<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission File No.1-13696
AK STEEL HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-1401455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
703 Curtis Street
Middletown, Ohio 45043
(Address of principal executive offices) (Zip Code)
(Registrant s telephone number including area code)513) 425-5000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the
issuer s classes of common stock, as of the latest practicable
date.
26,373,445 shares of common stock
--------------------------------
(as of July 29, 1996) <PAGE>
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(This page intentionally left blank.)
<PAGE>
<PAGE>
AK STEEL HOLDING CORPORATION
INDEX
PART I Page
Item 1 Financial Information
Condensed Consolidated Statements of
Operations -
Three and Six-Month Periods Ended
June 30, 1996 and 1995 2
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of
Cash Flows -
Six-Month Periods Ended June 30, 1996 4
and 1995
Notes to Condensed Consolidated Financial
Statements 5
Item 2 Management's Discussion and Analysis of the
Condensed Consolidated Financial Statements 6
PART II
OTHER INFORMATION
Item 1 Legal Proceedings 7
Item 4 Submission of Matters to a Vote of 7
Security Holders
Item 6 Exhibits and Reports on Form 8-K 7
Signatures 8
-1-<PAGE>
<PAGE>
Item 1.
<TABLE>
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $575.4 $595.9 $1,134.3 $1,206.3
Cost of products
sold 456.5 460.2 901.0 945.6
Selling and
Admin. Expenses 29.0 30.1 56.2 57.9
Depreciation 20.0 19.2 40.0 38.5
------ ------ ------ -------
Total operating costs 505.5 509.5 997.2 1,042.0
Operating profit 69.9 86.4 137.1 164.3
Interest expense 9.5 9.2 18.9 18.3
Other income 2.8 5.1 5.6 8.0
------ ------- ------ -------
Income before income
taxes 63.2 82.3 123.8 154.0
Current income tax
provision 6.1 7.2 12.0 13.4
Deferred income tax
provision (benefit) 18.6 (3.3) 36.3 (6.1)
------ ------- ------- --------
Net income 38.5 78.4 75.5 146.7
Preferred stock
dividends 2.8 4.1 5.9 8.1
------- ------- ------- --------
Net income applicable
to common
shareholders $ 35.7 $ 74.3 $ 69.6 $ 138.6
------- ------- ------- --------
------- ------- ------- --------
Earnings per common
share: (See note 2)
Primary $1.34 $ 2.81 $ 2.65 $ 5.25
Fully diluted $1.24 $ 2.39 $ 2.44 $ 4.47
Cash dividends per
common share $ .15 $ - $ .30 $ -
Common shares and
common share
equivalents outstanding
(weighted average in
millions):
For primary earnings
per share 26.4 26.4 26.2 26.4
For fully diluted
earnings per share 30.9 32.9 31.0 32.9
<FN>
- -----------
See notes to condensed consolidated financial statements.
</TABLE>
-2- <PAGE>
<PAGE>
<TABLE>
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
<CAPTION>
ASSETS
June 30, December 31,
1996 1995
------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 168.7 $ 137.0
Short-term investments 52.7 175.8
Accounts receivable - net 248.8 217.0
Inventories:
Finished and semi-finished 197.6 183.5
Raw materials 127.3 157.2
--------- ---------
Total inventories - net 324.9 340.7
Deferred taxes 0.1 14.8
Other current assets 12.1 1.9
--------- ---------
Total Current Assets 807.3 887.2
--------- ---------
Property, plant and equipment 1,470.6 1,451.6
Less accumulated depreciation (517.0) (478.0)
---------- ----------
Property, plant and equipment - net 953.6 973.6
---------- ----------
Prepaid Pension 157.5 138.8
Other 119.0 115.9
---------- ----------
TOTAL ASSETS $2,037.4 $2,115.5
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 191.0 $ 255.9
Other accruals 111.3 141.4
Current portion of long-term debt - -
Current portion of pension obligation 0.1 0.1
Current portion of postretirement benefit
obligation - -
--------- ---------
Total Current Liabilities 302.4 397.4
--------- ---------
Noncurrent Liabilities:
Long-term debt 325.0 325.0
Pension obligation - -
Postretirement benefit obligation 626.0 655.7
Other liabilities 63.9 63.2
---------- ---------
Total Noncurrent Liabilities 1,014.9 1,043.9
---------- ---------
TOTAL LIABILITIES 1,317.3 1,441.3
---------- ---------
Stockholders' Equity:
Preferred stock - Authorized 25,000,000
shares of $.01 par value each;
7,479,674 shares issued;
outstanding 1996 - 5,139,774 shares,
1995 - 5,915,974 shares 0.1 0.1
Common stock - Authorized 75,000,000
shares of $.01 par value each;
issued 1996 - 26,994,380 shares,
1995 - 26,476,297 shares; outstanding
1996 - 26,356,945 shares,
1995 - 25,838,862 shares 0.3 0.3
Additional paid-in capital 706.6 715.0
Treasury Stock - common shares at
cost - 637,435 shares (21.5) (21.5)
Retained earnings 34.6 (19.7)
-------- ---------
TOTAL STOCKHOLDERS' EQUITY 720.1 674.2
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,037.4 $2,115.5
--------- ---------
--------- ---------
<FN>
- --------
See notes to condensed consolidated financial statements.
</TABLE>
-3-<PAGE>
<PAGE>
<TABLE>
AK STEEL HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
<CAPTION>
Six Months Ended
June 30,
----------------
1996 1995
---- ----
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES $(38.3) $136.4
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital investments (20.0) (56.0)
Change in short-term investments 123.1 (111.2)
Other 0.6 (0.6)
-------- -------
NET CASH FLOWS FROM INVESTING ACTIVITIES 103.7 (167.8)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 9.4 0.8
Principal payments on long-term debt - (5.0)
Preferred stock dividends paid (6.3) (8.1)
Common stock dividends paid (7.8) -
Purchase of preferred stock (29.0) -
-------- -------
NET CASH FLOWS FROM FINANCING ACTIVITIES (33.7) (12.3)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 31.7 (43.7)
Cash and cash equivalents, beginning
of period 137.0 261.8
------- -------
Cash and cash equivalents, end of period $168.7 $218.1
------- -------
------- -------
Supplemental disclosure of cash flow information:
- -------------------------------------------------
Cash paid during the period for:
Interest (net of amount capitalized) 18.3 16.9
Income taxes 1.6 2.2
<FN>
- ----------
See notes to condensed consolidated financial statements.
