Document:

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                                                                   EXHIBIT 10.34

                             FIRST AMENDMENT TO THE
                               ROUGE STEEL COMPANY
                              STOCK INCENTIVE PLAN

             (As last Amended and Restated Effective July 30, 1997)

         WHEREAS, Rouge Industries, Inc., a Delaware corporation (the
"Company"), sponsors the Rouge Steel Company Stock Incentive Plan (as last
amended and restated effective July 30, 1997) (the "Plan"); and

         WHEREAS, the Company, by action of its Compensation Committee, desires
to amend the Plan.

         NOW, THEREFORE, the Company hereby amends the Plan, effective December
2, 1999, as follows:

         1.     A new subsection g. shall be added to Section 6.A.3, effective
December 2, 1999, to read in its entirety as follows:

                "g.    Notwithstanding the terms of any Option Agreement, but
         subject to the other provisions of this Section 6, in the event of the
         occurrence of a Change in Control, as defined herein, prior to an
         Optionee's retirement, disability, termination of employment or death,
         all outstanding Options shall become fully vested and exercisable.

                       For purposes of this Plan, "Change in Control" means,
         subject to the last paragraph of this subsection, the occurrence of any
         of the following events:

                       (1) The Company or Rouge Steel Company is merged,
                consolidated or reorganized into or with another corporation or
                other legal person, and as a result of such merger,
                consolidation or reorganization less than 55% of the combined
                voting power of the then-outstanding Voting Stock of such
                corporation or person immediately after such transaction are
                held in the aggregate by the Company or Rouge Steel Company or
                by the holders of Voting Stock of the Company immediately prior
                to such transaction;

                       (2) The Company or Rouge Steel Company sells or transfers
                all or substantially all of its assets to another corporation or
                other legal person, and as a result of such sale or transfer
                less than 55% of the combined voting power of the

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                then-outstanding Voting Stock of such corporation or other legal
                person immediately after such sale or transfer is held in the
                aggregate by the Company or Rouge Steel Company or by the
                holders of Voting Stock of the Company immediately prior to such
                sale or transfer;

                       (3) The Company files a report or proxy statement with
                the Securities and Exchange Commission pursuant to the
                Securities Exchange Act of 1934 disclosing in response to Form
                8-K or Schedule 14A (or any successor schedule, form or report
                or item therein) that a change in control of the Company or
                Rouge Steel Company will occur in the future pursuant to a
                then-existing contract or transaction which when consummated
                would be a Change in Control determined without regard to this
                subsection (3);

                       (4) If, during any period of two (2) consecutive years,
                individuals who at the beginning of any such period constitute
                the directors of the Company cease for any reason to constitute
                at least a majority thereof; provided, however, that for
                purposes of this subsection (4), each director who is first
                elected, or first nominated for election by the Company's
                stockholders, by a vote of at least two-thirds of the directors
                of the Company (or a committee thereof) then still in office who
                were directors of the Company at the beginning of any such
                period will be deemed to have been a director of the Company at
                the beginning of such period; or

                       (5) Unless otherwise determined by a majority vote of the
                Board of Directors of the Company in the case of a corporate
                structure reorganization, the shareholders of the Company
                approve, pursuant to applicable state law requirements, a
                complete liquidation or dissolution of the Company or Rouge
                Steel Company.

                       Notwithstanding the foregoing provisions of subparagraph
         (3) above, unless otherwise determined in a specific case by a majority
         vote of the Board of Directors of the Company, a "Change in Control"
         shall not be deemed to have occurred for purposes of subparagraph (3)
         above solely because the Company, a subsidiary, or any
         Company-sponsored employee stock ownership plan or any other employee
         benefit plan of the Company or any subsidiary either files or becomes
         obligated to file a report or a proxy statement under or in response to
         Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
         successor schedule, form or report or item therein) under the
         Securities Exchange Act of 1934 disclosing beneficial ownership by it
         of shares of Voting Stock, whether in excess of 20% or otherwise, or
         because the Company reports that a Change in Control of the Company has
         occurred or will occur in the future by reason of such beneficial
         ownership.

                       For purposes of this Article, "Voting Stock" means
         securities entitled to vote generally in the election of directors.

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                       Notwithstanding anything to the contrary herein, a
         "Change in Control" shall not be deemed to have occurred solely as a
         result of a transfer of stock of the Company by Worthington Industries,
         Inc., or any of its affiliates or shareholders, to any lender pursuant
         to the amortization of one or more certain debt-in-exchange-for-capital
         loans between such parties which are referred to as "DECS" and which
         are evidenced by exchangeable notes due March 1, 2000. However, this
         paragraph shall not prohibit the occurrence of a "Change In Control"
         event if subsequent transactions would otherwise result in the
         occurrence of a "Change In Control" event pursuant to this subsection."

         2.     The phrase "Compensation Committee" in Section 12 is deleted and
replaced with the phrase "Committee."

         3.     Except as amended by this First Amendment, the terms of the Plan
shall remain in full force and effect.

         IN WITNESS WHEREOF, the Company has adopted this First Amendment as of
the 22nd day of December, 1999.

