FILED AUG 2 8 2000 W AUG 3 0 2000 KENNETH J. MURPHY, Clerk CINCINNATIL OHIO

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

BERNARD FIDEL and IRONWOOD Lead Case No. C-1-00-320 CAPITAL MANAGEMENT, On Behalf of (Consolidated with No. C-1-00-349) Themselves and All Others Similarly Situated,

Plaintiffs, Judge Herman J. Weber

CLASS ACTION

AK STEEL HOLDING CORPORATION, CONSOLIDATED AMENDED ARMCO INC., RICHARD M. WARDROP, COMPLAINT FOR VIOLATION JR., JAMES F. WILL, JAMES L. WAREHAM, OF THE FEDERAL SECURITIES JAMES L. WAINSCOTT, JOHN G. HRITZ, LAWS ALLEN BORN, BONNIE G. HILL, ROBERT H. JENKINS, LAWRENCE A. LESER, (Jury Trial Demanded) ROBERT E. NORTHAM, CYRUS TANG and JAMES A. THOMSON,

Defendants INTRODUCTION AND OVERVIEW

1. This is an action on behalf of those who purchased or otherwise acquired AK Steel

Holding Corporation ("AK Steel" or the "Company") publicly traded securities between July 15,

1999 through January 25, 2000 (the "Class Period"). This action also is brought on behalf of a sub-

class of those who held Armco Inc. ("Armco") shares as of August 25, 1999 and were thereby

entitled to vote to approve the merger with AK Steel (the "sub-class").

2. AK Steel is a fully integrated producer of flat-rolled carbon, stainless and electrical

steels. AK Steel's steel operations consist of eight steelmaking and finishing plants in Indiana,

Kentucky, Ohio and Pennsylvania. AK Steel's other operations include steel pipe and tubing products, snow plows and ice control products for light trucks and the operation of the Greens Port

Industrial Park in Texas. Armco is a producer of stainless and electrical steels. Armco was acquired by AK Steel on September 30, 1999.

3. Defendants' false and misleading statements about AK Steel's financial results, the

Company's ability to renegotiate its contracts at the end of 1999, the minimal impact of a labor dispute in its Mansfield facility, the positive impact on AK Steel's results of price increases in the steel industry and an improved cost structure which would result in 2000 EPS of $2.25-$2.65, artificially inflated the price of AK Steel stock to a Class Period high of $24-5/16. This inflation in

AK Steel's stock enabled AK Steel to acquire Armco in a stock-for-stock acquisition for fewer AK

Steel shares than AK Steel otherwise would have had to issue and permitted AK Steel to complete the exchange of $450 million in Senior Notes in September 1999. AK Steel management represented to analysts throughout the Class Period that it expected price increases but failed to disclose that this was a negative factor for the Company since the Company was locked into long- term contracts with customers but not with suppliers, such that price increases would cause AK Steel to experience increasing costs but not increasing sales. Thus, AK Steel management knew but did not disclose that the anticipated price increases would have a negative impact on the Company and its future results.

4. In September 1999, AK Steel/Armco locked-out its union workers in the Mansfield

Ohio plant as the labor contract expired, despite the workers' offer to work under the old agreement

-1- until a new contract could be negotiated. Over the next few months, AK Steel management told analysts the costs of the labor dispute would be minimal and requested analysts not to discuss the lock-out in their analyst reports until the labor dispute was resolved. Thus, the market was unaware of the severe and adverse effect the labor dispute was having and would have on the Company's results.

5. Then, on January 25, 2000, AK Steel revealed disappointing 4thQ 99 earnings and a huge drop in projected 2000 earnings versus earlier statements and exposed the problems AK Steel was having, including the adverse effects caused by the labor dispute in Mansfield, Ohio, the fact that AK Steel's costs were increasing due to increases in spot market for raw materials, and, because

AK Steel was bound under long-term contracts which limited its ability to raise prices, its margins would not benefit from price increases in the market, all of which would severely reduce its 2000 earnings.

6. On these disclosures, AK Steel's stock fell by 25% in one day to $12-3/8, on huge volume of more than 9.3 million shares, later falling to as low as $8 per share. AK Steel's stock price has not recovered and currently trades at less than $12 per share. The impact on AK Steel's stock price due to these disclosures is shown in the chart below.

AK Steel Holding Corporation July 1, 1999 • August 21, 2000 Daily Share Prices 30

25

20

15

10

07/01/99 09/09/99 11 /16/99 01 /26/00 04/04/00 06/13/00 08/21/00 08/05199 10113/ 99 12 /21/99 03101 /00 05/09/00 07118/00

-2- JURISDICTION AND VENUE

7. The claims asserted herein arise under § § 11 and 15 of the Securities Act of 1933

(" 1933 Act"), 15U.S.C. §§77k and 77o, and §§ 10(b), 14(a) and 20(a) ofthe Securities Exchange Act

of 1934 ("1934 Act"), 15 U.S.C. §§ 78j(b), 78n(a) and 78t(a), and Rule 10b-5. Jurisdiction is

conferred by §22 of the 1933 Act, 15 U.S.C. §77v, and §27 of the 1934 Act, 15 U.S.C. § 78aa.

Venue is proper here pursuant to §22 of the 1933 Act and §27 of the 1934 Act. The acts and transactions giving rise to the violations of law complained of occurred in this District.

THE PARTIES

Plaintiffs

8. Lead Plaintiff Bernard Fidel acquired shares of AK Steel common stock by exchanging his Armco shares for AK Steel stock and was damaged thereby. Plaintiff Fidel held

Armco shares as of August 25, 1999 and was thereby entitled to vote in the merger.

9. Lead Plaintiff Ironwood Capital Management purchased AK Steel common stock during the Class Period and was damaged thereby.

AK Steel Defendants

10. Defendant AK Steel maintains its headquarters in Middletown, Ohio. During the

Class Period, AK Steel's common stock traded in an efficient market on the New York Stock

Exchange.

11. (a) Defendant Richard M. Wardrop, Jr. was, during the Class Period, Chief

Executive Officer and Chairman of the Board of the Company.

(b) Defendant James L. Wareham was, during the Class Period, President of the

Company.

(c) Defendant James L. Wainscott was, during the Class Period, Senior Vice

President, Treasurer and Chief Financial Officer of the Company.

(d) Defendant John G. Hritz was, during the Class Period, Executive Vice

President and General Counsel of the Company.

12. The above individuals are the "Individual Defendants." They are liable for the false statements pleaded herein at ¶¶43, 50, 52-53, 61, 64 and 77 , as those statements were each "group-

-3- published" information for which they were collectively responsible. The Individual Defendants, by reason of their stock ownership and positions with AK Steel, were controlling persons of AK

Steel. AK Steel controlled each ofthe Individual Defendants. These controlling persons are liable under §20(a) of the 1934 Act and under §15 of the 1933 Act.

Director Defendants

13. Defendants Allen Born, Bonnie G. Hill, Robert H. Jenkins, Lawrence A. Leser,

Robert E. Northam, Cyrus Tang and James A. Thomson were directors of AK Steel (the "Director

Defendants") and each signed the false and misleading Registration Statement Form S-4 containing the Prospectus/Joint Proxy and are named as defendants herein due to their violations of § 11 of the

1933 Act and § 14(a) of the 1934 Act and Rule 14a-9.

Armco Defendants

14. Armco maintained its headquarters in Pittsburgh, Pennsylvania and, until its acquisition by AK Steel, its stock was traded in an efficient market on the New York Stock

Exchange.

15. Defendant James F. Will was President, ChiefExecutive Officer and Chairman ofthe

Board of Armco until the merger. Will, by virtue of his positions as President, CEO and Chairman of Armco was a controlling person of Armco until the merger with AK Steel.

SCIENTER AND SCHEME ALLEGATIONS

Scheme

16. Each Individual Defendant is liable for making false statements or for failing to disclose adverse facts and for participating in a fraudulent scheme which operated as a fraud or deceit on purchasers of AK Steel stock.

Knowledge

17. The Individual Defendants were top executives of AK Steel. They ran AK Steel as

"hands-on" managers, dealing with important issues facing AK Steel's business, i. e., its long-term contracts, its ability or inability to renegotiate the prices in those contracts, the increases in the cost of new materials in the spot market and the impact such price increases would have on AK Steel, and the labor issues affecting Armco and AK Steel manufacturing plants.

-4- 18. The Individual Defendants closely monitored the performance of AK Steel's business via reports which AK Steel's Finance Department (under Wainscott) generated on a weekly and monthly basis. They also monitored the labor issues affecting AK Steel and the impact these issues would have on AK Steel's future results. The Individual Defendants were in a unique position to expect the occurrence of the labor dispute at Mansfield. This dispute resulted not in a strike but in a lock-out planned by AK Steel/Armco management. Management refused the union's offer to continue working under the old agreement after its expiration and did not offer a new agreement until the day of the expiration of the old one. Thus, the Individual Defendants actually knew what the public did not know, that there would be a lock-out and that it would be protracted. Each member of management was also extremely concerned about the prices of steel and the costs of raw materials. The Individual Defendants monitored the spot market price increases and knew at the beginning of the Class Period that they were expecting increases in the spot market for steel (particularly hot-rolled sheet) and raw materials, telling analysts that the increases would benefit the Company. The Individual Defendants also knew the customers with whom the Company had long-term contracts and knew about the inability to renegotiate prices on these long-term contracts. The Individual Defendants knew that their inability to renegotiate prices on long-term contracts with customers would result in much lower gross margins in the event of price increases. Thus, the Individual Defendants actually knew that their forecasts of favorable earnings in 2000 could not and would not be achieved. Defendants were also aware of AK Steel's quarter-end sales manipulations in which the Company instructed its outside processors - outside companies which perform finishing processes for steel manufacturers and deliver finished products to the manufacturers' customers to double ship product to AK Steel's customers in order to inflate AK Steel's sales and earnings. Two of these customers were Walker, a subsidiary of Tenneco, and Arvin. Motive and Opportunity 19. In addition to having actual knowledge of the falsity of their false statements, AK Steel and the Individual Defendants had the motive and the opportunity to perpetrate the fraudulent scheme and course of business described herein. AK Steel was in the process of acquiring Armco and would have to issue additional shares for Armco if AK Steel's stock price declined.