</TABLE>
-4-<PAGE>
<PAGE>
AK STEEL HOLDING CORPORATION
- -----------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions)
- ------------------------------------------------------------
1. Basis of Presentation
In the opinion of the management of AK Steel Holding
Corporation ("AK Holding") and AK Steel Corporation ( AK
Steel"), collectively the ( Company ), the accompanying
condensed consolidated financial statements contain all
adjustments, consisting of normal recurring adjustments,
necessary to present fairly the financial position of the
Company as of June 30, 1996, and the results of its operations
for the three-month and six-month periods ended June 30, 1996
and 1995, and cash flows for the six-month periods ended June
30, 1996 and 1995. The results of operations and financial
position of AK Steel approximate the results and financial
position of AK Holding and the results of operations for the
six-month period ended June 30, 1996 are not necessarily
indicative of the results to be expected for the year ending
December31, 1996. These condensed consolidated financial
statements should be read in conjunction with the audited
consolidated financial statements for the years ended
December 31, 1995 and 1994.
2. Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Net income $38.5 $78.4 $75.5 $146.7
Less dividends on
preferred stock 2.8 4.1 5.9 8.1
----- ----- ------ ------
Income applicable to
common shareholders 35.7 74.3 69.6 138.6
----- ----- ------ ------
Shares (weighted average):
Number of common shares
outstanding 25.7 26.1 25.6 26.1
Number of common equivalent
shares outstanding .7 .3 .6 .3
------ ------ ------ ------
Number of common shares
outstanding as adjusted 26.4 26.4 26.2 26.4
------- ------ ------ ------
------- ------ ------ ------
Primary earnings per
common share $1.34 $2.81 $2.65 $5.25
------- ------- ------ -------
------- ------- ------ -------
Assuming full dilution:
Net income $38.5 $78.4 $75.5 $146.7
-------- ------- ------- -------
-------- ------- ------- -------
Shares (weighted average):
Number of common shares
outstanding 25.7 26.1 25.6 26.1
Number of common equivalent
shares outstanding .7 .4 .7 .4
Assuming conversion of
preferred stock 4.5 6.4 4.7 6.4
------ ------- ------- -------
Number of common shares
outstanding as adjusted 30.9 32.9 31.0 32.9
------- ------- ------- -------
------- ------- ------- -------
Earnings per share
assuming full dilution $1.24 $2.39 $2.44 $4.47
------- ------- -------- -------
------- ------- -------- -------
</TABLE>
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of the
Condensed Consolidated Financial Statements
Net Sales for the second quarter of 1996 totaled $575.4
million, an increase of 3% from first quarter and a decrease of
3% from the second quarter of 1995. Net Sales in the second
quarter of 1995 included merchant coke sales amounting to $13
million. In December of 1995 the Company shut down two of its
coke oven batteries at the Middletown Works thus eliminating
merchant coke sales for 1996.
Demand for flat rolled products continued at strong levels with
shipments of 1.1 million tons in the second quarter. Shipments
during the second quarter to the automotive markets attained
record levels, totaling 489,000 net tons. This achievement
comes on top of record shipments to automotive customers in the
first quarter. Coated and cold rolled products accounted for
59% of total shipments in the second quarter of 1996.
Due to the Company s strong financial and operating
performance, AK Steel s book tax rate for 1996 will approximate
39% compared to nearly a 5% rate in 1995. Earnings per fully
diluted share for the second quarter 1996 were $1.24 compared
to a reported $2.39 ($1.53 on a comparably taxed basis) for the
prior year quarter.
Liquidity:
- ----------
The Company s board authorized a $100 million equity share
repurchase program in October, 1995. This program has now been
completed with repurchases totaling $73.7 million, $17.6
million, and $8.7 million during the fourth quarter 1995, first
quarter 1996, and second quarter 1996, respectively.
On May 15, 1996, the Company s board authorized an additional
$100 million equity share repurchase program and during the
second quarter the company repurchased $2.7 million.
At June 30, 1996, the Company had $221.4 million in cash, cash
equivalents and short-term investments and also had $119.2 of
financing availability under its $125.0 receivable purchase
facility. Cash used in operating activities for the first six
months of 1996 totaled $38.3 million. Of this amount the
Company made contributions of $25 million to its pension fund,
$50 million to pre-fund health care benefits for all active and
retired employees and paid profit sharing bonuses of
approximately $34 million in the first quarter. The Company
has spent $20 million for capital investment, repurchased $29
million of its stock and paid cash dividends of $14.1 million.
-6-
<PAGE>
PART II OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
In April, 1996, the Company and the Occupational Safety and
Health Administration ( OSHA ) agreed to settle all outstanding
issues involving a series of OSHA inspections at the Company s
Middletown Works for $1.9 million. This matter was described
in PartII, Item 1 of the Company s report on Form 10-Q for the
period ended March 31, 1996.
In May, 1996, an action was filed in the United States District
Court, Southern District of Ohio in Cincinnati, Ohio by several
plaintiffs under the citizen suit provisions of federal
environmental laws alleging violation of those laws in
connection with a release of coke oven gas from the Company s
Middletown Works which occurred on or about January 24, 1996.
This matter was described in Part II, Item 1 of the Company s
report on Form 10-Q for the period ended March 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders was held on May 15, 1996.
In connection with the meeting, proxies were solicited pursuant
to the Securities Exchange Act. The following are the voting
results on proposals considered and voted upon at the meeting
as described in the proxy statement.
All ten nominees for Director listed in the proxy statement
were elected.
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Allen Born 23,862,665 21,087
John A. Georges 23,863,705 20,047
Thomas C. Graham 23,863,632 20,120
Dr. Bonnie Guiton Hill 23,859,105 24,647
Robert H. Jenkins 23,859,304 24,448
Lawrence A. Leser 23,862,365 21,387
Robert E. Northam 23,862,580 21,172
Cyrus Tang 23,862,805 20,947
James A. Thomson 23,859,064 24,688
Richard M. Wardrop, Jr. 23,863,805 19,947
</TABLE>
The proposal to amend the 1994 Stock Incentive Plan was
approved (For 20,769,430, Against 668,414, Abstained 307,292).
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Executive Minimum and Supplemental Retirement Plan as
amended January 1, 1996
10.2 Form of Amended Executive Officer Severance Agreement
B. Form 8-K
Earnings Release April 10, 1996
Stock Repurchase Plan May 15, 1996
-7-<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on behalf of the registrant
by the following duly authorized persons.