ATTEST:                             ROUGE INDUSTRIES, INC.

/s/ Martin Szymanski                By: /s/ William E. Hornberger
------------------------------          ---------------------------------
Secretary                                       William E. Hornberger
                                    Its:        Senior Vice President
                                        ---------------------------------

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                                                                   EXHIBIT 10.35

                               ROUGE STEEL COMPANY
                            1998 STOCK INCENTIVE PLAN
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    SECTION 1. PURPOSE.

    The purpose of this Stock Incentive Plan is to align the interests of
certain officers and employees of Rouge Steel Company with those of shareholders
of the Company by rewarding long-term growth and profitability of the Company.
Ownership of stock assists in the attraction and retention of qualified
employees and provides them with additional incentive to devote their best
efforts to pursue and sustain the Company's financial success through the
achievement of corporate goals. Accordingly, certain officers and employees may
be granted Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance Share Awards.

    SECTION 2. DEFINITIONS.

    A. "Agreement" shall mean a written agreement, in a form approved by the
Committee, which sets forth the terms and conditions of an Award. Agreements
shall be subject to the express terms and conditions set forth herein, and to
such other terms and conditions not inconsistent with the Plan as the Committee
shall deem appropriate.

    B. "Award" shall mean an Option (which may be designed as a Nonqualified
Stock Option or an Incentive Stock Option), a Stock Appreciation Right (which
may be designated as a Freestanding SAR or Tandem SAR), a Restricted Stock Award
or a Performance Share Award, in each case granted under this Plan. Each Award
shall be evidenced by an Agreement.

    C. "Beneficiary" shall mean (i) any transferee of an Employee's right,
interests, Options or SARs, subject to Section 13B of the Plan or (ii) the
person, persons, trust or trusts designated by an Employee, or if no designation
has been made, the person, persons, trust or trusts entitled by will, any trust
agreement or the laws of descent and distribution, to receive the benefits
specified under this Plan in the event of an Employee's death, and, if
necessary, for purposes of exercise of any Option or SAR, the term shall include
the Employee's executor, administrator or personal representative.

    D. "Board" shall mean the Board of Directors of the Company.

    E. "Code" shall mean the Internal Revenue Code of 1986, as amended.

    F. "Committee" shall mean the Compensation Committee of the Board. All
Directors serving on the Committee at any given time shall be (i) "Non-Employee
Directors" as that term is used in Rule 16b-3 of the Securities and Exchange
Commission, and (ii) "outside directors" as that term is used in Section 162(m)
of the Code (except to the extent not necessary for Section 162(m) Relief or
Section 162(m) Relief is not sought). The number of Directors serving on the
Committee at any given time shall be no less than the number then required by
Rule 16b-3 and by Section 162(m) (except to such extent not necessary for
Section 162(m) Relief or Section 162(m) Relief is not sought).

    G. "Common Stock" shall mean shares of $0.01 par value Class A Common Stock
of the Company, subject to adjustment pursuant to Section 11.

    H. "Company" shall mean Rouge Industries, Inc., a Delaware corporation.

    I. "Disabled"  or  "Disability"  shall  mean  eligible  to  receive  a
benefit  under  the  Long-Term Disability Plan of Rouge Steel Company.

    J. "Employee" shall mean an Employee of Rouge Steel Company, whether or not
an officer thereof, and shall include any such Employee who is also a director
of Rouge Steel Company.

    K. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

    L. "Exercise Price" shall mean, with respect to each share of Common Stock
subject to an option, the price fixed by the Committee at which such share may
be purchased from the Company pursuant to the exercise of such Option, which
price may not be less than 100% of the Fair Market Value of such share on the
date the Option is granted.

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    M. "Fair Market Value" shall mean the closing price of the Common Stock on
the New York Stock Exchange as reported on the Composite Tape, or if it is not
listed on the New York Stock Exchange, the closing price on the exchange on
which the Common Stock is then listed, or if not listed on any exchange, the
closing price reported on the NASDAQ National Market System over-the-counter
market; if, however, there is no trading of the Common Stock on the date in
question, then the closing price of the Common Stock, as so reported, on the
last preceding date on which there was trading shall instead be used to
determine Fair Market Value. If Fair Market Value for any date in question
cannot be determined as hereinabove provided, Fair Market Value shall be
determined by the Committee by whatever method or means the members, in the good
faith exercise of their discretion, at that time shall deem appropriate.

    N. "Freestanding SAR" shall mean a right, granted pursuant to this Plan
without reference or relationship to any Option, of a holder to receive cash,
shares of Common Stock, or a combination thereof, as the case may be, having an
aggregate value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise of such SAR over the Fair Market Value of
one such share on the date of grant of such SAR.

