Document:

canfield.htm

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective as of the 15th day of March, 2012 (the "Effective Date") by and between Duckwall-ALCO Stores, Inc., a Kansas corporation (the “Company”), and Tom L. Canfield, Jr., an individual (the “Employee”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ the Employee on the terms and conditions set forth herein;

 

WHEREAS, the Employee desires to enter into an agreement with Company to provide services for the Company under the terms and conditions hereinafter provided;

 

NOW, THEREFORE, the Company and the Employee, each intending to be legally bound, hereby mutually covenant and agree as follows:

 

	
I.  

	
DEFINITIONS

 

The following terms used in this Agreement shall have the meanings set forth below:

 

A. “Affiliate” of the Company shall mean any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with the Company.  As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person.

 

B. “Base Salary” shall mean the amount set forth in Section III(A).

 

C. “Board” shall mean the board of directors of the Company.

 

D. “Cause” shall mean the following:

 

1. Employee’s violation of any provision of this Agreement or any other agreement between Employee and the Company and Employee's failure to cure such violation within thirty (30) days after Employee has been notified of such violation by the Company;

 

2. Employee's engaging in conduct which is fraudulent, dishonest or illegal in the course of Employee's duties hereunder or in the course of any actions involving the Employee and the Company, an Affiliate, any Customers, or the Company's owners, directors, officers, contractors, or employees;

 

3. Employee’s gross negligence or willful misconduct in the performance or nonperformance of duties or responsibilities hereunder or Employee's inability or refusal to perform Employee's duties in a proper and reasonable fashion;

 

 

  

  

  

 

4. Employee’s engagement in misconduct which is materially injurious or materially damaging to the Company or any Affiliate or the reputation of the Company or any Affiliate;

 

5. Employee’s conviction of, or the plea of nolo contendere or guilty to, a felony;

 

6. Failure to cooperate with regulatory or legal proceedings;

 

7. Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Company’s standard confidentiality policies and procedures;

 

8. Employee’s material breach or violation of the Company’s policies, including but not limited to those on discrimination, harassment or substance abuse, including any use of illegal drugs, or abuse of prescription drugs, regardless of whether the Employee is at work or away from work;

 

9. Failure to carry out any reasonable, lawful instructions of the Company;

 

10. Breach by the Employee of a fiduciary obligation to the Company;

 

11. Acting in a manner disloyal or in conflict with the interests of the Company;

 

12.  Competition with the Company, or personal utilization of opportunities which could be for the benefit of the Company; or

 

13. Absence from work for more than seven (7) days without prior written approval of Company (excluding absences for legitimate medical reasons, including leave permitted in accordance with the Family and Medical Leave Act, if applicable).

 

E. “Competitor” shall have the meaning set forth in Section IV(D).

 

F. “Confidential Information” shall have the meaning set forth in Section IV(F).

 

G. "Contract Year" shall mean the period commencing on the day of the Effective Date and ending one (1) year after such day.

 

H. “Change of Control” shall mean a change in control of a nature as set forth in the Duckwall-ALCO Stores, Inc. Incentive Stock Option Plan of 2003, or as may be amended (“ISO Plan”).

 

I. "Customer" shall have the meaning set forth in Section IV(B).

 

                                                                   

  

  

  

 

J. “Disability” and "Disabled" means that Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that, even with reasonable accommodation of the disability, can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. Employee will be deemed Disabled hereunder if determined to be totally disabled by the social security administration, or a disability insurance program where the definition of disability applied under such disability insurance program complies with the requirement of this paragraph.

 

K. “Earned Obligations” shall mean, as of the date of Termination of Employment, the sum of (A) the Employee’s aggregate Base Salary through such date to the extent not theretofore paid, (B) all vacation pay, expense reimbursements and other cash entitlements earned by the Employee hereunder as of such date to the extent not theretofore paid, and (C) any bonus earned by Employee under any bonus plan adopted by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee") as set forth in Section  III(B) of this Agreement prorated for any partial fiscal year of the Company worked by Employee provided no such bonus shall be paid if Employee has been terminated for Cause.

 

L. “Good Reason” means any of the following:

 

1. A material diminution in the Employee’s Base Salary; or

 

2. Any other action or inaction that constitutes a material breach by the Company of this Agreement.

 

The Company’s placing of Employee on paid leave for up to ninety (90) consecutive days while it is determining whether there is a basis to terminate Employee’s employment for Cause will not constitute Good Reason. The term “Good Reason” is intended to be an exempt “involuntary separation of service” under Treas. Reg. § 1.409A-1(n).

 

M. “Person” shall mean an individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or any other entity or governmental or other agency or political subdivision thereof.

 

N. “Termination of Employment” shall mean a separation from service as defined by Internal Revenue Code § 409A and the final regulations thereunder by the Employee with the Company due to (i) the Employee’s death or Disability, (ii) termination by the Company of the Employee’s employment for Cause or without Cause, (iii) resignation by the Employee from the employ of the Company, (iv) retirement of the Employee, or (v) any other reason.

 

                                                                    

  

  

  

 

	
II.  

	
EMPLOYMENT AND TERM

 

A. Employment.  The Company hereby offers to employ the Employee as an employee of the Company, and the Employee hereby accepts such employment.  Employee will be employed in the position of Senior Vice President-Logistics/Administration of the Company.

 

B. Employment Period.  The Employee’s employment under this Agreement will begin on the Effective Date, and the Agreement will thereafter govern Employee’s employment with the Company until the effective date of the Termination of Employment, the “Employment Period.”

 

C. Duties.  The Employee shall have all powers, duties and responsibilities commensurate with his or her position as set forth in Section II hereof or as may be assigned by the Company from time to time (provided any such powers, duties and responsibilities assigned by the Company are commensurate with such position). The Employee shall devote substantially all of his or her business time, attention and energies to the performance of the duties hereunder. Notwithstanding the foregoing, nothing in this Agreement shall restrict the Employee from managing personal investments, personal business affairs and other personal matters, or serving on civic or charitable boards or committees, provided that none of such activities interfere with the performance of the duties and responsibilities hereunder or conflicts or competes with the interests of the Company or any Affiliate. The Employee shall not serve on the Board of Directors or similar governing body of any for-profit Person without the prior written consent of the President of the Company.   The Employee shall report to the President and Chief Executive Officer.

 

D. Location.  The Employee’s principal place of employment shall be as designated by the Company's President in the President's sole discretion.  The Employee agrees to be regularly present at that office.  The Employee acknowledges that Employee may be required to travel from time to time in the course of performing duties for the Company.

 

	
III.  

	
COMPENSATION AND BENEFITS

 

A. Base Salary.  For services performed by the Employee for the Company and its Affiliates pursuant to this Agreement, the Company shall pay the Employee an initial Base Salary of Two Hundred Five Thousand Dollars ($205,000.00) per year, payable in accordance with the Company’s regular payroll practices and subject to annual review by the Compensation Committee of the Company's Board.

 

                                                                

  

  

  

 

B. Benefits and Bonus.

 

1. The Employee shall be entitled to participate in any bonus plan and such fringe benefits, if any, by way of insurance, hospitalization, and vacations normally provided to other members of the executive management of the Company generally and such additional benefits as may be from time to time agreed upon in writing between the Employee and the Company or as provided in the terms of the plans providing such benefits that the  Compensation Committee of the Board of the Company may from time to time adopt.  The Company, at its sole discretion may pay, or not pay, any other bonus as it determines.  If the Compensation Committee adopts a bonus plan, the bonus plan shall provide for a bonus of up to forty percent (40%) of Employee's Base Salary if certain targets are met as set forth in the adopted bonus plan.

 

2. Employee acknowledges and agrees that it must reimburse the Company and/or have the Company offset any payments due to Employee to the extent that any bonuses are paid on financial information which is later determined to be overstated due to (1) a material (as determined by the Compensation Committee, which decision is binding and unappealable) mistake, miscalculation or intentional misstatement by the Company; or (2) the material  (as determined by the Compensation Committee, which decision is binding and unappealable) noncompliance of the Company with any financial reporting requirement under federal or state securities laws  and results in any financial restatement, which would have lessened the amount paid to Employee. Pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (as amended from time to time), Employee agrees that the terms of this Section III(B)(2) apply for three (3) years after any bonus based upon inaccurate financial information of the Company is paid to Employee, regardless if this Agreement has been terminated before the end of such three (3) year period for any reason.

 

C. Business Expenses.  Employee will be reimbursed for all reasonable business expenses incurred by Employee in performing Employee’s responsibilities under the Employment Agreement in accordance with Company policies.

 

D. Relocation Expenses.  N/A.

 

E. Stock Options.  Subject to the approval and authorization by the Compensation Committee of the Board of Directors of the Company, Employee will be granted options to purchase 7,500 shares of the Company’s common stock  (the "Options") as provided in the Company’s ISO Plan.  The exercise price of the Options will be as set forth in the ISO Plan.  The Options shall vest, be exercisable and otherwise governed in accordance with the ISO Plan.  The Company and Employee agree to enter into a separate Stock Option Agreement regarding the Options. The Options granted to Employee under this Agreement are in consideration of Employee's execution of this Agreement and his or her agreement to comply with all covenants set forth herein.

 

                                                                    

  

  

  

 

F. Vacation.  Employee will be entitled to four (4) weeks of paid vacation per Contract Year during Employee’s employment.

 

	
IV.  

	
COVENANTS

 

A. Non-Solicitation of Employees or Contractors.  During the Employment Period and for twelve (12) months after the Termination of Employment of the Employee for any reason (the "Restricted Period"), the Employee agrees to refrain from, directly, indirectly or as an agent on behalf of or in conjunction with any Person, (i) soliciting or encouraging any employee or independent contractor of the Company or an Affiliate, to leave the employment of, or terminate any engagement with, the Company or an Affiliate or (ii) hiring any person that was an employee or independent contractor of the Company or an Affiliate within twelve (12) months of such individual's termination of an employment or contractor arrangement with the Company or an Affiliate.

 

B. Non-Solicitation of Vendors. During the Restricted Period, the Employee agrees to refrain from, directly or indirectly through any other Person, influencing or attempting to influence vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, or partners of the Company or any Affiliate of the Company (collectively, "Customers") to divert any Customer's business away from the Company or any Affiliate, and the Employee will not otherwise interfere with, disrupt or attempt to disrupt the business relationships, contractual or otherwise, between the Company or any Affiliate and any Customer.

 

C. Notice to New Employers. Before Employee either applies for or accepts employment with any other person or entity while any of this Section IV is in effect, the Employee will provide the prospective employer with written notice of the provisions of this Section IV and will deliver a copy of the notice to the Company.

