1998 between Co-Steel (UK) Limited, ASW Holdings and the
Company).

     "CONTAMINANT" shall mean any pollutant, dangerous substance, liquid waste,
industrial waste, hauled liquid waste, toxic substance, hazardous waste,
hazardous material, hazardous substance, nuclear material, contaminant or like
substance including any of the foregoing controlled, regulated or prohibited
under any Environmental Law or otherwise.

                                       68
<PAGE>
     "CONTROL" shall mean with respect to a body corporate deemed to be
controlled by another person or by two or more bodies corporate that (a) voting
securities of the first-mentioned body corporate carrying more than 50 percent
of the votes for the election of directors are held, other than by way of
security only, by or for the benefit of such other person or by or for the
benefit of such other bodies corporate; and (b) the votes carried by such
securities are sufficient, if exercised, to elect a majority of the board of
directors of the first-mentioned body corporate and "CONTROLLED" shall have a
corresponding meaning.

     "CONTROLLED GROUP" shall mean all members of a controlled group of
corporations and all members of a controlled group of trades or business
(whether or not incorporated) under common control which, together with each US
Guarantor, are treated as a single employer under section 414 of the Code or
section 4001 of ERISA.

     "CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES" shall mean the Company's
6.50% Convertible Unsecured Subordinated Debentures issued pursuant to a
prospectus dated April 14, 1997.

     "CO-STEEL HUNGARY" means Co-Steel Liquidity Management Hungary Limited
Liability Company, a corporation incorporated pursuant to the laws of Hungary
and licensed as a Hungarian off-shore company.

     "CUMULATIVE CONSOLIDATED EBITDA" shall mean Consolidated EBITDA calculated
for a period from October 1, 2001 to the date of calculation, which date shall
be the last calendar day of a month.

     "CURRENT ASSETS" shall mean the consolidated current assets of any Person,
as defined and determined in accordance with GAAP.

     "DEBENTURE" shall mean a Debenture from any Obligor in favor of the
Canadian Security Agent on behalf of the holders of Notes, PNC and the Banks
containing a first ranking fixed charge (subject to Permitted Liens) with
respect to the Company's leasehold interest in the North York Property, the
Company's freehold interest in each Ontario Property and other assets and a
floating charge over the remaining present and future assets of such Obligor
delivered or pledged to the Canadian Security Agent pursuant to a debenture
pledge agreement.

     "DEFERRED PRINCIPAL AMOUNTS" shall mean, collectively, the Deferred Series
A Amounts and the Deferred Series B Amounts.

     "DEFERRED SERIES A AMOUNTS" shall have the meaning specified in paragraph
4A(a).

                                       69
<PAGE>
     "DEFERRED SERIES B AMOUNTS" shall have the meaning specified in paragraph
4A(b).

     "DISPOSAL" shall mean the sale, lease, transfer or other disposition of
Property of the Company or any of its Restricted Subsidiaries, whether by one
transaction or a series of transactions and whether at the same time or over a
period of time.

     "DOCUMENTS" shall mean each of this Agreement, any Note, any Guarantee, any
Collateral Document, the Intercreditor Agreement, the Standstill Agreement and
all certificates and other documents delivered or to be delivered to the
Purchasers pursuant to this Agreement or any other Document.

     "ENGLISH FINANCE STRUCTURE COMPANIES" shall mean each of Co-Steel Amsterdam
B.V., Co-Steel (UK) Limited and Cansteel Antilles N.V.

     "ENVIRONMENT" shall mean soil, surface waters, ground waters, land stream
sediments, surface or subsurface strata, ambient air, and any environmental
medium.

     "ENVIRONMENTAL LAW" shall mean any environmental or health and
safety-related law, regulation, rule or ordinance at the Canadian, United States
or British federal, state, provincial or local level, whether existing as of the
date hereof, whether or not previously enforced, and, for purposes of complying
in the future with such laws, regulations, rules or ordinances, those that are
subsequently enacted.

     "ENVIRONMENTAL PERMITS" shall mean all permits, licenses and other
authorizations required under any applicable Environmental Law.

     "EQUIVALENT AMOUNT" shall mean, on any date, the equivalent amount in
Canadian Dollars or United States Dollars, as the case may be, after giving
effect to a conversion of a specified amount of United States Dollars to
Canadian Dollars or of Canadian Dollars to United States Dollars, as the case
may be, at the official noon rate of exchange as quoted by the Bank of Canada on
page BOFC on Reuters service for the purchase of the applicable currency in the
wholesale market on the date in question at approximately noon (Toronto time)
for the purchase of United States Dollars with Canadian Dollars or at the rate
that is the reciprocal thereof for the purchase of Canadian Dollars with United
States Dollars, as the case may be.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

     "ERISA AFFILIATE" shall mean any corporation which is a member of the same
controlled group of corporations as the Company within the meaning of

                                       70
<PAGE>
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.

     "EVENT OF DEFAULT" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "DEFAULT" shall mean any of such events,
whether or not any such requirement has been satisfied.

     "EXCESS REVOLVER PAYDOWN" shall have the meaning specified in the
Intercreditor Agreement.

     "EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended.

     "EXISTING AGREEMENTS" shall have the meaning specified in paragraph 1A(b).

     "EXISTING 1994 AGREEMENT" shall have the meaning specified in paragraph
1A(a).

     "EXISTING 1997 AGREEMENT" shall have the meaning specified in paragraph
1A(b).

     "EXISTING NOTES" shall have the meaning specified in paragraph 1A(b).

     "EXISTING SERIES A NOTES" shall have the meaning specified in paragraph
1A(a).

     "EXISTING SERIES B NOTES" shall have the meaning specified in paragraph
1A(b).

     "FAIR MARKET VALUE" shall mean, at any time with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively, as determined in good
faith by the Board of Directors of the Company.

     "FINANCIAL FORECAST" shall mean the financial forecast for the Company and
its Subsidiaries dated October 1, 2001 for the fiscal years ending December 31,
2001, 2002 and 2003, which financial forecast is attached hereto as Schedule
8CC.

     "FOREIGN PENSION PLAN" shall mean any plan, fund or other similar program
established or maintained by, or for the benefit of the employees of, any
Restricted Subsidiary or the Company which provides for retirement income for

                                       71
<PAGE>
such employees or results in a deferral of income for such employees in
contemplation of retirement and is not subject to ERISA.

     "GAAP" shall mean, as of any time of determination, generally accepted
accounting principles applicable in Canada as recommended in the Handbook of the
Canadian Institute of Chartered Accountants as in effect at such time of
determination.

     "GALLATIN" shall mean Gallatin Steel Company, a partnership created under
the laws of the Commonwealth of Kentucky.

     "GALLATIN COUNTY INDUSTRIAL REVENUE BONDS" shall mean the industrial
revenue bonds issued by Gallatin to Gallatin County, Kentucky, U.S.A. pursuant
to an indenture dated as of March 1, 1994.

     "GALLATIN PROJECT CONTRACTS" shall mean the Agreement between the Company
and Dofasco Inc. made April 30, 1993 and the related Partnership Agreement
between Co-Steel C.S.M. Corp. and Dofasco Gallatin Inc. made as of May 11, 1993,
as amended by the First Amending Agreement made June 24, 1993.

     "GOVERNMENTAL AUTHORITY" shall mean the government of any nation or any
province, municipality, state or other political subdivision of any nation, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled (through stock or capital ownership or otherwise) by any of
the foregoing.

     "GUARANTEE" shall mean a guarantee agreement from a Guarantor in favor of
the Purchasers, guaranteeing the payment and performance of all obligations to
the Purchasers, substantially in the form of Exhibit E hereto.

     "GUARANTOR" shall mean each Initial Guarantor and each Subsidiary of the
Company which becomes a party hereto as a Guarantor from time to time pursuant
to paragraph 5M.

     "HAZARDOUS MATERIAL" shall mean any pollutant, toxic substance, hazardous
waste, hazardous material, hazardous substance, or oil as defined in or pursuant
to the Resource Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, the Federal
Clean Water Act, or any other federal, state, provincial or local environmental
law, regulation, ordinance, rule, or by-law of the United States, Canada or the
United Kingdom, whether existing as of the date hereof, previously enforced, or
subsequently enacted.

                                       72
<PAGE>
     "HEDGING CONTRACT" shall mean a contract entered into between the Company
and any Bank under the Bank Agreement with respect to any interest rate or
currency hedging product.

     "HUNGARIAN FINANCE STRUCTURE COMPANIES" shall mean Goldmarsh Enterprises,
Acierco S. A. and Co-Steel Hungary.

     "HUNGARIAN GUARANTEE" shall have the meaning set out in paragraph 2L(d).

     "HUNGARIAN GUARANTEE DOCUMENTS" shall have the meaning set out in paragraph
2L(d).

     "HUNGARIAN LOAN NOTES" shall mean:

          (i) promissory note from Co-Steel C.S.M. Corp. for U.S.$25,000,000
     maturing November 23, 2004 (Approximate Cdn.$39,730,000);

          (ii) promissory note from Co-Steel C.S.M. Corp. for U.S.$25,000,000
     maturing November 23, 2004 (Approximate Cdn.$39,730,000);

          (iii) promissory note from Co-Steel C.S.M. Corp. for U.S.$28,650,000
     maturing July 31, 2006 (Approximate Cdn.$45,530,000);

          (iv) term loan to Co-Steel USA Holdings, Inc. for U.S.$100,000,000
     maturing January 8, 2008 (Approximate Cdn.$158,920,000);

          (v) term loan to Co-Steel Sayreville, Inc. for U.S.$13,000,000
     maturing January 30, 2008 (Approximate Cdn.$20,659,600);

          (vi) term loan to Co-Steel Sayreville, Inc. for U.S.$3,600,000
     maturing June 30, 2008 (Approximate Cdn.$5,721,120);

          (vii) term loan to Co-Steel Sayreville, Inc. for U.S.$5,683,330
     maturing June 30, 2008 (Approximate Cdn.$9,031,948); and

          (viii) promissory note from Co-Steel C.S.M. Corp. for U.S.$150,000
     (Approximate Cdn.$238,000).

     "HUNGARIAN LOAN REORGANIZATION DOCUMENTS" shall have the meaning set out in
paragraph 2L(d).

     "INCHOATE LIEN" shall mean, with respect to any property or asset of any
Person, the following Liens:

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          (a) any Lien for taxes, local improvement charges, levies, rates,
     assessments or utility charges not yet due or being contested in good faith
     by appropriate proceedings and for which a provision has been taken in
     accordance with GAAP, if applicable;

          (b) any carriers, warehousemen, mechanics, or materialmen's lien in
     respect of charges accruing in favor of any Person, so long as the charges
     are not yet due or are being contested in good faith by appropriate
     proceedings and for which a provision has been taken in accordance with
     GAAP, if applicable; and

          (c) undetermined or inchoate liens, privileges or charges incidental
     to current operations which have not at such time been filed pursuant to
     law against the Person's property or assets or which relate to obligations
     not due or delinquent.

     "INDEBTEDNESS" shall mean, with respect to any Person, at any time, the
aggregate, without duplication, of:

          (a) all indebtedness, obligations and liabilities, (other than
     accounts payable and accrued liabilities), of the Person which, in
     accordance with GAAP, would be included in determining total liabilities as
     shown in the liability section of the balance sheet of the Person,
     including, without limitation, indebtedness, obligations and liabilities
     for borrowed money (whether on account of principal, interest or otherwise)
     or in respect of any bankers' or trade acceptance credit facility, but
     excluding, for greater certainty, any inter-company debt that is eliminated
     upon consolidation;

          (b) all indebtedness, obligations and liabilities of the Person
     secured by any Lien on any property or asset owned or held by the Person,
     whether or not any other Person has assumed or is liable for the
     indebtedness, obligations or liabilities so secured and whether or not the
     rights and remedies of the secured party are limited to repossession or
     sale of the property or assets covered, but, for greater certainty,
     excluding operating leases;

          (c) any Synthetic Lease or other transfer of property of assets which
     has been made with recourse to the transferor or any obligation to
     repurchase any property or assets or to purchase property or assets
     regardless of the delivery or non-delivery thereof;

          (d) any liability under any instrument of guarantee or indemnity or
     arising under any guarantee, endorsement or undertaking which may be made
     or issued to others for the account of the Person and at the request of

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     such Person, including any Advance made by way of Letter of Credit or
     Banker's Acceptance or BA Equivalent Note;

          (e) all indebtedness, obligations and liabilities of others which the
     Person has directly or indirectly guaranteed, endorsed (otherwise than for
     collection or deposit in the ordinary course of business), discounted with
     recourse or other obligation to pay or under agreement (contingently or
     otherwise) to purchase, repurchase or otherwise acquire or become liable
     for, or in respect of which the Person has provided a comfort letter or
     agreed to supply or advance funds (whether by way of loan, share purchase
     or capital contribution, through a commitment to pay for property or
     services regardless of the non-delivery of the property or the
     non-furnishing of the services or otherwise) or in respect of which the
     Person has otherwise become directly or indirectly liable; and the amount
     of each such indebtedness, obligation or liability (each in this definition
     a "GUARANTEE OF INDEBTEDNESS") shall be deemed to be the amount of the
     Indebtedness in respect of which the Guarantee of Indebtedness relates,
     unless the Guarantee of Indebtedness is limited to a determinable amount in
     which case the amount of the Guarantee of Indebtedness shall be deemed to
     be the lesser of the amount of the Indebtedness in respect of which the
     Guarantee of Indebtedness relates and the determinable amount and for
     greater certainty, a Guarantee of Indebtedness shall be deemed to be in the
     same principal amount and bear the same rate of interest as the
     Indebtedness which is the subject of such Guarantee of Indebtedness;

          (f) all liabilities of the Person as a partner or venturer in any
     partnership, joint venture or other enterprise;

          (g) all items of indebtedness convertible into, or exchangeable for,
     shares in the capital of the Person;

          (h) all shares in the capital of, or partnership units in, the Person
     which are redeemable or retractable at the option of any Person (other than
     the Person in respect of whom a determination of Indebtedness is being
     made); and

          (i) any Capitalized Lease Obligation.

     "INITIAL GUARANTOR" shall mean each of the Restricted Subsidiaries (other
than the Hungarian Finance Structure Companies) in existence as of the
Restructuring Date.

     "INITIAL RATE" shall mean (a) 8.57% per annum in the case of the Series A
Notes, and (b) 9.09% per annum in the case of the Series B Notes.

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     "INSURANCE ASSIGNMENT" shall mean any assignment in favor of the applicable
Security Agent by each Obligor of all insurance, including business
interruption, liability and property insurance, maintained by each Obligor in
respect of their respective businesses and assets, together with evidence of (a)
the applicable Security Agent being noted as loss payee as its interests may
appear; or (b) in the case of liability policies, the applicable Security Agent
being noted as additional insured; or (c) in the case of any insurance
maintained in respect of the Ontario Properties, that insurance being endorsed
with a standard mortgage clause (as approved by the Insurance Bureau of Canada,
from time to time); or (d) in the case of any insurance maintained in respect of
the New Jersey Properties, that insurance being endorsed with a standard
mortgage clause.

     "INSURANCE PROCEEDS" shall mean all proceeds of any insurance policy
maintained by the Company or any Subsidiary and shall not include insurance
proceeds less than Cdn.$2,500,000 (or its equivalent) in respect of any one
instance or less than Cdn.$5,000,000 (or its equivalent) annually which may be
retained by the Company or applicable Subsidiary. For greater certainty if the
Company or any Subsidiary receives Insurance Proceeds consisting of property
insurance and business interruption insurance in respect of the same loss, the
amount of the business interruption insurance shall not be used in determining
such Cdn.$2,500,000 and Cdn.$5,000,000 thresholds.

     "INTELLECTUAL PROPERTY RIGHTS" shall mean all patents, trademarks, trade
names, service marks, copyrights, industrial designs, inventions, technology and
other similar rights which are material to its business and owned by the
Company, all rights licensed by it to third parties and all rights by which it
has the use of any patents, trade-marks, trade names, service marks, copyrights,
industrial designs, inventions, technology or other similar rights owned by
others.

     "INTERCOMPANY INDEBTEDNESS" shall have the meaning specified in paragraph
8V.

     "INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor Agreement,
dated as of the Restructuring Date, among the Banks, the Purchasers, PNC, the
Canadian Security Agent and the U.S. Security Agent, and acknowledged and agreed
to by the Company, for itself and on behalf of its Subsidiaries, as amended,
restated, supplemented or otherwise modified from time to time.

     "INVENTORY" shall mean tangible personal property that is held by a Person
for sale or lease or that has been leased or that is to be furnished or has been
furnished under a contract of service, or that is raw materials, work in process
or materials used or consumed in a business or profession, which has been, or
properly may be, classified as inventory in accordance with GAAP.

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     "INVESTMENT CAPITAL" shall mean any cash or cash equivalents received in
respect of any investment made in the Company or any of its Subsidiaries by a
Person that is not the Company or any Subsidiary.

     "KEY EMPLOYEE LOANS" shall mean loans to key employees of the Company for
the purpose of purchasing shares of the Company or for other employment
benefits.

     "LANDLORD'S CONSENTS" shall mean collectively, such consents from the
landlords of the Leased Properties to the granting of a Lien in favor of a
Security Agent and such other matters in the form and substance satisfactory to
the Required Holders as the Required Holders may reasonably request.

     "LEASED PROPERTIES" shall mean all lands and premises described in Schedule
8J(b) and any lands and premises which are subsequently leased by any Obligor.

     "LEASEHOLD MORTGAGE" shall mean a leasehold mortgage with assignment of
subleases and rents, security agreement and fixture filing as a first ranking
encumbrance against all leasehold property, right, title and interest in the
premises identified thereon in favor of a Security Agent on behalf of the
holders of Notes, PNC and the Banks (subject in each case to Permitted Priority
Liens).

     "LETTER OF CREDIT" shall mean a documentary or stand-by letter of credit or
letter of guarantee issued by a Bank at the request and for the account of the
Company under the Bank Agreement.

     "LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or Inchoate Lien (statutory or otherwise) or charge of any kind (including
any agreement to give any of the foregoing, 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
and/or the Personal Property Security Act of any jurisdiction) or any other type
of preferential arrangement for the purpose, or having the effect, of protecting
a creditor against loss or securing the payment or performance of an obligation.

     "MARCH 2002 SIGNIFICANT SHARE OFFERING" shall mean the Company's offering
of 20,907,000 of its common shares which closed on March 12, 2002.

     "MATERIAL ADVERSE EFFECT" shall mean, with respect to the Company and the
Guarantors taken as a whole, (a) a material adverse effect upon the validity or
enforceability of this Agreement, the Collateral Documents, any Guarantee or the
Intercreditor Agreement, (b) a material adverse effect on the business,
properties, assets, financial condition, results of operations or prospect of
the Company and the Guarantors, taken as a whole, (c) an event, circumstance or
effect that impairs

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materially the ability of the Company and the Guarantors, taken as a whole, to
duly and punctually pay or perform their obligations in respect of this
Agreement, the Notes and the other Documents, or (d) an event, circumstance or
effect that impairs materially the ability of the holders of the Notes, to the
extent permitted, to enforce their legal remedies pursuant to this Agreement,
the Notes and the other Documents.

     "MATERIAL CONTRACTS" shall mean, collectively, those contracts listed in
Schedule 8S-1 and any contract or lease to which an Obligor is now or hereafter
becomes a party and which is at any time on or after the date of this Agreement,
material to the business of any Obligor in each case whether oral or written,
and in each case as the same may be amended, supplemented or otherwise modified
and in effect from time to time, but excluding (a) any collective agreements,
(b) any pension plan and benefits agreements, and (c) insurance policies.

     "MATERIAL LICENSES" shall mean, collectively, those licenses, permits or
approvals listed on Schedule 8S-2 and any license, permit or approval issued by
any Governmental Authority, applicable stock exchange or securities commission,
to an Obligor, and which is at any time on or after the date of this Agreement,
necessary or material to the business and operations of an Obligor or to the
listing of its securities.

     "MORTGAGE" shall mean a mortgage with assignment of leases and rents if
any, security agreement and fixture filing as a first ranking encumbrance
against all real property, right, title and interest in the properties
identified therein in favor of the U.S. Security Agent on behalf of the holders
of Notes, PNC and the Banks (subject in each case to Permitted Priority Liens)
and shall include each Mortgage listed on Schedule 10B-2 hereto.

     "MOVEABLE HYPOTHEC" shall mean a deed of moveable hypothec entered into by
any Obligor in favor of the Canadian Security Agent on behalf of the holders of
Notes, PNC and the Banks creating a first ranking security interest in favor of
the Canadian Security Agent on all the present and future assets of such Obligor
located in the Province of Quebec (subject in each case to Permitted Priority
Liens).

     "MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).

     "NET CASH PROCEEDS" shall mean the cash proceeds (including any cash
payment received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of any sale of any Property or of any offering of
debt or equity securities, net of (without duplication): (a) reasonable and
documented legal, accounting and investment banking fees and/or commissions
actually paid to any

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Person that is not an Affiliate of the Company, (b) in the case of an asset
disposition, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted under this Agreement (other than those
created pursuant to the Collateral Documents) on any asset which is the subject
of the asset disposition, (c) amounts agreed among the administration agent on
behalf of the Banks, the Required Holders and PNC pursuant to the Intercreditor
Agreement, and (d) in the case of an asset disposition, other customary fees
actually incurred in connection with the sale, all net of taxes paid or
reasonably estimated to be payable as a result of the asset disposition.

     "NET TANGIBLE ASSETS" shall mean, with respect to any Subsidiary the
aggregate amount of assets of such Subsidiary after deducting therefrom (a) all
goodwill, trade names, trademarks, patents, organization expenses and other like
intangibles; (b) all equity held by it in another Subsidiary, and (c)
inter-company loans and advances to another Subsidiary of the Company, all as
set forth on the most recent balance sheet of such Subsidiary, computed in
accordance with GAAP (provided that such balance sheet shall be prepared on a
non-consolidated basis).

     "NEW HOLDCO" shall have the meaning set out in Schedule 2L(d).

     "NEW JERSEY PROPERTIES" shall mean the lands and premises described in
Schedule 8J(a) that are located in New Jersey and all plant, buildings,
structures, erections, improvements, appurtenances and fixtures (including fixed
machinery and fixed equipment) situate on those lands.

     "NEW SUBORDINATED LOAN NOTES" shall have the meaning set out in Schedule
2L(d).

     "NON-RESIDENT TAX" shall mean any and all present and future Tax, imposed,
assessed, levied or collected by or for the account of (a) Canada or any
political subdivision or taxing authority thereof or therein, or (b) such other
taxing jurisdiction (or any political subdivision or taxing authority thereof or
therein) in which the Company may now or hereafter reside or be treated (by such
taxing jurisdiction) as residing for tax purposes or with which the Company has
any relation or asserted relation forming the basis for the imposition,
assessment, levy or collection of any Tax but excluding Tax imposed upon the
overall net income of a holder of Notes by virtue of the residence, business
activities, organization or similar criterion of a holder in the jurisdiction
imposing such Tax and excluding Tax, if any, imposed pursuant to Part I of the
Income Tax Act (Canada) and Part II of the Corporations Tax Act (Ontario)
("HOLDER TAX").

     "NORMALIZED CONSOLIDATED EBITDA" shall mean Consolidated EBITDA calculated
on a rolling twelve-month basis, except for the period ended December

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<PAGE>
31, 2001 only, which shall be calculated using only the preceding 9 months
beginning April 1, 2001 and annualizing such number over 12 months.

     "NORMALIZED CONSOLIDATED EBITDA NET OF CAPEX" shall mean, for any period,
Normalized Consolidated EBITDA minus (a) cash capital expenditures, (b) to the
extent not already deducted in the calculation of Normalized Consolidated
EBITDA, scheduled payments in respect of Capitalized Lease Obligations, and (c)
to the extent not otherwise already deducted in the calculation of Normalized
Consolidated EBITDA, mandatory funding requirements in respect of pension
obligations, in each case of any member of the Restricted Group during such
period.

     "NORTH YORK PROPERTY" shall mean the leased premises of the Company located
at 55 Fenmar Drive, North York, Ontario.

     "NOTES" shall have the meaning specified in paragraph 1A.

     "OBLIGOR" shall mean each of the Company and the Guarantors.

     "OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the
Company by its President, one of its Vice Presidents or its Treasurer.

     "ONTARIO PROPERTIES" shall mean the lands and premises described in
Schedule 8J(a) that are located in Ontario, Canada and all plant, buildings,
structures, erections, improvements, appurtenances and fixtures (including fixed
machinery and fixed equipment) situate on those lands.

     "OWNED PROPERTY" shall mean the lands and premises described in Schedule
8J(a) and all plant, buildings, structures, erections, improvements,
appurtenances and fixtures (including fixed machinery and fixed equipment)
situated on these lands.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor corporation or governmental agency.

     "PENSION PLAN" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multi-employer plan as defined in section 4001(a)(3) of ERISA), and to which
each US Guarantor or any corporation, trade or business that is, along with such
US Guarantor, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.

     "PERMITTED ASSET SALES" shall mean, in respect of the Company and its
Subsidiaries, (a) sales of inventory in the ordinary course of business upon

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<PAGE>
customary credit terms; (b) sales of assets between or among the Obligors; and
(c) sales of assets (excluding items set forth in (a) or (b)) valuing less than
Cdn.$2,500,000 (or its equivalent) individually and less than Cdn.$5,000,000 (or
its equivalent) in the aggregate per annum.

     "PERMITTED INTERCOMPANY INDEBTEDNESS" shall mean (a) loans from an
Unrestricted Subsidiary to a Restricted Subsidiary, provided that no such loan
exceeds Cdn.$1,500,000 (or its equivalent) and that such loans in the aggregate
do not exceed Cdn.$3,000,000 (or its equivalent); (b) loans from a Restricted
Subsidiary to another Restricted Subsidiary; and (c) Intercompany Indebtedness
described in Schedule 8V.

     "PERMITTED INVESTMENTS" shall have the meaning specified in paragraph 6EE.

     "PERMITTED LIENS" shall mean, with respect to any property or asset of any
Person, the following Liens:

     (a)  any Inchoate Lien;

     (b)  Liens respecting Priority Payables;

     (c) minor encumbrances, and those municipal agreements, easements, rights
of way, servitudes, rights in the nature of an easement, reservations,
restrictions and other similar rights in land granted to or reserved by other
Persons, rights of way for sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real properties which do not in the aggregate materially detract from the value
of the real properties or materially impair their use or operation;

     (d) Liens arising out of judgments or awards against such Person with
respect to which enforcement has been stayed and such Person at the time shall
currently be prosecuting an appeal or proceeding for review in good faith by
appropriate proceedings diligently conducted and with respect to which such
Person has created adequate reserves or has adequate insurance protection;
provided, however, that at no time may the aggregate dollar amount of such liens
exceed Cdn.$5,000,000 (or its equivalent);

     (e) Liens respecting Capitalized Lease Obligations provided such Liens
secure Indebtedness which is permitted under paragraph 6G;

     (f) any right reserved to or vested in any Governmental Authority by the
terms of any lease, license, franchise, grant or permit acquired by such Person,
or by any statutory provision to terminate any such lease, license,

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<PAGE>
franchise, grant or permit, or to require annual or other periodic payments as a
condition of the continuance thereof;

     (g) security by such Person to a utility or any Governmental Authority when
required by such utility or Governmental Authority in connection with the
operations of such Person and in the ordinary course of its business;

     (h) reservations, limitations, provisos and conditions, if any, expressed
in any original grants from a Governmental Authority, as applicable;

     (i) any Lien securing a purchase money obligation, provided that (i) no
such Lien affects any Property other than the Property acquired by the incurring
of such purchase money obligation; (ii) such Lien does not secure an amount in
excess of the original purchase price of such Property, less repayments made
from time to time; and (iii) such Liens secure Indebtedness which is permitted
under paragraph 6G.

     (j) the Liens in favor of the Security Agents in their capacity as security
agents pursuant to the Intercreditor Agreement; and

     (k) any Lien consented to in writing by the Required Holders.

Provided, however, that no Lien described in clauses (a) through (e) above shall
constitute a Permitted Lien if such Lien materially detracts from the value of
property of the Person or materially impairs its use in the operation of the
business of such Person.

     "PERMITTED PARENT GUARANTEES" guarantees by the Company of the obligations
of a Restricted Subsidiary provided that the obligations guaranteed are
otherwise permitted pursuant to paragraph 6G and the guarantee by the Company of
the obligations of Co-Steel (UK) Limited pursuant to the share purchase
agreement dated December 23, 1998 among Co-Steel (UK) Limited, ASW Holdings and
the Company.

     "PERMITTED PRIORITY LIENS" shall mean those encumbrances set forth in
subsections (a), (b), (c), (e), (f), (g), (h) and (i) of the definition of
Permitted Liens or any other Lien consented to in writing by the Required
Holders.

     "PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.

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     "PLAN" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.

     "PLEDGOR" shall mean each of the Company, 1102590 Ontario Limited, Co-Steel
(U.S.) Ltd., Co-Steel Finance Corp., Co-Steel Raritan, Inc., Co-Steel USA
Holdings, Inc., and Co-Steel Sayreville, Inc. and each other Person from time to
time party to any Stock Pledge Agreement.

     "PNC" shall mean PNC Bank, National Association together with any other
party that becomes a lender under the PNC Credit Agreements.

     "PNC CREDIT AGREEMENTS" shall mean each of (a) the second amended and
restated credit agreement dated as of the date hereof between PNC and Co-Steel
Sayreville, Inc. pursuant to which PNC is providing a revolving line of credit
to Co-Steel Sayreville, Inc., together with an accompanying promissory note, and
(b) the second amended and restated credit agreement dated as of the date hereof
between PNC and Co-Steel Raritan, Inc. pursuant to which PNC is providing a
revolving line of credit to Co-Steel Raritan Inc., together with an accompanying
promissory note.

     "PNC PARENT GUARANTY" shall mean the Second Amended and Restated Guaranty
Agreement dated as of the date hereof entered into by the Company in favor of
PNC.

     "PRIORITY PAYABLES" shall mean all statutory liens, deemed trusts and
preferred claims of any Person, including claims for employee wages, vacation
pay, termination or severance pay, employee withholdings, pension plan
contributions, workers' compensation assessments, municipal taxes and claims by
public utilities.

     "PROPERTY" shall mean and include all interests in property and assets,
whether tangible or intangible, choate or inchoate and whether real, personal or
mixed.

     "PURCHASERS" shall have the meaning specified at the commencement of this
Agreement.

     "QUALIFIED BANK" shall mean a bank or trust company organized under the
laws of the United States of America or any state thereof, having either (a)
capital, surplus and undivided profits aggregating at least $250,000,000 or (b)
total assets in excess of $1,000,000,000 and whose long-term certificates of
deposit are rated "AA" or better by Standard and Poor's Rating Group, a division
of McGraw Hill, Inc. or "Aa" or better by Moody's Investors Service, Inc.

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     "REFERENCE BANK" shall mean Morgan Guaranty Trust Company of New York or
such other commercial bank or trust company as shall be selected by the Required
Holders.

     "RELEASE" shall mean discharge, spray, inject, inoculate, abandon, deposit,
spill, leak, seep, pour, emit, empty, throw, dump, place and exhaust, and when
used as a noun, has a similar meaning.

     "REPLACEMENT COVENANTS" shall have the meaning specified in paragraph 6DD.

     "REQUIRED HOLDER(s)" shall mean the holder or holders of at least 66 2/3%
of the aggregate principal amount of the Notes without regard to Series from
time to time outstanding.

     "RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer, or chief accounting officer of the
Company, or any Person who, regardless of title, is performing the duties of any
of the aforesaid.

     "RESTRICTED GROUP" shall mean the Company and the Restricted Subsidiaries
collectively.

     "RESTRICTED SUBSIDIARY" shall mean each of 1300554 Ontario Limited, 1102590
Ontario Limited, Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd.,
Co-Steel Finance Corp., Co-Steel Raritan, Inc., Raritan River Urban Renewal
Corporation, Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc.,
Co-Steel USA Holdings, Inc., Co-Steel Sayreville, Inc., and each other
Subsidiary of the Company that becomes a Guarantor pursuant to this Agreement or
as may be designated as a Restricted Subsidiary by the Company with the consent
of the Required Holders from time to time; provided, however that the Hungarian
Finance Structure Companies and N.J.S.C. Investment Co., Inc. shall be
considered Restricted Subsidiaries for calculation of the covenants set forth in
paragraphs 6A through 6F, inclusive, for purposes of the Special Purpose
Financial Statements and for the purpose of paragraph 5X.

     "RESTRUCTURING DATE" shall have the meaning specified in paragraph 2.

     "SECURITIES ACT" shall mean the Securities Act of 1933 of the United
States, as amended.

     "SECURITY AGENTS" shall mean the Canadian Security Agent and the U.S.
Security Agent, collectively, and "SECURITY AGENT" shall mean either of them.

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     "SECURITY AGREEMENTS" shall mean each of (a) the Security Agreement dated
as of the Restructuring Date by and among the U.S. Security Agent, the Company,
and various Subsidiaries of the Company domiciled in the United States party
thereto and (b) the Security Agreement dated as of the Restructuring Date by and
among the Canadian Security Agent, the Company and various Subsidiaries of the
Company domiciled in Canada party thereto.

     "SERIES" shall mean any series of Notes described in this Agreement.

     "SERIES A NOTES" shall have the meaning specified in paragraph 1A(a).

     "SERIES B NOTES" shall have the meaning specified in paragraph 1A(b).

     "SETTLEMENT AMOUNTS" shall have a meaning equivalent to that provided in
clause (e) of the definition of "Specified Transaction" in the Intercreditor
Agreement.

     "SHARE OFFERING" shall mean the sale of common shares by the Company to a
Person that is not the Company or any of its Subsidiaries.

     "SHAREHOLDERS' EQUITY" shall mean, shareholders' equity as reflected on the
balance sheet in the most recent Special Purpose Financial Statements excluding
that portion of the Convertible Debentures classified as equity in accordance
with GAAP.

     "SIGNIFICANT HOLDER" shall mean (a) each Purchaser, so long as such
Purchaser shall hold (or be committed under this Agreement to purchase) any
Note, or (b) any other holder of at least 5% of the aggregate principal amount
of the Notes (without regard to Series) from time to time outstanding.

     "SIGNIFICANT SHARE OFFERING" shall mean any Share Offering (except the
March 2002 Significant Share Offering), the gross proceeds of which equal or
exceed Cdn.$ 50,000,000.

     "SIGNIFICANT SHARE OFFERING PROPORTION" shall mean 662/3% of the Net Cash
Proceeds received in respect of any Significant Share Offering.

     "SIGNIFICANT U.S. LEASED PROPERTIES" shall mean all lands and premises
described in Schedule 8J(b) that are located in the United States.

     "SPECIAL PURPOSE FINANCIAL STATEMENTS" shall mean the consolidated
financial statements of the Company prepared under GAAP, except that the
Unrestricted Subsidiaries (excluding the Hungarian Finance Structure Companies
and N.J.S.C. Investment Co., Inc.) are not consolidated but are accounted for at
Adjusted Cost Base.

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     "SPECIFIED TRANSACTION CERTIFICATE" shall have the meaning specified in the
Bank Agreement.

     "STANDSTILL AGREEMENT" shall mean a standstill agreement from Co-Steel (UK)
Limited in favor of the Purchasers in a form and substance reasonably
satisfactory to the Required Holders.

     "STOCK PLEDGE AGREEMENTS" shall mean each of the stock pledge agreements
and the share pledge agreements entered into by each of the Pledgors and any
other pledgors from time to time in favor of a Security Agent on behalf of the
Banks, PNC and the Purchasers including all holders of Notes from time to time.