    O. "Incentive Stock Option" or "ISO" shall mean an Option that meets the
requirements of Section 422 of the Code, or any successor provision, and that is
intended by the Committee to constitute an ISO. Any ISO granted hereunder must
be granted within ten years from the date the Plan becomes effective and the
aggregate Fair Market Value (determined at the time of grant of any ISO) of the
Common Stock for which ISOs are granted under the Plan which are exercisable by
an Employee for the first time during any calendar year may not exceed $100,000.
If for any reason an Option (or any portion thereof) intended by the Committee
to be an ISO nevertheless does not so qualify as an ISO under the Code, either
at the time of grant or subsequently, such failure to qualify shall not
invalidate the Option (or any portion thereof) and instead the nonqualified
portion (or, if necessary, the entire Option) shall be deemed to have been
granted as a Nonqualified Stock Option irrespective of the manner in which it is
designated in the Option Agreement.

    P. "Legal Representative" shall mean the guardian or legal representative of
the Employee who, upon the Disability or incapacity of an Employee, shall have
acquired on behalf of the Employee, by legal proceeding or otherwise, the right
to exercise the Employee's rights and receive his or her benefits under the
Plan.

    Q. "Nonqualified Stock Option" or "NQSO" shall mean an Option that is not an
ISO.

    R. "Option" shall mean the right, granted pursuant to this Plan, of a holder
to purchase shares of Common Stock at a price and upon terms to be specified by
the Committee. The term shall include a Nonqualified Stock Option or an
Incentive Stock Option.

    S. "Performance Measures" shall mean, with respect to each Performance Share
Award or any Restricted Stock Award, the criteria and objectives, determined by
the Committee, which must be met during the applicable Performance Period or
Restriction Period, as the case may be: (i) for any Performance Share Award, the
conditions established upon the holder's receipt of the Award; or (ii) for any
Restricted Stock Award, the lapse of restrictions with respect to the Award.
Such criteria and objectives may include, but shall not be limited to, earnings
per share, total return on Common Stock, and Company return on equity compared
to a peer group's return on equity. To the extent Section 162(m) Relief is
sought, the Committee shall take into account the provisions of Section 162(m)
of the Code with respect to the timing of the establishment of the Performance
Measures. The Performance Measures pertinent to any Performance Share Award or
Restricted Stock Award shall be established at the time of such Award and set
forth in the applicable Agreement, but may be revised by the Committee
thereafter if and whenever its members determine that, in light of events
occurring or circumstances arising after the date of such Award, such revision
is necessary or appropriate to afford the recipient benefits substantially
similar to those originally intended with respect to such Award; provided that,
to the extent Section 162(m) Relief is sought, the Committee shall take in to
account the requirements of Section 162(m) of the Code in making any such
revision. Anything herein to the contrary notwithstanding, to the extent Section
162(m) Relief is sought, (i) the Committee shall provide that no compensation
shall be payable under the Plan in connection with a Performance Measure (or the
satisfaction or attainment thereof) unless the applicable Performance Measure
has been disclosed to and approved by the shareholders to the extent required to
qualify for Section 162(m) Relief; and (ii) no such compensation shall be
payable in the absence of such disclosure and approval.

    T. "Performance Period" shall mean the period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured. The Performance Period shall be established at the time of
such Performance Share Award, and shall not be less than three (3) nor more than
five (5) years in duration. The duration of Performance Periods may vary.

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    U. "Performance Share Award" shall mean an award of the right, contingent
upon attainment of Performance Measures within a Performance Period, to receive
a specified number of Performance Shares or, in lieu of all or any portion of
such Performance Shares, their Fair Market Value in cash, as more specifically
provided in Section 9.

    V. "Performance  Shares" shall mean those shares of Common Stock issuable
pursuant to a Performance Share Award.

    W. "Plan" shall mean the Rouge Steel Company Stock Incentive Plan.

    X. "Restriction Period" shall mean the period designated by the Committee
during which Restricted Stock may not be sold, exchanged, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of except as otherwise
provided in the Plan, which period shall not be less than three (3) years nor
more than five (5) years from the date of grant.

    Y. "Restricted Stock" shall mean any shares of Common Stock issued pursuant
to the Plan subject to the restriction that they may not be sold, exchanged,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of except as otherwise provided in the Plan, prior to termination of a
Restriction Period. Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes.

    Z. "Restricted Stock Award" shall mean an award of Restricted Stock pursuant
to the Plan.

    AA.  "Retirement"  shall mean  retirement  of an Employee  from the employ
of Rouge Steel Company as described in the Rouge Steel Company Salaried Employee
Retirement Plan.

    BB.  "Rule  16b-3"  means Rule 16b-3 of the  Securities  and  Exchange
Commission (or any successor regulation) as in effect with respect to the
Company at a given time.

    CC.  "Section  162(m) Relief" shall mean such exception as may be available
pursuant to Section 162(m) of the Code from the limitation on tax deductibility
provided for thereunder.

    DD.  "Stock Appreciation Right" or "SAR" shall mean any Freestanding SAR or
Tandem SAR.

    EE.  "Tandem SAR" shall mean a right, granted under this Plan, pursuant to
which a holder may elect to surrender an Option, or any portion thereof, which
is then exercisable, and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be with an aggregate value equal
to the excess of the Fair Market Value of one share of Common Stock at the time
of exercise over the per share Exercise Price specified in such Option,
multiplied by the number of shares of Common Stock covered by such Option, or
portion thereof, which is so surrendered.

