Document:

<PAGE>
                                                                  EXHIBIT 10(ii)
                                CREDIT AGREEMENT

                           DATED AS OF APRIL 30, 2002

                                     BETWEEN

                                  CO-STEEL INC.
                                   AS BORROWER

                                       AND

                1300554 ONTARIO LIMITED, 1102590 ONTARIO LIMITED,
           CO-STEEL DISTRIBUTION CANADA LIMITED, CO-STEEL (U.S.) LTD.,
            CO-STEEL FINANCE CORP., LAKE ONTARIO STEEL COMPANY INC.,
          CO-STEEL USA DISTRIBUTION, INC., CO-STEEL USA HOLDINGS, INC.,
               CO-STEEL RARITAN, INC., CO-STEEL SAYREVILLE, INC.,
                   RARITAN RIVER URBAN RENEWAL CORPORATION AND
                   THE OTHER SUBSIDIARIES OF THE BORROWER FROM
                            TIME TO TIME PARTY HERETO

                                  AS GUARANTORS

                                       AND

         BANK ONE, NA, CANADA BRANCH, BANK OF TOKYO-MITSUBISHI (CANADA),
            CANADIAN IMPERIAL BANK OF COMMERCE, COMERICA BANK, CANADA
      BRANCH, MIZUHO CORPORATE BANK (CANADA), THE BANK OF NOVA SCOTIA, THE
           TORONTO-DOMINION BANK AND THE OTHER FINANCIAL INSTITUTIONS
                         FROM TIME TO TIME PARTY HERETO
                                   AS LENDERS

                                       AND

                            THE TORONTO-DOMINION BANK
                     AS ADMINISTRATION AGENT FOR THE LENDERS

                                       AND

                             THE BANK OF NOVA SCOTIA
                      AS SYNDICATION AGENT FOR THE LENDERS

                              MCCARTHY TETRAULT LLP
                                  GOODMANS LLP

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
ARTICLE 1 - INTERPRETATION........................................................................................1

   1.01     Defined Terms.........................................................................................1
   1.02     Headings and Internal References.....................................................................26
   1.03     Number and Gender....................................................................................26
   1.04     Accounting Terms and Principles......................................................................26
   1.05     Interest Act (Canada)................................................................................27
   1.06     Schedules............................................................................................27
   1.07     Exhibits.............................................................................................28
   1.08     Determination of Materiality.........................................................................28
   1.09     Certificates and Opinions, etc.......................................................................28
   1.10     Governing Law........................................................................................28
   1.11     Currency.............................................................................................28

ARTICLE 2 - CREDIT FACILITIES....................................................................................28

   2.01     The Revolving Facility...............................................................................28
   2.02     The Swingline Facility...............................................................................29
   2.03     Purpose of Credit Facilities.........................................................................29
   2.04     Manner of Borrowing - Revolving Facility.............................................................29
   2.05     Manner of Borrowing - Swingline Facility.............................................................30
   2.06     Notice of Borrowing..................................................................................31
   2.07     Notification of Lenders Under Credit Facilities......................................................32
   2.08     Disbursement of Loans Under Credit Facilities........................................................32
   2.09     Issuance of Bankers' Acceptances and Letters of Credit...............................................32
   2.10     Pro-Rata Advances Under Credit Facilities............................................................32
   2.11     Conversions..........................................................................................33
   2.12     Rollovers............................................................................................33
   2.13     Evidence of Borrowings...............................................................................34
   2.14     Hedging Contracts....................................................................................34

ARTICLE 3 - REPAYMENT AND PAYMENT................................................................................34

   3.01     Repayment of Revolving Facility......................................................................34
   3.02     Repayment of Swingline Facility......................................................................35
   3.03     Mandatory Prepayment and Reduction of Availability under Credit Facilities...........................35
   3.04     Excess Amount........................................................................................36
   3.05     Place and Manner of Payments.........................................................................36
   3.06     Net Payments, etc....................................................................................37
   3.07     Application of Payments..............................................................................38

ARTICLE 4 - INTEREST AND FEES....................................................................................38

   4.01     Computation of Interest and Fees.....................................................................38
   4.02     Accrual and Payment of Interest on Loans.............................................................39
   4.03     Currency.............................................................................................39
   4.04     LIBOR Loans..........................................................................................39
</TABLE>

<PAGE>

                                       ii

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
   4.05     Fees.................................................................................................39
   4.06     Administration Agent's Certificate...................................................................40
   4.07     Late Payment.........................................................................................40
   4.08     Maximum Rate of Return...............................................................................40

ARTICLE 5 - BANKERS' ACCEPTANCES AND LETTERS OF CREDIT...........................................................41

   5.01     Bankers' Acceptances.................................................................................41
   5.02     Letters of Credit....................................................................................44

ARTICLE 6 - CHANGE IN CIRCUMSTANCES AND INDEMNITIES..............................................................46

   6.01     Increased Costs......................................................................................46
   6.02     Income Tax Act, etc..................................................................................47
   6.03     Lack of LIBOR Rate...................................................................................47
   6.04     Inability to Fund in U.S. Dollars....................................................................47
   6.05     Unlawful, etc........................................................................................49
   6.06     General Indemnity....................................................................................49
   6.07     Environmental Indemnity..............................................................................50
   6.08     Agents and Lenders Not Liable........................................................................51
   6.09     Survival.............................................................................................52

ARTICLE 7 - CONDITIONS PRECEDENT.................................................................................52

   7.01     Closing..............................................................................................52
   7.02     Conditions Precedent to Closing......................................................................52
   7.03     Conditions Precedent to Each Drawdown Under the Revolving Facility...................................55
   7.04     Conditions Precedent to Each Drawdown Under the Swingline Facility...................................56
   7.05     Post-Closing Deliveries..............................................................................57

ARTICLE 8 - Security Documents...................................................................................60

   8.01     Form of Security Documents...........................................................................60
   8.02     Valid Lien...........................................................................................61
   8.03     Registration.........................................................................................61
   8.04     After Acquired Property and Further Assurances.......................................................61
   8.05     Form, Substance and Registration of Security.........................................................62
   8.06     Benefit of Security..................................................................................62

ARTICLE 9 - REPRESENTATIONS AND WARRANTIES.......................................................................62

   9.01     Representations and Warranties.......................................................................62

ARTICLE 10 - COVENANTS...........................................................................................71

   10.01    Positive Covenants...................................................................................71
   10.02    Financial Covenants..................................................................................79
   10.03    Negative Covenants...................................................................................81
   10.04    Accounting Financial Statements and Other Information................................................87
</TABLE>

<PAGE>

                                       iii

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
ARTICLE 11 - DEFAULT AND ENFORCEMENT.............................................................................91

   11.01    Events of Default....................................................................................91
   11.02    Deferral of Advances.................................................................................93
   11.03    Termination of Credit Facilities.....................................................................94
   11.04    Acceleration.........................................................................................94
   11.05    Legal Proceedings....................................................................................94
   11.06    No Prejudice, etc....................................................................................95
   11.07    Set-off..............................................................................................95
   11.08    Remedies Cumulative..................................................................................95
   11.09    Appropriation of Monies Received.....................................................................95
   11.10    Non-Merger...........................................................................................96
   11.11    Pro Rata Sharing.....................................................................................96
   11.12    Sharing of Set-Offs..................................................................................97

ARTICLE 12 - THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT..................................................98

   12.01    Appointment..........................................................................................98
   12.02    Dealing by Borrower with the Administration Agent....................................................98
   12.03    Delegation of Duties.................................................................................99
   12.04    Retention of Advisors................................................................................99
   12.05    Indemnity............................................................................................99
   12.06    Limitation of Agent's Liability.....................................................................100
   12.07    Reliance............................................................................................100
   12.08    Exchange of Information.............................................................................101
   12.09    The Administration Agent and the Syndication Agent, Individually....................................101
   12.10    Resignation.........................................................................................101
   12.11    Administration of the Credits.......................................................................102
   12.12    Instructions by Lenders.............................................................................103
   12.13    Arrangements for Repayment of Advances..............................................................104
   12.14    Repayment by Lenders to Administration Agent........................................................104
   12.15    Delivery of Assignment Agreement....................................................................105
   12.16    Provisions for Benefit of Lenders Only..............................................................105

ARTICLE 13 - ASSIGNMENT AND PARTICIPATION.......................................................................105

   13.01    Benefit and Burden of this Agreement................................................................105
   13.02    Borrower............................................................................................105
   13.03    Participation and Syndication.......................................................................106
   13.04    Assignment by Lenders After Event of Default........................................................107
   13.05    Borrower's Documents................................................................................107

ARTICLE 14 - MISCELLANEOUS......................................................................................107

   14.01    Exchange and Confidentiality of Information.........................................................107
   14.02    Payment of Expenses.................................................................................108
   14.03    Judgement Currency..................................................................................108
   14.04    Notice..............................................................................................109
   14.05    Reliance on Instructions............................................................................110
</TABLE>

<PAGE>

                                       iv

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
   14.06    Survival of Representations, Warranties and Covenants...............................................111
   14.07    Further Assurances..................................................................................111
   14.08    Amendment, Waiver etc...............................................................................111
   14.09    Remedies Cumulative.................................................................................111
   14.10    Non-Merger..........................................................................................112
   14.11    Conflict............................................................................................112
   14.12    Severability........................................................................................112
   14.13    Counterparts........................................................................................112
   14.14    Benefit of Agreement................................................................................113
   14.15    Time of Essence.....................................................................................113
   14.16    Entire Agreement....................................................................................113
</TABLE>

<PAGE>
                                CREDIT AGREEMENT

         THIS AGREEMENT dated as of April 30, 2002 is made by and between
Co-Steel Inc., as Borrower, 1300554 Ontario Limited, 1102590 Ontario Limited,
Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd., Co-Steel Finance
Corp., Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc.,
Co-Steel USA Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc.
and Raritan River Urban Renewal Corporation as Guarantors and The
Toronto-Dominion Bank, The Bank of Nova Scotia and the other financial
institutions listed in Schedule A and the financial institutions which from time
to time have entered into an Assignment Agreement amending Schedule A to become
a party to this Agreement, as Lenders, and The Toronto-Dominion Bank, as
Administration Agent for the Lenders and The Bank of Nova Scotia as Syndication
Agent for the Lenders.

         In consideration of the mutual covenants in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which the
parties each acknowledge, the parties agree as follows:

                           ARTICLE 1 - INTERPRETATION

1.01     Defined Terms

         In this Agreement, the following words and phrases shall have the
following meanings:

         "ACCOUNT DEBTOR" means any Person who is obligated to pay an Account
Receivable.

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

         "ADJUSTED COST BASE" means the dollar amount by which the Unrestricted
Subsidiaries would be carried as at December 31, 1998 in the accounts of the
Borrower, if the Unrestricted Subsidiaries were accounted for, from inception,
by the equity method of accounting. Furthermore: (i) 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; (ii)
consistent with the equity method of accounting all inter-company transactions
and balances would be eliminated; and (iii) 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 the purposes of this definition, the Hungarian Finance
Structure Companies and NJSC shall be deemed to be Restricted Subsidiaries.

         "ADMINISTRATION AGENT" means The Toronto-Dominion Bank and its
successors or permitted assigns.

         "ADVANCE" means an advance of funds hereunder by way of a Prime Rate
Loan, a Base Rate Loan, a LIBOR Loan, a Bankers' Acceptance, a BA Equivalent
Note or the issuance of a

<PAGE>
                                       -2-
                                                                       Article 1

Letter of Credit, including deemed Advances and Conversions, renewals and
Rollovers of existing Advances, and any reference relating to the amount of
Advances shall mean the sum of the principal amount of all outstanding Prime
Rate Loans, Base Rate Loans, LIBOR Loans plus the face amount of Bankers'
Acceptances, BA Equivalent Notes and outstanding Letters of Credit.

         "AFFILIATE" means, 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 Borrower, shall include each of its
Subsidiaries.

         "AGREEMENT" means this agreement together with all amendments from time
to time made to it in accordance with its provisions.

         "APPLICABLE LAW" means, with respect to any Person, property,
transaction or event, all present or future applicable laws, statutes,
regulations, by-laws, treaties, judgements 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 MARGIN" means with respect to any Advance under the Credit
Facilities the percentage per annum determined in accordance with the following
table, based on the Borrower's ratio of Consolidated Total Net Debt to
Normalized Consolidated EBITDA as at the end of its most recently completed
fiscal quarter (in this definition such fiscal quarter is the "RELEVANT
QUARTER"):

<TABLE>
<CAPTION>
Consolidated Total Net Debt  Base Rate             Stamping Fee/ LIBOR     Commitment Fee Rate
to Normalized Consolidated   Margin/Prime Rate     Margin/ Letter of
EBITDA                       Margin                Credit Fee Rate
<S>                          <C>                   <C>                     <C>
----------------------------------------------------------------------------------------------------
=<3:0:1                      1.00%                 2.00%                   0.75%
----------------------------------------------------------------------------------------------------
> 3:0:1, =<4:0:1             2.00%                 3.00%                   1.10%
----------------------------------------------------------------------------------------------------
> 4.0:1, =<5.0:1             2.75%                 3.75%                   1.40%
----------------------------------------------------------------------------------------------------
> 5.0:1, <=7.5:1             3.25%                 4.25%                   1.65%
----------------------------------------------------------------------------------------------------
>7.5:1, <=10.0:1             3.50%                 4.50%                   1.80%
----------------------------------------------------------------------------------------------------
>10.0:1                      4.00%                 5.00%                   2.00%
----------------------------------------------------------------------------------------------------
</TABLE>

The Applicable Margin to be applied with respect to an Advance, Conversion or
Rollover shall be the Applicable Margin on the relevant date of the Advance,
Conversion or Rollover, as the case may be. The Applicable Margin shall change,
if required, one Banking Day after receipt by the Administration Agent of the
financial statements required to be delivered pursuant to Section 10.04 for the
Relevant Quarter, and the related Compliance Certificate required to be
delivered pursuant to Section 10.04, are delivered to the Administration Agent;
provided, however, that for

<PAGE>
                                      -3-
                                                                       Article 1

the purpose of determining the Applicable Margin, if the Borrower fails to
deliver such financial statements and Compliance Certificate when required, the
Borrower's ratio of Consolidated Total Net Debt to Normalized Consolidated
EBITDA shall be deemed to exceed 10.0:1 until the same have been delivered.

         "APPROVED ASSET SALE" has the meaning set out in Section 10.03(6).

         "ASSET MONETIZATION PROGRAM" means the asset monetization program for
the Borrower and its Subsidiaries dated February 25, 2002, which program is
attached hereto as Schedule AA, as revised from time to time pursuant to Section
10.01(26).

         "ASSIGNMENT AGREEMENT" means an agreement substantially in the form of
Exhibit A by which a financial institution assumes a Commitment and becomes a
Lender.

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

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

         "BA DEPOSIT AMOUNT" has the meaning set out in Section 5.01(11).

         "BA DISCOUNT RATE" means with respect to any Bankers' Acceptance
purchased by a:

         (a)      Schedule 1 Lender, CDOR; and

         (b)      Schedule 2 Lender or Schedule 3 Lender, the lower (a) of the
                  bid rate quoted by such Lender for its own acceptance of a
                  like term with effect as at about 10:00 a.m. on the applicable
                  date; and (b) CDOR plus 10 basis points.

         "BA EQUIVALENT NOTE" has the meaning set out in Section 5.01(9).

         "BANKERS' ACCEPTANCE" means 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 Borrower and accepted by a Lender or, for Lenders 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 Borrower and accepted
by a Lender.

         "BANKING DAY" means:

         (a)      with respect to a Prime Rate Loan and a Bankers' Acceptance,
                  any day other than a Saturday or a Sunday, on which all of the
                  Lenders are open to the public for carrying on substantially
                  all of their banking functions in Toronto, Ontario;

         (b)      with respect to a LIBOR Loan, any day, other than a Saturday
                  or a Sunday, on which the Administration Agent is open to the
                  public for carrying on substantially all of their banking
                  functions in Toronto, Ontario, New York, New York and

<PAGE>
                                       -4-
                                                                       Article 1

                  which is also a day on which dealings are carried out in the
                  London Interbank Eurocurrency Market;

         (c)      with respect to a Base Rate Loan, any day, other than a
                  Saturday or Sunday, on which all of the Lenders are open to
                  the public for carrying on substantially all of their banking
                  functions in Toronto, Ontario and New York, New York; and

         (d)      for any other purpose any day, other than a Saturday or
                  Sunday, on which all of the Lenders are open to the public for
                  carrying on substantially all of their banking functions in
                  Toronto, Ontario.

         "BANKRUPTCY EVENT" means, with respect to any Person, the occurrence of
any one or more of the following events:

         (a)      it passes a resolution, institutes proceedings, (whether
                  formal or informal), or consents to the filing of a notice of
                  intention to file a proposal, a proposal, petition for its
                  winding-up, liquidation or dissolution or files or consents to
                  the filing of a notice of intention to file a proposal, a
                  proposal, a petition, answer or consent seeking
                  reorganization, readjustment, arrangement in connection with
                  any insolvency proceeding, composition or similar relief under
                  any Applicable Law or a receiver, receiver-manager, manager,
                  custodian, liquidator or trustee or similar officer or
                  official of itself or any part of its property is appointed,
                  or it makes an assignment for the benefit of creditors or is
                  unable, or admits its inability, to pay its debts as they
                  become due or otherwise acknowledges its insolvency or
                  voluntarily suspends transaction of its usual business or any
                  action is taken by such Person in furtherance of any of the
                  aforesaid purposes or if such Person commits any other act of
                  bankruptcy under the Bankruptcy Code of the United States, 11
                  U.S.C. Section 1.01 et. seq. or the Bankruptcy and Insolvency
                  Act (Canada) or if such Person makes any application or filing
                  pursuant to the Companies' Creditors Arrangement Act (Canada),
                  the Bankruptcy and Insolvency Act (Canada) or the Winding-Up
                  and Restructuring Act (Canada) or any other similar statute;
                  or

         (b)      any application, petition or proposal is made with respect to
                  it under the Companies' Creditors Arrangement Act (Canada),
                  the Bankruptcy Code of the United States, 11 U.S.C. Section
                  1.01 et. seq. or the Bankruptcy and Insolvency Act (Canada) or
                  the Winding-Up and Restructuring Act (Canada) or any other
                  legislation seeking reorganization, readjustment or
                  arrangement in connection with any insolvency proceeding,
                  composition or similar relief under any other Applicable Law,
                  or a proceeding, (whether formal or informal), is instituted,
                  filed or initiated for its winding up, liquidation or
                  dissolution or seeking an order adjudging it insolvent or the
                  appointment of any receiver, receiver-manager, manager,
                  custodian, liquidator or trustee or similar officer or
                  official of it or over all or any part of its property or a
                  petition in bankruptcy is instigated by a Person other than
                  it, and such application, proceeding or petition is not
                  dismissed, stayed or withdrawn within 60 days after it has
                  notice or knowledge of the institution of such proceedings
                  provided that a Bankruptcy Event shall have occurred

<PAGE>
                                      -5-
                                                                       Article 1

                  immediately (i) upon the appointment of a receiver, trustee,
                  custodian, liquidator or similar officer of the Person, (ii)
                  if it is determined by the Required Lenders, acting reasonably
                  in their sole discretion, that the Person against whom such
                  application, petition or proceeding is brought is not
                  contesting such application, proceeding or petition in good
                  faith, or (iii) if assets with an aggregate fair market value
                  in excess of $5,000,000 have been attached, in all cases
                  whether or not such application, proceeding or petition is
                  dismissed, stayed or withdrawn within 60 days after the Person
                  against whom such application, petition or proceeding is
                  brought has notice or knowledge of the institution thereof.

         "BASE RATE" means the greater of: (a) the variable rate per annum
established by the Administration Agent as the reference rate of interest for
the determination of the interest rate that it will charge to customers of
varying degrees of credit worthiness in Canada for United States Dollar loans in
Toronto, Canada which shall be adjusted automatically from time to time without
notice to the Borrower; and (b) the Federal Funds Rate plus 0.50%.

         "BASE RATE LOAN" means a U.S. Dollar loan made to the Borrower under
this Agreement on which interest is calculated with reference to the Base Rate.

         "BASE RATE MARGIN" means, for any period, the percentage rate per annum
relevant to the period in respect of which a determination is being made
indicated beside or below the reference to Base Rate Margin in the definition of
"Applicable Margin".

         "BI-ANNUAL AUDITOR'S REPORT" has the meaning set out in Section
10.01(29).

         "BIS GUIDELINES" means the guidelines relating to capital adequacy
proclaimed in July, 1988 by the Basle Committee on Banking Regulation and
Supervisory Practices of the Bank of International Settlements.

         "BLOCKED ACCOUNT AGREEMENT" means a blocked account agreement entered
into by a bank with which the Borrower or a Subsidiary, (other than Co-Steel
C.S.M. Corp. and its Subsidiaries), maintains an account in a form and substance
acceptable to the Administration Agent and the Borrower.

         "BORROWER" means Co-Steel Inc., a corporation incorporated under the
laws of the Province of Ontario.

         "BREAKAGE COSTS" means all costs, losses and expenses incurred by any
Lender by reason of the liquidation or deployment of deposits or other funds,
the breakage of hedging and LIBOR contracts, the redeployment of funds, the loss
of investment opportunity or for any other reason whatsoever resulting from the
prepayment of any Advance, all as set out in a certificate delivered to the
Borrower by any Lender entitled to receive same.

         "BUSINESS PLAN" means a detailed and comprehensive twenty-four month
business plan and forecast for the Borrower, including a written management
discussion, all as approved by the Borrower's Board of Directors.

<PAGE>
                                      -6-
                                                                       Article 1

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

         "CANADIAN SECURITY AGENT" means Computershare Trust Company of Canada
in its capacity as Canadian security agent for and on behalf of the
Administration Agent, the Noteholders and PNC pursuant to the Inter-Creditor
Agreement.

         "CAPITAL EXPENDITURE" means 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 OBLIGATIONS" means, 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 the Person; the term "rentals" means, all
payments which the lessee is required to make by the terms of any lease or other
arrangement.

         "CDOR" means the annual rate (rounded upward to the nearest two decimal
places), calculated on the basis of a 365 day year, for bankers' acceptances of
the applicable Lender denominated in Dollars for a specified term that appears
on the Reuters Screen CDOR page as of 10:00 a.m. Toronto time on the date of
determination, provided that if a rate does not appear on the Reuters Screen
CDOR page at 10:00 a.m. Toronto time on such date the rate for that date shall
be determined as of 10:00 a.m. Toronto time on the next preceding Banking Day
provided further that if a rate does not appear on the Reuters Screen CDOR page
at 10:00 a.m. Toronto time on such next preceding Banking Day, CDOR shall be the
discount rate quoted by the Administration Agent for Canadian Dollar bankers'
acceptances for the specified term at 10:00 a.m. Toronto time on that next
preceding Banking Day.

         "CLOSING DATE" means April 30, 2002 or such other date as the parties
may agree upon in writing.

         "COLLATERAL" means all property, of whatever nature or kind, which is
the subject of any Lien created by any Security Document.

         "COLLATERAL AUDIT" has the meaning set out in Section 10.01(28).

         "COMMITMENT" means with reference to any Lender, the percentage set
forth in Schedule B or in an Assignment Agreement amending Schedule B, which
represents the aggregate amount which that Lender has severally agreed to make
available to the Borrower under the terms of this Agreement, expressed as a
percentage of the aggregate amount which all of the Lenders have agreed to make
available to the Borrower under the terms of this Agreement.

         "COMMITMENT FEE RATE" means, for any period, the percentage rate per
annum relevant to the period in respect of which a determination is being made
indicated beside or below the reference to Commitment Fee Rate in the definition
of "Applicable Margin".

<PAGE>
                                      -7-
                                                                       Article 1

         "COMPLIANCE CERTIFICATE" means a certificate in the form of Exhibit B
executed by a Senior Officer of the Borrower and setting out, among other things
a detailed calculation of compliance with the Financial Covenants.

         "CONSOLIDATED CURRENT ASSETS" means, 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 Borrower 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" means, for any period, the accounts
payable and accrued liabilities of the Borrower 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" means, for any period: (i) the Consolidated Net
Earnings in the period; plus (ii) Consolidated Net Interest Expense in the
period; plus (iii) income taxes, whether paid or deferred, which are deducted in
determining Consolidated Net Earnings in the period, if any; plus (iv)
depreciation and amortization expense for the period; minus (v) to the extent
added in determining Consolidated Net Earnings, extraordinary gains; plus (vi)
to the extent deducted in determining Consolidated Net Earnings, 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 (vii) all cash receipts from Gallatin that have been used by the
Borrower and its Subsidiaries to permanently repay indebtedness to the
Noteholders, PNC and the Lenders; plus (viii) to the extent deducted in
determining Consolidated Net Earnings unrealized foreign exchange losses; minus
(ix) the amount of loans or advances to Gallatin pursuant to Section 10.03(9);
minus (x) to the extent added in determining Consolidated Net Earnings
unrealized foreign exchange gains; all as set forth on the Special Purpose
Financial Statements for such period and all as determined in accordance with
GAAP.

         "CONSOLIDATED NET EARNINGS" means for any period, the net earnings, for
such period, as set forth on the Special Purpose Financial Statements for such
period.

         "CONSOLIDATED NET INTEREST EXPENSE" means, 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 paid in
respect of the Convertible Debentures together with interest, calculated on an
accrual basis, on the equity component of the Convertible Debentures before
income taxes.

         "CONSOLIDATED TOTAL NET DEBT" means, at any time, the principal amount
of all outstanding interest bearing Indebtedness including, without limitation,
the principal amount of the Convertible Debentures, the face amount of
outstanding Bankers' Acceptances, Letters of

<PAGE>

                                       -8-
                                                                       Article 1

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 for such period 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 Borrower 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
Borrower.

         "CONTAMINANT" means 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.

         "CONTROL" has the meaning set out in the Business Corporations Act
(Ontario), and "CONTROLLED" has a corresponding meaning.

         "CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(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.

         "CONVERSION" has the meaning set out in Section 2.11.

         "CONVERSION NOTICE" means a notice in the form of Exhibit C executed by
a Senior Officer of the Borrower.

         "CONVERTIBLE DEBENTURES" means the 10 year, convertible, unsecured,
subordinated debentures of the Borrower in the principal amount of
Cdn.$125,000,000 carrying a 6.5% coupon.

         "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.

         "CREDIT FACILITY" means either of the Revolving Facility or the
Swingline Facility and "CREDIT FACILITIES" means each of them collectively.

         "CUMULATIVE CONSOLIDATED EBITDA" means 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" means the consolidated current assets of any Person,
as defined and determined in accordance with GAAP.

         "DEBENTURE" means a debenture entered into by an Obligor in favour of
the Canadian Security Agent on behalf of the Noteholders, PNC and the
Administration Agent on behalf of the Lenders containing a first ranking fixed
charge (subject to Permitted Priority Liens), in favour of

<PAGE>
                                      -9-
                                                                       Article 1

the Canadian Security Agent with respect to the Borrower's leasehold interest in
the North York Property, the Borrower's freehold interest in each Ontario
Property and other assets and a floating charge over the remaining present and
future assets of the Borrower delivered or pledged to the Canadian Security
Agent pursuant to a debenture delivery or pledge agreement.

         "DEFAULT" means an event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default.

         "DEFAULT RATE" means the highest rate of interest or fee payable
hereunder for a particular type of Advance, regardless of the then Applicable
Margin, plus an additional 2% per annum, or 2% as applicable.

         "DEFAULTING LENDER" has the meaning set out in Section 2.10(2).

         "DEFICIT LENDER" has the meaning set out in Section 11.11(2).

         "DISCOUNT PROCEEDS" means the face amount of any Bankers' Acceptance
less the discount to its face amount required to yield an interest rate per
annum equal to the BA Discount Rate in effect on the date of the applicable
Drawdown, Conversion or Rollover.

         "DOCUMENTS" means each of this Agreement, the Inter-Creditor Agreement,
the Security Documents, any Bankers' Acceptance, any B.A. Equivalent Note, any
Hedging Contract, any Guarantee and all letter agreements, including the Fee
Side Letter, entered into on the Closing Date and all certificates and other
documents delivered or to be delivered to the Administration Agent or any Lender
pursuant to this Agreement or any other Document.

         "DRAWDOWN" means the advance of a Loan by a Lender to the Borrower
under a Credit Facility or the acceptance or purchase by a Lender of a Bankers'
Acceptance or BA Equivalent Note or the issuance of a Letter of Credit by the LC
Lender under the Revolving Facility.

         "DRAWDOWN NOTICE" means a notice in the form of Exhibit D executed by a
Senior Officer of the Borrower.

         "ENGLISH FINANCE STRUCTURE COMPANIES" means 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 ACTIVITY" means any past, present or future activity,
event or circumstance in respect of a Contaminant, including its storage, use,
holding, collection, purchase, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization, disposition,
handling or transportation, or its Release, escape, leaching, dispersal or
migration into the natural environment, including the movement through or in the
air, soil, surface water or groundwater.

         "ENVIRONMENTAL LAW" means any and all Applicable Laws relating to the
environment, occupational health and safety or any Environmental Activity,
including the requirements to

<PAGE>
                                      -10-
                                                                       Article 1

comply with or obtain any authorizations, permits, licences or approvals issued
by or from any Governmental Authority.

         "EQUIVALENT AMOUNT" means, 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 the 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" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections thereto.

         "EVENT OF DEFAULT" has the meaning set out in Section 11.01.

         "EXCESS AMOUNT" means, in respect of a Credit Facility, the excess, if
any, as at the date of determination of (a) the Utilized Portion of the Credit
Facility at that date over (b) the maximum available principal amount of the
Credit Facility at that date, provided that if the amount of difference
calculated is less than $10,000 the difference shall be deemed to be nil.

         "EXCESS REVOLVER PAYDOWN" means, as of the end of any fiscal quarter of
the Borrower, the amount by which the outstanding amount, if any, of the sum of
(x) the Advances and (y) the Equivalent Amount in Canadian Dollars of the
principal amount advanced under the PNC Sayreville Credit Agreement and the PNC
Raritan Credit Agreement is less than the result of (a) the sum of (x) the
Commitments and (y) the Equivalent Amount in Canadian Dollars of all commitments
under the PNC Sayreville Credit Agreement and the PNC Raritan Credit Agreement
at such time minus (b) Cdn.$50,000,000.

         "EXCLUDED TAXES" means any Tax imposed on the Administration Agent's or
a Lender's net income or capital by any Governmental Authority as a result of
the Administration Agent or a Lender (a) carrying on a trade or business or
having a permanent establishment in such jurisdiction, (b) being organized under
the laws of such jurisdiction, or (c) being or being deemed to be resident in
such jurisdiction.

         "F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.

         "FEDERAL FUNDS RATE" means, for any day, the variable rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Banking Day
next succeeding such day, provided that if the day for which such rate is to be
determined is not a Banking Day, the Federal Funds Rate for such day shall be
such rate on such
<PAGE>
                                      -11-
                                                                       Article 1

transactions on the next day preceding Banking Day as so published on the next
succeeding Banking Day.

         "FEE SIDE LETTER" means the fee letter dated the date hereof between
the Borrower and the Administration Agent providing for certain agency fees
payable to the Administration Agent.

         "FINANCIAL COVENANTS" means the covenants set out in Section 10.02.

         "FINANCIAL FORECAST" means the financial forecast for the Borrower 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 W.

         "GAAP" means the generally accepted accounting principles from time to
time approved by the Canadian Institute of Chartered Accountants, or any
successor institute.

         "GALLATIN" means Gallatin Steel Company, a partnership created under
the laws of Kentucky.

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

         "GENERAL SECURITY AGREEMENT" means a security agreement entered into by
an Obligor in favour of a Security Agent on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders creating a first ranking security interest
in favour of such Security Agent on all the present and future assets of the
Obligor (subject in each case to Permitted Priority Liens).

         "GOVERNMENTAL AUTHORITY" means 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" means a guarantee agreement from a Guarantor in favour of
the Administration Agent on behalf of itself, the Syndication Agent and the
Lenders, guaranteeing the payment and performance of all obligations to the
Administration Agent, the Syndication Agent and each Lender by the Borrower,
substantially in the form of Exhibit E.

         "GUARANTOR" means each of 1300554 Ontario Limited, 1102590 Ontario
Limited, Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd., Co-Steel
Finance Corp., Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc.,
Co-Steel USA Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc.,
and Raritan River Urban Renewal Corporation and each Restricted Subsidiary of
the Borrower which becomes a party hereto as a Guarantor from time to time
pursuant to Section 10.01(13).

         "HAZARDOUS MATERIAL" shall mean any pollutant, toxic substance,
hazardous waste, hazardous material, hazardous substance, or oil as defined in
or pursuant to the Resource Conversation and Recovery Act, as amended, the
Comprehensive Environmental Response,
<PAGE>

                                      -12-
                                                                       Article 1

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.

         "HEDGING CONTRACT" means a contract entered into between the Borrower
and any Lender with respect to any interest rate or currency hedging product.

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

         "HUNGARIAN GUARANTEE" has the meaning set out in Section 7.05(3).

         "HUNGARIAN GUARANTEE DOCUMENTS" has the meaning set out in Section
7.05(3).

         "HUNGARIAN LOAN NOTES" means:

          (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" has the meaning set out in
Section 7.05(3).

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

<PAGE>
                                      -13-
                                                                       Article 1

         (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 favour 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" means, 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 such Person, including any
                  Advance made by way of Letter of Credit or Bankers' 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

<PAGE>
                                      -14-
                                                                       Article 1

                  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.

         "INDEMNIFIED PERSONS" has the meaning set out in Section 6.06.

         "INFORMATION" has the meaning set out in Section 14.01.

         "INSURANCE PROCEEDS" has the meaning set out in Section 10.01(18).

         "INTELLECTUAL PROPERTY RIGHTS" has the meaning set out in Section
9.01(30).

         "INTER-CREDITOR AGREEMENT" means the inter-creditor agreement dated the
date hereof between the Canadian Security Agent, the US Security Agent, PNC, the
Administration Agent and the Noteholders as consented to by the Borrower and
each of the Guarantors.

         "INTEREST PAYMENT DATE" means the last day of an Interest Period and
also, in the case of an Interest Period which is longer than three months, each
date within such Interest Period which follows at intervals of three months
after the first day of such Interest Period.

         "INTEREST PERIOD" means, in relation to a LIBOR Loan, the period
selected by the Borrower pursuant to this Agreement for computing interest on
the LIBOR Loan.

         "INVENTORY" means 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

<PAGE>
                                      -15-
                                                                       Article 1

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.

         "JUDGEMENT CONVERSION DATE" has the meaning set out in Section 14.03.

         "JUDGEMENT CURRENCY" has the meaning set out in Section 14.03.

         "KEY EMPLOYEE LOANS" means loans to key employees of the Borrower for
the purpose of purchasing shares of the Borrower or for other employment
benefits.

         "LANDLORD'S CONSENTS" means collectively, such consents in form and
substance satisfactory to the Administration Agent of landlords of Leased
Properties to the granting of a Lien in favour of a Security Agent and such
other matters as the Administration Agent may reasonably require.

         "LATE PAYMENT RATE" means, without duplication of any applicable
Default Rate, in the case of amounts payable in Canadian Dollars, the rate then
applicable to Prime Rate Loans plus 2% and, in the case of amounts payable in
U.S. Dollars, the rate then applicable to Base Rate Loans plus 2%.

         "LC DEPOSIT AMOUNT" has the meaning set out in Section 5.02(8).

         "LC LENDER" means The Toronto-Dominion Bank.

         "LEASED PROPERTIES" means all lands and premises described in Schedule
C and any lands and premises which are subsequently leased by any Obligor.

         "LEASEHOLD MORTGAGE" means 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 favour of a Security Agent on behalf of the
Noteholders, PNC, the Administration Agent and the Lenders (subject in each case
to Permitted Priority Liens).

         "LENDERS" means The Toronto-Dominion Bank, The Bank of Nova Scotia and
the other financial institutions which have executed this Agreement and are
listed in Schedule A and the financial institutions which from time to time
pursuant to and in accordance with the provisions of this Agreement have entered
into an Assignment Agreement amending Schedule A to become a party to this
Agreement.

         "LETTER OF CREDIT" means a documentary or stand-by letter of credit or
letter of guarantee issued by the LC Lender at the request and for the account
of the Borrower under this Agreement.

         "LETTER OF CREDIT FEE RATE" means, with respect to a Letter of Credit,
the applicable percentage rate per annum indicated beside or below the reference
to "Letter of Credit Fee Rate" in the definition of "Applicable Margin" relevant
to the period in respect of which a determination is being made.
<PAGE>
                                      -16-
                                                                       Article 1

         "LIBOR LOAN" means a U.S. Dollar loan made to the Borrower under this
Agreement and on which interest is calculated by reference to the LIBOR Rate.

         "LIBOR MARGIN" means, for any period, the applicable percentage rate
per annum applicable to that period as indicated beside or below the reference
to "LIBOR Margin" in the definition of "Applicable Margin" relevant to the
period in respect of which a determination is being made.

         "LIBOR RATE" means, for each Interest Period, a rate of interest per
annum, calculated on the basis of a 360 day year, equal to:

         (a)      the simple average (rounded upward, if necessary, to the
                  nearest whole multiple of 1/16 of one percent) of the rates
                  shown on the display referred to as the "LIBOR Page" (or any
                  display substituted therefor) of the Reuters Domestic Money
                  Service with respect to the banks in the London interbank
                  market named in the display as at 11:00 a.m. (London, England
                  time) on the second Banking Day prior to the first day of the
                  Interest Period, in an amount similar to the LIBOR Loan and
                  for a deposit period comparable to the Interest Period; or

         (b)      if a rate is not determinable pursuant to clause (a) of this
                  definition at the relevant time, the rate expressed as a rate
                  of interest per annum on the basis of a year of 360 days, at
                  which United States Dollars are offered by the principal
                  lending office in London, England of the Administration Agent
                  to prime banks in the London interbank market at approximately
                  11:00 a.m. (London, England time) on the second Banking Day
                  prior to the first day of the Interest Period, in an amount
                  similar to the LIBOR Loan and for a deposit period comparable
                  to the Interest Period; or

         (c)      if a rate is not determinable pursuant to clause (a) or (b) of
                  this definition at the relevant time, the Base Rate.

         "LIEN" means any mortgage, hypothec, title retention arrangement,
pledge, lien, right of set-off, charge, security interest, assignment or other
encumbrance whatsoever, whether fixed or floating, however created or arising.

         "LOAN" means a Prime Rate Loan, Base Rate Loan or LIBOR Loan.

         "LOSSES" has the meaning set out in Section 6.06.

         "MAJORITY LENDERS" means, at any time, if any Advance is outstanding
under the Credit Facilities, any one or more Lenders who have in the aggregate
extended at least 50% of Advances outstanding at that time under the Credit
Facilities and if no Advance is outstanding under the Credit Facilities, any two
or more Lenders who have in the aggregate at least 50% of the then maximum
available Commitments under the Credit Facilities.

         "MANAGING SECURITY AGENT" means the Managing Security Agent appointed
from time to time pursuant to the Inter-Creditor Agreement.

<PAGE>
                                      -17-
                                                                       Article 1

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

         "MATERIAL ADVERSE EFFECT" means, with respect to the Borrower and the
Guarantors any circumstances or event which (i) has or could reasonably be
expected to have a material adverse effect upon the validity or enforceability
of this Agreement, the Security Documents, any Guarantee or the Inter-Creditor
Agreement, (ii) is material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of the Obligors, taken
as a whole, (iii) impairs materially the ability of the Obligors, taken as a
whole, to duly and punctually pay or perform the obligations hereunder, or (iv)
impairs materially the ability of the Administration Agent or the Lenders to the
extent permitted, to enforce their legal remedies pursuant to this Agreement and
the other Documents.

         "MATERIAL CONTRACTS" means, collectively, those contracts listed in
Schedule G 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 LICENCES" means, collectively, those licences, permits or
approvals listed on Schedule H any licence, 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.

         "MATURITY DATE" means the earlier of (i) January 15, 2004, and (ii) the
date the Credit Facilities are terminated pursuant to Section 11.03 or
accelerated pursuant to Section 11.04.

         "MORTGAGE" means a mortgage with assignment of leases and rents,
security agreement and fixture filing as a first ranking encumbrance against all
real property, right, title and interest in the properties identified therein in
favour of US Security Agent on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders (subject in each case to Permitted Priority
Liens).

         "MOVEABLE HYPOTHEC" means a deed of moveable hypothec entered into by
an Obligor in favour of the Canadian Security Agent on behalf of the
Noteholders, PNC, the Administration Agent and the Lenders creating a first
ranking security interest in favour 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).

         "NET CASH PROCEEDS" means the aggregate cash proceeds (including any
cash payment received by way of deferred payment of principal pursuant to a note
or instalment receivable or purchase price adjustment receivable or otherwise,
but only as and when received) of any sale or of any offering of debt or equity
securities, net of (without duplication): (i) reasonable and documented legal,
accounting and investment banking fees and/or commissions (actually paid to any
Person that is not an Affiliate of the Company), (ii) in the case of an asset
disposition
<PAGE>
                                      -18-
                                                                       Article 1

amounts required to be applied to the repayment of Indebtedness secured by a
Lien, (other than a Lien created by any Security Document), expressly permitted
under this Agreement on any asset which is the subject of the asset disposition,
(iii) amounts agreed between the Administration Agent on behalf of the Lenders,
the Noteholders and PNC pursuant to the Inter-Creditor Agreement, and (iv) 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" means, with respect to any Restricted Subsidiary
the aggregate amount of assets of such Restricted Subsidiary after deducting
therefrom (i) all goodwill, trade names, trade marks, patents, organization
expenses and other like intangibles; (ii) all equity held by it in another
Restricted Subsidiary, and (iii) inter-company loans and advances to another
Subsidiary of the Borrower, all as set forth on the most recent balance sheet of
such Restricted Subsidiary, computed in accordance with GAAP (provided that such
balance sheet shall be prepared on a non-consolidated basis).

         "NEW HOLDCO" has the meaning set out in Schedule BB.

         "NEW JERSEY PROPERTIES" means the lands and premises described in
Schedule D and all plant, buildings, structures, erections, improvements,
appurtenances and fixtures (including fixed machinery and fixed equipment)
situate on those lands.

         "NEW SUBORDINATED LOAN NOTES" has the meaning set out in Schedule BB.

         "1999 CREDIT AGREEMENT" means the Credit Agreement dated as of May 28,
1999 between Borrower, certain of the Guarantors, the Lenders, the
Administration Agent and the Syndication Agent.

         "NJSC" means N.J.S.C. Investment Co., Inc., a corporation incorporated
pursuant to the laws of the State of Delaware.

         "NORMALIZED CONSOLIDATED EBITDA" means Consolidated EBITDA calculated
quarterly on a rolling twelve-month basis, except for the period ended December
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" means, 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" means the leased premises of the Borrower located
at 55 Fenmar Drive, North York, Ontario.
<PAGE>
                                      -19-
                                                                       Article 1

         "NOTEHOLDERS" means The Prudential Insurance Company of America, U.S.
Private Placement Fund or any other holders from time to time of notes under the
Prudential Note Agreement.

         "NOTICE OF BORROWING" means, in the case of a Drawdown, a Drawdown
Notice, in the case of a Conversion, a Conversion Notice and in the case of a
Rollover, a Rollover Notice.

         "OBLIGOR" means the Borrower or any Guarantor.

         "ONTARIO PROPERTIES" means the lands and premises described in Schedule
E and all plant, buildings, structures, erections, improvements, appurtenances
and fixtures (including fixed machinery and fixed equipment) situate on those
lands.

         "OUTSTANDING ADVANCE" has the meaning set out in Section 2.11.

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

         "PARTICIPANT" has the meaning set out in Section 13.03(2).

         "PARTICIPATION" has the meaning set out in Section 13.03(1).

         "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         "PENSION PLAN" means 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" means (i) sales of inventory in the ordinary
course of business upon customary credit terms; or (ii) sales of assets between
any Obligor; or (iii) sales of assets (excluding items set forth in (i) and
(ii)) valuing less than Cdn.$2,500,000 provided that the total amount of asset
sales under item (iii) do not exceed Cdn.$5,000,000 in the aggregate per annum,
calculated on a calendar year basis, for the Restricted Group.

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

         "PERMITTED LIENS" means, with respect to any property or asset of any
Person, the following Liens:
<PAGE>
                                      -20-
                                                                       Article 1

         (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 judgements 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 $5,000,000;

         (e)      Liens respecting Capitalized Lease Obligations provided such
                  Liens secure Indebtedness which is permitted under Section
                  10.03(1)(l);

         (f)      any right reserved to or vested in any Governmental Authority
                  by the terms of any lease, license, franchise, grant or permit
                  acquired by the Person, or by any statutory provision to
                  terminate any such lease, license, franchise, grant or permit,
                  or to require annual or other periodic payments as a condition
                  of the continuance thereof;

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

         (h)      reservations, limitations, provisos and conditions, if any,
                  expressed in any original grants from the Crown or State, as
                  applicable;

         (i)      any Lien securing a purchase money obligation, provided that
                  (a) no such Lien affects any property other than the property
                  acquired by the incurring of such purchase money obligation;
                  (b) 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 (c) such Lien secures Indebtedness
                  which is permitted under Section 10.03(1)(l);

         (j)      the Liens in favour of the Security Agents in their capacity
                  as security agents pursuant to the Inter-Creditor Agreement;
                  and

         (k)      any Lien consented to in writing by the Administration Agent
                  on the instruction of the Majority Lenders,

<PAGE>
                                      -21-
                                                                       Article 1

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 the Person.

         "PERMITTED PARENT GUARANTEES" guarantees by Borrower of the obligations
of a Restricted Subsidiary provided that the obligations guaranteed are
otherwise permitted pursuant to Section 10.03(1) and the guarantee by the
Borrower 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 Borrower.

         "PERMITTED PRIORITY LIENS" means 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 Administration
Agent on the instruction of the Majority Lenders.

         "PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a government or any governmental department or
agency or any other entity whatsoever and the heirs, executors, administrators
or other legal representatives of an individual.

         "PNC" means PNC Bank National Association, a U.S. national banking
association.

         "PNC INDEBTEDNESS" means indebtedness of Co-Steel Raritan, Inc. to PNC
pursuant to the PNC Raritan Credit Agreement up to U.S.$15,633,564.23 and of
Co-Steel Sayreville, Inc. to PNC pursuant to the PNC Sayreville Credit Agreement
up to U.S.$11,748,614.61.

         "PNC RARITAN CREDIT AGREEMENT" means 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 in an amount
up to U.S.$15,633,564.23 to Co-Steel Raritan Inc., together with an accompanying
promissory note.

         "PNC SAYREVILLE CREDIT AGREEMENT" means 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
up to U.S.$11,748,614.61 to Co-Steel Sayreville, Inc., together with an
accompanying promissory note.

         "PRIME RATE" means the variable rate of interest per annum (calculated
on the basis of a 365 or 366 day year) that is the greater of (a) the variable
rate of interest per annum from time to time established by the Administration
Agent as its reference rate of interest for the determination of interest that
it will charge to customers of varying degrees of credit worthiness for Canadian
Dollar demand loans made in Canada; and (b) 0.75% above the average of the rates
from time to time quoted on the CDOR page of Reuters, rounded up to the second
decimal place, at approximately 10:00 a.m. (Toronto time) for one-month Canadian
Dollar bankers' acceptances; provided that any change in the Prime Rate shall be
effective on the effective day of any change in the reference rate referred to
in (a) above or (b) above, respectively.

         "PRIME RATE LOAN" means a Canadian Dollar loan made to the Borrower
under this Agreement and on which interest is calculated by reference to the
Prime Rate.

<PAGE>
                                      -22-
                                                                       Article 1

         "PRIME RATE MARGIN" means, for any period, the applicable percentage
rate per annum as indicated beside or below the reference to Prime Rate Margin
in the definition of "Applicable Margin".

         "PRIORITY PAYABLES" means 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.

         "PROPORTIONATE SHARE" means, in respect of each Lender, from time to
time, (i) with respect to any Credit Facility, the percentage of such Credit
Facility that a Lender has agreed to advance to the Borrower, determined by
dividing the Lender's Commitment in respect of the Credit Facility by the
aggregate of all of the Lenders' Commitments with respect to such Credit
Facility and, (ii) with respect to an Advance, means such percentage of the
Credit Facility under which such Advance is made.

         "PRUDENTIAL NOTE AGREEMENT" means the second amended and restated note
agreement dated as of the date hereof amending and restating (i) the Note
Agreement, dated as of January 10, 1994, as amended and restated by an Amended
and Restated Note Agreement, dated as of February 4, 2000, pursuant to which the
Borrower issued U.S.$100,000,000 of its senior promissory notes due January 15,
2004, and (ii) the Note Agreement dated as of February 20, 1997, as amended and
restated pursuant to the Amended and Restated Note Agreement, dated as of
February 4, 2000 pursuant to which the Borrower issued U.S.$75,000,000 of its
senior promissory notes due July 15, 2006.

         "RELEASE" means 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.

         "REQUIRED LENDERS" means, at any time, if any Advance is outstanding
under the Credit Facilities, any one or more Lenders who have in the aggregate
extended at least 66 2/3% of Advances outstanding at that time under the Credit
Facilities and if no Advance is outstanding under the Credit Facilities, any two
or more Lenders who have in the aggregate at least 66 2/3% of the then maximum
available Commitments under the Credit Facilities.

         "RESTRICTED GROUP" means the Borrower and the Restricted Subsidiaries
collectively.

         "RESTRICTED SUBSIDIARY" means each of 1300554 Ontario Limited, 1102590
Ontario Limited, Co-Steel Distribution Canada Limited, Co-Steel (U.S.) Ltd.,
Co-Steel Finance Corp., Lake Ontario Steel Company Inc., Co-Steel USA
Distribution, Inc., Co-Steel USA Holdings, Inc., Co-Steel Sayreville, Inc.,
Raritan River Urban Renewal Corporation, Co-Steel Raritan, Inc. and such other
Subsidiary of the Borrower that becomes a Guarantor hereunder or as may be
designated as a Restricted Subsidiary by the Borrower and the Required Lenders
from time to time provided that the Hungarian Finance Structure Companies and
NJSC shall be considered Restricted Subsidiaries for the purposes of calculation
of the covenants set forth in Section 10.02, for the purposes of the Special
Purpose Financial Statements and for the purposes of Section 9.01(25) only.

<PAGE>
                                      -23-
                                                                       Article 1

         "REVOLVING FACILITY" means the credit facility established by Section
2.01.

         "REVOLVING FACILITY AMOUNT" means initially an amount up to but not
exceeding Cdn.$155,713,930 or the Equivalent Amount in U.S.$, less the Swingline
Facility Amount, as permanently reduced from time to time pursuant to Section
3.03.

         "RIGHTS" has the meaning set out in Section 13.03.

         "ROLLOVER" means the obtaining of a new LIBOR Loan upon the expiration
of the Interest Period of an outstanding LIBOR Loan, or the drawing and
acceptance of a new Bankers' Acceptance upon the maturity of a Bankers'
Acceptance outstanding under this Agreement.

         "ROLLOVER NOTICE" means a notice in the form of Exhibit G executed by a
Senior Officer of the Borrower.

         "SCHEDULE 1 LENDER" means a bank listed on Schedule 1 of the Bank Act
(Canada).

         "SCHEDULE 2 LENDER" means a bank listed on Schedule 2 of the Bank Act
(Canada).

         "SCHEDULE 3 LENDER" means a bank listed on Schedule 3 of the Bank Act
(Canada).

         "SECURITY" means the Liens created by the Security Documents.

         "SECURITY AGENTS" means the Canadian Security Agent and the US Security
Agent collectively and "SECURITY AGENT" means either of them.

         "SECURITY DOCUMENTS" means the Documents referred to in Article 8.

         "SENIOR OFFICER" means, in respect of any corporation, its chairman,
president, chief executive officer, executive vice-president, finance and
administration, vice-president finance, treasurer or chief financial officer or
any person holding a similar office.

         "SETTLEMENT AMOUNTS" has the meaning equivalent to that provided in
clause (e) of the definition of "Specified Transaction" in the Inter-Creditor
Agreement.

         "SHARE PLEDGE AGREEMENT" means a share pledge agreement entered into in
favour of a Security Agent for and on behalf of the Noteholders, PNC, the
Administration Agent and the Lenders.

         "SHAREHOLDERS' EQUITY" means, 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 SHARE OFFERING" means a public offering by the Borrower of
its common shares, the gross proceeds of which equal or exceed Cdn.$50,000,000
and for greater certainty, excludes the March 2002 Significant Share Offering.

         "SIGNIFICANT U.S. LEASED PROPERTIES" means all lands and premises
described in Schedule O.
<PAGE>
                                      -24-
                                                                       Article 1

         "SPECIAL PURPOSE FINANCIAL STATEMENTS" means the consolidated financial
statements of the Borrower prepared under GAAP, except that the Unrestricted
Subsidiaries, (excluding the Hungarian Finance Structure Companies and NJSC),
are not consolidated but are accounted for at Adjusted Cost Base.

         "SPECIFIED TRANSACTION CERTIFICATE" means a certificate of a Senior
Officer of the Borrower substantially in the form of Exhibit F.

         "STAMPING FEE" means, with respect to a Bankers' Acceptance or a BA
Equivalent Note, the applicable percentage rate per annum indicated beside or
below the reference to "Stamping Fee" in the definition of "Applicable Margin"
relevant to the period in respect of which a determination is being made.

         "STANDSTILL AGREEMENT" means a standstill agreement from Co-Steel (UK)
Limited in favour of the Administration Agent on behalf of the Lenders, the
Noteholders and PNC in form and substance reasonably satisfactory to the
Administration Agent.

         "STRATEGIC PLAN" has the meaning set out in Section 10.01(27).

         "SUBSIDIARY" means, with respect to any Person at any time: (i) any
other Person of which either (a) 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 (b) 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 (ii) 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.

         "SURPLUS LENDER" has the meaning set out in Section 11.11(2).

         "SWINGLINE ACCOUNTS" has the meaning set out in Section 2.05.

         "SWINGLINE FACILITY" means the credit facility established by Section
2.02.

         "SWINGLINE FACILITY AMOUNT" means an amount up to but not exceeding
Cdn. $5,000,000.

         "SWINGLINE LENDER" means The Toronto-Dominion Bank.

         "SYNDICATE PORTION" means the amount allocated pursuant to the terms of
the Inter-Creditor Agreement to the Administration Agent for the benefit of the
Lenders to prepay the Credit Facilities in respect of the amounts detailed in
Section 3.03(1).

         "SYNDICATION" has the meaning set out in Section 13.03(1).

<PAGE>
                                      -25-
                                                                       Article 1

         "SYNDICATION AGENT" means The Bank of Nova Scotia, and its successors
and permitted assigns.

         "SYNTHETIC LEASE" means 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" means, as at any date, the amount equal to the
Shareholders' Equity (excluding foreign currency translation adjustments), less
all goodwill, investments in and amounts due from ASW Holdings PLC, trade names,
trade marks, 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 at such date.

         "TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and
other assessments, including all income, sales, use, goods and services, value
added, capital, capital gains, alternative, net worth, transfer, profits,
withholding, payroll, employer health, excise, franchise, real property and
personal property taxes, and any other taxes, customs duties, fees, assessments,
royalties, duties, deductions, compulsory loans or similar charges in the nature
of a tax, including Canada Pension Plan and provincial pension plan
contributions, employment insurance payments and workers compensation premiums,
together with any instalments, and any interest, fines and penalties, imposed by
any Governmental Authority, whether disputed or not.

         "THIS AGREEMENT", "HEREIN", "HEREOF", "HERETO" and similar expressions
mean and refer to this agreement and include any instrument amending or
supplementing the same, and the expressions "ARTICLE", "SECTION", "SECTION " and
"SCHEDULE" followed by a number or letter and no reference to another agreement
mean and refer to the specified Article, Section, Section or Schedule of this
agreement.

         "UNDERWRITERS" means the Administration Agent and the Syndication Agent
collectively.

         "UNITED STATES DOLLARS, U.S. DOLLARS", "$U.S." and "U.S.$" means lawful
currency of the United States of America.

         "UNRESTRICTED SUBSIDIARIES" means each of 1062316 Ontario Limited,
Co-Steel Dofasco LLC, Co-Steel Benefit Plans Inc., Co-Steel C.S.M. Corp.,
Gallatin, Gallatin Terminal Company and Gallatin Transit Authority, Co-Steel
Benefit Plans USA Inc., Co-Steel Amsterdam B.V., Cansteel Antilles N.V.,
Co-Steel (UK) Limited, ASW Holdings PLC, NJSC, Goldmarsh Enterprises, Acierco
S.A., Co-Steel Hungary and such other Subsidiary of the Borrower as may be
designated as an Unrestricted Subsidiary by the Borrower with the consent of the
Required Lenders from time to time and "Unrestricted Subsidiary", means any of
them, provided that the Hungarian Finance Structure Companies and NJSC shall not
be considered Unrestricted Subsidiaries for the purposes of calculation of the
covenants set forth in Section 10.02, for the purposes of the Special Purpose
Financial Statements and for the purposes of Section 9.01(25) only.

         "UNUTILIZED PORTION" means, in respect of any Credit Facility, on any
date, the maximum principal amount of such Credit Facility at such date, after
giving effect to any

<PAGE>
                                      -26-
                                                                       Article 1

reductions required by this Agreement, minus the Utilized Portion of such Credit
Facility, at such date.

         "US GUARANTORS" means Co-Steel (U.S.) Ltd., Co-Steel Finance Corp.,
Lake Ontario Steel Company Inc., Co-Steel USA Distribution, Inc., Co-Steel USA
Holdings, Inc., Co-Steel Raritan, Inc., Co-Steel Sayreville, Inc. and Raritan
River Urban Renewal Corporation 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.

         "US SECURITY AGENT" means State Street Bank and Trust Company in its
capacity as US Security Agent for and on behalf of the Administration Agent, the
Noteholders and PNC pursuant to the Inter-Creditor Agreement.

         "UTILITY" means a Person which supplies natural gas, electricity or
oxygen.

         "UTILIZED PORTION" means the sum of (i) all Advances outstanding under
a facility in Canadian Dollars at the date of determination plus (ii) the
Equivalent Amount in Canadian Dollars of the amount of all Advances outstanding
under such facility in U.S. Dollars at that date; and in determining the
foregoing amount, the face amount of all outstanding Bankers' Acceptances, BA
Equivalent Notes and Letters of Credit shall be used.

1.02     Headings and Internal References

         The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not affect
its construction or interpretation. The terms "this Agreement", "hereof",
"hereunder" and similar expressions refer to this Agreement together with any
amendments or supplements, and not to any particular Article, Section or other
portion of this Agreement or its amendments or supplements. Unless inconsistent
with the subject matter or context, textual references to Articles and Sections
are to Articles and Sections of this Agreement.

1.03     Number and Gender

         Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine and
neuter genders and vice versa and words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and vice versa.

1.04     Accounting Terms and Principles

         All accounting terms not otherwise defined in this Agreement shall have
the meanings ascribed to them in accordance with GAAP, consistently applied,
provided that, if any change in GAAP subsequent to the date of this Agreement is
material for the purpose of determining the Borrower's compliance with a
covenant contained in this Agreement or any calculations hereunder, then:

         (a)      the change shall not be effective for the purpose of
                  determining compliance with the covenant, (i) without the
                  consent of the Required Lenders, if the change

<PAGE>
                                      -27-
                                                                       Article 1

                  makes the covenant less restrictive, or (ii) without the
                  consent of the Borrower, if the change makes the covenant more
                  restrictive; provided that once an amendment in accordance
                  with Section (b) below has been made the change shall
                  immediately become effective; and

         (b)      the Borrower, the Underwriters and the Lenders agree to enter
                  into negotiations at the request of any of them, in order to
                  amend any covenant to equitably reflect any change in GAAP,
                  with the desired result that the criteria for evaluating the
                  Borrower's financial condition shall be the same after the
                  change as before the change.

1.05     Interest Act (Canada)

         Interest rates expressed in this Agreement on the basis of a 360 day
year shall be deemed to be also expressed at a yearly rate of interest
determined by multiplying the expressed rate by the actual number of days in the
calendar year divided by 360.

1.06     Schedules

         The following Schedules are annexed to, incorporated by reference in
and deemed to be part of this Agreement:

<TABLE>
<CAPTION>
<S>                            <C>   <C>
        Schedule A             -     Lenders Party to this Agreement
        Schedule B             -     Commitments of Lenders
        Schedule C             -     Leased Properties
        Schedule D             -     New Jersey Properties
        Schedule E             -     Ontario Properties
        Schedule G             -     Material Contracts
        Schedule H             -     Material Licenses
        Schedule I             -     Jurisdictions for Registration of Security
        Schedule J             -     Environmental Notices
        Schedule K             -     Debt Default
        Schedule L             -     Litigation
        Schedule M             -     Exceptions from title to Assets - Borrower
        Schedule N             -     Owners of Owned Property and Municipal Address Thereof
        Schedule O             -     Significant U.S. Leased Properties
        Schedule P             -     Jurisdictions in which Borrower and Subsidiaries Carry on Business
        Schedule Q             -     Subsidiaries
        Schedule R             -     Intentionally Deleted
        Schedule S             -     Intellectual Property Rights
        Schedule T             -     Licenses, Agency and Distribution Agreements
        Schedule U             -     Wind Up of English Finance Structure
        Schedule V             -     Assets and Liabilities of Certain Subsidiaries
        Schedule W             -     Financial Forecast
        Schedule X             -     Bank Accounts
        Schedule Y             -     Inter-Corporate Indebtedness
</TABLE>

<PAGE>
                                      -28-
                                                                       Article 1
<TABLE>
<CAPTION>
<S>                            <C>   <C>
        Schedule Z             -     Pension Plans
        Schedule AA            -     Asset Monetization Plan
        Schedule BB            -     Hungarian Loan Reorganization
</TABLE>

1.07     EXHIBITS

         The following Exhibits are annexed to, incorporated by reference in and
deemed to be part of this Agreement:

<TABLE>
<CAPTION>
<S>                            <C>   <C>
        Exhibit A              -     Assignment Agreement
        Exhibit B              -     Compliance Certificate
        Exhibit C              -     Conversion Notice
        Exhibit D              -     Drawdown Notice
        Exhibit E              -     Guarantee
        Exhibit F              -     Specified Transaction Certificate
        Exhibit G              -     Rollover Notice
</TABLE>

1.08     DETERMINATION OF MATERIALITY

         In any Document, except where specifically stated otherwise, whether
any event or state of affairs is "material" shall be determined by the
Administration Agent and the Majority Lenders, acting reasonably.

1.09     CERTIFICATES AND OPINIONS, ETC.

         Whenever the delivery of a certificate or opinion by or on behalf of
any Person is a condition precedent to the taking of any action by the
Administration Agent or the Lenders under any Document, the truth and accuracy
of the facts and opinions stated in the certificate or opinion shall in each
case be conditions precedent to the right of the Person to have the action
taken, and each statement of fact contained in the certificate or opinion shall
be deemed to be a representation and warranty of the Person for the purposes of
this Agreement.

1.10     GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable within the
Province of Ontario.

1.11     CURRENCY

         Unless expressly stated otherwise, all amounts expressed herein are in
Canadian Dollars.

                         ARTICLE 2 - CREDIT FACILITIES

2.01     THE REVOLVING FACILITY

         Subject to the terms and conditions of this Agreement, the Lenders and
the LC Lender establish in favour of the Borrower a revolving credit facility
(the "Revolving Facility") in the

<PAGE>
                                      -29-
                                                                       Article 2

Revolving Facility Amount which shall be available from and including the
Closing Date to but excluding the Maturity Date.

2.02     THE SWINGLINE FACILITY

         Subject to the terms and conditions of this Agreement, the Swingline
Lender establishes in favour of the Borrower a revolving credit facility (the
"Swingline Facility") in the Swingline Facility Amount which shall be available
from and including the Closing Date to but excluding the Maturity Date.

2.03     PURPOSE OF CREDIT FACILITIES

         (1)      Revolving Facility Purpose. The first Advance under the
Revolving Facility shall only be used to pay and cancel currently outstanding
Indebtedness of the Borrower to each Lender pursuant to the 1999 Credit
Agreement and subsequent Advances under the Revolving Facility shall only be
used for working capital and/or general corporate purposes in the ordinary
course of business of the Borrower.

         (2)      Swingline Facility Purpose. Advances under the Swingline
Facility shall only be used for working capital and/or general corporate
purposes in the ordinary course of business of the Borrower.

2.04     MANNER OF BORROWING - REVOLVING FACILITY

         Subject to the further terms and conditions of this Agreement, (a) the
Borrower may make Drawdowns, Rollovers or Conversions under the Revolving
Facility on and after the Closing Date up to the earlier of (i) the occurrence
of a Default and (ii) the Maturity Date; on the following terms:

         (a)      the Borrower may request a Drawdown, Conversion or Rollover
                  under the Revolving Facility by delivering the appropriate
                  Notice of Borrowing to the Administration Agent in accordance
                  with Section 2.06;

         (b)      each Rollover or Conversion under the Revolving Facility shall
                  be used solely to fund the repayment of an outstanding Advance
                  under the Revolving Facility;

         (c)      each Drawdown or Conversion may take the form of a Prime Rate
                  Loan, a Base Rate Loan, a Bankers' Acceptance or a BA
                  Equivalent Note, a LIBOR Loan or a Letter of Credit;

         (d)      each Prime Rate Loan shall be in a minimum amount of Cdn.
                  $1,000,000 and in integral multiples of Cdn. $100,000;

         (e)      each Base Rate Loan shall be in a minimum amount of
                  U.S.$1,000,000 and in integral multiples of U.S.$100,000;

         (f)      each Bankers' Acceptance or BA Equivalent Note shall be in a
                  minimum amount of Cdn. $1,000,000, in integral multiples of
                  Cdn. $100,000 and for a term not

<PAGE>
                                      -30-
                                                                       Article 2

                  exceeding six months provided that each Bankers' Acceptance
                  shall mature on a Banking Day and shall not extend beyond the
                  Maturity Date;

         (g)      there shall not be more than seven different Bankers'
                  Acceptance or BA Equivalent Note maturity dates at any one
                  time;

         (h)      LIBOR Loans are subject to availability as set out in Section
                  6.03, shall be in minimum amounts of U.S.$1,000,000 and in
                  integral multiples of U.S.$100,000 and for terms of
                  approximately 30, 60, 90 or 180 days; provided that each LIBOR
                  Loan shall mature on a Banking Day and shall not extend beyond
                  the Maturity Date;

         (i)      there shall not be more than seven Interest Periods in respect
                  of LIBOR Loans with different termination dates at any one
                  time;

         (j)      each Drawdown of a Letter of Credit shall be subject to the
                  terms and conditions of the LC Lender's standard agreements
                  and practices respecting Letters of Credit;

         (k)      Letters of Credit may not have a term longer than one year and
                  shall not extend beyond the Maturity Date;

         (l)      the aggregate amount of Letters of Credit which may be
                  outstanding at any time shall not exceed Cdn.$20,000,000 or
                  the Equivalent Amount in U.S.$; and

         (m)      after a Drawdown, Conversion or Rollover, the Utilized Portion
                  of the Revolving Facility shall not exceed the Revolving
                  Facility Amount.

2.05     MANNER OF BORROWING - SWINGLINE FACILITY

         Subject to the further terms and conditions of this Agreement, the
Borrower may make Drawdowns under the Swingline Facility on and after the
Closing Date up to the earlier of (a) the occurrence of a Default and (b) the
Maturity Date on the following terms:

         (a)      no Notice of Borrowing shall be necessary for a Drawdown;

         (b)      each Drawdown may take the form of a Prime Rate Loan or a Base
                  Rate Loan;

         (c)      each Drawdown shall only be by way of overdraft on accounts
                  (the "Swingline Accounts") established by the Borrower with
                  the Swingline Lender and designated for that purpose;

         (d)      each Drawdown shall be subject to the terms and conditions set
                  out in the Swingline Lender's standard account documentation
                  entered into by the Borrowers in accordance with Section
                  7.02(12);

         (e)      each Drawdown by way of overdraft on any Swingline Account
                  shall have no minimum requirement;

<PAGE>
                                      -31-
                                                                       Article 2

         (f)      if at any time the Borrower is a party to a cash concentration
                  agreement with the Swingline Lender, the amount of overdraft
                  from time to time in the concentration account of the Borrower
                  established pursuant to such arrangement shall be deemed to be
                  an Advance under the Swingline Facility;

         (g)      the Swingline Accounts shall be subject to a cash management
                  system administered by the Swingline Lender in accordance with
                  the Swingline Lender's standard practice; and

         (h)      after making an Advance the Utilized Portion of the Swingline
                  Facility shall not exceed the Swingline Facility Amount.

2.06     NOTICE OF BORROWING

         (1)      Notice of Borrowing - Credit Facilities. The Borrower shall
give the Administration Agent prior notice of each intended Drawdown under the
Revolving Facility by delivery to the Administration Agent of a Notice of
Borrowing on or prior to the times respectively set forth below:

<TABLE>
<CAPTION>
Type of Advance                             Notice Required
---------------                             ---------------
<S>                                         <C>
Prime Rate Loans                            One Banking Day

Base Rate Loans                             One Banking Day

LIBOR Loans                                 Three Banking Days

Bankers' Acceptances or BA Equivalent       One Banking Day for a Drawdown or Conversion,
Notes                                       Three Banking Days for a Rollover

Letter of Credit                            Five Banking Days
</TABLE>

         No Notice of Borrowing is required to Drawdown a Prime Rate Loan or a
Base Rate Loan by way of overdraft under the Swingline Facility.

         (2)      Timing. Each Notice of Borrowing shall be delivered to the
Administration Agent on a Banking Day on or prior to 11:00 a.m. (Toronto time)
to the Administration Agent, on the date on which the Notice of Borrowing is
required. Any Notice of Borrowing delivered after 11:00 a.m. (Toronto time)
shall be deemed to have been delivered on the next Banking Day.

         (3)      Irrevocability. Each Notice of Borrowing given to the
Administration Agent by the Borrower shall be irrevocable and the Borrower shall
borrow the stated amount on the stated date in accordance with the Notice of
Borrowing.
<PAGE>
                                      -32-
                                                                       Article 2

2.07     NOTIFICATION OF LENDERS UNDER CREDIT FACILITIES

         Upon receipt of a duly completed Notice of Borrowing in respect of the
Revolving Facility in accordance with the provisions of this Agreement, the
Administration Agent shall notify each Lender before 5:00 p.m. (Toronto time) on
the day of receipt of the Notice of Borrowing with respect to (i) the proposed
Advance, (ii) the amount and type of Advance to be made available by each
Lender, (iii) the particulars of the Administration Agent's account to which the
proceeds of any Advance are to be credited and (iv) such other particulars as
may be provided for elsewhere in this Agreement.

2.08     DISBURSEMENT OF LOANS UNDER CREDIT FACILITIES

         Each Loan made by a Lender to the Borrower under a Credit Facility
shall be made by that Lender crediting the account of the Administration Agent
that the Administration Agent shall have designated to the Lenders for that
purpose in same day funds for same day value by 10:00 a.m. (Toronto time) on the
date of the applicable Drawdown or Conversion and the Administration Agent shall
credit the applicable funds to the account the Borrower shall have designated to
the Administration Agent in the Notice of Borrowing in same day funds for same
day value by 11:00 a.m. (Toronto time) on the date of the applicable Drawdown or
Conversion.