     "STRATEGIC PLAN" shall mean a written detailed plan which shall include,
without limitation: (a) an analysis of strategies and options to maximize value
for the Company and its Subsidiaries, including its Co-Steel Raritan, Inc.
operations and its interests in Gallatin; (b) a detailed written capital
expenditure plan for the Company and each of its Subsidiaries; (c) general cost
reduction and efficiency strategies for the Company and its Subsidiaries,
including a cost/benefit analysis of each such strategy; (d) an update of the
Asset Monetization Program, including any additional assets subject thereto; and
(e) a proposed timetable for implementing all of the foregoing. The Strategic
Plan shall be in a form reasonably satisfactory to the Required Holder(s) and
shall be updated annually to the extent acceptable to the Required Holders. The
Strategic Plan and each annual update thereof shall be approved by the Company's
board of directors.

     "SUBSIDIARY" shall mean, with respect to any Person at any time: (a) any
other Person of which either (i) 50% or more of the shares in its capital or
other interests which entitle it to vote in the election of directors or
comparable Persons performing similar functions (excluding shares or other
interests entitled to vote only upon the failure to pay dividends thereon or
other contingencies) are owned by the former Person or (ii) it has a 50%
interest in the profits or capital of such other Person, at the time owned
directly (or indirectly through one or more Subsidiaries) by such Person, or (b)
any other Person whose net earnings, or any portion thereof, are consolidated
with the net earnings of such Person and are recorded on the books of such
Person for financial reporting purposes in accordance with GAAP, and includes
any entity in like relation to a Subsidiary.

     "SYNTHETIC LEASE" shall mean any lease that, in accordance with GAAP, is
classified by the lessee as an operating lease for financial reporting purposes
but is treated as a secured financing for the purposes of income tax reporting.

     "TANGIBLE NET WORTH" as of any date shall mean the amount equal to the
Shareholders' Equity (excluding foreign currency translation adjustments), less
all

                                       86
<PAGE>
goodwill, investments in and amounts due from ASW Holdings, trade names,
trademarks, patents, organization expenses, deferred financing expenses, amounts
due from employees and other like intangibles, all calculated based on the
Special Purpose Financial Statements prepared as of such date.

     "TAX" shall mean any and all taxes, duties, levies, imposts, fees,
compulsory loans, charges and withholdings whatsoever as well as any interest or
penalties in respect of such amounts imposed, assessed, levied or collected in
respect of payments under the Notes or this Agreement.

     "TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.

     "UNRESTRICTED SUBSIDIARY" shall mean each of 1062316 Ontario Limited,
Co-Steel Dofasco LLC, Co-Steel C.S.M. Corp., Gallatin, Gallatin Terminal Company
and Gallatin Transit Authority, Co-Steel Amsterdam B.V., Cansteel Antilles N.V.,
ASW Holdings, Co-Steel (UK) Limited, Co-Steel Benefit Plans, Inc., Co-Steel
Benefit Plans USA Inc., N.J.S.C. Investment Co., Inc., Goldmarsh Enterprises,
Acierco S.A., Co-Steel Hungary and such other Subsidiary of the Company as may
be designated as an Unrestricted Subsidiary by the Company with the consent of
the Required Holders from time to time and "Unrestricted Subsidiary" means any
of them, provided that N.J.S.C. Investment Co., Inc. and the Hungarian Finance
Structure Companies shall not be considered Unrestricted Subsidiaries for the
purposes of calculating the covenants set forth in paragraphs 6A through 6F,
inclusive, for the purposes of the Special Purpose Financial Statements and for
the purposes of paragraph 5X only.

     "US GUARANTORS" shall mean Co-Steel (US) Ltd., Co-Steel Finance Corp.,
Co-Steel Raritan, Inc., Raritan River Urban Renewal Corporation, Lake Ontario
Steel Company Inc., Co-Steel USA Distribution, Inc., Co-Steel USA Holdings, Inc.
and Co-Steel Sayreville, Inc., and each Restricted Subsidiary carrying on
business in the United States that from time to time becomes a Guarantor
pursuant to the terms of this Agreement.

     "U.S. SECURITY AGENT" shall mean State Street Bank and Trust Company in its
capacity as U.S. security agent for and on behalf of the administration agent
and the Banks, the holders of Notes and PNC pursuant to the Intercreditor
Agreement.

     "VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).

                                       87
<PAGE>
     "WHOLLY-OWNED RESTRICTED SUBSIDIARY" shall mean any Wholly-Owned Subsidiary
that is a Restricted Subsidiary.

     "WHOLLY-OWNED SUBSIDIARY" shall mean at any time, with respect to any
Person, any Subsidiary 100% of all of the equity securities (except directors'
qualifying shares) and Voting Stock of which are owned by one or more of such
Person and such Person's other Wholly-Owned Subsidiaries at such time.

     10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS.

     Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the most
recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A.

11.  MISCELLANEOUS

     11A. NOTE PAYMENTS.

     The Company agrees that, so long as any Purchaser shall hold any Note, it
will make payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for credit (not later
than 12:00 noon, New York City time, on the date due) to such Purchaser's
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as such Purchaser may
designate in writing, notwithstanding any contrary provision herein or in any
Note with respect to the place of payment. Each Purchaser agrees that, before
disposing of any Note, such Purchaser will make a notation thereon (or on a
schedule attached thereto) of all principal payments previously made thereon and
of the date to which interest thereon has been paid. The Company agrees to
afford the benefits of this paragraph 11A to any Transferee which shall have
made the same agreement as each Purchaser has made in this paragraph 11A.

     11B. EXPENSES.

     The Company agrees, whether or not the transactions contemplated hereby
shall be consummated, to pay, and save each Purchaser and any Transferee
harmless against liability for the payment of, all out-of-pocket expenses
arising in connection with such transactions, including:

                                       88
<PAGE>
          (a) all document production and duplication charges and the fees and
     expenses of any special counsel engaged (X) by such Purchaser in connection
     with this Agreement and the transactions contemplated hereby, and (Y) by
     such Purchaser or any Transferee in connection with any subsequent proposed
     modification of, or proposed consent under, this Agreement, whether or not
     such proposed modification shall be effected or proposed consent granted,
     and

          (b) the costs and expenses, including the fees and expenses of
     counsel, incurred by such Purchaser or such Transferee in enforcing (or
     determining how to enforce) any rights under this Agreement or the Notes or
     in responding to any subpoena or other legal process or informal
     investigative demand issued in connection with this Agreement or the
     transactions contemplated hereby or by reason of such Purchaser's or such
     Transferee's having acquired any Note, including without limitation costs
     and expenses incurred in any bankruptcy case.

     The obligations of the Company under this paragraph 11B shall survive the
     transfer of any Note or portion thereof or interest therein by any
     Purchaser or any Transferee and the payment of any Note.

     11C. CONSENT TO AMENDMENTS.

     This Agreement may be amended, and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, if
the Company shall obtain the written consent to such amendment, action or
omission to act, of the Required Holder(s) except that, without the written
consent of the holder or holders of all Notes at the time outstanding, no
amendment to this Agreement shall change the maturity of any Note, or change the
principal of, or the rate or time of payment of interest on or any
Yield-Maintenance Amount payable with respect to any Note, or affect the time,
amount or allocation of any prepayments or repayments, or change the proportion
of the principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note.

                                       89
<PAGE>
     11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.

     The Notes are issuable as registered notes without coupons in denominations
of at least $100,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company, shall, at its expense,
execute and deliver one or more new Notes of like tenor of the same Series and
of a like aggregate principal amount, registered in the name of such transferee
or transferees. At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor of the same Series and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company, shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company, will make
and deliver a new Note, of like tenor of the same Series in lieu of the lost,
stolen, destroyed or mutilated Note. Until such time as no longer required under
applicable requirements of the Securities Act or applicable state laws, the
Notes, and all Notes issued in exchange therefor or in substitution thereof,
shall bear the following legend:

                     "THIS SECURITY HAS NOT BEEN REGISTERED
                      UNDER THE SECURITIES ACT OF 1933, AS
                      AMENDED AND MAY BE REOFFERED AND SOLD
                    ONLY IF SO REGISTERED OR IF AN EXEMPTION
                        FROM REGISTRATION IS AVAILABLE."

     11E. PERSONS DEEMED OWNERS; PARTICIPATIONS.

     Prior to due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered in the register of Notes
kept by the Company at its principal office as the owner and holder of such Note
for the purpose

                                       90
<PAGE>
of receiving payment of principal of, interest on and any Yield-Maintenance
Amount payable with respect to such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person on
such terms and conditions as may be determined by such holder in its sole and
absolute discretion.

     11F. CURRENCY EQUIVALENT.

     For purposes of the construction of this Agreement and the Notes, unless
explicitly indicated to the contrary all references to "Dollars" or "$" is to
United States Dollars and the equivalent in Dollars of an amount in any other
currency shall be determined at the rate of exchange quoted by the Reference
Bank in New York City, at 9:00 A.M. (New York City time) on the Business Day
immediately preceding the date of determination to prime banks in New York City
for the spot purchase in the New York City foreign exchange market of Dollars
with such other currency.

     11G. JUDGMENT.

          (a) If for the purpose of obtaining judgment in any court it is
     necessary for any holder of any Note to convert a sum due hereunder or
     under such Note in Dollars (the "Original Currency") into another currency
     (the "Other Currency"), the Company agrees, to the fullest extent permitted
     by Applicable Law, that the rate of exchange used shall be that at which in
     accordance with normal banking procedures such Person could purchase the
     Original Currency with the Other Currency on the Business Day preceding
     that on which final judgment is given in the New York City foreign exchange
     market.

          (b) The obligation of the Company in respect of any sum due from it to
     any holder of any Note hereunder shall, notwithstanding any judgment in
     such Other Currency, be discharged only to the extent that on the Business
     Day following receipt by such Person of any sum adjudged to be so due in
     the Other Currency such Person may in accordance with normal banking
     procedures in the New York City foreign exchange market purchase the
     Original Currency with the Other Currency. If the amount of the Original
     Currency so purchasable is less than the sum originally due to such Person
     in the Original Currency, the Company agrees, as a separate obligation and
     notwithstanding any such judgment, to indemnify such Person against such
     loss, and if the amount of the Original Currency so purchasable exceeds the
     sum originally due to such Person in the Original Currency, such Person
     agrees to remit to the Company such excess.

                                       91
<PAGE>
     11H. TAX INDEMNITY.

     Any and all payments by the Company under this Agreement and pursuant to
the Notes shall be made free and clear of, and without deduction or withholding
for or on account of, Non-Resident Tax unless any deduction or withholding for
or on account of Non-Resident Tax is required by law. If the Company shall be
obligated by law to deduct or withhold for or on account of any Non-Resident
Tax, or, if any holder of a Note shall be obligated to pay any Non-Resident Tax
on or in respect of any payment under the Notes or under this Agreement, then
the Company will (a) within 10 days notify each holder of the Notes of such
event and provide documentation to verify such event and (b) promptly (i) pay
over to the government or taxing authority imposing such Non-Resident Tax the
full amount required to be deducted or withheld from or otherwise paid by the
Company (including the full amount required to be deducted or withheld from or
otherwise paid by it in respect to any Additional Amount paid pursuant to clause
(ii) hereof), and (iii) save as provided below, pay to such holder such
additional amount (the "ADDITIONAL AMOUNT") as is necessary in order that the
net amount received by such holder after any required deduction, withholding or
other payment of, or liability for, Non-Resident Tax on or in respect of such
payment and any required deduction, withholding or other payment of, or
liability for, Non-Resident Tax or United States Federal or State Tax on or with
respect to such Additional Amount (net of all applicable foreign tax credits)
shall equal the amount such holder would have received had no such deduction,
withholding or other payment of, or liability for, such Non-Resident Tax or
United States Federal or State Tax been paid or incurred, provided that no such
United States Federal or State Tax on or with respect to such Additional Amount
in respect of a payment shall be required to be paid by the Company to a holder
unless such Additional Amount is subject to such United States Federal or State
Tax in addition to the amount of such tax which would have been payable by the
holder on or in respect of the payment had no deduction, withholding or
Additional Amounts been required or paid, and (iii) furnish to such holder
within 30 days after it or they become available, the official receipt or
receipts from the relevant taxation or other authorities for the full amounts
deducted, withheld or paid. It is agreed that the Company shall have no right to
examine any of the books, records or tax returns of any holder, on or with
respect to such Additional Amount. The provisions of this paragraph 11H shall
apply to any successive holder of any Notes. Notwithstanding the foregoing, the
Company will not be liable for the payment of any Additional Amount to any
holder of Notes if and to the extent such holder is subject to Non-Resident Tax
in respect of the Notes solely by reason of such holder being considered to deal
with the Company not at arm's-length for purposes of the Income Tax Act
(Canada).

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<PAGE>
     11I. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

          (a) THIS AGREEMENT. All representations and warranties contained
     herein or made in writing by or on behalf of the Company in connection
     herewith shall survive the execution and delivery of this Agreement and
     transfer by any Purchaser of any Note or portion thereof or interest
     therein and the payment of any Note, and may be relied upon by any
     Transferee, regardless of any investigation made at any time by or on
     behalf of any Purchaser or any Transferee.

          (b) EXISTING AGREEMENTS. Without limiting the foregoing, all
     warranties, representations and certifications made by the Company in or
     pursuant to the Existing Agreements or in any certificate or other
     instrument delivered by it or on its behalf thereunder or pursuant thereto
     shall be considered to have been relied upon by you, shall survive the
     delivery to you of this Agreement and shall be incorporated herein by this
     reference, regardless of any investigation made by you or on your behalf.

     11J. SURVIVAL OF NOTES AND PAYMENT OBLIGATIONS.

     Under the Existing Agreements and all payment obligations of the Company
this Agreement (including, without limitation, reimbursement obligations in
respect of costs, expenses, and fees of or incurred by the holders of the
Notes), including any obligation to pay the principal of and interest and
Yield-Maintenance Premium on the Notes, shall survive the amendment and
restatement of the Existing Agreements and this Agreement.

     11K. SUCCESSORS AND ASSIGNS.

     All covenants and other agreements in this Agreement contained by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including, without
limitation, any Transferee) whether so expressed or not.

     11L. DISCLOSURE TO OTHER PERSONS.

     The Company acknowledges that the holder of any Note may deliver copies of
any financial statements and other documents delivered to such holder, and
disclose any other information disclosed to such holder, by or on behalf of the
Company or any of its Restricted Subsidiaries in connection with or pursuant to
this Agreement to (a) such holder's directors, officers, employees, agents and
professional consultants, (b) any other holder of any Note, (c) any Person to
which such holder offers to sell such Note or any part thereof, (d) any Person
to which such holder sells or offers to sell a participation in all or any part
of such Note, (e) any Person from

                                       93
<PAGE>
which such holder offers to purchase any security of the Company, (f) any
federal or state regulatory authority having jurisdiction over such holder, (g)
the National Association of Insurance Commissioners or any similar organization
or (h) any other Person to which such delivery or disclosure may be necessary or
appropriate (i) in compliance with any law, rule, regulation or order applicable
to such holder, (ii) in response to any subpoena or other legal process or
informal investigative demand to which the Notes or the Note Agreement are
relevant or (iii) in connection with any litigation to which such holder is a
party and to which the Notes or the Note Agreement are relevant.

     11M. NOTICES.

     All written communications provided for hereunder shall be sent by first
class mail or nationwide overnight delivery service (with charges prepaid) and
(a) if to any Purchaser, addressed to such Purchaser at the address specified
for such communications in the Purchaser Schedule attached hereto, or at such
other address as such Purchaser shall have specified to the Company in writing,
(b) if to any other holder of any Note, addressed to such other holder at such
address as such other holder shall have specified to the Company in writing or,
if any such other holder shall not have so specified an address to the Company,
then addressed to such other holder in care of the last holder of such Note
which shall have so specified an address to the Company, and (c) if to the
Company, addressed to it at Hopkins Street South, Whitby, Ontario L1N 5T1,
Canada, Attention: Chief Financial Officer (Facsimile No. 905-665-3720), or at
such other address as the Company shall have specified to the holder of each
Note in writing; provided, however, that any such communication to the Company
may also, at the option of the holder of any Note, be delivered by any other
means either to the Company at its address specified above or to any officer of
the Company.

     11N. PAYMENTS DUE ON NON-BUSINESS DAYS.

     Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or interest on any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

     11O. SATISFACTION REQUIREMENT.

     If any agreement, certificate or other writing, or any action taken or to
be taken, is by the terms of this Agreement required to be satisfactory to any
Purchaser or to the Required Holder(s), the determination of such satisfaction
shall be made by such Purchaser or the Required Holder(s), as the case may be,
in the

                                       94
<PAGE>
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.

     11P. JURISDICTION; SERVICE OF PROCESS

     The Company hereby irrevocably and unconditionally agrees that any suit,
action or proceeding with respect to this Agreement, any Note, or any other
Document to which the Company is a party, or any action or proceeding to execute
or otherwise enforce any judgment in respect of any breach hereof and thereof,
brought by any holder of a Note against the Company or any of its Property, may
be brought by such holder of a Note in the United States District Court for the
Southern District of New York or any New York state court sitting in New York
City as such holder of a Note may in its sole discretion elect, and, by the
execution and delivery of this Agreement, the Company irrevocably submits to the
non-exclusive jurisdiction of each such court; and agrees that process served
either personally or by registered mail shall, to the extent permitted by law,
constitute adequate service of process in any such suit. Without limiting the
foregoing, the Company hereby appoints, in the case of any such action or
proceeding brought in the courts of or in the state of New York, Corporation
Service Company with offices on the date hereof at 80 State Street, Albany, NY
12207-2543, to receive, for it and on its behalf, service of process in the
state of New York with respect thereto, provided the Company may appoint any
other Person, reasonably acceptable to the Required Holders, with offices in the
state of New York to replace such agent for service of process upon delivery to
the holders of a reasonably acceptable agreement of such new agent agreeing so
to act. (The person making any such service of process shall also mail or
otherwise deliver a copy of such process to the Company, provided that the
failure of the Company to receive such copy shall not affect the validity of
such service on the Company.) In addition, the Company hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue in any suit, action or proceeding
arising out of or relating to this Agreement or any Note brought in the said
courts, and hereby irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall in any way be deemed to limit the ability of any holder of
a Note to serve any such writs, process or summonses, in any manner permitted by
applicable law or to obtain jurisdiction over the Company, in such other
jurisdiction, and in such manner, as may be permitted by Applicable Law.

     11Q. GOVERNING LAW.

     This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such state that would require
the application of the laws of a jurisdiction other than such state.

                                       95
<PAGE>

     11R. SEVERABILITY.

     Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     11S. DESCRIPTIVE HEADINGS.

     The descriptive headings of the several paragraphs and Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

     11T. 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 instrument.

     11U. CERTAIN CONFLICTS.

     The parties hereto agree that, if any provision of this Agreement is
inconsistent with or contrary to any provisions in any of the other Documents
(other than the Intercreditor Agreement), this Agreement shall control. The
parties hereto agree that, if any provision of this Agreement is inconsistent
with or contrary to any provisions in the Intercreditor Agreement, the
Intercreditor Agreement shall control.

      [Rest of page intentionally left blank; next page is signature page.]

                                       96
<PAGE>

     If you are in agreement with the foregoing, please sign the form of
acceptance below and return the same to the Company, whereupon this letter shall
become a binding agreement between the Company and the Purchasers.

                                   Sincerely,

                                   CO-STEEL INC.

                                   By:______________________________
                                      Name:
                                      Title:

                                       97
<PAGE>

The foregoing Agreement is
hereby accepted as of the
date first above written.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: ___________________________________
    Name:
    Title:

U.S. PRIVATE PLACEMENT FUND

By: Prudential Private Placement
     Investors, L.P., Investment Advisor

    By: Prudential Private Placement
         Investors, Inc., its General Partner

        By: __________________________________
            Name:
            Title:

                                       98
<PAGE>

                               PURCHASER SCHEDULE

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PURCHASER NAME                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
-----------------------------------------------------------------------------------------
<S>                                    <C>
Name in which to register Notes        THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
-----------------------------------------------------------------------------------------
Series A Note registration number;     RA-1; $45,000,000
principal amount;

Series B Note registration number;     RB-1; $70,000,000
principal amount
-----------------------------------------------------------------------------------------
Payment on account of Note

         Method                        Federal Funds Wire Transfer

         Account information           Bank of New York
                                       New York, NY
                                       ABA No.:  021-000-018
                                       Account No. 890-0304-391

                                       Re:  (See "Accompanying information" below)
-----------------------------------------------------------------------------------------
Accompanying information               Name of Issuer:  Co-Steel Inc.

                                       Description of
                                       Security:        Series A Senior Secured Notes due
                                                        January 15, 2004

                                       PPN:

                                       Description of
                                       Security:        Series B Senior Secured Notes due
                                                        July 15, 2006

                                       PPN:

                                       Due date and application (as among principal,
                                       premium and interest) of the payment being made.
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PURCHASER NAME                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
-----------------------------------------------------------------------------------------
<S>                                    <C>
Address / Fax # for notices related    The Prudential Insurance Company of America
to payments                            c/o Investment Operations Group
                                       Gateway Center Two, 10th Floor
                                       100 Mulberry Street
                                       Newark, NJ  07102
                                       Attn:  Manager, Billings and Collections

                                       Fax:  (973) 802-8764

                                       with a copy to:

                                       The Prudential Insurance Company of America
                                       c/o Prudential Capital Group
                                       Gateway Center Four, 7th Floor
                                       100 Mulberry Street
                                       Newark, NJ  07102
                                       Attn:  Gwendolyn Foster

                                       Fax:  (973) 802-2333

                                       With receipt of telephonic prepayment notices to:

                                       Manager, Trade Management Group
                                       Phone:  (973) 802-6009
                                       Fax:  (973) 802-9425
-----------------------------------------------------------------------------------------
Address / Fax # for all other notices  The Prudential Insurance Company of America
                                       c/o Prudential Capital Group
                                       Gateway Center Four, 7th Floor
                                       100 Mulberry Street
                                       Newark, NJ  07102
                                       Attn:  Gwendolyn Foster

                                       Fax:  (973) 802-2333
-----------------------------------------------------------------------------------------
Instructions re Delivery of Notes      The Prudential Insurance Company of America
                                       c/o Prudential Capital Group
                                       1114 Avenue of the Americas, 30th Floor
                                       New York, NY 10036
                                       Attn:  Suzanne Lui, Esq.
-----------------------------------------------------------------------------------------
Tax identification number              22-1211670
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
PURCHASER NAME                         U.S. PRIVATE PLACEMENT FUND
---------------------------------------------------------------------------------------------
<S>                                    <C>
Name in which to register Notes        U.S. PRIVATE PLACEMENT FUND
---------------------------------------------------------------------------------------------
Series B Note registration number;     RB-2; $5,000,000
principal amount
---------------------------------------------------------------------------------------------
Payment on account of Note

         Method                        Federal Funds Wire Transfer

         Account information           Deutsche Bank New York
                                       New York, NY
                                       ABA #: 026-003-780
                                       Account #: 100457000006
                                       FCC:  U.S. Private Placement Fund Account # 60-0180210

                                       Re:  (See "Accompanying information" below)
---------------------------------------------------------------------------------------------
Accompanying information               Name of Issuer:    Co-Steel Inc.

                                       Description of
                                       Security:          Series B Senior Secured Notes due
                                                          July 15, 2006

                                       PPN:

                                       Due date and application (as among principal, premium
                                       and interest) of the payment being made.
---------------------------------------------------------------------------------------------
Address / Fax # for notices related    Deutsche International (Ireland) Limited
to payments                            Valuations Department
                                       George's Dock House
                                       International Financial Services Centre
                                       Dublin 1, Ireland
                                       Attn:  Daniel Kearney

                                       Phone:  (353-1) 6076-300
                                       Fax:  (353-1) 6076-491

                                       with a copy to:

                                       Prudential Private Placement Investors, Inc.
                                       Four Gateway Center, 7th Floor
                                       100 Mulberry Street
                                       Newark, NJ  07102
                                       Attn:  Institutional Asset Management
---------------------------------------------------------------------------------------------
Address / Fax # for all other notices  Prudential Private Placement Investors, Inc.
                                       Four Gateway Center, 7th Floor
                                       100 Mulberry Street
                                       Newark, NJ  07102
                                       Attn:  Institutional Asset Management
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
PURCHASER NAME                         U.S. PRIVATE PLACEMENT FUND
---------------------------------------------------------------------------------------------
<S>                                    <C>
Instructions re Delivery of Notes      The Prudential Insurance Company of America
                                       c/o Prudential Capital Group
                                       1114 Avenue of the Americas, 30th Floor
                                       New York, NY 10036
                                       Attn:  Suzanne Lui, Esq.
---------------------------------------------------------------------------------------------
Tax identification number              N/A
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                       ATTACHMENT 1 TO PURCHASER SCHEDULE

I. FEES DUE ON RESTRUCTURING DATE

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
PURCHASER NAME                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
---------------------------------------------------------------------------------------------
<S>                                    <C>
Restructuring Fee due at closing re:   $225,000.00
Series A Notes
---------------------------------------------------------------------------------------------
Restructuring Fee due at closing re:   $350,000.00
Series B Notes
---------------------------------------------------------------------------------------------
Interest Payable re: Series A Notes    $1,124,812.50
---------------------------------------------------------------------------------------------
Interest Payable re: Series B Notes    $265,125.00
---------------------------------------------------------------------------------------------
Significant Share Offering Amount      $7,103,350.91
---------------------------------------------------------------------------------------------
</TABLE>

II.  FEES DUE POST CLOSING

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
PURCHASER NAME                         THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
---------------------------------------------------------------------------------------------
<S>                                    <C>
Restructuring Fee due on or prior to   $112,500.00
August 30, 2002 re: Series A Notes
---------------------------------------------------------------------------------------------
Restructuring Fee due on or prior to   $175,000.00
August 30, 2002 re: Series B Notes
---------------------------------------------------------------------------------------------

</TABLE>
<PAGE>

I.   FEES DUE ON RESTRUCTURING DATE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PURCHASER NAME                         U.S. PRIVATE PLACEMENT FUND
--------------------------------------------------------------------------------
<S>                                    <C>
Restructuring Fee due at closing re:   $25,000.00
Series B Notes
--------------------------------------------------------------------------------
Interest Payable re: Series B Notes    $18,937.50
--------------------------------------------------------------------------------
Significant Share Offering Amount      $308,841.31
--------------------------------------------------------------------------------
</TABLE>

II.  FEES DUE POST CLOSING

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
PURCHASER NAME                         U.S. PRIVATE PLACEMENT FUND
--------------------------------------------------------------------------------
<S>                                    <C>
Restructuring Fee due prior to         $12,500.00
August 30, 2002 re: Series B Notes
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
                                                                  SCHEDULE 2L(d)

                                 Schedule 8C-1
<PAGE>
                                                                     SCHEDULE 5V

                            [UK HOLDINGS TRANSACTION]

                                  Schedule 8C-1

<PAGE>
                                                                     SCHEDULE 5X

                                [JURISDICTIONS]

                                 Schedule 8C-1

<PAGE>
                                                                    SCHEDULE 6AA

                [BUSINESS OF ENGLISH FINANCE STRUCTURE COMPANIES]

                                 Schedule 8C-1

<PAGE>

                                                                    SCHEDULE 6DD

                   FINANCIAL COVENANTS AFTER JANUARY 15, 2004

     6A. MAINTENANCE OF INTEREST EXPENSE COVERAGE. Commencing with the fiscal
quarter ending December 31, 2003 and at each fiscal quarter end thereafter, the
Company covenants that it shall not permit the ratio of EBITDA to Interest
Expense to be less than 3.00X.

     6B. RATIO OF CONSOLIDATED DEBT TO TOTAL CAPITALIZATION. The Company
covenants that it shall not permit Consolidated Debt to Total Capitalization to
exceed, at any time, 40%. In calculating Consolidated Debt for purposes of this
covenant only, the Company will be allowed to deduct from Consolidated Debt an
amount equal to the Company's cash and marketable securities on the date of
determination up to, and to the extent of, such Consolidated Debt as may be
prepaid by the Company at such time without penalty or premium provided,
                                                               --------
however, that if such Consolidated Debt were so prepaid, (a) such prepayment
would not conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or create any obligation under,
any instrument evidencing Debt of the Company or its Subsidiaries or any other
agreement of the Company or its Subsidiaries and (b) no Default or Event of
Default would exist or result therefrom.

     6C. [Reserved].

     6D. CONSOLIDATED TOTAL NET DEBT TO CONSOLIDATED EBITDA. Commencing with the
fiscal quarter ending December 31, 2003 and at each fiscal quarter end
thereafter, the Company covenants that it shall not permit Consolidated Total
Net Debt to Consolidated EBITDA (calculated on a rolling four quarter basis) to
exceed, as of the last day of each such quarterly fiscal period, 3.30X.

     6E. MAINTENANCE OF TANGIBLE NET WORTH. The Company covenants that

     (a) it shall not permit Tangible Net Worth of the Company and its
Restricted Subsidiaries, at any time, to be less than the sum of:

          (i) Cdn.$450,000,000, PLUS

                                 Schedule 8C-1
<PAGE>
          (ii) 75% of cumulative Consolidated Net Income Available For Tangible
               Net Worth for the period from September 30, 2003 to and including
               the last day of the fiscal quarter most recently ended prior to
               the measurement date; and

     (b)  it shall not permit Tangible Net Worth of the Company and its
          Restricted Subsidiaries, at any time, to be less than the sum of:

          (i)  Cdn.$450,000,000, PLUS

          (ii) 75% of consolidated net earnings, as shown on the Special Purpose
               Financial Statements for the period from September 30, 2003 to
               and including the last day of the fiscal quarter most recently
               ended prior to the measurement date.

     6F. [Reserved]

The following defined terms used in this Schedule 6DD shall have the following
meanings (all other defined terms used herein shall have the definitions as set
forth in paragraph 10B of this Agreement):

     "CASH PAID" shall mean any amounts contributed by any member of the
Restricted Group to any Unrestricted Subsidiary in the form of subscription for
equity, inter-company loan, contribution of surplus or otherwise, excluding
trade payable, tax equivalent payments for a tax liability of a member of the
Restricted Group or receivables in the ordinary course of business.

     "CONSOLIDATED DEBT" at any time shall mean, without duplication, the
sum of all Funded Debt and Current Debt, in each case of the Company and its
Restricted Subsidiaries at such time, determined in accordance with GAAP on a
consolidated basis after eliminating all intercompany transactions.

     "CONSOLIDATED EBITDA" shall mean for the Restricted Group (a) the
consolidated net earnings, as shown on the Special Purpose Financial Statements,
in the period; plus (b) Consolidated Net Interest Expense in the period; plus
(c) income taxes, whether paid or deferred, which are deducted in determining
consolidated net earnings, as shown on the Special Purpose Financial Statement,
in the period, if any; plus (d) depreciation and amortization expense for the
period; minus (e) to the extent added in determining consolidated net earnings,
as shown on the Special Purpose Financial Statements, extraordinary gains; plus
(f) to the extent deducted in determining consolidated net earnings, as shown on
the Special

                                 Schedule 8C-2
<PAGE>
Purpose Financial Statements, extraordinary losses; plus (g) to the extent
deducted in determining consolidated net earnings, as shown on the Special
Purpose Financial Statements, non-cash foreign exchanges losses; all as set
forth on the most recent Special Purpose Financial Statements plus (h) cash
received by the Company from an Unrestricted Subsidiary or any third party in
respect of interest, dividends, reductions in share capital and repayment of
inter-company loans; minus (i) Cash Paid by any member of the Restricted Group
to any Unrestricted Subsidiary.

     "CONSOLIDATED FUNDED DEBT" at any time shall mean Funded Debt of the
Company and its Restricted Subsidiaries at such time, determined in accordance
with GAAP on a consolidated basis after eliminating all inter-company
transactions.

     "CONSOLIDATED NET INCOME" shall mean, with reference to any period, any net
earnings (or net loss) of the Company and its Restricted Subsidiaries occurring
during such period, determined in accordance with GAAP on a consolidated basis,
excluding:

     (i) extraordinary gains (net of any extraordinary losses up to the
     amount of any extraordinary gains);

     (ii) net income of any Person (other than a Restricted Subsidiary) in
     which the Company or a Restricted Subsidiary has an ownership interest
     unless those net earnings have actually been received in the form of cash
     for distribution;

     (iii) any portion of the net income of any Restricted Subsidiary which
     for any reason is unavailable to pay dividends to the Company or any other
     Restricted Subsidiary;

     (iv) any aggregate net gain (in excess of any net losses) arising from
     the sale, exchange or other disposition of capital assets (such term to
     include all fixed assets, whether tangible or intangible, all inventory
     sold in conjunction with the disposition of fixed assets, and all
     securities);

     (v) any write-up of any asset;

     (vi) any gain arising from the acquisition of any securities of the
     Company or its Restricted Subsidiaries;

                                 Schedule 8C-3
<PAGE>

     (vii) net income or gain (but not any loss) resulting from a change in
     accounting, discontinuing or disposing of operations, an extraordinary
     event or prior period adjustments; and

     (viii) the income (or loss) of any Person accrued prior to the date it
     becomes a Restricted Subsidiary.

     "CONSOLIDATED NET INCOME AVAILABLE FOR TANGIBLE NET WORTH" shall mean, with
reference to any period, Consolidated Net Income for all quarterly fiscal
periods of the Company occurring during such period (taken as a cumulative
whole), without deducting or offsetting therefrom any deficit or net loss
occurring during any quarterly fiscal period of the Company occurring therein.

     "CONSOLIDATED NET INTEREST EXPENSE" shall mean, for any period, the
aggregate of interest charges, finance charges and debt service charges, fees or
discounts for borrowed money, paid, payable or accrued in respect of
interest-bearing Indebtedness including without limitation Bankers' Acceptances
net of all interest and dividend income and specifically excluding all fees
payable under or in connection with this agreement for such period, all as set
forth on the most recent Special Purpose Financial Statements, plus interest,
calculated on an accrual basis, on the equity component of the Convertible
Unsecured Subordinated Debentures before income taxes.

     "CONSOLIDATED TOTAL NET DEBT" shall mean for the Restricted Group, at any
time, the principal amount of all outstanding interest bearing Indebtedness
including, without limitation, the debt component but excluding the equity
component of the Convertible Unsecured Subordinated Debentures, the face amount
of outstanding Bankers' Acceptances, Letters of Credit, and the amount of
Capitalized Lease Obligations (net of interest component) but specifically
excluding trade payables, and deducting cash and short term investments (rated
R-1 (middle) or better by Dominion Bond Rating Service), all as set forth on the
most recent Special Purpose Financial Statements plus the face amount of all
guarantees provided by any Restricted Subsidiary for the benefit of any
Unrestricted Subsidiary.

     "CURRENT DEBT" shall mean, with respect to any Person, (i) all Indebtedness
of such Person for borrowed money which by its terms or by the terms of any
instrument or agreement relating thereto matures on demand or within one year
from the date of the creation thereof and is not directly or indirectly
renewable or extendible at the option of the debtor to a date more than one year
from the date of the creation thereof, and (ii) any guarantee of an obligation
described in the preceding clause (i).

                                 Schedule 8C-4
<PAGE>

     "CURRENT LIABILITIES" at any time shall mean the aggregate amount carried
as current liabilities on the books of the Company and its Restricted
Subsidiaries at such time, determined in accordance with GAAP on a consolidated
basis and after eliminating all intercompany items, in accordance with GAAP.

     "DEBT" at any time shall mean, without duplication, the sum of Current Debt
and Funded Debt at such time.

     "EBITDA" shall mean, at the time of determination thereof, Consolidated Net
Income for the then immediately preceding four full consecutive fiscal quarters,
plus all amounts deducted in calculating Consolidated Net Income for such period
in respect of

               (a) gross interest accrued (including amortization of debt
          discount and imputed interest on Capitalized Lease Obligations) on
          Consolidated Debt,

               (b) depreciation and amortization, and

               (c) income taxes.