    FF.  "Tax  Withholding  Date" shall mean the date the  withholding  tax
obligation first arises with respect to an Award.

    SECTION 3. STOCK SUBJECT TO THE PLAN.

    Shares of Common Stock issuable as or pursuant to Awards granted under the
Plan must be authorized and issued shares of Common Stock. Subject to adjustment
as provided in Section 11, at any given time, the maximum number of shares of
Common Stock which may be issued as Restricted Stock and made subject to future
issuance in settlement of Performance Awards or pursuant to the exercise of
Options or SARs hereunder shall be 500,000 shares, except that the following
shall also be available hereunder: (i) shares as to which Options granted during
the Granting Period have since expired, terminated, or been canceled for any
reason other than exercise of such Options (or of related Tandem SARs); (ii) the
excess (if any) of the number of shares subject to Tandem SARs both granted and
exercised during the Granting Period over the number of shares issued or to be
issued (or withheld or to be withheld for purposes of tax withholding) in
connection with the exercise of such SARs; (iii) the excess (if any) of the
number of Freestanding SARs both granted and exercises during the Granting
Period over the number of shares issued or to be issued (or withheld or to be
withheld for tax withholding purposes) in connection with the exercise of such
SARs; (iv) the number of shares subject to Performance Share Awards both granted
and forfeited during the Granting Period; (v) with respect to Performance Share
Awards granted during the Granting Period which have been determined to have
been earned, the excess (if any) of the number of shares so determined to have
been earned over the number of shares issued or to be issued (or withheld or to
be withheld for tax withholding purposes) in settlement of such Performance
Share Awards; and (vi) to the extent permitted by Rule 16b-3, shares of
Restricted Stock that are forfeited.

    In addition to the foregoing, in no event may the total number of shares
covered by outstanding ISOs plus the number of shares issued in settlement of
exercised ISOs, whenever granted, exceed 500,000 shares, and in no event may
Freestanding SARs exercisable only for cash be granted at any time at which this
Section would not permit the grant of Freestanding SARs which could be settled
in shares. In no event may any Employee receive Options, SARs, Restricted

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Stock Awards, Performance Share Awards or any combination of each for more than
50,000 shares of Common Stock over the life of the Plan.

    SECTION 4. ADMINISTRATION.

    The Plan shall be administered by the Committee. In addition to any implied
powers and duties that may be needed to carry out the provisions of the Plan,
the Committee shall have all the powers vested in it by the terms of the Plan,
including exclusive authority to grant Awards under the Plan, to select the
employees to receive such Awards, to determine the type, size and terms of the
Awards to be made to each Employee selected (which Awards need not be uniform),
to determine the time when Awards will be granted (to the extent Section 162(m)
Relief is sought, taking into account the provisions of Section 162(m) of the
Code), and to prescribe the form of the Agreements embodying Awards made under
the Plan. The Committee shall be authorized to interpret the Plan and the Awards
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to make any other determinations which it
believes necessary or advisable for the administration of the Plan, and to
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Award in the manner and to the extent the Committee deems
desirable to carry it into effect.

    All Committee determinations shall, unless otherwise determined by the
Board, be final, conclusive and binding on the Company, any Employee,
Beneficiary, Legal Representative, and any other interested parties. The
Committee may authorize any one or more of their number, or any officer of the
Company, to execute and deliver documents on behalf of the Committee.

    SECTION 5. ELIGIBILITY.

    All Employees are eligible for selection by the Committee to receive an
Award, except Employees covered by a Collective Bargaining Agreement with the
Company which does not provide for coverage under this Plan.

SECTION 6. STOCK OPTIONS.

    A. Terms and Conditions.

       1. Type of Option. Each Option Agreement shall specify whether the
    pertinent Option is intended as a Nonqualified Stock Option or an Incentive
    Stock Option.

       2. Number of Shares Covered. Each Option Agreement shall specify the
    number of shares of Common Stock subject to the pertinent Option.

    3. Exercise Period.

       a. In General. Each Option Agreement shall specify the period (or
    periods) during which the pertinent Option (or portions thereof) may be
    exercised, and shall provide that the Option (or such portion) shall expire
    at the end of such period (or periods). Except as otherwise provided herein,
    any Option must be exercised during the period of the Employee's employment
    with Rouge Steel Company. No Option may be exercised later than ten (10)
    years from the date it is granted.

       b. Retirement. In the event of the Retirement of the Optionee, his/her
    Option shall be exercisable for a period of three (3) years after the date
    of Retirement (or, in the case of any ISO held by an Optionee who is not
    Disabled, three (3) months after such date), or during the remainder of the
    original term of the Option, whichever is shorter.

       c. Disability. In the event of the cessation of the Employee's
    employment by reason of Disability, the Option shall be exercisable for a
    period of three (3) years after the date of cessation of such employment
    (or, in the case of any ISO held by an Optionee who is Disabled, one (1)
    year after such date), or during the remainder of the original term of the
    Option, whichever period is shorter.

