CO-STEEL INC.







                                ANNUAL INCENTIVE

                                      PLAN







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                                 CO-STEEL INC.

                                  ("CO-STEEL")



                        EXECUTIVE ANNUAL INCENTIVE PLAN





1.   PURPOSE OF THE PLAN



1.1  Co-Steel hereby establishes a plan to be known as the "Co-Steel Executive

     Annual Incentive Plan" for the purpose of rewarding executives of Co-Steel

     for a positive annual contribution to Co-Steel's corporate strategy and

     total shareholder return.



2.   DEFINITIONS



2.1  In this Plan, the following terms have the following meanings:



     "ACT" means the Income Tax Act (Canada), as amended;



     "AWARD PAYMENT" has the meaning set out in paragraph 5.3;



     "CHANGE-IN-CONTROL" means any of the following occurrences:



     (a)  the acquisition by any one shareholder, or group of shareholders

          acting jointly or in concert, of more than 50% of the outstanding

          voting shares of Co-Steel;



     (b)  a sale by Co-Steel of all or substantially all of its assets to an

          unrelated third party, or other liquidation or dissolution;



     (c)  a change in the composition of the Board of Directors of Co-Steel

          involving at least one-half of the Board which occurs at the same time

          or within a 60 day period; or



     (d)  a merger, consolidation, or other reorganization of Co-Steel which

          results in Co-Steel's shareholders owning less than 50% of the voting

          shares of the resulting entity;



     "COMMITTEE" means the Compensation Committee of Co-Steel's Board of

     Directors or such other committee as may be designated by Co-Steel's Board

     of Directors from time to time;



     "COMMON SHARES" means common shares of Co-Steel;



     "EFFECTIVE DATE" means December 8, 1999;



     "ELIGIBLE EXECUTIVES" means those executives of Co-Steel [AND ITS

     SUBSIDIARIES] designated by the Committee to participate in the Plan;









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                                      -2-



     "NOTIONAL ACCOUNT VALUE" means the number of Common Shares allocated to an

     Eligible Executive's notional account (whether or not vested) multiplied by

     the closing price of Co-Steel's Common Shares on the date of the

     distribution to the Eligible Executive;



     "PERFORMANCE MEASURES" means the performance measures established by the

     Committee from time to time as the basis for determining Award Payments;



     "PERMANENT DISABILITY" means the permanent incapacity of an Eligible

     Executive, as determined by a licensed medical practitioner, due to a

     medically determinable physical or mental impairment which prevents such

     individual from performing substantially all of the essential duties of his

     or her office or employment;



     "PLAN" means this plan which is intended to be an Employee Benefit Plan as

     defined in the Act and to be known as the "Co-Steel Inc. Executive Annual

     Incentive Plan";



     "TARGET AMOUNT" means the amount, in Canadian dollars, obtained when

     multiplying the Eligible Executive's base salary by the Target Award;



     "TARGET AWARD" means the percentage of an Eligible Executive's base salary

     determined by the Committee which will be applied to calculate the Target

     Amount;



     "TRUST" means the Co-Steel Inc. Executive Annual Incentive Plan Trust as

     embodied in the Trust Agreement entered into between Co-Steel and the

     Trustee;



     "TRUST AGREEMENT" means the trust agreement entered into by the Trustee and

     Co-Steel in connection with the administration of the Trust Fund for the

     purposes of the Plan as amended from time to time;

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