     "FUNDED DEBT" shall mean, with respect to any Person, (i) all indebtedness,
Capitalized Lease Obligations, letters of credit (other than trade letters of
credit) and other obligations that are required to be listed as a liability on a
balance sheet under GAAP (other than deferred taxes) or are secured by a Lien,
in each case, having a final maturity of more than one year from the date of
origin thereof (or which is renewable or extendible for a period or periods more
than one year from the date of origin), including all payments in respect
thereof that are required to be made within one year from the date of any
determination of Funded Debt, whether or not included in Current Liabilities and
(ii) all guarantees of Funded Debt.

     "INTEREST EXPENSE" shall mean, at the time of determination thereof, the
sum of (i) the gross interest accrued (including amortization of debt discount
and imputed interest on Capitalized Lease Obligations) during the then
immediately preceding four full consecutive fiscal quarters on Consolidated Debt
plus (ii) to the extent not included in (i), total cash interest expense paid on
the Convertible Unsecured Subordinated Debentures.

     "TANGIBLE NET WORTH" at any time shall mean the aggregate amount of
shareholders equity determined on a consolidated basis in accordance with GAAP,
excluding (i) any intercompany transactions, (ii) the net book value of all
assets

                                 Schedule 8C-5
<PAGE>
which would be treated as intangible under GAAP and (iii) the cumulative amount
of any net write-up of asset values after the date of the audit immediately
preceding the date of closing.

     "TOTAL CAPITALIZATION" at any time shall mean the sum of Tangible Net Worth
plus Consolidated Debt at such time.

                                 Schedule 8C-6
<PAGE>

                                                                     SCHEDULE 8C

                     [WAIVED DEFAULTS AND EVENTS OF DEFAULT]

                                 Schedule 8C-1

<PAGE>

                                                                     SCHEDULE 8H

             [ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES]

                                 Schedule 8H-1

<PAGE>

                                                                     SCHEDULE 8I

                              [CERTAIN LITIGATION]

                                  Schedule 8I-1

<PAGE>

                                                                  SCHEDULE 8J(a)

                               [OWNED PROPERTIES]

                                  Schedule 8M-1

<PAGE>

                                                                  SCHEDULE 8J(b)

                               [LEASED PROPERTIES]

                                 Schedule 8M-1

<PAGE>

                                                                     SCHEDULE 8K

                             [EXISTING INDEBTEDNESS]

                                 Schedule 8M-1

<PAGE>

                                                                     SCHEDULE 8N

                             [ENVIRONMENTAL MATTERS]

                                 Schedule 8O-1

<PAGE>

                                                                   SCHEDULE 8S-1

                              [MATERIAL CONTRACTS]

                                 Exhibit A-1 - 1

<PAGE>

                                                                   SCHEDULE 8S-2

                               [MATERIAL LICENSES]

                                 Exhibit A-1 - 1

<PAGE>

                                                                     SCHEDULE 8U

                                 [BANK ACCOUNTS]

                                 Exhibit A-1 - 1

<PAGE>

                                                                     SCHEDULE 8V

                           [INTERCOMPANY INDEBTEDNESS]

                                 Exhibit A-1 - 1

<PAGE>

                                                                     SCHEDULE 8X

                             [INTELLECTUAL PROPERTY]

                                 Exhibit A-1 - 1

<PAGE>

                                                                     SCHEDULE 8Y

                 [LICENSES, AGENCY AND DISTRIBUTION AGREEMENTS]

                                 Exhibit A-1 - 1

<PAGE>
                                                                    SCHEDULE 8CC

                              [FINANCIAL FORECAST]

                                 Exhibit A-1 - 1

<PAGE>
                                                                    SCHEDULE 8GG

                                 [PENSION PLANS]

                                 Exhibit A-1 - 1

<PAGE>

                                                                    SCHEDULE 8II

                           [ASSETS AND LIABILITIES OF
                      ENGLISH FINANCE STRUCTURE COMPANIES]

                                 Exhibit A-1 - 1

<PAGE>

                                                                    SCHEDULE 8JJ

                           [ASSETS AND LIABILITIES OF
                     HUNGARIAN FINANCE STRUCTURE COMPANIES]

                                 Exhibit A-1 - 1

<PAGE>

                                                                    SCHEDULE 8KK

                        [ASSETS OF CO-STEEL C.S.M. CORP.]

                                Exhibit A-1 - 1

<PAGE>

                                                                  SCHEDULE 10B-2

                                  [MORTGAGES]

                                Exhibit A-1 - 1

<PAGE>

                                                                     EXHIBIT A-1

                     [FORM OF SERIES A SENIOR SECURED NOTE]

                                  CO-STEEL INC.

                SERIES A SENIOR SECURED NOTE DUE JANUARY 15, 2004

No. R-                                                          [DATE]
      -------
$                                                               PPN: 18975N B# 8
 ------------

     FOR VALUE RECEIVED, CO-STEEL INC. (the "COMPANY"), a corporation organized
and existing under the laws of the Province of Ontario, Canada hereby promises
to pay to                            , or registered assigns, the principal
         ----------------------------
sum of                     DOLLARS ($          ) on January 15, 2004 or earlier
      ---------------------          ----------
as provided in the Agreement referred to below with interest (computed on the
basis of a three hundred sixty (360) day year of twelve (12) thirty (30) day
months) (a) on the unpaid balance thereof at the Applicable Rate from the date
hereof, payable on the 15th day of each month in each year commencing with the
month next succeeding the date hereof, until the principal hereof shall have
become due and payable; and (b) during the existence of an Event of Default,
payable monthly as aforesaid (or, at the option of the registered holder hereof,
on demand), at a rate per annum from time to time equal to the greater of (i)
the Applicable Rate plus 2% per annum or (ii) 2% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate. Capitalized terms used herein and not
otherwise defined herein have the respective meanings ascribed thereto in the
Agreement referred to below.

     Payments of principal of, and interest on, and any Yield-Maintenance Amount
payable with respect to, this Note are to be made at the main office of Bank of
New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.

     This Note is one of the senior promissory notes (herein called the "NOTES")
originally issued pursuant to the Note Agreement dated as of January 10, 1994
which was amended pursuant to the Amended and Restated Note Agreement dated as
of February 4, 2000 and further amended by the Second Amended and Restated

                                Exhibit A-1 - 1
<PAGE>
Note Agreement, dated as of April 30, 2002 (herein called the "AGREEMENT"),
between the Company and The Prudential Insurance Company of America, and is
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to required prepayments as well as optional prepayment, in whole or from
time to time in part on the terms specified in the Agreement.

     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.

     In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.

     This Note is intended to be performed in the State of New York and shall be
construed and enforced in accordance with the law of such State.

                                       CO-STEEL INC.

                                       By ________________________________
                                          Name:
                                          Title:

                                Exhibit A-1 - 2

<PAGE>
                                                                     EXHIBIT A-2

                     [FORM OF SERIES B SENIOR SECURED NOTE]

                                  CO-STEEL INC.

                 SERIES B SENIOR SECURED NOTE DUE JULY 15, 2006

No. R-                                                          [DATE]
      -------
$                                                               PPN: 18975N C* 1
 ------------

     FOR VALUE RECEIVED, CO-STEEL INC. (the "COMPANY"), a corporation organized
and existing under the laws of the Province of Ontario, Canada hereby promises
to pay to                                  or registered assigns, the principal
         ---------------------------------
sum of                                DOLLARS ($            ) on July 15, 2006
      -------------------------------           ------------
or earlier as provided in the Agreement referred to below with interest
(computed on the basis of a three hundred sixty (360) day year of twelve (12)
thirty (30) day months) (a) on the unpaid balance thereof at the Applicable Rate
from the date hereof, payable on the 15th day of each month in each year
commencing with the month next succeeding the date hereof, until the principal
hereof shall have become due and payable; and (b) during the existence of an
Event of Default, at a rate per annum from time to time equal to the greater of
(i) the Applicable Rate plus 2% per annum or (ii) 2% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate. Capitalized terms used herein and not
otherwise defined herein have the respective meanings ascribed thereto in the
Agreement referred to below.

     Payments of principal of, and interest on, and any Yield-Maintenance Amount
payable with respect to, this Note are to be made at the main office of Bank of
New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.

     This Note is one of the senior promissory notes (herein called the "NOTES")
originally issued pursuant to the Note Agreement dated as of February 20, 1997
which was amended pursuant to the Amended and Restated Note Agreement dated as
of February 4, 2000 and further amended by the Second Amended and Restated Note
Agreement, dated as of April 30, 2002 (herein called the "AGREEMENT"), between
the Company and each of The Prudential Insurance Company of America

                                Exhibit A-2 - 1
<PAGE>
and U.S. Private Placement Fund, and is entitled to the benefits thereof. As
provided in the Agreement, this Note is subject to required prepayments as well
as optional prepayment, in whole or from time to time in part on the terms
specified in the Agreement.

     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.

     In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.

     This Note is intended to be performed in the State of New York and shall be
construed and enforced in accordance with the law of such State.

                                       CO-STEEL INC.

                                       By ________________________________
                                          Name:
                                          Title:

                                Exhibit A-2 - 2

<PAGE>

                                                                       EXHIBIT B

                        [FORM OF INTERCREDITOR AGREEMENT]

                                  Exhibit B-1
<PAGE>

                                                                       EXHIBIT C

                             [INTENTIONALLY DELETED]

                                  Exhibit C-1

<PAGE>

                                                                       EXHIBIT D

                          [ASSET MONETIZATION PROGRAM]

                                  Exhibit D-1

<PAGE>

                                                                       EXHIBIT E

                              [FORM OF GUARANTEE]

                                  Exhibit F-1

<PAGE>

                                  CO-STEEL INC.
                  (TO BE RENAMED GERDAU AMERISTEEL CORPORATION)

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

                          AMENDMENT NO. 1 AND WAIVER TO
                   SECOND AMENDED AND RESTATED NOTE AGREEMENT

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

                          DATED AS OF OCTOBER 23, 2002

               SERIES A SENIOR SECURED NOTES DUE JANUARY 15, 2004
                 SERIES B SENIOR SECURED NOTES DUE JULY 15, 2006

<PAGE>
                                                       As of October 23, 2002

To each of the Persons
Named in Annex 1 hereto
(the "CURRENT HOLDERS")

Ladies and Gentlemen:

     CO-STEEL INC. (to be renamed GERDAU AMERISTEEL CORPORATION) an Ontario,
Canada corporation (together with any successors and assigns, the "COMPANY"),
hereby agrees with each of you as follows:

1.   BACKGROUND

     1.1. PRIOR ISSUANCE OF NOTES, ETC.

     The Company issued and sold its (a) senior promissory notes due January 15,
2004 (the "SERIES A NOTES") in the original aggregate principal amount of
$100,000,000 pursuant to that certain Note Agreement, dated as of January 10,
1994, as amended by the Amended and Restated Note Agreement dated as of February
4, 2000, and as further amended by that certain Second Amended and Restated Note
Agreement, dated as of April 30, 2002 (the "EXISTING NOTE AGREEMENT") among the
Company, The Prudential Insurance Company of America ("PRUDENTIAL") and U.S.
Private Placement Fund (the "FUND"); and (b) senior promissory notes due July
15, 2006 (the "SERIES B NOTES" and together with the Series A Notes, the
"NOTES") in the original aggregate principal amount of $75,000,000 pursuant to
that certain Note Agreement, dated as of February 20, 1997 among the Company,
Prudential and the Fund, as amended by the Amended and Restated Note Agreement
dated as of February 4, 2000, and as further amended by the Existing Note
Agreement. The Existing Note Agreement, as may be amended pursuant to this
Amendment No. 1 and Waiver to Second Amended and Restated Note Agreement (this
"AMENDMENT") and as may be further amended, restated or otherwise modified from
time to time, is hereinafter referred to as the "NOTE AGREEMENT." As of the date
hereof, the outstanding principal amount of the Series A Notes is $41,058,376.04
and the outstanding principal amount of the Series B Notes is $68,430,626.74.

     1.2. GERDAU TRANSACTION.

     The Company proposes to enter into a series of transactions in which Gerdau
Steel Inc. ("GERDAU CANADA") will acquire common shares in the Company
representing approximately 74% (to be reduced to approximately 64.8%) of the
voting capital stock of the Company on a fully diluted basis after issuance
pursuant to certain proposed merger transactions (the "MERGER") outlined in more
detail in

<PAGE>
the  Management Information Memorandum of the Company dated August 26, 2002. The
Merger contemplates the following transfers:

          (a) the transfer by Gerdau Canada of all of the existing share capital
     (the "EXISTING GERDAU CANADA SUBGROUP SHARES") in each of Gerdau Courtice
     Steel Inc. ("COURTICE"), Gerdau MRM Holdings Inc. ("MRM HOLDINGS") and
     Gerdau USA Inc. ("GERDAU USA") to 4104315 Canada Limited;

          (b) followed by a transfer of the Existing Gerdau Canada Subgroup
     Shares to Gerdau Nova Scotia Holding Company ("GERDAU HOLDCO 2"); and

          (c) followed by a transfer of all of the issued share capital in
     Gerdau Holdco 2 to the Company.

2.   REQUEST FOR CONSENT TO AMENDMENTS, WAIVERS AND DESIGNATION

     The Company requests that each of the Current Holders enter into this
Amendment and consent to (a) the amendments to the Existing Note Agreement more
particularly set forth in Exhibit A of this Amendment (collectively, the
"AMENDMENTS"), (b) certain waivers as more particularly set forth in Exhibit B
of this Amendment (collectively, the "WAIVERS"), and (c) the designation of
certain entities as Unrestricted Subsidiaries as set forth in Section 4.3 of
this Amendment (the "DESIGNATION").

3.   WARRANTIES AND REPRESENTATIONS

     To induce the Current Holders to enter into this Amendment and to consent
to the Amendments and the Waivers, the Company warrants and represents as to
itself and its Subsidiaries (other than the Gerdau Subgroup except in respect of
Sections 3.9, 3.10, 3.11 and 3.12) as follows (it being agreed, however, that
nothing in this Section 3 shall affect any of the warranties and representations
previously made by the Company in or pursuant to the Existing Note Agreement,
and that all of such other warranties and representations, as well as the
warranties and representations in this Section 3, shall survive the
effectiveness of the Amendments and Waivers):

     3.1. REAFFIRMATION.

     All representations and warranties made in the Existing Note Agreement by
the Company continue to be true and correct in all material respects as of the
date hereof except for those representations and warranties which speak to a
prior specific date.

     3.2. NO MATERIAL ADVERSE CHANGE.

                                       2
<PAGE>
     Since April 30, 2002, there has been no change in the business operations,
profits, financial condition, Properties or business prospects of the Company
except changes that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.

     3.3. CORPORATE ORGANIZATION AND AUTHORITY.

     The Company is duly organized, validly existing and in good standing under
the laws of Ontario, Canada and has the requisite corporate power and authority
to execute and deliver this Amendment and to perform its obligations under this
Amendment and the Note Agreement, as amended by this Amendment.

     3.4. LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.

          (a) Neither the execution nor delivery of this Amendment, nor
     fulfillment of nor compliance with the terms and provisions hereof will
     conflict with, or result in a breach of the terms, conditions or provisions
     of, or constitute a default under, or result in any violation of, or result
     in the creation of any Lien upon any of the Properties or assets of the
     Company or any of its Subsidiaries pursuant to, the charter or by-laws of
     the Company or any of its Subsidiaries, any award of any arbitrator or any
     agreement (including any agreement with stockholders), any Material
     Contract, any Material License, the leases for the North York Property or
     the Significant U.S. Leased Properties or any order, judgment, decree,
     statute, law, rule or regulation to which the Company or any of its
     Subsidiaries is subject.

          (b) The execution and delivery of this Amendment has been duly
     authorized by all necessary action on the part of the Company, and has been
     executed and delivered on behalf of the Company by one or more duly
     authorized officers of the Company, and this Amendment constitutes a legal,
     valid and binding obligation of the Company, enforceable against the
     Company in accordance with its terms.

     3.5. FULL DISCLOSURE.

     None of the financial statements and other certificates previously provided
to the Current Holders pursuant to the provisions of the Existing Note Agreement
nor the statements made in this Amendment nor any other written statements
furnished by or on behalf of the Company or any of its Subsidiaries, including,
without limitation, the Asset Monetization Program, the Financial Forecasts and
the Business Plans, and other written statements furnished to the Current
Holders in connection with the proposal and negotiation of the Merger, the
Existing Note Agreement and this Amendment, the other Documents and the Waivers
contained in Exhibit B hereto, taken as a whole, contain any untrue statement of
a material fact or omit a material fact necessary to make the statements
contained therein and herein not misleading. There is no fact relating to any
event or circumstance that

                                       3
<PAGE>
has occurred or arisen since April 30, 2002 that the Company has not disclosed
to the Current Holders in writing that has had or, so far as the Company can now
reasonably foresee, could reasonably be expected to have, a Material Adverse
Effect.

     3.6. MERGER DOCUMENTS.

          (a) Each of the representations and warranties made by the Company in
     the Transaction Agreement among Gerdau Canada, Gerdau S.A. and the Company
     dated as of August 12, 2002, as amended and restated on August 23, 2002
     (together with all exhibits, schedules and other related documents,
     collectively, the "TRANSACTION AGREEMENT") is true and correct in all
     material respects, and such representations and warranties are hereby
     incorporated herein by reference with the same effect as though made by the
     Company and set forth herein in their entirety.

          (b) The Company has delivered to each Current Holder a true and
     correct copy of the Transaction Agreement.

     3.7. INTENT.

     The  Company is entering into this Amendment and has entered into the
Transaction Agreement without any intent to hinder, delay, or defraud either
current creditors or future creditors of the Company.

     3.8. NO DEFAULTS.

     Except as disclosed on Exhibit B hereto, immediately prior to the
effectiveness of this Amendment, no Default or Event of Default had occurred and
was continuing under the Existing Note Agreement, and immediately after the
effectiveness of this Amendment, the Amendments and Waivers, no Default or Event
of Default under the Note Agreement will have occurred and be continuing.

     3.9. GERDAU HOLDCO 2.

     As of the Gerdau Transaction Effective Date (defined in Section 4.4),
Gerdau Holdco 2 (a) is an unlimited liability company duly organized and validly
existing under the laws of the Province of Nova Scotia and has all necessary
company power and authority to own its property and to carry on its business,
(b) carries on the business of being a holding body corporate of all of the
issued and outstanding shares of MRM and Courtice and, directly or indirectly,
all of the issued and outstanding shares of Gerdau USA and carries on no other
business, (c) has assets consisting solely of the aforementioned shareholdings,
and (d) has no Indebtedness or other liabilities. As of the Effective Date, all
of the issued and outstanding capital of Gerdau Holdco 2 will be beneficially
owned by the Company.

     3.10. INTERMEDIATE HOLDING COMPANY.

                                       4

<PAGE>
     As of the Effective Date, Intermediate Holding Company (a) is a corporation
duly incorporated and validly existing under the laws of the Province of Ontario
and has all necessary corporate power and authority to own its property and
carry on its business, (b) carries on no business (other than in respect of the
Status Quo Agreement), and (c) has no assets, Indebtedness or other liabilities.
As of the Effective Date, all of the issued and outstanding capital of
Intermediate Holding Company will be beneficially owned by the Company.

     3.11. PRO FORMA FINANCIALS

     The Company has delivered to the Current Holders its pro forma consolidated
balance sheet dated as of June 30, 2002, prepared giving effect to the Merger as
if the Merger had occurred on January 1, 2001, and statements of income for the
12-month period ended December 30, 2001, and for the six month period ended June
30, 2002, in each case prepared as if the Merger had occurred on January 1,
2001. Such pro forma consolidated financial statements were (a) prepared in good
faith and, in the Company's opinion, were reasonable when made and continue to
be reasonable as of the Effective Date, (b) based on the best information
reasonably available to the Company after due inquiry, (c) accurately reflect
all adjustments necessary to give effect to the Merger, and (d) present fairly
in accordance with GAAP, in all material respects, the pro forma financial
position of the Company and its Subsidiaries (including the Gerdau Subgroup) as
if the Merger had occurred on such date or at the beginning of such periods. The
Company does not have, as of the Effective Date, any material liabilities that
would be required to be included in financial statements prepared in accordance
with GAAP that are not reflected in such pro forma financial statements.

     3.12. CAPITAL STRUCTURE.

     After giving effect to the Gerdau Acquisition, the Parent Amalgamation and
the Ameristeel Amalgamation, Gerdau Canada will own 64.8% of the outstanding
common shares of the Company on a fully diluted basis.

4.   AMENDMENTS; WAIVERS; DESIGNATION.

     4.1. AMENDMENTS TO EXISTING NOTE AGREEMENT.

     On the Effective Date, the Existing Note Agreement is hereby amended in the
manner specified in Exhibit A to this Amendment.

     4.2. LIMITED WAIVERS UNDER EXISTING NOTE AGREEMENT.

     On the Effective Date, each Current Holder hereby grants the Waivers set
forth in Exhibit B to this Amendment.

     4.3. DESIGNATION AS UNRESTRICTED SUBSIDIARIES.

                                       5
<PAGE>
     On the Effective Date, each Current Holder hereby consents to the
designation of each member of the Gerdau Subgroup as an Unrestricted Subsidiary
pursuant to the definition of "Unrestricted Subsidiary" in paragraph 10B of the
Existing Note Agreement.

     4.4. EFFECTIVENESS OF AMENDMENTS, WAIVERS AND DESIGNATION.

     The Amendments, the Waivers and the Designation shall become effective (the
"EFFECTIVE DATE") at such time as all of the Current Holders shall have
indicated their written consent to such Amendments, Waivers and Designation by
executing and delivering the applicable counterparts of this Amendment and
satisfaction in full of the following conditions precedent:

          (a)  delivery to each Current Holder of a copy of a fully executed
      amendment to the Bank Agreement dated the date hereof substantially in the
      form attached hereto as Exhibit C;

          (b)  delivery to each Current Holder of a copy of a fully executed
     amendment to the PNC Credit Agreements dated the date hereof substantially
     in the form attached hereto as Exhibit D;

          (c) delivery to each Current Holder of a copy of a fully executed
     Status Quo Agreement substantially in the form attached hereto as
     Exhibit E;

          (d) delivery to each Current Holder of certified copies of all
     corporate action taken by the Company and each Guarantor to authorize the
     execution and delivery of this Amendment;

          (e) delivery to each Current Holder of certified copies of all
     corporate action taken by each member of the Gerdau Subgroup party to the
     Status Quo Agreement and Intermediate Holding Company to authorize the
     execution and delivery of the Status Quo Agreement;

          (f) if the Effective Date is not the date of execution of this
     Agreement, delivery to each Current Holder of a certificate dated the
     Effective Date and signed by a Responsible Officer of the Company,
     certifying: (i) that the warranties and representations contained in
     Section 3 of this Amendment are true on the Effective Date with the same
     effect as though made on and as of that date; and (ii) that the Company has
     performed and complied with all agreements and conditions contained herein
     that are required to be performed or complied with by the Company on or
     prior to the Effective Date, and that such performance and compliance
     remains in effect on the Effective Date;

          (g) delivery to each Current Holder of a certificate dated the
     Effective Date and signed by the Secretary or the Assistant Secretary of
     the Company

                                       6
<PAGE>
     certifying as to (i) the incumbency of the Company, each Guarantor, the
     Intermediate Holding Company and each member of the Gerdau Subgroup
     party to the Status Quo Agreement; and (ii) the good standing or the
     equivalent thereof for the Company, each Guarantor, Intermediate Holding
     Company and each member of the Gerdau Subgroup party to the Status Quo
     Agreement;

          (h) delivery to each Current Holder from Goodmans LLP and Wilentz,
     Goldman & Spitzer, special counsel to the Company, of closing opinions,
     dated as of the Effective Date, and in form and substance satisfactory to
     the Current Holders. This Section 4.4(h) shall constitute direction by the
     Company to such counsel to deliver such closing opinions to the Current
     Holders;

          (i) no Material Adverse Effect shall have occurred;

          (j) the payment of the fee by the Company payable to the Current
     Holders pursuant to Section 6 of this Amendment and the expenses to be paid
     on behalf of the Current Holders pursuant to Section 7 of this Amendment
     (to the extent a statement therefor has been presented to the Company on or
     prior to the Effective Date);

          (k) delivery to each Current Holder of any additional information,
     certification or other document or instrument as such Current Holder may
     request, including, without limitation, opinions of Nova Scotia counsel
     delivered to the Company or Gerdau Canada dated as of the Effective Date;

          (l) delivery to the relevant Security Agent or its nominee, of (i) an
     acknowledgement in respect of the Stock Pledge Agreement concerning the
     pledge of the membership interests in Gerdau Holdco 2 and (ii) all
     certificates, instruments or other documents representing all of the issued
     and outstanding membership interests of Gerdau Holdco 2 endorsed for
     transfer or accompanied by a power of attorney, all as satisfactory to such
     Security Agent;

          (m) the Gerdau Acquisition shall have occurred in the manner
     contemplated by the Transaction Agreement;

          (n) delivery to each Current Holder of pro forma financial statements
     incorporating the business of the Gerdau Subgroup;

          (o) the representation contained in Section 3.8 shall be true and
     correct as of the Effective Date;

          (p) the maturity of the Gerdau Canada Credit Agreement revolver shall
     have been renewed and extended until at least September 22, 2003;

                                       7
<PAGE>
          (q) delivery of copies of all constating documents of Gerdau Holdco 2
     and Intermediate Holding Company which shall be in form and substance
     satisfactory to the Current Holders;

          (r) execution and delivery of the amendment to the Intercreditor
     Agreement dated the date hereof substantially in the form attached hereto
     as Exhibit F; and

          (s) delivery to the relevant Security Agent or its nominee of all
     certificates, instruments or other documents representing all of the issued
     and outstanding shares of Intermediate Holding Company endorsed for
     transfer or accompanied by a power of attorney, all as satisfactory to such
     Security Agent together with an acknowledgement by the Company that such
     issued and outstanding shares are subject to the Lien of the Stock Pledge
     Agreement.

     4.5. NO OTHER AMENDMENTS OR WAIVERS; CONFIRMATION.

     The parties agree and confirm that entering into this agreement shall in no
way evidence a new debt entered into between the parties or a novation of the
original debt but rather the debt created pursuant to the existing agreement is
continued in full force and effect, as amended by this Amendment. Except as
expressly provided herein, (a) no terms or provisions of the Note Agreement or
any other Document are modified or changed by this Amendment, (b) the terms of
this Amendment shall not operate as a waiver by any Current Holder of, or
otherwise prejudice any Current Holder's rights, remedies or powers under, the
Existing Note Agreement or any other Document or under any applicable law and
(c) the terms and provisions of the Existing Note Agreement and each other
Document shall continue in full force and effect.

5.   DEFINED TERMS

     Capitalized terms used herein and not otherwise defined have the meanings
ascribed to them in the Note Agreement.

6.   FEE.

     In consideration of the consent by the Current Holders to the Amendments
and the Waivers, the Company shall pay a combined fee to the Current Holders on
the Effective Date in an aggregate amount equal to one-tenth of one percent
(0.10%) of the outstanding principal amount of the Notes. Such combined fee
shall be paid to the Current Holders ratably in accordance with the respective
principal amounts of Notes held by them (as indicated in Annex 1) and in the
manner and to the accounts specified in the Existing Note Agreement for payments
of principal and interest on the Notes. The Company hereby represents that any
and all fees paid to the Banks and PNC, respectively, in consideration of
receiving amendments and

                                       8
<PAGE>
waivers similar to the Amendments and Waivers are (a) in respect of the Banks,
as a collective group, not more than one-tenth of one percent (0.10%) of the
aggregate outstanding principal amount of Indebtedness evidenced by the Bank
Agreement as of the Effective Date and (b) in respect of PNC, not more than
one-tenth of one percent (0.10%) of the aggregate outstanding principal amount
of Indebtedness evidenced by the PNC Credit Agreements as of the Effective Date.

7.   EXPENSES

     Whether or not any of the Amendments or Waivers becomes effective, the
Company will promptly (and in any event within thirty (30) days of receiving any
statement or invoice therefor) pay all fees, expenses and costs relating to this
Amendment, including, but not limited to, (a) the cost of reproducing this
Amendment and the other documents delivered in connection herewith and (b) the
reasonable fees and disbursements of the Current Holders' special counsel,
Bingham McCutchen LLP, incurred in connection with the preparation, negotiation
and delivery of this Amendment. This Section 7 shall not be construed to limit
the Company's obligations under paragraph 11B of the Note Agreement.

8.   MISCELLANEOUS

     8.1. PART OF NOTE AGREEMENT, FUTURE REFERENCES, ETC.

     This Amendment shall be construed in connection with and as a part of the
Note Agreement and, except as expressly amended by this Amendment, all terms,
conditions and covenants contained in the Note Agreement, the Notes and the
other Documents are hereby ratified and shall be and remain in full force and
effect. Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this Amendment may
refer to the Note Agreement without making specific reference to this Amendment,
but nevertheless all such references shall include this Amendment unless the
context otherwise requires.

     8.2. GOVERNING LAW.

     THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

     8.3. DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.

     Two (2) or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the

                                       9
<PAGE>
same instrument. This Amendment may be executed in one or more counterparts and
shall become effective at the time provided in Section 4.4 hereof, and each set
of counterparts that, collectively, show execution by the Company and each
consenting Current Holder shall constitute one duplicate original.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. NEXT PAGE IS SIGNATURE PAGE.]

                                       10
<PAGE>
     If this Amendment is satisfactory to you, please so indicate by signing the
applicable acceptance on a counterpart hereof and returning such counterpart to
the Company, whereupon this Amendment shall become binding among the Company and
you in accordance with its terms.

                                               Sincerely,

                                               CO-STEEL INC.

                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

Accepted:

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:
   --------------------------------------
   Name:
   Title:

U.S. PRIVATE PLACEMENT FUND

By: Prudential Private Placement
     Investors, L.P., Investment Advisor

By: Prudential Private Placement
     Investors, Inc., its General Partner

           By:
              --------------------------------------
              Name:
              Title:

                 [Signature Page to Amendment No. 1 and Waiver]

<PAGE>
                                       Each undersigned Guarantor hereby
                                       consents to the Amendments and confirms
                                       its obligations as Guarantor under the
                                       Amended and Restated Guarantee, dated
                                       as of April 30, 2002:

                                       CO-STEEL SAYREVILLE, INC.

                                       By:
                                         ---------------------------------------
                                       Name:
                                       Title:

                                       CO-STEEL RARITAN, INC.

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       CO-STEEL USA DISTRIBUTION, INC.

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       CO-STEEL (U.S.) LTD.

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       CO-STEEL FINANCE CORP.

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                 [Signature Page to Amendment No. 1 and Waiver]
<PAGE>
                                       CO-STEEL USA HOLDINGS, INC.

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       LAKE ONTARIO STEEL COMPANY INC.

                                       By:
                                          -------------------------------------
                                       Name:
                                       Title:

                                       RARITAN RIVER URBAN RENEWAL CORPORATION

                                       By:
                                          -------------------------------------
                                       Name:
                                       Title:

                                       CO-STEEL DISTRIBUTION CANADA LIMITED

                                       By:
                                          -------------------------------------
                                       Name:
                                       Title:

                                       1300554 ONTARIO LIMITED

                                       By:
                                          -------------------------------------
                                       Name:
                                       Title:

                 [Signature Page to Amendment No. 1 and Waiver]

<PAGE>
                                       1102590 ONTARIO LIMITED

                                       By:
                                          -------------------------------------
                                       Name:
                                       Title:

                 [Signature Page to Amendment No. 1 and Waiver]

<PAGE>
                                     ANNEX 1
                      CURRENT HOLDERS AND PRINCIPAL AMOUNTS

<TABLE>
<CAPTION>
==============================================================================================================
                                                                AGGREGATE PRINCIPAL       AGGREGATE
                                                                AMOUNT OF SERIES A        PRINCIPAL AMOUNT
                                                                SENIOR SECURED NOTES      OF SERIES B SENIOR
NAME OF CURRENT HOLDER                                          HELD                      SECURED NOTES HELD
==============================================================================================================
<S>                                                             <C>                       <C>
The Prudential Insurance Company of America                         $41,058,376.04          $63,868,584.94
--------------------------------------------------------------------------------------------------------------

U.S. Private Placement Fund                                               N.A.              $4,562,041.80
==============================================================================================================
</TABLE>

                                   Annex 1-1

<PAGE>
                                                                      EXHIBIT A

                      AMENDMENTS TO EXISTING NOTE AGREEMENT

1.   Subsection (l) of paragraph 5A, paragraphs 5F, 5I, 5L, 5M, 5P, 5R, 5Y, 5Z,
     5BB, 5EE, 6L, 6T, 6W, 6X, 6Z, 6AA and Subsections (c), (g), (h), (i), (j),
     (l), (n), (o), (q), (v), (w) and (bb) of paragraph 7A of the Existing Note
     Agreement are hereby amended by deeming each reference therein to
     "Subsidiary" and "Subsidiaries" as excluding each member of the Gerdau
     Subgroup; and paragraph 6Z of the Existing Note Agreement is hereby amended
     by deeming the reference therein to "Affiliate" as excluding each member of
     Gerdau Canada.

2.   The Existing Note Agreement is hereby amended by adding a new paragraph 5FF
     to read as follows:

       "5FF. GERDAU HOLDCO 2; INTERMEDIATE HOLDING COMPANY.

            The Company shall do or cause to be done all things necessary to
       ensure that each of Gerdau Holdco 2 and Intermediate Holding Company
       remains a company duly created and validly subsisting under the laws of
       its jurisdiction of formation and maintains all necessary company power
       and authority to own its property and carry on its business as owned and
       carried on by it on the Amendment No. 1 Effective Date, except as may
       otherwise be permitted pursuant to paragraph 6HH."

3.   The Existing Note Agreement is hereby amended by adding a new paragraph 5GG
     to read as follows:

       "5GG. FINANCING STATEMENTS.

            The Company shall within 30 days following the Amendment No. 1
       Effective Date, at its expense (a) register, file or record such
       financing statements or financing change statements under applicable law
       as are necessary to perfect or preserve the perfection of the security of
       the Security Agents and the holders of the Notes in connection with the
       change of name of the Company; and (b) cause to be delivered to the
       Purchasers opinions of its Canadian and U.S. counsel in respect of such
       registrations in a form and substance reasonably satisfactory to the
       Purchasers.

4.   Clause (e) in paragraph 6EE of the Existing Note Agreement is hereby
     deleted and replaced in its entirety as follows:

            "(e) ownership of the capital stock of ASW Holdings, the Gerdau
       Subgroup and Subsidiaries existing on the Restructuring Date or as
       otherwise provided herein; and"

                                  Exhibit A-1

<PAGE>
5.   The Existing Note Agreement is hereby amended by adding a new paragraph 6GG
     to read as follows:

       "6GG. GERDAU HOLDCO 2; INTERMEDIATE HOLDING COMPANY.