       d. Termination of Employment. In the event of the cessation of the
    Optionee's employment for any reason other than Retirement, Disability or
    death, the Option shall expire on the date of termination of employment from
    Rouge Steel Company, if not earlier expired in accordance with its terms.

       e. Death. In the event of the Optionee's death (whether during his or
    her employment with Rouge Steel Company or during any applicable
    post-termination exercise period), the Option shall be exercisable by the
    Beneficiary(ies) of the decedent for a period of one (1) year after the date
    of the Employee's death (or, in the case of ISOs, for a period of three (3)
    months after the Employee's death), or, if the decedent's death occurs
    subsequent to his or her Retirement, Disability

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    or termination of employment for any other reason, during the period the
    decedent would have been permitted to exercise the Option (had he or she
    survived), if that period is shorter. Notwithstanding the foregoing,
    however, in no event may any Option be exercised after its original term.

        f. Extension or Reduction of Exercise Period. In the circumstances set
    forth in subsections "b" through "e" of this Section, the Committee may
    extend or reduce the length of the exercise period, but may not extend any
    such period beyond the original term of the Option (or, insofar as this
    paragraphs related to Freestanding SARs pursuant to Section 7, the SAR).
    Further, with respect to ISOs, as a condition of any such extension, the
    holder shall be required to deliver to the Company a release which provides
    that such holder holds the Company and Rouge Steel Company harmless with
    respect to any adverse tax consequences the holder may suffer by reason of
    any such extension.

        4. Exercise Price. The Exercise Price shall be determined by the
    Committee at the time any Option is granted and shall be set forth in the
    Option Agreement.

        5. Manner of Exercise. The specified number of shares with respect to
    which an Option is exercised will, subject to applicable tax withholding, be
    issued following receipt by the Company of (i) written notice of such
    exercise from the optionee (in such form as the Committee shall have
    specified in the Option Agreement or otherwise) of an Option delivered to
    the Corporate Secretary or Vice President, Employee Relations and Public
    Affairs of the Company, and (ii) payment to the Company, as provided herein,
    of the Exercise Price.

        6. Payment for Shares. The Exercise Price for the number of shares of
    Common Stock with respect to which an Option is exercised shall be paid in
    full when the Option is exercised. Unless otherwise provided in the Option
    Agreement, the Exercise Price may be paid, in whole or in part, in (i) cash,
    (ii) whole shares of Common Stock, valued at their then Fair Market Value,
    (iii) if permitted in the sole discretion of the Committee (taking into
    account, without limitation, Section 16 of the Exchange Act), through the
    withholding of shares issuable upon exercise of the Option valued at their
    then Fair Market Value, or (iv) by a combination of such methods of payment.
    The Company may enter into any arrangement permitted under applicable laws
    to facilitate the "cashless" exercise of any Option.

    B. Effect of Exercise of Option on Tandem SAR.

    Upon the exercise of an Option with respect to which a Tandem SAR has been
granted, the number of shares of Common Stock with respect to which the SAR
shall be exercisable shall be reduced by the number of shares with respect to
which the Option has been exercised.

    SECTION 7. STOCK APPRECIATION RIGHTS.

    A. Terms and Conditions.

        1. Type of SAR. Each SAR Agreement shall specify whether it relates to a
    Tandem SAR or to Freestanding SARs.

        2. Number of Optioned Shares or Freestanding SARs. In the case of any
    Tandem SAR, the SAR Agreement shall specify the Option and the number of
    shares of Common Stock subject thereto to which the SAR relates. Any SAR
    Agreement relating to Freestanding SARs shall specify the number of such
    SARs to which it relates.

        3. Exercise Period. Each SAR Agreement shall specify the period during
    which the pertinent SAR(s) may be exercised and shall provide that the
    SAR(s) shall expire at the end of each period (or periods). For a
    Freestanding SAR, such expiration date shall be no later than ten (10) years
    from the date of grant thereof. For Tandem SARs, such expiration date(s)
    shall be no later than the date(s) of expiration of the related Option and a
    Tandem SAR shall be exercisable during its term only when and to the extent
    the related Option is exercisable. A Freestanding SAR shall be exercisable
    only during the period of the grantee's employment with Rouge Steel Company
    and for such post-termination exercise period as would apply under the
    provisions of Section 6(A)(3)(b)-(f) had the Freestanding SAR Award to the
    grantee instead been an Award of NQSOs.

        4. Manner of Exercise. A SAR granted under the Plan shall be exercised
    by the holder by delivery to the Corporate Secretary or Vice President,
    Employee Relations and Public Affairs of the Company of written notice of
    exercise in such form as the Company shall have specified in the SAR
    Agreement or otherwise.