AK Steel Holding Corporation
-----------------------------
(Registrant)
Date: July 29, 1996 /s/ Richard E. Newsted
------------- ---------------------------------
Richard E. Newsted
Senior Vice President and
Chief Financial Officer
Date: July 29, 1996 /s/ Donald B. Korade
-------------- ---------------------------------
Donald B. Korade
Controller
-8-
<PAGE>
EXHIBIT 10.1
AK STEEL CORPORATION
EXECUTIVE MINIMUM AND SUPPLEMENTAL RETIREMENT PLAN
As Amended and Restated Effective January 1, 1996
ARTICLE 1: PURPOSE
The purpose of the Executive Minimum and Supplemental
Retirement Plan (the "Plan") is to aid AK Steel Corporation and
its subsidiaries and affiliates in attracting and retaining key
personnel by providing a minimum pension benefit to a select
group of elected officers and key management.
The Plan is intended to be unfunded for tax purposes and for
the purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Any obligations of
the Plan shall be the joint and several obligation of AK Steel
Holding Corporation, AK Steel Corporation and each of their
respective subsidiaries, affiliates, and successors.
ARTICLE 2: DEFINITIONS
The following defined terms are used in this Plan. Other terms
may be defined in the text of the Plan. When a word contained
in this Plan is capitalized, a defined term is intended unless
the context clearly requires otherwise.
2.1 "Administrator"
The Compensation Committee of the Board, or any
successor Committee duly empowered by the Board.
2.2 "Average Monthly Earnings"
The Member s average monthly earnings during the highest
three (3) calculation years of the last ten (10) calculation
years. For this purpose, earnings includes all compensation
for services rendered including base salary, bonus and any
elective deferrals made with respect to any calendar year under
the AK Steel Corporation Deferred Compensation Plan, the AK
Steel Corporation Thrift Plan or under any Internal Revenue
Code Section 125 plan. Compensation attributable to
reimbursement of business or relocation expenses; Company
contributions after 1991 to any Company sponsored Code Section
401(k) or 125 employee benefit plans; and income under any
stock option, restricted stock or phantom stock plan, shall be
disregarded. The term "calculation years" means fiscal years
measured by the twelve (12) consecutive calendar months ending
with the last day of the month coincident with or immediately
preceding the date of a Member s Termination Date.
<PAGE>
<PAGE>
2.3 "Board"
The Board of Directors of AK Steel Holding Corporation
or any successor thereto, as the same shall be constituted from
time to time.
2.4 "Chairman"
The Chairman of the Board of AK Steel Holding
Corporation.
2.5 "Company"
AK Steel Corporation and any successor to all or
substantially all of the assets or business of AK Steel
Corporation.
2.6 "Key Management Service"
A Member s Service as an elected officer or in any other
position which, during the Member s period of incumbency, was
identified by the Chairman as a key management position. Years
of employment in one or more key management positions shall be
aggregated. The Administrator s determination that a position
qualified as a key management position shall be final. Key
Management service shall include service in a key management
position with Armco Steel Company, L.P. and Armco Inc.
2.7 "Member"
Any elected officer or member of key management of the
Company who is selected by the Chairman and who is approved by
the Administrator to be a participant eligible for benefits
under this Plan.
2.8 "NCPP"
The AK Steel Corporation Noncontributory Pension Plan as
amended, and any predecessor, substitute or successor Qualified
DB Plan.
2.9 "NCPP Benefit"
For any Member who, as of his Termination Date, is
entitled to a vested accrued benefit under the NCPP, the
Member s vested accrued benefit under the NCPP, determined in
accordance with the limitations of Code Sections 401(a)(17) and
415 (or any substitute or similar provision limiting benefits
allowed to be paid under the NCPP).
2
<PAGE>
2.10 "Qualified DB Plan"
Any tax-qualified defined benefit pension plan in which
a Member has an accrued benefit as of his or her Termination
Date including the NCPP or any other tax-qualified defined
benefit pension plan sponsored by the Company or by any
previous employer of any Member.
2.11 "Qualified DC Plan"
Any tax-qualified defined contribution plan offered
instead of a Qualified DB Plan as determined by the
Administrator. For purposes of this definition, however, the
AK Steel Corporation Thrift Plan A and any predecessor,
substitute or successor thrift plan shall not be deemed to be
a Qualified DC Plan.
2.12 "Qualified Plan"
Any Qualified DB Plan and any Qualified DC Plan.
2.13 "Service"
A Member s years of employment with the Company,
including years of employment with Armco Steel Company, L.P. or
Armco Inc. and including years of employment with any other
predecessor organization approved by the Administrator.
2.14 "Spouse"
The person to whom a Member has been married for at
least one full year as of the Member s Termination Date.
2.15 "Termination Date"
The date a Member s employment with the Company
terminates for any reason, including death, on or after the
Member s Vesting Date.
2.16 "Unlimited NCPP Benefit"
For any Member who, as of his Termination Date, is
entitled to a vested accrued benefit under the NCPP, the
Member s vested accrued benefit under the NCPP, determined
without regard to the limitations of Code Sections 401(a)(17)
and 415 (or any substitute or similar provision limiting
benefits allowed to be paid under the NCPP) and based upon
Average Monthly Earnings as defined in Plan Section 2.2 above.
3
<PAGE>
2.17 "Vesting Date"
The last to occur of the date a Member: (i) completes
five (5) years of Key Management Service; and (ii) completes
ten (10) years of Service.
ARTICLE 3: ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Administrator and such
members of the corporate staff as the Administrator may
designate from time to time. Except as otherwise provided
herein, it is intended that the Administrator shall have full
discretion to interpret the Plan s terms and to resolve claims
which may arise under the Plan.
ARTICLE 4: SOURCE OF BENEFITS
4.1 Source Of Benefits
The Company may pay benefits due under the terms of this
Plan directly from its assets or from assets held in the AK
Steel Corporation Executive Minimum And Supplemental Retirement
Plan Trust ("Trust"), as in effect from time to time. The
Trust and all assets held by the Trust shall at all times
conform to the terms of the model trust described in Revenue
Procedure 92-64, I.R.B. 1992-33, or any successor thereto, and
shall be assets of the Company. The benefits payable under
this Plan shall be unfunded for all purposes of the Code and
ERISA.
4.2 Assets Of The Company
Nothing contained in this Plan shall give or be deemed
to give any Member or any other person any interest in any
property of the Trust or of the Company or any right except to
receive such payments as are expressly provided hereunder.
4.3 Liability Of Officers And Directors
No past, present or future employee, officer or director
of the Company shall be personally liable to any Member or
other person under any provision of this Plan.
ARTICLE 5: ELIGIBILITY FOR PARTICIPATION
5.1 Selection Of Members
Participation in this Plan shall be limited to those
members of management who have been selected by the Chairman
and approved from time to time by the Administrator. No
affirmative election is required on the part of any person
selected to become a Member.
4
<PAGE>
<PAGE>
5.2 Removal Of Members
The Board may remove any member from participation in
this Plan. Removal shall not affect a Member' vested rights
from and after his or her Vesting Date.