-5- 20. Defendants' scheme was successful. By artificially inflating AK Steel's stock, AK

Steel was able to complete the acquisition ofArmco for 41 million shares. Moreover, AK Steel was able to complete a registration of some $450 million in Senior Notes. The artificial inflation in AK

Steel's price also was important to the Individual Defendants as it permitted AK Steel's largest shareholder, Kawasaki Steel Corporation, which previously owned 14.4% of AK Steel's stock, to sell 3 million shares of its stock for $49.6 million.

21. The Individual Defendants were motivated to engage in the scheme as their annual incentive bonuses, which were as high as 150% of their base salaries, were dependent on meeting financial and non-financial targets, ofwhich the acquisition ofArmco was a key component. In fact, the Individual Defendants were successful in that they received extremely high amounts ofbonuses, restricted stock awards and Long-Term Incentive Plan payments ("LTIP"). For example, for 1999, the following Individual Defendants received the following amounts:

RESTRICTED STOCK NAME SALARY BONUS AWARD LTIP TOTAL Wardrop $1,200,000 $2,040,000 $1,539,688 $1,800,000 $6,579,688 Wareham $ 400,000 $ 600,000 $ 355,313 $ 600,000 $1,955,313 Hritz $ 350,000 $ 350,000 $ 826,251 $ 350,000 $1,876,251

22. After the merger, AK Steel and the Individual Defendants were motivated to conceal the Company's problems because holders of $250 million in Armco Senior Notes had a repurchase option which was triggered by the change in control ofArmco. AK Steel was offering such holders cash payments to waive their repurchase option and to not sell their Notes prior to the repurchase option expiring. The Individual Defendants knew that if the true state and prospects for AK Steel were revealed, the Note holders would choose to exercise their repurchase option thereby exhausting much of the Company's capital.

23. Defendant Will was motivated to engage in the scheme herein described as the successful merger ofArmco into AK Steel would provide him with constructive termination benefits of more than $3 million including:

-6- APPROXIMATE DOLLAR TYPE OF BENEFIT VALUE OF BENEFIT A lump sum payment of three times his annual base salary, $1.7 million annualized at the highest rate paid during any month during the 24 months preceding the merger. A payment equal to the average annual incentive bonus he $57,000 received in the four calendar years prior to the merger. A payment for the pro-rata bonus of any incentive compensation Unknown for the year of the merger Continuation of one year of coverage under welfare benefit $40,000 annually plans, including life, health and other insurance benefits. All of Will's unvested options would immediately vest and any 328,420 options restrictions on his Armco stock would immediately be removed. exercisable at $5.31 A cash payment for any of his options equal to the difference Difference of between the option price and the higher of the per share market approximately $2 x value of AK Steel stock and the average value of the per share 668,682 options = consideration paid to Armco stockholders in the merger. $1.3 million

BACKGROUND TO CLASS PERIOD

24. AK Steel, through its wholly owned subsidiary AK Steel Corporation (collectively,

"AK Steel" or the "Company"), is a fully integrated producer of flat-rolled carbon steel. The

Company seeks to produce premium quality coated cold-rolled and hot-rolled carbon steel primarily for sale to the automotive, appliance, construction and manufacturing markets. The Company also cold rolls and aluminum coats stainless steel for automotive industry customers. AK Steel has operations in Middletown, Ohio, Ashland, Kentucky and Rockport, Indiana. The Rockport Works, a state-of-the-art finishing facility currently completing construction on a 1,700 acre site in Spencer

County, Indiana, began operating a hot-dip galvanizing and galvannealing line on June 16, 1998 and a continuous cold rolling mill on September 12, 1998. The Rockport facility, however, was not fully operational until late 1999, at the earliest. The Company's principal customers are in the automotive, appliance, construction and manufacturing markets. AK Steel also sells its products to distributors and convertors.

25. AK Steel is the successor to a business that, until May 1989, was a division ofArmco.

In May 1989, Armco transferred the assets of that division to a partnership jointly owned equally

-7- by Armco and Kawasaki Steel . AK Steel had its IPO in April 1994. By April 1995, Armco had sold its interest in AK Steel. After this, AK Steel continued to perform rolling services on behalf of

Armco.

26. After experiencing significant appreciation in late 1998 to early 1999, AK Steel's stock declined between April 1999 and July 1999 as steel inventories increased and prices declined.

As steel prices rebounded, AK Steel was poised to benefit from these increases. However, AK Steel had long-term contracts with many of its customers which prevented it from raising prices.

Moreover, the prices of raw materials (coal, iron ore, electricity, natural gas, oxygen, scrap metal, zinc and limestone) also were increasing. AK Steel had moved away from purchasing much of its raw materials under long-term contracts over the prior two years and was thereby exposed to increases in costs of raw materials.

27. On April 1, 1999, AK Steel filed an S-4 Registration Statement with the SEC to register $450 million in 7-7/8% Senior Notes due 2009 to exchange for $450 million in Senior Notes issued in February 1999 in a private placement.

28. AK Steel and its officers sought to acquire Armco because ofArmco's stainless steel capabilities. There was no place for AK Steel to get stainless steel domestically and there was pressure mounting in Congress to impose tariffs on imported stainless steel. Moreover, AK Steel had a "super patent" for aluminum and coatings on stainless steel, so acquiring Armco would provide

AK Steel with a steady supply of stainless steel which it could very profitably sell.

29. On May 21, 1999, AK Steel announced it had entered into a definitive merger agreement with Armco. The release stated:

The proposed merger was jointly announced today by Richard M. Wardrop, Jr., chairman and chief executive officer of AK Steel, and James F. Will, chairman, president and chiefexecutive officer ofArmco, following approval ofthe transaction by the boards of directors of both companies.

"This merger is the next step in AK Steel's successful strategy of providing high value-added products for our customers," said Mr. Wardrop. "Clearly, we see significant operational and organizational synergies that we believe will benefit our customers and result in an accretive transaction for AK Steel 's shareholders."

-8- The exchange ratio is subject to adjustment, within the limits of a collar, based upon the average closing price ofAK Steel Holding common stock during the ten-day trading period ending six days before the meeting at which Armco shareholders vote on the transaction. Under the terms of the collar, Armco common shareholders will receive AK Steel Holding shares having a value of $7.50 per Armco share so long as the average closing price ofAK Steel Holding common stock during that trading period is between $22.00 and $26.44 per share. If the average closing price of AK Steel Holding common stock during that period is higher than $26.44, Armco common shareholders will receive AK Steel Holding shares having a value greater than $7.50 per Armco share, but in no event more than $8.00 per share. If the average closing price of AK Steel Holding common stock during the trading period is less than $22.00, the exchange ratio will nonetheless be fixed at .3409 AK Steel Holding shares per Armco common share (so that the value received by Armco common shareholders would be less than $7.50). However, in that event, Armco will have the right to terminate the merger agreement prior to the meeting of the Armco shareholders, in which event AK Steel may elect to deliver additional shares of its common stock in order to assure a value of $7.50 per Armco common share. Holders of Armco's $3.625 Preferred Stock will receive an equal amount of a newly issued series ofpreferred stock ofAK Steel Holding Corporation having the same terms as the $3.625 Preferred Stock. Holders of each of the other series of Armco's outstanding preferred stock would receive cash in an amount equal to the redemption price of their shares.

30. By the time of this announcement, AK Steel had already been in discussions with

Armco for more than one year. In February 1998, Wardrop and Will met informally to discuss strategic issues confronting their respective companies, including the possibility ofa merger or other business combination transaction. On March 26, 1998, AK Steel entered into a confidentiality

agreement with Armco and, shortly after that, began a due diligence investigation of Armco to identify and evaluate the potential benefits and risks of a strategic transaction between the two companies. On April 14, 1998, May 1, 1998 and May 14, 1998, representatives of AK Steel and

Armco met to discuss a strategic transaction between the two companies. On July 12, 1998,

Wardrop, together with Wainscott, met with Will and the ChiefFinancial Officer ofArmco to further discuss the merger. On July 16, 1998, following a meeting of the board of directors of AK Steel,

Wardrop delivered to Will a written proposal for the acquisition by AK Steel of all of the assets comprising Armco's Specialty Steel Division and the assumption by AK Steel of selected liabilities relating to that division.