        5. Payment to Holder. If the form of consideration to be received upon
    exercise of the SAR is not specified in the Agreement governing the SAR,
    upon the exercise thereof, the holder may request the form of consideration
    he or she wishes to receive in satisfaction of such SAR, which may be in
    shares of Common Stock (valued at Fair Market Value on the date of exercise
    of the SAR), or in cash, or partly in cash and partly in shares of Common
    Stock, as the holder

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<PAGE>   6

    shall request; provided, however, that the Committee, in its sole
    discretion (taking into account, without limitation, Section 16 of the
    Exchange Act), may consent to or disapprove any request of the Employee to
    receive cash in full or partial settlement of such SAR. Payment shall be
    subject to applicable tax withholding.

    B. Effect of Exercise of Tandem SAR on Related Option.

    Upon the exercise of a Tandem SAR, the number of shares covered by the
related Option shall be reduced by the number of shares of Common Stock with
respect to which such SAR is exercised.

    SECTION 8. RESTRICTED STOCK AWARDS.

    A. Terms and Conditions.

    The general terms and conditions of any Restricted Stock Award shall be set
forth in the applicable Agreement. Such Agreement shall specify the number of
shares of Common Stock subject to the Award, and the applicable Restriction
Period or Periods. Any such Agreement may (or, to the extent Section 162(m)
Relief is sought, shall) provide for forfeiture of shares covered thereby if
specified Performance Measures are not attained during a Restriction Period
and/or for termination of any Restriction Period upon attainment of Performance
Measures, but in no event may any such Agreement permit termination of any
Restriction Period earlier than three (3) years after the date of grant of the
pertinent Award.

    B. Certificates Evidencing Ownership of Restricted Stock.

    During the Restriction Period, a certificate representing the Restricted
Stock shall be registered in the recipient's name and bear a restrictive legend
to the effect that ownership of such Restricted Stock, and the enjoyment of all
rights appurtenant thereto, are subject to the restrictions, terms, and
conditions provided in the Plan and the applicable Agreement.

    Such certificate, the Restricted Stock certificate, shall be deposited by
the recipient with the Company, together with stock powers or other instruments
of assignment, each endorsed in blank, which will permit transfer to the Company
of all or any portion of the Restricted Stock evidenced by the Restricted Stock
certificate in the event it is forfeited. Upon the termination of an applicable
Restriction Period, and subject to remittance of applicable withholding tax, a
certificate or certificates evidencing ownership of the number of shares of
Common Stock theretofore evidenced by the Restricted Stock certificate, free of
restrictive legend (other than any relating to a right of first refusal of the
Company or required by any applicable securities laws), shall be issued to the
Employee, his or her Beneficiary(ies), or Legal Representative, promptly after
the expiration of the Restriction period.

    C. Rights With Respect to Shares During Restriction Period.

    Subject to the terms and conditions of the Agreement governing a particular
Restricted Stock Award, the Employee, as the owner of the Common Stock issued as
Restricted Stock, shall have all rights of a shareholder, including, but not
limited to, voting rights, the right to receive cash or stock dividends thereon,
and the right to participate in any capital adjustment of the Company. The
Committee may, at the time of grant and otherwise in its sole discretion,
provide for the deferral of the payment of cash dividends otherwise payable
until the expiration of the applicable Restriction Period. Any distributions
with respect to shares of Restricted Stock other than in the form of cash shall
be held by the Company, and shall be subject to the same restrictions as the
shares with respect to which such distributions were made.

    D. Reduction of Length of Restriction Period.

    The Committee may, at any time, reduce the length of the Restriction Period
with respect to any shares comprising a Restricted Stock Award; provided,
however, that subject to the provisions of Section 13(J) hereof, in no event
shall such Restriction Period be less than three (3) years from the date of
grant of the Restricted Stock Award.

    E. Effect of Termination of Employment by Recipient During Restriction
Period.

    In the event the employment with Rouge Steel Company of a recipient of a
Restricted Stock Award shall terminate during the Restriction Period by reason
of death or Disability, the restrictions with respect to the shares comprising
such Award shall lapse, unless otherwise determined by the Committee.

    In the event the employment with Rouge Steel Company of a recipient of a
Restricted Stock Award shall terminate during the Restriction Period by reason
of the recipient's Retirement, or for any other reason other than death or
Disability, the shares comprising the Award shall be forfeited by such Employee,
unless otherwise determined by the Committee.

                                      -6-
<PAGE>   7

    SECTION 9. PERFORMANCE SHARE AWARDS.

    A. Terms and Conditions.

    The general terms and conditions of any Performance Share Award shall be set
forth in the applicable Agreement. Such Agreement shall specify the number of
Performance Shares subject to the Award, the Performance Period(s) and the
Performance Measures applicable to the Award.

    B. Following the end of a Performance Period applicable to a granted Award,
the Committee will determine the extent (if any) to which Performance Measures
established for the Award were attained and, accordingly, the consideration (if
any) to which the holder of the Award becomes entitled. The Committee may, in
its sole discretion, determine that such holder will be entitled to less than
the maximum permitted consideration pursuant to such Award; provided, that the
Committee has reserved unto itself this flexibility at the time of grant. The
Committee shall, where required for Section 162(m) Relief and Section 162(m)
Relief is sought, certify in writing, prior to payment of the consideration,
that the Performance Measures were in fact satisfied.