 

                                                                    

  

  

  

 

D. Noncompetition.  During the Restricted Period, the Employee will not, either directly or indirectly, own, manage, operate, join or control or participate (or serve as a consultant or director, or in a similar position) in the ownership, management, operation or control of, any business, entity, firm, partnership, corporation or other Person, whether, private, governmental or quasi-governmental (“Competitor”), other than the Company and its Affiliates, which, directly or indirectly, in any state where the Company has a retail establishment: (i) engages in the business of the development, design, production, supply, sale or distribution of discount consumable basic or general merchandise retail stores; (ii) generally engages in the discount consumable basic or general merchandise retail business, including but not limited to businesses such as Wal-Mart, Sam's Club, Target, Dollar General, Costco, K-Mart, Big Lots, ShopKo, Walgreen's, Rite-Aid, CVS, Family Dollar Stores, Fred's Inc., Dollar Tree Stores, or any similar stores; (iii) engages in any other business engaged in or being developed by the Company or its Affiliates in which the Employee has played a material role in the acquisition, development or management of such business; or (iv)  plans to engage in the discount consumable basic or general merchandise business or any other business engaged in or being developed by the Company or any Affiliate; provided, however, that the Employee will not be deemed to engage in any of the businesses of any publicly traded corporation solely by reason of Employee's ownership of less than 2% of the outstanding stock of such Person or by serving as a director on the board of directors of a customer or supplier of the Company at the request of the Company.

 

E. No Public Statements. Both parties agree to not make any public statements regarding Employee's employment or the termination of Employee's employment (for whatever reason) that are not agreed to by the other party. Both parties agree not to make any public statement that would libel, slander or disparage the other party, including any party's Affiliates or respective past or present officers, directors, employees or agents.

 

F. Nondisclosure of Confidential Information.

 

1. Company Information.  In the performance of Employee's duties, the Employee will have, has previously had, and may be expected in the future to have, access to Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, methods, strategies, services, Customer lists, prospective Customer lists, Customer records, telephone lists and all other information with respect to Customers (including, but not limited to, Customers of the Company on whom Employee called or with whom Employee became acquainted during the term of Employment Period), documents, notes, working papers, records, systems, contracts, agreements, market data and related information, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering information, hardware configuration information, marketing plans, finances, pricing and credit documents and policies, service development techniques or plans, business acquisition plans, new personnel acquisition plans or other business information presently owned or at any time hereafter developed by the Company or its Affiliates, agents or consultants or used presently or at any time hereafter in the course of the business of the Company and its Affiliates, that are not otherwise part of the public domain (collectively, the “Company Information”).

 

                                                                   

  

  

  

 

All such Company Information is considered secret and has been and/or will be disclosed to the Employee in confidence, and the Employee acknowledges that, as a consequence of Employee's employment and position with the Company and any Affiliate, the Employee will have access to and become acquainted with Company Information. Except in the performance of Employee's duties to the Company or its Affiliates, the Employee shall not, during the Employment Period and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Company Information. All records, files, drawings, documents, equipment and other tangible items, wherever located, relating in any way to or containing Company Information, which the Employee has prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Company Information.

 

Upon termination of this Agreement, or whenever requested by the Company, the Employee shall promptly deliver to the Company any and all of the Company Information and copies thereof, not previously delivered to the Company or its Affiliates, that may be in the possession or under the control of the Employee. The foregoing restrictions shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other written agreement between or among the Employee and the Company (and/or any Affiliate), (ii) such Company Information which has become publicly known and made generally available through no wrongful act of the Employee or of others who were under confidentiality obligations as to the item or items involved, (iii) the Employee’s general skills and education, and know-how of broad application known to the Employee or independently developed by the Employee prior to the Employee’s employment by the Company or (iv) the Employee is required to disclose Company Information by or to any court of competent jurisdiction or any governmental or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided, that the Employee shall, prior to any such disclosure, immediately notify the Company of such requirement and provided further, that the Company shall have the right, at its expense, to object to such disclosures and to seek confidential treatment of any Company Information to be so disclosed on such terms as it shall determine.

 

2. Third Party Information.  In the performance of Employee's duties, the Employee has previously had, will have and/or may be expected in the future to have, access to confidential or proprietary information with respect to third parties which is subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes (the “Third Party Information”). Except in the performance of duties to the Company or any Affiliate, the Employee shall not, during the Employment Period and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Third Party Information.

 

                                                                   

  

  

  

 

G. Work Product.

 

1. As used in this Agreement, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable, copyrightable, registerable as a trademark, reduced to writing, or otherwise) which relates to the Company’s or any of its Affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Employee (whether or not during usual business hours, whether or not by the use of the facilities of the Company or any of its Affiliates, and whether or not alone or in conjunction with any other person) while employed by the Company (including those conceived, developed or made prior to the Effective Date) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

 

2. All Work Product that the Employee may have discovered, invented or originated during Employee's employment by the Company or any of its Affiliates prior to the Employment Period, that he or she may discover, invent or originate during the Employment Period or at any time in the period of six (6) months after the Termination of Employment, shall be the exclusive property of the Company and its Affiliates, as applicable, and Employee hereby assigns all of Employee’s right, title and interest in and to such Work Product to the Company or its applicable Affiliate, including all intellectual property rights therein.  Employee shall promptly disclose all Work Product to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or perfect its (or any of its Affiliates’, as applicable) rights therein, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s (or any of its Affiliates’, as applicable) rights therein.  The Employee hereby appoints the Company as Employee's attorney-in-fact to execute on Employee's behalf any assignments or other documents deemed necessary by the Company to protect or perfect the Company, the Company’s (and any of its Affiliates’, as applicable) rights to any Work Product.

 

                                                                    

  

  

  

 

H. Enforcement.

 

1. The Employee acknowledges that violation of any of the covenants and agreements set forth in this Section IV would cause the Company or any of its Affiliates irreparable damage for which the Company or any Affiliate cannot be reasonably compensated in damages in an action at law, and therefore in the event of any breach by the Employee of this Section IV, the Company or any Affiliate shall be entitled to make application to a court of competent jurisdiction for equitable relief by way of injunction or otherwise (without being required to post a bond). Employee agrees to pay all of the Company’s court costs and attorneys’ fees incurred in enforcing its rights under this Section IV and all other obligations of Employee under this Agreement, provided if the court, in a final and nonappealable decision, finds that the Company improperly filed the aforementioned action, the Company shall pay all of its own costs and those incurred by Employee. This provision shall not, however, be construed as a waiver of any of the rights which the Company or any Affiliate may have for damages under this Agreement or otherwise, and all of the Company’s and its Affiliate’s rights and remedies shall be unrestricted. This Section IV shall survive termination of this Agreement or Termination of Employment for any reason whatsoever.

 

2. If any of the provisions of this Agreement shall otherwise contravene or be invalid under the laws of any state or other jurisdiction where it is applicable but for such contravention or invalidity, such contravention or invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be reformed and construed, insofar as the laws of that state or jurisdiction are concerned, as not containing the provision or provisions, but only to the extent that they are contravening or are invalid under the laws of that state or jurisdiction, and the rights and obligations created hereby shall be reformed and construed and enforced accordingly. In particular, if any of the covenants or agreements set forth in Section IV, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, or otherwise, the parties hereby expressly agree that the court making such determination shall have the power to reduce the duration and/or the areas of such provision or otherwise limit any such provision, and, in its reduced form, such provision shall then be enforceable. The parties intend that each covenant set forth in this Section IV shall be deemed to be a series of separate covenants, one for each and every county and political subdivision to which it is applicable.

 

3. The Employee understands that the provisions of this Section IV may limit Employee's ability to earn a livelihood in a business similar to the business of the Company or any Affiliate but nevertheless agrees and hereby acknowledges that such provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company and any Affiliate and the consideration provided under this Agreement, including, without limitation, any amounts or benefits provided hereunder, is sufficient to compensate the Employee for the restrictions contained in this Section IV.  In consideration of the foregoing and in light of the Employee’s education, skills and abilities, the Employee agrees that Employee will not assert, and it should not be considered, that any provisions of this Section IV prevented Employee from earning a living or otherwise are void, voidable or unenforceable or should be voided or held unenforceable.

 

                                                                   

  

  

  

 

4. Each of the covenants of this Section IV is given by the Employee as part of the consideration for this Agreement and as an inducement to the Company to enter into this Agreement and accept the obligations hereunder.

 

	
V.  

	
TERMINATIONS

 

A. Procedures Applicable to Termination of Employment.

 

1. Termination by Employee. The Employee may resign upon thirty (30) days notice to the Company.  If Employee desires to terminate his or her employment for Good Reason, then Employee must give the Company a written notice of termination detailing why Employee believes a Good Reason event has occurred and such notice must be provided to the Company within ninety (90) days of the initial occurrence of such alleged Good Reason event.  The Company shall then have thirty (30) days after its receipt of written notice to cure the item cited in the written notice. Good Reason will not have formally occurred with respect to the event in question, unless and until the cure period has expired and the item remains uncured. At the end of the cure period, if the Company has not cured the basis for the Good Reason termination, Employee’s obligation to serve the Company, and the Company’s obligation to employ Employee under the terms of this Agreement, shall terminate simultaneously.

 

2. Termination by Company. The Company shall notify the Employee if the Employee's employment is terminated, and the date of Termination of Employment will be the date such notice is given.

 

B. Termination In the Event of Death or Disability.

 

1. In the event of the Employee’s death or Disability, the Company shall pay to the Employee or the Employee’s heirs, estate or legal representatives, as the case may be, the following:

 

(i) all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment; and

 

(ii) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and non qualified retirement, pension, profit sharing and similar plans of the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements.

 

2. Employee’s employment will terminate automatically on Employee’s death.

 

                                                                   

  

  

  

 

3. If Employee dies or becomes Disabled before Employee’s employment starts, all of the provisions of this Agreement will also terminate and there will be no liability of any kind under this Agreement.

 

4. In the event of Termination of Employment as a result of the Employee’s Disability, the Company shall keep in force existing health and dental benefits for the Employee and Employee's dependents for a period of twelve (12) months from the date of Termination of Employment on the basis in effect at the time of such Termination of Employment.

 

C. Termination Without Cause or for Good Reason.

 

1. In the event that the Company terminates the Employee’s employment without Cause or the Employee terminates Employee's employment for Good Reason (within the time period provided above) (but excluding Termination of Employment by reason of the Employee’s death or Disability), the Company shall pay to the Employee the following:

 

(i) all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment;

 

(ii) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and nonqualified retirement, pension, profit sharing and similar plans of  the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements;

 

(iii) the Company shall pay to the Employee, subject to applicable withholding, twelve (12) months of Base Salary paid in equal bi-monthly installments over a twelve (12) month period in accordance with the Company’s regular payroll practices; and

 

(iv) the Company shall reimburse Employee for benefits' coverage obtained by Employee with the consent of the Company for the Employee and Employee's dependents comparable to the coverage provided under the Company’s benefit plans or policies for a period of ninety (90) days following Termination of Employment.