5.3 Notification Of Members
The Company shall notify in writing those employees
selected as Members pursuant to Plan Section 5.1 of their
Member status and shall notify in writing any Member removed
from membership.
ARTICLE 6: BENEFIT
6.1 Benefit
Subject to the provisions of Article 7, the benefit
payable under this Plan (the "Benefit") will be the sum of the
Regular Benefit and the Early Retirement Benefit if applicable.
No Benefit shall be payable under this Plan if a Member's
employment with the Company terminates for any reason prior to
the Member's Vesting Date.
6.2 Regular Benefit
The Regular Benefit shall be the value of a monthly
payment deemed to commence on the later of a Member s 60th
birthday or his or her Termination Date which, for any month,
is in an amount equal to the greater of:
(a) the Unlimited NCPP Benefit; or
(b) 45% of a Member s Average Monthly Earnings.
6.3 Early Retirement Benefit
The Early Retirement Benefit shall be the value of a
monthly payment equal to the Members Unlimited NCPP Benefit
during the period between the Members Early Retirement Date and
commencement of the Regular Benefit. The Members Early
Retirement Date shall be the earliest date that a Member is
entitled to receive benefits under the NCPP after the Members
Termination Date.
6.4 Maximum Benefit
In no event will any monthly payment under this Plan be
in an amount greater than 75% of the Member s highest monthly
rate of pay, ignoring deferrals, during the Member's employment.
5
<PAGE>
6.5 Non-duplication
A Member of this Plan shall not be eligible for benefits
under any other non-qualified supplemental retirement benefit
plan maintained by the Company for the purpose of providing
benefits not permitted to be paid under any Qualified DB Plan.
Nothing herein shall prohibit participation by any Member in
the AK Steel Corporation Deferred Compensation Plan.
ARTICLE 7: PAYMENT
7.1 Payment Of Benefits
The Benefit to be paid in accordance with Plan Article 6
shall be paid in a single lump-sum payment, the amount of which
shall be determined in accordance with Plan Section 7.2, as
reduced by the amount determined in accordance with Plan
Section 7.3. Payment shall be made within ten (10) days after
a Member s Termination Date.
7.2 Lump-Sum Valuation
(a) To calculate the lump-sum present value of the
Benefit to be paid in accordance with Plan Article 6, it shall
be assumed that the Benefit is payable as a lifetime annuity
for an unmarried Member or as a joint and 50% surviving
spouse s annuity for a married Member. A Member is deemed
married for the purposes of this Plan Section 7.2(a) if the
Member has a Spouse on his or her Termination Date.
(b) Subject to the provisions of Plan Section 7.2(c)
below, the lump sum present value of a Member s Benefit
under Plan Article 6 shall be determined by the enrolled
actuary for the NCPP based upon assumptions approved by the
Administrator in the Administrator s sole discretion. The
assumptions may be changed at any time, and from time to time,
but any change shall only be valid with respect to Termination
Dates occurring twelve or more months after the change is
approved.
(c) Unless otherwise directed by the Administrator, the
lump-sum present value of the Benefit under Plan Article 6
shall be calculated as of a Member s Termination Date based
upon (i) the 3 month average of the Pension Benefit Guaranty
Corporation ("PBGC") immediate annuity interest rate in effect
during each of the 3 months preceding the month in which the
Termination Date occurs, (ii) the age of the Member, (iii) the
1984 Unisex Pension table (UP84) and (iv) such other actuarial
assumptions as would apply under the NCPP.
7.3 Offset For Other Pension
The benefit determined in accordance with Plan Section
7.2 shall be reduced by an amount equal
6
<PAGE>
<PAGE>
to the present value on the Member s Termination Date of (i)
any accrued benefit under any employer provided Qualified DB
Plan; and (ii) the aggregate amount of any employer provided
vested benefits accumulated under any Qualified DC Plan.
ARTICLE 8: INTERPRETATION, AMENDMENT AND TERMINATION
8.1 Interpretation Of The Plan
This document contains the terms of the Plan. However,
the Administrator shall have, and the Board expressly reserves
to itself and its designate, the broadest possible power to
exercise its discretion in the interpretation of the terms of
this Plan and to resolve any question regarding any person s
rights under the Plan. Any such interpretation shall be final
and binding upon a Member, his or her spouse and his or her
heirs and subject to review only in accordance with Plan
Section 8.2.
8.2 Claims Procedure
Any Member or other person questioning the rights of any
person under the Plan shall submit such question in writing to
the Board, or its designate, for resolution. No person shall
have any claim or cause of action for any benefit under this
Plan until the Board, or its designate, has responded to such
written claim, which response shall not be unreasonably
delayed. Except as to disputes described in Plan Sections 9.2
or 9.4, it is intended by the Board, and each Member agrees as
a condition of membership, that any judicial review of any
decision hereunder shall be limited to a determination of
whether the Board, or its designate, acted arbitrarily or
capriciously, and that any decision of the Board, or its
designate shall be enforced unless the action taken is found by
a court of competent jurisdiction to have been arbitrary or
capricious. Disputes described in Plan Sections 9.2 or 9.4 may
be resolved by binding arbitration, if mutually agreed by the
Member and the Administrator, or by litigation; and in either
case such action may proceed without the necessity of
exhausting any other remedies that may be available under this
Plan.
8.3 Amendment Or Termination Of Plan
The Board may, at any time, with or without notice to
any person, amend or terminate this Plan. No such amendment or
termination shall adversely affect a Member s rights under this
Plan after a Member's Vesting Date.
8.4 No Cause Of Action
No Member shall have any right, claim or cause of action
against any person or entity to appeal the denial of a benefit
by the Administrator except as provided in Plan Sections 8.1
and 8.2. In addition, no Member, and no person claiming by,
through or on behalf of a Member, shall have any claim to or
cause of action for any benefit under this Plan which might
have been earned
7
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<PAGE>
but for the amendment or termination of the Plan, or the
termination of the Member's employment or the removal of the
Member from participation under this Plan.
ARTICLE 9: MISCELLANEOUS
9.1 Unsecured General Creditor
Any and all rights created under this Plan shall be
unfunded and unsecured contractual rights of the Members
against the Company. The Company's obligation under this Plan
shall be a mere promise by the Company to make the benefit
payments described herein. Members shall have no legal or
equitable right, interest or other claim in any property or
assets of the Company by reason of the establishment of this
Plan.
9.2 Obligations To The Company
If a Member becomes entitled to a distribution of
benefits under this Plan, and if at such time the Member has
any outstanding debt, obligation or other liability
representing an amount certain owed to the Company, then the
Company may offset such amount against the amount of benefits
otherwise distributable. Such determination shall be made by
the Administrator.