31. On July 17, 1998, Armco's board of directors met to consider the AK Steel proposal.

The board expressed reservations about the value of the proposal to the Armco stockholders and

directed Armco management to discuss it further with AK Steel. Will advised Wardrop of the

-9- board's views. On July 21, 1998, representatives of AK Steel and Armco, together with their

respective financial advisors, met to discuss AK Steel's proposal. On August 14, 1998, the Armco board of directors further considered AK Steel's proposal. Following the meeting, Will advised

Wardrop that it was the judgment of Armco's management and board of directors that a sale of

Armco's core specialty steel business, without a concurrent sale of its other businesses, was not in the best interests ofArmco's stockholders. On December 11, 1998, Wardrop and Wainscott, together with other members of AK Steel's management, met with Will and other members of Armco's management, to explore the possibility of creating a joint venture that would combine various operations of Armco's Specialty Steel Division and AK Steel's Rockport Works finishing facility.

On December 13, 1998, January 19, 1999 and February 8, 1999, representatives of both companies met to discuss the proposed joint venture. On March 22, 1999, AK Steel and Armco entered into a confidentiality agreement with respect to a potential joint venture. After entering into the confidentiality agreement, representatives of both companies continued to have discussions regarding the joint venture. On April 7, 1999, at a meeting held to evaluate the relative production costs and synergies that might be obtained through a joint venture, it became clear to the management of both companies that a joint venture would not be in the best interests of Armco or its stockholders.

32. On April 18, 1999, Wardrop and Will met again to explore whether there remained any possibility of merging their respective businesses in their entirety. Will informed Wardrop that

Armco was considering strategic alternatives with respect to its business, including a possible acquisition by Armco of another company. On April 27, 1999, at a meeting of members of senior management of both companies, Will stated that Armco's board had instructed its management to pursue the acquisition of the other company. Shortly thereafter, AK Steel executed a restated confidentiality agreement with Armco and began an expedited due diligence investigation to determine whether, in light of developments subsequent to the summer of 1998, including the possible resolution of various uncertainties associated with Armco's Financial Services Group and the substantial appreciation in the market price of AK Steel common stock relative to the market

-10- price of Armco common stock, an acquisition by AK Steel of Armco in its entirety might be in the

best interest of AK Steel and its stockholders.

33. On May 7, 1999, AK Steel's board of directors authorized Wardrop to make a formal

offer to Armco for the acquisition of Armco in a stock-for-stock merger transaction that would

provide Armco common stockholders a transaction value between $7.00 and $7.50 per share in the

form of shares of AK Steel common stock. Wardrop promptly submitted to Will a written proposal

that reflected a transaction value of $7.00 per share of Armco common stock. During a telephone

conversation that day regarding the proposal, Wardrop and Will reached a tentative agreement on

a transaction value to Armco common stockholders of $7.50 per share.

34. The initial draft of the merger agreement contemplated an exchange ratio to be fixed

immediately prior to signing the agreement, which might have provided Armco common

stockholders a value of more or less than $7.50 per share depending upon future changes in the

market price ofAK Steel common stock. However, Armco's representatives indicated that they were

not willing to subject Armco's common stockholders to the risk of a substantial decline in the market

price of AK Steel common stock between the date of signing the agreement and the date of

consummation of the merger, even though they would have the opportunity to benefit from any

appreciation in that market price during the same period.

35. On May 13, 1999, the Armco board of directors met to consider the AK Steel

proposal. The board of directors reviewed the current state of negotiations and the draft merger

agreement and considered a presentation by Salomon Smith Barney and other matters related to the

proposal. The board authorized Armco management to continue negotiations with respect to the AK

Steel proposal, with the direction to seek alternatives to a fixed exchange ratio.

36. On May 13, 1999, the board of directors of AK Steel authorized management to propose the use of a collar, under which Armco stockholders would be protected from a decline in

the market price ofAK Steel common stock, within a prescribed limit, and would forego the benefits

of future appreciation in the price of AK Steel common stock above a prescribed maximum.

37. Shortly following the meeting of AK Steel's board of directors, AK Steel's management, with the assistance of its legal and financial advisors, developed a proposal for a collar

-11- mechanism which was presented to Armco management and agreed upon. During the following week, representatives of Armco and AK Steel and their respective financial and legal advisors continued to negotiate the terms of the definitive merger agreement.

38. On May 20, 1999, the Armco board of directors approved the merger and the merger agreement and authorized the execution of the merger agreement.

39. On May 20, 1999, the AK Steel board of directors also approved the merger and the merger agreement and authorized the execution ofthe merger agreement and authorized submission to AK Steel stockholders for their approval of a proposal to issue shares of AK Steel common stock pursuant to the merger agreement.

40. On the morning of May 21, 1999, AK Steel and Armco executed the merger agreement and issued the release which stated in part:

AK Steel Holding Corporation (NYSE: AKS) and Armco Inc. (NYSE: AS) have entered into a definitive merger agreement under which Armco will be merged into AK Steel Corporation, the principal operating subsidiary of the holding corporation. The proposed merger was jointly announced today by Richard M. Wardrop, Jr., chairman and chief executive officer of AK Steel and James F. Will, chairman, president and chiefexecutive officer ofArmco, following approval ofthe transaction by the boards of directors of both companies.

"We are pleased that this transaction will provide Armco shareholders a premium on their investment and the opportunity to be shareholders of the premier flat-rolled steel producer in the U.S.," said Mr. Will. "Our specialty steel and technology strengths, combined with AK Steel's proven capabilities, will enable the merged company to compete successfully on a global basis."

41. On July 1, 1999, AK Steel and Armco jointly filed a Registration Statement S-4 Joint

Proxy/Prospectus pursuant to the merger. The document, signed by the directors of AK Steel, encouraged Armco shareholders to vote in favor of the merger.

42. By the beginning ofthe Class Period, AK Steel insiders knew that there were serious problems with AK Steel's business, including its long-term contracts, its ability to renegotiate the prices in those contracts, the increases in the cost ofnew materials in the spot market and the impact such price increases would have on AK Steel, and the labor issues affecting Armco and AK Steel manufacturing plants. Nevertheless, AK Steel's insiders sought to portray the Company's business as successful and growing in order to make the acquisition possible and to do so on favorable terms.

-12- The terms of the merger were such that ifAK Steel's stock price dropped, the Company Would have

to issue more shares (i.e., the transaction would be dilutive) to complete it. The Individual

Defendants were also attempting to register $450 million in Senior Notes and to also allow the

Company's largest shareholder to cash out on very favorable terms.

FALSE AND MISLEADING STATEMENTS DURING THE CLASS PERIOD

43. On July 15, 1999, AK Steel issued a press release announcing its 2nd Q99 results:

AK Steel (NYSE: AKS) reported earnings of $7.9 million, or $0.13 per diluted share of common stock, for the second quarter of 1999. The results include an extraordinary charge of $12.0 million, net of tax, or $0.20 per diluted share, related to the refinancing of the company's $325 million 10-3/4% Senior Notes Due 2004. Excluding the extraordinary item, earnings were $19.9 million, or $0.33 per diluted share in the 1999 second quarter.

Operating profit was $53.6 million, or $40 per ton for the quarter. Revenues for the 1999 second quarter were a record $682.6 million on record shipments of 1,345,000 tons. Shipments of value-added cold-rolled and coated products reached a record quarterly mark of 1,021,000 tons, or 76% of total shipments.

44. After issuing this press release, AK Steel management held a conference call for analysts, media representatives and large AK Steel shareholders and made additional statements not included in the press release. During the conference call and in follow-up conversations with analysts and other market participants, AK Steel management represented that:

• Management expected a strong fourth quarter in terms of revenues and earnings due to higher volume, improved mix and lower costs. Once the Company had its two pickling lines up and running it would not have to outsource the pickling and would have a more favorable cost structure going forward.

• Demand remained strong for AK Steel products.

• Management expected to generate significant benefits from its Rockport Works facility, primarily the ability to roll stainless steel.

• AK Steel would benefit rather than suffer from continued strengthening in the prices in the domestic steel markets.

• AK Steel was on track to report EPS of $2.60+ for 2000.

45. Analysts immediately repeated this information to the markets in analyst reports.

These reports forecast AK Steel's 2000 EPS and rated the Company as follows:

-13- Firm Analyst 2000 EPS Ratin Bear Stearns Winters $2.85 Buy Lehman Brothers Aldrich $2.82 Outperform DLJ Securities Morrison $2.60 Market Perform

Analysts also wrote the following about AK Steel:

CS First Boston:

AK Steel management continues to believe the transaction will be accretive in 2000. Because many analysts will not revise their 2000 and 2001 AK Steel estimates for the Armco transaction until after the merger is completed, the consensus for AK Steel should have a positive bias after the combination.

Lehman Brothers:

In a conference call following the release ofits results, management made the following key points:

- 3Q99 will be challenging and should approach 1Q99 or 2Q99 results. Factors impacting the quarter will include: 1) the further ramping up ofthe 2 new pickle lines at Rockport; 2) a slightly weaker mix due to scheduled auto shutdowns; 3) the hopeful merger with Armco ($6 3/4; Outperform) targeted to close by the end of September and 4) a blast furnace outage at the Ashland facility which is expected to last for approximately 11 days and will cost about $11 million. The blast furnace outage is a normal outage except for the hot blast system work that is being done (that is why it will be 11 days, this is not something done all the time).

- Management stated that 4Q99 will probably be the strongest of the year (exclusive of the Armco merger) reflecting higher volume, improved mix and lower costs (including start-up costs). Management noted that AK has been "handcuffed" by its lack of pickling capacity to-date and that once its two new picking [sic] lines are fully up and running, it will now [sic] longer have to outsource its pickling at cost disadvantage of $20-25/ton and will be able to ramp up its offerings of higher margined annealed and fully dressed cold-rolled product. Management wants 75- 80,000 tons of stainless out in H299 including some 400 series but mostly 300 series. Entry into the stainless market should be helped by the favorable trade case ruling that will block imports, and improving demand.