2.09     ISSUANCE OF BANKERS' ACCEPTANCES AND LETTERS OF CREDIT

         Bankers' Acceptances or BA Equivalent Notes shall be accepted or
purchased and Letters of Credit shall be issued in accordance with Article 5 of
this Agreement.

2.10     PRO-RATA ADVANCES UNDER CREDIT FACILITIES

         (1)      Requirement to Advance. Subject to the terms and conditions of
this Agreement, all Advances under the Credit Facilities shall be made available
contemporaneously by the Lenders on a pro rata basis in the same proportions as
their respective Commitments; provided that the Administration Agent shall be
entitled at any time to request an Advance from the Lenders otherwise than in
accordance with their respective Commitments if required by, or consistent with,
the traditional treasury management practices of the Administration Agent or
normal money market practices. The obligations of the Lenders to make an Advance
shall be several and no Lender shall be responsible for any default by any other
Lender in its obligation to make its proportionate share of Advances available
nor shall the Commitment of any Lender be increased as a result of the default
by any other Lender in its obligation to make Advances available, except as
provided in Subsection (2) of this Section.

         (2)      Failure to Advance Under Credit Facility. In the event that
any Lender (a "Defaulting Lender") fails to make available its portion of any
Advance under a Credit Facility as required, the Administration Agent shall
forthwith give notice of that failure to each of the other Lenders and the
Borrower, and any other Lender, upon notice to the Administration Agent and the
other Lenders and acknowledgement by the Administration Agent, may advance to
the Borrower the amount (or if more than one Lender so elects, its pro rata
share of the amount based upon the Commitments of the electing Lenders) of the
Defaulting Lender's portion of the Advance. The Lender or Lenders after making
the advances shall have the right to forthwith recover the same from the
Defaulting Lender together with costs incurred by such Lender or

<PAGE>
                                      -33-
                                                                       Article 2

Lenders or, if required by any Lender making any advance on behalf of another
Lender, the Lenders, the Administration Agent and the Borrower shall enter into
documentation, in form and substance satisfactory to the parties (other than the
Defaulting Lender), as may be appropriate to evidence an adjustment of the
Commitments of the Lenders necessitated by the Advance made by the Lender(s).
Nothing in this Section shall be deemed to relieve any Lender from its
obligation in respect of the Credit Facilities or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by that
Lender under this Agreement.

2.11     CONVERSIONS

         The Borrower may at any time deliver a Conversion Notice in accordance
with Section 2.06 to the Administration Agent requesting one or more Drawdowns
under a Credit Facility the proceeds of which shall be used to retire one or
more outstanding Advances under the relevant Credit Facility in order to convert
the outstanding Advance into a different type of Advance (the "Conversion"),
provided that:

         (a)      the Conversion Notice identifies the outstanding Advance or
                  Advances to be retired (the "Outstanding Advance");

         (b)      the Conversion would otherwise be a permitted Drawdown and the
                  Borrower complies with the provisions of this Agreement
                  relating to the obtaining of a Drawdown;

         (c)      the aggregate principal amount of the Conversion then
                  requested is not greater than the aggregate principal amount
                  of the Outstanding Advance;

         (d)      the entire proceeds of the Conversion are used to retire in
                  full the Outstanding Advance;

         (e)      each Conversion is made contemporaneously with the retirement
                  of the Outstanding Advance; and

         (f)      if the Conversion is to be outstanding in a currency different
                  from that of the Outstanding Advance, the amount of the
                  Conversion shall be the Equivalent Amount of the Outstanding
                  Advance.

2.12     ROLLOVERS

         (1)      Delivery of Rollover Notice. Prior to the expiration of the
Interest Period on a LIBOR Loan or the maturity of a Bankers' Acceptance, the
Borrower may deliver a Rollover Notice in accordance with Section 2.06 to the
Administration Agent:

         (a)      in respect of a LIBOR Loan, selecting the next Interest Period
                  applicable to the LIBOR Loan which new Interest Period shall
                  commence on and include the last day of the previous Interest
                  Period; and

         (b)      in respect of a Bankers' Acceptance, stating that it intends
                  to draw and present for acceptance on the maturity date of the
                  maturing Bankers' Acceptance, a new

<PAGE>
                                      -34-
                                                                       Article 2

                  Bankers' Acceptance in the same face amount as the maturing
                  Bankers' Acceptance.

         (2)      Failure to Deliver Notice. If the Borrower fails to deliver a
Rollover Notice or a Conversion Notice to the Administration Agent in respect of
the expiration of the Interest Period of a LIBOR Loan or the maturity of a
Bankers' Acceptance then:

         (a)      in the case of an expiring LIBOR Loan, the Borrower shall be
                  deemed to have given a Conversion Notice to the Administration
                  Agent electing to convert the LIBOR Loan into a Base Rate
                  Loan; and

         (b)      in the case of a maturing Bankers' Acceptance, the Borrower
                  shall be deemed to have given a Conversion Notice to the
                  Administration Agent electing to convert the Bankers'
                  Acceptance into a Prime Rate Loan.

2.13     EVIDENCE OF BORROWINGS

         The Administration Agent shall maintain records evidencing all Advances
and all other amounts owing by the Borrower to the Lenders pursuant to this
Agreement. The Administration Agent shall enter in the foregoing records details
of all amounts from time to time owing, paid or repaid by the Borrower. The
information kept in the foregoing records shall, absent manifest error,
constitute prima facie evidence of the obligations of the Borrower to the
Lenders with respect to all amounts owing by the Borrower to the Lenders
pursuant to this Agreement.

2.14     HEDGING CONTRACTS

         The Lenders may, but shall not be obliged to, arrange Hedging
Contracts. Any Hedging Contracts arranged shall be subject to terms and
conditions to be negotiated at the time the Hedging Contract is arranged. The
obligation of the Borrower to any Lender under Hedging Contracts if related to
Advances under this Agreement shall rank pari passu with the obligations
hereunder and shall be secured by the Security Documents.

                       ARTICLE 3 - REPAYMENT AND PAYMENT

3.01     REPAYMENT OF REVOLVING FACILITY

         (1)      Revolving. The Borrower may repay Advances under the Revolving
Facility at any time up to the Maturity Date and during such period amounts
repaid may be reborrowed from time to time in accordance with the provisions of
this Agreement.

         (2)      Prepayment and Repayment. The Borrower shall from time to time
prepay the Revolving Facility in accordance with Section 3.04 and shall repay to
the Administration Agent for the account of the Lenders the outstanding balance
of all amounts owing by the Borrower under the Revolving Facility on the
Maturity Date.
<PAGE>
                                      -35-
                                                                       Article 3

3.02     REPAYMENT OF SWINGLINE FACILITY

         (1)      Revolving. The Borrower may repay Advances under the Swingline
Facility at any time and amounts repaid may be reborrowed from time to time in
accordance with the provisions of this Agreement.

         (2)      Repayment. The Borrower shall repay the Administration Agent
for the account of the Swingline Lender the balance of all amounts owing by the
Borrower under the Swingline Facility on the Maturity Date.

3.03     MANDATORY PREPAYMENT AND REDUCTION OF AVAILABILITY UNDER CREDIT
         FACILITIES

         (1)      Specified Transactions. Borrower shall prepay the Credit
Facilities by an amount equal to the Syndicate Portion of:

         (a)      the Net Cash Proceeds received by the Borrower or any member
                  of the Restricted Group from time to time under the Asset
                  Monetization Program;

         (b)      the Net Cash Proceeds received by the Borrower or any member
                  of the Restricted Group from time to time from Approved Asset
                  Sales or any other sales of assets in excess of $1,000,000
                  from any one transaction or series of transactions or in
                  excess of $5,000,000 in the aggregate per annum;

         (c)      the Net Cash Proceeds received by the Borrower or any member
                  of the Restricted Group from any offering by any such entity
                  of debt or equity securities that is not a Significant Share
                  Offering;

         (d)      two-thirds of the Net Cash Proceeds received by the Borrower
                  from a Significant Share Offering.

         (e)      100% of the Borrower's share of cash or other property
                  received from Gallatin;

         (f)      100% of all Settlement Amounts received by the Borrower or any
                  member of the Restricted Group;

         (g)      all Insurance Proceeds received or deemed received by an
                  Obligor which are required to be paid to a Security Agent
                  pursuant to the terms of Section 10.01(18); and

         (h)      the amount of any Excess Revolver Paydown.

For greater certainty, any transaction in accordance with Section 10.01(11) or
7.05(3) shall not result in a prepayment obligation hereunder.

         (2)      Time of Payment. The Syndicate Portion of all Insurance
Proceeds paid directly to a Security Agent by an insurer that constitute a
prepayment in accordance with the terms of the Inter-Creditor Agreement shall be
deemed a prepayment hereunder upon receipt by such Security Agent. All
prepayments required pursuant to Section 3.03(1)(a) through (g) shall be
<PAGE>
                                      -36-
                                                                       Article 3

made within three Banking Days of receipt of funds by the Borrower, and the
prepayment required pursuant to Section 3.03(1)(h) shall be made within five
Banking Days following the end of each fiscal quarter of the Borrower. All such
prepayments shall permanently reduce the amount available under the Credit
Facility prepaid. All such prepayments shall be applied first to Loans and
thereafter to Letters of Credit.

         (3)      Manner of Payment. All prepayments to be made by the Borrower
under this Section 3.03 shall be made to the Managing Security Agent. Once so
received by the Managing Security Agent, the Borrower shall have discharged its
obligations in respect thereof. The Borrower shall deliver to the Managing
Security Agent and the Administration Agent a Specified Transaction Certificate
together with each prepayment under this Section 3.03. The Borrower shall
specify, pursuant to the Specified Transaction Certificate, the Advances against
which to apply such prepayment; and all prepayments shall be made in the same
currency in which the Advance is outstanding. For greater certainty, the
Borrower 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. All prepayments to be made by the Borrower under Section 3.03 shall be
made in immediately available funds and received by the Managing Security Agent
before 12:00 p.m. (Toronto time) on the date due. Prepayments received after
that time shall be deemed to have been received on the next Banking Day.
Whenever any prepayment under this Section 3.03 is due on a day which is not a
Banking Day, the due date shall be extended to the next succeeding Banking Day
unless that Banking Day falls in the next calendar month in which event the due
date shall be the immediately preceding Banking Day. During any extension of the
date due for payment of any amount payable under this Section 3.03, interest
shall be payable on unpaid amounts at the rate or rates borne by the those
amounts.

3.04     EXCESS AMOUNT

         If at any time there exists an Excess Amount in respect of any Credit
Facility whether as a result of currency fluctuations or otherwise, the Borrower
shall pay to the Administration Agent on behalf of the Lenders upon demand by
the Administration Agent the amount of the Excess Amount together with Breakage
Costs incurred by each of the Lenders as a result of the payment provided,
however, that the Lenders agree that the Borrower shall not be required to break
any LIBOR Loan or Bankers' Acceptance prior to its maturity date in order to pay
any Excess Amount and such Excess Amount shall, in such case be paid upon the
maturing of such LIBOR Loan or Bankers' Acceptance.

3.05     PLACE AND MANNER OF PAYMENTS

         (1)      Payments. Except as set forth in Section 3.03(3), all payments
to be made by the Borrower hereunder shall be made to the Administration Agent
in the same currency in which any pertinent Advance is outstanding provided that
if any payment does not relate specifically to any Advance, that payment shall
be made in Canadian Dollars. All payments to be made by the Borrower shall be
made in immediately available funds and received by the Administration Agent
before 12:00 p.m. (Toronto time) on the date due. Payments received after that
time shall be deemed to have been received on the next Banking Day. Whenever any
payment hereunder is
<PAGE>
                                      -37-
                                                                       Article 3

due on a day which is not a Banking Day, the due date shall be extended to the
next succeeding Banking Day unless that Banking Day falls in the next calendar
month in which event the due date shall be the immediately preceding Banking
Day. During any extension of the due date for payment of any amount payable
hereunder pursuant to this Section, interest shall be payable on unpaid amounts
at the rate or rates borne by those amounts.

         (2)      Debiting of Accounts. The Borrower authorizes and directs the
Administration Agent and each Lender to debit the amount of all principal,
interest, fees and all other amounts due and owing by the Borrower under this
Agreement from time to time from any account it has with the Administration
Agent or any Lender.

3.06     NET PAYMENTS, ETC.

         (1)      No Set-Off or Deductions. Any and all payments made by the
Borrower hereunder shall be made to the Administration Agent, the Managing
Security Agent or to the Lenders in full, without set-off or counterclaim and
free and clear of and without deduction or withholding for, or on account of,
any and all present and future Taxes. If the Borrower is required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
(i) the sum payable shall be increased, as may be necessary, so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) the
Administration Agent, the Managing Security Agent or the Lenders, as the case
may be, receives an amount equal to the sum that it would have received had no
deductions or withholdings been made, (ii) the Borrower shall make the required
deductions or withholdings, and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance with
Applicable Laws. Each Lender agrees to repay or credit to the Borrower any
refund or tax credit which such Lender receives or receives the benefit of with
respect to Taxes that were paid by the Borrower pursuant to this Section
3.06(1).

         (2)      Tax Indemnity. The Borrower shall indemnify the Administration
Agent and the Lenders for the full amount of any Taxes (other than Excluded
Taxes) imposed by any jurisdiction on amounts payable by the Borrower under this
Section paid or payable by the Administration Agent and the Lenders and for any
liability (including penalties, interest and reasonable expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted, and for any Taxes (other than Excluded Taxes) levied or
imposed with respect to any indemnity payment made under this Section. This
indemnification shall be made within 30 days after the date the Administration
Agent or any of the Lenders makes written demand therefor.

         (3)      Evidence of Payment. Within 30 days after the date of any
payment of Taxes withheld by the Borrower in respect of any payment by the
Borrower to the Administration Agent or any of the Lenders, the Borrower shall
furnish to the Administration Agent or the applicable Lenders the original or a
certified copy of a receipt issued by the relevant taxing authority evidencing
payment by the Borrower to the taxing authority of any Taxes (other than
Excluded Taxes) with respect to any payment payable to the Administration Agent
or the applicable Lenders.
<PAGE>
                                      -38-
                                                                       Article 3

         (4)      Survival. The obligations of the Borrower under this Section
shall survive the termination of this Agreement and the payment of all amounts
payable under this Agreement.

3.07     APPLICATION OF PAYMENTS

         If any Event of Default shall occur and be continuing, all payments
made by the Borrower hereunder shall be applied in the following order:

         (a)      to amounts due hereunder as costs and expenses;

         (b)      to amounts due hereunder as commitment fees;

         (c)      to amounts due hereunder as default interest;

         (d)      to amounts due hereunder as Bankers' Acceptance or Letter of
                  Credit fees;

         (e)      to amounts due hereunder as interest;

         (f)      to amounts due hereunder as principal; and

         (g)      any other amounts owing hereunder.

                          ARTICLE 4 - INTEREST AND FEES

4.01     COMPUTATION OF INTEREST AND FEES

         (1)      Rates of Interest. The Borrower shall pay interest to the
Administration Agent for the account of the Lenders, or in the case of Swingline
Facility to the Swingline Lender, (a) on Prime Rate Loans at a rate per annum
equal to the sum of the Prime Rate plus the Prime Rate Margin; (b) on Base Rate
Loans at a rate per annum equal to the sum of the Base Rate plus the Base Rate
Margin; and (c) on LIBOR Loans at a rate per annum equal to the sum of the LIBOR
Rate plus the LIBOR Margin.

         (2)      Default Interest. During the continuance of an Event of
Default, the Borrower shall pay interest to the Administration Agent for the
account of the Lenders, or in the case of Swingline Facility to the Swingline
Lender, on all Advances at a rate of interest per annum equal to the Default
Rate unless prohibited by law, in which event such amount, if payable in
Canadian Dollars, shall bear interest at the rate applicable to a Prime Rate
Loan under the applicable Credit Facility or, if payable in U.S. Dollars, shall
bear interest at the rate applicable to a Base Rate Loan under the applicable
Credit Facility. Such interest shall be calculated daily and payable monthly
with interest on overdue interest at the same rate.

         (3)      Computation. The Administration Agent or the Swingline Lender,
as applicable, shall calculate interest daily, according to its regular
practice, both before and after demand, maturity, default and judgement and (i)
in the case of a Prime Rate Loan or Base Rate Loan, on the basis of a year of
365 days or 366 days, as the case may be and (ii) in the case of a LIBOR Loan,
on the basis of a year of 360 days.
<PAGE>
                                      -39-
                                                                       Article 4

         (4)      Bankers' Acceptance and Letter of Credit Fees. The Borrower
shall pay the fees set out in Article 5 with respect to Bankers' Acceptances, BA
Equivalent Notes and Letters of Credit to the Administration Agent for the
account of the Lenders.

4.02     ACCRUAL AND PAYMENT OF INTEREST ON LOANS

         Each Loan shall accrue interest from day to day including the date of
advance but excluding the date of repayment and which shall be payable:

         (a)      in the case of each Prime Rate Loan and Base Rate Loan,
                  monthly in arrears on the last Banking Day of each month or
                  otherwise in accordance with the usual practice of the
                  Administration Agent or the Swingline Lender, as applicable,
                  as advised by the Administration Agent or the Swingline
                  Lender, as applicable, to the Borrower and as changed by the
                  Administration Agent or the Swingline Lender, as applicable,
                  upon notice to the Borrower from time to time; and

         (b)      in the case of each LIBOR Loan, on each Interest Payment Date.

4.03     CURRENCY

         The Borrower shall pay any interest or fee owing in respect of an
Advance in the same currency as that Advance is denominated.

4.04     LIBOR LOANS

         (1)      Repayment of LIBOR Loans. Each LIBOR Loan shall be repaid on
the last day of its Interest Period.

         (2)      Interest Periods in respect of LIBOR Loans. The right of the
Borrower to choose the duration of an Interest Period in respect of a LIBOR Loan
shall be limited as follows:

         (a)      Interest Periods shall be for approximately 30, 60, 90 or 180
                  days (or the interest periods then being offered in the London
                  interbank market) and of a duration to permit the Borrower to
                  make the reductions or repayments required by this Agreement;

         (b)      the first Interest Period for a LIBOR Loan shall commence on
                  the day of its advance and each subsequent Interest Period
                  shall commence forthwith upon the expiry of the immediately
                  preceding Interest Period; and

         (c)      the last day of each Interest Period shall be determined in
                  accordance with the practices of the London interbank market
                  as from time to time in effect.

4.05     FEES

         (1)      Commitment Fees. The Borrower shall pay to the Administration
Agent on account of the Lenders a commitment fee calculated daily on the
Unutilized Portion of the Revolving Facility at a rate per annum equal to the
Commitment Fee Rate. The Borrower shall
<PAGE>
                                      -40-
                                                                       Article 4

pay to the Swingline Lender a commitment fee calculated daily on the Unutilized
Portion of the Swingline Facility at a rate per annum equal to the Commitment
Fee Rate. The Borrower shall pay all fees quarterly in arrears within two
Banking Days following the end of each calendar quarter and on the day any
Credit Facility is repaid pursuant to this Agreement. All fees shall be
calculated on the basis of 365 or 366 days, as the case may be. For greater
certainty, all fees payable in connection with the Revolving Facility shall be
without duplication to those payable in respect of the Swingline Facility.

         (2)      Restructuring Fee. The Borrower shall pay to the
Administration Agent, for the benefit of the Lenders, a fee of Cdn. $890,000
payable on the Closing Date, and a further fee of Cdn. $445,000 payable on
August 30, 2002.

         (3)      Administration Fee. The Borrower shall pay to the
Administration Agent, for the Administration Agent's own account, the fees set
forth in the Fee Side Letter.

4.06     ADMINISTRATION AGENT'S CERTIFICATE

         A certificate of the Administration Agent or the Swingline Lender, as
applicable, shall be, absent manifest error, prima facie evidence of each rate
of interest or fee payable under this Agreement and the amount thereof due from
the Borrower.

4.07     LATE PAYMENT

         If any payment required to be made by the Borrower hereunder is not
made on the due date thereof, the Borrower shall pay interest on the amount of
such required payment at the Late Payment Rate until payment in full of such
required payment has been made.

4.08     Maximum Rate of Return

         Notwithstanding any provision to the contrary in this Agreement, in no
event shall the aggregate "interest" (as defined in Section 347 of the Criminal
Code, Revised Statutes of Canada, 1985, c. 46 as the same may be amended,
replaced or re-enacted from time to time) payable under this Agreement exceed
the effective annual rate of interest on the "credit advanced" (as defined in
that section) under this Agreement lawfully permitted under that section and, if
any payment, collection or demand pursuant to this Agreement in respect of
"interest" (as defined in that section) is determined to be contrary to the
provisions of that section, such payment, collection or demand shall be deemed
to have been made by mutual mistake of the Borrower and the Lenders and the
amount of such payment or collection shall be refunded to the Borrower; for the
purposes of this Agreement the effective annual rate of interest shall be
determined in accordance with generally accepted actuarial practices and
principles over the term of the Credit Facilities on the basis of annual
compounding of the lawfully permitted rate of interest and, in the event of
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Administration Agent shall be conclusive for the purposes of
such determination.
<PAGE>
                                      -41-
                                                                       Article 5

             ARTICLE 5 - BANKERS' ACCEPTANCES AND LETTERS OF CREDIT

5.01     BANKERS' ACCEPTANCES

         (1)      Obligation to Accept. The Borrower may request an Advance by
way of Bankers' Acceptances by delivering to the Administration Agent a Notice
of Borrowing in accordance with Section 2.06. Upon receipt of a Notice of
Borrowing given in accordance with this Agreement and subject to the provisions
of this Agreement each Lender shall accept, from time to time, such Bankers'
Acceptances under the Revolving Facility as the Borrower may request in the
Notice of Borrowing.

         (2)      General. Subject to the other requirements in this Agreement,
Bankers' Acceptances shall only be issued on the following terms:

         (a)      each Bankers' Acceptance shall be issued on a Banking Day;

         (b)      each Bankers' Acceptance shall have the term elected by the
                  Borrower in the relevant Notice of Borrowing, provided that
                  each Bankers' Acceptance shall mature on a Banking Day and the
                  Borrower shall choose Bankers' Acceptances of durations to
                  ensure that the Borrower complies in all respects with its
                  reduction or repayment obligations under this Agreement; and

         (c)      each Bankers' Acceptance shall be in a form acceptable to the
                  applicable Lender acting reasonably.

         (3)      Bankers' Acceptance Stamping Fees. Upon the acceptance by a
Lender of any Bankers' Acceptance of the Borrower pursuant to the Agreement, the
Borrower shall pay to the Administration Agent for the account of the Lender the
applicable Stamping Fee, which payment obligation shall be satisfied:

         (a)      in the case of a Drawdown, by each Lender withholding the
                  amount of the Stamping Fee from the Discount Proceeds
                  otherwise payable to the Borrower; and

         (b)      in the case of a Rollover or a Conversion, by the Borrower
                  paying the amount of the Stamping Fee by wire transfer to the
                  account designated by the Administration Agent, who thereafter
                  shall direct those Stamping Fees received to the applicable
                  Lender by wire transfer to the account designated by the
                  applicable Lender to the Administration Agent.

         (4)      Purchase of Bankers' Acceptances. Each Lender shall purchase
each Bankers' Acceptance accepted by it for a price equal to the Discount
Proceeds. Each Lender may at any time and from time to time hold, sell,
rediscount or otherwise dispose of any Bankers' Acceptance purchased by it.

         (5)      Drawdowns. On each date that a Drawdown of a Bankers'
Acceptance occurs, each Lender shall transfer to the Administration Agent at the
Administration Agent's account immediately available Canadian Dollars in an
aggregate amount equal to the Discount Proceeds
<PAGE>
                                      -42-
                                                                       Article 5

of all Bankers' Acceptances accepted by it (less the amount of Stamping Fees).
The Administration Agent shall make the amounts received by it from the Lenders
available to the Borrower by depositing the same in immediately available funds
on the applicable date that a Drawdown occurs according to the instructions on
the relevant Drawdown Notice.

         (6)      Rollovers. In the case of a Rollover of a Bankers' Acceptance,
in order to satisfy the continuing liability of the Borrower to a Lender for the
face amount of the maturing Bankers' Acceptance, the Lender shall determine and
retain the Discount Proceeds of the new Bankers' Acceptance and the Borrower
shall, on the maturity date of the maturing Bankers' Acceptance, pay to the
Administration Agent for the account of the relevant Lender (i) the difference
between the principal amount of the maturing Bankers' Acceptance and the
Discount Proceeds from the new Bankers' Acceptance and (ii) the Stamping Fee in
respect of the new Bankers' Acceptance.

         (7)      Conversions.

         (a)      In the case of a Conversion into a Bankers' Acceptance, in
                  order to satisfy the continuing liability of the Borrower to
                  the Lender for the amount of the converted Advance, the Lender
                  shall determine and retain for its own account the Discount
                  Proceeds of the Bankers' Acceptance and the Borrower shall on
                  the date of Conversion pay to the Administration Agent for the
                  account of the relevant Lender (i) the difference between the
                  principal amount of the converted Advance and the Discount
                  Proceeds from the Bankers' Acceptance, and (ii) the Stamping
                  Fee in respect of the Bankers' Acceptance.

         (b)      In the case of a Conversion of a Bankers' Acceptance into
                  another type of Advance, in order to satisfy the continuing
                  liability of the Borrower to the Lender for an amount equal to
                  the face amount of the Bankers' Acceptance being converted,
                  the Administration Agent shall record the obligation of the
                  Borrower to the Lender as an Advance of the type into which
                  the obligation has been converted.

         (8)      General.

         (a)      In order to facilitate the issuance of Bankers' Acceptances
                  pursuant to this Agreement, the Borrower authorizes each of
                  the Lenders to complete, sign and endorse drafts on its behalf
                  in handwritten form or by facsimile or mechanical signature or
                  otherwise and, once so completed, signed and endorsed, to
                  accept them as Bankers' Acceptances under this Agreement and
                  then purchase, discount or negotiate them in accordance with
                  the provisions of this Article. Drafts so completed, signed,
                  endorsed and negotiated on behalf of the Borrower by any
                  Lender shall bind the Borrower as fully and effectively as if
                  those acts were performed by an authorized officer of the
                  Borrower.

         (b)      Any executed drafts to be used for Bankers' Acceptances which
                  are held by any Lender need only be held in safekeeping with
                  the same degree of care as if they were that Lender's own
                  property and that Lender was keeping them at the place at
                  which they are to be held. The Borrower shall, by written
                  notice to the

<PAGE>
                                      -43-
                                                                       Article 5

                  Administration Agent, designate the persons authorized to give
                  the Administration Agent and each Lender instructions
                  regarding the manner in which Bankers' Acceptances are to be
                  completed and the times at which they are to be issued.
                  Neither the Administration Agent nor any Lender nor any of
                  their respective directors, officers, employees or
                  representatives shall be liable for any action taken or
                  omitted to be taken by any of them under this Article except
                  for its own gross negligence or wilful misconduct.

         (c)      Each Lender shall maintain a record with respect to Bankers'
                  Acceptances (i) accepted by it hereunder; (ii) cancelled at
                  their respective maturities; or (iii) voided by it for any
                  reason. Each Lender further agrees to retain the foregoing
                  records in the manner and for the statutory periods provided
                  in the various provincial or federal statutes and regulations
                  which apply to such Lender.

         (d)      The Borrower shall not claim any days of grace for the payment
                  at maturity of any Bankers' Acceptance. The obligations of the
                  Borrower with respect to Bankers' Acceptances under this
                  Section shall be unconditional and irrevocable and shall be
                  paid strictly in accordance with the terms of this Agreement
                  under all circumstances, including, without limitation, the
                  following circumstances:

                  (i)      any lack of validity or enforceability of any bill of
                           exchange accepted by a Lender as a Bankers'
                           Acceptance; or

                  (ii)     the existence of any claim, set-off, defence or other
                           right which the Borrower may have at any time against
                           the holder of a Bankers' Acceptance, or any other
                           Person, whether in connection with this Agreement or
                           otherwise.

         (9)      Non-Bank Lender. If a Lender is not a chartered bank under the
Bank Act (Canada) or if a Lender notifies the Administration Agent in writing
that it is unable or unwilling to accept Bankers' Acceptances, that Lender
shall, instead of discounting Bankers' Acceptances, purchase from the Borrower a
non-interest bearing note (a "BA Equivalent Note"), issued by the Borrower in
the amount and for the same term as the Bankers' Acceptance the Lender would
otherwise have been required to discount under this Agreement, at a purchase
price calculated on the same basis as Bankers' Acceptances are discounted by the
Administration Agent. Each such Lender shall credit or transfer, as the case may
be, the purchase price to the account designated by the Administration Agent and
the Administration Agent shall credit to such account of the Borrower as the
Borrower shall have designated to the Administration Agent in same day funds on
the applicable date of a Drawdown, Conversion or Rollover.

         (10)     BA Equivalent Notes. The provisions of this Section apply
mutatis mutandis to BA Equivalent Notes, and unless otherwise specified a BA
Equivalent Note is considered to be a Bankers' Acceptance for the purposes of
this Agreement.

         (11)     Bankers' Acceptances and BA Equivalent Notes Outstanding Upon
Event of Default. If any Bankers' Acceptance or BA Equivalent Note is
outstanding upon the occurrence of an Event of Default, the Borrower shall
forthwith pay to the Administration Agent an amount
<PAGE>
                                      -44-
                                                                       Article 5

(the "BA Deposit Amount") equal to the face amount of the outstanding Bankers'
Acceptance or BA Equivalent Note, which BA Deposit Amount shall be held by the
Administration Agent in an interest bearing account for application against the
Indebtedness owing by the Borrower to a particular Lender in respect of the
outstanding Bankers' Acceptance or BA Equivalent Note. In the event that the
particular Lender is not called upon to make full payment on the outstanding
Bankers' Acceptance or BA Equivalent Note, the BA Deposit Amount, or any part
thereof as has not been paid out, together with accrued interest, shall be
applied first to any other amounts payable pursuant to this Agreement and any
amount remaining shall be returned to the Borrower.

5.02     LETTERS OF CREDIT

         (1)      Documentation. The Borrower may request a Letter of Credit by
delivering to the Administration Agent, together with the required Notice of
Borrowing, three duly executed copies of the LC Lender's usual documentation
relating to the issuance and administration of letters of credit or letters of
guarantee (which shall include the LC Lender's standard forms of application for
a letter of credit or guarantee, indemnity and such other forms as the LC Lender
may require).

         (2)      Form. Each Letter of Credit shall be in a form and on such
terms as determined by the LC Lender in its sole and unfettered discretion.

         (3)      Face Amount Deemed Advance. The full face amount of each
Letter of Credit shall be deemed to be an Advance under the Revolving Facility
for the purposes of determining the Utilized Portion of the Revolving Facility
Amount, which Advance shall be retired upon the earlier of:

         (a)      the return of the Letter of Credit to the LC Lender for
                  cancellation;

         (b)      the expiry date of the Letter of Credit;

         (c)      the provision of cash collateral for the Letter of Credit
                  satisfactory to the LC Lender; or

         (d)      the deeming of the amount drawn on the Letter of Credit to be
                  a Prime Rate Loan or a Base Rate Loan under the Revolving
                  Facility pursuant to Section 5.02(7).

         (4)      Fees. One Banking Day prior to issuance of a Letter of Credit,
the Borrower shall pay to the Administration Agent a fee calculated at the
Letter of Credit Fee Rate and calculated on the aggregate amount payable under
the Letter of Credit for the duration of its stated term on the basis of the
actual number of days in the stated term, commencing on, and including, the date
of issuance of the Letter of Credit and ending on, but excluding, its stated
expiry date. The Administration Agent shall deduct from and remit to the LC
Lender 0.125% of the amount of each such fee paid by the Borrower pursuant to
this Section .

         (5)      Payments. The LC Lender, on behalf of each of the Lenders
shall at all times be entitled, and are irrevocably authorized by the Borrower,
to make any payment under the Letters of Credit for which a request or demand
has been made in the required form without any further reference to the Borrower
and any investigation or enquiry, need not concern themselves or itself
<PAGE>
                                      -45-
                                                                       Article 5

with the propriety or validity of any claim made or purported to be made under
the terms of such Letter of Credit (except as to compliance with the payment
conditions of such Letters of Credit) and shall be entitled to assume that any
Person expressed in such Letter of Credit as being entitled to make demand or
receive payments thereunder is so entitled. Accordingly, so long as a request or
demand has been made as aforementioned it shall not be a defence to any demand
made of the Borrower hereunder, nor shall the Borrower or its obligations
hereunder be impaired by the fact (if it be the case) that the LC Lender, the
Administration Agent or the Lenders were or might have been justified in
refusing payment, in whole or in part, of the amounts so claimed.

         (6)      Reimbursement Obligations of the Borrower. The Borrower shall
reimburse the LC Lender, for the account of the Lenders, on demand for any
amounts paid by the LC Lender from time to time as contemplated by Section
5.02(5) and, without limiting the foregoing, the Borrower shall indemnify and
save the LC Lender and the other Lenders harmless on demand from and against any
and all other losses (other than lost profits), costs, damages, expenses,
claims, demands or liabilities which any of them may suffer or incur arising in
any manner whatsoever in connection with the making of any such payments
(including, without limitation, in connection with proceedings to restrain the
LC Lender from making, or to compel the LC Lender to make, any such payment).

         (7)      Overdue Amounts and Indemnity.

         (a)      Without limiting any other provisions of this Agreement, if
                  the Borrower shall fail to reimburse the LC Lender, on behalf
                  of the Lenders, in respect of any payments made by the LC
                  Lender under a Letter of Credit as contemplated in Section
                  5.02(5), the amount that the Borrower fails to reimburse the
                  LC Lender shall be deemed to be, if in Canadian Dollars, an
                  Advance of a Prime Rate Loan under the Revolving Facility and,
                  if in U.S. Dollars, an Advance of a Base Rate Loan under the
                  Revolving Facility. The LC Lender shall forthwith give notice
                  of such Advance to the Borrower and the Administration Agent
                  (which shall promptly give notice to the other Lenders). Each
                  Lender shall deliver its Proportionate Share of such Advance
                  to the Administration Agent for the benefit of the LC Lender
                  not later than 2:00 p.m. (Toronto time) on the day that such
                  Advance is deemed to have been made.

         (b)      Each Lender agrees to indemnify the LC Lender (to the extent
                  not reimbursed by the Borrower), rateably according to its
                  Proportionate Share of the Credit Facilities from and against
                  any and all liabilities and obligations, losses, damages,
                  penalties, actions, judgements, suits, costs, expenses or
                  disbursements of any kind or nature whatsoever which may be
                  imposed on, incurred by, or asserted against the LC Lender in
                  any way relating to or arising out of the issuance of a Letter
                  of Credit in accordance with this Agreement, provided that no
                  Lender shall be liable for any portion of such liabilities,
                  obligations, losses, damages, penalties, actions, judgements,
                  suits, costs, expenses or disbursements resulting from the LC
                  Lender's gross negligence or wilful misconduct.

         (8)      Letters of Credit Outstanding Upon Event of Default. If any
Letter of Credit is outstanding upon the occurrence of an Event of Default or
upon a demand for payment under the
<PAGE>
                                      -46-
                                                                       Article 5

Revolving Facility, the Borrower shall forthwith pay to the Administration Agent
an amount (the "LC Deposit Amount") equal to 105% of the undrawn principal
amount of each outstanding Letter of Credit, which LC Deposit Amount shall be
held by the Administration Agent in an interest bearing account for application
against the Indebtedness owing by the Borrower to the LC Lender in respect of
any draw on any outstanding Letter of Credit. In the event that the LC Lender or
the Administration Agent is not called upon to make full payment on the
outstanding Letter of Credit prior to its expiry date, the LC Deposit Amount, or
any part thereof as has not been paid out, together with accrued interest, shall
be applied first to any other amounts payable pursuant to this Agreement and any
amount remaining shall be returned to the Borrower.

         (9)      Evidence. A certificate of the Administration Agent and/or the
LC Lender as to the amounts paid by any Lender pursuant to this Section or the
amount paid out under any Letter of Credit shall, in the absence of manifest
error, be prima facie evidence of the existence and amount of such payment in
any legal action or proceeding arising out of or in connection herewith.

               ARTICLE 6 - CHANGE IN CIRCUMSTANCES AND INDEMNITIES

6.01     INCREASED COSTS

         (1)      Lenders' Determination. If at any time a Lender determines in
good faith (which determination shall be conclusive, absent manifest error) and
notifies the Borrower that (i) any Applicable Law (relating to capital adequacy
or otherwise); (ii) any change in, or in the interpretation or application of
Applicable Law by a court or by any authority charged with the administration of
Applicable Law (including, without limitation, the Superintendent of Financial
Institutions for Canada); or (iii) any compliance by that Lender with any
request, directive or guideline (whether or not having the force of law) of any
applicable monetary, fiscal or other governmental agency or authority
(including, without limitation, the Superintendent of Financial Institutions for
Canada), has the effect of:

         (a)      increasing the cost to that Lender of making, maintaining or
                  funding an Advance;

         (b)      reducing the amount of principal, interest, fees or other
                  amounts received or receivable by that Lender under this
                  Agreement or the effective return of that Lender under this
                  Agreement; or

         (c)      causing that Lender to make any payment, or to forego any
                  interest or other return on or calculated by reference to, any
                  sum received or receivable by that Lender under this
                  Agreement,

then, upon demand being made from time to time to the Borrower by that Lender,
the Borrower shall, within 30 days, pay to that Lender the amount necessary to
compensate it for its additional cost, reduction, payment, foregone interest or
other return. If that Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled, provide the Borrower with particulars
of the basis of the claim and of the calculation of the additional amount
payable by the Borrower under this Section as a result of the event and provide
the Borrower with a certificate setting out
<PAGE>
                                      -47-
                                                                       Article 6

the additional amount payable which shall be, absent manifest error, prima facie
evidence of the amount payable. The Borrower shall also be entitled, upon 30
days' notice, to prepay to the Administration Agent for the account of that
Lender that Lender's Proportionate Share of outstanding Advances hereunder
together with Breakage Costs. The amount of such prepayment shall be a permanent
reduction of the Credit Facilities.

         (2)      BIS Guidelines. The Borrower acknowledges and agrees that for
all purposes relating to this Agreement, including, without limitation, for the
purposes of this Section, the rates and fees set forth in this Agreement have
been agreed to by the Lenders taking the BIS Guidelines into account. Any change
to the administration, interpretation, application of or compliance with the BIS
Guidelines after the date of this Agreement may, in accordance with this
Section, entitle the Lenders to receive additional compensation pursuant to this
Section.

6.02     INCOME TAX ACT, ETC.

         The Administration Agent and each of the Lenders shall have the right
to comply with a request to pay specified amounts to the Receiver General issued
under Section 224(1.1) of the Income Tax Act (Canada) or Section 317(2) of the
Excise Tax Act (Canada) in respect of the Borrower. After the date of receipt of
any such request, and for so long as it may require the Administration Agent or
any Lender to make payments to the Receiver General, the Administration Agent or
any Lender may, but shall not be obligated to, fund any further Advances under
this Agreement.

6.03     LACK OF LIBOR RATE

         If at any time prior to the commencement of an Interest Period with
respect to a LIBOR Loan the Administration Agent shall have determined (which
determination shall be conclusive) that:

         (a)      by reason of circumstances affecting the London interbank
                  market, adequate and fair means do not exist for ascertaining
                  the rate of interest applicable to an Advance intended to be
                  outstanding during the proposed Interest Period; or

         (b)      deposits in U.S. Dollars for the duration of the proposed
                  Interest Period are not available to the Administration Agent
                  in the London interbank market in sufficient amounts in the
                  ordinary course of business having regard to its aggregate
                  funding requirements to all its customers,

then, from and after the date of determination, the Borrower shall not have the
right to obtain or maintain a LIBOR Loan from the Lenders. If thereafter the
circumstances referred to in this Section cease to exist, the Administration
Agent shall notify the Borrower within 10 Banking Days of becoming aware that
the circumstances no longer exist and thereafter the Borrower shall have the
right to drawdown a LIBOR Loan in accordance with the provisions of this
Agreement.

6.04     INABILITY TO FUND IN U.S. DOLLARS

         If the Administration Agent determines in good faith, which
determination shall be final, conclusive and binding on the Borrower, and
notifies the Borrower that (i) by reason of
<PAGE>
                                      -48-
                                                                       Article 6

circumstances affecting financial markets inside or outside Canada or the United
States, deposits of United States dollars are unavailable to a Lender, (ii)
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided in the definition of Interest Period or Base Rate, as
the case may be, (iii) the making or continuation of any United States dollar
advance has been made impracticable by the occurrence of a contingency (other
than a mere increase in rates payable by a Lender to fund the advance) which
materially and adversely affects the funding of the advance at any interest rate
computed on the basis of the Interest Period or Base Rate, as the case may be,
or by reason of a change since the date hereof in any Applicable Law or
interpretation thereof by any Governmental Authority affecting a Lender or any
relevant financial market, which results in the Interest Period or Base Rate, as
the case may be, no longer representing the effective cost to a Lender of
deposits in such market, or (iv) any change to present law or any future
Applicable Law or any interpretation or application thereof by any Governmental
Authority has made it unlawful for a Lender to make or maintain or give effect
to its obligations in respect of United States dollar advances as contemplated
herein, then:

         (a)      the right of the Borrower to obtain any affected type of
                  credit shall be suspended until the Administration Agent
                  determines that the circumstances causing such suspension no
                  longer exist and the Administration Agent so notifies the
                  Borrower;

         (b)      if any affected type of credit is not yet outstanding, any
                  applicable Notice of Borrowing shall be cancelled and the
                  advance requested therein shall not be made;

         (c)      if any LIBOR Loan is already outstanding at any time when the
                  right of the Borrower to obtain credit by way of a LIBOR Loan
                  is suspended, it shall, subject to the Borrower having the
                  right to obtain credit by way of a Base Rate Loan at such
                  time, be converted to a Base Rate Loan on the last day of the
                  Interest Period applicable thereto (or on such earlier date as
                  may be required to comply with any Applicable Law) or, if the
                  Borrower does not have the right to obtain credit by way of a
                  Base Rate Loan at such time, such LIBOR Loan shall be
                  converted to a Prime Rate Loan on the last day of the Interest
                  Period applicable thereto (or on such earlier date as may be
                  required to comply with any applicable law) in the principal
                  amount equal to the Equivalent Amount of the principal amount
                  of such LIBOR Loan; and

         (d)      if any Base Rate Loan is already outstanding at any time when
                  the right of the Borrower to obtain credit by way of a Base
                  Rate Loan is suspended, it shall be immediately converted to a
                  Prime Rate Loan in the Equivalent Amount in Canadian Dollars
                  of the Base Rate Loan.

Provided that the Borrower shall be entitled, upon 30 days' notice, to prepay to
the Administration Agent for the account of the Lenders all outstanding United
States dollar advances that are affected by this Section 6.04 together with
Breakage Costs. The amount of such prepayment shall be a permanent reduction of
the Credit Facilities.
<PAGE>
                                      -49-
                                                                       Article 6
6.05     UNLAWFUL, ETC.

         Notwithstanding anything in this Agreement, if at any time while any
Advance is outstanding a Lender determines in good faith that, by reason of any
Applicable Law, any change in Applicable Law or in the interpretation or
application of Applicable Law by any court or by any governmental or other
authority charged with the administration of Applicable Law (including, without
limitation, the Superintendent of Financial Institutions for Canada), it is
unlawful, impracticable or contrary to the direction of such court or any such
authority for that Lender to make or fund any Drawdown, maintain any Advance or
give effect to any of its related obligations as contemplated by this Agreement,
that Lender, by notice to the Administration Agent and the Borrower, may declare
that its obligations under this Agreement are terminated and the Borrower shall
repay forthwith or at the end of the period that the Lender shall have advised
the Borrower in its notice, the whole of each Advance together with all unpaid
interest accrued thereon to the date of repayment and all other unpaid amounts
payable to the Lender under this Agreement in respect of its Advances. If an
Advance is a Bankers' Acceptance, the Borrower shall provide the applicable
Lender, forthwith upon request by the applicable Lender, the amount required by
the Lender to discharge its obligations with respect to the Bankers' Acceptance.
If the Advance is a Letter of Credit, the Borrower shall provide the LC Lender
with an amount equal to the undrawn principal amount of the Letter of Credit,
forthwith upon request by the LC Lender, which amount shall be applied by the LC
Lender as provided in Section 5.02(8). If any Applicable Law, or any change in
Applicable Law, shall only affect a portion of the Lender's obligations under
this Agreement which portion is, in the opinion of the Lender, severable from
the remainder of this Agreement so that the remainder of this Agreement may
continue in full force and effect without otherwise affecting any of the
obligations of the Lender under this Agreement or any other Document, the Lender
shall only declare its obligations under that portion terminated.

6.06     GENERAL INDEMNITY

         (1)      Indemnity Obligation. In addition to all the rights and
remedies available to the Administration Agent, the Syndication Agent and each
of the Lenders at law or in equity, the Borrower and each Guarantor hereby
indemnifies the Administration Agent, the Syndication Agent and each Lender and
their successors and permitted assigns and their respective Affiliates,
shareholders, officers, directors, employees, agents, and representatives
(collectively, the "Indemnified Persons") and save and hold each of them
harmless against and pay on behalf of, or reimburse each of them for, any loss
(including diminutions in value and consequential damages), liability, demand,
suit, claim, action, cause of action, judgement, cost, damage, debt, obligation,
deficiency, Tax (including any Taxes imposed with respect to indemnity payments
made under this Agreement), penalty, fine, charge and expense, whether or not
arising out of any claims by or on behalf of the Borrower, a Guarantor or any
other Person, including interest, penalties, reasonable lawyers' fees and
expenses and all amounts paid in investigation, defence or settlement of any of
the foregoing (collectively "Losses") which any Indemnified Persons may suffer,
sustain, or become subject to, as a result of, in connection with, relating or
incidental to, or by virtue of:

         (a)      any misrepresentation or breach of warranty on the part of the
                  Borrower or any Guarantor under Article 9 of this Agreement;

<PAGE>
                                      -50-
                                                                       Article 6

         (b)      without duplication of clause (a) above, any misrepresentation
                  in or omission from any of the representations, warranties,
                  statements, schedules and exhibits in or to this Agreement or
                  any certificate or other instrument or document furnished to
                  the Administration Agent, the Syndication Agent or any Lender
                  by the Borrower or any Guarantor pursuant to this Agreement or
                  any other Document;

         (c)      any non-fulfilment or breach of any covenant or agreement on
                  the part of the Borrower or any Guarantor under this Agreement
                  or the Inter-Creditor Agreement including, without limitation,
                  any failure by the Borrower or any Guarantor to pay any
                  amounts owing to a Security Agent pursuant to the terms of the
                  Inter-Creditor Agreement; or

         (d)      any claim whenever made, relating in any way to the Borrower
                  or any Subsidiary and any claim, whenever made, arising out
                  of, relating to, resulting from or caused by any transaction,
                  status, event, condition, occurrence or situation relating to,
                  arising out of or in connection with (i) the status or conduct
                  of the Borrower or any Subsidiary, (ii) the execution,
                  performance and delivery by the Borrower, any Guarantor or any
                  Subsidiary of this Agreement and the Documents and agreements
                  contemplated hereby or (iii) any actions taken by or omitted
                  to be taken by any of the Indemnified Persons in connection
                  with this Agreement or any of the Documents and agreements
                  contemplated hereby,

the obligations under this Section shall not extend to Losses of an Indemnified
Person arising because of the gross negligence or wilful misconduct of such
Indemnified Person.

         (2)      Timing. The indemnification of any Indemnified Person by the
Borrower or any Guarantor pursuant to this Section shall be effected by wire
transfer of immediately available funds from the Borrower to an account
designated by the Indemnified Person within 15 days after determination of the
requirement for indemnification.

6.07     ENVIRONMENTAL INDEMNITY

         Without in any way limiting the indemnity obligation set out in Section
6.06, the Borrower and each Guarantor shall at all times indemnify and hold
harmless each Indemnified Person against and from any and all Losses of any
nature whatsoever suffered or incurred by any Indemnified Person upon
realization upon any Security Document or the Borrower's, any Restricted
Subsidiaries' or any English Finance Structure Companies' assets, or as a result
of any order, investigation or action by any Governmental Authority relating to
the Borrower, any Restricted Subsidiary or any English Finance Structure Company
or its business or assets, or as mortgagee in possession of any property of any
Obligor, or as successor-in-interest to any Obligor by foreclosure deed or deed
in lieu of foreclosure, or under or on account of any Environmental Law or
Environmental Activity including the assertion of any Lien thereunder, with
respect to any one or more of the following:

         (a)      the Release or threat of Release of a Contaminant, or the
                  presence of any Contaminant at, on or near any real property
                  owned, leased or controlled by the Borrower, any Restricted
                  Subsidiary or any English Finance Structure Company,
<PAGE>
                                      -51-
                                                                       Article 6

                  whether or not the same originates or emanates from such
                  property or any contiguous real property;

         (b)      the Release of a Contaminant owned by, or under the charge,
                  management or control of the Borrower, any Restricted
                  Subsidiary or any English Finance Structure Company or any
                  predecessor of or assignor to the Borrower, any Restricted
                  Subsidiary or any English Finance Structure Company, at a
                  place other than real property owned, leased or controlled by
                  the Borrower, any Restricted Subsidiary or any English Finance
                  Structure Company;

         (c)      any costs of removal or remedial action incurred by any
                  Governmental Authority or any costs or damages incurred by any
                  Person as a result of injury to, destruction of or loss of
                  natural resources in relation to any real property owned,
                  leased or controlled by the Borrower, any Restricted
                  Subsidiary or any English Finance Structure Company or any
                  contiguous real property or elsewhere, including reasonable
                  costs of assessing injury, destruction or loss;

         (d)      liability for personal injury or property damage arising under
                  any statutory or common law, including damages assessed for
                  the maintenance of a public or private nuisance or for the
                  carrying on of a dangerous activity at, on or near any
                  property owned, leased or controlled by the Borrower, any
                  Restricted Subsidiary or any English Finance Structure Company
                  or elsewhere; and

         (e)      any other environmental matter within the jurisdiction of any
                  Governmental Authority,

provided that no indemnification shall enure to the extent suffered or incurred
by the Indemnified Person as a result of the negligence or wilful misconduct of
the Indemnified Person. The obligations of the Borrower and each Guarantor under
this Section shall arise upon the discovery of the presence of any Contaminant,
whether or not any Governmental Authority has taken or threatened any action in
connection with the presence of any Contaminant. The Borrower and each Guarantor
shall be liable for any obligation arising under this Section even if the amount
of liability incurred exceeds the amount of the Credit Facilities outstanding or
available at any time.

6.08     AGENTS AND LENDERS NOT LIABLE

         The Borrower and each Guarantor agrees that the Administration Agent,
the Syndication Agent and the Lenders shall not be liable to the Borrower or any
Guarantor for any Losses which the Borrower or any Subsidiary may suffer,
sustain or become subject to as a result of, in connection with, relating or
incidental to or by virtue of any action taken or not taken or anything done or
not done by the Administration Agent, the Syndication Agent or any Lender under
or in respect of this Agreement, any Drawdown or Advance, save and except for
any Losses which arise out of, or result from, the negligence, fraud or wilful
misconduct of the Administration Agent, the Syndication Agent or any Lender,
provided that none of the Administration Agent, the Syndication Agent nor any
Lender shall be liable for any consequential damages under any circumstances and
in any case the Administration Agent, the Syndication Agent and each Lender
shall be severally and not jointly liable.
<PAGE>
                                      -52-
                                                                       Article 6

6.09     SURVIVAL

         The obligations of the Borrower, each Guarantor, the Administration
Agent, the Syndication Agent and the Lenders under this Article are in addition
to any indemnities in the Security Documents, shall survive the execution and
delivery of this Agreement, the consummation of the transactions contemplated by
this Agreement, the payment of all Advances and the termination of the Credit
Facilities and the Security, indefinitely, regardless of any investigation,
enquiry or examination made for, or on behalf of, or any knowledge of, any of
the other Indemnified Persons or the acceptance by the Administration Agent, the
Syndication Agent or any Lender of any certificate or opinion.

                        ARTICLE 7 - CONDITIONS PRECEDENT

7.01     CLOSING

         Subject to the fulfilment of the conditions precedent specified in
Section 7.02, the closing of the transaction contemplated in this Agreement
shall take place on the Closing Date at the offices of McCarthy Tetrault, Suite
4700, Toronto Dominion Bank Tower, Toronto, Ontario.

7.02     CONDITIONS PRECEDENT TO CLOSING

         The obligation of the Lenders to establish the Credit Facilities and to
permit the first Drawdown is subject to the fulfilment of each of the following
conditions precedent to the satisfaction of the Administration Agent and all of
the Lenders on or prior to the Closing Date. The following conditions precedent
are included for the exclusive benefit of the Administration Agent and all of
the Lenders and may only be waived, in whole or in part, in writing by the
Administration Agent and all of the Lenders in their sole discretion.

         (1)      Due Diligence. The Lenders shall have completed, and be
satisfied with the results of, their due diligence review of the business,
operations, affairs, financial information and management of the Borrower and
its Subsidiaries.

         (2)      No Material Adverse Effect. There shall not have occurred any
condition, event or change in the business, liabilities, operations, results of
operations, assets or prospects of the Borrower or any of its Subsidiaries which
constitutes or has, or could reasonably be expected to constitute or have, a
Material Adverse Effect on any of them.

         (3)      No Event of Default. There shall exist no Default or Event of
Default on the Closing Date.

         (4)      No Change in Applicable Law. There shall not have occurred on
or before the Closing Date: (i) any change in any Applicable Law or its
interpretation by any authority charged with its administration or by any court
which in the opinion of counsel for the Administration Agent would make it
unlawful or impossible for any Lender to make any Advance; or (ii) any event
which, if an Advance was outstanding, would have brought or would entitle any
Lender to bring into operation the provisions of Section 6.01 or 6.05.
<PAGE>
                                      -53-
                                                                       Article 7

         (5)      Documents. The Administration Agent shall have received
original counterparts of this Agreement, the Security Documents, (other than the
Standstill Agreement), the Fee Side Letter and all other documents required by
this Agreement duly authorized, executed and delivered by each party thereto.

         (6)      Guarantee. The Administration Agent shall have received a
Guarantee from each Guarantor duly authorized, executed and delivered by each
Guarantor.

         (7)      Solvency Certificate. Each Guarantor subject to any financial
assistance restriction shall have executed and delivered to the Administration
Agent a certificate respecting solvency matters, in form and substance
satisfactory to all of the Lenders, dated as at the Closing Date.

         (8)      Asset Monetization Program. The Administration Agent and the
Lenders shall have received the Asset Monetization Program which shall be in
form and substance satisfactory to the Administration Agent and each Lender in
their sole and absolute discretion.

         (9)      Business Plan. The Administration Agent and the Lenders shall
have received the Borrower's Business Plan in respect of fiscal 2002 and 2003,
(without duplication for those items included in the Financial Forecast for
fiscal 2002), which shall be in form and substance satisfactory to the
Administration Agent and each Lender in their sole and absolute discretion.

         (10)     Financial Statements. The Administration Agent and the Lenders
shall have received the monthly financial statements of the Borrower pursuant to
Section 10.04(2)(e) for the month ended March 31, 2002.

         (11)     Repayment of 1999 Credit Agreement. The Borrower shall have
(x) irrevocably directed the Administration Agent to apply the proceeds of the
first Advance under the Revolving Facility and (y) shall have made irrevocable
arrangements to direct proceeds of the March 2002 Significant Share Offering
which together are sufficient to pay in full and cancel all outstanding
Indebtedness of the Borrower to each Lender pursuant to the 1999 Credit
Agreement.

         (12)     Other Documentation. The Administration Agent and/or the
Swingline Lender shall have received from the Borrower the Fee Side Letter and
its customary documentation concerning the administration of this Agreement and
the Drawdowns, including, if required, the Administration Agent's and/or the
Swingline Lender's standard account documents and centralized cash control
agreements for Cdn. Dollar and U.S. Dollar accounts, and each Lender's standard
form of indemnity in respect of Bankers' Acceptances or BA Equivalent Notes and
the LC Lender's standard form of indemnity respecting Letters of Credit.

         (13)     Representations and Warranties. The representations and
warranties contained in Article 9 shall be true and correct on and as of the
Closing Date with the same effect as though made on and as of the Closing Date
and the Borrower and each Guarantor shall have delivered to the Administration
Agent a certificate to that effect, dated the Closing Date and signed by a
Senior Officer of the Borrower or such Guarantor, as applicable.
<PAGE>
                                      -54-
                                                                       Article 7

         (14)     Constating Documents and Authorizing Resolutions. The
Administration Agent shall have received from the Borrower and each Guarantor
certified copies of its articles of incorporation, by-laws and resolutions
authorizing the actions taken under this Agreement and the incumbency of the
officers signing this Agreement, any Guarantee and any other Document.

         (15)     Share Certificates. A Security Agent shall have received the
original share certificates representing all of the capital stock in each
Guarantor and ASW Holdings together with a duly executed stock transfer power in
respect of same.

         (16)     Registrations. All Security Documents shall have been
registered in all offices in which, in the opinion of the Administration Agent
and its counsel, registration is necessary or of advantage to preserve the
priority of the Liens intended to be created by the Security Documents,
including in the jurisdictions identified in Schedule I, and duplicate copies of
security instruments bearing or accompanied by appropriate endorsements or
certificates of registration with respect to the Security Documents shall have
been delivered to the Administration Agent by the Borrower.

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

         (18)     Searches. The Administration Agent shall have received and be
satisfied with the results of all real property, personal property, Bank Act
(Canada), bankruptcy, bulk sale, execution and other searches conducted by
counsel for the Administration Agent with respect to the Borrower and each
Restricted Subsidiary (including all predecessors and prior names).

         (19)     Discharges, Estoppel Letters, Subordinations. The
Administration Agent shall have received from creditors of the Borrower and each
Restricted Subsidiary all releases, discharges, estoppel letters and
subordination agreements as the Administration Agent may require.

         (20)     Regulatory Approvals. The Administration Agent shall have
received copies of all approvals and all consents of all Governmental
Authorities which are required to be obtained by the Borrower or any Guarantor
in order to complete the transactions contemplated by this Agreement or any
Guarantee and perform its obligations under this Agreement or any other
Document.

         (21)     Material Contracts. The Administration Agent shall have
received from the Borrower a certified, complete and correct copy of each
Material Contract listed in Schedule G.

         (22)     Landlord's Consent. The applicable Security Agent shall have
received such Landlord's Consents as may be required by the Administration
Agent.
<PAGE>
                                      -55-
                                                                       Article 7

         (23)     Material Licenses. The Administration Agent shall have
received from the Borrower a certified complete and correct copy of each
Material License listed in Schedule H.

         (24)     Consents to Guarantees. The Administration Agent shall have
received consents from PNC and the Noteholders, in form and substance
satisfactory to each Lender, consenting to the Borrower entering into this
Agreement and the Guarantors entering into the Guarantees.

         (25)     Inter-Creditor Agreement. The Administration Agent on behalf
of the Lenders shall have entered into the Inter-Creditor Agreement and the
Borrower and each Guarantor shall have executed the consent and agreement
thereto.

         (26)     Fees. All fees and expenses payable to the Administration
Agent, the Syndication Agent and/or the Lenders on or before the Closing Date or
the initial advance, as the case may be, including those set forth in the Fee
Side Letter, shall have been paid.

         (27)     Payment of Legal Fees and Other Expenses. The Borrower shall
have paid all reasonable out-of-pocket expenses (including all reasonable legal
fees and consultant's fees) incurred by or on behalf of the Administration
Agent, the Syndication Agent and/or the Lenders in connection with this
Agreement and the transactions and other documents contemplated by this
Agreement.

         (28)     Opinion of Canadian Counsel for Borrower and the Guarantors.
The Administration Agent, the Syndication Agent and the Lenders shall have
received from Goodmans LLP, and other Canadian counsel for the Borrower,
opinions dated the Closing Date in form and substance reasonably satisfactory to
the Administration Agent.

         (29)     Opinion of US Counsel for the Guarantors. The Administration
Agent, the Syndication Agent and the Lenders shall have received from US counsel
acceptable to each of them, an opinion dated the Closing Date and in form and
substance reasonably satisfactory to the Administration Agent.

         (30)     [INTENTIONALLY DELETED]

         (31)     Certificate of Status/Compliance. To the extent available, the
Borrower shall have delivered to the Administration Agent a recently dated
certificate of status with respect to itself and each Guarantor.

         (32)     Compliance with Financial Covenants. The Administration Agent
shall have received a Senior Officer's certificate demonstrating, and including
calculations to evidence, compliance with each of the Financial Covenants as at
March 31, 2002.

         (33)     Other. The Administration Agent shall have received such
further agreements, instruments and other documents as the Administration Agent
may reasonably require.

7.03     CONDITIONS PRECEDENT TO EACH DRAWDOWN UNDER THE REVOLVING FACILITY

         The obligation of the Administration Agent and the Lenders to permit
any Drawdown, including the first Drawdown, under the Revolving Facility is
subject to fulfilment of the
<PAGE>
                                      -56-
                                                                       Article 7

following conditions precedent on or prior to the date of Drawdown. The
following conditions precedent are included for the exclusive benefit of the
Administration Agent and the Lenders and may be waived, in whole or in part, in
writing by the Administration Agent and all of the Lenders at any time.

         (1)      Notice. The Administration Agent shall have received a
Drawdown Notice within the time specified in Section 2.06 and any other document
required to be delivered in connection with a Notice of Borrowing.

         (2)      Representations and Warranties. The representations and
warranties contained in Article 9 shall be true and correct on and as of the
date of Drawdown, both before and after giving effect to the proposed Drawdown,
with the same effect as though made on and as of the date of the Drawdown and,
if required by the Administration Agent, the Borrower and each Guarantor shall
deliver a certificate of a Senior Officer to that effect.

         (3)      No Event of Default. There shall exist no Default or Event of
Default on the applicable date of Drawdown and the completion of the Drawdown
shall not result in the occurrence of a Default or an Event of Default.

         (4)      Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any condition, event or change in the business,
liabilities, operations, results of operations, assets or prospects of the
Borrower or any of its Subsidiaries which constitutes or which has, or could be
reasonably be expected to constitute or have, a Material Adverse Effect on the
Borrower or any of its Subsidiaries.

         (5)      Compliance Certificate. The Administration Agent shall have
received a Senior Officer's certificate certifying compliance with Sections (2),
(3) and (4) of this Section.

7.04     CONDITIONS PRECEDENT TO EACH DRAWDOWN UNDER THE SWINGLINE FACILITY

         The obligation of the Swingline Lender to permit any Drawdown,
including the first Drawdown, under the Swingline Facility is subject to
fulfilment of the following conditions precedent on or prior to the date of
Drawdown. The following conditions precedent are included for the exclusive
benefit of the Swingline Lender and may be waived, in whole or in part, in
writing by the Swingline Lender in its sole discretion, at any time.

         (1)      No Event of Default. There shall exist no Default or Event of
Default on the applicable date of Drawdown and the completion of the Drawdown
shall not result in the occurrence of a Default or an Event of Default.

         (2)      Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any condition, event or change in the business,
liabilities, operations, results of operations, assets or prospects of the
Borrower or any of its Subsidiaries which constitutes or which has, or could be
reasonably be expected to constitute or have, a Material Adverse Effect on the
Borrower or any of its Subsidiaries.
<PAGE>
                                      -57-
                                                                       Article 7

7.05     POST-CLOSING DELIVERIES

(1)      Ten Banking Days following the general resumption of public services in
         the Province of Ontario the Borrower shall cause to be delivered to the
         Administration Agent for and on behalf of the Lenders the following:

         (a)      Registrations. Evidence of registration of all Security
                  Documents in all offices in the Province of Ontario in which,
                  in the opinion of the Administration Agent and its counsel,
                  registration is necessary or of advantage to preserve the
                  priority of the Liens intended to be created by the Security
                  Documents together with duplicate copies of security
                  instruments bearing or accompanied by appropriate endorsements
                  or certificates of registration with respect to such Security
                  Documents.

         (b)      Searches. Search results showing personal property security
                  registrations, bulk sales and executions with respect to the
                  Borrower and each Restricted Subsidiary which has tangible
                  personal property or a place of business in the Province of
                  Ontario.

         (c)      Certificate of Status. A currently dated certificate of status
                  for the Borrower and each Guarantor incorporated pursuant to
                  the laws of the Province of Ontario.

         (d)      Opinion of Ontario Counsel. An opinion of counsel respecting
                  customary matters that would have been included in the opinion
                  of Ontario counsel delivered on the Closing Date but for the
                  public service employee strike in the Province of Ontario, in
                  form and substance satisfactory to the Administration Agent.

         (e)      Other. Such further agreements, instruments and other
                  documents as the Administration Agent may reasonably request
                  in respect of customary closing matters not completed because
                  of the public service employee strike in the Province of
                  Ontario.

         (2)      Twenty Banking Days following the Closing Date the
Administration Agent and the Lenders shall have received the annual financial
statements of the Borrower required pursuant to Section 10.04(2)(b) for the year
ended December 31, 2001.

         (3)      The Borrower shall cause to be delivered to the Administration
Agent for and on behalf of the Lenders, or where indicated to a Security Agent,
at the option of the Borrower, either the documents specified in Section
7.05(3)(a) (collectively, the "Hungarian Guarantee Documents") or the documents
specified in Section 7.05(3)(b) (collectively the "Hungarian Loan Reorganization
Documents") in accordance with the provisions of Section 7.05(3)(c).

         (a)      Hungarian Guarantee Documents

                  The Borrower, if it chooses this option, shall deliver the
                  following Hungarian Guarantee Documents:
<PAGE>
                                      -58-
                                                                       Article 7

                  (i)      Guarantee. A guarantee by Co-Steel Hungary of all of
                           the obligations of the Borrower to the Lenders, in a
                           form and substance reasonably satisfactory to the
                           Administration Agent which guarantee shall include,
                           without limitation, a pledge of the Hungarian Loan
                           Notes in favour of the US Security Agent (the
                           "Hungarian Guarantee");

                  (ii)     Constating Documents and Authorizing Resolutions.
                           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.

                  (iii)    Loan Notes. The original Hungarian Loan Notes
                           delivered to the US Security Agent and duly endorsed
                           in favour of the US Security Agent.

                  (iv)     Registrations. Evidence of registration of the
                           Hungarian Guarantee in all offices, if any, in which,
                           in the opinion of the Administration Agent and its
                           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.

                  (v)      Regulatory Approvals. Copies of all approvals and all
                           consents of all Governmental Authorities which are
                           required to be obtained by the Borrower or Co-Steel
                           Hungary in order to complete the transactions
                           contemplated by the Hungarian Guarantee and perform
                           its obligations under the Hungarian Guarantee.

                  (vi)     Opinion of Hungarian Counsel. A legal opinion of
                           Hungarian counsel in form and substance reasonably
                           satisfactory to the Administration Agent in respect
                           of the Hungarian Guarantee.

                  (vii)    Other. Such further agreements, instruments and other
                           documents as the Administration Agent may reasonably
                           request in respect of the foregoing.

         (b)      Hungarian Guarantee Documents

                  The Borrower, if it chooses this option, shall deliver the
                  following Hungarian Loan Reorganization Documents in respect
                  of the transaction described in Schedule BB:

                  (i)      Constating Documents and Authorizing Resolutions.
                           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 BB and the incumbency of
                           the officers signing the documents contemplated in
                           Schedule BB.
<PAGE>
                                      -59-
                                                                       Article 7

                  (ii)     New Subordinated Loan Notes. The original New
                           Subordinated Loan Notes delivered to a Security Agent
                           and duly endorsed in favour of such Security Agent.

                  (iii)    Registrations. Evidence of registration of all the
                           security described in Schedule BB in all offices, if
                           any, in which, in the opinion of the Administration
                           Agent 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 BB together with duplicate copies of
                           security instruments bearing or accompanied by
                           appropriate endorsements or certificates of
                           registration with respect to such security.

                  (iv)     Regulatory Approvals. Copies of all approvals and all
                           consents of all Governmental Authorities which are
                           required to be obtained by the Borrower or any
                           Subsidiary in order to complete the transactions
                           contemplated by Schedule BB and perform its
                           obligations under Schedule BB.

                  (v)      Opinions of Counsel. Such opinions of counsel in form
                           and substance reasonably satisfactory to the
                           Administration Agent respecting the transactions
                           described in Schedule BB.

                  (vi)     Other. Such further agreements, instruments, tax
                           rulings and other documents as the Administration
                           Agent may reasonably request in respect of the
                           foregoing.

         (c)      If the Borrower fails to deliver either the Hungarian
                  Guarantee Documents or the Hungarian Loan Reorganization
                  Documents within 90 days following the Closing Date, the
                  margin otherwise applicable to Advances hereunder shall, in
                  lieu of interest at the Default Rate, be increased by 20 basis
                  points and 120 days thereafter by a further 15 basis points
                  all until such time as the Borrower 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 Section 10.01 or
                  10.03. In the event of a margin increase under this Section
                  7.05(3)(c), the margin applicable to Advances shall revert to
                  the otherwise applicable margin upon delivery of either the
                  Hungarian Guarantee Documents or the Hungarian Loan
                  Reorganization Documents.

         (4)      If the Borrower has not sold the land and buildings located at
100 Bayview Avenue, Keasbey, New Jersey by July 31, 2002, it shall on or before
August 15, 2002, provide to the Administration Agent 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 Administration Agent
in an amount reasonably requested by the Administration Agent, and insuring,
among such other matters that the Administration Agent may reasonably request,
that
<PAGE>
                                      -60-
                                                                       Article 7

Co-Steel Sayreville, Inc. has good and marketable title to such property and the
mortgage of the US Security Agent in respect of such property is a valid first
Lien.

         (5)      On or before June 1, 2002 the Administration Agent and the
Lenders shall receive:

         (a)      Standstill Agreement. The Standstill Agreement duly executed
                  by Co-Steel (UK) Limited.

         (b)      Opinion of UK Counsel. An opinion of counsel reasonably
                  acceptable to the Administration Agent and in form and
                  substance reasonably satisfactory to the Administration Agent
                  in respect of the Standstill Agreement.

                         ARTICLE 8 - SECURITY DOCUMENTS

8.01     FORM OF SECURITY DOCUMENTS

         As general and continuing collateral security for the payment and
performance of all obligations of each Obligor at any time owing to the
Administration Agent or any Lender, the following security documents shall be
delivered to the Security Agents for and on behalf of the Administration Agent
and each Lender, in each case in form and substance satisfactory to the
Administration Agent:

         (a)      a General Security Agreement from the Borrower and each
                  Guarantor, together with all necessary consents (including
                  Landlord's Consents);

         (b)      a Moveable Hypothec from the Borrower, Co-Steel Distribution
                  Canada Limited, Co-Steel Raritan, Inc. and Co-Steel
                  Sayreville, Inc.