9.3 Assignability
No Member shall have any right to anticipate, alienate,
assign, sell, transfer, pledge, encumber, attach, mortgage or
otherwise hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder. No part of the amounts
payable hereunder shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance, nor shall any
person have any other claim to any benefit payable under this
Plan as a result of a divorce or the Member's, or any other
person's, bankruptcy or insolvency.
9.4 Forfeiture
Any Member terminated for Cause shall forfeit all rights
under this Plan. Cause means a willful engaging in gross
misconduct materially and demonstrably injurious to the
Company. "Willful" means an act or omission in bad faith and
without reasonable belief that such act or omission was in or
not opposed to the best interests of the Company. Any such
determination shall be made by the Board. Each Member shall be
entitled to a statement of the facts alleged as a basis for the
Board's determination that a Member has been terminated for
cause and shall be permitted an opportunity to present, in
person, for the Board's consideration, in such manner as the
Board shall direct, any facts or arguments on the Member s
behalf as the Member or his representative may determine.
8
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<PAGE>
9.5 Sale Of Business
The sale as a going business of (i) the Company or (ii)
substantially all of the assets of the Company shall not be a
termination of Service for the purpose of establishing a
Member s right to receive benefits under this Plan.
9.6 Employment Not Guaranteed
Neither the establishment of this Plan, nor a Member s
appointment as a Member of the Plan, nor any provision of this
Plan, nor any action taken hereunder, shall be or be construed
as a contract of employment for any definite term. The Company
may take any action related to a Member's employment without
regard to the effect such action has or may have on a Member s
rights hereunder.
9.7 Captions
The captions to the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
9.8 Validity
In the event any provision of this Plan is found by a
court of competent jurisdiction to be invalid, void or
unenforceable, such provision shall be stricken and the
remaining provisions shall continue in full force and effect.
9
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<PAGE>
9.9 Applicable Law
This Plan is subject to interpretation under federal law
and, to the extent applicable, the law of the State of Ohio.
AK Steel Corporation
AK Steel Holding Corporation
By: /s/ Randall F. Preheim
-------------------------
Randall F. Preheim
Vice President, General Counsel
and Secretary
June 11, 1996
By: /s/ John G. Hritz
----------------------------
John G. Hritz
Vice President-Employee Relations
June 11, 1996
Adopted December 12, 1989
Amended and Restated Effective January 1, 1994
Amended and Restated Effective January 1, 1995
Amended and Restated Effective January 1, 1996
10
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EXHIBIT 10.2
[AK STEEL LOGO] AK STEEL HOLDING CORPORATION
703 CURTIS STREET
MIDDLETOWN, OH 45043-0001
Form of Amended Executive Officer Severance Agreement
(Date)
(Addressee)
Dear (Addressee):
Reference is made to the agreement between us, dated
(the "Agreement"), setting forth the benefits to be provided to
you in the event of the termination of your employment upon the
circumstances therein specified. Upon your execution of a
counterpart of this letter, the Agreement shall be deemed
amended and, as so amended, is restated in its entirety to read
as hereinafter set forth.
AK Steel Corporation ("AKS"), since its formation, has
established itself as a strong competitor in the carbon flat
rolled steel industry. Continuity of the management of AKS is
a critical factor to the continued growth and success of AKS.
The Board of Directors ("Board") of AK Steel Holding
Corporation ("Holding"), of which AKS is a wholly-owned
subsidiary, believes it is in the best interest of Holding and
AKS to reinforce and encourage the continued attention and
dedication of key members of management to their assigned
duties.
In consideration of the mutual promises contained herein, it is
hereby agreed that Holding shall cause AKS to provide and AKS
shall provide to you, and you shall receive from AKS, the
benefits set forth in this Agreement if your employment by AKS
(including, for the purposes hereof, its subsidiaries and
Affiliates, as hereinafter defined) is terminated during the
term of this Agreement as provided herein.
1. Purpose
-------
This Agreement establishes certain basic terms and
conditions relating to your employment with AKS, and special
arrangements relating to the termination of your employment
with AKS for any reason other than: (i) your voluntary
retirement; (ii) your becoming totally and permanently disabled
under the AKS long-term disability plan or policy; or (iii) your death. This
Agreement supersedes all prior agreements with AKS or any predecessor
business, as well as all other AKS severance policies and practices, except to
the extent incorporated or restated
<PAGE>
<PAGE>
herein. Notwithstanding the foregoing, neither the termination
of your employment nor anything contained in this Agreement
shall have any affect upon your rights under (i) any tax-
qualified "pension benefit plan", as such term is defined in
the Employee Retirement Income Security Act of 1974, as amended
(ERISA), (ii) any "welfare benefit plan" as defined in ERISA,
including by way of illustration and not limitation, any
medical, surgical or hospitalization benefit coverage or long-
term disability benefit coverage, or (iii) any non-qualified
deferred compensation arrangement, including by way of
illustration and not limitation, any non-qualified pension plan
or deferred compensation plan.
2. Employment
----------
During the term of this Agreement:
(a) you will be employed by AKS (including for this
purpose any direct or indirect subsidiary or Affiliate of AKS
to which you may be transferred) in your present position or in
a position that is at least comparable to your present position
in compensation, responsibility and stature and for which you
are suited by education and background;
(b) you will continue to be eligible to participate in any
employee benefit plan of AKS in accordance with its terms; and
(c) you will be entitled to the same treatment under any
generally applicable employment policy or practice as any other
key member of management of AKS whose position in the AKS
organization is at a level of responsibility comparable to
yours.
Those plans, policies and practices that generally apply to
other key members of management of AKS will be referred to in
this Agreement as your "Employment Benefits." Your Employment
Benefits may be modified from time to time after the date
hereof without violation of this Agreement if the changes apply
generally to other key members of management of AKS.
3. Term of Agreement
-----------------
This Agreement shall be deemed effective as of June 1, 1996
(the "Effective Date") and shall continue in effect through the
later of: (i) the fifth anniversary of the Effective Date or
(ii) the completion of full payment of all benefits promised
hereunder. This Agreement shall be automatically renewed
annually from and after the fifth anniversary of the Effective
Date unless written notice of non-renewal is given by you or by
AKS at least ninety (90) days prior to the expiration of the
term, including any extension thereof.
2
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<PAGE>
4. Termination of Employment
-------------------------
Your employment may be terminated in accordance with any of
the following paragraphs. The date upon which the termination
of your employment becomes effective is hereinafter referred to
as the "Date of Termination". The period between the date of
notice of termination and the Date of Termination is referred
to as the "Notice Period".