          The Company shall not:

              (a) permit Gerdau Holdco 2 or Intermediate Holding Company to
          create, incur, assume or permit to exist any Indebtedness;

              (b) permit Gerdau Holdco 2 or Intermediate Holding Company to
          guarantee, or give an indemnity in respect of, any Indebtedness,
          obligation or liability (whether present or future, actual or
          contingent) of any Person, or to create, assume or permit to exist
          over all or any part of its business or assets, whether now owned or
          hereafter acquired, any Lien (whether prior or subsequent to or pari
          passu with any Lien in favor of the holders of the Notes) other than
          the Liens in favor of The Toronto Dominion Bank as Administrative
          Agent under the Gerdau Canada Credit Agreement existing on the Gerdau
          Transaction Effective Date in the Gerdau Subgroup shares, equity
          interests and assets;

              (c) permit Gerdau Holdco 2 or Intermediate Holding Company to
          sell, lease, license, transfer, assign, grant options or rights in or
          over, or otherwise dispose of or deal with any of its business,
          assets, rights, revenues or property, real, personal or mixed,
          tangible or intangible (including, without limitation, shares of stock
          and indebtedness of Subsidiaries, receivables and leasehold
          interests), whether in one or a series of transactions other than the
          Liens in favor of The Toronto Dominion Bank as Administrative Agent
          under the Gerdau Canada Credit Agreement existing on the Gerdau
          Transaction Effective Date in the Gerdau Subgroup shares, equity
          interests and assets;

              (d) permit Gerdau Holdco 2 to (i) acquire or incorporate any
          Subsidiary; or (ii) acquire all or a substantial part of, in one or a
          series of transactions (whether by way of amalgamation, merger, share
          purchase, asset purchase or otherwise) the assets, shares or any other
          equity interest of any Person;

              (e) other than as permitted pursuant to paragraph 6HH, permit
          Intermediate Holding Company to (i) acquire or incorporate any
          Subsidiary; or (ii) acquire all or a substantial part of, in one or a
          series of transactions (whether by way of amalgamation, merger, share
          purchase,

                                  Exhibit A-2
<PAGE>
     asset purchase or otherwise) the assets, shares or any other equity
     interest of any Person;

          (f) permit Gerdau Holdco 2 or Intermediate Holding Company to declare
     any dividends from, or set apart any sum for the payment of any dividends
     on, or make any other distribution (by reduction of capital or otherwise)
     in respect of, any of Gerdau Holdco 2's membership interests or
     Intermediate Holding Company's shares;

          (g) permit Gerdau Holdco 2 or Intermediate Holding Company to apply
     any of their respective assets to the purchase, redemption or other
     acquisition or retirement of any shares or membership interests in their
     capital or otherwise reduce issued or paid up capital in respect of any of
     their shares;

          (h) permit Gerdau Holdco 2 or Intermediate Holding Company to issue or
     approve the transfer of any new capital by way of equity or subordinated
     debt offering or otherwise other than as contemplated by paragraph 6HH;

          (i) permit Gerdau Holdco 2 or Intermediate Holding Company to:

               (i) enter into any transaction with any Affiliate, including,
          without limitation, any transaction for the purchase, sale or exchange
          of property, the rendering of any services, the making or obtaining of
          any loans or advances, and the entering into of any contracts or
          agreements other than the Status Quo Agreement, the Approved Transfer
          Documents and as contemplated by paragraph 6HH; or;

               (ii) pay any fees or expenses to, or reimburse or assume any
          obligation for the reimbursement of any expenses incurred by any
          Affiliate of it;

          (j) permit Gerdau Holdco 2 or Intermediate Holding Company to enter
     into any corporate transaction (or series of transactions), whether by way
     of reconstruction, arrangement, reorganization, consolidation,
     amalgamation, merger or otherwise, whereby all or substantially all of its
     or their undertaking and assets would become the property of any other
     Person or in the case of any amalgamation, the property of the continuing
     corporation resulting from the amalgamation other than in respect of the
     Intermediate Holding Company Transfer or the Gerdau Holdco 2 Conversion;

                                  Exhibit A-3

<PAGE>
          (k) permit Gerdau Holdco 2 or Intermediate Holding Company to engage
          in any business other than holding the common stock of the Gerdau
          Subgroup and entering into and performing the terms of the Status Quo
          Agreement and as otherwise contemplated herein;

          (l) permit Gerdau Holdco 2 or Intermediate Holding Company to amend,
          revise or supplement or take any action or omit to take any action
          which would contravene any of their respective organizational
          documents other than as required by the Gerdau Holdco 2 Conversion;

          (m) permit Intermediate Holding Company to engage in any business
          other than holding the membership interests of Gerdau Holdco 2 after
          the occurrence of the Intermediate Holding Company Transfer or
          entering into and performing the terms of the Status Quo Agreement and
          the Approved Transfer Documents; and

          (n) permit any of its Subsidiaries (other than the Gerdau Subgroup
          (excluding Gerdau Holdco 2 and Intermediate Holding Company)) to
          transfer, except in connection with the Intermediate Holding Company
          Transfer, any assets to or incur any Indebtedness in respect of any
          member of the Gerdau Subgroup."

6.   The Existing Note Agreement is hereby amended by adding a new paragraph 6HH
     to read as follows:

     "6HH. INTERMEDIATE HOLDING COMPANY TRANSFER; GERDAU HOLDCO 2 CONVERSION.

          (a) INTERMEDIATE HOLDING COMPANY TRANSFER. Upon the occurrence of any
     of the following events:

               (i) in the event that Cumulative Consolidated EBITDA tested on
          March 31, 2003 does not exceed $105,000,00; or

               (ii) in the event that the Adjusted Cost Base of the Gerdau
          Subgroup as reflected in the Special Purpose Financial Statements at
          any time is less than 99% of the Adjusted Cost Base of the Gerdau
          Subgroup as reflected in the Special Purpose Financial Statements as
          of December 31, 2002; or

               (iii) in the event that the Required Lenders reasonably deem that
          a Material Event exists;

                                  Exhibit A-4

<PAGE>
          then the Company shall take all steps necessary to effect the
          Intermediate Holding Company Transfer. The Intermediate Holding
          Company Transfer shall take place within 30 days of an event specified
          in clauses (i) or (ii) above and within 5 Business Days of the event
          specified in clause (iii) above. The Intermediate Holding Company
          Transfer will be effected to ensure that the securities of Gerdau
          Holdco 2 so transferred remain subject to the Lien of the Stock Pledge
          Agreement.

          (b)  GERDAU HOLDCO 2 CONVERSION.

               (i) If at any time the Required Holders reasonably deem that a
          Material Event exists, whether or not arising from the direct
          ownership of Gerdau Holdco 2, then the Company will immediately
          commence, and diligently proceed with, the Gerdau Holdco 2 Conversion
          which shall in no event take longer than 5 Business Days.

               (ii) If any relevant Governmental Authority makes a final
          determination disapproving of the Ameristeel Amalgamation or the
          Company has not completed a refinancing of its obligations hereunder
          on or before December 15, 2003, then the Company will cause the Gerdau
          Holdco 2 Conversion to occur within 5 Business Days.

          (c)  LIMITED WAIVER. Any provision contained herein or in Amendment
          No. 1 to the contrary notwithstanding, the Company shall be permitted
          to take any and all acts reasonably necessary to complete the
          Intermediate Holding Company Transfer and/or the Gerdau Holdco
          Conversion for the purposes outlined above."

7.   The Existing Note Agreement is hereby amended by adding a new paragraph 6II
     to read as follows:

       "6II. GERDAU SUBGROUP INVESTMENT.

       From and after January 1, 2003, the Adjusted Cost Base of the Gerdau
       Subgroup as reflected in the Special Purpose Financial Statements
       shall not at any time be less than 90% of the Adjusted Cost Base of
       the Gerdau Subgroup as reflected in the Special Purpose Financial
       Statements as of December 31, 2002."

8.   The Existing Note Agreement is hereby amended by replacing "Restructuring
     Date" in subsection (t) of paragraph 7A with "Amendment No. 1 Effective
     Date".

                                  Exhibit A-5

<PAGE>
9.   The Existing Note Agreement is hereby amended by deleting Schedule 8H and
     substituting therefor the Schedule 8H attached hereto.

10.  The Existing Note Agreement is hereby amended by deleting Schedule 8I and
     substituting therefor the Schedule 8I attached hereto.

11.  Paragraph 10B is hereby amended by adding the following definitions in the
     appropriate alphabetical order:

          ""AMENDMENT NO. 1" shall mean that certain Amendment No. 1 and Waiver
          to Second Amended and Restated Note Agreement, dated as of October 23,
          2002, among the Company, the Guarantors and the Purchasers."

          ""AMENDMENT NO. 1 EFFECTIVE DATE" shall mean the effective date of the
          Amendment No. 1.

          ""AMERISTEEL AMALGAMATION" shall mean the issuance by the Company of
          its common shares pursuant to and in accordance with Section 3.5 of
          the Transaction Agreement."

          ""APPROVED TRANSFER DOCUMENTS" shall mean those documents attached
          hereto as Exhibit F."

          ""COURTICE" shall mean Gerdau Courtice Steel Inc., a corporation
          incorporated under the laws of Canada."

          ""GERDAU ACQUISITION" shall mean the acquisition by the Company of all
          of the issued and outstanding shares in the capital stock of Gerdau
          Holdco 2 in consideration for the issuance by the Company of its
          common shares in Gerdau Holdco 1 pursuant to and in accordance with
          the Transaction Agreement."

          ""GERDAU CANADA" shall mean Gerdau Steel Inc., a corporation
          incorporated under the laws of Canada."

          ""GERDAU CANADA CREDIT AGREEMENT" shall mean the Amended and Restated
          Loan Agreement dated November 8, 1996, among Gerdau Canada, Courtice,
          MRM, GUSAP Partners, Chase Securities Inc., Salomon Smith Barney Inc.,
          The Toronto-Dominion Bank, the financial institutions from time to
          time parties thereto as lenders and The Toronto-Dominion Bank as
          agent, as further amended or amended and restated from time to time."

          ""GERDAU HOLDCO 1" shall mean 4104315 Canada Limited, a corporation
          incorporated under the laws of Canada."

                                  Exhibit A-6

<PAGE>
          ""GERDAU HOLDCO 2" shall mean Gerdau Nova Scotia Holding Company, a
          company formed under the laws of Nova Scotia."

          ""GERDAU HOLDCO 2 CONVERSION" shall mean the conversion of Gerdau
          Holdco 2 from a Nova Scotia unlimited liability company into a Nova
          Scotia limited liability company pursuant to documentation reasonably
          satisfactory to the Required Holders."

          ""GERDAU SUBGROUP" shall mean Gerdau Holdco 2, Gerdau MRM Holdings
          Inc., Gerdau Courtice Steel Inc., GUSAP Partners, 3038482 Nova Scotia
          Company, PASUG LLC, Gerdau USA Inc. and Ameristeel Corporation, and
          their respective direct and indirect subsidiaries and, if at any time
          Intermediate Holding Company holds all of the issued and outstanding
          membership interests of Gerdau Holdco 2, then shall also include
          Intermediate Holding Company."

          ""GERDAU TRANSACTION EFFECTIVE DATE" shall mean the date on which the
          Gerdau Acquisition is consummated."

          ""GERDAU USA" shall mean Gerdau USA Inc., a corporation incorporated
          under the laws of the State of Delaware."

          ""INTERMEDIATE HOLDING COMPANY" shall mean 2017387 Ontario Limited, a
          corporation incorporated under the laws of the province of Ontario."

          ""INTERMEDIATE HOLDING COMPANY TRANSFER" shall mean a transfer by the
          Company to Intermediate Holding Company of all issued and outstanding
          securities of Gerdau Holdco 2 pursuant to the Approved Transfer
          Documents."

          ""MATERIAL EVENT" shall mean the occurrence of any of the following:
          (a) a Material Adverse Effect, (b) Gerdau Holdco 2 asserts any
          claim(s) against the Company in excess of $1,000,000 for any single
          claim or the aggregate of all such claims exceeds $5,000,000, (c) any
          Bankruptcy Event in respect of Gerdau Holdco 2, (d) any claim is
          asserted against Gerdau Holdco 2 in excess of $250,000 for any single
          claim or the aggregate of all such claims exceeds $1,000,000, (e) an
          Event of Default occurs, or (f) an event of default occurs under the
          Gerdau Canada Credit Agreement entitling the lenders thereunder, with
          the passage of time or otherwise, to accelerate their rights
          thereunder."

          ""MRM" shall mean Gerdau MRM Steel Inc., a corporation continued under
          the laws of the Province of Saskatchewan."

                                  Exhibit A-7

<PAGE>
          ""PARENT AMALGAMATION" shall mean the amalgamation of Gerdau Canada
          and Gerdau Holdco 1 on or before January 1, 2003 by way of a vertical
          short form amalgamation under the Canada Business Corporations Act."

          ""STATUS QUO AGREEMENT" shall mean the status quo agreement dated as
          of October 22, 2002 among Gerdau Canada, Courtice, MRM, Gerdau USA,
          Gerdau Holdco 2, Intermediate Holding Company, the Company, the
          Security Agents, PNC, the Purchasers and the Toronto-Dominion Bank, as
          administration agent, in form and substance satisfactory to the
          Required Holders."

          ""TRANSACTION AGREEMENT" shall mean the transaction agreement dated
          August 12, 2002 between Gerdau Canada, Gerdau S.A. and the Company, as
          amended, as amended and restated on August 23, 2002."

12.  The definition of "ADJUSTED COST BASE" in paragraph 10B of the Existing
     Note Agreement is hereby deleted and replaced in its entirety as follows:

          ""ADJUSTED COST BASE" shall mean (i) for each Unrestricted Subsidiary
          (with the exception of the Gerdau Subgroup), the dollar amount by
          which the Unrestricted Subsidiaries would be carried as at December
          31, 1998 in the accounts of the Company if the Unrestricted
          Subsidiaries were accounted for, from inception, by the equity method
          of accounting and (ii) the Gerdau Subgroup will be carried at cost as
          of the Amendment No. 1 Effective Date. Except that (a) the Adjusted
          Cost Base will have no further adjustments for net income or loss of,
          or unrealized gains or losses on, the Unrestricted Subsidiaries; (b)
          consistent with GAAP, all inter-company transactions and balances
          would be adjusted as appropriate to consolidate the Company's
          Restricted Subsidiaries, and all transactions between or among the
          Company and its Restricted Subsidiaries, on the one hand, and the
          Unrestricted Subsidiaries (including, without limitation, the Gerdau
          Subgroup), on the other hand, shall be treated as transactions between
          or among unrelated third parties and accounted for and measured at the
          exchange amount of consideration established and agreed to by the
          parties; and (c) the Adjusted Cost Base will be increased or
          decreased, as the case may be, for any amounts contributed or received
          in the form of subscription for equity, contribution of surplus, or
          receipt of dividends. For greater certainty, realized gains or losses
          on dispositions of Unrestricted Subsidiaries will be reflected in the
          Special Purpose Financial Statements. For the purposes of this
          definition, the Hungarian Finance Structure Companies and NJSC
          Investment Co., Inc. shall be deemed to be Restricted Subsidiaries,
          provided, however, that as used in paragraph 6II, "Adjusted Cost Base"
          shall be determined solely with

                                  Exhibit A-8

<PAGE>
          respect to the Gerdau Subgroup and will reflect any permanent
          impairment of value as determined in accordance with GAAP."

13.  The definition of "PERMITTED INTERCOMPANY INDEBTEDNESS" in paragraph 10B of
     the Existing Note Agreement is hereby deleted and replaced in its entirety
     as follows:

          ""PERMITTED INTERCOMPANY INDEBTEDNESS" shall mean (a) loans from an
          Unrestricted Subsidiary (other than a member of the Gerdau Subgroup)
          to a Restricted Subsidiary, provided that no such loan exceeds
          Cdn.$1,500,000 (or its equivalent) and that such loans in the
          aggregate do not exceed Cdn.$3,000,000 (or its equivalent); (b) loans
          from a Restricted Subsidiary to another Restricted Subsidiary; and (c)
          Intercompany Indebtedness described in Schedule 8V."

14.  The definition of "SPECIAL PURPOSE FINANCIAL STATEMENTS" in paragraph 10B
     of the Existing Note Agreement is hereby deleted and replaced in its
     entirety as follows:

          "SPECIAL PURPOSE FINANCIAL STATEMENTS" shall mean the consolidated
          financial statements of the Company prepared under GAAP, except that
          the Unrestricted Subsidiaries (excluding the Hungarian Finance
          Structure Companies and N.J.S.C. Investment Co., Inc.) are not
          consolidated but are accounted for at Adjusted Cost Base. Purchase
          accounting related to the Gerdau Acquisition including adjustments to
          the assets and liabilities of the Company and the Restricted
          Subsidiaries to reflect fair market values will be excluded. The
          Gerdau Subgroup will be shown at cost."

15.  The definition of "TANGIBLE NET WORTH" in paragraph 10B of the Existing
     Note Agreement is hereby deleted and replaced in its entirety as follows:

          ""TANGIBLE NET WORTH" as of any date shall mean the amount equal to
          the Shareholders' Equity (excluding foreign currency translation
          adjustments), less all (i) goodwill, investments in and amounts due
          from ASW Holdings, trade names, trademarks, patents, organization
          expenses, deferred financing expenses, amounts due from employees and
          other like intangibles, all calculated based on the Special Purpose
          Financial Statements prepared as of such date plus (ii) an amount
          equal to the greater of (A) the Adjusted Cost Base attributable to the
          Gerdau Subgroup or (B) the aggregate investment of the Company in the
          Gerdau Subgroup, determined as of the Gerdau Transaction Effective
          Date, and any increase in such investment arising from the
          distribution of any equity of the Company after such date to minority
          shareholders in Ameristeel Corporation in exchange for their shares of
          Ameristeel Corporation."

                                  Exhibit A-9

<PAGE>
16.  The definitions of "Asset Monetization Program", "Blocked Account
     Agreement", "Consolidated EBITDA", "Financial Forecast", "Insurance
     Proceeds", "Intercreditor Agreement", "Net Tangible Assets", "Permitted
     Asset Sales" and "Strategic Plan" in paragraph 10B of the Existing Note
     Agreement are hereby amended by deeming each reference therein to
     "Subsidiary" or "Subsidiaries" as excluding the Gerdau Subgroup.

                                  Exhibit A-10

<PAGE>
                                                         EXHIBIT B TO AMENDMENT

                      WAIVERS UNDER EXISTING NOTE AGREEMENT

1.   The Current Holders hereby consent to the Gerdau Acquisition and the
     formation of Intermediate Holding Company and hereby waive compliance by
     the Company with paragraphs 6N, 6R and 6EE of the Existing Note Agreement
     solely with respect to the Gerdau Acquisition and the formation of
     Intermediate Holding Company, and with respect to paragraph 6R only, also
     with respect to the Ameristeel Amalgamation.

2.   The Current Holders hereby waive any Event of Default including, without
     limitation, Events of Default pursuant to subsections (t) and (v) of
     paragraph 7A that would arise solely as an immediate consequence of the
     consummation of (a) the Gerdau Acquisition, (b) the Parent Amalgamation or
     (c) the Ameristeel Amalgamation.

3.   The Current Holders hereby waive compliance by the Company with subsection
     (d) of paragraph 2L arising solely as a result of the Company's failure to
     deliver the applicable documentation within the period set forth therein.

4.   The Current Holders hereby waive compliance by the Company and its
     Restricted Subsidiaries with paragraph 6H solely with respect to the
     amendment and modification of the Bank Agreement and the PNC Credit
     Agreements in connection with permitting the Gerdau Acquisition.

                                  Exhibit B-1

<PAGE>
                                                         EXHIBIT C TO AMENDMENT

                        [INSERT BANK AGREEMENT AMENDMENT]

                                  Exhibit C-1

<PAGE>
                                                         EXHIBIT D TO AMENDMENT

                    [INSERT PNC CREDIT AGREEMENTS AMENDMENT]

                                  Exhibit D-1

<PAGE>
                                                         EXHIBIT E TO AMENDMENT

                          [INSERT STATUS QUO AGREEMENT]

                                  Exhibit E-1

<PAGE>
                                                         EXHIBIT F TO AMENDMENT

                  [INSERT AMENDMENT TO INTERCREDITOR AGREEMENT]

                                  Exhibit F-1
<PAGE>
                                                                    SCHEDULE 8H

              ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES

                              Please see attached.

                                 Schedule 8H-1

<PAGE>
                                                                    Schedule 8I

                               CERTAIN LITIGATION

CO-STEEL RARITAN, INC.
----------------------

DAVID KRUPPA. Co-Steel Raritan, Inc. has been listed as a third-party defendant
in a personal injury claim in the Superior Court, Middlesex County, N.J. by
David Kruppa, a former employee, against Consolidated Rail Corporation. The
discovery phase of this claim is substantially completed.

GALLATIN STEEL COMPANY
----------------------

ELLIS FAMILY. By letter dated December 29, 1998, three individuals that live in
close proximity to the Gallatin Steel Company's Ghent, Kentucky facility gave
notice of a complaint that the facility has released emissions of matter into
the air which violates the federal waste management regulations and a lawsuit
was filed on July 30, 1999 in the Federal District Court. The Gallatin Steel
Company believes the allegations are based upon erroneous interpretations of
permits and regulations and are inaccurate in fact. A second nearly identical
complaint was filed by the same plaintiffs on December 1, 1999. (Vernon Ellis,
et al v. Gallatin Steel Company, Civil Action No. 99-242). The Court dismissed
most of the first lawsuit on procedural grounds and consolidated the remaining
claims in the December 1, 1999 lawsuit. Most of the claims raised in the lawsuit
against the Company would be resolved under a Consent Decree which has been
negotiated between the United States and Gallatin Steel Company in Civil Action
99-30. Under the Consent Decree, the Gallatin Steel Company would be required to
pay a civil penalty in the amount of $925,000 and undertake certain pollution
control projects to reduce particulate emissions. The Consent Decree should
resolve the air emissions claims advanced in Vernon Ellis, et al v. Gallatin
Steel Company, Civil Action No. 99-242.

CO-STEEL INC.
-------------

EUROPEAN METALS RECYCLING. European Metals Recycling ("EMR") has made a claim
against Co-Steel Inc. in relation to EMR's purchase of Mayer Parry Recycling
from Co-Steel Inc. in 2000. The claim has been initiated in the English High
Court of Justice in the amount of Pound Sterling 5,933,773. The total amount of
the claim is based upon a number of smaller claims arising from alleged breaches
of representations. The alleged breaches cover a number of items including
environmental as well as asset value. Co-Steel Inc. believes the claim is
substantially without merit and it has filed a statement of defence and made a
request for particulars of the claim.

                                  SCHEDULE 8I-1
<PAGE>
                                                                       EXHIBIT F

                          [APPROVED TRANSFER DOCUMENTS]

                                   Exhibit F-1<PAGE>

                                                                 Exhibit 10(vii)

                                 CO-STEEL INC.

                                    - AND -

                             THE R-M TRUST COMPANY

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

                                TRUST INDENTURE

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

                           Providing for the Issue of
                    $125,000,000 Aggregate Principal Amount
             of 6.50% Convertible Unsecured Subordinated Debentures

                           DATED AS OF APRIL 23, 1997

<PAGE>
                                      -i-

                               TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I -- INTERPRETATION...............................................    2
     Section 1.1 -- Definitions...........................................    2
     Section 1.2 -- Number and Gender.....................................    6
     Section 1.3 -- Interpretation Not Affected by Headings, etc..........    6
     Section 1.4 -- Day Not a Business Day................................    6
     Section 1.5 -- Time of the Essence...................................    7
     Section 1.6 -- Currency..............................................    7
     Section 1.7 -- Invalidity of Provisions..............................    7
     Section 1.8 -- Applicable Law........................................    7
     Section 1.9 -- Language..............................................    7

ARTICLE II -- ISSUE OF DEBENTURES.........................................    7
     Section 2.1 -- Issue and Terms of Debentures.........................    7
     Section 2.2 -- Form of Debentures....................................    8
     Section 2.3 -- Signing of Debenture Certificates.....................    8
     Section 2.4 -- Certification by the Trustee..........................    8
     Section 2.5 -- Debentureholder not a Shareholder.....................    9
     Section 2.6 -- Issue in Substitution for Lost Debenture Certificates.    9
     Section 2.7 -- Debentures to Rank Pari Passu.........................    9
     Section 2.8 -- Registers for Debentures..............................    9
     Section 2.9 -- Transferee Entitled to Registration...................   10
     Section 2.10 -- Registers Open for Inspection........................   10
     Section 2.11 -- Exchange of Debentures...............................   10
     Section 2.12 -- Persons Entitled to Payment..........................   11
     Section 2.13 -- U.S. Legend..........................................   12
     Section 2.14 -- Concerning Interest..................................   14

ARTICLE III -- REDEMPTION AND PURCHASE FOR CANCELLATION OF DEBENTURES.....   14
     Section 3.1 -- Redemption of Debentures..............................   14
     Section 3.2 -- Limitation on Redemption..............................   15
     Section 3.3 -- Partial Redemption of Debentures......................   15
     Section 3.4 -- Notice of Redemption..................................   15
     Section 3.5 -- Debentures Due on Redemption Dates....................   16
     Section 3.6 -- Deposit of Redemption Monies..........................   16
     Section 3.7 -- Failure to Surrender Debentures Called for Redemption.   16
     Section 3.8 -- Surrender of Debentures for Cancellation..............   16
     Section 3.9 -- Purchase of Debentures................................   17
     Section 3.10 -- Share Payment Option.................................   17
     Section 3.11 -- Issue of Shares on Redemption of Debentures or
                     Maturity Date........................................   18
     Section 3.12 -- General Provisions...................................   18
<PAGE>
                                      -ii-

                                                                            PAGE

ARTICLE IV -- CONVERSION OF DEBENTURES....................................   20
     Section 4.1 -- Conversion Privilege and Conversion Price.............   20
     Section 4.2 -- Revival of Right to Convert...........................   21
     Section 4.3 -- Manner of Exercise of Right to Convert................   21
     Section 4.4 -- Adjustment Rules......................................   22
     Section 4.5 -- Proceedings Prior to any Action Requiring Adjustment..   27
     Section 4.6 -- Certificate of Adjustment.............................   27
     Section 4.7 -- Notice of Special Matters.............................   27
     Section 4.8 -- No Action after Notice................................   27
     Section 4.9 -- Protection of Trustee.................................   28
     Section 4.10 -- Accounting and Recording.............................   28
     Section 4.11 -- Cancellation of Surrendered Debenture Certificates...   28
     Section 4.12 -- Expiration...........................................   28
     Section 4.13 -- Revival of Right to Convert..........................   28
     Section 4.14 -- U.S. Legend..........................................   29

ARTICLE V -- COVENANTS ...................................................   29
     Section 5.1 -- General Covenants.....................................   29
     Section 5.2 -- Trustee's Remuneration and Expenses...................   30
     Section 5.3 -- Performance of Covenants by Trustee...................   31
     Section 5.4 -- Enforceability of Debentures..........................   31
     Section 5.5 -- No to Extend Time for Payment of Interest.............   31

ARTICLE VI -- DEFAULT AND ENFORCEMENT.....................................   31
     Section 6.1 -- Events of Default.....................................   31
     Section 6.2 -- Notice of Events of Default...........................   33
     Section 6.3 -- Waiver of Defaults....................................   33
     Section 6.4 -- Enforcement by the Trustee............................   34
     Section 6.5 -- Suits by Debentureholders.............................   35
     Section 6.6 -- Application of Monies by Trustee......................   36
     Section 6.7 -- Distribution of Proceeds..............................   37
     Section 6.8 -- Remedies Cumulative...................................   37
     Section 6.9 -- Judgment Against the Corporation......................   38
     Section 6.10 -- Immunity of Shareholders and Others..................   38
     Section 6.11 -- Trustee Appointed Attorney...........................   38

ARTICLE VII -- SATISFACTION AND DISCHARGE.................................   38
     Section 7.1 -- Cancellation..........................................   38
     Section 7.2 -- Non-Presentation of Debentures........................   38
     Section 7.3 -- Repayment of Unclaimed Monies.........................   39
     Section 7.4 -- Discharge.............................................   39

ARTICLE VIII -- MEETINGS OF DEBENTUREHOLDERS..............................   40
     Section 8.1 -- Right to Convene Meetings.............................   40
     Section 8.2 -- Notice................................................   40
<PAGE>
                                     -iii-

                                                                            PAGE

     Section 8.3 -- Chairman...............................................  40
     Section 8.4 -- Quorum.................................................  40
     Section 8.5 -- Power to Adjourn.......................................  41
     Section 8.6 -- Show of Hands..........................................  41
     Section 8.7 -- Poll and Voting........................................  41
     Section 8.8 -- Regulations............................................  42
     Section 8.9 -- Corporation, Trustee and Counsel may be Represented....  42
     Section 8.10 -- Powers Exercisable by Extraordinary Resolution........  42
     Section 8.11 -- Meaning of Extraordinary Resolution...................  44
     Section 8.12 -- Powers Cumulative.....................................  45
     Section 8.13 -- Minutes...............................................  45
     Section 8.14 -- Instruments in Writing................................  46
     Section 8.15 -- Binding Effect of Resolutions.........................  46
     Section 8.16 -- Holding by the Corporation or Subsidiaries
                     of the Corporation Disregarded........................  46
     Section 8.17 -- Evidence of Rights of Debentureholders................  46

ARTICLE IX -- SUPPLEMENTAL INDENTURES......................................  47
     Section 9.1 -- Supplemental Indentures................................  47
     Section 9.2 -- Prior Approvals........................................  48
     Section 9.3 -- Successor Corporations.................................  48
     Section 9.4 -- Vesting of Powers in Successor.........................  49

ARTICLE X -- CONCERNING THE TRUSTEE........................................  49
     Section 10.1 -- Trust Indenture Legislation...........................  49
     Section 10.2 -- Rights and Duties of Trustee..........................  49
     Section 10.3 -- Evidence, Experts and Advisers........................  50
     Section 10.4 -- Documents, Monies, etc. Held by Trustee...............  51
     Section 10.5 -- Actions by Trustee to Protect Interest................  52
     Section 10.6 -- Trustee Not Required to Give Security.................  52
     Section 10.7 -- Protection of Trustee.................................  52
     Section 10.8 -- Replacement of Trustee................................  53
     Section 10.9 -- Conflict of Interest..................................  53
     Section 10.10 -- Acceptance of Trust..................................  54
     Section 10.11 -- Trustee Not to be Appointed Receiver.................  54
     Section 10.12 -- Authorization to Carry on Business...................  54

ARTICLE XI -- SUBORDINATION OF DEBENTURES TO SENIOR OBLIGATIONS............  54
     Section 11.1 -- Subordination.........................................  54
     Section 11.2 -- Payment on Dissolution or Winding-Up..................  54
     Section 11.3 -- Senior Obligations' Default...........................  56
     Section 11.4 -- Subrogation to Senior Obligations.....................  57
     Section 11.5 -- Rights of Debentureholders Reserved...................  57
     Section 11.6 -- Exceptions to Subordination...........................  58
     Section 11.7 -- Renewal or Extension of Senior Obligations............  59
<PAGE>
                                      -iv-

                                                                            PAGE

     Section 11.8 -- Authorization to Trustee. . . . . . . . . . . . . . .   59
     Section 11.9 -- Relationship of Trustee. . . . . . . . . . . . . . . .  59
     Section 11.10 -- Restriction on Purchase of Debentures. . . . . . . .   60

ARTICLE XII -- GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . .  60
     Section 12.1 -- Notice to the Corporation and the Trustee. . . . . . .  60
     Section 12.2 -- Notice to Debentureholders. . . . . . . . . . . . . .   61
     Section 12.3 -- Mail Service Interruption. . . . . . . . . . . . . . .  61
     Section 12.4 -- Counterparts and Formal Date. . . . . . . . . . . . .   61
     Section 12.5 -- Benefit of Provisions of Indenture and Debentures. . .  61
     Section 12.6 -- Governing Law. . . . . . . . . . . . . . . . . . . . .  62

<PAGE>

                   THIS INDENTURE dated as of April 23, 1997.

B E T W E E N :

                                        CO-STEEL INC., a corporation amalgamated
                                        under the laws of Ontario and having its
                                        registered office in the City of
                                        Toronto, in the Province of Ontario
                                        (hereinafter called the "CORPORATION")

                                        - and -

                                        THE R-M TRUST COMPANY, a trust company
                                        incorporated under the laws of Canada
                                        and authorized to carry on business in
                                        all Provinces of Canada (hereinafter
                                        called the "TRUSTEE"),

     WHEREAS the Corporation proposes to issue and sell up to $125,000,000
principal amount of Debentures (as hereinafter defined) upon the terms and
conditions herein set forth;

     AND WHEREAS the Corporation is duly authorized to create and issue the
Debentures to be issued as herein provided;

     AND WHEREAS all things necessary have been done and performed to make the
Debentures, when evidenced by a certificate or certificates, issued and
certified by the Trustee and issued as in this Indenture provided, legal, valid
and binding upon the Corporation with the benefits of and subject to the terms
of this Indenture;

     AND WHEREAS the Trustee has agreed to act as Trustee for the Debentures on
the terms and conditions herein set forth;

     AND WHEREAS the foregoing recitals are made as representations and
statements of fact by the Corporation and not the Trustee;

     NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable
consideration mutually given and received, the receipt and sufficiency of which
is hereby acknowledged, it is hereby agreed and declared as follows:

<PAGE>
                                      -2-

                                   ARTICLE I
                                 INTERPRETATION

SECTION 1.1 - DEFINITIONS

     In this Indenture, unless there is something in the subject matter or
context inconsistent therewith or except as otherwise expressly provided herein,
the following phrases and words have the following meanings:

     "AUTHORIZED INVESTMENTS" means short term interest bearing or discount debt
     obligations issued or guaranteed by the Government of Canada or a Province
     of Canada or a Canadian chartered bank (which may include an affiliated or
     related party of the Trustee, including without limitation, Mellon Bank
     Canada) provided that each such obligation is rated at least R1 (middle)
     by DBRS Inc. or an equivalent rating by Canadian Bond Rating Service
     Limited.

