EMPLOYMENT AGREEMENT

Execution Copy

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT made effective as of the first day of January 2008 between NOVAMERICAN STEEL INC., a Delaware corporation (the “Corporation”), with its principal offices at 28 West 44 ^th Street, 16 ^th Floor, New York, NY 10036 and KAREN NARWOLD (the “Executive”). Each of the Executive and the Corporation are called, individually, a “Party” and, collectively, the “Parties”.

WITNESSETH:

WHEREAS, the Corporation desires to employ the Executive and the Executive desires to be employed by the Corporation, as a senior executive of the Corporation;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and other good, valuable and sufficient consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

1.          Employment . The Corporation hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Corporation, on the terms and conditions set forth herein.

(a)       The Executive shall serve as the Vice President, Chief Administrative Officer and General Counsel of the Corporation. The Executive shall report to the Chief Executive Officer of the Corporation (the “CEO”). The Executive shall have such responsibilities and duties as are customary for such position and as may be assigned by the CEO to the Executive from time to time.

(b)       The Executive shall devote all of the Executive’s working time and efforts to the business and affairs of the Corporation; provided , however , that the Executive may from time to time serve on boards of trustees or directors of a limited number of (i) not-for-profit organizations so long as she shall have advised the Board of Directors of the Corporation (the “Board”) of her intention to so serve prior to the commencement of such service and (ii) for-profit organizations so long as the Board shall have approved such service prior to commencement of such service and Executive may manage her personal investments so long as such management does not interfere with performance of her responsibilities or duties hereunder. The proviso to the preceding sentence shall not limit the obligations of the Executive under Section 7.

(a)       The Executive’s salary shall be $400,000 per year during which this Agreement is in effect. Such salary shall be paid in accordance with the Corporation’s payroll practices. Such salary shall be subject to review each year by the Board and may be

increased (but not decreased) in the discretion of the Board. The Executive’s salary, as then in effect, is called the “Salary”.

(b)       The independent directors of the Board shall determine performance targets and metrics for the Executive for each year during which this Agreement is in effect. The Executive will be eligible to receive a performance bonus each year. The bonus is expected to be no less than 50% and no greater than 100% of the Salary. The independent directors of the Board shall determine, in their discretion, the amount of the bonus, if any, for each year. The bonus will be paid in accordance with the Corporation’s payroll practices no later than March 15 following the year in respect of which the bonus is earned.

(c)       The Executive shall be entitled to receive reimbursement, in accordance with the Corporation’s expense reimbursement practices, for all reasonable and customary expenses incurred by the Executive in connection with performance of her duties and responsibilities; provided , that such expenses are incurred and reported in accordance with the Corporation’s expense reimbursement policies and procedures. Without limiting such expenses, such expenses include expenses for reasonable and customary temporary accommodations near the Corporation’s facilities located more than 35 miles outside of New York, New York for the Executive and, if the Executive is required to work from such facilities for an extended period, the Executive’s spouse and dependents and related travel arrangements.

(d)       The Executive shall be entitled to participate in or receive benefits under any medical, pension, profit sharing or other employee benefit plan or arrangement generally made available by the Corporation now or in the future to its executives and management employees (or to their family members) subject to the terms and conditions of such plans and arrangements.

(e)       The Executive shall be entitled to four (4) weeks vacation each year, with carryover of unused vacation days in accordance with the Corporation’s vacation policy.

(a)        Termination by Corporation . The Executive’s employment may be terminated by the Corporation at any time with or without Cause (as defined in Section 5(e)(ii)) or if the Executive becomes Disabled (as defined in Section 5(e)(i)), by notifying the Executive, in which case the termination shall be effective immediately upon receipt of such notice by the Executive.

(b)        Termination by the Executive . The Executive’s employment may be terminated by the Executive with or without Good Reason (as defined in Section 5(e)(iii)) by notifying the Board within ninety (90) days following the first occurrence of the event or circumstance constituting Good Reason, in which case the termination shall be effective thirty (30) days following the receipt of such notice by the Board; provided , that the event or circumstance is not cured within thirty (30) days following such notice to the Board. Any failure to so notify the Board within the applicable ninety (90) day period constitutes a waiver by the

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Executive of her right to terminate her employment for Good Reason as to such applicable event(s) or circumstance(s).

(c)        Notice of Termination . Any notification under this Section to either Party shall indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated.

