-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mBgS1tajO7+hTXs23BF/hlr8NPBCzGzZu1YyhlJjptnnu7xC9mm8ImgpkxbaCFY9 KAABcfmbiF+HxJm4J8qz1A== 0000950131-94-001273.txt : 19940817 0000950131-94-001273.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950131-94-001273 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL STEEL CORP CENTRAL INDEX KEY: 0000070578 STANDARD INDUSTRIAL CLASSIFICATION: 3312 IRS NUMBER: 250687210 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00983 FILM NUMBER: 94542820 BUSINESS ADDRESS: STREET 1: 4100 EDISON LAKES PARKWAY CITY: MISHAWAKA STATE: IN ZIP: 465453440 BUSINESS PHONE: 2192737000 MAIL ADDRESS: STREET 1: 4100 EDISON LAKE PARKWAY CITY: MISHAWAKA STATE: IN ZIP: 46545-3440 10-Q 1 FORM 10-Q 1994 SECOND QUARTER F O R M 1 0 - Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-983 NATIONAL STEEL CORPORATION (Exact name of registrant as specified in its charter) Delaware 25-0687210 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4100 Edison Lakes Parkway, Mishawaka, IN 46545-3440 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): 219-273-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- The number of shares outstanding of the Registrant's Common Stock $.01 par value, as of July 28, 1994, was 36,364,434 shares. NATIONAL STEEL CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE ---- Statements of Consolidated Income - Three Months Ended June 30, 1994 and 1993 3 Statements of Consolidated Income - Six Months Ended June 30, 1994 and 1993 4 Consolidated Balance Sheets - June 30, 1994 and December 31, 1993 5 Statements of Consolidated Cash Flows - Six Months Ended June 30, 1994 and 1993 6 Statements of Changes in Consolidated Stockholders' Equity and Redeemable Preferred Stock-Series B - Six Months Ended June 30, 1994 and Year Ended December 31, 1993 7 Notes to Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION Legal Proceedings 14 Submission of Matters to a Vote of Security Holders 16 Exhibits and Reports on Form 8-K 16 2 PART I. - FINANCIAL INFORMATION NATIONAL STEEL CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (In Thousands of Dollars, Except Per Share Amounts) (Unaudited)
THREE MONTHS ENDED JUNE 30, 1994 1993 -------- -------- NET SALES $650,682 $622,684 Cost of products sold 573,919 568,962 Selling, general and administrative 31,132 31,850 Depreciation, depletion and amortization 35,589 34,333 Equity (income) loss of affiliates (209) 526 -------- -------- INCOME (LOSS) FROM OPERATIONS 10,251 (12,987) Financing costs Interest and other financial income (973) (704) Interest and other financial expense 15,778 16,282 -------- -------- 14,805 15,578 -------- -------- LOSS BEFORE INCOME TAXES (4,554) (28,565) Income tax credit (5,395) (11,102) -------- -------- NET INCOME (LOSS) 841 (17,463) Less: preferred stock dividends 2,740 3,489 -------- -------- Net loss applicable to common stock $ (1,899) $(20,952) ======== ======== PER SHARE DATA APPLICABLE TO COMMON STOCK: NET LOSS APPLICABLE TO COMMON STOCK $ (.05) $ (.58) ======== ======== Weighted average shares outstanding (in thousands) 36,361 36,295
See notes to consolidated financial statements. 3 NATIONAL STEEL CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (In Thousands of Dollars, Except Per Share Amounts) (Unaudited)
SIX MONTHS ENDED JUNE 30, 1994 1993 (RESTATED) ---------- --------------- NET SALES $1,273,420 $1,210,082 Cost of products sold 1,145,578 1,126,370 Selling, general and administrative 67,558 67,279 Depreciation, depletion and amortization 69,690 68,060 Equity (income) loss of affiliates 14 (918) Unusual gain (110,972) _ ---------- ---------- INCOME (LOSS) FROM OPERATIONS 101,552 (50,709) Financing costs Interest and other financial income (1,554) (972) Interest and other financial expense 31,974 32,457 ---------- ---------- 30,420 31,485 ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 71,132 (82,194) Income tax credit (7,720) (11,066) ---------- ---------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 78,852 (71,128) Cumulative effect of accounting change - 16,453 ---------- ---------- NET INCOME (LOSS) 78,852 (87,581) Less: preferred stock dividends 5,480 7,852 ---------- ---------- Net income (loss) applicable to common stock $ 73,372 $ (95,433) ========== ========== PER SHARE DATA APPLICABLE TO COMMON STOCK: INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 2.02 $ (2.52) Cumulative effect of accounting change - (.52) ---------- ---------- NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ 2.02 $ (3.04) ========== ========== Weighted average shares outstanding (in thousands) 36,361 31,397
See notes to consolidated financial statements. 4 NATIONAL STEEL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars, Except Share Amounts) (Unaudited)
ASSETS JUNE 30, DECEMBER 31, 1994 1993 ---------- ---------- Current assets Cash and cash equivalents $ 82,141 $ 5,322 Receivables - net 265,110 224,709 Inventories: Finished and semi-finished products 255,421 246,285 Raw materials and supplies 85,849 124,812 ---------- ---------- 341,270 371,097 ---------- ---------- Total current assets 688,521 601,128 Investments in affiliated companies 57,753 58,278 Property, plant and equipment 3,367,009 3,296,792 Less: Allowances for depreciation, depletion and amortization 1,946,168 1,898,055 ---------- ---------- 1,420,841 1,398,737 Other assets 256,154 246,057 ---------- ---------- TOTAL ASSETS $2,423,269 $2,304,200 ========== ========== LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 190,642 $ 242,294 Accrued liabilities 353,827 303,981 Long-term obligations and related party indebtedness due within one year 26,438 28,257 ---------- ---------- Total current liabilities 570,907 574,532 Long-term obligations 386,185 344,096 Long-term indebtedness to related parties 323,327 329,995 Other long-term liabilities 812,236 797,585 Redeemable Preferred Stock - Series B 67,280 68,030 Stockholders' equity Common Stock - par value $.01: Class A - authorized 30,000,000 shares; issued and outstanding 22,100,000 shares 221 221 Class B - authorized 65,000,000 shares; issued and outstanding 14,261,100 shares 143 143 Preferred Stock - Series A 36,650 36,650 Additional paid-in-capital 360,314 360,314 Retained deficit (133,994) (207,366) ---------- ---------- Total stockholders' equity 263,334 189,962 ---------- ---------- TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY $2,423,269 $2,304,200 ========== ==========
See notes to consolidated financial statements. 5 NATIONAL STEEL CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (In Thousands of Dollars) (Unaudited)
SIX MONTHS ENDED JUNE 30, 1994 1993 (RESTATED) ----------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 78,852 $(87,581) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation, depletion and amortization 69,690 68,060 Carrying charges related to facility sales and plant closings 14,781 17,730 Equity (income) loss of affiliates 14 (918) Dividends from affiliates 900 900 Postretirement benefits 27,590 29,600 Deferred income taxes (10,800) (11,100) Cumulative effect of accounting change - 16,453 Cash provided (used) by working capital items: Receivables (40,401) (29,565) Inventories 29,827 18,033 Accounts payable (51,652) (54,881) Accrued liabilities 23,517 22,186 Other 5,981 (10,041) ----------- -------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 148,299 (21,124) ----------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and equipment (90,105) (39,765) ----------- -------- NET CASH USED BY INVESTING ACTIVITIES (90,105) (39,765) ----------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Class B Common Stock - 141,432 Redemption of Series B Redeemable Preferred Stock - (67,804) Debt repayments (54,348) (12,403) Borrowings 87,950 40,541 Payment of released Weirton benefit liabilities (8,979) (11,530) Dividend payments on Preferred Stock-Series A (1,999) (1,998) Dividend payments on Preferred Stock-Series B (87) (1,422) Payment of unreleased Weirton liabilities and their release in lieu of cash dividends on Preferred Stock-Series B (3,912) (6,567) ----------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 18,625 80,249 ----------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 76,819 19,360 Cash and Cash Equivalents, Beginning of the Period 5,322 55,220 ----------- -------- CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 82,141 $ 74,580 =========== ======== See notes to consolidated financial statements.