         (c)      a Debenture from Borrower comprising a first ranking fixed
                  charge, (subject to Permitted Liens), in favour of the
                  Canadian Security Agent on the Borrower's interest in all of
                  the Ontario Properties and the North York Property and other
                  fixed assets and a floating charge over the remaining present
                  and future assets of Borrower, pledged to the Canadian
                  Security Agent pursuant to a debenture pledge agreement
                  together with a Landlord's Consent from the landlord of the
                  North York Property;

         (d)      a Mortgage with assignment of leases and rents, security
                  agreement and fixture filing encumbering the New Jersey
                  Properties as a first ranking fixed charge, (subject to
                  Permitted Liens), in favour of the US Security Agent;

         (e)      a Leasehold Mortgage with assignment of subleases and rents,
                  security agreement and fixture filing encumbering the North
                  York Property with a Landlord's Consent from the landlord of
                  the North York Property;
<PAGE>
                                      -61-
                                                                       Article 8

         (f)      a Share Pledge Agreement from the Borrower pledging all the
                  securities held by the Borrower in the capital of each of its
                  direct Subsidiaries, (other than Co-Steel Benefit Plans Inc.),
                  and ASW Holdings in favour of the Canadian Security Agent;

         (g)      a Share Pledge Agreement from each Guarantor pledging all the
                  securities held by such Person in the capital of each of its
                  direct Subsidiaries;

         (h)      an assignment in favour 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 (i) the applicable Security
                  Agent being noted as loss payee as its interests may appear;
                  or (ii) in the case of liability policies, the applicable
                  Security Agent being noted as additional insured; or (iii) 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);

         (i)      a Guarantee from each Guarantor of all of the obligations of
                  Borrower in favour of the Administration Agent for and on
                  behalf of the Lenders;

         (j)      a Standstill Agreement from Co-Steel (UK) Limited; and

         (k)      such other security as may reasonably be required by the
                  Administration Agent from time to time in order to preserve
                  and protect the interest of the Administration Agent, the
                  Lenders or either Security Agent in the assets and property of
                  any Obligor from time to time.

8.02     VALID LIEN

         All Security granted by any Obligor to either Security Agent shall rank
prior and senior to all other Liens on such assets and undertaking of each
Obligor, except for Permitted Priority Liens, and as otherwise expressly agreed
by the Administration Agent in writing.

8.03     REGISTRATION

         The Borrower shall, at its expense, register, file or record the
Security Documents in all offices where such registration, filing or recording
is necessary or of advantage to the creation, perfection and preserving of the
security applicable to each Obligor including, without limitation, any land
registry offices.

8.04     AFTER ACQUIRED PROPERTY AND FURTHER ASSURANCES

         The Borrower shall, and it shall cause each of its Restricted
Subsidiaries or any other Person that grants security hereunder from time to
time to, upon the request of the Administration Agent, provide the applicable
Security Agent for the benefit of the Administration Agent and the Lenders with
such further security instruments as may be required in connection with any
assets or shares acquired by the Borrower, any of its Restricted Subsidiaries or
any other Person that grants security hereunder after the date hereof.
<PAGE>
                                      -62-
                                                                       Article 8

8.05     FORM, SUBSTANCE AND REGISTRATION OF SECURITY

         The Security Documents and all acknowledgements referred to in this
Article shall be in form and substance satisfactory to the Administration Agent,
and the Security Documents shall be registered in those jurisdictions that the
Administration Agent may from time to time reasonably require.

8.06     BENEFIT OF SECURITY

         The Security shall enure to the benefit of the Administration Agent and
each of the Lenders until this Agreement is terminated and all indebtedness and
liability of each Obligor to all the Lenders and any of them, whether under this
Agreement or otherwise, shall have been paid. The provisions of this Section
shall have effect notwithstanding that any obligations may at any time or from
time to time be fully discharged while this Agreement is still in full force and
effect. None of the Security Documents shall be amended, released or discharged,
in whole or in part, without the prior written consent of all of the Lenders,
acting reasonably. The Security shall continue to be effective or be reinstated,
as the case may be, if at any time any amount received by a Security Agent, the
Administration Agent or the Lenders in respect of the Credit Facilities or any
Document is rescinded or must otherwise be restored or returned upon the
occurrence of a Bankruptcy Event with respect to any Obligor or any substantial
part of any Obligor's properties, or otherwise, all as though that amount had
not been received.

                   ARTICLE 9 - REPRESENTATIONS AND WARRANTIES

9.01     REPRESENTATIONS AND WARRANTIES

         To induce the Administration Agent, the Syndication Agent and each of
the Lenders to enter into this Agreement, establish and maintain the Credit
Facilities and permit Drawdowns under the Credit Facilities, the Borrower and
each Guarantor represents and warrants to the Administration Agent, the
Syndication Agent and each Lender, upon each of which representations and
warranties the Administration Agent, the Syndication Agent and each Lender
specifically relies, as follows:

         (1)      Corporate Existence. It is a corporation duly incorporated and
validly subsisting under the laws of its jurisdiction of incorporation, each US
Guarantor is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction material to its business where the nature of
its business requires such qualification or incorporation and it has all
necessary corporate power and authority to own its properties and carry on its
business as presently owned and carried on by it and it is duly licensed,
registered and qualified in all jurisdictions where the character of its
property owned or leased or the nature of the activities conducted by it makes
licensing, registration or qualification necessary or desirable.

         (2)      Corporate Authority. It has full corporate power and authority
to enter into and perform its obligations and exercise its rights hereunder and
under each other Document.

         (3)      Qualification, Licences, etc. It has obtained, maintained and
is in good standing with respect to, all material licences, permits and
approvals from any and all Governmental
<PAGE>
                                      -63-
                                                                       Article 9

Authorities and all applicable stock exchange and securities commission rules
applicable in respect of its property and operations and the listing of its
securities. It has made all material filings required under Applicable Laws.

         (4)      Due Execution. It has duly authorized, executed and delivered
this Agreement and each other Document and this Agreement and each other
Document constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium and similar laws affecting the rights of creditors generally, and
equitable principles which may limit the availability of certain remedies
including the remedy of specific performance.

         (5)      Consents. No material consent, approval or authorization of,
or declaration, registration, filing or qualification with, or giving of notice
to, or taking of any other action in respect of, any Governmental Authority or
stock exchange or securities commission or any other Person is required in
connection with the execution, delivery or enforcement of this Agreement or any
other Document or the performance of this Agreement or any other Document or the
consummation of any of the transactions contemplated by this Agreement or any
other Document, except the Security Documents to which it is a party, which
require registration under applicable security registration systems.

         (6)      Laws, Regulations, etc. It is conducting its business
operations in material compliance with its articles of incorporation and its
by-laws and all Applicable Laws and it has obtained and maintained in good
standing all licences, permits and approvals from any and all Governmental
Authorities and all applicable stock exchanges and securities commissions
required in respect of its operations and the listing of its securities.

         (7)      Environmental Compliance. Except as disclosed in Schedule J,
the Borrower has no knowledge of any claim nor has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Borrower, 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 Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed in Schedule J,

         (a)      the Borrower 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 Borrower, 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 Borrower, 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 Borrower, any of its Restricted Subsidiaries
                  or any of the English Finance Structure Companies nor has
                  disposed
<PAGE>
                                      -64-
                                                                       Article 9

                  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 Borrower, 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.

         (8)      Tax Returns. It has filed all tax returns which are required
to be filed by it and it has paid all Taxes which have become due as shown on
tax returns or any assessments received by it except those Taxes (if any) that
are being contested in good faith by appropriate proceedings and for which a
provision in accordance with GAAP and satisfactory to the Administration Agent
is currently provided; and it is not aware of any proposed additional Tax
assessment against it.

         (9)      Compliance with Covenants. It is in compliance with each of
the covenants set out in Article 10 of this Agreement.

         (10)     No Event of Default. No Default or Event of Default has
occurred.

         (11)     Debt Default. Except as disclosed in Schedule K, neither it
nor any of its Subsidiaries is in default or breach under any instrument
evidencing any Indebtedness in an aggregate principal amount greater than Cdn.
$5,000,000 or under the terms of any instrument pursuant to which an instrument
evidencing any Indebtedness in an aggregate principal amount greater than Cdn.
$5,000,000 has been issued or made and delivered.

         (12)     No Event of Default Caused. Neither the execution nor the
delivery of this Agreement or any other Document, the consummation of the
transactions contemplated in this Agreement or any other Document, nor
compliance with the terms, conditions and provisions in this Agreement or any
other Document conflicts with, or will conflict with, or results or will result
in, any breach of, or constitutes a default under any provisions of its articles
of incorporation or by-laws or of any Material Contract, Material License, the
leases for the North York Property or the Significant U.S. Leased Properties to
which it is a party or by which it is, or any of its property or assets are,
bound, or, results or will result in the creation or imposition of any Lien upon
any of its properties or assets (other than Permitted Liens) or the
contravention of any Applicable Law. All necessary approvals from the other
parties to the Material Contracts and Material Licences, the leases for the
North York Property or the Significant U.S. Leased Properties have been obtained
so as to allow it to bind itself in accordance with the terms and conditions of
the Documents.

         (13)     Litigation. Except as disclosed in Schedule L (as amended from
time to time with the consent of the Administration Agent), there are no
actions, suits or proceedings pending or, to the best of its knowledge and
belief, after due inquiry and all reasonable investigation, threatened against
or affecting it at law or in equity or before or by any Governmental Authority,
domestic or foreign, or before any arbitrator that are reasonably likely to
have, either separately
<PAGE>
                                      -65-
                                                                       Article 9

or in the aggregate, a Material Adverse Effect upon it. It is not in default
with respect to any judgement, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or Governmental Authority, domestic or
foreign.

         (14)     Burdensome Provisions. etc. To the best of its knowledge, it
is not a party to any agreement or instrument or subject to any corporate
restriction or any judgement, order, writ, injunction, decree, award, rule or
regulation which has, or is reasonably likely to have, a Material Adverse Effect
upon it.

         (15)     Title to Assets. Except as disclosed in Schedule M (as amended
from time to time with the consent of the Administration Agent), it and each of
its Subsidiaries has good and marketable title to its assets, free and clear of
all Liens except Permitted Liens. There are no agreements, options, contracts or
commitments to sell, transfer or otherwise dispose of any of its or any of its
Subsidiaries' assets or which would restrict its or any of its Subsidiaries'
ability to transfer any of its or any of its Subsidiaries' assets.

         (16)     Liens. The Security Documents create in favour of the Security
Agents for and on behalf of the Administration Agent and the Lenders valid,
binding and perfected (when registered) Liens on all right, title and interest
in all of the Collateral which is the subject matter of the Security Documents
and those Liens have first priority for all purposes over any other Liens on the
Collateral, except for Permitted Priority Liens.

         (17)     Property Descriptions. The Security Documents to which it is a
party, including their attached schedules (if any), contain accurate
descriptions of all of its material assets and the Security Documents to which
each Guarantor is a party, including their attached schedules (if any), contain
accurate descriptions of all material assets of the Guarantor party thereto.

         (18)     Owned Property. It does not, nor does any of its Restricted
Subsidiaries, own any real property or have any interest in any real property
other than the Owned Properties. Schedule N correctly sets out the name of each
Person which owns any Owned Property and the municipal address of each Owned
Property. 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 comprise all of
the Owned Properties that in the reasonable good faith estimate of the Borrower
have a value individually in excess of Cdn.$5,000,000.

         (19)     Leased Properties. It 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 are accurately
described in Schedule C. 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 it 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 Borrower or any of its Restricted Subsidiaries.
<PAGE>
                                      -66-
                                                                       Article 9

         (20)     Ownership of Inventories Retained on Leased Properties.
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.

         (21)     Ownership of Third Party Accounts Receivable. 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 Borrower's recycling division which are owned by the Borrower), 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.

         (22)     Contracts Affected by Change of Control. It 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 Administration Agent and the Lenders pursuant to the
Security Documents.

         (23)     Material Contracts and Material Licences.

         (a)      Schedule G accurately sets out all Material Contracts and
                  Schedule H accurately sets out all Material Licences.

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

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

         (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)      It 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.

         (24)     Jurisdictions. The jurisdictions in which it and each of its
Restricted Subsidiaries carries on business and has assets are accurately set
forth in Schedule P. The registered office, principal place of business and
chief executive office and the location where its and each of its Restricted
Subsidiaries' records are kept, is specified in Schedule P. Its jurisdiction of
incorporation and the jurisdiction of incorporation of each of its Restricted
Subsidiaries is accurately set forth in Schedule P.
<PAGE>
                                      -67-
                                                                       Article 9

         (25)     Subsidiaries. etc. It does not own any shares in the capital
of any Person other than as listed in Schedule Q (as amended from time to time).
It is not a party to any shareholders agreement. Except for its interest in
Gallatin, it is not a partner in any partnership or a party to any joint venture
or a party to any agreement pursuant to which it has agreed to become a partner
in any partnership or a party to any joint venture. Schedule Q accurately lists
each Subsidiary of the Borrower and the percentage ownership by the Borrower in
each Subsidiary.

         (26)     Restricted Subsidiaries. Other than the Guarantors, no
Restricted Subsidiary has Net Tangible Assets in excess of Cdn.$5,000,000.

         (27)     Bank Accounts. Schedule X accurately sets out each bank
account maintained by it 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 Section 10.03(24), the bank
account maintained by Acierco S.A. with the Banque de Luxembourg in 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 Borrower or any of its Subsidiaries (other than Co-Steel C.S.M.
and its Subsidiaries) shall be either maintained with either the Administration
Agent or PNC or shall be the subject of a Blocked Account Agreement or if it
does not meet any of the foregoing criteria shall contain less than Cdn.$150,000
(or the Equivalent Amount in U.S.$) and less than Cdn.$600,000 (or the
Equivalent Amount in U.S.$) in the aggregate for all such accounts.

         (28)     Inter-Corporate Indebtedness. Schedule Y accurately describes
each inter-company loan between it and any of its Subsidiaries or between any of
its Subsidiaries 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.

         (29)     Computer Systems. It makes commercially reasonable efforts to
ensure that all computer systems used in its businesses and material to its
business, owned or leased by it 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. It 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.

         (30)     Intellectual Property Rights. It is the registered (if
registration is possible) and beneficial owner or licensee of, with good and
marketable title to, all patents, patent applications, trade marks, trade mark
applications, trade names, service marks, copyrights, industrial designs,
inventions, technology and other rights with respect to the foregoing and other
similar property which are material to its business, free of all licenses,
franchises and Liens and without any conflict with the rights of any other
Person. All patents, trade-marks, trade names, service marks, copyrights,
industrial designs, inventions, technology and other similar rights owned by it,
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
<PAGE>
                                      -68-
                                                                       Article 9

other similar rights owned by others which are material to its business are
accurately described in Schedule S, as amended by written notice by it to the
Administration Agent from time to time (collectively, the "Intellectual Property
Rights"). It has the right to use the Intellectual Property Rights, all
applications and registrations in Canada, the United States and elsewhere for
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.

         (31)     Licenses, Agency and Distribution Agreements. Schedule T, as
amended by written notice by it to the Administration Agent 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 T grants to any Person any
authority to incur any liability or obligation to enter into any agreement on
behalf of it.

         (32)     Insurance. It 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.

         (33)     Financial Year End. Its financial year end is December 31.

         (34)     Financial Statements. The annual audited consolidated
financial statements of the Borrower for the fiscal year most recently ended,
furnished to the Administration Agent and the Lenders are the most recent annual
audited financial statements of the Borrower and its Subsidiaries. The
Borrower'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
Borrower's audited financial statements (i) present fairly in all material
respects its and its Subsidiaries' financial position and its results of
operations at the dates thereof and for the periods covered therein, and (ii)
disclose all liabilities of it 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.

         (35)     Special Purpose Financial Statements. The Special Purpose
Financial Statements of the Borrower for the fiscal year most recently ended,
furnished to the Administration Agent and the Lenders are the most recent
Special Purpose Financial Statements of the Borrower 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 (i)
present fairly in all material respects its and its Subsidiaries', (other than
the Unrestricted Subsidiaries), financial position and its results of operations
at the dates thereof and for the periods covered therein, and (ii) disclose all
liabilities of it and its Subsidiaries, (other
<PAGE>
                                      -69-
                                                                       Article 9

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.

         (36)     Financial Forecast. The Borrower 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, Underwriters and each
Lender acknowledge that (i) there are uncertainties inherent in attempting to
make such projections and forecasts, (ii) they are familiar with such
uncertainties, and (iii) they acknowledge and agree that the Financial Forecast
are projections and the actual results will likely differ. The Financial
Forecasts have been approved by the Borrower's Board of Directors.

         (37)     Asset Monetization Program. The Borrower 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,
Underwriters and each Lender acknowledge that (i) there are uncertainties
inherent in attempting to make such a program; (ii) they are familiar with such
uncertainties; and (iii) they acknowledge and agree 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 Borrower's Board of Directors.

         (38)     Material Adverse Effect. Since the date of the Borrower's most
recent annual audited financial statements provided to the Administration Agent,
there has been no condition (financial or otherwise), event or change in the
Borrower's or any Subsidiaries' business, liabilities, operations, results of
operations, assets or prospects which constitutes or has, or could reasonably be
expected to constitute, or have, a Material Adverse Effect.

         (39)     Solvency. It is not and none of its Subsidiaries is insolvent
nor will it be insolvent immediately following the completion of the
transactions contemplated by, or referred to in, this Agreement.

         (40)     Employment Disputes. There are no disputes pending or, to its
best knowledge after due inquiry by its Senior Officers, threatened, between it
and any of its employees which could reasonably be expected to have a Material
Adverse Effect.

         (41)     Benefit and Pension Plans. Its benefit and pension plans are
fully insured or otherwise funded in accordance with Applicable Law and all
premiums and other payments due by it 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 Internal Revenue Code of the United States 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 such Internal Revenue
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 (B) is a "prohibited transaction" within the meaning of Section 406(a) or
406(b) of ERISA or Section 4975(c) of such Internal Revenue Code.
<PAGE>
                                      -70-
                                                                       Article 9

         (42)     Pension Plans. Except as disclosed on Schedule Z during the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Advance hereunder, 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.

         (43)     Regulations U and X. None of the US Guarantors is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Advance will be used to purchase or carry
margin stock or otherwise for a purpose which violates, or would be inconsistent
with, F.R.S. Board Regulation U or X. Terms for which meanings are provided in
F.R.S. Board Regulation U or X or any regulations substituted therefor, as from
time to time in effect, are used in this Section with such meanings.

         (44)     Full Disclosure. All information provided or to be provided to
the Administration Agent, the Syndication Agent and/or the Lenders in connection
with the Credit Facilities is true and correct and none of the documentation
furnished to the Administration Agent, the Syndication Agent and/or the Lenders
by or on behalf of it, to its knowledge, omits or will omit as of such time, a
material fact necessary to make the statements contained therein not misleading
in any material way, and all expressions of expectation, intention, belief and
opinion contained therein were honestly made on reasonable grounds after due and
careful inquiry by it (and any other Person who furnished such material on
behalf of them).

         (45)     Deemed Repetition. The representations and warranties
contained in this Article shall continue in effect until payment and performance
of all Indebtedness under this Agreement and each other Document and termination
of the Credit Facilities notwithstanding any investigation made by or on behalf
of the Administration Agent, the Syndication Agent or any Lender or any other
person or any knowledge of the Administration Agent, the Syndication Agent or
any Lender or any person and shall be deemed to be repeated as if made on the
date of each Drawdown, Conversion or Rollover.

         (46)     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 in
Schedule V.

         (47)     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
in Schedule V.

         (48)     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
<PAGE>
                                      -71-
                                                                       Article 9

minimill in Kentucky specializing in the production of flat rolled steel.
Co-Steel C.S.M. Corp.'s assets and liabilities are summarized in Schedule V.

         (49)     NJSC. NJSC is inactive and is currently in the process of
being dissolved.

                             ARTICLE 10 - COVENANTS

10.01    POSITIVE COVENANTS

         The Borrower and each Guarantor covenants with the Administration
Agent, the Syndication Agent and each of the Lenders that, until the Credit
Facilities are cancelled and there is no outstanding Advance or other
Indebtedness of the Borrower to any of the Administration Agent, the Syndication
Agent or any Lender hereunder or of a Guarantor under a Guarantee, it shall
comply with each of the covenants set out in this Section, except as otherwise
permitted by the prior written consent of the Administration Agent on the
instruction of the Required Lenders.

         (1)      Corporate Existence. It shall do or cause to be done all
things necessary to ensure it remains a corporation duly incorporated and
validly subsisting under the laws of its jurisdiction of incorporation and to
maintain all necessary corporate power and authority to own its property and
carry on its business as presently owned and carried on by it and to keep in
full force and effect its material licences, registrations, and qualifications
in all jurisdictions where the character of its property owned or leased or the
nature of the activities conducted by it makes licensing, registration or
qualification necessary.

         (2)      Laws, Regulations etc. It shall conduct its business and
operations in material compliance with its articles of incorporation and by-laws
and all Applicable Laws and 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 labour 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.

         (3)      Obligations and Taxes. It shall pay or discharge, or cause to
be paid or discharged, before the same shall become delinquent (i) all Taxes
imposed upon it or upon its income or profits or in respect of its business or
property and file all tax returns in respect thereof, (ii) all lawful claims for
labour, materials and supplies (iii) all required payments under any of its
Indebtedness, and (iv) all other obligations; provided, however that it shall
not be required to pay or discharge or to cause to be paid or discharged any
such amount so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and a reserve in accordance with GAAP and
satisfactory to the Administration Agent has been established in its books and
records and by way of separate trust fund.

         (4)      Payment. It shall duly and punctually pay or cause to be paid
to the Administration Agent, the Managing Security Agent, the Syndication Agent
and each Lender all
<PAGE>
                                      -72-
                                                                      Article 10

principal, interest, fees and other amounts payable by it under this Agreement
and any other Document on the dates, times, at the places and in the moneys and
manner set forth herein and therein.

         (5)      Use of Credit. It shall use the proceeds of the Credit
Facilities as contemplated by Section 2.03.

         (6)      Business. It 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 and
shall conduct and shall cause its Subsidiaries to conduct its business in a
proper, efficient and business-like manner.

         (7)      Assets. It shall keep all of the material assets and
properties used or useful in the conduct of its business in good repair, working
order and condition, ordinary wear and tear excepted, and from time to time
make, or cause to be made, all necessary and proper repairs, renewals,
replacements and improvements thereto, all as in its reasonable judgement may be
necessary so that its business may be properly and advantageously conducted at
all times.

         (8)      Inventory. It shall maintain contractual relationships, in
form and substance satisfactory to the Administration Agent, 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.

         (9)      Accounts Receivable. It shall ensure that Co-Steel
Distribution Canada Limited has title to all Account 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 Borrower's recycling division), that the Borrower has title to all
Accounts Receivable relating to the Borrower'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.

         (10)     Co-Steel (UK) Limited - Borrower Loan. On or before June 30,
2002 it shall document the intercompany loan between Co-Steel (UK) Limited and
the Borrower in a form approved by the Administration Agent.

         (11)     Wind-up of English Finance Structure. It shall use its
commercially reasonable efforts to complete the transaction described in
Schedule U on or before December 31, 2002. For greater certainty the transaction
described in Schedule U may be completed notwithstanding any restriction in
Section 10.01 or 10.03 and no step in such transaction shall constitute a
Bankruptcy Event hereunder.

         (12)     Security Over English Finance Structure. On or before December
31, 2002, if there is any inter-company indebtedness from the Borrower or any
Restricted Subsidiary to any English Finance Structure Company or successor
thereof, it shall either (x) (i) continue or incorporate a Subsidiary pursuant
to the Ontario Business Corporations Act, which Subsidiary will be the sole
holder of any intercompany indebtedness formerly held by any of the English
<PAGE>
                                      -73-
                                                                      Article 10

Finance Structure Companies; (ii) cause such new Subsidiary to provide to the
Administration Agent a Guarantee and provide to the Canadian Security Agent a
General Security Agreement; and (iii) deliver to the Administration Agent
customary evidence of perfection of the security interests granted by the
foregoing General Security Agreement together with a customary opinion of
counsel in respect of same in form and substance reasonably satisfactory to the
Administration Agent, or (y) provide such other security, together with
customary legal opinions in respect of same, in form and substance reasonably
requested by the Administration Agent and the Required Lenders in respect of the
English Finance Structure Companies.

         (13)     Guarantors. It shall cause each Subsidiary, (other than
Co-Steel C.S.M. Corp. and its Subsidiaries and 1062316 Ontario Limited and its
Subsidiaries), having Net Tangible Assets in excess of Cdn. $5,000,000 to
execute and deliver to the Administration Agent a Guarantee and a supplement to
this Agreement in such form as the Administration Agent reasonably deems
necessary to have such Subsidiary become a party hereto as a Guarantor.

         (14)     Material Contracts and Material Licences. It 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 Licences all in accordance with prudent
                  business practice;

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

         (c)      promptly upon request by the Administration Agent, provide the
                  Administration Agent with all information regarding
                  contractual relations of the Borrower of a material nature
                  which is requested by the Administration Agent; and

         (d)      use reasonable commercial efforts to obtain and deliver to the
                  Administration Agent the consent of any party that the
                  Administration Agent requests with respect to the Lien on any
                  Material Contract or Material Licence in favour of the
                  Administration Agent, such consent to be in form and substance
                  acceptable to the Administration Agent.

         (15)     Jurisdictions. It shall advise the Administration Agent of any
change in the location at which its or any of its Restricted Subsidiaries'
assets may be located from the location disclosed on Schedule P 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.

         (16)     Computer Systems. It shall take commercially reasonable steps
to ensure, so far as reasonably possible, that all computer systems used in its
business
<PAGE>
                                      -74-
                                                                      Article 10

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.

         (17)     Intellectual Property Rights. The Borrower 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;

         (b)      notify the Administration Agent if it knows, or has reason to
                  know, of any application or registration, relating to any
                  patent or trade mark 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.A. Patent and Trade Mark
                  Offices 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 Administration Agent any application for the
                  registration of any trade mark material to its business with
                  the Canadian or U.S.A. Trade Mark Office and any application
                  for any patent material to its business with the Canadian or
                  U.S.A. Patent 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).

         (18)     Insurance.

         (a)      It shall maintain insurance of such type, in such amounts and
                  against such risks as is prudent for a business of an
                  established reputation with financially sound and reputable
                  insurers, including product liability, business interruption
                  liability and property insurance.

         (b)      It shall, from time to time at the Administration Agent's
                  request, deliver certified copies of its insurance policies
                  (or satisfactory evidence of its policies) to the
                  Administration Agent.

         (c)      At any time during normal business hours and following
                  reasonable notice from the Administration Agent, but, in any
                  case, not more than twice in each calendar year, acting
                  reasonably, it shall co-operate and assist in any review of
                  the insurance policies maintained by it by a firm of
                  independent insurance consultants selected by the
                  Administration Agent, the cost of any such review being for
                  its account.

         (d)      If it does not obtain or maintain the insurance in accordance
                  with Section 10.01(18)(a), the Administration Agent may, but
                  need not, do so, in which event it
<PAGE>
                                      -75-
                                                                      Article 10

                  shall immediately on demand reimburse the Administration Agent
                  for all payments made by the Administration Agent in
                  connection with obtaining and maintaining such insurance, and
                  until reimbursed any such payment shall bear interest at the
                  Default Rate unless prohibited by law, in which event such
                  amount, if payable in Canadian Dollars shall bear interest at
                  the rate applicable to a Prime Rate Loan, or if payable in
                  U.S. Dollars, shall bear interest at the rate applicable to a
                  Base Rate Loan.

         (e)      All proceeds of any insurance policy maintained by the
                  Borrower or any Subsidiary (the "Insurance Proceeds") less
                  than Cdn.$2,500,000 in respect of any one instance or less
                  than Cdn.$5,000,000 annually may be retained by the Borrower
                  or applicable Subsidiary; for greater certainty if the
                  Borrower 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.
                  All Insurance Proceeds in excess of such amounts shall be paid
                  by the insurers directly to a Security Agent and if paid to
                  the Borrower or any Guarantor, such Insurance Proceeds shall
                  be received only in trust for the Managing Security Agent,
                  shall be segregated from other funds of the Borrower or
                  Guarantor, as applicable, and shall be forthwith paid over to
                  the Managing Security Agent in the same form as received. All
                  Insurance Proceeds paid to a Security Agent shall be applied
                  in accordance with the terms of the Inter-Creditor Agreement.

         (19)     Benefit and Pension Plans. It 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.

         (20)     Notices, etc. Each US Guarantor will furnish, or will cause to
be furnished, to the Administration Agent with sufficient copies for each Lender
copies of reports, notices and information immediately upon becoming aware of
(i) the institution of any steps by any US Guarantor or any other Person to
terminate any Pension Plan (other than a standard termination under Section
4041(b) of ERISA), (ii) the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA, (iii) the taking of any action with respect to a Pension Plan
which could result in the requirement that any US Guarantor furnish a bond or
other security to the PBGC or such Pension Plan, or (iv) the occurrence of any
event with respect to any Pension Plan which could result in the incurrence by
any US Guarantor of any material liability, fine or penalty, notice thereof and
copies of all documentation relating thereto.

         (21)     Defence of Claims. It shall diligently defend itself and its
properties from and against any lawsuits or claims in accordance with prudent
business practice.

         (22)     Notices. It shall provide the Administration Agent with
immediate written notice of the commencement or occurrence of any of the
following events of which it becomes aware:
<PAGE>
                                      -76-
                                                                      Article 10

         (a)      the institution of any proceeding for the condemnation,
                  expropriation or other taking of any of its or any Restricted
                  Subsidiaries' 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 Subsidiaries' property that 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 Subsidiaries' 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 $5,000,000 or the aggregate amount claimed under all
                  such actions, suits or proceedings which are unresolved is in
                  excess of $10,000,000 in the aggregate, and any such notice
                  shall specify the nature of such action, suit or proceeding
                  and its Restricted Subsidiaries' proposed response and shall
                  from time to time provide all information requested by the
                  Administration Agent 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 Subsidiaries' 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 Subsidiaries' property with a value in excess
                  of $5,000,000;

         (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;

         (h)      any Leased Property, other than the North York Property or the
                  Significant U.S. Leased Properties becoming material to the
                  Business of the Borrower 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 Borrower or any of its Subsidiaries in excess of
                  $5,000,000;

         (j)      its, or any Obligor's, acquisition of any property that is not
                  subject to the Security 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
                  Security Documents;

         (k)      the preparation of any financial or strategic report by any
                  third party for the benefit of the Borrower or any Subsidiary
                  other than Gallatin, and with respect to
<PAGE>
                                      -77-
                                                                      Article 10

                  Gallatin any such financial or strategic report not subject to
                  a confidentiality obligation;

         (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 Subsidiaries' or any Hungarian Finance Structure
                  Companies' property which, if determined adversely, would have
                  a Material Adverse Effect;

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

         (n)      the effecting of any Capital Expenditure pursuant to the
                  proviso to Section 10.03(13).

         (23)     Additional Covenants. It shall promptly notify the
Administration Agent if at any time it has entered into any new instrument or
agreement or has amended an existing instrument or agreement relating to any
Indebtedness in an aggregate principal amount greater than Cdn. $5,000,000 to
include covenants or defaults (or their equivalent) not substantially provided
for in this Agreement or more favourable to the lender or lenders thereunder
than those provided for in this Agreement. Thereupon, if the Administration
Agent shall request, the parties to this Agreement shall amend this agreement to
provide for substantially the same covenants and defaults (or their equivalent)
as those provided for in such instrument or agreement.

         (24)     Environmental Reporting. It shall immediately provide to the
Administration Agent written notice of any of the following events of which it
becomes aware which could result in a Material Adverse Effect:

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

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

         (c)      its receipt of any written notice that it 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;

         (d)      its receipt of any written notice of, or its obtaining
                  knowledge of, a condition with respect to any property which
                  it owns, leases, occupies or has control of, or previously
                  owned, leased, occupied or had control of which might
                  reasonably result in a notice of violation by it of any
                  Environmental Law;
<PAGE>
                                      -78-
                                                                      Article 10

         (e)      its 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
                  owns, leases, occupies or has control of or owned, leased
                  occupied or had control of; or

         (f)      its 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.

         (25)     Maintenance of Bank Accounts. It shall and shall cause each
Subsidiary to maintain each of its bank accounts with either the Administration
Agent or PNC; provided however that (i) Acierco S.A. may maintain, up to the
lesser of U.S.$1,000,000 and its then contingent tax liability in the account
with Banque de Luxembourg in Luxembourg, identified in Schedule X, (ii) Lake
Ontario Steel Company Inc. may maintain up to U.S.$500,000 in the account with
Manufacturers and Traders Trust Company in Buffalo, New York identified in
Schedule X, and (iii) Co-Steel C.S.M. Corp. and any of its Subsidiaries may
maintain any bank account from time to time, and with the consent of the
Administration Agent, the Borrower 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 maintaining such account
and may retain amounts individually less than Cdn.$150,000 and cumulatively less
than Cdn.$600,000 in bank accounts not maintained with the Administration Agent
or PNC or not subject to a Blocked Account Agreement. Notwithstanding the
foregoing, in connection with loans and advances permitted pursuant to Section
10.03(24), up to U.S.$10,200,000 may be transferred to and retained for up to
three Banking Days in the bank account of Co-Steel Hungary at HSBC London,
England identified in Schedule X and the bank account of Acierco S.A. at Banque
de Luxembourg in Luxembourg and identified in Schedule X.

         (26)     Asset Monetization Program. It 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. Any revision
to the Asset Monetization Program shall be subject to the approval of the
Administration Agent and the Required Lenders and shall be approved by the
Borrower's Board of Directors.

         (27)     Strategic Plan. It shall, with the assistance of an
independent consultant, prepare and shall deliver to Administration Agent and
Lenders, on or before July 31, 2002, a detailed written five-year strategic
option plan for the Borrower and its Subsidiaries (the "Strategic Plan"). The
Borrower shall deliver to Administration Agent and Lenders all reports from time
to time received that will form part of the Strategic Plan as well as all drafts
and interim versions of such reports. As well, the Borrower will provide notice
of engagement of any consultant or professional advisor engaged to give
strategic advice to the Borrower together with copies of any agreements relating
to any such engagement, and copies of all work product produced by such
consultants or professional advisors. The Strategic Plan shall include, without
limitation: (i) an analysis of strategies and options to maximize value for the
Borrower and its Subsidiaries, including its Raritan operations and its
interests in Gallatin; (ii) a detailed written capital expenditure plan for the
Borrower and each of its Subsidiaries; (iii) general cost reduction and
<PAGE>
                                      -79-
                                                                      Article 10

efficiency strategies for the Borrower and its Subsidiaries, including a
cost/benefit analysis of each such strategy; (iv) an update of the Asset
Monetization Program, including any additional assets subject thereto; and (v) a
proposed timetable for implementing the foregoing. The Strategic Plan shall be
in a form reasonably satisfactory to the Administration Agent and the Required
Lenders and shall be updated annually on or before July 31. The Strategic Plan
and each annual update thereof shall be approved by the Borrower's Board of
Directors.

         (28)     Collateral Audit. It shall assist a consultant of
Administration Agent's and the Required Lender's 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 Borrower and each Subsidiary (the "Collateral Audit"), such report shall
be dated as of August 31, 2003.

         (29)     Bi-Annual Auditor's Report. It shall, twice annually; (i) on
or before 60 days following March 31, and (ii) on or before 60 days following
September 30, provide to the Administration Agent and the Lenders from auditors
acceptable to the Majority Lenders an audit report of the Borrower's and its
Subsidiaries' accounts receivable, inventory, accounts payable, cash and related
systems (the "Bi-Annual Auditor's Report"). The first such Bi-Annual Auditor's
Report shall be delivered by the Borrower to the Administration Agent on or
before June 15, 2002. Such report shall be satisfactory in form and content to
the Administration Agent and the Required Lenders.

         (30)     Other Reports. It shall, from time to time, prepare or provide
such reports to the Administration Agent and the Lenders as may be reasonably
requested by the Administration Agent or any Lender, including, without
limitation, reports identified by the Borrower pursuant to Section 10.01(22)(k).

         In addition, it shall notify the Administration Agent upon receipt of
any report with respect to environmental audits conducted by or on behalf of, or
provided to, the Borrower or any Subsidiary, and upon request shall forthwith
provide copies of same, with sufficient copies for each Lender, to the
Administration Agent.

10.02    FINANCIAL COVENANTS

         The Borrower covenants with the Administration Agent, the Syndication
Agent and each of the Lenders that, until the Credit Facilities are cancelled
and there is no outstanding Advance or other Indebtedness of the Borrower to any
of the Administration Agent, the Syndication Agent or any Lender hereunder or of
a Guarantor under a Guarantee, it shall comply with each of the covenants set
out in this Section, except as otherwise permitted by the prior written consent
of the Administration Agent on the instruction of the Required Lenders.

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

                  (i)      as at December 31, 2001, 1.8:1

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

<PAGE>
                                      -80-
                                                                      Article 10

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

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

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

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

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

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

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

         (2)      The Borrower 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.

         (3)      The Borrower 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 Borrower does not exceed:

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

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

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

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

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

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

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

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

                  (ix)     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 debt in effect at the Closing Date included in
Consolidated Total Net Debt shall be pegged at $1.55 Cdn.: $1 U.S. per Borrower
projections.

         (4)      The Borrower 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 Borrower is not less than:

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

<PAGE>
                                      -81-
                                                                      Article 10

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

                  (iii)    as at June 30, 2002, 0.1:1;

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

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

                  (vi)     as at March 31, 2003, 0.9:1;

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

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

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

         (5)      The Borrower shall ensure that Tangible Net Worth, calculated
as at the end of each fiscal quarter of the Borrower commencing December 31,
2001: (i) on or before September 30, 2002 exceeds $390 million, minus the amount
of write-downs of assets resulting from asset sales approved in advance by the
Administration Agent and the Required Lenders; and (ii) after and, including
December 31, 2002 exceeds $380 million, minus the amount of write-downs of
assets resulting from asset sales approved in advance by the Administration
Agent and the Required Lenders.

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------
                                        ($Cdn. 000's)
Quarter Ending 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>

10.03    NEGATIVE COVENANTS

         The Borrower and each Guarantor covenants with the Administration
Agent, the Syndication Agent and each of the Lenders that, until the Credit
Facilities are cancelled and there is no outstanding Advance or other
Indebtedness of the Borrower to any of the Administration Agent, the Syndication
Agent or any Lender hereunder or of a Guarantor under a Guarantee, it shall
comply with each of the covenants set out in this Section, except as otherwise
permitted by the prior written consent of the Administration Agent on the
instruction of the Required Lenders.

         (1)      Indebtedness. It shall not and shall not permit any Restricted
Subsidiary to create, incur, assume or permit to exist any Indebtedness except:
<PAGE>
                                      -82-
                                                                      Article 10

         (a)      Indebtedness in favour of the Administration Agent and the
                  Lenders under this Agreement;

         (b)      Indebtedness pursuant to the Prudential Note Agreement;

         (c)      Indebtedness pursuant to the Convertible Debentures;

         (d)      Indebtedness pursuant to the PNC Indebtedness;

         (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
                  judgements 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 $5,000,000; and

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

         (2)      Other Indebtedness and Agreements. It shall not and shall not
permit any Restricted Subsidiary 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, defease or in
substance defease, purchase, redeem, retire or otherwise acquire any other
Indebtedness in advance of Indebtedness outstanding under this Agreement.

         (3)      Payments to other Senior Lenders. Other than as permitted
pursuant to the terms of the Inter-Creditor Agreement no Obligor shall make any
payment of any kind to the Noteholders or PNC. Notwithstanding the foregoing,
provided no Event of Default or Default has then occurred, the Borrower may from
time to time pay interest as required pursuant to the terms of the Prudential
Note Agreement and Co-Steel Raritan, Inc. may from time to time pay interest as
required pursuant to the terms of the PNC Raritan Credit Agreement and Co-Steel
<PAGE>
                                      -83-
                                                                      Article 10

Sayreville, Inc. may from time to time pay interest as required pursuant to the
terms of the PNC Sayreville Credit Agreement.

         (4)      Negative Pledge. It 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 subsequent to or pari passu with any Lien in favour of
the Security Agents) other than Permitted Liens.

         (5)      Material Contracts and Material Licences. It shall not and
shall not permit any Guarantor to:

         (a)      allow any circumstances to arise which would allow any
                  Material Contract or Material Licence 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 Licence if such
                  amendment could reasonably be expected to have a material and
                  adverse effect on the Administration Agent or the Lenders or
                  the repayment of the obligations hereunder; or

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

         (6)      Sale of Assets. Other than Permitted Asset Sales, or sales
pursuant to the Asset Monetization Program it 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 Lenders (each such asset sale so approved an "Approved Asset Sale").

         (7)      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 Section 10.03(1), it 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 real or personal property if such property is owned on the
date of this Agreement or thereafter acquired by it 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 it or any of its Affiliates for substantially the same purpose
as such property was used by it or such Affiliate prior to such sale or
transfer.

         (8)      Acquisitions. It shall not and shall not permit any Restricted
Subsidiary 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 (other than pursuant to Section 10.01(11)), 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 Borrower or any
Restricted Subsidiary receiving equity of an arm's length Person as part of a
compromise of such
<PAGE>
                                      -84-
                                                                      Article 10

arm's length Person's debt pursuant to a Bankruptcy Event. And provided further
that the foregoing shall not prevent the Borrower or any Restricted Subsidiary
from acquiring:

                  (i)      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;

                  (ii)     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 Lender;

                  (iii)    commercial paper maturing in 270 days or less from
                           the date of issuance which, at the time of
                           acquisition by the Borrower 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 a Lender;

                  (iv)     direct obligations of the United States of America or
                           Canada or any agency or instrumentality of the United
                           States of America or Canada 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 months or less from the date of
                           acquisition;

                  (v)      ownership of the capital stock of Subsidiaries and
                           ASW existing on the Closing Date or as otherwise
                           provided herein; and

                  (vi)     money market funds or income funds that invest solely
                           in the investments identified in clauses (i) to (iv),
                           inclusive in this Section 10.03(8).

         (9)      Loans, Investments etc. Other than Key Employee Loans
not to exceed Cdn.$5,000,000 at any time, it shall not and shall not permit any
Restricted Subsidiary to:

                  (i)      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, in
                           each case other than to another member of the
                           Restricted Group; or

                  (ii)     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 (US) 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 advances
is received by the Borrower, immediately prior to, or contemporaneously
therewith and further provided that each previous
<PAGE>
                                      -85-
                                                                      Article 10

payment under subsection (i) of this notwithstanding clause has been duly
received by the Borrower; (ii) provided that at the time of and immediately
after giving effect to such loan or advance no Event of Default or Default would
result (or the equivalent with respect to the credit facilities of Gallatin),
the Borrower may from time to time make loans or advances to Gallatin totalling
per annum up to the lesser of (x) Cdn.$3,000,000; and (y) the amount by which
the Lenders, the Noteholders and PNC have been prepaid pursuant to payments of
the nature described in Section 3.03(1)(e); and (iii) the Borrower or any
Restricted Subsidiary may make investments from time to time as permitted under
the second proviso of Section 10.03(8).

         (10)     Dividends, etc. The Borrower 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 Borrower's shares.

         (11)     No Reduction of Capital. It shall not, or shall ensure that
the Restricted Subsidiaries shall not, (as applicable), apply any of its assets
to the purchase, redemption or other acquisition or retirement of any shares in
the Borrower's capital or otherwise reduce the Borrower's issued or paid up
capital in respect of any of its shares.

         (12)     No Issue of Capital. Other than pursuant to a Significant
Share Offering or 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 Debentures in accordance with their terms, it shall not, without
the consent of the Majority Lenders, issue any new capital by way of equity or
subordinated debt offering or otherwise. 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 Share Pledge Agreement, and the certificates
representing such new capital are forthwith delivered to a Security Agent.

         (13)     Capital Expenditures. In each fiscal year the Restricted Group
cumulatively 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 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 proceeds with respect to which are payable to the Borrower.

         (14)     Accounting Changes. It 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 Administration Agent and it
shall not change its financial year end.

         (15)     Transactions with Affiliates. Except as otherwise permitted in
this Section, it 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

<PAGE>
                                      -86-
                                                                      Article 10

                  Affiliate which is in the ordinary course of its business and
                  which is upon fair and reasonable terms no less favourable to
                  it than it would obtain in a comparable arm's-length
                  transaction with a Person who is not an Affiliate of it; or

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

         (16)     Fundamental Changes. It shall not and it 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

         (b)      any Guarantor may sell, transfer, lease or otherwise dispose
                  of its assets to the Borrower or another Guarantor,

provided that such Guarantor provides the Administration Agent with prior notice
of any such transaction and upon any amalgamation, the resulting company
delivers to the applicable Security Agent the Security 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 Administration Agent including, if applicable, a pledge of the amalgamated
company's shares.

         (17)     Hedging Contracts. It shall not and shall not permit any of
its Subsidiaries to engage in currency trading, convert Loans from one currency
into another or enter into any currency or interest rate hedge for speculative
reasons.

         (18)     Nature of Business. It shall not and shall not permit any of
its Subsidiaries to make any substantial change in the nature of its business
from that engaged in on the date of this Agreement or engage in any other
businesses other than those in which it is engaged on the date of this
Agreement.

         (19)     Inconsistent Agreements. It 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.

         (20)     Announcements. Except as required by Applicable Law, it shall
not make or permit any press release or other public announcement to be made by
or on its behalf which
<PAGE>
                                      -87-
                                                                      Article 10

mentions either Underwriter or any Lender without each Underwriter's and each
Lender's prior written approval of the press release or public announcement.

         (21)     Industrial Bonds. It shall not permit Co-Steel Dofasco LLC to
sell the Gallatin County Industrial Revenue Bonds except to another Affiliate or
Subsidiary of the Borrower.

         (22)     English Finance Structure Companies. Except as set forth in
Schedule U, (i) it shall not 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, (ii) it shall not and shall not permit
any of its Subsidiaries to transfer any assets to any of the English Finance
Structure Companies, and (iii) it shall not permit any of the English Finance
Structure Companies to incur additional liabilities.

         (23)     Co-Steel C.S.M. Corp. Other than its duties as a partner in
Gallatin, it shall not permit Co-Steel C.S.M. Corp. to carry on any business and
it shall not and shall not permit any of its Subsidiaries to transfer any assets
to Co-Steel C.S.M. Corp. Notwithstanding the foregoing, it may and may permit
its Subsidiaries to transfer funds to Co-Steel C.S.M. Corp. (i) pursuant to its
regular tax planning if (x) no Event of Default or Default then exists or would
occur because of such transfer, and (y) an amount equivalent to the amount so
transferred is received by the Borrower or a Guarantor on the same Banking Day
as such transfer or (ii) if otherwise permitted pursuant to Section 10.03(9).

         (24)     Payment of Intercompany Indebtedness. It 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 Y.
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 under this notwithstanding clause has been duly received by a Restricted
Subsidiary, it may twice annually permit payment of up to U.S. $10,200,000 in
respect of interest on the Permitted Intercompany Indebtedness described in
Schedule Y, if the amount of such interest payment (net of up to Cdn. $100,000
for operating expenses), is received by a Restricted Subsidiary within three
Banking Days of such payment.

         (25)     Unrestricted Subsidiaries' Cumulative Net Tangible Assets. It
shall not permit the aggregate Net Tangible Asset of all Unrestricted
Subsidiaries, (other than Co-Steel C.S.M. Corp. or 1062316 Ontario Limited and
their Subsidiaries), to exceed Cdn.$10,000,000 at any time.

10.04    ACCOUNTING FINANCIAL STATEMENTS AND OTHER INFORMATION

         (1)      General. The Borrower and each Subsidiary shall maintain a
system of accounting established and administered in accordance with GAAP, and
shall set aside on its books all such proper provisions as required by GAAP. The
Borrower and each Subsidiary shall permit Persons reasonably designated by the
Administration Agent or any consultant reasonably appointed by the
Administration Agent to visit and inspect, at the expense of the Borrower, any
properties of the Borrower or a Subsidiary, to examine the books and financial
records of the Borrower or a Subsidiary and to discuss its affairs, finances and
accounts, all at reasonable times and as often as may reasonably be requested by
the Administration Agent and the Borrower and
<PAGE>
                                      -88-
                                                                      Article 10

each Subsidiary agrees to answer any inquiries made by any designated Persons or
consultants fully and fairly to the best of its ability. The Persons designated
or the consultants appointed by the Administration Agent pursuant to this
Section may include accountants or management consultants reasonably appointed
by the Administration Agent to examine reasonable aspects of the operations of
the Borrower or a Subsidiary. The Borrower and each Subsidiary further
acknowledge that any designated Persons or consultants may make extracts from
its records to prepare reports to the Administration Agent concerning the
financial position and business prospects of the Borrower or any Subsidiary and
the Administration Agent shall have no obligation to disclose the content of any
reports to the Borrower or any Subsidiary. The Administration Agent shall have
no duty to make any visits, inspections or examinations or to have any
discussions and shall not incur any liability or obligation nor lose any rights
for not making the same.

         (2)      Financial Reports. The Borrower shall furnish to the
Administration Agent with sufficient copies for itself, the Syndication Agent
and each Lender:

         (a)      promptly upon availability and in any event within 90 days
                  after the end of its 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 Borrower 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, in the case of the
                  Borrower's audited financial statements, with the Auditor's
                  report to directors, shareholders or lenders, as appropriate,
                  thereon, which report shall contain no qualifications;

         (b)      promptly upon availability and in any event within 90 days
                  after the end of its fiscal year, its annual audited Special
                  Purpose Financial Statements, and 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, together with the
                  Auditor's report to directors or lenders, as appropriate,
                  thereon, which report shall be substantially in the form
                  delivered to the Lenders under the 1999 Credit Agreement and
                  shall otherwise contain no qualifications;

         (c)      promptly upon availability and in any event within 45 days
                  after the end of each of its first three fiscal quarters 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
                  Borrower 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
<PAGE>
                                      -89-
                                                                      Article 10

                  the Financial Forecast and of significant matters, including,
                  without limitation of labour negotiations, pending and current
                  litigation and general market conditions, and market
                  positioning of the Borrower;

         (d)      at the times referred to in (a), (b) and (c) above, a
                  Compliance Certificate;

         (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, (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 Borrower'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 of
                  labour negotiations, pending and current litigation, pension
                  and trade cases and general market conditions and market
                  positioning of the Borrower; (ii) an unaudited consolidated
                  earnings summary for the Borrower; (iii) a summary of cash
                  balances, accounts receivable, accounts payable, inventory and
                  capital expenditures for such month, in form and substance
                  satisfactory to the Administration Agent and the Majority
                  Lenders; 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 any Lender;

         (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, delivery of a
                  roll-forward summary satisfactory in form and content to the
                  Administration Agent and the Majority Lenders of the
                  Borrower'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;

         (g)      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, delivery of an operating
                  report for the Borrower, satisfactory in form and content to
                  the Administration Agent and the Majority Lenders, providing
                  details of, among other matters, tons produced, utilization at
                  the melt shops and bar mills, major production downtimes,
                  significant changes in component input costs and supply
                  contracts, as well as significant events related to
                  environmental and safety matters and detailing progress made,
                  to the date of such report, in effecting the Asset
                  Monetization Program, effecting approved capital expenditures
                  and in implementing the Strategic Plan;
<PAGE>
                                      -90-
                                                                      Article 10

         (h)      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 Borrower shall use its best
                  efforts to obtain a release of any confidentiality obligation
                  and provide same to the Administration Agent and the Lenders
                  if so requested by the Administration Agent or any Lender;

         (i)      on or before September 30 of each year, its Business Plan for
                  the next two fiscal years, such Business Plan to be in form
                  and substance acceptable to the Borrower and the Required
                  Lenders in their absolute discretion;

         (j)      promptly upon availability and in any event within 45 days
                  after the end of each of its fiscal quarters, commencing with
                  the fiscal quarter in which the Closing Date falls, an update
                  to its then current Business Plan, (the first such update to
                  be delivered no later than June 15, 2002), such updates to be
                  approved by the Borrower's Board of Directors;

         (k)      promptly, and in any event at least 15 days after the filing
                  thereof, all continuous disclosure materials it has filed with
                  any securities regulator;

         (l)      promptly, and in any event within 10 days after receipt, a
                  copy of any management letter or comparable analysis prepared
                  by its Auditors or any annual, interim or special audit
                  conducted by its Auditors or any other independent public
                  accountants concerning the Borrower; and

         (m)      promptly, upon request, all other information as the
                  Administration Agent or any Lender may from time to time
                  reasonably request.

         (3)      Excess Revolver Paydown. The Borrower shall deliver to the
Administration Agent and the Managing Security Agent, on or before the fifth
Banking Day following the end of each of its fiscal quarters, a certificate of a
Senior Officer setting forth a calculation of the amount by which the
outstanding amount of the sum of (x) the Advances and (y) the Equivalent Amount
in Canadian Dollars of the principal amount advanced under the PNC Sayreville
Credit Agreement and the PNC Raritan Credit Agreement is less than the result of
(a) the sum of (x) the Commitments and (y) the Equivalent Amount in Canadian
Dollars of all commitments under the PNC Sayreville Credit Agreement and the PNC
Raritan Credit Agreement at such time minus, (b) Cdn.$50,000,000.
<PAGE>
                                      -91-
                                                                      Article 11

                      ARTICLE 11 - DEFAULT AND ENFORCEMENT

11.01    EVENTS OF DEFAULT

         The occurrence of any one or more of the following events (each an
"Event of Default") shall constitute a default under this Agreement:

         (a)      the Borrower shall fail to pay any principal amount due under
                  this Agreement, or under any other Document, on the due date
                  thereof;

         (b)      the Borrower shall fail to pay when due any interest, fee or
                  other amount not referred to in Section (a) of this Section
                  which is payable under this Agreement, or under any other
                  Document, and the failure to pay continues for three Banking
                  Days or more;

         (c)      the Borrower or any Guarantor shall fail to duly perform the
                  covenants set out in Section 10.03(9) or 10.03(24) within the
                  time limit set forth therein, or fail to duly perform and
                  observe any other term, condition or covenant contained in
                  this Agreement or under any other Document or any other
                  document, agreement or instrument made between it and the
                  Administration Agent or the Syndication Agent or the Lenders
                  or delivered by it or on its behalf to the Administration
                  Agent or to the Syndication Agent or the Lenders, and the
                  failure, is not corrected within fifteen Banking Days from the
                  date the Borrower or any Guarantor, as applicable, is notified
                  of such failure by the Administration Agent, the Syndication
                  Agent or any Lender or otherwise becomes aware of such
                  failure;

         (d)      any representation, warranty or statement which is made, or
                  deemed to have been made, or acknowledged to have been made by
                  or on behalf of the Borrower or any Guarantor in this
                  Agreement or any other Document, or which is contained in any
                  certificate, statement, legal opinion or notice provided under
                  or in connection with this Agreement or any other Document, is
                  untrue, incorrect or misleading in any material respect when
                  made or deemed to have been made;

         (e)      the Borrower or any of its Subsidiaries shall default in: (i)
                  the payment, when due, of any Indebtedness (other than under
                  this Agreement or the other Documents) having an aggregate
                  principal amount greater than Cdn.$5,000,000; or (ii) the
                  payment, performance or observance of any obligation or
                  condition with respect or relating to any Indebtedness having
                  an aggregate principal amount greater than Cdn.$5,000,000; or
                  (iii) any other event occurs, and the effect of such other
                  event is to accelerate the maturity of any Indebtedness having
                  an aggregate principal amount greater than Cdn.$5,000,000, or
                  to permit the holder or holders of any Indebtedness having an
                  aggregate principal amount greater than Cdn.$5,000,000, or any
                  trustee or agent for any holder or holders, to cause such
                  Indebtedness to become due and payable, or capable of becoming
                  due and payable, prior to its expressed maturity, except for
                  defaults in payment (if any) as are being contested in good
                  faith by appropriate proceedings and for which cash collateral
                  satisfactory
<PAGE>
                                      -92-
                                                                      Article 11

to the Administration Agent (acting reasonably) is provided to the
Administration Agent;

         (f)      a Bankruptcy Event shall occur in respect of the Borrower or
                  any Subsidiary of the Borrower;

         (g)      one or more final non-appealable judgements in an aggregate
                  amount in excess of Cdn.$5,000,000 shall be rendered against
                  the Borrower or any Subsidiary of the Borrower and shall not
                  be discharged within 30 days;

         (h)      one or more encumbrancers shall take possession of any
                  property or assets valued in excess of Cdn.$5,000,000 of the
                  Borrower or any Subsidiary of the Borrower or a distress or
                  execution or any similar process is levied or enforced against
                  any property or assets valued in excess of Cdn.$5,000,000 of
                  the Borrower or any Subsidiary of the Borrower and remains
                  unsatisfied for the shorter of a period of 10 days and the
                  period that would permit that property or those assets to be
                  sold in accordance with Applicable Law;

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

         (j)      in the sole judgement of the Required Lenders, any Security
                  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 Borrower is
                  unable to rectify the problem to the satisfaction of the
                  Required Lenders within 14 days after the Administration Agent
                  gives notice to the Borrower of the problem;

         (k)      the Borrower 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;

         (l)      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 Lenders;

         (m)      any consent, licence or authorization of any Governmental
                  Authority or any other Person which is required to make any
                  Material Contract or Material Licence legal, valid, binding
                  and enforceable or is required in order to enable any Borrower
                  or any other party thereto to perform its obligations
                  hereunder or thereunder shall be withdrawn or ceases to be in
                  full force and effect;

         (n)      other than as a result of the conversion or redemption of the
                  Convertible Debentures to common shares of the Borrower in
                  accordance with their terms, a
<PAGE>
                                      -93-
                                                                      Article 11

                  change of Control of the Borrower from that which existed on
                  the Closing Date shall have occurred;

         (o)      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 Borrower,
                  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;

         (p)      other than as permitted pursuant to Section 10.03(16), if the
                  Borrower 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;

         (q)      the Borrower or any Subsidiary of the Borrower shall (i)
                  change the nature or scope of its business or (ii) other than
                  pursuant to an Approved Asset Sale or as contemplated by
                  Section 10.01(11), cease to carry on business;

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

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

         (t)      a contribution failure occurs with respect to any Pension Plan
                  sufficient to give rise to a Lien under Section 302(f) of
                  ERISA;

         (u)      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;

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

         (w)      if the Noteholders shorten the maturity of the Prudential Note
                  Agreement or if PNC shortens the maturity under the PNC
                  Raritan Credit Agreement or the PNC Sayreville Credit
                  Agreement, so that any such indebtedness matures sooner than
                  January 15, 2004.

11.02    DEFERRAL OF ADVANCES

         Upon the occurrence of any Default, the right of the Borrower to obtain
further Advances under this Agreement shall, at the option of the Required
Lenders be deferred until the Default is
<PAGE>
                                      -94-
                                                                      Article 11

remedied to the satisfaction of the Required Lenders; provided that the
foregoing shall not prevent the Lenders from making an Advance in accordance
with the provisions hereof or from disbursing money under this Agreement in
reduction of outstanding Bankers' Acceptances, BA Equivalent Notes and Letters
of Credit.

11.03    TERMINATION OF CREDIT FACILITIES

         Upon the occurrence of any Event of Default, the Administration Agent
may on instruction of the Required Lenders and, by written notice to the
Borrower, terminate the Credit Facilities; provided that the foregoing shall not
prevent the Lenders from making an Advance in accordance with the provisions
hereof or from disbursing money under this Agreement in reduction of outstanding
Bankers' Acceptances, BA Equivalent Notes and Letters of Credit.

11.04    ACCELERATION

         Upon the occurrence of any Event of Default:

         (a)      the entire principal amount of each Loan then outstanding and
                  all accrued and unpaid interest thereon;

         (b)      the principal amount of each Bankers' Acceptance and BA
                  Equivalent Note which is unmatured;

         (c)      the face amount of each unexpired Letter of Credit;

         (d)      all unwinding costs under any Hedging Contract; and

         (e)      all other payments due under this Agreement or any other
                  Document,

shall, at the option of the Required Lenders, become immediately due and payable
with interest thereon, at the Default Rate to the date of actual payment
thereof, all without notice, presentment, protest, demand, notice of dishonour
or any other demand or notice whatsoever, all of which are hereby expressly
waived by the Borrower. In such event, the Administration Agent, on behalf of
the Lenders and the Syndication Agent, may exercise any right or recourse and
proceed by any action, suit, remedy or proceeding against the Borrower as
authorized or permitted by law for the recovery of all the indebtedness and
liabilities of the Borrower to the Administration Agent, the Syndication Agent
or the Lenders and proceed to exercise any and all rights hereunder and no such
remedy for the enforcement of the rights of the Administration Agent, the
Syndication Agent or any Lender shall be exclusive of, or dependent on, any
other remedy but any one or more remedy may, from time to time, be exercised
independently or in combination.

11.05    LEGAL PROCEEDINGS

         After an Event of Default has occurred, the Administration Agent shall,
upon the written request of the Required Lenders, commence a legal action or
other proceedings as it, in its sole discretion, deems expedient to collect the
Indebtedness of the Borrower under this Agreement and the other Documents and to
exercise its rights under the Security Documents and the
<PAGE>
                                      -95-
                                                                      Article 11

Guarantees, all without any additional notice, presentation, demand, or protest,
all of which the Borrower, to the extent permitted by law, expressly waives.

11.06    NO PREJUDICE, ETC.

         Nothing contained in any Document, nor any act or omission of the
Administration Agent with respect to any Document, shall in any way prejudice or
affect the rights, remedies and powers of the Administration Agent with respect
to any other Document.

11.07    SET-OFF

         Upon the occurrence of an Event of Default, in addition to and not in
limitation of any rights now or ever granted under Applicable Law or the
Security Documents, the Administration Agent, the Syndication Agent or any
Lender may, to the extent permitted by law, without notice to the Borrower, at
any time and from time to time: (i) combine, consolidate or merge any or all of
the deposits or other accounts of the Borrower with the Administration Agent,
the Syndication Agent or any Lender (whether term, notice, demand or otherwise
and whether matured or unmatured) and the Indebtedness of the Borrower to the
Administration Agent, the Syndication Agent or the Lender and (ii) set-off,
apply or transfer any or all sums standing to the credit of any deposits or
accounts in or towards the satisfaction of any of the Indebtedness of the
Borrower to the Administration Agent, the Syndication Agent or the Lenders under
any Document, and may do so notwithstanding that the balances on any account and
the Indebtedness may not be expressed in the same currency and the
Administration Agent, the Syndication Agent or the applicable Lender is
authorized to effect any necessary conversions at the rate of exchange of the
Administration Agent, the Syndication Agent or applicable Lender then
prevailing. The parties acknowledge and agree that this Section is not intended
to create, and shall not be construed as creating, a security interest in any
property of the Borrower.

11.08    REMEDIES CUMULATIVE

         The rights and remedies of the Administration Agent, the Syndication
Agent and the Lenders under this Agreement are cumulative and in addition to,
and not in substitution for, any rights or remedies provided by any other
Document, by law or by equity.

11.09    APPROPRIATION OF MONIES RECEIVED

         (1)      Appropriation. The Administration Agent or any Lender may from
time to time, when an Event of Default has occurred which is continuing,
appropriate any monies received under this Agreement as the Administration Agent
or that Lender in its discretion may see fit, and the Borrower shall have no
right to require any inconsistent appropriation.

         (2)      Payments Received by Lenders. If any Lender at any time
receives payment or satisfaction of all or any part of its Advances, interest
thereon or any amount payable under this Agreement by whatever means (including
by set-off) to which it is not otherwise entitled under this Agreement, then
that Lender shall pay to the Administration Agent, on behalf of the other
Lenders, an amount that shall ensure that each Lender shall receive the payment
to which it is entitled under this Agreement.
<PAGE>
                                      -96-
                                                                      Article 11

         (3)      Where Refund Required by Lender. In the event that at any time
any Lender is required to refund (as a preference or otherwise) any amount which
has been paid to or received by it on account of any part of its Advances,
interest thereon or any other amount payable hereunder and which has been paid
to any other Lender pursuant to this Section, such other Lender shall repay a
proportionate amount of the sums so refunded without interest, or, as the case
may be, repurchase for cash from the first-mentioned Lender a proportionate part
of the Indebtedness of the Borrower to such first-mentioned Lender.

         (4)      Effect on Borrower's Indebtedness. If a Lender is required to
make any payment to any other Lender pursuant to this Section it shall give
notice of the required payment to the Administration Agent and the liability of
the Borrower to the Lender making a payment under this Agreement shall be
treated as not having been reduced by the amount of the payment and the
liability of the Borrower to any Lender receiving the payment shall be treated
as having been reduced by the amount of the payment received by that Lender.

11.10    NON-MERGER

         The taking of a judgement or judgements or any other action or dealing
whatsoever by the Administration Agent, the Syndication Agent or any Lender in
respect of any Document shall not operate as a merger of any Indebtedness of the
Borrower to the Administration Agent, the Syndication Agent or any of the
Lenders or in any way suspend payment or affect or prejudice the rights,
remedies and powers, legal or equitable, which the Administration Agent, the
Syndication Agent or any of the Lenders may have in connection with such
liabilities.

11.11    PRO RATA SHARING

         (1)      Pro Rata Sharing of Lenders. All amounts received by the
Administration Agent, the Syndication Agent or the Lenders following a Default
or an Event of Default shall be shared pro rata among the Lenders in the same
proportion as the Advances extended by each Lender bears to the total of all
outstanding Advances under the Credit Facilities; provided that following a
Default or an Event of Default, payments received by any of the Lenders shall be
applied first to amounts outstanding under the Credit Facilities until fully
paid.

         (2)      Allocation of Advances. Following a Default or an Event of
Default, the Administration Agent shall allocate outstanding Advances among the
Lenders so that the total Advances under all of the Credit Facilities in the
same proportion as the total Commitment of each Lender bears to the total
Commitments of all of the Lenders. Without limiting the foregoing, if, at any
time after the Credit Facilities have been terminated, the total Advances under
the Credit Facilities are not in the same proportion as the total commitment of
each Lender bears to the total Commitments of all of the Lenders any Lender who
has an excess outstanding (the "Surplus Lender") shall sell to any relevant
Lender that has deficit outstanding (the "Deficit Lender"), and the Deficit
Lender shall purchase from the Surplus Lender, for cash, at par, without
representation or warranty from or recourse to the Surplus Lender, an interest
in such of the Advances outstanding from the Surplus Lender as results in the
percentage of the Advances outstanding from each Lender for each Credit Facility
being equal to the percentage of their Lender's Commitment for the Credit
Facility. The intention of this Section is that when any and
<PAGE>
                                      -97-
                                                                      Article 11

all purchases and sales required hereby have been completed, the outstanding
Advances will be held by each Lender in the percentage of the Lender's
Commitment in each Credit Facility.

         (3)      Allocation of Advances Under Swingline Facility. At any time
and from time to time in its discretion, the Swingline Lender may notify the
Administration Agent that the Swingline Lender wishes each of the other Lenders
to provide its Proportionate Share of the Advances made under the Swingline
Facility, in which case the Administration Agent shall forthwith notify each of
the Lenders of such requirement and each Lender, including the Swingline Lender,
as a Lender, shall thereupon provide to the Administration Agent, for the
account of the Swingline Lender, such Lender's Proportionate Share under the
Revolving Facility of the then outstanding Advances under the Swingline
Facility, as an advance on the Revolving Facility. The amounts so provided by
the Lenders in respect of the payment to the Swingline Lender of the Lender's
Proportionate Share of the Swingline Facility advanced in Canadian Dollars shall
be deemed to be Prime Rate Loans denominated in Canadian Dollars and advanced in
US Dollars shall be deemed to be Base Rate Loans denominated in US Dollars,
under the Revolving Facility, in accordance with the provisions of this
Agreement (but for such purposes any notice provisions or minimum amounts of
such Advances otherwise required under this Agreement shall be disregarded). The
aggregate of the amounts paid by the Lenders to the Administration Agent in
respect of the Swingline Facility shall be paid by the Administration Agent to
the Swingline Lender and applied by the Swingline Lender to reduce the then
outstanding Advances under the Swingline Facility.

11.12    SHARING OF SET-OFFS

         Each Lender agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest then due and payable with respect to any
Advance which is greater than the proportion received by any other Lender in
respect of the aggregate amount of principal and interest then due and payable
to such other Lender with respect to such Advance, the Lender receiving such
proportionately greater payment shall purchase such participations in the
Advances held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Advances held by the Lenders shall be shared by the Lenders pro rata;
provided that nothing in this Section shall impair or restrict in any manner the
right of any Lender to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of indebtedness
of the Borrower other than its indebtedness hereunder. Each Lender agrees that
amounts received or retained upon exercise of a right of set-off are subject to
distribution pursuant to the terms of the Inter-Creditor Agreement and agrees to
provide such amounts to the Administration Agent for such purpose. The Borrower
agrees that any holder of any participation in an Advance may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of such participation were a direct creditor of the
Borrower in the amount of such participation.
<PAGE>
                                      -98-
                                                                      Article 12

         ARTICLE 12 - THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT

12.01    APPOINTMENT

         (1)      Appointment of Administration Agent. Each Lender and the
Syndication Agent hereby appoints The Toronto-Dominion Bank to act as
Administration Agent for the Lenders and the Syndication Agent in the manner and
upon the terms provided in this Agreement. Except as may be specifically
provided to the contrary in this Agreement, each Lender and the Syndication
Agent irrevocably authorizes the Administration Agent as its agent, to take any
action on its behalf under the provisions of the Documents and any other
instruments and agreements referred to in them, and to exercise any powers and
to perform any duties as are delegated to the Administration Agent by the terms
of the Documents, together with such other powers as are reasonably incidental
thereto, which it may be necessary for the Administration Agent to exercise in
order that the provisions of the Documents are carried out, including, without
limitation, powers as are necessary to comply in all technical aspects with the
practices of the London Interbank Eurocurrency Market. The Administration Agent
shall only be required to exercise powers and perform its duties as agent under
the Documents as it is instructed to exercise from time to time by the Lenders
and shall not be required to act upon any instructions received directly by the
Administration Agent from a Participant under a Participation. The
Administration Agent is hereby expressly authorized and directed to enter into
the Inter-Creditor Agreement for and on behalf of the Lenders.

         (2)      Appointment of Syndication Agent. Each Lender hereby appoints
The Bank of Nova Scotia to act as Syndication Agent for the Lenders in the
manner and upon the terms provided in this Agreement. Except as may be
specifically provided to the contrary in this Agreement, each Lender irrevocably
authorizes the Syndication Agent as its agent, to take any action on its behalf
under the provisions of this Agreement and any other instruments and agreements
referred to in them, and to exercise any powers and to perform any duties as are
delegated to the Syndication Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto, which it may be
necessary for the Syndication Agent to exercise in order that the provisions of
this Agreement are carried out. The Syndication Agent shall only be required to
exercise powers and perform its duties as agent under this Agreement as it is
instructed to exercise from time to time by the Lenders and shall not be
required to act upon any instructions received directly by the Syndication Agent
from a Participant under a Participation.

12.02    DEALING BY BORROWER WITH THE ADMINISTRATION AGENT

         (1)      Dealing Exclusively with Administration Agent. Except as
expressly provided in this Agreement, the Borrower and each Guarantor shall deal
with the Administration Agent in lieu of the Lenders for the purposes set out in
this Agreement.

         (2)      Reliance by Borrower on Administration Agent. The Borrower and
each Guarantor may rely, and shall be fully protected in so relying, without any
obligation to inquire into the correctness of its reliance, upon any action,
notice, direction, waiver, consent, determination, communication or agreement by
the Administration Agent purporting to be on
<PAGE>
                                      -99-
                                                                      Article 12

behalf of the Lenders, any of which shall, as regards the Borrower and each
Guarantor, be deemed to be an action, notice, direction, waiver, consent,
determination, communication or agreement of the Lenders.