5.          Compensation Upon Termination . Upon termination of the Executive’s employment for any reason, the Executive is deemed to have resigned, as of the date of such termination of employment, from the Board and any committees of the Corporation or its affiliates on which she serves.

(a)       If the Corporation shall terminate the Executive’s employment for any reason other than for Cause, including due to the Executive’s Disability, or if the Executive resigns for Good Reason, subject to Sections 5(f) and 5(h), the Executive shall be entitled to the following:

(i)        A lump sum payment, within thirty (30) days following the termination of the Executive’s employment, which includes all amounts due to the Executive through the date of her termination, including any accrued but unpaid Salary and/or bonus and any accrued and unused vacation days;

(ii)       A lump sum payment, within sixty (60) days following the termination of the Executive’s employment, equal to the product of (A) the Salary plus the minimum bonus of 50% of the Salary multiplied by (B) a fraction, the numerator of which is the number of months (full and partial) remaining between the date of termination and December 31, 2010 and the denominator of which is twelve (12), but in no event shall the fraction equal less than one (1) (the “Severance Period”);

(iii)      Continued participation in the Corporation’s health plans (medical and dental), at the same cost to the Executive as immediately prior to such termination of employment, for the longer of (A) the Severance Period and (B) eighteen (18) months; provided , that if the Executive is entitled to participate in a health plan provided by a new employer, any payment by the Corporation for continued participation in the Corporation’s health plans shall cease (although participation may continue solely at the Executive’s cost, to the extent participation must be offered under federal law); provided , further , that if the new employer plan does not have preexisting condition coverage, the Executive may continue medical coverage with the Company for the balance of the period described above, without affecting the cost to the Executive. The Corporation anticipates that health benefits made available pursuant to this clause (iii) will be provided in accordance with applicable continuation coverage requirements under federal and state law.

(iv)      Continuation of life insurance coverage at the same level and at the same cost to the Executive as immediately prior to such termination of employment, for the longer of (A) the Severance Period and (B) eighteen (18) months;

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(v)       Reimbursement for reasonable outplacement services for 12 months following the termination of the Executive’s employment. The Parties shall use their good faith efforts to locate a provider, and determine the scope of, outplacement services which are reasonably acceptable to both parties.

(vi)      Except as provided in this Section 5(a), the Corporation will have no further obligations to the Executive under this Agreement following the Executive’s termination of employment under the circumstances described in this Section 5(a).

(b)       If the Executive’s employment with the Corporation shall terminate due to either (i) the Executive’s termination other than for Good Reason or (ii) by the Corporation’s termination of the Executive’s employment for Cause, then the Executive shall be entitled to receive her Salary through the date of termination (which Salary shall not include any accrued and unused vacation days). Except as provided in this Section 5(b), the Corporation shall have no further obligations to the Executive under this Agreement following the Executive’s termination of employment under the circumstances described in this Section 5(b).

(c)       If the Executive’s employment with the Corporation shall terminate due to the Executive’s death, then the Executive’s estate shall be entitled to the amounts described in Section 5(a)(i) and (ii) and the Executive’s surviving spouse and dependents, if any, shall be entitled to continued participation in the Corporation’s health plans (medical and dental) as described in Section 5(a)(iii) above. Except as provided in this Section 5(c), the Corporation shall have no further obligations to the Executive under this Agreement following the Executive’s termination of employment under the circumstances described in this Section 5(c).

(d)       In the event a Change of Control (as defined in Section 5(e)(iv)) of the Corporation occurs after December 31, 2008 but prior to the termination of the Executive’s employment, then, for purposes of Section 5(a), the “Severance Period” shall mean the number of months (full and partial) remaining between the date of termination and the two year anniversary of the effective date of the Change of Control.

(i)        “Disability” means the Executive becomes “disabled” as defined in the Corporation’s long term disability plan or, if there is no such plan, the Executive becomes physically or mentally incapacitated and absent and/or unable to perform her duties on a full-time basis for 90 days in any 180 consecutive day period.

(ii)       “Cause” means the Executive’s (A) willful, intentional or grossly negligent failure to substantially perform her duties (other than due to Disability) after the CEO or the Board has given lawful directive to so perform; (B) conviction of or plea of no contest to a crime constituting (I) a felony or (II) a misdemeanor involving deceit, dishonesty or fraud that relates to the Corporation; or (C) willful, intentional or grossly negligent conduct which is materially injurious to the Corporation, monetarily or otherwise. The Executive’s employment shall not be deemed to have been terminated for Cause without (x) reasonable written notice to the Executive setting forth the reasons for the Corporation’s intention to

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terminate for Cause and (y) the opportunity to cure (if curable) within 15 days of such written notice of the event(s) giving rise to such notice.