 

D. Other Terminations.

 

1. In the event of Termination of Employment for any other reason (including a termination for Cause or resignation), the Company shall pay to the Employee the following:

 

(i) all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment; and

 

(ii) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and nonqualified retirement, pension, profit sharing and similar plans of the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements.

 

                                                                    

  

  

  

 

E. Change of Control Severance Payments.  Pursuant to Internal Revenue Code § 409A, and as more fully described in Section VII, any and all severance payments paid to the Employee due to Termination of Employment without Cause or for Good Reason within six (6) months of a Change of Control shall not be paid until the seventh (7th) month following the Termination of Employment.

 

F. Reduction of Severance Payments upon Additional Employment. If the Employee obtains any other employment during the period the Company remains obligated to provide any compensation or benefits to Employee as set forth in this Section V, the Employee shall promptly notify the Company thereof and of the aggregate gross compensation payable to Employee in respect of such other employment, and the Company shall have the right to deduct, dollar for dollar, from the amount payable by the Company to Employee the gross aggregate amount of compensation and benefits Employee receives from such other employment. If Employee violates any provisions of Sections IV or V during the period which the Company is obligated to compensate Employee under this Section V, then Company's obligations under this Section V to provide Employee certain compensation and benefits shall cease and Employee shall have no rights to any future payments or benefits from Company.

 

G. Exclusivity.  The amounts payable to the Employee pursuant to Section V shall be the Employee’s sole remedy in the event of the Termination of Employment of the Employee, and the Employee waives any and all rights to pursue any other remedy at law or in equity; provided, however, that this shall not constitute a waiver of any rights provided under any federal, state or local laws or regulations relating to discrimination in employment, employment compensation laws, or the Fair Labor Standards Act, and provided, further, that nothing in this Section V or elsewhere in this Agreement is intended to limit the Employee’s rights under Company policies or applicable law which by their terms survive the applicable Termination of Employment.

 

H. Survival of Terms upon Termination of the Agreement.  Except as otherwise provided in this Agreement, the provisions in Section IV shall survive the Termination of Employment.

 

                                                                   

  

  

  

 

	
VI.  

	
EMPLOYEE REPRESENTATIONS

 

The Employee hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Employee and the Company and the performance by the Employee of the Employee’s duties hereunder do not and shall not constitute a breach of, conflict with, or otherwise contravene or cause a default under, the terms of any other agreement or policy to which the Employee is a party or otherwise bound or any judgment, order or decree to which the Employee is subject or other applicable law; (ii) that the Employee has no information (including, without limitation, confidential information and trade secrets) relating to any other Person which would prevent, or be violated by, the Employee entering into this Agreement or carrying out Employee's duties hereunder; (iii) the Employee is not bound by any employment, consulting, non-compete, confidentiality, trade secret or similar agreement (other than this Agreement) with any other Person; and (iv) the Employee understands the Company will rely upon the accuracy and truth of the representations and warranties of the Employee set forth herein and the Employee consents to such reliance.

 

	
VII.  

	
INTERNAL REVENUE CODE § 409A COMPLIANCE.

 

The Agreement shall be interpreted to ensure that the payments made to the Employee are exempt from, or comply with, Internal Revenue Code § 409A; provided, however, that nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Internal Revenue Code § 409A) from the Employee to the Company or to any other individual or entity.

 

A.  Delay of Payment to Specified Employees. Notwithstanding anything contained in this Agreement to the contrary, subject to the remaining provisions of this paragraph, if, as of the date of the Employee's Termination of Employment, the Company determines that the Employee is a “specified employee,” the aggregate of the severance payments described in Section V that otherwise would be paid in the six-month period following the date of the Employee's Termination of Employment  will instead be paid during the seventh (7th) calendar month following the date of the Employee's Termination of Employment or, if earlier, within thirty (30) days of the date of the Employee’s death, provided, however, that the six-month delay described herein shall not apply with respect to payments that are not deferred compensation under severance payments that (i) are due only upon an involuntary separation from service (as defined in Treas. Reg. § 1.409A-1(n) of the Department of Treasury Regulations), (ii) when combined with all other such severance payments, do not exceed the amount specified in Treas. Reg. § 1.409A-1(b)(9)(iii)(A) (generally the lesser of two times annualized pay or two times the compensation limit in Section 401(a)(17) of the Internal Revenue Code), and (iii) are completed by the end of the second calendar year following the year in which the Employee's involuntary separation from service occurred. To the extent severance amounts are required to be delayed under this paragraph A, such severance amounts are considered for purposes of Internal Revenue Code § 409A to be separate payments from the severance amounts that are not required to be delayed. For purposes of this Agreement, "specified employee" shall have the meaning described in Section 1.409A-1(i) of the Treasury Regulations.

 

                                                                   

  

  

  

 

B. Payment to Beneficiary Upon Death.  Upon death, severance pay shall continue to be paid to an Employee’s beneficiary, designated in writing, or if none, to his or her estate.

 

C. Amendment of Severance Pay Plan. During the lifetime of an Employee, this Agreement may be amended in whole or in part by the mutual written agreement of the parties involved. In the case of an amendment that increases the amount of deferred compensation (severance pay), the plan is not considered established with respect to the additional amount deferred until the plan, as amended, is established in accordance with Treas. Reg. § 1.409A-1(c)(3)(i).  No acceleration of the deferred compensation shall occur on account of any such amendment.  In addition, the payment of deferred compensation shall not be deferred by amendment unless the amendment takes effect at least twelve (12) months after the date on which the amendment is made and becomes irrevocable; (2) in the case of an amendment related to a payment not occurring on account of death, the payment with respect to which such amendment is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid (or in the case of a life annuity or installment payments treated as a single payment, five (5) years from the date the first amount was scheduled to be paid); and (3) any amendment related to a payment at a specified time or pursuant to a fixed schedule is made not less than twelve (12) months before the date the payment is scheduled to be paid.

 

D. Domestic Relations Orders. The rules of this Agreement governing changes in the time and form of payment do not apply to elections by individuals other than a service provider to the extent such elections are reflected in, or made in accordance with, the terms of a domestic relations order, as defined in Internal Revenue Code § 414(p)(1)(B).

 

E. USERRA Rights. The requirements of this Agreement are deemed met to the extent an election to change the time or form of a payment of deferred compensation is provided to satisfy the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994.

 

F. Termination Of Severance Pay Plan. The Company and Employee may agree to terminate this Agreement and provide for distribution of a Employee’s deferred compensation (severance pay) to an Employee in lump sum provided that (1) the termination and liquidation do not occur proximate to a downturn in the financial health of the Company, (2) the Company terminates all similar aggregated deferred compensation agreements, (3) no payments in liquidation of the Agreement are made within twelve (12) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Agreement, other than payments that would be payable under the terms of the Agreement if the action to terminate and liquidate the Agreement had not occurred, (4) all payments are made within twenty-four (24) months of the date the Company takes all necessary action to irrevocably terminate and liquidate the Agreement, and (5) the Company does not adopt a new similar aggregated plan within three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Agreement.

 

                                                                    

  

  

  

 

 

 

In addition, the Agreement can be terminated and liquidated within twelve (12) months of a corporate dissolution taxed under Internal Revenue Code § 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that the amounts deferred under the plan are included in the participants' gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received):

 

(1)           The calendar year in which the plan termination and liquidation occurs.

 

	
  

	
(2)

	
The first calendar year in which the amount is no longer subject to a substantial risk of forfeiture.

 

(3)           The first calendar year in which the payment is administratively practicable.

 

In addition, the right is reserved to discontinue and terminate this Agreement in the event of an irrevocable action taken by the Company within the thirty (30) days preceding or the twelve (12) months following a Change of Control as defined by the final Internal Revenue Code § 409A regulations, provided that this paragraph will only apply to a payment made under the Agreement if all agreements, methods, programs, and other arrangements sponsored by the Company immediately after the time of the Change of Control with respect to which deferrals of compensation are treated as having been deferred under a single plan under Treas. Reg. § 1.409A-1(c)(2) are terminated and liquidated with respect to each Employee that experienced the Change of Control event, so that under the terms of the termination and liquidation all such participants are required to receive all amounts of compensation deferred under the terminated agreements, methods, programs, and other arrangements within twelve (12) months of the date the Company irrevocably takes all necessary action to terminate and liquidate the agreements, methods, programs, and other arrangements.

 

No termination shall adversely affect any Employee’s entitlement to payments under the Agreement prior to such termination, nor shall such termination relieve the Company of its obligation to pay benefits to participants as otherwise set forth herein.

 

G. Offset. The amount of any debt or other liability owed by a party to the Company shall reduce dollar for dollar any deferred compensation (severance pay) otherwise payable to that party hereunder, but not in excess of Five Thousand and No/100 Dollars ($5,000).  Any additional debt above Five Thousand and No/100 Dollars ($5,000) owed by a party shall not reduce that party’s deferred compensation but instead such party shall pay that debt to the Company.  If such party fails to do so, such party shall be liable for and shall reimburse the Company for the Company’s legal fees and costs in attempting to obtain such repayment.

 

H. Separate Payments. Each payment after Employee's Termination of Employment is intended to be a separate payment and not a stream of payments for purposes of Internal Revenue Code § 409A.

 

                                                                    

  

  

  

 

	
VIII.  

	
ARBITRATION

 

A. It is mutually agreed between the Employee and the Company that any and all disputes between them, including disputes arising out of or relating to the Employee’s employment or the termination of Employee’s employment, will be subject to resolution only through final and binding arbitration in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (AAA), except as otherwise provided in this provision, in which case, this provision controls. A copy of the Rules may be obtained from Employer or by contacting the American Arbitration Association, 140 West 51st St., New York, New York 10020, or any regional office of the AAA. The claims covered by this Agreement to arbitrate include: contract claims; tort claims; wrongful termination claims; claims of discrimination, harassment, or retaliation; wage claims; and claims for violation of any public policy or any federal, state, or other governmental law, statute, regulation, or ordinance.  Claims may be brought only in the Employee’s individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.

 

B. Notwithstanding the foregoing, nothing in this Agreement is intended to prohibit the Employee from filing a claim or communicating with the United States Equal Employment Opportunity Commission (the “EEOC”) or state agency responsible for the administrative processing of claims of discrimination, harassment or retaliation, or from pursuing any claim that cannot, as a matter of law, be the subject of a prospective arbitration agreement.  There are time limitations for filing a claim with the EEOC or such state agency.  This is not intended to provide legal advice; however, in most cases, in order to pursue a claim with the EEOC for discrimination under the federal civil rights laws, employees must file their claims within 300 days of the last act of discrimination.  State time limitations vary from state to state.