6 NATIONAL STEEL CORPORATION AND SUBSIDIARIES STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK - SERIES B (In Thousands of Dollars, Except Share Amounts) (Unaudited)
REDEEMABLE COMMON COMMON PREFERRED ADDITIONAL RETAINED TOTAL PREFERRED STOCK - STOCK - STOCK - PAID-IN- EARNINGS STOCKHOLDERS' STOCK - SERIES A SERIES B SERIES A CAPITAL (DEFICIT) EQUITY SERIES B -------- -------- ----------- ---------- --------- ------------- --------- BALANCE AT JANUARY 1, 1993 $255 $ - $36,650 $218,991 $ 70,795 $ 326,691 $137,802 Net loss (258,861) (258,861) Redemption of Redeemable Preferred Stock - Series B (67,804) Amortization of excess of book value over redemption value of Redeemable Preferred Stock - Series B 1,968 1,968 (1,968) Cumulative dividends on Preferred Stocks - Series A and B (15,332) (15,332) Issuance of Common Stock - Class B 109 141,323 141,432 Conversion of 3,400,000 shares of NII Common Stock - Class A to Common Stock - Class B (34) 34 Minimum pension liability (5,936) (5,936) ---- ---- ------- -------- --------- --------- -------- BALANCE AT DECEMBER 31, 1993 $221 $143 $36,650 $360,314 $(207,366) $ 189,962 $ 68,030 Net Income 78,852 78,852 Amortization of excess of book value over redemption value of Redeemable Preferred Stock - Series B 750 750 (750) Cumulative dividends on Preferred Stocks - Series A and B (6,230) (6,230) ---- ---- ------- -------- --------- --------- -------- BALANCE AT JUNE 30, 1994 $221 $143 $36,650 $360,314 $(133,994) $ 263,334 $ 67,280 ==== ==== ======= ======== ========= ========= ========
See notes to consolidated financial statements. 7 NATIONAL STEEL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements of National Steel Corporation and its majority owned subsidiaries (the "Company") presented herein are unaudited. However, in the opinion of management, such statements include all adjustments necessary for a fair presentation of the results for the periods indicated. All such adjustments made, except for the unusual gain which is discussed in Note 2, were of a normal recurring nature. The financial results presented for the three and six month periods ended June 30, 1994 are not necessarily indicative of results of operations for the full year. The Annual Report of the Company on Form 10-K for the year ended December 31, 1993 (the "1993 Form 10-K") contains additional information and should be read in conjunction with this report. Financial information for the first six months of 1993 has been retroactively restated to reflect the implementation of Statement of Financial Accounting Standards No. 112, "Employer's Accounting for Postemployment Benefits", which the Company adopted during the fourth quarter of 1993. Certain items in prior years have been reclassified to conform with current year presentation. NOTE 2 - UNUSUAL GAIN On January 24, 1994, the United States Supreme Court denied the Bessemer & Lake Erie Railroad's ("B&LE") petition for certiorari in the Iron Ore Antitrust Litigation, thus sustaining the Company's judgment against the B&LE. On February 11, 1994, the Company received $111.0 million, including interest, in satisfaction of this judgment, which was recorded as an unusual gain in the first quarter of 1994. The Company used $25.2 million of the proceeds to repurchase a portion of its outstanding First Mortgage Bonds. Pursuant to the terms of the 1993 labor agreement between the Company and the United Steelworkers of America (the "USWA"), approximately $11 million of the proceeds will be deposited into a Voluntary Employee Benefits Association trust (the "VEBA Trust") established to fund the Company's retiree healthcare obligation ("OPEB") with respect to USWA represented employees. The Company expects to use remaining proceeds for working capital and general corporate purposes. The Company did not recognize any income taxes associated with these proceeds, other than alternative minimum tax of $3.1 million, as regular federal income tax expense was offset by the utilization of previously reserved tax assets. NOTE 3 - NATIONAL STEEL PELLET COMPANY As discussed in the 1993 Form 10-K, National Steel Pellet Company, a wholly- owned subsidiary of the Company ("NSPC"), was temporarily idled in October 1993, following a strike by the USWA on August 1, 1993, and the subsequent decision to satisfy the Company's iron ore pellet requirements from external sources. At December 31, 1993, it was the previous managements' intention (See Managements Discussion and Analysis-Other) to externally satisfy its iron ore pellet requirements for a period in excess of two years, which would have caused NSPC to remain idle for that period. The Company determined that in accordance with Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies", a contingent liability of $108.6 million relating to the idle period had been incurred which was recorded as an unusual charge during the fourth quarter of 1993. This charge was primarily comprised of employee benefits such as pensions and OPEBs, along with expenses related to the idle period. Effective June 1, 1994, the Company's Board of Directors appointed a new Chief Operating Officer and President, a new Chief Financial Officer and a new Vice President of Human Resources. Earlier in the year, there were new USWA presidents elected at both the international and local levels. In an effort to revitalize the cooperative partnership approach to labor relations that existed between the USWA and the Company since the 1986 labor agreement, the new executive 8 officers deemed it appropriate to reconsider the decisions leading to the 1993 idling. It was determined that if a $4 per gross ton reduction in pellet production costs could be achieved, the facility could be reopened on a cost effective basis. After a series of negotiations, a settlement agreement was reached between the USWA and NSPC. This agreement, which is pending Board approval and labor ratification, set the stage for negotiations with other stakeholders such as public utilities, transportation companies, royalty holders and suppliers and led to the achievement of the $4 reduction in production costs. On July 22, 1994, NSPC announced that it will re-open the facility in August 1994. While the final number of employees to elect retirement or remain laid-off has not yet been determined, management estimates that the decision to re-open the facility will result in the restoration of approximately $50 million of the unusual charge recorded in 1993. NOTE 4 - STOCK OPTIONS A reconciliation of the Company's stock option activity for 1994 is as follows:
EXERCISE NUMBER PRICE OF OPTIONS (WEIGHTED AVERAGE) ---------- ------------------ Balance outstanding at January 1, 1994 584,168 $13.99 Granted 303,500 14.00 Exercised - Forfeited (155,139) Balance outstanding at June 30, 1994 732,529 $14.00 ======== Exercisable at June 30, 1994 229,029 ========
Outstanding stock options did not enter into the determination of earnings per share for 1994 as their effect was not dilutive. NOTE 5 - RECEIVABLES PURCHASE AGREEMENT Effective May 16, 1994, the Company entered into a Purchase and Sale Agreement with National Steel Funding Corporation ("NSFC"), a newly created wholly-owned subsidiary. Effective on that same date, NSFC entered into a Receivables Purchase Agreement with a group of twelve banks. The total commitment of the banks is $180 million, including up to $150 million in letters of credit. To implement the arrangement, the Company sold substantially all of its accounts receivable, and will sell additional receivables as they are generated, to NSFC. NSFC will finance its ongoing purchase of receivables from a combination of cash received from receivables already in the pool, short-term intercompany notes and the cash proceeds derived from selling interests in the receivables to the participating banks from time to time. The Certificates of Participation sold to the banks by NSFC have been rated AAA by Standard & Poor's Corporation, resulting in lower borrowing costs to the Company. As of June 30, 1994 no funded participation interests had been sold under the facility, although $89.4 million in letters of credit had been issued. With respect to the pool of receivables at June 30, 1994, after reduction for letters of credit outstanding, the amount eligible for sale was $83.9 million. During the period May 16, 1994 through June 30, 1994, the eligible amount ranged from $79.6 million to $90.6 million. The banks commitments are scheduled to expire on May 16, 1997, subject to renewal of the agreement. The Company will continue to act as servicer of the assets sold into the program and will continue to make billings and collections in the ordinary course of business according to established practices. The Company terminated its revolving secured credit facility, which included a letter of credit facility on May 16, 1994. On that same date, the Company also terminated it subordinated loan agreement with a U.S. subsidiary of NKK Corporation. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - - --------------------- COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993 Net Sales - - --------- Net sales for the second quarter of 1994 increased 4.5% to $650.7 million compared to $622.7 million for the same period in 1993. This increase is attributable to an increase in realized selling prices, coupled with a favorable shift in product mix from lower priced secondary products to higher priced prime products. These improvements more than offset the effects of a .7% decrease in shipments. Steel shipments for the current period were 1,274,000 tons compared to 1,283,000 tons shipped during the same 1993 period. Raw steel production totaled 1,434,000 tons, a 4.8% increase from the 1,368,000 tons produced in the second quarter of 1993. Cost of Products Sold - - --------------------- The Company's cost of products sold as a percentage of net sales decreased from 96.9% in the second quarter of 1993 to 93.7% in the same 1994 period. In addition to the factors discussed above, operating performance improvements such as a reduction in manhours per net ton shipped, as well an upward trend in yields were among the more significant factors contributing to lower costs in the second quarter. Consequently, gross profit as a percentage of net sales grew from 3.1% in the second quarter of 1993 to 6.3% for the same 1994 period. Net Income and Third Quarter 1994 Anticipated Results - - ----------------------------------------------------- During the second quarter of 1994, the Company recorded operating and net income of $10.3 million and $.9 million, respectively. This compares to operating and net losses of $13.0 million and $17.4 million, respectively, for the same 1993 period. Excluding the effect of accounting changes and an unusual gain, the second quarter of 1994 represents the Company's first profitable quarter in two years. Management attributes this return to profitability to a number of corrective actions aimed at reducing product costs and improving product quality and delivery performance, along with improvements in realized selling prices. (See Other - Change in Management) The Company believes that continued cost reduction efforts together with a strong market will result in a net profit for the third quarter of 1994. National Steel Pellet Company - - ----------------------------- See Note 3 to the financial statements regarding the July 22, 1994 decision to re-open NSPC. 10 COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993 Net Sales - - --------- Net sales for the first half of 1994 totaled $1.27 billion, a 5.2% increase when compared to 1993. This increase was attributable to both an increase in realized selling prices, as well as an improvement in product mix from lower priced secondary products to higher priced prime products. Steel shipments for the first half of 1994 were 2,507,000 tons, a 2.9% decrease from the 2,582,000 tons shipped during the corresponding 1993 period. This slight decrease in volume was more than offset by the improvement in product mix and selling prices. Raw steel production increased to 2,795,000 tons, a .3% increase from the 2,787,000 tons produced during the six month period ended June 30, 1993. Cost of Products Sold - - --------------------- Cost of products sold as a percentage of net sales decreased from 98.7% in the first half of 1993 to 95.4% for the corresponding 1994 period. This decrease is reflective of improvements in realized selling prices, product mix and performance yields, as well a reduction in product costs. Correspondingly, gross profit as a percentage of net sales grew from 1.3% in the first half of 1993 to 4.6% for the same 1994 period. Unusual Item - - ------------ As discussed in the 1993 Form 10-K, the Company received approximately $111.0 million of proceeds, including interest, in the first quarter of 1994 from the B&LE judgment and, as such, recognized an unusual gain upon its receipt. The Company utilized $25.2 million of the proceeds to repurchase a portion of its outstanding First Mortgage Bonds. Pursuant to the labor agreement reached between the Company and the USWA in 1993, $11 million of the proceeds will be deposited into a VEBA Trust established to prefund the Company's OPEB obligation with respect to USWA represented employees. The remaining proceeds will be used for working capital and general corporate purposes. The Company did not recognize any income taxes associated with these proceeds, other than alternative minimum taxes of $3.1 million, as regular federal income tax expense was offset by the utilization of previously reserved tax assets. OTHER Change in Management - - -------------------- Effective June 1, 1994, the Company's Board of Directors appointed the following individuals to serve as executive officers of the Company: Name Position - - ------------------ ---------------------------------------------------------- V. John Goodwin Director, President and Chief Operating Officer Robert M. Greer Senior Vice President and Chief Financial Officer David A. Pryzbylski Vice President-Human Resources and Secretary Hiroshi Matsumoto Director, Vice President and Assistant to the President George D. Lukes Vice President-Quality Assurance and Customer Satisfaction David L. Peterson Vice President and General Manager, Great Lakes Division Robert G. Pheanis Vice President and General Manager, Midwest Division Messrs. Goodwin, Greer, Pryzbylski, Lukes, Peterson and Pheanis were formerly employed by USX Corporation's Gary Works. Prior to joining the Company, Mr. Matsumoto was employed by a U.S. subsidiary of NKK Corporation. Effective June 30, 1994, Yoshito Tokumitsu submitted his resignation as a Director of the Company. 