(iii)      “Good Reason” means: (A) any failure to pay or reduction in the Executive’s Salary; (B) the assignment of duties or responsibilities to the Executive that are materially and adversely inconsistent with the Executive’s position, including a material diminution in duties or responsibilities or title; (C) a material breach by the Corporation of this Agreement or any other material agreement between the Executive and the Corporation; (D) the failure of the Corporation to obtain the assumption of this Agreement in writing by each successor to the Corporation; or (E) any circumstance in which the Corporation is directing the Executive to participate in illegal activity; provided , that the events and circumstances described in clauses (A) through (E) above shall not constitute Good Reason (I) if the Executive consents to such event or circumstance or (II) if such event or circumstance has been cured within thirty (30) days after notice of such event or circumstance has been given by the Executive to the Board.

(iv)      A “Change of Control” shall be deemed to occur upon the occurrence of any of the following events or circumstances:

(A)      any “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”) becomes the beneficial owner of 40% or more of the then outstanding common stock of the Corporation or 40% or more of the then outstanding voting securities of the Corporation;

(B)      any “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Act acquires, by proxy or otherwise, the right to vote on any matter or question with respect to 40% or more of the then outstanding common stock of the Corporation or 40% or more of the combined voting power of the then outstanding voting securities of the Corporation;

(C)      Present Directors and New Directors cease for any reason to constitute a majority of the Board (and, for purposes of this clause (C), “Present Directors” shall mean individuals who, at the beginning of any consecutive twenty-four month period, were members of the Board and “New Directors” shall mean individuals whose election by the Board or whose nomination for election as directors by the Corporation’s stockholders was approved by at least two-thirds of the Present Directors and New Directors then in office);

(D)      the stockholders of the Corporation approve a plan of dissolution or complete or substantially complete liquidation of the Corporation; or

I.         any reorganization, restructuring, recapitalization, reincorporation, merger, consolidation or similar form of corporate transaction involving the Corporation (a “Business Combination”) unless, following such Business Combination, (a) all or substantially all of the individuals and entities who were the beneficial owners of the common

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stock of the Corporation and the voting securities of the Corporation outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 40% of the common equity securities and the combined voting power of the voting securities of the entity resulting from such Business Combination (including the Corporation, if it is such resulting entity) outstanding after such Business Combination (including, without limitation, an entity that, as a result of such Business Combination, owns the Corporation or all or substantially all of the assets of the Corporation and its subsidiaries on a consolidated basis, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership of common stock of the Corporation and combined voting power of the voting securities of the Corporation, respectively, outstanding immediately prior to such Business Combination, (b) no “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Act (excluding (x) any entity resulting from such Business Combination and (y) any employee benefit plan (or related trust) of any entity resulting from such Business Combination) beneficially owns 40% or more of the common equity securities or of the combined voting power of the voting securities of the entity resulting from such Business Combination (including the Corporation, if it is such resulting entity) outstanding after such Business Combination (including, without limitation, an entity that, as a result of such Business Combination, owns the Corporation or all or substantially all of the assets of the Corporation and its subsidiaries on a consolidated basis,, either directly or through one or more subsidiaries), except to the extent that such beneficial ownership existed prior to such Business Combination with respect to the common stock of the Corporation and the voting securities of the Corporation, and (c) at least a majority of the members of the board of directors (or similar governing body) of the entity resulting from such Business Combination were members of the Board at the earliest of the time of the execution of the initial agreement providing for such Business Combination, the time of the action of the Board approving such Business Combination or, if such approval is required or sought, at the time of action of the stockholders approving such Business Combination; or

II.        any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or a majority of the assets of the Corporation, whether held directly or indirectly through one or more subsidiaries (excluding any pledge, mortgage, grant of security interest, sale-leaseback or similar transaction, but including any foreclosure sale).

Notwithstanding anything contained herein to the contrary, a Change in Control shall not be deemed to occur pursuant to clause (A) or (B) above solely because 40% or more of the then outstanding common stock of the Corporation or the then outstanding voting securities of the Corporation is or becomes beneficially owned or is directly or indirectly held or acquired

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by (1) one or more employee benefit plans (or related trusts) maintained by the Corporation or (2) any one or more of the founding stockholders of the Corporation.

For purposes of this definition, refer