 

                                                                    

  

  

  

 

C. A demand for arbitration giving notice of any claim sought to be arbitrated must be filed with the regional office of the AAA within the time limit established by the applicable statute of limitations if the dispute involves statutory rights.  If no statutory rights are involved, notice must be filed within 180 calendar days of the date of the occurrence giving rise to the claim.  The party initiating arbitration must also give timely written notice of intention to arbitrate a claim to the other party by certified mail, return receipt requested.  One neutral arbitrator will conduct the arbitration and will be selected in accordance with AAA’s employment arbitration rules and procedures.  The arbitration generally will take place in the city where the Employee was last employed by the Company.  The Employee may initiate arbitration in the city where the Employee resides at the time of the request for arbitration; provided, however, that the Employee resides in a state where the Company maintains an office and that the arbitrator will have the authority to consider a motion by either party to change the venue of the arbitration and/or arbitration proceedings.  The arbitrator will have authority to resolve all or portions of the dispute through a summary judgment motion or related proceeding(s) in accordance with the Federal Rules of Civil Procedure.   The arbitrator must allow the parties discovery sufficient to adequately arbitrate their claims and defenses, even if the AAA’s rules and procedures are more restrictive.  The arbitrator will also apply the Federal Rules of Evidence.  The arbitrator must render a written arbitration decision that reveals the essential findings and conclusions on which the decision is based.  A party’s right to appeal the decision is limited to grounds provided under applicable state law or, if the dispute raises issues that would support federal jurisdiction, under applicable federal law.

 

D. In no event will the Employee be required to pay administrative fees in excess of the fees (if any) which would have been incurred by the Employee had the dispute(s) arbitrated under this Agreement been litigated in state court or, if the dispute raises issues that would support federal jurisdiction, in federal court.  The Company will be responsible for all administrative fees exceeding such amount.  The Company and Employee will be equally responsible for paying the arbitrator’s daily, hourly, or other fees.  The types of costs (as limited herein) for which the Employee may also be responsible for include filing fees, deposition costs, service of process costs, witness fees, and transcript costs. The parties agree that in any arbitration, the arbitrator shall determine a prevailing party. The prevailing party in the arbitration will be entitled to recover such actual costs and attorneys' fees that the prevailing party would be entitled to recover in state court or, if the dispute raises issues that would support federal jurisdiction, in federal court.

 

E. The arbitrator will have authority to order all remedies, including temporary restraining orders, preliminary injunctions, and permanent injunctions, that would be available to the parties if the dispute between them was litigated in state court or, if the dispute raises issues that would support federal jurisdiction, in federal court.  In statutory claims of discrimination, the arbitrator may award reasonable attorneys’ fees (including expert fees) to the prevailing party if it would be entitled to recover such fees in accordance with applicable legal standards in state court or, if the dispute raises issues that would support federal jurisdiction, in federal court.

 

 

  

  

  

 

F. THE EMPLOYEE AND THE COMPANY KNOWINGLY AND VOLUNTARILY WAIVE THEIR LEGAL RIGHTS TO HAVE DISPUTES BETWEEN THEM DECIDED BY A COURT OR PRESENTED TO A JURY.

 

	
IX.  

	
MISCELLANEOUS

 

A. Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Employee and the successors and assigns of the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of assets or stock, liquidation, or otherwise), by agreement in form and substance reasonably satisfactory to the Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor of the Company in accordance with the operation of law, and such successor shall be deemed to be the “Company” for purposes of this Agreement.

 

B. Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class certified mail, return receipt requested, postage prepaid, addressed as follows:

 

1. if to the President or the Company, to:

 

Duckwall-ALCO Stores, Inc.

401 Cottage Street

Abilene, KS  67410

Attention: President

 

with a copy to:

 

Lathrop & Gage LLP

10851 Mastin Blvd., Suite 1000

Overland Park, Kansas 66210

Attention: Brett C. Bogan

2. if to the Employee to:

 

Tom L. Canfield, Jr.

Duckwall-Alco Stores, Inc.

401 Cottage Street

Abilene, KS  67410

 

Any such address may be changed by written notice sent to the other party at the last recorded address of that party.

 

                                                                    

  

  

  

 

C. Tax Withholding.  The Company shall provide for the withholding of any taxes required to be withheld under federal, state and local law (other than the employer’s portion of such taxes) with respect to any payment in cash and/or other property made by or on behalf of the Company to or for the benefit of the Employee under this Agreement or otherwise. The Company may, at its option: (i) withhold such taxes from any cash payments owing from the Company to the Employee or (ii) make other satisfactory arrangements with the Employee to satisfy such withholding obligations.

 

D. No Assignment; No Third-Party Beneficiaries.  Except as otherwise expressly provided under this Agreement, this Agreement is not assignable by any party, and no payment to be made hereunder shall be subject to alienation, sale, transfer, assignment, pledge, encumbrance or other charge.  No person shall be, or deemed to be, a third-party beneficiary of this Agreement.

 

E. Execution in Counterparts.  This Agreement may be executed by the parties hereto in one or more counterparts, including by electronic or facsimile signature, each of which shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on anyone counterpart.

 

F. Governing Law.  The validity of this Agreement and the interpretation and performance of all its terms shall be governed by and construed in accordance with the laws of the State of Kansas, without regard to the choice of law rules thereof.

 

G. Headings.  The headings in this Agreement are for convenience of reference only and shall not be construed as part of this Agreement or to limit or otherwise affect the meaning hereof.

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

 

 

DUCKWALL-ALCO STORES, INC.

 

 

By:           /s/ Richard E. Wilson                                                            

 

 

Richard E. Wilson, President-Chief Executive Officer

 

 

 

 

EMPLOYEE

 

 

By:           /s/ Tom L. Canfield, Jr.                                                            

 

 

Tom L. Canfield, Jr.

 

18513101v1Exhibit 4.1 - Second Supplemental Indenture

    

Exhibit 4.1

AK Steel Corporation 
as the Company
AK Steel Holding Corporation
as the Parent Guarantor

and
U.S. Bank, National Association,
as Trustee

Second Supplemental Indenture

Dated as of March 22, 2012

	
				
	TABLE OF CONTENTS

	 
	 
	 
	Page

	ARTICLE 1

	SCOPE OF FIRST SUPPLEMENTAL INDENTURE

	Section 1.01.
	Scope
	 
	2

	 
	 
	 
	 

	ARTICLE 2

	DEFINITIONS

	Section 2.01.
	Definitions and Other Provisions of General Application
	 
	2

	Section 2.02.
	Other Definitions
	 
	8

	 
	 
	 
	 

	ARTICLE 3

	FORM AND TERMS OF THE NOTES

	Section 3.01.
	Form and Dating
	 
	8

	Section 3.02.
	Terms of the Notes
	 
	8

	 
	 
	 
	 

	ARTICLE 4.

	CHANGE OF CONTROL.

	Section 4.01.
	Redemption Upon Change Of Control
	 
	10

	 
	 
	 
	 

	ARTICLE 5

	COVENANTS

	Section 5.01.
	Limitation On Liens
	 
	12

	Section 5.02.
	Limitation On Subsidiary Debt
	 
	13

	Section 5.03.
	Limitation on Sale and Leaseback
	 
	15

	 
	 
	 
	 

	ARTICLE 6

	AMENDMENTS, SUPPLEMENTS AND WAIVERS

	 
	 
	 
	 

	Section 6.01.
	 In General
	 
	16

	Section 6.02.
	Additional Provisions
	 
	16

	 
	 
	 
	 

	ARTICLE 7

	 
	MISCELLANEOUS
	 
	 

	Section 7.01.
	Trust Indenture Act of 1939
	 
	17

	Section 7.02.
	Governing Law
	 
	17

	Section 7.03.
	Duplicate Originals
	 
	17

	Section 7.04.
	Separability
	 
	17

 i

	
				
	Section 7.05.
	Ratification
	 
	17

	Section 7.06.
	Effectiveness
	 
	17

	Section 7.07.
	Successors
	 
	17

	Section 7.08.
	Trustee's Disclaimer
	 
	18

	 
	 
	 
	 

	EXHIBIT A - Form of 8.375% Senior Note due 2022
	 
	A-1

	EXHIBIT B - Form of Supplemental Indenture
	 
	B-1

 ii

SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this “Second Supplemental Indenture”), dated as of March 22, 2012, between AK Steel Corporation, a Delaware corporation (the “Company”), AK Steel Holding Corporation, a Delaware corporation, as Parent Guarantor, and U.S. Bank, National Association, a national banking association, as trustee (the “Trustee”).
RECITALS OF THE COMPANY
WHEREAS, the Company, the Parent Guarantor and the Trustee executed and delivered an Indenture, dated as of May 11, 2010 (the “Base Indenture” and as supplemented by this Second Supplemental Indenture, the “Indenture”), to provide for the issuance by the Company from time to time of its senior debentures, notes or other evidences of indebtedness (the “Securities”);
WHEREAS, Sections 2.01, 2.03 and 11.01 of the Base Indenture provide that the Company and the Parent Guarantor, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture, without the consent of any Holders, to, among other things, establish the form or terms of Securities of any series as permitted by the Indenture;
WHEREAS, the issuance and sale of $300,000,000 aggregate Principal amount of a new series of the Securities of the Company designated as its 8.375% Senior Notes due 2022 (the “Notes”) have been authorized by resolutions adopted by the board of directors of the Company and the Parent Guarantor;
WHEREAS, the Company desires to issue and sell $300,000,000 aggregate Principal amount of the Notes as of the date hereof;
WHEREAS, the Company desires to establish the form and terms of the Notes;
WHEREAS, all things necessary to make this Second Supplemental Indenture a legal and binding supplement to the Base Indenture in accordance with its terms and the terms of the Base Indenture have been done;
WHEREAS, the Company and the Parent Guarantor have complied with all conditions precedent provided for in the Base Indenture relating to this Second Supplemental Indenture; and
WHEREAS, the Company has requested that the Trustee execute and deliver this Second Supplemental Indenture.

