-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N+7kYlNnY6Ve1KMJVrrfvXQ2HOXG5ceMBmUFUk0YseCjYXBOnoxQ2l+ZEUtm3pZ7 T7MWd+JMNcQoyvMeKkwbeQ== 0000950131-99-003116.txt : 19990517 0000950131-99-003116.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950131-99-003116 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL STEEL CORP CENTRAL INDEX KEY: 0000070578 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 250687210 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-76541 FILM NUMBER: 99622185 BUSINESS ADDRESS: STREET 1: 4100 EDISON LAKES PARKWAY CITY: MISHAWAKA STATE: IN ZIP: 46545-3440 BUSINESS PHONE: 2192737000 MAIL ADDRESS: STREET 1: 4100 EDISON LAKE PARKWAY CITY: MISHAWAKA STATE: IN ZIP: 46545-3440 S-4/A 1 AMENDMENT NO. 1 TO FORM S-4 As filed with the Securities and Exchange Commission on May 14, 1999 Registration No. 333-76541 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT Under the Securities Act of 1933 --------------- National Steel Corporation (Exact name of Registrant as specified in its charter) Delaware 3312 25-0687210 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number) --------------- 4100 Edison Lakes Parkway Mishawaka, Indiana 46545-3440 (219) 273-7000 (Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) --------------- Glenn H. Gage Senior Vice President and Chief Financial Officer 4100 Edison Lakes Parkway Mishawaka, Indiana 46545-3440 (219) 273-7000 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------- With copies to: Ronald J. Werhnyak, Esq. Gary P. Cullen, Esq. Vice President, General Counsel and Skadden, Arps, Slate, Meagher & Flom Secretary (Illinois) National Steel Corporation 333 W. Wacker Drive 4100 Edison Lakes Parkway Chicago, Illinois 60606 Mishawaka, Indiana 46545-3440 (312) 407-0700 (219) 273-7000 --------------- Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] --------------- The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT COMPLETION, DATED MAY 14, 1999 PROSPECTUS [LOGO OF NATIONAL STEEL APPEARS HERE] National Steel Corporation Offer to Exchange Our First Mortgage Bonds, 9 7/8% Series D due 2009 for any or all of our First Mortgage Bonds, 9 7/8% Series A due 2009 and First Mortgage Bonds, 9 7/8% Series C due 2009 -------- The exchange offer will expire at 5:00 p.m. New York time, on , 1999 unless extended. -------- Terms of the exchange offer: . We will exchange all original bonds that are validly tendered and not withdrawn prior to the expiration of the exchange offer. . You may withdraw tendered original bonds at any time prior to the expiration of the exchange offer. . We believe that the exchange of original bonds will not be a taxable exchange for United States federal income tax purposes, but you should see the section entitled "Certain Federal Income Tax Considerations" on page 56 for more information. . The terms of the exchange bonds to be issued are substantially identical to the terms of the original bonds, except for certain transfer restrictions and registration rights relating to the original bonds. . We will not receive any proceeds from the exchange offer. -------- Investing in the exchange bonds involves risks. See "Risk Factors" beginning on page 7 for a discussion of the risks that you should consider prior to tendering your original bonds for exchange. -------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. -------- May , 1999. TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUMMARY 1 The Exchange Offer...................................................... 1 Summary Description of Exchange Bonds................................... 2 Summary of Our Business................................................. 4 Summary Historical Consolidated Financial and Other Data................ 5 RISK FACTORS.............................................................. 7 Risk Factors Relating to the Exchange Offer............................. 7 If you do not exchange your bonds in the exchange offer, you may not be able to ever sell them............................................ 7 You cannot be sure that an active trading market will develop for these bonds.......................................................... 7 Risk Factors Relating to the bonds...................................... 7 Not all of our property secures the bonds............................. 7 The value of the mortgaged property has not been independently determined and cannot be guaranteed in the event of a liquidation.... 7 You may be limited in your rights to claim the mortgaged property by bankruptcy law....................................................... 8 We may be inadequately insured to protect the value of the mortgaged property............................................................. 8 You may not be able to direct the trustee to exercise the rights and remedies under the indenture in the event of a default............... 8 Risk Factors Relating to National Steel................................. 9 We rely heavily on the automotive industry to purchase our products... 9 Our labor agreements expire this year, and we may not be able to renegotiate new agreements on favorable terms........................ 9 We have substantial debt obligations, especially our pension and other postretirement benefits obligations, which may impair our ability to repay the bonds and our liquidity.................................... 9 The bonds are subordinate to the creditors of our subsidiaries........ 10 The restrictive covenants in our debt agreements may limit our corporate activities................................................. 10 Our business requires substantial capital investment and maintenance requirements which we may be unable to meet.......................... 10 We rely on certain pieces of steelmaking equipment which may not be easily or readily replaced in the event of damage or maintenance..... 10 NKK has the ability to exercise control over our business............. 11 We are subject to stringent environmental regulation.................. 11 Our systems may not be completely Year 2000 compliant................. 12 Risk Factors Relating to the Steel Industry............................. 12 The steel industry is cyclical which may make our operating results fluctuate............................................................ 12 There is excess world capacity in the steel industry which has depressed prices..................................................... 12 Recent economic instability in a number of foreign economies has resulted in increased steel exports to the United States at depressed prices causing downward pricing pressure for our products............ 12 We compete with other producers of steel and steel substitutes which may adversely effect demand for our products......................... 13 The forward looking statements we make in this prospectus may not be realized............................................................. 13 USE OF PROCEEDS........................................................... 14 CAPITALIZATION............................................................ 14 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA................. 15 THE EXCHANGE OFFER........................................................ 17 Terms of the exchange offer; period for tendering original bonds........ 17 Procedures for tendering original bonds................................. 18
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PAGE ---- Signature requirements.................................................. 18 Our interpretations are binding on you.................................. 19 Representation you make by tendering.................................... 19 Acceptance of original bonds for exchange; delivery of exchange bonds... 20 Book-entry transfer..................................................... 20 Guaranteed delivery procedures.......................................... 21 Withdrawal rights....................................................... 21 Conditions to the exchange offer........................................ 22 Exchange agent.......................................................... 22 Fees and expenses....................................................... 22 Transfer taxes.......................................................... 22 Holders, other than affiliates, may offer or sell the exchange bonds.... 22 DESCRIPTION OF OTHER INDEBTEDNESS......................................... 23 Receivables Facility.................................................... 23 Inventory Facilities.................................................... 24 Old Bonds............................................................... 24 USWA Lien............................................................... 24 Other Indebtedness and Operating Leases................................. 24 DESCRIPTION OF THE EXCHANGE BONDS......................................... 25 Principal, maturity and interest........................................ 25 Transfer and exchange................................................... 26 Ranking................................................................. 26 Mortgaged Property...................................................... 26 We may issue more bonds................................................. 26 Optional Redemption..................................................... 27 Sinking Fund............................................................ 27 Repurchase at the Option of Holders Upon a Change of Control............ 27 Certain Covenants....................................................... 28 Merger, Consolidation and Sale of Property.............................. 37 SEC Reports............................................................. 37 Events of Default....................................................... 37 Amendments and Waivers.................................................. 39 Defeasance.............................................................. 40 Book-Entry System....................................................... 40 Second Mortgage......................................................... 42 Certain Bankruptcy Limitations.......................................... 42 Governing Law........................................................... 43 The Trustee, Paying Agent and Registrar for the Bonds................... 43 Registration Rights..................................................... 43 Certain Definitions..................................................... 44 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................. 56 United States Holders and United States Alien Holders................... 57 United States Federal Income Tax Consequences to United States Holders.. 57 United States Federal Income Tax Consequences to United States Alien Holders................................................................ 58 PLAN OF DISTRIBUTION...................................................... 60 LEGAL MATTERS............................................................. 61 EXPERTS................................................................... 61 AVAILABLE INFORMATION..................................................... 61 INFORMATION INCORPORATED BY REFERENCE..................................... 61
ii PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all of the information that is important to you. This prospectus contains specific terms of the Series D bonds that we are offering. Other important information regarding our business, results of operations and financial condition is incorporated by reference from other documents filed with the SEC. You are encouraged to read this prospectus and to refer to the documents incorporated by reference. The Exchange Offer On March 8, 1999, we completed the private offering of $225.0 million of our First Mortgage Bonds, 9 7/8% Series A due 2009. On March 31, 1999, we completed the private offering of $75.0 million of our First Mortgage Bonds, 9 7/8% Series C due 2009. We entered into a registration rights agreement with the placement agents in each private offering in which we agreed to complete this exchange offer. You should read the discussion under the headings "--Summary Description of the Exchange Bonds" and "Description of the Bonds" for more information about the registered exchange bonds. We refer to the original bonds and the exchange bonds as "the bonds" in this prospectus. We believe that the exchange bonds to be issued in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act, unless you are an affiliate of National Steel or an underwriter or a broker dealer. You should read the discussion under the heading "The Exchange Offer" for further information regarding the exchange offer and resale of the exchange bonds. Registration rights These agreements entitle holders of original agreements.................... bonds to exchange their bonds for registered bonds with identical economic terms. The exchange offer............ We are offering to exchange up to $300.0 million of the exchange bonds for up to $225.0 million of the original Series A bonds and up to $75.0 million of the original Series C bonds. Original bonds may only be exchanged in increments of $1,000. The economic terms of the exchange bonds are identical to the original bonds except that the principal amount of the exchange bonds may be up to $300.0 million. Tenders; expiration date; The exchange offer will expire at 5:00 p.m., withdrawal.................... New York City time, on , 1999, unless we extend it. If you decide to exchange your original bonds for exchange bonds, you must acknowledge that you are not engaging in, and do not intend to engage in, a distribution of the exchange bonds. You may withdraw your tender of original bonds at any time before , 1999. If we decide for any reason not to accept your original bonds for exchange, we will return them to you promptly and without expense after the exchange offer expires or terminates. Conditions to the exchange We are not required to accept any original offer......................... bonds in exchange for exchange bonds. We may terminate or amend the exchange offer if we determine that the exchange offer violates applicable law or any applicable interpretation of the SEC. 1 Federal tax considerations.... We believe that the exchange of original bonds for exchange bonds in the exchange offer will not result in any gain or loss to you for federal income tax purposes. Use of proceeds............... We will receive no proceeds from the exchange offer. Exchange agent................ The Chase Manhattan Bank is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth under the heading "The Exchange Offer-- Exchange agent." Summary Description of Exchange Bonds The terms of the exchange bonds are identical to the original bonds in all material respects except: . the transfer restrictions and registration rights relating to the original bonds do not apply to the exchange bonds; . if we do not complete the exchange offer by September 6, 1999, the interest rate on such original bonds will increase by 0.25% for each 90 day period, with a maximum total increase of 1.00%, until we complete it; and . the exchange bonds are part of a single series of up to $300.0 million. Bonds offered................. Up to $300.0 million total principal amount of First Mortgage Bonds, 9 7/8% Series D due 2009, which have been registered under the Securities Act. Maturity date................. March 1, 2009. Interest payment dates........ March 1 and September 1 of each year, beginning on September 1, 1999. Sinking fund.................. None. Collateral.................... The bonds will be secured by a lien on our Great Lakes, Granite City and Midwest facilities, subject to some exceptions, and some of our ore properties and related mining facilities. The bonds rank equally with all other mortgage bonds issued under the indenture in their rights in the mortgaged property. There is $375.0 million in total principal amount of mortgage bonds outstanding under the indenture. Ranking....................... The bonds rank equally with our other senior obligations. While the bonds also rank equally with our unsecured indebtedness, holders of the bonds, our First Mortgage Bonds, 8.375% Series due 2006 and any additional series of bonds that may be issued under the indenture in the future may seek repayment out of the sale of the mortgaged property. At December 31, 1998, assuming the original bonds were issued at that time, we would have had total debt, including secured debt, pension and other postretirement employee benefits liabilities, of approximately $1,315 million, excluding the unamortized portion of our postretirement employee benefits transition obligation of approximately $373 million at 2 December 31, 1998. Of this amount, our subsidiaries' total indebtedness of approximately $30.6 million is senior to the bonds. The $623.0 million of secured debt or other secured obligations included in our total debt ranks equally to the bonds and $375.0 million of this debt is secured by the mortgaged property. In addition, as of the same date, we and our subsidiaries would have had approximately $79 million of outstanding secured letters of credit and approximately $257 million of available borrowing capacity under three revolving credit facilities that are secured by certain inventory and receivables. All of this indebtedness ranks equally with the bonds, except the credit facilities have priority as to the inventory or receivables that secure them. Optional redemption........... We may redeem any of the bonds beginning on March 1, 2004. The initial redemption price is 104.938% of their principal amount, plus accrued interest. The redemption price will decline each year after 2004 and will be 100% of their principal amount, plus accrued interest on March 1, 2007. In addition, before March 1, 2002, we may redeem up to 35% of the total principal amount of the bonds at 109.875% of their principal amount, plus accrued interest, with the proceeds of a public equity offering. However, at least 65% of the total principal amount of the bonds originally issued must remain outstanding after the redemption. Change of control............. Upon a change of control, we must offer to purchase the bonds for 101% of their principal amount, plus accrued interest. However, we may not have sufficient funds to repurchase the bonds or we may be prohibited from doing so by our other debt. Certain covenants............. The indenture contains covenants that limit our ability and that of our subsidiaries to: .incur additional debt; . pay dividends, prepay subordinated indebtedness, repurchase capital stock and make investments; .create liens on mortgaged property; .issue or sell capital stock of subsidiaries; .sell or dispose of our property; .restrict distributions from subsidiaries; .engage in transactions with affiliates; .engage in different lines of business; or . in the case of National Steel, merge, consolidate or sell all or substantially all of our property. These limitations are subject to a number of important qualifications and exceptions. 3 Summary of Our Business We are the fourth largest integrated steel producer in the United States. We manufacture and sell a wide variety of flat rolled carbon steel products. Our products include: . hot rolled steel, . cold rolled steel, . galvanized steel, . tin and . chrome plated steel. Our annual effective raw steelmaking capacity is approximately 6.8 million net tons, all of which is continuously cast. Our annual hot rolled band production capacity is approximately 8.0 million tons. We target sales of high value-added applications of flat rolled carbon steel to the automotive, construction and container markets. In 1998, the automotive market accounted for 29.5% of our sales, the construction market accounted for 26.6% of our sales, and 11.3% of our sales were to the container market. We operate three principal facilities: . Granite City--an integrated steel plant located near St. Louis, . Great Lakes--an integrated steel plant located near Detroit and . Midwest--a finishing facility located near Chicago. We also own and operate National Steel Pellet Company, an iron ore mine and pelletizing facility in Keewatin, Minnesota. Our pellet facility has a current annual pelletizing capacity of approximately 5.3 million gross tons and reserves in excess of 350.0 million gross tons. Granite City. Granite City is a fully integrated steelmaking facility with annual hot rolled band production capacity of approximately 3.6 million tons. Granite City also operates 800,000 tons of higher value-added processing capacity, including three hot dip galvanizing lines. Granite City ships (1) hot rolled, (2) hot dipped galvanized and Galvalume(R), (3) grain bin and (4) high strength, low alloy steels. The construction market accounted for approximately 50% of the facility's 1998 sales. Approximately 10% of Granite City's hot band production is transferred to Midwest for further value-added processing. Great Lakes. Great Lakes is a fully integrated steelmaking facility with annual hot rolled band production capacity of approximately 4.4 million tons. Higher value-added processing capacity includes 1.2 million tons of cold rolling and 400,000 tons of electrolytic galvanizing. Great Lakes ships (1) hot rolled, (2) cold rolled, (3) galvanized and (4) high strength, low alloy steels. Great Lakes primarily serves the automotive industry, which accounted for approximately 70% of the facility's direct 1998 sales. Approximately 45% of the facility's hot rolled band production is transferred to Midwest and to joint venture coating operations for further value-added processing. We have entered into a contract for the construction of a new 450,000 ton hot dip galvanizing facility at Great Lakes. The new facility is scheduled to begin operations in the first half of 2000 and will serve the automotive industry. Midwest. Midwest finishes hot rolled bands produced at Great Lakes and Granite City for use in the automotive, construction and container markets. Facilities at Midwest have 2.0 million tons of cold rolling capacity, approximately 1.0 million tons of galvanizing capacity and 600,000 tons of tin mill capacity. NKK Alliance. We have a strong alliance with our principal stockholder, NKK Corporation. NKK is the second largest steel company in Japan and the ninth largest in the world as measured by production. Since 1984, we have had access to a wide range of NKK's steelmaking, processing and applications technology. 4 Recent Developments In the first quarter of 1999, we generated net sales of $657.9 million, a 7.1% decrease from the first quarter of 1998 due to a 29,000 ton decrease in shipments and a $25 per ton decline in average selling prices, both of which were primarily caused by high levels of low-priced imported steel and service center inventories. We reported a net loss in the period of $24.1 million, or $.58 per diluted common share down from our net income in the first quarter of 1998 of $5.9 million, or $.14 per diluted common share. We were able to hold onto the cost reductions we achieved in the fourth quarter of 1998 and to improve our product mix by continuing to focus on our cost reduction initiatives and customer-focused strategies designed to improve operating performance. However, the downward pricing pressure more than offset such gains. During the first quarter, we purchased the remaining outstanding 44% equity interest in ProCoil Corporation, a steel processing facility which blanks, slits and cuts steel coils to desired lengths to serve the automotive industry and is also providing laser welding services. We purchased this remaining equity interest for $7.7 million. This acquisition was in line with our overall customer service initiatives for the automotive market. Summary Historical Consolidated Financial and Other Data The following table presents our summary consolidated financial information and other operating information for the periods indicated. The financial information for the five years ended December 31, 1998 is derived from our audited financial statements. The following financial information and operating data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the consolidated financial statements and related notes, for each of the years ended December 31, 1996 through 1998 and the other information included in our Annual Report on Form 10-K.
Years Ended December 31, ----------------------------------------------- 1994 1995 1996 1997 1998 ------- ------- ------- ------- ------- Statement of Operations: (dollars in millions) Net sales.................... $2,700 $2,954 $2,954 $3,140 $2,848 Gross margin................. 221 279 192 331 222 Income from operations....... 113 129 65 191 96 Financing costs, net......... 56 39 36 15 11 Net income................... 185 108 54 214 84 Net income applicable to common stock................ 174 97 43 203 84 Other Data: Shipments (net tons, in thousands).................. 5,208 5,564 5,895 6,144 5,587 Raw steel production (net tons, in thousands)......... 5,763 6,081 6,557 6,527 6,087 Effective capacity utilization................. 96.1% 96.5% 93.7% 96.0% 92.2% Number of employees at period end......................... 9,711 9,474 9,579 9,417 9,230 Man hours per net ton shipped..................... 3.71 3.41 3.24 3.06 3.31 Net cash provided by operating activities........ $ 317 $ 265 $ 159 $ 332 $ 32 Net cash provided by (used in) investing activities.... (136) (215) (121) 168 (166) Net cash used in financing activities.................. (24) (84) (57) (297) (40) Depreciation................. $ 142 $ 146 $ 144 $ 135 $ 129 Capital investments.......... 138 215 129 152 171 EBITDA (1)................... 255 275 209 326 225 Adjusted EBITDA (2).......... 258 308 237 353 226 Ratio of earnings to fixed charges (3)................. 3.0x 2.2x 1.5x 5.2x 3.0x EBITDA to gross interest charges..................... 4.2x 5.4x 4.8x 9.6x 8.5x Adjusted EBITDA to gross interest charges............ 4.2 6.0 5.5 10.4 8.5 Total debt to EBITDA......... 2.8 2.0 2.4 1.1 1.4 Total debt to Adjusted EBITDA...................... 2.7 1.7 2.1 1.0 1.4
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December 31, -------------------------------------- 1994 1995 1996 1997 1998 Balance Sheet Data: ------ ------ ------ ------ ------ Cash, cash equivalents and investments. $ 162 $ 128 $ 109 $ 338 $ 138 Working capital........................ 252 250 279 367 333 Net property, plant & equipment........ 1,394 1,469 1,456 1,229 1,271 Total assets........................... 2,500 2,669 2,558 2,453 2,484 Total debt............................. 707 538 508 343 323 Total pension and OPEB liabilities (4). 457 592 519 614 692 Redeemable preferred stock--Series B... 67 65 64 -- -- Stockholders' equity................... 401 600 645 837 850
- -------- (1) EBITDA represents income from operations plus depreciation. EBITDA should not be construed as a substitute for income from operations, net income or cash flows from operating activities for the purpose of analyzing our operating performance, financial position and cash flows. We have presented EBITDA because it is commonly used by certain investors to analyze and compare companies on the basis of operating performance and to determine a company's ability to service debt. This definition of EBITDA differs from the definition of EBITDA applicable to the covenants for the bonds and may not be comparable to EBITDA as defined by other companies. (2) Adjusted EBITDA includes the add back of the amortization of our OPEB transition obligation, which results in a non-cash charge of approximately $27 million per year, and unusual charges (credits). (3) The ratio of earnings to fixed charges is determined by dividing earnings by fixed charges. Earnings is the sum of: (a) income before income taxes, extraordinary items and cumulative effect of accounting change, (b) amortization of capitalized interest less interest capitalized in the current year, and (c) fixed charges. Fixed charges include interest both expensed and capitalized during the year and a portion of rent expense representative of interest. (4) This amount excludes the unamortized portion of our other pension and employee benefits transition obligation, which was approximately $373 million at December 31, 1998. 6 RISK FACTORS You should carefully consider all of the information in this prospectus, including the following risk factors and warnings, before deciding to exchange your original bonds for exchange bonds. Except for the first risk factor below, the risk factors generally apply to the original bonds as well as to the exchange bonds. Risk Factors Relating to the Exchange Offer If you do not exchange your bonds in the exchange offer, you may not be able to ever sell them. It may be difficult for you to sell bonds that are not exchanged in the exchange offer. Those bonds may not be offered or sold unless they are registered or there are exemptions from the registration requirements under the Securities Act and applicable state securities laws. If you do not tender your bonds or if we do not accept some of your bonds, those bonds will continue to be subject to the transfer and exchange restrictions in: . the indenture, . the legend on the original bonds, and . the offering memorandum relating to the original bonds. The restrictions on transfer of the original bonds arise because we issued the original bonds pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the original bonds if they are registered under the Securities Act and applicable state securities laws, or offered and sold pursuant to an exemption from such requirements. We do not intend to register the original bonds under the Securities Act. To the extent original bonds are tendered and accepted in the exchange offer, the trading market, if any, for the original bonds would be adversely affected. Holders of Series A bonds may elect to exchange their original bonds for Series B bonds, which are also registered under the Securities Act, instead of exchange bonds. The aggregate principal amount of Series B bonds is limited to $225.0 million. It is uncertain if any of the Series A bonds will be exchanged for Series B bonds and, as a result, the market for the Series B bonds may be substantially less liquid then the exchange bonds. You cannot be sure that an active trading market will develop for these bonds. The exchange bonds are being offered to the holders of the original bonds only. The original bonds, and the exchange bonds when issued, will be eligible for trading on the PORTAL Market. However, there is no public market for the exchange bonds. The placement agents have informed us that they currently intend to make a market in the exchange bonds, but they are not required to do so and may stop their market making at any time. The exchange bonds could trade at prices that may be higher or lower than the initial offering price of the original bonds. The liquidity of the trading market in these bonds, and the market price quoted for these bonds, may be adversely affected by changes in the overall market for similar securities, existing interest rates and by our operating results. Risk Factors Relating to the Bonds Not all of our property secures the bonds. The mortgaged property securing the bonds does not include some significant assets, including inventory and receivables and other plant assets and processing lines at our three facilities. We do not own some assets that service our facilities, including the coke battery at Great Lakes, that are therefore, not subject to the lien. A complete description of the assets that are subject to the lien and those that are excluded can be found under the caption "Description of the Bonds--Mortgaged Property." The value of the mortgaged property has not been independently determined and cannot be guaranteed in the event of a liquidation. 7 The proceeds of any sale of the mortgaged property following an event of default may not be sufficient to satisfy the amounts due on the bonds issued under the indenture. If the proceeds of any sale of the mortgaged property are insufficient to repay all amounts due on any of the bonds outstanding under the indenture, the holders of the bonds would have only an unsecured claim against the remaining assets of National Steel for any amount not repaid by such sale. Factors which could affect the value of the mortgaged property in the event of a liquidation include: . market and economic conditions; . some assets necessary to operate our steelmaking or finishing facilities are not mortgaged property; . some of the mortgaged property is illiquid and has no readily ascertainable market value; and . liens, rights and easements granted to third parties encumber assets located on property owned by us or constitute subordinate liens on the mortgaged property, and such third parties have or may exercise rights and remedies that could diminish the value of the mortgaged property and the ability of the trustee or the holders of the bonds to foreclose on such mortgaged property. In addition, the indenture permits the release of mortgaged property without the substitution of additional collateral if the value of the remaining collateral is sufficient to secure the bonds. You may be limited in your rights to claim the mortgaged property by bankruptcy law. The right of the trustee to repossess and dispose of the mortgaged property if an event of default occurs is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy case were to be commenced by or against National Steel prior to, or after, the trustee having repossessed and disposed of the mortgaged property. Under the bankruptcy code, a secured creditor such as the trustee may be prohibited from repossessing or disposing of its security from a debtor in a bankruptcy case, and any action allowed to be taken by the trustee to recover its security may be significantly delayed. During any such delay the value of the mortgaged property may be diminished. We may be inadequately insured to protect the value of the mortgaged property. We must properly insure the mortgaged property against loss or damage by fire or other hazards to the extent typically insured by corporations operating similar properties. The proceeds of insurance from each loss in excess of one million dollars will be made payable to the trustee. However, we may suffer losses which are either uninsurable or not economically insurable. And, the amounts for which we are insured or the proceeds of such insurance may not compensate us fully for our losses. If we have a total or partial loss of any of the mortgaged property, the insurance proceeds received may not be sufficient to satisfy all bonds outstanding. We may also be unable to replace the mortgaged property, or to replace it without significant delay, because of the large size and extended period necessary to manufacture such equipment. Additionally, we are not required to, and we do not currently, maintain any title insurance with regard to our title to any of the real property or improvements which constitute mortgaged property. If a loss occurs arising from a title defect with respect to any mortgaged property, we may not be able to replace such mortgaged property with collateral of equal value. You may not be able to direct the trustee to exercise the rights and remedies under the indenture in the event of a default. The holders of a majority in total principal amount of all series of outstanding bonds under the indenture have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee. The outstanding bonds may not constitute a majority of the outstanding principal amount of all bonds of all series. In such case, the holders of the bonds will not have any ability to direct the trustee independently of any other series of bonds. Further, the holders of other series of bonds may have sufficient voting power to direct the actions of the trustee or cause the acceleration of the bonds without your consent. 8 Risk Factors Relating to National Steel We rely heavily on the automotive industry to purchase our products. Our sales are heavily concentrated in the automotive industry. Demand for our steel products is affected by, among other things, the strength or weakness of the domestic automotive industry. The North American automotive industry has historically experienced significant fluctuations in demand, based on such factors as: . general economic conditions, . interest rates, . consumer confidence, and . significant fluctuations in production due to strikes, lock-outs, work stoppages or other production interruptions in the automotive industry. Any material reduction in the sale of automobiles could have a material adverse impact on our results of operations. We also have a concentrated customer base within the automotive industry. Combined direct sales to Chrysler Corporation, Ford Motor Company and General Motors Corporation accounted for 21.2% of net sales in 1998, 14.6% in 1997, and 16.3% in 1996. We may not continue to sell to these companies at these historic levels, which could have a material adverse effect on our business. Our labor agreements expire this year, and we may not be able to renegotiate new agreements on favorable terms. Our 1993 labor agreement with the United Steel Workers of America, covering approximately 7,500 employees, or approximately 82% of our total employees, expires on July 31, 1999. If we are unable to negotiate a new agreement when the existing agreement expires, our operations could be impacted by a strike or work stoppage. Our negotiations with the USWA may be more difficult because the USWA's labor agreements with other domestic integrated steel producers also expire on July 31, 1999. In addition, work stoppages may occur in the future in connection with contract negotiations or otherwise. A prolonged general work stoppage would have an adverse effect on our results of operations and financial condition. Also, our profitability could be adversely affected if increased costs associated with any future contract are not recoverable through productivity improvements or price increases. We have substantial debt obligations, especially our pension and other postretirement benefits obligations, which may impair our ability to repay the bonds and our liquidity. We have substantial financial obligations related to our employee postretirement benefit plans for pensions, other postretirement employee benefit liabilities (also known as OPEB liabilities) and other obligations, including debt. As of December 31, 1998, after giving pro forma effect to the offerings, the total consolidated debt including secured debt, pension and OPEB liabilities would have been approximately $1,315 million, excluding the unamortized portion of our OPEB transition obligation, which was approximately $373 million at December 31, 1998. Our substantial debt and corresponding required payments may adversely affect our ability to: . make capital investments, . take advantage of business opportunities, including making joint venture investments, or . obtain additional financing. At December 31, 1998, our liabilities for pensions were approximately $284 million and for OPEB were approximately $408 million, excluding the unamortized portion of National Steel's OPEB transition obligation. We amortize our OPEB transition obligation over a 20 year period resulting in a non-cash charge of 9 approximately $27 million per year. The recording of these charges could have a material adverse effect on our financial condition and results of operations because of the resulting increase in recorded liabilities, decrease in stockholders' equity and increases in required contributions to the pension fund. Our obligations could increase substantially if: . the actual retirement of active employees is significantly earlier than projected because of plant closings or for other reasons, . the plans are modified after August 1999 because of contractual changes with the USWA, . events occur differently than assumed, or . assumptions change as a result of such events or otherwise. The bonds are subordinate to the creditors of our subsidiaries. The bonds are effectively subordinated to all creditors of our subsidiaries to the extent of the assets of each such subsidiary, including the Pension Benefit Guaranty Corporation, trade creditors, unsecured creditors and preferred stockholders, if any. The amount of subsidiary indebtedness could be substantial and could impair your ability to recover your investment from us. The bonds contain no limitations on our subsidiaries' ability to incur trade credit or other obligations. Further, our subsidiaries may become jointly and severally liable for our pension liabilities. The indenture does not limit such liabilities, and under some circumstances the amount of such pension liabilities for which our subsidiaries are liable could be substantial. The restrictive covenants in our debt agreements may limit our corporate activities. We are subject to operating and financial restrictions based on the terms of the receivables facility, inventory facilities, the indenture and the other agreements governing our indebtedness. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict our corporate activities. Such restrictions limit our ability and that of our subsidiaries to: . incur additional indebtedness, . create liens, . sell assets, or . engage in mergers or acquisitions. Our business requires substantial capital investment and maintenance requirements which we may be unable to meet. Our integrated steel operations are capital intensive. In order to maintain production capacity, reduce costs, improve productivity, upgrade selected facilities to meet competitive requirements and maintain compliance with environmental laws and regulations, including the Clean Air Act of 1990, we are required to make substantial capital investments. We anticipate making capital investments of approximately $300 million in the year ended December 31, 1999. We may not have adequate funds to make all capital investments deemed necessary or the amount of future capital investments may not be adequate to preserve our competitive position or to comply with environmental regulations. We rely on certain pieces of steelmaking equipment which may not be easily or readily replaced in the event of damage or maintenance. We depend upon critical pieces of steelmaking equipment, such as our blast furnaces and continuous casters. These pieces of equipment on occasion may be out of service due to routine scheduled maintenance or 10 as the result of equipment failures or casualties, including explosions, fire and severe weather conditions. Interruptions in our production capabilities could result in fluctuations in quarterly sales and income. Using purchased steel to offset lost production may adversely affect our profitability if we must purchase at higher prices than our cost. Although we have experienced no equipment failures or scheduled maintenance outages resulting in the complete shutdown of a major portion of our steelmaking production for a significant period of time, a material shutdown could occur in the future. NKK has the ability to exercise control over our business. Approximately 70% of the combined voting power of our outstanding capital stock is held indirectly by NKK, Japan's second largest steel company. As a result, NKK has the ability to exercise control over our business by virtue of its ability to elect all the members of our board of directors and its majority voting power for actions requiring stockholder approval. If NKK no longer owned a majority of the combined voting power of our outstanding capital stock, or, in some cases, a majority economic interest in us, an event of default would occur under some of our joint venture and financing arrangements. We may be unable to replace or renegotiate these arrangements in such event. In connection with our relationship with NKK, NKK has provided financial assistance to us in the form of investments, loans and introductions to Japanese financial institutions and trading companies. NKK may not continue to provide financial support in the future or continue to do so at historical levels. There is the potential for conflicts of interest between our two companies. NKK may not make available to us corporate opportunities discovered by NKK which would benefit us. Our certificate of incorporation expressly provides that NKK would not be liable to us if they do not make such opportunities available to us. We are subject to stringent environmental regulation. We are subject to numerous laws and regulations relating to the protection of human health and the environment. Because these environmental laws and regulations are quite stringent and are generally becoming more stringent, we have expended, and expect to expend in the future, substantial amounts for compliance with these laws and regulations. Due to the possibility of future changes in circumstances or regulatory requirements, the amount and timing of environmental expenditures could vary from those currently anticipated and could adversely effect our financial results. In addition, any of the following occurrences could also negatively impact our operating performance: . we may be required to remediate or reclaim any contamination that may be present at sites at which we have been conducting operations for over 60 years under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and similar state statutes; . we and some of our subsidiaries are involved as potentially responsible parties at a number of off-site CERCLA and other environmental cleanup proceedings and as these matters progress or we become aware of additional matters, we may be required to accrue substantial charges and charges in excess of those previously accrued; . we will need to make substantial capital expenditures in connection with matters relating to environmental compliance, estimated to be $63.0 million in each of 1999 and 2000; and . we will need to make capital expenditures relating to environmental control, estimated to be $8.0 million in 1999 and $20.3 million in 2000. These costs for environmental compliance may place us at a competitive disadvantage with respect to foreign steel producers and domestic mini mills as well as manufacturers of steel substitutes, which are subject to less stringent environmental requirements. 11 Our systems may not be completely Year 2000 compliant. As is the case with most other companies using computers in their operations, we are continuing to address the Year 2000 problem this year. This problem results from the past practice of using only two digits in computer software to designate the calendar year with the assumption being the first two digits would be "19." If not corrected, this practice may result in incorrect results when computer software programs perform arithmetic operations, comparisons or data field sorting involving years later than 1999. We are currently engaged in a comprehensive project to upgrade our computer software in our information technology, manufacturing and facilities systems to programs which will be Year 2000 compliant. We expect to be able to modify or replace our affected systems in a manner that will minimize any detrimental effects on our operations. To date, we have spent approximately $9.3 million on Year 2000 projects. We estimate that we will spend an additional $10.6 million to complete our Year 2000 compliance effort. We cannot be sure that the actual costs required to become Year 2000 compliant will not exceed our estimates. We also cannot be sure that our customers, vendors, suppliers and other third parties conducting business with us will be Year 2000 compliant. If National Steel and/or our customers, vendors, suppliers or other third parties conducting business with us fail to complete the Year 2000 compliance work it could have a material adverse effect on our operations. Risk Factors Relating to the Steel Industry The steel industry is cyclical which may make our operating results fluctuate. The domestic steel industry is highly cyclical in nature due to the cyclicality of the automotive and construction industries, the principal markets it serves, as well as to changes in total industry demand. Our results of operations are substantially affected by small variations in the realized prices of our products. Such realized prices are significantly influenced by prevailing prices for steel and demand for particular products. There is excess world capacity in the steel industry which has depressed prices. There is excess world capacity for many of our products. This has resulted in intense competition and lower prices for our products, which we expect will continue in the foreseeable future. Currently, the economic slowdown in a number of areas of the world, including Russia, Eastern Europe, Brazil, Japan and The Republic of Korea, as well as favorable exchange rates, has caused a substantial increase in steel exports to the United States at depressed prices. In addition, overcapacity has been perpetuated by the continued operation, modernization and upgrading of marginal domestic facilities through bankruptcy reorganization proceedings and by the sale of marginal domestic facilities to new owners, which operate such facilities with lower cost structures. Also, some foreign steel producers are owned, controlled or subsidized by foreign governments. Decisions by these foreign producers to continue marginal facilities may be influenced to a greater degree by political and economic policy considerations than by prevailing market conditions and may further contribute to excess world capacity. Recent economic instability in a number of foreign economies has resulted in increased steel exports to the United States at depressed prices, causing downward pricing pressure for our products. A number of foreign economies, particularly those in Asia, Eastern Europe and Latin America, have experienced difficulties in recent months. These difficulties have included one or several of the following factors: (1) decline in the value of the local currency versus the U.S. dollar, (2) decline in gross domestic product, (3) decline in corporate earnings, (4) political turmoil and (5) stock market volatility. The slowdown in these foreign economies has resulted in significantly lower global demand for steel products and caused an increase in steel exports to the United States at depressed prices. Consequently, to the extent that such economic difficulties continue, there could be continued downward pricing pressures for our products that could have a material adverse effect on our results of operations and financial condition. 12 In 1998, we joined a number of other U.S. steel producers in filing certain unfair trade petitions before the Department of Commerce and the International Trade Commission. These unfair trade petitions were filed against foreign steel companies in Brazil, Japan and Russia, alleging widespread dumping of imported steel products and, in the case of Brazil, substantial subsidization of those products. We joined as a petitioner in these cases, except the case involving Japan. Over the past few months the ITC and the Commerce Department have each made preliminary determinations favorable to domestic producers. These determinations found reasonable indications of "dumping" of foreign steel products in the U.S. market, threatening domestic producers. If these preliminary findings are affirmed by final dumping or countervailing duty determinations, then the foreign producers will be subject to additional duties. This would make their products more expensive and would enable domestic producers to more effectively compete with such foreign products. If these findings are not made, then the current situation of excess capacity and intense downward price pressure for steel products could continue which would have an adverse effect on our operations. We compete with other producers of steel and steel substitutes which may adversely effect demand for our products. We directly compete with domestic and foreign flat rolled carbon steel producers and producers of plastics, aluminum and other materials which can be used in place of flat rolled carbon steel in manufactured products. Mini-mills provide significant competition in hot rolled and cold rolled products, which represented 52.8% of our total shipments in 1998. If this competition continues it could negatively impact our results of operation. Mini-mills are relatively efficient, low-cost producers, have lower employment and environmental costs and target regional markets. Technological advances have also enabled them to produce a wider range of products that were historically only provided by traditional steel producers. Some companies have announced plans for, or have indicated that they are currently considering, additional mini-mill plants for sheet products in the United States. The forward looking statements we make in this prospectus may not be realized. Statements we make in this prospectus or documents that are incorporated by reference that are not historical facts constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements, by their nature, involve risk and uncertainty. A variety of factors could cause business conditions and our actual results and experience to differ materially from those expected by us or expressed in our forward looking statements. These factors include, but are not limited to, the following: . changes in market prices and market demand for our products; . changes in the costs or availability of the raw materials and other supplies used by us in the manufacture of our products; . equipment failures or outages at our steelmaking and processing facilities; . loss of customers; . changes in the levels of our operating costs and expenses; . collective bargaining agreement negotiations, strikes, labor stoppages or other labor difficulties; . actions by our competitors; . changes in industry capacity; . changes in economic conditions in the United States and other major international economies, including rates of economic growth and inflation; . worldwide changes in trade, monetary or fiscal policies, including changes in interest rates; . changes in legal and regulatory requirements; and . the effects of extreme weather conditions. 13 USE OF PROCEEDS We will not receive any proceeds from the exchange of the original bonds for the exchange bonds. CAPITALIZATION The following table presents our historical capitalization as of December 31, 1998 and, as adjusted, to give effect to the Series A and Series C offerings. This table should be read in conjunction with the Consolidated Financial Statements and related notes.
As of December 31, 1998 ---------------- As Actual Adjusted ------ -------- (dollars in millions) Cash and cash equivalents..................................... $ 138 $ 436 ====== ====== Long-term debt: First mortgage bonds, 8.375% series due 2006................ $ 75 $ 75 Other loans, 7.726% to 10.336% due 2000 to 2007............. 187 187 Bonds offered hereby........................................ -- 300 Capitalized lease obligations and other..................... 61 61 ------ ------ Total long-term debt.......................................... 323 623 Total pension benefit liabilities............................. 284 284 Total postretirement benefits other than pensions(1).......... 408 408 Stockholders' equity: Common stock, additional paid-in-capital, and retained earnings................................................... 909 909 Minimum pension liability................................... (51) (51) Treasury stock.............................................. (8) (8) ------ ------ Total stockholders' equity................................ 850 850 ------ ------ Total capitalization...................................... $1,865 $2,165 ====== ======
- -------- (1) This amount excludes the unamortized portion of our OPEB transition obligation, which was approximately $373 million at December 31, 1998. 14 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA The following table presents our selected consolidated financial information and other operating data for the periods indicated. The financial information for the five years ended December 31, 1998 is derived from our audited financial statements. The following financial information and operating data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the consolidated financial statements for each of the years ended December 31, 1996 through 1998 and the other information in our Annual Report on Form 10-K.
Years Ended December 31, -------------------------------------- 1994 1995 1996 1997 1998 ------ ------ ------ ------ ------ (dollars in millions) Statement of Operations: Net sales.............................. $2,700 $2,954 $2,954 $3,140 $2,848 Cost of products sold.................. 2,337 2,529 2,618 2,674 2,497 Depreciation........................... 142 146 144 135 129 ------ ------ ------ ------ ------ Gross margin.......................... 221 279 192 331 222 Selling, general and administrative expense............................... 138 154 137 141 154 Equity (income) of affiliates.......... (5) (9) (10) (1) (1) Unusual charges (credits).............. (25) 5 -- -- (27) ------ ------ ------ ------ ------ Income from operations................. 113 129 65 191 96 Interest income........................ (5) (12) (7) (19) (16) Interest expense....................... 61 51 43 34 27 Net gain on disposal of non-core assets and other related activities.......... -- -- (3) (59) (3) Proceeds from settlement of a lawsuit.. (111) -- -- -- -- ------ ------ ------ ------ ------ Total other (income) expense........... (55) 39 33 (44) 8 ------ ------ ------ ------ ------ Income before income taxes, extraordinary items and cumulative effect of accounting change........... 169 90 32 235 88 ------ ------ ------ ------ ------ Income taxes (credit).................. (16) (12) (11) 16 4 ------ ------ ------ ------ ------ Income before extraordinary items and cumulative effect of accounting change................................ 185 102 43 219 84 Extraordinary items, net............... -- 6 -- (5) -- Cumulative effect of accounting change. -- -- 11 -- -- ------ ------ ------ ------ ------ Net income ............................ 185 108 54 214 84 Preferred stock dividends.............. 11 11 11 11 -- ------ ------ ------ ------ ------ Net income applicable to common stock.. $ 174 $ 97 $ 43 $ 203 $ 84 ====== ====== ====== ====== ====== Diluted earnings per share: Income before extraordinary items and cumulative effect of accounting change................................ $ 4.70 $ 2.10 $ 0.74 $ 4.76 $ 1.94 Net income applicable to common stock.. $ 4.70 $ 2.22 $ 0.99 $ 4.64 $ 1.94
15
Year Ended December 31, -------------------------------------- 1994 1995 1996 1997 1998 ------ ------ ------ ------ ------ (dollars in millions) Other Data: Shipments (net tons, in thousands)..... 5,208 5,564 5,895 6,144 5,587 Raw steel production (net tons, in thousands)............................ 5,763 6,081 6,557 6,527 6,087 Effective capacity utilization......... 96.1% 96.5% 93.7% 96.0% 92.2% Number of employees at period end...... 9,711 9,474 9,579 9,417 9,230 Man hours per net ton shipped.......... 3.71 3.41 3.24 3.06 3.31 Net cash provided by operating activities............................ $ 317 $ 265 $ 159 $ 332 $ 32 Net cash provided by (used in) investing activities.................. (136) (215) (121) 168 (166) Net cash used in financing activities.. (24) (84) (57) (297) (40) Capital investments.................... $ 138 $ 215 $ 129 $ 152 $ 171 EBITDA (1)............................. 255 275 209 326 225 Adjusted EBITDA (2).................... 258 308 237 353 226 Ratio of earnings to fixed charges (3). 3.0x 2.2x 1.5x 5.2x 3.0x EBITDA to gross interest charges....... 4.2x 5.4x 4.8x 9.6x 8.5x Adjusted EBITDA to gross interest charges............................... 4.2 6.0 5.5 10.4 8.5 Total debt to EBITDA................... 2.8 2.0 2.4 1.1 1.4 Total debt to Adjusted EBITDA.......... 2.7 1.7 2.1 1.0 1.4 December 31, -------------------------------------- 1994 1995 1996 1997 1998 ------ ------ ------ ------ ------ Balance Sheet Data: Cash, cash equivalents and investments. $ 162 $ 128 $ 109 $ 338 $ 138 Working capital........................ 252 250 279 367 333 Net property, plant & equipment........ 1,394 1,469 1,456 1,229 1,271 Total assets........................... 2,500 2,669 2,558 2,453 2,484 Total debt............................. 707 538 508 343 323 Total pension and OPEB liabilities (4). 457 592 519 614 692 Redeemable preferred stock--Series B... 67 65 64 -- -- Stockholders' equity................... 401 600 645 837 850
- -------- (1) EBITDA represents income from operations plus depreciation. EBITDA should not be construed as a substitute for income from operations, net income or cash flows from operating activities for the purpose of analyzing our operating performance, financial position and cash flows. We have presented EBITDA because it is commonly used by certain investors to analyze and compare companies on the basis of operating performance and to determine a company's ability to service debt. This definition of EBITDA differs from the definition of EBITDA applicable to the covenants for the bonds and may not be comparable to EBITDA as defined by other companies. (2) Adjusted EBITDA includes the add back of the amortization of our OPEB transition obligation, which results in a non-cash charge of approximately $27 million per year, and unusual charges (credits). (3) The ratio of earnings to fixed charges is determined by dividing earnings by fixed charges. Earnings is the sum of: (a) income before income taxes, extraordinary items and cumulative effect of accounting change, (b) amortization of capitalized interest less interest capitalized in the current year, and (c) fixed charges. Fixed charges include interest both expensed and capitalized during the year and a portion of rent expense representative of interest. (4) This amount excludes the unamortized portion of our other pension and employee benefits transition obligation, which was approximately $373 million at December 31, 1998. 16 THE EXCHANGE OFFER Terms of the exchange offer; period for tendering original bonds Subject to the terms and conditions described in this prospectus and in the accompanying letter of transmittal, we will accept for exchange original bonds that are properly tendered on or before the expiration date and not withdrawn as permitted below. As used in this prospectus, expiration date means 5:00 p.m., New York City time, on , 1999, or such later date and time to which we, in our sole discretion, extend the exchange offer. The form and terms of the bonds being issued in the exchange offer are the same as the form and terms of the original bonds except that: . the bonds being issued in the exchange offer will not be subject to increased interest related to completing an exchange offer; . the bonds being issued in the exchange offer will have been registered under the Securities Act so that their transfer will not be restricted pursuant to the Securities Act; . the bonds being issued in the exchange offer will not contain the registration rights contained in the original bonds; and . following the exchange offer, there may be up to $300.0 million aggregate principal amount of Series D bonds outstanding. Holders of Series A bonds may elect to exchange their bonds for Series B bonds instead of Series D bonds. The aggregate principal amount of Series B bonds issued will not exceed $225.0 million. We cannot predict whether any of the holders of Series A bonds will make such election and, therefore, the aggregate principal amount of such series may be substantially less than $225.0 million following the exchange offer. This prospectus and the letter of transmittal are first being sent on or about , 1999, to all holders of original bonds known to us. Our obligation to accept original bonds for exchange pursuant to the exchange offer is subject to certain conditions as set forth below under "--Conditions to the exchange offer." Bonds tendered in the exchange offer must be in denominations of principal amount of $1,000 and any whole number multiple of $1,000. We expressly reserve the right, at any time or from time to time, to extend the period of time during which the exchange offer is open. This would delay acceptance for exchange of any original bonds. We may do so by giving oral or written notice of such extension to the holders of original bonds as described below. During any such extension, all original bonds previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. We will return, at no expense to the holder, any original bonds not accepted for exchange as promptly as practicable after the expiration or termination of the exchange offer. If any of the events specified in "--Conditions to the exchange offer" should occur, we may amend or terminate the exchange offer, and not accept for exchange any original bonds not previously accepted for exchange. We will give oral or written notice of any extension, amendment, nonacceptance or termination to holders of original bonds as promptly as practicable. In the case of an extension, we will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Following completion of the exchange offer, we may begin one or more additional exchange offers to those holders of original bonds who did not exchange their original bonds for exchange bonds on terms which may differ from those contained in the registration rights agreement. We may use this prospectus, as amended or supplemented from time to time, in connection with additional exchange offers. Such additional exchange offers will take place from time to time until all outstanding original bonds have been exchanged for exchange bonds. 17 Procedures for tendering original bonds The tendering of original bonds by the holder, and our mutual acceptance of the original bonds, will constitute a binding agreement between us and the holder on the terms and subject to the conditions described in this prospectus and in the accompanying letter of transmittal. Except as set forth below, to tender in the exchange offer, a holder must transmit to The Chase Manhattan Bank, the exchange agent, at the address set forth under "--Exchange agent" on or before the expiration date either: . a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, or . if the original bonds are tendered pursuant to the book-entry procedures set forth below, an agent's message instead of a letter of transmittal. In addition, on or prior to the expiration date, either: . the exchange agent must receive the certificates for the original bonds along with the letter of transmittal; or . the exchange agent must receive a timely confirmation of a book-entry transfer of such original bonds into the exchange agent's account at The Depository Trust Company (DTC) according to the procedure for book-entry transfer described below, along with a letter of transmittal or an agent's message instead of a letter of transmittal; or . the holder must comply with the guaranteed delivery procedures described below. The term "agent's message" means a message, transmitted by DTC and received by the exchange agent and forming a part of the book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering holder that such holder has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against the holder. The method of delivery of original bonds, letters of transmittal or agent's messages and all other required documents is at the election and risk of the holders. If delivery is by mail, we recommend registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to guarantee timely delivery. Do not send letters of transmittal, agent's messages or bonds to us. Signature requirements Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the bonds surrendered for exchange are tendered: . by a registered holder of original bonds who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal, or . for the account of an eligible institution. An "eligible institution" is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States. If signatures on a letter of transmittal or a notice of withdrawal are required to be guaranteed, the guarantor must be an eligible institution. If original bonds are registered in the name of a person other than a signer of the letter of transmittal, the original bonds surrendered for exchange must be endorsed, or be accompanied, by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the holder's signature guaranteed by an eligible institution. 18 If a person or persons other than the registered holder or holders of original bonds signs the letter of transmittal, such original bonds must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the original bonds. If trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity sign the letter of transmittal or any original bonds or powers of attorney, those persons should indicate their capacity when signing, and must submit proper evidence satisfactory to us of their authority to sign unless we waive this requirement. Our interpretations are binding on you We will determine all questions as to the validity, form, eligibility, including time of receipt, and acceptance of original bonds tendered for exchange in our sole discretion. Our determination will be final and binding. We reserve the absolute right to: . reject any and all tenders of any original bond not properly tendered, . refuse acceptance of any original bond if, in our judgment or the judgment of our counsel, acceptance of the original bond might be unlawful, and . Waive any defects or irregularities or conditions of the exchange offer as to any original bond either before or after the expiration date. This includes the right to waive the ineligibility of any holder who seeks to tender original bonds in the exchange offer. Our interpretation of the terms and conditions of the exchange offer as to any particular original bonds either before or after the expiration date, including the letter of transmittal and the instructions to it, will be final and binding on all parties. Holders must cure any defects or irregularities in connection with tenders of original bonds for exchange within such reasonable period of time as we will determine, unless we waive such defects or irregularities. Neither we, the exchange agent, nor any other person shall have the duty to notify anyone of any defect or irregularity regarding any tender of original bonds for exchange, nor shall any of us incur any liability for failing to notify any person. Representation you make by tendering By tendering your original bonds, you represent to us that, among other things, . the person receiving the exchange bonds in the exchange offer is obtaining them in the ordinary course of its business, whether or not such person is the holder, and . neither you nor such other person receiving the exchange bonds has any arrangement or understanding with any person to participate in the distribution of the exchange bonds issued in the exchange offer, and . if you are not a broker-dealer, that you are not engaged in, or intend to be engaged in, a distribution of exchange bonds. If you or any person receiving the exchange bonds is an "affiliate," as defined under Rule 405 of the Securities Act of 1933, of National Steel, or is engaged in or intends to engage in or has an arrangement or understanding with any person to participate in a distribution of the exchange bonds to be acquired pursuant to the exchange offer, you or any such other person receiving the bonds may not rely on the applicable interpretations of the staff of the SEC. In this event you or any such other person must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives exchange bonds for its own account in exchange for original bonds, where such original bonds were acquired by it as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange bonds. See 19 "Plan of Distribution." The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" under the Securities Act. Acceptance of original bonds for exchange; delivery of exchange bonds Upon satisfaction or waiver of all of the conditions to the exchange offer, we will accept, promptly after the expiration date, all original bonds properly tendered and will issue the exchange bonds promptly after acceptance of the original bonds. For purposes of the exchange offer, we will be deemed to have accepted properly tendered original bonds for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter. For each original bond accepted for exchange, the original bond holder will receive an exchange bond having a principal amount of maturity equal to that of the surrendered bond. Interest on the exchange bonds will accrue from March 8, 1999, the original issue date of the original bonds. If the exchange offer is not consummated by September 6, 1999, the interest rate on the original bonds, from and including such date until but excluding the date of completion of the exchange offer, will increase by 0.25% every 90 days until a maximum total 1.00% is reached. We will pay such interest, if any, on original bonds in exchange for which exchange bonds were issued to the persons who, at the close of business on February 15 or August 15 immediately preceding the interest payment date, are registered holders of such original bonds if such record date occurs prior to such exchange, or are registered holders of the exchange bonds if such record date occurs on or after the date of such exchange, even if bonds are cancelled after the record date and on or before the interest payment date. In all cases, we will issue exchange bonds in the exchange offer for original bonds that are accepted for exchange only after the exchange agent timely receives either: . certificates for such original bonds or a timely book-entry confirmation of such original bonds into the exchange agent's account at DTC, and . a properly completed and duly executed letter of transmittal or, in the case of a book-entry confirmation, an agent's message, and all other required documents. If tendered original bonds are not accepted for any reason set forth in the terms and conditions of the exchange offer or if a holder submits original bonds for a greater principal amount than the holder desired to exchange, we will return such unaccepted or non-exchanged original bonds without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer. In the case of original bonds tendered by book-entry transfer into the exchange agent's account at DTC, such unaccepted or non-exchanged original bonds will be credited to an account maintained with DTC as promptly as practicable after the expiration or termination of the exchange offer. Book-entry transfer The exchange agent will request to establish an account for the original bonds at DTC for the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC's systems may make book-entry delivery of original bonds by causing DTC to transfer such original bonds into the exchange agent's account at DTC in accordance with DTC's procedures for transfer in accordance with DTC's Automated Tender Offer Procedures ("ATOP"). However, although delivery of original bonds may be effected through book-entry transfer at DTC, unless such delivery is effected through the DTC ATOP procedures, the letter of transmittal or facsimile thereof, with any required signature guarantees, or an agent's message in lieu of such letter of transmittal, and any other required documents, must, in any case, be transmitted to and received by the exchange agent at one of the addresses set forth below under "--Exchange agent" on or prior to the expiration date or the guaranteed delivery procedures described below must be complied with. 20 Guaranteed delivery procedures If a registered holder of the original bonds desires to tender such original bonds and the original bonds are not immediately available, or time will not permit such holder's original bonds or other required documents to reach the exchange agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if: . the tender is made through an eligible institution; . before the expiration date, the exchange agent receives from such eligible institution a properly completed and duly executed letter of transmittal, or a facsimile thereof, (unless effected through the DTC ATOP system, in which case it is not necessary to submit the letter of transmittal) and notice of guaranteed delivery, substantially in the form provided by us, by telegram, telex, facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of original bonds and the amount of original bonds tendered. Such communication must state that the tender is being made thereby and guarantee that within three New York Stock Exchange, Inc. trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered original bonds, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and . the exchange agent receives the certificates for all physically tendered original bonds, in proper form for transfer, or a book-entry confirmation, as the case may be, and all other documents required by the letter of transmittal, within three New York Stock Exchange, Inc. trading days after the date of execution of the notice of guaranteed delivery. Withdrawal rights You may withdraw tenders of original bonds at any time before the expiration date. For a withdrawal to be effective, you must send a written notice of withdrawal to the exchange agent at one of the addresses set forth below under "--Exchange agent." Any such notice of withdrawal must: . specify the name of the person having tendered the original bonds to be withdrawn, . identify the original bonds to be withdrawn, including the principal amount of such original bonds, and . if you have transmitted certificates for original bonds, specify the name in which such original bonds are registered, if different from that of the withdrawing holder. If certificates for original bonds have been delivered or otherwise identified to the exchange agent, then, before the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If original bonds have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn original bonds and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility, including time of receipt, of such notices. Our determination will be final and binding on all parties. Any original bonds so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any original bonds which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder without cost to such holder. In the case of original bonds tendered by book-entry transfer into the exchange agent's account at DTC pursuant to the book-entry transfer procedures described above, such original bonds will be credited to an account maintained with DTC for the original bonds. Any return or credit will occur as soon as practicable after withdrawal, rejection of 21 tender or termination of the exchange offer. Properly withdrawn original bonds may be retendered by following one of the procedures described under "-- Procedures for tendering original bonds" above at any time on or before the expiration date. Conditions to the exchange offer We are not required to accept for exchange, or to issue exchange bonds in exchange for, any original bonds. We may terminate or amend the exchange offer if, at any time before the acceptance of such original bonds for exchange or the exchange of the exchange bonds for such original bonds, we determine in our sole and absolute discretion, that the exchange offer violates applicable law or any applicable interpretation of the staff of the SEC. Exchange agent The Chase Manhattan Bank has been appointed as the exchange agent for the exchange offer. All executed letters of transmittal should be directed to the exchange agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery should be directed to the exchange agent addressed as follows: Delivery to: The Chase Manhattan Bank, Exchange Agent By Hand/Overnight Delivery: Registered or Certified Mail: 55 Water Street--Room 55 Water Street--Room 234 234 North Building North Building New York, New York 10041 New York, New York 10041 By Facsimile: (212) 638-7380/7381 Confirm by Telephone: (212) 638-0828 Delivery of the letter of transmittal to an address other than as set forth above or transmission of instructions via facsimile other than as set forth above is not valid delivery of such letter of transmittal. Fees and expenses We will not pay any brokers, dealers, or others soliciting acceptances of the exchange offer. We will pay the estimated cash expenses to be incurred in connection with the exchange offer, which are estimated to total $7,000. Transfer taxes Holders who tender their original bonds for exchange will not be obligated to pay any transfer taxes in connection with the exchange. However, holders who instruct us to register exchange bonds in the name of, or request that original bonds not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be responsible for the paying of any applicable transfer tax. Holders, other than affiliates, may offer or sell the exchange bonds Based on interpretations by the SEC staff, as set forth in no-action letters issued to third parties, we believe that exchange bonds issued in the exchange offer for original bonds may be offered for resale, resold or otherwise transferred by the holders of such exchange bonds, other than any such holder that is an "affiliate" of National Steel within the meaning of Rule 405 under the Securities Act. Such exchange bonds may be offered for resale, resold or otherwise transferred without compliance with the registration and prospectus delivery requirements of the Securities Act if: . such exchange bonds issued in the exchange offer are acquired in the ordinary course of such holder's business, and 22 . such holders have no arrangement or understanding with any person to participate in the distribution of such exchange bonds issued in the exchange offer. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of exchange bonds and has no arrangement or understanding to participate in a distribution of exchange bonds. However, we do not intend to request the SEC to consider, and the SEC has not considered, the exchange offer in the context of a no-action letter. We cannot guarantee that the SEC staff would make a similar determination with respect to the exchange offer as in other circumstances. If any holder is an "affiliate" of ours, as defined in Rule 405 under the Securities Act of 1933, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the exchange bonds to be acquired pursuant to the exchange offer such holder: . could not rely on the applicable interpretations of the SEC staff, and . must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives exchange bonds for its own account in exchange for original bonds, where such original bonds were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange bonds. In addition, to comply with state securities laws, the exchange bonds may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. The offer and sale of the exchange bonds to "qualified institutional buyers," as that term is defined under Rule 144A of the Securities Act, is generally exempt from registration or qualification under the state securities laws. We currently do not intend to register or qualify the sale of the exchange bonds in any state where an exemption from registration or qualification is required and not available. DESCRIPTION OF OTHER INDEBTEDNESS Receivables Facility The Receivables Purchase Agreement is an agreement dated as of May 16, 1994 among National Steel Funding Corporation ("Funding"), a bankruptcy-remote, special purchase subsidiary of National Steel, the lenders party thereto and J.P. Morgan Delaware, as Structuring and Collateral Agent. Under the receivables purchase agreement we may cause letters of credit to be issued and receive revolving loans until September 30, 2002, subject to extension, unless earlier terminated. Letters of credit in a total face amount, together with unreimbursed drawings, may be issued for up to $150.0 million. Revolving loans in a total principal amount, together with the total amount of letter of credit obligations at such time, may be made for up to $200.0 million. The maximum amount which may be issued for either letters of credit or revolving loans may be a lesser amount equal to the then current base amount. The base amount is an amount equal to net eligible receivables, less a reserve of not less than the greater of either 17% or a dynamic reserve percentage calculated based on historic losses and dilution. Funding borrows on the revolving loans or causes letters of credit to be issued to purchase accounts receivable from National Steel pursuant to a purchase and sale agreement entered into by Funding and us at the same time as the receivables purchase agreement. Additional amounts needed to finance Funding's purchases of accounts receivables from us are obtained through loans made to Funding by us, equity contributions by us and retained earnings of Funding. Under the purchase and sale agreement, we have limited obligations to indemnify Funding if the accounts receivable did not satisfy some of the eligibility criteria when sold and in other limited cases not relating to the collectability of receivables sold. The sales of receivables to Funding are intended to be true sales, and Funding, and not us or our other subsidiaries, owns the receivables. 23 Funding has granted to the receivables lenders a security interest in the accounts receivable purchased by Funding and all of Funding's related rights and its various bank accounts. The receivables purchase agreement contains customary covenants by Funding, including covenants that, among other things: (1) limit Funding's ability to engage in any activities except as necessary to perform its obligations under the receivables purchase agreement and related documents, (2) limit Funding's ability to incur or suffer to exist indebtedness, contingent obligations and liens, (3) limit Funding's ability to enter into leases, make or own Investments, or make capital expenditures, and (4) limit Funding's ability to amend or waive any provision of other agreements and conduct business with affiliates. Termination events include customary events of default, impairment of the receivables lenders' rights to pledged collateral, change of control of Funding, and failure of Funding to maintain stockholder's equity of at least $40.0 million. Upon the occurrence of a termination event the receivables lenders may terminate the commitments, accelerate the revolving loans or require cash collateralization of letters of credit. A termination event will also occur if we are in default with respect to debt obligations in excess of $5.0 million. Inventory Facilities We are also party to two revolving credit facilities, all of the lenders under which are Japanese banks. These inventory facilities together total $150.0 million and are available for revolving loans and letters of credit. The $100.0 million facility expires on May 31, 2000 and the $50.0 million facility expires on July 18, 1999 provided that it will be automatically renewed through May 31, 2000 unless we are given prior notice by the lender. The inventory facilities are secured by a lien on our steel and raw materials inventory. Interest rates and letter of credit fees with respect to the $100.0 million facility increase if NKK ceases to hold greater than 50% of the combined voting power of all of our stock. The inventory facilities require that we maintain a specified minimum stockholder's equity and a ratio of cash flow from operations to net financing costs of not less than 1.5 to 1. Events of default include, among other things, a default with respect to our other indebtedness in excess of $10.0 million. Old Bonds We have outstanding $75.0 million in total principal amount of our 8.375% First Mortgage Bonds Series due 2006. These old bonds bear interest at 8.375% per year. These bonds were issued under the indenture. They are secured by substantially all of the property which secures the original and exchange bonds. We may redeem these bonds at a redemption price of 101.005% of the total principal amount outstanding. This redemption price will decrease to 100% of the total principal amount in 2001. USWA Lien Pursuant to the 1993 settlement agreement, we have agreed to grant a second mortgage on the Great Lakes facility to secure payment of certain retiree health benefits to salaried and hourly employees and retirees. This security interest is subordinate to the security interest granted to the holders of the bonds. Other Indebtedness and Operating Leases Our vacuum degassing facility and pickle line at Great Lakes and a continuous caster facility at Granite City are each subject to mortgages, securing total indebtedness incurred to construct these facilities. The debt related to these facilities currently totals $187.3 million. 24 These mortgages contain customary default provisions and also provide that the failure of NKK to own at least a majority of the combined voting power of all classes of our stock also constitutes an event of default. The No. 2 caster and related ladle metallurgy station and electrolytic galvanizing line at Great Lakes as well as a portion of the coke oven battery at Granite City are owned by third parties and leased to us pursuant to leveraged operating leases. The present value of all such lease obligations as of December 31, 1998 was approximately $190 million. A 1,000 foot Great Lakes ore boat, the M/V George A. Stinson, is indirectly leased to us through an unrelated corporation through a single investor lease. Most of the other mobile equipment we use is leased pursuant to operating leases. DESCRIPTION OF THE BONDS We will issue the exchange bonds, under the provisions of the Indenture of Mortgage and Deed of Trust dated May 1, 1952 from National Steel and Great Lakes Steel Corporation, a former wholly owned subsidiary which in 1966 was merged into National Steel, to City Bank Farmers Trust Company and Ralph E. Morton, as trustees, as supplemented by all supplemental instruments, including the Eleventh Supplemental Indenture dated as of March 31, 1999, between National Steel and The Chase Manhattan Bank and Frank J. Grippo as trustees. The terms of the bonds include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939. For purposes of this section, references to "National Steel" or "we," "us" or "our" means only National Steel Corporation and not our subsidiaries. The following description is a summary of the material provisions of the indenture. It does not restate it in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as holders of these bonds. Some of the terms used in this description are defined under the heading "Certain Definitions." Principal, maturity and interest The original bonds are, and the exchange bonds will be: (1) our senior obligations; (2) secured by a first mortgage lien on most of our facilities, our ore properties and related mining facilities and stock of some of our Subsidiaries; and (3) equal in right of payment to all of our other Senior Debt. As of the date of the eleventh supplemental indenture, all of our Subsidiaries are Restricted Subsidiaries. However, under the circumstances described below under the subheading "Certain Covenants--Designation of Restricted and Unrestricted Subsidiaries," we will be permitted to designate other of our Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture. The bonds mature on March 1, 2009. The trustee authenticated and delivered two separates series of original bonds for original issue in a total principal amount of $225.0 million on March 8, 1999 and $75.0 million on March 31, 1999. The exchange bonds will be treated as a continuation of the original bonds but will constitute a single series of up to $300.0 million principal amount. We cannot predict what amount, if any of either series of original bonds will be exchanged for exchange bonds. The bonds bear interest at a rate of 9 7/8% per year. Interest is payable semiannually on March 1 and September 1 of each year, beginning on September 1, 1999. Interest is payable to the persons who are registered holders of the bonds at the close of business on the February 15 or August 15, immediately preceding the interest payment date. We will make all payments of principal, premium, if any, and interest on the bonds in immediately available funds. The bonds will be exchangeable and transferable at our office or agency, one of which will be maintained for such purpose in New York City, which initially will be the corporate trust office of the trustee. 25 Transfer and exchange The bonds will be issued only in fully registered form without coupons, in denominations of $1,000 or any integral multiple thereof. No service charge will be made for any registration of transfer or exchange of bonds, except for any tax or other governmental charge that may be imposed in connection with a transfer. Ranking The bonds are senior secured obligations. They rank equally in right of payment with our other senior obligations. As of December 31, 1998, after giving effect to the issuance of the bonds, the total principal amount of our outstanding indebtedness would be approximately $623 million, all of which constitutes senior obligations. While unsecured indebtedness ranks equally with the bonds in right of payment, the holders of the bonds and all other bonds issued under the indenture may, to the exclusion of unsecured creditors, seek repayment for the sale of the Mortgaged Property in the event of a Default. The bonds are effectively subordinated to all creditors to the extent of the assets of such subsidiaries, including the PBGC, trade creditors and unsecured creditors, and preferred stockholders, if any, of our Subsidiaries. These creditors will be entitled to receive payment in full of their obligations before holders of the bonds may be paid from cash generated by our Subsidiaries, in the event of a distribution of assets to our creditors due to dissolution, liquidation, bankruptcy or other similar events. As of December 31, 1998, the total outstanding indebtedness of our Subsidiaries totaled approximately $30.6 million. Although our Subsidiaries are restricted from Incurring indebtedness by the bonds, the amount of indebtedness which is permitted could be substantial. Our Subsidiaries are not restricted from Incurring trade credit or other obligations. Under some circumstances, our Subsidiaries may become jointly and severally liable for our pension liabilities. The amount of these pension liabilities could be substantial and they may be secured. Mortgaged Property The bonds are secured by the lien of the indenture equally with all other bonds issued under the indenture. This lien is a first lien on: (1) our plants at Granite City, Great Lakes and Midwest, with some exceptions, (2) some of our ore properties and related mining facilities and (3) all of the outstanding Capital Stock of the Hanna Furnace Corporation, NS Land Company and National Mines Corporation. The Mortgaged Property does not include, among other things: (1) inventory and accounts receivable and related books and records, most of which will be pledged to secure the obligations under the inventory facilities and receivables facility, (2) our interest in Double G, DNN and other joint ventures and Subsidiaries, (3) a continuous caster and related ladle metallurgy facility servicing Great Lakes, (4) an electrolytic galvanizing line servicing Great Lakes, (5) a portion of the coke battery servicing Granite City, (6) a vacuum degassing facility and pickle line which service Great Lakes, and (7) a continuous caster servicing Granite City. We use other assets to service our facilities, including the coke battery which services Great Lakes, that we do not own and, therefore, these assets are not subject to the lien of the indenture. We may issue more bonds We may issue more bonds of other series from time to time under the indenture. The total principal amount of these bonds is limited to: (1) 66 2/3% of the net bondable value of our property additions, 26 (2) 66 2/3% of our cost or fair value, whichever is less, of bondable obligations, (3) 66 2/3% of our cost or fair value, whichever is less, of bondable stock, (4) the total principal amount of refundable Bonds, and (5) the amount of cash deposited with the trustee. We may not issue additional bonds on the basis of bondable obligations, bondable stock or refundable bonds originally issued on the basis of bondable obligations or bondable stock, if, as a result, more than 25% of all the bonds then outstanding under the indenture would be bonds issued on such bases. The original bonds were issued under the provisions of the indenture relating to the issuance of bonds for property additions and refundable Bonds. As of February 28, 1999, approximately $21 million in principal amount of bonds was issuable under the various provisions of the indenture, after deducting the $300.0 million principal amount of original bonds. We have agreed under our settlement with the USWA that, as long as the 1993 Settlement Agreement is in existence, we will not issue additional bonds in excess of 90% of the amount of bonds that could otherwise be issued under the indenture. Optional Redemption On or after March 1, 2004, we may redeem all or part of the bonds upon not less than 30 nor more than 60 days' prior notice. The redemption prices, expressed as percentages of principal amount, are set forth below, plus accrued interest, to the applicable redemption date, if redeemed during the 12-month period beginning on March 1 of the years set forth below:
Year Redemption Price ---- ---------------- 2004..................................................... 104.938% 2005..................................................... 103.292% 2006..................................................... 101.646% 2007 and thereafter...................................... 100.000%
At any time before March 1, 2002, we may redeem up to a maximum of 35% of the total principal amount of the bonds with the proceeds of one or more public equity offerings. If we redeem bonds in this manner, we will pay a redemption price equal to 109.875% of the principal amount of the bonds, plus accrued interest; provided that: (1)at least 65% of the original total principal amount of the bonds remains outstanding, (2)the redemption is made within 90 days of the public equity offering, and (3)notice of the redemption is mailed not less than 30 nor more than 60 days before the redemption. Sinking Fund There are no sinking fund payments for the bonds. Repurchase at the Option of Holders Upon a Change of Control We are required to commence, within 30 days of the occurrence of a Change of Control, an offer to repurchase the bonds at a purchase price equal to 101% of the principal amount, plus accrued interest. We must send a notice of the Change of Control offer to repurchase at least once to the Dow Jones News Service or similar business news service in the United States. We must also mail to the trustee and to each holder of bonds, at such holder's address appearing in the bond register, a notice describing the transaction which constitutes the Change of Control, and our offer to repurchase the bonds. 27 The definition of Change of Control includes a phrase relating to the sale, assignment, lease, conveyance, disposition or transfer of "all or substantially all" of our assets. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of bonds to require us to repurchase such bonds as a result of a sale, assignment, lease, conveyance, disposition or transfer of less than all of our the assets may be uncertain. Our receivables facility and inventory facilities prohibit some events that constitute a Change of Control under the indenture. If such events occur, there would also occur a liquidation event or an event of default under these agreements. Any future Debt may contain prohibitions of these events or require such Debt to be repurchased upon a Change of Control. Also, if the holders of bonds require us to repurchase bonds we could be in Default under existing or future Debt, even if the Change of Control itself does not cause a Default, due to the financial effect of such repurchase. In addition, we may not have sufficient funds available to make any required repurchases. Our failure to repurchase the bonds in connection with a Change of Control would result in a Default under the indenture which could, in turn, constitute a Default under our existing or future Debt. Our obligation to make an offer to repurchase the bonds as a result of a Change of Control may be waived or modified at any time prior to the occurrence of such Change of Control with the written consent of the holders of a majority in principal amount of the bonds. Certain Covenants Covenant Suspension. For so long as we reach and maintain Investment Grade Status, we and our Restricted Subsidiaries are released from our obligations to comply with all of the covenants described below, except for the covenants described under: (1) "Limation on Liens" (2) "Limitation on Sale and Leaseback Transactions," (3) "Limitation on Pledged Subsidiaries to Incur Indebtedness or Issue Capital Stock," (4) "Limitation on Sale of Capital Stock and Indebtedness of Pledged Subsidiaries," (5) "Limitation on Sale of Mortgaged Property," (6) "Designation of Restricted and Unrestricted Subsidiaries" (other than clause (x) of the third paragraph (and such clause (x) as referred to in the second paragraph) thereunder), (7) "Merger, Consolidation and Sale of Property" (other than clauses (5) and (6) of the first and second paragraphs thereunder), and (8) "Repurchase at the Option of Holders Upon a Change of Control." If we later cease to have an Investment Grade Rating from either or both of the Rating Agencies, the following restrictive covenants will once again apply to us and our Restricted Subsidiaries. Limitation on Debt and Restricted Subsidiary Preferred Stock. We may not, and may not permit any Restricted Subsidiary to, directly or indirectly, Incur any Debt, which includes preferred stock of Restricted Subsidiaries; provided, however, that: (1) we and our Restricted Subsidiaries may Incur Debt if (a) after giving effect to the application of the proceeds of such Debt, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and (b) after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio would be greater than 2.50 to 1.00, and (2) we and our Restricted Subsidiaries may also Incur Permitted Debt. 28 Permitted Debt includes the following: (1) the bonds; (2) our Debt or that of any Restricted Subsidiary under the Credit Facilities, provided that the total principal amount of all such Debt at any one time outstanding may not exceed the greater of: (a) $350.0 million less the total amount of all required payments of principal applied to reduce the maximum amount available to be borrowed as a result of an Asset Sale and as described below in "--Limitation on Sale of Assets other than Mortgaged Property," and (b) the sum of (x) 60% of the book value of our inventory and that of the Restricted Subsidiaries and (y) 85% of the book value of our accounts receivable and those of the Restricted Subsidiaries, in each case as of the most recently ended quarter prior to such Incurrence for which financial statements have been provided to the holders of bonds; (3) Capital Expenditure Debt of National Steel or any Restricted Subsidiary, provided that (a) the total principal amount of such Debt does not exceed the Fair Market Value on the date of the Incurrence of the Property acquired, constructed or leased and (b) the total principal amount of all such Capital Expenditure Debt Incurred and then outstanding, together with all permitted refinancing Debt Incurred and then outstanding in respect of such Capital Expenditure Debt previously Incurred, does not exceed $175.0 million; (4) Debt of National Steel owing to and held by any Wholly Owned Subsidiary and Debt, including preferred stock, of a Restricted Subsidiary owing to and held by National Steel or any Wholly Owned Subsidiary; provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such Debt, except to National Steel or a Wholly Owned Subsidiary, will be deemed to be the Incurrence of such Debt by National Steel or such Restricted Subsidiary; (5) Debt of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by us or otherwise became a Restricted Subsidiary, other than Debt Incurred in our acquisition of the Subsidiary; provided that at the time such Restricted Subsidiary was acquired or otherwise became a Restricted Subsidiary and after giving pro forma effect to the Incurrence of such Debt, we would have been able to Incur $1.00 of additional Debt pursuant to clause (1) of the immediately preceding paragraph; (6) Debt under Interest Rate Agreements entered into by us or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of our financial management and not for speculative purposes; provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by the terms of this covenant; (7) Debt under Currency Exchange Protection Agreements entered into by us or a Restricted Subsidiary for the purpose of limiting currency exchange rate risk in the ordinary course of our financial management and not for speculative purposes; (8) Debt under Commodity Price Protection Agreements entered into by us or a Restricted Subsidiary in the ordinary course of our financial management, including cost control, and not for speculative purposes; (9) Debt in connection with one or more standby letters of credit or performance bonds issued by National Steel or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit; (10) Debt outstanding on the Series A Issue Date not otherwise described in clauses (1) through (9) above; (11) Debt of National Steel or any Restricted Subsidiary, other than Debt permitted by the immediately preceding paragraph or the other clauses of this paragraph, in a total principal amount outstanding at any one time not to exceed $75.0 million; and (12) Permitted Refinancing Debt Incurred in respect of Debt Incurred: 29 (a) pursuant to the Consolidated Interest Coverage Ratio test described in clause (1) of the immediately preceding paragraph, (b) the bonds, (c) Capital Expenditure Debt, subject to the limitations described in clause 3 of this paragraph, (d) the acquisition of a Restricted Subsidiary, subject to the requirement that $1.00 of additional Debt may be Incurred without causing an Event of Default, and (e) other Debt outstanding on the Series A Issue Date. Limitation on Pledged Subsidiaries to Incur Indebtedness or Issue Capital Stock. As long as bonds are outstanding, we may not permit any Wholly Owned Subsidiary whose stock is pledged under the indenture to: (1) Incur any indebtedness, except owed to us, and its extension, renewal or refunding and except current liabilities other than for borrowed money, and (2) issue any Capital Stock except to us. However, a Wholly Owned Subsidiary may acquire Property subject to an existing lien or create a lien on it at the time of its acquisition up to 66 2/3% of the cost of such Property, subject to some limitations. We may not assign any indebtedness of a pledged Wholly Owned Subsidiary, except to the trustee or, after assignment to the trustee, unless all indebtedness and Capital Stock of the Wholly Owned Subsidiary has been or at the same time is sold or disposed of. Limitation on Restricted Payments. We may not make, and may not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving effect to, such proposed Restricted Payment: (1) a Default or Event of Default has occurred and is continuing, (2) we could not Incur at least $1.00 of additional Debt pursuant to the covenant described under "Limitation on Debt and Restricted Subsidiary Preferred Stock" or (3) the total amount of such Restricted Payment and all other Restricted Payments declared or made since the Series A Issue Date, measured by cash amount paid or Fair Market Value if a non-cash payment, would exceed an amount equal to the sum of: (a) 50% of the total amount of Consolidated Net Income accrued during the period, treated as one accounting period, from and after the first day of the fiscal quarter following the end of the most recent fiscal quarter ended immediately prior to the Series A Issue Date to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment, or if the total amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit; (b) Capital Stock Sale Proceeds; (c) the amount by which our Debt, other than Subordinated Obligations issued or sold prior to the Series A Issue Date, is reduced on our balance sheet upon the conversion or exchange, other than by a Subsidiary, subsequent to the Series A Issue Date of any of our Debt convertible or exchangeable for our Capital Stock, other than Disqualified Stock, less the amount of any cash or other Property distributed by us or any Restricted Subsidiary upon such conversion or exchange; and (d) to the extent not otherwise included in our Consolidated Net Income, an amount equal to (x) the net reduction in Investments in any person, other than reductions in Permitted Investments, resulting from the payment in cash of interest on Debt, dividends, repayments of loans or advances, or other transfers of assets, in each case to us or any Restricted Subsidiary after the Series A Issue Date from such person and (y) the portion, proportionate to our equity interest in such Subsidiary, of the Fair Market Value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that in the case of (x) or (y) the sum shall not exceed the amount of Investments previously made, and treated as a Restricted Payment, by us or any Restricted Subsidiary in such person or Unrestricted Subsidiary. 30 Notwithstanding the preceding limitation, we may: (a) pay dividends on our Capital Stock within 60 days of their declaration if, on such date, such dividends could have been paid in compliance with the indenture; provided, however, that at the time of payment of such dividend, no other Default or Event of Default has occurred and is continuing or would result; provided further, however, that such dividend will be included in the calculation of the amount of Restricted Payments; (b) purchase, repurchase, redeem, legally defease, acquire or retire for value our Capital Stock or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, our Capital Stock, other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or trust established by National Steel or any of our Subsidiaries for the benefit of our employees; provided, however, that (1) such payment will be excluded in the calculation of the amount of Restricted Payments and (2) the net cash proceeds from such exchange or sale will be excluded from the calculation of the amount of Capital Stock Sale Proceeds; (c) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided, however, that such payment will be excluded in the calculation of the amount of Restricted Payments; (d) expend up to $5.0 million in any fiscal year to repurchase our common stock (1) to distribute to current or former employees, officers and directors of National Steel and our Subsidiaries, including upon the exercise of stock options, (2) from such current or former employees, officers or directors or (3) otherwise in order to distribute as employee compensation; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure no other Default or Event of Default has occurred and is continuing; provided further, however, that such repurchase will be excluded in the calculation of the amount of Restricted Payments; (e) repurchase up to 700,000 shares of our common stock pursuant to the stock repurchase approved by our board of directors on August 26, 1998; provided, however, that at the time of, and after giving effect to, any such expenditure no other Default or Event of Default has occurred and is continuing; provided further, however, that such repurchase will be included in the calculation of the amount of Restricted Payments; and (f) expend up to $50.0 million for Restricted Payments in addition to amounts permitted by clauses (a) through (e) above; provided, however, that at the time of, and after giving effect to, any such expenditure, no other Default or Event of Default has occurred and is continuing; provided further, however, that such expenditures will be included in the calculation of the amount of Restricted Payments. Limitation on Liens. If we create any mortgage on, or pledge of, the then Mortgaged Property or any part of it, it must be subordinate to the prior lien of the indenture for the security of all bonds issued under the indenture whether currently outstanding or issued in the future. The lien of the indenture may be subordinate to permitted liens, including: (1) undetermined or inchoate liens incidental to construction of current operations, (2) tax liens for the then current year, (3) the liens of taxes, assessments or governmental charges not at the time delinquent or which are being contested in good faith and (4) liens based on workmen's compensation which are not due and payable or which are being contested in good faith. Limitation on Sale of Capital Stock and Indebtedness of Pledged Subsidiaries. We will not sell or otherwise dispose of any indebtedness or Capital Stock of any Wholly Owned Subsidiary whose Capital Stock is pledged under the indenture, unless all indebtedness and Capital Stock of such Wholly Owned Subsidiary has been or is at the same time sold or disposed of. 31 Limitation on Sale of Mortgaged Property. We will not sell or otherwise dispose of less than substantially all, of the Mortgaged Property except, subject to exceptions, upon its release as provided in the indenture. We will not consolidate or merge with or into, or transfer or convey all or substantially all the Mortgaged Property as an entirety to, any other corporation or permit any other corporation to merge into us, except as provided in the indenture. We may, subject to the limitations described above under "Limitation of Sale of Capital Stock and Indebtedness of Pledged Subsidiaries," from time to time sell, exchange or otherwise dispose of Mortgaged Property, other than shares of stock, and such Mortgaged Property shall be released from the lien of the indenture upon receipt by the trustee of: (1) A certified resolution requesting such release. (2) An engineer's certificate stating in substance: (a) A description in reasonable detail of the Property to be released; (b) A description in reasonable detail of the consideration for the Property to be released, which may consist of cash and/or purchase money obligations given in payment of the purchase price of the Property to be released; (c) The then fair value of the Property to be released, which may not more than the amount of the consideration received or to be received from the sale, exchange or other disposition of the Property to be released; and (d) That such release will not impair the security under the indenture in contravention of the provisions of the indenture and is desirable in the proper conduct of our business, or is otherwise in our best interests. If the fair value of such Property to be released, and of all other Property or securities released from the lien of the indenture since the beginning of the then current calendar year, is ten percent (10%) or more of the total principal amount of all the outstanding bonds under the indenture, the certificate must be made by an independent engineer. However, the certificate need not be made by an independent engineer if the fair value of the Property to be released is less than $25,000 or less than one percent (1%) of the total principal amount of all the outstanding bonds. (c) If the consideration for the Property to be released includes purchase money obligations, an officers' certificate stating that such obligations were given in payment of part of the purchase price of the Property to be released and are secured by a purchase money mortgage on the Property to be released maturing not more than ten years after the date of deposit with the trustee. Such purchase money obligations may not exceed in principal amount (1) 66 2/3% of the fair value of the Property covered by such purchase money mortgage and (2) together with the total principal amount of all such obligations received for Property released and held by the trustee, ten percent of the total principal amount of all bonds then outstanding. (d) We must deposit with the trustee any cash or purchase money obligations stated in the engineer's certificate to be consideration for the Property to be released. We may elect to reduce the cash required to be deposited by an amount equivalent to the amount of cash which could at the time be withdrawn pursuant to the indenture on the same conditions as additional bonds are issued, described above under "Issuance of Additional Bonds;" provided that the amount of cash required to be deposited may not be reduced by the amount of cash that could at the time be withdrawn on the basis of bondable obligations or bondable stock, and that the amount of cash to be deposited may not be reduced by the amount of cash which could at the time be withdrawn on the basis of bondable stock. (e) In addition, subject to the limitations stated above under "Limitation on Sale of Capital Stock and Indebtedness of Pledged Subsidiaries," we may sell, exchange or otherwise dispose of any Mortgaged Property, other than shares of stock or other securities or indebtedness of any corporation pledged under the indenture or any of our rights and interests with respect to the contract between the Corporation and 32 Iron Ore Company of Canada as described in the indenture. The trustee must release this Mortgaged Property from the lien of the indenture, without compliance with any of the provisions described in clauses (a) through (d) above and without the deposit of cash with the trustee, upon receipt by the trustee of: (1). A request evidenced by an officer's certificate; and (2). An engineer's certificate, stating in substance: (a) A description in reasonable detail of the Property to be released; (b) A description in reasonable detail of the consideration, if any, for the Property to be released; (c) The then fair value of the Property to be released, which fair value may not exceed $100,000; (d) That neither (A) the total fair value of all Property released under this paragraph (e) in the calendar year in which the Property described in the certificate is to be released nor (B) the total consideration received by us for all Property so released for such calendar year, exceeds $250,000; and (e) That such Property is not useful or necessary in the conduct of our business and that such release will not impair the security under the indenture in contravention of the provisions of the indenture and is desirable in the proper conduct of our business or is otherwise in our best interests. No Property may be released under this provision in any calendar year after either (A) the total fair value of all Property released under this provision for such calendar year, or (B) the total consideration received for such Property for such calendar year, exceeds $250,000. Limitation on Sale of Assets other than Mortgaged Property. We may not, and may not permit any Restricted Subsidiary to, directly or indirectly, complete any Asset Sale, which does not include sales or other dispositions of Mortgaged Property made in compliance with the covenant described above under the heading "Limitation on Sale of Mortgaged Property," unless (1) consideration received at the time of such Asset Sale or, in the case of a lease that is an Asset Sale, is to be received over the term of such lease, is at least equal to the Fair Market Value of the Property sold; (2) at least 75% of the consideration paid in such Asset Sale is in the form of cash, Cash Equivalents, additional assets or the assumption by the purchaser of liabilities of National Steel or any Restricted Subsidiary, other than liabilities that are by their terms subordinated to the bonds, as a result of which National Steel and the Restricted Subsidiaries are no