     "BUSINESS DAY" means a day which is not a Saturday, Sunday or civic or
     statutory holiday in Toronto, Ontario;

     "CONVERSION DATE" with respect to any Debenture means the date on which
     such Debenture is surrendered for conversion in accordance with the
     provisions of Article IV;

     "CONVERSION PRICE" means $26.25 per share in lawful money of Canada being a
     rate of approximately 38.0952 Shares for each $1,000 principal amount of
     Debenture, unless such price shall have been adjusted in accordance with
     the provisions of Article IV, in which case it shall mean the adjusted
     price in effect at that time;

     "CORPORATION" means Co-Steel Inc., a corporation incorporated under the
     laws of Ontario and any successor corporation which has complied with the
     provisions of section 9.3 hereof from time to time;

     "COUNSEL" means a barrister or solicitor or a firm of barristers or
     solicitors retained or employed by the Trustee, who may be counsel for the
     Corporation, or retained or employed by the Corporation and acceptable to
     the Trustee;

     "CURRENT MARKET PRICE" in respect of a Share at any date means the
     weighted average price per share for the Shares for the period of 20
     consecutive trading days ending on (and including) the fifth trading day
     before such date on The Toronto Stock Exchange or, if the Shares are not
     then listed on The Toronto Stock Exchange, on such other stock exchange in
     Canada on which the Shares are then listed on which the greatest volume of
     trading in Shares occurred during such period or, if the Shares are not
     then listed on any exchange in Canada, then the Current Market Price shall
     be the fair market value of the Shares at such date, as determined by an
     independent nationally

<PAGE>
                                      -3-

     recognized investment dealer selected by the Corporation for that purpose.
     The "weighted average price per share" shall be determined by dividing the
     aggregate sale price of all such Shares sold on such exchange during such
     20 consecutive trading days by the total number of such Shares so sold;

     "DATE OF CONVERSION" shall have the meaning ascribed thereto in Subsection
     4.3(2);

     "DEBENTURES" means the 6.50% Convertible Unsecured Subordinated Debentures
     of the Corporation issued or to be issued hereunder and for the time being
     outstanding;

     "DEBENTURE CERTIFICATES" means the certificates representing the Debentures
     issued hereunder;

     "DEBENTUREHOLDER" or "HOLDER" means a person whose name is entered for the
     time being in the register maintained pursuant to Section 2.8;

     "DEBENTUREHOLDERS' REQUEST" means an instrument signed in one or more
     counterparts by Debentureholders holding in the aggregate not less than 25%
     of the then outstanding principal amount of Debentures which requests the
     Trustee to take some action or proceeding specified therein;

     "DESIGNATED REPRESENTATIVE" means, with respect to any class of Senior
     Obligations which shall have been issued under an indenture, the trustee or
     trustees under such indenture, except that, if any other person shall be
     designated in writing to the Trustee by the holders of a majority of the
     outstanding principal amount of such class of Senior Obligations, such
     person shall be the Designated Representative of such class; and, with
     respect to any other class of Senior Obligations, the person designated in
     writing to the Trustee by the holders of a majority of the outstanding
     principal amount thereof, or, in the absence of such designation, the
     person designated in writing to the Trustee by the Corporation;

     "DIRECTOR" means a director of the Corporation for the time being and
     "DIRECTORS" means the board of directors of the Corporation for the time
     being, or, whenever duly empowered, the executive committee, if any, of the
     board of directors and reference without more to action by the directors or
     by the board of directors shall mean action by the directors as a board or
     by the executive committee, as such;

     "DIVIDENDS PAID IN THE ORDINARY COURSE" means dividends paid on the Shares
     in any financial year of the Corporation, whether in (1) cash, (2) shares
     of the Corporation, (3) rights, options or warrants to purchase any shares,
     property or other assets of the Corporation, or (4) in property or other
     assets of the Corporation, in each case to the extent that the amount or
     value of such dividends does not exceed, in the aggregate, the greater of:
<PAGE>
                                      -4-

     (a)  150% of the arithmetic mean of the aggregate amount or value of
          dividends paid by the Corporation on the Shares in its two immediately
          preceding financial years; or

     (b)  100% of the consolidated cash flow of the Corporation from operations
          for its immediately preceding financial year, determined in accordance
          with Generally Accepted Accounting Principles;

     and for the purpose of the foregoing, where any dividend is paid, otherwise
     than in cash, any securities, property or other assets so distributed by
     way of dividend shall be valued at the fair market value of such
     securities, property or other assets, as the case may be, as determined by
     the directors, which determination shall be conclusive;

     "EXECUTION DATE" means April 23, 1997;

     "EVENT OF DEFAULT" has the meaning ascribed thereto in Section 6.1;

     "EXPIRY TIME" shall have the meaning ascribed thereto in Section 4.1;

     "EXTRAORDINARY RESOLUTION" has the meaning ascribed thereto in
     Section 8.11;

     "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
     accounting principles as provided in the Handbook of the Canadian Institute
     of Chartered Accountants from time to time consistently applied;

     "MATURITY DATE" has the meaning ascribed thereto in Subsection 2.1(2);

     "OFFICER'S CERTIFICATE" means a certificate signed by one or more Senior
     Officers of the Corporation;

     "PERSON" means an individual, a corporation or a company (with or without
     share capital), a partnership, a limited partnership, a joint venture, a
     syndicate, a sole proprietorship, an incorporated association, trust,
     trustee, executor, administrator or other legal personal representative,
     government or governmental authority or entity, however designated or
     constituted;

     "PRESCRIBED SECURITY" shall have the meaning attributed thereto from time
     to time pursuant to Regulation 6208 of the Income Tax Act (Canada) and
     "Prescribed Securities" shall have a corresponding meaning;

     "PUBLICLY TRADED SECURITIES" means securities of a corporation which are
     listed on any stock exchange and are entitled to share without limitation
     in a distribution of the assets of the corporation upon any liquidation,
     dissolution or winding-up of the corporation and includes any securities
     convertible or exchangeable into such securities;
<PAGE>
                                      -5-

     "REDEMPTION PRICE" has the meaning ascribed thereto in Section 3.1;

     "SENIOR OBLIGATIONS" means the principal of (and the premium, if any) and
     interest on and other amounts in respect of all indebtedness of or
     guaranteed by the Corporation (whether outstanding at the date of this
     Indenture or hereafter created, incurred, assumed or guaranteed), other
     than indebtedness to non-arm's length parties (as that term is defined in
     the Income Tax Act (Canada), indebtedness evidenced by the Debentures, and
     indebtedness which, by the terms of the contract or instrument creating or
     evidencing the indebtedness, or pursuant to which the indebtedness is
     outstanding, is expressed to be pari passu with, or subordinate in right of
     payment to, the Debentures;

     "SENIOR OFFICERS" of the Corporation means the chair of the board of
     directors, a vice-chair of the board of directors, the chief executive
     officer, a deputy chief executive officer, the president, a vice-president,
     the secretary, the treasurer or an assistant secretary of the Corporation;

     "SHAREHOLDER" means a holder of record of one or more Shares;

     "SHARES" means the fully paid and non-assessable common shares in the
     capital of the Corporation as such shares exist at the close of business on
     the date of the execution and delivery of this Indenture and, in the event
     of any adjustment under Article IV, shall mean thereafter the shares, other
     securities or other property which a Debentureholder is entitled to
     purchase after any such adjustment; provided that, in the event of any
     adjustment pursuant to Section 4.4, "SHARES" shall thereafter mean the
     shares or other securities or property resulting from any such adjustment;

     "SIGNIFICANT SUBSIDIARY" means any Subsidiary of the Corporation;

     (i)  the net assets of which, as at the end of the most recently completed
          fiscal quarter of the Corporation prior to the relevant date, exceeds
          25% of the consolidated net assets of the Corporation as at the end of
          such fiscal quarter, in each case determined on a book value basis in
          accordance with Generally Accepted Accounting Principles; or

     (ii) the revenues of which during such fiscal quarter exceeds 25% of the
          consolidated revenues of the Corporation during such quarter;

     "SUBSIDIARY OF THE CORPORATION" means any corporation of which more than
     50% of the outstanding Voting Shares are owned, directly or indirectly, by
     or for the Corporation, provided that the ownership of such shares confers
     the right to elect at least a majority of the board of directors of such
     corporation and includes any corporation in like relation to a Subsidiary
     and shall include Gallatin Steel Company if the direct or indirect
     partnership interest of the Corporation therein is equal to or
<PAGE>

                                     - 6 -

     greater than 50%; provided, however, that for the purpose of Section 6.6
     such term shall not include any corporation which has Publicly Traded
     Securities;

     "THIS TRUST INDENTURE", "THIS INDENTURE", "HEREIN", "HEREBY", and similar
     expressions mean and refer to this Indenture and any indenture, deed or
     instrument supplemental or ancillary hereto; and the expressions "Article",
     "Section" and "Subsection" followed by a number mean and refer to the
     specified Article, Section or Subsection of this Indenture;

     "TRUSTEE" means The R-M Trust Company, a corporation incorporated under the
     laws of Canada, or any successor(s) for the time being in the trusts hereby
     created that has been appointed under this Indenture;

     "VOTING SHARES" means shares of capital stock of any class of any
     corporation carrying voting rights under all circumstances, provided that,
     for the purposes of such definition, shares which only carry the right to
     vote on the happening of an event shall not be considered Voting Shares,
     whether or not such event shall have occurred, nor shall any shares be
     deemed to cease to be Voting Shares solely by reason of a right to vote
     accruing to shares of another class or classes by reason of the happening
     of such event; and

     "WRITTEN ORDER OF THE CORPORATION", "WRITTEN REQUEST OF THE CORPORATION",
     "WRITTEN CONSENT OF THE CORPORATION", "CERTIFICATE OF THE CORPORATION" and
     "ANY OTHER DOCUMENT REQUIRED TO BE SIGNED BY THE CORPORATION" mean,
     respectively, a written order, request, consent, certificate or other
     document signed by one or more Senior Officers of the Corporation, and may
     consist of one or more instruments so executed.

SECTION 1.2 - NUMBER AND GENDER

     Unless otherwise provided herein or unless the context otherwise requires,
words importing the singular include the plural and vice versa and words
importing the masculine gender include the feminine and neuter genders.

SECTION 1.3 - INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.

     The division of this Indenture into Articles, Sections and Subsections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.

SECTION 1.4 - DAY NOT A BUSINESS DAY

     In the event that any day on or before which any action is required to be
taken hereunder is not a Business Day, then such action shall be required to be
taken on or before the requisite time on the next succeeding day that is a
Business Day.
<PAGE>
                                      -7-

SECTION 1.5 - TIME OF THE ESSENCE

     Time shall be of the essence in all respects in this Indenture and the
Debentures.

SECTION 1.6 - CURRENCY

     All dollar amounts herein are expressed in lawful money of Canada.

SECTION 1.7 - INVALIDITY OF PROVISIONS

     Each of the provisions contained in this Indenture or the Debentures is
distinct and severable and a declaration of invalidity or unenforceability of
any such provision by a court of competent jurisdiction shall not affect the
validity or enforceability of any other provisions hereof or thereof.

SECTION 1.8 - APPLICABLE LAW

     This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the Province of Ontario and shall be treated in all
respects as Ontario contracts.

SECTION 1.9 - LANGUAGE

     The parties hereto confirm their express wish that this Indenture and all
documents and agreements directly or indirectly relating thereto (other than the
Debenture) be drawn up in the English language. Notwithstanding such express
wish, the parties agree that any such document or agreement, or any part thereof
or of this Indenture, also may be drawn up in the French language.

     Les parties reconnaissent leur volonte expresse que le present acte de
fiducie ainsi que tous les documents et contrats s'y rattachant directement ou
indirectement soient rediges en anglais. Nonobstant cette volonte expresse, les
parties conviennent que tout document ou contrat ou toute partie de ces derniers
ou du present acte de fiducie, puissent etre rediges en francais aussi.

                                   ARTICLE II
                              ISSUE OF DEBENTURES

SECTION 2.1 - ISSUE AND TERMS OF DEBENTURES

(1)  An aggregate principal amount of $125,000,000 Debentures are hereby created
and authorized to be issued hereunder upon the terms and conditions herein set
forth and shall be executed by the Corporation and certified by or on behalf of
the Trustee and delivered by the Corporation in accordance with Sections 2.3 and
2.4. The Debentures are direct, unconditional and unsecured obligations of the
Corporation.

<PAGE>
                                     - 8 -

(2)  The Debentures shall be designated as "6.50% Convertible Unsecured
Subordinated Debentures", shall be dated the Execution Date, shall mature on
April 30, 2007 (the "Maturity Date") and shall bear interest (subject to the
provisions of Subsection 2.2(3)) from the Execution Date at the rate of 6.50%
per annum, payable after as well as before maturity, default and judgment, with
interest on amounts in default at the same rate, payable in arrears
semi-annually on April 30 and October 31, in each year, or if such day is not a
Business Day, on the immediately following Business Day, the first such payment
to fall due on October 31, 1997 and to consist of interest accrued from the
Execution Date.

SECTION 2.2 - FORM OF DEBENTURES

(1)  The Debentures shall be issued in registered form only in denominations of
$1,000 and integral multiples thereof, and the Debenture Certificates shall be
substantially in the form set out in Schedule "A" hereto, shall be dated as of
the Execution Date (regardless of their actual date of issue and including all
replacements issued in accordance with this Indenture), and shall have such
distinguishing letters and numbers as the Corporation may, with the approval of
the Trustee, prescribe, such approval by the Trustee to be evidenced by its
certification of the Debentures.

(2)  The Debentures may be engraved, printed or lithographed, or partly in one
form and partly in another, as the Corporation may determine.

SECTION 2.3 - SIGNING OF DEBENTURE CERTIFICATES

     The Debenture Certificates shall be signed by any two officers of the
Corporation and may but need not be under the corporate seal of the Corporation
or a reproduction thereof. The signatures of such persons may be manual
signature or by signature mechanically reproduced in facsimile and Debenture
Certificates bearing such facsimile signatures shall, subject to Section 2.4,
be binding upon the Corporation as if they had been manually signed by such
persons. Notwithstanding that any of the persons whose manual or facsimile
signature appears on any Debenture Certificate may no longer hold the relevant
office at the date of issue of such Debenture Certificate or at the date of
certification or delivery thereof, any Debenture Certificate signed as
aforesaid shall, subject to Section 2.4, be valid and binding upon the
Corporation and the registered holder thereof shall be entitled to the benefits
as a Debentureholder under this Indenture.

SECTION 2.4 - CERTIFICATION BY THE TRUSTEE

(1)  No Debenture Certificate shall be issued or, if issued, shall be valid for
any purpose or entitle the registered holder to the benefit hereof until it has
been certified by manual signature by or on behalf of the Trustee upon the
written order of the Corporation in the form of the certificate set out in
Schedule "A" hereto. Such certification by the Trustee upon any Debenture
Certificate shall be conclusive evidence as against the Corporation that the
Debenture Certificate so certified has been duly issued hereunder and the
holder is entitled to the benefits hereof.

(2)  The certification of the Trustee on Debenture Certificates issued
hereunder shall not be construed as a representation or warranty by the
Trustee as to the validity of this Indenture or the
<PAGE>

                                     - 9 -

Debentures (except the due certification thereof) and the Trustee shall in no
respect be liable or answerable for the use made of the Debentures or any of
them or of the consideration therefor except as otherwise specified herein.

SECTION 2.5 - DEBENTUREHOLDER NOT A SHAREHOLDER

     The holding of a Debenture shall not be construed as conferring upon a
Debentureholder any right or interest whatsoever as a Shareholder nor as
entitling the holder to any right or interest in respect thereof except as
herein and in the Debentures expressly provided.

SECTION 2.6 - ISSUE IN SUBSTITUTION FOR LOST DEBENTURE CERTIFICATES

(1)  In case any of the Debenture Certificates shall become mutilated or be
lost, destroyed or stolen, the Corporation, subject to applicable law and
Subsection 2.6(2), shall issue and thereupon the Trustee shall certify and
deliver a new Debenture Certificate of like tenor as the one mutilated, lost,
destroyed or stolen in exchange for and in place of and upon cancellation of
such mutilated certificate, or in lieu of an in substitution for such lost,
destroyed or stolen certificate, and the substituted certificate shall be in a
form approved by the Trustee and shall be entitled to the benefits hereof and
shall rank equally with all other Debenture Certificates issued or to be issued
hereunder.

(2)  The applicant for the issue of a new Debenture Certificate pursuant to
this Section 2.6 shall bear the cost of the issue thereof and in case of loss,
destruction or theft shall, as a condition precedent to the issue thereof,
furnish to the Corporation and to the Trustee such evidence of ownership and of
the loss, destruction or theft of the certificate so lost, destroyed or stolen
as shall be satisfactory to the Corporation and to the Trustee in their sole
discretion and such applicant may also be required to furnish an indemnity or
security in amount and form satisfactory to the Corporation and the Trustee in
their discretion and shall pay the reasonable charges of the Corporation and
the Trustee in connection therewith.

SECTION 2.7 - DEBENTURES TO RANK PARI PASSU

     All Debentures shall rank pari passu, whatever may be the actual date of
issue of same.

SECTION 2.8 - REGISTERS FOR DEBENTURES

(1)  The Corporation hereby appoints the Trustee as registrar and transfer
agent of the Debentures, and the Corporation shall cause to be kept by and at
the principal office of the Trustee in the City of Toronto a central register
and, in such additional place or places as the Corporation with the approval of
the Trustee may determine, a branch register in which shall be entered the
names and addresses of holders of Debentures and the other particulars,
prescribed by law, of the Debentures held by them. The Corporation shall also
cause to be kept by and at such principal office of the Trustee in the City of
Toronto the register of transfer, and may also cause to be kept by the Trustee
or such other registrar or registrars and at such other place or places as the
Corporation may designate with the approval of the Trustee, branch registers of
transfers in which shall be recorded the particulars of the transfers of
Debentures, registered in that branch register of transfers.

<PAGE>
                                     - 10 -

(2)  No transfer of a Debenture shall be valid (i) unless made by due execution
of the transfer form attached to the Debenture Certificate or any other written
notice in a form satisfactory to the Trustee by the holder and the transferee or
their respective executors, administrators, or other legal representatives or
their respective attorneys duly appointed by an instrument in writing in form
and execution satisfactory to the Trustee, which duly executed transfer form
shall be delivered to the Trustee, (ii) until, upon compliance with such
reasonable requirements as the Trustee may prescribe, such transfer is recorded
on the register maintained by the Trustee pursuant to Subsection 2.8(1), (iii)
unless such registration shall be noted on the Debenture Certificate by the
Trustee, and (iv) until all governmental or other charges arising by reason of
such transfer have been paid.

(3)  Neither the Corporation nor the Trustee shall be required (i) to transfer
or exchange any Debentures during a period of 15 Business Days immediately
preceding any interest payment date; or (ii) to transfer or exchange any
Debentures on the day of any selection by the Trustee of any Debentures to be
redeemed or purchased or during the 15 preceding Business Days or thereafter
until after the mailing of any notice of redemption or purchase; or (iii) to
transfer or exchange any Debentures selected or called for redemption in whole
or in part unless upon due presentation thereof such Debenture or part thereof
called for redemption shall not be redeemed.

SECTION 2.9 - TRANSFEREE ENTITLED TO REGISTRATION

     The transferee of a Debenture shall, after the transfer form attached to
the Debenture or any other form of transfer substantially in that form is duly
completed and the Debenture and form of transfer are lodged with the Trustee and
upon compliance with all other conditions in that regard required by this
Indenture or by law, be entitled to have his name entered on the register as the
owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and his transferor or any pervious holder
of such Debenture, save in respect of equities of which the Corporation is
required to take notice by statute or by order of a court of competent
jurisdiction.

SECTION 2.10 - REGISTERS OPEN FOR INSPECTION

     The registers hereinbefore referred to shall be open at all reasonable
times for inspection by the Corporation, the Trustee or any Debentureholder.
The Trustee shall, from time to time when requested so to do by the Corporation,
furnish the Corporation with a list of the names and addresses of holders of
Debentures entered in the registers kept by the Trustee and showing the
principal amount of Debentures.

SECTION 2.11 - EXCHANGE OF DEBENTURES

(1)  Debenture Certificates may, upon compliance with the reasonable
requirements of the Trustee, be exchanged for Debenture Certificates in any
other authorized denomination representing in the aggregate the same principle
amount of Debentures. The Corporation shall sign and the Trustee shall certify,
in accordance with Sections 2.3 and 2.4, all Debenture Certificates necessary to
carry out the exchanges contemplated herein.

<PAGE>

                                     - 11 -

(2)  Debenture Certificates may be exchanged only at the principal office of
the Trustee in the City of Toronto (or at such additional place or places that
may be designated by the Corporation with the approval of the Trustee from time
to time). Any Debenture Certificates tendered for exchange shall be surrendered
by the Trustee and cancelled. The Corporation shall supply the Trustee with
sufficient copies of the Debenture Certificates to effect such exchanges.

(3)  Except as otherwise herein provided, the Trustee may charge persons
requesting an exchange a reasonable sum for each Debenture Certificate
exchanged. Payment of such charges and reimbursement of the Trustee or the
Corporation for any and all taxes or governmental or other charges required to
be paid shall be made by the party requesting such exchange as a condition
precedent to such exchange.

(4)  Debentures issued pursuant to this Section 2.11 in exchange for Debentures
which at the time of such issue have been selected or called for redemption at a
later date shall be deemed to have been selected or called for redemption and
shall have noted thereon a statement to that effect.

SECTION 2.12 - PERSONS ENTITLED TO PAYMENT

(1)  The Corporation and the Trustee may deem and treat the registered holder of
any Debenture Certificate as the absolute owner of the Debenture represented
thereby for all purposes and the Corporation and the Trustee shall not affected
by any notice or knowledge to the contrary except where the Corporation or the
Trustee is required to take notice by statute or by order of a court of
competent jurisdiction. A Debentureholder shall be entitled to the rights
evidenced by such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate holder
thereof and all persons may act accordingly and neither the Corporation nor the
Trustee shall be bound to inquire into the title of any such holder except where
the Corporation or the Trustee is required to take notice by statute or by order
of a court of competent jurisdiction.

(2)  Payment of or on account of the principal of a Debenture shall be made only
to the person in whose name such Debenture is registered and such payment shall
be a good and sufficient discharge to the Trustee and any registrar and to the
Corporation and any paying agent for the amounts so paid.

(3)  As the interest on the Debentures becomes due (except interest payable at
maturity or on redemption which may be paid upon presentation and surrender of
such Debentures for payment), the Corporation, at least three Business Days
prior to each date on which interest on such Debentures becomes due, shall
forward or cause to be forwarded by prepaid post, to each holder for the time
being at his address appearing on a register of holders hereinbefore mentioned,
or in the case of joint holders to the one whose name appears first on such
register, a cheque for such interest (less any tax required by law to be
deducted including, without limitation, applicable withholding tax with respect
to payments as, on account or in lieu of payment of, or in satisfaction of,
interest on the Debentures to holders thereof who are not or are deemed not
resident in Canada for the purposes of the Income Tax Act (Canada)) payable to
such holder or holders and negotiable at par at each of the places at which
interest upon such Debentures is expressed to be payable. The forwarding of such
cheque shall
<PAGE>
                                      -12-

satisfy and discharge the liability for the interest on such Debentures to the
extent of the sums represented thereby (plus any amount of any tax deducted as
aforesaid) unless such cheque is not paid on presentation; provided that in the
event of the non-receipt of such cheque by the holder, or the loss or
destruction thereof, the Corporation, upon being furnished with reasonable
evidence of such non-receipt, loss or destruction and indemnity reasonably
satisfactory to it, shall issue to such holder a replacement cheque for the
amount of such cheque.

(4)  Where Debentures are registered in more than one name, the principal
monies and interest from time to time payable in respect thereof may be paid by
cheque payable to all such holders and such payment shall be a valid discharge
to the Trustee, any other registrar, the Corporation and any paying agent.

(5)  In the case of the death of one or more joint holders, the principal
monies and interest on any Debentures may be paid to the survivor or survivors
of such holders whose receipt therefor shall constitute a valid discharge to
the Trustee and any registrar and to the Corporation and any paying agent.

(6)  Except as is otherwise provided herein, the principal amount of the
Debentures and interest thereon shall be payable in lawful money of Canada at
any branch in Canada of The Bank of Nova Scotia (or such other financial
institutions as the Corporation may designate in writing to the Trustee) from
time to time at the option of the respective holders thereof.

(7)  Except as is herein otherwise provided, all sums which may at any time
become payable, whether at maturity or on redemption or otherwise, on account
of any Debenture or any interest thereon shall be payable at the option of the
holder at any of the places at which the principal of and interest on such
Debenture are payable.

SECTION 2.13 - U.S. LEGEND

     The Trustee acknowledges that the Debentures and the Shares issuable on
conversion of the Debentures or which may be issued by the Corporation in
satisfaction of its obligations under the Debentures (the "Underlying Common
Shares") have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities
laws of any state of the United States and may be offered and sold only in the
United States only pursuant to an exemption from the registration requirements
of the U.S. Securities Act and U.S. state securities laws.

     Each Debenture issued to a person whose registered address is, or is
directed to be, in the United States, and all Debentures issued in exchange or
transfer therefor, whether under Section 2.6 or 2.11 hereof or otherwise, shall
bear the following legend in boldface print on the face of such certificate:

     THE SECURITIES REPRESENTED HEREBY (AND UNDERLYING COMMON SHARES) HAVE NOT
     BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
     (THE
<PAGE>
                                      -13-

     "SECURITIES ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
     PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF CO-STEEL INC. THAT
     SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
     (A) TO CO-STEEL INC., (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
     904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C) INSIDE THE UNITED
     STATES IN ACCORDANCE WITH (1) RULE 144A UNDER THE SECURITIES ACT, OR (2)
     RULE 144 or 145 UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS
     CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
     TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO
     LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED
     FROM THE R-M TRUST COMPANY AT ITS PRINCIPAL OFFICES IN TORONTO, MONTREAL,
     VANCOUVER, CALGARY, REGINA, WINNIPEG AND HALIFAX UPON DELIVERY OF THIS
     CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE
     R-M TRUST COMPANY AND CO-STEEL INC., TO THE EFFECT THAT THE SALE OF THE
     SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
     REGULATION S UNDER THE SECURITIES ACT.

provided that, if the Debentures are being sold outside the united States in
accordance with Rule 904 of Regulation S under the U.S. Securities Act, such
legend may be removed by providing a declaration to the Trustee to the
following effect (or as the Corporation may prescribe from time to time):

     The undersigned (i) acknowledges that the sale of the [IDENTIFY SECURITIES
     BY NUMBER AND TYPE], represented by certificate number [PROVIDE NUMBERS],
     to which this declaration relates is being made in reliance on Rule 904 of
     Regulation S under the United States Securities Act of 1933, as amended,
     (the "1933 Act") and certifies that (1) it is not an "affiliate" (as
     defined in Rule 405 under the 1933 Act) of Co-Steel inc., (2) the offer of
     such securities was not made to a person in the United States and either
     (a) at the time the buy order was originated, the buyer was outside the
     United States, or the seller and any person acting on its behalf reasonably
     believed that the buyer was outside the United States, or (b) the
     transaction was executed on or through the facilities of [INSERT THE NAME
     OF THE APPLICABLE CANADIAN STOCK EXCHANGES DESIGNATED IN REGULATION S] and
     neither the seller nor any person acting on its behalf knows that the
     transaction was prearranged with a buyer in the United States and (3)
     neither the seller nor any person acting on its behalf engaged in any
     directed selling efforts in connection with the offer and sale of such
     securities. (Terms used in this declaration have the meanings ascribed
     thereto in Regulation S); and
<PAGE>
                                     - 14 -

provided that, if the Debentures are being sold inside the United States in
compliance with Rule 144 or 145 under the U.S. Securities Act, if available, and
U.S. state securities laws, such legend may be removed by delivery to the
Trustee of an opinion of counsel of recognized standing satisfactory to the
Corporation acting reasonably, to the effect that such legend is no longer
required under applicable requirements of the U.S. Securities Act or state
securities laws.

SECTION 2.14 -- CONCERNING INTEREST

(1)  Every Debenture, whether issued originally or in exchange for other
     Debentures, shall bear interest from and including the date such Debenture
     is issued hereunder or from and including the last interest payment date to
     which interest shall have been paid or made available for payment on the
     Debentures, whichever shall be later.

(2)  Interest on each Debenture shall cease to accrue from the earliest of: (i)
     the Maturity Date; or (ii) if such Debenture is called for redemption, the
     date fixed for redemption; or (iii) if such Debenture is converted, the
     date stipulated in Subsection 4.3(4), unless, in the case of (i) or (ii),
     as the case may be upon due presentation and surrender thereof for payment
     on or after the Maturity Date or the date fixed for redemption, as the case
     may be, such payment is improperly withheld or refused.

(3)  Wherever in this Indenture or the Debentures there is mention, in any
     context, of the payment of interest, such mention shall be deemed to
     include the payment of interest on amounts in default to the extent that,
     in such context, such interest is, was or would be payable pursuant to
     Subsection 2.1(2) and express mention of interest on amounts in default in
     any of the provisions hereof shall not be construed as excluding such
     interest in those provisions hereof where such express mention is not made.

                                  ARTICLE III
             REDEMPTION AND PURCHASE FOR CANCELLATION OF DEBENTURES

SECTION 3.1 -- REDEMPTION OF DEBENTURES

     Subject to Section 3.2, the Debentures shall be redeemable prior to
maturity in whole at any time or in part from time to time, at the option of the
Corporation (in the manner hereinafter provided and in accordance with and
subject to the provisions hereinafter set forth) at prices equal to the
principal amount of the Debentures to be redeemed, together with accrued and
unpaid interest on the principal amount of the Debentures, or part thereof, so
redeemed to and including the date fixed for redemption (the applicable price,
including accrued and unpaid interest, at which Debentures may be redeemed being
hereinafter referred to as the "REDEMPTION PRICE").
<PAGE>

                                     - 15 -

SECTION 3.2 - LIMITATION ON REDEMPTION

     Notwithstanding the provisions of Section 3.1, the Debentures shall not be
redeemable on or prior to April 30, 2002.

SECTION 3.3 - PARTIAL REDEMPTION OF DEBENTURES

(1)  In case less than all the Debentures are to be redeemed, the Corporation
shall in each such case, at least 15 Business Days before the date upon which
the notice of redemption is to be given, notify the Trustee in writing of its
intention to redeem Debentures and of the aggregate principal amount of
Debentures so to be redeemed. The Debentures so to be redeemed shall be selected
by the Trustee on a pro rata basis (to the nearest multiple of $1,000) in
accordance with the principal amount of Debentures registered in the name of
each holder. For this purpose, the Trustee may make, and from time to time
amend, regulations with regard to the manner in which such Debentures may be so
selected and regulations so made shall be valid and binding upon all holders
notwithstanding the fact that, as a result thereof, one or more of such
Debentures become subject to redemption in part only.

(2)  Debentures in denominations in excess of $1,000 may be selected and called
for redemption in part only (such part being $1,000 or an integral multiple
thereof) and, unless the context otherwise requires, references to Debentures in
this Article III shall be deemed to include any such part of the principal
amount of Debentures which shall have been so selected and called for
redemption. The holder of any Debenture called for redemption in part only, upon
surrender of such Debenture for payment as required herein, shall be entitled to
receive, without expense to such holder, a new Debenture Certificate for the
unredeemed part of the Debenture so surrendered, and the Corporation shall
execute and the Trustee shall certify and deliver, at the expense of the
Corporation, such new Debenture Certificate upon receipt of the Debenture
Certificate so surrendered.

SECTION 3.4 - NOTICE OF REDEMPTION

     Subject to Section 3.10, notice of the intention of the Corporation to
redeem any Debentures shall be given by or on behalf of the Corporation to the
holders of the Debentures which are to be redeemed not more than 60 days and not
less than 30 days prior to the date fixed for redemption in the manner provided
in Section 12.2. The notice of redemption shall specify the redemption date, the
Redemption Price and the places of payment and shall state that all interest on
the Debentures shall cease to accrue from and after such redemption date and
that the Debentures are convertible into Shares at any time prior to but not
after the close of business on the Business Day immediately preceding the
redemption date in the manner provided for herein. The notice of redemption
shall, unless all the Debentures then outstanding are to be redeemed, specify
the distinguishing letters and numbers of the Debenture Certificates in respect
of the Debentures which are to be redeemed and, in case a Debenture is to be
redeemed in part only, shall specify that part of the principal amount thereof
which is to be redeemed.
<PAGE>
                                     - 16 -

SECTION 3.5 - DEBENTURES DUE ON REDEMPTION DATES

(1)  Upon notice having been given as aforesaid, all Debentures called for
redemption, other than Debentures converted into Shares in accordance with the
provisions of Section 4.1, shall thereupon be and become due and payable at the
Redemption Price and on the redemption date specified in such notice, in the
same manner and with the same effect as if it were the Maturity Date specified
in such Debentures, anything therein or herein to the contrary notwithstanding,
and from and after such redemption date, if the monies necessary to redeem such
Debentures shall  have been deposited as hereinafter provided and affidavits or
other proof satisfactory to the Trustee as to the mailing of such notices shall
have been lodged with it, such Debentures shall not be considered as outstanding
hereunder and interest upon such Debentures shall cease to accrue from and after
said dates.

(2)  In case any question shall arise as to whether any notice has been given
as above provided and any deposit referred to below made, such question shall be
decided by the Trustee whose decision shall be final and binding upon all
parties in interest.

SECTION 3.6 - DEPOSIT OF REDEMPTION MONIES

     Subject to Section 3.10, upon Debentures having been called for redemption
as hereinbefore provided, the Corporation shall deposit with the Trustee or any
paying agent to the order of or for the account of the Trustee, on or before the
redemption date specified in the notice of redemption thereof, such sums as may
be sufficient to pay the Redemption Price of the Debentures so to be redeemed.
From the sums so deposited the Trustee shall pay or cause to be paid to the
holders of such Debentures so called for redemption, upon surrender of such
Debentures, the principal and interest to which they are respectively entitled
on redemption.

SECTION 3.7 - FAILURE TO SURRENDER DEBENTURES CALLED FOR REDEMPTION

     In case the holder of any Debentures so called for redemption shall within
30 days from the date fixed for redemption fail so to surrender any of its
Debenture Certificates in respect of such Debentures or shall not within such
time accept payment of the redemption monies payable in respect thereof or give
such receipt therefor, if any, as the Trustee may require, such redemption
monies shall be set aside in trust for such holder in a non-interest bearing
account with any chartered bank in Canada or any loan or trust company
authorized to accept deposits under the laws of Canada or any province thereof,
and such setting aside shall for all purposes be deemed a payment to the
Debentureholder of the sum so set aside, and to that extent the Debentureholder
shall have no right except to receive payment out of the monies so paid and
deposited upon surrender and deliver up of its Debenture or Debentures of the
Redemption Price of such Debenture or Debentures.

SECTION 3.8 - SURRENDER OF DEBENTURES FOR CANCELLATION

     If the principal monies due upon any Debenture shall become payable by
redemption or otherwise before the Maturity Date thereof, the person presenting
such Debenture for payment must surrender the same for cancellation, the
Corporation nevertheless paying or causing to be paid the
<PAGE>
                                     - 17 -

interest accrued and unpaid thereon (computed on a per diem basis if the date
fixed for payment is not an interest payment date). All Debentures so
surrendered for cancellation shall forthwith be delivered to the Trustee and
shall be cancelled by it and, subject to Section 3.3, no Debentures shall be
issued in substitution therefor.

SECTION 3.9 - PURCHASE OF DEBENTURES

(1)  Subject to applicable law, the Corporation may at any time, unless an Event
of Default hereunder has occurred and is continuing, purchase Debentures in the
market or by tender (including a dutch or reverse auction) or by private
contract. Any Debentures purchased pursuant to this Section 3.9 shall forthwith
be delivered to and cancelled by the Trustee and no Debentures shall be issued
in substitution therefor.

(2)  If, in response to an invitation to tender, more Debentures are tendered at
a price acceptable to the Corporation than the Corporation is prepared to
purchase, the Debentures to be purchased by the Corporation shall be selected by
the Trustee on a pro rata basis (to the nearest multiple of $1,000) in
accordance with the principal amount of Debentures tendered by each holder who
tendered at the same price, provided that when Debentures are tendered at
different prices, such selection shall be effected only with respect to the
Debentures tendered at the price at which more Debentures were tendered than the
Corporation is prepared to purchase after the Corporation has purchased all the
Debentures tendered at lower prices. The holder of any Debenture of which a part
only is purchased, upon surrender of such Debenture for payment, shall be
entitled to receive, without expense to such holder, one or more new Debentures
for the unpurchased part so surrendered and the Trustee shall certify and
deliver such new Debenture or Debentures upon receipt of the Debenture so
surrendered.

SECTION 3.10 - SHARE PAYMENT OPTION

     Subject to Section 3.11 and applicable law, and notwithstanding any other
provision of this Indenture, except as hereinafter provided, the Corporation, at
its option and subject to regulatory approval, on at least 30 days' and not more
than 60 days' notice given to the Trustee and to the Debentureholders in
accordance with Sections 3.12, 12.1 and 12.2 (which notice, in the case of a
redemption, may be given contemporaneously with notice of such redemption
pursuant to Section 3.4), may satisfy its obligation hereunder to pay the
aggregate principal amount payable to the holders of Debentures on redemption or
on the Maturity Date by the issue to such holders of that number of Shares
determined by dividing such amount by 95% of the Current Market Price of the
Shares. Accrued and unpaid interest on such aggregate principal amount shall be
payable in cash.

     The Corporation may not exercise this right if an Event of Default
hereunder has occurred and is continuing on the date of the notice referred to
in this Section 3.10.