- Demand remains strong for AKS products despite a modest rise in interest rates, with new home and appliance end-markets on a blistering pace . AK Steel's shipments for 1999 could be as high as 5.2 million tons (probably 800,000 tons made off of purchased slabs) exclusive of any contribution from Armco. Slab purchases in H299 should be similar to H199 (about 400,000 - 500,000 tons).

- Pricing, unfortunately, remains depressed but should improve over the coming quarters. Management noted that it expects about a $5/ton increase on spot business going into the next quarter. Hot-rolled sheet should get tighter, and coated products could also get a bump up in price according to management, but cold-rolled remains quite competitive.

Bear Stearns:

-14- Lowering Third Quarter Estimate but Raising Fourth Quarter - 1999' Full Year Estimate Dropped Slightly, but 2000 Estimate Remains Unchanged. With the Ashland outage now scheduled for the third quarter and given the seasonal slowdowns expected in the automotive business, the company does not expect to see a significant improvement in its earnings performance on a sequential basis. Therefore, our recently revised third quarter estimate of $0.50 per share looks to [sic] high and we are taking this down to $0.35 per share. The fourth quarter should see a strong rebound, however, as volumes, mix and costs all are expected to improve significantly. By that time period, AK's two new pickling lines could be running at or near full capacity, enabling the company to greatly reduce and/or eliminate costly outside pickling. We are pushing up our fourth quarter estimate modestly to $0.65 per share from $0.60 per share currently. These two changes cause us to lower our overall 1999 estimate for AK Steel to $1.60 per share from $1.65 per share previously. Our '2000 estimate remains $2.85 per share, which we are still comfortable with at this point.

46. On July 21, 1999, Armco reported its 2ndQ 99 results in a press release which stated:

Armco Inc. ... reported net income of $41.3 million, or $.31 per diluted share of common stock for the second quarter of 1999. Net income includes a gain of $7.5 million, or $.06 per diluted share, for resolution of tax issues related to previously discontinued foreign operations. In the second quarter of 1998, Armco had net income of $31.1 million, or $.23 per diluted share.

Sales for the second quarter of 1999 were $468.2 million, up from $450.1 million in the second quarter a year ago primarily as a result of higher shipments of specialty semi-finished steels and snowplows.

47. Subsequent to issuing this press release, Armco management held a conference call for analysts, media representatives and large Armco shareholders to discuss Armco's results, its business and its prospects. During the call and in follow-up conversations with analysts, Armco management represented that:

• The outlook for the remainder of 1999 and into 2000 was good as demand was strong for stainless and electrical steels and pricing was becoming more favorable.

• Prices in Asia were increasing which would benefit Armco's future results.

• Armco had made contingency plans for potential labor problems at the Mansfield facility to prevent any impact on customers.

• Armco would be renegotiating its sales contracts at year-end and would be able to increase prices at that time.

• The merger with AK Steel would provide promising prospects to Armco shareholders.

48. After this release, several analysts issued reports on Armco based on Armco management's statements, including a July 22, 1999 report by Lehman Brothers written by Aldrich which stated in part:

-15- In a conference call following the release ofits results, management made the following key points:

- SG&A in 2Q99 was $5.8 million higher than 2Q98 primarily due to expenses associated with Y2K and the pending merger with AK Steel. Sundry, Other net (related to employee benefits) was down slightly versus last year, expect a $5 million credit per quarter for the balance of the year. Also expect $50-$60 million in capex for 1999 and depreciation of about $65 million.

- Autochrome sector was strong in 2Q99 driven by high demand for new vehicles, expect this to continue through the 3Q99.

- In the specialty strip and sheet section, chrome nickel shipments were strong, pricing is weak. Management is pleased with the ITC findings on injury and believes they will now have a chance to improve pricing and they also expect strong shipments through the 3Q99.

- Armco has a labor contract up on August 31st at the Mansfield plant. Management noted that negotiations will commence in early August and they hope to reach an agreement before the deadline, though they have made contingency plans for a strike and believe that if it happens there will not be any effect on its customers.

- Management stated that they are backing the recently announced Allegheny Teledyne and J&L price increase even though they have not made any official announcement. A lot ofArmco sales are on contract and these do not come up until the end of the year, but the increase should be seen quickly on the spot markets (i.e. should be fully implemented within 30-60 days). A rise in contract pricing is due (have not had one for 3-4 years), but need to wait and see what the markets look like at year end.

49. In fact, the Individual Defendants, AK Steel and the Armco Defendants' statements were false and misleading as they knew or recklessly disregarded at least the following facts and conditions which seriously undermined their positive statements about Armco and AK Steel and the future combined company:

(a) The increasing prices of steel in the spot markets was actually a negative factor for AK Steel as the Company had moved away from long-term contracts for purchasing raw materials which meant that increases in spot market prices would cause AK Steel's costs to increase;

(b) AK Steel's long-term contracts to sell its products were a detriment in times of rising spot market prices as AK Steel was committed to selling product at below market prices;

(c) AK Steel's "record" shipments of steel and its reported revenue and earnings were actually artificially inflated due to the Company's practice of double shipping orders to customers from AK Steel's processing plants;

-16- (d) AK Steel's processing plants (independent companies which perform finishing processes for AK Steel), including Southern Ohio Steel and Precision Strip, received letters from AK

Steel instructing them to double ship AK Steel products to its customers regardless of what the customers said. When customers complained, AK Steel would grant credits to them in the following quarter;

(e) The majority of AK Steel's long-term contracts with its customers could not be renegotiated to provide for significantly higher prices which, assuming steel prices continued to increase, would result in a deterioration in AK Steel's 2000 earnings;

(f) The issues with the United Steelworkers in the Mansfield facility were much more serious than disclosed and would be a significant problem for Armco and AK Steel going forward until the issues were resolved; and

(g) As a result of the above, there was no way AK Steel would be able to report

EPS of $2.60+ in 2000.

50. On August 6, 1999, AK Steel filed a prospectus with the SEC pursuant to the exchange of $450 million in Senior Notes due 2009. These notes were originally issued in a private placement for Notes which would be required to be registered and tradeable. The prospectus stated in part:

The Merger

On May 20, 1999, AK Holding and AK Steel entered into an agreement with Armco under which Armco will be merged with and into AK Steel. The merger will be treated as a pooling of interests for accounting purposes.

Consummation of the merger is subject to various conditions, including the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval of the merger by the stockholders of both AK Steel and Armco and receipt of the requisite consents from state insurance departments having jurisdiction over Armco's insurance subsidiaries. We expect that the merger will be consummated by the end of the third quarter of 1999.

We believe that, by combining the two companies into one, we will be able to offer a broader range of higher value-added products to a larger group of customers, assure a reliable source of high quality semi-finished stainless steel for finishing at our new Rockport Works facility, maximize the use ofArmco's stainless steel melt capacity, achieve enhanced efficiencies at Armco's production facilities, and achieve substantial operating synergies and cost savings. In light of these anticipated benefits, Standard & Poor's has publicly stated that, upon completion of the merger, it will raise our corporate credit and senior debt ratings to "BB."

-17- 51. On August 9, 1999, Kawasaki (the largest shareholder of AK Steel), 'sold three

million shares for $49. 6 million.

52. On August 25, 1999, AK Steel and Armco filed a Joint Proxy Statement/Prospectus

("Joint Proxy") as part of a Registration Statement, Form S-4/A, pursuant to the merger. This document included a letter signed by Wardrop and Will which stated in part:

AK Steel Holding Corporation and Armco Inc. have agreed to merge. The merger is structured so that Armco Inc. will be merged into AK Steel Corporation, a wholly owned subsidiary of AK Holding. AK Steel Corporation will be the surviving corporation.

We have scheduled special meetings of the holders ofArmco common stock and Class A preferred stock and the holders of AK Holding common stock to vote on these matters. Your vote is very important. Whether or not you plan to attend one of these meetings, please take the time to vote by completing and mailing the enclosed proxy card to us. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote in favor ofthe merger if you are an Armco stockholder and in favor of the issuance of AK Holding common stock if you are an AK Holding stockholder.

53. The Joint Proxy also stated:

Q. Why are you proposing to merge?

A. AK Steel and Armco are involved in complementary businesses. By combining their businesses through the merger they will be able to offer a broader range of products to an expanded group of customers, to make more efficient use of their production facilities, to reduce their manufacturing costs and to eliminate duplicative administrative expenses.

We believe that this merger will allow'us to accelerate the long-term growth of AK Holding and enhance its stockholder value in years to come.

Armco's board of directors believes that the merger is in the best interests of its stockholders and recommends that holders of Armco's voting stock vote FOR the proposal to adopt the merger agreement.

AK Holding's board of directors believes that the merger is in the best interests ofits stockholders and recommends that they vote FOR the proposal to issue shares of AK Holding common stock in the merger.

At the core of AK Steel's profitability is an experienced, results-oriented management team that focuses on. continuously increasing productivity, reducing costs and improving product quality while continually striving to improve safety and health in the workplace. Since arriving in mid-1992, this management team has

-18- reconfigured AK Steel's production facilities, increased the operating rates on its equipment and reduced operating costs throughout the organization. Product quality and reliability have been improved as well, enabling AK Steel to increase its sales of value-added coated and cold rolled products to the high-end automotive, appliance, construction and manufacturing markets.