12.03    DELEGATION OF DUTIES

         The Administration Agent and the Syndication Agent may perform any of
their duties under any Document or any other instruments and agreements referred
to in any Document by or through their agents or employees and shall be entitled
to the advice of counsel concerning all matters pertaining to their duties
thereunder.

12.04    RETENTION OF ADVISORS

         In administering the Credit Facilities, the Administration Agent may
retain, at the expense of the Lenders if such expenses are not recoverable from
the Borrower, such solicitors, counsel, auditors, consultants and other experts
and agents as the Administration Agent may select, in its sole discretion,
acting reasonably.

12.05    INDEMNITY

         Each Lender hereby separately indemnifies the Administration Agent and
the Syndication Agent (in each case to the extent not reimbursed by the
Borrower) rateably in accordance with its Commitment from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements of any nature or kind whatsoever which
may be imposed on, incurred by, or asserted against, either of them in their
respective capacities as Administration Agent and Syndication Agent in any way
relating to or arising out of, the Documents, including, without limitation all
payment obligations under the Inter-Creditor Agreement and any other instruments
and agreements referred to in them or any action taken or omitted by either of
them under the Documents or any other instruments and agreements referred to in
them; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements resulting from either of their gross
negligence or wilful misconduct. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Administration Agent or the
Syndication Agent promptly upon demand for its rateable share, in accordance
with its Commitment, of any payments made pursuant to the Inter-Creditor
Agreement (on account of true up amounts or otherwise), out-of-pocket expenses
(including the fees and disbursements of solicitors, counsel, auditors,
consultants and other experts and agents) incurred by the Administration Agent
or the Syndication Agent in connection with the determination or preservation of
any rights of the Administration Agent or the Syndication Agent or the Lenders
under, or the enforcement of, or legal advice in respect of rights or
responsibilities under, the Documents or any other instruments and agreements
referred to in them, to the extent that the Administration Agent or the
Syndication Agent is not reimbursed for such expenses by the Borrower on demand.
In addition, the Administration Agent or the Syndication Agent may refrain from
exercising any right, power or discretion or taking any action to protect or
enforce the rights of the Administration Agent or the Syndication Agent or any
Lender under the Documents or any other instruments and agreements referred to
in them until it has been indemnified or secured to its satisfaction against
<PAGE>
                                      -100-
                                                                      Article 12

any and all costs, losses, expenses or liabilities (including legal fees) which
it would or might sustain or incur as a result of such exercise or action.

12.06    LIMITATION OF AGENT'S LIABILITY

         Neither the Administration Agent nor the Syndication Agent shall have
any duties or responsibilities except those expressly set out in this Agreement.
The Administration Agent, the Syndication Agent or any of their respective
officers, directors, employees or agents shall not be liable for any action
taken or omitted to be taken under this Agreement or in connection with it,
unless caused by its or their own gross negligence or wilful misconduct. The
duties of the Administration Agent and the Syndication Agent shall be mechanical
and administrative in nature. Neither the Administration Agent nor the
Syndication Agent shall have, by reason of this Agreement or any other Document,
a fiduciary relationship in respect of any Lender and nothing herein or therein,
expressed or implied, is intended to, or shall be construed so as to, impose
upon either of them any obligation except as expressly set out herein. Neither
the Administration Agent nor the Syndication Agent shall be responsible for any
recitals, statements, representations or warranties herein or therein or which
may be contained in any document subsequently received by either of them or for
the authorization, execution, effectiveness, genuineness, validity or
enforceability of the Documents or any other instruments and agreements referred
to therein and shall not be required to make any enquiry concerning the
performance or observance of any of the terms, provisions or conditions of the
Documents or any other instruments and agreements referred to therein. Each of
the Lenders severally represents and warrants to each of the Administration
Agent and the Syndication Agent that it has made and shall continue to make such
independent investigation of the financial condition and affairs of the Borrower
as such Lender deems appropriate in connection with its entering into this
Agreement and the making and continuance of borrowings under the Credit
Facilities, that such Lender has and shall continue to make its own appraisal of
the creditworthiness of the Borrower and that such Lender in connection with
such investigation and appraisal has not relied upon any information provided to
such Lender by the Administration Agent or the Syndication Agent. The
Administration Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which, by the terms of this Agreement or any
other Document, the Administration Agent without any consent of the Lenders is
permitted or required to take or to grant, and it shall be absolutely entitled
to refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from taking any
action or withholding any approval under this Agreement or any other Document
until it has received such instructions from the Majority Lenders. No Lender
shall have any right of action whatsoever against the Administration Agent or
the Syndication Agent as a result of the Administration Agent or the Syndication
Agent acting or refraining from acting hereunder or under any other Document in
accordance with instructions received from the requisite number of Lenders. No
Lender shall have any right of action whatsoever against the Administration
Agent or the Syndication Agent as a result of the Administration Agent or
Syndication Agent acting hereunder or under any other Document in a manner in
which it is permitted or required to act.

12.07    RELIANCE

         In connection with this Agreement or any other Document, each of the
Administration Agent and the Syndication Agent shall be entitled to rely upon
any writing, notice, statement,
<PAGE>
                                      -101-
                                                                      Article 12

certificate, facsimile or other document or telephone conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and, with respect to all legal matters pertaining to this
Agreement or any other Document and its duties hereunder or thereunder, upon the
advice of counsel selected by it.

12.08    EXCHANGE OF INFORMATION

         The Borrower and each Guarantor agrees that the Administration Agent,
the Syndication Agent and each Lender may provide to each other any information
concerning the financial position, property and operations of the Borrower or
any Restricted Subsidiary which, in their opinion, is relevant to the ability of
the Borrower or any Guarantor to fulfil its obligations under or in connection
with this Agreement or any other Document provided that no such party shall be
under any obligation to disclose any information to any other such party in
respect of the Borrower or any Restricted Subsidiary, other than the
Administration Agent providing to the Lenders copies of this Agreement, the
financial statements and other materials delivered by the Borrower or any
Guarantor pursuant to this Agreement and copies of any certificates delivered by
the Borrower or any Guarantor pursuant to this Agreement and the Administration
Agent providing to the Lenders copies of each Assignment Agreement entered into
from time to time. All information supplied by the Borrower or any Guarantor to
the Administration Agent, the Syndication Agent or any Lender shall be kept
strictly confidential and used only for the purpose of managing, participating,
syndicating, selling or assigning the Credit Facilities.

12.09    THE ADMINISTRATION AGENT AND THE SYNDICATION AGENT, INDIVIDUALLY

         With respect to its Commitment and the Advances granted by it under the
Credit Facilities, each of the Administration Agent and the Syndication Agent
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not such an agent, and the term
"Lenders" or any similar terms shall, unless the context clearly indicates
otherwise, include the Administration Agent and the Syndication Agent in their
capacities as Lenders hereunder. It is understood and agreed by each of the
Lenders that the Administration Agent may accept deposits from, lend money to,
and generally engage in banking business with the Borrower, as if it were not an
Administration Agent under this Agreement.

12.10    RESIGNATION

         (1)      Resignation of Administration Agent. If at any time the
Administration Agent deems it advisable, in its sole discretion, it may, as
hereinafter provided, deliver to each Lender, the Borrower and each Guarantor
written notification of its resignation insofar as it acts on behalf of the
Lenders pursuant to this Article, such resignation to be effective upon the date
of the appointment by the Majority Lenders of a successor agent acceptable to
the Borrower, such appointment to be promptly made. If no such appointment has
been made within 30 days, the Administration Agent may make such appointment on
behalf of the Lenders and shall forthwith give notice of such appointment to the
Lenders, the Borrower and each Guarantor.

         (2)      Resignation of Syndication Agent. If at any time the
Syndication Agent deems it advisable, in its sole discretion, it may, as
hereinafter provided, deliver to each Lender, the
<PAGE>
                                      -102-
                                                                      Article 12

Borrower and each Guarantor written notification of its resignation insofar as
it acts on behalf of the Lenders pursuant to this Article, such resignation to
be effective upon the date of the appointment by the Majority Lenders of a
successor agent, such appointment to be promptly made. If no such appointment
has been made within 30 days, the Syndication Agent may make such appointment on
behalf of the Lenders and shall forthwith give notice of such appointment to the
Lenders, the Borrower and each Guarantor.

12.11    ADMINISTRATION OF THE CREDITS

         (1)      The Administration Agent may exercise any rights of approval
conferred upon it pursuant to this Agreement. The Administration Agent may only
exercise any and all rights of approval conferred upon the Majority Lenders with
the prior consent of the Majority Lenders.

         (2)      The Administration Agent may take the following actions only
with the prior consent of the Required Lenders, unless otherwise specified in
this Agreement:

         (a)      exercise any and all rights of approval conferred upon the
                  Required Lenders by this Agreement;

         (b)      amend, modify or waive any of the terms of this Agreement
                  (including waiver of a Default or Event of Default), if such
                  action is not otherwise provided for in Section 12.11(3);

         (c)      declare an Event of Default or take action to enforce
                  performance of the obligations of the Borrower including the
                  appointment of a receiver, the exercise of powers of distress,
                  lease or sale given by law and take foreclosure proceedings
                  and/or pursue any other legal remedy necessary;

         (d)      decide to accelerate the amounts outstanding under the Credit
                  Facilities; and

         (e)      pay insurance premiums, taxes and any other sums as may be
                  reasonably required to protect the interests of the Lenders.

         (3)      The Administration Agent may take the following actions only
if the prior unanimous consent of the Lenders is obtained, unless otherwise
specified herein:

         (a)      exercise any and all rights of approval conferred upon all of
                  the Lenders by this Agreement;

         (b)      amend, modify, discharge, terminate or waive any of the terms
                  of this Agreement if such amendment, modification, discharge,
                  termination or waiver would increase the amount of a Credit
                  Facility, reduce the interest rates applicable to a Credit
                  Facility, reduce the fees payable with respect to a Credit
                  Facility, extend any date fixed for payment of principal or
                  interest relating to a Credit Facility, extend the repayment
                  dates of a Credit Facility or release any Lien of any Security
                  Document, (provided that the Administration Agent may release
                  any Lien on property or a specific asset without the consent
                  of any Lender if disposition of such property or asset is
                  permitted hereunder);
<PAGE>
                                      -103-
                                                                      Article 12

         (c)      increase the Commitment of any Lender under any Credit
                  Facility;

         (d)      amend the definition of "Majority Lenders" or "Required
                  Lenders"; and

         (e)      amend this Section.

         (4)      Any decision herein expressed to be a decision of or action to
be taken by the Lenders and not explicitly stated to be a decision or action to
be taken by the Majority Lenders, the Required Lenders or all of the Lenders,
shall be deemed to be a decision of or action to be taken by the Majority
Lenders.

         (5)      As between the Borrower, on the one hand, and the
Administration Agent and the Lenders, on the other hand:

         (a)      all statements, certificates, consents and other documents
                  which the Administration Agent purports to deliver on behalf
                  of the Lenders, the Majority Lenders or the Required Lenders
                  shall be binding on each of the Lenders, and the Borrower
                  shall not be required to ascertain or confirm the authority of
                  the Administration Agent in delivering such documents;

         (b)      all certificates, statements, notices and other documents
                  which are delivered by the Borrower to the Administration
                  Agent in accordance with this Agreement shall be deemed to
                  have been delivered to each of the Lenders; and

         (c)      all payments which are delivered by the Borrower to the
                  Administration Agent in accordance with this Agreement shall
                  be deemed to have been duly delivered to each of the Lenders.

12.12    INSTRUCTIONS BY LENDERS

         (1)      An approval, instruction or other expression of applicable
Lenders, (i.e. the Majority Lenders, the Required Lenders or all of the
Lenders), may be obtained by instrument in writing as provided in Section
12.12(2) or may be included in a resolution that is submitted to a meeting or
adjourned meeting of Lenders duly called and held for the purpose of considering
the same as hereinafter provided and shall be deemed to have been obtained if
such resolution is passed by the affirmative vote of the requisite number of the
votes given on a poll of such Lenders with respect to such resolution. A meeting
of Lenders may be called by the Administration Agent, the Syndication Agent or
the Borrower and shall be called by the Administration Agent upon the request of
any Lender. Every such meeting shall be held in the City of Toronto, or at such
other reasonable place as the Administration Agent may approve. At least 10
Banking Days notice of the time and place of any such meeting shall be given to
each Lender and shall include or be accompanied by a draft of the resolution to
be submitted to such meeting, but the notice may state that such draft is
subject to amendment at the meeting or any adjournment thereof. The Lenders who
are present in person or by proxy at the time and place specified in the notice
shall constitute a quorum. A person nominated in writing by the Administration
Agent shall be chairman of the meeting. Upon every poll taken at any such
meeting, every Lender who is present in person or represented by a proxy duly
appointed in writing (who need not be a Lender) shall be entitled to one vote in
respect of each Dollar of
<PAGE>
                                      -104-
                                                                      Article 12

outstanding Advances which it is then owed, calculated as of the Banking Day
first preceding the day of the meeting, or if no Advance is outstanding as at
such date, shall be entitled to one vote in respect of each percentage of the
Commitment made by such Lender of the total Commitments of all Lenders. In
respect of all matters concerning the convening, holding and adjourning of
Lenders' meetings, the form, execution and deposit of instruments appointing
proxies and all other relevant matters, the Administration Agent may from time
to time make such reasonable regulations not inconsistent with this Section as
it shall deem expedient and any regulations so made by the Administration Agent
shall be binding upon each of the Borrower, the Guarantors, the Administration
Agent, the Syndication Agent and the Lenders. A resolution passed pursuant to
this Section by the requisite vote of the Majority Lenders, the Required Lenders
or all of the Lenders, as applicable, shall be binding upon all Lenders, and the
Administration Agent or the Syndication Agent, as applicable (subject to the
provisions for its indemnity herein contained) shall be bound to give effect
thereto accordingly.

         (2)      Any approval, instruction or other expression of applicable
Lenders may also be obtained by an instrument in writing signed in one or more
counterparts by the Majority Lenders, the Required Lenders or all of the
Lenders, as applicable.

12.13    ARRANGEMENTS FOR REPAYMENT OF ADVANCES

         Prior to an acceleration of the payment of amounts outstanding under
this Agreement, the Administration Agent shall, upon receipt by it of payments
from the Borrower or the Managing Security Agent on account of principal,
interest, fees or any other payment made to the Administration Agent on behalf
of the Lenders or the Syndication Agent, pay over to each Lender or the
Syndication Agent, as applicable, the amount to which it is entitled under this
Agreement on a pro rata basis in accordance with the then outstanding amount
owed to each Lender. Such payment shall be made promptly following receipt and,
in any event, the Administration Agent shall use its best efforts to pay such
amount on the same Banking Day as such amount is received by the Administration
Agent.

12.14    REPAYMENT BY LENDERS TO ADMINISTRATION AGENT

         (1)      Unless the Administration Agent has been notified in writing
by the Borrower at least one Banking Day prior to the date on which any payment
to be made by the Borrower under this Agreement is due that the Borrower does
not intend to remit such payment, the Administration Agent may, in its
discretion, assume that the Borrower has remitted such payment when so due, (to
the Administration Agent or Managing Security Agent, as applicable), and the
Administration Agent may, in its discretion and in reliance upon such
assumption, make available to each Lender on such payment date an amount equal
to such Lender's rateable portion of such assumed payment. If the Borrower does
not in fact remit such payment to the Administration Agent or Managing Security
Agent, as applicable, without restricting the obligation of such Borrower to
make such payment, the Administration Agent shall promptly notify each Lender
and each such Lender shall forthwith on demand repay to the Administration Agent
the amount of such assumed payment made available to such Lender, together with
interest thereon until the date of repayment thereof at a rate determined by the
Administration Agent (such rate to be conclusive and binding on each such
Lender) in accordance with the Administration Agent's usual banking practice for
such advances to financial institutions of like
<PAGE>
                                      -105-
                                                                      Article 12

standing to each such Lender, but in any event at a rate no greater than the
usual interbank offered rate for the sale of deposits in the applicable
currency.

         (2)      Unless the Administration Agent has been notified in writing
by the Lender at least one Banking Day prior to a Drawdown date that such Lender
does not intend to make available its proportion of any Advance under the Credit
Facilities, the Administration Agent may, in its discretion, assume that such
Lender has remitted funds to the Administration Agent and the Administration
Agent may, in its discretion and in reliance upon such assumption, make
available to the Borrower on such Drawdown date an amount equal to such Lender's
proportion of such Advance. If a Lender does not in fact remit such funds to the
Administration Agent, without restricting the obligation of such Lender to make
such funds available and for damages as a result of the failure to do so, the
Administration Agent shall promptly notify such Lender and the Borrower, and the
Borrower shall forthwith on demand repay to the Administration Agent the amount
made available to the Borrower by the Administration Agent on behalf of such
Lender, together with interest thereon until the date of repayment thereof at a
rate reasonably determined by the Administration Agent (such rate to be
conclusive and binding on such Lender and the Borrower).

12.15    DELIVERY OF ASSIGNMENT AGREEMENT

         The Administration Agent undertakes and agrees to deliver to the
Borrower, the Syndication Agent and each Guarantor a copy of each Assignment
Agreement executed pursuant to this Agreement forthwith after execution thereof.

12.16    PROVISIONS FOR BENEFIT OF LENDERS ONLY

         The provision of this Article relating to the rights and obligations of
the Administration Agent, the Syndication Agent and the Lenders inter se shall
be operative as between the Administration Agent, the Syndication Agent and the
Lenders only, and neither the Borrower nor any Guarantor shall have rights
under, or be entitled to rely for any purposes upon, such provisions.

                    ARTICLE 13 - ASSIGNMENT AND PARTICIPATION

13.01    BENEFIT AND BURDEN OF THIS AGREEMENT

         This Agreement shall enure to the benefit of and be binding on the
parties hereto, their respective successors and any permitted assignees or
transferees of some or all of the parties' rights or obligations hereunder.

13.02    BORROWER

         Neither this Agreement nor the benefit hereof may be assigned by the
Borrower or any Guarantor without the prior written consent of the
Administration Agent and each Lender.
<PAGE>
                                      -106-
                                                                      Article 13

13.03    PARTICIPATION AND SYNDICATION

         (1)      The rights, benefits and obligations of each Lender under this
Agreement and the other Documents (referred to in this Section as the "Rights")
may, in whole or in part, be participated (a "Participation") or syndicated,
sold or assigned (a "Syndication") by a Lender from time to time to one or more
financial institutions; provided that (a) in the case of a Syndication, the
Lender shall first have notified the Borrower, the Syndication Agent and the
Administration Agent and each of them shall have consented to the Syndication in
writing, such consent not to be unreasonably withheld, (b) any Syndication of
less than all of a Lender's Commitment shall be in a minimum amount of
$5,000,000, unless such Lender is assigning to another Lender some or all of its
Commitment, in which event no minimum amount shall apply, (c) the participant in
a Syndication shall execute and deliver to the Administration Agent a duly
completed Assignment Agreement, (d) the syndicating, selling or assigning Lender
shall pay to the Administration Agent a syndication fee of $3,500 with respect
to each Syndication, and (e) a non-resident of Canada participant in a
Syndication shall not have the benefit of Section 3.06.

         (2)      For the purpose of Participations or Syndications, the
Administration Agent, the Syndication Agent or any Lender may provide to a
potential participant, transferee or assignee (a "Participant") access, (on a
confidential basis), to any and all information disclosed to any of the
Administration Agent, the Syndication Agent or a Lender pursuant to this
Agreement or in the possession of any of them. In addition, the Borrower and
each Guarantor agrees (a) to promptly provide, and cause its advisors to
provide, upon request by the Administration Agent or the Syndication Agent, all
information reasonably deemed necessary by the party so requesting to complete a
Participation or Syndication, including, without limitation, information and
projections prepared by the Borrower or a Guarantor or on the Borrower's or a
Guarantor's behalf relating to this Agreement; and (b) to, upon request, assist,
and to cause its advisors to assist the Administration Agent or the Syndication
Agent in the preparation of an information memorandum or other marketing
materials to be used in connection with a potential Participation or
Syndication.

         (3)      In the event of a Syndication to a Participant, such
Participant, to the extent of the rights and obligations syndicated, sold or
assigned to it, shall become a "Lender" under this Agreement and shall become
entitled to such rights and be bound by such obligations to the same extent as
if such Participant were an original party to this Agreement in respect thereof,
and the syndicating Lender shall be released and discharged accordingly.

         (4)      If the Rights are the subject of a Participation, all
references in this Agreement to a Lender shall thereafter be construed as a
reference to such Lender and the Participants, provided that the Borrower, each
Guarantor and the Underwriters shall be entitled to deal with such Lender as if
it were the sole owner of the Rights and such Lender shall not be released from
any of its obligations under this Agreement by virtue of the Participation and
provided further that such documents do not adversely modify the Borrower's or
any Guarantor's rights or increase their obligations under this Agreement. The
Borrower and each Guarantor acknowledges and agrees that each Lender is
entitled, in its own name and on behalf of the Participants, to enforce for the
benefit of, or as agent for, any Participants, any and all rights, claims and
interests of such Participants, in respect of the Rights subject to a
Participation. A Lender granting a Participation shall not grant or assign any
Participant any rights to approve any
<PAGE>
                                      -107-
                                                                      Article 13

amendment, waiver or proposed consent to or under this Agreement or the other
Documents. None of the Administration Agent, the Syndication Agent nor any
Lender shall be responsible for any default by any other Lender in its
obligation not to so grant or assign any of such rights.

13.04    ASSIGNMENT BY LENDERS AFTER EVENT OF DEFAULT

         Notwithstanding the restrictions requiring Borrower consent contained
in Section 13.03, but otherwise subject to Section 13.03, upon the occurrence of
an Event of Default, the rights, benefits and obligations of each of the Lenders
under or in respect of this Agreement and the other Documents may, in whole or
in part, be syndicated, sold or assigned by a Lender to one or more Persons
without consent of the Borrower. For the purpose of such syndication, sale or
assignment, any Lender may provide to a potential syndicate member, transferee
or assignee, (on a confidential basis), access to any and all information
disclosed to any of the Administration Agent, the Syndication Agent or a Lender
pursuant to this Agreement or in the possession of any of the Administration
Agent, the Syndication Agent or a Lender.

13.05    BORROWER'S DOCUMENTS

         The Borrower and each Guarantor agrees to execute and deliver, at the
Administration Agent's request, such further documentation as the Administration
Agent considers necessary or advisable to put into effect any Syndication,
Participation, sale or assignment permitted by this Article provided that such
further documentation does not adversely modify any of the rights, or increase
any of the obligations, of the Borrower or any Guarantor under the Documents.

                           ARTICLE 14 - MISCELLANEOUS

14.01    EXCHANGE AND CONFIDENTIALITY OF INFORMATION

         The Administration Agent, the Syndication Agent and each of the Lenders
acknowledge the confidential nature of the financial, operational and other
information and data provided and to be provided to them by the Borrower and
each Guarantor pursuant to this Agreement (the "Information") and agree to use
all reasonable efforts to prevent the disclosure of the Information provided,
however, that:

         (a)      the Administration Agent, the Syndication Agent or any Lender
                  may disclose all or any part of the Information if, in its
                  opinion, disclosure is required in connection with any
                  judicial, administrative or governmental proceeding;

         (b)      neither the Administration Agent, the Syndication Agent nor
                  any Lender shall incur any liability in respect of any
                  disclosure of Information pursuant to the requirements of any
                  judicial authority, law enforcement agency or taxation
                  authority; and

         (c)      the Administration Agent, the Syndication Agent and each
                  Lender may provide each other and any potential assignee or
                  participant under this Agreement with any information
                  concerning the assets, affairs, operations and financial
                  condition

<PAGE>
                                      -108-
                                                                      Article 14

                  of the Borrower and each Restricted Subsidiary provided that
                  such potential assignee or participant shall agree to be bound
                  by the terms of this Section.

14.02    PAYMENT OF EXPENSES

         Whether or not the transactions contemplated by this Agreement are
consummated, the Borrower shall pay on demand all reasonable costs and expenses
of the Administration Agent, the Syndication Agent or the Lenders, and the fees
and disbursements of any experts or advisers (including counsel, insurance
consultants and others) retained by any of the Administration Agent, the
Syndication Agent or the Lenders incurred in connection with: (i) the
preparation, negotiation, execution, administration or interpretation of the
Documents; (ii) any amendment, modification or waiver of any of the provisions
of any Document; (iii) the protection and enforcement of the rights of the
Administration Agent, the Syndication Agent or the Lenders provided for in the
Documents; (iv) any syndication or publicity with respect to any of the Credit
Facilities; and (v) the preparation of any report hereunder, including without
limitation the Collateral Audit.

14.03    JUDGEMENT CURRENCY

         (1)      Currency Conversion. If, for the purpose of obtaining or
enforcing judgement against the Borrower or any Guarantor in any court in any
jurisdiction, it becomes necessary to convert into any other currency (the other
currency being referred to in this Section as the "Judgement Currency") an
amount due in Canadian Dollars or United States Dollars under this Agreement,
the conversion shall be made at the rate of exchange prevailing on the Banking
Day immediately preceding:

         (a)      the date of actual payment of the amount due, in the case of
                  any proceeding in the courts of the Province of Ontario or in
                  the courts of any other jurisdiction that will give effect to
                  a conversion being made on that date; or

         (b)      the date on which the judgement is given, in the case of any
                  proceeding in the courts of any jurisdiction that will not
                  give effect to a conversion being made per Section 14.03(1)(a)
                  (the date as of which conversion is made pursuant to this
                  Section being referred to in this Section as the "Judgement
                  Conversion Date").

         (2)      Change in Rate of Exchange. If, in the case of any proceeding
in the court of any jurisdiction referred to in Section 14.03(1)(b), there is a
change in the rate of exchange prevailing between the Judgement Conversion Date
and the date of actual payment of the amount due, the Borrower or Guarantor, as
applicable, shall pay an additional amount (if any, but in any event not a
lesser amount) as may be necessary to ensure that the amount paid in the
Judgement Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of Canadian Dollars or United States
Dollars, as the case may be, which could have been purchased with the amount of
Judgement Currency stipulated in the judgement or judicial order at the rate of
exchange prevailing on the Judgement Conversion Date. This obligation shall
constitute an obligation separate and independent from the other obligations
contained in this Agreement and the other Documents, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the recipient
<PAGE>
                                      -109-
                                                                      Article 14

from time to time and shall continue in full force and effect notwithstanding
any judgement or order for a liquidated sum in respect of an amount due under
his Agreement or any other Document or under any judgement or order.

         (3)      Rate of Exchange. The term "rate of exchange" in this Section
means:

         (a)      for a conversion of Canadian Dollars into the Judgement
                  Currency, the reciprocal of the official noon rate of exchange
                  published by the Bank of Canada for the date in question;

         (b)      for a conversion of United States Dollars into the Judgement
                  Currency when the Judgement Currency is Canadian Dollars, the
                  official noon rate of exchange published by the Bank of
                  Canada;

         (c)      for a conversion of United States Dollars to the Judgement
                  Currency when the Judgement Currency is not Canadian Dollars,
                  the effective rate obtained when a given amount of United
                  States Dollars is converted to Canadian Dollars at the rate
                  determined by Section 14.03(3)(b) and the result is then
                  converted to the Judgement Currency pursuant to Section
                  14.03(3)(a); or

         (d)      if a required rate is not published by the Bank of Canada for
                  any applicable date, the spot rate quoted by the
                  Administration Agent at the Administration Agent's main branch
                  at approximately noon (Toronto time) on that date in
                  accordance with its normal practice for the applicable
                  currency conversion in the wholesale market.

14.04    NOTICE

         Subject to Section 14.05, any demand, notice or other communication to
be given in connection with this Agreement must be given in writing and shall be
given by personal delivery, by ordinary mail or by electronic means of
communication addressed to the recipient or to any Guarantor as follows:

         To the Borrower or to any Guarantor:

                  Co-Steel Inc.
                  Hopkins Street South
                  Whitby, Ontario
                  L1N 5T1

                  Facsimile No.:    905-665-3720

                  Attention:        Vice President and Chief Financial Officer

<PAGE>
                                      -110-
                                                                      Article 14

         To the Administration Agent:

                  The Toronto-Dominion Bank
                  Toronto Dominion Bank Tower
                  38th Floor
                  66 Wellington Street West
                  Toronto, Ontario
                  M5K 1A2

                  Facsimile No.:    416-982-5535

                  Attention:        Vice President, Loan Syndications

         To the Syndication Agent:

                  The Bank of Nova Scotia
                  44 King Street West
                  Toronto, Ontario
                  M5H 1H1

                  Facsimile No.:    416-866-2009

                  Attention:        Senior Manager

To any Lender at the address of such Lender set out next to its signature
hereon, or next to its signature on an Assignment Agreement.

         Or to such other address, individual or electronic communication number
as may be designated by notice given by either party to the other. Any demand,
notice or other communication given by personal delivery shall be conclusively
deemed to have been given on the day of actual delivery and, if given by
ordinary mail, on the third Banking Day following the deposit in the mail and,
if given by electronic communication, on the day of transmittal if given before
or during the normal business hours of the recipient and on the next Banking Day
if given after the normal business hours of the recipient.

14.05    RELIANCE ON INSTRUCTIONS

         The Administration Agent and the Lenders shall be entitled to act upon
the oral or written instructions of any Person who the Administration Agent or
the Lenders reasonably believe is a Person the Borrower has identified in
writing from time to time to the Administration Agent and the Lenders as being a
person authorized by the Borrower to give instructions regarding the completion
and issuance of Bankers' Acceptances, the making of Drawdowns and other matters
under this Agreement and the Administration Agent and the Lenders shall not be
responsible for any error or omission in any instructions or their performance
except in the case of gross negligence or wilful misconduct by the
Administration Agent or the Lenders or their agents. The Borrower shall
immediately confirm in writing any oral instructions given to the Administration
Agent or a Lender; provided that in the event of any discrepancy between any
parties' records of
<PAGE>
                                      -111-
                                                                      Article 14

the oral instructions and the Borrower's written confirmation, the records of
the Administration Agent or the Lenders shall prevail. The Borrower may revoke
the authority of the persons authorized to give instructions by notifying the
Administration Agent and the Lenders in writing, which notice shall be effective
on the Banking Day immediately following the date of its actual receipt. Any
instruction given prior to the day the notice becomes effective shall remain
effective for the purposes of this Agreement.

14.06    SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

         All agreements, representations, warranties and covenants made by or on
behalf of the Borrower and each Guarantor in the Documents are material, shall
be considered to have been relied upon by the Administration Agent, the
Syndication Agent and the Lenders and shall survive the execution and delivery
of the Documents, any investigation made at any time by or on behalf of the
Administration Agent, the Syndication Agent or the Lenders and any disposition
or payment of the Advances until repayment in full of all Indebtedness of the
Borrower under the Credit Facilities and cancellation or other termination of
the Credit Facilities. All statements contained in any certificate delivered by
or on behalf of the Borrower or a Guarantor pursuant to the Documents or in
connection with the transactions contemplated by this Agreement shall be deemed
representations and warranties made by the Borrower or such Guarantor, as
applicable, pursuant to this Agreement.

14.07    FURTHER ASSURANCES

         The Borrower and each Guarantor shall, at its expense, from time to
time do, execute and deliver, or shall cause to be done, executed and delivered,
all such further acts, documents (including certificates, declarations,
affidavits, reports and opinions) and things as the Administration Agent, the
Syndication Agent or any Lender may reasonably request for the purpose of giving
effect to this Agreement and the other Documents, perfecting, protecting and
maintaining the Liens created by the Security Documents or establishing
compliance with the representations, warranties and conditions of this Agreement
or any other Document.

14.08    AMENDMENT, WAIVER ETC.

         No course of conduct, waiver or delay on the part of the Administration
Agent or any of the Lenders in exercising any right or privilege under this
Agreement or under any other Document shall operate as a waiver unless made in
writing and signed by an authorized officer of the Administration Agent. No
written waiver shall preclude the further or other exercise by the
Administration Agent or any of the Lenders of any right, power or privilege
under this Agreement or under any other Document, or extend to or apply to any
further Default or Event of Default. The Borrower acknowledges and agrees that a
waiver of a Default or an Event of Default shall not constitute a postponement
of the maturity date of any amount payable under this Agreement or an increase
in the obligations or Commitment of any Lender under this Agreement.

14.09    REMEDIES CUMULATIVE

         No right or remedy conferred upon or reserved to the Administration
Agent, the Syndication Agent or any Lender under this Agreement or any of the
other Documents is
<PAGE>
                                      -112-
                                                                      Article 14

intended to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to every other right or remedy
granted under any Document or now or ever existing under any Applicable Law.
Every right and remedy granted by the Documents or by Applicable Law to the
Administration Agent, the Syndication Agent or any Lender may be exercised from
time to time and as often as may be deemed expedient by the Administration
Agent, the Syndication Agent or any Lender and, unless contrary to the express
provisions of this Agreement, irrespective of the occurrence or continuance of
any Default or Event of Default.

14.10    NON-MERGER

         The taking of a judgement or judgements or any other action or dealing
whatsoever by the Administration Agent, including in respect of any Security,
shall, to the extent permitted by law, not operate as a merger of any
Indebtedness of the Borrower or any Guarantor to the Administration Agent, the
Syndication Agent or the Lenders or in any way suspend payment or affect or
prejudice the rights, remedies and powers, legal or equitable, which the
Administration Agent may have in connection with any Indebtedness and the
foreclosure, surrender, cancellation or any other dealing with any Security for
any Indebtedness shall, to the extent permitted by law, not release or affect
the Indebtedness of the Borrower or any Security Document.

14.11    CONFLICT

         To the extent that any term, condition, representation, covenant or
other provision contained in any Document (other than this Agreement and the
Inter-Creditor Agreement) is at any time inconsistent or conflicts with any
term, condition, representation, covenant or other provision contained in this
Agreement, then this Agreement shall govern.

         To the extent that any term, condition, representation, covenant or
other provision contained in this Agreement is inconsistent or conflicts with
any term, condition, representation, covenant or other provision contained in
the Inter-Creditor Agreement, the Inter-Creditor Agreement shall govern.

14.12    SEVERABILITY

         Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, respecting that jurisdiction only, be ineffective to the
extent of the prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of that
provision in any other jurisdiction.

14.13    COUNTERPARTS

         The parties may execute this Agreement in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original, but
all of which when taken together shall constitute one and the same instrument;
any party may execute this Agreement by signing any counterpart of it.
<PAGE>
                                      -113-
                                                                      Article 14

14.14    BENEFIT OF AGREEMENT

         This Agreement shall enure to the benefit of and be binding upon each
Borrower, each Guarantor, each Lender, the Administration Agent, the Syndication
Agent and their respective successors and assigns.

14.15    TIME OF ESSENCE

         Time shall be of the essence in this Agreement.

14.16    ENTIRE AGREEMENT

         This Agreement and each of the Documents constitute the entire
agreement between the parties relating to the subject matter of this Agreement
and the Documents and, except as stated in this Agreement or any Document, they
contain all the representations and warranties of the respective parties
relating to the subject matter of this Agreement and the Documents. This
Agreement and the Documents supersede and invalidate all other commitments,
representations and warranties relating to the subject matter hereof which may
have been made by the parties either orally or in writing prior to the date
hereof, and all of which shall become null and void from the date this Agreement
is signed.

<PAGE>
                                      -114-
                                                                      Article 14

         IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date and year first above written.

                         CO-STEEL INC.

                         By:
                            ----------------------------------------------------
                            Lorie Waisberg
                            Executive Vice President, Finance and Administration

                         By:
                            ----------------------------------------------------
                            Andy Boulanger
                            Vice President & Chief Financial Officer

                         1300554 ONTARIO LIMITED

                         By:
                            ----------------------------------------------------
                            Lorie Waisberg
                            Vice-President

                         By:
                            ----------------------------------------------------
                            Andy Boulanger
                            Secretary & Treasurer

                         1102590 ONTARIO LIMITED

                         By:
                            ----------------------------------------------------
                            Lorie Waisberg
                            Vice-President

                         By:
                            ----------------------------------------------------
                            Andy Boulanger
                            Secretary & Treasurer

                         CO-STEEL DISTRIBUTION CANADA LIMITED

                         By:
                            ----------------------------------------------------
                            Lorie Waisberg
                            Vice President

                         By:
                            ----------------------------------------------------
                            Andy Boulanger
                            Treasurer

<PAGE>
                                      -115-
                                                                      Article 14

                      CO-STEEL (U.S.) LTD.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      CO-STEEL FINANCE CORP.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      LAKE ONTARIO STEEL COMPANY INC.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      CO-STEEL USA DISTRIBUTION, INC.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and
                         Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

<PAGE>
                                      -116-
                                                                      Article 14

                      CO-STEEL USA HOLDINGS, INC.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      CO-STEEL RARITAN, INC.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      CO-STEEL SAYREVILLE, INC.

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer

                      RARITAN RIVER URBAN RENEWAL CORPORATION

                      By:
                         -------------------------------------------------------
                         Lorie Waisberg
                         Executive Vice President - Finance and Administration

                      By:
                         -------------------------------------------------------
                         Andy Boulanger
                         Treasurer and Chief Financial Officer
<PAGE>
                                      -117-
                                                                      Article 14

                                       THE TORONTO-DOMINION BANK AS
                                       ADMINISTRATION AGENT

                                       By:
                                          --------------------------------------
                                          Wayne Shiplo
                                          Vice President, Loan Syndications

                                       THE BANK OF NOVA SCOTIA, AS SYNDICATION
                                       AGENT

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:

Address:                               BANK ONE, NA, CANADA BRANCH, AS LENDER

BCE Place, P.O. Box 613
161 Bay Street, Suite 4240             By:
Toronto, Ontario                          --------------------------------------
M5J 2S1                                Name:
                                       Title:

Attention:     Jeremiah A. Hynes/
               Michael Bauer           By:
                                          --------------------------------------
                                       Name:
Facsimile:     416-363-7574            Title:

Address:                               BANK OF TOKYO - MITSUBISHI (CANADA),
                                       AS LENDER
Royal Bank Plaza, South Tower,
Suite 2100, P.O. Box 42
Toronto, Ontario                       By:
M5J 2J1                                   --------------------------------------
                                       Name:
                                       Title:
Attention:     Angelo Bisutti/
               Ian MacNeil
                                       By:
                                          --------------------------------------
Facsimile:     416-865-9511            Name:
                                       Title:

<PAGE>
                                     -118-
                                                                      Article 14

Address:                              CANADIAN IMPERIAL BANK OF COMMERCE,
                                      AS LENDER
Commerce Court West
161 Bay Street, 6th Floor
Toronto, Ontario                      By:
M5L 1A2                                  --------------------------------------
                                      Name:
                                      Title:
Attention:     Ken Miller/
               Brian McDonough
                                      By:
                                         --------------------------------------
Facsimile:     416-861-3602           Name:
                                      Title:

Address:                              COMERICA BANK, CANADA BRANCH, AS LENDER

Suite 2210, South Tower
Royal Bank Plaza, P.O. Box 61         By:
Toronto, Ontario                         --------------------------------------
M5J 2J2                               Name:
                                      Title:

Attention:     Marc Drouin/           By:
               Philip Buxton             --------------------------------------
                                      Name:
                                      Title:
Facsimile:     416-367-2460

Address:                              MIZUHO CORPORATE BANK (CANADA), AS LENDER

100 Yonge Street, Suite 1102
Toronto, Ontario                      By:
M5C 2W1                                  --------------------------------------
                                      Name:
                                      Title:

Attention:     Campbell McLeish/
               Don Correia
                                      By:
                                         --------------------------------------
Facsimile:     416-367-3452           Name:
                                      Title:

<PAGE>
                                     -119-

                                                                      Article 14

Address:                                THE TORONTO-DOMINION BANK, AS LENDER
Toronto Dominion Bank Tower
Investment Banking-Corporate Credit
55 King Street West & Bay Street        By:
8th Floor                                   ------------------------------------
Toronto, Ontario                        Name:
M5K 1A2                                 Title:

Attention:        Edward A. (Ted)       By:
                  Hopkinson/                ------------------------------------
                  Liliana Godina        Name:
                                        Title:

Facsimile:        416-944-5164

Address:                                THE BANK OF NOVA SCOTIA, AS LENDER
40 King Street West
29th Floor, Special Accounts Management
Toronto, Ontario                        By:
M5H 1H1                                     ------------------------------------
                                        Name:
Attention:        Jameel Sethi/         Title:
                  Neil Stride
                                        By:
                                            ------------------------------------
Facsimile:        416-933-1357          Name:
                                        Title:
<PAGE>

     THIS AMENDING AGREEMENT made as of the 23rd day of October, 2002

BETWEEN:

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

          (hereinafter called the "Borrower"),

          - and -

          1300554 ONTARIO LIMITED, 1102590 ONTARIO LIMITED, CO-STEEL
          DISTRIBUTION CANADA LIMITED, CO-STEEL (U.S.) LTD., CO-STEEL FINANCE
          CORP., LAKE ONTARIO STEEL COMPANY INC., CO-STEEL USA DISTRIBUTION,
          INC., CO-STEEL USA HOLDINGS, INC., CO-STEEL RARITAN, INC., CO-STEEL
          SAYREVILLE, INC., RARITAN RIVER URBAN RENEWAL CORPORATION

          (hereinafter called the "Guarantors"),

          BANK ONE, NA, CANADA BRANCH, BANK OF TOKYO-MITSUBISHI (CANADA),
          CANADIAN IMPERIAL BANK OF COMMERCE, COMERICA BANK, CANADA BRANCH,
          MIZUHO CORPORATE BANK (CANADA), THE BANK OF NOVA SCOTIA AND THE
          TORONTO-DOMINION BANK

          (hereinafter called the "Lenders"),

          - and -

          THE TORONTO-DOMINION BANK,
          as Administration Agent

          (hereinafter called the "Administration Agent"),

          - and -

          THE BANK OF NOVA SCOTIA,
          as Syndication Agent

<PAGE>

                                     - 2 -

          (hereinafter called the "Syndication Agent"),

     WHEREAS the parties hereto entered into a credit agreement dated as of
April 30, 2002 (the "Credit Agreement"), pursuant to which certain credit
facilities were established in favour of the Borrower;

     AND WHEREAS the parties now wish to amend certain terms and conditions of
the Credit Agreement;

     NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
covenants and agreements contained herein and for other good and valuable
consideration, the parties hereto agree to amend the Credit Agreement as
provided herein:

                           ARTICLE 1 - INTERPRETATION

1.1     TO BE READ WITH CREDIT AGREEMENT.

     This Amending Agreement is an amendment to the Credit Agreement. Unless the
context of this Amending Agreement otherwise requires, the Credit Agreement and
this Amending Agreement shall be read together and shall have effect as if the
provisions of the Credit Agreement and this Amending Agreement were contained in
one agreement. The term "Agreement" when used in the Credit Agreement means the
Credit Agreement as amended, supplemented or modified from time to time,
including hereby.

1.2     DEFINED TERMS.

     In this Amending Agreement unless otherwise defined or the context
otherwise requires, all capitalized terms shall have the respective meanings
specified in the Credit Agreement.

1.3     DESIGNATION.

     The Lenders hereby consent to the designation of each member of the Gerdau
Subgroup as an Unrestricted Subsidiary pursuant to the Credit Agreement.

1.4     SCHEDULES.

     The Credit Agreement is hereby amended by deleting Schedules L and Q in
their entirety and replacing them with Schedules L and Q attached hereto.

                       ARTICLE 2 - AMENDMENTS AND WAIVERS

2.1     AMENDMENTS TO DEFINITIONS.

     (a) The following terms are hereby added to the Credit Agreement:

<PAGE>

                                     - 3 -

     "AMERISTEEL AMALGAMATION" has the meaning set out in Section 2.4(b) of this
Agreement.

     "APPROVED TRANSFER DOCUMENTS" means those documents attached hereto as
Exhibit A.

     "BORROWER SHARE PLEDGE AGREEMENT" means the share pledge agreement dated as
of April 30, 2002 between the Borrower and Computershare Trust Company of
Canada.

     "COURTICE" means Gerdau Courtice Steel Inc., a corporation incorporated
under the laws of Canada.

     "EFFECTIVE DATE" has the meaning set out in Article 3 of this Agreement.

     "GERDAU ACQUISITION" means the acquisition by the Borrower of all of the
issued and outstanding shares in the capital stock of Gerdau Holdco 2 in
consideration for the issuance by the Borrower of certain of its common shares
to Gerdau Holdco 1 pursuant to and in accordance with the terms of the
Transaction Agreement.

     "GERDAU CANADA" means Gerdau Steel Inc., a corporation incorporated under
the laws of Canada.

     "GERDAU CANADA CREDIT AGREEMENT" means the amended and restated loan
agreement dated November 8, 1996, among Gerdau Steel Inc., Gerdau Courtice Steel
Inc., Gerdau MRM Steel Inc., GUSAP Partners, Chase Securities Inc., Salomon
Smith Barney Inc., The Toronto-Dominion Bank, the financial institutions form
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" means 4104315 Canada Limited, a corporation incorporated
under the laws of Canada.

     "GERDAU HOLDCO 2" means Gerdau Nova Scotia Holding Company, a corporation
incorporated under the laws of Nova Scotia.

     "GERDAU HOLDCO 2 CONVERSION" means 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
Lenders.

     "GERDAU SUBGROUP" means 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, shall
also include Intermediate Holding Company.

     "GERDAU USA" means Gerdau USA Inc., a corporation incorporated under the
laws of the State of Delaware.

<PAGE>
                                     - 4 -

     "INTERMEDIATE HOLDING COMPANY" means 2017387 Ontario Limited, a corporation
incorporated under the laws of the Province of Ontario.

     "INTERMEDIATE HOLDING COMPANY TRANSFER" means the transfer by Co-Steel 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 Borrower in excess of
          $1,000,000 for any one claim or in excess of $5,000,000 in the
          aggregate;

     (c)  a Bankruptcy Event in respect of Gerdau Holdco 2;

     (d)  any claim(s) made against Gerdau Holdco 2 in excess of $250,000 for
          any one claim or in excess of $1,000,000 in the aggregate;

     (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" means Gerdau MRM Steel Inc., a corporation continued under the laws
of the Province of Saskatchewan.

     "PARENT AMALGAMATION" means the amalgamation of Gerdau Canada and Gerdau
Holdco 1 on or before January 1, 2003 by way of vertical short form amalgamation
under the Canada Business Corporations Act.

     "PROPOSED TRANSACTIONS" means the Gerdau Acquisition, the Parent
Amalgamation and the Ameristeel Amalgamation, collectively.

     "STATUS QUO AGREEMENT" means the status quo agreement dated October 22,
2002 between Gerdau Canada, Courtice, MRM, Gerdau USA, Gerdau Holdco 2,
Intermediate Holding Company, the Borrower, State Street Bank and Trust Company,
Computershare Trust Company of Canada, the Administration Agent, PNC Bank
National Association, The Prudential Insurance Company of America, U.S. Private
Placement Fund and The Toronto-Dominion Bank as Administration Agent under the
Gerdau Canada Credit Agreement all in form and substance satisfactory to the
Administration Agent.

     "TRANSACTION AGREEMENT" means the transaction agreement dated August 12,
2002 between Gerdau Canada, Gerdau S.A. and the Borrower, as amended.

     (b)  The definition of "Adjusted Cost Base" is hereby deleted and replaced
          with the following:

<PAGE>
                                     - 5 -

          "ADJUSTED COST BASE" means (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 Borrower 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 Effective
          Date. Except that, (i) the Adjusted Cost Base will have no further
          adjustments for net income or loss of, or unrealized gains or losses
          on, the Unrestricted Subsidiaries; (ii) consistent with GAAP all
          inter-company transactions and balances would be adjusted as
          appropriate to consolidate the Restricted Subsidiaries and all
          transactions between or among the Borrower 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 (iii) 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 shall be deemed to be
          Restricted Subsidiaries, provided, however, that as used in Section
          5.1(4) of the Amending Agreement "Adjusted Cost Base" shall be
          determined solely with respect to the Gerdau Subgroup and will reflect
          any permanent impairment of value as determined in accordance with
          GAAP.

     (c)  The definition of "Indebtedness" is hereby amended by deleting
          subsection (f) thereof and replacing it with the following:

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

     (d)  The definition of "Permitted Inter-Company Indebtedness" is hereby
          amended by adding the words "(other than a member of the Gerdau
          Subgroup)" immediately following the word "Subsidiary" the first time
          it appears on the second line of such definition.

     (e)  The definition of "Special Purpose Financial Statements" is hereby
          deleted and replaced with the following:

          "Special Purpose Financial Statements" shall mean the consolidated
          financial statements of the Borrower 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 Borrower and the Restricted
          Subsidiaries to reflect fair market values will be excluded. The
          Gerdau Subgroup will be shown at cost.

<PAGE>
                                     - 6 -

     (f)  The definition of "Tangible Net Worth" is hereby deleted and replaced
          with the following:

          "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 PLC, 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 Borrower 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 Borrower after such date to minority
          shareholders in Ameristeel Corporation in exchange for their shares in
          Ameristeel Corporation.

     (g)  The definitions of "Asset Monetization Program", "Blocked Account
          Agreement", "Consolidated EBITDA", "Financial Forecast" and "Net
          Tangible Assets" in the Credit Agreement are hereby amended by deeming
          each reference therein to Subsidiary or Subsidiaries, (but not any
          reference to any Restricted Subsidiary or Unrestricted Subsidiary), as
          excluding the Gerdau Subgroup.

2.2     AMENDMENTS TO REPRESENTATIONS AND WARRANTIES.

     Sections 9.01(11), (15), (27), (28), (38) and (39) in the Credit Agreement
are hereby amended by deeming each reference therein to Subsidiary or
Subsidiaries as excluding the Gerdau Subgroup.

2.3     AMENDMENTS TO POSITIVE COVENANTS.

     Sections 10.01(6), (13), (18)(e), (22), (24), (25), (27), (28), (29) and
(30) in the Credit Agreement are hereby amended by deeming each reference
therein to Subsidiary or Subsidiaries as excluding the Gerdau Subgroup.

2.4     WAIVERS OF AND AMENDMENTS TO NEGATIVE COVENANTS.

     (a)  The Lenders hereby consent to the Gerdau Acquisition and the formation
          of Intermediate Holding Company and hereby waive compliance by the
          Borrower with Sections 10.03(8), (12) and (15) of the Credit Agreement
          in connection with the Gerdau Acquisition and the formation of
          Intermediate Holding Company.

     (b)  The Lenders hereby waive compliance by the Borrower with Section
          10.03(12) of the Credit Agreement in connection with the issuance by
          the Borrower of its common shares pursuant to and in accordance with
          Section 3.5 of the Transaction Agreement (the "Ameristeel
          Amalgamation") and hereby consent to same.

     (c)  The Lenders hereby consent to the Parent Amalgamation and hereby waive
          compliance by the Borrower with Section 10.03(12) of the Credit
          Agreement in

<PAGE>
                                     - 7 -

          connection with the Parent Amalgamation; provided same occurs on or
          before January 1, 2003.

     (d)  Section 10.03(25) of the Credit Agreement is hereby amended by
          deleting the words in parenthesis in the second and third lines
          thereof and replacing them with the following: "(excluding Co-Steel
          C.S.M. Corp. and its Subsidiaries, 1062316 Ontario Limited and its
          Subsidiaries and each member of the Gerdau Subgroup)".

     (e)  Sections 10.03(6), (14), (17), (18), (19), (21) and (22) in the Credit
          Agreement are hereby amended by deeming each reference therein to
          Subsidiary or Subsidiaries as excluding the Gerdau Subgroup and
          Sections 10.03(1)(h) and (21) are hereby amended by deeming each
          reference therein to Affiliate as excluding the Gerdau Subgroup.

2.5     WAIVERS OF AND AMENDMENTS TO EVENTS OF DEFAULTS.

     (a)  The Lenders hereby waive any Event of Default arising in consequence
          of the Proposed Transactions, including without limitation Events of
          Default arising pursuant to Section 11.01(n) and (q) of the Credit
          Agreement.

     (b)  Sections 11.01(e), (f), (g), (h), (q) and (r) in the Credit Agreement
          are hereby amended by deeming each reference therein to Subsidiary or
          Subsidiaries as excluding the Gerdau Subgroup.

                        ARTICLE 3 - CONDITIONS PRECEDENT

     This Amending Agreement shall not be effective until the Administration
Agent and the Required Lenders are satisfied that the following terms and
conditions have been fulfilled (the date that the Administration Agent and the
Required Lenders are so satisfied being referred to herein as the "Effective
Date"):

     (a)  execution and delivery of this Amending Agreement by the Borrower, the
          Administration Agent and the Required Lenders;

     (b)  delivery to the Administration Agent of fully executed amendments to
          the guarantees of the PNC Raritan Credit Agreement and the PNC
          Sayreville Credit Agreement consenting to closing of the transactions
          contemplated by the Transaction Agreement such amendments to be in
          form and substance satisfactory to the Administration Agent, and if
          accepted by the Administration Agent the Required Lenders shall be
          deemed to have waived Section 10.03(2) in respect of such amendments;

     (c)  delivery to the Administration Agent of a fully executed amendment to
          the Prudential Note Agreement consenting to closing of the
          transactions contemplated by the Transaction Agreement such amendment
          to be in form and substance satisfactory to the Administration Agent,
          and if accepted by the Administration

<PAGE>
                                     - 8 -

          Agent the Required Lenders shall be deemed to have waived Section
          10.03(2) in respect of such amendment;

     (d)  execution and delivery to the Administration Agent of the Status Quo
          Agreement by each party thereto;

     (e)  delivery to the Administration Agent of certified copies of all
          corporate action taken by the Borrower and each Guarantor to authorize
          the execution and delivery of this Amending Agreement;

     (f)  delivery to the Administration Agent 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;

     (g)  if the Effective Date is not the date of execution of this Agreement,
          delivery to the Administration Agent of a certificate dated the
          Effective Date and signed by a Senior Officer of the Borrower,
          certifying: (i) that the warranties and representations contained in
          Article 4 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
          Borrower has performed and complied with all agreements and conditions
          contained herein that are required to be performed or complied with by
          the Borrower on or prior to the Effective Date, and that such
          performance and compliance remains in effect on the Effective Date;

     (h)  delivery to the Administration Agent of a certificate of incumbency
          for the Borrower, each Guarantor, the Intermediate Holding Company and
          each member of the Gerdau Subgroup party to the Status Quo Agreement;

     (i)  delivery to the Administration Agent of a certificate of status/good
          standing or the equivalent thereof for each Obligor, the Intermediate
          Holding Company and each member of the Gerdau Subgroup party to the
          Status Quo Agreement;

     (j)  no Material Adverse Effect having occurred;

     (k)  delivery to the Security Agent or its nominee of an acknowledgement
          concerning rights in membership interests of Holdco 2, together with
          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 the Security Agent;

     (l)  delivery to the Security Agent 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 the Security Agent
          together with an acknowledgement by the Borrower that such issued and
          outstanding shares are subject to the Lien of the Borrower Share
          Pledge Agreement;

<PAGE>
                                     - 9 -

     (m)  delivery of an amendment to the Intercreditor Agreement by the parties
          thereto, in form and substance satisfactory to the Administration
          Agent;

     (n)  the Gerdau Acquisition shall have occurred in accordance with the
          terms of the Transaction Agreement;

     (o)  delivery to the Administration Agent of pro forma financial statements
          incorporating the Gerdau Subgroup;

     (p)  other than as expressly waived hereunder, no Default or Event of
          Default shall be in existence;

     (q)  payment by the Borrower of all fees (including legal fees and
          disbursements of Lenders' counsel) owing to the Lenders including, for
          greater certainty, payment to the Administration Agent of a fee
          representing 0.1% of the Commitment of each Lender that has executed
          this Amending Agreement and confirmed that the conditions precedent
          contained herein have been satisfied or waived, to be distributed on a
          pro rata basis to such consenting Lenders;

     (r)  delivery to the Administration Agent of opinions of Canadian, Nova
          Scotia and U.S. counsel to the Borrower dated the date hereof in form
          and substance reasonably satisfactory to the Administration Agent;

     (s)  the maturity of the Gerdau Canada Credit Agreement revolver shall have
          been renewed and extended until at least September 22, 2003;

     (t)  delivery to the Administration Agent of copies of all organizational
          documents of Gerdau Holdco 2 which shall be in form and substance
          satisfactory to the Administration Agent;

     (u)  delivery to the Administration Agent of all constating documents of
          Intermediate Holding Company which shall be in form and substance
          satisfactory to the Administration Agent; and

     (v)  delivery to the Administration Agent of such other documents and
          instruments as may be reasonably required by the Administration Agent
          or the Lenders.

                   ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

     To induce the Administration Agent, the Syndication Agent and each of the
Lenders party hereto to enter into this Amending Agreement, the Borrower and
each Guarantor represents and warrants to the Administration Agent, the
Syndication Agent and the Lenders as follows, which representations and
warranties shall survive the execution and delivery hereof:

     (a)  the representations and warranties set forth in Article Nine of the
          Credit Agreement as amended hereby continue to be true and correct in
          all material

<PAGE>
                                     - 10 -

          respects as of the date hereof with reference to facts subsisting on
          such date except for those representations and warranties which speak
          to a specific date;

     (b)  all necessary action, corporate or otherwise, has been taken to
          authorize the execution, delivery and performance of this Amending
          Agreement by the Borrower and the Guarantors. The Borrower and each
          Guarantor has duly executed and delivered this Amending Agreement.
          This Amending Agreement is a legal, valid and binding obligation of
          the Borrower and the Guarantors enforceable against it by the
          Administration Agent, the Syndication Agent and the Lenders in
          accordance with its terms;

     (c)  as of the date hereof, no Default or Event of Default exists;

     (d)  the Borrower and Guarantors are in compliance with the covenants
          contained in Article Ten of the Credit Agreement;

     (e)  each of the representations and warranties made by the Borrower in 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 Borrower and
          set forth herein in their entirety;

     (f)  the Borrower has delivered to the Administration Agent and the Lenders
          its pro forma consolidated balance sheet dated as of June 30, 2002,
          prepared giving effect to all Proposed Transactions as if the Proposed
          Transactions had occurred on January 1, 2001, and the related
          statements of income for the 12-month period ended December 31, 2001
          and for the six month period ended June 30, 2002, in each case
          prepared as if the Proposed Transactions had occurred on January 1,
          2001. Such pro forma consolidated financial statements were (a)
          prepared in good faith and, in the Borrower'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 Borrower
          after due inquiry, (c) accurately reflect all adjustments necessary to
          give effect to the Proposed Transactions, and (d) present fairly, in
          accordance with GAAP, in all material respects, the pro forma
          financial position of the Borrower and its Subsidiaries (including the
          Gerdau Subgroup) as if the Proposed Transactions had occurred on such
          date or at the beginning of such periods. The Borrower 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;

     (g)  after giving effect to the Proposed Transactions, Gerdau Canada will
          own 64.8% of the issued and outstanding common shares of the Borrower
          on a fully diluted basis;

     (h)  any and all fees paid to the Noteholders and PNC, respectively, in
          consideration of receiving amendments and waivers similar to this
          Amending Agreement are (a)

<PAGE>
                                     - 11 -

          in respect of the Noteholders, as a collective group, not more than
          one-tenth of one percent (0.10%) of the aggregate outstanding
          principal amount of Indebtedness outstanding under the Prudential Note
          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 PNC Indebtedness as of the Effective
          Date;

     (i)  the Borrower has delivered to the Administration Agent a true and
          correct copy of the Transaction Agreement;

     (j)  the Borrower 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 Borrower;

     (k)  Gerdau Holdco 2 is an unlimited liability company duly incorporated
          and validly existing under the laws of the Province of Nova Scotia and
          has all necessary corporate power and authority to own its property
          and to carry on its business. Gerdau Holdco 2 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. The only assets of Gerdau Holdco 2 are the aforementioned
          shareholdings and Gerdau Holdco 2 has no Indebtedness or other
          liabilities. As of the Effective Date, all of the issued and
          outstanding capital of Holdco 2 will be beneficially owned by the
          Borrower; and

     (l)  Intermediate Holding Company 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. Other than as provided in the Status Quo Agreement,
          Intermediate Holding Company carries on no business and 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 Borrower.

                              ARTICLE 5 - COVENANTS

5.1     POSITIVE COVENANTS

     The Borrower covenants with the Administration Agent, the Syndication Agent
and each of the Lenders that, until the Credit Facilities are cancelled and
there is no outstanding Advance or other Indebtedness of the Borrower to any of
the Administration Agent, the Syndication Agent or any Lender under the Credit
Agreement or of a Guarantor under a Guarantee, it shall comply with each of the
covenants set out in this Section, except as otherwise permitted by the prior
written consent of the Administration Agent on the instruction of the Required
Lenders.

     (1) Corporate Existence. It 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 incorporation and maintains all

<PAGE>
                                     - 12 -

necessary corporate power and authority to own its property and carry on its
business as presently owned and carried on by it, except as otherwise may be
permitted pursuant to Section 5.1(3) of this Amending Agreement.

     (2)  Financing Statements. It shall within 30 days following the Effective
Date, at its expense, (i) 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 Administration Agent and the
Lenders in connection with the change of name and change of location of the
Borrower; and (ii) cause to be delivered to the Administration Agent opinions of
its Canadian and U.S. counsel in respect of such registrations in a form and
substance reasonably satisfactory to the Administration Agent.

     (3)  Transfer to Intermediate Holding Company; Gerdau Holdco 2 Conversion.

     (a)  TRANSFER TO INTERMEDIATE HOLDING COMPANY. 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 $105,000,000; 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% 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;

          then the Borrower 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 Borrower
          Share Pledge Agreement.

     (b) GERDAU HOLDCO 2 CONVERSION.

          (i)  If at any time the Required Lenders reasonably deem that a
               Material Event exists, whether or not arising from the direct
               ownership of Gerdau Holdco 2, then the Borrower 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
               Borrower has not completed a refinancing of its obligations
               hereunder on or before

<PAGE>
                                     - 13 -

               December 15, 2003, then the Borrower will cause the Gerdau Holdco
               2 Conversion to occur within 5 Business Days.

     (c)  LIMITED WAIVER. Any provision contained herein or in the Credit
          Agreement to the contrary notwithstanding, the Borrower shall be
          permitted to take any and all acts reasonably necessary to complete
          the Intermediate Holding Company Transfer per subsection (a) hereof
          and/or the Gerdau Holdco Conversion for the purposes outlined above.

     (4) 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 ninety percent (90%) of
the Adjusted Cost Base of the Gerdau Subgroup as reflected in the Special
Purpose Financial Statements as of December 31, 2002.

5.2     NEGATIVE COVENANTS

     The Borrower covenants with the Administration Agent, the Syndication Agent
and each of the Lenders that, until the Credit Facilities are cancelled and
there is no outstanding Advance or other Indebtedness of the Borrower to any of
the Administration Agent, the Syndication Agent or any Lender under the Credit
Agreement or of a Guarantor under a Guarantee, it shall comply with each of the
covenants set out in this Section, except as otherwise permitted by the prior
written consent of the Administration Agent on the instruction of the Required
Lenders.

     (1) Indebtedness. It shall not and shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to create, incur, assume or permit to exist any
Indebtedness.

     (2) Negative Pledge. It shall not 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 favour of
the Security Agents) other than the Liens in favour of The Toronto-Dominion Bank
as Administration Agent under the Gerdau Canada Credit Agreement existing on the
date hereof in the Gerdau Subgroup shares, equity interests and assets.

     (3) Sale of Assets. It shall not 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 favour of The Toronto-Dominion Bank as
Administration Agent under the Gerdau Canada Credit Agreement existing on the
date hereof in the Gerdau Subgroup shares, equity interests and assets.

     (4) Acquisitions. It shall not permit Gerdau Holdco 2 either 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. Other than as permitted

<PAGE>
                                     - 14 -

pursuant to Section 5.1(3), the Borrower shall not permit Intermediate Holding
Company either 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.

     (5) Dividends, etc. It shall not 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.

     (6) No Reduction of Capital. It shall ensure that neither Gerdau Holdco 2
nor Intermediate Holding Company 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 membership interests or shares.

     (7) No Issue of Capital. It shall not 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 Section 5.1(3).

     (8) Transactions with Affiliates. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company 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 or
          agreements other than the Status Quo Agreement, in respect of the
          Gerdau Holdco 2 Conversion or as contemplated by Section 5.1(3); or

     (b)  pay any fees or expenses to, or reimburse or assume any obligation for
          the reimbursement of any expenses incurred by any Affiliate of it.

     (9) Fundamental Changes. It shall not 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 pursuant to the Gerdau
Holdco Conversion or the Intermediate Holding Company Transfer.

     (10) Nature of Business. It shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to engage in any business other than holding the
common stock of Gerdau Courtice Steel Inc., Gerdau MRM Holdings Inc. and Gerdau
USA Inc. and entering into and performing the terms of the Status Quo Agreement
and those other Agreements consented to by the Administration Agent pursuant to
Section 5.2(11) hereof. The Borrower shall not 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

<PAGE>
                                     - 15 -

or entering into and performing the terms of the Status Quo Agreement and the
Approved Transfer Documents.

     (11) Agreements. Other than the Status Quo Agreement, the Approved Transfer
Documents and those documents entered into on or before the acquisition by the
Borrower of Gerdau Holdco 2 the form and substance of which have expressly been
approved by the Administration Agent, it shall not permit Gerdau Holdco 2 or
Intermediate Holding Company to enter into any agreement.

     (12) No Amendments to Articles. It shall not 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 its organizational
documents.

     (13) Subsidiary Transactions With Gerdau Subgroup. It shall not permit any
of its Subsidiaries (other than the Gerdau Subgroup (excluding Gerdau Holdco 2
and Intermediate Holding Company)) to transfer any assets to or incur any
Indebtedness in respect of any member of the Gerdau Subgroup, except in
connection with the Intermediate Holding Company Transfer.

                              ARTICLE 6 - EXPENSES

     The Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable legal fees and travel expenses incurred by the
Administration Agent in connection with the preparation, negotiation,
completion, execution, delivery and review of this Amending Agreement and all
other documents and instruments arising therefrom and/or executed in connection
therewith.

                               ARTICLE 7 - WAIVER

     The Administration Agent and the Lenders hereby waive compliance by the
Borrower with Section 7.05(4) of the Credit Agreement arising solely as a result
of the Borrower's failure to deliver the applicable documentation within the
period set forth therein.

                        ARTICLE 8 - STATUS QUO AGREEMENT

     Each Lender and the Syndication Agent hereby authorizes the Administration
Agent to enter into the Status Quo Agreement on their behalf and exercise all
rights, including rights of approval, conferred to the Administration Agent
thereunder.

            ARTICLE 9 - CONTINUANCE OF CREDIT AGREEMENT AND SECURITY

     The Credit Agreement, as changed, altered, amended or modified by this
Amending Agreement, shall be and continue in full force and effect and is hereby
confirmed and the rights and obligations of all parties thereunder shall not be
affected or prejudiced in any manner except as specifically provided for herein.
It is agreed and confirmed that after giving effect to this

<PAGE>
                                     - 16 -

Amending Agreement each Guarantee, all Security and each Security Document
remains in full force and effect.

                            ARTICLE 10 - COUNTERPARTS

     This Amending Agreement may be executed in any number of separate
counterparts, each of which shall be deemed an original and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

                           ARTICLE 11 - GOVERNING LAW

     This Amending Agreement shall be construed and interpreted in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein and each of the parties hereto irrevocably attorns to the jurisdiction
of the courts of the Province of Ontario.

<PAGE>

                                     - S1 -

     IN WITNESS WHEREOF the parties hereto have executed this Amending Agreement
as of the day and year first above written.

                                        CO-STEEL INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President,
                                            Finance and Administration

                                        1300554 ONTARIO LIMITED

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Vice-President

                                        1102590 ONTARIO LIMITED

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Vice-President

                                        CO-STEEL DISTRIBUTION CANADA LIMITED

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Vice President

                                        CO-STEEL (U.S.) LTD.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

<PAGE>

                                     - S2 -

                                        CO-STEEL FINANCE CORP.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        LAKE ONTARIO STEEL COMPANY INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        CO-STEEL USA DISTRIBUTION, INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        CO-STEEL USA HOLDINGS, INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        CO-STEEL RARITAN, INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        CO-STEEL SAYREVILLE, INC.