     The Corporation reserves the right to satisfy its obligation hereunder to
pay the aggregate principal amount payable to the holders of Debentures on
redemption or on the Maturity Date, as the case may be, in cash instead of in
Shares as provided above, to holders of Debentures not residing in Canada, if
any.
<PAGE>
                                     - 18 -

SECTION 3.11 - ISSUE OF SHARES ON REDEMPTION OF DEBENTURES OR MATURITY DATE

(1)  If the Corporation elects under Section 3.10 to satisfy its obligation to
pay the principal amount of Debentures on the Maturity Date or the redemption
date, as the case may be, by the issue of Shares and if otherwise permitted to
do so by law, the Corporation will issue that number of Shares determined under
Section 3.10 and will deliver to the Trustee the following:

     (a)  an Officer's Certificate certifying that no Event of Default hereunder
          has occurred and is continuing as at the date of the notice referred
          to in Section 3.10;

     (b)  a certified copy of a resolution authorizing the issuance of such
          Shares; and

     (c)  an opinion of Counsel that (i) all requirements imposed by this
          Indenture or by law in connection with the proposed issue of Shares
          have been complied with including that no prospectus or similar
          document is required to be filed or authorizations of regulatory
          authorities required to be obtained under applicable legislation of
          any province of Canada (other than as may have been filed or
          obtained) before such Shares may properly and legally be issued and
          thereafter freely traded through persons registered if required under
          applicable laws, (ii) the Shares so issued have been validly issued
          and upon receipt by the Corporation of the consideration therefor will
          be outstanding as fully paid and non-assessable shares and (iii) the
          Shares so issued have been conditionally approved for listing on The
          Toronto Stock Exchange or on such other principal exchange as the
          Shares may then be listed, subject to compliance with the requirements
          of such exchange.

(2)  If the provisions of Subsections 3.11(1)(a) and (b) are not complied with,
the principal amount of the Debentures together with accrued and unpaid interest
thereon payable on the Maturity Date or on the redemption date, as the case may
be, will be payable in lawful money of Canada as otherwise provided hereunder.
If such provisions are complied with, the issue by the Corporation of that
number of Shares determined under Section 3.10 shall fully satisfy and discharge
the obligation of the Corporation to pay the principal amount of such Debentures
on the Maturity Date or on the redemption date, as the case may be.

SECTION 3.12 - GENERAL PROVISIONS

(1)  The notice to the holders of Debentures to be given by the Corporation
pursuant to Section 3.10 must:

     (a)  state that the Corporation has exercised its option to pay the
          aggregate principal amount payable to the holders of Debentures on the
          date of redemption or the Maturity Date, as the case may be, by the
          issue of Shares to the holders of Debentures and indicate the number
          of Shares issuable per $1,000 of principal amount of Debentures;

     (b)  state that to receive a certificate for the Shares and the interest to
          which the holder of a Debenture is entitled on the redemption date or
          the Maturity Date, as the case may
<PAGE>

                                     - 19 -

          be, the holders of Debentures must surrender their Debentures to the
          Trustee at its principal office in the City of Toronto;

     (c)  advise each holder of Debentures that the Shares to be issued in
          respect of such holder's Debentures will be registered in the name of
          the holder unless the Trustee, receives from such holder, on or
          before the tenth Business Day prior to the redemption date or the
          Maturity Date, as the case may be, at its principal office in the
          City of Toronto written notice in form and execution satisfactory to
          the Trustee directing the Corporation to register such Shares in some
          other name or names stating the name or names (with addresses)
          accompanied by payment to the Trustee of any transfer tax which may
          be payable by reason thereof; and

     (d)  advise each holder of Debentures that such holder may, on or after
          the redemption date or the Maturity Date, as the case may be, and on
          proof of identity satisfactory to the Trustee, take personal delivery
          of the share certificates representing that holder's Shares so issued
          and receive the interest to which such holder is entitled, at the
          principal office of the Trustee in the City of Toronto, if the
          Trustee receives from such holder at its principal office, in
          addition to any other notice or delivery required by this Subsection
          and on or before the tenth Business Day prior to the redemption date
          or the Maturity Date, as the case may be, written notice in form and
          execution satisfactory to the Trustee, stating that such holder
          wishes to take personal delivery of the Shares issued hereunder.

(2)  On the redemption date or the Maturity Date, as the case may be, the
     Corporation shall:

     (a)  subject to Subsection 3.12(1)(c) and (d), cause to be sent by prepaid
          ordinary insured mail, or in the event of mail service interruption
          by such other means as the Trustee and the Corporation will determine
          to be appropriate, share certificates for Shares issued pursuant to
          Section 3.10 to each holder of Shares in respect of which Debentures
          have been surrendered in accordance with the requirements of the
          notice given pursuant to Subsection 3.12(1), at their addresses as
          shown on the register maintained pursuant to Article II hereof; and

     (b)  make available for personal delivery, on proof of identity
          satisfactory to the Trustee, to each holder of Debentures who has
          delivered a notice to the Trustee in accordance with Subsection
          3.12(1)(d) on or before the tenth Business day prior to the
          redemption date or the Maturity Date, as the case may be, share
          certificates for Shares issued pursuant to Section 3.10 to such
          holder in respect of which Debentures have been surrendered in
          accordance with the requirements of the notice given pursuant to
          Section 3.12(1).

(3)  On or after the redemption date or the Maturity Date, as the case may be,
the Corporation will deliver or cause to be delivered share certificates
representing the Shares issued pursuant to Section 3.10 to any other registered
holder thereof, on presentation and surrender of the Debentures in respect of
which such shares were issued.

<PAGE>
                                      -20-

(4)  Each share certificate delivered pursuant to this Section 3.12 will be for
that number of Shares to which the holder is entitled in accordance with
Section 3.10.

(5)  If the holder of any Debentures, in respect of which the Corporation has
elected pursuant to Section 3.10 to satisfy its obligation to pay the aggregate
principal amount of such Debentures by the issue of Shares shall fail to
surrender any of such Debentures or shall not accept delivery of certificates
representing the Shares issuable to such holder on or before the redemption
date or the Maturity Date, as the case may be, such Debenture shall thereafter
not be considered as outstanding hereunder, and the Debenture holder shall have
no right in respect thereof except to receive certificates representing Shares
upon surrender of such Debentures.

(6)  If the Debentures which have been surrendered to the Trustee pursuant to
this Article III bear the legend referred to in Section 2.13, then the
Corporation shall cause the Trustee (or the registrar and transfer agent of the
Shares if other than the Trustee) to affix the legend set forth in Section 2.13
on the certificate or certificates of the Shares, provided that the proviso
with respect to the removal of the legend set forth in Section 2.13 shall also
apply thereto.

(7)  The Corporation shall not be required to issue fractional Shares upon the
issue of Shares pursuant to Section 3.10. If any fractional interest in a Share
would, except for the provisions of this Subsection 3.12(7), be deliverable upon
the issue of any shares pursuant to Section 3.10, the Corporation shall, in
lieu of delivering any certificate representing such fractional interest,
satisfy such fractional interest by paying to the registered holder of such
shares an amount in lawful money of Canada equal (computed to the nearest cent)
to the appropriate fraction of the value (being the last reported sale price
or, if none, the mean between the closing bid and ask quotations on The Toronto
Stock Exchange, or, if the Shares are not listed on The Toronto Stock Exchange,
on such stock exchange on which the Shares are listed, as may be selected for
such purpose by the directors and approved by the Trustee or, if the Shares are
not listed on any stock exchange, a value reasonably determined by the
directors) of a Share on the redemption date or the Maturity Date, as the case
may be.

                                   ARTICLE IV
                            CONVERSION OF DEBENTURES

SECTION 4.1 - CONVERSION PRIVILEGE AND CONVERSION PRICE

(1)  Upon and subject to the provisions and conditions of this Article and
provided the Corporation has not paid to the Trustee the principal and accrued
and unpaid interest on the Debentures pursuant to Section 6.1, the holder of
each Debenture shall have the right, at his option, at any time prior to
5:00 p.m. (Toronto time) on the earlier of April 30, 2007 and the Business Day
immediately preceding the date, if any, fixed for redemption of such Debenture
(such earlier time and date in this Article being referred to as the "EXPIRY
TIME"), to convert the whole or, in the case of a Debenture in a denomination in
excess of $1,000, any part which is $1,000 or an integral multiple
<PAGE>
                                      -21-

thereof, of the principal amount of such Debenture into fully paid and
non-assessable Shares at the Conversion Price in effect on the Date of
Conversion.

(2)  Such right of conversion shall extend only to the maximum number of whole
Shares into which the aggregate principal amount of the Debenture or Debentures
or part thereof surrendered for conversion at any one time by the holder thereof
may be converted in accordance with the foregoing provisions of this Section.
Fractional interests in Shares shall be adjusted for in the manner provided in
Subsection 4.4(10).

SECTION 4.2 - REVIVAL OF RIGHT TO CONVERT

     If the Corporation shall fail to redeem any Debenture in accordance with
the notice of redemption upon due surrender of such Debenture, any right to
convert such Debenture as provided in this Article shall revive and continue as
if such Debenture had not been called for redemption.

SECTION 4.3 - MANNER OF EXERCISE OF RIGHT TO CONVERT

(1)  The holder of a Debenture desiring to convert such Debenture into Shares
shall surrender such Debenture prior to the Expiry Time to the Trustee at its
principal office in the City of Toronto (or at such additional place or places
as the Corporation with the approval of the Trustee may determine) together with
the conversion form on the reverse side of the Debenture Certificate in respect
of such Debenture or any other written notice in a form satisfactory to the
Trustee, in either case duly executed by the holder or his executors or
administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and substance satisfactory to the
Trustee and executed in a manner satisfactory to the Trustee, with signatures
medallion guaranteed or guaranteed by a Canadian chartered bank, a trust company
or a member firm of The Toronto Stock Exchange (the "EXCHANGE") or other
recognized stock exchange if Shares are to be issued to a person other than a
holder, exercising its rights to convert such Debenture in accordance with the
provisions of this Article. Thereupon such Debentureholder and/or, subject to
payment of all applicable stamp or security transfer taxes or other governmental
charges and compliance with all reasonable requirements of the Trustee, its
nominee(s) or assignee(s), shall, subject to the provisions of Subsection 4.4(6)
and Section 4.8, be entitled to be entered in the books of the Corporation as at
the Date of Conversion (or such later date as is specified in Subsection 4.3(2))
as the holder of the number of Shares into which such Debenture is convertible
in accordance with the provisions of this Article and, as soon as practicable
thereafter, the Corporation shall deliver to such Debentureholder and/or,
subject as aforesaid, its nominee(s) or assignee(s), a certificate or
certificates for such Shares and, if applicable, a cheque for any amount payable
under this Article.

(2)  For the purposes of this Article, a Debenture shall be deemed to be
surrendered for conversion on the date (herein called the "DATE OF CONVERSION")
on which it is so surrendered in accordance with the provisions of this Article
and, in the case of a Debenture so surrendered by post or other means of
transmission, on the date on which it is received by the Trustee at its office
specified in Subsection (1) of this Section; provided that if a Debenture is
surrendered for conversion on a day on which the register of Shares is closed,
the person or persons entitled to receive Shares shall, except as provided in
Subsection 4.4(6), become the holder or holders of record of such Shares
<PAGE>
                                      -22-

as at the date on which such register is next reopened. If a Debenture is
surrendered for conversion on, or during the 15 Business Days preceding, any
interest payment date or the day of selection by the Trustee of any Debentures
for redemption, such Debenture shall be deemed to be surrendered for conversion
on the Business Day immediately following such interest payment date or the
date on which the Debentures are selected for redemption.

(3)  The holder of any Debenture of which part only is converted shall, upon the
exercise of his right of conversion, surrender the Debenture Certificate in
respect of said Debenture to the Trustee, and the Trustee shall cancel the same
and shall without charge to the holder forthwith certify and deliver to the
holder a new Debenture Certificate or Debenture Certificates in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered.

(4)  The holder of a Debenture surrendered for conversion in accordance with
this Section 4.3 shall be entitled to receive accrued and unpaid interest in
respect thereof only for the period up to the interest payment date, if any,
which falls on the Date of Conversion or, if the Date of Conversion is not an
interest payment date, for the period up to the interest payment date
immediately preceding the Date of Conversion; and there shall be no payment or
adjustment by the Corporation on account of any interest accrued or accruing on
such Debenture from the date of the latest interest payment date. The Shares
issued upon conversion shall rank only in respect of dividends declared in
favour of holders of record of Shares on and after the Date of Conversion or
such later date as such holder shall become the holder of record of such Shares
pursuant to Subsection 4.3(2), from which applicable date they will for all
purposes by and be deemed to be issued and outstanding as fully paid and
non-assessable Shares.

SECTION 4.4 -- ADJUSTMENT RULES

     The conversion rights at any date attaching to the Debentures shall be
subject to the adjustment from time to time as follows:

(1)  If and whenever at any time prior to the Expiry Time, the Corporation
shall (i) subdivide its then outstanding Shares into a greater number of Shares
(ii) consolidate its then outstanding Shares into a lesser number of Shares, or
(iii) issue Shares or securities exchangeable for or convertible into Shares to
all or substantially all of the holders of its then outstanding Shares by way
of stock dividend or other distribution, other than an issue of Shares or
securities exchangeable for or convertible into Shares to the holders of Shares
who exercise an option to receive dividends in Shares in lieu of receiving
dividends paid in the ordinary course, or (iv) distribute any securities or
assets of any kind whatsoever to all or substantially all of the holders of
Shares (other than cash dividends and equivalent dividends in stock and other
than an issue of Shares to holders of Shares pursuant to a right granted to such
holders to receive such Shares in lieu of dividends paid in the ordinary
course) (any of the events described in (i) through (iv) being herein called a
"SHARE REORGANIZATION"), the Conversion Price shall be adjusted effective
immediately after the effective date or the record date, as the case may be, on
which the holders of shares are determined for the purpose of the Share
Reorganization by multiplying the Conversion Price in effect on such record date
by a fraction, of which the numerator shall be the number of Shares outstanding
on such record date before
<PAGE>
                                     - 23 -

giving effect to the Share Reorganization and the denominator of which shall be
the number of Shares (including, in the case where securities exchangeable for
or convertible into Shares are distributed, the number of Shares that would
have been outstanding had all securities been exchanged or converted into
Shares on such date) outstanding after the completion of such Share
Reorganization (but before giving effect to the issue of any Shares issued
after such record date otherwise than as part of such Share Reorganization).

(2)     If and whenever at any time prior to the Expiry Time the Corporation
shall fix a record date for the issuance of rights, options or warrants to all
or substantially all the holders of its outstanding Shares entitling them to
subscribe for or purchase Shares in the capital of the Corporation (or
securities exchangeable for or convertible into such Shares) within a period of
not more than 45 days after such record date (the "Rights Period") at a price
per share (or having a conversion or exchange price per share) of less than 95%
of the Current Market Price for a Share on such record date (a "Rights
Offering") the Conversion Price shall be adjusted immediately after such record
date so that it shall equal the price determined by multiplying the Conversion
Price in effect on such record date by a fraction, of which the numerator shall
be the total number of Shares outstanding on such record date plus a number of
Shares equal to the number arrived at by dividing the aggregate price of the
total number of additional shares offered for subscription or purchase (or the
aggregate conversion or exchange price of the convertible or exchangeable
securities so offered) by such Current Market Price per Share and of which the
denominator shall be the total number of Shares outstanding on such record date
plus the total number of additional Shares offered for subscription or purchase
(or into which the convertible or exchangeable securities so offered are
convertible or exchangeable). Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that any such rights,
options or warrants are not so issued or any such rights, options or warrants
are not converted during the Rights Period, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if such record
date had not been fixed or the Conversion Price which would then be in effect
based upon the number of Shares (or securities convertible into Shares)
actually issued upon the conversion of such rights, options or warrants, as the
case may be.

(3)     If and whenever at any time prior to the Expiry Time the Corporation
shall fix a record date for the making of a distribution to all or
substantially all the holders of its outstanding Shares of (i) shares of any
class other than Shares, or (ii) rights, options or warrants (excluding a
Rights Offering and also excluding rights, options or warrants entitling the
holders thereof within not more than 45 days of the date of their issuance to
acquire Shares (or securities convertible into or exchangeable for Shares) at a
price per Share (or having a conversion price per Share) equal to or greater
than 95 percent of the Current Market Price of a Share on the record date for
the issuance of such rights, options or warrants or (iii) evidences of its
indebtedness or (iv) assets (including cash dividends except cash dividends
paid in the ordinary course) (a "SPECIAL DISTRIBUTION") then, in each such
case, the Conversion Price shall be adjusted immediately after such record date
for the Special Distribution so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date by a fraction of
which the numerator shall be the total number of Shares outstanding on such
record date multiplied by the Current Market Price per Share on such record
date, less the fair market value (as determined by the auditors of the
Corporation, which determination shall be conclusive) of such shares or
evidences of indebtedness or assets so distributed, and of which the
denominator shall be the total number of Shares outstanding on such record date
multiplied by such
<PAGE>

                                      -24-

Current Market Price per Share. Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that such distribution is
not so made, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon such shares or
rights, options or warrants or evidences of indebtedness or assets actually
distributed, as the case may be.

(4)  Upon any adjustment of the Conversion Price pursuant to Subsections
4.4(1), 4.4(2) or 4.4(3), the number of Shares receivable upon the conversion
of each $1,000 in principal amount of Debentures shall contemporaneously be
adjusted by multiplying the number of Shares theretofore receivable on the
conversion thereof by a fraction of which the numerator shall be the
Conversion Price in effect immediately prior to such adjustment and the
denominator shall be the Conversion Price resulting from such adjustment.

(5)  If and whenever at any time prior to the Expiry Time there is a
reclassification of the Shares or a capital reorganization of the Corporation
other than as otherwise described in this Section 4.4 or a consolidation,
amalgamation or merger of the Corporation with or into any other body corporate,
trust, partnership or other entity or a sale or conveyance of the property and
assets of the Corporation as an entirety or substantially as an entirety to any
other body corporate, trust partnership or other entity, any Debentureholder who
has not exercised his right of conversion prior to the effective date of such
reclassification, reorganization, consolidation, amalgamation, merger, sale or
conveyance, upon the exercise of such right of conversions thereafter, shall be
entitled to receive and shall accept in lieu of the number of Shares to which
such Debentureholder was theretofore entitled upon conversion, the number of
shares or other securities or property of the Corporation or of the body
corporate, trust, partnership or other entity resulting from such merger,
amalgamation or consolidation or to which such sale or conveyance may be made,
as the case may be, that such holder would have been entitled to receive on such
reclassification, capital reorganization, consolidation, amalgamation, merger,
sale or conveyance if, immediately prior to the record date or the effective
date thereof, as the case may be, he had exercised his right of conversion. To
give effect to or to evidence the provisions of this paragraph, the Corporation,
its successor or such purchasing body corporate, trust, partnership or other
entity, as the case may be, shall, prior to or contemporaneously with any such
reclassification, reorganization, consolidation, amalgamation, merger, sale or
conveyance, enter into an indenture which shall provide, to the extent possible,
that the application of the provisions set forth in this Indenture shall
thereafter correspondingly be made applicable as nearly as may reasonably be,
with respect to any shares, other securities or property to which a
Debentureholder is entitled on the conversion of his Debenture(s) thereafter.
Any indenture entered into between the Corporation and the Trustee pursuant to
the provisions of this Subsection 4.4(5) shall be a supplemental indenture
entered into pursuant to the provisions of Articles IX hereof. Any indenture
entered into between any successor to the Corporation or a purchasing body
corporate, trust, partnership or other entity shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section 4.4 and which shall apply to successive
reclassifications, capital reorganizations, amalgamation, consolidations,
mergers, sales or conveyances. Notwithstanding any provision of this Indenture,
in the event any reclassification, change, amalgamation, consolidation, merger
or sale occurs on or prior to the date which is five years from the issue of the
Debenture, a holder of Debentures who exercises the right to convert Debentures
into Shares shall be entitled to receive only shares, other securities or
property that constitute Prescribed Securities provided that the
<PAGE>

                                     - 25 -

fair market value of such Prescribed Securities shall be equal to the fair
market value of any Prescribed Securities and any other type of consideration
that the holder would have been entitled to receive had such Debentures been
converted into Shares immediately prior thereto and the Corporation shall not
undertake, permit or enter into any such reclassification, change,
amalgamation, consolidation, merger or sale on or before such date unless such
Debentureholders are provided with the right to receive Prescribed Securities
as aforesaid.

(6)  In any case in which this Section 4.4 shall require that an adjustment
shall become effective immediately after a record date for an event referred to
herein and where the application of such adjustment would result in a decrease
in the Conversion Price immediately after such record date, the Corporation may
defer, until the occurrence of such event, issuing to the holder of any
Debenture exercising his conversion rights after such record date and before the
occurrence of such event the additional Shares issuable upon such conversion by
reason of the adjustment required by such event before giving effect to such
adjustment; provided, however, that the Corporation shall deliver to such holder
an appropriate instrument evidencing such holder's right to receive such
additional Shares upon the occurrence of the event resulting in the decreased
Conversion Price and the right to receive any distributions made on such
additional Shares declared in favour of holders of record of Shares on and after
the Conversion Date or such later date as such holder would, but for the
provisions of this Subsection 4.4, have become the holder of record of such
additional Shares.

(7)  The adjustments provided for in this Section 4.4 in the Conversion Price
and in the number and classes of shares which are to be received on the
conversion of Debentures are cumulative. After any adjustment pursuant to this
Section, the term "SHARES" where used in this Indenture shall be interpreted to
mean shares of any class or classes which, as a result of all prior adjustments
pursuant to this Section, the Debentureholder is entitled to receive upon the
conversion of his Debenture, and the number of Shares indicated in any
conversion made pursuant to a Debenture shall be interpreted to mean the number
of shares of all classes which, as a result of all prior adjustments pursuant to
this Section, a Debentureholder is entitled to receive upon the full exercise of
his conversion rights.

(8)  All shares of any class which a Debentureholder is at the time in question
entitled to receive on the full exercise of the conversion rights attaching to
his Debenture, whether or not as a result of adjustments made pursuant to this
Section, shall, for the purposes of the interpretation of this Indenture, be
deemed to be shares which such Debentureholder is entitled to receive on
conversion of such Debenture.

(9)  Anything in this Section 4.4 to the contrary notwithstanding, no adjustment
shall be made in the Conversion Price and no notice shall be given (a) unless
such adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect (but in such case any adjustment that would
otherwise have been required then to be made shall be carried forward and taken
into account in any subsequent adjustment in the Conversion Price) or (b) in
respect of entitlement to acquire Shares pursuant to an employee stock purchase,
stock option or analogous plan as now or hereafter existing or as hereafter
amended, supplemented or replaced provided that each entitlement is to acquire
equity shares or securities convertible or exchangeable into equity shares at a
price as defined in such plans. In case the Shares at any time outstanding
shall, prior to the Expiry

<PAGE>

                                     - 26 -

Time, be subdivided into a greater number of Shares or consolidated into a
lesser number of Shares, the minimum adjustment aforesaid shall thereupon be
itself adjusted to such amount which shall bear the same relation to the
minimum adjustment established immediately prior to such event as the total
number of Shares outstanding immediately after such event. Any such minimum
adjustment so established shall continue in effect until the same shall again
be changed as herein provided.

(10) The Corporation shall not be required to issue fractional Shares upon
conversion of the Debenture. If any fractional interests in a Share would,
except for the provisions of this Subsection, be deliverable upon the exercise
of a Debentureholder's conversion rights, the Corporation shall make a cash
payment equal to the fair value (based on the last reported sale price or, if
none, the mean between the closing bid and ask quotations on The Toronto Stock
Exchange, or, if the Shares are not listed on The Toronto Stock Exchange, on
such stock exchange on which the Shares are listed which may be selected by the
Trustee) of the fraction of a Share not so issued. If more than one Debenture
shall be surrendered for conversion at one time by the same holder, the number
of whole Shares issuable upon conversion thereof shall be converted on the basis
of the aggregate principal amount of the Debentures to be converted.

(11) If any question arises with respect to the adjustments provided in this
Article IV such questions shall be conclusively determined by a firm of
chartered accountants (who may be the Corporation's auditors) appointed by the
Corporation and acceptable to the Trustee. Such accountants shall have access
to all necessary records of the Corporation and such determination shall be
binding upon the Corporation, the Trustee and the Debentureholders. If any such
determination is made, the Corporation shall deliver a certificate to the
Trustee describing such determination.

(12) No adjustment in the Conversion Price shall be made in respect of any event
described in this Section 4.4, other than events referred to in paragraphs
4.4(1)(i) and (ii), if Debentureholders are entitled to participate in such
event on the same terms mutatis mutandis as if Debentureholders had exercised
their rights of conversion prior to or on the effective date or record date of
such event. Any such participation will be subject to the prior approval or
consent of each Canadian stock exchange on which the Shares are listed.

(13) If, after the date of this Indenture the Corporation shall take any action
affecting the Shares other than the actions described in this Article IV which
in the opinion of the directors, acting reasonably, would materially and
adversely affect the rights of Debentureholders, the Conversion Price and the
number of Shares which may be acquired upon exercise of conversion rights
attaching to a Debenture shall be adjusted in such manner and at such time, as
may be determined by the auditors of the Corporation to be equitable in the
circumstances (having regard to the fair market value of the Debentures and the
Shares before and after such action is taken); provided that no such adjustment
will be made unless prior approval or consent of each Canadian stock exchange
on which the Shares are listed for trading, if required, have been obtained. In
the event that any such adjustment is made, the Corporation shall deliver a
certificate to the Trustee describing such adjustment.

(14) In the absence of a resolution of the directors fixing a record date for
an event described in this Section 4.4, the Corporation will be deemed to have
fixed as the record date therefor the date on which the event is effected.

<PAGE>

                                      -27-

SECTION 4.5 -- PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT

     As a condition precedent to the taking of any action which would require an
adjustment pursuant to Section 4.4, the Corporation shall take any action which
may, in the opinion of counsel, be necessary in order that the Corporation may
validly and legally issue as fully paid and non-assessable all the Shares which
the holders of the Debentures are entitled to receive on the exercise of the
conversion rights in respect thereof in accordance with the provisions hereof.

SECTION 4.6 -- CERTIFICATE OF ADJUSTMENT

     The Corporation shall from time to time immediately after the occurrence
of any event which requires an adjustment or readjustment as provided in
Section 4.4, deliver a certificate of the Corporation to the Trustee specifying
the nature of the event requiring the same and the amount of the adjustment
necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate and the amount of the adjustment specified therein shall be
verified by an opinion of the Corporation's auditors and, absent manifest
error, shall be conclusive and binding on all parties in interest. When so
verified, the Corporation shall forthwith give notice to the Debentureholders
in the manner provided in Section 12.2 specifying the event requiring such
adjustment or readjustment and the results thereof, including the resulting
Conversion Price; provided that, if the Corporation has given notice under
Section 4.7 covering all the relevant facts in respect of such event and if the
Trustee approves, no such notice need be given under this Section 4.6. The
Trustee may, for all purposes, act and rely upon any certificate or
certificates and any other document delivered by the Corporation or the
Corporation's auditors pursuant to this Section 4.6.

SECTION 4.7 -- NOTICE OF SPECIAL MATTERS

     The Corporation covenants with the Trustee that so long as any Debenture
remains outstanding, it will give at least fourteen days' notice to the Trustee
and to the Debentureholders as provided in Section 12.2, of its intention to fix
a record date for any event referred to in Subsections 4.4(1), 4.4(2) or 4.4(3)
which may give rise to an adjustment in the Conversion Price, of its intention
to take any action described in Subsection 4.4(5) or of its intention to fix a
record date for the payment of dividends on the Shares other than dividends paid
in the ordinary course, and, in each case, such notice shall specify the
particulars of such event and the record date and/or the effective date for such
event; provided that the Corporation shall only be required to specify in such
notice such particulars of such event as shall have been fixed and determined on
the date on which the notice is given. The Corporation shall forthwith upon
determining further particulars provide a subsequent notice to the Trustee and
the Debentureholders setting forth such particulars.

SECTION 4.8 -- NO ACTION AFTER NOTICE

     The Corporation covenants with the Trustee that it will not close its
transfer books or take any other corporate action which might deprive the
holder of a Debenture of the opportunity of exercising his right of conversion
pursuant thereto during the period of ten Business Days after the giving of the
notice set forth in Sections 4.6 and 4.7

<PAGE>
                                     - 28 -

SECTION 4.9 - PROTECTION OF TRUSTEE

     Subject to Subsection 10.2(1), the Trustee (i) shall not at any time be
under any duty or responsibility to any Debentureholder to determine whether any
facts exist which may require any adjustment contemplated by Section 4.4, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method  employed in making the same; (ii) shall not be
accountable with respect to validity or value (or the kind or amount) of any
Shares or of any shares or other securities or property which may at any time
be issued or delivered upon the conversion of the conversion rights attaching
to any Debenture; or (iii) shall not be responsible for any failure of the
Corporation to make any cash payment or to issue, transfer or deliver Shares or
share certificates upon the surrender of any Debentures for the purpose of the
exercise of such conversion rights or to comply with any of the covenants
contained in this Article IV.

SECTION 4.10 - ACCOUNTING AND RECORDING

(1)  The Trustee shall account to the Corporation as soon as practicable with
respect to conversion of Debentures.

(2)  The Trustee shall record the particulars of the Debentures converted which
shall include the name or names and addresses of the persons who become holders
of Shares on conversion, the Conversion Date and the Conversion Price therefor.
Within three Business Days of each Conversion Date, the Trustee shall provide
such particulars in writing to the Corporation.

SECTION 4.11 - CANCELLATION OF SURRENDERED DEBENTURE CERTIFICATES

     All Debenture Certificates surrendered to the Trustee pursuant to Section
2.6, 2.11, 3.3, 3.8 or 4.3 shall be cancelled by the Trustee. The Trustee shall,
if required by the Corporation, furnish the Corporation with a certificate
identifying the Debenture Certificates so cancelled.

SECTION 4.12 - EXPIRATION

     After the Expiry Time, all rights under any Debenture in respect of which
the right of conversion herein and therein provided for have not theretofore
been exercised shall wholly cease and terminate and such Debenture shall be void
and of no value or effect.

SECTION 4.13 - REVIVAL OF RIGHT TO CONVERT

     If the Corporation shall fail to redeem any Debenture which has been called
for redemption upon due surrender of such Debenture, any right to convert such
Debenture as provided in this Article IV shall revive and continue as if such
Debenture had not been called for redemption.

<PAGE>

                                     - 29 -

SECTION 4.14 - U.S. LEGEND

     In the event any Debenture(s) which have been delivered to the Trustee
pursuant to Section 4.3 hereof bears the U.S. Securities Act legend referred to
in Section 2.13, the Corporation shall cause the certificates in respect of the
Shares issuable upon the conversion of such Debenture(s) to be affixed with the
same legend set forth in Section 2.13 and the proviso with respect to the
removal of the legend set forth in Section 2.13 shall apply thereto.

                                   ARTICLE V
                                   COVENANTS

SECTION 5.1 - GENERAL COVENANTS

     The Corporation covenants with the Trustee that so long as any Debentures
remain outstanding;

(1)  It will duly and punctually pay or cause to be paid to every
Debentureholder the principal of, and interest accrued on, the Debentures of
which he is the holder on the dates, at the places, in the monies or Shares; as
the case may be, and in the manner mentioned herein;

(2)  It will at all times maintain its corporate existence, provided that
subject to Section 9.3 nothing herein contained shall prevent the amalgamation,
consolidation or merger of the Corporation or any Subsidiary of the Corporation
if, in the reasonable opinion of the directors or officers of the Corporation,
it would be advisable and in the best interest of the Corporation so to do, and
will keep or cause to be kept proper books of account in accordance with
generally accepted accounting practice and will file with the Trustee copies of
all financial statements and other material furnished to the holders of Shares
after the date of this Indenture;

(3)  It will use its best efforts to ensure that it maintains, until one year
after the Expiry Time, its status as a reporting issuer not in default (or the
equivalent) under the securities laws of each Canadian province;

(4)  It will at all times carry on and conduct and will cause to be carried on
and conducted its business in the same general manner as hereto before carried
on and conducted, provided, however, that, subject to Section 9.3, the
Corporation or any Subsidiary of the Corporation may cease to carry on a
business or may purchase or dispose of any business, premises, assets, property
or operation if, in the opinion of the directors or officers of the Corporation
or any Subsidiary of the Corporation, as the case may be, it would be advisable
and in the best interest of the Corporation or any Subsidiary of the Corporation
so to do, or if the purchase or disposition is required by law or is made
pursuant to a partnership or shareholder agreement, arrangements with respect to
a joint venture, or buy-sell, shotgun, rights of first refusal or similar
arrangements entered into by the Corporation or a Subsidiary;
<PAGE>

                                      -30-

(5)  It will reserve out of its authorized capital a sufficient number of Shares
to satisfy the rights of conversion provided for herein and it will
conditionally issue to holders of Debentures such number of Shares as shall be
issuable on the conversion of all outstanding Debentures;

(6)  It will cause the Shares from time to time issued upon the conversion of
Debentures or upon exercise by the Corporation of its right to issue Shares in
satisfaction of its obligations at redemption or maturity, and the certificates
representing such Shares, to be duly issued and delivered in accordance with the
Debentures and the terms hereof;

(7)  All Shares which shall be issued upon exercise of the right to convert
Debentures provided for herein shall be issued as fully-paid and non-assessable
and the holders thereof shall not be liable to the Corporation or its creditors
in respect of the issue of such Shares;

(8)  It will use its best efforts to maintain the listing of the Shares on The
Toronto Stock Exchange, to complete all necessary requirements in connection
with the listing and posting for trading of the Shares issuable upon conversion
of the Debentures on such exchange as soon as practicable following the
Execution Date, and to secure the listing of the Debentures on the exchange as
soon as is practicable following the Execution Date and thereafter to maintain
such listing;

(9)  If at any time any registration or filing pursuant to any securities laws
of Canada or any province thereof is required to ensure that the Shares issuable
upon the conversion of the Debentures are issued in compliance with all such
laws or to ensure that any Shares, once issued, are not subject to any
restriction as to resale thereof (other than restrictions that apply to a holder
of Shares solely as a result of that holder holding or being part of a group
that holds a sufficient number of securities to control the Corporation), it
will promptly take all necessary action to make or obtain such registration or
filing, as the case may be;

(10) On or before December 31 in each year commencing December 31, 1997, it will
furnish to the Trustee a certificate stating that it has complied with all
covenants, conditions, or other requirements contained in this Indenture, the
non-compliance with which would, with the giving of notice or lapse of time,
constitute an Event of Default; and

(11) It will well and truly perform and carry out all of the acts or things to
be done by it as provided in this Indenture, and will execute, acknowledge, and
deliver or cause to be executed, acknowledged and delivered all other acts,
deeds and assurances in law as the Trustee may reasonably require for the better
accomplishing and effecting of the provisions of this Indenture.

SECTION 5.2 - TRUSTEE'S REMUNERATION AND EXPENSES

     The Corporation covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services hereunder and will pay or reimburse the
Trustee upon its request for all reasonable expenses and disbursements of the
Trustee in the administration or execution of the trusts hereby created
(including the reasonable compensation and disbursements of its counsel and all
other advisers and assistants not regularly in its employ) until all duties of
the Trustee hereunder shall be
<PAGE>
                                      -31-

finally and fully performed, except any such expense or disbursement in
connection with or related to or required to be made as a result of the
negligence, wilful misconduct or bad faith of the Trustee.

SECTION 5.3 - PERFORMANCE OF COVENANTS BY TRUSTEE

     If the Corporation shall fail to perform any of its covenants contained in
this Indenture and the Corporation has not rectified such failure within ten
Business Days after receiving notice from the Trustee of such failure, the
Trustee may notify the Debentureholders of such failure on the part of the
Corporation or may itself perform any of the said covenants capable of being
performed by it, but shall be under no obligation to perform said covenants or
to notify the Debentureholders of such performance by it. All sums expended or
disbursed by the Trustee in so doing shall be repayable as provided in Section
5.2. No such performance, expenditure or disbursement by the Trustee shall be
deemed to relieve the Corporation of any default hereunder or of its continuing
obligations under the covenants herein contained.

SECTION 5.4 - ENFORCEABILITY OF DEBENTURES

     The Corporation covenants and agrees that it is duly authorized to create
and issue the Debentures to be issued hereunder and that the Debentures, when
issued and countersigned as herein provided, will be valid and enforceable
against the Corporation in accordance with the provisions hereof and the terms
thereof.