    C. Payment.

    The Committee shall determine, in its sole discretion (taking into account,
without limitation, Section 16 of the Exchange Act), the manner of payment upon
attainment of Performance Measures during a Performance Period, which may
include (i) cash equal to the Fair Market Value (as of the end of the
Performance Period) of the Performance Shares, (ii) delivery of the Performance
Shares subject to the Performance Share Award, without restrictions, or subject
to any restrictions the Committee may impose, or (iii) a combination of cash and
Performance Shares. Payment to the recipient shall be subject to any applicable
withholding tax.

    If, following the completion of a Performance Period, it is the
determination of the Committee that Performance Shares be delivered to the
Employee in the form of shares of Restricted Stock, the recipient must execute a
Restricted Stock Agreement as a condition of the issuance of such shares in his
or her name.

    D. Effect of Termination of Employment During Performance Period.

    An Employee must be employed by Rouge Steel Company at the end of a
Performance Period to be entitled to settlement of the Performance Share Award
for such Period; provided, however, that in the event of an Employee's
termination of employment before the end of such Period, the Committee may, in
its sole discretion, limit any forfeiture in any manner it deems appropriate, to
the extent that, in its sole discretion, it determines doing so would be
equitable or in the best interests of the Company.

    SECTION 10. WITHHOLDING TAXES.

    The Company will, if required by applicable law, cause to be withheld
Federal, state and/or local taxes in connection with the exercise, vesting or
settlement of an Award. Unless otherwise provided in the applicable Agreement,
each Employee may satisfy any such tax withholding obligation by any of the
following means, or by a combination of such means: (i) a cash payment; (ii) by
delivery to the Company or Rouge Steel Company a number of shares of Common
Stock having a Fair Market Value, as of the Tax Withholding Date, sufficient to
satisfy the amount of the withholding tax obligation arising from an exercise,
vesting or settlement of an Award; (iii) if permitted in the sole discretion of
the Committee (taking into account, without limitation, Section 16 of the
Exchange Act), by authorizing the withholding from the shares of Common Stock
otherwise issuable to the Employee pursuant to the exercise or vesting of an
Award, a number of shares having a Fair Market Value, as of the Tax Withholding
Date, which will satisfy the amount of the withholding tax obligation; or (iv)
by a combination of such methods of payment. If the amount requested is not
paid, the Company may refuse to satisfy the Award.

    SECTION 11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

    In the event of any change in the outstanding Common Stock by reason of any
stock split, stock dividend, recapitalization, merger, consolidation,
reorganization, combination, or exchange of shares, split-up, split-off,
spin-off, spin-away, liquidation or other similar change in capitalization, or
any distribution to common stockholders other than cash dividends, the number or
kind of shares that may be issued under the Plan pursuant to Section 3, and the
number or kind of shares subject to any outstanding Award, shall be
automatically adjusted, and the Committee shall be authorized to make such other
equitable adjustment of any Award or shares issuable pursuant thereto, or in any
Performance Measures related to any Award, so that the proportionate interest of
the Employee shall be maintained as before the occurrence of such event. Any
such adjustment shall be conclusive and binding for all purposes of the Plan.

                                      -7-
<PAGE>   8

    SECTION 12. AMENDMENT AND TERMINATION.

    Subject to the following sentences of this Section 12, the Board or the
Compensation Committee may at any time terminate, modify or amend the Plan in
such respects as it shall deem advisable; provided, that the Board or the
Compensation Committee may not make any amendment in the Plan that would, if
such amendment were not approved by the shareholders, cause the Plan to fail to
comply with (A) Section 16 of the Exchange Act (or Rule 16b-3), (B) any other
requirement of applicable law or regulation, or (C) the requirements for Section
162(m) Relief to the extent Section 162(m) Relief is sought, unless and until
the approval of the shareholders is obtained. Under no circumstances, without
shareholder approval, may the Plan be amended or modified to permit the exercise
of an Option at less than the Exercise Price. The termination or any
modification or amendment of the Plan shall not, without the consent of the
Employee, adversely affect his or her rights under an Award previously granted,
unless required by applicable law.

    SECTION 13. MISCELLANEOUS PROVISIONS.