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

<PAGE>

                                     - S3 -

                                        RARITAN RIVER URBAN RENEWAL CORPORATION

                                        By:
                                            ------------------------------------
                                            Lorie Waisberg
                                            Executive Vice President -- Finance
                                            and Administration

                                        THE TORONTO-DOMINION BANK AS
                                        ADMINISTRATION AGENT

                                        By:
                                            ------------------------------------
                                            Wayne Shiplo
                                            Vice President, Loan Syndications

                                        THE BANK OF NOVA SCOTIA, AS SYNDICATION
                                        AGENT

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        BANK ONE, NA, CANADA BRANCH, AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>

                                     - S4 -

                                        BANK OF TOKYO - MITSUBISHI (CANADA),
                                        AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        CANADIAN IMPERIAL BANK OF COMMERCE,
                                        AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         COMERICA BANK, CANADA BRANCH, AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>

                                     - S5 -

                                        MIZUHO CORPORATE BANK (CANADA), AS
                                        LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        THE TORONTO-DOMINION BANK, AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        THE BANK OF NOVA SCOTIA, AS LENDER

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:<PAGE>

                                                                 Exhibit 10(iii)

                                     SECOND
                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                                    BETWEEN

                            CO-STEEL RARITAN, INC.,
                           A NEW JERSEY CORPORATION,
                                AS THE BORROWER

                                      AND

                        PNC BANK, NATIONAL ASSOCIATION,
                                  AS THE BANK

                           DATED AS OF APRIL 30, 2002

<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                              Page
                                                                                                              ----
<S>         <C>                                                                                               <C>
ARTICLE 1.     DEFINITIONS....................................................................................  1
     1.1    Defined Terms.....................................................................................  1
     1.2    Other Definitional Provisions..................................................................... 28
ARTICLE 2.    THE REVOLVING CREDIT LOANS...................................................................... 29
     2.1    Revolving Credit Commitment....................................................................... 29
     2.2    Interest.......................................................................................... 31
     2.3    Yield Protection; Indemnity....................................................................... 35
     2.4    Capital Adequacy.................................................................................. 36
     2.5    Payments.......................................................................................... 37
     2.6    Loan Account...................................................................................... 38
     2.7    Fees.............................................................................................. 38
     2.8    Payment From Accounts Maintained by Borrower...................................................... 39
     2.9    Letter of Credit Subfacility...................................................................... 40
     2.10   Events Requiring Mandatory Prepayments and Reductions of Commitment............................... 43
     2.11   Late Payment...................................................................................... 44
     2.11   Excess Amount..................................................................................... 44
ARTICLE 3.    REPRESENTATIONS AND WARRANTIES.................................................................. 45
     3.1    Existence......................................................................................... 45
     3.2    Capitalization; Ownership; Title to Shares........................................................ 45
     3.3    Subsidiaries and Other Investments................................................................ 45
     3.4    Power and Authority............................................................................... 45
     3.5    Validity and Binding Effect....................................................................... 45
     3.6    No Conflict....................................................................................... 46
     3.7    Financial Matters................................................................................. 46
     3.8    Material Adverse Change........................................................................... 46
     3.9    Solvency.......................................................................................... 46
     3.10   Litigation........................................................................................ 46
     3.11   Compliance with Laws and Regulations.............................................................. 47
     3.12   Labor Matters..................................................................................... 47
     3.13   Title to Properties............................................................................... 47
     3.14   Tax Returns and Payments.......................................................................... 48
     3.15   Intellectual Property............................................................................. 48
     3.16   Insurance......................................................................................... 49
     3.17   Consents and Approvals............................................................................ 49
     3.18   Plans and Benefit Arrangements.................................................................... 49
     3.19   Environmental Matters............................................................................. 51
     3.20   Margin Stock...................................................................................... 51
     3.21   Compliance with Covenants......................................................................... 52
     3.22   No Default........................................................................................ 52
     3.23   Debt Default...................................................................................... 52
     3.24   No Default Caused................................................................................. 52
     3.25   Burdensome Provisions, Etc........................................................................ 52
</Table>
<PAGE>

<Table>
<Caption>
                                                                                                              Page
                                                                                                              ----
<S>         <C>                                                                                               <C>
     3.26   Encumbrances...................................................................................... 52
     3.27   Property Descriptions............................................................................. 53
     3.28   Contracts Affected by Change of Control........................................................... 53
     3.29   Material Contracts and Material Licences.......................................................... 53
     3.30   Jurisdictions..................................................................................... 53
     3.31   Bank Accounts..................................................................................... 54
     3.32   Intercorporate Indebtedness....................................................................... 54
     3.33   Computer Systems.................................................................................. 54
     3.34   Licenses, Agency and Distribution Agreements...................................................... 54
     3.35   Full Disclosure................................................................................... 54
ARTICLE 4.    AFFIRMATIVE CONVENANTS.......................................................................... 55
     4.1    Use of Proceeds................................................................................... 55
     4.2    Delivery of Financial Statements and Other Information............................................ 55
     4.3    Preservation of Existence; Qualification.......................................................... 58
     4.4    Compliance with Laws and Contracts................................................................ 58
     4.5    Accounting System; Books and Records.............................................................. 59
     4.6    Payment of Taxes and Other Liabilities............................................................ 59
     4.7    Insurance......................................................................................... 59
     4.8    Maintenance of Properties......................................................................... 60
     4.9    Maintenance of Leases............................................................................. 60
     4.10   Maintenance of Patents; Trademarks, Permits, Etc.................................................. 60
     4.11   Bank Accounts..................................................................................... 60
     4.12   Plans and Benefits Arrangements................................................................... 60
     4.13   Environmental Matters and Indemnification......................................................... 61
     4.14   Reciprocal Guarantees............................................................................. 61
     4.15   Agency Agreement.................................................................................. 61
     4.16   Business.......................................................................................... 61
     4.17   Inventory......................................................................................... 61
     4.18   [Reserved]........................................................................................ 62
     4.19   Material Contracts and Material Licences.......................................................... 62
     4.20   Jurisdictions..................................................................................... 62
     4.21   Computer Systems.................................................................................. 62
     4.22   Defense of Claims................................................................................. 63
     4.23   Additional Covenants.............................................................................. 63
ARTICLE 5.    NEGATIVE COVENANTS.............................................................................. 63
     5.1    Indebtedness...................................................................................... 63
     5.2    Guarantees........................................................................................ 64
     5.3    Negative Pledge................................................................................... 64
     5.4    Other Indebtedness and Agreements................................................................. 64
     5.5    Sale of Assets.................................................................................... 64
     5.6    Sale and Leaseback Transactions................................................................... 65
     5.7    Loans, Investments, Etc........................................................................... 65
     5.8    Investments....................................................................................... 65
     5.9    Affiliate Transactions............................................................................ 66
     5.10   Use of Proceeds................................................................................... 66

</Table>

                                      -ii-
<PAGE>
<Table>
<Caption>
<S>            <C>                                                                                            <C>
     5.11      Change of Business............................................................................. 66
     5.12      ERISA.......................................................................................... 66
     5.13      Material Contracts and Material Licences....................................................... 67
     5.14      Acquisitions................................................................................... 67
     5.15      Fundamental Changes............................................................................ 67
     5.16      Accounting Changes............................................................................. 68
     5.17      Hedging Contracts.............................................................................. 68
     5.18      Inconsistent Agreements........................................................................ 68
     5.19      Announcements.................................................................................. 68
ARTICLE 6.        CONDITIONS TO MAKING EXTENSIONS OF CREDIT................................................... 68
     6.1       All Extensions of Credit....................................................................... 68
     6.2       Conditions Precedent to Restatement Closing Date............................................... 69
     6.3       Amendment of Extension of Letter of Credit..................................................... 72
     6.4       Post-Closing Deliveries........................................................................ 72
ARTICLE 7.        EVENT OF DEFAULT; REMEDIES.................................................................. 75
     7.1       Event of Default............................................................................... 75
     7.2       Remedies....................................................................................... 80
ARTICLE 8.        GENERAL PROVISIONS.......................................................................... 81
     8.1       Amendments and Waivers......................................................................... 81
     8.2       Taxes.......................................................................................... 81
     8.3       Expenses....................................................................................... 81
     8.4       Notices........................................................................................ 81
     8.5       Set-Off and Collateral......................................................................... 82
     8.6       Participations and Assignments................................................................. 84
     8.7       Successors and Assigns......................................................................... 86
     8.8       Confidentiality................................................................................ 86
     8.9       Severability................................................................................... 87
     8.10      Interest Limitation............................................................................ 87
     8.11      Survival....................................................................................... 87
     8.12      GOVERNING LAW.................................................................................. 87
     8.13      Non-Business Days.............................................................................. 88
     8.14      Integration.................................................................................... 88
     8.15      Headings....................................................................................... 88
     8.16      Counterparts; Effectiveness.................................................................... 88
     8.17      WAIVER OF JURY TRIAL........................................................................... 88
     8.18      General Indemnity.............................................................................. 88
     8.19      Environmental Indemnity........................................................................ 90
     8.20      Bank Not Liable................................................................................ 91
     8.21      Revisions to List of Authorized Officers....................................................... 91
     8.22      Amendment and Restatement of Original Credit Agreement......................................... 91
     8.23      Waiver of Existing Defaults Under Original Credit Agreement; Release of Claims................. 91
     8.24      Intercreditor Agreement........................................................................ 92
</Table>

                                     -iii-
<PAGE>

                                LIST OF EXHIBITS

EXHIBIT
DESIGNATION                               EXHIBIT
-----------                               -------

A                                         Revolving Credit Note

B-1                                       Compliance Certificate

B-2                                       Co-Steel Compliance Certificate

C                                         Loan Request

D                                         [Reserved]

E                                         [Reserved]

F-1                                       Co-Steel Guaranty Agreement

F-2                                       Amended and Restated Guaranty
                                          Agreement for Affiliates

F-3                                       Guaranty Agreement for Affiliates

                                     - iv -

<PAGE>
                                LIST OF SCHEDULES

<TABLE>
<CAPTION>

          SCHEDULE DESIGNATION
             AND PRINCIPAL
           SECTION REFERENCE              SCHEDULE
         ---------------------            --------
                <S>                       <C>
                1.1-1                     Leased Properties
                1.1-2                     New Jersey Properties
                1.1-3                     Ontario Properties
                1.1-4                     Owned Properties
                1.1-5                     Existing Permitted Intercompany Indebtedness
                1.1-6                     Significant U.S. Leased Properties
                2.9(a)                    Outstanding Letters of Credit
                2.10(iv)                  March 2002 Significant Share Offering Paydown and Revised
                                          Revolving Credit Commitment
                3.8                       Material Adverse Changes since December 31, 2001
                3.10                      Litigation
                3.12                      Labor Matters
                3.15                      Intellectual Property Rights
                3.19                      Environmental Matters
                3.23                      Debt Defaults
                3.29-1                    Material Contracts
                3.29-2                    Material Licenses
                3.30                      Jurisdictions of Business, Assets, Chief Executive Office and
                                          Formation
                3.31                      Bank Accounts
                3.32                      Intercorporate Loans by Borrower
                3.34                      Licenses, Agency and Distribution Agreements
                5.1                       Permitted Indebtedness
                6.4c                      Hungarian Loan Reorganization
</TABLE>

                                      -v-
<PAGE>
                 SECOND AMENDMENT AND RESTATED CREDIT AGREEMENT

     This SECOND AMENDMENT AND RESTATED CREDIT AGREEMENT, dated as of April 30,
2002 (as more fully defined below, the "AGREEMENT"), entered into by and between
CO-STEEL RARITAN, INC., a New Jersey corporation (as more fully defined below,
the "BORROWER"), and PNC BANK, NATIONAL ASSOCIATION, a national banking
association (as more fully defined below, the "BANK").

                                   RECITALS:

     WHEREAS, the Borrower and the Bank have entered into that certain Amendment
and Restated Credit Agreement dated as of September 30, 2000 (as amended or
otherwise modified from time to time prior to the date hereof, the "ORIGINAL
CREDIT AGREEMENT");

     WHEREAS, the Borrower has requested that the Bank amend and restate the
Original Credit Agreement as provided for herein; and

     WHEREAS, the Bank is willing to amend and restate the Original Credit
Agreement and the Bank is willing to make loans and other financial
accommodations available to the Borrower, in each case on the terms and subject
to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference) and the mutual promises contained herein and
other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and with the intent to be legally bound hereby, the parties hereto
agree as follows:

ARTICLE 1. DEFINITIONS

1.1 DEFINED TERMS. As used in this Agreement, including the preamble and
recitals hereto, the following terms shall have the respective meanings set
forth below or in the Section of this Agreement referred to, unless the
context otherwise requires:

     Account Debtor: This term shall mean any Person who is obligated to pay an
Account Receivable.

     Accounts Receivable: Any right of a Person to payment for goods sold or
leased or services rendered in the ordinary course of business, classified as an
account receivable in accordance with GAAP.

     ACIERCO: Acierco, S.A., a Luxembourg limited liability company.

     Adjusted Cost Base: This term shall mean the dollar amount by which the
Unrestricted Subsidiaries would be carried as at December 31, 1998 in the
accounts of Co-Steel, if the Unrestricted Subsidiaries were accounted for, from
inception, by the equity method of accounting. Furthermore: (i) the Adjusted
Cost Base will have no further adjustments
<PAGE>
subsequent to December 31, 1998 for net income or loss of, or unrealized gains
or losses on, the Unrestricted Subsidiaries; (ii) consistent with the equity
method of accounting all inter-company transactions and balances would be
eliminated; and (iii) 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, (x) realized gains or losses on disposals of Unrestricted
Subsidiaries will be reflected in the Special Purpose Financial Statements; and
(y) for purposes of the preparation of the Special Purpose Financial
Statements, Goldmarsh Enterprises, ACIERCO, Co-Steel Liquidity Management and
N.J.S.C. Investments Co., Inc. are treated as Restricted Subsidiaries.

     Administration Agent: This term shall mean The Toronto-Dominion Bank and
its successors or permitted assigns, as administrative agent under the Canadian
Bank Credit Agreement.

     Affiliate: (i) As such term is used in Subsection 5.1(v), in Section 5.9 or
in the Co-Steel Guaranty Agreement, such term shall mean 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 (ii) as such term is used elsewhere in this Agreement or in the other Loan
Documents, with respect to any Person, such term shall mean any of (a) a
director or executive officer of the Person or any other Person described in
clause (b) below and (b) 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: This Credit Agreement, all exhibits and schedules hereto and all
extensions, renewals, amendments, substitutions and replacements hereof and
hereto.

     Applicable Base Rate Margin: This term shall have the meaning ascribed to
it in Section 2.2a(i) hereof.

     Applicable Commitment Fee Rate: This term shall have the meaning ascribed
to it in Section 2.7b hereof.

     Applicable Euro-Rate Margin: This term shall have the meaning ascribed to
it in Section 2.2a(ii) hereof.

     Applicable Law: This term shall mean, with respect to any Person, property,
transaction or event, all present or future applicable laws, statutes,
regulations, by-laws, treaties, judgements and decrees and all applicable
official directives if legally binding and all other

                                     - 2 -
<PAGE>

legally binding requirements of any Governmental Authority or Person having
authority over such Person, property, transaction or event.

     Applicable Letter of Credit Rate: This term shall have the meaning
ascribed to it in Section 2.9(c) hereof.

     Application for Letter of Credit: Each Application and Agreement for
standby letter of credit from time to time used by the Bank in connection with
the issuance, amendment, extension or renewal by the Bank of a Letter of Credit.

     Approved Asset Sale: This term has the meaning set out in Section 5.5

     Asset Monetization Program: This term shall mean the asset monetization
program for Co-Steel and its Subsidiaries dated February 25, 2002, as revised
from time to time with the consent of the Bank, which program is attached as
Schedule 3.37 to the Co-Steel Guaranty Agreement.

     Assignment and Assumption Agreement: An Assignment and Assumption
Agreement by and among a Purchasing Lender, the Bank or another Lender,
substantially in the form of Exhibit "D" hereto.

     ASW Holdings: ASW Holdings PLC, a corporation incorporated under the laws
of England.

     Authorized Officer: The President, the Vice President, Finance, the
Treasurer, the Vice President, Plant Manager, or the Secretary of a Loan Party.
The Bank shall be entitled to rely on the incumbency certificate delivered
pursuant to Section 6.2 for the initial designation of each Authorized Officer.

     Bank: PNC Bank, National Association, a national banking association, and
its successors and assigns.

     Base Rate: A fluctuating rate of interest per annum equal to the greater
of (i) the Prime Rate or (ii) the sum of (A) the Federal Funds Effective Rate
plus (B) 1/2 of one percent per annum.

     Base Rate Loan: All or any portion of the Loans bearing interest under the
Base Rate Option, as set forth in Subsection 2.2(a)(i).

     Base Rate Option: The ability of the Borrower to elect Base Rate Loans, as
set forth in Subsection 2.2(a)(i).

     Benefit Arrangement: An "employee benefit plan", within the meaning of
Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which is
maintained or

                                     - 3 -
<PAGE>
otherwise contributed to by a Loan Party or any ERISA Affiliate for the benefit
of employees of the Borrower or any ERISA Affiliate.

     Blocked Account Agreement: This term shall mean means a blocked account
agreement entered into by a bank, a Loan Party and a Security Agent with which a
Loan Party maintains an account in form and substance acceptable to the Bank.

     Borrower: Co-Steel Raritan, Inc., a New Jersey corporation, and its
successors and permitted assigns.

     Borrowing Tranche: Each portion of the Loans bearing interest at a discrete
Euro-Rate Option and that portion of the Loans bearing interest at the Base Rate
Option.

     Business Day: A day other than a Saturday or a Sunday on which the Bank is
open for business.

     Canadian Bank Credit Agreement: That certain credit agreement dated as of
April 30, 2002, between Co-Steel as the borrower, and the Canadian Bank
Guarantee Entities, as the guarantors, the financial institutions from time to
time party thereto as the lenders, The Toronto-Dominion Bank, as administration
agent for such lenders, and the Bank of Nova Scotia, as syndication agent for
such lenders.

     Canadian Bank Guarantee: Any of those certain guarantees executed and
delivered in connection with the Canadian Bank Credit Agreement.

     Canadian Bank Guarantee Entities: The Borrower, Distribution, USA
Distribution, Sayreville, Lake Ontario Steel Company, and Raritan River, and any
other entity which may hereafter be required (or should have been required, in
accordance with Co-Steel's contractual arrangements, if any, in connection with
the Canadian Bank Credit Agreement) to execute and deliver a Canadian Bank
Guarantee.

     Canadian Dollars, Cdn. Dollars, and Cdn.$: Each of these terms shall mean
the lawful currency of Canada.

     Canadian GAAP: This term shall mean the generally accepted accounting
principles from time to time approved by the Canadian Institute of Chartered
Accountants, or any successor institute.

     Canadian Lenders: This term shall mean the Persons a party to the Canadian
Bank Credit Agreement from time to time as a lender.

     Canadian Security Agent: This term shall mean Computershare Trust Company
of Canada in its capacity as Canadian security agent for and on behalf of the
Administration Agent, the Noteholders and the Bank pursuant to the Intercreditor
Agreement.

                                      -4-

<PAGE>

     Capital Adequacy Event: This term shall have the meaning given it in
Section 2.4.

     Capital Compensation Amount: This term shall have the meaning given it in
Section 2.4.

     Capital Expenditure: This term means 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: With respect to a Loan Party, any lease of property by
such Loan Party as lessee would be capitalized on a balance sheet of the
Borrower prepared in accordance with GAAP.

     Capitalized Lease Obligations: With respect to a Loan Party, the amount of
the obligations of such Loan Party under Capitalized Leases which would be
shown as a liability on a balance sheet of such Loan Party prepared in
accordance with GAAP.

     Collateral: This term shall mean all property, of whatever nature or kind,
which is the subject of any Encumbrance created by any Security Document.

     Commitment Fee: The fee described in Section 2.7b.

     Compliance Certificate: A certificate substantially in the form of Exhibit
"B-1" which has been executed by an Authorized Officer and delivered to the
Bank.

     Consolidated: With respect to a Loan Party, the consolidation of items of
financial activity and accounts of such Loan Party and its Subsidiaries, in
which such Loan Party owns or controls a controlling interest, for the
presentation of financial statements of such Loan Party and its consolidated
Subsidiaries in all accordance with, and as required by, GAAP consistently
applied.

     Consolidated Current Assets: With respect to a Loan Party, such Loan
Party's Consolidated current assets determined in accordance with GAAP
consistently applied.

     Consolidated Current Liabilities: With respect to a Loan Party, such Loan
Party's Consolidated current liabilities determined in accordance with GAAP.

     Consolidated EBITDA shall mean: (i) the Consolidated Net Earnings in the
period, plus (ii) Consolidated Net Interest Expense in the period, plus (iii)
income taxes, whether paid or deferred, which are deducted in determining
Consolidated Net Earnings in the Period, if any; plus (iv) depreciation and
amortization expense for the period; minus (v) to the extent added in
determining Consolidated Net Earning, extraordinary gains, plus (vi) to the
extent deducted in determining Consolidated Net Earnings, extraordinary losses
(which for greater certainty shall

                                     - 5 -

<PAGE>

include the non-cash Cdn.$13 million pension curtailment charge of Co-Steel
from the third quarter of 2001); plus (vii) all cash receipts from Gallatin
that have been used by the Borrower and its Subsidiaries to permanently repay
indebtedness to the Noteholders, the Bank and the Canadian Lenders; plus (viii)
to the extent deducted in determining Consolidated Net Earnings unrealized
foreign exchange losses; minus (ix) the amount of loans and advances to
Gallatin pursuant to Section 10.03(9) of the Canadian Bank Credit Agreement;
minus (x) to the extent added in determining Consolidated Net Earning
unrealized foreign exchange gains; all as set forth on the Special Purpose
Financial Statements for such period and all determined in accordance with GAAP.

     Consolidated Net Earnings shall mean, for any period, the net earnings, 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
Co-Steel Indebtedness (including without limitation Co-Steel Bankers'
Acceptances) net of all interest and dividend income and specifically excluding
all fees but not interest charges payable under or in connection with the
Canadian Bank Credit Agreement for such period, all as set forth on the Special
Purpose Financial Statements for such period, plus interest, calculated on an
accrual basis, on the equity component of the Co-Steel Convertible Debentures
before income taxes.

     Consolidated Net Worth: With respect to a Loan Party, such Loan Party's
Consolidated stockholders' equity, as determined in accordance with GAAP
consistently applied.

     Consolidated Total Net Debt shall mean, at any time, the principal amount
of all outstanding interest bearing Co-Steel Indebtedness including, without
limitation, the debt component but excluding the equity component of the
Co-Steel Convertible Debentures, the face amount of outstanding Co-Steel
Bankers' Acceptances, Co-Steel Letters of Credit, and the amount of Capitalized
Lease Obligations of Co-Steel and its Consolidated Subsidiaries (net of interest
component) but specifically excluding accounts payable and accrued liabilities,
and deducting cash and short term investment (rated R-1 (middle) or better by
Dominion Bond Rating Service), all as set forth on the Special Purpose Financial
Statements for such period 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 Co-Steel 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 Co-Steel).

     Contaminant: This term 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.

                                     - 6 -
<PAGE>
     Contamination: The presence of any Hazardous Material at any real property
owned or leased by a Loan Party which requires investigation, clean-up or
remediation under any Environmental Law.

     Control: This term shall mean with respect to a body corporate, such body
corporate is deemed to be controlled by another Person or by two or more bodies
corporate if but only if, (a) the voting securities of the first mentioned body
corporate carrying more than fifty percent (50%) 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 the term "Controlled" shall have a corresponding meaning.

     Co-Steel: Co-Steel Inc., an Ontario corporation, and its successors and
assigns, which currently owns, directly and indirectly, all of the issued and
outstanding capital stock of the Borrower.

     Co-Steel Advance shall have the meaning ascribed to the term "Advance" in
the Canadian Bank Credit Agreement as of the Restatement Closing Date.

     Co-Steel BA Equivalent Note shall have the meaning ascribed to the term
"BA Equivalent Note" in the Canadian Bank Credit Agreement as of the Restatement
Closing Date.

     Co-Steel Bankers' Acceptance shall have the meaning ascribed to the term
"Banker's Acceptance" in the Canadian Bank Credit Agreement as of the
Restatement Closing Date.

     Co-Steel Compliance Certificate: A certificate substantially in the form of
Exhibit "B-2" which has been executed by the chief financial officer of Co-Steel
and delivered to the Bank.

     Co-Steel Convertible Debentures shall mean the 10 year, convertible,
unsecured subordinated debentures of Co-Steel in the principal amount of
Canadian Dollars $125,000,000 carrying a 6.5% coupon and a conversion price of
Canadian Dollars $26.25.

     Co-Steel CSM: Co-Steel C.S.M. Corp., a Delaware corporation, and its
successors and assigns.

     Co-Steel Fiscal Quarter: Each three-month fiscal period of Co-Steel
beginning respectively on each successive January 1, April 1, July 1 and
October 1 during the term hereof and ending on the immediately succeeding
March 31, June 30, September 30 and December 31.

     Co-Steel Guaranty Agreement: A guaranty agreement, in the form of Exhibit
"F-1" attached hereto, executed by Co-Steel in favor of the Bank to secure the
payment of the Obligations to the Bank.

                                      -7-
<PAGE>
     Co-Steel Indebtedness shall have the meaning ascribed to the term
"Indebtedness" in the Canadian Bank Credit Agreement as of the Restatement
Closing Date.

     Co-Steel Letters of Credit shall have the meaning ascribed to the term
"Letters of Credit" in the Canadian Bank Credit Agreement as the Restatement
Closing Date.

     Co-Steel Liquidity Management: Co-Steel Liquidity Management Hungary
Limited Liability Company, a Hungarian corporation and licensed as a Hungarian
off-shore corporation, and its successors and assigns.

     Credit Facility: This term shall mean the credit accommodations made
available to the Borrower hereunder.

     Debenture: This term shall mean a debenture entered into by a Loan Party in
favor of the Canadian Security Agent on behalf of the Noteholders, the Bank, and
the Administration Agent on behalf of the Canadian Lenders containing a first
ranking fixed charge (subject to Permitted Priority Liens), in favor of the
Canadian Security Agent with respect to Co-Steel's freehold interest in each
Ontario Property and other assets and a floating charge over the remaining
present and future assets of Co-Steel delivered or pledged to the Canadian
Security Agent pursuant to a debenture delivery or pledge agreement.

     Default: Any condition, event, omission or act which, with the giving of
notice, the passage of time or both, would constitute an Event of Default.

     Default Rate: The rate of interest charged pursuant to Section 2.2b(iii)
hereof.

     Distribution: Co-Steel Distribution Canada Limited, an Ontario, Canada
corporation, and it successors and assigns.

     Dollars or US Dollars or U.S. Dollars or $ or US$ or U.S.$: The legal
tender of the United States of America.

     Encumbrance: Any security interest, mortgage, charge, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any Capitalized Lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code) in, upon,
or against any asset of a Loan Party or any Subsidiary of such Loan Party,
whether or not voluntarily given.

     English Finance Structure Companies: Each of Co-Steel Amsterdam B.V.,
Co-Steel (UK) Limited and Cansteel Antilles N.V.

                                     - 8 -
<PAGE>
     Environment: shall mean soil, surface waters, ground waters, land stream
sediments, surface or subsurface strata, ambient air, and any environmental
medium.

     Environmental Activity: This term shall mean any past, present or future
activity, event or circumstance in respect of a Contaminant, including its
storage, use, holding, collection, purchase, accumulation, assessment,
generation, manufacture, construction, processing, treatment, stabilization,
disposition, handling or transportation, or its Release, escape, leaching,
dispersal or migration into the natural environment, including the movement
through or in the air, soil, surface water or groundwater.

     Environmental Claim:  Any written claim, suit notice or order made by a
Person (including without limitation a Governmental Authority) or any written
demand made by a Governmental Authority with respect to a Loan Party or any of
its properties, whether owned or leased, that: (i) asserts a violation of an
Environmental Law; (ii) asserts a liability under an Environmental Law; (iii)
orders investigations, corrective action, remediation or other response under an
Environmental Law; (iv) demands information under an Environmental Law; (v)
alleges personal injury or property damage resulting from Contaminants or
Hazardous Material; or (vi) alleges that there is or may be Contamination.

     Environmental Law: Any Governmental Rule concerning protection or
regulation of the discharge or substances into the environment, including but
not limited to those concerning air emissions, water discharges and treatment,
storage tanks, and the handling, generation, treatment, storage and disposal of
waste materials, chemical substances, pollutants, contaminants, toxic
substances, pathogens, radioactive materials or hazardous substances of any
kind, whether solid, liquid or gaseous.

     ERISA: The Employee Retirement Income Security Act of 1974 or any successor
legislation thereto, and the rules and regulations promulgated thereunder,
including any amendments to any of the foregoing.

     ERISA Affiliate: Any member of a controlled group of corporations under
Section 414(b) of the Internal Revenue Code of which the Borrower or Co-Steel is
a member, and any trade or business (whether or not incorporated) under common
control with the Borrower or Co-Steel, under Section 414(c) of the Internal
Revenue Code, and all other entities which, together with the Borrower or
Co-Steel, are or were treated as a single employer under Sections 414(m) or
414(o) of the Internal Revenue Code.

     Euro-Rate: With respect to Borrowing Tranches to which the Euro-Rate Option
applies for any Euro-Rate Interest Period, the interest rate per annum
determined by the Bank by dividing (the resulting quotient rounded upward to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Bank
in accordance with its usual procedures (which determination shall be
conclusive, absent manifest error) to be the "offered" eurodollar rate as quoted
by Exco-Noonan Incorporated (or appropriate successor or, if Exco-Noonan or its
successor ceases to provide such quotes, a comparable replacement determined by
the Bank) as evidenced on Dow Jones Markets Service (formerly known as Telerate)
display page 4756 (or

                                      -9-
<PAGE>
such other display page on the Dow Jones Markets System as may replace Dow Jones
Markets Service display page 4756), two (2) Business Days prior to the first day
of such Euro-Rate Interest Period for an amount comparable to such Borrowing
Tranche and having a borrowing date and a maturity comparable to such Euro-Rate
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:

               the "offered rate" as quoted by Exco-Noonan
               as shown on Dow Jones Markets Service display page 4756
Euro-Rate =    -------------------------------------------------------
               1.00 - Euro-Rate Reserve Percentage

     Euro-Rate Interest Period: Any individual period of one, two or three
months commencing on the date a Euro-Rate Option is exercised; provided,
however, that (i) any Euro-Rate Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the next Business Day
unless such Business Day falls in the succeeding calendar month, in which case
such Euro-Rate Interest Period shall end on the next preceding Business Day,
(ii) any Euro-Rate Interest Period which begins on the last day of a calendar
month or on a day for which there is no numerically corresponding day in the
subsequent calendar month during which such Euro-Rate Interest Period is to end
shall end on the last Business Day of such subsequent month and (iii) no
Euro-Rate Interest Period with respect to any Revolving Credit Loan may end
after the Revolving Credit Termination Date.

     Euro-Rate Loan: All or any portion of the Loans bearing interest under the
Euro-Rate Option, as set forth in Subsection 2.2(a)(ii).

     Euro-Rate Option: The ability of the Borrower to elect Euro-Rate Loans, as
set forth in Subsection 2.2(a)(ii).

     Euro-Rate Reserve Percentage: The maximum percentage (expressed as a
decimal rounded upward to the nearest 1/100th of 1%), as determined by the Bank
which is in effect during any relevant period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirements (including supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities") of a member bank in such System.

     Event of Default: Any of the events specified in Section 7.1.

     Excess Amount: This term means, in respect of the Credit Facility, the
excess, if any, as at the date of determination of (a) the sum of the
Outstanding Revolving Credit Amount, plus the U.S. Dollar equivalent of the
Stated Amount of all outstanding Letters of Credit, plus any Unreimbursed Letter
of Credit Draws all at that date, over (b) the Revolving Credit Commitment at
that date.

     Excess Revolver Paydown: as at the end of any fiscal quarter of Co-Steel
the amount, if any, by which the outstanding amount of the sum of (x) the
Co-Steel Advances and (y) the Equivalent Amount (as defined in the Canadian Bank
Credit Agreement) in Canadian Dollars

                                     - 10 -
<PAGE>
of the principal amount advanced (including letters of credit outstanding) under
the Credit Facility and the Sayreville Credit Facility is less than the result
of (a) the sum of (x) the Revolving Credit Commitment and (y) the Equivalent
Amount in Canadian Dollars of all commitments under the Canadian Bank Credit
Agreement and the Sayreville Credit Facility at such time, minus (b)
Cdn.$50,000,000.

     Excluded Taxes: Any Tax imposed on the Bank's net income or capital by any
Governmental Authority as a result of the Bank (a) carrying on a trade or
business or having a permanent establishment in such jurisdication, (b) being
organized under the laws of such jurisdication, or (c) being or being deemed to
be resident in such jurisdiction.

     Existing Canadian Bank Indebtedness: The outstanding Indebtedness of
Co-Steel at the opening of business on the Restatement Closing Date under and
pursuant to a certain credit agreement dated May 28, 1999, between Co-Steel as
the borrower, Distribution, USA Distribution, Sayreville and Borrower as the
guarantors, the financial institutions from time to time party thereto as the
lenders, The Toronto-Dominion Bank, as administration agent for such lenders,
and the Bank of Nova Scotia, as syndication agent for such lenders.

     Existing Prudential Indebtedness: The outstanding Indebtedness of Co-Steel
at the opening of business on the Restatement Closing Date under and pursuant to
certain note purchase agreement dated as of February 27, 1997, between Co-Steel,
Prudential and U.S. Private Placement Fund and that certain note purchase
agreement dated as of January 10, 1994, between Co-Steel, Prudential and U.S.
Private Placement Fund.

     FDIC: The Federal Deposit Insurance Corporation or any entity succeeding to
its functions.

     Federal Funds Effective Rate: For any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.

     Fee: Any of the fees payable or to be payable by the Borrower to the Bank
pursuant to any of the Loan Documents, including but not limited to, the
Restructuring Fees, the Commitment Fee and any Letter of Credit Fee.

     Fiscal Quarter: Each three-month fiscal period of the Borrower beginning
respectively on each successive January 1, April 1, July 1 and October 1 during
the term hereof and ending on the immediately succeeding March 31, June 30,
September 30 and December 31.
<PAGE>
     Fiscal Year: Each 12-month fiscal period of the Borrower, currently January
1 to December 31.

     GAAP: Generally accepted accounting principles which are consistent with
the principles promulgated or adopted by the Financial Accounting Standards
Board, its predecessors and its successors, including any official
interpretations thereof.

     Gallatin: This term shall mean Gallatin Steel Company, a partnership formed
under the laws of the Commonwealth of Kentucky.

     General Security Agreement: This term shall mean a security agreement
entered into by a Loan Party in favor of a Security Agent on behalf of the Bank,
Administration Agent, the Canadian Lenders and Noteholders creating a first
ranking security interest in favor of such Security Agent on all the present and
future assets of the Loan Party (subject in each case to Permitted Priority
Liens).

     Governmental Authority: Any (i) nation, state, government, jurisdiction or
jurisdictional authority (domestic, foreign or international), any political
subdivision thereof, and any governmental, quasi-governmental, judicial, public,
statutory, administrative or regulatory body, agency, department, bureau,
authority, court, commission, board, office, instrumentality, administrative
tribunal or other entity of any of the foregoing and any official thereof and
(ii) any arbitrator, arbitration tribunal or other non-governmental entity which
has jurisdiction over the Borrower or a Subsidiary as a result of (A) the
written consent of the Borrower or (B) being vested with such jurisdiction by
any Governmental Authority.

     Governmental Rule: Any constitutional provision, law, statue code, act,
rule, regulation, permit, license, treaty, ordinance, order, writ, injunction,
decree, judgment, award, standard, directive, decision, determination or holding
of any Governmental Authority, whether in existence on the Original A&R Closing
Date or whether issued, enacted or adopted after the Original A&R Closing Date,
and any change therein or in the interpretation or application thereof following
the Original A&R Closing Date.

     Guaranty or Guarantee: As to any Person, any obligation, direct or
indirect, by which such Person undertakes to guaranty, assume or remain liable
for the payment of a second Person's obligations, including but not limited to
(i) endorsements of negotiable instruments, (ii) discounts with recourse, (iii)
agreements to pay or perform upon a second Person's failure to pay or perform,
(iv) agreements to remain liable on obligations assumed by a second Person
(other than pursuant to Letters of Credit permitted hereunder), (v) agreements
to maintain the capital, working capital, solvency or general financial
condition of a second Person and (vi) agreements for the purchase or other
acquisition of products, materials, supplies or services, if in any case payment
therefor is to be made regardless of the nondelivery of such products, materials
or supplies or the nonfurnishing of such services.

                                      -12-

<PAGE>

     Hazardous Material: This term shall mean any pollutant, toxic substance,
hazardous waste, hazardous material, hazardous substance, or oil as defined
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, any Environmental Law 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.

     Hungarian Finance Structure Companies: This term shall mean Goldmarsh
Enterprises, ACIERCO and Co-Steel Liquidity Management.

     Hungarian Guarantee: This term shall have the meaning ascribed to such
term in Section 6.4c hereof.

     Hungarian Guarantee Documents: This term shall have the meaning ascribed
to such term in Section 6.4c hereof.

     Hungarian Loan Notes: This term means individually or collectively any or
all of the following loans however evidenced from time to time extended or held
by Co-Steel Liquidity Management:

          (i)      promissory note from Co-Steel CSM for U.S.$25,000,000
     maturing November 23, 2004;

          (ii)     promissory note from Co-Steel CSM for U.S.$25,000,000
     maturing November 23, 2004;

          (iii)    promissory note from Co-Steel CSM for U.S.$28,650,000
     maturing July 31, 2006;

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

          (v)      term loan to Sayreville for U.S.$13,000,000 maturing
     January 30, 2008;

          (vi)     term loan to Sayreville for U.S.$3,600,000 maturing
     June 30, 2008;

          (vii)    term loan to Sayreville for U.S.$5,683,330 maturing
     June 30, 2008; and

          (viii)   promissory note from Co-Steel CSM for U.S.$150,000.

     Hungarian Loan Reorganization Documents: This term shall have the meaning

                                     - 13 -

<PAGE>

ascribed to such term in Section 6.4c hereof.

     Inchoate Lien: This term shall mean, with respect to any property or asset
of any Person, the following Encumbrances: any Encumbrance 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;

          (a)  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

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

     Indebtedness: 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 Encumbrance 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
     such Person;

          (e)  all indebtedness, obligations and liabilities of others which the
     Person has directly or indirectly guaranteed, endorsed (otherwise than for
     collection or

                                     - 14 -

<PAGE>
     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
     principal amount of, and bear the same rate of interest as, the
     Indebtedness which is the subject of such Guarantee of Indebtedness so
     guaranteed;

          (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.

     INDEMNIFIED PARTIES: This term shall have the meaning ascribed to such term
in Section 8.18a hereof.

     INSURANCE PROCEEDS: This term has the meaning ascribed to such term in
the Prudential Note Agreement as of the Restatement Closing Date.

     INTERCREDITOR AGREEMENT: This term shall mean the intercreditor agreement
dated as of April 30, 2002, among the Canadian Security Agent, the US Security
Agent, the Bank, the Administration Agent and the Noteholders as concerned to
by the Borrower and each of the Guarantors.

     INTEREST RATE OPTION: Any of the Base Rate Option to the Euro-Rate Option.

     INTEREST RATE PERIOD: The Euro-Rate Interest Periods.

                                     - 15 -

<PAGE>
     INTERNAL REVENUE CODE: The Internal Revenue Code of 1986 or any successor
legislation thereto, and the rules and regulations issued or promulgated
thereunder, including any amendments to any of the foregoing.

     INVENTORY: This term 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.

     LAKE ONTARIO STEEL COMPANY: Lake Ontario Steel Company, Inc., a Delaware
corporation, and its successors and assigns.

     LANDLORD'S CONSENTS: This term shall mean collectively, such in form and
substance satisfactory to the Bank of consents landlords of Leased Properties
to permit an Encumbrance in favor of a Security Agent against property of a
Loan Party located at such premises and to waive any landlord's lien or right
of distraint against any property of a Loan Party located at such premises, all
in a form approved by the Bank.

     LEASED PROPERTIES: This term shall mean all lands and premises described
in Schedule 1.1-1 and any lands and premises which are subsequently leased by
the Borrower or a Subsidiary of the Borrower.

     LEASEHOLD MORTGAGE: This term 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 Bank, the Administration Agent, the Canadian Lenders and the
Noteholders (subject in each case to Permitted Priority Liens).

     LENDERS: The Bank, and any other financial institution which joins this
Agreement as a lender pursuant to an Assignment and Assumption Agreement, and
their respective successors and assigns as permitted hereunder, each of which
is referred to herein from time to time as a LENDER.

     LETTER OF CREDIT: Any standby letter of credit issued by the Bank pursuant
to any Application for Letter of Credit and the applicable Reimbursement
Agreement.

     LETTER OF CREDIT FEE: Any fee due to the Bank for the issuance of or
processing of a Letter of Credit or a draw thereunder.

     LOAN ACCOUNT: The loan account referred to in Section 2.6.

     LOAN DOCUMENT: Any of this Agreement, the Revolving Credit Note, any
Letter of Credit, any Application for Letter of Credit, the Reimbursement
Agreement, the Standstill Agreement, the Related Parties Guarantees, any
Security Documents, the Intercreditor

                                     - 16 -
<PAGE>
Agreement, any cash management agreement and all other documents and
instruments executed and delivered from time to time to govern, evidence or
secure the Obligations, and the exhibits, schedules, statements, reports
certificates and other documents required by, or related to, any of the
foregoing, and all extensions, renewals, amendments, substitutions and
replacements thereto and thereof.

     LOAN PARTIES: collectively, the Borrower and the Related Parties; and the
term LOAN PARTY shall mean any of the Loan Parties.

     LOAN REQUEST: Each Loan Request executed by the Borrower and delivered to
the Bank, substantially in the form of EXHIBIT "C".

     LOANS: Collectively, the Revolving Credit Loans, together with all
outstanding reimbursement obligations of the Borrower for draft presented under
the Letters of Credit and honored by the Bank that have been converted into
Revolving Credit Loans; and the term LOAN refers individually to any of the
Loans.

     LOSSES: This term shall have the meaning ascribed to such term in Section
8.18a hereof.

     MANAGING SECURITY AGENT: The Canadian Security Agent in its capacity as
managing security agent under the terms of the Intercreditor Agreement.

     MARCH 2002 SIGNIFICANT SHARE OFFERING: Co-Steel's offering of 20,907,000
of its common shares which closed March 12, 2002.

     MATERIAL ADVERSE CHANGE: With respect to any Loan Party, any circumstance
or event which (i) has or could reasonably be expected to have a material
adverse effect upon the validity or enforceability of this Agreement or any of
the Security Documents, any of the Related Parties Guarantees or the
Intercreditor Agreement, (ii) is material and adverse to the business,
properties, assets, financial condition, results of operations or prospects of
the Loan Parties, taken as a whole, (iii) impairs materially the ability of the
Loan Parties, taken as a whole, to duly and punctually pay or perform the
Obligations, or (iv) impairs materially the ability of the Bank, to the extent
permitted, to enforce the Bank's legal remedies pursuant to this Agreement and
the other Loan Documents.

     MATERIAL CONTRACTS: Means, collectively, those contracts listed in
Schedule 3-29-1 and any contract or lease to which a Loan Party 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 Loan Party 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: Means, collectively, those licenses, permits or
approvals listed on Schedule 3-29-2 any license, permit or approval issued by
any Governmental Authority,

                                      -17-
<PAGE>
applicable stock exchange or securities commission, to a Loan Party, and which
is at any time on or after the date of this Agreement, necessary or material to
the business and operations of a Loan Party or to the listing of its securities.

     MATURITY DATE: The Maturity Date shall be (a) January 15, 2004, or (b) such
other later date as the Borrower and the Bank have mutually agreed to and such
later date is set forth in a writing executed by the Borrower and accepted by
the Bank.

     MONEY PURCHASE PLAN: Any Benefit Arrangement subject to the minimum funding
standards under Section 302 of ERISA and Section 412 of the Internal Revenue
Code.

     MORTGAGE: This term shall mean a mortgage with assignment of leases and
rents, 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 US Security Agent on behalf of the Bank, the
Administration Agent, the Canadian Lenders and the Noteholders (subject in each
case to Permitted Priority Liens).

     MOVEABLE HYPOTHEC: A deed of moveable hypothec entered into a Loan Party in
favor of the Canadian Security Agent on behalf of the Noteholders, the Bank, the
Administration Agent on behalf of the Canadian Lenders creating a first ranking
security interest in favor of the Canadian Security Agent on all the present and
future assets of such Loan Party located in the Province of Quebec (subject in
each case to Permitted Priority Liens).

     MULTIEMPLOYER PLAN: A ""multiemployer plan'' as defined in Section
4001(a)(3) of ERISA to which a Loan Party or any ERISA Affiliate of such Loan
Party is making or accruing an obligation to make contributions or has within
any of the preceding five plan years made or accrued an obligation to make
contributions.

     NET CASH PROCEEDS: This term 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 property or of any offering of
debt or equity securities, net of (without duplication): (i) reasonable and
documented legal, accounting and investment banking fees and/or commissions
(actually paid to any Person that is not an Affiliate of Co-Steel), (ii) in the
case of an asset disposition amounts required to be applied to the repayment of
indebtedness secured by an Encumbrance expressly permitted under this Agreement
(other than those created pursuant to the Security Documents) on any asset which
is the subject of the asset disposition, (iii) amounts agreed among the
Administration Agent on behalf of the Canadian Lenders, the Noteholders and the
Bank pursuant to the Intercreditor Agreement, and (iv) 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: With respect to any Restricted Subsidiary, the
aggregate amount of assets of such Restricted Subsidiary after deducting
therefrom (i) all goodwill, trade names, trade marks, patents, organization
expenses and other like intangibles; (ii) all equity held

                                        - 18 -
<PAGE>
by it in another Restricted Subsidiary, and (iii) inter-company loans and
advances to another Subsidiary of Co-Steel, all as set forth on the most recent
balance sheet of such Restricted Subsidiary, computed in accordance with GAAP
(provided that such balance sheet shall be prepared on a non-consolidated
basis).

     NEW HOLDCO: This term has the meaning ascribed to such term in Schedule
6.4c attached hereto.

     NEW JERSEY PROPERTIES: This term shall mean the lands and premises
described in Schedule 1.1-2 and all plant, buildings, structures, erections,
improvements, appurtenances and fixtures (including fixed machinery and fixed
equipment) situate on those lands.

     NEW SUBORDINATED LOAN NOTES: This term has the meaning ascribed to such
term in Schedule 6.4c attached hereto.

     NORMALIZED CONSOLIDATED EBITDA shall mean Consolidated EBITDA calculated
quarterly on a rolling twelve-month basis, except for the period ended
December 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 CEPEX 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
obligation, in each case of any member of the Restricted Group during such
period.

     NORTH YORK PROPERTY: This term shall mean the leased premises of Co-Steel
located at 55 Fenmar Drive, North York, Ontario.

     NOTEHOLDERS: This term shall mean Prudential, U.S. Private Placement Fund
or any other holders from time to time of the Prudential Notes.

     OBLIGATIONS: Collectively, (i) all unpaid principal and accrued and unpaid
interest under the Loans, (ii) all accrued and unpaid Fees hereunder or under
any of the other Loan Documents, (iii) all obligations (contingent or matured)
due the Bank pursuant to draws on Letters of Credit, (iv) any other amounts due
hereunder or under any of the other Loan Documents, including all
reimbursements, indemnities, Fees, costs, expenses, prepayment premiums, and
other obligations of the Borrower or any Subsidiary to the Bank or any
indemnified party hereunder and thereunder, (v) all other existing and future
obligations of the Borrower or any Subsidiary to the Bank for the payment of
money under any other agreement or instrument between the Borrower or any
Subsidiary and the Bank or among the Borrower or any Subsidiary, the Bank and
any other Person, and (vi) all reasonable out-of-pocket costs and reasonable
expenses incurred by the Bank in connection with this Agreement and the other
Loan Documents, including but not limited to the reasonable fees and expenses
of the Bank's counsel.

                                      -19-
<PAGE>
     ONTARIO PROPERTIES: This term shall mean the lands and premises described
in Schedule 1.1-3 and all plant, buildings, structures, erections,
improvements, appurtenances and fixtures (including fixed machinery and fixed
equipment) situate on those lands.

     ORIGINAL A&R CLOSING DATE: September 30, 2000.

     ORIGINAL CREDIT AGREEMENT: The meaning ascribed to it in the RECITALS to
this Agreement.

     OUTSTANDING REVOLVING CREDIT AMOUNT: The sum of the aggregate principal
amount of outstanding Revolving Credit Loans.

     OWNED PROPERTY: This term shall mean the lands and premises described in
Schedule 1.1-4 and all plant, buildings, structures, erections, improvements,
appurtenances and fixtures (including fixed machinery and fixed equipment)
situated on these lands.

     PARTICIPANT: Any bank or financial institution which acquires from the
Bank an undivided interest in the Bank's Revolving Credit Commitment, the
Revolving Credit Loans or in the Letters of Credit, pursuant to Section 8.6a.

     PARTICIPATION: The sale, made in accordance with the provisions of Section
8.6a, by the Bank to any Participant of an undivided interest in the Bank's
Revolving Credit Commitment, the Revolving Credit Loans or in the Letters of
Credit.

     PBGC: The Pension Benefit Guaranty Corporation established pursuant to
ERISA, or any entity succeeding to any or all of its functions under ERISA.

     PERMITTED ASSET SALES: This term shall mean (i) sales pursuant to the
Asset Monetization Program provided the proceeds thereof are distributed as
required by the Intercreditor Agreement, (ii) sales of assets between Loan
Parties; or (iii) sales of assets (excluding items set forth in (i) and (ii)
above) valuing less than Cdn.$2,500,000 (or its US Dollar equivalent) provided
that the total amount of asset sales under this item (iii) do not exceed
Cdn.$5,000,000 (or its US Dollar equivalent) in the aggregate per annum,
calculated on a calendar year basis, for the Restricted Group.

     PERMITTED INTERCOMPANY INDEBTEDNESS: This term shall mean (a) loans from
an Unrestricted Subsidiary to a Restricted Subsidiary, provided that no such
loan exceeds Cdn.$1,500,000 (or its US Dollar equivalent) and that such loans
in the aggregate do not exceed Cdn.$3,000,000 (or its US Dollar equivalent);
(b) loans from a Restricted Subsidiary to another Restricted Subsidiary; and
(c) Indebtedness described in Schedule 1.1-5.

     PERMITTED LIENS: This term shall mean, with respect to any property or
asset of any Person, the following Encumbrances:

                                      -20-
<PAGE>
     (i)  any Inchoate Lien;

     (ii)  Encumbrances respecting Priority Payables;

     (iii)  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;

     (iv) Encumbrances arising out of judgements 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 US Dollar equivalent);

     (v)  Encumbrances respecting Capitalized Lease Obligations provided such
Encumbrances secure Indebtedness which is permitted under Section 10.03(1)(1) of
the Canadian Bank Credit Agreement;

     (vi)  any right reserved to or vested in any Governmental Authority by the
terms of any lease, license, franchise, grant or permit acquired by the Person,
or by any statutory provision to terminate any such lease, license, franchise,
grant or permit, or to require annual or other periodic payments as a condition
of the continuance thereof;

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

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

     (ix)  any Encumbrance securing a purchase money obligation, provided that
(a) no such Encumbrance affects any property other than the property acquired by
the incurring of such purchase money obligation; (b) such Encumbrance does not
secure an amount in excess of the original purchase price of such property, less
repayments made from time to time; and (c) such Encumbrance secures Indebtedness
which is permitted under Section 10.03(1)(1) of the Canadian Bank Credit
Agreement;

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

     (xi)  any Encumbrance consented to in writing by the Bank,

                                     - 21 -

<PAGE>
provided, however, that no Encumbrance described in clauses (i) through (v)
above shall constitute a Permitted Lien if such Encumbrance materially detracts
from the value of property of the Person or materially impairs its use in the
operation of the business of the Person; and provided further however that any
modification of Section 10.03(l)(1) of the Canadian Bank Credit Agreement after
the Restatement Closing Date shall not amend the terms of this definition
unless the Bank consents to such modification in writing.

     PERMITTED PRIORITY LIENS: This term shall mean those encumbrances set
forth in subsections (i), (ii), (iii), (v), (vi), (vii), (viii) and (ix) of the
definition of Permitted Liens or any other Encumbrance consented to in writing
by the Bank.

     PERSON: Any individual, partnership, corporation, association, trust,
business trust, joint venture, joint stock company, limited liability company,
unincorporated organization or enterprise or Governmental Authority.

     PLAN: With respect to a Loan Party, any employee pension benefit plan
other than a Multiemployer Plan which is covered by Title IV of ERISA and which
either (i) is maintained by such Loan Party and/or any ERISA Affiliate of such
Loan Party for employees of such Loan Party and/or any ERISA Affiliate or (ii)
has at any time within the preceding five years been maintained by the Borrower
and/or any entity which was an ERISA Affiliate at such time for their
respective employees.

     PNC PORTION: An amount equal to the portion of any Specified Transaction
(as defined in the Intercreditor Agreement) allocated to the Bank under the
Intercreditor Agreement for the payment of the outstanding principal
obligations of the Borrower hereunder and of Sayreville under the Sayreville
Credit Facility.

     PNC RARITAN PORTION: An amount equal to 57.1% of any PNC Portion
distributed to the Bank under the Intercreditor Agreement with respect to any
Specified Transaction.

     PRIME RATE: For any day, a fluctuating interest rate per annum equal to
the rate of interest which the Bank announces from time to time as its prime
lending rate, which rate may not be the lowest rate then being charged by the
Bank to certain commercial borrowers.

     PRIORITY PAYABLES: This term 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 assessment, municipal Taxes and claims by
public utilities.

     PROHIBITED TRANSACTION: A "prohibited transaction" as defined under
Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

     PRUDENTIAL: The Prudential Insurance Company of America.

                                     - 22 -
<PAGE>
     PRUDENTIAL GUARANTEE: Any of those certain guarantees executed and
delivered in connection with the Prudential Note Purchase Agreement.

     PRUDENTIAL GUARANTEE ENTITIES: Borrower, Distribution, USA Distribution,
Sayreville and any other entity which may thereafter be required (or should
have been required, in accordance with Co-Steel's contractual arrangements, if
any, in connection with the Prudential Note Purchase Agreements) to execute and
deliver a Prudential Guarantee.

     PRUDENTIAL NOTE AGREEMENT: That certain amended and restated note
agreement dated as of April 30, 2002, among Co-Steel, Prudential and U.S.
Private Placement Fund, as amended, modified or supplemented from time to time.

     PRUDENTIAL NOTES: This term shall be a collective reference to the Series
A Notes and the Series B Notes as such terms are defined in the Prudential Note
Agreement.

     PURCHASING LENDER: A Lender which becomes a party to this Agreement by
executing an Assignment and Assumption Agreement in accordance with the terms
and provisions of Section 8.6b.

     QUALIFIED BANK: A bank or trust company organized under the laws of the
United States of America or any state thereof, having either (i) capital,
surplus and undivided profits aggregating at least $250,000,000 or (ii) 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.

     RARITAN RIVER: Raritan River Urban Renewal Corporation, a New Jersey
corporation, and its successors and assigns.

     RATABLE SHARE: The proportion that a Lender's aggregate Revolving Credit
Commitment bears to the Revolving Credit Commitments of all of the Lenders,
respectively.

     REGULATIONS T, U AND X: Regulation T, Regulation U and Regulation X
promulgated by the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 220 ET SEQ., Part 221 ET SEQ., and Part 224 ET SEQ., respectively), as
such regulations are now in effect and as may hereafter be amended.

     REIMBURSEMENT AGREEMENT: The Reimbursement Agreement pursuant to which the
Borrower agrees to reimburse the Bank for any draw against any Letter of Credit.

     RELATED PARTIES: Each of 13000554 Ontario Limited, 1102590 Ontario Limited
Co-Steel (U.S.) Ltd., Co-Steel USA Holdings, Inc., Co-Steel Finance Corp.,
Co-Steel, Distribution, USA Distribution, Lake Ontario Steel Company,
Sayreville and Raritan River and any other entity which have or may hereinafter
be required (or which should have been required) to execute and deliver Related
Parties Guarantees pursuant to Section 4.14 of the Agreement.

                                     - 23 -
<PAGE>
     RELATED PARTIES GUARANTEES: Any of those certain guaranties executed by
the Related Parties, under which the Related Parties agree to provide
guaranties for the Obligations of Borrower under and pursuant to this Agreement
(together with any amendment, modification or replacement thereof) including
those guaranties attached hereto as EXHIBIT "F-1", EXHIBIT "F-2", or EXHIBIT
"F-3".

     RELEASE: This term shall mean any 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.

     REPORTABLE EVENT: A "reportable event" described in Section 4043(b) of
ERISA and in 29 C.F.R. Part 2615.

     RESTATEMENT CLOSING DATE: The date on which each of the conditions
precedent set forth in Section 6.2 is satisfied.

     RESTRICTED GROUP: This term shall mean Co-Steel and the Restricted
Subsidiaries collectively.

     RESTRICTED SUBSIDIARY: This term shall mean each of 1300554 Ontario
Limited, 1102590 Ontario Limited, Distribution, Co-Steel (U.S.) Ltd., Co-Steel
Finance Corp., Lake Ontario Steel Company, USA Distribution, Co-Steel USA
Holdings, Inc., the Borrower, Raritan River, Sayreville, and such other
Subsidiary of Co-Steel that becomes a Related Party hereunder or as may be
designated as a Restricted Subsidiary by Co-Steel with the consent of the Bank
from time to time; provided that for purposes of compliance with the financial
covenants set forth in Section 4.02 of the Co-Steel Guaranty Agreement and for
purposes of the Special Purpose Financial Statements, ACIERCO, Goldmarsh
Enterprises, Co-Steel Liquidity Management and N.J.S.C. Investment Co., Inc.,
shall be deemed Restricted Subsidiaries.

     RESTRUCTURING FEES: This term shall have the meaning ascribed to such term
in Section 2.7c.

     REVOLVING CREDIT COMMITMENT OR COMMITMENT: The obligation of the Bank to
make available to the Borrower an amount (i) which prior to the Restatement
Closing Date shall not exceed $15,682,088.02 in the aggregate at any one time
outstanding, and (ii) which on or after the Restatement Closing Date (and
subject to Sections 2.1a, 2.1f and 2.10) shall not exceed $15,682,088.02 in the
aggregate at any one time.

     REVOLVING CREDIT LOAN: An individual borrowing under the Revolving Credit
Commitment.

     REVOLVING CREDIT NOTE OR NOTE: The Revolving Credit Note, in substantially
the form of EXHIBIT "A", duly executed by the Borrower and delivered to the
Bank together with all extensions, renewals, amendments, substitutions and
replacements thereto and thereof.

                                      -24-
<PAGE>
     REVOLVING CREDIT TERMINATION DATE: The current Maturity Date.

     SAYREVILLE: Co-Steel Sayreville, Inc., a New Jersey corporation, and its
successors and assigns.

     SAYREVILLE CREDIT FACILITY: That certain amended and restated credit
agreement dated as of April 30, 2002, by and between Bank and Sayreville, and
all extensions, renewals, amendments, substitutions and replacements thereto
and thereof.

     SEC: The Securities and Exchange Commission and any entity succeeding to
its functions.

     SECURITY DOCUMENTS: This term shall mean the documents or agreements
referred to in Section 8.5b hereof.

     SETTLEMENT AMOUNTS: This term shall have the meaning ascribed to such term
in clause (e) of the definition of "Specified Transactions" in the
Intercreditor Agreement.

     SHARE PLEDGE AGREEMENT:This term shall mean any share pledge agreement
entered into in favor of a Security Agent for and on behalf of the Bank, the
Administration Agent on behalf of the Canadian Lenders and the Noteholders.

     SHAREHOLDERS' EQUITY: This term shall mean shareholders' equity as
reflected on the balance sheet in the most recent Special Purpose Financial
Statements excluding that portion of the Co-Steel Convertible Debentures
classified as equity in accordance with GAAP.

     SIGNIFICANT SHARE OFFERING: This term shall mean a public offering by
Co-Steel of its common shares the gross proceeds of which equal or exceed Cdn
$50,000,000 (or its US Dollar equivalent), and for greater certainty, excludes
the March 2002 Significant Share Offering.

     SIGNIFICANT U.S. LEASED PROPERTIES: This term shall mean all lands and
premises described in Schedule 1.1-6.

     SOLVENT: As to any Person, the condition which exists when such Person (i)
owns assets whose value (both at fair market value and present fair saleable
value) is, on the date of determination, greater than the amount of such
Person's liabilities (including without limitation contingent and unliquidated
liabilities), (ii) is able to pay all of its Indebtedness as such Indebtedness
matures and (iii) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.

     SPECIAL PURPOSE FINANCIAL STATEMENTS: This term shall mean the
consolidated financial statements of Co-Steel prepared under GAAP, except that
the Unrestricted Subsidiaries are not consolidated but are accounted for at
Adjusted Cost Base. For greater certainty, it is hereby acknowledged that for
purposes of the preparation of the Special Purpose Financial

                                     - 25 -
<PAGE>
Statements, Goldmarsh Enterprises, ACIERCO, Co-Steel Liquidity Management and
N.J.S.C. Investment Co., Inc. are treated as Restricted Subsidiaries.

     STANDSTILL AGREEMENT: This term means a standstill agreement from Co-Steel
(UK) Limited in favor of the Administration Agent in its representative
capacity, the Noteholders and the Bank, in a form and substance reasonably
satisfactory to the Bank.

     STATED AMOUNT: As to any Letter of Credit, the lower of (i) the face amount
thereof or (ii) the remaining available undrawn amount thereof (regardless of
whether any conditions for drawing could then be met).

     SUBSIDIARY: With respect to any Person ay any time: (i) any other Person of
which either (a) 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 (b) 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 (ii) 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: This term means 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 purpose of income tax reporting.

     TANGIBLE NET WORTH: This term shall mean at any date, the amount equal to
the Shareholders' Equity (excluding foreign currency translation adjustments),
less all goodwill, investments in and amounts due from ASW Holdings, trade
names, trade marks, 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 at such date.

     TAX or TAXES: Such term shall mean all taxes, charges, fees, levies,
imposts and other assessments, including all income, sales, use, goods and
services, value added, capital, capital gains, alternative, net worth, transfer,
profits, withholding, payroll, employer health, excise, franchise, real property
and personal property taxes, and any other taxes, customs duties, fees,
assessments, royalties, duties, deductions, compulsory loans or similar charges
in the nature of a tax, including PBGC, the Canada Pension Plan, any state or
provincial pension plan contributions, employment insurance payments and workers
compensation premiums, together with any installments, and any interest, fines
and penalties, imposed by any Governmental Authority, whether disputed or not.

                                     - 26 -
<PAGE>
     TD AVAILABILITY: Shall mean, on any date, the sum of the maximum principal
amount available to be advanced but remaining unadvanced on such date under the
Canadian Bank Credit Agreement.

     TERMINATION EVENT: With respect to a Loan Party, (i) A Reportable Event
with respect to a Plan or an event described in Section 4062(e) of ERISA with
respect to a Plan, (ii) the withdrawal of such Loan Party or any ERISA
Affiliate from a Plan during a Plan year in which such Loan party or such ERISA
Affiliate was a "substantial employer", as such term is defined in Section
4001(a)(2) of ERISA, (iii) the incurrence of liability by such Loan Party or
such ERISA Affiliate under Section 4064 of ERISA upon the termination of a
Plan, (iv) the distribution of a notice of intent to terminate a Plan pursuant
to Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (v) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or (vi) any other
event or condition which might reasonably constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan.

     TRANSFER EFFECTIVE DATE: Shall have the meaning ascribed to it in the
applicable Assignment and Assumption Agreement.

     UNFUNDED BENEFIT LIABILITIES: With respect to any Plan, the amounts
described in Section 4001(a)(18) of ERISA.

     UNREIMBURSED LETTER OF CREDIT DRAWS: As defined in Section 2.9(e).

     UNRESTRICTED SUBSIDIARIES: This term shall mean each of 1062316 Ontario
Limited, Co-Steel Dofasco LLC, Co-Steel Benefit Plans Inc., Co-Steel CSM,
Co-Steel (UK) Limited, Gallatin, Gallatin Terminal Company and Gallatin Transit
Authority, Co-Steel Benefit Plans USA Inc., Co-Steel Amsterdam B.V., Cansteel
Antilles N.V., N.J.S.C. Investment Co. Inc.,ASW Holdings, Goldmarsh
Enterprises, ACIERCO, Co-Steel Liquidity Management and such other Subsidiary
of Co-Steel as may be designated as an Unrestricted Subsidiary by Co-Steel with
the consent of the Bank from time to time and "Unrestricted Subsidiary" means
any of them; provided that, Goldmarsh Enterprises, ACIERCO, Co-Steel Liquidity
Management, N.J.S.C. Investment Co. Inc. shall not be considered Unrestricted
Subsidiaries for purposes of the covenants set forth in Section 4.02 of the
Co-Steel Guaranty Agreement and for purposes of the Special Purposes of the
Special Purpose Financial Statements only.

     US SECURITY AGENT: This term shall mean State Street Bank and Trust
Company in its capacity as U.S. security agent for and on behalf of the
Administration Agent, the Noteholders and the Bank pursuant to the
Intercreditor Agreement.

     USA DISTRIBUTION: Co-Steel USA Distribution, Inc., a Delaware corporation,
and its successors and assigns (formerly known as Co-Steel Lasco, Inc., a
Delaware corporation).

     UNUTILIZED PORTION: This term shall mean on any date, the maximum
principal amount of the Credit Facility at such date, after giving effect to
any reductions required by this

                                     - 27 -
<PAGE>
Agreement, minus the sum of Loans outstanding, the effective Stated Amount of
Outstanding Letters of Credit and Unreimbursed Letter of Credit Draws.

     WITHDRAWAL LIABILITY: "Withdrawal liability" as defined by the provisions
of Part 1 of Subtitle E to Title IV of ERISA.

1.2  OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified herein,
all references in any Loan Document (A) to any Person shall be deemed to include
such Person's successors and assigns, (B) to any applicable law or Governmental
Rule defined or referred to herein shall be deemed references to such applicable
law or Governmental Rule as the same may have been or may be amended,
supplemented or replaced from time to time and (C) to any Loan Document defined
or referred to herein shall be deemed references to such Loan Document (and, in
the case of the Revolving Credit Note or other instrument, any instrument issued
in substitution therefor) as the terms thereof may have been or may be amended,
supplemented, waived or otherwise modified from time to time.

     (ii)   When used in any Loan Document, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to such Loan Document as a
whole and not to any particular provision of such Loan Document, and the words
"Article", "Section", "Subsection", "Schedule", "Exhibit" and "Annex" shall
refer to Articles, Sections and Subsections of, and Schedules, Exhibits and
Annexes to, such Loan Document unless otherwise specified.

     (iii)  Whenever the context so requires, in all Loan Documents the use of
or reference to any gender includes the masculine, feminine, and neuter
genders, and all terms used in the singular shall have comparable meanings when
used in the plural and vice versa.

     (iv)   All accounting terms used in any Loan Document which are not
specifically defined therein shall be construed in accordance with GAAP
consistently applied, except as otherwise expressly stated therein.

     (v)    All calculations of the equivalent amount for currency conversions
shall be calculated in accordance with the definition of "Equivalent Amount" in
the Canadian Bank Credit Agreement.

                                      -28-
<PAGE>
ARTICLE 2. THE REVOLVING CREDIT LOANS

2.1     REVOLVING CREDIT COMMITMENT

2.1a    REVOLVING CREDIT LOANS. The Bank agrees, subject to the terms and
conditions hereof and relying upon the representations and warranties herein set
forth, that the Borrower shall have the right to borrow, repay and reborrow,
from the Restatement Closing Date until the Revolving Credit Termination Date,
an aggregate principal amount which on and after the Restatement Closing Date
shall not exceed $15,682,088.02 in the aggregate at any one time outstanding
minus the sum of (x) the aggregate Stated Amount of outstanding Letters of
Credit, any (y) the aggregate amount of Unreimbursed Letter of Credit Draws. Any
Resolving Credit Loans (as such term is defined in the Original Credit
Agreement) outstanding on the Restatement Closing Date shall automatically, and
without any further action on the part of the Borrower or the Bank, be deemed
Revolving Credit Loans outstanding under this Agreement and governed by the
terms of this Agreement. The Borrower hereby acknowledges that on the
Restatement Closing Date the Borrower will cause a mandatory prepayment of the
Revolving Credit Loans with a portion of the March 2002 Significant Share
Offering and thereafter the Revolving Credit Commitment hereunder shall be
reduced as set forth in Schedule 2.10(iv).

2.1b    REQUESTS FOR REVOLVING CREDIT LOANS. Each request for a Revolving Credit
Loan or conversion of an existing Interest Rate Option shall be made to the Bank
orally or in writing, by an Authorized Officer, (i) by 12:00 Noon (Pittsburgh,
Pennsylvania time) on the Business Day of the proposed Revolving Credit Loan or
portion thereof bearing interest at the Base Rate Option and (ii) by 12:00 noon
(Pittsburgh, Pennsylvania time) at least two Business Days prior to the proposed
Revolving Credit Loan or portion thereof bearing interest at the Euro-Rate
Option. Each request shall specify the date on which such Revolving Credit Loan
or conversion of an existing Interest Rate Option is to be made, the amount
thereof and, if applicable, the Euro-Rate Interest Period therefor. Any oral
request of a Revolving Credit Loan or conversion of an existing Interest Rate
Option shall be followed immediately by the Borrower's written request for a
Revolving Credit Loan. All written requests and confirmations shall be made
pursuant to a Loan Request in the form of EXHIBIT "C". A request from the
Borrower pursuant to this Section 2.1b, with respect to a Revolving Credit Loan
or any portion thereof which is to bear interest at the Euro-Rate Option, shall
irrevocably commit the Borrower to accept such Revolving Credit Loan on the date
specified in such request.

2.1c    REVOLVING CREDIT BORROWINGS. Each Revolving Credit Loan shall be in a
minimum principal amount of $200,000; PROVIDED, HOWEVER, that if any Revolving
Credit Loan is to bear interest at the Euro-Rate Option, then such Revolving
Credit Loan must be in the amounts required by Subsection 2.2f.

2.1d    REVOLVING CREDIT REPAYMENTS. Except (i) for any repayment which is to
repay a Euro-Rate Loan, which must be repaid in its entirety on the last day of
the applicable Euro-Rate Interest Period (unless converted to the Base Rate
Option or refinanced through a new Euro-Rate Loan) and which must otherwise be
in the amounts required by Section 2.2f, and (ii) as otherwise provided herein,
each repayment of Revolving Credit Loans made by the Borrower shall be in a

                                      -29-
<PAGE>
minimum principal amount of $200,000; PROVIDED, HOWEVER, that if the entire
amount of Revolving Credit Loans then outstanding is less than $200,000, then
the Borrower shall repay such entire lesser amount. On the Revolving Credit
Termination Date the entire outstanding principal balance of the Revolving
Credit Loans, plus all accrued and unpaid interest thereon, any unpaid Fees
relating thereto and any other outstanding Obligations relating to the
Revolving Credit Commitment shall be due and payable, in cash or by federal
wire transfer of immediately available funds.

2.1e    REVOLVING CREDIT NOTE. On and after the Restatement Closing Date, the
obligation of the Borrower to repay, on or before the Revolving Credit
Termination Date, the aggregate unpaid principal amount of all Revolving Credit
Loans shall be evidenced by the Revolving Credit Note substantially in the form
of EXHIBIT "A", attached hereto, executed by the Borrower and payable to the
order of the Bank in the maximum amount of the Revolving Credit Commitment.

2.1f    MANDATORY AND VOLUNTARY REDUCTION OF REVOLVING CREDIT COMMITMENTS
MANDATORY AND VOLUNTARY PRINCIPAL PAYMENTS.

        (i)     MANDATORY PERMANENT REDUCTIONS. The Borrower shall repay the
Outstanding Revolving Credit Amount and contemporaneously therewith the
Revolving Credit Commitment shall be permanently reduced as provided in section
2.10, from time to time as required by section 2.10 hereof. Until such
repayment occurs, the Bank shall not be required to make additional revolving
Credit Loans to the Borrower and the Bank shall not be required to issue any
extension to any Letters of Credit.

        (ii)    VOLUNTARY PERMANENT REDUCTIONS. Upon two Business Days' written
notice to the Bank, the Borrower may from time to time voluntary permanently
reduce the Revolving Credit Commitment. Each voluntary reduction shall be in a
minimum amount of $200,000 or, if greater than $200,000, in integral multiples
of $100,000.

        (iii)   EFFECT OF REDUCTIONS. The portion of the Revolving Credit
Commitment so terminated pursuant to the preceding item (ii) shall no longer be
available for borrowing and, as of the effective date of any such reduction, the
Commitment Fee shall no longer be payable on the portion so terminated.
Simultaneously with each voluntary permanent reduction, the Borrower shall make
a payment of the outstanding Revolving Credit Loans equal to the excess, if any,
of (A) the aggregate principal amount of the Outstanding Revolving Credit Amount
over (B) the Revolving Credit Commitment, as so reduced. Notice of a reduction,
once given, shall be irrevocable. All such reductions shall be without penalty
or premium (except for amounts owing pursuant to Section 2.2g, if any).

        (iv)    APPLICATION OF REDUCTIONS AND PREPAYMENTS. Any and all
Revolving Credit Commitment reductions or mandatory or voluntary prepayments
made pursuant to any particular item of this Section 2.1f shall be made in
addition to, and not in lieu of, any and all Revolving Credit Commitment
reductions and mandatory and voluntary prepayments to be made pursuant to any
other item of this Section 2.1f. All such mandatory and voluntary prepayments

                                      -30-
<PAGE>
of Revolving Credit Loans shall be accompanied by all accrued and unpaid
interest thereon, all amounts due pursuant to Section 2.2g, if any, and, in the
case of a permanent reduction of the Revolving Credit Commitment to zero, any
accrued and unpaid Commitment Fees and any other outstanding Obligations
relating to the Revolving Credit Commitment which are then due and payable. All
such mandatory and voluntary prepayments shall be applied by the Bank to repay
Base Rate Loans first, and then to repay Euro-Rate Loans.