SECTION 5.5 - NOT TO EXTEND TIME FOR PAYMENT OF INTEREST

     In order to prevent any accumulation after maturity of unpaid interest, the
Corporation will not directly or indirectly extent or assent to the extension of
time for payment of any interest upon any Debenture and it will not directly or
indirectly be or become a party to or approve any such arrangement in any
manner; and the Corporation shall deliver to the Trustee all Debentures when
paid as evidence of such payment. In case the time for the payment of any such
interest shall be so extended, whether or not such extension be by or with the
consent of the Corporation notwithstanding anything herein or in the Debenture
Certificates contained, such interest shall not be entitled in case of default
hereunder to the benefits of this Trust Indenture except subject to the prior
payment in full of all interest on Debentures the payment of which has not been
so extended.

                                   ARTICLE VI
                            DEFAULT AND ENFORCEMENT

SECTION 6.1 - EVENTS OF DEFAULT

     Upon the happening of one or more of the following events (herein
sometimes referred to as an "EVENT OF DEFAULT"), namely:
<PAGE>
                                      -32-

     (i)     if the Corporation makes default in payment of the principal of any
             Debenture when the same becomes due under any provision hereof;

     (ii)    if the Corporation makes default in payment of any interest due on
             any Debenture hereof and any such default shall have continued for
             a period of five days after receipt by the Corporation of notice
             from the Trustee setting forth the default and requiring the
             Corporation to rectify the same;

     (iii)   if a decree or order of a court having jurisdiction in the premises
             is entered adjudicating the Corporation or a Significant Subsidiary
             a bankrupt or insolvent under the Bankruptcy and Insolvency Act
             (Canada) or any other bankruptcy, insolvency or analogous laws or
             issuing sequestration or process of execution against all or
             substantially all of the property of the Corporation or a
             Significant Subsidiary or appointing a receiver of such property,
             or ordering the winding-up or liquidation of the affairs of the
             Corporation or a Significant Subsidiary and enforcement of any such
             aforesaid decree or order continues unstayed and in effect for a
             period of 60 days after notice of such decree or order is received
             by the Corporation;

     (iv)    if a resolution is passed for the winding-up or liquidation of the
             Corporation (except in the course of carrying out or pursuant to a
             transaction in respect of which the conditions or Article IX are
             duly observed and performed) or if the Corporation or a Significant
             Subsidiary institutes proceedings to be adjudicated a bankrupt or
             insolvent or consents to the filing of any such petition or to the
             appointment of a receiver of all or substantially all of the
             property of the Corporation or a Significant Subsidiary or makes a
             general assignment for the benefit of creditors or admits in
             writing its inability to pay its debts generally as they become due
             or takes corporate action in furtherance of any of the aforesaid
             purposes;

     (v)     if the Corporation shall neglect to carry out or observe any other
             covenant or condition herein to be observed or performed and, after
             notice in writing has been given by the Trustee to the Corporation
             specifying such default and requiring the Corporation to put an
             end to the same (which said notice may be given by the Trustee in
             its discretion and shall be given by the Trustee upon receipt of a
             request in writing signed by the holders of not less than 25% in
             principal amount of the Debentures then outstanding), the
             Corporation shall fail to make good such default within a period of
             30 days unless the Trustee (having regard to the subject matter of
             the neglect or non-observance) shall have agreed to a longer period
             and, in such event, the Corporation shall not have made good the
             default within the period agreed to by the Trustee; or

     (vi)    if an encumbrancer takes possession of all or substantially all of
             the property of the Corporation or a Significant Subsidiary, or if
             any process or execution is levied or enforced upon or against all
             or substantially all of the property of the Corporation or a
             Significant Subsidiary and remains unsatisfied for such period as
             would permit any such property to be sold thereunder, unless the
             Corporation or the Significant Subsidiary, as the case may be,
             actively and diligently contests in good faith such
<PAGE>
                                     - 33 -

             process, but in that event the Corporation or the Significant
             Subsidiary shall, if the Trustee so requires, give security which,
             in the discretion of the Trustee, is sufficient to pay in full the
             amount thereby claimed in case the claim is held to be valid;

then in such and every such event the Trustee may in its discretion and shall
upon receipt of a request in writing signed by the holders of not less than 25%
in principal amount of the Debentures then outstanding, subject to the
provisions of Section 6.3, by notice in writing to the Corporation declare the
principal of and interest on all Debentures then outstanding and all other
monies outstanding hereunder to be due and payable and the same shall forthwith
become immediately due and payable to the Trustee, anything therein or herein to
the contrary notwithstanding, and the Corporation shall forthwith pay to the
Trustee for the benefit of the Debentureholders the principal of the Debentures
and accrued and unpaid interest on the Debentures to, but not including, the
date payment is received by the Trustee. Such payment when made shall be deemed
to have been made in discharge of the Corporation's obligations hereunder and
any monies so received by the Trustee shall be applied in the manner provided in
Section 6.6.

SECTION 6.2 -- NOTICE OF EVENTS OF DEFAULT

(1)  If an Event of Default shall occur and is continuing, the Trustee shall,
within a reasonable time but not exceeding 15 days after it becomes aware of the
occurrence of such Event of Default give notice of such Event of Default to the
Debentureholders in the manner provided in Section 12.2, provided that,
notwithstanding the foregoing, unless the Trustee shall have been requested to
do so by the holders of at least 255 of the principal amount of the Debentures
then outstanding, the Trustee shall not be required to give such notice if the
Trustee reasonably believes that the withholding of such notice is in the best
interests of the Debentureholders and shall have so advised the Corporation in
writing.

(2)  When notice of the occurrence of an Event of Default has been given and the
Event of Default is thereafter cured, notice that the Event of Default is no
longer continuing shall be given by the Trustee to the Debentureholders in the
manner provided in Section 12.2 within a reasonable time, but not exceeding 15
days, after the Trustee becomes aware that the Event of Default has been cured.

SECTION 6.3 -- WAIVER OF DEFAULTS

     Upon the happening of any Event of Default hereunder otherwise than default
in payment of any principal monies at maturity:

     (i)  the holders of more than 50% of the principal amount of the
          Debentures then outstanding shall have the power (in addition to the
          powers exercisable by Extraordinary Resolution as hereinafter
          provided) by requisition in writing to instruct the Trustee to waiver
          any default hereunder and/or to cancel any declaration made by the
          Trustee pursuant to Section 6.1 and the Trustee shall thereupon waive
          the default or cancel such declaration upon such terms and conditions
          as shall be prescribed in such requisition; and
<PAGE>

                                     - 34 -

     (ii)    the Trustee, so long as it has not become bound to declare the
             principal of and interest on the Debentures then outstanding to be
             due and payable or to obtain or enforce payment of the same, shall
             have the power to waive any default hereunder if, in the Trustee's
             opinion, the same shall have been cured or adequate satisfaction
             made therefor, and in such event to cancel any such declaration
             theretofore made by the Trustee in the exercise of its discretion,
             upon such terms and conditions as the Trustee may deem advisable;

provided that no delay or omission of the Trustee or of the Debentureholders to
exercise any right of power shall impair any such right or power or shall be
construed to be a waiver of any Event of Default and provided no act or
omission either of the Trustee or of the Debentureholders in the premises shall
extend to or be taken in any manner whatsoever to affect any subsequent default
hereunder or the rights resulting therefrom.

SECTION 6.4 - ENFORCEMENT BY THE TRUSTEE

(1)  Subject to the provisions of Section 6.3 and to the provisions of any
Extraordinary Resolution that may be passed by the Debentureholders, in case
the Corporation shall fail to pay to the Trustee, forthwith after the same
shall have been declared to be due and payable under Section 6.1, the principal
of and interest on all Debentures then outstanding, together with any other
amounts due hereunder, the Trustee may in its discretion and shall upon receipt
of a request in writing signed by the holders of not less than 25% in principal
amount of the Debentures then outstanding and upon being indemnified to its
reasonable satisfaction against all costs, expenses and liabilities to be
incurred, and upon receiving such funds as it reasonably considers necessary,
proceed in its name as Trustee hereunder to obtain or enforce payment of the
said principal of and interest on all the Debentures then outstanding together
with any other amounts due hereunder by such proceedings authorized by this
Indenture or by law or equity as the Trustee in such request shall have been
directed to take, or if such request contains no such direction, or if the
Trustee shall act without such request, then by such proceedings authorized by
this Indenture or by suit at law or in equity as the Trustee shall deem
expedient.

(2)  The Trustee shall be entitled and empowered, either in its own name or as
trustee of an express trust, or as attorney-in-fact for the holders of the
Debentures, or in any one or more of such capacities, to file such proof of
debt, amendment of proof of debt, claim, petition or other document as may be
necessary or advisable in order to have the claims of the Trustee and of the
holders of the Debentures allowed in any insolvency, bankruptcy, liquidation,
winding-up or other judicial proceeding relative to the Corporation or its
creditors or relative to or affecting its property. The Trustee is hereby
irrevocably appointed (and the successive holders of the Debentures by taking
and holding the same shall be conclusively deemed to have so appointed the
Trustee) the true and lawful attorney-in-fact of the holders of the Debentures
with authority to make or file in the names of the holders of the Debentures as
a class, subject to deduction from any such claims of the amounts of any claim
filed by any of the holders of the Debentures themselves, any proof of debt,
amendment of proof of debt, claim, petition or other document in any such
proceedings and to receive payment of any sums becoming distributable on
account thereof, and to execute any such other papers and documents and to do
and perform any and all such acts and things for and on behalf of such holders
<PAGE>

                                      -35-

of the Debentures, as may be necessary or advisable in the opinion of the
Trustee or Counsel, in order to have the respective claims of the Trustee and of
the holders of the Debentures against the Corporation or its property allowed in
any such proceeding, and to receive payment of or on account of such claims;
provided, however, that nothing contained in this Indenture shall be deemed to
give to the Trustee, unless so authorized by Extraordinary Resolution, any right
to accept or consent to any plan of reorganization or otherwise by action of any
character in such proceeding to waive or change in any way any right of any
Debentureholder.

(3)  The Trustee shall also have power at any time and from time to time to
institute and to maintain such suits and proceedings as it may be advised shall
be necessary or advisable to preserve and protect its interests and the
interests of the Debentureholders.

(4)  Any rights of action hereunder may be enforced by the Trustee without the
possession of any of the Debentures or the production thereof on the trial or
other proceedings relative thereto. Any such suit or proceeding instituted by
the Trustee shall be brought in the name of the Trustee as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Debentures subject to the provisions of this Indenture. In
any proceeding brought by the Trustee (and also any preceding in which a
declaratory judgment of a court may be sought as to the interpretation or
construction of any provision of this Indenture, to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceeding.

SECTION 6.5 - SUITS BY DEBENTUREHOLDERS

     No holder of any Debenture shall have any right to institute any action,
suit or proceeding at law or in equity for the purpose of enforcing payment of
the principal of or interest on the Debentures or for the execution of any
trust or power hereunder of for the appointment of a liquidator or receiver or
for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to
have the Company wound up or to file or prove a claim in any liquidation or
bankruptcy proceeding or for any other remedy hereunder, unless:

     (i)    such holder shall previously have given to the Trustee written
            notice of the happening of an Event of Default hereunder;

     (ii)   the Debentureholders by Extraordinary Resolution or by written
            instrument signed by holders of at least 25% in principal amount of
            the Debentures then outstanding shall have made a request to the
            Trustee and the Trustee shall have been afforded reasonable
            opportunity either itself to proceed to exercise the power
            hereinbefore granted or to institute an action, suit or proceeding
            in its name for such purposes;

     (iii)  the Debentureholders or any of them shall have furnished to the
            Trustee, when so requested by the Trustee, sufficient funds and
            securities and indemnity satisfactory to it against the costs,
            expenses and liabilities to be incurred herein or thereby; and
<PAGE>
                                     - 36 -

     (iv)    the Trustee shall have failed to act within a reasonable time after
             such notification, request and offer of indemnity and such
             notification, request and offer of indemnity may, at the option of
             the Trustee, constitute a condition precedent to any other
             proceedings.

     In such event, but not otherwise, any Debentureholder acting on behalf of
himself and all other Debentureholders, shall be entitled to take proceedings in
any court of competent jurisdiction such as the Trustee might have taken under
Section 6.5, but in no event shall any Debentureholder or combination of
Debentureholders have any right to take any other remedy or proceedings out of
court; it being understood and intended that no one or more holders of
Debentures shall have any right in any manner whatsoever to enforce any right
hereunder or under any Debenture except subject to the conditions and in the
manner herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and maintained by
the Trustee, except only as herein provided, and in any event for the equal
benefit of all holders of outstanding Debentures.

SECTION 6.6 - APPLICATION OF MONIES BY TRUSTEE

     Except as herein otherwise expressly provided, any monies received by the
Trustee from the Corporation pursuant to the foregoing provisions of this
Article, or as a result of legal or other proceedings or from any trustee in
bankruptcy or liquidator of the Corporation, shall be applied, together with any
other monies in the hands of the Trustee available for such purpose, as follows:

     (i)     first, in payment or in reimbursement to the Trustee of its
             reasonable compensation, costs, charges, expenses, borrowings,
             advances or other monies furnished or provided by or at the
             instance of the Trustee in or about the execution of its trusts
             under, or otherwise in relation to, this Indenture, with interest
             thereon as herein provided;

     (ii)    second, subject as otherwise herein provided, in payment rateably
             and proportionately to the holders of Debentures of the principal
             of and accrued and unpaid interest and interest on amounts in
             default on the Debentures which shall then be outstanding in the
             priority of principal first and then accrued and unpaid interest
             and interest on amounts in default unless otherwise directed by
             Extraordinary Resolution and, in that case, in such order of
             priority as between principal and interest as may be directed by
             such resolution; and

     (iii)   third, in payment of the surplus, if any, of such monies to the
             Corporation or its assigns;

provided, however, that no payment shall be made pursuant to clause (ii) above
in respect of the principal, premium, if any, of, or interest on, any Debenture
held, directly or indirectly, by or for the benefit of the Corporation or any
Subsidiary of the Corporation provided that only those Debentures which have
been certified to the Trustee as so owned shall be disregarded (other than any
Debenture pledged for value and in good faith to a person other than the
Corporation or any Subsidiary but only to the extent of such person's interest
therein) except subject to the prior payment in full of the principal and
interest on all Debentures which are not so held.
<PAGE>

                                     - 37 -

SECTION 6.7 - DISTRIBUTION OF PROCEEDS

     Payments to holders of Debentures pursuant to clause (ii) of Section 6.6
shall be made as follows:

     (i)    at least 15 days' notice of every such payment shall be given in the
            manner provided in Section 12.2 specifying the time when and the
            place or places where the Debentures are to be presented and the
            amount of the payment and the application thereof as between
            principal and interest;

     (ii)   payment on any Debenture shall be made upon presentation thereof at
            any one of the places specified in such notice and any such
            Debenture thereby paid in full shall be surrendered, otherwise a
            memorandum of such payment shall be endorsed thereon; but the
            Trustee may in its discretion dispense with presentation and
            surrender or endorsement in any special case upon such indemnity
            being given as it shall deem sufficient;

     (iii)  from and after the date of payment specified in the notice,
            interest shall accrue only on the amount owing on each Debenture
            after giving credit for the amount of the payment specified in such
            notice unless the Debenture in respect of which such amount is owing
            be duly presented on or after the date so specified and payment of
            such amount is not made; and

     (iv)   the Trustee shall not be bound to apply or make any partial or
            interim payment of any monies coming into its hands if the amount so
            received by it, after reserving therefrom such amount as the
            Trustee may think necessary to provide for the payments mentioned in
            clause (i) of Section 6.6, is insufficient to make a distribution of
            at least 5% of the aggregate principal amount of the outstanding
            Debentures, but it may retain the monies so received by it and
            invest or deposit the same as provided in Section 10.4 until the
            monies or the investments representing the same, with the income
            derived therefrom, together with any other monies for the time being
            under its control, shall be sufficient for the said purpose or until
            it shall consider it advisable to apply the same in the manner
            hereinbefore set forth. The foregoing in this clause (iv) shall,
            however, not apply to a final payment in distribution hereunder.

SECTION 6.8 - REMEDIES CUMULATIVE

     No remedy herein conferred upon or reserved to the Trustee or upon or to
the holders of Debentures is intended to be exclusive of any other remedy, but
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now existing or hereafter to exist by law
or by statute.

<PAGE>
                                     - 38 -

SECTION 6.9 - JUDGMENT AGAINST THE CORPORATION

     The Corporation covenants and agrees with the Trustee that, in case of any
judicial or other proceeding to enforce the rights of the Debentureholders,
judgment may be rendered against it in favour of the Debentureholders or in
favour of the Trustee, as trustee for the Debentureholders, for any amount which
may remain due in respect of the Debentureholders and the interest thereon and
any other monies owing hereunder.

SECTION 6.10 - IMMUNITY OF SHAREHOLDERS AND OTHERS

     Subject to the applicable laws, the Debentureholders and the Trustee hereby
waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any past, present or future incorporator,
shareholder, director or officer or agent of the Corporation or of any successor
company for the payment of the principal of or interest on any of the Debentures
or on any covenant, agreement, representation or warranty by the Corporation
herein or in the Debenture Certificates contained.

SECTION 6.11 - TRUSTEE APPOINTED ATTORNEY

     The Corporation hereby irrevocably appoints the Trustee to be the attorney
of the Corporation in the name and on behalf of the Corporation to execute any
instruments and do any acts and things which the Corporation ought to execute
and do, and has not executed or done, under the covenants and provisions
contained in this Indenture and generally to use the name of the Corporation in
the exercise of all or any of the powers hereby conferred on the Trustee, with
full powers of substitution and revocation.

                                  ARTICLE VII
                           SATISFACTION AND DISCHARGE

SECTION 7.1 - CANCELLATION

     All Debentures shall forthwith after full payment thereof be cancelled by
the Trustee and, if required by the Corporation, the Trustee shall furnish to
the Corporation a certificate in respect of the Debentures so cancelled.

SECTION 7.2 - NON-PRESENTATION OF DEBENTURES

     If the holder of any Debenture shall fail to present the Debentures either
for payment or for satisfaction by way of issuance of Shares pursuant to Section
3.10 on the date on which the principal thereof and/or the interest thereon or
represented thereby becomes payable either at maturity or on redemption or
otherwise or shall not accept payment or satisfaction thereof and give such
receipt therefor (if any) as the Trustee may require:
<PAGE>
                                      -39-

     (a)  the Corporation shall be entitled to pay or deliver to the Trustee and
          direct it to set aside; or

     (b)  in respect of monies in the hands of the Trustee which may or should
          be applied to the payment of the Debentures, the Corporation shall be
          entitled to direct the Trustee to set aside;

the principal monies, Shares and/or the interest, as the case may be, in trust
to be paid or delivered to the holder of such Debenture, without further
interest, upon due presentation and surrender thereof in accordance with the
provisions of this Indenture; and thereupon the principal monies, Shares and/or
the interest payable on or represented by each Debenture in respect whereof
such monies and/or Shares have been set aside shall be deemed to have been paid
or issued and thereafter such Debentures shall not be considered as outstanding
hereunder and the holders thereof shall thereafter have no right in respect
thereof except that of receiving payment of the monies or delivery of Shares
(together with any distributions or dividends received by the Trustee in
respect of such Shares), as the case may be, so set aside by the Trustee
(without any interest) upon due presentation and surrender thereof, subject
always to the provisions of Section 7.3.

SECTION 7.3 -- REPAYMENT OF UNCLAIMED MONIES

     Any monies and/or Shares set aside under Section 7.2 and not claimed by and
paid to holders of Debentures as provided in Section 7.2 within two years after
the date of such setting aside shall be repaid to the Corporation by the Trustee
and thereupon the Trustee shall be released from all further liability with
respect to such monies and thereafter the holders of the Debentures in respect
of which such monies and/or Shares were so repaid to the Corporation shall have
no rights in respect thereof except to obtain payment of the monies due thereon
or the delivery of Shares (without interest) from the Corporation up to such
time as the right to proceed against the Corporation for recovery of such
monies has become statute barred under the laws of the Province of Ontario.
Interest earned on any such monies shall be paid from time to time by the
Trustee to the Corporation.

SECTION 7.4 -- DISCHARGE

     The Trustee shall at the request of the Corporation release and discharge
this Indenture and execute and deliver such instruments as it shall be advised
by Counsel are requisite for that purpose and to release the Corporation from
its covenants herein contained (other than the provisions relating to the
indemnification of the Trustee) upon proof being given to the reasonable
satisfaction of the Trustee that the principal of and interest (including
interest on amounts in default, if any) on all the Debentures and all other
monies payable hereunder have been paid or satisfied or that, all the Debentures
having matured or having been duly called for redemption, payment of the
principal of and interest (including interest on amounts in default, if any) on
such Debentures and of all other monies payable hereunder has been duly and
effectually provided for in accordance with the provisions hereof.

<PAGE>

                                     - 40 -

                                  ARTICLE VIII
                          MEETINGS OF DEBENTUREHOLDERS

SECTION 8.1 - RIGHT TO CONVENE MEETINGS

     The Trustee may at any time and from time to time, and shall on receipt of
a written request of the Corporation or of a Debentureholders' Request, convene
a meeting of the Debentureholders provided that the Trustee is indemnified to
its reasonable satisfaction and receives reasonable funding by and from the
Corporation or by and from the Debentureholders signing such Debentureholders'
Request against the costs which may be incurred in connection with the calling
and holding of such meeting. If the Trustee fails to convene a meeting within 30
days after the receipt of a written request of the Corporation or
Debentureholders' Request and indemnity and funding given as aforesaid, the
Corporation or such Debentureholders, as the case may be, may convene such
meeting. Every such meeting shall be held in the City of Toronto or at such
other place as may be approved or determined by the Trustee.

SECTION 8.2 - NOTICE

     At least 15 days' prior notice of any meeting of Debentureholders shall be
given to the Debentureholders in the manner provided for in Section 12.2 and a
copy of such notice shall be delivered to the Trustee unless the meeting has
been called by it, and to the Corporation unless the meeting has been called by
it. Such notice shall state the time and place of the meeting, the general
nature of the business to be transacted and shall contain such information as is
reasonably necessary to enable the Debentureholders to make a reasoned decision
on any matter to be voted on but it shall not be necessary for any such notice
to set out any of the provisions of this Article VIII. The notice convening any
such meeting may be signed by an appropriate officer of the Trustee or of the
Corporation or the person designated by such Debentureholders, as the case may
be.

SECTION 8.3 - CHAIRMAN

     The Trustee may nominate in writing an individual to be Chairman of the
meeting and if no individual is so nominated, or if the individual so nominated
is not present within 15 minutes after the time fixed for the holding of the
meeting, the Debentureholders present in person or by proxy shall appoint an
individual present to be Chairman. The Chairman of the meeting need not be a
Debentureholder.

SECTION 8.4 - QUORUM

     Subject to the provisions of Section 8.11, at any meeting of the
Debentureholders a quorum shall consist of Debentureholders present in person or
represented by proxy and holding at least 25% in principal amount of the
Debentures then outstanding, provided that at least two persons entitled to vote
thereat are personally present. If a quorum of the Debentureholders shall not be
present within one half-hour from the time fixed for holding any meeting, the
meeting, if summoned by the Debentureholders or on a Debentureholders' Request,
shall be dissolved. In any other case the
<PAGE>
                                     - 41 -

meeting shall be adjourned to the same day in the next week (unless such day is
a non-Business Day in which case it shall be adjourned to the next following
Business Day) at the same time and place to the extent possible and, subject to
the provisions of Section 8.11, no notice of the adjournment need be given. Any
business may be brought before or dealt with at an adjourned meeting which could
have been dealt with at the original meeting in accordance with the notice
calling the same. At the adjourned meeting the Debentureholders present in
person or represented by proxy shall from a quorum and may transact the business
for which the meeting was originally convened, notwithstanding that they may not
hold at least 25% in principal amount of the Debentures then outstanding. No
business shall be transacted at any meeting unless a quorum is present at the
commencement of business.

SECTION 8.5 - POWER TO ADJOURN

     The Chairman of any meeting at which a quorum of the Debentureholders is
present may, with the consent of the meeting, adjourn any such meeting, and no
notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.

SECTION 8.6 - SHOW OF HANDS

     Every question submitted to a meeting shall be decided in the first place
by a majority of the votes given on a show of hands except that votes on an
Extraordinary Resolution shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the Chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.

SECTION 8.7 - POLL AND VOTING

     On every Extraordinary Resolution, and when demanded by the Chairman or by
one or more of the Debentureholders acting in person or by proxy on any other
question submitted to a meeting and after a vote by show of hands, a poll shall
be taken in such manner as the Chairman shall direct. Questions other than those
required to be determined by Extraordinary Resolution shall be decided by a
majority of the votes cast on the poll. On a show of hands, every person who is
present and entitled to vote, whether as a Debentureholder or as proxy for one
or more absent Debentureholders, or both, shall have one vote. On a poll, each
Debentureholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each $1,000
principal amount of Debentures then held by him. A proxy need not be a
Debentureholder. The Chairman of any meeting shall be entitled, both on a show
of hands and on a poll, to vote in respect of the Debentures, if any, held or
presented by him.
<PAGE>
                                     - 42 -

SECTION 8.8 - REGULATIONS

(1)  Subject to the provisions of this Indenture, the Trustee or the Corporation
with the approval of the Trustee may from time to time make and from time to
time vary such regulations as it shall consider necessary for:

     (a)  the deposit of instruments appointing proxies at such place and time
          as the Trustee, the Corporation or the Debentureholders convening the
          meeting, as the case may be, may in the notice convening the meeting
          direct;

     (b)  the deposit of instruments appointing proxies at some approved place
          other than the place at which the meeting is to be held and enabling
          particulars of such instruments appointing proxies to be mailed,
          cabled or telegraphed or telecopied before the meeting to the
          Corporation or to the Trustee at the place where the same is to be
          held and for the voting of proxies so deposited as though the
          instruments themselves were produced at the meeting;

     (c)  the form of the instrument of proxy; and

     (d)  generally for the calling of meetings of Debentureholders, including
          setting a record date for determining Debentureholders entitled to
          receive notice of the meeting and the conduct of business thereat.

(2)  Any regulations so made shall be binding and effective and the votes given
in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Debentureholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 8.9), shall be Debentureholders or persons
holding proxies of Debentureholders.

SECTION 8.9 - CORPORATION, TRUSTEE AND COUNSEL MAY BE REPRESENTED

     The Corporation and the Trustee, by their respective directors, officers
and employees, and the counsel for each of the Corporation, the Debentureholders
and the Trustee may attend any meeting of the Debentureholders, but shall have
no vote as such.

SECTION 8.10 - POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION

     In addition to all other power conferred upon them by any other provisions
of this Indenture or by law, the Debentureholders at a meeting shall have the
power, exercisable from time to time by Extraordinary Resolution:

     (a)  to sanction any change of any provision of the Debentures or of this
          Indenture or to any modification, alteration, compromise or
          arrangement of the rights of Debentureholders and/or the Trustee in
          its capacity as trustee hereunder or on behalf of the
<PAGE>
                                      -43-

          Debentureholders against the Corporation, whether such rights arise
          under this Indenture or the Debentures or otherwise;

     (b)  to amend or repeal any Extraordinary Resolution previously passed or
          sanctioned by the Debentureholders;

     (c)  to direct or authorize the Trustee, subject to funding and
          indemnification, to enforce any of the covenants on the part of the
          Corporation contained in this Indenture or the Debenture Certificates
          or to enforce any of the rights of the Debentureholders in any manner
          specified in such extraordinary resolution or to refrain from
          enforcing any such covenant or right;

     (d)  to waive and direct the Trustee to waive any default on the part of
          the Corporation in complying with any provisions of this Indenture or
          the Debenture Certificates either unconditionally or upon any
          conditions specified in such extraordinary resolution;

     (e)  to restrain any Debentureholder from taking or instituting any suit,
          action or proceeding against the Corporation for the enforcement of
          any of the covenants on the part of the Corporation contained in this
          Indenture or the Debenture Certificate or to enforce any of the rights
          of the Debentureholders;

     (f)  to direct any Debentureholder who, as such, has brought any suit,
          action or proceeding to stay or discontinue or otherwise deal with any
          such suit, action or proceeding, upon payment of the costs, charges
          and expenses reasonably and properly incurred by such Debentureholder
          in connection therewith;

     (g)  power to assent to any judgment, compromise or arrangement with any
          creditor or creditors or any class or classes of creditors, whether
          secured or otherwise, and with holders of any shares or other
          securities of the Corporation;

     (h)  power to appoint a committee with power and authority (subject to such
          limitations, if any, as may be prescribed in the resolution) to
          exercise, and to direct the Trustee to exercise, on behalf of the
          Debentureholders, such of the powers of the Debentureholders as are
          exercisable by extraordinary or other resolutions as shall be included
          in the resolution appointing the committee. The resolution making such
          appointment may provide for payment of the expenses and disbursements
          of and compensation to such committee. Such committee shall consist of
          such number of persons as shall be prescribed in the resolution
          appointing it and the members need not be themselves Debentureholders.
          Subject to the terms of the resolution appointing it, every such
          committee may elect its chairman and may make regulations respecting
          its quorum, the calling of meetings, the filling of vacancies
          occurring in its number and its procedure generally. Such regulations
          may provide that the committee may act at a meeting at which a quorum
          is present or may act by instrument signed by the number of members
          thereof necessary to constitute a quorum. All acts of any such
          committee within the authority delegated to it shall be binding upon
          all Debentureholders. Neither
<PAGE>

                                      -44-

          the committee nor any member thereof shall be liable for any loss
          arising from or in connection with any action taken or omitted to be
          taken by them in good faith;

     (i)  power to sanction the exchange of the Debentures for or the conversion
          thereof into shares, bonds, debentures or other securities or
          obligations of the Corporation or of any company formed or to be
          formed;

     (j)  power, notwithstanding Section 5.5, to authorize the Corporation and
          the Trustee to grant extensions of time for payment of interest on
          any of the Debentures, whether or not the interest of which payment
          is extended is at the time due or overdue;

     (k)  power to amend, alter or repeal any extraordinary resolution
          previously passed or sanctioned by the Debentureholders or by any
          committee appointed pursuant to clause (h) of this Section 8.10; and

     (l)  power to remove the Trustee from office and appoint a new Trustee; and

     (m)  power to sanction any scheme for the reconstruction or reorganization
          of the Corporation or for the consolidation, amalgamation or merger
          of the Corporation with any other corporation or for the sale,
          leasing, transfer or other disposition of the undertaking, property
          and assets of the Corporation or any part hereof, provided that no
          such sanction shall be necessary in respect of any such transaction
          if the provisions of Section 9.3 shall have been complied with.

SECTION 8.11 - MEANING OF EXTRAORDINARY RESOLUTION

(1)  The expression "EXTRAORDINARY RESOLUTION" when used in this Indenture
means, subject as hereinafter in this Section 8.11 and in Section 8.14
provided, a resolution proposed at a meeting of Debentureholders duly convened
for that purpose and held in accordance with the provision of this Article VIII
at which there are present in person or represented by proxy Debentureholders
holding at least 50% of the aggregate principal amount of Debentures then
outstanding and passed by the affirmative votes of Debentureholders not less
than 66-2/3% of the aggregate principal amount of Debentures that are
represented at the meeting and voted on the poll upon such resolution.

(2)  If, at any meeting called for the purpose of passing an extraordinary
resolution, Debentureholders holding at least 50% in principal amount of the
Debentures then outstanding are not present in person or by proxy within one
half-hour after the time appointed for the meeting, then the meeting shall be
adjourned to such day, being no less than five and no more than 10 days later,
and to such place and time as may be appointed by the Chairman. Not less than
three days' prior notice shall be given of the time and place of such adjourned
meeting in the manner provided in Section 12.1 and 12.2. Such notice shall
state that at the adjourned meeting the Debentureholders present in person or
represented by proxy shall form a quorum but it shall not be necessary to set
forth the purposes for which the meeting was originally called or any other
particulars. At the adjourned meeting the Debentureholders present in person or
represented by proxy shall form a quorum and may transact the business for
which the meeting was originally convened and a resolution proposed at such
adjourned

<PAGE>
                                     - 45 -

meeting and passed by the requisite vote as provided in Subsection 8.11(1) shall
be an extraordinary resolution within the meaning of this Indenture
notwithstanding that Debentureholders holding at least 50% in principal amount
of the aggregate number of Debentures then outstanding may not be present in
person or represented by proxy at such adjourned meeting.

(3)  Votes on an Extraordinary Resolution shall be given on a poll and no
demand for a poll on an extraordinary resolution shall be necessary.

(4)  Notwithstanding anything contained in this Indenture, any Extraordinary
Resolution:

     (a)  to modify the percentage or number of Debentureholders that are
     required under this Indenture to sign a resolution or affirmatively vote at
     a meeting of Debentureholders to pass a resolution to approve a
     modification of this Indenture or the Debentures, or

     (b)  to modify the percentage or number of Debentureholders required to
     constitute a quorum for meeting called to approve a resolution referred to
     in Subsection 8.11(4)(a),

must, in addition to any other approval required in this Indenture, be approved
in writing by the holders of at least 90% of the aggregate principal amount of
all Debentures then outstanding.

SECTION 8.12 - POWERS CUMULATIVE

     It is hereby declared and agreed that any one or more of the powers or any
combination of the powers in this Indenture stated to be exercisable by the
Debentureholders by extraordinary resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Debentureholders to exercise such powers or combination of powers then or
thereafter from time to time.

SECTION 8.13 - MINUTES

     Minutes of all resolutions and proceedings at every meeting of
Debentureholders shall be made and duly entered in books to be from time to time
provided for that purpose by the Trustee at the expense of the Corporation, and
any such minutes as aforesaid, if signed by the Chairman of the meeting at which
such resolutions were passed or proceedings taken or by the Chairman of the next
succeeding meeting of the Debentureholders, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes shall have been made shall be deemed
to have been duly convened and held, and all resolutions passed thereat or
proceedings taken shall be deemed to have been duly passed and taken.
<PAGE>
                                     - 46 -

SECTION 8.14 - INSTRUMENTS IN WRITING

     All actions which may be taken and all powers that may be exercised by the
Debentureholders at a meeting held as provided in this Article VIII may also be
taken and exercised by Debentureholders holding at least 66 2/3% of the
principal amount of Debentures then outstanding by an instrument in writing
signed in one or more counterparts by such Debentureholders in person or by
attorney duly appointed in writing, and the expression "EXTRAORDINARY
RESOLUTION" when used in this Indenture shall include an instrument so signed.

SECTION 8.15 - BINDING EFFECT OF RESOLUTIONS

     Every resolution and every Extraordinary Resolution passed in accordance
with the provisions of this Article VIII at a meeting of Debentureholders shall
be binding upon all the Debentureholders, whether present at or absent from such
meeting, and every instrument in writing signed by Debentureholders in
accordance with Section 8.14 shall be binding upon all the Debentureholders,
whether signatories thereto or not, and each and every Debentureholder and the
Trustee (subject to the provisions for indemnity and funding herein contained)
shall be bound to give effect to every such resolution and instrument in
writing. In the case of an instrument in writing the Trustee shall give notice
in the manner contemplated in Section 12.2 of the effect of the instrument in
writing to all Debentureholders and the Corporation as soon as is reasonably
practicable.

SECTION 8.16 - HOLDINGS BY THE CORPORATION OR SUBSIDIARIES OF THE CORPORATION
DISREGARDED

     In determining whether Debentureholders holding the requisite number of
Debentures are present at a meeting of Debentureholders for the purpose of
determining a quorum or have concurred in any consent, waiver, extraordinary
resolution, Debentureholders' Request or other action under this Indenture,
Debentures owned legally or beneficially by the Corporation or any Subsidiary of
insider of the Corporation, as defined in the Securities Act (Ontario), shall be
disregarded.