longer obligated for such liabilities; and (3) we deliver an officers' certificate to the trustee certifying compliance with clauses (1) and (2). The Net Available Cash from Asset Sales may be applied, to the extent we or such Restricted Subsidiary elects, or is required by the terms of any Debt: (a) to prepay, repay, legally defease or purchase our Senior Debt or Debt of any other Restricted Subsidiary, excluding, in any such case, Debt owed to National Steel or an affiliate; (b) to permanently fund our pension or OPEB obligations; or (c) to reinvest in additional assets, including by means of an Investment in additional assets by a Restricted Subsidiary with Net Available Cash received by National Steel or another Restricted Subsidiary, or to commit to reinvest in additional assets, such commitments to include amounts anticipated to be expended pursuant to our capital Investment plan. We must file an officer's certificate with the trustee stating that the total amount of the Net Available Cash from such Asset Sale, after giving effect to the prior application of any portion pursuant to clause (a) or (b) of this paragraph, is less than the total amount contemplated to be expended pursuant to such capital Investment 33 plan within 24 months of the completion of such Asset Sale. However, in connection with any prepayment, repayment, legal defeasance or purchase of Debt pursuant to clause (a) above, we, or our Restricted Subsidiary, must retire such Debt and cause any related loan commitment to be permanently reduced by an equal amount. Any Net Available Cash from an Asset Sale not applied in accordance with the preceding provisions within twelve months after its receipt or not committed to be reinvested and actually reinvested within twenty-four months after its receipt, shall constitute "excess proceeds." When the total amount of excess proceeds exceeds $5.0 million, including income earned on such excess proceeds, we must make an offer to purchase the bonds. This prepayment offer must be: (1) in the amount of the excess proceeds, (2) made on a pro rata basis according to principal amount, (3) made at a purchase price equal to 100% of the principal amount, plus accrued interest to the Purchase Date and (4) made in accordance with the procedures provided in the eleventh supplemental indenture. If any portion of Net Available Cash remains after such application and after all holders of bonds have been given the opportunity to tender their bonds, we or such Restricted Subsidiary may use any remaining amount for any purpose permitted by the indenture and the amount of excess proceeds will be reset to zero. The prepayment offer must be made within five business days after we become obligated to make it. We must mail a written notice to holders, accompanied by information regarding us and our Subsidiaries as we in good faith believe will enable such holders to make an informed decision regarding our prepayment offer. We must state the purchase price and the purchase date, which must be, unless otherwise required by applicable law, a business day no earlier than 30 days nor later than 60 days from the date the notice is mailed. We will comply with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of bonds pursuant to the prepayment offer. Limitation on Restrictions on Distributions from Restricted Subsidiaries. We may not, and may not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any restriction on the right of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to National Steel or any other Restricted Subsidiary, (2) make any loans or advances to National Steel or any other Restricted Subsidiary, (3) transfer any of its Property to National Steel or any other Restricted Subsidiary or (4) Guarantee any Debt of National Steel or any other Restricted Subsidiary. These limitations will not apply to restrictions : (1) in effect on the Series A Issue Date, (2) relating to Debt of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction in which it became a Restricted Subsidiary or was acquired, (3) which result from the refinancing of Debt Incurred pursuant to an agreement referred to in the immediately preceding clauses (1) or (2), provided that such restriction is no less favorable to the holders of bonds than those under such agreement, (4) on Funding or any other bankruptcy-remote special-purpose Subsidiary or any Restricted Subsidiary that purchases or sells accounts receivable or inventory pursuant to the Credit Facilities, (5) arising out of or agreed to in a joint venture agreement entered into by us or a Restricted Subsidiary in the ordinary course of business that do not, individually or in total, (a) detract from the value 34 of our Property or assets or those of any Restricted Subsidiary in any material manner or (b) materially adversely affect our ability to make principal or interest payments on the bonds, and (6) with respect to clause (3) only, to restrictions: (A) relating to Debt that is permitted to be Incurred and secured pursuant to the covenants described under "Limitation on Debt and Restricted Subsidiary Preferred Stock" and "Limitation on Liens" that limit the right of the debtor to dispose of the Property securing such Debt, (B) encumbering Property at the time such Property was acquired by us or any Restricted Subsidiary, so long as such restriction relates solely to the Property acquired and was not created in connection with or in anticipation of such acquisition, (C) which result from the refinancing of Debt Incurred pursuant to an agreement referred to in clauses (A) or (B), (D) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights, or (E) customary restrictions contained in Asset Sale agreements limiting the transfer of such Property pending the closing of such sale. Limitation on Transactions with Affiliates. We may not, and may not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or transactions, including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service, with, or for the benefit of, any affiliate of National Steel, unless: (1) the terms of such affiliate transaction are (a) set forth in writing and (b) no less favorable than those that could be obtained in a comparable arm's-length transaction with a non-affiliate, (2) if such affiliate transaction involves total payments or value in excess of $10.0 million, the board of directors, including a majority of its disinterested members, approves the affiliate transaction and in its good faith judgment believes that such affiliate transaction complies with clause (1) and (3) if such affiliate transaction involves total payments or value in excess of $20.0 million, we obtain a written opinion from an Independent Financial Advisor to the effect that such affiliate transaction is fair, from a financial point of view, to National Steel or such Restricted Subsidiary. Notwithstanding the foregoing limitation, National Steel or any Restricted Subsidiary may enter into or suffer to exist the following: (1) any transaction or series of transactions between us and one or more Restricted Subsidiaries or between Restricted Subsidiaries, provided that no more than 5% of the total voting power of the voting stock of any such Restricted Subsidiary is owned by an affiliate other than a Restricted Subsidiary; (2) any Restricted Payment permitted to be made pursuant to the covenant described under "Limitation on Restricted Payments;" (3) any issuance of securities or other payments, awards or grants in securities or otherwise pursuant to, or the funding of, employment arrangements, pension or other benefit plans, stock options and stock ownership plans and other compensatory arrangements approved by the board of directors; (4) the payment of reasonable fees to directors of National Steel or such Restricted Subsidiary who are not employees of them; (5) loans and advances to employees made in the ordinary course of business and consistent with past practices, provided that such outstanding loans and advances do not exceed $5.0 million in total at any one time; (6) any payments for the purchase of steel products from NKK or any of its affiliates or the provision of services by NKK or any of its affiliates, including the construction by NKK or an affiliate of NKK of the new hot dip galvanizing facility at the Great Lakes Division; provided, that, in each case, the terms of 35 such payments are determined on an arm's length basis and are approved by the disinterested members of the board of directors; and (7) any affiliate transactions between National Steel or any Restricted Subsidiary and one or more Affiliate Joint Ventures that (a) are on terms no less favorable than those that could be obtained in a comparable arm's length transaction with a non-affiliate of National Steel and (b) if such affiliate transactions involve total payments or value in excess of $10.0 million, the board of directors, including a majority of its disinterested members, approves such affiliate transaction and in its good faith judgment believes that it complies with this provision. Limitation on Sale and Leaseback Transactions. We may not, and may not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Property unless: (1) we would be entitled to (a) Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to the covenant described under "Limitation on Debt and Restricted Subsidiary Preferred Stock" and (b) create a Lien on the Property securing such Attributable Debt pursuant to the covenant described under "Limitation on Liens" and (2) such Sale and Leaseback Transaction is effected in compliance with the covenant described under "Limitation on Sale of Assets other than Mortgaged Property" or the covenant described under "Limitation on Sale of Mortgaged Property," as applicable. Designation of Restricted and Unrestricted Subsidiaries. National Steel's board of directors may designate any Subsidiary to be an Unrestricted Subsidiary if: (1) such Subsidiary does not own any Capital Stock or Debt of, or own or hold any Lien on any Property of, National Steel or any other Restricted Subsidiary, (2) such Subsidiary is not obligated under any Debt, Lien or other obligation that, if in Default, would result in a Default on any of our Debt or Debt of any Restricted Subsidiary, and (3) either (a) such Subsidiary has total assets of $1,000 or less or (b) such designation is effective immediately upon such entity becoming our Subsidiary or a Subsidiary of any Restricted Subsidiary. Unless designated as an Unrestricted Subsidiary, any person that becomes a Subsidiary of National Steel or of any Wholly Owned Subsidiary will be classified as a Restricted Subsidiary, provided that (x) we could Incur at least $1.00 of additional Debt pursuant to the covenant described under "Limitation on Debt and Restricted Subsidiary Preferred Stock" and (y) no Default or Event of Default has occurred and is continuing or would result after giving effect to such classification. Any person that does not meet the preceding requirements will be automatically classified as an Unrestricted Subsidiary. Except as provided in the first sentence of this paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. The board of directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving effect to such designation, (x) we could Incur at least $1.00 of additional Debt pursuant to the covenant described under "Limitation on Debt and Restricted Subsidiary Preferred Stock" and (y) no Default or Event of Default has occurred and is continuing or would result. Limitation on Lines of Business. We may not, nor may any of our Restricted Subsidiaries, directly or indirectly, engage to any substantial extent in any line or lines of business activity other than those businesses, and reasonably related businesses, that we were engaged in as of the Series A Issue Date. 36 Merger, Consolidation and Sale of Property We will not merge, consolidate or amalgamate with or into any other person, other than a merger of a Wholly Owned Subsidiary into us, or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all our Property in any one transaction or series of transactions unless: (1) National Steel is the surviving person or the surviving person, if other than National Steel, formed by, or to which such sale or other disposition is made, is a corporation organized and existing under the laws of the United States of America, any State or the District of Columbia; (2) the surviving person, if other than National Steel, expressly assumes, in accordance with the provisions of the indenture, the due and punctual payment of the principal of, and premium, if any, and interest on, all the bonds, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions to be performed by National Steel and confirms in writing the lien of the indenture, including the after-acquired Property clauses; (3) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all of our Property, such Property has been transferred as an entirety or virtually as an entirety to one person; (4) immediately before and after giving effect to such transaction or transactions and treating, for purposes of this clause (4) and clauses (5) and (6) below, any Debt which becomes, or is anticipated to become, an obligation of the surviving person or any Restricted Subsidiary as a result of such transaction or transactions as having been Incurred at the time of such transaction or series of transactions, no Default or Event of Default shall have occurred and be continuing; (5) immediately after giving effect to such transaction or series of transactions, National Steel or the surviving person would be able to Incur at least $1.00 of additional Debt under the covenant described under "Certain Covenants--Limitation on Debt and Restricted Subsidiary Preferred Stock;" (6) immediately after giving effect to such transaction or series of transactions, the surviving person has a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of National Steel immediately prior to such transaction or series of transactions; and (7) National Steel delivers, or causes to be delivered, to the trustee an officers' certificate and an opinion of counsel, each stating that such transaction and any supplemental indenture with respect to it comply with this covenant and that all conditions precedent relating to such transaction have been satisfied. SEC Reports Whether or not we are then required to file reports with the SEC, we will file all such reports and other information as would be required by Sections 13 and 15(d) of the Exchange Act if we were subject to the Exchange Act. We also must supply, within 15 days after the required filing time of such reports and other information, to the trustee and each holder or to the trustee to be forwarded to each holder, without cost to the holder, copies of such reports and other information. If the SEC does not permit the filing of such reports and other information, we will supply copies of such reports and other information to any holder of bonds upon their written request. Events of Default Events of Default. The following events are defined as "Events of Default" in the indenture and apply to all bonds issued under the indenture: (1) default in payment of any installment of interest on any bond issued under the indenture continued for ninety days; (2) default in payment of any principal on any bond issued under the indenture when due; 37 (3) default in meeting any sinking fund requirement on any bond issued under the indenture; (4) default for ninety days after written notice in the observance or performance of any other covenant or agreement in the indenture; or (5) specific events of bankruptcy or insolvency. The trustee of the holders of 25% in principal amount of all bonds issued under the indenture may declare the principal of all such bonds to be immediately due and payable upon an event of default. However, the holders of a majority in principal amount of all such bonds may waive the Default and rescind any declaration if the Default is cured. The trustee is required to take steps to enforce payment of the bonds and the lien of the indenture upon the written request of the holders of at least than a majority in principal amount of all the bonds issued under the indenture upon any event of default. Supplemental Indenture Events of Default. In addition to the Events of Default described in the preceding paragraph, the original and exchange bonds have additional Events of Default which apply only to them. The following events are, under the terms of the tenth and eleventh supplemental indentures, referred to as "Supplemental Indenture Events of Default": (1) Default in the payment of any interest on the bonds when it becomes due and payable continued for a period of 30 days; (2) Default in the payment of any principal or premium, if any, on any of the bonds when it becomes due and payable under the eleventh supplemental indenture; (3) failure to comply with the covenant described above under "Merger, Consolidation and Sale of Property;" (4) failure to comply with any other covenant or agreement in the bonds or in the indenture, other than a failure which is the subject of the foregoing clause (1), (2) or (3), which continues for 30 days after written notice is given to us as provided below; (5) a Default under any Debt by us or any Restricted Subsidiary which results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an total amount greater than $10.0 million (the "cross acceleration provisions"); (6) if any judgment or judgments for the payment of money in a total amount in excess of $10.0 million is rendered against us or any Restricted Subsidiary and is not waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement is not in effect; and (7) specific events involving bankruptcy, insolvency or reorganization of us or any Significant Subsidiary. The trustee may withhold notice to the holders of the bonds of any Eleventh Supplemental Indenture Default, except payment Defaults, if it is considered to be in the best interest of the holders of the bonds to do so. A Supplemental Indenture Default under clause (4) is not a Supplemental Indenture Event of Default until the trustee or the holders of not less than 25% in outstanding principal amount of the bonds outstanding under the tenth or eleventh supplemental indenture, as applicable, notify us of the Supplemental Indenture Default and we do not cure it within the time period specified. Such notice must specify the Supplemental Indenture Default, demand that it be remedied and state that such notice is a "Notice of Default." We must notify the trustee within 30 days after the occurrence of a Default or an Event of Default. If a Supplemental Indenture Event of Default continues, other than as a result of bankruptcy, insolvency or reorganization, the trustee or the registered holders of not less than 25% in total outstanding principal amount of all bonds outstanding under the tenth or eleventh supplemental indenture, as applicable, may declare the principal and accrued but unpaid interest of the bonds immediately due and payable. If a Supplemental Indenture Event of Default results from bankruptcy, insolvency or reorganization of us or any Significant 38 Subsidiary, the bonds shall be due and payable immediately without any declaration or other act on the part of the trustee or the holders of the bonds. Subject to the right of the holders of 25% in principal amount of all bonds issued under the tenth or eleventh supplemental indenture, as applicable, to accelerate the maturity of all of such bonds as described above, the holders of a majority in total outstanding principal amount of the bonds may rescind any acceleration if it would not conflict with any judgment or decree and if all existing Supplemental Indenture Events of Default are cured. No such rescission shall affect any subsequent Supplemental Indenture Default or impair any rights related to such subsequent Default. Subject to the provisions of the indenture relating to the duties of the trustee, the trustee does not have to exercise any of its rights or powers in the event of a Default unless holders of all bonds agree to reasonably indemnify the trustee. If they do so agree, the holders of a majority in total principal amount of all bonds issued under the indenture then outstanding have the right to direct the time, method and place of conducting any proceeding for any available remedy or exercising any trust or power conferred on the trustee with respect to all the bonds. The original or exchange bonds outstanding at any time may not constitute a majority of the outstanding principal amount of all bonds of all series. Thus, holders of these bonds may not have any ability to direct the trustee independently of any other series of bonds. Further, holders of series of bonds other than these bonds may have sufficient voting power to direct the actions of the trustee or cause the acceleration of the bonds without the consent of the holders of these bonds. A holder may not pursue any remedy with respect to the indenture or the bonds issued under the indenture, or take any action for the appointment of a receiver or trustee, unless: (1) the holder has given the trustee written notice of a continuing Event of Default, (2) the registered holders of at least 25% in total principal amount of all the bonds issued under the indenture or the applicable supplemental indenture then outstanding have made written request, (3) the holder or holders offer the trustee reasonable indemnity against any costs, liability or expense, (4) the trustee has not received from the registered holders of a majority in total outstanding principal amount of all the bonds issued under the indenture a direction inconsistent with such request, and (5) the trustee has failed to institute such proceeding within 30 days. These limitations do not apply to a suit instituted by a holder of any bonds issued under the indenture for enforcement of payment on such bond on or after the due dates expressed in such bond. Amendments and Waivers The indenture may be modified only with the consent of the holders of 66 2/3% of the principal amount of all bonds issued under the indenture. However, no modification may be made to: (1) alter the dates fixed for the payment on all the bonds, or otherwise modify the terms of payment, (2) alter the amount of principal of, or rate of interest or premium on, any of the bonds, (3) affect the rights of the holders of less than all the bonds of any series, (4) affect the rights of the holders of less than all the series of bonds except with the consent of the holders of not less than 66 2/3% in principal amount of the bonds of each of the series so affected, or (5) reduce the percentage of bondholder consent required for any modification. In addition, the tenth and eleventh supplemental indentures may not be amended without the consent of the registered holders of a majority of total outstanding principal amount of the bonds under the applicable supplemental indenture. They may also waive any past Default or compliance with any provisions of the applicable supplemental indenture, except a Default in the payment of principal, premium or interest and certain covenants and provisions of the tenth or eleventh supplemental indenture which cannot be amended without the consent of each holder of an outstanding bond. 39 However, the tenth and eleventh supplemental indentures may not, without the consent of each holder of an outstanding bond, be amended to: (1) reduce the amount of bonds whose holders must consent to an amendment or waiver, (2) reduce the rate of or extend the time for payment of interest on any bond, (3) reduce the principal of or extend the stated maturity of any bond, (4) make any bond payable in money other than that stated in the bond, (5) impair the right of any holder of the bonds to receive payment on such holder's bonds on or after the due dates or to institute suit for the enforcement of any payment on such holder's bonds, (6) subordinate the bonds to any other obligation of National Steel, (7) reduce the premium payable upon the redemption or repurchase of any bond as described under "Optional Redemption" or "Repurchase at the Option of Holders Upon a Change of Control," or (8) at any time after a Change of Control has occurred, change the time at which the related Change of Control offer must be made or at which the bonds must be repurchased. Defeasance We may cancel the indenture and discharge the lien if we pay, or make provision for the payment of, the principal, interest and premium, if any, on all the bonds issued under the indenture at the times and in the manner provided for in the indenture. Any moneys deposited with the trustee for the payment or redemption of all the bonds under the indenture and coupons, and remaining unclaimed by the bondholders for six years after the date of maturity or the date fixed for redemption of such bonds, shall be repaid to us and thereafter such bondholders will be limited to a claim against us for payment. Book-Entry System The exchange bonds will initially be issued in the form of one or more registered new bonds in global form without interest coupons registered in the name of The Depository Trust Company or its nominee. Upon the issuance of a global bond, DTC or its nominee will credit the accounts of persons holding through it with the respective principal amounts of the bonds represented by such global bond exchanged in the exchange offer. Ownership of beneficial interests in a global bond will be limited to persons that have accounts with DTC who are "participants," or persons that may hold interests through participants. Any person acquiring an interest in a global bond through an offshore transaction in reliance on Regulation S under the Securities Act may hold such interest through Cedel or Euroclear. Ownership of beneficial interests in a global bond will be shown on, and the transfer of that ownership interest will be effected only through, records maintained by DTC, with respect to participants' interests, and such participants, with respect to the owners of beneficial interests in such global bond other than participants. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. These limits and laws may impair the ability to transfer beneficial interests in a global bond. Payment of principal of and interest on bonds represented by a global bond will be made in immediately available funds to DTC or its nominee, as the case may be, as the sole registered owner and the sole holder of the bonds represented thereby for all purposes under the indenture. We have been advised by DTC that upon receipt of any payment of principal of or interest on any global bond, DTC will immediately credit, on its book-entry registration and transfer system, the accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal or face amount of such global bond as shown on the records of DTC. Payments by participants to owners of beneficial interests in a global bond held through such participants will be governed by standing instructions and customary practices as is now the case with securities held for customer accounts registered in "street name" and will be the sole responsibility of such participants. 40 A global bond may not be transferred except as a whole by DTC or a nominee of DTC to a nominee of DTC or to DTC. A global bond is exchangeable for certificated bonds only if: (1) DTC notifies us that it is unwilling or unable to continue as a depositary for such global bond or if at any time DTC ceases to be a clearing agency registered under the Exchange Act, (2) we, in our discretion at any time determine not to have all the bonds represented by such global bond or (3) there shall have occurred and be continuing a Default or an Event of Default with respect to the bonds represented by such global bond. Any global bond that is exchangeable for certificated bonds pursuant to the preceding sentence will be exchanged for certificated bonds in authorized denominations and registered in such names as DTC or any successor depositary holding such global bond may direct. Except as provided for in this paragraph, a global bond is not exchangeable, except for a global bond of like denomination to be registered in the name of DTC or any successor depositary or its nominee. In the event that a global bond becomes exchangeable for certificated bonds, (1) certificated bonds will be issued only in fully registered form in denominations of $1,000 or integral multiples thereof, (2) payment of principal of, and premium, if any, and interest on, the certificated bonds will be payable, and the transfer of the certificated bonds will be registerable, at our office or agency maintained for such purposes and (3) no service charge will be made for any registration of transfer or exchange of the certificated bonds, although we may require payment of a sum sufficient to cover any tax or governmental charge imposed in connection with the exchange. So long as DTC or any successor depositary for a global bond, or any nominee, is the registered owner of such global bond, DTC or such successor or nominee, will be considered the sole owner or holder of the bonds represented by such global bond for all purposes under the indenture and the bonds. Except as set forth above, owners of beneficial interests in a global bond will not be entitled to have the bonds represented by such global bond registered in their names, will not receive or be entitled to receive physical delivery of certificated bonds in definitive form and will not be considered to be the owners or holders of any bonds under such global bond. Accordingly, each person owning a beneficial interest in a global bond must rely on the procedures of DTC or any successor depositary, and, if not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the indenture. We expect that under existing industry practices, in the event that we request any action of holders or that an owner of a beneficial interest in a global bond desires to give or take any action which a holder is entitled to give or take under the indenture, DTC or any successor depositary would authorize the participants holding the relevant beneficial interest to give or take such action and such participants would authorize beneficial owners owning through such participants to give or take such action or would otherwise act upon the instructions of beneficial owners owning through them. DTC has advised us that it is: (1)a limited-purpose trust company organized under the Banking Law of the State of New York, (2)a member of the Federal Reserve System, (3)a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and (4)a "clearing agency" registered under the Exchange Act. DTC was created to hold the securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and 41 certain other organizations some of whom, or their representatives, own DTC. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in global securities among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Second Mortgage Under the terms of our collective bargaining agreement with the USWA, effective August 1, 1993, we have agreed to grant a second mortgage to Mellon Bank N.A., Trustee for National Steel Corporation Represented Retirees Benefit Trust, an unincorporated voluntary employees' beneficiary association organized under the laws of Pennsylvania. The second mortgage will cover all of the current and future real estate and improvements located at Great Lakes that are encumbered by the indenture for the purpose of securing our benefit liabilities and those of our Subsidiaries for collectively bargained retiree health care and insurance benefits for all of represented employees regardless of particular union representation. The benefits liabilities to be secured exclude retired employees covered under labor agreements with the United Mine Workers of America and retired employees of the Delray Connecting Railroad Corporation. We have calculated the benefit liabilities for such employees to be $406 million as of December 31, 1998. The rights to be granted pursuant to the second mortgage will be subordinate and subject to the rights of the trustee under the indenture as amended, modified and supplemented, including amendments, modifications and supplements executed after the date that the second mortgage is entered into. Under certain conditions, the second mortgage will provide that it will be released and satisfied by the second mortgagee trustee. The second mortgage will be subject, in both lien and payment, to the indenture, as amended or supplemented, and any additional bonds that may be issued. In the event of any conflict between the terms of the second mortgage and the terms of the indenture, the terms of the indenture will control. The second mortgagee trustee, at one or more times at our request, will consent, waive and agree, and will be deemed to have consented, waived and agreed on the same basis and to the same extent that any form of consent, waiver or agreement is granted by the trustee. The second mortgagee trust will forebear from taking any action not taken by the trustee. Such undertakings by the second mortgagee trustee will be declared to be a condition to the creation of any rights in second mortgagee trust pursuant to the second mortgage. The second mortgagee trustee will be required upon receipt of our written request to release from the lien of the second mortgage any portion or all of the Mortgaged Property that is released from the lien of the indenture. Furthermore, we will not be restricted by the second mortgage from conveying interests in the Mortgaged Property free of the lien of the second mortgage or be required to obtain the consent of second mortgagee trustee in any case where such conveyance free of the lien of the indenture is permitted by the terms of the indenture and the consent of the trustee is not required. In the event of a liquidation or foreclosure by the trustee, in any action involving such liquidation or foreclosure, we will agree to use our best efforts to support the enforcement of an appropriate equitable remedy for the benefit of the second mortgagee Trust, including, but not limited to, a marshaling of all of our assets. Certain Bankruptcy Limitations The right of the trustee to repossess and dispose of the Mortgaged Property, or otherwise to exercise rights or remedies against the Mortgaged Property, upon the occurrence of an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be begun by or against National Steel prior to the date when, or possibly even after, the trustee has taken any such action. Under 42 bankruptcy law, secured creditors such as the trustee on behalf of the holders are prohibited from repossessing their security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without bankruptcy court approval. Bankruptcy law also permits the debtor to continue to keep and use collateral even though the debtor is in default under the applicable debt instruments, provided generally that the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but it is intended in general to protect the value of the secured creditor's interest in the collateral. Adequate protection may include cash payments or the granting of additional security if the court determines it appropriate for any diminution in the value of the collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. Because of the lack of a precise definition of the term "adequate protection" and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the bonds could be delayed following commencement of a bankruptcy case, whether or when the trustee could repossess or dispose of the Mortgaged Property or whether or to what extent holders would be compensated for any delay in payment or loss of value of the Mortgaged Property through the requirement of "adequate protection." In the event that the bankruptcy court determines the value of the Mortgaged Property is not sufficient to repay all amounts due on the bonds, the holders would hold "undersecured claims." Applicable federal bankruptcy laws do not permit the payment and/or accrual of interest, costs and attorney's fees for "undersecured claims" during the pendency of a debtor's bankruptcy case. Governing Law The indenture and the bonds are governed by the internal laws of the State of New York without reference to principles of conflicts of law. The Trustee, Paying Agent and Registrar for the Bonds The Chase Manhattan Bank is the trustee under the indenture and has been appointed by National Steel as registrar and paying agent with regard to the bonds. During the continuance of an Event of Default, the trustee will perform only such duties as are specifically set forth in the indenture. During the existence of an Event of Default, the trustee will exercise such of the rights and powers vested in it under the indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. Registration Rights National Steel entered into the registration rights agreements with the placement agents, for the benefit of the holders of original bonds. Under these agreements, we agreed to use our best efforts, at our cost, to file and cause to become effective a registration statement with respect to a registered offer to exchange original bonds for exchange bonds with terms identical to the original bonds, except that the exchange bonds will not bear legends restricting their transfer. The registration statement, of which this prospectus is part, constitutes a registration statement for purposes of the registration rights agreements. Upon the registration statement being declared effective, we will offer the exchange bonds in return for surrender of the exchange bonds. The exchange offer will remain open for not less than 30 days after the date notice of the exchange offer is mailed to holders of the original bonds. For each original bond surrendered to us under the exchange offer, the holder of such original bond will receive an exchange bond of equal principal amount. Interest on each exchange bond will accrue from the last interest payment date on which interest was paid on the original bonds so surrendered or, if no interest has been paid on such original bond, from March 8, 1999. If the applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer, or under certain other circumstances, we will, at our cost, use our best efforts: 43 (1) to cause to become effective a shelf registration statement with respect to resales of the original bonds, and (2) to keep such shelf registration statement effective until the expiration of the time period referred to in Rule 144(k) under the Securities Act after March 31, 1999, or such shorter period that will terminate when all original bonds covered by the shelf registration statement have been sold pursuant to the shelf registration statement. We will, in the event of such a shelf registration, provide to each holder copies of the prospectus, notify each holder of original bonds when the shelf registration statement for the original bonds has become effective and take other actions as are required to permit resales of the original bonds. A holder that sells its old bonds pursuant to the shelf registration statement generally: (1) will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, (2) will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales, and (3) will be bound by the provisions of the registrations rights agreement that are applicable to such a holder, including indemnification obligations. If the exchange offer is not consummated and a shelf registration statement is not declared effective on or before September 6, 1999, the annual interest rate borne by the original bonds will be increased by 0.25% per 90 day period, until reaching a maximum increase of 1.00%, until the exchange offer is consummated or the shelf registration statement is declared effective. If we effect the exchange offer, we will be entitled to close the exchange offer 30 days after the commencement of it, provided that we have accepted all original bonds previously validly surrendered in accordance with the terms of the exchange offer. Original bonds not tendered in the exchange offer will bear interest at 9 7/8% per year and be subject to all of the terms and conditions specified in the indenture and to the transfer restrictions set forth in the legend on the certificate for such original bonds. This summary of provisions of the registration rights agreements does not restate the agreements in their entirety. We urge you to read the applicable registration rights agreement, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. Certain Definitions Set forth below is a summary of defined terms used in the indenture. You should refer to the indenture for the full definition of all terms as well as any other capitalized terms used herein for which no definition is provided. "Additional Assets" means (1) any Property other than cash, Cash Equivalents or securities to be owned by National Steel or any Restricted Subsidiary; or (2) Capital Stock of a person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by National Steel or another Restricted Subsidiary from any person other than National Steel or an affiliate. "Affiliate" of any specified person means (1) any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person or (2) any other person who is a director or officer of (a) such specified person, (b) any Subsidiary of such specified person or (c) any person described in clause (1) above. For the purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The terms "controlling" and "controlled" have consistent meanings. 