2.2  INTEREST.

2.2a INTEREST RATE. During the term hereof, the Borrower, in accordance with
the provisions of this Section 2.2, shall have the option of electing from time
to time one or more Interest Rate Options set forth below to be applied by the
Bank to all or a portion of the Loans.

     (i) BASE RATE OPTION. Under the Base Rate Option, the Borrowing Tranches
of the Loans bearing interest as such Option shall bear interest at the Base
Rate plus the Applicable Base Rate Margin. The rate of interest established
pursuant to the preceding sentence of this Section 2.2a(i) for the Loans shall
be adjusted from time to time in accordance with the provisions of Section
2.2b. From and including the Restatement Closing Date, for purposes of this
Agreement, the term ""Applicable Base Rate Margin'' means, with respect to any
Loans outstanding under this Agreement from and including the Restatement
Closing Date, the percentage per annum determined in accordance with the
following table, based on Co-Steel's ratio of Consolidated Total Net Debt to
Normalized Consolidated EBITDA as at the end of the preceding Co-Steel Fiscal
Quarter falls:

<Table>
<Caption>
CONSOLIDATED TOTAL NET DEBT TO NORMALIZED            APPLICABLE BASE RATE
CONSOLIDATED EBITDA RATIO                                   MARGIN
-----------------------------------------            --------------------
<S>                                                           <C>
Less than or equal to 3.0 to 1.0                             1.00%
Greater than 3.0 to 1.0 but less than or equal
to 4.0 to 1.0                                                2.00%
Greater than 4.0 to 1.0 but less than or equal
to 5.0 to 1.0                                                2.75%
Greater than 5.0 to 1.0 but less than or equal
to 7.5 to 1.0                                                3.25%
Greater than 7.5 to 1.0 but less than or equal
to 10.0 to 1.0                                                3.5%
Greater than 10.0 to 1.0                                     4.00%

</Table>

     All adjustments shall be effective as of the date on which Co-Steel's
quarterly financial statements and Co-Steel Compliance Certificates are
delivered to the Bank pursuant to item (vii) of Section 4.2d hereof.
Notwithstanding the foregoing, during the period from the Restatement Closing
Date to and including the first date on which the Borrower delivers to the Bank
the quarterly financial statements and the corresponding Co-Steel Compliance
Certificate

                                      -31-
<PAGE>
required by the Canadian Bank Credit Agreement of Co-Steel pursuant to Section
4.2d(vii) for the Co-Steel Fiscal Quarter ending March 31, 2002, the Applicable
Base Rate Margin on all Loans bearing interest at the Base Rate Option shall be
4.00%.

     (ii)  EURO-RATE OPTION. As of the Restatement Closing Date there are no
outstanding Euro-Rate Interest Periods under the Original Credit Agreement. On
and after the Restatement Closing Date, interest under the Euro-Rate Option
shall accrue, for each Borrowing Tranche outstanding on or after the Restatement
Closing Date and bearing interest at, or selected after, the Restatement Closing
Date to bear interest under the Euro-Rate Option for the Euro-Rate Interest
Period selected for such Borrowing Tranche, at a rate per annum equal to the sum
of (A) the Euro-Rate applicable for such Euro-Rate Interest Period PLUS (B) the
Applicable Euro-Rate Margin as determined below. The rate of interest
established pursuant to the preceding sentence of this Section 2.2a(ii) for each
Euro-Rate Interest Period shall be adjusted from time to time in accordance with
the further provisions of this Section 2.2a(ii) and the provisions of Section
2.2b. From and including the Restatement Closing Date, for purposes of this
Agreement, the term "Applicable Euro-Rate Margin" means, with respect to any
Euro-Rate Loan under this Agreement from and including the Restatement Closing
Date, outstanding under this Agreement form and including the Restatement
Closing Date, the percentage per annum determined in accordance with the
following table, based on Co-Steel's ratio of Consolidated Total Net Debt to
Normalized Consolidated EBITDA as at the end of the preceding Co-Steel Fiscal
Quarter falls:

<Table>
<Caption>
CONSOLIDATED TOTAL NET DEBT TO NORMALIZED                  APPLICABLE EURO-RATE
       CONSOLIDATED EBITDA RATIO                                  MARGIN
-----------------------------------------                  --------------------
<S>                                                        <C>
Less than or equal to 3.0 to 1.0                                   2.00%

Greater than 3.0 to 1.0 but less than or
equal to 4.0 to 1.0                                                3.00%

Greater than 4.0 to 1.0 but less than or
equal to 5.0 to 1.0                                                3.75%

Greater than 5.0 to 1.0 but less than or
equal to 7.5 to 1.0                                                4.25%

Greater than 7.5 to 1.0 but less than or
equal to 10.0 to 1.0                                                4.5%

Greater than 10.0 to 1.0                                           5.00%

</Table>

     All adjustments shall be effective as of the date on which Co-Steel's
quarterly financial statements and Co-Steel Compliance Certificates are
delivered to the Bank pursuant to item (vii) of Section 4.2d hereof.
Notwithstanding the foregoing, during the period from the Restatement Closing
Date to and including the first date on which the Borrower delivers to the Bank
the quarterly financial statements and the corresponding Co-Steel Compliance
Certificate required by the Canadian Bank Credit Agreement of Co-Steel pursuant
to Section 4.2d(vii) for the Co-Steel Fiscal Quarter ending March 31, 2002, the
Applicable Euro-Rate Margin on all Borrowing Tranches bearing interest at the
Euro-Rate Option shall be 5.00%.

                                     - 32 -
<PAGE>
2.2b    ADJUSTMENTS TO INTEREST RATES

        (i)     CHANGES IN PRIME RATE OR FEDERAL FUND EFFECTIVE RATE. The Base
Rate shall be adjusted from time to time, without notice to the Borrower, as
necessary to reflect any changes in the Prime Rate or in Federal Funds
Effective Rate, as applicable, which adjustments shall be automatically
effective on the day of any such change.

        (ii)    CHANGES IN EURO-RATE RESERVE PERCENTAGE. The Euro-Rate Option
shall be adjusted from time to time, without notice to the Borrower, as
necessary to reflect any changes in the Euro-Rate Reserve Percentage, which
adjustments shall be automatically effective on the day of such change.

        (iii)   EVENT OF DEFAULT. Upon the occurrence of and during the
continuance of an Event of Default, the outstanding principal amount of the
Loans shall bear interest from the date of such occurrence at a rate per annum
which is equal to 2% (200 basis points) in excess of the rate or rates which
would then otherwise in effect pursuant to this Section 2.2 with respect to
such Loans.

2.2c    INTEREST PAYMENT DATES. Interest due on all outstanding Base Rate
Borrowing Tranches shall be payable monthly in arrears on the last day of each
month for the period just ended, with the first such payment due after the
Restatement Closing Date on May 31, 2002. Interest due on each outstanding
Borrowing Tranche of the Loans bearing interest under the Euro-Rate Option
shall be payable on the last day of the relevant Euro-Rate Interest Period. All
accrued and unpaid interest on the Loans shall be due and payable on the
Revolving Credit Termination Date and upon acceleration of the Revolving Credit
Note. After any maturity of the Revolving Credit Note or the Obligations,
whether on a scheduled maturity date, by acceleration or otherwise, all accrued
and unpaid interest under the Revolving Credit Note or Obligation shall be due
and payable on demand until all amounts due hereunder are paid in full. Any
Borrowing Tranches outstanding under the Original Credit Agreement shall
continue to exist and shall be governed by the terms hereof. Any accrued and
unpaid interest under the Original Credit Agreement existing on the Restatement
Closing Date shall continue to be due and payable hereunder in accordance with
the terms and conditions hereof, and such interest shall be due and payable on
the Restatement Closing Date.

2.2d    METHOD OF CALCULATION. The interest rate shall be calculated on the
basis of the actual number of days elapsed, using an assumed year of 360 days.
Interest for any period shall be calculated from and including the first day
thereof to but not including the last day thereof.

2.2e    INTEREST RATE OPTION ELECTIONS, RENEWALS AND CONVERSIONS. Subject to
the remaining provisions of this Agreement, the Borrower shall have the option
to elect to have all or any of the Borrowing Tranches bear interest at any of
the Interest Rate Options and shall have the right to renew elections of
Interest Rate Options and convert Borrowing Tranches to other Interest Rate
Options. Notice of the Borrower's election shall be made in accordance with
Section 2.1b. Elections of, conversions to or renewals of the Base Rate Option
shall continue in

                                      -33-

<PAGE>
effect until converted to the Euro-Rate Option. Elections of, conversions to or
renewals of the Euro-Rate Option shall expire as to each such Interest Rate
Option at the expiration of the applicable Euro-Rate Interest Period. Any
Borrowing Tranches outstanding for which no elections have been made shall bear
interest under the Base Rate Option.

2.2f    LIMITATION ON ELECTION OF INTEREST RATE OPTIONS. Each election of the
Euro-Rate Option or the prepayment of all or any Euro-Rate Loans shall be in
the minimum principal amount of $1,000,000 or, if in excess of $1,000,000, in
integral multiples of $500,000. At no time during the term hereof may there be
more than a total of five (5) separate Borrowing Tranches in effect. Upon the
occurrence and during the continuance of an Event of Default, the Borrower's
right to elect, renew or convert to Euro-Rate Loans shall be suspended.

2.2g    SPECIAL PROVISIONS RELATING TO EURO-RATE OPTION.

        (i)    EURO-RATE UNASCERTAINABLE. In the event that on any date on
which a Euro-Rate would otherwise be set the Bank shall have determined in good
faith (which determination shall be final and conclusive) that, by reason of
circumstances affecting the London interbank market, adequate and reasonable
means do not exist for ascertaining the Euro-Rate, the Bank shall give prompt
notice of such determination to the Borrower. Until the Bank notices the
Borrower that the circumstances giving rise to such determination no longer
exist, the right of the Borrower to borrow under, renew or convert to the
Euro-Rate Option shall be treated as a request to borrow under, renew or
convert to the Base Rate Option.

        (ii)   ILLEGALITY OF OFFERING EURO-RATE. If the Bank shall determine in
good faith (which determination shall be final and conclusive) that compliance
by the Bank with any applicable Governmental Rule (whether or not having the
force of law), or the interpretation or application thereof by any Governmental
Authority has made it unlawful for the Bank to make or maintain Euro-Rate
Loans, the Bank shall give notice of such determination to the Borrower.
Notwithstanding any provision of this Agreement to the contrary, unless and
until the Bank shall give notice to the Borrower that the circumstances giving
rise to such determination no longer apply:

               (A)   with respect to any Euro-Rate Interest Periods thereafter
commencing, interest on the corresponding Euro-Rate Loans shall be computed and
payable under the Base Rate Option, and

               (B)   on such date, if any, as shall be required by law, any
Euro-Rate Loans then outstanding shall be automatically renewed at the Base
Rate Option; and the Borrower shall pay to the Bank the accrued and unpaid
interest on such Euro-Rate Loans to (but not including) such renewal date.

     The Borrower shall pay the Bank any additional amounts reasonably
necessary to compensate the Bank for any out-of-pocket costs incurred by the
Bank as a result of any renewal pursuant to item (B) above on a day other than
the last day of the relevant Euro-Rate Interest Period, including, but not
limited to, any interest or fees payable by the Bank to lenders of funds
obtained by it to

                                      -34-
<PAGE>
loan or maintain the Loans so converted. The Bank shall furnish to the Borrower
a certificate showing the calculation of the amount necessary to compensate the
Bank for such costs (which certificate, in the absence of manifest error, shall
be conclusive), and the Borrower shall pay such amount to the Bank, as
additional consideration hereunder, within ten (10) days of the Borrower's
receipt of such certificate.

          (iii)  INABILITY TO OFFER EURO-RATE. In the event that the Bank shall
determine, in its sole discretion, that it is unable to obtain deposits in the
London interbank market in sufficient amounts and with maturities related to the
Euro-Rate Loans which would enable the Bank to fund such Euro-Rate Loans, then
the Bank shall immediately notify the Borrower that the right of the Borrower to
borrow under, convert to or renew the Euro-Rate Option shall be suspended.
Following notification of the suspension of the Euro-Rate Option, the Borrower
agrees to negotiate with the Bank for a modified Euro-Rate which will allow the
Bank to realize its anticipated and bargained for yield. In the event that the
Borrower and the Bank cannot agree on a modified Euro-Rate, any notice of
borrowing under, conversion to or renewal of the Euro-Rate Option which was to
become effective during the period of suspension shall be treated as a request
to borrow under, convert to or renew the Base Rate Option with respect to the
principal amount specified therein.

          (iv)   INDEMNITY. In addition to the other provisions of this Section
2.2g, the Borrower hereby agrees to indemnify the Bank against any loss or
expense which the Bank may sustain or incur as a consequence of any default by
the Borrower in failing to make any borrowing, conversion or renewal hereunder
to bear interest at the Euro-Rate Option on the scheduled date, in failing to
make when due (whether by declaration, acceleration or otherwise) any payment of
any Euro-Rate Loan or in making any payment or prepayment of any Euro-Rate Loan
or any part thereof on any day other than the last day of the relevant Euro-Rate
Interest Period, including but not limited to any loss of profit, premium or
penalty incurred by the Bank in respect of funds borrowed by it for the purpose
of making or maintaining any Euro-Rate Loan as determined in good faith by the
Bank in the exercise of its sole but reasonable discretion. The Bank shall
furnish to the Borrower a certificate showing the calculation of the amount of
any such loss or expense (which certificate, absent manifest error, shall be
conclusive), and the Borrower shall pay such amount to the affected Bank within
ten days of the Borrower's receipt of such certificate.

2.3       YIELD PROTECTION; INDEMNITY.

2.3a      YIELD PROTECTION. If any Governmental Rule or the interpretation or
application thereof by any court or any Governmental Authority charged with the
administration thereof, or the compliance with any guideline or request from any
central bank or other Governmental Authority, whether or not having the force of
law:

          (i)    subjects the Bank to any tax, levy, impost, charge, fee, duty,
deduction or withholding of any kind hereunder (other than any tax imposed or
based upon the income of the Bank and payable to any Governmental Authority or
taxing authority of the United States of America or any state thereof) or
changes the basis of taxation of the Bank with respect to

                                     - 35 -
<PAGE>
payments by the Borrower of principal, interest or other amounts due from the
Borrower hereunder (other than any change which affects, and to the extent that
it affects, the taxation by the United States of America or any state thereof of
the total net income of the Bank), or

     (ii)  imposes, modifies or deems applicable any reserve, special deposit,
special assessment or similar requirements against assets held by, deposits with
or for the account of or credit extended by the Bank, or

     (iii) imposes upon the Bank any other condition with respect to this
Agreement,

and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank, reduce the rate of return on the
Bank's capital or impose any expense upon the Bank by an amount which the Bank
in its sole but reasonable discretion deems to be material, the Bank shall from
time to time notify the Borrower of the amount determined by the Bank (which
determination, absent manifest error, shall be conclusive) to be reasonably
necessary to compensate the Bank (or an after-tax basis) for such increase in
cost, reduction in income, reduction in rate of return or additional expense,
setting forth the calculations therefor, and the Borrower shall pay such amount
to the Bank, as additional consideration hereunder within ten (10) days of the
Borrower's receipt of such notice.

2.3B  METHOD OF CALCULATION. In determining the amount due to the Bank hereunder
by reason of the application of this Section 2.3, the Bank may use any
reasonable averaging or attribution method; PROVIDED, HOWEVER, that the Bank
must use reasonable efforts to minimize such losses and costs.

2.4  CAPITAL ADEQUACY. If (i) any adoption of, change in or interpretation of
any Governmental Rule, or (ii) compliance with any guideline, request or
directive of any central bank or other Governmental Authority or
quasi-Governmental Authority exercising control over banks or financial
institutions generally, including but not limited to regulations set forth as 12
C.F.R. Part 3 (Appendix A), 12 C.F.R. Part 208 (Appendix A), 12 C.F.R. Part 225
(Appendix A) and 12 C.F.R. Part 325 (Appendix A) or any court requires that the
commitments of the Bank hereunder be treated as an asset or otherwise be
included for purposes of calculating the appropriate amount of capital to be
maintained by the Bank or any corporation controlling the Bank (a "CAPITAL
ADEQUACY EVENT"), the result of which is to reduce the rate of return on the
Bank's capital as a consequence of such commitments to a level below that which
the Bank could have achieved but for such Capital Adequacy Event, taking into
consideration the Bank's policies with respect to capital adequacy, by an amount
which the Bank reasonably deems to be material, the Bank shall promptly deliver
to the Borrower a statement of the amount necessary to compensate the Bank for
the reduction in the rate of return on its capital attributable to such
commitments (the "CAPITAL COMPENSATION AMOUNT"). The Bank shall determine the
Capital Compensation Amount in good faith, using reasonable attribution and
averaging methods. The Bank shall from time to time notify the Borrower of the
amount so determined (which determination, absent manifest error, shall be
conclusive). Such amount shall be due and payable by the Borrower to the Bank
ten (10) Business Days after such notice is given.

                                     - 36 -

<PAGE>
2.5      PAYMENTS.

2.5a     PLACE AND MANNER OF PAYMENTS. All payments of principal, interest,
fees, costs and other amounts due hereunder and under the other Loan Documents
shall be made by the Borrower to the Bank at the Bank's principal office at One
PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, Attention:
Capital Recoveries, not later than 12:00 Noon (Eastern time) on the due date.
All such payments with respect to the Loans shall be immediately good funds when
delivered by the Borrower to the Bank.

2.5b     NO SET-OFF OR DEDUCTIONS. Any and all payments made by the Borrower
hereunder shall be made to the Bank in full, without set-off or counterclaim and
free and clear of and without deduction or withholding for, or on account of,
any and all present and future Taxes. If the Borrower is required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
(i) the sum payable shall be increased, as may  be necessary, so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) the Bank
receives an amount equal to the sum that it would have received had no
deductions or withholdings been made, (ii) the Borrower shall make the required
deductions or withholdings, and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance with any
applicable Governmental Rule. The Bank agrees either to repay or credit at
Bank's discretion to the Borrower any refund or tax credit actually received by,
or for the benefit of, the Bank for tax amounts paid by the Borrower pursuant to
this Section.

2.5c     TAX INDEMNITY. The Borrower shall indemnify the Bank for the full
amount of any Taxes (other than Excluded Taxes) imposed by any jurisdiction on
amounts payable by the Borrower under this Section paid or payable by the Bank
and for any liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted, and for any Taxes (other than Excluded Taxes)
levied or imposed with respect to any indemnity payment made under this Section.
This indemnification shall be made within 30 days after the date the Bank makes
written demand therefor.

2.5d     EVIDENCE OF PAYMENT. Within 30 days after the date of any payment of
Taxes withheld by the Borrower in respect of any payment by the Borrower to the
Bank, the Borrower shall furnish to the Bank the original or a certified copy of
a receipt issued by the relevant taxing authority evidencing payment by the
Borrower to the taxing authority of any Taxes (other than Excluded Taxes) with
respect to any payment payable to the Bank.

2.5e     SURVIVAL. The obligation of the Borrower under this Section shall
survive the termination of this Agreement and the payment of all amounts payable
under this Agreement.

2.6      LOAN ACCOUNT. The Bank shall open and maintain on its books a Loan
Account in the Borrower's name with respect to Loans made, repayments,
prepayments, the computation and payment of interest and other amounts due and
sums paid to the Bank hereunder and under the other Loan Documents. Such Loan
Account shall be conclusive and binding on the Borrower

                                     - 37 -

<PAGE>
as to the amount at any time due to the Bank from the Borrower except in the
case of manifest error in computation.

2.7     FEES.

2.7a    LETTER OF CREDIT FEES. The Borrower shall pay all Letter of Credit Fees
in accordance with the terms of the relevant Application for Letter of Credit
or the Reimbursement Agreement, or Section 2.9 hereof as the case may be. Any
accrued and unpaid Letter of Credit Fees under the Original Credit Agreement
existing on the Restatement Closing Date shall continue to be due and payable
hereunder in accordance with the terms and conditions hereof.

2.7b    COMMITMENT FEE. The Borrower shall, on and after the Restatement
Closing Date, pay to the Bank, on the last day of each March, June, September
and December during the term of the Revolving Credit Commitment, on the
Revolving Credit Termination Date and upon the termination of the Revolving
Credit Commitment, a Commitment Fee calculated on the basis of the actual
number of days elapsed, using a year of 360 days, at the Applicable Commitment
Fee Rate per annum on the average daily (computed at the opening of business)
unused amount of the Revolving Credit Commitment (i.e., the Revolving Credit
Commitment less the Outstanding Revolving Credit Amount). The first payment of
the Commitment Fee under this Agreement after the Restatement Closing Date
shall be due on June 30, 2002. From and including the Restatement Closing Date,
for purposes of this Agreement, the term "Applicable Commitment Fee Rate''
means the percentage per annum determined in accordance with the following
table, based on Co-Steel's ratio of Consolidated Total Net Debt to Normalized
Consolidated EBITDA as at the end of the preceding Co-Steel Fiscal Quarter
falls:

<Table>
<Caption>

CONSOLIDATED TOTAL NET DEBT TO NORMALIZED                          APPLICABLE
      CONSOLIDATED EBITDA RATIO                                COMMITMENT FEE RATE
-----------------------------------------                      --------------------
<S>                                                           <C>
Less than or equal to 3.0 to 1.0                                      .75%

Greater than 3.0 to 1.0 but less than or equal to 4.0 to 1.0         1.10%

Greater than 4.0 to 1.0 but less than or equal to 5.0 to 1.0         1.40%

Greater than 5.0 to 1.0 but less than or equal to 7.5 to 1.0         1.65%

Greater than 7.5 to 1.0 but less than or equal to 10.0 to 1.0        1.80%

Greater than 10.0 to 1.0                                             2.00%

</Table>

     All adjustments shall be effective as of the date on which Co-Steel's
quarterly financial statements and Co-Steel Compliance Certificates are
delivered to the Bank pursuant to item (vii) of Section 4.2d hereof.
Notwithstanding the foregoing, during the period from the Restatement Closing
Date to and including the first date on which the Borrower delivers to the

                                      -38-

<PAGE>
Bank the quarterly financial statements and the corresponding Co-Steel
Compliance Certificate required by the Canadian Bank Credit Agreement of
Co-Steel pursuant to Section 4.2d(vii) for the Co-Steel Fiscal Quarter ending
March 31, 2002, the Applicable Commitment Fee Rate shall be 2.00%. Any accrued
and unpaid Commitment Fees (as defined in the Original Credit Agreement) under
the Original Credit Agreement existing on the Restatement Closing Date shall be
due and payable on the Restatement Closing Date.

2.7c RESTRUCTURING FEE. The Borrower shall pay to the Bank (i) a fee of
US$80,969.29 payable on the Restatement Closing Date (the "Restatement Closing
Date Fee"), and (ii) a further fee of US$40,484.65 payable on August 30, 2002
(the "Subsequent Closing Fee"; and the Restatement Closing Date Fee and the
Subsequent Closing Fee are herein referred to collectively as, the
"Restructuring Fee").

2.8  PAYMENT FROM ACCOUNTS MAINTAINED BORROWER. In the event that any payment
of principal, interest, Commitment Fee, Letter of Credit Fee, other Fee or
expense or any other amount due the Bank under any of the Loan Documents is not
paid when due, the Bank is hereby authorized to effect such payment by debiting
any deposit account of the Borrower now or in the future maintained with the
Bank by the Borrower. This right of debiting accounts of the Borrower is in
addition to any right of setoff accorded the Bank hereunder or by operation of
law.

2.9  LETTER OF CREDIT SUBFACILITY.

     (a)  As of the Restatement Closing Date, each of the letters of credit
issued by the Bank and outstanding on such date for the account of the Borrower,
whether pursuant to the terms of the Original Credit Agreement or otherwise, and
identified on Schedule 2.9(a) shall be deemed to be Letters of Credit issued
hereunder and shall be subject to all of the terms and provisions of this
Agreement. The Borrower is hereby deemed to be account party hereunder with
respect to each letter of credit listed on Schedule 2.9(a) for all purposes
thereunder and hereunder. With respect to each such outstanding letter of
credit, for the period commencing on the Restatement Closing Date, the Borrower
shall pay all fees and commissions set forth in this Agreement at the times and
in the manner herein set forth. The obligations of the Borrower under each
application for letter of credit and reimbursement agreement (together with any
related amendments) executed by the Borrower with respect to the letters of
credit shown on Schedule 2.9(a) are hereby expressly assumed, ratified and
confirmed by the Borrower and each such application for letter of credit and
reimbursement agreement, as amended, is hereby deemed an Application for Letter
of Credit hereunder. The existing reimbursement agreement shall be superseded in
their entirety hereby which shall apply to existing letters of credit set forth
on Schedule 2.9(a) as well as all Letters of Credit issued, amended or extended
hereunder on and after the date hereof. The parties hereto acknowledge that one
or more of the Letters of Credit on Schedule 2.9(a) were issued in Cdn. Dollars
and currency fluctuations in the U.S. Dollar equivalents for such Letters of
Credit may give rise to payments of Excess Amounts from time to time pursuant to
Section 2.12.

     (b)  At the request of the Borrower, the Bank will issue one or more
extensions of the Letters of Credit identified on Schedule 2.9(a); provided,
however, no Letter of Credit

                                     - 39 -
<PAGE>
shall have an expiry date later than the earlier of one (1) year from the
date of issuance or fifteen (15) days prior to the Revolving Credit Termination
Date, unless in connection with a request for an extension of a Letter of Credit
with a proposed expiration date after the Revolving Credit Termination Date the
Borrower shall offer to the Bank, and shall provide if such offer is accepted,
cash collateral in an amount equal to 105% of the face amount of such extended
Letter of Credit, and the Bank agrees in its sole discretion to accept such cash
collateral, and the Borrower delivers such cash collateral to the Bank prior to
the Bank's issuance of such extension of the applicable Letter of Credit; and
provided, further, however, that in no event shall (i) the Stated Amount of the
Letters of Credit issued or deemed issued pursuant to this Section 2.9 exceed,
at the time of any issuance, $3,000,000, or (ii) the sum of aggregate
outstanding principal balance of the Revolving Credit Loans, the aggregate
unpaid balance of any Unreimbursed Letter of Credit Draws and the aggregate
Stated Amount of the Letters of Credit exceed, at any one time, the Revolving
Credit Commitment.

     (c)   The Borrower acknowledges that the Letter of Credit Fee (as defined
in the Original Credit Agreement) is currently accruing at a rate of 3.75% per
annum as calculated below. The Borrower shall pay to the Bank a fee (the
"LETTER OF CREDIT FEE") equal to Applicable Letter of Credit Fee Rate per
annum, all as determined below, on the aggregate daily (computed at the opening
of business and on the basis of an assumed year of 360 and actual days elapsed)
Stated Amount of the outstanding Letters of Credit for the period in question.
The Letter of Credit Fee shall be payable (i) quarterly in arrears on the last
Business Day of each Fiscal Quarter occurring during the term of this Agreement
thereafter, (ii) on the Revolving Credit Termination Date of (iii) upon
acceleration of the Revolving Credit Note. Any issuance of an amendment to
extend the stated expiration date of a Letter of Credit or an amendment to
increase the Stated Amount of a Letter of Credit shall be treated as an
issuance of a new Letter of Credit for purposes of calculation of Letter of
Credit Fee due and payable hereunder. The Borrower shall also pay to the Bank,
the Bank's customary documentation fees payable with respect to the Letters of
Credit as the Bank may generally charge from time to time. After the
occurrence of an Event of Default (which continues after the expiration of any
cure period applicable thereto) and during the continuation thereof, the rate
at which the Letter of Credit Fee is calculated shall be increased by two
hundred (200) basis points (2%) above the pre-default rate; the increase to be
payable monthly during the continuation of the Event of Default, regardless of
whether or not judgment has been entered with respect to such Event of Default.
From and including the Restatement Closing Date, for purposes of this
Agreement, the term "Applicable Letter of Credit Rate" means, with respect to
any Letters of Credit outstanding under this Agreement from and including the
Restatement Closing Date, the percentage per annum determinated in accordance
with the following table, based on Co-Steel's ratio of Consolidated. Total Net
Debt to Normalized Consolidated EBITDA as at the end of the preceding Co-Steel
Fiscal Quarter falls:

                                      -40-
<PAGE>

CONSOLIDATED TOTAL NET DEBT TO NORMALIZED              APPLICABLE LETTER OF
       CONSOLIDATED EBITDA RATIO                         CREDIT FEE RATE
-----------------------------------------              --------------------

Less than or equal to 3.0 to 1.0                               2.00%

Greater than 3.0 to 1.0 but less than or                       3.00%
equal to 4.0 to 1.0

Greater than 4.0 to 1.0 but less than or                       3.75%
equal to 5.0 to 1.0

Greater than 5.0 to 1.0 but less than or                       4.25%
equal to 7.5 to 1.0

Greater than 7.5 to 1.0 but less than or                        4.5%
equal to 10.0 to 1.0

Greater than 10.0 to 1.0                                       5.00%

     All adjustments shall be effective as of the date on which Co-Steel's
quarterly financial statements and Co-Steel Compliance Certificates are
delivered to the Bank pursuant to item (vii) of Section 4.2d hereof.
Notwithstanding the foregoing, during the period from the Restatements Closing
Date to and including the first date on which the Borrower delivers to the Bank
the quarterly financial statements and the corresponding Co-Steel Compliance
Certificate required by the Canadian Bank Credit Agreement of Co-Steel pursuant
to Section 4.2d(vii) for the Co-Steel Fiscal Quarter ending March 31, 2002, the
Applicable Letter of Credit Fee Rate shall be 5.00%. Any accrued and unpaid
Letter of Credit Fees (as defined in the Original Credit Agreement) outstanding
on the Restatement Closing Date under the Original Credit Agreement shall be due
and payable on the Restatement Closing Date.

     (d) Prior to the date on which the Borrower desires the Bank to issue the
initial amendment or extension of a letter of Credit hereunder, the Borrower
shall execute and deliver to the Bank such application for amendment or
extension of Letter of Credit or such Reimbursement Agreement as the Bank shall
request. Thereafter, each time the Borrower desires the Bank to issue an
amendment or extension of a Letter of Credit, the Borrower shall deliver a duly
completed Application for Letter of Credit to the Bank no later than 11:00 A.M.
(Pittsburgh, Pennsylvania time) at least three (3) Business Days, in advance of
the proposed date of issuance of an amendment or extension to Letter of Credit.
Upon satisfaction of the conditions set forth in Section 6.1 and, if applicable,
Section 6.2, the Bank shall issue the amendment or extension of a Letter of
Credit. In determining whether to pay under a Letter of Credit, the Bank shall
be responsible only to determine that the documents and certificates required to
be delivered under the Letter of Credit have been delivered and that they comply
on their face with the requirements of the Letter of Credit.

     (e) In the event of any request for drawing under a Letter of Credit by the
beneficiary thereof, the Bank shall immediately notify the Borrower, and the
Borrower shall reimburse the Bank on demand in an amount in same day funds equal
to the amount of such drawing, provided, however, that anything contained in
this Agreement to the contrary

                                     - 41 -

<PAGE>
notwithstanding, unless the Borrower shall have notified the Bank prior to such
time that the Borrower intends to reimburse the Bank for all or a portion of the
amount of such drawing with funds other than the proceeds of Revolving Credit
Loans, the Borrower shall be deemed to have given a loan request to the Bank
requesting the Bank to make Revolving Credit Loans on the first Business Day
immediately following the date on which such drawing is honored in an aggregate
amount equal to the excess of the amount of such drawing over the amount
received by the Bank from such other funds in reimbursement thereof (the
"Unreimbursed Letter of Credit Draw"), plus accrued interest on such amount. The
proceeds of any such Revolving Credit Loans shall be applied directly by the
Bank upon receipt from the Bank to reimburse the Bank for the Unreimbursed
Letter of Credit Draw plus accrued interest on such amount. The foregoing shall
not limit or impair the obligation of the Borrower to reimburse the Bank on
demand. The Borrower acknowledges with respect to any Letters of Credit issued
in Cdn. Dollars upon the presentation of any draft related thereto the Borrower
is obligated to reimburse in full the Bank in U.S. Dollars for the sums
necessary for the Bank to purchase Cdn. dollars equal to such drawing honored
plus the cost of any such currency conversion.

2.9f      LETTERS OF CREDIT OUTSTANDING UPON DEFAULT. If any Letter of Credit is
outstanding upon the occurrence of a Default or upon a demand for payment under
the Revolving Facility, the Borrower shall forthwith pay to the Bank an amount
(the "LC Deposit Amount") equal to 105% of the undrawn principal amount of each
outstanding Letter of Credit, which LC Deposit Amount shall be held by the Bank
in an interest bearing account for application against the Indebtedness owing by
the Borrower to the Bank in respect of any draw on any outstanding Letter of
Credit. In the event that the Bank is not called upon to make full payment on
the outstanding Letter of Credit prior to its expiry date, the LC Deposit
Amount, or any part thereof as has not been paid out, together with accrued
interest, shall be applied first to any other amounts payable pursuant to this
Agreement and any amount remaining shall be returned to the Borrower.

2.10      EVENTS REQUIRING MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENT.
The Borrower shall prepay the Credit Facility (in each case subject to the
agreed distribution set forth in the Intercreditor Agreement) by an amount equal
to the PNC Raritan Portion of:

          (i)    the Net Cash Proceeds received by Co-Steel or any member of the
     Restricted Group from time to time under the Asset Monetization Program;

          (ii)   the Net Cash Proceeds received by Co-Steel or any member of the
     Restricted Group from time to time from Approved Asset Sales or any other
     sale of assets in excess of Cdn.$1,000,000 (or its US Dollar equivalent)
     from any one transaction or series of transactions or in excess of
     Cdn.$5,000,000 (or its US Dollar equivalent) in the aggregate per annum;

          (iii)  the Net Cash Proceeds received by Co-Steel or any member of the
     Restricted Group from any offering by any such entity of debt or equity
     securities that is not a Significant Share Offering;

                                     - 42 -

<PAGE>
          (iv)     two-thirds of the Net Cash Proceeds received by Co-Steel from
     a Significant Share Offering (including without limitation the March 2002
     Significant Share Offering);

          (v)      100% of Co-Steel's share of cash or other property received
     from Gallatin;

          (vi)     100% of all Settlement Amounts received by Co-Steel or any
     member of the Restricted Group;

          (vii)    all Insurance Proceeds received, or deemed received, by a
     Loan Party which are required to be paid to a Security Agent pursuant to
     the terms of Section 10.01(18) of the Canadian Bank Credit; and

          (viii)   the amount of any Excess Revolver Paydown.

For greater certainty any transaction in accordance with Section 10.01(11) of
the Canadian Bank Credit Agreement as incorporated into Section 4.01 of the
Co-Steel Guaranty Agreement or Section 6.4c hereof shall not result in
prepayment obligations hereunder.

          All Insurance Proceeds paid directly to a Security Agent by an insurer
that constitute a prepayment in accordance with the terms of the Intercreditor
Agreement shall be deemed received by the applicable Loan Party and shall give
rise a prepayment hereunder pursuant to clause (vii) of this Section 2.10 upon
receipt by such Security Agent. All prepayments required pursuant to items (i)
through (vii) of this Section 2.10 shall be made within five Business Days of
receipt of such funds by Co-Steel; the prepayment required pursuant to item
(viii) of this Section 2.10 shall be made within five Business Days following
the end of each fiscal quarter of Co-Steel. All such prepayments under this
Section 2.10 shall be paid by the Borrower to the Managing Security Agent. Once
so received by the Managing Security Agent the Borrower shall have discharged
its obligations with respect hereto. All such prepayments pursuant to this
Section 2.10 shall permanently reduce the Revolving Credit Commitment by the
amount of any such prepayment. All such prepayments shall be applied to repay
outstanding Revolving Credit Loans and then to cash collateralize any
outstanding Letters of Credit. Schedule 2.10(iv) attached hereto sets for the
amount of the PNC Raritan Portion of the March 2002 Significant Share Offering
and the revised Revolving Credit Commitment after the payment of the PNC Raritan
Portion of the March 2002 Significant Share Offering on the Restatement Closing
Date.

          The Borrower shall deliver to the Managing Security Agent and the Bank
a Specified Transaction Certificate (as defined in the Canadian Bank Credit
Agreement) in connection with each prepayment required by this Section 2.10. The
Borrower shall specify, pursuant to the Specified Transaction Certificate, the
Loans (including Euro-Rate Loans) against which to apply such prepayment. For
greater certainty, the Borrower shall not deduct any cost of converting from one
currency to another from a prepayment hereunder and conversion from one currency
to another shall be calculated as required by Section 3.03 of the Canadian Bank
Credit Agreement. All prepayments to be made by the Borrower under Section 2.10
shall be made in

                                     - 43 -

<PAGE>
immediately available funds and received by the Managing Security Agent before
12:00 p.m. (Pittsburgh, Pennsylvania time) on the date due. Prepayments
received after that time shall be deemed to have been received on the next
Business Day. Whenever any prepayment under this Section 2.10 is due on a day
which is not a Business Day, the due date shall be extended to the next
succeeding Business Day unless that Business Day falls in the next calendar
month in which event the due date shall be the immediately preceding Business
Day. During any extension of the date due for payment of any amount payable
under this Section 2.10, interest shall be payable on unpaid amounts at the
rate or rates borne by those amounts.

2.11    LATE PAYMENT. If any payment required to be made by the Borrower
hereunder is not made on the due date thereof, the Borrower shall pay interest
on the amount of such required payment at the Default Rate for any Base Rate
Loans (whether or not a Base Rate Loan exists) until payment in full of such
required payment has been made.

2.12    EXCESS AMOUNT. If at the time there exists an Excess Amount in respect
of the Credit Facility whether as a result of currency fluctuations or
otherwise, the Borrower shall pay to the Bank upon demand by the Bank the
amount of the Excess Amount together with any break funding costs incurred by
the Bank as a result of the payment. In the absence of the occurrence of a
Default or an Event of Default, the Bank agrees to settle prepayments of Excess
Amounts arising from currency fluctuations monthly as of the last day of the
month occurring during the term thereof commencing with April 30, 2002; and the
Borrower will pay any such Excess Amount arising from currency fluctuations
within two Business Days of any notice from the Bank to the Borrower of such
Excess Amount.

ARTICLES 3. REPRESENTATIONS AND WARRANTIES

     To induce the Bank to amend and restate the Original Credit Agreement and
to enter into this Agreement and to make, and to continue, the Loans and the
other extensions of credit herein provided for, the Borrower makes the
following representations and warranties to the Bank:

3.1     EXISTENCE. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and the
Borrower is duly qualified or licensed and in good standing as a foreign
corporation authorized to do business in each jurisdiction where the nature of
its activities or the ownership of its properties makes such qualification or
licensing necessary.

3.2     CAPITALIZATION; OWNERSHIP; TITLE TO SHARES. The authorized capital
stock of the Borrower consists of 1,000 shares of common stock, of which 100
shares of common stock are issued and outstanding. All of the issued and
outstanding shares of capital stock of the Borrower are fully paid and
nonassessable and through Subsidiaries, are beneficially owned by Co-Steel.
There are no options, warrants or other rights outstanding to purchase any
shares of the Borrower, nor are any securities of the Borrower convertible into
or exchangeable for its capital

                                      -44-
<PAGE>
stock. None of the capital stock of the Borrower is listed for trading on a
stock exchange or registered with a securities commission.

3.3  SUBSIDIARIES AND OTHER INVESTMENTS. The Borrower has no Subsidiaries
except Raritan River, and it has no other ownership interests in any other
Person.

3.4  POWER AND AUTHORITY. The Borrower has the lawful power to own or lease its
properties and to engage in the business it now conducts or proposes to conduct.
The Borrower is duly authorized to enter into, execute, deliver and perform all
of the terms and provisions of this Agreement, the Revolving Credit Note and the
other Loan Documents to which it is a party, to incur the Obligations and to
perform its obligations under the Loan Documents to which it is a party. All
necessary corporate action required to authorize the execution, delivery and
performance of this Agreement, the Revolving Credit Note and the other Loan
Documents has been properly taken by the Borrower.

3.5  VALIDITY AND BINDING EFFECT. This Agreement has been and each other Loan
Document will be, duly executed and delivered by the Borrower. This Agreement
and the other Loan Documents, when delivered by the Borrower pursuant to the
provisions hereof, will constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and except as such enforceability may
be limited by the availability of equitable remedies.

3.6  NO CONFLICT. The execution and delivery of this Agreement and the other
Loan Documents by the Borrower and the consummation of the transactions herein
or therein contemplated or compliance with the terms and provisions hereof or
thereof by it will not conflict with, constitute a default under or result in
any breach of (i) the terms and conditions of the Borrower's certificate of
incorporation, by-laws, other organizational documents, (ii) any Governmental
Rule or (iii) any material agreement, instrument, order, writ, judgment,
injunction or decree to which the Borrower is a party or by which it is bound or
to which it is subject, or will result in the creation of any Encumbrance
whatsoever upon any property, whether now owned or hereafter acquired, of the
Borrower, except for Permitted Liens.

3.7  FINANCIAL MATTERS.

     (i)  The Borrower has delivered to the Bank a Consolidated balance sheet
dated as of March 31, 2002, and related Consolidated financial statements as of
such date.

     (ii)  The annual unaudited Consolidated financial statements of the
Borrower for the fiscal year most recently ended, furnished to the Bank are the
most recent annual audited financial statements of the Borrower and its
Subsidiaries. The Borrower'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 Borrower's unaudited financial statements (a) present
fairly in all material respects its and its

                                     - 45 -
<PAGE>
Subsidiaries' financial position and its results of operations at the dates
thereof and for the periods covered therein, and (b) disclose all liabilities
of it 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.

3.8  MATERIAL ADVERSE CHANGE: Since December 31, 2001, no Material Adverse
Change has occurred, except as set forth on SCHEDULE 3.8 attached hereto and
incorporated herein by reference.

3.9  SOLVENCY. On the Restatement Closing Date, and on each date of a
disbursement of a Loan, or the issuance, renewal or extension of a Letter of
Credit, the Borrower is, or will be, Solvent.

3.10 LITIGATION. Except as disclosed in Schedule 3.10, there are no actions,
suits, proceedings or investigations pending or, to the Borrower's knowledge,
threatened against the Borrower's business, operations, properties, prospects,
profits or condition (financial or otherwise), at law or in equity, before any
Governmental Authority, court or arbitrator which, individually or in the
aggregate, if adversely determined, could reasonably be expected to cause a
Material Adverse Change or which purport to affect the rights and remedies of
the Bank pursuant to this Agreement and the other Loan Documents or which
purport to restrain or enjoin (either temporarily, preliminary or permanently)
the performance by the Borrower of any action contemplated by any of the Loan
Documents. The Borrower is not in default with respect to any judgment, order
writ, injunction, decree, award, rule, or regulation of any court, arbitrator or
Governmental Authority, domestic or foreign.

3.11 COMPLIANCE WITH LAWS AND REGULATIONS. The Borrower has duly complied in all
material respects with, and all of its properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
its articles of incorporation, its by-laws and all Governmental Rules applicable
to Borrower, its properties and the conduct of its business. The Borrower is not
in material violation of any Governmental Rule. The Borrower has obtained and
maintained in good standing all licences, permits and approvals from any and all
Governmental Authorities required in respect of its operations such that a
failure to hold such licenses, permits and approvals would constitute a Material
Adverse Change.

3.12 LABOR MATTERS. Except as disclosed in Schedule 3.12, the Borrower is not a
party to any labor contract or collective bargaining agreement, and there are no
strikes, work stoppages, material grievances, disputes or controversies with any
union or any other organization of the Borrower's employees, or threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization. Neither the Borrower nor New Jersey
Steel Corporation has, within the two-year period preceding either the Original
A&R Closing Date or the Restatement Closing Date, taken any action which would
have constituted or resulted in a "plant closing" or "mass layoff" within
the meaning of the Federal Worker Adjustment and Retraining Notification Act of
1988 or any similar applicable Federal, state or local law. The procedures by
which the Borrower has hired or will hire its employees

                                        - 46 -
<PAGE>
have complied and will comply in all respects with each collective bargaining
agreement to which the Borrower is a party and all applicable Governmental
Rules.

3.13    TITLE TO PROPERTIES.

        (i)     The Borrower does not, nor does any of its Subsidiaries, own any
real property or have any interest in any real property other than the Owned
Properties. SCHEDULE 1.1-4) correctly sets out the name of the fee owner of the
Owned Properties and the municipal address of each Owned Property. 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 New
Jersey Properties comprise all of the Owned Properties that in the reasonable
good faith estimate of the Borrower have a value individually in excess of
Cdn.$5,000,000.00 (or its US Dollar equivalent).

        (ii)    The Borrower is not, nor is any of its 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 are accurately described in SCHEDULE 1.1-1.
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 it nor any of its Subsidiaries, as applicable, is in default
of any of its obligations under the leases for any of the Leased Properties.

        (iii)   The Borrower has good and indefeasible title to, or valid
leasehold interests in, all properties and assets purported to be owned or
leased by the Borrower, and none of such properties and assets is subject to
any Encumbrance, except for Permitted Liens in existence on the Restatement
Closing Date.

        (iv)    All permits, licenses and authorizations required to have been
issued or appropriate to enable all real property owned or leased by the
Borrower to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full
force and effect, other than those which in the aggregate are not material.

        (v)     The Borrower has not received any notice, or has any knowledge,
of any pending, threatened or contemplated condemnation proceeding affecting
any real property owned or leased by the Borrower or any part thereof except
those which, in the aggregate, are not material.

3.14    TAX RETURNS AND PAYMENTS. The Borrower has filed all Federal, state,
local and other tax returns required by law to be filed. The Borrower has paid
all taxes, assessments and other governmental charges levied upon the Borrower
or any of its properties, assets, income or franchises which are due and
payable, other than (i) those presently payable without penalty or interest,
(ii) those which are being contested in good faith by appropriate proceedings
which are

                                      -47-
<PAGE>

being diligently conducted and (iii) those which, if not paid, would not, in the
aggregate, result in a Material Adverse Change and as to each of items (i), (ii)
and (iii) the Borrower has set aside on its books reserves for such taxes,
assessments or other governmental charges as are determined to be adequate by
application of GAAP consistently applied. The charges, accruals, and reserves on
the books of the Borrower in respect of Federal, state and local taxes for all
fiscal periods to date are adequate, and the Borrower knows of no unpaid
assessments for additional Federal, state, local or other taxes which are now
due and payable for any such fiscal period for any basis therefor.

3.15  INTELLECTUAL PROPERTY. The Borrower is the registered (if registration is
possible) and beneficial owner or licensee of, with good and marketable title
to, all patents, patent applications, trade marks, trade mark applications,
trade names, service marks, copyrights, industrial designs, inventions,
technology and other rights with respect to the foregoing and other similar
property which are material to its business, free of all licenses, franchises
and Encumbrances and without any conflict with the rights of any other Person.
All patents, trademarks, trade names, service marks, copyrights, industrial
designs, inventions, technology and other similar rights owned by it, 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 which
are material to its business are accurately described in Schedule 3.15, as
amended by written notice by it to the Bank from time to time (collectively, the
"Intellectual Property Rights"). It has the right to use the Intellectual
Property Rights, all applications and registrations in Canada, the United States
and elsewhere for 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.

3.16  INSURANCE. The Borrower currently maintains insurance which meets or
exceeds the requirements of Section 4.7 hereof and the applicable insurance
requirements set forth in the other Loan Documents, and such insurance is
provided by reputable and financially sound insurers and is of such types and at
least in such amounts as are customarily carried by, and insures against such
risks as are customarily insured against by similar businesses similarly
situated and owning, leasing and operating similar properties to those owned,
leased and operated by the Borrower. All of such insurance policies are valid
and in full force and effect. No notice has been given or claim made, and, to
the Borrower's knowledge, no grounds exist to cancel or avoid any of such
policies or to reduce the coverage provided thereby.

3.17  CONSENTS AND APPROVALS. No order, authorization, consent, license,
validation or approval of, or notice to, filing, recording, or registration with
any Governmental Authority or any other Person, or the exemption by any such
Governmental Authority or any other Person, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of any
of the Loan Documents or (ii) the legality, binding effect or enforceability of
any such Loan Document.

3.18  PLANS AND BENEFIT ARRANGEMENTS. (i) Neither the Borrower nor any ERISA
Affiliate has made any promises of retirement or other benefits to employees or
former employees (A) except as set forth in any Plan or Benefit Arrangement, (B)
except for such

                                     - 48 -

<PAGE>
promises under unfunded plans maintained primarily for the purpose of providing
deferred compensation for a select group of management of highly compensated
employees, which in the aggregate are not material in amount of (C) except for
any other promises which in the aggregate are not material in amount.

        (ii)    Each Plan and Benefit Arrangement has been maintained and
administered in all material respects in compliance with ERISA and the Internal
Revenue Code and all rules, orders and regulations issued thereunder.

        (iii)   The Internal Revenue Service has determined that each Plan and
Benefit Arrangement which constitutes an employee pension benefit plan as
defined in Section 3(2) of ERISA and which is intended to qualify under Section
401(a) of the Internal Revenue Code so qualifies under Section 401(a) of the
Internal Revenue Code, and that the trusts related thereto are exempt from tax
under the provisions of Section 501(a) of the Internal Revenue Code. Nothing
has occurred with respect to any such Plan or Benefit Arrangement or to the
related trusts since the date of the most recent favorable determination letter
issued by the Internal Revenue Service which has affected or may reasonably be
expected to affect adversely such qualification or exemption.

        (iv)    The Borrower and each ERISA Affiliate have complied fully in
all material respects with their respective obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and Money Purchase Plan. Neither the Borrower nor any ERISA Affiliate has
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code or has applied for an extension of any amortization
period under Section 412 of the Code with respect to any Plan or Money Purchase
Plan. Neither the Borrower nor any ERISA Affiliate has failed to make any
contribution or payment to any Plan which has resulted or may reasonably be
expected to result in the imposition of an Encumbrance under ERISA or the
Internal Revenue Code against the property or rights to property of the
Borrower or any ERISA Affiliate.

        (v)     No Unfunded Benefit Liabilities exist with respect to any
Plans, and no Unfunded Benefit Liabilities would exist with respect to any Plan
if such Plan were terminated immediately.

        (vi)    No Reportable Event (other than a Reportable Event described in
Section 4043(b) of ERISA or in PBGC Regulation Section 2615.23) has occurred
with respect to any Plan.

        (vii)   No Termination Event has occurred or is reasonably anticipated
to occur with respect to any Plan which has resulted in or which will result in
the incurrence by the Borrower or any ERISA Affiliate of any liability to the
PBGC under Title IV of ERISA which has not been discharged or satisfied. No
such Termination Event is reasonably anticipated to occur which will result in
an Encumbrance in favor of the PBGC against the property or rights to property
of the Borrower or any ERISA Affiliate.

                                      - 49 -
<PAGE>
          (viii)    Neither the Borrower nor any ERISA Affiliate which is a
"party in interest" (as that term is defined in Section 3(14) of ERISA) or a
"disqualified person" (as that term is defined in Section 4975 of the Internal
Revenue Code) with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA), has engaged in a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue Code) involving any such
employee benefit plan which will subject the Borrower of such ERISA Affiliate to
the tax or penalty imposed under Section 502(i) of ERISA and Section 4975 of the
Internal Revenue Code.

          (ix)      Neither the Borrower nor any ERISA Affiliate currently
contributes to, or is obligated to contribute to, or is a member of, any
Multiemployer Plan. Neither the Borrower nor any ERISA Affiliate has incurred,
or is reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan.

          (x)       The Borrower and each ERISA Affiliate has complied in all
material respects with all requirements of Sections 10001 and 10002 of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law No. 99-272);
Title I, Subtitle B, Part 6 of ERISA; and Section 4980B of the Internal Revenue
Code.

          (xi)      Neither the Borrower nor any ERISA Affiliate has entered
into any transaction described in Section 4069(a) of ERISA.

          (xii)     No Benefit Arrangement provides postretirement welfare
benefits of any type which will have a material adverse effect on the financial
condition of the Borrower and the ERISA Affiliates taken as a whole and which
will be required to be accounted for in the income statement, balance sheet and
footnotes of the financial report of the Borrower or any ERISA Affiliate in the
manner described in the Financial Accounting Standards Board, Proposed Statement
of Financial Accounting Standards, EMPLOYER'S ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS, if the same were effective for the current Fiscal
Year of the Borrower or any ERISA Affiliate.

3.19      ENVIRONMENTAL MATTERS.  Other than as set forth in SCHEDULE 3.19, the
Borrower has no knowledge of any Environmental Claim nor has received any notice
of any Environmental Claim, and no proceeding has been instituted raising any
Environmental Claim against the Borrower or any of its Subsidiaries 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 Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Change. Except as otherwise disclosed
in Schedule 3.19.

          (i)       the Borrower 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 Borrower or any
of its Subsidiaries or to other assets or their use, except in each case, as
such could not reasonably be expected to result in a Material Adverse Change;

                                     - 50 -
<PAGE>
     (ii)  neither the Borrower or any of its Subsidiary has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by the Borrower or any of its Subsidiaries nor has disposed of any Hazardous
Substance 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 Change;
and

     (iii)  all buildings on all real properties now owned, leased or operated
by the Borrower or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Change.

3.20  MARGIN STOCK. The Borrower is not engaged principally or as one of its
important activities in the business of extending credit for the purpose,
immediately, incidentally or ultimately, of purchasing or carrying margin stock
(within the meaning of Regulations T, U and X, as applicable).

3.21  COMPLIANCE WITH COVENANTS. The Borrower is in compliance with each of the
covenants set out in Article 4 and 5 of this Agreement.

3.22  NO DEFAULT. No Event of Default or Default has occurred.

3.23  DEBT DEFAULT. Except as disclosed in SCHEDULE 3.23, neither the Borrower
nor any of its Subsidiaries is in default or breach under any instrument
evidencing any Indebtedness in an aggregate principal amount greater than
Cdn.$5,000,000 (or its US Dollar equivalent) or under the terms of any
instrument pursuant to which an instrument evidencing any Indebtedness in an
aggregate principal amount greater than Cdn.$5,000,000 (or its US Dollar
equivalent) has been issued or made and delivered.

3.24  NO DEFAULT CAUSED. Neither the execution nor the delivery of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated in this Agreement or any other Loan Document, nor compliance with
the terms, conditions and provisions in this Agreement or any other Loan
Document conflicts with, or will conflict with, or results or will result in,
any breach of, or constitutes a default under any provisions of articles of
incorporation or by-laws of the Borrower or of any Material Contract, Material
License or any of the leases for any of the Significant U.S. Leased Properties
to which it is a party or by which it is, or any of its property or assets are,
bound, or, results or will result in the creation or imposition of any
Encumbrance upon any of its properties or assets (other than Permitted Liens)
or the contravention of any Applicable Law. All necessary approvals from the
other parties to the Material Contracts, Material Licenses and for the leases
for the Significant U.S. Lease Properties have been obtained so as to allow the
Borrower to bind itself in accordance with the terms and conditions of the Loan
Documents.

3.25  BURDENSOME PROVISIONS, ETC. To the best of its knowledge, the Borrower is
not a party to any agreement or instrument or subject to any corporate
restriction or any judgement,

                                     - 51 -
<PAGE>
order, writ, injunction, decree, award, rule or regulation which has caused, or
is reasonably likely to have cause, a Material Adverse Change.

3.26      ENCUMBRANCES. The Security Documents create in favor of the Security
Agents for and on behalf of the Bank, the Administration Agent, the Canadian
Lenders and the Noteholders valid, binding and perfected (when registered)
Encumbrances on all right, title and interest in all of the Collateral which is
the subject matter of the Security Documents and those Encumbrances have first
priority for all purposes over any other Encumbrances on the Collateral, except
for Permitted Priority Liens.

3.27      PROPERTY DESCRIPTIONS. The Security Documents to which it is a party,
including their attached schedules (if any), contain accurate descriptions of
all of its material assets and the Security Documents to which each Guarantor is
a party, including their attached schedules (if any), contain accurate
descriptions of all material assets of the Guarantor party thereto.

3.28      CONTRACTS AFFECTED BY CHANGE OF CONTROL. The Borrower 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 Bank, the Administration Agent, the Canadian Lenders and
the Noteholders pursuant to the Security Documents.

3.29      MATERIAL CONTRACTS AND MATERIAL LICENSES.

          (i)    SCHEDULE 3.29-1 accurately sets out all Material Contracts of
     the Borrower and its Subsidiaries and SCHEDULE 3.29-2 accurately sets out
     all Material Licenses of the Borrower and its Subsidiaries.

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

          (iii)  No event has occurred and is continuing caused by any member of
     the Restricted Group or, to the best of Borrower'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.

          (iv)   Each Material Contract to which the Borrower 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.

          (v)    The Borrower 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.

                                     - 52 -

<PAGE>
3.30 JURISDICTIONS. The jurisdictions in which the Borrower and each of its
Subsidiaries carries on business and has assets are accurately set forth in
SCHEDULE 3.30. The registered office, principal place of business and chief
executive office and the location where its and each of its Subsidiaries'
records are kept, is specified in SCHEDULE 3.30. Its jurisdiction of
incorporation and the jurisdiction of incorporation of each of its Subsidiaries
is accurately set forth in SCHEDULE 3.30.

3.31 BANK ACCOUNTS. SCHEDULE 3.31 accurately sets out each bank account
maintained by the Borrower and each of its Subsidiaries and accurately sets
forth the institution and location where each such account is maintained. Each
such account is either maintained with the Administration Agent or the Bank or
is the subject of a Blocked Account Agreement or if it does not meet the
foregoing criteria contains less than Cdn.$150,000 (or its U.S. Dollar
equivalent) and less than Cdn.$600,000 (or its U.S. Dollar equivalent) in the
aggregate for all such accounts.

3.32 INTERCORPORATE INDEBTEDNESS. SCHEDULE 3.32 accurately describes each
inter-company loan between the Borrower and any of its Subsidiaries or between
any of its Subsidiaries 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.

3.33 COMPUTER SYSTEMS. The Borrower makes commercially reasonable efforts to
ensure that all computer systems used in its businesses and material to its
business, owned or leased by it 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 Borrower 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.

3.34 LICENSES, AGENCY AND DISTRIBUTION AGREEMENTS. SCHEDULE 3.34, as amended by
written notice by the Borrower to the Bank 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 3.34 grants to any Person any authority to
incur any liability or obligation to enter into any agreement on behalf of the
Borrower.

3.35 FULL DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to the Bank by or on behalf of the Borrower
pursuant to this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Borrower which
materially and adversely affects the business, property, assets, financial
condition, results of operations or

                                        - 53 -
<PAGE>
prospects of the Borrower which has not been set forth in this Agreement or in
the other documents, certificates and statements (financial or otherwise)
furnished to the Bank by or on behalf of the Borrower prior to or on the
Restatement Closing Date in connection with the transactions contemplated
hereby.

ARTICLE 4. AFFIRMATIVE COVENANTS

           From the Restatement Closing Date and thereafter until the last to
occur of (i) the termination of the Revolving Credit Commitment and (ii) the
payment in full of the Revolving Credit Note and the other Obligations of the
Borrower hereunder, the Borrower agrees, for the benefit of the Bank, that it
will comply with each of the following affirmative covenants;

4.1        USE OF PROCEEDS. Proceeds of the Loans shall be used by the Borrower
only for general working capital and for general corporate purposes.

4.2        DELIVERY OF FINANCIAL STATEMENTS AND OTHER INFORMATION. During the
term hereof, the Borrower shall deliver or cause to be delivered to the Bank
the following financial statements and other information:

4.2a       ANNUAL REPORTS. As soon as available and in any event within 90 days
after the end of each Fiscal Year of the Borrower, the Borrower shall deliver
to the Bank an unaudited Consolidated balance sheet as of the end of such
Fiscal Year and the related Consolidated statements of operations and cash
flows for such Fiscal Year, each of which shall be prepared in accordance with
GAAP consistently applied and setting forth in each case in comparative form
the figures for the previous Fiscal Year, when available, all presenting fairly
the financial condition of the Borrower in such reasonable detail as the Bank
may request from time to time. Such financial statements are relied upon to
compile the Consolidated audited financial statements of Co-Steel which will
receive an unqualified opinion of PriceWaterhouseCoopers, LLP, or other
accounting firm acceptable to the Bank.

4.2b       QUARTERLY REPORTS. As soon as available and in any event within 45
days after the end of the first the Fiscal Quarters of the Borrower for each
Fiscal Year, the Borrower shall deliver to the Bank (i) an unaudited
Consolidated balance sheet as of the end of such Fiscal Quarter and (ii) the
related unaudited Consolidated statements of operations and cash flows for such
month and for the period beginning on the first day of the current Fiscal Year
through the last day of the Fiscal Quarter for which such financial statements
are being delivered, each of which shall be prepared in accordance with GAAP
consistently applied and setting forth in each case in comparative form the
figures for the month in the prior Fiscal Year, when available, which
corresponds to the month for which the statements are being delivered, all
presenting fairly the financial condition of the Borrower in such reasonable
detail as the Bank may request from time to time and certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer of the Borrower.

4.2c       COMPLIANCE CERTIFICATE. Simultaneously with the delivery of the
financial statements referred to in Sections 4.2a and 4.2b, the Borrower shall
deliver to the Bank a

                                      -54-
<PAGE>
completed Compliance Certificate substantially in the form of EXHIBIT "B-1",
executed by an Authorized Officer, and containing such additional information as
the Bank may request from time to time, (i) stating that the financial
statements being delivered with such Compliance Certificate are true, complete
and correct and (ii) stating (A) whether any Default or Event of Default exists
on the date of such certificate, (B) whether any Material Adverse Change has
occurred since the date of the previously delivered Compliance Certificate,
(C) whether any event has occurred since the date of the previously delivered
Compliance Certificate which the Borrower believes is likely to result in a
Material Adverse Change; and (D) if any Default or Event of Default, or any
Material Adverse Change has occurred during the Fiscal Quarter or Fiscal Year to
which the Compliance Certificate relates or is in existence, setting forth the
details thereof and the action which the Borrower has taken, is taking or
proposes to take with respect thereto.

4.2d    OTHER REPORTS, INFORMATION AND NOTICES. The Borrower will deliver or
cause to be delivered to the Bank, within the time periods set forth below, the
following other reports, information and notices:

        (i)     AUDITOR'S REPORTS. As soon as practicable after they have
become available, copies of all other reports and management letters submitted
to the Borrower by its accountants in connection with any annual or interim
audit of the books of the Borrower made by such accountants.

        (ii)    NOTICE OF DEFAULTS AND MATERIAL ADVERSE CHANGES. Promptly after
any officer of the Borrower has learned of the occurrence or existence of a
Default or Event of Default, or of an event or set of circumstances which has
caused or which may cause a Material Adverse Change, telephone notice thereof
specifying the details thereof, the anticipated effect thereof and the action
which the Borrower has taken, is taking or proposes to take with respect
thereto, which notice shall be promptly confirmed in writing within five days
by the president, any vice president or the chief financial officer of the
Borrower.

        (iii)   NOTICE OF LITIGATION. (A) Promptly after the commencement
thereof, written notice of any action, suit, proceeding or investigation before
any Governmental Authority, court or arbitrator, affecting the Borrower, except
for actions, suits, proceedings and investigations which, if adversely
determined, would not and could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change and (B) promptly
after any Authorized Officer has notice thereof, written notice of any
decision, ruling, judgment, appeal, reversal or other significant action in
connection with any existing action, suit, proceeding or investigation before
any Governmental Authority, court or arbitrator affecting the Borrower, which
would or could reasonably be expected to result in a Material Adverse Change.

        (iv)    ORDERS, ETC. Promptly after receipt thereof, a copy of any
material order, writ, decree, judgment, decision or injunction issued by any
Governmental Authority in any material proceeding, action, suit or
investigation to which any member of the Restricted Group is a party that could
be reasonably be expected to result in a Material Adverse Change.

                                      - 55 -
<PAGE>
     (V)  ERISA REPORTS

          (A)  As soon as possible, and in any event not later than the date
notice is sent to the PBGC, notice of any Reportable Event regarding any Plan
and an explanation of any action which has been or which is proposed to be taken
with respect thereto;

          (B)  concurrent with the filing thereof, a copy of any request to the
United States Secretary of the Treasury for a waiver or variance of the minimum
funding standards of Section 302 of ERISA and Section 412 of the Internal
Revenue Code with respect to any Plan or Money Purchase Plan;

          (C)  as soon as possible, but in no event later than 60 days after an
officer of the Borrower becomes aware of unfunded accumulated benefit
obligations for any Plan, as determined in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 87,
EMPLOYER'S ACCOUNTING FOR PENSIONS, (or any superceding statement thereto),
written notice of the occurrence of such event;

          (D)  upon the request of the Bank, copies of each annual report (Form
5500 Series) with accompanying schedules filed with respect to any Plan or Money
Purchase Plan;

          (E)  Promptly after receipt thereof, a copy of any notice which the
Borrower or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Money Purchase Plan, or to
appoint a trustee to administer any Plan or Money Purchase Plan, or to assert
any liability under Title IV of ERISA against the Borrower or any ERISA
Affiliate;

          (F)  a copy of any notice of assessment of Withdrawal Liability
received by the Borrower or any ERISA Affiliate from any Multiemployer Plan;

          (G)  as soon as possible, and in no event later than the date
notification is sent to the PBGC, notice of the failure by the Borrower of any
ERISA Affiliate to make a required installment or other payment under Section
302 of ERISA and Section 412 of the Internal Revenue Code;

          (H)  concurrent with the filing thereof, a copy of any Notice of
Intent to Terminate any Plan filed under Section 4041(c) of ERISA; and

          (I)  promptly after receipt thereof, but without any obligation or
responsibility to secure the same, copies of any calculations of estimated
Unfunded Benefit Liabilities (or, if applicable, the portions of any estimated
Unfunded Benefit Liabilities that would be allocated to the Borrower or any
ERISA Affiliate under Sections 4063 and 4064 or Section 4062(e) of ERISA) for
any Plans.

                                     - 56 -

<PAGE>
          (vi)   NOTICE OF ENVIRONMENTAL CLAIMS. Promptly after receipt thereof,
the Borrower shall deliver to the Bank a copy of any material Environmental
Claim.

          (vii)  CO-STEEL NOTICES. Promptly upon availability and in any event
within 45 days after the end of each Co-Steel Fiscal Quarter occurring after the
Restatement Closing Date, deliver Co-Steel's unaudited Special Purpose Financial
Statements, and Co-Steel's unaudited financial statements (including a balance
sheet and statements of profit and loss and cash flow) for such quarterly fiscal
period certified by the chief financial officer of Co-Steel, prepared on a
consolidated basis in accordance with Canadian GAAP, subject to audit, and
setting forth in comparative form the corresponding figures for the
corresponding period of the preceding fiscal quarter, all in reasonable detail
and accompanied by a management discussion and analysis, together with the
Co-Steel Compliance Certificate.

          (viii) EXCESS REVOLVER PAYDOWN. The Borrower shall deliver to the
Bank and the Managing Security Agent, on or before the fifth Business Day
following the end of each of its fiscal quarters, a certificate of a senior
officer of Co-Steel or the Borrower setting forth a calculation of the amount
by which the outstanding amount of the sum of (x) the Co-Steel Advances and (y)
the Equivalent Amount in Canadian Dollars of the principal amount advanced
hereunder and the Sayreville Credit Facility is less than the result of (a) the
sum of (x) the Commitments as defined under the Canadian Bank Credit Agreement
and (y) the Equivalent Amount in Canadian Dollars of all commitments hereunder
and the Sayreville Credit Facility at such time minus, (b) Cdn.$50,000,000.

4.2e      ADDITIONAL INFORMATION VISITATION. The Borrower shall deliver to the
Bank such additional financial statements, reports, financial projections and
other information, whether or not financial in nature, as the Bank may
reasonably request from time to time. The Borrower will permit the Bank and the
Bank's designated employees and agents to have access, at any time and from time
to time, upon reasonable notice and during normal business hours, to visit any
of the properties of the Borrower, to examine and make copies of any of its
books of record and account and such reports and returns as the Borrower may
file with any Governmental Authority and discuss the Borrower's affairs and
accounts with, and be advised about them by, any Authorized Officer and the
Borrower's certified public accountants.

4.3       PRESERVATION OF EXISTENCE: QUALIFICATION. At its own cost and expense,
the Borrower will do all things necessary to preserve and keep in full force and
effect its corporate existence, power, authority and qualification under the
laws of the state of its incorporation and each state where, due to the nature
of its activities or the ownership of its properties, qualification to do
business is required.

4.4       COMPLIANCE WITH LAWS AND CONTRACTS. The Borrower shall be in material
compliance with its articles of incorporation and by-laws and all applicable
Governmental Rules (including, but not limited to, Environmental Laws); and the
Borrower shall obtain and maintain in good standing all material licenses,
permits and approvals from any and all Governmental Authorities in respect of
its operations. The Borrower shall comply with all material provisions of each
material contract and agreement to which the Borrower is a party.

                                     - 57 -
<PAGE>
4.5     ACCOUNTING SYSTEM; BOOKS AND RECORDS. The Borrower shall maintain a
system of accounting established and administered in accordance with GAAP
consistently applied and will set aside on its books all such proper reserves as
shall be required by GAAP. Further, the Borrower will maintain proper books of
record and account in accordance with GAAP in which full, true and correct
entries shall be made of all of its properties and assets and its dealings and
business affairs.

4.6     PAYMENT OF TAXES AND OTHER LIABILITIES. The Borrower shall promptly pay
and discharge all obligations, accounts and liabilities to which it is subject,
including but not limited to all taxes, assessments and governmental charges and
levies upon it or upon any of its income, profits, or property, prior to the
date on which penalties attach thereto; PROVIDED, HOWEVER, that for purposes of
this Agreement, the Borrower shall not be required to pay any tax, assessment,
charge or levy (i) the payment of which is being contested in good faith by
appropriate and lawful proceedings diligently conducted and (ii) as to which the
Borrower shall have set aside on its books reserves for such claims as are
determined to be adequate by the application of GAAP consistently applied; and
PROVIDED, FURTHER, that the Borrower shall pay all such contested liabilities
forthwith upon the commencement of proceedings to foreclose any Encumbrance
which may have attached as security therefor.

4.7     INSURANCE. The Borrower shall maintain at all times adequate insurance
to the satisfaction of the Bank with financially sound and reputable insurers
acceptable to the Bank against such risks of loss as are customarily insured
against and in amounts customarily carried by Persons owing, leasing or
operating similar properties, including, but not limited to: (i) fire and theft
and extended coverage insurance in an amount at least equal to the total full
replacement cost of its insurable property, (including boiler coverage, if
applicable); (ii) liability insurance on account of injury to persons or
property; (iii) insurance which complies with all applicable workers'
compensation, unemployment and similar laws; (iv) interruption of the Borrower's
business and loss of income; (v) flood insurance, at any time when any real
property of the Borrower on which the Bank has a mortgage, or is a beneficiary
of the Encumbrance of a Mortgage, is designated to be in an area of special
flood hazard; and (vi) such other insurance as the Bank may reasonably request
from time to time, all of the foregoing to be acceptable to the Bank at all
times during the term hereof. The Borrower shall cause all such insurance to
provide for at least thirty (30) days written notice to the Bank prior to
cancellation and the Borrower shall cause an original certificate of insurance
to be delivered to the Bank prior to the first extension of credit under this
Agreement and no later than thirty (30) days prior to the expiration of any such
insurance coverage. On or prior to the Restatement Closing Date and thereafter
within ninety (90) days of the close of each Fiscal Year, the Borrower shall
deliver to the Bank a schedule indicating all insurance coverage then in effect
for the Borrower, in such detail as the Bank may reasonably request from time to
time, along with evidence satisfactory to the Bank showing that the applicable
Security Agent is the named mortgagee and loss payee for the insurance described
in this Section 4.7 pursuant to standard long-form mortgagee and loss payee
clauses.