NOW, THEREFORE:
For and in consideration of the premises stated herein and the purchase of the Notes by the Holders thereof, the Company, the Parent Guarantor and the Trustee covenant and agree, for the equal and proportionate benefit of the Holders of the Notes, as follows:
ARTICLE 1
SCOPE OF SUPPLEMENTAL INDENTURE

Section 1.01. Scope. This Second Supplemental Indenture constitutes a supplement to the Base Indenture and an integral part of the Indenture and shall be read together with the Base Indenture as though all the provisions thereof are contained in one instrument. Except as expressly amended by the Second Supplemental Indenture, the terms and provisions of the Base Indenture shall remain in full force and effect. Notwithstanding the foregoing, this Second Supplemental Indenture shall only apply to the Notes. 
ARTICLE 2
DEFINITIONS

Section 2.01. Definitions and Other Provisions of General Application. For all purposes of this Second Supplemental Indenture unless otherwise specified herein:

(a)all terms used in this Second Supplemental Indenture which are not otherwise defined herein shall have the meanings they are given in the Base Indenture; 

(b)the provisions of general application stated in Section 1.04 of the Base Indenture shall apply to this Second Supplemental Indenture, except that the words “herein,” “hereof,” “hereto” and “hereunder” and other words of similar import refer to this Second Supplemental Indenture as a whole and not to the Base Indenture or any particular Article, Section or other subdivision of the Base Indenture or this Second Supplemental Indenture; 

(c)Section 1.01 of the Base Indenture is amended and supplemented, solely with respect to the Notes, by inserting the following additional defined terms in their appropriate alphabetical positions:

“Attributable Debt,” in respect of any Sale and Leaseback Transaction, means, as of the time of determination, the total obligation (discounted to present value at the rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with GAAP) of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, water rates and other items which 

2

do not constitute payments for property rights) during the remaining portion of the initial term of the lease included in such Sale and Leaseback Transaction.
“Board of Directors” means the board of directors of the Parent Guarantor.
“Change of Control” means such time as:
(1)    the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act);
(2)    a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the Parent Guarantor on a fully diluted basis;
(3)    the adoption of a plan relating to the liquidation or dissolution of the Company or the Parent Guarantor;
(4)    individuals who on the Closing Date constitute the Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination by the Board of Directors for election by the Parent Guarantor's stockholders was approved by a vote of a majority of the members of the Board of Directors then in office who either were members of the Board of Directors on the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors then in office;
(5)    the Company or the Parent Guarantor consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company or the Parent Guarantor, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or the Parent Guarantor, as the case may be, or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) the Voting Stock of the Company or the Parent Guarantor outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes, directly or indirectly, the Beneficial Owner of 50% or more of the voting power of the Voting Stock of the surviving or transferee Person; or 

3

(6)    the Parent Guarantor fails to own 100% of the Capital Stock of the Company; provided, however, that it shall not be deemed a Change of Control if the Parent Guarantor merges into the Company, except that in such case, the Company shall be substituted for the Parent Guarantor for purposes of this definition of “Change of Control,” and this clause (6) shall no longer be applicable.
“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Ratings Event.
“Closing Date” means March 22, 2012.
“Consolidated Net Tangible Assets” means the total assets of the Parent Guarantor and its Subsidiaries after deducting therefrom all intangible assets, current liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed) and minority interests, if any, in any assets of the Subsidiaries, all as would be set forth on the most recently available quarterly or annual consolidated balance sheet of the Parent Guarantor and its Subsidiaries, prepared in conformity with GAAP.
“Foreign Subsidiary” means any Subsidiary that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof.
“Funded Debt” means all Indebtedness having a maturity of more than 12 months from the date as of which the determination is made or having a maturity of 12 months or less but by its terms being renewable or extendable beyond 12 months from such date at the option of the borrower, but excluding any such Indebtedness owed to the Parent Guarantor or a Subsidiary of the Parent Guarantor.
“Guarantor” means the Parent Guarantor and each Subsidiary Guarantor, if any.
“Investment Grade” means a rating of Baa3 or better by Moody's (or its equivalent under any successor Rating Categories of Moody's), a rating of BBB- or better by S&P (or its equivalent under any successor Rating Categories of S&P) and the equivalent Investment Grade credit rating from any additional Rating Agency or Rating Agencies selected by the Company.
“Moody's” means Moody's Investors Service Inc.
“Mortgage” means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or any other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

4

“Note Guarantee” means a Guarantee of the obligations of the Company under the Notes and the Indenture in respect of the Notes.
“Offer to Purchase” means an offer to purchase Notes by the Company from the Holders of the Notes commenced by mailing a notice, which will govern the offer, by first class mail to the Trustee and each Holder of a Note stating:
(1)    that all Notes validly tendered will be accepted for payment on a pro rata basis;
(2)    the Change of Control Payment and the date of purchase of the Notes, which shall be at least 30 days but not more than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control Payment Date”);
(3)    that any Note not tendered will continue to accrue interest pursuant to its terms;
(4)    that, unless the Company defaults in the payment of the Change of Control Payment, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Change of Control Payment Date;
(5)    that Holders of the Notes electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled “Option of the Holder to Elect Purchase” on the reverse side of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day immediately preceding the Change of Control Payment Date;
(6)    that Holders of the Notes will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the third Business Day immediately preceding the Payment Date, a telegram, facsimile transmission or letter setting forth the name of such Holder, the Principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and
(7)    that Holders of the Notes whose Notes are being purchased only in part will be issued new Notes equal in Principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a Principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
“Principal Property” means any domestic blast furnace or steel producing facility, or casters that are part of a plant that includes such a facility, in each case located in the United States, having a net book value in excess of 1% of Consolidated Net Tangible Assets at the time of determination.

5

“Rating Agency” means (1) each of Moody's and S&P and (2) if either of Moody's or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the control of the Company, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-l(e)(2)(vi)(F) under the Exchange Act, selected by the Company (as certified by a resolution of the board of directors of the Company) as a replacement agency for Moody's or S&P, or both, as the case may be.
“Rating Category” means (i) with respect to S&P, any of the following categories: BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); (ii) with respect to Moody's, any of the following categories: Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one gradation).
“Rating Date” means the date that is 60 days prior to the earlier of (i) a Change of Control or (ii) public notice of the occurrence of a Change of Control or of the intention by the Company or the Parent Guarantor, as applicable, to effect a Change of Control.
“Ratings Event” means the occurrence of the events described in (a) or (b) of this definition on, or within 60 days after the earlier of, (i) the occurrence of a Change of Control or (ii) public notice of the occurrence of a Change of Control or the intention by the Company or the Parent Guarantor, as applicable, to effect a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for a possible downgrade by any of the Rating Agencies): (a) if the Notes are rated by both Rating Agencies on the Rating Date as Investment Grade, the rating of the Notes shall be reduced so that the Notes are rated below Investment Grade by both Rating Agencies, or (b) if the Notes are rated below Investment Grade by at least one Rating Agency, the ratings of the Notes by both Rating Agencies shall be decreased by one or more gradations (including gradations within Rating Categories, as well as between Rating Categories) and the Notes are then rated below Investment Grade by both Rating Agencies.
Notwithstanding the foregoing, a Ratings Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Ratings Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in 

6

respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Ratings Event).
“Receivables Facility” means one or more receivables financing facilities, as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Company or any of its Restricted Subsidiaries sells their accounts receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.
“Receivables Subsidiary” means any Subsidiary formed for the purpose of, and that solely engages only in one or more Receivables Facilities or other activities reasonably related thereto.
“Restricted Subsidiary” means any Subsidiary other than an Unrestricted Subsidiary.
“S&P” means Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
“Sale and Leaseback Transaction” means any arrangement with any Person providing for the leasing to the Company or any Subsidiary of the Company of any Principal Property, which Principal Property has been or is to be sold or transferred by the Company or any Subsidiary of the Company to such Person.
“Subsidiary Guarantor” means a Subsidiary that Guarantees the Company's obligations under the Notes and the Indenture in respect of the Notes.
“Unrestricted Subsidiary” means (i) any Foreign Subsidiary, (ii) any Receivables Subsidiary and (iii) any Subsidiary of the Parent Guarantor created after the Closing Date, at least 10% of the Voting Stock of which is owned by Persons other than the Parent Guarantor or a Subsidiary thereof; provided that (a) such Subsidiary does not engage in the business of the Company as conducted on the Closing Date (but shall engage in any extension thereof or activities incidental or related thereto) and (b) in the event (1) any such Subsidiary Guarantees Indebtedness of the Company in an aggregate amount in excess of $50 million or (2) the Company or any of its Subsidiaries (other than an Unrestricted Subsidiary) contributes or otherwise transfers (other than a sale for fair market value) any Principal Property (including shares of stock of a Subsidiary that owns the Principal Property) or the proceeds of any sale of Principal Property to such Subsidiary, in either case such Subsidiary shall cease to be an Unrestricted Subsidiary.

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“Voting Stock” means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.
Section 2.02. Other Definitions. Each of the following terms is defined in the section set forth opposite such term:
	
		
	Term
	Section

	Change of Control Payment
	Section 4.01

	DTC
	Section 3.02(r)

	Non-Guarantor Subsidiary Debt
	Section 5.02(a)

ARTICLE 3
FORM AND TERMS OF THE NOTES

Section 3.01. Form and Dating. 

(a)    The Notes shall be substantially in the form of Exhibit A attached hereto. The Notes shall be executed on behalf of the Company by one Officer of the Company. The Notes may have a legend or legends or endorsements as may be required to comply with any law or with any rules of any securities exchange or usage. The Notes shall be dated the date of their authentication. The Notes and any beneficial interest in the Notes shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

(b)     The terms contained in the Notes shall constitute, and are hereby expressly made, a part of the Indenture as supplemented by this Second Supplemental Indenture and the Company, the Parent Guarantor and the Trustee, by their execution and delivery of this Second Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.
    
Section 3.02. Terms of the Notes. The following terms relating to the Notes are hereby established:

(a)    Title. The Notes shall constitute a series of Securities having the title “8.375% Senior Notes due 2022.”
    
(b)    Principal Amount. The aggregate Principal amount of the Notes that may be authenticated and delivered under the Indenture, as amended hereby, shall be $300,000,000 on the Issue Date. Provided that no Event of Default has occurred and is continuing with respect to the Notes, the Company may, without notice to or the consent of the Holders, create and issue additional Securities having the same terms as, and ranking equally and ratably with, the Notes in all respects and so that such additional Notes will be consolidated and form a single series with, and have the same terms as to status, redemption or otherwise as, the Notes initially issued; provided that if the additional Securities are not fungible 

8

with the Notes for U.S. federal income tax purposes, the additional Securities will have a separate CUSIP number.

(c)    Maturity Date. The entire outstanding Principal of the Notes shall be payable on April 1, 2022.

(d)    Interest Rate. The rate at which the Notes shall bear interest shall be 8.375% per annum; the date from which interest shall accrue on the Notes shall be March 22, 2012 or the most recent interest payment date to which interest has been paid or duly provided for; the interest payment dates for the Notes shall be April 1 and October 1 of each year, beginning October 1, 2012; the interest so payable and punctually paid or duly provided for, on any interest payment date, will be paid to the Person in whose names the Notes are registered at the close of business on the record date for such interest, which shall be the March 15 or September 15, as the case may be, immediately preceding such interest payment date, except that interest payable at maturity will be paid to the same Persons to whom Principal of the Notes is payable; the interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. 

(e)    Place of Payment of Principal and Interest. Section 4.02 of the Base Indenture shall apply to the Notes.