44 For purposes of the covenants described under "Certain Covenants--Limitation on Transactions with Affiliates," "Limitation on Sale of Assets other than Mortgaged Property" and the definition of the term "additional assets" only, "affiliate" also means any beneficial owner of shares representing 5% or more of the total voting power of the voting stock on a fully diluted basis of National Steel or of rights or warrants to purchase such voting stock whether or not currently exercisable and any person who would be an affiliate of any such beneficial owner. "Affiliate Joint Venture" means a person, other than one of our Subsidiaries, in which we or any Restricted Subsidiary has an Investment and which is an affiliate only because we or such Restricted Subsidiary has the ability to control such person, and for no other reason. "Asset Sale" means any sale, lease, transfer, issuance or other disposition, or series of such transactions, by National Steel or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction, each referred to for the purposes of this definition as a disposition, of: (1) any shares of Capital Stock of a Restricted Subsidiary other than directors' qualifying shares; (2) all or substantially all the assets of any division or line of business of National Steel or any Restricted Subsidiary; or (3) any other assets of National Steel or any Restricted Subsidiary outside of the ordinary course of business of either; other than: (a) in the case of preceding clauses (1), (2) and (3), any disposition by a Restricted Subsidiary to National Steel or by National Steel or a Restricted Subsidiary to a Wholly Owned Subsidiary, (b) and in the case of the preceding clauses (1) and (2): (A) any disposition of accounts receivable or inventory by or to National Steel or any Restricted Subsidiary to or from funding or any other bankruptcy-remote, special-purpose Subsidiary in connection with the Incurrence of Debt by such Subsidiary under the Credit Facilities, or (B) any disposition of Property having, together with other Property disposed of pursuant to such clauses during the same fiscal year, a total Fair Market Value of less than $25.0 million, (c) in the case of clause (3) above, any disposition made in compliance with the first paragraph of the covenant described under "Merger, Consolidation and Sale of Property" and a disposition of obsolete assets in the ordinary course of business, and (d) in the case of clauses (1), (2) and (3) above, but only for purposes of the covenant described under the heading "Limitation on Sale of Assets other than Mortgaged Property", dispositions of Mortgaged Property made in compliance with the covenant described under the heading "Limitation on Sale of Mortgaged Property." "Attributable Debt" in a Sale and Leaseback Transaction means, at any date of determination: (1) if it is a Capital Lease Obligation, the amount of Debt represented by it according to the definition of the term "Capital Lease Obligation;" and (2) in all other instances, the present value, discounted at the actual rate of interest implicit in such transaction, compounded annually, of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction, including any period for which such lease has been extended. "Average Life" means, as of any date of determination, with respect to any Debt or preferred stock, the quotient obtained by dividing (1) the sum of the product of the numbers of years, rounded to the nearest one-twelfth, from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such preferred stock multiplied by the amount of such payment by (2) the sum of all such payments. 45 "bondable obligations" means obligations acquired by National Steel subsequent to December 31, 1951, (1) issued by a Wholly Owned Subsidiary, all of whose stock is pledged under the indenture, and (2) secured by a direct first lien, subject only to permitted liens, on Property acquired by such Wholly Owned Subsidiary since December 31, 1951, which would have constituted property additions if acquired by National Steel. The obligation may be for a total principal amount up to 100% of the net amount of such Property. "bondable stock" means: (1) shares of Capital Stock purchased or otherwise acquired by National Steel subsequent to May 1, 1952, issued by a Wholly Owned Subsidiary whose outstanding Capital Stock is or will be subject to the lien of the indenture, which is engaged in a business in which we may then be engaged or in an affiliated business or one useful to such business and which does not have outstanding any indebtedness except indebtedness to us and current liabilities, other than for money borrowed, Incurred in the ordinary course of business and payable not more than one year from the date of their creation; (2) shares of Capital Stock of Iron Ore Company of Canada acquired and paid for by National Steel subsequent to December 31, 1951, and (3) shares of stock of any other corporation, including evidences of indebtedness, not exceeding in principal amount our share, based on our stock interest, of the indebtedness of such corporation issued to its stockholders, acquired and paid for by us subsequent to May 1, 1952, provided: (a) all the shares of stock of such corporation owned by National Steel are, or will be, subject to the lien of the indenture, (b) the company's principal assets consist of mining Property, (c) we have the right to a share of the products mined or extracted from such mining Property, and (d) we assign our right to the trustee. "Capital Expenditure Debt" means Debt Incurred by any person to finance a capital expenditure so long as (1) such capital expenditure is or should be included as an addition to "Property, Plant and Equipment" in accordance with GAAP and (2) such Debt is Incurred within 180 days of the date such capital expenditure is made. "Capital Lease Obligations" means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of Debt represented by such obligation will be the capitalized amount of such obligations determined in accordance with GAAP. The stated maturity will be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of "Certain Covenants--Limitation on Liens," a Capital Lease Obligation will be deemed secured by a Lien on the Property being leased. "Capital Stock" means any shares or other equivalents of corporate stock, partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in any person, including preferred stock, but excluding any Debt security convertible or exchangeable into such equity interest. "Capital Stock Sale Proceeds" means the total net cash proceeds received by us from the issuance or sale, other than to a Subsidiary or an employee stock ownership plan or trust established by us or any of our Subsidiaries for the benefit of our employees, by us of any class of our Capital Stock, other than Disqualified Stock, after the Series A Issue Date. "Cash Equivalents" means (1) any evidence of Debt with a maturity of 360 days or less issued or directly and fully Guaranteed or insured by the United States of America or any agency or instrumentality, provided that the full faith and credit of the United States of America is pledged in support, 46 (2) certificates of deposit, Eurodollar time deposits, bankers' acceptances and other similar unsubordinated Debt instruments with a maturity of 360 days or less and overnight bank deposits of any bank, trust company, investment bank or other financial institution, including any branch, that is organized or regulated under the laws of the United States of America or any state, and which has capital, surplus and undivided profits totaling in excess of US$1.0 billion and has outstanding unsecured Debt which is rated "A3" or higher by Moody's or "A-" or higher by S&P; provided that up to $25.0 million of the total amount of the Investments of the type described in this clause (2) may be with banks or their branches of the type described above with outstanding unsecured Debt that has an Investment Grade Rating or higher, (3) commercial paper with a maturity of 360 days or less issued by a corporation that is not an affiliate of National Steel and is organized under the laws of any state of the United States or the District of Columbia and rated at least A-2 by S&P or at least P-2 by Moody's, (4) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (1) and (2) above entered into with a bank, trust company, investment bank or other financial institution meeting the qualifications described in clause (2) above, or (5) funds (including, without limitation, any fund for which the trustee or any affiliate of the trustee serves as an administrator, shareholder servicing agent and/or custodian or subcustodian), invested exclusively in cash and Investments of the types described in clauses (1) through (4) above. "Change of Control" means the occurrence of any of the following events: (1) if any "person" or "group" as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provisions, including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d- 5(b)(1) under the Exchange Act, other than Permitted Holders, becomes the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time, directly or indirectly, of 30% or more of the total voting power of all classes of the voting stock of National Steel; or (2) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of National Steel and the Restricted Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Subsidiary) has occurred, or National Steel merges, consolidates or amalgamates with or into any other person or any other person merges, consolidates or amalgamates with or into us, in any such event pursuant to a transaction in which our outstanding voting stock is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where: (a) our outstanding voting stock is reclassified into or exchanged for voting stock of the surviving corporation and (b) the holders of our voting stock immediately prior to such transaction own, directly or indirectly, not less than a majority of the voting stock of the surviving corporation immediately after such transaction and in substantially the same proportion as before the transaction; or (3) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors, together with any new directors whose election or appointment by such board or whose nomination for election by the shareholders was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the board of directors then in office; or (4) the shareholders shall have approved any plan of liquidation or dissolution of National Steel. "Commodity Price Protection Agreement" means any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect a person against fluctuations in commodity prices. 47 "Consolidated Interest Coverage Ratio" means, as of any date of determination, the ratio of (1) the total amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to such determination date to (2) Consolidated Interest Expense for such four fiscal quarters; provided, however, that: (a) if National Steel or any Restricted Subsidiary has Incurred any Debt since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence of Debt, or both, Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Debt as if such Debt had been Incurred, and the discharge of any other Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as if such discharge had occurred, on the first day of such period; (b) if since the beginning of such period National Steel or any Restricted Subsidiary has made any Asset Sale or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Asset Sale, or both, EBITDA for such period will be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, in either case as if the Asset Sale had occurred on the first day of such period and Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Debt of National Steel or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to National Steel and its continuing Restricted Subsidiaries in connection with such Asset Sale for such period, as if such Asset Sale had occurred on the first day of such period, or, if the Capital Stock of any Restricted Subsidiary is sold, by an amount equal to the Consolidated Interest Expense for such period directly attributable to the Debt of such Restricted Subsidiary to the extent National Steel and its continuing Restricted Subsidiaries are no longer liable for such Debt after such sale; (c) if since the beginning of such period National Steel or any Restricted Subsidiary by merger or otherwise has made an Investment in any Restricted Subsidiary or any person which becomes a Restricted Subsidiary or an acquisition of Property, including any acquisition of Property occurring in connection with a transaction causing a calculation to be made, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period will be calculated after giving it pro forma effect, including the Incurrence of any Debt, as if such Investment or acquisition occurred on the first day of such period; and (d) if since the beginning of such period any person that subsequently became a Restricted Subsidiary or was merged with or into National Steel or any Restricted Subsidiary since the beginning of such period has made any Asset Sale, Investment or acquisition of Property that would have required an adjustment pursuant to clause (b) or (c) above if made by National Steel or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such Asset Sale, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of Property, the amount of income or earnings relating to it and the amount of Consolidated Interest Expense associated with any Debt Incurred in connection with it, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer and as further contemplated by the definition of the term "pro forma." If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period, taking into account any Interest Rate Agreement applicable to such Debt if such Interest Rate Agreement has a remaining term in excess of 12 months. "Consolidated Interest Expense" means, for any period, the total interest expense of National Steel and our consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to 48 the extent Incurred by us and our Restricted Subsidiaries: (1) interest expense attributable to capital leases; (2) amortization of Debt discount and Debt issuance cost; (3) capitalized interest; (4) non-cash interest expenses; (5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; (6) net costs associated with Hedging Obligations under Interest Rate Agreements, including amortization of fees; (7) Redeemable Dividends; (8) preferred stock dividends on all preferred stock of Restricted Subsidiaries held by persons other than National Steel or a Wholly Owned Subsidiary; and (9) interest accruing on any Debt of any other person to the extent such Debt is Guaranteed by National Steel or any Restricted Subsidiary. "Consolidated Net Income" means, for any period, the net income (loss) of National Steel and our consolidated Subsidiaries; provided, however, that there will not be included in such Consolidated Net Income: (1) any net income (loss) of any person other than National Steel if such person is not a Restricted Subsidiary, except that (a) subject to the exclusion contained in clause (4) below, our equity in the net income of any such person for such period will be included in such Consolidated Net Income up to the total amount of cash distributed by such person during such period to us or a Restricted Subsidiary as a dividend or other distribution, subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (3) below, and (b) our equity in a net loss of any such person, other than an Unrestricted Subsidiary, for such period shall be included in determining such Consolidated Net Income; (2) any net income (loss) of any person acquired by National Steel or any of our consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition; (3) any net income (loss) of any Restricted Subsidiary to the extent that such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to us, except that (a) subject to the exclusion contained in clause (4) below, our equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the total amount of cash distributed by such Restricted Subsidiary during such period to us or another Restricted Subsidiary as a dividend or other distribution, subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause, and (b) our equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; (4) any gain (but not loss) realized upon the sale or other disposition of any Property of National Steel or any of its consolidated Subsidiaries, including pursuant to any Sale and Leaseback Transaction, which is not sold or otherwise disposed of in the ordinary course of business; and (5) any extraordinary gain or loss. "Consolidated Net Worth" means the total of the amounts shown on our consolidated balance sheet as of the end of the most recent fiscal quarter ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (1) the par or stated value of all of our outstanding Capital Stock plus (2) paid-in capital or capital surplus relating to such Capital Stock plus (3) any retained earnings or earned surplus less (a) any accumulated deficit, (b) any amounts attributable to Disqualified Stock and (c) any adjustments for pension liabilities. "Credit Facilities" means the receivables purchase agreement and the inventory facilities, in each case together with any extensions, revisions, refinancings or replacements of them by a lender or syndicate of lenders, including through the sale of accounts receivable or inventory to such lender or lenders or to 49 Funding or any other bankruptcy-remote special-purpose Subsidiary that purchases such accounts receivable or inventory. "Currency Exchange Protection Agreement" means any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect a person against fluctuations in currency exchange rates. "Debt" means, with respect to any person on any date of determination (without duplication): (1) the principal of and premium (if any) in respect of (a) Debt of such person for money borrowed and (b) Debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable; (2) all Capital Lease Obligations of such person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such person; (3) all obligations of such person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such person and all obligations of such person under any title retention agreement, excluding trade accounts payable arising in the ordinary course of business; (4) all obligations of such person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, other than obligations with respect to letters of credit securing obligations, other than obligations described in (1) through (3) above, entered into in the ordinary course of business of such person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth business day following receipt by such person of a demand for reimbursement following payment on the letter of credit; (5) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such person, any preferred stock, excluding any accrued dividends; (6) all obligations of the type referred to in clauses (1) through (5) of other persons and all dividends of other persons for the payment of which, in either case, such person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (7) all obligations of the type referred to in clauses (1) through (6) of other persons secured by any Lien on any Property or asset of such person, whether or not such obligation is assumed by such person, the amount of such obligation being deemed to be the lesser of the value of such Property or assets or the amount of the obligation so secured; (8) to the extent not otherwise included in this definition, Hedging Obligations of such person; and (9) to the extent not otherwise included in this definition, any financing of accounts receivable or inventory of such person (whether or not treated as a sale or Debt for accounting purposes); provided that such accounts receivable or inventory shall be deemed to be on the consolidated balance sheet of National Steel for purposes of clause (2)(b) of the definition of "Permitted Debt". The amount of Debt of any person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Disqualified Stock" means, with respect to any person, redeemable stock of such person as to which the maturity, mandatory redemption, redemption at the option of the holder thereof, conversion or exchange occurs, or may occur, on or prior to the first anniversary of the stated maturity of the bonds; provided, however, that redeemable stock of such person that would not otherwise be characterized as Disqualified Stock under this definition shall not constitute Disqualified Stock if such redeemable stock is convertible or exchangeable into Debt solely at the option of the issuer thereof. 50 "EBITDA" means, for any period, for National Steel and its consolidated Restricted Subsidiaries, an amount equal to: (1) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (a) the provision for taxes for such period based on income or profits or utilized in computing net loss, (b) Consolidated Interest Expense, (c) depreciation and amortization of fixed and intangible assets and (d) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period, except amortization of any SFAS 106 transition obligation of National Steel), minus (2) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent and in the same proportion that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to us by such Restricted Subsidiary without prior approval that has not been obtained, pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders. "Event of Default" means any "Event of Default" under the indenture or any Supplemental Indenture Event of Default. "Fair Market Value" means, with respect to any Property, the price or, in the case of a lease, the rent which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller or lessor and a willing buyer or lessee, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value will be determined, except as otherwise provided, (1) if such Property has a Fair Market Value equal to or less than $10.0 million, by any officer or (2) if such Property has a Fair Market Value in excess of $10.0 million, by a majority of the board of directors and evidenced by a board resolution, dated within 30 days of the relevant transaction, delivered to the trustee. "GAAP" means United States generally accepted accounting principles as in effect on the Series A Issue Date, including those set forth (1) in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) in the statements and pronouncements of the Financial Accounting Standards Board, (3) in such other statements by such other entity as approved by a significant segment of the accounting profession and (4) the rules and regulations of the SEC governing the inclusion of financial statements, including pro forma financial statements, in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "Guarantee" means any obligation, contingent or otherwise, of any person directly or indirectly Guaranteeing any Debt of any other person and any obligation, direct or indirect, contingent or otherwise, of such person (1) to purchase or pay, or advance or supply funds for the purchase or payment of, such Debt of such other person whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise or (2) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any person Guaranteeing any obligation. 51 "Hedging Obligation" of any person means any obligation of such person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement. "Incur" means, with respect to any Debt or other obligation of any person, to create, issue, Incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such person and "Incurrence" and "Incurred" shall have consistent meanings; provided, however, that a change in GAAP that results in an obligation of such person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further, however, that solely for purposes of determining compliance with "--Certain Covenants--Limitation on Debt and Restricted Subsidiary Preferred Stock," amortization of Debt discount shall not be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount, the amount of such Debt Incurred shall at all times be the total principal amount at stated maturity. "Independent Financial Advisor" means, an investment banking firm of national standing or any third party appraiser of national standing, provided that such firm or appraiser is not an affiliate of National Steel. "Interest Rate Agreement" means, for any person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates. "Investment" by any person means any direct or indirect loan, other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such person, advance or other extension of credit or capital contribution by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, notes, bonds, debentures or other securities or evidence of Debt issued by, any other person. In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment. "Investment Grade Rating" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P. "Investment Grade Status" shall be deemed to have been reached on the date that the bonds have an Investment Grade Rating from both Rating Agencies. "Lien" means, with respect to any Property of any person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property, including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction, but excluding any operating lease (except Sale and Leaseback Transactions) entered into in the ordinary course of such person's business. "Net Available Cash" from any Asset Sale means cash payments received therefrom, including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other noncash form, in each case net of: (1) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale, 52 (2) all payments made on any Debt which is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale, (3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale and (4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with the GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by National Steel or any Restricted Subsidiary after such Asset Sale. "Net Cash Proceeds" means, with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Permitted Investments" means any Investment by National Steel or any Restricted Subsidiary in any of the following: (1)Cash Equivalents; (2)National Steel or any Restricted Subsidiary; (3) another person, if as a result of such Investment (a) such other person becomes a Restricted Subsidiary or (b) such other person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, National Steel or a Restricted Subsidiary; (4) loans or advances made to employees or directors of National Steel or any Restricted Subsidiary in the ordinary course of business in an total amount not to exceed US$1 million at any one time outstanding; (5)Hedging Obligations which constitute permitted Debt; (6) Investments consisting of non-cash consideration received in the form of securities, bonds or similar obligations in connection with an Asset Sale permitted by the covenant described under "Limitation on Sale of Assets other than Mortgaged Property," or the covenant described under "Limitation on Sale of Mortgaged Property," as applicable, provided that the total amount of such non-cash consideration received in connection with any such Asset Sale shall not exceed the amount permitted under the covenant described under the "Limitation on Sale of Assets other than Mortgaged Property" or the covenant described under "Limitation on Sale of Mortgaged Property," as applicable; (7) the purchase by National Steel or any Restricted Subsidiary in one or more transactions of all or any portion of NKK's ownership interest in DNN; and (8) Investments in joint ventures engaged in the steel business or other businesses reasonably related thereto in an total amount not to exceed $20.0 million. "Permitted Holders" means NKK U.S.A. Corporation and its affiliates. "Permitted Refinancing Debt" means any Debt that refinances any other Debt, including any successive refinancings, so long as: (1) such Debt is in a total principal amount, or a total issue price, not in excess of the sum of (a) the total principal amount or total accreted value, then outstanding of the Debt being refinanced and (b) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such refinancing, (2) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being refinanced, 53 (3) the stated maturity of such Debt is no earlier than the stated maturity of the Debt being refinanced and (4) the new Debt shall not be senior in right of payment to the Debt that is being refinanced; provided, however, that Permitted Refinancing Debt will not include (a) Debt of a Subsidiary that refinances Debt of National Steel or (b) Debt of National Steel or a Restricted Subsidiary that refinances Debt of an Unrestricted Subsidiary. "Property" means, with respect to any person, any interest of such person in any kind of Property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other person. For purposes of any calculation required pursuant to the indenture, the value of any Property shall be its Fair Market Value. "property additions" includes any Property, including mining Property, located within the continental United States which is: (1) used or useful in our business, (2) purchased, constructed or otherwise acquired subsequent to December 31, 1951, (3) properly chargeable to plant account, and (4) not subject to a prior lien, other than permitted liens. Property additions do not include, among other things, (a) any Property not subject to the lien of the indenture, (b) any good will or going concern value, or (c) any plant or Property, other than mining Property, in which National Steel has only a leasehold interest or, unless the same is movable physical personal Property, any improvement or additions of, upon, or to any plant or Property in which National Steel owns a leasehold interest. "Rating Agencies" mean Moody's Investors Service, Inc. and Standard & Poor's Rating Service. "Redeemable Dividend" means, for any dividend with respect to redeemable stock, the quotient of the dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such redeemable stock. "Redeemable Stock" means, with respect to any person, any Capital Stock that by its terms, or by the terms of any security into which it is convertible or for which it is exchangeable, or otherwise (1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (2) is or may become redeemable or repurchasable at the option of the holder thereof, in whole or in part, or (3) is convertible or exchangeable for Debt or Disqualified Stock. "refundable Bonds" means, at any particular time, any bonds issued under the indenture which were issued and paid at maturity or redeemed or purchased otherwise than out of funds in the trust estate and surrendered to the trustee, or otherwise surrendered to the trustee and which were not made the basis for the authentication and delivery of additional bonds or the withdrawal of cash or the reduction of the amount of cash required to be paid into the trust estate, or paid or redeemed or purchased pursuant to, or used in anticipation of, sinking fund requirements. "Restricted Payment" means: (1) any dividend or distribution whether made in cash, securities or other Property declared or paid on or with respect to any shares of Capital Stock of National Steel or any Restricted Subsidiary, including any payment in connection with any merger or consolidation with or into National Steel or any Restricted Subsidiary, except for any dividend or distribution which is made solely to National Steel or a Restricted Subsidiary and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders of such Restricted Subsidiary on a proportionate basis or any dividend or distribution payable solely in shares of Capital Stock, other than Redeemable Stock, of National Steel; 54 (2) any payment made by National Steel or any Restricted Subsidiary to purchase, redeem, repurchase, acquire or retire for value any Capital Stock of National Steel or any Restricted Subsidiary, other than (a) Capital Stock of a Wholly Owned Restricted Subsidiary or (b) from all holders of Capital Stock of a non-Wholly Owned Restricted Subsidiary on a pro rata basis; (3) any payment made by National Steel or any Restricted Subsidiary to purchase, redeem, repurchase, defease or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled sinking fund or mandatory redemption payment, any Subordinated Obligation, other than the purchase, repurchase, or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition, or (4) any Investment other than any Permitted Investment in any person, including, without limitation, any Unrestricted Subsidiary. "Restricted Subsidiary" means (1) any Subsidiary after the Series A Issue Date unless such Subsidiary shall have been designated an Unrestricted Subsidiary as permitted or required pursuant to "Certain Covenants--Designation of Restricted and Unrestricted Subsidiaries" and (2) an Unrestricted Subsidiary which is redesignated as a Restricted Subsidiary as permitted pursuant to "Certain Covenants--Designation of Restricted and Unrestricted Subsidiaries." "Sale and Leaseback Transaction" means any arrangement relating to Property now owned or hereafter acquired whereby National Steel or a Restricted Subsidiary transfers such Property to another person and then leases it from such person, other than any such arrangement with respect to Property acquired or placed into service by National Steel or any Restricted Subsidiary after the Series A Issue Date to the extent entered into within 365 days after the date of such acquisition or placement into service and not constituting a Capital Lease Obligation. "Senior Debt" of National Steel means: (1) all obligations consisting of the principal, premium, if any, and accrued interest in respect of (a) Debt for borrowed money and (b) Debt evidenced by bonds, debentures, notes or other similar instruments permitted under the indenture for the payment of which we are responsible or liable; (2) all Capital Expenditure Debt; (3) all obligations (a) for the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction or (b) under Hedging Obligations; and (4) all obligations of other persons of the type referred to in clauses (1) and (2) for the payment of which we are responsible or liable as Guarantor; provided, however, that Senior Debt shall not include (a) Debt that is by its terms subordinate in right of payment to the bonds; (b) any Debt Incurred in violation of the provisions of the indenture; (c) accounts payable or any other obligations to trade creditors created or assumed in the ordinary course of business in connection with the obtaining of materials or services, including Guarantees thereof or instruments evidencing such liabilities; (d) any liability for Federal, state, local or other taxes owed or owing; (e) any obligation to any Subsidiary; or (f) any obligations with respect to any Capital Stock. "Series A Issue Date" means the date on which the Series A bonds were initially issued, which was March 8, 1999. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of National Steel within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "Subordinated Obligation" means any Debt of National Steel whether outstanding on the Series A Issue Date or thereafter Incurred which is subordinate or junior in right of payment to the bonds pursuant to a written agreement to that effect. 55 "Subsidiary" means, in respect of any specified person, any corporation, company, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests, including partnership interests, entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (1) such person, (2) such person and one or more Subsidiaries of such person or (3) one or more Subsidiaries of such person. "Supplemental Indenture Default" means any event which is, or after notice or passage of time or both would be, a Supplemental Indenture Event of Default. "Supplemental Indenture Event of Default" has the meaning set forth under "Events of Default". "Unrestricted Subsidiary" means (1) any Subsidiary in existence on the Series A Issue Date that is not a Restricted Subsidiary; (2) any Subsidiary of an Unrestricted Subsidiary; and (3) any Subsidiary that is designated after the Series A Issue Date as an Unrestricted Subsidiary as permitted pursuant to the covenant described under "Certain Covenants--Designation of Restricted and Unrestricted Subsidiaries" and not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto. "Wholly Owned Subsidiary" means, at any time, a corporation all the stock of which, except directors' qualifying shares, where necessary, is at such time owned, directly or indirectly, by National Steel or by one or more Wholly Owned Subsidiaries or by National Steel and one or more Wholly Owned Subsidiaries. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following summary describes material United States federal income tax considerations associated with the exchange of the original bonds for the exchange bonds. This summary is based on the Internal Revenue Code of 1986, as amended, administrative pronouncements and rulings, judicial decisions and Treasury Regulations, changes to any of which subsequent to the date of this prospectus may affect the tax consequences described (possibly on a retroactive basis). This summary is limited to investors who hold and will hold the bonds as capital assets within the meaning of Section 1221 of the tax code and does not address holders that may be subject to special tax rules including, but not limited to: . financial institutions, . insurance companies, . dealers in securities, . tax-exempt organizations, . persons holding bonds as a hedge or as part of a straddle, or . holders whose "functional currency" is not the U.S. dollar. This summary is for general information only and does not address all aspects of federal income taxation that may be relevant to holders of the bonds in light of their particular circumstances. It does not address any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Holders should consult their own tax advisors as to the particular tax consequences of the exchange of original bonds for exchange bonds and the ownership and disposition of the bonds, including the applicability and effect of any United States federal, state, local and foreign income and other tax laws. As used herein, the term "United States holder" means a beneficial owner of a bond that is for United States federal income tax purposes: . a citizen or resident of the United States, . a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, 56 . an estate or trust described in Section 7701(a)(30) of the tax code, or . a person whose worldwide income or gain is otherwise subject to United States federal income taxation regardless of its source. As used herein, the term "United States alien holder" means an owner of a bond that is not a United States holder. United States Holders and United States Alien Holders There will be no United States federal income tax consequences to any one exchanging an original bond for an exchange bond pursuant to the exchange offer. Such holder will have the same adjusted basis and holding period in the exchange bond as it had in the original bond immediately before the exchange. United States Federal Income Tax Consequences to United States Holders Payments of Interest Interest on a bond will be taxable to a United States holder as ordinary income at the time it is received or accrued, depending on the United States holder's method of accounting for tax purposes. Sale, Exchange or Retirement of the Bonds Upon the sale, exchange or retirement of a bond, a United States holder will generally recognize capital gain or loss equal to the difference between the amount realized not including any amounts attributable to accrued interest and the United States holder's tax basis in the bond. A United States holder's tax basis in a bond generally will be its cost. Such capital gain or loss will be long-term if the United States holder had held the bond more than one year. As described above, an exchange of original bonds for exchange bonds pursuant to the exchange offer will not be treated as an exchange for United States federal income tax purposes. Accordingly, holders who exchange their original bonds for exchange bonds will not recognize income, gain or loss for United States federal income tax purposes. Market Discount United States holders, other than original purchasers of the original bonds in the offering, should be aware that the sale of the bonds may be affected by the market discount provisions of the tax code. The market discount rules generally provide that if a United States holder of a bond . purchased the bond, after the original offering, at a "market discount" (i.e., at an amount less than the adjusted issue price of the bond as determined on the date of such purchase) exceeding a statutorily-defined de minimis amount, and . thereafter recognizes gain upon a disposition, including a partial redemption, of the exchange bond received in exchange for an original bond, the lesser of such gain or the portion of the market discount that accrued while the exchange bond and original bond were held by such United States holder will be treated as ordinary interest income at the time of disposition. The rules also provide that a United States holder who acquires a bond at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness Incurred or maintained to purchase or carry the bond until the United States holder disposes of such bond in a taxable transaction. If a holder of such a bond elects to include market discount in income currently, both of the preceding rules would not apply. 57 United States Federal Income Tax Consequences to United States Alien Holders Under present United States federal law and subject to the discussion below concerning backup withholding: (a) payments of principal and interest on the bonds by National Steel or any paying agent to any United States alien holder will not be subject to United States federal withholding tax, provided that, in the case of interest, (1) such holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of stock of National Steel entitled to vote, is not a controlled foreign corporation related, directly or indirectly, to National Steel through stock ownership, is not a bank receiving interest described in Section 881(c)(3)(A) of the tax code, and is not a foreign tax-exempt organization or a foreign private foundation, and (2) the statement requirement set forth in Section 871(h) or Section 881(c) of the tax code has been satisfied with respect to the beneficial owner, as discussed below; and (b) a United States alien holder of a bond will not be subject to United States federal income tax on gain realized on the sale, exchange or other disposition of such bond, unless (1) such holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and either (A) such individual has a "tax home" (as defined in tax code Section 911(d)(3)) in the United States (unless such gain is attributable to a fixed place of business in a foreign country maintained by such individual and has been subject to foreign tax of at least 10%) or (B) the gain is attributable to an office or other fixed place of business maintained by such individual in the United States or (2) such gain is effectively connected with the conduct by such holder of a trade or business in the United States or, if a tax treaty applies, the gain is attributable to a United States permanent establishment of the United States alien holder. Sections 871(h) and 881(c) of the tax code require that, in order to qualify for the portfolio interest exemption from withholding tax described in clause (a) above, either the beneficial owner of the bond, or a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and that is holding the bond on behalf of such beneficial owner, must file a statement with the withholding agent to the effect that the beneficial owner of the bond is not a United States person. Such requirement will be fulfilled if the beneficial owner of a bond certifies on IRS Form W-8 or a substantially similar substitute form, under penalties of perjury, that it is not a United States person and provides its name and address, and any financial institution holding the bond on behalf of the beneficial owner files a statement with the withholding agent to the effect that it has received such a statement from the holder (and furnishes the withholding agent with a copy thereof). With respect to bonds held by a foreign partnership, under current law, the Form W-8 may be provided by the foreign partnership. However, for interest (including original issue discount) and disposition proceeds paid with respect to a bond after December 31, 1999, unless the foreign partnership has entered into a withholding agreement with the IRS, a foreign partnership will be required, in addition to providing a partnership withholding certificate on IRS Form W-8, to attach an appropriate certification by each partner. Prospective investors, including foreign partnerships and their partners, should consult their tax advisors regarding possible additional reporting requirements. A United States alien holder that does not qualify for exemption from withholding generally will be subject to withholding of U.S. federal income tax at the rate of 30% (or lower applicable treaty rate) on payments of interest on the bonds. If a United States alien holder of a bond is engaged in a trade or business in the United States and, if interest on the bond (or gain realized on its sale, exchange or other disposition) is effectively connected with the conduct of such trade or business, the United States alien holder will be exempt from the withholding tax discussed in the preceding paragraph. Unless a tax treaty provides otherwise, such United States alien holders will generally be subject to regular United States income tax on interest and on any gain realized on the sale, 58 exchange or other disposition of a bond in the same manner as if it were a United States holder. See "United States Federal Income Tax Consequences to United States Holders" above. Such a holder will be required to provide to National Steel a properly executed IRS Form 4224 (or after December 31, 1999 an IRS Form W-8) in order to claim an exemption from withholding tax. In addition, if such United States alien holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest on and any gain recognized on the sale, exchange or other disposition of a bond will be included in the effectively connected earnings and profits of such United States alien holder if such interest or gain, as the case may be, is effectively connected with the conduct by the United States alien holder of a trade or business in the United States. Backup Withholding and Information Reporting In general, backup withholding at a rate of 31% will not apply to payments of principal or interest made outside the United States by National Steel or any paying agent thereof on a bond if the certifications required by Sections 871(h) and 881(c) of the tax code are received, provided that National Steel or such paying agent, as the case may be, does not have actual knowledge that the payee is a United States person. Under current Treasury Regulations, payments on the sale, exchange or other disposition of a bond made to or through a foreign office of a broker generally will not be subject to backup withholding, absent actual knowledge that the payee is a United States person. However, if such broker is: (1) a United States person, or (2) a controlled foreign corporation for United States federal income tax purposes or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, or in the case of payments made after December 31, 1999, a foreign partnership with certain connections to the United States, information reporting will be required unless the broker has in its records documentary evidence that the beneficial owner is not a United States person and certain other conditions are met or the beneficial owner otherwise establishes an exemption. Payments to or through the United States office of a broker will be subject to backup withholding and information reporting unless the holder certifies, under penalties of perjury, that it is not a United States person or otherwise establishes an exemption. United States alien holders of bonds should consult their tax advisors regarding the application of information reporting and backup withholding in their particular situations, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available. Backup withholding is not an additional tax. Any amounts withheld from a payment to a United States alien holder under the backup withholding rules will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the IRS. 59 PLAN OF DISTRIBUTION Each broker-dealer that receives exchange bonds for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange bonds. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange bonds received in exchange for original bonds where such original bonds were acquired as a result of market-making activities or other trading activities. We have agreed that for a period of one year after the expiration date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. We will not receive any proceeds from any sale of exchange bonds by broker- dealers. Exchange bonds received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time: . in one or more transactions in the over-the-counter market, . in negotiated transactions, . through the writing of options on the exchange bonds, or . a combination of such methods of resale. Such bonds may be sold: . at market prices prevailing at the time of resale, . at prices related to such prevailing market prices, or . at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such exchange bonds. Any broker-dealer that resells exchange bonds that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange bonds may be deemed to be an "underwriter" within the meaning of the Securities Act. Any profit on any such resale of exchange bonds and any commissions or concessions received by any of them may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of one year after the expiration date, we will promptly send additional copies of the prospectus and any amendment or supplement to the prospectus to any broker-dealer requesting these copies in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer other than commissions or concessions of any brokers or dealers and will indemnify the holders of the bonds, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act. Following consummation of the exchange offer, we may, in our sole discretion, commence one or more additional exchange offers to holders of original bonds who did not exchange their original bonds for exchange bonds in the exchange offer on terms which may differ from those contained in the registration rights agreement. We may use this prospectus, as it may be amended of supplemented from time to time, in connection with any such additional exchange offers. Such additional exchange offers will take place from time to time until all outstanding original bonds have been exchanged for exchange bonds. 60 LEGAL MATTERS The validity of the bonds offered hereby will be passed upon for National Steel by Skadden, Arps, Slate, Meagher & Flom (Illinois). EXPERTS Ernst & Young LLP, independent auditors, have audited our consolidated financial statements and schedule included in our Annual report on form 10-K for the year ended December 31, 1998, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. AVAILABLE INFORMATION We are subject to the informational requirements of the Exchange Act, and in accordance with that act, we file reports, proxy statements and other information with the SEC. You may inspect and copy such reports, proxy statements and other information at the Public Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies may be obtained at prescribed rates. You may obtain information on the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file documents with the SEC, including National Steel, and the address is http://www.sec.gov. Our common stock is listed on the New York Stock Exchange. Our periodic reports and proxy statements filed under the Exchange Act as well as other information about us can be requested at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. INFORMATION INCORPORATED BY REFERENCE The SEC allows us to incorporate by reference the information filed by National Steel with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we later file with the SEC will automatically update and supersede this information. We incorporate by reference into this prospectus the following documents or information filed with the SEC: (1) Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998; (2) Our Proxy Statement for the 1999 Annual Meeting of Stockholders; and (3) All documents filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of the Registration Statement of which this prospectus is a part and before the effectiveness of such Registration Statement and prior to the termination of the exchange offer made by this prospectus. Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in the prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this prospectus modifies or supersedes such statement. Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. This prospectus incorporates by reference documents that are not presented in or delivered with it. You may obtain copies of such documents without charge, other than exhibits to such documents that are not specifically incorporated by reference herein, by making written or oral request to: Director, Investor Relations, National Steel Corporation, 4100 Edison Lakes Parkway, Mishawaka, Indiana 46545-3440, telephone (219) 273-7158. In order to assure timely delivery, you should make such request no later than , 1999, which is five business days before the expiration date of the exchange offer. 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $300,000,000 National Steel Corporation Exchange Offer First Mortgage Bonds, 9 7/8% Series D due 2009 [NATIONAL STEEL LOGO] -------- PROSPECTUS May , 1999 -------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a corporation, subject to certain limitations, to indemnify its directors and officers against expenses (including attorneys' fees, judgments, fines and certain settlements) actually and reasonably incurred by them in connection with any suit or proceeding to which they are a party so long as they acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to a criminal action or proceeding, so long as they had no reasonable cause to believe their conduct to have been unlawful. The By-laws of the Company provide that the Company shall indemnify its directors and such of its officers, employees and agents as the board of directors may determine from time to time, to the fullest extent permitted by the DGCL. Section 102 of the DGCL and Article Tenth of the Company's Restated Certificate of Incorporation permit the Company to limit a director's liability to the Company or its stockholders for monetary damages for breaches of fiduciary duty except with respect to liability for breaches of the duty of loyalty, acts or omissions not in good faith or involving intentional misconduct, or knowing violation of the law, and the unlawful purchase or redemption of stock or payment of unlawful dividends or the receipt of improper personal benefits cannot be eliminated or limited in this manner. The DGCL authorizes the purchase of indemnification insurance by the Company. The Company currently maintains a policy insuring, subject to certain exceptions, its directors and officers against liabilities which may be incurred by such persons acting in such capacities. In addition, the board of directors of the Company has entered into indemnification agreements with the directors and certain officers of the Company. Rights of directors and officers under such indemnification agreements are not exclusive of other rights they may have under the Company's Restated Certificate of Incorporation, the Company's By-laws or Delaware law. The Purchase Agreement and the Registration Rights Agreement included as exhibits to this Registration Statement provide for indemnification of directors and officers of the Company against certain liabilities. II-1 Item 21. Exhibits.
Exhibit Number Exhibit Description ------- ------------------- *1-A Purchase Agreement, dated as of March 3, 1999, between the Company and Salomon Smith Barney Inc. and J.P. Morgan Securities, Inc. (collectively the "Series A Purchasers"). *1-B Purchase Agreement, dated as of March 27, 1999, between the Company and Salomon Smith Barney Inc. (the "Series C Purchaser"). 2-A Assets Purchase Agreement between Weirton Steel Corporation and the Company, dated as of April 29, 1983, together with collateral agreements incident to such Assets Purchase Agreement, filed as Exhibit 2-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-B Stock Purchase Agreement by and among NKK Corporation, National Intergroup, Inc. and the Company, dated August 22, 1984, together with certain collateral agreements incident to such Stock Purchase Agreement and certain schedules to such agreements, filed as Exhibit 2-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-C Stock Purchase and Recapitalization Agreement by and among National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated as of June 26, 1990, filed as Exhibit 2-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-D Amendment to Stock Purchase and Recapitalization Agreement by and among, National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated July 31, 1991 filed as Exhibit 2-D to the annual report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 2-E Stock Purchase Agreement dated as of January 31, 1997 among the Company, North Limited, NS Holdings Corporation, Bethlehem Steel Corporation and Bethlehem Steel International Corporation filed as Exhibit 2-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1997, is incorporated herein by reference. 2-F Asset Purchase Agreement dated as of June 6, 1997 between EES Coke Battery Company, Inc. and the Company, filed as Exhibit 2.1 to the Report on Form 8-K of the Company dated June 12, 1997, is incorporated herein by reference. 2-G Coal Inventory Purchase Agreement dated as of June 6, 1997 between DTE Coal Services, Inc. and the Company, filed as Exhibit 2.2 to the Report on Form 8-K of the Company dated June 12, 1997, is incorporated herein by reference. 3-A The Sixth Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 3-B Form of Amended and Restated By-laws of the Company filed as Exhibit 3-B to the annual report of the Company on Form 10-K for the year ended December 31, 1996, is incorporated herein by reference. 4-A Indenture of Mortgage and Deed of Trust, dated May 1, 1952, between the Company and Great Lakes Steel Corporation and City Bank Farmers Trust Company and Ralph E. Morton, as Trustee (the "Original Indenture"), filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Registration No. 2-9639) is incorporated herein by reference.
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Exhibit Number Exhibit Description ------- ------------------- 4-B Second Supplemental Indenture, dated as of January 1, 1957, between the Company and City Bank Farmers Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 2-C to the Company's Registration Statement on Form S-9 (Registration No. 2- 15070) is incorporated herein by reference. 4-C Fourth Supplemental Indenture, dated as of December 1, 1960, between the Company and First National City Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 4(b)(5) to the Registration Statement of M. A. Hanna Company on Form S-1 (Registration No. 2-19169) is incorporated herein by reference. *4-D Fifth Supplemental Indenture dated as of May 1, 1962 between the Company, First National City Trust Company, as Trustee, and First National City Bank, as Successor Trustee. 4-E Eighth Supplemental Indenture, dated as of September 19, 1973, between the Company and First National City Bank and E. J. Jaworski, as Trustee, filed as Exhibit 2-I to the Company's Registration Statement on Form S-7 (Registration No. 2-56823) is incorporated herein by reference. 4-F Ninth Supplemental Indenture, dated as of August 1, 1976, between the Company and Citibank, N.A., and E.J. Jaworski, as Trustees, filed as Exhibit 2-J to the company's Registration Statement on Form S-7 (Registration No. 2-5622916) is incorporated herein by reference. *4-G Tenth Supplemental Indenture, dated as of March 8, 1999, between the Company and The Chase Manhattan Bank and Frank J. Grippo, as Trustees. *4-H Eleventh Supplemental Indenture, dated as of March 31, 1999, between the Company and The Chase Manhattan Bank and Frank J. Grippo (together with the Original Indenture and all instruments supplemental, the "Indenture"), as Trustees. *4-I Registration Rights Agreement, dated as of March 8, 1999, between the Company and the Series A Purchasers. *4-J Registration Rights Agreement, dated as of March 31, 1999, between the Company and the Series C Purchaser. 4-K NSC Stock Transfer Agreement between National Intergroup, Inc., the Company, NKK Corporation and NII Capital Corporation dated December 24, 1985, filed as Exhibit 4-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 4-L The Company is a party to certain long-term debt agreements where the amount involved does not exceed 10% of the Company's total assets. The Company agrees to furnish a copy of any such agreement to the Commission upon request. *5 Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois). 10-A Amended and Restated Lease Agreement between the Company and Wilmington Trust Company, dated as of December 20, 1985, relating to the Electrolytic Galvanizing Line, filed as Exhibit 10-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-B Lease Agreement between The Connecticut National Bank as Owner Trustee and Lessor and National Acquisition Corporation as Lessee dated as of September 1, 1987 for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference.
II-3
Exhibit Number Exhibit Description ------- ------------------- 10-C Lease Supplement No. 1 dated as of September 1, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as the Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-D Lease Supplement No. 2 dated as of November 18, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-D to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-E Purchase Agreement dated as of March 25, 1988 relating to the Stinson Motor Vessel among Skar-Ore Steamship Corporation, Wilmington Trust Company, General Foods Credit Investors No. 1 Corporation, Stinson, Inc. and the Company, and Time Charter between Stinson, Inc. and the Company, filed as Exhibit 10-E to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-F Purchase and Sale Agreement, dated as of May 16, 1994 between the Company and National Steel Funding Corporation, filed as Exhibit 10-A to Amendment No. 1 to the quarterly report of the Company on Form 10-Q/A for the quarter ended June 30, 1994, is incorporated herein by reference. 10-G Form of Indemnification Agreement filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference. 10-H Shareholders' Agreement, dated as of September 18, 1990, among DNN Galvanizing Corporation, 904153 Ontario Inc., National Ontario Corporation and Galvatek America Corporation, filed as Exhibit 10.27 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-I Partnership Agreement, dated as of September 18, 1990, among Dofasco, Inc., National Ontario II, Limited, Galvatek Ontario Corporation and DNN Galvanizing Corporation, filed as Exhibit 10.28 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-J Amendment No. 1 to the Partnership Agreement, dated as of September 18, 1990, among Dofasco, Inc., National Ontario II, Limited, Galvatek Ontario Corporation and DNN Galvanizing Corporation, filed as Exhibit 10.29 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-K Receivables Purchase Agreement, dated as of May 16, 1994, among the Company, National Steel Funding Corporation and certain financial institutions named therein, filed as Exhibit 10-A to Amendment No. 2 to the quarterly report of the Company on Form 10-Q/A for the quarter ended June 30, 1994, is incorporated herein by reference. 10-L Amendment Number One to the Receivables Purchase Agreement, dated as of May 31, 1995, among the Company, National Steel Funding Corporation and certain financial institutions named therein, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1995, is incorporated herein by reference. 10-M Amendment No. 2 and Consent to the Receivables Purchase Agreement, dated as of July 18, 1996, among the Company. National Steel Funding Corporation and certain financial institutions named therein, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein by reference.
II-4
Exhibit Number Exhibit Description ------- ------------------- *10-N Amended and Restated Receivables Purchase Agreement, dated as of September 30, 1997, among the Company, National Steel Funding Corporation and certain financial institutions named therein. 10-O Agreement for the Transfer of Employees by and between NKK Corporation and the Company, dated as of May 1, 1995, filed as Exhibit 10-CC to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-P Amendment No. 1 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation filed as Exhibit 10-NN to the annual report of the Company on Form 10-K for the year ended December 31, 1996, is incorporated herein by reference. 10-Q Amendment No. 2 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation filed as Exhibit 10-Q to the annual report on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-R Amendment No. 3 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-R to the annual report on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. 10-S Agreement dated as of November 25, 1997 among the Company, Avatex Corporation, NKK Corporation and NKK U.S.A. Corporation filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-T 1993 National Steel Corporation Long-Term Incentive Plan, filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-U 1993 National Steel Corporation Non-Employee Directors' Stock Option Plan, filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-V Amendment Number One to the 1993 National Steel Corporation Non- Employee Directors' Stock Option Plan, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1997, is incorporated herein by reference. 10-W Amendment Number Two to the 1993 National Steel Corporation Non- Employee Directors' Stock Option Plan filed as Exhibit 10-V to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-X National Steel Corporation Management Incentive Compensation Plan dated January 30, 1989, filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-Y Employment contract dated April 30, 1996 between the Company and David L. Peterson, filed as Exhibit 10-D to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference. 10-Z Supplement to Employment contract dated July 30, 1996 between the Company and David L. Peterson, filed as Exhibit 10-C to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein by reference.
II-5
Exhibit Number Exhibit Description ------- ------------------- 10-AA Amendment dated August 1, 1998 to Employment Contract between the Company and David L. Peterson, filed as Exhibit 10-D to the quarterly report of the Company for the quarter ended September 30, 1998 is incorporated herein by reference. 10-BB Amended and Restated Employment Agreement dated as of February 1, 1998 between the Company and Robert G. Pheanis filed as Exhibit 10-CC to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-CC Employment contract dated May 1, 1996 between the Company and John A. Maczuzak, filed as Exhibit 10-G to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference. 10-DD Employment Contract dated as of August 1, 1998 between the Company and Glenn H. Gage, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference. 10-EE Employment Contract dated as of August 1, 1998 between the Company and John F. Kaloski, filed as Exhibit 10-B to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference. 10-FF Agreement dated January 28, 1999 between the Company and John F. Kaloski, filed as Exhibit 10-FF to the annual report of the Company on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. 10-GG Employment Contract dated as of September 1, 1998 between the Company and Yutaka Tanaka, filed as Exhibit 10-C to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference. 10-HH Employment contract dated December 11, 1996 between the Company and Osamu Sawaragi filed as Exhibit 10-MM to the annual report of the Company on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference. 10-II No. 1 Continuous Galvanizing Line Turnkey Engineering and Construction Contract dated October 23, 1998 between the Company and NKK Steel Engineering, Inc., filed as Exhibit 10-II to the annual report of the Company on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. *10-JJ Amendment No. 1, dated March 19, 1999, to No. 1 Continuous Galvanizing Line Turnkey Engineering and Construction Contract dated October 23, 1998 between the Company and NKK Steel Engineering, Inc. **12 Statement re Computation of Ratios. **21 List of Subsidiaries of the Company. *23-A Consent of Ernst & Young LLP. *23-B Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois) (Filed as part of Exhibit 5 hereto). 24 Powers of Attorney, included on the signature page of this Registration Statement. **25-A Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939 (the "Trust Indenture Act") of The Chase Manhattan Bank, as Trustee under the Indenture. **25-B Statement of Eligibility on Form T-2 under the Trust Indenture Act of Frank J. Grippo, as Individual Trustee under the Indenture.
II-6
Exhibit Number Exhibit Description ------- ------------------- 27 Financial Data Schedule, filed as Exhibit 27 to the annual report of the Company on Form 10-K for the year ended December 31, 1998, is incorporated herein by reference. *99-A Form of Letter of Transmittal. *99-B Form of Notice of Guaranteed Delivery. *99-C Form of Letter to Brokers. *99-D Form of Letter to Clients. *99-E Guidelines for certification of taxpayer identification number on substitute Form W-9.
- -------- *Filed herewith. **Previously filed. II-7 Item 22. Undertakings. (a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. (b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the total, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the total, the changes in volume and price represent no more than a 20% change in the maximum total offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (d) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Company has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mishawaka, State of Indiana, on May 14, 1999. National Steel Corporation /s/ John A. Maczuzak By: _________________________________ John A. Maczuzak President and Chief Operating Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on May 14, 1999.
Signature Title --------- ----- /s/ Yutaka Tanaka* Director, Chairman of the ____________________________________ Board and Chief Executive Yutaka Tanaka Officer /s/ Charles A. Bowsher* Director ____________________________________ Charles A. Bowsher /s/ Edsel D. Dunford* Director ____________________________________ Edsel D. Dunford /s/ Mitsuoki Hino* Director ____________________________________ Mitsuoki Hino /s/ Frank J. Lucchino* Director ____________________________________ Frank J. Lucchino /s/ Bruce K. MacLaury* Director ____________________________________ Bruce K. MacLaury /s/ Mineo Shimura* Director ____________________________________ Mineo Shimura /s/ Hisashi Tanaka* Director ____________________________________ Hisashi Tanaka /s/ Sotaro Wakabayashi* Director ____________________________________ Sotaro Wakabayashi /s/ Glenn H. Gage Senior Vice President and ____________________________________ Chief Financial Officer Glenn H. Gage /s/ Kirk A. Sobecki Corporate Controller ____________________________________ Kirk A. Sobecki
/s/ Glenn H. Gage *By: _____________________ Glenn H. Gage Attorney in Fact II-9 EXHIBIT INDEX Except for those exhibits which are incorporated by reference, as indicated below, all exhibits are being filed along with this Registration Statement.
Exhibit Number Exhibit Description ------- ---------------------------------------------------------------------- *1-A Purchase Agreement, dated as of March 3, 1999, between the Company and Salomon Smith Barney Inc. and J.P. Morgan Securities, Inc. (collectively the "Series A Purchasers") *1-B Purchase Agreement, dated as of March 27, 1999, between the Company and Salomon Smith Barney Inc. (the "Series C Purchaser") 2-A Assets Purchase Agreement between Weirton Steel Corporation and the Company, dated as of April 29, 1983, together with collateral agreements incident to such Assets Purchase Agreement, filed as Exhibit 2-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-B Stock Purchase Agreement by and among NKK Corporation, National Intergroup, Inc. and the Company, dated August 22, 1984, together with certain collateral agreements incident to such Stock Purchase Agreement and certain schedules to such agreements, filed as Exhibit 2-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-C Stock Purchase and Recapitalization Agreement by and among National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated as of June 26, 1990, filed as Exhibit 2-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 2-D Amendment to Stock Purchase and Recapitalization Agreement by and among, National Intergroup, Inc., NII Capital Corporation, NKK Corporation, NKK U.S.A. Corporation and the Company, dated July 31, 1991 filed as Exhibit 2-D to the annual report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 2-E Stock Purchase Agreement dated as of January 31, 1997 among the Company, North Limited, NS Holdings Corporation, Bethlehem Steel Corporation and Bethlehem Steel International Corporation filed as Exhibit 2-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1997, is incorporated herein by reference. 2-F Asset Purchase Agreement dated as of June 6, 1997 between EES Coke Battery Company, Inc. and the Company, filed as Exhibit 2.1 to the Report on Form 8-K of the Company dated June 12, 1997, is incorporated herein by reference. 2-G Coal Inventory Purchase Agreement dated as of June 6, 1997 between DTE Coal Services, Inc. and the Company, filed as Exhibit 2.2 to the Report on Form 8-K of the Company dated June 12, 1997, is incorporated herein by reference. 3-A The Sixth Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 3-B Form of Amended and Restated By-laws of the Company filed as Exhibit 3-B to the annual report of the Company on Form 10-K for the year ended December 31, 1996, is incorporated herein by reference. 4-A Indenture of Mortgage and Deed of Trust, dated May 1, 1952, between the Company and Great Lakes Steel Corporation and City Bank Farmers Trust Company and Ralph E. Morton, as Trustee (the "Original Indenture"), filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Registration No. 2-9639) is incorporated herein by reference.
1
Exhibit Number Exhibit Description ------- ---------------------------------------------------------------------- 4-B Second Supplemental Indenture, dated as of January 1, 1957, between the Company and City Bank Farmers Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 2-C to the Company's Registration Statement on Form S-9 (Registration No. 2-15070) is incorporated herein by reference. 4-C Fourth Supplemental Indenture, dated as of December 1, 1960, between the Company and First National City Trust Company and Francis M. Pitt, as Trustees, filed as Exhibit 4(b)(5) to the Registration Statement of M. A. Hanna Company on Form S-1 (Registration No. 2-19169) is incorporated herein by reference. *4-D Fifth Supplemental Indenture dated as of May 1, 1962 between the Company, First National City Trust Company, as Trustee, and First National City Bank, as Successor Trustee. 4-E Eighth Supplemental Indenture, dated as of September 19, 1973, between the Company and First National City Bank and E. J. Jaworski, as Trustee, filed as Exhibit 2-I to the Company's Registration Statement on Form S-7 (Registration No. 2-56823) is incorporated herein by reference. 4-F Ninth Supplemental Indenture, dated as of August 1, 1976, between the Company and Citibank, N.A., and E.J. Jaworski, as Trustees, filed as Exhibit 2-J to the company's Registration Statement on Form S-7 (Registration No. 2-5622916) is incorporated herein by reference. *4-G Tenth Supplemental Indenture, dated as of March 8, 1999, between the Company and The Chase Manhattan Bank and Frank J. Grippo, as Trustees. *4-H Eleventh Supplemental Indenture, dated as of March 31, 1999, between the Company and The Chase Manhattan Bank and Frank J. Grippo (together with the Original Indenture and all instruments supplemental, the "Indenture"), as Trustees. *4-I Registration Rights Agreement, dated as of March 8, 1999, between the Company and the Series A Purchasers. *4-J Registration Rights Agreement, dated as of March 31, 1999, between the Company and the Series C Purchaser. 4-K NSC Stock Transfer Agreement between National Intergroup, Inc., the Company, NKK Corporation and NII Capital Corporation dated December 24, 1985, filed as Exhibit 4-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 4-L The Company is a party to certain long-term debt agreements where the amount involved does not exceed 10% of the Company's total assets. The Company agrees to furnish a copy of any such agreement to the Commission upon request. *5 Opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois). 10-A Amended and Restated Lease Agreement between the Company and Wilmington Trust Company, dated as of December 20, 1985, relating to the Electrolytic Galvanizing Line, filed as Exhibit 10-A to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-B Lease Agreement between The Connecticut National Bank as Owner Trustee and Lessor and National Acquisition Corporation as Lessee dated as of September 1, 1987 for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-B to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-C Lease Supplement No. 1 dated as of September 1, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as the Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-C to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference.