The results of these efforts have been significant. Each of AK Steel's key production units has achieved substantial percentage increases in average monthly production since 1992 through a combination of improved operating and maintenance practices, targeted capital investments and focused production planning. The tandem cold mill at AK Steel's Middletown Works has increased average monthly production by over 104% from 1992 to 1998. Average monthly production from AK Steel's Middletown and Ashland coating lines has increased over 94% over the same period.

54. These statements were false as the statements omitted serious adverse factors affecting AK Steel's business, including, but not limited to:

(a) The increasing prices of steel in the spot markets was actually a negative factor for AK Steel as the Company had moved away from long-term contracts for raw materials which meant that increases in spot market prices would cause AK Steel's costs to increase;

(b) AK Steel's long-term contracts to sell its products were a detriment in times of rising spot market prices as AK Steel was committed to selling product at below market prices;

(c) The majority of AK Steel's long-term contracts with its customers could not be renegotiated to provide for significantly higher prices which, assuming steel prices continued to increase, would result in a deterioration in AK Steel's 2000 earnings; and

(d) The merger was not in the best interest of Armco shareholders due to the problems caused by AK Steel's long-term contracts and due to AK Steel's approach to the labor problems in Mansfield.

55. AK Steel had significant involvement and, in fact, control over Armco's labor issues in Mansfield. The merger agreement essentially gave AK Steel veto power over any labor agreement

Armco entered into. If AK Steel believed the agreement was expected to have a material effect on

Armco's results, AK Steel could walk away from the deal. The Joint Proxy stated:

The merger agreement may be terminated at any time prior to the closing of the merger, despite the adoption ofthe merger agreement by the Armco stockholders and the approval by AK Holding stockholders of the issuance of AK Holding common stock in connection with the merger:

-19- by AK Holding if:

--Armco enters into or modifies any labor or collective bargaining agreement and AK Holding believes, in its sole discretion, that the agreement or modification would reasonably be expected to have, individually or in the aggregate, a. material adverse effect on Armco and its subsidiaries

Thus, AK Steel management was aware of and actually controlled Armco' s tactics in the labor issues

in Mansfield.

56. In September 1999, AK Steel/Armco presented its workers with a proposal on the

same day the old agreement was set to expire. AK Steel management knew the workers would reject

the agreement and when they did, they locked out the workers, forcing a labor dispute. The workers

were willing to work under the old agreement, however, AK Steel engaged in this risky strategy to

break the union. Later, United Steelworkers issued a release which stated in part:

"We have begun mobilizing workers at Mansfield and other plants where Armco/AK employees are threatened by a brutal management that is determined to destroy the rights of its workers," said Mark Robertson, President of Local 169 USWA.

Armco employees in Mansfield were willing to work under the old agreement while continuing to negotiate but management refused the offer and presented the union with a letter saying they were locked out of their jobs. Before the ink was dry on the letter, replacement workers and armed security guards had seized the plant, hours before the contract had expired.

"They wanted us to strike," said Robertson. "They gave us an 84 page written proposal on the day of the lockout. It was the first economic proposal that we had seen from them. They knew that we wouldn't accept it. AK Steel has arrived on the scene and destroyed more than two decades of labor peace."

57. AK Steel management then engaged in a scheme to conceal the extent of problems

the labor issues would cause to AK Steel's results telling analysts not to discuss the situation in their

analyst reports.

58. Due to the share price decline of AK Steel, Armco was allowed under the merger

agreement to alter the exchange ratio. Thus, on September 22, 1999, Armco issued the following release:

-20- Armco Inc. (NYSE: AS) announced today that its Board of Directors' had determined that it was in the best interests of Armco's shareholders to exercise Armco's right to deliver a termination notice under its merger agreement with AK Steel Holding Corporation (NYSE: AKS). Under the agreement, if AK Steel's average per share stock price during the measuring period that ended yesterday was less than $22.00, Armco could elect to give a termination notice to AK Steel. Pursuant to the agreement, the exchange ratio is fixed at .3409 at or below a $22.00 average AK stock price during the measuring period. The average per share price of the AK Steel stock during the measuring period was $19.59. The closing price of AK Steel on September 21, 1999 was $18.375.

Armco gave the termination notice this morning. AK Steel has the right to override the termination ofthe merger agreement by agreeing, by 5:00 PM (EDT) on Friday, September'24, 1999, to increase the exchange ratio to the ratio that would equal $7.50 per Armco common share based on the average AK Steel stock price during the measuring period as described above.

59. On September 22, 1999, AK Steel issued a press release announcing an increase in

the exchange ratio for Armco. The release stated:

AK Steel (NYSE: AKS) today announced that it has increased the exchange ratio under its merger agreement with Armco Inc. so that, upon effectiveness of the merger, holders of Armco common stock will receive .3829 of a share of AK Steel common stock for each share of Armco common stock they own.

The increased exchange ratio will result in the receipt by Armco stockholders of AK Steel shares representing $7.50 per share of Armco common stock, based on AK Steel's average closing price of $19.59 per share during the ten trading day period ended September 21, 1999. The merger is being submitted to the stockholders of both companies on September 29, 1999, as previously announced.

Based upon the 108,662,797 shares of Armco common stock outstanding on August 25, 1999 (the record date for the Armco stockholders meeting), AK Steel expects to issue approximately 41,607,000 shares of its common stock upon consummation of the merger, which is planned for September 30, 1999.

60. In fact, had the serious problems affecting AK Steel's business been known to the market and to Armco shareholders, i.e., the seriousness of the labor problems AK Steel had caused in Mansfield, the adverse effects ofprice increases in the steel industry on AK Steel as it would have to pay more for new materials but would not be able to charge more upon selling its finished products, and that there was no reasonable basis for EPS projections of $2.25+ in 2000, AK Steel's stock price would have been much lower and the number of shares necessary to acquire Armco would have been significantly higher if the merger would have been completed at all.

61. On September 30,1999, AK Steel issued apress release announcing it had completed its merger with Armco:

-21- AK Steel (NYSE: AKS) today announced that its merger with Armco Inc. has become effective. As a result of the merger, the business and operations of Armco will now be conducted by and in the name of AK Steel. Armco shares will cease to trade on the New York Stock Exchange as of the close of business today.

"Today marks the beginning of an exciting new chapter in the growth of AK Steel," said Richard M. Wardrop, Jr., chairman and chief executive officer. "We are eager to meld together under one name some of the finest steelmaking facilities and organizations in the world. The shareholders of both companies have voted their confidence in this merger and today we set about the work ofbuilding upon the value of AK Steel."

62. Even after the merger, AK Steel and the Individual Defendants were motivated to conceal the Company's problems. Beginning in November 1999, Note holders ofArmco's long-term debt had the right to require the repurchase of their Notes due to the change in control. If AK Steel had any hope of convincing these Note holders not to exercise this option (which would have cost

AK Steel hundreds of millions of dollars in much needed capital) it needed to maintain the appearance of a successful and growing company.

63. On October 5, 1999, Credit Suisse First Boston issued a report on AK Steel written by Thomas Abrams based on and repeating statements made by AK Steel management to Abrams.

The report forecast 2000 EPS of $2.37 and stated:

We believe the stocks recent weakness presents an excellent buying point. We are reinstating our Strong Buy rating on the shares with a 12-month target of$32.

The rating on AK Steel is our only Strong Buy among the steels. This rating reflects our confidence in the company and management. Relative to its peers, AK Steel continues to generate better operating profits and to have the most dramatic mix improvement and free cash flow potential.

We believe the stock will benefit from a number ofpositive items during the next quarter and year. These items include:

the absence in the fourth quarter of the nonrecurring operating expenses currently depressing the third quarter;

settlements in the current auto labor negotiations (removes any perceived auto strike threat);

an improvement in product mix (more cold rolled and coated) and growing higher- margined contract exposure;

the resolution to labor issues at its Mansfield operation (once part ofArmco) by early 2000 via either a new contract with existing workers or with replacement workers;

-22- growing the relatively higher-margined stainless output of the Armco system;

the achievement of stated merger synergies and then some during 2000;

the application of $50-$75 million per quarter in free cash flow ($2.75-$3.00 per share per year) to debt reduction and share repurchases;

and the slow improvement in general steel fundamentals and pricing.

64. On October 21, 1999, AK Steel reported its 3rdQ 99 results. The release stated:

AK Steel (NYSE: AKS) today reported its results for the three months ended September 30, 1999, which give effect to its recent merger with Armco Inc. utilizing the pooling of interests method. AK Steel reported a net loss of $1.5 million, or $0.04 per diluted share of common stock, including merger-related costs and special charges. Excluding the merger-related costs and special charges, AK Steel earned $40.1 million, or $0.37 per diluted share of common stock.

"We are pleased to welcome the former Armco shareholders to the AK Steel family," said Richard M. Wardrop, Jr., chairman and chief executive officer. "Our merger was completed within the aggressive schedule we established last spring, and we have begun the important work of combining our operations and workforces to take full advantage of the synergies created with this merger. We also welcome the opportunity to continue providing the highest quality products and service to our new customers."

65. Subsequent to the release of its 3rdQ 99 results on October 21, 1999, AK Steel held a conference call for analysts, money and portfolio managers, institutional investors and large AK

Steel shareholders to discuss AK Steel's 3rdQ 99 results, its business and its prospects. During the conference call - and in follow-up one on one conversations with analysts - AK Steel management stated:

• The Armco merger had an extremely positive effect on AK Steel's results, reflecting the accretive benefits of the merger.

