WAJAX LIMITED   
(undated but presumed to be December 22, 2000)

Pension Plan Information- a Follow-up

This is the promised follow-up commentary on the message sent over the Wajax internal e-mail system last Friday by some former Wajax employees.

The suggestion in that message was the planned conversion of the existing Wajax Industries Limited Pension Plan (the "WIL Pension Plan") from a defined benefit (DB) plan to a defined contribution (DC) plan was undertaken in an inappropriate way. We disagree. We have retained outside professional advisors to assist us in effecting the conversion in compliance with regulatory requirements and we have proceeded based on the advice so received. We believe that we have not only handled the conversion from a DB to DC plan within regulatory requirements but have exceeded those requirements and, at the same time, have provided improved pensions to our retirees and put in place an ongoing plan that better meets the needs of our existing employees.

With respect to surplus funds, surplus is generally only paid out to employees when a plan is terminated. We are not terminating the current plan. We are simply converting it from a DB approach to a DC approach. This may have led to the misunderstanding of the facts by the authors of the Pension Plan Info e-mail.

We indicated in our employee communication meetings that the plan is in an over-funded position (we also report on this in the Annual Report every year), The fact that Wajax is converting the nature of the plan from DB to DC does not affect the funded status of the plan nor does it given any different rights to either the Company or the employees over the use of the funds that have not been allocated to members' accounts. It is a well‑known fact that the Company has taken contribution holidays i.e. its contributions were paid out of the surplus under the old plan design (the Income Tax Act (Canada) effectively prohibited current contributions by the Company while the plan was in a surplus position), and it will continue to use part of it under the new plan design. The Company has also used another part of the fund surplus to improve active plan member accrued benefits and provide a pensioner upgrade.

It was clear that the current plan was not meeting the needs of our employees as evidenced by the fact that only 40% of employees had joined the plan. The fact that a surplus existed was a key consideration that allowed Wajax to improve the WIL Pension Plan for employees. The new DC plan will have a much 'higher ongoing cost because of plan design and increased participation, (As a result of The changes we have introduced our participation will be almost 70%). As noted above, the Company intends to utilize the balance of the surplus to offset the transition costs. Without this opportunity to utilize surplus, Wajax would not have been in a position to improve its pension arrangements at this time.

Should you have personal concerns not addressed in this communication please contact the writer and I will attempt to deal with your individual needs/questions.

Doug Ball

Senior Vice President, Human Resources
Wajax Limited