(f)    Optional Redemption. The Notes shall be redeemable as specified in the form of Note attached as Exhibit A hereto, and Article 3 of the Base Indenture shall reply to any such redemption.

(g)    Mandatory Redemption, Repurchase or Repayment. Except as provided pursuant Article 4, the Company shall have no other obligation to redeem, purchase or repay the Notes pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof.

(h)    Denomination. The Notes shall be denominated as set forth in the Base Indenture.

(i)    Acceleration. 100% of the Principal amount of the Notes shall be payable upon declaration of acceleration of the maturity thereof.

(j)    Currency of the Notes. The Notes shall be denominated, and payment of Principal and interest of the Notes shall be payable in, the currency of the United States of America.

(k)    Currency of Payment. The Principal of and interest on the Notes shall be payable in the currency of the United States of America.

(l)    Registered Form. The Notes shall be issuable as Registered Global Securities. Section 2.07 of the Base Indenture shall apply to the Notes.

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(m)    Exchange or Conversion. The Notes shall not be exchangeable for or convertible into the common stock of the Company or any other security.

(n)    Additional Amounts. The Company will not pay any additional amounts on the Notes.

(o)    Definitive Form. The Notes may be issued in definitive form pursuant to the terms of the Base Indenture.

(p)    Trustee. The trustee shall be U.S. Bank, National Association; and the Paying Agent and Authenticating Agent shall initially be the Trustee.

(q)    Satisfaction and Discharge. Article 10 of the Base Indenture shall apply to the Notes.

(r)    Depositary. The Depositary for any Notes issued as Global Registered Securities shall be The Depository Trust Company in The City of New York (“DTC”) or any successor Depositary appointed by the Company within 90 days of the termination of services of DTC (or any successor to DTC).

(s)    Events of Default. Article 7 of the Base Indenture shall apply to the Notes.

(t)    Covenants. The covenants set forth in Article 4 of the Base Indenture and Article 5 of this Second Supplemental Indenture shall apply to the Notes.

(u)    Additional Terms. Other terms applicable to the Notes are as otherwise provided for below.
    
ARTICLE 4.
CHANGE OF CONTROL.

Section 4.01. Redemption Upon Change Of Control. (a) Within 30 days following the date upon which any Change of Control Repurchase Event occurs, or at the Company's option, prior to any Change of Control Repurchase Event if a definitive agreement is in place for the Change of Control at the time of making the Offer to Purchase pursuant to the Change of Control Repurchase Event, the Company shall commence an Offer to Purchase at a purchase price equal to 101% of the aggregate Principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to the date of repurchase (the “Change of Control Payment”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.

(b)    On the Change of Control Payment Date, the Company will, to the extent lawful:

10

(i)    accept for payment on a pro rata basis all Notes or portions of Notes properly tendered pursuant to an Offer to Purchase not validly withdrawn;

(ii)    deposit with the Paying Agent the required payment for all properly tendered Notes or portions of Notes so accepted; and

(iii)    deliver or cause to be delivered to the Trustee the repurchased Notes or portions thereof so accepted, accompanied by an Officers' Certificate stating, among other things, the aggregate Principal amount of repurchased Notes.

(c)    Following the Change of Control Payment Date:

(i)    the Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new Note equal in Principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a Principal amount of $2,000 or integral multiples of $1,000 in excess thereof; and 

(ii)    the Company will publicly announce the results of an Offer to Purchase as soon as practicable after the Change of Control Payment Date.

(d)    The Trustee shall act as the Paying Agent for an Offer to Purchase.

(e)    The Company will not be required to make an Offer to Purchase upon the occurrence of a Change of Control Repurchase Event if a third party makes an offer to purchase the Notes in the manner, at the times and price, and otherwise in compliance with the requirements of the Indenture applicable to an Offer to Purchase made by the Company and the third party purchases all Notes validly tendered and not withdrawn in such offer to purchase.

(f)    Notwithstanding anything to the contrary herein, the Company may make an Offer to Purchase upon the occurrence of a Change of Control Repurchase Event in advance of a Change of Control Repurchase Event if a definitive agreement is in place for the Change of Control at the time of making the Offer to Purchase, in which case the notice will state that the Offer to Purchase is conditioned on the Change of Control Repurchase Event being consummated on or prior to the Change of Control Payment Date.

(g)    The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent those laws and regulations are applicable, in connection with the repurchase of Notes as a result of a Change of Control Repurchase Event. To the 

11

extent that the provisions of any such securities laws or regulations conflict with this Section 4.01, the Company will comply with those securities laws and regulations and will not be deemed to have breached the Company's obligations under this Section 4.01 by virtue of any such conflict.

ARTICLE 5
COVENANTS

In addition to the covenants set forth in the Base Indenture, the Company agrees for the benefit of the Holders of the Notes that:
Section 5.01. Limitation On Liens. (a) So long as any Notes are outstanding, the Parent Guarantor will not, and will not permit any of its Subsidiaries to, create, incur, issue, assume or Guarantee any Indebtedness secured by a Mortgage upon (a) any Principal Property of the Company or any Principal Property of a Subsidiary of the Company or (b) any shares of stock or other equity interests or Indebtedness of any Subsidiary of the Company that owns a Principal Property (whether such Principal Property, shares of stock or other equity interests or Indebtedness is now existing or owned or hereafter created or acquired) or any shares of stock or other equity interests or Indebtedness of the Company, in each case, without effectively providing concurrently that the Notes are secured equally and ratably with or, at the Company's option, prior to such Indebtedness, so long as such Indebtedness shall be so secured. This restriction does not apply to, and there shall be excluded from Indebtedness in any computation under such restriction, Indebtedness secured by:

(i)    Mortgages on any property or assets existing at the time of the acquisition thereof by the Company or any of its Subsidiaries and not incurred in contemplation of such acquisition;

(ii)    Mortgages on property or assets of a Person existing at the time such Person is merged into or consolidated with the Company or any of its Subsidiaries or at the time of a sale, lease or other disposition of the properties and assets of such Person (or a division thereof) as an entirety or substantially as an entirety to the Company or any of its Subsidiaries; provided that any such Mortgage does not extend to any Principal Property owned by the Company or any of its Subsidiaries immediately prior to such merger, consolidation, sale, lease or disposition and not incurred in contemplation of such acquisition;

(iii)    Mortgages on property or assets of a Person existing at the time such Person becomes a Subsidiary of the Company and not incurred in contemplation of such acquisition;

(iv)    Mortgages in favor of the Company or any Guarantor;

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(v)    Mortgages on property or assets (including shares of Capital Stock or Indebtedness of any Subsidiary formed to acquire, construct, develop or improve such property) to secure all or part of the cost of acquisition, construction, development or improvement of such property, or to secure Indebtedness incurred to provide funds for any such purpose; provided that the commitment of the creditor to extend the credit secured by any such Mortgage shall have been obtained no later than 360 days after the later of (a) the completion of the acquisition, construction, development or improvement of such property or assets or (b) the placing in operation of such property or assets;

(vi)    Mortgages in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments; and

(vii)    Mortgages existing on the date of the Indenture or any extension, renewal, replacement or refunding of any Indebtedness secured by a Mortgage existing on the date of the Indenture or referred to in clauses (i), (ii), (iii) or (v); provided that any such extension, renewal, replacement or refunding of such Indebtedness shall be created within 360 days of repaying the Indebtedness secured by the Mortgage referred to in clauses (i), (ii), (iii) or (v) and the principal amount of the Indebtedness secured thereby and not otherwise authorized by clauses (i), (ii), (iii) or (v) shall not exceed the principal amount of Indebtedness plus any premium or fee payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding.

(b)    Notwithstanding the restrictions described above, the Parent Guarantor and any of its Subsidiaries may create, incur, issue, assume or Guarantee Indebtedness secured by Mortgages, without equally and ratably securing the Notes, if at the time of such creation, incurrence, issuance, assumption or Guarantee, after giving effect thereto and to the retirement of any Indebtedness which is concurrently being retired, the aggregate amount of all such Indebtedness secured by Mortgages which would otherwise be subject to such restrictions (other than any Indebtedness secured by Mortgages permitted as described in clauses (i) through (vii) of Section 5.01(a)) plus the aggregate amount (without duplication) of (x) all Non-Guarantor Subsidiary Debt (other than Non-Guarantor Subsidiary Debt described in clauses (i) through (v) of Section 5.02(a)) and (y) all Attributable Debt of the Company and any of its Subsidiaries in respect of Sale and Leaseback Transactions (with the exception of such transactions which are permitted under clauses (i) through (iv) of Section 5.03) does not exceed 15% of Consolidated Net Tangible Assets.

Section 5.02. Limitation On Subsidiary Debt. (a) So long as any Notes are outstanding, the Company will not permit any of its Restricted Subsidiaries 

13

that is not a Subsidiary Guarantor to create, assume, incur, Guarantee or otherwise become liable for or suffer to exist any Indebtedness (any Indebtedness of a non-Guarantor Subsidiary of the Company, “Non-Guarantor Subsidiary Debt”), without concurrently Guaranteeing the payment of the Principal of, premium, if any, and interest on the Notes on an unsecured unsubordinated basis. This restriction does not apply to, and there shall be excluded from Indebtedness in any computation under such restriction, Non-Guarantor Subsidiary Debt constituting:

(i)    Indebtedness of a Person existing at the time such Person is merged into or consolidated with any Restricted Subsidiary of the Company or at the time of a sale, lease or other disposition of the properties and assets of such Person (or a division thereof) as an entirety or substantially as an entirety to any Restricted Subsidiary of the Company and is assumed by such Restricted Subsidiary; provided that any Indebtedness was not incurred in contemplation thereof and is not Guaranteed by any other Subsidiary of the Company;

(ii)    Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company; provided that any Indebtedness was not incurred in contemplation thereof;

(iii)    Indebtedness owed to the Company or any Guarantor;

(iv)    Indebtedness outstanding on the date of the Indenture or any extension, renewal, replacement or refunding of any Indebtedness existing on the date of the Indenture or referred to in clauses (i), (ii) or (iii); provided that any such extension, renewal, replacement or refunding of such Indebtedness shall be created within 360 days of repaying the Indebtedness referred to in this clause or clauses (i), (ii) or (iii) above and the principal amount of the Indebtedness shall not exceed the principal amount of Indebtedness plus any premium or fee payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding; and 

(v)    Indebtedness in respect of a Receivables Facility.