• The merger charges associated with the acquisition of Armco would be much lower than previously expected, in the $150 to $175 million range versus prior estimates of $250 to $300 million.

• Management believed AK Steel's stock price was so low relative to the Company's earnings and prospects, they might consider taking the Company private.

• Management expected to enjoy $50 million in synergies from the merger with Armco.

• Two-thirds of AK Steel's contract business was up for renegotiation at year-end which would allow AK Steel to modestly increase prices.

• The costs ofthe Mansfield strike would increase only to $12 million in the 4thQ 99.

-23- Management expected costs to decline in 2000 due to the blast furnace reline in the Ashland facility.

The Company was still on track to report 2000 EPS of at least $2.25.

66. Analysts immediately reported this information to the market in analyst reports which forecast the following 2000 EPS:

Firm Analyst 2000 EPS Rating

DLJ Securities Morrison $2.25 Market Perform Lehman Brothers Aldrich $2.30 Buy CS First Boston Abrams $2.24 Strong Buy

The reports also stated:

CS First Boston:

With a better look at how the combined company will report results, we are able to rework our model. We have taken our estimates down slightly to $2.24 and $3.15 for 2000 and 2001, respectively. Even with these slight reductions, however, the stock appears to be remarkably good value and we enthusiastically reiterate our Strong Buy rating and 12-month target of$32. We believe that several positive items will improve results during the next few quarters. These positive items include an improving mix, the resolution of the Mansfield labor situation in the next few months, growing contract exposure, the application of free cash flow to debt reduction and share repurchases, the achievement of stated synergies and then some, and indications that specialty steel sales will expand beyond their current scope.

Lehman Brothers:

* Management indicated in its conference call that it may consider taking AK Steel private given the stock's unduly cheap valuation and the company's sizable free cash flow prospects the next few years. (Note: we don't view this as very likely near- term prospect, but the point is well taken).

* EPS estimate trimmed based on increased Mansfield strike relatedly [sic] costs and fully diluted share assumptions ; however, our free cash flow estimates, which we view as critical to the AK story, have actually been boosted due to lowered capital expenditure and cash tax rate assumptions.

* Reemphasize Buy (1) rating. Stock looks very cheap trading at only 7.1 and 5.0 times our 2000 and 2001 EPS estimates and only 4.7 and 3.8 times our 2000 and 2001 free cash flow estimates. Company could generate near half its market capitalization in operating free cash flow the next two years!

DLJ Securities:

Included in SG&A was about $4 million in costs related to the labor lockout at Armco's Mansfield plant. We expect improved operations in the fourth quarter, but are reducing our estimate due to seasonal factors, increased expenses and the Mansfield situation. We expect average pricing to increase for the fourth quarter due

-24- to both product mix (to about 85% value added versus the 82% of the third quarter) and increasing spot prices. We also anticipate a 35,000 ton increase in volume and for costs to decline substantially due to the completion of a $12 million blast furnace reline in the third quarter. at Ashland.

67. After these announcements, AK Steel's stock traded above $ 17 per share.

68. When some top Wall Street analysts started questioning management's assertions that

the costs associated with the Mansfield lock-out would be minimal, AK Steel management asked

analysts not to talk about the lock-out until it was resolved, intentionally concealing material

information from the marketplace. Later, according to Dan Dorfman, one analyst had been telling

his clients that the labor problems were horrendous but had not published anything on the severity

of the labor problems, based on clear intimations from the Company that if he did, the Company

would cut off all contact with him.

69. In fact, AK Steel and the Individual Defendants' statements were false and misleading

as they knew or recklessly disregarded at least the following facts and conditions which undermined

their positive statements about Armco and AK Steel and the future combined company:

(a) The increasing prices of steel in the spot markets was actually a negative

factor for AK Steel as the Company had moved away from long-term contracts for raw materials

which meant that increases in spot market prices would cause AK Steel's costs to increase;

(b) AK Steel's long-term contracts to sell its products were a detriment in times

of rising spot market prices as AK Steel was committed to selling product at below market prices;

(c) The majority of AK Steel's long-term contracts with its customers could not be renegotiated to provide for significantly higher prices which, assuming steel prices continued to increase , would result in a deterioration in AK Steel's 2000 earnings;

(d) The issues with the United Steelworkers in the Mansfield facility were much more serious than disclosed and would be a significant problem for AK Steel going forward until the issues were resolved; and

(e) As a result of the above, there was no way AK Steel would be able to report

EPS of $2.25+ in 2000.

-25- 70. On October 28, 1999, AK Steel announced that it had commenced change ofcontrol

repurchase offers for all $150 million ofits 9% SeniorNotes Due 2007 and $75 million ofits 8-7/8%

Senior Notes Due 2008. Both series of Notes were originally issued by Armco and were assumed

by AK Steel upon the merger with Armco on September 30, 1999. The release stated:

Because the merger constituted a change of control of Armco, holders have the right, until December 7, 1999, to tender their notes for repurchase at 101% of their principal amount, plus accrued interest to the repurchase date, which also will be December 7, 1999.

AK Steel said that it is also offering cash payments to holders of notes who agree on or before November 12, 1999 to waive their repurchase rights and not to sell their notes prior to expiration of the change of control offer. The cash payments will be $17.50 for each $1,000 principal amount of the 9% Notes and $20.00 for each $1,000 principal amount of the 8-7/8% notes. Only holders of record as of the close of business on November 2, 1999 will be eligible to receive such cash payments.

71. It was important to AK Steel to conceal its problems with rising raw material costs, locked-in prices on its contracts with its customers, and the heavy toll ofthe protracted labor dispute in Mansfield, Ohio, so that the Note holders would choose to accept AK Steel's cash offer and AK

Steel could avoid the repurchase obligation.

72. On November 4, 1999, J.P. Morgan issued a report on AK Steel written by M.

Gambardella based on Gambardella's conversations with AK Steel management. The report forecast

2000 EPS for AK Steel of $2.55 and stated:

We are revising down our estimate for AK Steel's fourth quarter primarily to reflect an extended worker lock-out at the Armco Mansfield operations. Although no incremental news has been released regarding the labor issue at the facility (United Steelworkers union members have been locked out since early September when their labor contract expired), we are now assuming in our earnings model that the cost penalty from operating the plant with management and replacement workers will last through the end of the year. AK management indicated that the Mansfield issue adds about $4 million to $5 million to costs each month, or around $0.09 per share for the quarter....

Despite the estimate reductions, we remain extremely positive on AK's earnings growth potential owing to the $75 million in merger-related costs savings, solid automotive demand, and incremental benefits from the Rockport facility. We consider AK's current valuation extremely attractive as its FV/EBITDA multiple of 4.2 off our 2000 estimate is at the low end of its historical range and about on par with the peer group average, despite AK's higher growth potential and profitability.

-26- 73. In fact, by this time, the lock-out was costing AK Steel more than $5'million per

quarter and was not close to resolution. Thus, this problem was likely to continue into 2000 and

would adversely affect 2000 earnings.

74. On December 8, 1999, AK Steel announced that the repurchase option on the Armco

Notes had been completed with AK Steel repurchasing only $74 million of the $225 million in

Notes:

AK Steel ... today announced that it has completed its change of control repurchase offers for two series of senior notes, totaling $225 million, originally issued by Armco Inc.

The principal amount of senior notes tendered under the offers totaled $74 million, thus reducing AK Steel's long-term debt by that amount. Utilizing existing corporate cash, AK Steel purchased the notes at a price of 101% of their principal amount plus accrued interest.

75. During mid-December 1999, AK Steel' s price declined to the $16 range as market participants worried about stainless steel prices and demand.

76. On January 7, 2000, Lehman Brothers issued a report on the steel industry written by Aldrich. This report included a section on AK Steel which was based on and repeated statements made to Aldrich by AK Steel management. The report rated AK Steel a Buy and stated:

AK Steel (Buy): Stock stands out as looking particularly cheap based on its cumulative free cash flow prospects in 2000-20001 which amount to near 30% ofthe company's current market capitalization based on our estimates. EPS is not very leveraged to steel pricing but is expected to grow significantly nonetheless reflecting mix improvement, volume gains and cost reduction associated with the ramp up of Rockport Works, and the garnering of synergies from the recent merger with Armco. Excellent, shareholder friendly management should be enabled to repurchase shares in April.

77. On January 14, 2000, AK Steel announced a favorable ruling in its labor dispute involving Mansfield. The release stated:

AK Steel today said a federal court ruled in its favor in a lawsuit regarding an ordinance passed by the City Council of Mansfield related to private security guards. Judge John M. Manos issued the ruling today from U.S. District Court in Cleveland. Judge Manos' ruling permanently enjoins the City of Mansfield from enforcing the ordinance. County Security Agency and an individual private security employee jointly filed the complaint with AK Steel.

In his ruling, Judge Manos said Mansfield City Council member Butch Jefferson improperly voted on the ordinance because of a conflict of interest. Mr. Jefferson, who insisted the city draft the ordinance, is a member of United Steelworkers of America, Local 169. The union is in a contract dispute with AK

-27- Steel and has been locked out since September 1, 1999. Judge Manos also concurred with AK Steel and the other plaintiffs that the ordinance conflicts with the existing State of Ohio statute regarding regulation of private security guards.