SECTION 8.17 - EVIDENCE OF RIGHTS OF DEBENTUREHOLDERS

     Any request, direction, notice, consent or other instrument which this
Indenture may require or permit to be signed or executed by the Debentureholders
may be in any number of concurrent instruments of similar tenor and may be
signed or executed by such Debentureholders in person or by attorney duly
appointed in writing. Proof of the execution of any such request, direction,
notice, consent or other instrument or of a writing appointing any such attorney
shall be sufficient for any purpose of this Indenture if made in the following
manner, namely, the fact and date of the execution by a person of such request,
direction, notice, consent or other instrument or writing may be provided by the
certificate of any notary public, or other officer authorized to take
acknowledgements of deeds to be recorded at the place where such certificate is
made, that the person signing such request, direction, notice, consent or other
instrument or writing acknowledged to him the execution thereof, or by an
affidavit of a witness of such execution or in any other manner which the
Trustee may consider adequate.
<PAGE>
                                     -47-

     The Trustee may, nevertheless, in its discretion require further proof in
cases where it considers further proof is desirable or may accept such other
proof as it shall consider proper.

                                   ARTICLE IX
                            SUPPLEMENTAL INDENTURES

SECTION 9.1 -- SUPPLEMENTAL INDENTURES

     From time to time the Corporation and the Trustee may, subject to the
provisions of this Indenture, and they shall, when so directed pursuant to this
Indenture, execute and deliver by their proper officers, indentures, or
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more of the following purposes:

     (a)  adding to the provisions hereof such additional covenants and
          enforcement provisions as in the opinion of counsel are necessary or
          advisable, for the protection of the Debentureholders;

     (b)  giving effect to any Extraordinary Resolution passed as provided in
          Article VIII;

     (c)  making such provisions not inconsistent with this Indenture as may be
          necessary or desirable with respect to matters or questions arising
          hereunder provided that such provisions are not, in the opinion of
          the Trustee and in the opinion of Counsel, prejudicial to the
          interests of the Debentureholders or inconsistent with the terms of
          this Indenture;

     (d)  adding to or amending the provisions hereof in respect of the
          transfer of Debentures, making provision for the redemption or
          conversion of the Debentures, and making any modification in the form
          of the certificates for the Debentures which does not affect the
          substance thereof; and

     (e)  for any other purpose not inconsistent with the terms of this
          Indenture, including the correction or rectification of any
          ambiguities, defective or inconsistent provisions, errors or
          omissions herein, provided that, in the opinion of the Trustee and in
          the opinion of Counsel, the rights of the Trustee and of the
          Debentureholders are in no way prejudiced thereby.

Notwithstanding the foregoing, no amendment or supplement to this Indenture may
be made which would have the effect of denying exemption from withholding tax
provided in Subparagraph 212(1)(b)(vii) of the Income Tax Act (Canada) and the
Trustee may at its sole discretion decline to enter into any supplemental
indenture which in its opinion may not afford adequate protection to the
Trustee when the same shall become operative.

<PAGE>
                                      -48-

SECTION 9.2 -- PRIOR APPROVALS

     Notwithstanding anything to the contrary in this Indenture, no supplement
or amendment to this Indenture or to the terms of the Debentures may be made
without the consent of The Toronto Stock Exchange if, at the time, the
Debentures or the Shares are listed on such exchange.

SECTION 9.3 -- SUCCESSOR CORPORATIONS

     The Corporation shall not, directly or indirectly, sell, transfer or
otherwise dispose of all or substantially all of its property and assets as an
entirety to any other corporation and shall not amalgamate or merge with or
into any other corporation (any such other corporation being herein referred to
as a "SUCCESSOR CORPORATION") unless:

     (i)     the successor corporation is a corporation incorporated:

             (A)  under the laws of Canada or any province thereof, or

             (B)  in the United States, Australia, New Zealand or any country
                  in the European Union as of the date hereof if, in the opinion
                  of the Trustee, acting reasonably, the Debentureholders are
                  not economically disadvantaged in any material respect as a
                  result of such transaction (including, without limitation, as
                  a result of the fact that the successor corporation is
                  incorporated or resident in a jurisdiction outside Canada).
                  For purposes of rendering its opinion under this paragraph
                  9.3(i)(B), the Trustee shall be entitled to hire such experts
                  or advisors as it deems necessary and to rely upon the advice
                  of such experts and advisors in supporting its opinion;

     (ii)    the successor corporation shall execute, prior to or
             contemporaneously with the consummation of any such transaction, an
             indenture supplemental hereto together with such other instruments
             as are satisfactory to the Trustee and in the opinion of Counsel
             are necessary or advisable to evidence the assumption by the
             successor corporation of the due and punctual payment of all the
             Debentures and the interest thereon and all other moneys payable
             hereunder and the covenant of the successor corporation to pay the
             same and its agreement to observe and perform all the covenants and
             obligations of the Corporation under this Indenture:

     (iii)   such transaction shall to the satisfaction of the Trustee and in
             the opinion of Counsel be upon such terms as substantially to
             preserve and not to impair any of the rights and powers of the
             Trustee or of the Debentureholders hereunder and will not have the
             effect of denying the exemption from withholding tax provided in
             Subparagraph 212(1)(b)(vii) of the Income Tax Act (Canada); and

     (iv)    no condition or event shall exist as to the Corporation or the
             successor corporation either at the time of or immediately after
             the consummation of any such transaction and after giving full
             effect thereto or immediately after the successor corporation
             complying
<PAGE>
                                      -49-

             with the provisions of clause (i) above which constitute or would
             constitute an event of default hereunder.

SECTION 9.4 - VESTING OF POWERS IN SUCCESSOR

     Whenever the conditions of Section 9.3 have been duly observed and
performed, the successor corporation shall possess and from time to time may
exercise each and every right and power of the Corporation under this Indenture
in the name of the Corporation or otherwise and any act or proceeding by any
provision of this Indenture required to be done or performed by any directors or
officers of the Corporation may be done and performed with like force and effect
by the directors or officers of such successor corporation.

                                   ARTICLE X
                             CONCERNING THE TRUSTEE

SECTION 10.1 - TRUST INDENTURE LEGISLATION

(1)  In this Article, the term "APPLICABLE LEGISLATION" means the provisions of
any statute of Canada or a province thereof, and of regulations under any such
named or other statute, relating to trust indentures and/or to the rights,
duties and obligations of trustees and of corporations under trust indentures,
to the extent that such provisions are at the time in force and applicable to
this Indenture.

(2)  If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with a mandatory requirement of Applicable Legislation, such
mandatory requirement shall prevail.

(3)  The Corporation and the Trustee agree that each will at all times in
relation to this Indenture and any action to be taken hereunder observe and
comply with and be entitled to the benefit of Applicable Legislation.

SECTION 10.2 - RIGHTS AND DUTIES OF TRUSTEE

(1)  In the exercise of the rights and duties prescribed or conferred by the
terms of this Indenture, the Trustee shall act honestly and in good faith with a
view to the best interests of the Debentureholders and shall exercise that
degree of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this Indenture shall be
construed to relieve the Trustee from, or require any other person to indemnify
the Trustee against, liability for its own negligence, wilful misconduct or bad
faith.

(2)  The Trustee shall not be bound to give any notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall have been required so to do under the terms hereof; nor shall the
Trustee be required to take notice of any default hereunder, unless and until
notified in writing of such default, which notice shall distinctly specify the
<PAGE>
                                      -50-

default desired to be brought to the attention of the Trustee and in the absence
of any such notice the Trustee may for all purposes of this Indenture
conclusively assume that no default has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein. Any such notice shall in no way limit any
discretion herein given the Trustee to determine whether or not the Trustee
shall take action with respect to any default.

(3)  Subject only to Subsection 10.2(1), the Trustee shall not be bound to do or
take any act, action or proceeding for the enforcement of any of the obligations
of the Corporation under this Indenture unless and until it shall have received
a Debentureholders' Request specifying the act, action or proceeding which the
Trustee is requested to take. The obligation of the Trustee to commence or
continue any act, action or proceeding for the purpose of enforcing any rights
of the Trustee or the Debentureholders hereunder shall be conditional upon the
Debentureholders furnishing, when required by notice in writing by the Trustee,
sufficient funds to commence or continue such act, action or proceeding and an
indemnity reasonably satisfactory to the Trustee to protect and hold harmless
the Trustee against the costs, charges and expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof. None
of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers unless indemnified as aforesaid.

(4)  The Trustee may, before commencing or at any time during the continuance of
any such act, action or proceeding, require the Debentureholders, at whose
instance it is acting, to deposit with the Trustee the Debentures held by them,
for which Debentures the Trustee shall issue receipts.

(5)  Every provision of this Indenture that by its terms relieves the Trustee of
liability or entitles it to rely upon any evidence submitted to it is subject to
the provisions of Applicable Legislation, of this Section 10.2 and of Section
10.3.

SECTION 10.3 - EVIDENCE, EXPERTS AND ADVISERS

(1)  In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Corporation shall furnish to the Trustee such
additional evidence of compliance with any provision hereof in such form as may
be prescribed by Applicable Legislation, or as the Trustee may reasonably
require by written notice to the Corporation.

(2)  In the exercise of its rights and duties hereunder, the Trustee may, if it
is acting in good faith, act and rely as to the truth of the statements and the
accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, written requests, consents, or orders of the Corporation,
certificates of the Corporation or other evidence furnished to the Trustee,
provided that such evidence complies with Applicable Legislation and the Trustee
examines the same and determines that such evidence complies with the applicable
requirements of this Indenture.

(3)  Whenever Applicable Legislation requires the evidence referred to in
Subsection 10.3(1) to be in the form of a statutory declaration, the Trustee may
accept such statutory declaration in lieu
<PAGE>
                                      -51-

of a certificate of the Corporation required by any provision hereof. Any such
statutory declaration may be made by one or more of the president or a
vice-president of the Corporation.

(4)  Proof of the execution of an instrument in writing, including a
Debentureholders' Request, by any Debentureholder may be made by the certificate
of a notary public, or other officer with similar powers, that the person
signing such instrument acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution or in any other manner which the
Trustee may consider adequate.

(5)  The Trustee may employ or retain such counsel, accountants, appraisers or
other experts or advisers as it may reasonably require for the purpose of
determining and discharging its duties hereunder and may pay reasonable
remuneration for all services so performed by any of them, without taxation of
costs of any counsel, and shall not be responsible for any misconduct on the
part of any of them. Any remuneration so paid by the Trustee shall be repaid to
the Trustee by the Corporation in accordance with Section 5.2.

SECTION 10.4 - DOCUMENTS, MONIES, ETC. HELD BY TRUSTEE

(1)  Any securities, documents or title or other instruments that may at any
time be held by the Trustee subject to the trusts hereof may be placed in the
deposit vaults of the Trustee or of any Canadian chartered bank or trust company
or deposited for safekeeping with any such bank or trust company.

(2)  Unless otherwise provided in this Indenture, any monies held by or on
behalf of the Trustee which under the terms of this Indenture may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee, may be invested and reinvested in the name or under the
control of the Trustee in Authorized Investments, provided such securities are
expressed to mature within 90 days after their purchase by the Trustee, on the
written direction of the Corporation until the Trustee shall have declared the
principal of and interest on the Debentures to be due and payable. Any direction
by the Corporation to the Trustee as to the investment of the monies shall be in
writing and shall be provided to the Trustee no later than 9:00 a.m. on the day
on which the investment is to be made. Any such direction received by the
Trustee after 9:00 a.m. or received on a non-Business Day, shall be deemed to
have been given prior to 9:00 a.m. the next Business Day.

(3)  Pending the investment of any monies as hereinbefore provided, such monies
may be deposited in the name of the Trustee in any chartered bank in Canada or
any loan or trust company authorized to accept deposits under the laws of Canada
or any province thereof at the rate of interest (if any) then current on similar
deposits.

(4)  Unless and until the Trustee shall have declared the principal of and
interest on the Debentures to be due and payable, the Trustee shall pay over to
the Corporation all interest received by the Trustee in respect of any
investments or deposits made pursuant to the provisions of this Section.
<PAGE>
                                      -52-

SECTION 10.5 -- ACTIONS BY TRUSTEE TO PROTECT INTERESTS

     Subject to the provisions of this Indenture and applicable law, the Trustee
shall have the power to institute and to maintain such actions and proceedings
as it may consider necessary or expedient to preserve, protect or enforce its
interests and the interests of the Debentureholders.

SECTION 10.6 -- TRUSTEE NOT REQUIRED TO GIVE SECURITY

     The Trustee shall not be required to give any bond or security in respect
of the execution of the trusts and powers of this Indenture or otherwise.

SECTION 10.7 -- PROTECTION OF TRUSTEE

     By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows, subject to
Subsection 10.2(1):

(1)  The Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Debenture Certificates (except the
representations contained in Sections 10.9 and 10.12 or in the certificate of
the Trustee on the Debenture Certificates) or be required to verify the same,
but all such statements or recitals are and shall be deemed to be made by the
Corporation.

(2)  Nothing herein contained shall impose any obligation on the Trustee to see
to or to require evidence of the registration or filing (or renewal thereof) of
this Indenture or any instrument ancillary or supplemental hereto.

(3)  The Trustee shall not be bound to give notice to any person of the
execution hereof.

(4)  The Trustee shall not incur any liability or responsibility whatsoever or
be in any way responsible for the consequence of any breach on the part of the
Corporation of any of the covenants herein contained or of any acts of any
directors, officers, employees, agents or servants of the Corporation.

(5)  The Corporation hereby indemnifies and saves harmless the Trustee and its
officers from and against any and all liabilities, losses, costs, claims,
actions or demands whatsoever which may be brought against the Trustee or which
it may suffer or incur as a result of or arising out of the performance of its
duties and obligations under this Indenture, save only in the event of the
negligent action, the negligent failure to act, or the wilful misconduct or bad
faith of the Trustee. It is understood and agreed that this indemnification
shall survive the termination or discharge of this Indenture or the resignation
or replacement of the Trustee.
<PAGE>
                                      -53-

SECTION 10.8 - REPLACEMENT OF TRUSTEE

     (1)  The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder by giving to the Corporation not less than 30
days' prior notice in writing or such shorter prior notice as the Corporation
may accept as sufficient. The Debentureholders by extraordinary resolution shall
have the power at any time to remove the existing Trustee and to appoint a new
trustee. In the event of the Trustee resigning or being removed as aforesaid or
being dissolved, becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Corporation shall forthwith appoint a new
trustee unless a new trustee has already been appointed by the Debentureholders.
Failing such appointment by the Corporation, the retiring Trustee at the
expense of the Corporation or any Debentureholder may apply to a justice of the
Ontario Court of Justice (General Division), on such notice as such justice may
direct, for the appointment of a new trustee. Any new trustee so appointed by
the Corporation or by the Court shall be subject to removal as aforesaid by the
Debentureholders. Any new trustee appointed under any provision of this Section
10.8 shall be a corporation authorized to carry on the business of a trust
company in each of the Provinces of Canada. On any such appointment the new
trustee shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as Trustee without
any further assurance, conveyance, act or deed. There shall be immediately
executed, at the expense of the Corporation, all such conveyances or other
instruments as may, in the opinion of counsel, be necessary or advisable for the
purpose of assuring the same to the new trustee. Any resignation or removal of
the Trustee and appointment of a successor trustee shall not become effective
until the successor trustee shall have executed an appropriate instrument
accepting such appointment and, at the request of the Corporation, the
predecessor Trustee, upon payment of its outstanding remuneration and expenses,
shall execute and deliver to the successor trustee an appropriate instrument
transferring to such successor trustee all rights and powers of the Trustee
hereunder and all securities, documents of title, or other instruments and all
monies and property held by the Trustee hereunder.

     (2)  Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Debentureholders thereof in the manner provided for in
Section 12.2.

     (3)  Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the trust
business of the Trustee, shall be the successor to the Trustee hereunder
without any further act on its part or of any of the parties hereto provided
that such corporation would be eligible for appointment as a new Trustee under
Subsection 10.8(1).

     (4)  Any Debentures certified but not delivered by a predecessor Trustee
may be certified by the successor trustee in the name of the predecessor or
successor trustee.

SECTION 10.9 - CONFLICT OF INTEREST

     (1)  The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest exists in the
Trustee's role as a fiduciary hereunder and agrees that in the event of a
material conflict of interest arising hereafter it will, within 90 days after
ascertaining that it has such a material conflict of interest, either eliminate
the same or resign its trust hereunder to a successor trustee approved by the
Corporation. If any such material conflict of interest

<PAGE>
                                      -54-

exists or hereafter shall exist, the validity and enforceability of this
Indenture and the Debenture Certificates shall not be affected in any manner
whatsoever by reason thereof.

(2)  The Trustee, in its personal or any other capacity, may buy, lend upon and
deal in securities of the Corporation and generally may contract and enter into
financial transactions with the Corporation or any Subsidiary of the
Corporation without being liable to account for any profit made thereby.

SECTION 10.10 -- ACCEPTANCE OF TRUST

     The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth.

SECTION 10.11 -- TRUSTEE NOT TO BE APPOINTED RECEIVER

     The Trustee and any person related to the Trustee shall not be appointed a
receiver or receiver and manager or liquidator of all or any part of the assets
or undertaking of the Corporation.

SECTION 10.12 -- AUTHORIZATION TO CARRY ON BUSINESS

     The Trustee represents to the Corporation that it is duly authorized and
qualified to carry on the business of a trust company in each of the Provinces
of Canada.

                                   ARTICLE XI
               SUBORDINATION OF DEBENTURES TO SENIOR OBLIGATIONS

SECTION 11.1 -- SUBORDINATION

     The payment of the principal of and interest payable on the Debentures
shall be subordinate and rank junior, to the extent and in the manner set forth
in this Article XI, to the prior payment in full of all Senior Obligations,
whether outstanding on the date of this Indenture or thereafter incurred. This
Indenture shall not restrict the Corporation from incurring additional
indebtedness or from mortgaging, pledging or charging its properties to secure
any indebtedness.

SECTION 11.2 -- PAYMENT ON DISSOLUTION OR WINDING-UP

(1)  In the event of any payment or distribution of assets of the Corporation
upon any liquidation, dissolution or winding-up (or similar proceeding) of the
Corporation, whether or not pursuant to any bankruptcy, insolvency,
receivership proceedings or upon any assignment for the benefit of any creditor
thereof, subject to the provisions of Section 11.6:

     (a)  the holders of all Senior Obligations shall first be entitled to
          receive payment in full of the principal thereof, and premium, if any,
          and interest thereon and all other amounts
<PAGE>
                                     - 55 -

          owing in respect thereof, or such payment shall be duly provided for,
          before the holders of the Debentures shall be entitled to receive any
          payment of or upon the principal of or interest on the Debentures;

     (b)  the Debentureholders by their acceptance of Debentures assign to the
          holders of Senior Obligations or the Designated Representatives
          thereof, for the purposes and to the extent set forth in this clause
          (b), all their right and title and interest to and in any payment or
          distribution of assets of the Corporation of any kind or character,
          whether in cash, property or securities, to which the Debentureholders
          or the Trustee (for their benefit) would be entitled but for the
          provisions of this Section 11.2, and the Trustee shall take such steps
          as may be necessary or appropriate to entitle the holders of Senior
          Obligations or the Designated Representatives thereof to receive such
          payment or distribution directly from the liquidating trustee or agent
          or other person making such payment or distribution, whether a trustee
          in bankruptcy, a receiver or other liquidating agent, rateably
          according to the aggregate amounts remaining unpaid on the Senior
          Obligations held or represented by each, all to the extent necessary
          to provide for payment of all Senior Obligations in full (after giving
          effect to any concurrent payment or distribution to the holders of
          such Senior Obligations or provision therefor), prior to any payment
          upon the principal of or interest on the Debentures; and

     (c)  in the event, notwithstanding the provisions of clauses (a) and (b) of
          this Subsection (1), any payment or distribution of assets of the
          Corporation of any kind or character (other than Shares or cash duly
          delivered upon the conversion of Debentures pursuant to Article IV
          hereof) in respect of the principal of or interest on the Debentures,
          whether in cash, property or securities, shall be received by the
          Trustee or by any Debentureholder before all Senior Obligations shall
          have been paid in full or duly provided for, such payment or
          distribution shall be held by the recipient in trust (which trust is
          hereby declared) for the benefit of, and shall be paid over to, the
          holders of Senior Obligations or the Designated Representatives
          thereof, rateably according to the aggregate amount remaining unpaid
          on such Senior Obligations represented by each, to the extent
          necessary to pay all Senior Obligations in full (after giving effect
          to any concurrent payment or distribution to the holders of such
          Senior Obligations or provision thereof).

The consolidation or amalgamation of the Corporation with, or the merger of the
Corporation into, another corporation or the sale, lease or other transfer of
its undertaking, property and assets as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided in
Article IX, shall be deemed not to be a winding-up for the purposes of this
Section 11.2 if such consolidation, amalgamation, merger, or the sale, lease or
other transfer is carried out in compliance with the conditions set forth in
Article IX.

(2)  For the purposes of ascertaining the persons entitled to participate in
any payment or distribution, the holders of Senior Obligations and other
indebtedness, the amount thereof or payable thereon, the amount or amounts
distributed thereon and all other facts pertinent thereto, the Trustee and the
Debentureholders shall be entitled to act and rely upon a certificate
addressed to the Trustee

<PAGE>
                                     - 56 -

and the Debentureholders of a trustee in bankruptcy or other liquidating agent
or of any other person making such payment or distribution.

SECTION 11.3 - SENIOR OBLIGATIONS' DEFAULT

     At any time that a default in the payment of an amount outstanding in
respect of Senior Obligations has occurred and is continuing, and the amount so
outstanding in the aggregate represents in excess of five percent (5%) of the
shareholders' equity of the Corporation determined in accordance with Generally
Accepted Accounting Principles, (any such event being in this Article XI
referred to as a "Senior Obligations' Default") and written notice of such
Senior Obligations' Default, containing reasonable particulars thereof
(including the detail of any calculation required to determine that there is a
Senior Obligations' Default), shall have been received by the Trustee and the
Corporation from the holder or holders of the affected Senior Obligations or the
Designated Representatives thereof, subject to Section 11.6:

     (a)  the Corporation shall not purchase or redeem any Debentures or make
          any payment of the principal of or interest on the Debentures; and

     (b)  if the Trustee shall receive from the Corporation or shall hold any
          amount for payment of the principal of or interest on the Debentures,

          (i)     the Trustee shall hold such amount in trust for the benefit of
                  the holders of Senior Obligations or the Designated
                  Representatives thereof rateably according to, and to the
                  extent of, the aggregate principal amount of each class of
                  such Senior Obligations remaining unpaid at either the time of
                  receipt by the Trustee of such amount from the Corporation or
                  the time of the occurrence of such Senior Obligations'
                  Default, whichever is later, and

          (ii)    the Trustee shall from time to time pay over to the holders
                  of each class of Senior Obligations or the Designated
                  Representatives thereof, from the amount so held in trust for
                  the benefit of such class, so much as shall at the time of
                  such payment by the Trustee have become due, and remain
                  unpaid, of the principal of, and premium, if any, and interest
                  on and all other amounts owing in respect of such class, or,
                  if the amount so due and unpaid shall be greater than the
                  amount so held in trust for the benefit of such class, then
                  the entire amount so held,

provided, however, that if such Senior Obligations' Default shall be cured or
waived, or all amounts that shall have become due for principal of, and premium,
if any, and interest on and all other amounts owing in respect of all Senior
Obligations shall have been paid or duly provided for (whether by the
Corporation or by application by the Trustee as aforesaid or otherwise), and the
Trustee shall have received a certificate of the Corporation to that effect from
the Corporation and either (x) shall have received a similar certificate from
the holder or holders of each class of Senior Obligations which
<PAGE>
                                     -57-

constitutes indebtedness of the Corporation incurred for monies borrowed by the
Corporation or others, or the Designated Representatives thereof, as to the
payment in full or due provision for the payment of all amounts due in respect
of such class, or (y) shall not, within 10 days after written request by the
Trustee to each such holder or the Designated Representative thereof, have
received a statement to the contrary from any such holder or Designated
Representative, such trust for the benefit of the holders of Senior Obligations
and the Designated Representatives thereof shall terminate and any amount still
held by the Trustee shall be applied by it for the purposes for which such
amount shall have been received from the Corporation as aforesaid. In the event
that the Trustee shall make any payment to any Debentureholder contrary to the
provisions of this clause (b), then such Debentureholder shall repay any amount
so received to the Trustee, to be held and applied by the Trustee in accordance
with the provisions of this clause (b). The Trustee shall not have any
obligation to institute a suit, action or proceeding to recover such amount
unless the holder or holders of any such class of Senior Obligations or the
Designated Representative thereof shall have made written request upon the
Trustee to institute such suit, action or proceeding and shall have offered to
the Trustee reasonable indemnity, funding and security against the costs,
expenses and liabilities to be incurred thereon or thereby.

SECTION 11.4 -- SUBROGATION TO SENIOR OBLIGATIONS

     Subject to the payment in full of all Senior Obligations or the making of
due provision for such payment, the holders of the Debentures shall be
subrogated to the rights of the holders of the Senior Obligations to receive
payments or distributions of assets of the Corporation applicable to such Senior
Obligations, to the extent of the application thereto of monies or other assets
which would have been received by the holders of Debentures but for the
provisions of this Article XI, until the principal of and all accrued and
unpaid interest on the Debentures shall be paid in full or duly provided for.

SECTION 11.5 -- RIGHTS OF DEBENTUREHOLDERS RESERVED

     The provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the holders of the Debentures and
the holders of Senior Obligations. Nothing in this Article XI or elsewhere in
this Indenture or in the Debentures is intended to or shall impair the
obligation of the Corporation, subject to the rights of the holders of the
Senior Obligations, to pay to the holders of the Debentures the principal of
and interest on the Debentures as and when the same shall become due and
payable in accordance herewith, or affect the relative rights of the holders of
the Debentures and creditors of the Corporation other than the holders of Senior
Obligations, nor shall anything herein or in the Debentures prevent the Trustee
or the holder of any Debenture from exercising all remedies otherwise permitted
by this Indenture upon default under the Debentures or this Indenture, subject
to the rights (if any), under this Article XI, of the holders of Senior
Obligations in respect of any payment or distribution of cash, property or
securities of the Corporation received upon the exercise of any such remedy.

<PAGE>
                                      -58-

SECTION 11.6 - EXCEPTIONS TO SUBORDINATION

     Notwithstanding any other provision of this Article XI or any provision of
the Debentures relating to subordination:

     (a)  if notice of redemption of any Debentures has been mailed, the amount
          necessary to provide for the redemption of such Debentures may be paid
          to the Trustee by the Corporation;

     (b)  any amounts (other than the amounts referred to in clause (c) of this
          Section 11.6) received by the Trustee from the Corporation in
          accordance with the provisions of this Indenture for the purpose of
          making any payments to holders of the Debentures shall be held in
          trust solely for the purpose of making such payments and the Trustee
          may pay or make, and any such holder may receive, any payment or
          distribution from any such amounts and the holders of the Senior
          Obligations and their Designated Representatives shall have no right
          to, or claim in respect of, such amounts, payments or distributions,
          either against the Trustee or such holders, if,

          (i)     in case of a redemption of Debentures, the Trustee shall not
                  have received, prior to the mailing of notice of such
                  redemption, from the Corporation or from the holders of any
                  Senior Obligations or the Designated Representative thereof,
                  written notice that (A) any liquidation, dissolution,
                  winding-up or assignment referred to in Subsection 11.2 has
                  commenced or (B) a Senior Obligations' Default has occurred
                  and is continuing, or

          (ii)    in the case of a deposit for the purposes of any other payment
                  to such holders, the Trustee shall not have received, on or
                  before the tenth day prior to the date on which such payment
                  to such holders is to be made, from the Corporation or from
                  the holders of any Senior Obligations or the Designated
                  Representative thereof, written notice that (A) any
                  liquidation, dissolution, winding-up or assignment referred to
                  in Subsection 11.2(1) has commenced or (B) a Senior
                  Obligations' Default has occurred and is continuing;

     (c)  this Article XI shall not be applicable to any funds which are
          deposited with the Trustee for the purposes of the redemption or
          retirement of Debentures and which constitute the proceeds of the
          substantially concurrent issuance of other debentures or notes
          maturing not earlier than the Debentures which have subordination
          provisions and sinking fund provisions (if any) not less favourable to
          the holders of Senior Obligations than those contained herein or the
          substantially concurrent sale by the Corporation of shares of its
          capital, or both; and

     (d)  this Article XI shall not be applicable to any cash received by the
          Trustee or the holder of any Debenture as a holder of Senior
          Obligations.
<PAGE>
                                      -59-

Notwithstanding this Article XI or any other provision of this Indenture or the
Debenture Certificates, unless and until the Trustee shall have received
written notice thereof as provided in this Article XI, the Trustee shall not be
charged with knowledge of (1) the existence of any facts which would prohibit
the making of any payment of monies by the Trustee or the application of such
monies by the Trustee in accordance with the terms hereof, or (2) the existence
or identification of Senior Obligations or the holders thereof. For such
purpose, the Trustee may act or rely on certificates or other documents filed
by the Corporation, a holder or holders of the Senior Obligations or their
Designated Representatives.

SECTION 11.7 - RENEWAL OR EXTENSION OF SENIOR OBLIGATIONS

(1)   The holders of any Senior Obligations may at any time in their
discretion renew or extend the time of payment of the Senior Obligations so
held or exercise any other of their rights under the Senior Obligations,
including, without limitation, the waiver of default thereunder, all without
notice to or assent from the holders of the Debentures or the Trustee.

(2)  No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of an indenture other agreement under which any class
of Senior Obligations shall have been issued or created or which evidences any
Senior Obligations, shall in any way alter or affect any of the provisions of
this Article XI or of the Debentures relating to the subordination thereof or
shall be construed as a waiver of an Event of Default under this Indenture.

SECTION 11.8 - AUTHORIZATION TO TRUSTEE

     Each holder of Debentures by his acceptance thereof irrevocably authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to assure the subordination provided for in this Article XI, and
appoints the Trustee his agent for any and all such purposes. Without
limitation of the foregoing, the Trustee, for and on behalf of the holders from
time to time of all the Debentures, is authorized and directed, at the expense
of the Corporation, to execute deeds or agreements of subordination from time
to time upon receipt of a written request of the Corporation to that effect.
Any deed or agreement of subordination executed pursuant to this Section 11.8
shall be conclusive evidence that the indebtedness therein specified is Senior
Obligations. The Trustee shall keep on file at its principal office in Toronto,
and shall deliver to the Corporation, a copy of each deed or agreement of
subordination executed and delivered by it pursuant to this Section 11.8.
Nothing contained in this Section 11.8 shall impair the rights of any holders
of Senior Obligations in whose favour a deed or agreement or subordination has
not been so executed and delivered.

SECTION 11.9 - RELATIONSHIP OF TRUSTEE

     The Trustee shall not have any duty or obligation to the holders of Senior
Obligations other than to perform such duties and obligations, and only such
duties and obligations, as are specifically set forth in this Article XI for
the benefit of the holders of Senior Obligations.

<PAGE>

                                     - 60 -

SECTION 11.10 - RESTRICTION ON PURCHASE OF DEBENTURES

     Subject to Section 11.6, the Corporation shall not purchase any Debentures
or make any payment of the principal of or interest on the Debentures or make
any other payments or distributions to any person with respect thereto if,
after giving effect to such action, there would exist any Senior Obligations'
Default or an event which permits the holder or holders of any Senior
Obligations to declare such Senior Obligations due and payable prior to the
stated maturity thereof.

                                  ARTICLE XII
                                    GENERAL

SECTION 12.1 - NOTICE TO THE CORPORATION AND THE TRUSTEE

(1)  Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or the Trustee shall be in writing and shall be
deemed to be validly given if personally delivered or if sent by facsimile or
telecopy:

     (a)  if to the Corporation:

          Co-Steel Inc.
          Scotia Plaza
          Suite 5010, P.O. Box 130
          40 King Street West
          Toronto, Ontario
          M5S 1R1
          Fax: (416) 963-8512

          Attention: Chief Financial Officer

     (b)  if to the Trustee:

          The R-M Trust Company
          393 University Avenue
          Fifth Floor
          Toronto, Ontario
          M5G 2M7
          Fax: (416) 813-4555

          Attention: Vice-President, Corporate Trust Services

and any such notice delivered in accordance with the foregoing shall be deemed
to have been received when delivered or, if telecopied, on the Business Day
following the date such notice has been telecopied.

<PAGE>
                                     -61 -

(2)  The Corporation or the Trustee, as the case may be, may from time to time
notify the other in the manner provided in Subsection 12.1(1) of a change of
address which, from the effective date of such notice and until changed by like
notice, shall be the address of the Corporation or the Trustee, as the case may
be, for all purposes of this Indenture. A copy of any notice of change of
address given pursuant to this Subsection 12.1(2) shall be available for
inspection at the principal office of the Trustee in the City of Toronto by
Debentureholders during normal business hours.

SECTION 12.2 - NOTICE TO DEBENTUREHOLDERS

     Any notice to Debentureholder(s) under the provisions of this Indenture
shall be deemed to be validly given, subject to Section 12.3, if delivered or if
sent by first class mail, postage prepaid, to the holder(s) at their addresses
appearing in one of the registers hereinbefore mentioned. Any notice so
delivered shall be deemed to have been received on the date of delivery or the
Business Day following the date of delivery if such date is not a Business Day,
or if mailed, on the fifth Business Day following the date on which it was
mailed. Accidental error or omission in giving notice or accidental failure to
give notice to any Debentureholder shall not invalidate any action or proceeding
founded thereon.

SECTION 12.3 - MAIL SERVICE INTERRUPTION

(1)  If by reason of any interruption of mail service, actual or threatened, any
notice to be given to the Debentureholders would reasonably be unlikely to reach
its destination in the ordinary course of mail, such notice shall be valid and
effective only if published once (i) in the Cities of Montreal, Toronto,
Winnipeg and Vancouver, such publication to be made in the national edition of
The Globe & Mail or in a daily newspaper of general circulation published in
such cities; and (ii) in such other place or places and manner, if any, as the
Trustee may require.

(2)  Any notice given to the Debentureholders by publication shall be deemed to
have been given on the last day on which publication shall have been effected in
all of the cities in which publication is required pursuant to Subsection
12.3(1).

SECTION 12.4 - COUNTERPARTS AND FORMAL DATE

     This Indenture may be executed in several counterparts, each of which when
so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of the Execution Date.

SECTION 12.5 - BENEFIT OF PROVISIONS OF INDENTURE AND DEBENTURES

     Except as specifically provided in Section 2.9 and 2.12, nothing in this
Indenture or the Debentures, expressed or implied, shall give or be construed to
give any person other than the parties hereto and the registered holders of the
Debentures any legal or equitable right, remedy or claim under this Indenture,
or under any covenant or provision therein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and the
Debentureholders.
<PAGE>

                                     - 62 -

SECTION 12.6 - GOVERNING LAW

     This Indenture shall be governed and construed in accordance with the laws
of Ontario and the federal laws of Canada applicable therein. Each of the
parties irrevocably attorns to the non-exclusive jurisdiction of the courts of
the Province of Ontario with respect to all matters arising out of this
Indenture.

     IN WITNESS WHEREOF the parties hereto have executed this Indenture under
the hands of their proper signing officers in that behalf.

                                        CO-STEEL INC.

                                        By: /s/ Ronald P. Fournier
                                            ------------------------------------
                                            Ronald P. Fournier
                                            Vice-Chairman and Deputy Chief
                                            Executive Officer

                                        By: /s/ Edward G. Reilly
                                            ------------------------------------
                                            Edward G. Reilly
                                            Vice-President
                                            and Chief Financial Officer

                                        THE R-M TRUST COMPANY

                                        By: /s/ Mahomed Limbada
                                            ------------------------------------
                                            Mahomed Limbada
                                            Account Manager

                                        By: /s/ Geralyn Krowles
                                            ------------------------------------
                                            Geralyn Krowles
                                            Account Officer

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