(b)    Notwithstanding the limitations on Non-Guarantor Subsidiary Debt described in Section 5.02(a), the Company and any of its Restricted Subsidiaries may create, incur, issue, assume or Guarantee Non-Guarantor Subsidiary Debt, without Guaranteeing the Notes, if at the time of such creation, incurrence, issuance, assumption or Guarantee, after giving effect thereto and to the retirement of any Indebtedness which is concurrently being retired, the aggregate amount of all such Non-Guarantor Subsidiary Debt which would otherwise be subject to such restrictions (other than Non-Guarantor Subsidiary Debt which is described in clauses (i) through (v) of Section 5.02(a)) plus the aggregate amount (without duplication) of (x) all Indebtedness secured by Mortgages (not including any such Indebtedness secured by Mortgages described in clauses (i) through (vii)

14

of Section 5.01(a)) and (y) all Attributable Debt of the Company and any of its Subsidiaries in respect of Sale and Leaseback Transactions (with the exception of such transactions which are permitted under clauses (i) through (iv) of Section 5.03) does not exceed 15% of Consolidated Net Tangible Assets.

(c)    Any Subsidiary of the Company required to Guarantee the Notes pursuant to Section 5.02(a) or that chooses to Guarantee the Notes shall (i) execute and deliver to the Trustee a supplemental indenture substantially in the Form of Exhibit B or otherwise satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally Guarantee all of the Company's obligations under the Notes and the Indenture in respect of the Notes on the terms set forth in the Indenture and (ii) deliver to the Trustee an Opinion of Counsel. The execution by each Subsidiary Guarantor of a supplemental indenture in the form of Exhibit B evidences the Note Guarantee of such Subsidiary Guarantor, whether or not the person signing as an officer of the Subsidiary Guarantor still holds that office at the time of authentication of any Note. The delivery of any Note by the Trustee after authentication constitutes due delivery of the Note Guarantee set forth in the Indenture on behalf of each Subsidiary Guarantor. The Note Guarantee of a Subsidiary Guarantor will terminate upon:

(i)    the release or discharge (other than a discharge through payment thereon) of the Indebtedness of such Subsidiary that resulted in the obligation to Guarantee the Notes pursuant to Section 5.02(a);

(ii)    a sale or other disposition (including by way of consolidation or merger) of the Capital Stock of the Subsidiary such that the Subsidiary is no longer a Subsidiary of the Parent Guarantor;

(iii)    defeasance or discharge of the Notes, as provided under Article 10 of the Base Indenture; or

(iv)    if such Subsidiary Guarantor was not required to Guarantee the Notes pursuant to Section 5.02(a) but did so at its option, then if it requests such release at any time; provided that after giving effect to such release the Company would be in compliance with the covenant set forth in this Section 5.02.

Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel, the Trustee will execute any documents reasonably required in order to evidence the release of the Subsidiary Guarantor from its obligations under its Note Guarantee.
Section 5.03. Limitation on Sale and Leaseback. (a) So long as any Notes are outstanding, the Company will not, and will not permit any of its Subsidiaries to, enter into any Sale and Leaseback Transaction unless:

    

15

(i)    the Sale and Leaseback Transaction is solely with the Company or any of its Subsidiaries;

(ii)    the lease is for a period not in excess of 24 months, including renewals;

(iii)    the Company or such Subsidiary would (at the time of entering into such arrangement) be entitled as described in clauses (i) through (vii) of Section 5.01(a), without equally and ratably securing the Notes then outstanding under the Indenture, to create, incur, issue, assume or guarantee Indebtedness secured by a Mortgage on such property or assets in the amount of the Attributable Debt arising from such Sale and Leaseback Transaction;

(iv)    the Company or such Subsidiary, within 360 days after the sale of property or assets in connection with such Sale and Leaseback Transaction is completed, applies an amount equal to the greater of (A) the net proceeds of the sale of such Principal Property or (B) the fair market value of such Principal Property to (1) the retirement of Notes, other Funded Debt of the Company ranking on a parity with the Notes or Funded Debt of a Subsidiary of the Company or (2) the purchase of property or assets used or useful in its business or to the retirement of long-term indebtedness; or

(v)    the Attributable Debt of the Company and its Subsidiary in respect of such Sale and Leaseback Transaction and all other Sale and Leaseback Transactions entered into after the Closing Date (other than any such Sale and Leaseback Transaction as would be permitted as described in clauses (i) through (iv) of this Section 5.03), plus the aggregate principal amount (without duplication) of (x) Indebtedness secured by Mortgages then outstanding (not including any such Indebtedness secured by Mortgages described in clauses (i) through (vii) of Section 5.01(a)) which do not equally and ratably secure the Notes (or secure Notes on a basis that is prior to other Indebtedness secured thereby) and (y) Non-Guarantor Subsidiary Debt (with the exception of Non-Guarantor Subsidiary Debt which is described in clauses (i) through (v) of Section 5.02(a)), would not exceed 15% of Consolidated Net Tangible Assets.

ARTICLE 6
AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 6.01. In General. Article 11 of the Base Indenture will apply to the Notes.

Section 6.02. Additional Provisions. In addition to the provisions listed in Section 11.02 of the Base Indenture, without the consent of each Holder of the Notes affected thereby, an amendment or waiver may not:

    

16

(a)    change the optional redemption dates or optional redemption prices of the Notes from those stated under “Optional Redemption” on the reverse of each Note; or 

(b)    amend, change or modify the obligation of the Company to make and consummate an Offer to Purchase under Article 4 after a Change of Control Repurchase Event has occurred, including, in each case, amending, changing or modifying any definition relating thereto.

ARTICLE 7
MISCELLANEOUS

Section 7.01. Trust Indenture Act of 1939. This Second Supplemental Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act.

Section 7.02. Governing Law. The laws of the State of New York shall govern this Second Supplemental Indenture and the Notes. 

Section 7.03. Duplicate Originals. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

Sectopm7.04. Separability. In case any provision in this Second Supplemental Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

Section 7.05. Ratification. The Base Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects ratified and confirmed. The Base Indenture and this Second Supplemental Indenture shall be read, taken and construed as one and the same instrument. All provisions included in this Second Supplemental Indenture supersede any conflicting provisions included in the Base Indenture unless not permitted by law. The Trustee accepts the trusts created by the Base Indenture, as supplemented by this Second Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Base Indenture, as supplemented by this Second Supplemental Indenture.

Section 7.06. Effectiveness. The provisions of this Second Supplemental Indenture shall become effective as of the date hereof.

Section 7.07. Successors. All agreements of the Company and the Parent Guarantor in this Second Supplemental Indenture shall bind their successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors.

    

17

Section 7.08. Trustee's Disclaimer. The recitals contained herein shall be taken as the statements of the Company and the Parent Guarantor and the Trustee assumes no responsibility for their correctness. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture, the Notes, any Guarantee or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Parent Guarantor.

[Remainder of page intentionally left blank.]

18

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.

	
				
	 
	 
	AK STEEL CORPORATION
as the Company

	 
	 
	 
	 

	 
	 
	By:
	/s/ Albert E. Ferrara, Jr.

	 
	 
	Name:
	Albert E. Ferrara, Jr.

	 
	 
	Title:
	Senior Vice President, Finance

	 
	 
	 
	& Chief Financial Officer

	
				
	 
	 
	AK STEEL HOLDING CORPORATION
as Parent Guarantor

	 
	 
	 
	 

	 
	 
	By:
	/s/ Albert E. Ferrara, Jr.

	 
	 
	Name:
	Albert E. Ferrara, Jr.

	 
	 
	Title:
	Senior Vice President, Finance

	 
	 
	 
	& Chief Financial Officer

[Signature Page to Second Supplemental Indenture]

	
		
	U.S. BANK, NATIONAL ASSOCIATION, as Trustee

	 
	 

	 
	 

	By:
	/s/ William E. Sicking

	Name:
	William E. Sicking

	Title:
	Vice President & Trust Officer

[Signature Page to Second Supplemental Indenture]

EXHIBIT A
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR CEDE & CO. IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[THIS NOTE IS A GLOBAL SECURITY AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.] 

8.375% Senior Note due 2022
AK STEEL CORPORATION
CUSIP: 001546 AM2
ISIN: US001546AM29
No. 001    $300,000,000
AK STEEL CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to on the reverse hereof), for value received, promises to pay to CEDE & CO., or its registered assigns, the Principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) or such other amount as indicated on the Schedule of Increases and Decreases attached hereto on April 1, 2022.

A-1

Interest Rate: 8.375% per year
Interest Payment Dates: April 1 and October 1 of each year, commencing October 1, 2012
Record Dates: March 15 and September 15
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by the manual or facsimile signature of an authorized Officer, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated: March 22, 2012
	
		
	AK STEEL CORPORATION

	By:
	 

	Name:

	Title:

A-2

TRUSTEE'S CERTIFICATE OF AUTHENTICATION 
This is one of the Notes of the series designated therein referred to in the within-mentioned Indenture.
Dated: March 22, 2012
	
				
	 
	 
	U.S. BANK, NATIONAL ASSOCIATION
as the Trustee

	 
	 
	 
	 

	 
	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

[REVERSE OF NOTE]

8.375% SENIOR Note due 2022
Indenture. This Note is one of the 8.375% Senior Notes due 2022 (the “Notes”) of the Company issued under an Indenture, dated as of May 11, 2010 (the “Base Indenture”), between the Company, AK Holding Corporation (the “Parent Guarantor”) and U.S. Bank, National Association, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), as supplemented by the Second Supplemental Indenture dated March 22, 2012 (the “Second Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Parent Guarantor, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. To the extent that the terms of the Indenture and this Note are inconsistent, the terms of the Indenture shall govern. The aggregate Principal amount of the Notes that may be authenticated and delivered under the Indenture, as amended hereby, shall be $300,000,000. The Company may, without notice to or the consent of the Holders, create and issue additional Securities having the same terms as, and ranking equally and ratably with, the Notes in all respects and so that such additional Notes will be consolidated and form a single series with, and have the same terms as to status, redemption or otherwise as, the Notes initially issued; provided that if the additional Securities are not fungible with the Notes for U.S. federal income tax purposes, the additional Securities will have a separate CUSIP number. 
Interest. The Company promises to pay interest on the Principal amount of the Notes at the rate per year described above. Interest on the Notes will accrue from March 22, 2012. Interest on the Notes will be payable semi-annually on April 1 and October 1 of each year, beginning October 1, 2012. The interest so payable and punctually paid or duly provided for, on any interest payment date, will be paid to the Person in whose names the Notes are registered at the close of business on the record date for such interest, which shall be the March 15 or September 15, as the case may be, preceding such interest payment date, except that interest payable at maturity will be paid to the same Persons to whom Principal of the Notes is payable. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. The interest period relating to an interest payment date (including the maturity date) shall be the period from, and including, the most recent preceding interest payment date (or, in the case of the first interest period, March 22, 2012) to, but excluding, the relevant interest payment date.
All payments on the Notes, including Principal of, premium, if any, and interest on, will be payable at the Corporate Trust Office of the Trustee, as Paying Agent under the Indenture as set forth in the Indenture.