"We are very pleased that the Court has ruled in the company's favor on each of the four issues we presented," said Alan H. McCoy, vice president, public affairs for AK Steel. "The Court rightly concluded that the ordinance was introduced specifically in response to a labor dispute at AK Steel for the purpose of hindering the company's federally protected right to operate its plant."

78. In fact, during January, AK Steel experienced two maintenance outages which would

adversely affect 2000 results which AK Steel did not disclose until the end of the month.

79. In fact, AK Steel and the Individual Defendants' statements were false and misleading

as they knew or recklessly disregarded at least the following facts and conditions which undermined their positive statements about Armco and AK Steel and the future combined company:

(a) The increasing prices of steel in the spot markets was actually a negative factor for AK Steel as the Company had moved away from long-term contracts for raw materials which meant that increases in spot market prices would cause AK Steel's costs to increase;

(b) AK Steel's long-term contracts to sell its products were a detriment in times of rising spot market prices as AK Steel was committed to selling product at below market prices;

(c) The majority of AK Steel's long-term contracts with its customers could not be renegotiated to provide for significantly higher prices which, assuming steel prices continued to increase, would result in a deterioration in AK Steel's 2000 earnings;

(d) The issues with the United Steelworkers in the Mansfield facility were much more serious than disclosed and would be a significant problem for AK Steel going forward until the issues were resolved; and

(e) As a result of the above, there was no way AK Steel would be able to report

EPS of $2.25+ in 2000.

80. On January 25, 2000, AK Steel stock closed at $16-3/16 per share. After the close oftrading on January 25, 2000, AK Steel shocked the markets when it reported its 4thQ and year end

1999 results and said it expected operating costs in 2000 to be significantly higher than in 1999. The release stated:

-28- Higher Raw Material Costs To Impact 2000 Results

The company said it anticipates operating costs to be substantially higher in 2000 than in 1999, primarily due to increased raw material costs. In particular, AK Steel said prevailing prices for steel scrap and certain blast furnace additives, as well as purchased semi-finished carbon steel slabs, began to escalate late in 1999 and are continuing to rise. As a result, AK Steel expects its aggregate costs for these materials to be approximately $100 million more in 2000 than in 1999. The company said that, where possible, it will seek to offset a portion of the higher costs with increased productivity, enhanced product mix and price improvements in the spot market.

81. Analysts were shocked and immediately cut their 2000 EPS forecasts for AK Steel:

Deutsche Bank (from $2.25 to $1.50), J.P. Morgan (from $2.55 to $1.35), CS First Boston (from

$2.24 to $1.38), ABN Amro, Inc. (from $2.03 to $1.04), Donaldson, Lufkin & Jenrette (from $2.25 to $1.25), and Lehman Brothers (from $2.20 to $1.20). Donaldson, Lufkin & Jenrette specifically stated:

On a pretax basis, earnings were 30.5% below our forecast. Furthermore, the outlook for this year is significantly worse than previously expected. Management has guided that their contract prices, which cover about 75% of total shipments, will be down 1% and that operating expenses will be $100 million higher than previously expected due to escalation in a number of purchased consumables. We find both of these issues surprising as we have heard from other sources that contract pricing will be up slightly this year and believe that perhaps ASK is paying a price to place the increased available tonnage from the Rockport facility. On the cost side, we acknowledge that scrap and slab prices have been rising with the recovery in steel selling prices, but both remain well below the highs seen prior to the import crisis. As an example, we expect slab selling prices on an FOB basis to average around $205 per ton this year compared to $230 in 1997. Expenses related to the continuing strike at Mansfield will likely run $10-12 million in the first quarter and will remain a drag until at least mid-year absent a settlement. There are also two equipment outages now scheduled for the first quarter that will raise costs by $25 million.

82. Upon these revelations, AK Steel stock collapsed to a low of $11-1/2 on January 26,

2000, on huge volume of 9.3 million shares. AK Steel's stock price has not recovered and currently trades at below $11 per share.

83. On February 25, 2000, AK Steel filed its 1999 Form 10-K which included a new disclosure compared to the 1998 Form 10-K which disclosed the adverse effect of its long-term contracts with customers:

AK Steel is party to agreements with all of its major automotive and most appliance industry customers with terms that range from one to three years. These agreements, which are typically finalized late in the year, set forth prices to be paid for each product category during each year of their term, and, except for nickel and chrome, where surcharges may be passed on to the customer, do not permit

-29- adjustment to reflect changes in prevailing market conditions or raw material costs. During 1999, approximately 75% of AK Steel's sales of flat-rolled steel products were made pursuant to these agreements , with the balance being made at market prices at the time of sale.

84. On March 8, 2000, the United Steelworker' s issued a press release entitled "Letter to

AK Shareholders," which stated in part:

"Dear AK Steel Shareholder:

"We write to you regarding a matter of great urgency and common concern. All is not well with your company and our employer, AK Steel.

"As you know, on September 1, 1999 AK Steel locked out 650 members of the United Steelworkers ofAmerica Local 169 at their Mansfield, Ohio facility. This provocative attack on the Company's loyal workforce has caused significant yet totally unnecessary hardships for AK's employees, communities, shareholders and other stakeholders.

"The USWA did not want this dispute with AK Steel. In fact, before Local 169's contract expired, the union membership offered to continue working at the Mansfieldplant while the contract differences with management were worked out - an offer that remains on the table today. Yet, despite the union's offer, management has chosen to lock out the 650 workers who set plant records for production and profits in 1998. Both before and after the lockout began, the Union has modified its position and made concrete proposals to address each of the company's stated concerns. Unfortunately, at this point it appears that AK has no interest in reaching an agreement to end this dispute.

"Since management locked out its unionized employees at Mansfield and attempted to run the facility with inexperienced replacement workers, the Company's owners have seen the value of their Company reduced by approximately 60%, a destruction of over $1.3 Billion of shareholder value. While the stock's performance is obviously related to many factors, it is clear that, in addition to the direct losses, the situation at Mansfield has diverted Management's focus away from some very important challenges facing the Company. An AK Management with its eye on the ball would not have let the Company's problems with raw material pricing and maintenance outages get away from them as they have.

"And regardless of whether you agree with our estimate that the lockout is directly costing AK over $20 million per quarter, or accept Morgan Stanley's more conservative loss estimate of $15-16 million, the lockout is clearly irrational from a shareholder perspective.

"What has management been telling you about the impact of the lockout on AK Steel's performance? We believe that the answer is surprisingly little. AK's position has been that the lockout costs are minimal, production is normal and the dispute will be settled quickly and in the company's favor. Obviously this has not occurred.

"Of course, AK management does not want you to know the real story - and they have gone to extraordinary lengths to ensure that you do not find out. As evidence of this, two highly respected, independent sources confirm that

-30- management has even sought to silence the Wall Street analysts on whom' the market relies to make informed investment decisions:

• Waldo Best, an analyst with Morgan Stanley Dean Witter, New York, said he and other analysts had been asked byAKSteel not to talk about the lockout until the labor matter was resolved. American Metal Market, January 11, 2000

• Another steel analyst, who has been conveying similar information to one of his firm's money management clients, says AK Steel's labor difficulties - the company has been battling the United Steelworkers of America - are horrendous. He likens it to the kind of labor strife that in the past has put some other companies out of business. He also says he hasn 't published anything on the severity ofthe labor problems, based on clear intimations from the company that ifhe does it will cut offall contact with him. Wall Street commentator Dan Dorfman in his Streetside column, January 24, 2000

"In a blatant attempt at damage control, AK management subsequently invited Morgan Stanley's Best to be the first non-AK Steel person to tour the Mansfield plant since the USWA lockout began. Following his carefully orchestrated tour, Best issued a glowing report on January 24 - one day before management dropped its earnings bombshell - that the plant was running at above pre-lockout operating rates and producing high quality ferritic sheet. But he also warned investors that fourth quarter lockout costs would be $15-16 million rather than the $12-14 million 'guidance.'

"Management's effort to suppress the bad news finally collapsed -- along with AK's stock price -- when it announced its disappointing fourth quarter earnings on January 25. Reported earnings of 38 cents per share may have been in line with Wall Street's most recent consensus estimate, but only because the leading analysts had already cut their estimates drastically during the quarter. Citing lockout-related costs, JP Morgan lowered its fourth quarter estimate from $0.55 to $0.36 on November 4, Morgan Stanley Dean Witter cut its estimate from $0.60 to $0.38 on December 6, and Deutsche Banc Alex Brown dropped its estimate from $0.78 to $0.40 on December 8.

"What really caught many investors and analysts by surprise on January 25, however, was the Company's belated revelation that the outlook for 2000 would be far worse than they had previously been led to believe. In addition to higher raw material costs, mainly for scrap and semi-finished slab, management said that two previously undisclosed first quarter maintenance outages would contribute to substantially higher operating costs. Clearly stunned by management's failure to disclose the outages and their resulting impact sooner, JP Morgan warned clients that 'AK's reputation as providing consistent accurate guidance makes this sudden downward adjustment even more striking.'

"AK's management confronts a number of daunting challenges this year, including integrating the Armco acquisition, managing the company's soaring raw material costs and ramping up the $1.1 billion Rockport Works which, despite its timely start-up, is rumored to be suffering serious problems with regard to product volume and quality. Continuing to prosecute a bitter and irrational lockout at Mansfield will only divert management from these formidable tasks.

-31- "We believe that the Mansfield lockout is only one of several matters about which management has not been forthright with the Company's owners. We encourage you to ask your Company the following questions:

• What has been and is expected to be the full impact of the Mansfield lockout on AK Steel, including its financial costs, operational impacts and estimated executive management time consumed with lockout-related matters?