11 LIQUIDITY AND SOURCES OF CAPITAL - - -------------------------------- The Company's liquidity needs arise primarily from capital investments, working capital requirements and principal and interest payments on its indebtedness. In addition to the Company's 1993 initial public offering of common stock, the Company has satisfied these liquidity needs with funds provided by long-term borrowings and cash provided by operations. On January 24, 1994, the United States Supreme Court denied the B&LE's petition for certiorari in the Iron Ore Antitrust Litigation, thus sustaining the Company's judgment against the B&LE. On February 11, 1994, the Company received approximately $111 million, including interest, in satisfaction of this judgment. Cash and cash equivalents totaled $82.1 million at June 30, 1994 as compared to $5.3 million at December 31, 1993. This increase is primarily the result of the B&LE judgment, net of certain uses of the B&LE proceeds. Most significantly, the Company used $25.2 million of the proceeds to repurchase a portion of the Company's outstanding 8.375% First Mortgage Bonds on March 31, 1994. The Company will use remaining B&LE proceeds for working capital and general corporate purposes. Cash Flows from Operating Activities For the six months ended June 30, 1994, cash provided from operating activities increased by $169.4 million compared to the same 1993 period. This increase was primarily attributable to the receipt of $111.0 million of proceeds from the B&LE judgment along with an improvement in net income (See Results of Operations). The impact of working capital items reduced cash flows by $38.7 million for the six month period. A decrease in accounts payable had the most significant negative effect, due primarily to the timing of cash disbursement clearings. Additionally, an increase in accounts receivable had a negative cash flow impact due to higher shipments during the second quarter when compared to the previous fourth quarter. Inventories and accrued liabilities had smaller cash flow effects, and served to partially offset the aforementioned changes. Cash Flows from Investing Activities Capital investments for the first half of 1994 and 1993 amounted to $90.1 million and $39.8 million, respectively. This increase is largely attributable to the completion of a pickle line servicing the Great Lakes Division (the "Pickle Line"), which was financed under a turnkey contract and did not become the property of the Company until completion and acceptance of the facility during the first quarter of 1994. The Company plans to invest approximately $84 million during the remainder of 1994 for capital expenditures to improve its plant and equipment. Cash Flows from Financing Activities Financing activities included borrowings for the first half of 1994 and 1993 of $88.0 million and $40.5 million, respectively, representing primarily the commencement of the permanent financing for the Pickle Line and the remaining financing commitment for the rebuild of the No. 5 coke oven battery at the Great Lakes Division, respectively. This increase in borrowings was largely offset by the repurchase of $25.2 million in First Mortgage Bonds and $14.0 million in Series 1985 River Rouge Pollution Control Bonds during the first half of 1994. During the first six months of 1993, the Company completed its initial public offering of common stock, which generated net proceeds of $141.4 million. 12 Sources of Financing The Company's available sources of liquidity consist of a new Receivables Purchase Agreement with commitments of up to $180 million (See Note 5 to the financial statements) and $15 million in uncommitted, unsecured lines of credit (the "Uncommitted Lines of Credit"). On June 30, 1994, there were no cash borrowings outstanding under the Receivables Purchase Agreement and outstanding letters of credit under the new agreement amounted to $89.4 million. On February 7, 1994, the Company borrowed $20 million under various short term loan agreements, all of which was repaid on February 17, 1994. Additionally, in February 1994, the Company borrowed a maximum of $5 million under the Uncommitted Lines of Credit which was repaid later in the month. Total debt and redeemable preferred stock as a percentage of total capitalization decreased to 75.3% at June 30, 1994, as compared to 80.2% at December 31, 1993, as the Company's net income of $78.9 million more than offset the effect of the commencement of the permanent financing of the Pickle Line. 13 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Baker's Port, Inc. v. National Steel Corporation. With respect to the matter involving claims arising out of the sale of land in Texas to Baker's Port, Inc., previously reported in the 1993 Form 10-K and Form 10-Q for the quarter ended March 31, 1994 (the "first quarter Form 10-Q"), the Texas Supreme Court declined to hear any appeals. As a result, the appellate rights available to the parties have been exhausted and the matter has been remanded to the Trial Court for further proceedings. The Trial Court has not yet set a trial date. Detroit Coke Corporation v. NKK Chemical USA, Inc. With respect to the matter involving the claim of Detroit Coke Corporation ("Detroit Coke") that the defendants supplied it with defective coal and coal blends which allegedly caused damage to its coke making facility and environmental problems, previously reported in the 1993 Form 10-K, Detroit Coke filed a motion for leave to amend its complaint to clarify its theories of relief, alleging that certain coal and coke purchase and sale agreements among the parties were one integrated transaction and that it has suffered damages it believes exceed $150,000,000. The Company has previously denied all of the allegations of Detroit Coke and is defending this action. The Company will file a response to Detroit Coke's motion to file a second amended complaint and file an answer to the second amended complaint if Detroit Coke's motion is granted. Management believes that the final disposition of the case will not have a material adverse effect on the Company's financial condition. Donner-Hanna Coke Joint Venture. With respect to the matter previously reported in the 1993 Form 10-K and first quarter Form 10-Q, involving Hanna Furnace Corporation ("Hanna") and the Donner-Hanna Coke Joint Venture ("Donner- Hanna"), on July 8, 1994, the Pension Benefit Guaranty Corporation ("PBGC") filed an application in the United States District Court for the Western District of New York to terminate the Donner-Hanna's hourly pension plan retroactively to July 1, 1991 and the salaried plan retroactively to December 31, 1993. If the Court orders that the Plans be terminated, Hanna will be liable to the PBGC for the underfunding of the Plans. The Court has set a hearing on the PBGC's application for August 17, 1994. Hanna has intervened in this action and will seek to have the Plans terminated as of an earlier date. There has been no funding in 1994 of either of the Plans. Management believes that final disposition of the case will not have a material adverse effect on the Company's financial condition. USX Corporation v. National Steel Corporation. In June of 1994, USX Corporation ("USX") sued the Company, three of its directors, six other individuals who became officers of the Company on June 1, 1994 and NKK Corporation in the Indiana State Court in Hammond, Indiana, alleging that the Company and others misappropriated trade secrets and other confidential information of USX's Gary Works, interfered with USX's relationship with its former employees, and engaged in unfair trade practices involving USX's tin plate and automotive business. The core of the claims is that the Company had hired five management employees and one former management employee of USX's Gary Works ("the six former employees") who had signed confidentiality agreements while employees of USX. None of the six former USX employees had signed employment agreements or covenants not to compete. USX requested injunctive relief and unspecified monetary damages. Following a hearing on the request for the preliminary injunction, the Indiana Trial Court in June of 1994 denied USX's preliminary injunction request, holding that there had been no showing that any of the six former USX employees had misappropriated USX trade secrets or had engaged in any illegal conduct. USX's claims for a permanent injunction and monetary relief remain pending. No material developments have occurred in the litigation since the denial of the request for a preliminary injunction. The Company's counsel is of the opinion that the claims against the Company are without merit and that the outcome of the litigation will not have a material adverse effect on the financial condition of the Company. 14 Environmental Matters The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and similar state superfund statutes generally impose joint and several liability on present and former owners and operators, transporters and generators for remediation of contaminated properties regardless of fault. In addition to the inactive disposal site located at the Great Lakes Division facility previously reported in the 1993 Form 10-K, the Company and certain of its subsidiaries are involved as a potentially responsible party ("PRP") at a number of off-site CERCLA or state superfund site proceedings. The following paragraphs provide updates on previously reported proceedings: Port of Monroe. With reference to the matter involving the Port of Monroe site located in Monroe, Michigan, previously reported in the 1993 Form 10-K and first quarter Form 10-Q, the Michigan Department of Natural Resources ("MDNR") has agreed to a settlement in which it would accept $500,000 in full payment for all response costs incurred by it through October 1993. MDNR also agreed that no interest will be assessed on the $500,000, so long as a payment in full is received prior to the end of September 1994. The terms of the settlement will eventually be embodied in a Consent Decree, a draft of which is currently being reviewed by the various potentially responsible parties. The Company estimates that its share of the settlement payment will be approximately $50,000. NII Sites Lowry Landfill Site. With reference to the matter involving the Lowry Landfill Site in Aurora, Colorado, previously reported in the 1993 Form 10-K, the EPA issued a Special Notice Letter on May 11, 1994 to Alumet alleging that Alumet is a PRP under CERCLA for cleanup of the Lowry Landfill Superfund Site and demanding payment of EPA's past and future response costs. On July 6, 1994, the Alumet Partnership was served with a complaint filed by the City and County of Denver, Waste Management of Colorado, Inc. and Chemical Waste Management, Inc. against multiple companies, including the Alumet Partnership, NII, the Company and Southwire. The complaint has not yet been served on the Company. The complaint alleges that Alumet, NII, Southwire and the Company are liable under CERCLA for the costs of cleaning up the Lowry Landfill. The Company is unable to estimate its potential liability at this site. Other Great Lakes Division - 80 Inch Hot Strip Mill. With reference to this matter involving certain outfalls located at the Great Lakes Division facility, including the outfall at the 80-inch hot strip mill, previously reported in the 1993 Form 10-K and first quarter Form 10-Q, the Coast Guard has issued one additional penalty assessment in the amount of $8,000. Also, by letter dated July 12, 1994, the MDNR requested that the Company submit a comprehensive plan for addressing oil discharges from the 80-inch hot strip mill on or before August 13, 1994. Great Lakes Division - Wayne County Air. With reference to the matter involving alleged violations of air pollution regulations, previously reported in the 1993 Form 10-K, to date, approximately eleven notices of violation have been issued to the Company in 1994 for various process and fugitive emissions sources. The Company is not yet able to estimate its liability with respect to these alleged violations. 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of stockholders was held on April 26, 1994. In connection with the meeting, proxies were solicited pursuant to the Securities Exchange Act. The following are the voting results on proposals considered and voted upon at the meeting, all of which were described in the Company's Proxy Statement dated March 16, 1994. 1. All nominees for director listed in the Proxy Statement were elected. NAME VOTES FOR VOTES WITHHELD -------------------- ---------- -------------- Edwin V. Clarke, Jr. 55,118,318 2,362 Ronald H. Doerr 55,116,518 4,162 Masayuki Hanmyo 55,119,318 1,362 Keisuke Murakami 55,115,518 5,162 Osamu Sawaragi 55,116,518 4,162 Kenichiro Sekino 55,115,518 5,162 Robert J. Slater 55,118,318 2,362 Yoshito Tokumitsu 55,115,518 5,162 2. The proposal to ratify the selection of Ernst & Young as the Company's outside auditors for 1994 passed. (For 55,115,810, abstained 3,158, against 1,712) ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following is an index of the exhibits included in this Report on Form10-Q: 3A Form of Amended and Restated By-laws of the Company, a copy of which is attached hereto. 10-A Amended and Restated Employment Agreement, dated as of May 31, 1994, between the Company and V. John Goodwin, a copy of which is attached hereto. 10-B Amended and Restated Employment Agreement, dated as of May 31, 1994, between the Company and Robert M. Greer, a copy of which is attached hereto. (b) Reports on Form 8-K The Company filed a report on Form 8-K (the "report") on June 27, 1994. The report related to the press release issued on June 1, 1994 announcing the appointment of V. John Goodwin as President and Chief Operating Officer and Robert M. Greer as Senior Vice President and Chief Financial Officer. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL STEEL CORPORATION BY /s/Robert M. Greer ---------------------------------------------- Robert M. Greer, Senior Vice President and Chief Financial Officer BY /s/ Carl M. Apel ---------------------------------------------- Carl M. Apel, Corporate Controller, Accounting and Assistant Secretary Date: August 10, 1994 17 EX-3.II 2 BYLAWS AMENDED AND RESTATED BY-LAWS OF NATIONAL STEEL CORPORATION [Approved by the Board of Directors on May 31, 1994] OFFICES ------- 1. Registered Office. The registered office of National Steel Corporation (the "Corporation") shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof shall be The Corporation Trust Company. 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may determine from time to time, or as the business of the Corporation may require. MEETINGS OF STOCKHOLDERS ------------------------ 3. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. 4. Annual Meetings. The Annual Meeting of Stockholders shall be held on such date and at such time as shall be determined by the Board of Directors and stated in the notice of the meeting, at which meeting the stockholders shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. If the Board of Directors fails to set a time and date for the Annual Meeting, it shall be held on the second Wednesday of May at 10:00 a.m., and if a legal holiday, then on the next following business day. Written notice of the Annual Meeting -1- of Stockholders shall be given in the same manner set forth in Section 39 hereof, at least ten (10) days prior to the meeting to each stockholder entitled to vote thereat. 5. Special Meetings. A Special Meeting of Stockholders, for any purpose or purposes, may be called at any time by the Board of Directors and shall be called by the Chairman of the Board of Directors, the President or the Secretary at the request in writing of stockholders owning at least fifty percent (50%) of the voting power of the capital stock of the Corporation issued and outstanding and entitled to vote thereat. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at all Special Meetings of stockholders shall be confined to the matters specified in the notice of meeting. The place, date and hour of the Special Meeting and the purpose or purposes for which the meeting is called shall be given in the manner set forth in Section 39 hereof at least ten (10) days before such meeting to each stockholder entitled to vote thereat. 6. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, as amended and restated, the holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, but in no event less than one-third of the shares entitled to vote at the meeting, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. 7. Voting. Unless otherwise required by law, the Certificate of Incorporation, as amended and restated, or these By-Laws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the voting power of the capital stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast such number of votes as set forth in the Certificate of Incorporation, as amended and restated, with respect to such capital stock, for each share entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. All proxies shall be filed with the Secretary of the Corporation. The vote for directors, and, upon the demand of any stockholder, the vote upon any question before the meeting shall be cast by written ballot. -2- Each election of directors shall be conducted by one or more inspectors or judges, who may or may not be stockholders, appointed by the chairman of the meeting. The inspectors or judges shall be sworn to the faithful performance of their duties and shall, in writing, certify to the returns. No person who is a candidate for the office of director shall be an inspector or judge. 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, as amended and restated, any action required or permitted to be taken at any Annual or Special Meeting of Stockholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 9. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares by class registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. 10. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 9 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. DIRECTORS --------- 11. Number and Election of Directors. The property and business of the Corporation shall be managed by a Board of Directors, which shall consist of nine (9) directors. Directors need not be stockholders. Except as provided in Section 12, directors shall be elected by a plurality of the votes cast at the Annual Meeting of Stockholders and each director shall be elected to serve until the next Annual Meeting of Stockholders following said director's election and until said director's successor -3- shall be duly elected and qualified, or until said director's earlier resignation or removal. 12. Vacancies. Vacancies in newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the entire Board of Directors, and any other vacancy occurring on the Board of Directors may be filled by a majority of the directors then in office though less than a quorum is present, or by a sole remaining director. The directors so chosen to fill a vacancy shall hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier resignation or removal. 13. Duties and Powers. The Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation, as amended and restated, or by these By-Laws, directed or required to be exercised or done by the stockholders. 14. Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held at such time and at such place as may from time to time be determined by the Board of Directors. Notice of regular meetings shall be given in the manner set forth in Sections 39 and 40 hereof to each director at least five (5) days prior thereto. Special meetings of the Board of Directors may be called by the Chairman or the Secretary and shall be called by the Secretary upon the written request of any three directors. Oral or written notice thereof stating the place, date and hour of the meeting shall be given to each director at least five (5) days before the date of the meeting. 15. Quorum. At all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present and voting at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 16. Actions of the Board. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. 17. Meetings by Means of Conference Telephone. Members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a -4- conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 17 shall constitute presence in person at such meeting. 18. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not the member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have any and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Each committee shall keep regular minutes and report to the Board of Directors when required. 19. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be compensated for their services in such manner as the Board of Directors may determine. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may also be compensated in such manner as the Board of Directors may determine for attending committee meetings. OFFICERS -------- 20. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chairman (who must be a director), a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also designate any Vice Chairman of the Board of Directors (who must be a director) to be an officer and may choose one or more Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers and a Controller. The Board of Directors may designate officers to serve as Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and other such designated positions and to fulfill the responsibilities of such designated positions as may from time to time be assigned by the Board in addition to their duties as officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation, as amended and restated, or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation -5- nor, except in the case of the Chairman and Vice Chairman of the Board of Directors, need such officers be directors of the Corporation. 21. Election. The Board of Directors shall annually elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors, with or without cause. Any vacancy occurring in any of the offices of the Chairman, the President, Secretary or Treasurer shall be filled by the Board of Directors. Any vacancy occurring in any other office may be filled by, or pursuant to authority delegated by, the Board of Directors or may be left unfilled. Officers of the Corporation shall be entitled to receive such compensation for their services as officers as may be fixed by, or pursuant to authority delegated by, the Board of Directors. Each of the compensated officers of the Corporation shall be full-time employees of the Corporation unless the Board of Directors expressly authorizes otherwise. The positions of Chairman and/or Vice Chairman of the Board of Directors may be held by persons who are not full-time employees of the Corporation, in which event such persons will not be compensated by reason of holding such positions; provided that such persons shall be permitted to receive reimbursement for their expenses of attendance at Board and Board committee meetings under Section 19 hereof. 22. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President, and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. 23. Chairman of the Board of Directors. The Chairman of the Board shall preside at all meetings of the Board of Directors. The Chairman shall also perform all such other duties and exercise all such other powers as these By-Laws or the Board of Directors may from time to time prescribe. 24. Vice Chairman. The Vice Chairman of the Board, if there is one, in the absence or disability of the Chairman of the Board, shall perform the duties of the -6- Chairman of the Board and shall perform such other duties as the Board of Directors may from time to time prescribe. 25. President. The President shall preside at all meetings of the stockholders. If the President is a member of the Board, then at the request, or in the absence or disability, of the Chairman or Vice Chairman of the Board of Directors, the President shall preside at meetings of the Board of Directors. Under the direction of the Board of Directors, the President shall have the general management of the business of the Corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect, and, in general, shall perform all duties as are usually incident to the office of president of a corporation. The President shall also perform all such other duties and exercise all such other powers as from time to time may be assigned to the President by these By-Laws or by the Board of Directors. 26. Senior Vice President(s); Vice President(s). The Senior Vice Presidents, if any, and the Vice Presidents shall perform such duties and have such powers as shall be assigned to said officers by the Board of Directors or the President. At the request of the President, or in the event of the President's absence or inability or refusal to act, the Senior Vice President or Vice President designated by the Board of Directors shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. 27. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman or the President. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation, and the Secretary or any other officer of the Corporation shall have authority to affix the same to any instrument requiring it; and when so affixed, it may be attested by the signature of the Secretary or by the signature of any other such officer. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by the Secretary's signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. 28. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep, or cause to be kept, full and accurate accounts of receipts and disbursements in books belonging to the Corporation and kept for that purpose. -7- The Treasurer shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements, and shall render to the President an account of all transactions as Treasurer and of the financial condition of the Corporation. In addition, the Treasurer shall perform all the usual duties incident to the office of Treasurer. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such office and for the restoration to the Corporation, in case of the Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the possession or under the control of the Treasurer belonging to the Corporation. 29. Assistant Secretaries. The Assistant Secretary or Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to such Assistant Secretary or Assistant Secretaries by the Board of Directors or the President, and, in the absence of the Secretary or in the event of the Secretary's disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. 30. Assistant Treasurers. The Assistant Treasurer or Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to such Assistant Treasurer or Assistant Treasurers by the Board of Directors or the President, and, in the absence of the Treasurer or in the event of the Treasurer's disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such office and for the restoration to the Corporation, in case of the Assistant Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the possession or under the control of the Assistant Treasurer belonging to the Corporation. 31. Controller. The Controller, if any, shall perform such duties as shall be assigned to the Controller by the Board of Directors or the President. 32. Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. -8- In case of the absence of any officer of the Corporation, or for any other reason the Board of Directors may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer, or to any director, provided a majority of the entire Board of Directors concurs therein. STOCK ----- 33. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, either manually or by facsimile, in the name of the Corporation (i) by the Chairman of the Board of Directors, the President or the Vice President, Chief Financial Officer, and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by a stockholder in the Corporation. Each certificate issued by the Corporation representing shares of Class A Common Stock shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THESE SECURITIES ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OF NATIONAL STEEL CORPORATION. A COPY OF SUCH CERTIFICATE OF INCORPORATION IS ON FILE WITH THE SECRETARY OF NATIONAL STEEL CORPORATION. 