4.8     MAINTENANCE OF PROPERTIES. The Borrower shall maintain, preserve,
protect and keep its properties in good repair, working order and condition
(ordinary wear and tear excepted),

                                     - 58 -
<PAGE>
and make all necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly and advantageously
conducted at all times.

4.9       MAINTENANCE OF LEASES. The Borrower shall maintain in full force and
effect all leases for its real properties, and all other leases for personal
property if the failure to maintain such personal property lease would
constitute a Material Adverse Change.

4.10      MAINTENANCE OF PATENTS, TRADEMARKS, PERMITS, ETC.

          (i)    The Borrower shall maintain in full force and effect, and
investigate and prosecute all infringements of, all patents, trademarks, trade
names, copyrights and other intellectual property and all licenses, franchises,
permits and other authorizations necessary in the judgment of the Borrower for
the ownership and operation of its properties and business for so long as the
applicable intellectual property rights remain material to its business.

          (ii)   The Borrower shall notify the Bank if the Borrower knows, or
has reason to know, of any application or registration, relating to any patent
or trade mark 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.A. Patent and Trade Mark
Offices 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

          (iii)  The Borrower shall report to the Bank any application for the
registration of any trade mark material to its business with the Canadian or
U.S.A. Trade Mark Office and any application for any patent material to its
business with the Canadian or U.S.A. Patent Office, in each case with 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).

4.11      BANK ACCOUNTS. The Borrower shall maintain its principal operating,
cash management and disbursement accounts with the Bank.

4.12      PLANS AND BENEFIT ARRANGEMENTS. The Borrower shall, and shall cause
each ERISA Affiliate to, comply with ERISA, the Internal Revenue Code and all
other applicable Governmental Rules which are applicable to Plans and Benefit
Arrangements, except where the failure to do so, alone or in conjunction with
any other failure, would not result in a Material Adverse Change.

4.13      ENVIRONMENTAL MATTERS AND INDEMNIFICATION.

          (i)    The Borrower shall be in material compliance with all
Environmental Laws.

                                     - 59 -
<PAGE>
          (ii)   The Borrower shall employ appropriate technology in order to
maintain compliance with all applicable Environmental Laws, including without
limitation the replacement or updating, if required, of underground or
aboveground storage tanks owned by the Borrower.

          (iii)  The Borrower shall investigate and remediate any Contamination
in compliance with Governmental Rules and shall inform the Bank in writing from
time to time as to the status of any such remediation.

          (iv)   Notwithstanding the covenants set forth in clauses (i), (ii)
and (iii) of this Section 4.13, so long the Borrower is diligently proceeding to
remedy any non-compliance or possible non-compliance with Environmental Laws set
forth on SCHEDULE 3.19 attached hereto, and such conditions or events do not
develop into a Material Adverse Change over time, the existence of such
conditions set forth on such SCHEDULE 3.19 shall not consist a violation of this
Section 4.13.

4.14      RECIPROCAL GUARANTEES. The Borrower shall require any and all Persons,
which on or after the Restatement Closing Date, become additional Canadian Bank
Guarantee Entities and Prudential Guarantee Entities to execute and deliver a
Related Parties Guarantee to the Bank effective as of the effective date of any
such additional Canadian Bank Guarantee or Prudential Guarantee.

4.15      AGENCY AGREEMENT. In the event that it becomes desirable or necessary
to appoint an agent for the Lenders in the sole and absolute discretion of the
Bank, the Borrower shall promptly, but in no event later than ten (10) days of
receipt of an agreement to appoint an agent for the Lenders, execute, deliver
and otherwise consent to the appointment of an agent for the Lenders; and/or the
Borrower shall execute and deliver such amendment to this Agreement as the Bank
may reasonably request to accommodate the existence of multiple Lender
hereunder.

4.16      BUSINESS. The Borrower 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 Restatement
Closing Date; and the Borrower shall conduct, and shall cause its Subsidiaries,
to conduct their respective businesses in a proper, efficient and business-like
manner.

4.17      INVENTORY. The Borrower shall maintain contractual relationships, in
form and substance satisfactory to the Bank, to ensure that the title to all
Inventory located on Leased Properties located in the United States (with the
exception of the Borrowers principal facility in Perth Amboy, New Jersey) is
held in the name of USA Distribution.

4.18      [RESERVED]

4.19      MATERIAL CONTRACTS AND MATERIAL LICENSES. The Borrower shall, and
shall cause each Guarantor, to:

                                     - 60 -
<PAGE>
          (i)       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;

          (ii)      deliver to the Bank true and complete copies of each
     Material Contract or Material License and each other contract which has
     been requested by the Bank, and, if requested by the Bank, execute and
     deliver to the Bank a specific assignment of each contract in favor of the
     Bank 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 Bank;

          (iii)     promptly upon request by the Bank, provide the Bank with all
     information regarding contractual relations of the Borrower of a material
     nature which is requested by the Bank; and

          (iv)      use reasonable commercial efforts to obtain and deliver to
     the Bank the consent of any party that the Bank requests with respect to
     the Encumbrance on any Material Contract or Material License in favor of
     the Bank, such consent to be in form and substance acceptable to the Bank.

4.20           JURISDICTIONS.  The Borrower shall advise the Bank of any change
in the location at which the Borrower's or any of its Subsidiaries' assets may
be located from the location disclosed on SCHEDULE 3.30 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 Subsidiaries.

4.21           COMPUTER SYSTEMS.  The Borrower 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.

4.22           DEFENSE OF CLAIMS.  The Borrower shall diligently defend itself
and its properties from and against any lawsuits or claims in accordance with
prudent business practice.

4.23           ADDITIONAL COVENANTS.  The Borrower shall promptly notify the
Bank if at any time it has entered into any new instrument or agreement or has
amended an existing instrument or agreement relating to any Indebtedness in an
aggregate principal amount greater than Cdn.$5,000,000 (or its US Dollar
equivalent) to include covenants or defaults (or their equivalent) not
substantially provided for in this Agreement or more favorable to the lender or
lenders thereunder that those provided for in this Agreement. Thereupon, if the
Bank shall request, the parties to this Agreement shall amend this agreement to
provide for substantially the same covenants and defaults (or their equivalent)
as those provided for in such instrument or agreement.

                                     - 61 -

<PAGE>
ARTICLE 5. NEGATIVE COVENANTS

           From the Restatement Closing Date and thereafter until the last to
occur of (i) the termination of the Revolving Credit Commitment and (ii) the
payment in full of the Revolving Credit Note and the other Obligations of the
Borrower hereunder, the Borrower agrees, for the benefit of the Bank, that it
will comply with each of the following negative covenants:

5.1        INDEBTEDNESS. The Borrower shall not create, incur, assume, cause,
permit or suffer to exist or remain outstanding, any Indebtedness, except for:

           (i)     Indebtedness owed by the Borrower to the Bank;

           (ii)    Indebtedness in existence as of the March 31, 2002 as set
forth on consolidated unaudited Consolidated financial statements of the
Borrower as of March 31, 2002 previously delivered to the Bank;

           (iii)   Indebtedness incurred by the Borrower under the Canadian
Bank Guarantee;

           (iv)    Indebtedness incurred by the Borrower under the Prudential
Guarantee;

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

           (vi)    deferred revenue classified as a liability;

           (vii)   deferred taxes;

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

           (ix)    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 US Dollar equivalent);

           (x)     any unsecured Indebtedness as endorsee under negotiable
instruments received in payment of accounts receivable and endorsed for deposit
in the ordinary course of business;

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

           (xii)   Indebtedness pursuant to Permitted Intercompany Indebtedness.

                                     - 62 -
<PAGE>
5.2       GUARANTEES.  The Borrower shall not enter into any Guarantees, except
for endorsements of negotiable instruments for deposit and collection and
similar transactions in the ordinary course of business and, EXCEPT FURTHER for
any Canadian Bank Guarantee executed under and pursuant to the terms of the
Canadian Bank Credit Agreement on the Restatement Closing Date and any
Prudential Note Guarantee executed and delivered in connection with the
Prudential Note Purchase Agreements on the Restatement Closing Date.

5.3       NEGATIVE PLEDGE.  Except for Permitted Liens, the Borrower shall not
create, assume, incur, permit or suffer to exist any Encumbrance upon any of its
assets and properties, whether tangible or intangible and whether now owned or
in existence or hereafter acquired or created and wherever located.

5.4       OTHER INDEBTEDNESS AND AGREEMENTS.  The Borrower shall not, and shall
not permit any of its Subsidiaries 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, defease or in
substance defease, purchase, redeem, retire or otherwise acquire any other
indebtedness in advance of Indebtedness outstanding under this Agreement.

5.5       SALE OF ASSETS.  Other than Permitted Asset Sales, or sales pursuant
to the Asset Monetization Program, the Borrower shall not, and shall not permit
any of its Subsidiaries 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 its Subsidiaries, receivables and leasehold
interests), whether in one or a series of transactions, except on terms and
conditions approved by the Bank (each such asset sale so approved an "Approved
Asset Sale").

5.6       SALE AND LEASEBACK TRANSACTIONS.  Unless permitted by the Asset
Monetization Program, the Borrower shall not, and shall not permit any of its
Subsidiaries 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 real or
personal property if such property is owned on the date of this Agreement or
thereafter acquired by it 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 it or any of
its Affiliates for substantially the same purpose as such property was used by
it or such Affiliate prior to such sale or transfer.

5.7       LOANS, INVESTMENTS, ETC.  Except as otherwise expressly permitted by
Sections 5.1 or 5.8 hereof, the Borrower shall not, and shall not permit any of
its Subsidiaries to,:

          (i)  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
     in each case other than to another member of the Restricted Group; or

                                     - 63 -

<PAGE>
          (ii)   directly or indirectly subordinate or postpone any claim which
     it has against any Person, except (x) the extension of credit in the
     ordinary course of business to trade debtors in accordance with customary
     trade terms or (y) pursuant to a Subordination Agreement.

5.8       INVESTMENTS. Except as expressly permitted by Section 5.7, the
Borrower 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:

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

          (ii)   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;

          (iii)  commercial paper maturing in 270 days or less from the date of
issuance which, at the time of acquisition by the Borrower 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 the
Bank or an Affiliate of the Bank;

          (iv)   direct obligations of the United States of America 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, in each case maturing in twelve (12) months or less from the
date of acquisition;

          (v)    ownership of the capital stock of Subsidiaries existing on the
Restatement Closing Date; and

          (vi)   money market funds or income funds with a history of
maintaining a stable net asset value per share that invest solely securities
described in clauses (i), (ii), (iii) or (iv) of this Section 5.8.

5.9       AFFILIATE TRANSACTIONS. The Borrower shall not enter into or carry out
any transaction with an Affiliate (including, without limitation, purchasing
property or service from or selling property or services to, any Affiliate or
other Person) unless such transaction (i) is not otherwise prohibited by this
Agreement, (ii) is entered into in the ordinary course of business upon fair and
reasonable arm's-length terms and conditions, or (iii) is in accordance with all
applicable Governmental Rules.

5.10      USE OF PROCEEDS. The Borrower shall not use any proceeds of the Loans
or any Letter of Credit either directly or indirectly for the purpose of
"purchasing or carrying any margin stock" within the meaning of Regulations T, U
or X, as applicable.

                                     - 64 -

<PAGE>
5.11 CHANGE OF BUSINESS. The Borrower shall not engage directly or indirectly in
any business other than the production and sale of finished and semi-finished
carbon steel long products.

5.12 ERISA. The Borrower shall not:

     (i) (A) With respect to any Plan or Money Purchase Plan, incur any material
liability for failure to make timely payment of any contribution or installment
required under Section 302 of ERISA and Section 412 of the Internal Revenue
Code, whether or not waived, or otherwise materially fail to comply with the
funding provisions set forth therein, (B) with respect to any Plan or Money
Purchase Plan, suffer to exist any Encumbrance under Section 302(f) of ERISA or
Section 412(n) of the Internal Revenue Code against the property and rights to
property of the Borrower or any ERISA Affiliate or (C) terminate, or permit any
ERISA Affiliate to terminate, any Plan or Money Purchase Plan in a manner which
could reasonably be expected to result in the imposition of an Encumbrance upon
the property or rights to property of the Borrower or any ERISA Affiliate
pursuant to Section 4068 of ERISA;

     (ii) Engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code) with respect to any
"employee benefit plan" (as defined in Section 3(3) of ERISA) for which a
statutory or administrative exemption is not available under Section 408 of
ERISA or Section 4975 of the Internal Revenue Code; or

     (iii) Partially or completely withdraw from any Multiemployer Plan where
such withdrawal could reasonably be expected to subject the Borrower or any
ERISA Affiliate to Withdrawal Liability.

5.13 MATERIAL CONTRACTS AND MATERIAL LICENSES. The Borrower shall not, and shall
not permit any Guarantor, to:

     (i)  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;

     (ii) amend any Material Contract or Material License if such amendment
could reasonably be expected to have a material and adverse effect on the Bank
or the repayment of the Obligations; or

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

5.14 ACQUISITIONS. The Borrower shall not, and shall not permit any Subsidiary
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 (except as otherwise permitted hereby),

                                     - 65 -
<PAGE>
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 Borrower or any Subsidiary receiving equity of an arm's length
Person as part of a compromise of such arm's length Person's debt pursuant to a
bankruptcy of such Person; and provided further that the foregoing shall not
prevent the Borrower or any Subsidiary from acquiring investments permitted by
Section 5.8.

5.15      FUNDAMENTAL CHANGES. The Borrower shall not, and it shall not permit
any of its Subsidiaries 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 or Event of Default shall have occurred:

          (a)  any Restricted Subsidiary may amalgamate with any other
     Restricted Subsidiary; or

          (b)  any Restricted Subsidiary may sell, transfer, lease or otherwise
     dispose of its assets to the Borrower or another Restricted Subsidiary,

provided that such party provides the Bank with prior notice of any such
transaction and upon any amalgamation, the resulting company delivers to the
applicable Security Agent the Security 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 Loan Documents to which each predecessor entity was party
and such other security, certificates and opinions as may be required by the
Bank including, if applicable, a pledge of the amalgamated company's shares.

5.16      ACCOUNTING CHANGES. The Borrower 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 Bank and it shall not
change its financial year end.

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

5.18      INCONSISTENT AGREEMENTS. The Borrower 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.

5.19      ANNOUNCEMENTS. Except as required by Applicable Law, the Borrower
shall not make or permit any press release or other public announcement to be
made by or on its behalf

                                      -66-
<PAGE>
which mentions the Bank without the Bank's prior written approval of the press
release or public announcement.

ARTICLE 6. CONDITIONS TO MAKING EXTENSIONS OF CREDIT

6.1       ALL EXTENSIONS OF CREDIT. The obligation of the Bank to make any
Revolving Credit Loan, or to amend, extend or renew a Letter of Credit, or to
amend and restate the Original Credit Agreement, as applicable, is subject to
the satisfaction of each of the following conditions precedent:

6.1a      REQUEST FOR REVOLVING CREDIT LOAN OR LETTER OF CREDIT. Receipt by the
Bank of a request for a Revolving Credit Loan satisfying the conditions of
Section 2.1 or an Application for Letter of Credit, as appropriate.

6.1b      NO DEFAULT OR EVENT OF DEFAULT. The Borrower shall have performed and
complied with all agreements and conditions which are required hereby or by any
other Loan Document to be performed or complied with by it prior to such Loan
being made, or such Letter of Credit being extended, amended or renewed, or the
Original Credit Agreement being amended and restated, as applicable; and at the
time of such Revolving Credit Loan, or the, amendment, extension or renewal of
such Letter of Credit, or the amendment and restatement of the Original Credit
Agreement, as applicable, no Default or Event of Default has occurred and is
continuing or will result from the making such Revolving Credit Loan, the
amendment, extension or renewal of such Letter of Credit or the amendment and
restatement of the Original Credit Agreement, as applicable.

6.1c      NO MATERIAL ADVERSE CHANGE. At the time of making such Revolving
Credit Loan, the amendment, extension or renewal of such Letter of Credit, or
the amendment and restatement of the Original Credit Agreement, as applicable,
no Material Adverse Change has occurred and is continuing.

6.1d      REPRESENTATIONS CORRECT. The representations and warranties contained
in Article 3 hereof and in the other Loan Documents and otherwise made in
writing by or on behalf of the Borrower in connection with the transactions
contemplated by this Agreement shall be (i) correct when made and (ii) correct
in all material respects at the time of such Revolving Credit Loan, such
amendment, extension or renewal of such Letter of Credit or the amendment and
restatement of the Original Credit Agreement, as applicable.

The extension and delivery of this Agreement by the Borrower, each request for
a Revolving Credit Loan whether made orally or in writing, and each delivery of
an executed Application for Letter of Credit, shall be deemed to be, as of the
time made, a certification by the Borrower as to the accuracy of the matters set
forth in Section 6.1b, 6.1c and 6.1d.

6.2       CONDITIONS PRECEDENT TO RESTATEMENT CLOSING DATE. The obligation of
the Bank to amend and restate the Original Credit Agreement as herein set forth
is subject to the

                                      -67-
<PAGE>
satisfaction of each of the following conditions precedent, in addition to the
conditions precedent set forth in Section 6.1:

6.2a      CREDIT AGREEMENT. Receipt by the Bank of a fully-executed counter-
part original of this Agreement.

6.2b      SCHEDULES AND EXHIBITS. Receipt by the Bank of all schedules and
exhibits to this Agreement and the other Loan Documents prepared by the
Borrower, and a determination by the Bank that all exceptions shown on such
schedules are satisfactory to it.

6.2c      REVOLVING CREDIT NOTE. Receipt by the Bank of the Revolving Credit
Note in the form of Exhibit "A" attached hereto, executed by the Borrower.

6.2d      CERTAIN OTHER LOAN DOCUMENTS. Receipt by the Bank of the
fully-executed counterpart original of each of the Security Documents to be
executed by the Borrower in accordance with Section 8.5 hereof; and receipt by
the Bank of fully-executed copies each of the other Security Documents (other
than the Related Parties Guarantees and the Standstill Agreement) to be executed
and deliver pursuant to Section 8.5 hereof.

6.2e      RELATED PARTIES GUARANTEES. Receipt by the Bank of the fully-executed
Related Parties Guarantees.

6.2f      [RESERVED]

6.2g      INTERCREDITOR AGREEMENT. Receipt by the Bank of a fully-executed
counterpart original of the Intercreditor Agreement.

6.2h      HAZARD LIABILITY INSURANCE. Receipt by the Bank of insurance
certificates which evidence compliance with the requirements of Sections 3.16
and 4.7.

6.2i      LIEN SEARCHES. Receipt by the Bank of UCC, tax lien and judgment
searches concerning the Loan Parties satisfactory to the Bank.

6.2j      CORPORATE DOCUMENTS OF BORROWER. Receipt by the Bank of the following
corporate documents for the Borrower:

          (i)   a copy of its certificate of incorporation, certified as true
and correct by the Secretary of State of the State of New Jersey not more than
thirty (30) days prior to the Restatement Closing Date;

          (ii)  a good standing certificate issued by the Secretary of State of
the State of New Jersey dated not more than thirty (30) days prior to the
Restatement Closing Date;

          (iii) resolutions of its board of directors authorizing the execution
of the Loan Documents and the performance by the Borrower pursuant thereto,
certified by the secretary of

                                      -68-
<PAGE>
the Borrower as being true, correct, complete and in effect as of the
Restatement Closing Date and in form and substance satisfactory to the Bank;

          (iv)  a copy of its by-laws and all amendments thereto, certified by
the secretary of the Borrower as being true, correct, complete and in effect;
and

          (v)   an incumbency certificate for the Borrower, showing the names
of the officers of the Borrower, their respective titles and containing their
true signatures.

6.2k      CORPORATE DOCUMENTS OF LOAN PARTIES. Receipt by the Bank of the
following corporate documents for each of the Loan Parties:

          (i)   a copy of its certificate of incorporation or other formation
documents, certified as true and correct by the Secretary of State (or other
applicable governmental official) of the jurisdiction of incorporation or
formation of such parties not more than thirty (30) days prior to the
Restatement Closing Date;

          (ii)  a good standing certificate issued by the Secretary of State (or
other applicable governmental official) of the jurisdiction of incorporation or
formation of such parties dated not more than thirty (30) days prior to the
Restatement Closing Date;

          (iii) resolutions of the board of directors (or other governing body)
of the Loan Parties authorizing the execution of the Loan Documents to be
executed by the Loan Parties and the performance by the Loan Parties pursuant
thereto, certified by the secretary, general partner or member, as the case may
be, of the Loan Parties as being true, correct, complete and in effect as of the
Restatement Closing Date and in form and substance satisfactory to the Bank;

          (iv)  a copy of the by-laws of the Loan Parties and all amendments
thereto, certified by the secretary, general partner or member, as the case may
be, of each of the Loan Parties as being true, correct, complete and in effect;
and

          (v)   an incumbency certificate for each of the Loan Parties, showing
the names of the officers, general partner or member, as the case may be, of the
Loan Parties, their respective titles and containing their true signatures.

6.2l      OPINION OF COUNSEL. Receipt by the Bank of opinions of counsel to the
Borrower and the other Loan Parties, addressed to the Bank and in all respects
satisfactory to the Bank.

6.2m      NO DEFAULT CERTIFICATES. On the Restatement Closing Date, receipt by
the Bank of a certificate executed by an Authorized Officer, stating that, as
of such date, no Default or Event of Default exists or will exist after giving
effect to the transactions entered into by the Loan Parties under the Loan
Documents, no Material Adverse Change has occurred and all representations and
warranties made by the Loan Parties in the Agreement and the other Loan
Documents are true and correct as of such date.

                                      -69-
<PAGE>
6.2n     CANADIAN BANK CREDIT AGREEMENT.  Co-Steel shall have completed a
refunding of the Existing Canadian Bank Indebtedness pursuant to the closing of
the Canadian Bank Credit Agreement on terms consistent with the terms of the
commitment letter of the Bank to the Borrower dated February 19, 2002.

6.2o     PRUDENTIAL NOTE PURCHASE AGREEMENTS.  Co-Steel shall have completed an
amendment and restatement of the Existing Prudential Indebtedness pursuant to
the closing of the Prudential Note Purchase Agreements on terms consistent with
the terms of the commitment letter of the Bank to the Borrower dated February
19,2002.

6.2p     MATERIAL LITIGATION.  No actions, suits, proceedings or investigations
shall be pending or threatened against the Borrower of the other Loan Parties,
or any of their respective businesses, operations, properties, prospects,
profits or condition (financial or otherwise), at law or in equity, before any
Governmental Authority which, individually or in the aggregate, if adversely
determined, could reasonably be expected to cause a Material Adverse Change, or
which purport to affect the rights and remedies of the Bank pursuant to this
Agreement or any other Loan Document or which purport to restrain or enjoin
(either temporarily, preliminarily or permanently) the performance by the
Borrower or any of the other Loan Parties of any action contemplated by any of
the Loan Documents.

6.2q     EVALUATION OF CERTAIN LIABILITIES.  The Bank shall have completed a
satisfactory review and evaluation of the amount and nature of all tax, ERISA,
employee retirement benefit, and other contingent liabilities of the Borrower.

6.2r     ADEQUACY OF LEGAL MATTERS.  All legal matters incident to the Loans
and the Loan Documents, shall be satisfactory to counsel for the Bank.

6.2s     PAYMENT OF OUTSTANDING INTEREST AND FEES UNDER THE EXISTING CREDIT
AGREEMENTS.  Receipt by the Bank of all accrued and unpaid fees, expenses and
interest under the Original Credit Agreement.

6.2t     CLOSING STATEMENT.  The Borrower, Co-Steel, the Bank, the
Administration Agent and the Noteholders shall have executed a closing
statement which sets forth a statement of the use of proceeds of the March 2002
Significant Share Offering and the payment of other interest, fees and
principal repayments due on the Restatement Closing Date.

6.2u     FEES AND EXPENSES.  Receipt by the Bank of all fees and expenses
described herein which are payable on or prior to the Closing Date shall have
been paid, in immediately available funds.

6.3      AMENDMENT OR EXTENSION OF LETTER OF CREDIT.  In addition to the
satisfaction of the conditions set forth in Sections 6.1 and 6.2 of this
Article 6, the obligation of the Bank to amend or extend any Letter of Credit
hereunder is subject to the satisfaction of the following conditions precedent:

                                     - 70 -

<PAGE>
6.3a      REIMBURSEMENT AGREEMENT.  The execution by the Borrower and delivery
to the Bank of an amendment to the Reimbursement Agreement as required by the
Bank.

6.3b      APPLICATION FOR LETTER OF CREDIT.  The execution by the Borrower and
delivery to the Bank of an application for amendment to letter of credit
applicable to such Letter of Credit as required by the Bank.

6.4       POST-CLOSING DELIVERIES.

6.4a      ONTARIO REGISTRATIONS.  Ten Business Days following the general
resumption of public services in the Province on Ontario the Borrower shall
cause to be delivered to the Bank the following:

          (i)  Registrations.  Evidence of registration of all Security
Documents in all offices in the Province of Ontario in which, in the opinion of
the Bank and its counsel, registration is necessary or of advantage to preserve
the priority of the Encumbrances intended to be created by the Security
Documents together with duplicate copies of security instruments bearing or
accompanied by appropriate endorsements or certificates of registration with
respect to such Security Documents.

          (ii)  Searches.  Search results showing personal property security
registrations, bulk sales and executions with respect to Co-Steel and each
Restricted Subsidiary which has tangible personal property or a place of
business in the Province of Ontario.

          (iii) Certificate of Status.  A currently dated certificate of status
for Co-Steel and each of the Related Parties incorporated pursuant to the laws
of the Province of Ontario.

          (iv)  Opinion of Ontario Counsel.  An opinion of counsel respecting
customary matters that would have been included in the opinion of Ontario
counsel delivered on the Restatement Closing Date but for the public service
employee strike in the Province of Ontario, in form and substance satisfactory
to the Bank.

          (v)   Other.  Such further agreements, instruments and other documents
as the Bank may reasonably request in respect of customary closing matters not
completed because of the public service employee strike in the Province of
Ontario.

6.4b      CO-STEEL YEAR END FINANCIALS.  Twenty (20) Business Days following the
Restatement Closing Date the Bank shall have received the annual financial
statements of Co-Steel required pursuant to Section 10.04(2)(b) of the Canadian
Bank Credit Agreement for the year ended December 31, 2001.

                                     - 71 -

<PAGE>
6.4c HUNGARIAN INTER-COMPANY LOANS.

     The Borrower shall cause to be delivered to the Bank or where indicated to
a Security Agent, at the option of the Borrower, either the documents specified
in section 6.4c(1) (collectively, the "Hungarian Guarantee Documents") or the
documents specified in Section 6.4c(2) (collectively, the "Hungarian Loan
Reorganization Documents") in accordance with the provisions of Section 6.4c(3).

     (1)  Hungarian Guarantee Documents. The Borrower may deliver the following
Hungarian Guarantee Documents:

          (i)  Guarantee. A guarantee by Co-Steel Liquidity Management of all of
     the obligations of the Borrower to the Bank, in a form a substance
     reasonably satisfactory to the Bank which guarantee shall include, without
     limitation, a pledge of the Hungarian Loan Notes in favor of the U.S.
     Security Agent (the "Hungarian Guarantee");

          (ii) Constituent Documents and Authorizing Resolutions. 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.

          (iii) Loan Notes. The original Hungarian Loan Notes delivered to the
     U.S. Security Agent and duly endorsed in favor of the U.S. Security Agent.

          (iv) Registrations. Evidence of registration of the Hungarian
     Guarantee in all offices, if any, in which, in the opinion of the Bank and
     its counsel, registration is necessary or of advantage to preserve the
     priority of the Encumbrances 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.

          (v)  Regulatory Approvals. Copies of all approvals and all consents of
     all Governmental Authorities which are required to be obligated by the
     Borrower or Co-Steel Liquidity Management in order to complete the
     transactions contemplated by the Hungarian Guarantee and perform its
     obligations under the Hungarian Guarantee.

          (vi) Opinion of Hungarian Counsel. A legal opinion of Hungarian
     counsel in form and substance reasonably satisfactory to the Bank in
     respect of the Hungarian Guarantee.

          (vii) Other. Such further agreements, instruments and other documents
     as the Bank may reasonably request in respect of the foregoing.

     (2) Hungarian Loan Reorganization Documents. The Borrower may deliver the
following Hungarian Loan Reorganization Documents in respect of the transaction
described

                                     - 72 -

<PAGE>
in Schedule 6.4c.

          (i)  Constituent Documents and Authorizing Resolutions. Certified
     copies of the articles of incorporation, by-laws and resolutions of 1102590
     Ontario Limited, Co-Steel (U.S.) Ltd., New Holdco, Co-Steel CSM, Co-Steel
     USA Holdings, Inc., the Borrower and Co-Steel Liquidity Management
     authorizing the actions taken under Schedule 6.4c and the incumbency of the
     officers signing the documents contemplated in Schedule 6.4c.

          (ii) New Subordinated Loan Notes. The original New Subordinated Loan
     Notes delivered to a Security Agent and duly endorsed in favor of such
     Security Agent.

          (iii) Registrations. Evidence of registration of all the security
     described in Schedule 6.4c in all offices, if any, in which, in the opinion
     of the Bank and its counsel, registration is necessary or of advantage to
     preserve the priority of the Encumbrances intended to be created by the
     security described in Schedule 6.4c together with duplicate copies of
     security instruments bearing or accompanied by appropriate endorsements or
     certificates of registration with respect to such security.

          (iv) Regulatory Approvals. Copies of all approvals and all consents of
     all Governmental Authorities which are required to be obtained by the
     Borrower or any Subsidiary in order to complete the transactions
     contemplated by Schedule 6.4c and perform its obligations under Schedule
     6.4c.

          (v)  Opinions of Counsel. Such opinions of counsel in form and
     substance reasonably satisfactory to the Bank respecting the transactions
     described in Schedule 6.4c.

          (vi) Other. Such further agreements, instruments, tax rulings and
     other documents as the Bank may reasonably request in respect of the
     foregoing.

     (3)  Consequences of Delay. If the Borrower fails to deliver either the
Hungarian Guarantee Documents or the Hungarian Loan Reorganization Documents
within 90 days following the Restatement Closing Date, then each of the
otherwise existing Applicable Base Rate Margin, Applicable Euro-Rate Margin and
the Letter of Credit Fee shall in lieu of interest at the Default Rate, be
increased by 20 basis points and 120 days thereafter by a further 15 basis
points. For greater certainty, the transactions contemplated by the Hungarian
Guarantee Documents or the Hungarian Loan Reorganization Documents may be
completed notwithstanding any restriction in Article 5 hereof or Section 4.01 or
4.03 of the Co-Steel Guarantee Agreement. In the event of an increase in such
rates under this Section, the rates applicable to Loans and Letters of Credit
shall revert to the otherwise applicable margin upon delivery of either the
Hungarian Guarantee Documents or the Hungarian Loan Reorganization Documents.

                                     - 73 -
<PAGE>
6.4d  FLOOD INSURANCE CERTIFICATIONS. Within thirty (30) days of the Restatement
Closing Date, the Borrower shall provide to the Bank a certificate from a flood
zone consultant that the buildings of the Borrower the subject of a Mortgage are
not within a special flood hazard area, a survey of each property the subject of
a Mortgage that demonstrates that no building on such property is located within
a special flood hazard area, shall provide sufficient flood insurance that 10.8%
of the total flood insurance equals or exceeds the total outstandings under the
Credit Facility and the Sayreville Credit Facility, or if the buildings of the
Sayreville Credit Facility which are subject to a Mortgage are not located in a
special flood hazard area, the Borrower shall provide sufficient flood insurance
that 10.8% of the total flood insurance equals or exceeds the total outstandings
under the Credit Facility.

6.4e  UK STANDSTILL AGREEMENT. On or before June 1, 2002, the Borrower will
deliver, or cause the delivery of, a fully executed Standstill Agreement to the
Bank, together with an opinion of counsel reasonably acceptable to the Bank in
respect of the Standstill Agreement.

ARTICLE 7. EVENTS OF DEFAULT; REMEDIES

7.1   EVENTS OF DEFAULT. Each of the following events shall constitute an Event
of Default:

7.1a  NONPAYMENT OF OBLIGATIONS. The Borrower (i) shall default in any payment
of principal of the Revolving Credit Note when due; or (ii) shall default in the
payment of interest on the Revolving Credit Note when due or in the payment of
any of the Fees, expenses or other amounts due hereunder or under any of the
other Loan Documents when due, and such default in payment of interest, Fees,
expenses or other amounts shall have continued for a period of three (3)
Business Days after such due date.

7.1b  NONPAYMENT OF OTHER INDEBTEDNESS. Any of the Loan Parties shall (i)
default in the payment of any Indebtedness evidenced by the Canadian Bank Credit
Agreement or the Prudential Notes when such payment is due (whether by
acceleration or otherwise) and any applicable grace periods with respect thereto
have expired; (ii) default in the payment of any other Indebtedness, which
Indebtedness has an aggregate principal outstanding balance of $500,000 or more,
when such payment is due (whether by acceleration or otherwise) and any
applicable grace periods with respect thereto have expired, or (iii) default in
the performance of any term of any agreement under which any such Indebtedness
is created, [which default is not otherwise waived], if the effect of any
default described in this item (iii), after the expiration of any grace periods
applicable thereto, is to cause such Indebtedness to become, or to permit the
holder or holders of such Indebtedness (or any Person on behalf of such holder)
to declare such Indebtedness due prior to its stated maturity.

                                     - 74 -
<PAGE>
7.1c INSOLVENCY, ETC.

     (i) Involuntary Proceedings. A proceeding shall have been instituted in a
court having jurisdiction seeking a decree or order for relief in respect of any
of the Loan Parties in an involuntary case under the Federal bankruptcy laws, or
any other similar applicable Federal, state or foreign law, now or hereafter in
effect, or for the appointment of a receiver, liquidator, trustee, sequestrator
or similar official for any of the Loan Parties or for a substantial part of any
of the Loan Parties' respective property, or for the winding up or liquidation
of any of their affairs, and such shall remain undismissed or unstayed and in
effect for a period of thirty (30) days.

     (ii) Voluntary Proceedings. Any of the Loan Parties shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against any of the Loan Parties, or shall file
a petition or answer or consent seeking reorganization under the Federal
Bankruptcy laws, or any other similar applicable Federal, state or foreign law
now or hereinafter in effect, or shall consent to or acquiesce in the filing of
any such petition, or shall consent to or acquiesce in the appointment of a
receiver, liquidator, trustee, sequestrator or similar official for any of the
Loan Parties or for a substantial part of any of their respective property, or
shall make an assignment for the benefit of creditors, or shall be generally
unable to pay any of the Loan Parties' respective debts generally as they become
due, or action shall be taken by any of the Loan Parties in futherance of any of
the foregoing.

7.1d DISSOLUTION; CESSATION OF BUSINESS. Any of the Loan Parties shall dissolve,
liquidate all or substantially all of any of their respective assets, terminate
any of their respective existences or cease to exist or permanently cease
operations; or all or a material part of the assets of the Borrower or any
Subsidiary of the Borrower shall be lost or destroyed and the resulting losses
are not fully covered by insurance; or unless otherwise permitted by the Bank,
if the Borrower or any 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.

7.1e ERISA. (i) One or more of the following events occur which results in or
could result in liability to the Borrower;

          (A) A Notice of Intent to terminate any Plan (including any Plan of an
ERISA Affiliate) is filed under Section 4041(c) of ERISA;

          (B) Proceedings shall be instituted for the appointment of a trustee
by the appropriate United States court to administer any Plan (including any
Plan of an ERISA Affiliate);

          (C) the PBGC shall institute proceedings to terminate any Plan
(including any Plan of an ERISA Affiliate) or to appoint a trustee to administer
any such Plan;

                                      -75-
<PAGE>
          (D) A notice assessing Withdrawal Liability with respect to any
Multiemployer Plan (including any Multiemployer Plan of an ERISA Affiliate)
shall have been received by the Borrower or any ERISA Affiliate; or

          (ii) Any Governmental Rule is adopted, changed or interpreted by any
Governmental Authority or agency or court with respect to or otherwise affecting
one or more Plans, Multiemployer Plans or Benefit Arrangements which, in the
reasonable opinion of the Bank, could have a material adverse effect on the
priority of any Encumbrance or security interest in favor of the Bank as
established or described in this Agreement or the other Loan Documents.

7.1f  ADVERSE JUDGMENTS. The aggregate amount of final judgments against any of
the Loan Parties for which no further appellate review exists shall, at any one
time, exceed, by Cdn.$5,000,000 (or its US Dollar equivalent) or more, the
aggregate amount of insurance proceeds available to pay such judgments.

7.1g  PROCEEDINGS AGAINST ASSETS. Any levy, garnishment, attachment or similar
proceeding shall be instituted against any property of the Borrower held by or
deposited with any the Bank or the commencement of any foreclosure or forfeiture
proceeding, execution or attachment against any Collateral securing the
obligations of the Borrower to the Bank, except in accordance with the terms of
the Intercreditor Agreement.

7.1h  NOTICE OF ENCUMBRANCE OR ASSESSMENT. A notice of Encumbrance or assessment
in excess of Cdn.$5,000,000 (or its US Dollar equivalent) which is not a
Permitted Lien is filed of record with respect to all or any part of the
Collateral by Canada or the United States, or any department, agency or
instrumentality of either, or by any state, province, county, municipal or any
other Governmental Authority, or any taxes or debts owing at any time or times
hereafter to any one of these becomes payable and the same is not paid within
ten (10) days after the same becomes payable.

7.1i  FAILURE TO TAKE CERTAIN ACTION; RELEASE OF CONTAMINANT. The Borrower shall
fail to take appropriate measures, with ten (10) days after notice to the
Borrower by the Bank, with respect to any action, suit, investigation,
proceeding or Environmental Claim then pending or threatened against the
Borrower the outcome of which is reasonably likely to cause a Material Adverse
Change with respect to the Borrower or any of its Subsidiaries; or any Release
of a Contaminant shall occur or is discovered or any environmental complaint
shall be filed by any Person that has caused, or is reasonably likely to cause,
a Material Adverse Change with respect to the Borrower or any of its
Subsidiaries.

7.1j  FAILURE TO COMPLY WITH LOAN DOCUMENTS.

      (i) Failure to Comply with Negative Covenants. The Borrower shall default
in the due performance or observance of any covenant contained in Article 5 of
this Agreement.

                                      -76-
<PAGE>
      (ii)  Failure to Comply with Other Covenants and Loan Documents. The
Borrower shall default in the due performance or observance of any covenant,
condition or provision set forth in this Agreement or any of the other Loan
Documents which is not set forth elsewhere in this Section 7.1, and such
default described in this item (ii) shall not be remedied for a period of
fifteen (15) Business Days after the earlier of (A) such default becoming known
to any Authorized Officer or (B) notice of such default being delivered by the
Bank to the Borrower.

      (iii) Default Under Co-Steel Guaranty Agreement. The occurrence of an
"event of default" under the terms of the Co-Steel Guaranty Agreement.

      (iv)  Failure of Related Parties to Comply with Other Covenants and Loan
Documents. Any of the other Loan Parties shall default in the due performance
or observance of any covenant, condition or provision set forth in this
Agreement or any of the other Loan Documents which is not set forth elsewhere
in this Section 7.1, and such default described in this item (iii) shall not be
remedied for a period of fifteen (15) Business Days after the earlier of (A)
such default becoming known to any Authorized Officer or (B) notice of such
default being delivered by the Bank to any of the Loan Parties.

7.1k  MISREPRESENTATION. Any representation or warranty made by the Borrower or
another Loan Party in any Loan Document to which it is a party is untrue in any
material respect as of the date made, or any schedule, statement, report,
notice, certificate or other writing furnished by the Borrower to the Bank is
untrue in any material respect on the date as of which the facts set forth
therein are stated or certified.

7.11  INVALIDITY, ETC., OF LOAN DOCUMENTS. Any material provision of this
Agreement or any of the other Loan Documents shall at any time for any reason
cease to be valid and binding on any of the Loan Parties, shall be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any of the Loan Parties or ACIERCO, as applicable, or any of the Loan
Parties or ACIERCO, as applicable, shall deny that it has any or further
liability or obligation under any Loan Document to which it is a party.

7.1m  OWNERSHIP BY CO-STEEL. The Borrower ceases to be a direct or indirect
wholly owned Subsidiary of Co-Steel.

7.1n  [RESERVED]

7.1o  INVALIDITY, ETC. OF LOAN DOCUMENTS. Any material provision of this
Agreement or any of the other Loan Documents shall at any time for any reason
cease to be valid and binding on the Borrower or on any other Person which is a
party thereto, or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Borrower, any Governmental
Authority or any other Person (other than the Bank), or the Borrower or any
other Person (other than the Bank), shall deny that it has any or further
liability or obligation under any Loan Document to which it is a party.

                                     - 77 -
<PAGE>
7.1p  MATERIAL ADVERSE CHANGE. The occurrence of any Material Adverse Change.

7.1q  SECURITY AGENTS' ENCUMBRANCE. The Encumbrance of any Security Agent upon
any of the Collateral, through no fault or inaction on the part of a Security
Agent, is or becomes unperfected or no longer constitutes, subject only to
Permitted Liens, a valid, first priority perfected Encumbrance.

7.1r  BREACH OF HEDGING CONTRACT. The Borrower 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;

7.1s  BREACH OF MATERIAL CONTRACT. Any Loan Party shall default in any material
respect under any Material Contract and the Loan party has not, within 30 days
of the occurrence of such default, taken steps to remedy, cure or otherwise
respond to such default in a manner satisfactory to the Bank.

7.1t  LOSS OF GOVERNMENTAL CONSENT. Any consent, license or authorization of any
Governmental Authority or any other Person which is required to make this
Agreement or any other Loan Document legal, valid, binding and enforceable or is
required in order to enable the Borrower, 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 any consent, license or authorization
of any Governmental Authority or any other Person which is required to make any
Material Contract or Material License legal, valid, binding and enforceable or
is required in order to enable any Borrower or any other party thereto to
perform its obligations hereunder or thereunder shall be withdrawn or ceases to
be in full force and effect.

7.1u  MODIFICATIONS OF OTHER INDEBTEDNESS. The Noteholders shorten the maturity
of the Prudential Notes or the Canadian Lenders shorten the maturity of the
obligations under the Canadian Bank Credit Agreement such that any Indebtedness
related to the Prudential Notes or Canadian Bank Credit Agreement matures sooner
than the Maturity Date.

7.2   REMEDIES.

7.2a  EVENTS OF DEFAULT UNDER SECTIONS 7.1c AND 7.1d. Upon the occurrence of an
Event of Default set forth in Sections 7.1c or 7.1d, the Revolving Credit
Commitment shall automatically terminate and the Revolving Credit Note,
interest accrued thereon and all other Obligations of the Borrower to the Bank
shall become immediately due and payable, without the necessity of demand,
presentation, protest, notice of dishonor or notice of default, all of which are
hereby expressly waived by the Borrower. Thereafter, the Bank shall have no
further obligation to make any additional Revolving Credit Loans or other
extensions of credit hereunder. In addition, during any 30-day period described
in Section 7.1c(i), the Bank shall not have any obligation to make additional
Loans hereunder.

                                     - 78 -
<PAGE>
7.2b     REMAINING EVENTS OF DEFAULT.  Upon the occurrence and during the
continuance of any Event of Default set forth in Sections 7.1a, 7.1b, 7.1e,
7.1f, 7.1g, 7.1h, 7.1i, 7.1j, 7.1k, 7.1l, 7.1m, 7.1o, 7.1p, 7.1q, 7.1r, 7.1s,
7.1t or 7.1u the Bank shall have no further obligation to make any additional
Loans hereunder and the Bank may, at its option, declare the Revolving Credit
Commitment terminated and the Revolving Credit Note, interest accrued thereon
and all other Obligations of the Borrower to the Bank to be due and payable,
without the necessity of demand, presentation, protest, notice of dishonor or
notice of default, all of which are hereby expressly waived by the Borrower.
Thereafter, the Bank shall have no further obligation to make any additional
Revolving Credit Loans hereunder.

7.2c     ADDITIONAL REMEDIES.  In addition to the remedies set forth above, upon
the occurrence of any Event of Default, the Bank shall have all of the rights
and remedies granted to it under this Agreement and the other Loan Documents and
all other rights and remedies granted to creditors by law, in equity, or
otherwise.

7.2d     EXERCISE OF REMEDIES: REMEDIES CUMULATIVE.  No delay on the part of
the Bank or failure by the Bank to exercise any power, right or remedy under
this Agreement or any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any power, right or remedy or any
abandonment or discontinuance of steps to enforce such right, power or remedy
preclude other or further exercises thereof, or the exercise of any other
power, right or remedy. The rights and remedies in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights or remedies
(including, without limitation, the right of specific performance) which the
Bank would otherwise have.

ARTICLE 8. GENERAL PROVISIONS

8.1      AMENDMENTS AND WAIVERS.  The Bank and the Borrower may from time to
time enter into amendments, extensions, supplements and replacements to and of
this Agreement and the other Loan Documents to which they are parties, and the
Bank may from time to time waive compliance with a provision of any of such
documents. No amendment, extension, supplement, replacement or waiver shall be
effective unless it is in writing and is signed by the Bank and the Borrower.
Each waiver shall be effective only for the specific instance and for the
specific purpose for which it is given. All of the rights of the Bank set forth
in this Agreement or in the other Loan Documents shall apply to any
amendment, extension, supplement and replacement to and of this Agreement and
the other Loan Documents.

8.2      TAXES.  The Borrower shall pay any and all stamp, document, transfer
and recording taxes, filing fees and similar impositions payable or hereafter
determined by the Bank to be payable in connection with this Agreement, the
other Loan Documents and any other documents, instruments and transactions
pursuant to or in connection with any of the Loan Documents. The Borrower
agrees to save the Bank harmless from and against any and all present and
future claims or liabilities with respect to, or resulting from, any delay in
paying or failure to pay any such taxes or similar impositions. The obligations
of the Borrower pursuant to this Section 8.2 shall survive the termination of
this Agreement and the repayment of the Obligations.

                                     - 79 -
<PAGE>
8.3   EXPENSES. The Borrower shall pay all reasonable costs and expenses of the
Bank (including without limitation the reasonable fees and disbursements of the
Bank's counsel) in connection with (A) the enforcement of this Agreement and
the other Loan Documents arising pursuant to a breach by any Loan Party of any
of the terms, conditions, representations, warranties or covenants of any Loan
Document to which he or it is a party, and (B) defending or prosecuting any
actions, suits or proceedings relating to any of the Loan Documents. All of
such costs and expenses shall be payable by the Borrower to the Bank upon
demand or as otherwise agreed upon by the Bank and the Borrower, and shall
constitute Obligations under this Agreement. The Borrower's obligation to pay
such costs and expenses shall survive the termination of this Agreement and the
repayment of the Obligations.

8.4   NOTICES

8.4a  NOTICE TO THE BORROWER. All notices required to be delivered to the
Borrower pursuant to this Agreement shall be in writing and shall be sent to
the following address, by hand delivery, recognized national overnight courier
service, telecopier or by the United States certified mail, return receipt
requested:

          Co-Steel Raritan, Inc.
          c/o Co-Steel Inc.
          Hopkins Street South
          Whitby, Ontario, Canada L1N 5T1
          Attention:   Andy Boulanger
                       Vice President and Chief Financial Officer
          Telecopier:  (905) 665-3720

8.4B  NOTICE TO THE BANK. All notices required to be delivered to the Bank
pursuant to this Agreement shall be in writing and shall be sent to the
following address, by hand delivery, recognized national overnight courier
service, telecopier or by United States certified mail, return receipt
requested:

          PNC Bank, National Association
          One PNC Plaza, 3rd Floor
          249 Fifth Avenue
          Pittsburgh, PA 15222-2707
          Attention:   Thomas McCool
                       Senior Vice President
                       Capital Recoveries Group
          Telecopier:  (412) 762-4157

8.4c  EFFECTIVENESS OF NOTICES. All such notices shall be effective three days
after mailing, or on the date of telecopy transmission or when received,
whichever is earlier. The Borrower and the Bank may each change the address
for service of notice upon it by a notice in writing to the other party hereto.

                                     - 80 -

<PAGE>
8.5  SET-OFF AND COLLATERAL.

8.5a SET-OFF. The Borrower hereby gives to the Bank and any Participant an
Encumbrance and security interest upon and in any of the Borrower's property,
credits, securities or money which may at any time be delivered to, or be in the
possession of, or owed by the Bank and any Participant in any capacity whatever,
including the balance of any deposit account, maintained by the Borrower with
the Bank or the Participant, as the case may be. The Borrower hereby authorizes
the Bank and any Participant, at any time and from time to time upon the
occurrence and during the continuance of an Event of Default, at the Bank's or
the Participant's option, to apply, at the discretion of the Bank or the
Participant, to the payment of the Obligations, any and all such property,
credits, securities or money now or hereafter in the hands of the Bank or the
Participant or belonging or owed to the Borrower.

8.5b FORM OF SECURITY DOCUMENTS. As general and continuing collateral security
for the payment and performance of all Obligations of each Loan Party at any
time owing to the Bank, the following security documents shall be delivered to
the Security Agents for and on behalf of the Bank, the Administration Agent,
each Canadian Lender and the Noteholders, in each case in form and substance
satisfactory to the Bank:

     (i)  a General Security Agreement from the Borrower and each Guarantor,
     together with all necessary consents (including Landlord's Consents);

     (ii) a Moveable Hypothec from the Borrower, Co-Steel, Distribution, USA
     Distribution and Sayreville (other than Co-Steel Benefits Plans, Inc.);

     (iii) a Debenture from Co-Steel comprising a first ranking fixed charge,
     (subject to Permitted Liens), in favor of the Canadian Security Agent on
     the interest of Co-Steel in all of the Ontario Properties and the North
     York Property and other fixed assets and a floating charge over the
     remaining present and future assets of Borrower and each Guarantor, pledged
     to the Canadian Security Agent pursuant to a debenture pledge agreement
     together with a Landlord's Consent from the landlord of the North York
     Property (other than Co-Steel CMS);

     (iv) a Mortgage with assignment of leases and rents, security agreement and
     fixture filing encumbering the New Jersey Properties as a first ranking
     fixed charge, (subject to Permitted Liens), in favor of the US Security
     Agent;

     (v)  a Leasehold Mortgage with assignment of subleases and rents, security
     agreement and fixture filing encumbering the North York Property with a
     Landlord's Consent from the landlord of the North York Property;

     (vi) a Landlord's Consent from the landlord of each Significant U.S. Leased
     Property;

                                     - 81 -
<PAGE>

         (vii) a Share Pledge Agreement from Co-Steel pledging all the
         securities held by Co-Steel in the capital of each of its direct
         Subsidiaries (other than Co-Steel Benefit Plans, Inc.) and ASW Holdings
         in favor of the Canadian Security Agent;

         (viii) a Share Pledge Agreement from the Borrower and each Related
         Party (other than Co-Steel) pledging all the securities held by the
         Borrower or such Related Party (other than Co-Steel) in the capital of
         each of its direct Subsidiaries;

         (ix) an assignment in favor of the applicable Security Agent by each
         Loan Party of all insurance, including business interruption, liability
         and property insurance, maintained by each Loan Party in respect of
         their respective businesses and assets, together with evidence of (i)
         the applicable Security Agent being noted as loss payee as its
         interests may appear; or (ii) in the case of liability policies, the
         applicable Security Agent being noted as additional insured; or (iii)
         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);

         (x) a Guaranty Agreement from each Guarantor of all of the Obligations
         of Borrower in favor of the Bank;

         (xi) a Standstill Agreement from Co-Steel (UK) Limited to be delivered
         as set forth in Section 6.4e; and

such other security as may reasonably be required by the Bank from time to time
in order to preserve and protect the interest of the Bank or either Security
Agent in the assets and property of any Loan Party from time to time.

8.5c     VALID ENCUMBRANCE.  All Collateral granted by any Loan Party to either
Security Agent shall rank prior and senior to all other Encumbrances on such
assets and undertaking of each Loan Party, except for Permitted Priority Liens,
and as otherwise expressly agreed by the Bank in writing.

8.5d     REGISTRATION.  The Borrower shall, at its expense, register, file or
record the Security Documents in all offices where such registration, filing or
recording is necessary or of advantage to the creation, perfection and
preserving of the security applicable to each Loan Party including, without
limitation, any land registry offices.

8.5e     AFTER ACQUIRED PROPERTY AND FURTHER ASSURANCES. The Borrower shall,
and it shall cause each of the Restricted Subsidiaries from time to time to,
upon the request of the Bank, provide the applicable Security Agent for the
benefit of the Bank, the Administration Agent, the Canadian Lenders and the
Noteholders with such further security instruments as may be required in
connection with any assets or shares acquired by the Borrower or any of the
Restricted Subsidiaries after the date hereof.

                                     - 82 -
<PAGE>
8.5f  FORM, SUBSTANCE AND REGISTRATION OF COLLATERAL. The Security Documents and
all acknowledgements referred to in this Article shall be in form and substance
satisfactory to the Bank, and the Security Documents shall be registered in
those jurisdictions that the Bank may from time to time reasonably require.

8.5g  BENEFIT OF COLLATERAL. The Collateral shall inure to the benefit of the
Bank until this Agreement is terminated and all indebtedness and liability of
each Loan Party to the Bank and any of them, whether under this Agreement or
otherwise, shall have been paid. The provisions of this Section shall have
effect notwithstanding that any obligations may at any time or from time to time
be fully discharged while this Agreement is still in full force and effect. None
of the Loan Documents constituting the Security Documents shall be amended,
released or discharged, in whole or in part, without the prior written consent
of the Bank. The Collateral shall continue to be effective or be reinstated, as
the case may be, if at any time any amount received by a Security Agent or the
Bank in respect of the Credit Facility or any Loan Document is rescinded or must
otherwise be restored or returned upon the occurrence of a bankruptcy event with
respect to any Loan Party or any substantial part of any Loan Party's
properties, or otherwise, all as though that amount had not been received.

8.6   PARTICIPATIONS AND ASSIGNMENTS.

8.6a  SALE OF PARTICIPATIONS. The Bank (or any other Lender) may, in the
ordinary course of its commercial banking business and in accordance with
applicable law, and without the consent of the Borrower, at any time sell to one
or more Participants (which Participants may be Affiliates of the Bank)
Participations in the Revolving Credit Commitment, the Revolving Credit Loans,
the Revolving Credit Note, the Letters of Credit and the other interest of the
Bank hereunder. In the event of any such sale of a Participation, the Bank's
obligations under this Agreement to the Borrower shall remain unchanged, the
Bank shall remain solely responsible for its performance under this Agreement,
the Bank shall remain the holder of the Revolving Credit Note made payable to it
for all purposes under this Agreement and the Borrower shall continue to deal
solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement and the other Loan Documents.

8.6b  ASSIGNMENTS. Subject to the remaining provisions of this Section 8.6b, the
Bank (or any other Lender, as applicable) may at any time, in the ordinary
course of its commercial lending business, in accordance with applicable law,
sell to one or more Purchasing Lender (which Purchasing Lender may be an
Affiliate of the Bank), all or a portion of its rights and obligations under
this Agreement, the Revolving Credit Note then held by it and any outstanding
Letters of Credit issued hereunder, pursuant to an Assignment and Assumption
Agreement in form and substance satisfactory to the Bank, executed by the Bank
(or any other Lender, as applicable) and the Purchasing Lender; subject, however
to the following requirements:

      (i)  Each such assignment must be in a minimum amount of $1,000,000, or,
if in excess of $1,000,000, in integral multiples of $100,000; and

                                     - 83 -
<PAGE>
     (ii) Each such assignment shall be a constant, and not a varying,
percentage of the Bank's Revolving Credit Commitment, the outstanding Revolving
Credit Loans, the outstanding Letters of Credit and all other rights and
obligations under this Agreement and the other Loan Documents.

     Upon the execution, delivery, acceptance and recording of any such
Assignment and Assumption Agreement, from and after the Transfer Effective Date
determined pursuant to such Assignment and Assumption Agreement, (i) the
Purchasing Lender thereunder shall be a party hereto as a Lender and, to the
extent provided in such Assignment and Assumption Agreement, shall have the
rights and obligations of the Bank (or any other selling Lender, as applicable)
hereunder with a Revolving Credit Commitment as set forth therein, and (ii) the
Bank (or any other selling Lender, as applicable) shall, to the extent provided
in such Assignment and Assumption Agreement, be released for its obligations
under this Agreement. Such Assignment and Assumption Agreement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender as a Lender and the resulting
adjustment of the Ratable Share arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of the Bank (or any
other selling Lender, as applicable) under this Agreement and under the
Revolving Credit Note. On or prior to the Transfer Effective Date, the Borrower
shall execute and deliver to the Bank (or any other selling Lender, as
applicable), in exchange for the surrendered Revolving Credit Note held by the
Bank (or any other selling Lender, as applicable), a new Revolving Credit Note
to the order of such Purchasing Lender in an amount equal to the Revolving
Credit Commitment or the Revolving Credit Loan assumed by it and purchased by it
pursuant to such Assignment and Assumption Agreement, and a new Revolving Credit
Note to the order of the Bank (or any other selling Lender, as applicable) in an
amount equal to the Revolving Credit Commitment or the Revolving Credit Loans
retained by it hereunder.

8.6c WITHHOLDING OF INCOME TAXES. At least five Business Days prior to the first
date on which interest or fees are payable hereunder for the account of any
Participant or Purchasing Lender, each Participant or Purchasing Lender that is
not incorporated under the laws of the United States or a state thereof agrees
that it will deliver to the Borrower and the Bank two duly completed and
executed copies of either (i) United Stated Internal Revenue Service Form W-9,
4224 or 1001 or other applicable form prescribed by the Internal Revenue
Service, certifying in each case that such Participant or Purchasing Lender is
entitled to receive payments under this Agreement and the Revolving Credit Note
without deduction or withholding of any United States Federal income taxes, or
is subject to such tax at a reduced rate under an applicable tax treaty or (ii)
United States Internal Revenue Service Form W-8, or another applicable form
prescribed by the Internal Revenue Service, or a certificate of such Participant
or Purchasing Lender indicating in each case that no such exemption or reduced
rate is allowable with respect to such payments. Each Participant or Purchasing
Lender which delivers a Form W-8, W-9, 4224 or 1001 further undertakes to
deliver to the Borrower and the Bank two additional copies of such form (or a
successor form) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably required by the Borrower or the Bank, either
certifying that such Participant or Purchasing Lender is entitled to

                                      -84-
<PAGE>
receive payments under this Agreement and the Revolving Credit Note without
deduction or withholding of any United States Federal income taxes or is
subject to such tax at a reduced rate under an applicable tax treaty or stating
that no such exemption or reduced rate is allowable. The Bank shall be entitled
to withhold United States Federal income taxes at the full withholding rate,
unless the Participant or Purchasing Lender establishes an exemption, or at the
applicable reduced rate, as established pursuant to this provisions of this
Section 8.6c.

8.7   SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Borrower
and the Bank and their respective successors and assigns, and shall inure to
the benefit of the Borrower, the Bank and their respective successors and
assigns; provided, however, that the Borrower shall not assign its rights or
duties hereunder or under any of the other Loan Documents without the prior
written consent of the Bank.

8.8   CONFIDENTIALITY. The Bank shall keep confidential and not disclose to any
Person, other than its directors, officers, employees, Affiliates and agents,
and to actual or potential Participants (provided such Participants are bound
by the same confidentiality provisions as in this Section 8.8), all non-public
information concerning the Borrower and the Borrower's Affiliates which comes
into the Bank's possession during the term hereof. Notwithstanding the
foregoing, the Bank may disclose information concerning the Borrower (i) in
accordance with normal banking practices and the Bank's policies concerning
disclosure of such information, (ii) pursuant to what the Bank believes to be
the lawful requirements or request of any Governmental Authority regulating
banks or banking, (iii) as required by any Governmental Rule, judicial process
or subpoena and (iv) to its attorneys, accountants and auditors.

8.9   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 enforceability without
invalidating the remaining portions hereof in such jurisdiction or affecting
the validity or enforceability of such or any other provision hereof in any
other jurisdiction.

8.10  INTEREST LIMITATION. Notwithstanding anything to the contrary herein
contained, the total liability of the Borrower for payment of interest pursuant
hereto shall not exceed the maximum amount, if any, of such interest permitted
by any applicable Governmental Rule to be contracted for, charged or received,
and if any payment by the Borrower to the Bank includes interest in excess of
such a maximum amount, the Bank shall apply such excess to the reduction of the
unpaid principal amount due pursuant hereto, or if none is due, such excess
shall be refunded to the Borrower; provided that, to the extent permitted by
applicable Governmental Rules, in the event the interest is not collected, is
applied to principal or is refunded pursuant to this sentence and interest
thereafter payable pursuant hereto shall be less than such maximum amount, then
such interest thereafter so payable shall be increased up to such maximum
amount to the extent necessary to recover the amount of interest, if any,
theretofore uncollected, applied top principal or refunded pursuant to this
sentence. Any such application or refund shall not cure or waive any Default or
Event of Default. In determining whether or not any interest payable under this
Agreement exceeds the highest rate permitted by law, any non-principal payment
(except payments specifically stated in this Agreement to be "interest") shall
be deemed, to the

                                     - 85 -
<PAGE>

extent permitted by applicable law, to be an expense, fee, premium or penalty
rather than interest. To the extent permitted by applicable law, the Borrower
hereby waives any provision of law which renders any provision hereof
prohibited, unenforceable or not authorized in any respect.

8.11     SURVIVAL.  Except as otherwise provided in Sections 3.19, 4.13, 8.2
and 8.3, all representations, warranties, covenants and agreements of the
Borrower contained herein or in the other Loan Documents or made in writing in
connection herewith shall survive the issuance of the Revolving Credit Note and
shall continue in full force and effect so long as the Borrower may borrow
hereunder and so long thereafter until all of the Obligations are paid in full.

8.12     GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
JERSEY, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS,
EXCEPTING APPLICABLE FEDERAL LAW AND EXCEPT ONLY TO THE EXTENT PRECLUDED BY THE
MANDATORY APPLICATION OF THE LAW OF ANOTHER JURISDICTION.

8.13     NON-BUSINESS DAYS.  Whenever any payment hereunder or under the
Revolving Credit Note is due and payable on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day (except as
specifically required by the terms of this Agreement), and such extension of
time shall in each such case be included in computing interest in connection
with such payment.

8.14     INTEGRATION.  This Agreement, together with the other Loan Documents,
constitutes the entire agreement between the parties hereto relating to this
financing transaction and it supersedes all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
transactions provided for herein.

8.15     HEADINGS.  Article, Section and other headings used in this Agreement
are intended for convenience only and shall not affect the meaning or
construction of this Agreement.

8.16     COUNTERPARTS; EFFECTIVENESS.  This Agreement and any amendment hereto
may be executed in several counterparts and by each party on a separate
counterpart, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute but one and the same
instrument. In proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the other party against
whom enforcement is sought. This Agreement shall become binding when the
parties have delivered (which delivery may be by telecopier) at least one
executed counterpart hereof or of the signature page hereto. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be as effective as delivery of a manually executed counterpart of this
Agreement.

8.17     WAIVER OF JURY TRIAL.  IN ORDER TO EXPEDITE THE RESOLUTION OF ANY
DISPUTES WHICH MAY ARISE UNDER THIS AGREEMENT

                                     - 86 -
<PAGE>
OR UNDER ANY OTHER LOAN DOCUMENT TO WHICH THE BORROWER IS A PARTY, AND IN LIGHT
OF THE COMPLEXITY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, THE PARTIES HERETO WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT TO WHICH THEY MAY
BOTH BE PARTIES, WHETHER ARISING OUT OF, UNDER, OR BY REASON OF THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY ASSIGNMENT OR OTHER TRANSACTIONS
CONTEMPLATED HEREBY OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER
BETWEEN THEM OF ANY KIND OR NATURE. BOTH PARTIES ACKNOWLEDGE THAT THIS WAIVER
OF JURY TRIAL HAS BEEN SPECIFICALLY NEGOTIATED AS A PART OF THIS AGREEMENT.

8.18      GENERAL INDEMNITY

8.18.a    INDEMNITY OBLIGATION. In addition to all the rights and remedies
available to the Bank at law or in equity, the Borrower hereby indemnifies the
Bank and its successors and permitted assigns and its Affiliates, shareholders,
officers, directors, employees, agents, and representatives (collectively, the
"INDEMNIFIED PERSONS") and save and hold each of them harmless against and pay
on behalf of, or reimburse each of them for, any loss (including diminutions in
value and consequential damages), liability, demand, suit, claim, action, cause
of action, judgement, cost, damage, debt, obligation, deficiency, Tax (including
any Taxes imposed with respect to indemnity payments made under this Agreement),
penalty, fine, charge and expense, whether or not arising out of any claims by
or on behalf of the Borrower, a Guarantor or any other Person, including
interest, penalties, reasonable lawyers' fees and expenses and all amounts paid
in investigation, defense or settlement of any of the foregoing (collectively,
the "LOSSES") which any Indemnified Persons may suffer, sustain, or become
subject to, as a result of, in connection with, relating or incidental to, or by
virtue of:

     (a)  any misrepresentation or breach of warranty on the part of the
     Borrower under Article III of this Agreement or a Subsidiary of the
     Borrower under a Security Document to which it is a party;

     (b)  without duplication of clause (a) above, any misrepresentation in or
     omission from any of the representations, warranties, statements, schedules
     and exhibits in or to this Agreement or any certificate or other instrument
     or document furnished to the Bank by the Borrower or any Subsidiary of the
     Borrower pursuant to this Agreement or any other Loan Document;

     (c)  any non-fulfillment or breach of any covenant or agreement on the part
     of the Borrower or any Subsidiary of the Borrower under this Agreement or
     any other Loan Document including, without limitation, any failure by the
     Borrower or any Guarantor to pay any amounts owing to a Security Agent
     pursuant to the terms of the Intercreditor Agreement; or

                                      -87-
<PAGE>

         (d) any claim whenever made, relating in any way to the Borrower or any
         Subsidiary and any claim, whenever made, arising out of, relating to,
         resulting from or caused by any transaction, status, event, condition,
         occurrence or situation relating to, arising out of or in connection
         with (i) the status or conduct of the Borrower or any Subsidiary, (ii)
         the execution, performance and delivery by the Borrower or any
         Subsidiary of the Borrower or any Subsidiary of this Agreement and the
         other Loan Documents and agreements contemplated hereby or (iii) any
         actions taken by or omitted to be taken by any of the Indemnified
         Persons in connection with this Agreement or any of the other Loan
         Documents and agreements contemplated hereby.

The obligations under this Section shall not extend to Losses of an Indemnified
Person arising because of the gross negligence or willful misconduct of such
Indemnified Person.

8.18b TIMING.  The indemnification of any Indemnified Person by the Borrower
pursuant to this Section shall be effected by wire transfer of immediately
available funds from the Borrower to an account designated by the Indemnified
Person within 15 days after determination of the requirement for
indemnification.

8.19 ENVIRONMENTAL INDEMNITY.  Without in any way limiting the indemnity
obligation set out in Section 8.18, the Borrower shall at all times indemnify
and hold harmless each Indemnified Person against and from any and all Losses of
any nature whatsoever suffered or incurred by any Indemnified Person upon
realization upon any Loan Document or the Borrower's, any Restricted
Subsidiaries' or any English Finance Structure Companies' assets, or as a result
of any order, investigation or action by any Governmental Authority relating to
the Borrower, any Restricted Subsidiary or any English Finance Structure Company
or its business or assets, or as mortgagee in possession of any property of any
Loan Party, or as successor-in-interest to any Loan Party by foreclosure deed or
deed in lieu of foreclosure, or under or on account of any Environmental Law or
Environmental Activity including the assertion of any Encumbrance thereunder,
with respect to any one or more of the following:

         (a) the Release or threat of Release of a Contaminant, or the presence
         of any Contaminant at, on or near any real property owned, leased or
         controlled by the Borrower, any Restricted Subsidiary or any English
         Finance Structure Company, whether or not the same originates or
         emanates from such property or any contiguous real property;

         (b) the Release of a Contaminant owned by, or under the charge,
         management or control of the Borrower, any Restricted Subsidiary or any
         English Finance Structure Company or any predecessor of or assignor to
         the Borrower or any Restricted Subsidiary, at a place other than real
         property owned, leased or controlled by the Borrower, any Restricted
         Subsidiary or any English Finance Structure Company;

         (c) any costs of removal or remedial action incurred by any
         Governmental Authority or any costs or damages incurred by any Person
         as a result of injury to, destruction of or loss of natural resources
         in relation to any real property owned, leased or controlled by the
         Borrower, any Restricted Subsidiary or any English Finance Structure
         Company or any

                                     - 88 -
<PAGE>
     contiguous real property or elsewhere, including reasonable costs of
     assessing injury, destruction or loss;

     (d)  liability for personal injury or property damage arising under any
     statutory or common law, including damages assessed for the maintenance of
     a public or private nuisance or for the carrying on of a dangerous activity
     at, on or near any property owned, leased or controlled by the Borrower,
     any Restricted Subsidiary or any English Finance Structure Company or
     elsewhere; and

     (e)  any other environmental matter within the jurisdiction of any
     Governmental Authority;

provided that no indemnification shall inure to the extent suffered or incurred
by the Indemnified Person as a result of the negligence or willful misconduct of
the Indemnified Person. The obligations of the Borrower under this Section shall
arise upon the discovery of the presence of any Contaminant, whether or not any
Governmental Authority has taken or threatened any action in connection with the
presence of any Contaminant. The Borrower shall be liable for any obligation
arising under this Section even if the amount of liability incurred exceeds the
amount of the Credit Facility outstanding or available at any time.

8.20 BANK NOT LIABLE. The Borrower agrees that the Bank shall not be liable to
the Borrower or any other Loan Party for any Losses which the Borrower or any
Subsidiary may suffer, sustain or become subject to as a result of, in
connection with, relating or incidental to or by virtue of any action taken or
not taken or anything done or not done by the Bank under or in respect of this
Agreement, any Loan or Letter of Credit, save and except for any Losses which
arise out of, or result from, the negligence, fraud or willful misconduct of the
Bank, provided that the Bank shall not be liable for any consequential damages
under any circumstances.

8.21 REVISIONS TO LIST OF AUTHORIZED OFFICERS. Additions or deletions to the
list of Authorized Officers may be made by a Loan Party at any time during the
term hereof by delivering to the Bank a revised, fully-executed incumbency
certificate.

8.22 AMENDMENT AND RESTATEMENT OF ORIGINAL CREDIT AGREEMENT. This Agreement is
intended to amend and restate in full the provisions of the Original Credit
Agreement, and as of the Restatement Closing Date, provided that (a) all of the
terms and provisions of the Original Credit Agreement shall continue to apply
for the period prior to the Restatement Closing Date, including any
determinations of payment dates, interest rates, Events of Default or any amount
that may be payable to the Bank, and (b) the Obligations (as defined in the
Original Credit Agreement) outstanding under the Original Credit Agreement on
and after the Restatement Closing Date shall be, and shall continue to be, owing
and outstanding under, and shall be subject in all respects, to the terms of
this Agreement.