• Why has management sought to prevent equity analysts from discussing the Mansfield dispute?

• Why did management fail to disclose two first quarter maintenance outages on a timely basis?

• What has been and is expected to be the operating performance of the Rockport Works, including operating rates, product quality (including seconds and reject rates) and volume?

"The Management of AK Steel appears to be making a calculated gamble (with your money) that they will eventually be able to beat the Steelworkers Union. Other steel industry managements have made similar gambles with shareholder resources and all have ultimately failed: USX, WCI, Allegheny-Ludlum, Wheeling-Pittsburgh and others have all learned the folly of confronting us.

"At some point AK Management, just like others before it, will realize that we will never be beaten. Although we have endured a difficult winter without work, we remain committed to our principles. We are certain that you will grow weary of seeing the value ofyour shares erode long before we will accept an unjust settlement. Management's resorting to terror tactics with its employees has only strengthened our resolve.

"We hope that Management's strategy ofobfuscation with its shareholders has not distracted you from the reality of the situation at AK. The Company continues to throw money away on a confrontational strategy with its employees that is clearly failing.

"The only question that now remains is how much more of your money AK Management will waste as they dig themselves an ever deeper hole.

"To stay updated on the Mansfield dispute, feel free to visit the AK dispute web page at http://www.uswa.org/news/armco/armcoindex.html.

"We will be in touch in the coming weeks.

Sincerely,

/s/ Mark Robertson /s/ David McCall President, USWA Local Union 169 Director, USWA District 1"

85. The reaction to AK Steel's disclosures after it had completed the merger with Armco

and convinced Armco Note holders to not exercise their repurchase option is shown in the following chart:

-32- AK Steel Holding Corporation July 1, 1999 - March 22, 2000 Daily Share Prices

AK Steel announces 30 2ndQ99 results, tells analysts demand strong; analysts forecast 2000 AK Steel completes merger EPS of $2.70 with Armco

25 AK Steel announces huge shortfall in expected 2000 results; analysts now forecast 2000 EPS of $1.25-1.30

20

m 75 15 AK Steel's largest 0 shareholder sells 3 million shares of AK Steel stock I AK Steel offers cash payment to Armco note 10 holders to consent to not exercise repurchase option

5 07/01 /99 08/09/99 09/15/99 10/21/99 11/29/99 01/05/00 02/11/00 03121100 07/21 /99 08/26/99 10/04/99 11/09/99 12/16/99 01 /25/00 03/02/00

CLASS ACTION ALLEGATIONS

86. This is a class action on behalf of those who purchased or otherwise acquired AK

Steel publicly traded securities between July 15, 1999 and January 25, 2000, excluding defendants

(the "Class"). This action also is brought on behalf of a sub-class of those who held Armco shares as of August 25, 1999 and were thereby entitled to vote to approve the merger with AK Steel (the

"sub-class"). Class members are so numerous that joinder of them is impracticable.

87. Common questions of law and fact predominate and include whether the Individual

Defendants, AK Steel and the Armco Defendants: (i) violated the 1934 Act; (ii) omitted and/or misrepresented material facts; (iii) knew or recklessly disregarded that their statements were false; and (iv) artificially inflated AK Steel's stock price and the extent of and appropriate measure of damages.

88. As to the sub-class, common questions of law and fact predominate and include whether defendants violated the 1933 Act in that the Joint Proxy omitted and/or misrepresented material facts and the extent of and appropriate measure of damages.

-33- 89. Plaintiffs' claims are typical of those of the Class, including the sub-class. Prosecution of individual actions would create a risk of inconsistent adjudications. Plaintiffs will adequately protect the interests of the Class. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. CLAIM FOR RELIEF I

For Violations of §10(b) and Rule lOb-5 of the 1934 Act Against AK Steel and Section 20(a) of the 1934 Act against the Individual Defendants

90. Plaintiffs incorporate ¶¶ 1-89. 91. Defendants violated § 10-b and Rule I Ob-5 by: (a) Employing devices, schemes and artifices to defraud; (b) Making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) Engaging in acts, practices and a course of business that operated as a fraud or deceit upon the Class and sub-class in connection with their purchases of AK Steel stock. 92. By virtue of their positions and stock ownership the Individual Defendants are controlling persons of AK Steel, pursuant to §20(a) of the 1934 Act. 93. Class and sub-class members were damaged. In reliance on the integrity of the market, they pad artificially inflated prices for AK Steel stock. CLAIM FOR RELIEF II

For Violations of §11 of the 1933 Act Against Defendants AK Steel, Wardrop, Wainscott and Director Defendants and §15 of the 1933 Act Against Defendant Wardrop and Wainscott

94. Plaintiffs incorporate ¶¶1-15, 24.61 and 80-89. Plaintiffs expressly disclaim any allegations of fraud, knowledge, intent or scienter. 95. Defendants Wardrop, Wainscott and Director Defendants each signed and issued AK Steel's Registration Statement and Joint Proxy Statement/Prospectus ("Joint Proxy") 96. On September 30, 1999, the defendants named in this Claim for Relief completed the merger with Armco issuing 41 million shares of AK Steel stock to Armco shareholders.

-34- 97. In fact, the Joint Proxy was false and misleading as it omitted at least the following important facts and conditions which undermined the positive statements about Armco and AK Steel and the future combined company:

(a) The increasing prices of steel in the spot markets was actually a negative factor for AK Steel as the Company had moved away from long-term contracts for raw materials which meant that increases in spot market prices would cause AK Steel's costs to increase;

(b) AK Steel's and Armco's long-term contracts to sell its products were a detriment in times of rising spot market prices as AK Steel was committed to selling product at below market prices and thus AK Steel's long-term prospects would not be helped by the merger;

(c) The majority of AK Steel's long-term contracts with its customers could not be renegotiated to provide for significantly higher prices which, assuming steel prices continued to increase, would result in a deterioration in AK Steel's 2000 earnings; and

(d) The Company had serious issues with the United Steelworkers in the

Mansfield facility which were much more serious than disclosed and would be a significant problem for AK Steel going forward until the issues were resolved.

CLAIM FOR RELIEF III

For Violation of §14(a) of the 1934 Act and Rule 14a-9 Against AK Steel, the Individual Defendants, Will and the Director Defendants

98. Plaintiffs incorporate ¶¶1-15, 24-61 and 80-89. Plaintiffs expressly disclaim any allegations of fraud, knowledge, intent or scienter.

99. AK Steel, the Individual Defendants, Will and the Director Defendants violated

§ 14(a) ofthe 1934 Act and Rule 14a-9 in that these defendants solicited proxies or permitted the use of their names to solicit proxies from the sub-class by means of the Joint Proxy that contained statements which, at the time and in the light of the circumstances under which they were made, were false and misleading with respect to material facts, and omitted to state material facts necessary in order to make the statements therein not false or misleading.

-35- 100. The proxy solicitations were an essential link for the merger since the merger required a majority vote by the shareholders of Armco since the officers and directors ofthe company did not own or control a majority of the shares.

101. The Joint Proxy and other oral proxy statements pleaded contained untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. Defendants were negligent in making those statements and/or permitting them to be made.

102. As a result, the sub-class was denied the opportunity to make an informed decision in voting on the merger, and received a smaller stake in the combined company than they otherwise would have had the information been disclosed, and have been damaged due to the harm inflicted on their equity ownership of Armco.

103. The sub-class suffered damages as a result ofthe merger which was approved through the use of a proxy in violation of § 14(a) of the 1934 Act and Rule 14a-9 thereunder.

PRAYER

WHEREFORE, plaintiffs pray for judgment as follows: declaring this action to be a proper class action; awarding damages, including interest, costs and attorneys' fees; and such other relief as the Court may deem proper.

JURY DEMAND

Plaintiffs demand a trial by jury.

DATED: tKit 1-g w^ STRAUSS & TROY RICHARD S. WAYNE (0022390) WILLIAM K. FLYNN (0029536)

RICHARD S. WAYNE

Federal Reserve Building 150 East Fourth Street Cincinnati, OH 45202-4018 Telephone: 513/621-2120

Liaison Counsel

-36- MILBERG WEISS BERSHAD HYNES & LERACH LLP WILLIAM S. LERACH HELEN J. HODGES TRICIA L. McCORMICK 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058

Lead Counsel for Plaintiffs

Charles J. Pivin, Esq. Law Offices of Charles J. Pivin, P.A. The World Trade Center-Baltimore Suite 2525, 401 E. Pratt Street Baltimore , MD 21202

Steven E. Cauley, Esq. Cauley & Geller, LLP 11311 Arcade Drive, Suite 201 Little Rock, AR 72212

Jeffrey R. Krinsk, Esq. Finkelstein & Krinsk 501 West Broadway, Suite 1250 San Diego, CA 92101

Fred T. Isquith, Esq. Shane T. Rowley, Esq. Wolf Haldenstein Alder Freeman & Herz LLP 270 Madison Avenue New York, NY 10016

- 37- CERTIFICATE OF SERVICE

I hereby certify that a true and accurate copy of the foregoing was served upon the Attorney for Defendants , David C. Horn, Esq ., Frost & Jacobs , 2500 PNC Center, 201 East Fifth Street , P.O. Box 5717, Cincinnati, OH 45201-5715 by ordinary U.S. mail, postage prepaid, on this ZJ day of Au j u _t 2000.

Richard S. Wayne

314146_I .DOC

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