34. Signatures. Where a certificate is countersigned by (i) a transfer agent other than the Corporation or its employee, or (ii) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if said person were such officer, transfer agent or registrar at the date of issue. 35. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or -9- destroyed certificate, or said owner's legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 36. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by said person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled before a new certificate shall be issued. 37. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 38. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. NOTICES ------- 39. Notices. Except as otherwise provided in these By-Laws, whenever written notice is required by law, the Certificate of Incorporation, as amended and restated, or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, telecopy, telex or cable. -10- 40. Waiver of Notice. Whenever any notice is required by law, the Certificate of Incorporation, as amended or restated, or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. GENERAL PROVISIONS ------------------ 41. Fiscal Year. The fiscal year shall begin the first day of January in each year. 42. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, as amended and restated, if any, may be declared by the Board of Directors at any regular or special meeting, out of funds legally available for the payment thereof, in such amounts as the Board of Directors, in its sole discretion may determine. Dividends may be paid in cash, in property (including, but not limited to, in the form of a release of liabilities whether or not then due and owing to the Corporation or otherwise), or in shares of the capital stock of the Corporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. 43. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. 44. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION --------------- 45. Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation. Subject to Section 47, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including internal investigations) (other than an action -11- by or in the right of the Corporation) by reason of the fact that said person is or was or has agreed to become a director, officer, employee, fiduciary, trustee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, fiduciary, trustee or agent of another corporation, partnership, joint venture, trust, pension plan, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by said person or on said person's behalf in connection with such action, suit, investigation or proceeding, and any appeal therefrom, if said person acted in good faith and in a manner said person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which said person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such conduct was unlawful. 46. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 47, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or investigation (including internal investigations) or proceedings by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that said person is or was or has agreed to become a director, officer, employee, fiduciary, trustee or agent of the Corporation, or is or was or has agreed to serve at the request of the Corporation as a director, officer, employee, fiduciary, trustee or agent of another corporation, partnership, joint venture, trust, employee benefit plan, pension plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against expenses (including attorneys' fees) actually and reasonably incurred by said person in connection with the defense or settlement of such action, suit, investigation or proceeding or any appeal therefrom, if said person acted in good faith and in a manner said person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which said person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, said person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. -12- 47. Authorization of Indemnification. Any indemnification under Sections 45 and 46 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, fiduciary, trustee or agent is proper in the circumstances because said person has met the applicable standard of conduct set forth in Sections 45 or 46, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director, officer, employee, fiduciary, trustee or agent of the Corporation has been successful on the merits or otherwise, including without limitation, the dismissal of an action without prejudice, in defense of any action, suit, investigation or proceeding referred to in Sections 45 and 46, or in defense of any claim, issue or matter therein, said person shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by said person or on said person's behalf in connection therewith, without the necessity of authorization in the specific case. 48. Good Faith Defined. For purposes of any determination under Section 47, a person shall be deemed to have acted in good faith and in a manner said person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such conduct was unlawful, if said person's action is based on the records or books of account of the Corporation or another enterprise, or on information supplied by the officers of the Corporation or another enterprise in the course of such officers' duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 48 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which said person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 48 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 45 or 46, as the case may be. 49. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 47, and notwithstanding the absence of any determination thereunder, any director or officer may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 45 and 46. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such officer or director has met the applicable -13- standards of conduct set forth in Sections 45 or 46, as the case may be. Neither a contrary determination in the specific case under Section 47 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 49 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. 50. Expenses Payable in Advance. Costs, charges and expenses incurred by a person referred to in Sections 45 and 46 in defending or investigating a threatened or pending action, suit, investigation or proceeding shall be paid to the extent provided herein by the Corporation in advance of the final disposition of such action, suit, investigation or proceeding; provided, however, that (i) the payment of such costs, charges and expenses incurred by a director or officer of the Corporation in the capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit, investigation or proceeding shall be made only upon receipt of a written undertaking (in the form of an unsecured promissory note) by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in these By-Laws, and (ii) the payment of such costs, charges and expenses incurred by other employees, fiduciaries, trustees and agents may be so paid in advance upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may, in the manner set forth above, and upon approval of such director, officer, employee, fiduciary, trustee or agent of the Corporation, authorize the Corporation's counsel to represent such person, in any action, suit, investigation or proceeding, whether or not the Corporation is a party to such action, suit, investigation or proceeding. 51. Payment of Indemnification Amounts. Any indemnification under Sections 45, 46, and 47, or advance of costs, charges and expenses provided for or authorized under Section 50 of these By-Laws, shall be made promptly, and in any event within sixty (60) days, upon the written request of the director, officer, employee, fiduciary, trustee or agent. The right to indemnification or advances to the extent provided by these By-Laws shall be enforceable by the director, officer, employee, fiduciary, trustee or agent in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty (60) days. Said person's costs and expenses incurred in connection with successfully establishing said person's right to indemnification or advances, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 50 where the required -14- undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections 45 or 46, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the claimant has met the applicable standard of conduct set forth in Sections 45 and 46 of these By-Laws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. 52. Nonexclusivity of Indemnification and Advancement of Expenses. The rights to indemnification by these By-Laws shall be construed so as to mandate indemnification to the fullest extent permitted by applicable law (including, without limitation, Section 145 of the Delaware General Corporation Law, as amended) and shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled under the Certificate of Incorporation, as amended or restated, any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding office or while employed by or acting as an agent for the Corporation, and shall continue as to a person who has ceased to be a director, officer, employee, fiduciary, trustee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification and advances under these By-Laws shall be deemed to be a contract between the Corporation and each director, officer, employee, fiduciary, trustee or agent of the Corporation who serves or served in such capacity at any time while these indemnification provisions of the By-Laws are in effect. Any repeal or modification of these indemnification provisions of the By-Laws or any repeal or modification of relevant provisions of the Delaware General Corporation Law or any other applicable laws shall not, to the extent permitted by applicable law, in any way diminish any rights to indemnification and/or advances of such director, officer, employee, fiduciary, trustee or agent or the obligations of the Corporation arising hereunder for said person's conduct prior to such appeal or modification. 53. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee, fiduciary, trustee or agent of the Corporation, or is or was serving at the request of the Corporation, as a director, officer, employee, fiduciary, trustee or agent of another corporation, partnership, joint venture, trust, pension plan, employee benefit or other similar plan or other enterprise against any liability asserted against said person and incurred by said person or on said person's behalf in any such capacity, or arising out of said person's status as such, whether or not the Corporation would have -15- the power or the obligation to indemnify said person against such liability under the provisions of these By-Laws. 54. Validity. If these indemnification provisions of the By-Laws or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and provide advances to each director, officer, employee, fiduciary, trustee and agent of the Corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines, penalties, excise taxes and amounts paid in settlement with respect to any action, suit, investigation or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of these By-Laws that shall not have been invalidated and to the full extent permitted by applicable law. 55. Limitations on Indemnification. Notwithstanding any other provision of these By-Laws, the Corporation shall not be required to indemnify any person for any costs, charges, expenses (including attorneys' fees), judgments, fines, penalties, excise taxes and amounts paid in settlement incurred in any action, suit, investigation or proceeding (which shall not be deemed to include counterclaims or affirmative defenses) initiated by or participated in as an intervenor or amicus curiae by the person seeking indemnification unless the initiation of or participation in such action, suit, investigation or proceeding is authorized, either before or after its commencement, by the Board of Directors. This Section 55 does not apply to reimbursement of expenses incurred in successfully prosecuting or defending the right to indemnification granted by or pursuant to these By-Laws. 56. Certain Definitions. For purposes of these Sections 46 through 56, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of these Sections 46 through 56 with respect to the resulting or surviving corporation as said person would have with respect to such constituent corporation if its separate existence had continued. For purposes of these Sections 46 through 56, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner -16- said person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interest of the Corporation" as referred to in these Sections 46 through 56. AMENDMENTS ---------- 57. Amendment. These By-Laws may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of a majority of the voting power of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors. The stockholders may adopt a By-Law or By- Laws by the vote of the holders of a majority of the voting power of the outstanding capital stock entitled to vote thereon at any such annual or special meeting, and any By-Law so adopted may contain the provision that it is not subject to amendment or repeal by the Board of Directors. 58. Entire Board of Directors. As used in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. -17- EX-99 3 EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT -------------------- AMENDED AND RESTATED AGREEMENT made as of May 31, 1994, by and between National Steel corporation, a Delaware corporation (the "Company") and Robert M. Greer (the "Executive"). WHEREAS, the Executive is employed by the Company pursuant to an Employment Agreement made on May 31, 1994 (the "Prior Agreement"); WHEREAS, the parties desire to amend and restate the Prior Agreement; WHEREAS, the Board of Directors of the Company (the "Company Board") has approved and authorized the entry into this Agreement with the Executive; and WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions of the employment relationship of the Executive with the Company. NOW, THEREFORE, the parties agree as follows: 1. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company upon the terms and subject to the conditions set forth herein. 2. Term. This Agreement is for the three-year period (the "Term") commencing on June 1, 1994 and terminating on the third anniversary of such date, or upon the Executive's earlier death, disability or other termination of employment pursuant to Section 11. 3. Position. During the Term, the Executive shall serve as a Senior Vice President and Chief Financial Officer of the Company. 4. Duties and Reporting Relationship. During the Term, the Executive shall, on a full time basis, use his skills and render services to the best of his abilities in performing his duties hereunder. In performance of such duties, the Executive shall be subject to supervision by the Chief Executive Officer, Chief Operating Officer and the Company Board. 5. Place of Performance. The Executive shall perform his duties and conduct his business at the principal executive offices of the Company, except for required travel on the Company's business. 6. Inducement for Employment. As an inducement for the Executive's entering into the Agreement and undertaking to perform the services referred to in the Agreement, the Company shall grant to the Executive a non-qualified option (the "Option") to purchase 50,000 shares of Common Stock B, pursuant to the Company's Long Term Incentive Plan (the "LTIP"), subject to the terms and conditions set forth in the LTIP and the applicable stock option agreement, subject to the following terms and conditions: (i) the exercise price of the Option shall be $14; (ii) the Option shall become exercisable as to one-third (1/3) of the shares covered thereby on the first anniversary of the date hereof and as to an additional one-third (1/3) of such shares on each of the next two succeeding anniversaries of the date hereof; (iii) the Option shall expire on the earlier of the tenth anniversary of the date it is granted or the date the Executive's employment is terminated for any reason and may be exercised (to the extent it has become exercisable pursuant to clause (ii) above), in whole or in part (other than with respect to any fractional share), at any time prior to such expiration; provided, however, that the Option shall remain exercisable (to the extent it has become exercisable pursuant to clause (ii) above) for a period of 30 days following termination of Executive's employment and provided further, that if the Executive's employment is terminated on account of his death or Disability, the Option shall remain exercisable (to the extent it has become exercisable pursuant to clause (ii) above) for a period of six months following such termination of employment. -2- 7. Salary and Annual Incentive Compensation. ---------------------------------------- (a) Base Salary. The Executive's base salary hereunder shall be $270,000 a year, payable monthly. The Company Board shall review such base salary at least annually and make such adjustment from time to time as it may deem advisable, but the base salary shall not at any time be less than $270,000 a year. (b) Annual Incentive compensation. The Executive shall be eligible to receive annual incentive compensation pursuant to the Company's Management Incentive Compensation Program (the "MICP") to the extent such program is in effect during the relevant year and as determined in accordance with the terms and conditions of the MICP. The Executive's MICP target for 1994 shall be 35%. 8. Vacation, Holidays and Sick Leave. During the Term, the Executive shall be entitled to paid vacation, paid holidays and sick leave in accordance with the Company's standard policies for its senior executive officers. 9. Business Expenses. The Executive will be reimbursed for all ordinary and necessary business expenses incurred by him in connection with his employment upon timely submission by the Executive of receipts and other documentation as required by the Internal Revenue Code and in conformance with the Company's normal procedures. 10. Employee Benefits. During the Term, the Executive shall be eligible to participate fully in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements, including without limitation the Company's Executive Deferred Compensation Plan, if any, and the LTIP, (collectively, the "Employee Benefits") that are available to the senior executive officers of the Company; provided, however, that the Executive shall not be eligible to participate in the LTIP until January 1, 1995. During the Term and for a period of one year after the termination of this Agreement, the Company will pay the cost of financial and tax planning services, up to a maximum of $4,000 per year, for the Executive. Such services shall be furnished by a provider selected by the Executive with the approval of the Company. The -3- Executive shall be entitled to benefits for relocation in accordance with the terms of the National Steel Corporation Salary Exempt Relocation Policy, effective January 1, 1994, for any initial relocation prior to June 1, 1996 while employed by the Company. The Executive shall further be entitled to a lump sum payment of $10,000 for anticipated commuting expenses during the first year of employment by the Company. 11. Termination of Employment. ------------------------- (a) General. The Executive's employment hereunder may be ------- terminated only under the following circumstances. (b) Death or Disability. ------------------- (i) The Executive's employment hereunder shall automatically terminate upon the death of the Executive. (ii) If, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from his duties with the Company for any three (3) months (whether or not consecutive) during any twelve (12) month period, the Company may terminate the Executive's employment hereunder for "Disability." (c) Cause. The Company may terminate the Executive's employment hereunder for Cause. For purposes of this Agreement, "Cause" shall mean (i) the failure or refusal by the Executive to perform his duties hereunder (other than any such failure resulting from the Executive's incapacity due to physical or mental illness), which has not ceased within ten (10) days after a written demand for substantial performance is delivered to the Executive by the Company, which demand identifies the manner in which the Company believes that the Executive has not performed such duties, (ii) the engaging by the Executive in conduct which is materially injurious to the Company, monetarily or otherwise (including, but not limited to (a) conduct described in Section 15, and (b) conduct that is injurious to the Company's reputation or standing in the community) or (iii) the conviction of the Executive of, or the entering of a plea of nolo contendere by the Executive with respect to, a felony. -4- (d) Termination by the Executive. The Executive shall be entitled to terminate his employment hereunder (A) for Good Reason or (B) if his health should become impaired to an extent that makes his continued performance of his duties hereunder hazardous to his physical or mental health, provided that the Executive shall have furnished the Company with a written statement from a qualified doctor to such effect and provided further, that, at the Company's request, the Executive shall submit to an examination by a doctor selected by the Company and such doctor shall have concurred in the conclusion of the Executive's doctor. For purposes of this Agreement, "Good Reason" shall mean, without the Executive's express written consent, any failure by the Company to comply with any material provision of this Agreement, which failure has not been cured within ten (10) days after notice of such noncompliance has been given by the Executive to the Company. (e) Voluntary Resignation. Should the Executive wish to resign from his position with the Company or terminate his employment for other than Good Reason during the Term, the Executive shall give sixty (60) days written notice to the Company, setting forth the reasons and specifying the date as of which his resignation is to become effective. (f) Termination by Company without Cause. Should the Company wish to terminate Executive's employment with the Company without Cause during the Term, the Company shall give written notice to the Executive in accordance with Subsection (g) hereof, specifying the date as of which such termination is to become effective. (g) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 18. "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. (h) Date of Termination. "Date of Termination" shall mean (i) if the Executive's employment is terminated because of death, the date of the Executive's death, (ii) if the Executive's employment is terminated for Disability, the date Notice of Termination is given, (iii) if the Executive's -5- employment is terminated pursuant to Subsection (c), (d), (e) or (f) hereof or for any other reason (other than death or Disability), the date specified in the Notice of Termination (which date shall not be less than thirty (30) days (sixty (60) days in the case of a termination under Subsection (e) hereof) from the date such Notice of Termination is given). 12. Compensation During Disability, Death or Upon Termination. --------------------------------------------------------- (a) During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("disability period"), the Executive shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 11(b)(ii) hereof, provided that payments so made to the Executive during the disability period shall be reduced by the sum of the amounts, if any, payable to the Executive with respect to such period under disability benefit plans of the Company or under the Social Security disability insurance program, and which amounts were not previously applied to reduce any such payment. (b) If the Executive's employment is terminated by his death or Disability, the Company shall pay any amounts due to the Executive under Section 7 through the Date of Termination. (c) If the Executive's employment shall be terminated by the Company for Cause or by the Executive for other than Good Reason, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to the Executive under this Agreement. (d) If (A) the Company shall terminate the Executive's employment without Cause, or (B) the Executive shall terminate his employment for Good Reason, then (i) the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Termination under any compensation plan or program of the Company, at the time such payments are due; and -6- (ii) in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay as liquidated damages to the Executive: (A) in a single lump sum payment within 10 business days of the Date of Termination, an amount equal to two times the Executive's annual salary as in effect as of the Date of Termination; and (B) at the time such awards are otherwise payable to other Company executives, the pro rata portion of the bonus for the year in which the Date of Termination occurs calculated in accordance with the terms of the MICP as in effect, if at all, during the year in which the Date of Termination occurs, and based on the number of months and partial months that the Executive had been employed during such year. (e) If the Executive shall terminate his employment under clause (B) of subsection 11(d) hereof, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given. (f) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 12 by seeking other employment or otherwise, and the amount of any payment or benefit provided for in this Section 12 shall not be reduced by any compensation earned by the Executive as the result of employment by another employer or by retirement benefits. (g) The Executive hereby waives, and releases the Company, its affiliates, directors, officers and employees, from, any and all past, present or future claims, damages, liabilities, demands and causes of action of every nature, kind and character whatsoever, known and unknown (herein collectively called "Claims"), including, but not limited to, any age discrimination or other discrimination Claims or breach of contract Claims, which he has or may have against the Company and/or its parent corporations, shareholders, subsidiaries and affiliates and all and each of their officers, directors, employees, agents and representatives, based on or existing out of, or in any way in connection with, any facts, events, circumstances or occurrences which have occurred or exist up to and including the date of the signing of this Agreement or which will occur in the course of the lawful and proper performance of this Agreement, including -7- the present or future effects of such facts, events, circumstances or occurrences. The Executive agrees that in the event the Company commits a breach or breaches of this Agreement, the Executive's sole and exclusive remedy shall be, and the Company's liability shall be limited to damages equal to the payments and benefits to be provided by the Company hereunder and to the Executive's cost of litigation, if any, to enforce his rights hereunder, including reasonable attorney's fees, if the Executive is successful. 13. Representations. --------------- (a) The Company represents and warrants that this Agreement has been authorized by all necessary corporate action of the Company and is a valid and binding agreement of the Company enforceable against them in accordance with its terms. (b) The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from entering into or performing his duties in any way under this Agreement. The Executive represents and warrants that he has not breached any duty of confidentiality owed to any previous employer. The Executive represents and warrants that he has not brought with him to the Company any documents, written information, records, data, computer information and material, tapes, film, and other material of any kind incorporating any confidential information of a previous employer. 14. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. (b) This Agreement is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by the provisions of this Agreement. This Agreement shall inure to the benefit of and be enforceable by the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die -8- while any amount would still be payable to him hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee, to his estate. 15. Confidentiality and Non-Solicitation of Company's Employees. The Executive covenants and agrees that he will not at any time during and after the end of the Term, directly or indirectly, use for his own account, or disclose to any person, firm or corporation, other than authorized officers, directors and employees of the Company or its subsidiaries, Confidential Information (as hereinafter defined) of the Company. As used herein, "Confidential Information" of the Company means information of any kind, nature or description which is disclosed to or otherwise known to the Executive as a direct or indirect consequence of his association with the Company or any of its affiliates, which information is not generally known to the public or in the businesses in which the Company or any of its affiliates are engaged or which information relates to specific investment opportunities within the scope of the business of the Company or any of its affiliates which were considered by the Executive, the Company, or any of the Company's affiliates during the term of this Agreement. All documents, written information, records, data, computer information and material, tapes, film, and other material of any kind incorporating Confidential Information of the type described above, including but not limited to memoranda, notes, sketches, records, reports, manuals, business plans and notebooks in the Executive's possession or under his control during the term of his employment by the Company shall be the exclusive property of the Company and shall be delivered by him to the Company upon termination of his employment by the Company. During the Term and for a period of two years following the termination of the Executive's employment, the Executive shall not induce any employee of the Company or its subsidiaries to terminate his or her employment by the Company or its subsidiaries in order to obtain employment by any person, firm or corporation affiliated with the Executive. In the event of a breach or threatened breach of this Section 15, the Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the Executive acknowledging that damages would be inadequate and insufficient. 16. Entire Agreement. This Agreement contains all the understandings between the parties hereto pertaining to the -9- matters referred to herein, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto including, but not limited to, the Prior Agreement. The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter, bases or effect of this Agreement or otherwise. 17. Amendment or Modification, Waiver. No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Executive and by an officer of the Company specifically authorized by the Company Board to sign such an amendment. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time. 18. Notices. Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier or telecopy or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing: To Executive at: To the Company at: 4100 Edison Lakes Parkway Mishawaka, Indiana 46545 Attn: General Counsel Any notice delivered personally or by courier under this Section 18 shall be deemed given on the date delivered and any notice sent by telecopy or registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date telecopied or mailed. -10- 19. Legal Fees. Company shall bear, or reimburse Executive for, all reasonable legal fees and costs incurred by Executive in connection with entering into this agreement, up to a maximum of $1,000. 20. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law. 21. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 22. Governing Law; Attorney's Fees. This Agreement will be governed by and construed in accordance with the laws of the State of Indiana, without regard to its conflicts of laws principles. The prevailing party in any dispute arising out of this Agreement shall be entitled to be paid its reasonable attorney's fees incurred in connection with such dispute from the other party to such dispute. 23. Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph. 24. Withholdings. All payments to the Executive under this Agreement shall be reduced by all applicable withholding required by federal, state or local law. 25. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -11- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NATIONAL STEEL CORPORATION /s/ Osamu Sawaragi By:_________________________ Name: Osamu Sawaragi Title: Chairman of the Board /s/ Robert M. Greer _____________________________ Executive -12- EX-99.1 4 EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT -------------------- AMENDED AND RESTATED AGREEMENT made as of May 31, 1994, by and between National Steel corporation, a Delaware corporation (the "Company") and V. John Goodwin (the "Executive"). WHEREAS, the Executive is employed by the Company pursuant to an Employment Agreement made on May 31, 1994 (the "Prior Agreement"); WHEREAS, the parties desire to amend and restate the Prior Agreement; WHEREAS, the Board of Directors of the Company (the "Company Board") has approved and authorized the entry into this Agreement with the Executive; and WHEREAS, the parties desire to enter into this Agreement setting forth the terms and conditions of the employment relationship of the Executive with the Company. NOW, THEREFORE, the parties agree as follows: 1. Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company upon the terms and subject to the conditions set forth herein. 2. Term. This Agreement is for the five-year period (the "Term") commencing on June 1, 1994 and terminating on the fifth anniversary of such date, or upon the Executive's earlier death, disability or other termination of employment pursuant to Section 12. 3. Position. During the Term, the Executive shall serve as Chief Operating Officer of the Company. In addition, commencing on the date that resignation of the Company's current President is effective, the Executive shall serve as President of the Company. The Company shall, subject to the approval of the Company's Nominating committee, recommend appointment of the Executive to the Company Board. 4. Duties and Reporting Relationship. During the Term, the Executive shall, on a full time basis, use his skills and render services to the best of his abilities in performing his duties hereunder. In performance of such duties, the Executive shall be subject to supervision by the Chief Executive Officer and the Company Board. 5. Place of Performance. The Executive shall perform his duties and conduct his business at the principal executive offices of the Company, except for required travel on the Company's business. 6. Inducement for Employment. As an inducement for the Executive's entering into the Agreement and undertaking to perform the services referred to in the Agreement, the Company shall grant to the Executive a non-qualified option (the "Option") to purchase 100,000 shares of Common Stock B, pursuant to the Company's Long Term Incentive Plan (the "LTIP"), subject to the terms and conditions set forth in the LTIP and the applicable stock option agreement, subject to the following terms and conditions: (i) the exercise price of the Option shall be $14; (ii) the Option shall become exercisable as to one-third (1/3) of the shares covered thereby on the first anniversary of the date hereof and as to an additional one-third (1/3) of such shares on each of the next two succeeding anniversaries of the date hereof; (iii) the Option shall expire on the earlier of the tenth anniversary of the date it is granted or the date the Executive's employment is terminated for any reason and may be exercised (to the extent it has become exercisable pursuant to clause (ii) above), in whole or in part (other than with respect to any fractional share), at any time prior to such expiration; provided, however, that the Option shall remain exercisable (to the extent it has become exercisable pursuant to clause (ii) above) for a period of 30 days following termination of Executive's employment and provided further, that if the Executive's employment is terminated on account of his death or Disability, the Option shall remain exercisable (to the extent it has become exercisable pursuant to clause (ii) above) for a period of six months following such termination of employment. -2- 7. Salary and Annual Incentive Compensation. ---------------------------------------- (a) Base Salary. The Executive's base salary hereunder shall be $300,000 a year, payable monthly. The Company Board shall review such base salary at least annually and make such adjustment from time to time as it may deem advisable, but the base salary shall not at any time be less than $300,000 a year. (b) Annual Incentive compensation. The Executive shall be eligible to receive annual incentive compensation pursuant to the Company's Management Incentive Compensation Program (the "MICP") to the extent such program is in effect during the relevant year and as determined in accordance with the terms and conditions of the MICP. The Executive's MICP target for 1994 shall be 50%. 8. Vacation, Holidays and Sick Leave. During the Term, the Executive shall be entitled to paid vacation, paid holidays and sick leave in accordance with the Company's standard policies for its senior executive officers. 9. Business Expenses. The Executive will be reimbursed for all ordinary and necessary business expenses incurred by him in connection with his employment upon timely submission by the Executive of receipts and other documentation as required by the Internal Revenue Code and in conformance with the Company's normal procedures. 10. Employee Benefits. During the Term, the Executive shall be eligible to participate fully in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements, including without limitation the Company's Executive Deferred Compensation Plan, if any, and the LTIP, (collectively, the "Employee Benefits") that are available to the senior executive officers of the Company; provided, however, that the Executive shall not be eligible to participate in the LTIP until January 1, 1995. During the Term and for a period of one year after the termination of this Agreement, the Company will pay the cost of financial and tax planning services, up to a maximum of $4,000 per year, for the Executive. Such services shall be furnished by a provider selected by the Executive with the approval of the Company. The -3- Executive shall be entitled to benefits for relocation in accordance with the terms of the National Steel Corporation Salary Exempt Relocation Policy, effective January 1, 1994, for any initial relocation prior to June 1, 1996 while employed by the Company. The Executive shall further be entitled to a lump sum payment of $10,000 for anticipated commuting expenses during the first year of employment by the Company. 11. Pension Equalization Benefit. Upon retirement or early retirement in accordance with the terms of the Company's defined benefit tax qualified retirement plan (the "Retirement Plan"), the Executive shall be entitled to receive a "Retirement Equalization Benefit" equal to (A) the benefit payable to Executive under the Company's Retirement Plan calculated (i) without regard to the limitations on earnings taken into account for purpose of calculation of accrued benefits under section 401(a) (17) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) without regard to any applicable limitations on maximum benefits under section 415 of the Code, and (iii) based upon the number of years of service equal to the number of years of service of the Executive with the Company, plus the number of years of service of the Executive with the employer with which the Executive was employed immediately prior to the effective date of this Agreement (the "Prior Employer"), less (B) the benefit actually payable to the Executive under the Retirement Plan and the Company's ERISA Parity Plan, and further less (C) the actuarially equivalent annuity value of the Supplemental Pension payable to the Executive under the Company's Executive Deferred Compensation Plan, and further less (D) the benefit payable to the Executive under any defined benefit tax qualified retirement plans maintained by the Prior Employer. The Retirement Equalization Benefit shall be payable in monthly installments commencing on the first day of the month following the Executive's retirement date. The Retirement Equalization Benefit (or the actuarial equivalent thereof) shall be payable in the form of the normal form of benefit under the Retirement Plan or such optional form of benefit as the Executive elects in accordance with the terms of the Retirement Plan. 12. Termination of Employment. ------------------------- (a) General. The Executive's employment hereunder may be terminated only under the following circumstances. -4- (b) Death or Disability. (i) The Executive's employment hereunder shall automatically terminate upon the death of the Executive. (ii) If, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from his duties with the Company for any three (3) months (whether or not consecutive) during any twelve (12) month period, the Company may terminate the Executive's employment hereunder for "Disability." (c) Cause. The Company may terminate the Executive's employment hereunder for Cause. For purposes of this Agreement, "Cause" shall mean (i) the failure or refusal by the Executive to perform his duties hereunder (other than any such failure resulting from the Executive's incapacity due to physical or mental illness), which has not ceased within ten (10) days after a written demand for substantial performance is delivered to the Executive by the Company, which demand identifies the manner in which the Company believes that the Executive has not performed such duties, (ii) the engaging by the Executive in conduct which is materially injurious to the Company, monetarily or otherwise (including, but not limited to (a) conduct described in Section 16, and (b) conduct that is injurious to