(a) Involuntary Termination Without Cause
-------------------------------------
AKS may terminate your employment without Cause (as
defined in Section 4(b) below), but only upon written notice
given to you by AKS not less than thirty (30) days prior to the
Date of Termination. During the Notice Period, you shall
continue to receive your full salary and Employment Benefits.
From and after the Date of Termination, pursuant to this
Section 4 (a), you shall be entitled to those benefits provided
under Section 5.
(b) Involuntary Termination for Cause
---------------------------------
AKS may terminate your employment for Cause, but only
upon written notice, specifying the facts or circumstances
constituting such Cause, which notice may be given on or at any
time prior to the Date of Termination. For the purposes of
this Section 4(b), "Cause" means a willful engaging in gross
misconduct materially and demonstrably injurious to AKS.
"Willful" means an act or omission in bad faith and without
reasonable belief that such act or omission was in or not
opposed to the best interests of AKS. From and after your Date
of Termination, pursuant to this Section 4 (b), you shall only
be entitled to those benefits provided under Section 8.
(c) Voluntary Termination Without Good Reason
------------------------------------------
You may voluntarily terminate your employment without
Good Reason (as defined in Section 4 (d) below), but only upon
written notice given to AKS by you not less than thirty (30)
days prior to the Date of Termination. During the Notice
Period, you shall continue to receive your full salary and
Employment Benefits, provided you satisfactorily perform your
duties during the Notice Period (unless relieved of those
duties by AKS). From and after the Date of Termination,
pursuant to this Section 4 (c), you shall only be entitled to
those benefits provided under Section 8.
3
<PAGE>
(d) Voluntary Termination for Good Reason
-------------------------------------
You may voluntarily terminate your employment for Good
Reason (as herein defined), but only upon written notice,
specifying the facts or circumstances constituting such Good
Reason, given to AKS by you at least thirty (30) days prior to
the Date of Termination and not more than sixty (60) days
following the occurrence of the circumstances constituting such
Good Reason. For the purposes of this Section 4(d), "Good
Reason" shall mean the occurrence, without your express written
consent, of any of the following circumstances (unless, in the
case of clauses (i), (v), (vi),(vii) or (viii) below, such
circumstances are fully corrected prior to the Date of
Termination specified in the notice of termination):
(i) the assignment to you of any duties inconsistent
with your position within AKS or a significant adverse
alteration in the nature or status of your responsibilities or
the conditions of your employment;
(ii) a reduction by AKS in your annual base salary
provided, however, that no such reduction shall reduce your
benefits under Section 5 if you have given timely notice
pursuant to this Section 4(d);
(iii) a requirement by AKS that you be based anywhere
other than the principal executive offices of AKS except for
required travel on AKS business to an extent substantially
consistent with your customary business travel obligations;
(iv) the failure of AKS to pay to you any portion of
your compensation within seven (7) days of the date such
compensation is due;
(v) the failure of AKS, at any time within 24 months
following the occurrence of a Change In Control (as defined in
Section 7(b) hereof), to continue in effect any compensation
plan in which you participated immediately prior to such Change
In Control, which plan is material to your total compensation,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure of AKS to continue your participation
in such compensation plan (or in such substitute or alternative
plan) on a basis not materially less favorable to you, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, than that
existing immediately prior to such Change In Control;
4
<PAGE>
(vi) any material reduction, except to the extent
permitted by Section 2 hereof, in your Employment Benefits;
(vii) the failure of AKS to obtain a satisfactory
agreement from any successor corporation to assume and agree to
perform this Agreement, as contemplated in Section 15 hereof;
(viii) any purported termination of your employment by AKS
that is not effected in compliance with the provisions of
Section 4(a) or 4(b) hereof, as the case may be;
(ix) notice of non-renewal is given by AKS pursuant to
Section 3 of this Agreement.
If you give notice of termination for Good Reason, then,
during the Notice Period (which shall not exceed 60 days), you
shall continue to receive your full base salary and Employment
Benefits as in effect prior to the occurrence of the
circumstances constituting such Good Reason, subject to the
right of AKS to make changes to your Employment Benefits to the
extent permitted by Section 2. From and after the Date of
Termination, pursuant to this Section 4 (d), you shall be
entitled to those benefits provided under Section 5.
5. Special Severance Benefits
--------------------------
If your employment with AKS is involuntarily terminated by
AKS without Cause in accordance with Section 4(a) or you
voluntarily terminate your employment for Good Reason in
accordance with Section 4(d), then you shall receive the
following benefits:
(a) Your base salary shall be continued in effect for a
period (hereafter, the "Severance Pay Period") of (i) 36 months
from the Date of Termination, if the notice of your termination
is given within 24 months after the occurrence of a Change In
Control (as defined in Section 7(b) below) or (ii) 24 months
from your Date of Termination, if the notice of your
termination is given at any time other than within 24 months
after the occurrence of a Change In Control. The aggregate
base salary payable in accordance with this Section 5(a) shall
be paid to you in a single, undiscounted, lump sum payment
within ten (10) days following the Date of Termination unless
you have requested, in writing, at any time prior to your Date
of Termination to receive payments of your base salary in
regular monthly payments throughout the Severance Pay Period.
5
<PAGE>
(b)(i) Within ten (10) days following the Date of
Termination, you will receive a lump-sum payment equal in
amount to the result obtained by application of the following
formula: P = (x) times (y) times (z), where:
P = the lump-sum payment;
(x) = twelve times your monthly base salary;
(y) = the fraction obtained by dividing your annual
incentive compensation which was paid or is payable to you for
the immediately preceding calendar year by your actual base
salary for such year; and
(z) = 3.0 (if the notice of your termination is
given within 24 months after the occurrence of a Change In
Control, as defined in Section 7(b) hereof) or 2.0 (if the
notice of your termination is given at any time other than
within 24 months after the occurrence of a Change in Control).
(ii) Within ten (10) days following the date that
payment is made to active employees of AKS, you shall receive a
pro-rata payment of the annual incentive payment you would have
received for the year in which your Date of Termination occurs.
Such payment shall be (1) pro-rated based upon your Date of
Termination and (2) otherwise calculated as an employee in good
standing at your level of participation in effect prior to the
Date of Termination and assuming 100 percent completion of any
individual performance factors.