    A. No Employee or other person shall have any claim or right to be granted
an Award under the Plan.

    B. Except for ISOs and related Tandem SARs which shall not be transferrable
other than by will or the laws of descent and distribution, (i) an Employee's
Options or SARs may be transferred, in whole or in part, either directly or by
operation of law or otherwise only to immediate family members of the Employee
sharing the same household, a trust established for the benefit of the Employee
or immediate family members of the Employee sharing the same household, or
partnership in which the Employee and immediate family members sharing the same
household are the only partners, and in any event only to the extent such
transfer effects only a change in the form of beneficial ownership without
changing an Employee's pecuniary interest in such Options or SARs under the Plan
and is not the exercise (except in accordance with the terms of the Plan) or
conversion of a derivative security, or deposit or withdrawal from a voting
trust to the extent exempt pursuant to Rule 16a-13 of the Securities and
Exchange Commission, as then in effect, or (ii) an Employee's rights and
interests under the Plan or with respect to any Option, SAR or Performance Share
Award may be transferred pursuant to a domestic relations order to the extent
exempt pursuant to Rule 16a-12 of the Securities and Exchange Commission, as
then in effect; provided further, however, an Employee's rights and interests
under the Plan or with respect to Options, SARs, or Performance Share Awards
shall not otherwise be assigned or transferred in whole or in part, either
directly or by operation of law, or otherwise except in the event of Employee's
death, by will or the laws of descent and distribution (including, without
limitation, by way of execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner). An Option or SAR (and any right to satisfy
tax withholding obligations, or to pay any portion of an Exercise Price, through
withholding of shares otherwise issuable pursuant to the exercise or vesting of
an Award) shall be exercisable, during an Employee's lifetime, only by such
Employee, his or her Beneficiary or his or her Legal Representative. Grant of
any Option, SAR or Performance Share Award shall not confer upon the grantee any
rights of a shareholder with respect to any shares subject to such Award.

    C. The Plan, the grant, exercise, vesting and/or settlement of Awards
thereunder, and the obligations of the Company to satisfy Awards shall be
subject to all applicable Federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required, and
the Committee may impose any additional restrictions with respect to Awards in
order to comply with any legal requirements applicable to Awards or to qualify
for any exemption it may deem appropriate.

    D. The expenses of the Plan shall be borne by the Company.

    E. By accepting an Award under the Plan, each Employee and each Legal
Representative or Beneficiary shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company or the Board.

    F. Nothing in the Plan, or in any Agreement entered into pursuant to the
Plan, shall confer on an Employee any right to continue in the employ of the
Company or Rouge Steel Company, or in any way affect the Company's or Rouge
Steel Company's right to terminate the Employee's employment without prior
notice at any time for any reason or for no reason.

    G. Participation in the Plan shall not affect an Employee's eligibility to
participate in any other benefit or incentive plan of the Company or Rouge Steel
Company. Awards under the Plan are not considered earnings for purposes of the
Rouge Steel Company Savings Plan for Salaried Employees, the Rouge Steel Company
Salaried Employee Retirement Plan, Rouge Steel Company insurance or other
employee benefit programs.

    H. With respect to shares acquired upon the exercise of Options or Stock
Appreciation Rights and with respect to shares acquired by an individual under a
Restricted Stock Award, Performance Share Award, or otherwise under the Plan,
the Company may reserve a "right of first refusal" to purchase any such shares
at Fair Market Value from the holder thereof.

                                      -8-
<PAGE>   9

If such right is reserved, the holder, prior to any disposition of such shares
of Common Stock, shall be required to first notify the Corporate Secretary or
Vice President, Employee Relations and Public Affairs of the Company or such
other officer as may be designated by the Committee, in writing in such form as
the Committee may prescribe, of his or her intention to dispose of any such
shares, and the Company will advise the holder within five (5) days whether it
intends to purchase such shares, for this purpose. Fair Market Value shall be
determined as of the date next preceding the date that the Company notifies the
holder of its intention to purchase such shares. The Committee will designate an
officer to decide whether to accept or reject such right of first refusal. If
the Company does not exercise its right to purchase the shares within such
period, the holder may freely dispose of the shares following expiration of such
period.

    I. A breach by the Employee, his or her Beneficiary(ies), or Legal
Representative, of any restrictions, terms or conditions provided in the Plan,
the Agreement, or otherwise established by the Committee with respect to any
Award will, unless waived in whole or in part by the Committee, cause a
forfeiture of such Award.

                                      -9-
<PAGE>   10

    J. Except to the extent preempted by Federal law, the provisions of this
Plan shall be interpreted and construed in accordance with the internal laws of
the State of Michigan.

    K. It is the intention that the Plan at all times fully satisfy the
provisions and conditions of Rule 16b-3 applicable to a Plan of this type.
Accordingly, anything herein to the contrary notwithstanding, to the extent that
Rule 16b-3 at any given time would require that decisions concerning the
selection of Employees who are or become subject to reporting requirements of
Section 16 of the Exchange Act ("Section 16 Reporting Persons") to be granted
Awards hereunder, the timing, amounts, and other terms of such Awards, and the
form of settlement of any such Awards be made only by the Committee, all such
decisions by the Committee shall be final and conclusive and not subject to
reversal or modification by the Board. Moreover, irrespective of any rights or
discretionary power which a Section 16 Reporting Person holding a pertinent
Award otherwise would possess hereunder or under the Agreement evidencing such
Award concerning the timing of exercise of a SAR, the manner of paying the
Exercise Price for an exercised Option, a request or election concerning the
form of settlement of a SAR, or the manner of satisfying tax withholding
objections arising with respect to any Award, the Section 16 Reporting Person
shall be entitled to exercise such rights and discretion only at such times and
manner and under such other conditions as at the time are contemplated by the
applicable provisions of Rule 16b-3 and any attempt otherwise to exercise such
rights or discretion shall be void and of no effect.

                                      -10-

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