     On the Restatement Closing Date, the Revolving Credit Loans (as defined in
the Original Credit Agreement) made by the Bank and outstanding immediately
prior to the Restatement Closing Date (the "Existing Revolving Credit Loans")
shall automatically, and without any action

                                     - 89 -
<PAGE>
on the part of the Bank or any of the Loan Parties, be designated and continued
as Revolving Credit Loans hereunder. On and as of the Restatement Closing Date,
there are no "As Offered Rate Periods" or "Euro-Rate Interest Periods"
outstanding under the Original Credit Agreement in respect of the Existing
Revolving Credit Loans. On the Restatement Closing Date, all letters of credit
shown on Schedule 2.9(a) shall automatically, and without any action on the part
of the Bank or any of the Loan Parties, be designated and deemed a Letter of
Credit issued hereunder.

8.23  WAIVER OF EXISTING DEFAULTS UNDER ORIGINAL CREDIT AGREEMENT; RELEASE OF
CLAIMS. Upon satisfaction of the conditions precedent set forth in Section 6.2
hereof and the effectiveness of this Agreement, the Bank hereby irrevocably and
permanently waives all "Defaults" and "Events Of Default" under the Original
Credit Agreement which existed immediately prior to the effectiveness of this
Agreement and the Bank agrees that each such existing "Default" and "Event of
Default" under the Original Credit Agreement (if any) shall be deemed to have
been permanently and irrevocably waived as of the date of the initial occurrence
thereof; provided,however, nothing contained herein shall be deemed to waive any
Default or Event of Default hereunder which arises out of any fact or
circumstance which would otherwise constitute a Default or Event of Default
under this Agreement.

     The Borrower, for itself and all of its predecessors, successors and
assigns, acknowledges, affirms and represents that immediately prior to giving
effect to this Agreement, it is legally, validly and enforceably obligated to
the Bank under and pursuant to the Original Credit Agreement and each of the
other Loan Documents (as defined in the Original Credit Agreement) to which the
Borrower is a party (the Original Credit Agreement, together with such other
Loan Documents executed in connection therewith, the "EXISTING LOAN DOCUMENTS")
and that the Borrower has no defense, offset, counterclaim or right of
recoupment with regard to such obligations, hereby fully, forever and completely
releases and discharges the Bank and all of its respective employees, officers,
directors, trustees, shareholders, affiliates, agents, attorneys,
representatives, predecessors, successors and assigns (collectively, the
"RELEASED PARTIES"), from any and all claims, demands, liabilities, damages and
causes of action of any kind whatsoever, whether based on facts in existence
prior to or as of the date of the effectiveness of this Agreement, whether known
or unknown, which the Borrower may now have or may have had at any time
heretofore or may have at anytime hereafter, whether for contribution or
indemnity or otherwise, and whether direct or indirect, fixed or contingent,
liquidated or unliquidated, arising out of or related in any way to any of the
following: (a) any of the Existing Loan Documents; and (b) any action, inaction
or omission by any of the Released Parties in connection with any of the
Existing Loan Documents or the administration thereof.

8.24  INTERCREDITOR AGREEMENT. The terms of this Agreement, and the rights,
remedies, immunities and privileges of the Bank hereunder, are subject to the
terms, conditions, agreements and covenants of the Intercreditor Agreement. This
Agreement shall be interpreted to be consistent with the terms of the
Intercreditor Agreement; and any conflicts between the terms of this Agreement
and the Intercreditor Agreement shall be resolved to provide a consistent
reading between the two documents and if that is not possible the terms of the
Intercreditor Agreement will control.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     - 90 -
<PAGE>

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Second Amended and Restated Credit Agreement to be
executed by their respective duly authorized officers as of the date first
written above and as a contract under seal.

ATTEST/WITNESS:               (SEAL)         CO-STEEL RARITAN, INC.,
                                             a New Jersey corporation

By: [SIGNATURE]                              By: /s/ Andrew Boulanger
    -------------------------------              -------------------------------
Name:                                        Name: Andrew Boulanger
Title:                                       Title: Vice President and Chief
                                                    Financial Officer

                                             c/s

                                             By: [SIGNATURE]
                                                 -------------------------------
                                             Name:
                                             Title:

                                             PNC BANK, NATIONAL ASSOCIATION

                                             By:
                                                 -------------------------------
                                             Name:
                                             Title:

<PAGE>

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Second Amended and Restated Credit Agreement to be
executed by their respective duly authorized officers as of the date first
written above and as a contract under seal.

ATTEST/WITNESS:               (SEAL)         CO-STEEL RARITAN, INC.,
                                             a New Jersey corporation

By:                                          By:
    -------------------------------              -------------------------------
Name:                                        Name: Andrew Boulanger
Title:                                       Title: Vice President and Chief
                                                    Financial Officer

                                             c/s

                                             By:
                                                 -------------------------------
                                             Name:
                                             Title:

                                             PNC BANK, NATIONAL ASSOCIATION

                                             By: /s/ Martin E. Mueller
                                                 -------------------------------
                                             Name: Martin E. Mueller
                                             Title: Vice President

<PAGE>

                                 SCHEDULE 1.1-1

                               LEASED PROPERTIES

<TABLE>
<CAPTION>
                                                                                                                MONTHLY
LESSEE              LESSOR                        ADDRESS             TERM (MONTH/DAY/YEAR)      DESCRIPTION     RENT       CURRENCY
------              ------                        -------             ---------------------      -----------    -------     --------
<S>                 <C>                           <C>                 <C>                        <C>            <C>         <C>
Co-Steel Raritan,   One Heritage Plaza Building   7501 Lemont Road    Feb. 25/98 to Feb. 25/02   Sales office   $1,721.82   USD
Inc.                75th Street & Lemont Road     Suite 230
                    Woodbridge, Illinois 60517    Woodbridge, Illinois
</TABLE>

<PAGE>

                                 SCHEDULE 1.1-2

                             NEW JERSEY PROPERTIES

<TABLE>
<CAPTION>
OWNER                     ADDRESS                      DESCRIPTION
-----                     -------                      -----------
<S>                       <C>                          <C>
Raritan River Urban       225 Elm Street,              Located on 93 acres on the New York Harbour
Renewal Corporation       P.O. Box 309                 30 miles south of New York.
                          Perth Amboy, New Jersey      Operates an electric arc furnace, ladle arc
                          USA                          refining unit, a continuous caster and a
                                                       twin-stand rod mill.

Co-Steel Sayreville,      North Crossman Road          Located on 116.5 acres.
Inc.                      Sayreville, New Jersey       Operates a Consteel furnace, ladle arc furnace,
                          USA                          a six-strand continuous caster, rolling mill
                                                       and a rebar epoxy plant.

Co-Steel Sayreville,      100 Bayview Avenue,          Located on 26.8 acres on the Raritan River.
Inc.                      Keasbey, New Jersey          Consists of a rebar fabrication shop and an
                          USA                          adjacent office building.
</TABLE>

<PAGE>

                                 SCHEDULE 1.1-3

                               ONTARIO PROPERTIES

<TABLE>
<CAPTION>
OWNER                     ADDRESS                      DESCRIPTION
-----                     -------                      -----------
<S>                       <C>                          <C>
Co-Steel Inc.             Hopkins Street South         Located on a 334-acre site 35 miles east of
(Co-Steel Lasco)          Whitby, Ontario              Toronto.
                          L1N 5T1                      Operates an electric arc furnace with a
                                                       ladle arc refining unit, a continuous caster,
                                                       a bar mill with continuous cutting and finishing
                                                       and a structural mill.

Co-Steel Inc.             8645 Hwy 25 North            Located on 33 acres west of Toronto
(Co-Steel Recycling -     Milton, Ontario              in Milton, Ontario.
Milton Division)          L9T 4B6                      Operates a baling operation and collects and
                                                       distributes both ferrous and non-ferrous
                                                       products. Milton is also a distribution centre
                                                       for finished steel products.
</TABLE>

<PAGE>

                                 SCHEDULE 1.1-4

                                OWNED PROPERTIES

<TABLE>
<CAPTION>
OWNER                                        ADDRESS
-----                                        -------
<S>                                          <C>
Raritan River Urban Renewal Corporation      225 Elm Street, Perth Amboy, New Jersey, USA
</TABLE>

<PAGE>

                                 SCHEDULE 1.1-5

                  EXISTING PERMITTED INTERCOMPANY INDEBTEDNESS

None.

<PAGE>
                                 SCHEDULE 1.1-6

                       SIGNIFICANT U.S. LEASED PROPERTIES

<Table>
<Caption>

LESSEE          LESSOR           ADDRESS          DESCRIPTION     MONTHLY RENT   CURRENCY           TERM
                                                                                              (MONTH/DAY/YEAR)
--------------------------------------------------------------------------------------------------------------
<S>             <C>              <C>              <C>             <C>            <C>           <C>
Co-Steel USA    Rosemont         382 Rosemont     Distribution    $100,133.50    US Dollars    Sept. 1/01 to
Distribution,   Properties       Road             warehouse and                                Aug. 31/16
Inc.                             North Jackson,   office space
                                 Ohio
---------------------------------------------------------------------------------------------------------------
Co-Steel USA    Enterprise       13535 S.         Distribution    $107,097.42    US Dollars    Nov. 1/00 to
Distribution,   Center VII L.P.  Torrence         warehouse and                                June 30/17
Inc.                             Avenue           office space
                                 Chicago,
                                 Illinois
---------------------------------------------------------------------------------------------------------------
</Table>
<PAGE>

                                SCHEDULE 2.9(a)

                         OUTSTANDING LETTERS OF CREDIT

<TABLE>
<CAPTION>
LETTER OF CREDIT            LOAN AMOUNT                     TRANSLATED TO CDN$ (@$1.6075)
----------------            -----------                     -----------------------------
<S>                         <C>                             <C>
Co-Steel Raritan, Inc.      4,857,000 Cdn$ (CIBC Mellon)    4,857,000

Co-Steel Raritan, Inc.      575,000 US$ (Reliance           924,313
                            Insurance Co.)
</TABLE>

[NOTE TO DRAFT: UPDATE EXCHANGE RATE]

<PAGE>

                               SCHEDULE 2.10(iv)

         MANDATORY PREPAYMENT FOR MARCH 2002 SIGNIFICANT SHARE OFFERING
                    AND REVISED REVOLVING CREDIT COMMITMENT

     The PNC Raritan Portion of the March 2002 Significant Share Offering is
$964,348.29 and the revised Revolving Credit Commitment after such payment on
the Restatement Closing Date and the application of the terms of Section 2.1f
and Section 2.10 of this Agreement is $14,717,739.73.

                                     - 2 -

<PAGE>

                                  SCHEDULE 3.8

                MATERIAL ADVERSE CHANGES SINCE DECEMBER 31, 2001

None.

<PAGE>

                                 SCHEDULE 3.10

                                   LITIGATION

None.

<PAGE>

                                 SCHEDULE 3.12

                                 LABOUR MATTERS

CO-STEEL RARITAN, INC.

o    On June 26, 2001, approximately 275 employees at Co-Steel Raritan, Inc.
     certified the United Steel Workers of America as their bargaining
     representative. Co-Steel Inc. and Co-Steel Raritan, Inc. continue to
     negotiate with the United Steel Workers of America towards a mutually
     satisfactory first collective agreement.

<PAGE>

                                 SCHEDULE 3.15

                          INTELLECTUAL PROPERTY RIGHTS

None.

<PAGE>

                                 SCHEDULE 3.19

                             ENVIRONMENTAL MATTERS

Attached hereto is an extract from the Annual Report of Co-Steel Inc. (the
"Company") regarding environmental matters.

<PAGE>
                                     - 2 -

The Company's business units are required to comply with an evolving body of
environmental laws and regulations concerning, among other things, emission into
air, discharges to surface groundwater, noise control, and the generation,
handling, storage, transportation and disposal of toxic and hazardous substances
and the cleanup of contamination. These laws and regulations vary depending on
the location of the facility and can fall within federal, provincial, state, or
municipal jurisdictions.

The Company generates certain wastes, such as electric arc furnace dust, that
are classified as hazardous wastes and must be properly disposed of under
applicable environmental laws and regulations. In the United States and Canada,
certain environmental laws and regulations impose joint and several liability
on certain classes of persons for the costs of investigation and cleanup of
contaminated properties regardless of fault or the legality of the original
disposal. Some of the Company's present and former facilities have been in
operation for many years and, over such time, the facilities have used
substances and disposed of wastes that may require cleanup, for which the
Company could be liable. There is no assurance that the costs of such cleanups
or the cleanup of any potential contamination not yet discovered will not
materially adversely affect the Company.

In 2000, Co-Steel Sayreville and Co-Steel Raritan took part in the U.S.
Environmental Protection Agency's (EPA) Steel Mini-mill Audit Initiative
Program. Both New Jersey mini-mills conducted a comprehensive, third party,
multi-media environmental audit. The results of this audit were disclosed to the
U.S. EPA along with a list of corrective actions, all of which are expected to
be completed by the second half of 2002. None of the identified and disclosed
items have resulted, or will result, in material costs being incurred. In
meeting its overall environmental goals and government-imposed standards in 2000
and 2001, the Company incurred operating costs of approximately $6 million and
spent $10 million on capital improvements.

Carbon monoxide emissions at Co-Steel Raritan permitted levels on several
occasions during the six months ended December 31, 2001. These episodes were
promptly reported to the New Jersey Department of Environmental Protection
(NJDEP). Co-Steel Raritan is conducting investigations to determine the cause of
these episodes, what steps can be taken to reduce emissions and whether the
Co-Steel Raritan environmental permits require modification. Discussions with
the NJDEP regarding permit and compliance issues are in a preliminary stage. At
this time, it is not possible to determine whether a modified permit may be
required, whether penalties might be imposed, the extent of penalties that might
be imposed, the steps that might be required to reduce carbon monoxide emissions
to acceptable levels or the cost thereof.

No assurance can be given that unforeseen changes, such as new laws or
enforcement policies, or a crisis at one of the Company's properties or
operations, will not have as material adverse effect on the business, financial
condition or results of operations of the Company. The Company's business units
are required to have governmental permits and approvals. Any of these permits or
approvals may be subject to denial, revocation or modification under various
circumstances. Failure to obtain or comply with the conditions of permits and
approvals may adversely affect the operations of the Company and may subject the
Company to penalties. In addition, the Company may be required to obtain
additional operating permits or governmental approvals and incur additional
costs. There can be no assurance that the Company will be able to meet all
applicable regulatory requirements. There is no assurance that the Company's
environmental capital expenditures will not materially increase in the future.
Moreover, the Company may be subject to fines, penalties or other liabilities
arising from its actions imposed under environmental legislation or regulations.

<PAGE>

                                 SCHEDULE 3.23

                                  DEBT DEFAULT

Defaults under the following agreement:

     o  Amended and Restated Credit Agreement between Co-Steel Raritan, Inc.
        and PNC Bank, National Association, dated as of September 30, 2000.

<PAGE>

                                SCHEDULE 3.29-1

                               MATERIAL CONTRACTS

CO-STEEL INC./CO-STEEL LASCO

o    Transmission Connection Agreement between Hydro One Networks Inc. and
     Co-Steel Lasco, a division of Co-Steel Inc. dated March 8, 2002

o    Participation Agreement between Independent Electricity Market Operator
     (IMO) and Co-Steel Lasco, a division of Co-Steel Inc. dated January 10,
     2002

o    Enabling Agreement between Ontario Power Generators and Co-Steel Inc.
     dated March 18, 2002

CO-STEEL SAYREVILLE, INC.

o    Agreement between Jersey Central Power and Light Company and New Jersey
     Steel Corporation dated July 23, 1992.

CO-STEEL RARITAN, INC.

o    Agreement between Co-Steel Raritan, Inc. and Public Service Electric and
     Gas Company dated November 14, 1994.

<PAGE>

                                SCHEDULE 3.29-2

                               MATERIAL LICENSES

<Table>
<Caption>

PERMITHOLDER               NAME OF PERMITS                                  ISSUED BY
------------               ---------------                                  ---------
<S>                        <C>                                              <C>

Co-Steel Inc./Co-Steel     (a) Registered Waste Generator,                  (a) Ontario Ministry of the
Recycling Cedardale            Generator Registration No. ON0268903             Environment

Co-Steel Inc./Co-Steel     (a) Registered Waste Generator,                  (a) Ontario Ministry of the
Recycling Cornwall             Generator Registration No. ON0268909             Environment

Co-Steel Inc./Co-Steel     (a) Registered Waste Generator,                  (a) Ontario Ministry of the
Recycling Hamilton             Generator Registration No. ON0268908             Environment

Co-Steel Inc./Co-Steel     (a) Shredder Certificate of Approval (Air),      (a) Ontario Ministry of the
Recycling Industrial           Certificate of Approval No. 8-3029-87-006        Environment

                           (b) Stormwater Discharge Certificate of          (b) Ontario Ministry of the
                               Approval, Certificate of Approval                Environment
                               No. 4-0011-98-006

                           (c) Registered Waste Generator,                  (c) Ontario Ministry of the
                               Generator Registration No. ON0268907             Environment

Co-Steel Inc./Co-Steel     (a) Registered Waste Generator,                  (a) Ontario Ministry of the
Recycling London               Generator Registration No. ON0268910             Environment

Co-Steel Inc./Co-Steel     (a) Water discharge Certificate of Approval      (a) Ontario Ministry of the
Recycling Milton               (2 Oil/Water separators), Certificate of         Environment
                               Approval No. 4-0045-99-006

                           (b) Registered Waste Generator,                  (b) Ontario Ministry of the
                               Generator Registration No. ON0268906             Environment

Co-Steel Inc./Co-Steel     (a) Registered Waste Generator,                  (a) Ontario Ministry of the
Recycling Solomon              Generator Registration No. ON0268904             Environment

Co-Steel Inc./BERM*        (a) Landfill Certificate of Approval,            (a) Ontario Ministry of the
                               Waste Disposal Site No. A390510                  Environment

                           (b) Stormwater Certificate of Approval,          (b) Ontario Ministry of the
                               Sewer Discharge No. 4-0068-94-006                Environment & Energy

Co-Steel Inc./Co-Steel     (a) EAF APC Certificate of Approval (air),       (a) Ontario Ministry of the
Lasco                          Certificate of Approval No. 8-3017-88-006        Environment

                               Bar Mill BRF stack Certificate of
                               Approval (air), Application
                               No. 8/300/116/79/796

                               Structural Mill BRF stack Certificate of
                               Approval (air), Certificate of Approval
                               No. 8-3131-88-006

                           (b) MISA Reg. (effluent limits),                 (b) Ontario Ministry of the
                               ISBN No. 0-7778-3610-6                           Environment Regulation

                           (c) Registered Waste Generator, Generator        (c) Ontario Ministry of the
</Table>

_________________________

* BERM is an integral part of Co-Steel Recycling Industrial Division but is
owned by Co-Steel LASCO.

<PAGE>

                                      - 2-

<Table>
<Caption>

PERMITHOLDER               NAME OF PERMITS                                  ISSUED BY
------------               ---------------                                  ---------
<S>                        <C>                                              <C>
                               Generator Registration No. ON0268900              Environment

Co-Steel Sayreville, Inc.  (a) EAF Air Permit, Application Log# 01-96-0908   (a) New Jersey Department of
                                                                                 Environmental Protection
                               BRF Air Permit, Application Log# 01-96-2386

                               RRF Air Permit (Epoxy re-heat)
                               Certificate Nos. 094990; 115346; and 115347.

                           (b) Stormwater Discharge Permit,                  (b) New Jersey Department of
                               Permit No. NJ0107956                              Environmental Protection

                           (c) EPA Haz Waste Generator's ID and ISRA         (c) U.S. Environmental
                               Agreement, Generator's US EPA ID                  Protection Agency
                               No. NJD078873270

Co-Steel Raritan, Inc.     (a) EAF APC Certificate of Approval (air),        (a) New Jersey Department of
                               Application log# 01-98-0137                       Environmental Protection

                               BRF Air Permit, Application Log# 01933517

                               NOx RACT Plan, APC Plant ID No. 15562

                           (b) Stormwater/Groundwater Discharge Permit,      (b) New Jersey Department of
                               NJPDEPES Consolidated Permit No.,                 Environmental Protection
                               NJ0031178/P.I. ID No. 46826

                           (c) EPA Haz Waste Generator's ID,                 (c) U.S. Environmental
                               Generator's US EPA ID No. NJD085644110            Protection Agency
</Table>

<PAGE>
                                    SCHEDULE 3.30
    JURISDICTIONS OF BUSINESS, ASSETS, CHIEF EXECUTIVE OFFICE AND FORMATION

<Table>
<Caption>
------------------------------------------------------------------------------------------------------------------------------------
  COMPANY              REGISTERED OFFICE         PRINCIPAL PLACE OF     LOCATION OF ASSETS         RECORDS KEPT      JURISDICTION OF
                                                     BUSINESS                                                         INCORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                     <C>                     <C>                     <C>                     <C>
Co-Steel Raritan,    225 Elm Street          225 Elm Street          225 Elm Street          225 Elm Street          New Jersey
Inc.                 P.O. Box 309            P.O. Box 309            Perth Amboy, New Jersey P.O. Box 309
                     Perth Amboy, New Jersey Perth Amboy, New Jersey 08862                   Perth Amboy, New Jersey
                     08862                   08862                   135355 Torrence Avenue  08862
                                                                     Chicago, Illinois 60633 AND
                                                                     382 Rosemont Road       Hopkins Street South
                                                                     North Jackson, Ohio     Whitby, Ontario
                                                                     44451                   L1N 5T1
------------------------------------------------------------------------------------------------------------------------------------
Raritan River Urban  225 Elm Street          225 Elm Street          N/A                     225 Elm Street          New Jersey
Renewal Corporation  P.O. Box 309            P.O. Box 309                                    P.O. Box 309
                     Perth Amboy, New Jersey Perth Amboy, New Jersey                         Perth Amboy, New Jersey
                     08862                   08862                                           08862
                                                                                             AND
                                                                                             Hopkins Street South
                                                                                             Whitby, Ontario
                                                                                             L1N 5T1
------------------------------------------------------------------------------------------------------------------------------------
</Table>
<PAGE>

                                 SCHEDULE 3.31

                                 BANK ACCOUNTS

<TABLE>
<CAPTION>
                                                                                                IN CANADIAN
COMPANY                                                                                         (CAD) OR US
NAME           BANK NAME      LOCATION          ACCOUNT NUMBER         DESCRIPTION             (USD) DOLLARS
-------        ---------      --------          --------------         -----------             -------------
<S>            <C>            <C>               <C>                    <C>                     <C>
Co-Steel       PNC            East Brunswick,   8100902665WCM          Sweep Account           USD
Raritan, Inc.                 New Jersey        8100902665             Operating Account
                                                8100902673             Clearing Account
</TABLE>

<PAGE>

                                 SCHEDULE 3.32

                       INTER-CORPORATE LOANS BY BORROWERS

None.

<PAGE>

                                 SCHEDULE 3.34

                  LICENSES, AGENCY AND DISTRIBUTION AGREEMENTS

DISTRIBUTION AGREEMENT

     o  Distribution Agreement between Co-Steel USA Distribution, Inc. and
        Co-Steel Raritan, Inc., dated April 30, 2002

<PAGE>
                                  SCHEDULE 5.1

                             PERMITTED INDEBTEDNESS

                                 CO-STEEL INC.
                      SUMMARY OF OUTSTANDING INDEBTEDNESS

<Table>
<Caption>
                                      LOSS AMOUNT                    TRANSLATED TO CDN$ (@1.6075)
                                      -----------                    ----------------------------
<S>                                   <C>                            <C>
TD SYNDICATE
(CO-STEEL INC.)
          Base Rate Loans             40,500,000 Cdn$                              $40,500,000

                                      78,100,000 US$                              $125,545,750

Letters of Credit                      2,207,000 Cdn$ (Ministry of                  $2,207,000
                                       Environment)

                                         750,000 US$ (Chicago                       $1,205,625
                                       Depot)

PNC BANK
(CO-STEEL SAYREVILLE, INC.)
          Co-Steel Sayreville Loan     8,600,000 US$                               $13,824,500

          Letters of Credit            5,000,000 Cdn$ (CIBC Mellon)                 $5,000,000

PNC BANK
(CO-STEEL RARITAN, INC.)
          Co-Steel Raritan Loan       12,000,000 US$                               $19,290,000
                                       4,857,000 Cdn$ (CIBC Mellon)                 $4,857,000
                                         575,000 US$ (Reliance                        $924,313
                                       Insurance Co.)

PRUDENTIAL CAPITAL
(CO-STEEL INC.)
          2004 Loan                   45,000,000 US$                               $72,337,500

          2006 Loan                   75,000,000 US$                              $120,562,500

                                                                                  $406,254,187
</Table>
<PAGE>
                                 SCHEDULE 6.4C

                         HUNGARIAN LOAN REORGANIZATION

Set out below is a summary of the proposed transaction steps, which may change
based on a more detailed review of regulatory, tax or other considerations in
Canada, United States and Hungary.

     1.   1102590 Ontario Limited ("1102590") will incorporate a new subsidiary
               pursuant to the laws of the State of Delaware ("New Holdco").

     2.   1102590 will sell to New Holdco all of its shares in Co-Steel US Ltd.
               ("Co-Steel US") and a promissory note issued by Co-Steel US to
               1102590 of approximately US $19.6 million. As consideration, New
               Holdco will issue:

          o    a promissory note ("Note 1") in the amount of approximately U.S.
               $100 million, which amount equals the principal value of a term
               loan made by Co-Steel Hungary to Co-Steel USA Holdings, Inc
               ("Co-Steel USA Holdings") and unpaid accrued interest;

          o    a promissory note ("Note 2") in the amount of approximately U.S.
               $78,800,000, which amount equals the aggregate principal values
               of four promissory notes issued by Co-Steel CSM Corp. ("Co-Steel
               CSM") to Co-Steel Hungary and unpaid accrued interest; and

          o    common shares.

After this transaction New Holdco will be a wholly-owned subsidiary of 1102590
and Co-Steel US will be a wholly-owned subsidiary of New Holdco.

     3.   1102590 will assign Note 1 and Note 2 to Co-Steel US in exchange for
          the issuance by Co-Steel US of a promissory note ("US Note") to
          1102590.

     4.   Co-Steel US will assign Note 1 to Co-Steel USA Holdings in exchange
          for treasury shares of Co-Steel USA Holdings.

     5.   Co-Steel US will assign Note 2 to Co-Steel CSM in exchange for
          treasury shares of Co-Steel CSM.

     6.   Co-Steel USA Holdings will assign Note 1 to Co-Steel Hungary as
          consideration for the repayment in full of the principal amount of the
          term loan made by Co-Steel Hungary to Co-Steel USA Holdings and unpaid
          accrued interest, as referred to in step 2 above.

     7.   Co-Steel CSM will assign Note 2 to Co-Steel Hungary as consideration
          for the repayment in full of the principal amount of the four
          promissory notes issued by Co-Steel CSM to Co-Steel Hungary and unpaid
          accrued interest, as referred to in step 2 above.
<PAGE>
                                      -2-

     8.   1102590 will assign the US Note to New Holdco in exchange for treasury
          shares of New Holdco.

     9.   New Holdco will obtain a daylight loan and will use the proceeds to
          subscribe for additional shares of Co-Steel US. The amount of the
          daylight loan(s) should aggregate approximately U.S. $23 million,
          which amount equals the aggregate principal values of the three term
          loans made by Co-Steel Hungary to Co-Steel Sayreville and unpaid
          accrued interest.

     10.  Co-Steel US will lend the funds it receives from the share
          subscription in step 9 to Co-Steel Sayreville in consideration for
          which Co-Steel Sayreville will issue a promissory note to Co-Steel
          US.

     11.  Co-Steel Sayreville will use the loan proceeds from step 10 to repay
          in full the principal amounts of the three term loans made by
          Co-Steel Hungary to Co-Steel Sayreville and unpaid accrued interest.

     12.  Co-Steel Hungary will use the proceeds from the repayment of the three
          term loans to make a loan to New Holdco.

     13.  If and to the extent the credit facility limits the daylight loan
          referred to in step 9 to an amount less than that required to fully
          repay the three term loans and unpaid accrued interest, separate
          daylight loans should be obtained for the repayment in full of each
          term loan and unpaid accrued interest separately in accordance with
          steps 8 through 12.

     14.  Upon repayment of the three term loans and unpaid accrued interest in
          accordance with step 13, New Holdco will use the aggregate loan
          proceeds from step 12 to repay the total of its daylight loan(s) from
          step 9.

     15.  The Borrower will cause to be delivered to the U.S. Security Agent (i)
          all of the shares which 1102590 holds in the capital stock of New
          Holdco, together with a duly executed stock transfer power, (ii) a
          Guarantee, General Security Agreement and Share Pledge Agreement from
          New Holdco in favour of the U.S. Security Agent for the benefit of the
          Administrative Agent, Banks, PNC and Noteholders together with a duly
          executed stock transfer power respecting the shares which New Holdco
          owns in Co-Steel (U.S.) Ltd.

     16.  The terms and conditions of the New Holdco Loans, Note 1 and Note 2
          payable by New Holdco to Co-Steel Hungary (collectively "Hungary
          Debt") will have a maturity date after December 31, 2006, with no
          provision for the prepayment of principal until maturity. The Hungary
          Debt will include a clause establishing that the creditor will not sue
          under the default provisions without first consulting with the issuer
          and Noteholders. (Default provisions to be determined.)

     17.  The US Note and the Sayreville Notes ("New Subordinated Loan Notes")
          will be amended so that the terms and conditions are reasonably
          satisfactory to the Administration Agent pursuant to subordinated loan
          notes.
<PAGE>

                                     - 3 -

18.  New Holdco shall deliver to the US Security Agent the New Subordinated
     Loan Notes duly endorsed for transfer.

<PAGE>
                                  "EXHIBIT A"

                                     SECOND
                              AMENDED AND RESTATED
                             REVOLVING CREDIT NOTE

$15,682,088.02                                          Pittsburgh, Pennsylvania
                                                                  April 30, 2002

     THIS SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE (this Amended and
Restated Revolving Credit Note, together with all extensions, renewals,
amendments, substitutions and replacements hereto and hereof, is hereinafter
referred to as this "Revolving Credit Note") is executed and delivered under and
pursuant to the terms of that certain Second Amended and Restated Credit
Agreement dated as of April 30, 2002 (the Second Amended and Restated Credit
Agreement, together with all exhibits, schedules, amendments, extensions,
renewals, substitutions and replacements thereto and thereof is hereinafter
referred to as the "Credit Agreement") by and between CO-STEEL RARITAN, INC., a
New Jersey Corporation (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION (the
"Bank").

     FOR VALUE RECEIVED the Borrower promises to pay to the order of the Bank at
the Bank's principal office at One PNC Plaza, 249 Fifth Avenue, Pittsburgh,
Pennsylvania 15222 on the Revolving Credit Termination Date, the lesser of (i)
FIFTEEN MILLION SIX HUNDRED EIGHTY-TWO THOUSAND EIGHTY-EIGHT AND 02/100 DOLLARS
($15,682,088.02) or (ii) the aggregate unpaid principal amount of all Loans and
advances made by the Bank to the Borrower pursuant to Section 2.1 of the Credit
Agreement and reflected on the Loan Account maintained by the Bank pursuant to
Section 2.6 of the Credit Agreement.

     The outstanding principal balance hereunder shall be due and payable in its
entirety at maturity, whether on the Revolving Credit Termination Date, upon
acceleration, or otherwise, all as more fully described in the Credit Agreement.

     Interest on the unpaid principal balance hereof shall be due and payable
and shall be calculated and paid in accordance with the terms of the Credit
Agreement. The interest rate will be adjusted, when necessary and if
appropriate, in accordance with the terms of the Credit Agreement. Interest
shall accrue at the interest rate or interest rates per annum specified in the
Agreement until payment in full, notwithstanding entry of judgment on this
Revolving Credit Note. Interest payments shall be made at the office of the Bank
set forth above.

     The Bank has opened, and maintains, on its books a Loan Account in the name
of the Borrower with respect to the disbursements of the Revolving Credit Loans
under the Revolving Credit Commitment, repayments and prepayments of the
principal balance hereof, and the computation and payment of interest and all
other amounts due hereunder and under the Credit Agreement. Absent manifest
error, such Loan Account shall be conclusive and binding on the Borrower as to
the amount at any time due hereunder and under the Credit Agreement to the Bank
from the Borrower.

     This Revolving Credit Note is the Revolving Credit Note referred to in the
Credit Agreement. Reference is made to the provisions in the Credit Agreement
for the extension of the
<PAGE>
Revolving Credit Commitment, the prepayment hereof and the acceleration of the
maturity hereof. All of the terms, conditions, covenants, representations and
warranties of the Credit Agreement are incorporated herein by reference as if
same were more fully set forth at length herein. All capitalized terms used
herein as defined terms which are not defined herein but which are defined in
the Credit Agreement shall have the same meanings herein as are ascribed to
them in the Credit Agreement.

     This Revolving Credit Note amends and restates that certain Amended and
Restated Revolving Credit Note dated September 30, 2000, in the face amount of
TWENTY MILLION DOLLARS ($20,000,000) and executed by the undersigned in favor of
the Bank (the "Prior Note"). The credit available under this Revolving Credit
Note is a renewal and extension of the credit available under the Prior Note and
this Revolving Credit Note is issued in replacement of the Prior Note. The
credit available under the Prior Note will continue to be evidenced by this
Revolving Credit Note. No advances have been, or are being, made by Bank to
satisfy the indebtedness evidenced by the Prior Note, and this Revolving Credit
Note is not a novation of the indebtedness evidenced by the Prior Note. Any
accrued and unpaid interest on such Prior Note as of the date hereof shall
continue to be due and payable under this Revolving Credit Note.

     Upon the occurrence of any Event of Default specified in the Credit
Agreement the principal hereof and accrued interest hereon may become forthwith
due and payable, all as provided in the Credit Agreement.

     Demand, presentation, protest and notice of dishonor are hereby waived.

     This Revolving Credit Note is made under and governed by the laws of the
Commonwealth of Pennsylvania without reference to the provisions thereof
regarding conflicts of law.

     The terms of this Revolving Credit Note, and the rights, remedies,
immunities and privileges of the Bank hereunder, are subject to the terms,
conditions, agreements and covenants of the Intercreditor Agreement. This
Revolving Credit Note shall be interpreted to be consistent with the terms of
the Intercreditor Agreement; and any conflicts between the terms of this
Revolving Credit Note or the Credit Agreement and the Intercreditor Agreement
shall be resolved to provide a consistent reading among such documents and if
that is not possible the terms of the Intercreditor Agreement will control.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -2-
<PAGE>

     IN WITNESS WHEREOF, the Borrower, with the intent to be legally bound
hereby, has caused this Second Amended and Restated Revolving Credit Note to be
executed by its duly authorized officers as of the date first written above and
as an instrument under seal.

Attest/Witness:                         CO-STEEL RARITAN, INC.,
                                        a New Jersey corporation

By: [SIGNATURE]                         By: [SIGNATURE]                (SEAL)
    ---------------------------------       ---------------------------
Name:                                   Name:
Title:                                  Title:

                                        c/s

                                        By: [SIGNATURE]
                                            ---------------------------------
                                        Name:
                                        Title:

<PAGE>
                               FIRST AMENDMENT TO
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"FIRST AMENDMENT") is made as of October 1st, 2002, and entered into by and
between CO-STEEL RARITAN, INC., a New Jersey corporation (the "BORROWER"), and
PNC BANK, NATIONAL ASSOCIATION (the "BANK"), and amends that certain Second
Amended and Restated Credit Agreement dated as of April 30, 2002, by and between
the Borrower and the Bank (such Second Amended and Restated Credit Agreement is
hereinafter referred to as the "ORIGINAL CREDIT AGREEMENT").

                              W I T N E S S E T H :

     WHEREAS, the Borrower and the Bank entered into the Original Credit
Agreement; and

     WHEREAS, upon the request of the Borrower, the Bank has agreed to modify
the Original Credit Agreement, all as more particularly set forth herein.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
with the intent to be legally bound hereby, the parties hereto agree as follows:

                                    ARTICLE I
               AMENDMENTS TO ORIGINAL CREDIT AGREEMENT AND WAIVER
               --------------------------------------------------

     SECTION 1.01 AMENDMENTS TO SECTION 1.1 OF THE ORIGINAL CREDIT AGREEMENT.
                  ----------------------------------------------------------

          (a) The following defined terms and the definitions therefor are
     hereby added to Section 1.1 of the Original Credit Agreement and inserted
     in correct alphabetical order:

          Acknowledgment of Intercreditor Agreement: The First Amendment to
          -----------------------------------------
     Intercreditor Agreement among the Canadian Security Agent, the US Security
     Agent, the Bank, the Administration Agent and the Noteholders as consented
     to by the Borrower and each of the other Loan Parties and dated as of the
     First Amendment Effective Date.

     Ameristeel Amalgamation: The issuance by Co-Steel of its common shares
     -----------------------
     pursuant to and in accordance with Section 3.5 of the Transaction
     Agreement.

          Co-Steel Share Pledge Agreement: The share pledge agreement dated as
          -------------------------------
     of April 30, 2002 between Co-Steel and Computershare Trust Company of
     Canada, as amended, modified, restated or supplemented from time to time.
<PAGE>
          Courtice: Gerdau Courtice Steel Inc., a corporation incorporated under
          --------
     the laws of Canada.

          First Amendment: The First Amendment to Second Amended and Restated
          ---------------
     Credit Agreement entered into by and between the Borrower and the Bank and
     dated as of the First Amendment Effective Date.

          First Amendment Effective Date: October 23rd, 2002
          ------------------------------

          First Amendment to Guaranty Agreement: The First Amendment to Second
          -------------------------------------
     Amended and Restated Guaranty Agreement entered into by and between
     Co-Steel and the Bank and dated as of the First Amendment Effective Date.

          First Amendment Loan Documents: The First Amendment, the First
          ------------------------------
     Amendment to Guaranty Agreement, the Acknowledgment of Intercreditor
     Agreement, the Ratification of Guaranty Agreements, and any amendments to
     Security Documents, other agreements, acknowledgments, financing
     statements, stock powers, bond powers, assignments, notices, instruments,
     certificates or documents delivered or contemplated to be delivered
     hereunder or thereunder or in connection herewith or therewith, as the same
     may be supplemented or amended from time to time in accordance herewith or
     therewith; and the term "First Amendment Loan Document" shall mean any of
                              -----------------------------
     the First Amendment Loan Documents.

          Gerdau Acquisition: The acquisition by Co-Steel of all of the issued
          ------------------
     and outstanding shares in the capital stock of Gerdau Holdco 2 in
     consideration for the issuance by Co-Steel of certain of its common shares
     to Gerdau Holdco 1 pursuant to and in accordance with the terms of the
     Transaction Agreement.

          Gerdau Canada: Gerdau Steel Inc., a corporation incorporated under the
          -------------
     laws of Canada.

          Gerdau Canada Credit Agreement: That certain 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 form time to time parties
     thereto as lenders and The Toronto-Dominion Bank as agent, as further
     amended, modified, restated or supplemented from time to time.

          Gerdau Holdco 1: 4104315 Canada Limited, a corporation incorporated
          ---------------
     under the laws of Canada.

          Gerdau Holdco 2: Gerdau Nova Scotia Holding Company, a corporation,
          ---------------
     incorporated under the laws of Nova Scotia.

          Gerdau Merger Transaction: The acquisition by Co-Steel of the North
          -------------------------
     American business operations Gerdau S.A. in exchange for common shares of
     Co-Steel

                                       2
<PAGE>
     representing 67% of the outstanding common shares of Co-Steel and the
     completion of the related transactions contemplated by that Management
     Information Circular dated August 26, 2002 by Co-Steel to its shareholders.

          Gerdau Subgroup: Gerdau Holdco 2, Gerdau MRM Holdings Inc., Courtice,
          ---------------
     GUSAP Partners, 3038482 Nova Scotia Company, PASUG LLC, Gerdau USA Inc.,
     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, also
     Intermediate Holding Company.

          Gerdau USA: Gerdau USA Inc., a corporation incorporated under the laws
          ----------
     of the State of Delaware.

          Hedging Contract: This term shall have the meaning given it in the
          ----------------
     Canadian Bank Credit Agreement.

          Intermediate Holding Company: This term shall have the meaning given
          ----------------------------
     it in the Canadian Bank Credit Agreement.

          Intermediate Holding Company Formation: This term shall have the
          --------------------------------------
     meaning given it in the Canadian Bank Credit Agreement.

          MRM: Gerdau MRM Steel Inc., a corporation continued under the laws of
          ---
     the Province of Saskatchewan.

          Parent Amalgamation: The amalgamation of Gerdau Canada and Gerdau
          -------------------
     Holdco 1 on or before January 1, 2003, by way of vertical short form
     amalgamation under the Canada Business Corporations Act.

          Proposed Transactions: Gerdau Acquisition, the Parent Amalgamation and
          ---------------------
     the Ameristeel Amalgamation, collectively.

          Ratification of Guaranty Agreements: The Ratification of Guaranty
          -----------------------------------
     Agreements executed by the Related Parties, other than Co-Steel, and
     delivered to the Bank and dated as of the First Amendment Effective Date.

          Status Quo Agreement: That certain status quo agreement dated October
          --------------------
     22nd, 2002 between Gerdau Canada, Courtice, MRM, Gerdau USA, Gerdau Holdco
     2, Co-Steel, State Street Bank and Trust Company, Computershare Trust
     Company of Canada, the Administration Agent, PNC Bank National Association,
     The Prudential Insurance Company of America, U.S. Private Placement Fund
     and The Toronto-Dominion Bank as Administration Agent under the Gerdau
     Canada Credit Agreement, all in form and substance satisfactory to the
     Bank.

          Transaction Agreement: Means the transaction agreement dated August
          ---------------------
     12, 2002 between Gerdau Canada, Gerdau S.A. and the Borrower as the same
     may be amended.

                                       3
<PAGE>
          (b) The definitions for the following defined terms contained in the
Original Credit Agreement are hereby amended and restated in its entirety as
follows:

          Adjusted Cost Base: Means (i) for each Unrestricted Subsidiary (with
          ------------------
     the exception of those members of the Gerdau Subgroup) the dollar amount by
     which the Unrestricted Subsidiaries would be carried as of December 31,
     1998 in the accounts of Co-Steel 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 Effective Date.
     Except that, (i) the Adjusted Cost Case will have no further adjustments
     for net income or loss of, or unrealized gains or losses on, the
     Unrestricted Subsidiaries; (ii) consistent with GAAP all inter-company
     transactions and balances would be adjusted as appropriate to consolidate
     the Restricted Subsidiaries and all transactions between or among Co-Steel
     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; (iii) 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; and (iv) the Adjusted
     Cost Base of the Gerdau Subgroup will reflect any permanent impairment of
     value as determined in accordance with GAAP. 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 N.J.S.C.
     Investment Co. shall be deemed to be Restricted Subsidiaries, provided,
     however, that as used in Section 5.1(4) of the Canadian Bank Amending
     Agreement "Adjusted Cost Base" shall be determined solely with respect to
     the Gerdau Subgroup and will reflect any permanent impairment of value as
     determined in accordance with GAAP.

          Affiliate: (i) As such term is used in Subsection 5.1(v), in Section
          ----------
     5.9 or in the Co-Steel Guaranty Agreement, such term shall mean 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 Borrower, Co-Steel or any Subsidiary of either, 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 Borrower or
     Co-Steel as the case may be, and (ii) as such term is used elsewhere in
     this Agreement or in the other Loan Documents, with respect to any Person,
     such term shall mean any of (a) a director or executive officer of the
     Person or any other Person described in clause (b) below and (b) 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 Borrower or Co-Steel, shall include each of their
     respective Subsidiaries.

                                       4
<PAGE>
          Asset Monetization Program: This term shall mean the asset
          --------------------------
     monetization program for Co-Steel and its Subsidiaries (other than any
     member of the Gerdau Subgroup) dated February 25, 2002, as revised from
     time to time with the consent of the Bank, which program is attached as
     Schedule 3.37 to the Co-Steel Guaranty Agreement.

          Canadian Bank Credit Agreement: That certain credit agreement dated as
          ------------------------------
     of April 30, 2002, between Co-Steel as the borrower, and the Canadian Bank
     Guarantee Entities, as the guarantors, the financial institutions from time
     to time party thereto as the lenders, The Toronto-Dominion Bank, as
     administration agent for such lenders, and the Bank of Nova Scotia, as
     syndication agent for such lenders as amended by that certain Amending
     Agreement dated as of October 23rd, 2002.

          Consolidated: With respect to a Loan Party, the consolidation of items
          ------------
     of financial activity and accounts of such Loan Party and its Subsidiaries
     (other than any member of the Gerdau Subgroup), in which such Loan Party
     owns or controls a controlling interest, for the presentation of financial
     statements of such Loan Party and its consolidated Subsidiaries (other than
     any member of the Gerdau Subgroup) all in accordance with, and as required
     by, GAAP consistently applied, except that the consolidation of the Gerdau
     Subgroup with Co-Steel as required by GAAP shall not occur.

          Consolidated EBITDA: This term shall mean: (i) the Consolidated Net
          -------------------
     Earnings in the period; plus (ii) Consolidated Net Interest Expense in the
     period; plus (iii) income taxes, whether paid or deferred, which are
     deducted in determining Consolidated Net Earnings in the period, if any;
     plus (iv) depreciation and amortization expense for the period; minus (v)
     to the extent added in determining Consolidated Net Earning, extraordinary
     gains, plus (vi) to the extent deducted in determining Consolidated Net
     Earnings, extraordinary losses (which for greater certainty shall include
     the non-cash Cdn.$13 million pension curtailment charge of Co-Steel from
     the third quarter of 2001); plus (vii) all cash receipts from Gallatin that
     have been used by Co-Steel and its Subsidiaries (other than any member of
     the Gerdau Subgroup) to permanently repay indebtedness to the Noteholders,
     the Bank and the Canadian Lenders; plus (viii) to the extent deducted in
     determining Consolidated Net Earnings unrealized foreign exchange losses;
     minus (ix) the amount of loans and advances to Gallatin pursuant to Section
     10.03(9) of the Canadian Bank Credit Agreement; minus (x) to the extent
     added in determining Consolidated Net Earning unrealized foreign exchange
     gains; all as set forth on the Special Purpose Financial Statements for
     such period and all determined in accordance with GAAP.

          Consolidated Total Net Debt: This term shall mean, at any time, the
          ---------------------------
     principal amount of all outstanding interest bearing Co-Steel Indebtedness
     including, without limitation, the debt component but excluding the equity
     component of the Co-Steel Convertible Debentures, the face amount of
     outstanding Co-Steel Bankers' Acceptances, Co-Steel Letters of Credit, and
     the amount of Capitalized Lease Obligations of Co-Steel and its
     Consolidated Subsidiaries (net of interest component) but specifically
     excluding

                                       5
<PAGE>
     accounts payable and accrued liabilities, and deducting cash and short term
     investment (rated R-1 (middle) or better by Dominion Bond Rating Service),
     all as set forth on the Special Purpose Financial Statements for such
     period 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 Co-Steel 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 Co-Steel). For greater
     certainty, it is acknowledged that the term "Consolidated Subsidiaries" as
     used in this definition does not include any member of the Gerdau Subgroup.

          Encumbrance: Any security interest, mortgage, charge, pledge,
          -----------
     hypothecation, assignment, deposit arrangement, encumbrance, lien
     (statutory or other), preference, priority or other security agreement or
     preferential arrangement of any kind or nature whatsoever (including,
     without limitation, any conditional sale or other title retention
     agreement, any Capitalized Lease having substantially the same economic
     effect as any of the foregoing, and the filing of any financing statement
     under the Uniform Commercial Code) in, upon, or against any asset of a Loan
     Party or any Subsidiary of such Loan Party (but excluding any Subsidiary
     that is a member of the Gerdau Subgroup), whether or not voluntarily given.

          Leased Properties: This term shall mean all lands and premises
          -----------------
     described in Schedule 1.1-1 and any lands and premises which are
     subsequently leased by the Borrower or a Subsidiary of the Borrower (other
     than any member of the Gerdau Subgroup).

          Net Tangible Assets: With respect to any Restricted Subsidiary, the
          -------------------
     aggregate amount of assets of such Restricted Subsidiary after deducting
     therefrom (i) all goodwill, trade names, trade marks, patents, organization
     expenses and other like intangibles; (ii) all equity held by it in another
     Restricted Subsidiary, and (iii) inter-company loans and advances to
     another Subsidiary of Co-Steel (other than a member of the Gerdau
     Subgroup), all as set forth on the most recent balance sheet of such
     Restricted Subsidiary, computed in accordance with GAAP (provided that such
     balance sheet shall be prepared on a non-consolidated basis).

          Permitted Intercompany Indebtedness: This term 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 US Dollar equivalent) and that such loans in the
     aggregate do not exceed Cdn. $3,000,000 (or its US Dollar equivalent); (b)
     loans from a Restricted Subsidiary to another Restricted Subsidiary; and
     (c) Indebtedness described in Schedule 1.1-5.

          Related Parties (or Guarantors): Each of 1300554 Ontario Limited,
          -------------------------------
     1102590 Ontario Limited, Co-Steel (U.S.) Ltd., Co-Steel USA Holdings, Inc.,
     Co-Steel Finance Corp., Co-Steel, Distribution, USA Distribution, Lake
     Ontario Steel Company, Sayreville and Raritan River and any other entity
     which have or may hereinafter be required (or which should have been
     required) to execute and deliver Related Parties Guarantees pursuant to
     Section 4.14 of this Agreement.

                                       6
<PAGE>
          Special Purpose Financial Statements: Shall mean the consolidated
          ------------------------------------
     financial statements of Co-Steel 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
     Co-Steel and the Restricted Subsidiaries to reflect fair market values will
     be excluded. The Gerdau Subgroup will be shown at cost.

          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
     PLC, tradenames, 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, (ii) the greater of (A) the Adjusted Cost Base
     attributable to the Gerdau Subgroup or (b) the aggregate investment of
     Co-Steel 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 Borrower after such date to minority
     shareholders in Ameristeel Corporation in exchange for their shares in
     Ameristeel Corporation.

          Unrestricted Subsidiaries: This term shall mean each of 1062316
          -------------------------
     Ontario Limited, Co-Steel Dofasco LLC, Co-Steel Benefit Plans Inc.,
     Co-Steel CSM, Co-Steel (UK) Limited, Gallatin, Gallatin Terminal Company
     and Gallatin Transit Authority, Co-Steel Benefit Plans USA Inc., Co-Steel
     Amsterdam B.V., Cansteel Antilles N.V., N.J.S.C. Investment Co. Inc., ASW
     Holdings, Goldmarsh Enterprises, ACIERCO, Co-Steel Liquidity Management,
     each member of the Gerdau Subgroup and such other Subsidiary of Co-Steel as
     may be designated as an Unrestricted Subsidiary by Co-Steel with the
     consent of the Bank from time to time and "Unrestricted Subsidiary" means
     any of them; provided that, Goldmarsh Enterprises, ACIERCO, Co-Steel
     Liquidity Management, N.J.S.C. Investment Co. Inc. shall not be considered
     Unrestricted Subsidiaries for purposes of the covenants set forth in
     Section 4.02 of the Co-Steel Guaranty Agreement and for purposes of the
     Special Purposes of the Special Purpose Financial Statements only.

          (c) The definition of "Indebtedness" is hereby amended by deleting
subsection (f) thereof and replacing it with the following:

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

     SECTION 1.02 AMENDMENTS TO SECTION 3.2 OF THE ORIGINAL CREDIT AGREEMENT.
                  ----------------------------------------------------------
Section 3.2 of the Original Credit Agreement is hereby amended and restated as
follows:

          3.2 CAPITALIZATION; OWNERSHIP; TITLE TO SHARES. The authorized capital
          -----------------------------------------------
     stock of the Borrower consists of 100 shares of common stock, of which 100

                                       7
<PAGE>
     shares of common stock were issued and outstanding. All of the issued and
     outstanding shares of capital stock of the Borrower are fully paid and
     nonassessable and through Subsidiaries (none of which is a member of the
     Gerdau Subgroup), are beneficially owned by Co-Steel. There are no options,
     warrants or other rights outstanding to purchase any shares of the
     Borrower, nor are any securities of the Borrower convertible into or
     exchangeable for its capital stock. None of the capital stock of the
     Borrower is listed for trading on a stock exchange or registered with a
     securities commission.

     SECTION 1.03 AMENDMENTS TO SECTION 5.1 OF THE ORIGINAL CREDIT AGREEMENT.
                  ----------------------------------------------------------
Clause (v) of Section 5.1 of the Original Credit Agreement is hereby amended and
restated as follows:

          (v) (x) unsecured accounts payable and accrued liabilities owed to
     Persons other than an Affiliate which are incurred in the normal course of
     business, (y) unsecured accounts payable owed to a member of a Gerdau
     Subgroup which are incurred in the normal course of business in connection
     with the sale of Inventory upon fair and reasonable arm's-length terms and
     conditions, and (z) accrued and unfunded pension benefits;

     SECTION 1.04 AMENDMENT TO ORIGINAL CREDIT AGREEMENT TO ADD A NEW
                  ---------------------------------------------------
SECTION 8.25. The Original Credit Agreement is hereby amended to add a new
------------
Section 8.25 which such Section 8.25 shall read as follows:

          8.25 DESIGNATION OF ADDITIONAL UNRESTRICTED SUBSIDIARIES. As of the
               ---------------------------------------------------
     First Amendment Effective Date, the Bank consents to the designation of
     each member of the Gerdau Subgroup as an Unrestricted Subsidiary pursuant
     to this Agreement.

     SECTION 1.05 AMENDMENT TO EXHIBITS AND SCHEDULES TO ORIGINAL CREDIT
                  ------------------------------------------------------
AGREEMENT. Schedules 3.10 and 3.12 to the Original Credit Agreement are hereby
---------
amended and restated to read as set forth in Schedules 3.10 and 3.12 attached to
this First Amendment.

     SECTION 1.06 WAIVER OF CERTAIN DEFAULTS. On the First Amendment Effective
                  --------------------------
Date, the Bank hereby waives any Event of Default pursuant to Section 7.1(b) or
Section 7.1j(iii) arising out of the Gerdau Transaction.

     SECTION 1.07 NO OTHER AMENDMENTS OR WAIVERS. The amendments set forth in
                  ------------------------------
Sections 1.01 through 1.05 hereof do not either implicitly or explicitly alter,
waive or amend, except as expressly provided in Section 1.06 or elsewhere in
this First Amendment, the provisions of the Original Credit Agreement. The
amendments set forth in Sections 1.01 through 1.05 hereof do not amend or waive,
now or in the future, compliance with any other covenant, term or condition to
be performed or complied with nor do they impair any rights, remedies or
privileges of the Bank under the Original Credit Agreement with respect to any
such violation except as set forth in Section 1.06.

                                       8
<PAGE>
                                   ARTICLE II
                     BORROWER'S SUPPLEMENTAL REPRESENTATIONS
                     ---------------------------------------

     SECTION 2.01 INCORPORATION BY REFERENCE. As an inducement to the Bank to
                  --------------------------
enter into this First Amendment, (i) the Borrower hereby repeats and remakes
herein, for the benefit of the Bank the representations and warranties made by
the Borrower in Sections 3.1 through 3.35 inclusive, of the Original Credit
Agreement, as amended hereby, except that for purposes hereof such
representations and warranties, other than those representations and warranties
which speak to a specific data, shall be deemed to extend to and cover this
First Amendment and are remade as of the First Amendment Effective Date, and
(ii) the Borrower hereby represents and warrants that on and as the First
Amendment Effective Date that no Default or Event of Default has occurred and is
continuing.

     SECTION 2.02 CORPORATE AUTHORITY. As an inducement to the Bank to enter
                  -------------------
into this First Amendment, the Borrower hereby represents and warrants that the
Borrower is duly authorized to execute and deliver this First Amendment and the
other First Amendment Loan Documents; all necessary corporate action to
authorize the execution and delivery of this First Amendment and the other First
Amendment Loan Documents has been properly taken; and it is and will continue to
be duly authorized to borrow under the Original Credit Agreement, as amended
hereby, and to perform all of the other terms and provisions of this First
Amendment, the Original Credit Agreement, as amended hereby, and the other Loan
Documents.

     SECTION 2.03 VALIDITY OF THIS FIRST AMENDMENT. As an inducement to the Bank
                  --------------------------------
to enter into this First Amendment, the Borrower hereby represents and warrants
that the execution and delivery of this First Amendment and the other First
Amendment Loan Documents does not, and the borrowings contemplated by the
Original Credit Agreement, as amended hereby, and the performance by the
Borrower of its obligations under this First Amendment, the Original Credit
Agreement, as amended hereby, and the other Loan Documents will not contravene
any provision of law, of the Borrower's Certificate of Incorporation or Bylaws,
or the provisions of any agreement to which the Borrower is a party or by which
the Borrower is bound; this First Amendment and the other First Amendment Loan
Documents executed and delivered in connection herewith constitute the legal,
valid and binding obligations of the Borrower enforceable in accordance with
their respective terms.

     SECTION 2.04 AMENDMENT CLOSING FEE. As an inducement to the Bank to enter
                  ---------------------
into this First Amendment, the Borrower hereby represents, warrants and
agrees to pay to the Bank an amendment closing fee equal to the product of ten
(10) basis points (.10%) times the sum of the maximum Revolving Credit
Commitment under the Original Credit Agreement on the First Amendment Effective
Date (the "AMENDMENT CLOSING FEE").

                                   ARTICLE III
                              CONDITIONS PRECEDENT
                              --------------------

     SECTION 3.01 CONDITIONS PRECEDENT. Each of the following shall be a
                  --------------------
condition precedent to the effectiveness of this First Amendment:

                                       9
<PAGE>
     (a) The Bank shall have received, on or before the Amendment Effective
Date, the following items, each, unless otherwise indicated, dated on or before
the Amendment Effective Date and in form and substance satisfactory to the Bank:

          (i) 10 duly executed counterpart originals of this First Amendment;

          (ii) 10 duly executed counterpart originals of the First Amendment To
     Guaranty Agreement;

          (iii) 10 duly executed counterpart originals of the Ratification of
     Guaranty Agreements;

          (iv) 12 duly executed counterpart originals of the First Amendment to
     Intercreditor Agreement;

          (v) (x) a certificate from the secretary or assistant secretary of the
     Borrower certifying that the Articles of Incorporation and Bylaws of the
     Borrower previously delivered to the Bank are true, complete, and correct
     and in full force and effect, and (y) a certificate of the secretary,
     assistant secretary, general partner or member of each of the other Loan
     Parties certifying that the Articles of Incorporation, Bylaws and other
     constituent documents of each of the other Loan Parties previously
     delivered to the Bank are true, complete, and correct and in full force and
     effect;

          (vi) a good standing certificate for the Borrower issued by the
     Secretary of State of the State of Delaware dated not more than thirty (30)
     days prior to the Amendment Effective Date;

          (vii) a good standing certificate for each of the other Loan Parties
     issued by the Secretary of State (or other applicable governmental
     official) of the jurisdiction of incorporation or formation of such parties
     dated not more than thirty (30) days prior to the Amendment Effective Date;

          (viii) certified copies of resolutions of the Borrower and each of the
     other Loan Parties authorizing each of the transactions described herein,
     in form and substance satisfactory to the Bank and its counsel and duly
     executed by the appropriate corporate officers of each of the Loan Parties;

          (ix) a certificate of the secretary or assistant secretary of the
     Borrower and each of the other Loan Parties certifying the names of the
     persons authorized to sign this First Amendment and the other First
     Amendment Loan Documents executed in connection herewith to which any is a
     party, and all other documents and certificates delivered hereunder
     together with the true signatures of such persons;

                                       10
<PAGE>
          (x) a certificate of the chief financial officer of the Borrower
     certifying that the statements set forth in Section 3.01(b) of this First
     Amendment as of the Amendment Effective Date, are true and correct;

          (xi) Co-Steel shall consummate, contemporaneously with the execution
     of this First Amendment, an amendment to the Canadian Bank Credit Agreement
     on terms substantially consistent with the terms of this First Amendment;

          (xii) Co-Steel shall consummate, contemporaneously with the execution
     of this First Amendment, an amendment to the Prudential Note Purchase
     Agreements on terms substantially consistent with the terms of this First
     Amendment;

          (xiii) no actions, suits, proceedings or investigations shall be
     pending or threatened against the Borrower, any of the other Loan Parties,
     Gerdau Canada, Gerdau, S.A., or any of the members of the Gerdau Subgroup
     or any of their respective businesses, operations, properties, prospects,
     profits or condition (financial or otherwise), at law or in equity, before
     any Governmental Authority which, individually or in the aggregate, if
     adversely determined, could reasonably be expected to cause a Material
     Adverse Change, or which purport to affect the rights and remedies of the
     Bank pursuant to any of the Loan Documents or which purport to restrain or
     enjoin (either temporarily, preliminarily or permanently) the performance
     by the Borrower or any of the other Loan Parties of any action contemplated
     by this First Amendment, any of the other First Amendment Loan Documents or
     any of the Loan Documents, or which purport to restrain or enjoin (either
     temporarily, preliminarily or permanently) the performance by the Borrower,
     any of the other Loan Parties, Gerdau, S.A. or any member of the Gerdau
     Subgroup of any action contemplated by the Gerdau Merger Transaction;

          (xiv) the Gerdau Merger Transaction shall have been completed in
     accordance with its terms, all legal matters incident to the First
     Amendment Loan Documents and the Gerdau Merger Transaction shall be
     satisfactory to counsel for the Bank;

          (xv) all fees and expenses of the Bank, including counsel fees and
     expenses, incurred in connection with the approval of this First Amendment
     shall have been paid to the Bank in immediately available funds;

          (xvi) the Amendment Closing Fee shall have been paid to the Bank in
     immediately available funds;

          (xvii) opinions of counsel to the Borrower and the other Loan Parties,
     addressed to the Bank and in all respects satisfactory to the Bank;

          (xviii) all of the conditions precedent to the closing of the
     amendments to the Canadian Bank Credit Agreement and the Prudential Note
     Purchase Agreements referred to in items (xiii) and (xiv) of this Section
     3.01(a) shall have been satisfied or waived to the satisfaction of the
     Bank;

                                       11
<PAGE>
          (xix) such other instruments, documents and opinions of counsel as the
     Bank shall reasonably require, all of which shall be satisfactory in form
     and content to the Bank.

     (b) The following statements shall be true and correct on the Amendment
Effective Date and the Bank shall have received a certificate signed by an
Authorized Officer of the Borrower, dated the Amendment Effective Date, stating
that:

          (i) the representations and warranties made pursuant to this First
     Amendment and in the other Loan Documents, as amended hereby, are true and
     correct on and as of the Amendment Effective Date as though made on,
     through and as of such date;

          (ii) no petition by or against the Borrower has at any time been filed
     under the United States Bankruptcy Code or under any similar act;

          (iii) taking into account the amendments set forth in this First
     Amendment, no Event of Default or event which with the giving of notice,
     the passage of time or both would become an Event of Default has occurred
     and is continuing, or would result from (x) the execution of or performance
     under any of the First Amendment Loan Documents, or (y) the consummation of
     the Gerdau Merger Transaction;

          (iv) no Material Adverse Change in the properties, business,
     operations, financial condition or prospects of the Borrower has occurred
     which has not been disclosed to the Bank; and

          (v) taking into account the amendments set forth in this First
     Amendment, the Borrower has in all material respects performed all
     agreements, covenants and conditions required to be performed on or prior
     to the date hereof under the Original Credit Agreement and the other Loan
     Documents.

     (c)  The following statements shall be true and correct on the Amendment
Effective Date and the Bank shall have received a certificate signed by an
Authorized Officer of Co-Steel, dated the Amendment Effective Date, stating
that:

          (i) the representations and warranties made by it pursuant to the
     First Amendment to Guaranty Agreement and in the other First Amendment Loan
     Documents to which it is a party are true and correct on and as of the
     Amendment Effective Date as though made on, through and as of such date;

          (ii) no petition by or against Co-Steel or any of the other Loan
     Parties has at any time been filed under any bankruptcy, receivership or
     insolvency laws, or any other similar applicable federal, state or foreign
     law, or for the appointment of a receiver, liquidator, trustee,
     sequestrator or similar official for any of the Loan Parties or for a

                                       12
<PAGE>
     substantial part of any of the Loan Parties' respective property, or for
     the winding up or liquidation of any of their affairs;

          (iii) taking into account the amendments set forth in this First
     Amendment, no Event of Default or event which with the giving of notice,
     the passage of time or both would become an Event of Default has occurred
     and is continuing, or would result from (x) the execution of or performance
     under any of the First Amendment Loan Documents, or (y) the consummation of
     the Gerdau Merger Transaction;

          (iv) no Material Adverse Change in the properties, business,
     operations, financial condition or prospects of Co-Steel or any of the
     other Loan Parties has occurred which has not been disclosed to the Bank;

          (v) taking into account the amendments set forth in this First
     Amendment, Co-Steel has in all material respects performed all agreements,
     covenants and conditions required to be performed on or prior to the date
     hereof under the Loan Documents to which it is party; and

          (vi) taking into account the execution of this First Amendment, all
     conditions precedents to the consummation of the Gerdau Merger Transaction
     have been completed or waived and the Gerdau Merger Transaction shall be
     consummated contemporaneously with, or immediately after, the execution of
     this First Amendment;

     (d) Co-Steel has delivered to the Bank its pro forma consolidated balance
sheet dated as of June 30, 2002, prepared giving effect to all Proposed
Transactions as if the Proposed Transactions had occurred on January 1, 2001,
and the related statements of income for the 12-month period ended December 31,
2001 and for the six month period ended June 30, 2002, in each case prepared as
if the Proposed Transactions had occurred on January 1, 2001. Such pro forma
consolidated financial statements were (a) prepared in good faith and, in the
Co-Steel'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 Co-Steel after due inquiry, (c) accurately reflect all adjustments necessary
to give effect to the Proposed Transactions, and (d) present fairly, in
accordance with GAAP, in all material respects, the pro forma financial position
of the Co-Steel and its Subsidiaries (including the Gerdau Subgroup) as if the
Proposed Transactions had occurred on such date or at the beginning of such
period. The Co-Steel 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;

     (e) any and all fees paid to the Noteholders and the Canadian Lenders,
respectively, in consideration of receiving amendments and waivers similar to
this First Amendment are (a) in respect of the Noteholders, as a collective
group, not more than one-tenth of one percent (0.10%) of the aggregate
outstanding principal amount of Indebtedness outstanding under the Prudential
Note Agreement as of the Effective Date, and (b) in respect of the Canadian
Lenders, not more than one-tenth of one percent (0.10%) of the aggregate

                                       13
<PAGE>
outstanding principal amount of Indebtedness outstanding under the Canadian Bank
Credit Agreement as of the Effective Date;

     For purposes of this First Amendment, the term "AMENDMENT EFFECTIVE DATE"
means the date on which the Bank and its counsel have determined that each of
the conditions set forth in this Section 3.01 has been satisfied by the Borrower
or waived by the Bank.

                                   ARTICLE IV
                               GENERAL PROVISIONS
                               ------------------

     SECTION 4.01 RATIFICATION OF TERMS. Except as expressly amended by this
                  ---------------------
First Amendment, the Original Credit Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed. The Borrower hereby confirms that any
collateral for the Obligations, including but not limited to liens,
Encumbrances, security interests, mortgages and pledges granted by the Borrower
or third parties, shall continue unimpaired and in full force and effect. THE
BORROWER EXPRESSLY RATIFIES AND CONFIRMS THE WAIVER OF JURY TRIAL PROVISIONS
CONTAINED IN THE ORIGINAL CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     SECTION 4.02 REFERENCES. All notices, communications, agreements,
                  ----------
certificates, documents or other instruments executed and delivered after the
execution and delivery of this First Amendment in connection with the Original
Credit Agreement, any of the other Loan Documents or the transactions
contemplated thereby may refer to the Original Credit Agreement without making
specific reference to this First Amendment, but nevertheless all such references
shall include this First Amendment unless the context requires otherwise. From
and after the First Amendment Effective Date, all references in the Original
Credit Agreement and each of the other Loan Documents to the "AGREEMENT" shall
be deemed to be references to the Original Credit Agreement as amended hereby.

     SECTION 4.03 INCORPORATION INTO ORIGINAL CREDIT AGREEMENT. This First
                  --------------------------------------------
Amendment is deemed incorporated into, and made a part of, the Original Credit
Agreement. To the extent that any term or provision of this First Amendment is
or may be deemed expressly inconsistent with any term or provision of the
Original Credit Agreement, the terms and provisions hereof shall control.

     SECTION 4.04 COUNTERPARTS. This First Amendment may be executed in
                  ------------
different counterparts, and by the different parties hereto on separate
counterparts, each of which when executed and delivered by the Borrower and the
Bank (and by any consenting party listed below) shall be regarded as an
original, and all such counterparts shall constitute one First Amendment.
Delivery of an executed counterpart of a signature page to this First Amendment
by telecopier by any party hereto shall be as effective as delivery of a
manually executed counterpart of this First Amendment.

                                       14
<PAGE>
     SECTION 4.05 CAPITALIZED TERMS. Except for proper nouns and as otherwise
                  -----------------
defined herein, capitalized terms used herein as defined terms shall have the
same meanings herein as are ascribed to them in the Original Credit Agreement,
as amended hereby.

     SECTION 4.06 TAXES. The Borrower shall pay any and all stamp and other
                  -----
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this First Amendment and such other
documents and instruments as are delivered in connection herewith and agrees to
save the Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and fees.

     SECTION 4.07 COSTS AND EXPENSES. The Borrower will pay all costs and
                  ------------------
expenses of the Bank (including, without limitation, the reasonable fees and the
disbursements of the Bank's counsel, Tucker Arensberg, P.C.) in connection with
the preparation, execution and delivery of this First Amendment and the other
documents, instruments and certificates delivered in connection herewith.

     SECTION 4.08. SEVERABILITY. Any provision of this First Amendment which is
                   ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or enforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

     SECTION 4.09 GOVERNING LAW. THIS FIRST AMENDMENT AND THE RIGHTS AND
                  -------------
OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO THE PROVISIONS THEREOF
REGARDING CONFLICTS OF LAW.

     SECTION 4.10 HEADINGS. The headings of the sections in this First Amendment
                  --------
are for purposes of reference only and shall not be deemed to be a part
hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>
     IN WITNESS WHEREOF, the parties hereto, with the intent to be legally bound
hereby, have caused this First Amendment to Second Amended and Restated Credit
Agreement to be duly executed by their respective proper and duly authorized
officers as a document under seal, as of the day and year first above written.

<TABLE>
<S>                                        <C>
                                           BORROWER:

ATTEST:                       (SEAL)       CO-STEEL RARITAN, INC., a New Jersey
                                           corporation

By:                                        By:
   ---------------------------------          ---------------------------------
Name:                                      Name:  Andrew Boulanger
Title:                                     Title: Vice President, Controller

                                           By:
                                              ---------------------------------
                                           Name:
                                           Title:

                                           BANK:

                                           PNC BANK, NATIONAL ASSOCIATION

                                           By:
                                              ---------------------------------
                                           Name:  Martin E. Mueller
                                           Title: Vice President
</TABLE>

                                       16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]