the Company's reputation or standing in the community) or (iii) the conviction of the Executive of, or the entering of a plea of nolo contendere by the Executive with respect to, a felony. (d) Termination by the Executive. The Executive shall be entitled to terminate his employment hereunder (A) for Good Reason or (B) if his health should become impaired to an extent that makes his continued performance of his duties hereunder hazardous to his physical or mental health, provided that the Executive shall have furnished the Company with a written statement from a qualified doctor to such effect and provided further, that, at the Company's request, the Executive shall submit to an examination by a doctor selected by the Company and such doctor shall have concurred in the conclusion of the Executive's doctor. For purposes of this Agreement, "Good Reason" shall mean, without the Executive's express written consent, any failure by the Company to comply with any material provision of this Agreement, which failure has not been cured -5- within ten (10) days after notice of such noncompliance has been given by the Executive to the Company. (e) Voluntary Resignation. Should the Executive wish to resign from his position with the Company or terminate his employment for other than Good Reason during the Term, the Executive shall give sixty (60) days written notice to the Company, setting forth the reasons and specifying the date as of which his resignation is to become effective. (f) Termination by Company without Cause. Should the Company wish to terminate Executive's employment with the Company without Cause during the Term, the Company shall give written notice to the Executive in accordance with Subsection (g) hereof, specifying the date as of which such termination is to become effective. (g) Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 19. "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. (h) Date of Termination. "Date of Termination" shall mean (i) if the Executive's employment is terminated because of death, the date of the Executive's death, (ii) if the Executive's employment is terminated for Disability, the date Notice of Termination is given, (iii) if the Executive's employment is terminated pursuant to Subsection (c), (d), (e) or (f) hereof or for any other reason (other than death or Disability), the date specified in the Notice of Termination (which date shall not be less than thirty (30) days (sixty (60) days in the case of a termination under Subsection (e) hereof) from the date such Notice of Termination is given). (i) Resignation as Member of Company Board. If the Executive's employment by the Company is terminated for any reason, the Executive hereby agrees that, unless otherwise requested by the Company Board, he shall simultaneously submit his resignation as a member of the Company Board in writing on or before the Date of Termination. If the Executive fails to submit such resignation in writing, the provisions of this Subsection -6- 12(i) may be deemed by the Company to constitute the Executive's written resignation as a member of the Company Board effective as of the Date of Termination. 13. Compensation During Disability, Death or Upon Termination. --------------------------------------------------------- (a) During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("disability period"), the Executive shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 12(b)(ii) hereof, provided that payments so made to the Executive during the disability period shall be reduced by the sum of the amounts, if any, payable to the Executive with respect to such period under disability benefit plans of the Company or under the Social Security disability insurance program, and which amounts were not previously applied to reduce any such payment. (b) If the Executive's employment is terminated by his death or Disability, the Company shall pay any amounts due to the Executive under Section 7 through the Date of Termination. (c) If the Executive's employment shall be terminated by the Company for Cause or by the Executive for other than Good Reason, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to the Executive under this Agreement. (d) If (A) the Company shall terminate the Executive's employment without Cause, or (B) the Executive shall terminate his employment for Good Reason, then (i) the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Termination under any compensation plan or program of the Company, at the time such payments are due; (ii) in lieu of any further salary payments to the Executive for periods subsequent to the -7- Date of Termination, the Company shall pay as liquidated damages to the Executive: (A) in a single lump sum payment within 10 business days of the Date of Termination, an amount equal to two times the Executive's annual salary as in effect as of the Date of Termination; and (B) at the time such awards are otherwise payable to other Company executives, the pro rata portion of the bonus for the year in which the Date of Termination occurs calculated in accordance with the terms of the MICP as in effect, if at all, during the year in which the Date of Termination occurs, and based on the number of months and partial months that the Executive had been employed during such year; and (iii) the Company shall provide the benefits which the Executive would have been entitled to receive pursuant to the Retirement Plan, the Company's ERISA Parity Plan and Section 11 of this Agreement had his employment continued at the rate of compensation specified herein until the date the Executive attained the age of 55 or the Date of Termination, whichever comes later; provided that, for purposes of determining entitlement to such benefits, the Executive shall be deemed to be credited with not less than five years of service for vesting purposes under the Retirement Plan. (e) If the Executive shall terminate his employment under clause (B) of subsection 12(d) hereof, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given. (f) If the Company shall terminate the Executive's employment without Cause, or the Executive shall terminate his employment for any reason, after the earliest date as of which the Executive would have been eligible upon termination of employment, if his employment with the Prior Employer (as defined in Section 11 of this Agreement) had been employment with the Company, for retiree health care benefits under any plan then maintained by the Company and providing such benefits for salaried non-represented employees hired before 1993 who retire after satisfying such eligibility requirements as may then be in effect under such plan ("Company Plan"), then the -8- Company shall provide to the Executive such benefits as may be in effect from time to time under the Company Plan. (g) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 13 by seeking other employment or otherwise, and the amount of any payment or benefit provided for in this Section 13 shall not be reduced by any compensation earned by the Executive as the result of employment by another employer or by retirement benefits. (h) The Executive hereby waives, and releases the Company, its affiliates, directors, officers and employees, from, any and all past, present or future claims, damages, liabilities, demands and causes of action of every nature, kind and character whatsoever, known and unknown (herein collectively called "Claims"), including, but not limited to, any age discrimination or other discrimination Claims or breach of contract Claims, which he has or may have against the Company and/or its parent corporations, shareholders, subsidiaries and affiliates and all and each of their officers, directors, employees, agents and representatives, based on or existing out of, or in any way in connection with, any facts, events, circumstances or occurrences which have occurred or exist up to and including the date of the signing of this Agreement or which will occur in the course of the lawful and proper performance of this Agreement, including the present or future effects of such facts, events, circumstances or occurrences. The Executive agrees that in the event the Company commits a breach or breaches of this Agreement, the Executive's sole and exclusive remedy shall be, and the Company's liability shall be limited to damages equal to the payments and benefits to be provided by the Company hereunder and to the Executive's cost of litigation, if any, to enforce his rights hereunder, including reasonable attorney's fees, if the Executive is successful. 14. Representations. --------------- (a) The Company represents and warrants that this Agreement has been authorized by all necessary corporate action of the Company and is a valid and binding agreement of the Company enforceable against them in accordance with its terms. (b) The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from entering into or performing his duties in any way under -9- this Agreement. The Executive represents and warrants that he has not breached any duty of confidentiality owed to any previous employer. The Executive represents and warrants that he has not brought with him to the Company any documents, written information, records, data, computer information and material, tapes, film, and other material of any kind incorporating any confidential information of a previous employer. 15. Successors; Binding Agreement. ----------------------------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. (b) This Agreement is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by the provisions of this Agreement. This Agreement shall inure to the benefit of and be enforceable by the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee, to his estate. 16. Confidentiality and Non-Solicitation of Company's Employees. The Executive covenants and agrees that he will not at any time during and after the end of the Term, directly or indirectly, use for his own account, or disclose to any person, firm or corporation, other than authorized officers, directors and employees of the Company or its subsidiaries, Confidential Information (as hereinafter defined) of the Company. As used herein, "Confidential Information" of the Company means information of any kind, nature or description which is disclosed to or otherwise known to the Executive as a direct or indirect consequence of his association with the Company or any of its affiliates, which information is not generally known to the public or in the businesses in which the Company or any of its affiliates are engaged or which information relates to specific -10- investment opportunities within the scope of the business of the Company or any of its affiliates which were considered by the Executive, the Company, or any of the Company's affiliates during the term of this Agreement. All documents, written information, records, data, computer information and material, tapes, film, and other material of any kind incorporating Confidential Information of the type described above, including but not limited to memoranda, notes, sketches, records, reports, manuals, business plans and notebooks in the Executive's possession or under his control during the term of his employment by the Company shall be the exclusive property of the Company and shall be delivered by him to the Company upon termination of his employment by the Company. During the Term and for a period of two years following the termination of the Executive's employment, the Executive shall not induce any employee of the Company or its subsidiaries to terminate his or her employment by the Company or its subsidiaries in order to obtain employment by any person, firm or corporation affiliated with the Executive. In the event of a breach or threatened breach of this Section 16, the Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the Executive acknowledging that damages would be inadequate and insufficient. 17. Entire Agreement. This Agreement contains all the understandings between the parties hereto pertaining to the matters referred to herein, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by them with respect thereto including, but not limited to, the Prior Agreement. The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter, bases or effect of this Agreement or otherwise. 18. Amendment or Modification, Waiver. No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing, signed by the Executive and by an officer of the Company specifically authorized by the Company Board to sign such an amendment. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time. -11- 19. Notices. Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier or telecopy or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing: To Executive at: To the Company at: 4100 Edison Lakes Parkway Mishawaka, Indiana 46545 Attn: General Counsel Any notice delivered personally or by courier under this Section 19 shall be deemed given on the date delivered and any notice sent by telecopy or registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date telecopied or mailed. 20. Legal Fees. Company shall bear, or reimburse Executive for, all reasonable legal fees and costs incurred by Executive in connection with entering into this agreement, up to a maximum of $1,000. 21. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law. 22. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. -12- 23. Governing Law; Attorney's Fees. This Agreement will be governed by and construed in accordance with the laws of the State of Indiana, without regard to its conflicts of laws principles. The prevailing party in any dispute arising out of this Agreement shall be entitled to be paid its reasonable attorney's fees incurred in connection with such dispute from the other party to such dispute. 24. Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph. 25. Withholdings. All payments to the Executive under this Agreement shall be reduced by all applicable withholding required by federal, state or local law. 26. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NATIONAL STEEL CORPORATION /s/ Osamu Sawaragi By:_________________________ Name: Osamu Sawaragi Title: Chairman of the Board /s/ V. John Goodwin _____________________________ Executive -13- -----END PRIVACY-ENHANCED MESSAGE-----