If any interest payment date, maturity date or redemption date of a Note falls on a day that is not a Business Day, the required payment of Principal and interest may be made on the next succeeding Business Day as if made on the date that the payment was due and no interest will accrue on that payment for the period from and after that interest payment date, maturity date or redemption date as the case may be, to the date of that payment on the next succeeding Business Day.
Sinking Fund. The Notes will not be subject to any sinking fund.
Optional Redemption. (a) At any time prior to April 1, 2017, the Company may redeem the Notes at its option, in whole at any time or in part, at a redemption price equal to 100% of the Principal amount of the Notes to be redeemed plus the Applicable Premium, plus accrued and unpaid interest to the redemption date.
For the purposes of the preceding paragraph, the following terms shall have the following definitions:
“Applicable Premium” means, with respect to any Note on any redemption date, the greater of
(1) 1.0% of the Principal amount of such Note, and 
(2) the excess, if any of 
(a) the present value at such redemption date of (i) the redemption price of such Note at April 1, 2017 (as set forth in the table below), plus (ii) all required interest payments due on such Note through April 1, 2017 (excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over 
(b) the then outstanding Principal amount of such Note.
“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 1, 2017; provided, however, that if the period from the redemption date to April 1, 2017, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
(b) At any time on or after April 1, 2017, the Company may redeem the Notes, in whole or in part, at the redemption price for the Notes (expressed as a 

percentage of Principal amount) set forth below, plus accrued and unpaid interest to the redemption date, if redeemed during the twelve-month period commencing on April 1 of the years indicated below:
	
			
	Year
	 
	Redemption Price

	2017
	 
	104.188%

	2018
	 
	102.792%

	2019
	 
	101.396%

	2020 and thereafter
	 
	100.000%

(c) At any time prior to April 1, 2015, the Company may redeem up to 35% of the Principal amount of the Notes (including any additional Notes) with the net cash proceeds of one or more sales of the Parent Guarantor's common stock (to the extent proceeds are contributed to the Company as equity) at a redemption price (expressed as a percentage of Principal amount) of 108.375%, plus accrued and unpaid interest to the redemption date; provided that at least 65% of the aggregate Principal amount of Notes originally issued on the Closing Date remains outstanding after each such redemption and notice of any such redemption is mailed within 60 days of each such sale of common stock.
(d) No Note of $2,000 Principal amount or less shall be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the Principal amount to be redeemed. A new Note in Principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note.
Events of Default. If an Event of Default with respect to Notes of this series shall occur and be continuing, the Principal of the Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Guarantees. The Notes are fully and unconditionally guaranteed by the Parent Guarantor and each Subsidiary Guarantor, if any.
Amendment; Waiver. The Indenture provides that the Company, the Parent Guarantor and the Trustee may take certain actions to amend the Indenture or the Notes without notice to or the consent of any Holder of Notes. In addition, the Indenture permits, with certain exceptions as therein provided, the Company, the Parent Guarantor and the Trustee to otherwise amend the Indenture or the Notes with the consent of the Holders of a majority in Principal amount of the Notes affected by such amendment. However, certain actions of the Company require the consent of each Holder of outstanding Notes affected thereby. 
The Company may elect in any particular instance not to comply with certain covenants set forth in the Indenture or the Notes if, before the time for such compliance, the Holders of a majority in Principal amount of the Notes either waive compliance in that instance or generally waive compliance with those provisions, but the waiver may not extend to or affect any term, provision or 

condition except to the extent expressly so waived, and, until the waiver becomes effective, the Company's obligations and the duties of the Trustee in respect of any such provision will remain in full force and effect.
Payments. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.
Registered Form. The Notes will be issued in fully registered form only in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Choice of Law. This Note shall be governed by, and construed in accordance with, the laws of the State of New York.
Defined Terms. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

ABBREVIATIONS 
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT - ____________________Custodian _________________
	
	
	(Cust)
(Minor) 
Under Uniform Gifts to Minors Act

	 

	(State)

Additional abbreviations may also be used though not in the above list. 

ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto __________________________________ PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
_______________________________
_______________________________
__________________________________________________________________________________
__________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
the within Note and all rights thereunder, hereby irrevocably constitutes and appoints 
__________________________________________________________________________________
__________________________________________________________________________________
to transfer said Note on the books of the Company, with full power of substitution in the premises.
	
				
	Dated:
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.

OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Article 4 of the Second Supplemental Indenture, check the Box:  o
If you wish to have a portion of this Note purchased by the Company pursuant to Article 4 of the Second Supplemental Indenture, state the Principal amount: $ .
Date:
 
	
		
	Your Signature:
	 

 (Sign exactly as your name appears on the other side of this Note)
	
		
	 Signature Guarantee:
	 

 
Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee.

Schedule I

[Include Schedule I only for a Global Note]

SCHEDULE OF INCREASES OR DECREASES 
The initial Principal amount of this Global Note is $300,000,000. The following increases or decreases in the Principal amount of this Global Note have been made: 

	
					
	Date
	Amount of decrease in Principal Amount of this Global Note
	Amount of increase in Principal Amount of this Global Note
	Principal Amount of this Global Note following such increase or decrease
	Signature of authorized signatory of Trustee

EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of ___________, among _____________ (the “Guaranteeing Subsidiary”), a subsidiary of ________________ (or its permitted successor), AK Steel Corporation (the “Company”), a corporation organized under the laws of Delaware, AK Steel Holding Corporation, a Delaware corporation (the “Parent Guarantor”) and U.S. Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company, the Parent Guarantor and the Trustee executed and delivered an Indenture, dated as of May 11, 2010 (the “Base Indenture” and as supplemented by the Second Supplemental Indenture dated March 22, 2012 among the Company, the Parent Guarantor and the Trustee, the “Indenture”), to provide for the issuance by the Company of $300,000,000 aggregate Principal amount of the Securities of the Company designated as its 8.375% Senior Notes due 2022;
WHEREAS, the Indenture provides that under certain circumstances a Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary shall unconditionally Guarantee all of the Company's obligations under the Notes and the Indenture on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 11.01 of the Base Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company, the Parent Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of Holders as follows:
1.    Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.    Guarantee. The Guaranteeing Subsidiary hereby agrees to become a party to the Indenture as a Subsidiary Guarantor and shall have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture. The Guaranteeing Subsidiary agrees to be bound by all of the 

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provisions of the Indenture applicable to a Subsidiary Guarantor and to perform all of the obligations and agreements as follows:
(a)Subject to the provisions of this Supplemental Indenture, the Guaranteeing Subsidiary hereby irrevocably and unconditionally Guarantees on an unsecured unsubordinated basis, the full and punctual payment (whether at stated maturity, upon redemption, purchase pursuant to an offer to purchase or acceleration, or otherwise) of the Principal of, interest on and all other amounts payable under, each Note, and the full and punctual payment of all other amounts payable by the Company under the Indenture in respect of the Notes. Upon failure by the Company to pay punctually any such amount, each Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in the Indenture.

(b)The obligations of each Guaranteeing Subsidiary hereunder are unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged or otherwise affected by:

		
	i.
	any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under the Indenture or any Note, by operation of law or otherwise;

		
	ii.
	any modification or amendment of or supplement to the Indenture or any Note;

		
	iii.
	any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any obligation of the Company contained in the Indenture or any Note;

		
	iv.
	the existence of any claim, set‐off or other rights which the Guaranteeing Subsidiary may have at any time against the Company, the Trustee or any other Person, whether in connection with the Indenture or any unrelated transactions, provided that nothing herein prevents the assertion of any such claim by separate suit or compulsory counterclaim;

		
	v.
	any invalidity or unenforceability relating to or against the Company for any reason of the Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the Principal of or interest on any Note or any other amount payable by the Company under the Indenture; or

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	vi.
	any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Guaranteeing Subsidiary's obligations hereunder.

(c)Except as otherwise provided in the Indenture, each Guaranteeing Subsidiary's obligations hereunder will remain in full force and effect until the Principal of and interest on the Notes and all other amounts payable by the Company under the Indenture have been paid in full. If at any time any payment of the Principal of or interest on any Note or any other amount payable by the Company under the Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, each Guaranteeing Subsidiary's obligations hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time.

(d)Each Guaranteeing Subsidiary irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person.

(e)Upon making any payment with respect to any obligation of the Company under this Article, the Guaranteeing Subsidiary making such payment will be subrogated to the rights of the payee against the Company with respect to such obligation, provided that the Guaranteeing Subsidiary may not enforce either any right of subrogation, or any right to receive payment in the nature of contribution, or otherwise, from any other Guarantor, with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

(f)If acceleration of the time for payment of any amount payable by the Company under the Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of the Indenture are nonetheless payable by the Guaranteeing Subsidiary hereunder forthwith on demand by the Trustee or the Holders.

(g)Notwithstanding anything to the contrary in this Supplemental Indenture, each Guaranteeing Subsidiary, and by its acceptance of Notes, each Holder, confirms that it is the intention of all such parties that the Note Guarantee of such Guaranteeing Subsidiary not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. To effectuate that intention, the Trustee, 

B-3

the Holders and each Guaranteeing Subsidiary irrevocably agree that the obligations of each Guaranteeing Subsidiary under its Note Guarantee are limited to the maximum amount that would not render the Guaranteeing Subsidiary's obligations subject to avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law.

3.    Notation not Required. Neither the Company nor the Guaranteeing Subsidiary shall be required to make a notation on the Securities to reflect the Note Guarantee or any release, termination or discharge thereof.
4.     Governing Law. The laws of the State of New York shall govern this Supplemental Indenture.
4.    Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
5.    Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.
6.    The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary, the Company and the Parent Guarantor.
7.    Successors. All agreements of the Guaranteeing Subsidiary in the Indenture, this Supplemental Indenture and the Note Guarantee shall bind its successors. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
8.    No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Supplemental Indenture shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and are not exclusive of any other rights, remedies or benefits which either may have under this Supplemental Indenture at law, in equity, by statute or otherwise.
9.    Modification. No modification, amendment or waiver of any provision of this Supplemental Indenture, nor the consent to any departure by the Guaranteeing Subsidiary therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Guaranteeing Subsidiary in any case 

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shall entitle the Guaranteeing Subsidiary to any other or further notice or demand in the same, similar or other circumstance.

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IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of the date first written above.
	
		
	[Name of Guaranteeing Subsidiary],
as the Guaranteeing Subsidiary

	By:
	 

	Name:

	Title:

	
				
	 
	 
	U.S. BANK, NATIONAL ASSOCIATION
as the Trustee

	 
	 
	 
	 

	 
	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

	
				
	 
	 
	AK STEEL CORPORATION
as the Company

	 
	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

	
				
	 
	 
	AK STEEL HOLDING CORPORATION
as the Parent Guarantor

	 
	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

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