(c) Notwithstanding any provision to the contrary in the
AK Steel Holding Corporation 1994 Stock Incentive Plan as
amended or any other similar plan of AKS or Holding (each, a
"Plan"), or under the terms of any grant, award agreement or
form for exercising any right under the Plan, you shall have
the right:
(i) to exercise any stock option awarded to you under
the Plan without regard to any waiting period required by the
Plan or award agreement (but subject to a minimum six month
holding period from the date of award and any restrictions
imposed by law) from the first day of your Notice Period until
the first to occur of the third anniversary of your Date of
Termination or the date the award
6
<PAGE>
expires by its terms; and
(ii) to the absolute ownership of any shares of stock
granted to you under the Plan, free of any restriction on your
right to transfer or otherwise dispose of the shares (but
subject to a minimum six month holding period from the date of
grant and any restrictions imposed by law), regardless of
whether entitlement to the shares is contingent or absolute by
the terms of the grant; and the Board shall take such action
within the Notice Period as is necessary or appropriate to
eliminate any restriction on your ownership of, or your right
to sell or assign, any such shares; and further provided that
if the Board should fail or refuse to take such action, AKS
shall pay you, in exchange for such shares, no later than ten
(10) days after the Date of Termination, an amount in cash
equal to the greatest aggregate market value of the shares
during the Notice Period.
You agree, for a period of six (6) months after your
Termination Date, to continue to comply with all AKS and
Holding policies and directives related to trading in Holding
stock which were in effect prior to your notice of termination.
If your compliance with such policies and directives precludes
you from exercising any stock options or selling any shares of
stock described in paragraphs (i) and (ii) above for a period
of more than sixty (60) days from the first day of your Notice
Period, then AKS will pay you in cash the difference (if less)
between the average share price during the Notice Period and
the actual share price received by you at the time of sale
provided you have completed such sale within sixty (60) days
from your first opportunity to do so.
(d) During the Severance Pay Period your Employment
Benefits shall be continued, subject to the right of AKS to
make any changes to your Employment Benefits permitted in
accordance with Section 2; provided, however, that you shall
not:
(i) accumulate vacation pay for periods after the
Date of Termination;
(ii) first qualify for sickness and accident plan
benefits by reason of an accident occurring or a sickness first
manifesting itself after the Date of Termination;
(iii) be eligible to continue to make contributions to
any Internal Revenue Code Section 401(k) plan maintained by AKS
or qualify for a share of any employer contribution made to any
tax-qualified defined contribution plan; or
7<PAGE>
<PAGE>
(iv) be eligible to accumulate service for pension plan
purposes; and provided, further, that if, during the Severance
Pay Period, you are (and for so long as you remain) employed by
any other employer, the obligations of AKS to continue to
provide you with life, disability and medical, hospital and
other health insurance benefits shall be limited solely to
those benefits necessary to assure that, together with the
corresponding benefits provided to you by your new employer,
you receive total benefits comparable to those to which you
were entitled at the Date of Termination.
(e) You shall qualify for full COBRA health benefit
continuation coverage upon the expiration of the Severance Pay
Period.
(f) You shall be entitled, at no cost to you, to full
executive outplacement assistance with an agency selected by
AKS.
(g) You shall not be required to mitigate the amount of any
payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefits provided for in this Section 5 be reduced by any
compensation or benefits earned by you as the result of
employment by another employer (except as expressly provided in
Section 5(d) above) or by retirement benefits, or be offset
against any amount claimed to be owed by you to AKS or any of
its Affiliates or successors.
(h) For purposes of calculating any amount due under this
Agreement the effect of any deferral of income shall be
disregarded and all sums due shall be calculated as if no such
deferral had been made.
6. Certain Tax Matters
--------------------
(a) If any of the payments provided to you pursuant to
Section 5 hereof (the "Contract Payments") or any other portion
of the Total Payments (as defined below) becomes subject at any
time to the tax (the "Excise Tax") imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), AKS
shall pay to you at the time specified in section 6(b) below,
an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of the Excise Tax on
any Contract Payments and/or other Total Payments, any federal
and state and local income tax and Excise Tax upon the
payment(s) provided for by this paragraph, and any interest,
penalties or additions to tax payable by you with respect
thereto, shall be equal to the present value of the Contract
Payments and such other Total Payments. For purposes of
determining whether any of the foregoing payments will be
subject to the Excise Tax
8
<PAGE>
<PAGE>
and the amount of such Excise Tax, (1) any other payments or
benefits received or to be received by you in connection with a
Change In Control or the termination of your employment
(whether such payments are Contract Payments or are payable
pursuant to the terms of any other plan, arrangement or
agreement with AKS, Holding or any of their respective
Affiliates or successors, any person whose actions result in a
Change In Control or any corporation which, as a result of the
completion of the transactions causing a Change In Control,
will become affiliated with AKS or Holding within the meaning
of section 1504 of the Code (such other payments, together with
the Contract Payments, the "Total Payments")) shall be treated
as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, except to the extent that, in the
opinion of tax counsel selected by AKS' independent auditors
and acceptable to you ("Tax Counsel"), the Total Payments (in
whole or in part) do not constitute parachute payments, or such
excess parachute payments are otherwise not subject to the
Excise Tax, (2) the amount of the Total Payments that shall be
treated as subject to the Excise Tax shall be equal to the
lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of
sections 280G(b)(1) (after applying clause (1) hereof), and (3)
the value of any noncash benefits or any deferred payment or
benefit shall be determined by AKS' independent auditors in
accordance with the principles of sections 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the
Gross-Up Payment(s), you shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation
applicable to individuals in the calendar year in which the
Gross-Up Payment(s) is (are) to be made and state and local
income taxes at the highest marginal rates of taxation
applicable to individuals as are in effect in the state and
locality of your residence in the calendar year in which the
Gross-Up Payment(s) is (are) to be made, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the
amount taken into account hereunder, you shall repay to AKS at
the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-
Up Payment attributable to the Excise Tax and federal and state
and local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a federal and
state and local income tax deduction), plus interest on the
amount of such repayment at the applicable federal rate (as
defined in section 1274(d) of the Code). In the event that the
Excise Tax is determined to exceed the amount taken into
<PAGE>
account hereunder (including by reason of
9
<PAGE>
<PAGE>
any payment the existence or amount of which cannot be
determined at the time of the Gross-up Payment), AKS shall make
an additional gross-up payment in respect of such excess (plus
any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
(b) The Gross-up Payment(s) provided for in section 6(a)
above shall be made not later than the tenth day following the
Date of Termination or, with respect to any portion of the
Excise Tax not determined on or before such date to be due,
upon the imposition of such portion of the Excise Tax;
provided, however, that if the amounts of such payments cannot
be finally determined on or before such date, AKS shall pay to
you on such day an estimate, as determined in good faith by
AKS, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount
subsequently finally determined to have been due, such excess
shall constitute a loan by the Corporation to you, payable on
the tenth day after demand by the Corporation (together with
interest at the rate provided in section 1274(B)(2)(B) of the
Code).
(c) In the event of any change in, or further
interpretation of, sections 280G or 4999 of the Code and the
regulations promulgated thereunder, you shall be entitled, by
written notice to AKS, to request an opinion of Tax Counsel
regarding the application of such change to any of the fore-
going, and AKS shall use its best efforts to cause such opinion
to be rendered as promptly as practicable. All fees and
expenses of Tax Counsel incurred in connection with this
Agreement shall be borne by AKS.
7. Definitions
-----------
For purposes of this Agreement the following terms shall
have the following meanings:
(a) "Affiliate" of any specified person means (a) any
-----------
other person which, directly or indirectly, is in control of,
is controlled by or is under common control with such specified
person or (b) any other person who is a director of officer (i)
of such specified person, (ii) of any subsidiary of such
specified person or (iii) of any person described in clause (a)
above. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the
direction of the management and policies
10<PAGE>
<PAGE>
of such person whether by contract or otherwise and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
(b) "Change In Control" means the occurrence of any of the
------------------
following events:
(i) any "Person" (as such term is used in Sections
13(d) and 14(d) of Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 40% of
the total voting power of the Voting Equity Interests of
Holding; provided, however, that a Person shall not be deemed
-------- --------
the "beneficial owner" of shares tendered pursuant to a tender
or exchange offer made by that Person or any Affiliate of that
Person until the tendered shares are accepted for purchase or
exchange;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board (together with any new directors whose election by such
Board, or whose nomination for election by the shareholders of
Holding, as the case may be, was approved by a vote of 66-2/3%
of the directors then still in office who were either directors
at the beginning of such period or whose election of nomination
for election was previously so approved) cease for any reason
to constitute a majority of the Board then in office; or
(iii) Holding fails to own 100% of the outstanding stock
of AKS; provided, however, that it shall not be deemed a Change
--------- -------
in Control if Holding merges into AKS except that, in such
case, AK Steel shall be substituted for Holding for purposes of
this definition of "Change in Control" and this clause (iii)
shall not longer be applicable.
(c) "Voting Equity Interests" of a corporation means all
------------------------
classes of stock then outstanding and normally entitled to vote
in the election of directors or other governing body of such
corporation.
8. Benefits Upon Voluntary Termination or Termination for
Cause
------------------------------------------------------
Upon your Date of Termination for Cause in accordance with
Section 4(b) or your Date of Termination without Good Reason in
accordance with Section 4(c), all
11
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<PAGE>
benefits under this Agreement will be void, but, you
nevertheless shall be eligible for any benefits provided in
accordance with the plans and practices of AKS which are
applicable to employees generally.
9. Arbitration
------------
Any dispute under this Agreement (except for disputes
arising under Sections 10 and 12 below) shall be submitted to
binding arbitration subject to the rules of the American
Arbitration Association. Except as hereinafter provided, AKS
and you shall each bear your own attorney's fees and shall
share equally the cost of arbitration. However, if you prevail
in a challenge by you to AKS's assertion of the existence of
Cause for termination or in a challenge by AKS to your
assertion of the existence of Good Reason for termination, you
shall be reimbursed by AKS for all reasonable costs or expenses
incurred by you in such challenge, including reasonable
attorney's fees.
10. Confidentiality
---------------
You will not disclose to any person or use for the bene-
fit of yourself or any other person any confidential or
proprietary information of AKS without the prior written
consent of an elected officer of AKS. Upon your termination of
employment, you will return to AKS all written or
electronically stored memoranda, notes, plans, records, reports
or other documents of any kind or description (including all
copies in any form whatsoever) relating to the business of AKS.
11. Conflicts of Interest
---------------------
You agree for so long as you are employed by AKS to avoid
dealings and situations which would create the potential for a
conflict of interest with AKS. In this regard, you agree to
comply with the AKS policy regarding conflicts of interest.
12. Covenant Not to Compete
-----------------------
During the term of this Agreement, and for a period of one
year following your Date of Termination for any reason other
than for Cause pursuant to Section 4 (b) you agree not to be
employed by, or serve as director of or consultant or advisor
to, any business engaged directly or indirectly in the melting,
hot rolling, cold rolling, or coating of carbon or stainless,
flat rolled steel, or that is reasonably likely to engage in
such business during the one-year period following your
termination of employment.
12
<PAGE>
<PAGE>
13. Notice
------
Notices required or permitted under this Agreement shall
be in writing and shall be deemed to have been given when
personally delivered or mailed by United States certified mail,
return receipt requested, postage prepaid, addressed to the
intended recipient at its or his address first above written.
Notices to AKS shall be marked for the attention of the Chief
Executive Officer of AKS.
14. Modification; Waiver
--------------------
No provision of this Agreement may be waived, modified or
discharged except pursuant to a written instrument signed by
you and the Chairman of the Board or the Chief Executive
Officer of AKS.
15. Successors; Binding Agreement
-----------------------------
(a) AKS and Holding will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of AKS to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that AKS
would be required to perform it if no such succession had taken
place. Failure of AKS or Holding to obtain such assumption and
agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement.
(b) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount
would still be payable to you hereunder had you continued to
live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee, or, if there is no such
devisee, legatee or designee, to your estate.
16. Validity; Counterparts
----------------------
This Agreement shall be governed by and construed under
the law of the State of Delaware. The validity or
unenforceability of any provision hereof shall not affect the
validity or enforceability of any other provision hereof. This
Agreement may
13
<PAGE>
be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will
constitute one and the same instrument.
Sincerely,
AK STEEL HOLDING CORPORATION
By:
------------------------
AK STEEL CORPORATION
By:
-----------------------
Accepted and agreed to this day
, 1996.
- --------------------------
(Name of Employee)
- --------------------------
(Signature)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM AK STEEL
HOLDING CORPORATION'S QUARTERLY REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 169
<SECURITIES> 53
<RECEIVABLES> 249
<ALLOWANCES> 0
<INVENTORY> 325
<CURRENT-ASSETS> 12
<PP&E> 1,471
<DEPRECIATION> 517
<TOTAL-ASSETS> 2,037
<CURRENT-LIABILITIES> 302
<BONDS> 325
<COMMON> 0
0
0
<OTHER-SE> 720
<TOTAL-LIABILITY-AND-EQUITY> 2,037
<SALES> 1,134
<TOTAL-REVENUES> 1,134
<CGS> 901
<TOTAL-COSTS> 997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 124
<INCOME-TAX> 48
<INCOME-CONTINUING> 76
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76
<EPS-PRIMARY> 2.65
<EPS-DILUTED> 2.44
</TABLE>