2
Exhibit Number Exhibit Description ------- ---------------------------------------------------------------------- 10-D Lease Supplement No. 2 dated as of November 18, 1987 between The Connecticut National Bank as Owner Trustee and National Acquisition Corporation as Lessee for the Ladle Metallurgy and Caster Facility located at Ecorse, Michigan, filed as Exhibit 10-D to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-E Purchase Agreement dated as of March 25, 1988 relating to the Stinson Motor Vessel among Skar-Ore Steamship Corporation, Wilmington Trust Company, General Foods Credit Investors No. 1 Corporation, Stinson, Inc. and the Company, and Time Charter between Stinson, Inc. and the Company, filed as Exhibit 10-E to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference. 10-F Purchase and Sale Agreement, dated as of May 16, 1994 between the Company and National Steel Funding Corporation, filed as Exhibit 10-A to Amendment No. 1 to the quarterly report of the Company on Form 10- Q/A for the quarter ended June 30, 1994, is incorporated herein by reference. 10-G Form of Indemnification Agreement filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference. 10-H Shareholders' Agreement, dated as of September 18, 1990, among DNN Galvanizing Corporation, 904153 Ontario Inc., National Ontario Corporation and Galvatek America Corporation, filed as Exhibit 10.27 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-I Partnership Agreement, dated as of September 18, 1990, among Dofasco, Inc., National Ontario II, Limited, Galvatek Ontario Corporation and DNN Galvanizing Corporation, filed as Exhibit 10.28 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-J Amendment No. 1 to the Partnership Agreement, dated as of September 18, 1990, among Dofasco, Inc., National Ontario II, Limited, Galvatek Ontario Corporation and DNN Galvanizing Corporation, filed as Exhibit 10.29 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-K Receivables Purchase Agreement, date as of May 16, 1994, among the Company, National Steel Funding Corporation and certain financial institutions named therein, filed as Exhibit 10-A to Amendment No. 2 to the quarterly report of the Company on Form 10-Q/A for the quarter ended June 30, 1994, is incorporated herein by reference. 10-L Amendment Number One to the Receivables Purchase Agreement, dated as of May 31, 1995, among the Company, National Steel Funding Corporation and certain financial institutions named therein, filed as Exhibit 10- A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1995, is incorporated herein by reference. 10-M Amendment No. 2 and Consent to the Receivables Purchase Agreement, dated as of July 18, 1996, among the Company, National Steel Funding Corporation and certain financial institution named therein, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein by reference. *10-N Amended and Restated Receivables Purchase Agreement, dated as of September 30, 1997, among the Company, National Steel Funding Corporation and certain financial institutions named therein. 10-O Agreement for the Transfer of Employees by and between NKK Corporation and the Company, dated as of May 1, 1995, filed as Exhibit 10-CC to the annual report of the Company on Form 10-K for the year ended December 31, 1995, is incorporated herein by reference.
3
Exhibit Number Exhibit Description ------- ---------------------------------------------------------------------- 10-P Amendment No. 1 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation filed as Exhibit 10-NN to the annual report of the Company on Form 10-K for the year ended December 31, 1996, is incorporated herein by reference. 10-Q Amendment No. 2 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation filed as Exhibit 10-Q to the annual report on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-R Amendment No. 3 to Agreement for the Transfer of Employees by and between the Company and NKK Corporation, filed as Exhibit 10-R to the annual report on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. 10-S Agreement dated as of November 25, 1997 among the Company, Avatex Corporation, NKK Corporation and NKK U.S.A. Corporation filed as Exhibit 10-R to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-T 1993 National Steel Corporation Long-Term Incentive Plan, filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-U 1993 National Steel Corporation Non-Employee Directors' Stock Option Plan, filed as Exhibit 10.2 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-V Amendment Number One to the 1993 National Steel Corporation Non- Employee Directors' Stock Option Plan, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1997, is incorporated herein by reference. 10-W Amendment Number Two to the 1993 National Steel Corporation Non- Employee Directors' Stock Option Plan filed as Exhibit 10-V to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-X National Steel Corporation Management Incentive Compensation Plan dated January 30, 1989, filed as Exhibit 10.3 to the Company's Registration Statement on Form S-1, Registration No. 33-57952, is incorporated herein by reference. 10-Y Employment contract dated April 30, 1996 between the Company and David L. Peterson, filed as Exhibit 10-D to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference. 10-Z Supplement to Employment contract dated July 30, 1996 between the Company and David L. Peterson, filed as Exhibit 10-C to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein by reference. 10-AA Amendment dated August 1, 1998 to Employment Contract between the Company and David L. Peterson, filed as Exhibit 10-D to the quarterly report of the Company for the quarter ended September 30, 1998 is incorporated herein by reference. 10-BB Amended and Restated Employment Agreement dated as of February 1, 1998 between the Company and Robert G. Pheanis filed as Exhibit 10-CC to the Annual Report of the Company on Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. 10-CC Employment contract dated May 1, 1996 between the Company and John A. Maczuzak, filed as Exhibit 10-G to the quarterly report of the Company on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference. 10-DD Employment Contract dated as of August 1, 1998 between the Company and Glenn H. Gage, filed as Exhibit 10-A to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference.
4
Exhibit Number Exhibit Description ------- ---------------------------------------------------------------------- 10-EE Employment Contract dated as of August 1, 1998 between the Company and John F. Kaloski, filed as Exhibit 10-B to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference. 10-FF Agreement dated January 28, 1999 between the Company and John F. Kaloski, filed as Exhibit 10-FF to the annual report of the Company on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. 10-GG Employment Contract dated as of September 1, 1998 between the Company and Yutaka Tanaka, filed as Exhibit 10-C to the quarterly report of the Company on Form 10-Q for the quarter ended September 30, 1998 is incorporated herein by reference. 10-HH Employment contract dated December 11, 1996 between the Company and Osamu Sawaragi filed as Exhibit 10-MM to the annual report of the Company on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference. 10-II No. 1 Continuous Galvanizing Line Turnkey Engineering and Construction Contract dated October 23, 1998 between the Company and NKK Steel Engineering, Inc., filed as Exhibit 10-II to the annual report of the Company on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference. *10-JJ Amendment No. 1, dated March 19, 1999, to No. 1 Continuous Galvanizing Line Turnkey Engineering and Construction Contract dated October 23, 1998 between the Company and NKK Steel Engineering, Inc. **12 Statement re Computation of Ratios. **21 List of Subsidiaries of the Company. *23-A Consent of Ernst & Young LLP. *23-B Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois) (Filed as part of Exhibit 5 hereto). 24 Powers of Attorney, included on the signature page of this registration statement. 25-A Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939 (the "Trust Indenture Act") of The Chase Manhattan Bank, as Trustee under the Indenture, filed herewith. **25-B Statement of Eligibility and Qualification on Form T-2 under the Trust Indenture Act of Frank J. Grippo, as Individual Trustee under the Indenture. 27 Financial Data Schedule, filed as Exhibit 27 to the annual report of the Company on Form 10-K for the year ended December 31, 1998, is incorporated by reference. *99-A Form of Letter of Transmittal. *99-B Form of Notice of Guaranteed Delivery. *99-C Form of Letter to Brokers. *99-D Form of Letter to Clients. *99-E Guidelines for certification of taxpayer identification number on substitute Form W-9.
- -------- *Filed herewith. **Previously filed. 5 EX-1.A 2 PURCHASE AGREEMENT DATED MARCH 3, 1999 EXHIBIT 1-A NATIONAL STEEL CORPORATION $225,000,000 FIRST MORTGAGE BONDS, 9 7/8% SERIES DUE 2009 Purchase Agreement New York, New York March 3, 1999 SALOMON SMITH BARNEY INC. J.P. MORGAN SECURITIES INC. c/o Salomon Smith Barney Inc. 388 Greenwich Street New York, New York 10013 Ladies and Gentlemen: National Steel Corporation, a Delaware corporation (the "COMPANY"), proposes to issue and sell to the several parties named in Schedule I hereto (the "INITIAL PURCHASERS") $225,000,000 principal amount of its First Mortgage Bonds, 9 7/8% Series due 2009 (the "SECURITIES"). The Securities are to be issued under the Indenture of Mortgage and Deed of Trust dated May 1, 1952 (the "ORIGINAL INDENTURE") from the Company and Great Lakes Steel Corporation, a former wholly-owned subsidiary of the Company which in 1966 was merged into the Company, to City Bank Farmers Trust Company and Ralph E. Morton, as Trustees, as supplemented by all instruments supplemental thereto, including a proposed Tenth Supplemental Indenture to be dated as of March 8, 1999 (the TENTH SUPPLEMENTAL INDENTURE"), among the Company and The Chase Manhattan Bank (the "TRUSTEE") and Frank J. Grippo, as Trustees. The Original Indenture and all instruments supplemental thereto are herein together sometimes referred to as the "Indenture". The Securities have the benefit of the Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated as of March 8, 1999, between the Company and the Initial Purchasers, pursuant to which the Company has agreed to register the Securities under the Securities Act subject to the terms and conditions therein specified. The term Initial Purchasers shall mean either the singular or plural as the context requires. The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 17 herein. The sale of the Securities to the Initial Purchasers will be made without registration of the Securities under the Securities Act in reliance upon exemptions from the registration requirements of the Securities Act. In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum, dated February 16, 1999 (including any information incorporated by reference therein) (the "PRELIMINARY MEMORANDUM"), and a final offering memorandum, dated March 3, 1999 (including any information incorporated by reference therein)(the "FINAL MEMORANDUM"). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Company and the Securities. The Company hereby confirms that it has authorized the use of the Preliminary Memorandum and the Final Memorandum in connection with the offer and sale of the Securities by the Initial Purchasers. Unless stated to the contrary, all references herein to the Final Memorandum are to the Final Memorandum at the date and time that this Agreement is executed and delivered by the parties hereto (the "EXECUTION TIME") and are not meant to include any amendment or supplement thereto subsequent to the Execution Time and any references herein to the terms "AMEND", "AMENDMENT" or "SUPPLEMENT" with respect to the Final Memorandum shall be deemed to refer to and include any information filed under the Exchange Act, subsequent to the Execution Time which is incorporated by reference therein. Capitalized terms used herein without definition have the respective meanings assigned to them in the Final Memorandum. 1. Representations and Warranties. The Company represents and warrants to ------------------------------ each of the Initial Purchasers as set forth below in this Section 1. (a) At the Execution Time and on the Closing Date, the Final Memorandum, does not (and any amendment or supplement thereto, at the date thereof and at the Closing Date, will not), contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to the information contained in or omitted from the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Initial Purchasers 2 specifically for inclusion therein, it being understood that the only such information is that described in Section 8 hereof. (b) Each document filed pursuant to the Exchange Act and incorporated by reference in the Final Memorandum, when it was filed with the Commission, as amended at or prior to the Closing Date, conformed in all material respects to the requirements of the Exchange Act and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Final Memorandum when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The consolidated financial statements, and the related notes thereto, included or incorporated by reference in the Final Memorandum present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; and said consolidated financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis except as otherwise specified therein or in the reports related thereto, and the supporting schedules included or incorporated by reference in the Final Memorandum present fairly the information required to be stated therein. (d) Since the respective dates as of which information is given in the Final Memorandum, there has not been any material adverse change in or affecting the business, prospects, financial position or results of operations of the Company and its subsidiaries (which term shall, for purposes of this Agreement, be limited to entities in which the Company has a majority interest) taken as a whole, otherwise than as set forth or contemplated in the Final Memorandum and, except as set forth or contemplated in the Final Memorandum neither the Company nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Company and its subsidiaries taken as a whole. 3 (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of its incorporation, with corporate power and authority to own its properties and conduct its business as described in the Final Memorandum, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified or in good standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole. (f) The Company has no "significant subsidiaries" within the meaning of Rule 1-02 of Regulation S-X promulgated by the Commission. (g) This Agreement has been duly authorized, executed and delivered by the Company; the Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by the Company, will constitute a legal, valid and binding instrument enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity; and the Registration Rights Agreement has been duly authorized and, when executed and delivered by the Company, will constitute the legal, valid, binding and enforceable instrument of the Company, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and except as rights to indemnification and contribution under the Registration Rights Agreement by be limited under applicable law. (h) The Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement pursuant to which such Securities are to be issued. The Indenture creates a valid lien on and first priority perfected security interest in the Mortgaged Property and, on the Closing Date, will secure the payment of the Securities in accordance with the terms thereof and, except as permitted by the Indenture, at the Closing Date, the Mortgaged Property will be free and clear of all liens, encumbrances, charges, claims and security interests. On 4 the Closing Date, no filings, recordings or other action will be required in order to perfect the liens created by the Indenture except for the filings or recordings which on or before the Closing Date will have been duly made (or, to the extent acceptable to the Initial Purchasers in their sole discretion, which will be made promptly after the Closing Date) with respect to the Mortgaged Property with appropriate state and local filing offices. (i) Neither the Company nor any of its subsidiaries is, or with the giving of notice or lapse of time or both would be, in violation of or in default under, its Certificate of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them or any of their respective properties is bound, except for violations and defaults which individually and in the aggregate are not material to the Company and its subsidiaries taken as a whole; neither the execution and delivery of the Indenture, this Agreement or the Registration Rights Agreement, the issue and sale of the Securities nor the performance by the Company of its obligations under this Agreement, the Indenture or the Registration Rights Agreement nor the consummation of the transactions contemplated herein or therein will conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will any such action result in any violation of the provisions of the Certificate of Incorporation or the By- Laws of the Company or any violation by the Company of any applicable law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company, its subsidiaries or any of their respective properties, except for conflicts, breaches, defaults and violations which individually and in the aggregate are not material to the Company and its subsidiaries taken as a whole; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Securities by the Company or the consummation by the Company of the transactions contemplated by this Agreement, the Indenture or the Registration Rights Agreement, except such consents, approvals, authorizations, registrations or qualifications (i) as will be obtained under the Securities Act and the Trust Indenture Act, (ii) as may be required under state securities or Blue Sky Laws in connection with the purchase and distribution of the Securities by the Initial Purchasers in the 5 manner contemplated herein and in the Final Memorandum and the Registration Rights Agreement, and (iii) the absence of which individually and in the aggregate both are not material to the Company and its subsidiaries taken as a whole and would not have a material adverse effect on the sale or ownership of the Securities. (j) Other than as set forth or contemplated in the Final Memorandum, there are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is or may be a party or to which any property of the Company or any of its subsidiaries is or may be the subject which is reasonably likely to have a material adverse effect on the business, financial position or results of operations of the Company and its subsidiaries, taken as a whole, or on the ability of the Company to perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Securities, and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and there are no statutes or regulations, the effect of which would be required by the Securities Act to be described in a prospectus relating to a registered offering of Securities, or contracts or other documents of a character which would be required to be described in a prospectus relating to a registered offering of Securities, in each case which is not so described in the Final Memorandum in all material respects. (k) Other than as set forth in the Final Memorandum the Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws described in clause (i), failure to receive required permits, licenses or other approvals described in clause (ii) or failure to comply with the terms and conditions of such permits, licenses or approvals described in clause (iii) would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole. (l) Other than as set forth or contemplated in the Final Memorandum, the Company has reasonably concluded that the costs and 6 liabilities associated with the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole. (m) Each of the Company and its subsidiaries has all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Final Memorandum except to the extent that the failure to obtain or file would not have a material adverse effect on the Company and its subsidiaries taken as a whole. (n) The Company and its subsidiaries have good title to all items of real property and personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are referred to in the Final Memorandum or such as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, existing and, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect relating to creditors' rights generally and general principles of equity, enforceable leases with such exceptions as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole. (o) No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries on the one hand, and the directors, officers and stockholders of the Company or any of its subsidiaries on the other hand, which would be required by the Securities Act to be described in a Prospectus relating to a registered Offering of Securities which is not so described in the Final Memorandum in all material respects. (p) The Company has not taken nor will it take, directly or indirectly, any action prohibited by Regulation M under the Exchange Act in connection with the offering of the Securities. 7 (q) None of the Company, any of its Affiliates or any person acting on its or their behalf, has (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that is currently or will be integrated with the sale of the Securities in a manner that would require the registration of the Securities under the Securities Act or (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States. (r) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act. (s) None of the Company, any of its Affiliates, or any person acting on its or their behalf, has engaged in any directed selling efforts with respect to the Securities, and each of them has complied with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. (t) The Company is subject to and in full compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. (u) The Company has not paid or agreed to pay to any person any compensation for soliciting another to purchase any securities of the Company (except as contemplated by this Agreement). (v) Except as contemplated by the Registration Rights Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities in the manner contemplated by this Agreement and the Final Memorandum to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act. 2. Purchase and Sale. Subject to the terms and conditions and in reliance ----------------- upon the representations and warranties herein set forth, the Company agrees to sell to the Initial Purchasers, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price of 99.226% of the principal amount thereof less a discount of 2.5% of the principal amount thereof, the principal amount of Securities set forth opposite each Initial Purchaser's name in Schedule I hereto. 3. Delivery and Payment. Delivery of and payment for the Securities shall -------------------- be made at 10:00 A.M., New York City time, on March 8, 1999, or such 8 later date (not later than March 11, 1999) as the Initial Purchasers shall designate, which date and time may be postponed by agreement between the Initial Purchasers and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Securities being herein called the "CLOSING DATE"). Delivery of the Securities shall be made to the Initial Purchasers against payment by the several Initial Purchasers of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to a U.S. dollar account in New York previously designated by the Company or such other manner of payment as may be designated by the Company and agreed to by the Initial Purchasers not less than two business days prior to the Closing Date. Delivery of the Securities shall be made at the office of Davis Polk & Wardwell ("COUNSEL FOR THE INITIAL PURCHASERS"), 450 Lexington Avenue, New York, New York. Delivery of certificates for the Securities shall be made through the facilities of The Depository Trust Company unless the Initial Purchasers shall otherwise instruct not less than three full business days in advance of the Closing Date. The Company agrees to have the certificates for the Securities available for inspection by the Initial Purchasers in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date. 4. Offering by Initial Purchasers. Each Initial Purchaser (i) ------------------------------ acknowledges that the Securities have not been registered under the Securities Act and may not be offered or sold except pursuant to Rule 144A under the Securities Act, Regulation S or another exemption from the registration requirements of the Securities Act or pursuant to an effective registration statement under the Securities Act and (ii) severally and not jointly, represents and warrants to and agrees with the Company that: (a) It has not offered or sold, and will not offer or sell, any Securities except (i) to those it reasonably believes to be qualified institutional buyers (as defined in Rule 144A under the Securities Act) and that, in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of such Securities is aware that such sale is being made in reliance on Rule 144A or (ii) in accordance with the restrictions set forth in Exhibit A hereto. (b) Neither it nor any person acting on its behalf has made or will make offers or sales of the Securities in the United States by means of any form of general solicitation or general advertising (within the meaning of Regulation D) in the United States, except pursuant to a registered public offering as provided in the Registration Rights Agreement. 9 (c) It has (i) not offered or sold, and will not offer or sell, in the United Kingdom, by means of any document, any Securities other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or as agent (except in circumstances which do not constitute an offer to the public within the meaning of the Companies Act 1985 of Great Britain), (ii) complied and will comply with all applicable provisions of the Financial Services Act 1986 of the United Kingdom with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (iii) only issued or passed on, and will only issue or pass on, in the United Kingdom any document received by it in connection with the issue of Securities to a person who is of the kind described in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988, as amended, or is a person to whom the document may otherwise lawfully be issued or passed on. 5. Agreements. The Company agrees with each Initial Purchaser that: ---------- (a) The Company will furnish to each Initial Purchaser and to Counsel for the Initial Purchasers, without charge, during the period referred to in paragraph (c) below, as many copies of the Final Memorandum and any amendments and supplements thereto as it may reasonably request. (b) The Company will not amend or supplement the Final Memorandum, other than by filing documents under the Exchange Act that are incorporated by reference therein, provided, however, that, prior to the completion of the distribution of the Securities by the Initial Purchasers (as determined by the Initial Purchasers), the Company will not file any document under the Exchange Act that is incorporated by reference in the Final Memorandum unless, prior to such proposed filing, the Company has furnished the Initial Purchasers with a copy of such document for their review and has given reasonable consideration to any comments or objections of the Initial Purchasers prior to the filing of such document. The Company will promptly advise the Initial Purchasers when any document filed under the Exchange Act that is incorporated by reference in the Final Memorandum shall have been filed with the Commission. (c) If at any time prior to the completion of the sale of the Securities by the Initial Purchasers, any event occurs as a result of which the Final Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact 10 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it should be necessary to amend or supplement the Final Memorandum to comply with applicable law, the Company promptly (i) will notify the Initial Purchasers of any such event; (ii) subject to the requirements of paragraph (b) of this Section 5, will prepare an amendment or supplement that will correct such statement or omission or effect such compliance; and (iii) will supply any supplemented or amended Final Memorandum to the Initial Purchasers and Counsel for the Initial Purchasers without charge in such quantities as you may reasonably request. (d) Until such time as the Exchange Offer is complete, the Company will not, nor will it permit any of its respective Affiliates to, resell any Securities that constitute "restricted securities" under Rule 144A that have been acquired by any of them. (e) Except in accordance with the Registration Rights Agreement, neither the Company, any of its or respective Affiliates, nor any person acting on its or their behalf, will, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Securities under the Securities Act. (f) None of the Company, any of its Affiliates, or any person acting on its or their behalf will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States, except pursuant to a registered public offering as provided in the Registration Rights Agreement. (g) So long as any of the Securities are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securities. 11 (h) None of the Company, any of its Affiliates, or any person acting on its or their behalf will engage in any directed selling efforts with respect to the Securities, except pursuant to a registered public offering, and each of them will comply with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. (i) The Company will cooperate with the Initial Purchasers and use its best efforts to permit the Securities to be eligible for clearance and settlement through The Depository Trust Company. (j) The Company will not, until 180 days following the Closing Date, without the prior written consent of Salomon Smith Barney Inc., offer, sell or contract to sell, grant any other option to purchase or otherwise dispose of, directly or indirectly, or announce the offering of, or file a registration statement for, any debt securities issued or guaranteed by the Company (other than as required under the Registration Rights Agreement). The Company will not at any time offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor of Regulation S thereunder to cease to be applicable to the offer and sale of the Securities as contemplated by this Agreement and the Final Memorandum. (k) The Company hereby agrees to permit the Securities to be designated PORTAL eligible securities in accordance with the rules and regulations of the National Association of Securities Dealers, Inc. relating to trading in The PORTAL Market. (l) The Company hereby agrees to apply the net proceeds from the sale of the Securities as set forth in the Final Memorandum under the heading "Use of Proceeds". (m) The Company agrees to pay the costs and expenses relating to the following matters: (i) the costs and expenses incurred by the Company in the preparation, printing and distribution of the Indenture and the Registration Rights Agreement and the issuance of the Securities; (ii) the fees and expenses of the Trustee; (iii) the preparation, printing or reproduction of the Preliminary Memorandum and Final Memorandum and each amendment or supplement to either of them; (iv) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Preliminary 12 Memorandum and Final Memorandum, and all amendments or supplements to either of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (v) the preparation, printing, authentication, issuance and delivery of certificates for the Securities, including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (vi) the printing (or reproduction) and delivery of all agreements or documents printed (or reproduced) and delivered to the Initial Purchasers and the prospective purchasers in connection with the offering of the Securities; (vii) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of counsel for the Initial Purchasers relating to such registration and qualification); (viii) admitting the Securities for trading in the PORTAL Market; (ix) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Securities; (x) the fees and expenses of the Company's accountants and the fees and expenses of counsel (including local and special counsel) for the Company; and (xi) all other costs and expenses incurred by the Company in the performance of its obligations hereunder. 6. Conditions to the Obligations of the Initial Purchasers. The ------------------------------------------------------- obligations of the Initial Purchasers to purchase the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein at the Execution Time, and the Closing Date, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for the Company, shall have furnished to the Representatives its written opinion, dated the Closing Date, in the form of Exhibit B hereto. In rendering such opinions, such counsel may rely (A) as to matters involving the application of laws of the State of New York, upon the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, (B) as to matters involving the application of laws other than the laws of the United States and the State of New York and the General Corporation Law of the State of Delaware, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (reasonably satisfactory to Initial Purchasers' counsel) of other counsel reasonably acceptable to the Initial Purchasers' counsel, familiar with the applicable laws; and (C) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company, accountants and engineers and certificates or other written statements of officials 13 of jurisdictions having custody of documents respecting the corporate existence or good standing of the Company. For purposes of rendering such opinions, compliance with financial covenants contained in any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument relating to the Company or any of its subsidiaries shall be deemed to be a question of fact. With respect to the matters to be covered in subparagraph (viii) above, counsel may state that (A) they are not passing upon the adequacy of the derivation or compilation from Company financial statements or financial records of any financial or statistical data and (B) their opinion and belief is based upon their participation in the preparation of the Final Memorandum and any amendment or supplement thereto and review and discussion of the contents thereof but is without independent check or verification except as specified. All references in this Section 6 to the Final Memorandum shall be deemed to include any amendment or supplement thereto at the Closing Date. (b) Yukevich, Murchetti, Liekar & Zangrilli special counsel for the Company, shall have furnished to the Initial Purchasers their written opinion, dated the Closing Date, in the form of Exhibit C hereto. In rendering such opinions, such counsel may (A) rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and certificates or other written statements of officials of jurisdictions having custody of documents respecting the corporate existence or good standing of the Company and (B) state that they are not passing upon the adequacy or accuracy of the derivation or compilation from Company financial statements or financial records of any financial or statistical data. (c) The Initial Purchasers shall have received from Davis Polk & Wardwell, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date and addressed to the Initial Purchasers, with respect to the issuance and sale of the Securities, the Indenture, the Registration Rights Agreement, the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Initial Purchasers may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Initial Purchasers a certificate of the Company, signed by the Chairman of the Board or the President and the principal financial or accounting officer of the Company, dated the Closing Date, to the effect that the signers of such certificate 14 have carefully examined the Final Memorandum, any amendment or supplement to the Final Memorandum and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and (ii) since the date of the most recent financial statements included in the Final Memorandum (exclusive of any amendment or supplement thereto), there has been no material adverse change in the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). (e) At the Execution Time and at the Closing Date, Ernst & Young LLP shall have furnished to the Initial Purchasers a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers. (f) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Final Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6, or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Initial Purchasers, so material and adverse as to make it impractical to market the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). 15 (g) Subsequent to the Execution Time, there shall not have been (i) any decrease in the rating of the Securities or any of the Company's other debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act) or (ii) any notice given of any intended or potential decrease in any such rating or that such organization has under surveillance or review (other than any such notice with positive implications of a possible upgrading) its rating of the Securities or any of the Company's other debt securities. (h) The Securities shall have been designated as PORTAL-eligible securities in accordance with the rules and regulations of the NASD, and the Securities shall be eligible for clearance and settlement through The Depositary Trust Company. (i) The Company shall have furnished to the Trustee a certified resolution in accordance with Section 3.03(a) of the Original Indenture. (j) The Company shall have furnished to the Trustee an officer's certificate, as to all conditions precedent relating to authentication of the Securities being satisfied and no defaults existing under the Indenture, in accordance with Section 3.03(b) and Section 16.01(a) of the Original Indenture. (k) The Company shall have requested and caused Douglas, Alexa, Koppen & Hurley, Sorling, Northrup, Hanna, Cullen and Cochran, Ltd. and Clark Hill PLC, special counsel for the Company to furnish the Trustee and the Initial Purchasers their opinion, dated the Closing Date, to the effect set forth in Section 3.03(c), Section 3.05(e), Section 3.05(f) and Section 16.01(b) of the Original Indenture. (l) The Company shall have furnished to the Trustee the Tenth Supplemental Indenture. (m) The Company shall have furnished to the Trustee an officers' certificate with respect to (i) the net bondable value of property additions in accordance with Section 3.05(a) of the Original Indenture and (ii) the value of available refundable Bonds in accordance with Section 3.09(a) of the Original Indenture. (n) The Company shall have furnished to the Trustee an engineer's certificate in accordance with Section 3.05(b) of the Original Indenture. 16 (o) The Company shall have furnished to the Trustee an independent accountant's certificate in accordance with Section 3.05(d) and Section 16.01(c) of the Original Indenture. (p) The Company shall have furnished to the Initial Purchasers an insurance certificate of its independent consultant substantially in the form delivered annually under Section 4.06 of the Indenture. (q) At or before the Closing Date (i) evidence (including without limitation, the results of lien and title searches) reasonably satisfactory to the Initial Purchasers of the absence of any liens other than permitted liens on any of the Mortgaged Property shall have been furnished to the Initial Purchasers, and (ii) such evidence of the completion of all recordings and filings of the Indenture, and of the execution, delivery, recording and or filing of such other documents, as may be necessary or, in the reasonable opinion of the Initial Purchasers, desirable to create or perfect the liens created, or purported or intended to be created, by the Indenture shall have been furnished to the Initial Purchasers. (r) On or prior to the Closing Date the Company shall have furnished to the Initial Purchasers such further certificates and documents as the Initial Purchasers shall reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and Counsel for the Initial Purchasers, this Agreement and all obligations of the Initial Purchasers hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing. The documents required to be delivered by this Section 13 will be delivered at the office of Counsel for the Initial Purchasers, at 450 Lexington Avenue, New York, New York, on the Closing Date. 7. Reimbursement of Expenses. If the sale of the Securities provided for ------------------------- herein is not consummated because of any condition to the obligations of the Initial Purchasers set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply 17 with any provision hereof, in each case other than by reason of a default by any of the Initial Purchasers, the Company will reimburse the Initial Purchasers severally through Salomon Smith Barney, Inc. upon demand for all reasonable out- of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. 8. Indemnification and Contribution. (a) The Company agrees to -------------------------------- indemnify and hold harmless each Initial Purchaser, each director, officer, employee and agent of any Initial Purchaser and each other person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several (including, without limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted), to which they or any of them may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum, the Final Memorandum (or in any supplement or amendment thereto), or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of either Initial Purchasers specifically for inclusion therein, it being understood that the only such information is that described in Section 8(b). This indemnity agreement will be in addition to any liability that the Company may otherwise have. Such indemnity with respect to the Preliminary Memorandum shall not inure to the benefit of either Initial Purchaser (or any of the directors, officers, employees and agents of such Initial Purchaser) from whom the person asserting any such loss, claim, damage or liability purchased the Securities that are the subject thereof if such person did not receive a copy of the Final Memorandum as amended or supplemented at or prior to the confirmation of the sale of such Securities to such person in any case where the untrue statement or omission of a material fact 18 contained in such Preliminary Memorandum was corrected in the Final Memorandum as amended or supplemented and the sale to the person asserting any such loss, claim, damage or liability was an initial resale of such Securities by such Initial Purchaser. (b) Each Initial Purchaser severally and not jointly agrees to indemnify and hold harmless each of the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Initial Purchasers, but only with reference to written information relating to such Initial Purchasers furnished to the Company by or on behalf of the Initial Purchasers specifically for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any amendment thereof or supplement thereto). This indemnity agreement will be in addition to any liability that the Initial Purchasers may otherwise have. The Company acknowledges that the statements set forth in the last paragraph of the cover page, the first paragraph on page 3 and the penultimate paragraph under the heading "Plan of Distribution" in the Preliminary Memorandum and the Final Memorandum constitute the only information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any amendment thereof or supplement thereto). (c) Promptly after receipt by an indemnified party under this Section 7,8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7,8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to 19 appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood and agreed, however, that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate counsel for all such indemnified parties (and any local counsel) and that all such fees and expenses shall be reimbursed as they are incurred. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify any indemnified party from and against any loss or liability by reason of such settlement or judgment except as otherwise provided herein. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. An indemnifying party shall not be liable for any settlement of an action or claim without its written consent. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7,8 is unavailable to or insufficient to hold harmless an indemnified party for any reason except by virtue of the last sentence of Section 7(a), the Company and the Initial Purchasers agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or 20 other expenses reasonably incurred in connection with investigating or defending same) (collectively "LOSSES") to which the Company or either of the Initial Purchasers may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand or the Initial Purchasers on the other, as applicable, from the offering of the Securities; provided, however, that in no case shall any Initial Purchaser (except as may be provided in any agreement among the Initial Purchasers relating to the offering of the Securities) be responsible for any amount in excess of the purchase discount or commission applicable to the Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Initial Purchasers shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand or the Initial Purchasers on the other hand, as applicable, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering of the Securities (before deducting expenses), and benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions, in each case as set forth on the cover page of the Final Memorandum. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company on the one hand, or the Initial Purchasers on the other, the intent of the parties and their relative knowledge, information and opportunity to correct or prevent such untrue statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective purchase obligations and not joint. For purposes of this Section 7,8, each person who controls an Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee and such agent of an Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each person who controls the Company within the meaning of either the Securities Act or the Exchange 21 Act and each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). The indemnity and contribution agreements contained in this Section 8 are in addition to any liability which the indemnifying parties may otherwise have to the indemnified parties referred to above. The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser or any person controlling any Initial Purchaser or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Securities. 9. Default by an Initial Purchaser. If any of the Initial Purchasers ------------------------------- shall fail to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Initial Purchaser shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such non-defaulting Initial Purchaser does not purchase all the Securities, this Agreement will terminate without liability to the non-defaulting Initial Purchaser or the Company. In the event of a default by an Initial Purchaser as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding seven days, as the non-defaulting Initial Purchaser shall determine in order that the required changes in the Final Memorandum or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve a defaulting Initial Purchaser of its liability, if any, to the Company or the non-defaulting Initial Purchaser for damages occasioned by its default hereunder. 10. Termination. This Agreement shall be subject to termination in the ----------- absolute discretion of the Initial Purchasers, by notice given to the Company prior to delivery of and payment for the Securities, if prior to such time (i) trading in any of the Company's securities shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Initial Purchasers, impracticable or inadvisable to proceed with the offering or delivery 22 of the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). 11. Representations and Indemnities to Survive. The respective ------------------------------------------ agreements, representations, warranties, indemnities and other statements of the Company, or its officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchasers, the Company or any of the officers, directors or controlling persons referred to in Section 7, 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections and 7, 8 hereof shall survive the termination or cancellation of this Agreement. 12. Notices. All communications hereunder will be in writing and effective ------- only on receipt, and, if sent to the Initial Purchasers, will be mailed, delivered or sent by fax and confirmed to them, care of Salomon Smith Barney Inc., General Counsel (fax no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney Inc. at 388 Greenwich Street, New York, New York 10013 Attention: General Counsel; or, if sent to the Company will be mailed, delivered or faxed to (219) 273-7609 and confirmed to it at 4100 Edison Lakes Parkway, Mishawaka, Indiana 46545-3440 Attention: General Counsel. 13. Successors. This Agreement will inure to the benefit of and be ---------- binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7, 8 hereof, and no other person will have any right or obligation hereunder. 14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN -------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF). 15. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which will be deemed to be an original, but all such counterparts will together constitute one and the same instrument. 16. Headings. The section headings used herein are for convenience only -------- and shall not affect the construction hereof. 17. Definitions. The terms which follow, when used in this Agreement, ----------- shall have the meanings indicated. 23 "Affiliate" shall have the meaning specified in Rule 501(b) of Regulation D. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in The City of New York. "Commission" shall mean the Securities and Exchange Commission. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder. "NASD" shall mean the National Association of Securities Dealers, Inc. "Regulation D" shall mean Regulation D under the Act. "Regulation S" shall mean Regulation S under the Act. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. 24 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement among the Company and the Initial Purchasers. Very truly yours, NATIONAL STEEL CORPORATION By: /s/ William E. McDonough ------------------------------ Name: William E. McDonough Title: Treasurer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON SMITH BARNEY INC. J.P. MORGAN SECURITIES INC. By: SALOMON SMITH BARNEY INC. By: /s/ David R. Dowdle ____________________________ Name: David R. Dowdle Title: Associate 25 SCHEDULE I PRINCIPAL AMOUNT OF SECURITIES INITIAL PURCHASERS TO BE PURCHASED - ------------------ -------------------- Salomon Smith Barney Inc................ $ 157,500,000 J.P. Morgan Securities Inc.............. 67,500,000 -------------------- Total............................ $ 225,000,000 EX-1.B 3 PURCHASE AGREEMENT DATED MARCH 27, 1999 EXHIBIT 1-B NATIONAL STEEL CORPORATION $75,000,000 FIRST MORTGAGE BONDS, 9 7/8% SERIES C DUE 2009 Purchase Agreement New York, New York March 24, 1999 SALOMON SMITH BARNEY INC. 388 Greenwich Street New York, New York 10013 Ladies and Gentlemen: National Steel Corporation, a Delaware corporation (the "COMPANY"), proposes to issue and sell to Salomon Smith Barney Inc. hereto (the "INITIAL PURCHASER") $75,000,000 principal amount of its First Mortgage Bonds, 9 7/8% Series C due 2009 (the "SECURITIES"). The Securities are to be issued under the Indenture of Mortgage and Deed of Trust dated May 1, 1952 (the "ORIGINAL INDENTURE") from the Company and Great Lakes Steel Corporation, a former wholly-owned subsidiary of the Company which in 1966 was merged into the Company, to City Bank Farmers Trust Company and Ralph E. Morton, as Trustees, as supplemented by all instruments supplemental thereto, including a proposed Eleventh Supplemental Indenture to be dated as of March 31, 1999 (the "ELEVENTH SUPPLEMENTAL INDENTURE"), among the Company and The Chase Manhattan Bank (the "TRUSTEE") and Frank J. Grippo, as Trustees. The Original Indenture and all instruments supplemental thereto are herein together sometimes referred to as the "Indenture". The Securities have the benefit of the Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated as of March 31, 1999, between the Company and the Initial Purchaser, pursuant to which the Company has agreed to register the Securities under the Securities Act subject to the terms and conditions therein specified. The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 17 herein. The sale of the Securities to the Initial Purchaser will be made without registration of the Securities under the Securities Act in reliance upon exemptions from the registration requirements of the Securities Act. In connection with the sale of the Securities, the Company has prepared a final offering memorandum, dated March 24, 1999 (including any information incorporated by reference therein, the "FINAL MEMORANDUM"). The Final Memorandum sets forth certain information concerning the Company and the Securities. The Company hereby confirms that it has authorized the use of the the Final Memorandum in connection with the offer and sale of the Securities by the Initial Purchaser. Unless stated to the contrary, all references herein to the Final Memorandum are to the Final Memorandum at the date and time that this Agreement is executed and delivered by the parties hereto (the "EXECUTION TIME") and are not meant to include any amendment or supplement thereto subsequent to the Execution Time and any references herein to the terms "amend", "amendment" or "supplement" with respect to the Final Memorandum shall be deemed to refer to and include any information filed under the Exchange Act, subsequent to the Execution Time which is incorporated by reference therein. Capitalized terms used herein without definition have the respective meanings assigned to them in the Final Memorandum. 1. Representations and Warranties. The Company represents and warrants to ------------------------------ the Initial Purchaser as set forth below in this Section 1. (a) At the Execution Time and on the Closing Date, the Final Memorandum does not (and any amendment or supplement thereto, at the date thereof and at the Closing Date, will not) contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to the information contained in or omitted from the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Initial Purchaser specifically for inclusion therein, it being understood that the only such information is that described in Section 8(b) hereof. (b) Each document filed pursuant to the Exchange Act and incorporated by reference in the Final Memorandum, when it was filed with the Commission, as amended at or prior to the Closing Date, conformed in all material respects to the requirements of the Exchange Act 2 and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Final Memorandum when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The consolidated financial statements, and the related notes thereto, included or incorporated by reference in the Final Memorandum present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; and said consolidated financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis except as otherwise specified therein or in the reports related thereto, and the supporting schedules included or incorporated by reference in the Final Memorandum present fairly the information required to be stated therein. (d) Since the respective dates as of which information is given in the Final Memorandum, there has not been any material adverse change in or affecting the business, prospects, financial position or results of operations of the Company and its subsidiaries (which term shall, for purposes of this Agreement, be limited to entities in which the Company has a majority interest) taken as a whole, otherwise than as set forth or contemplated in the Final Memorandum and, except as set forth or contemplated in the Final Memorandum neither the Company nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Company and its subsidiaries taken as a whole. (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of its incorporation, with corporate power and authority to own its properties and conduct its business as described in the Final Memorandum, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified or in good 3 standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole. (f) The Company has no "significant subsidiaries" within the meaning of Rule 1-02 of Regulation S-X promulgated by the Commission. (g) This Agreement has been duly authorized, executed and delivered by the Company; the Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by the Company, will constitute a legal, valid and binding instrument enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity; and the Registration Rights Agreement has been duly authorized and, when executed and delivered by the Company, will constitute the legal, valid, binding and enforceable instrument of the Company, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and except as rights to indemnification and contribution under the Registration Rights Agreement may be limited under applicable law. (h) The Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchaser in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement pursuant to which such Securities are to be issued. The Indenture creates a valid lien on and first priority perfected security interest in the Mortgaged Property and, on the Closing Date, will secure the payment of the Securities in accordance with the terms thereof and, except as permitted by the Indenture, at the Closing Date, the Mortgaged Property will be free and clear of all liens, encumbrances, charges, claims and security interests. On the Closing Date, no filings, recordings or other action will be required in order to perfect the liens created by the Indenture except for the filings or recordings which on or before the Closing Date will have been duly made (or, to the extent acceptable to the Initial Purchaser in its sole discretion, which will be made promptly after the Closing Date) with respect to the Mortgaged Property with appropriate state and local filing offices. 4 (i) Neither the Company nor any of its subsidiaries is, or with the giving of notice or lapse of time or both would be, in violation of or in default under, its Certificate of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them or any of their respective properties is bound, except for violations and defaults which individually and in the aggregate are not material to the Company and its subsidiaries taken as a whole; neither the execution and delivery of the Indenture, this Agreement or the Registration Rights Agreement, the issue and sale of the Securities nor the performance by the Company of its obligations under this Agreement, the Indenture or the Registration Rights Agreement nor the consummation of the transactions contemplated herein or therein will conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will any such action result in any violation of the provisions of the Certificate of Incorporation or the By-Laws of the Company or any violation by the Company of any applicable law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company, its subsidiaries or any of their respective properties, except for conflicts, breaches, defaults and violations which individually and in the aggregate are not material to the Company and its subsidiaries taken as a whole; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Securities by the Company or the consummation by the Company of the transactions contemplated by this Agreement, the Indenture or the Registration Rights Agreement, except such consents, approvals, authorizations, registrations or qualifications (i) as will be obtained under the Securities Act and the Trust Indenture Act, (ii) as may be required under state securities or Blue Sky Laws in connection with the purchase and distribution of the Securities by the Initial Purchaser in the manner contemplated herein and in the Final Memorandum and the Registration Rights Agreement, and (iii) the absence of which individually and in the aggregate both are not material to the Company and its subsidiaries taken as a whole and would not have a material adverse effect on the sale or ownership of the Securities. (j) Other than as set forth or contemplated in the Final Memorandum, there are no legal or governmental proceedings pending or, 5 to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is or may be a party or to which any property of the Company or any of its subsidiaries is or may be the subject which is reasonably likely to have a material adverse effect on the business, financial position or results of operations of the Company and its subsidiaries, taken as a whole, or on the ability of the Company to perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Securities, and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and there are no statutes or regulations, the effect of which would be required by the Securities Act to be described in a prospectus relating to a registered offering of Securities, or contracts or other documents of a character which would be required to be described in a prospectus relating to a registered offering of Securities, in each case which is not so described in the Final Memorandum in all material respects. (k) Other than as set forth in the Final Memorandum the Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws described in clause (i), failure to receive required permits, licenses or other approvals described in clause (ii) or failure to comply with the terms and conditions of such permits, licenses or approvals described in clause (iii) would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole. (l) Other than as set forth or contemplated in the Final Memorandum, the Company has reasonably concluded that the costs and liabilities associated with the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole. 6 (m) Each of the Company and its subsidiaries has all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Final Memorandum except to the extent that the failure to obtain or file would not have a material adverse effect on the Company and its subsidiaries taken as a whole. (n) The Company and its subsidiaries have good title to all items of real property and personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are referred to in the Final Memorandum or such as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, existing and, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect relating to creditors' rights generally and general principles of equity, enforceable leases with such exceptions as would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole. (o) No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries on the one hand, and the directors, officers and stockholders of the Company or any of its subsidiaries on the other hand, which would be required by the Securities Act to be described in a Prospectus relating to a registered Offering of Securities which is not so described in the Final Memorandum in all material respects. (p) The Company has not taken nor will it take, directly or indirectly, any action prohibited by Regulation M under the Exchange Act in connection with the offering of the Securities. (q) None of the Company, any of its Affiliates or any person acting on its or their behalf, has (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that is currently or will be integrated with the sale of the Securities in a manner that would require the registration of the Securities under the Securities Act or (ii) engaged in any form of general solicitation 7 or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States. (r) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act. (s) None of the Company, any of its Affiliates, or any person acting on its or their behalf, has engaged in any directed selling efforts with respect to the Securities, and each of them has complied with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. (t) The Company is subject to and in full compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. (u) The Company has not paid or agreed to pay to any person any compensation for soliciting another to purchase any securities of the Company (except as contemplated by this Agreement). (v) Except as contemplated by the Registration Rights Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities in the manner contemplated by this Agreement and the Final Memorandum to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act. 2 . Purchase and Sale. Subject to the terms and conditions and in reliance ----------------- upon the representations and warranties herein set forth, the Company agrees to sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company, at a purchase price of 102 1/4% of the principal amount thereof less a discount of 2% of the principal amount thereof,plus an amount equal to accured interest on the Securities from March 8, 1999 to the date of delivery, the Securities. 3. Delivery and Payment. Delivery of and payment for the Securities shall -------------------- be made at 10:00 A.M., New York City time, on March 31, 1999, or such later date (not later than April 2, 1999) as the Initial Purchaser shall designate, which date and time may be postponed by agreement between the Initial Purchaser and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Securities being herein called the "CLOSING DATE"). Delivery of the Securities shall be made to the Initial Purchaser against payment by the several Initial Purchaser of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to a U.S. dollar account in New York previously 8 designated by the Company or such other manner of payment as may be designated by the Company and agreed to by the Initial Purchaser not less than two business days prior to the Closing Date. Delivery of the Securities shall be made at the office of Davis Polk & Wardwell ("COUNSEL FOR THE INITIAL PURCHASER"), 450 Lexington Avenue, New York, New York. Delivery of certificates for the Securities shall be made through the facilities of The Depository Trust Company unless the Initial Purchaser shall otherwise instruct not less than three full business days in advance of the Closing Date. The Company agrees to have the certificates for the Securities available for inspection by the Initial Purchaser in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date. 4. Offering by Initial Purchasers. The Initial Purchaser (i) ------------------------------ acknowledges that the Securities have not been registered under the Securities Act and may not be offered or sold except pursuant to Rule 144A under the Securities Act, Regulation S or another exemption from the registration requirements of the Securities Act or pursuant to an effective registration statement under the Securities Act and (ii) represents and warrants to and agrees with the Company that: (a) It has not offered or sold, and will not offer or sell, any Securities except (i) to those it reasonably believes to be qualified institutional buyers (as defined in Rule 144A under the Securities Act) and that, in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of such Securities is aware that such sale is being made in reliance on Rule 144A or (ii) in accordance with the restrictions set forth in Exhibit A hereto. (b) Neither it nor any person acting on its behalf has made or will make offers or sales of the Securities in the United States by means of any form of general solicitation or general advertising (within the meaning of Regulation D) in the United States, except pursuant to a registered public offering as provided in the Registration Rights Agreement. (c) It has (i) not offered or sold, and will not offer or sell, in the United Kingdom, by means of any document, any Securities other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or as agent (except in circumstances which do not constitute an offer to the public within the meaning of the Companies Act 1985 of Great Britain), (ii) complied and will comply with all applicable provisions of the Financial Services Act 1986 of the United Kingdom with respect to anything done by it in relation to the Securities in, from or 9 otherwise involving the United Kingdom, and (iii) only issued or passed on, and will only issue or pass on, in the United Kingdom any document received by it in connection with the issue of Securities to a person who is of the kind described in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988, as amended, or is a person to whom the document may otherwise lawfully be issued or passed on. 5. Agreements. The Company agrees with each Initial Purchaser that: ---------- (a) The Company will furnish to each Initial Purchaser and to Counsel for the Initial Purchaser, without charge, during the period referred to in paragraph (c) below, as many copies of the Final Memorandum and any amendments and supplements thereto as it may reasonably request. (b) The Company will not amend or supplement the Final Memorandum, other than by filing documents under the Exchange Act that are incorporated by reference therein, provided, however, that, prior to the completion of the distribution of the Securities by the Initial Purchaser (as determined by the Initial Purchaser), the Company will not file any document under the Exchange Act that is incorporated by reference in the Final Memorandum unless, prior to such proposed filing, the Company has furnished the Initial Purchaser with a copy of such document for its review and has given reasonable consideration to any comments or objections of the Initial Purchaser prior to the filing of such document. The Company will promptly advise the Initial Purchaser when any document filed under the Exchange Act that is incorporated by reference in the Final Memorandum shall have been filed with the Commission. (c) If at any time prior to the completion of the sale of the Securities by the Initial Purchaser, any event occurs as a result of which the Final Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it should be necessary to amend or supplement the Final Memorandum to comply with applicable law, the Company promptly (i) will notify the Initial Purchaser of any such event; (ii) subject to the requirements of paragraph (b) of this Section 5, will prepare an amendment or supplement that will correct such statement or omission or effect such compliance; and (iii) will supply any supplemented or amended Final Memorandum to the Initial Purchaser and 10 Counsel for the Initial Purchaser without charge in such quantities as you may reasonably request. (d) Until such time as the Exchange Offer is complete, the Company will not, nor will it permit any of its respective Affiliates to, resell any Securities that constitute "restricted securities" under Rule 144A that have been acquired by any of them. (e) Except in accordance with the Registration Rights Agreement, neither the Company, any of its or respective Affiliates, nor any person acting on its or their behalf, will, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Securities under the Securities Act. (f) None of the Company, any of its Affiliates, or any person acting on its or their behalf will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States, except pursuant to a registered public offering as provided in the Registration Rights Agreement. (g) So long as any of the Securities are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securities. (h) None of the Company, any of its Affiliates, or any person acting on its or their behalf will engage in any directed selling efforts with respect to the Securities, except pursuant to a registered public offering, and each of them will comply with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. 11 (i) The Company will cooperate with the Initial Purchaser and use its best efforts to permit the Securities to be eligible for clearance and settlement through The Depository Trust Company. (j) The Company will not, until 180 days following the Closing Date, without the prior written consent of the Initial Purchaser, offer, sell or contract to sell, grant any other option to purchase or otherwise dispose of, directly or indirectly, or announce the offering of, or file a registration statement for, any debt securities issued or guaranteed by the Company (other than as required under the Registration Rights Agreement). The Company will not at any time offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor of Regulation S thereunder to cease to be applicable to the offer and sale of the Securities as contemplated by this Agreement and the Final Memorandum. (k) The Company hereby agrees to permit the Securities to be designated PORTAL eligible securities in accordance with the rules and regulations of the National Association of Securities Dealers, Inc. relating to trading in The PORTAL Market. (l) The Company hereby agrees to apply the net proceeds from the sale of the Securities as set forth in the Final Memorandum under the heading "Use of Proceeds". (m) The Company agrees to pay the costs and expenses relating to the following matters: (i) the costs and expenses incurred by the Company in the preparation, printing and distribution of the Indenture and the Registration Rights Agreement and the issuance of the Securities; (ii) the fees and expenses of the Trustee; (iii) the preparation, printing or reproduction of the Preliminary Memorandum and Final Memorandum and each amendment or supplement to either of them; (iv) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Final Memorandum, and all amendments or supplements to it, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (v) the preparation, printing, authentication, issuance and delivery of certificates for the Securities, including any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (vi) the printing (or reproduction) and delivery of all agreements or documents printed (or reproduced) and delivered to the Initial Purchaser and the prospective 12 purchasers in connection with the offering of the Securities; (vii) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of Counsel for the Initial Purchaser relating to such registration and qualification); (viii) admitting the Securities for trading in the PORTAL Market; (ix) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Securities; (x) the fees and expenses of the Company's accountants and the fees and expenses of counsel (including local and special counsel) for the Company; and (xi) all other costs and expenses incurred by the Company in the performance of its obligations hereunder. (n) The Company agrees that the Registration Rights Agreement shall provide that the Company shall offer to exchange the Securities and the $225 million principal amount of the Company's First Mortgage Bonds, 9 7/8% Series A due 2009 issued March 8, 1999, for new first mortgage bonds registered under the Securities Act that will have the same terms as the Securities and will be treated as a single series under the Indenture with the same CUSIP number. 6. Conditions to the Obligation of the Initial Purchaser. The obligation ----------------------------------------------------- of the Initial Purchaser to purchase the Securities shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein at the Execution Time, and the Closing Date, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for the Company, shall have furnished to the Representatives its written opinion, dated the Closing Date, in the form of Exhibit B hereto. In rendering such opinions, such counsel may rely (A) as to matters involving the application of laws of the State of New York, upon the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, (B) as to matters involving the application of laws other than the laws of the United States and the State of New York and the General Corporation Law of the State of Delaware, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (reasonably satisfactory to Counsel for the Initial Purchaser) of other counsel reasonably acceptable to the Counsel for the Initial Purchaser, familiar with the applicable laws; and (C) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company, accountants and engineers and certificates or other written statements of officials of jurisdictions having custody of documents respecting the corporate 13 existence or good standing of the Company. For purposes of rendering such opinions, compliance with financial covenants contained in any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument relating to the Company or any of its subsidiaries shall be deemed to be a question of fact. With respect to the matters to be covered in subparagraph (viii) above, counsel may state that (A) they are not passing upon the adequacy of the derivation or compilation from Company financial statements or financial records of any financial or statistical data and (B) their opinion and belief is based upon their participation in the preparation of the Final Memorandum and any amendment or supplement thereto and review and discussion of the contents thereof but is without independent check or verification except as specified. All references in this Section 6 to the Final Memorandum shall be deemed to include any amendment or supplement thereto at the Closing Date. (b) Yukevich, Murchetti, Liekar & Zangrilli special counsel for the Company, shall have furnished to the Initial Purchaser their written opinion, dated the Closing Date, in the form of Exhibit C hereto. In rendering such opinions, such counsel may (A) rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and certificates or other written statements of officials of jurisdictions having custody of documents respecting the corporate existence or good standing of the Company and (B) state that they are not passing upon the adequacy or accuracy of the derivation or compilation from Company financial statements or financial records of any financial or statistical data. (c) The Initial Purchaser shall have received from Davis Polk & Wardwell, Counsel for the Initial Purchaser, such opinion or opinions, dated the Closing Date and addressed to the Initial Purchaser, with respect to the issuance and sale of the Securities, the Indenture, the Registration Rights Agreement, the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Initial Purchaser may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (d) The Company shall have furnished to the Initial Purchaser a certificate of the Company, signed by the Chairman of the Board, the President, Chief Financial Officer or any Vice President and the principal accounting officer or treasurer of the Company, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the 14 Final Memorandum, any amendment or supplement to the Final Memorandum and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and (ii) since the date of the most recent financial statements included in the Final Memorandum (exclusive of any amendment or supplement thereto), there has been no material adverse change in the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). (e) At the Execution Time and at the Closing Date, Ernst & Young LLP shall have furnished to the Initial Purchaser a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser. (f) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Final Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6, or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Initial Purchaser, so material and adverse as to make it impractical to market the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). 15 (g) Subsequent to the Execution Time, there shall not have been (i) any decrease in the rating of the Securities or any of the Company's other debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act) or (ii) any notice given of any intended or potential decrease in any such rating or that such organization has under surveillance or review (other than any such notice with positive implications of a possible upgrading) its rating of the Securities or any of the Company's other debt securities. (h) The Securities shall have been designated as PORTAL-eligible securities in accordance with the rules and regulations of the NASD, and the Securities shall be eligible for clearance and settlement through The Depositary Trust Company. (i) The Company shall have furnished to the Trustee a certified resolution in accordance with Section 3.03(a) of the Original Indenture. (j) The Company shall have furnished to the Trustee an officer's certificate, as to all conditions precedent relating to authentication of the Securities being satisfied and no defaults existing under the Indenture, in accordance with Section 3.03(b) and Section 16.01(a) of the Original Indenture. (k) The Company shall have requested and caused Douglas, Alexa, Koppen & Hurley, Sorling, Northrup, Hanna, Cullen and Cochran, Ltd. and Clark Hill PLC, special counsel for the Company to furnish the Trustee and the Initial Purchaser their opinion, dated the Closing Date, to the effect set forth in Section 3.03(c), Section 3.05(e), Section 3.05(f) and Section 16.01(b) of the Original Indenture. (l) The Company shall have furnished to the Trustee the Eleventh Supplemental Indenture. (m) The Company shall have furnished to the Trustee an officers' certificate with respect to the net bondable value of property additions in accordance with Section 3.05(a) of the Original Indenture. (n) The Company shall have furnished to the Trustee an engineer's certificate in accordance with Section 3.05(b) of the Original Indenture. 16 (o) The Company shall have furnished to the Trustee an independent accountant's certificate in accordance with Section 3.05(d) and Section 16.01(c) of the Original Indenture. (p) The Company shall have furnished to the Initial Purchaser an insurance certificate of its independent consultant substantially in the form delivered annually under Section 4.06 of the Indenture. (q) At or before the Closing Date, (i) evidence (including without limitation, the results of lien and title searches) reasonably satisfactory to the Initial Purchaser of the absence of any liens other than permitted liens on any of the Mortgaged Property shall have been furnished to the Initial Purchaser, and (ii) such evidence of the completion of all recordings and filings of the Indenture, and of the execution, delivery, recording and or filing of such other documents, as may be necessary or, in the reasonable opinion of the Initial Purchaser, desirable to create or perfect the liens created, or purported or intended to be created, by the Indenture shall have been furnished to the Initial Purchaser. (r) On or prior to the Closing Date, the Company shall have furnished to the Initial Purchaser such further certificates and documents as the Initial Purchaser shall reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Initial Purchaser and Counsel for the Initial Purchaser, this Agreement and all obligations of the Initial Purchaser hereunder may be canceled at, or at any time prior to, the Closing Date by the Initial Purchaser. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing. The documents required to be delivered by this Section 6 will be delivered at the office of Counsel for the Initial Purchaser, at 450 Lexington Avenue, New York, New York, on the Closing Date. 7. Reimbursement of Expenses. If the sale of the Securities provided for ------------------------- herein is not consummated because of any condition to the obligations of the Initial Purchaser set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof, in each case other than by reason of a default by the 17 Initial Purchaser, the Company will reimburse the Initial Purchaser upon demand for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by it in connection with the proposed purchase and sale of the Securities. 8. Indemnification and Contribution. (a) The Company agrees to -------------------------------- indemnify and hold harmless the Initial Purchaser, each director, officer, employee and agent of the Initial Purchaser and each other person, if any, who controls the Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several (including, without limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted), to which they or any of them may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Final Memorandum (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Final Memorandum, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Initial Purchaser specifically for inclusion therein, it being understood that the only such information is that described in Section 8(b). This indemnity agreement will be in addition to any liability that the Company may otherwise have. (b) The Initial Purchaser agrees to indemnify and hold harmless each of the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Initial Purchaser, but only with reference to written information relating to the Initial Purchaser furnished to the Company by or on behalf of the Initial Purchaser specifically for inclusion in the Final Memorandum (or in any amendment thereof or supplement thereto). This indemnity agreement will be in 18 addition to any liability that the Initial Purchaser may otherwise have. The Company acknowledges that the statements set forth in the last paragraph of the cover page, the first paragraph on page 3 and the penultimate paragraph under the heading "Plan of Distribution" in the Final Memorandum constitute the only information furnished in writing by or on behalf of the Initial Purchaser for inclusion in the Final Memorandum (or in any amendment thereof or supplement thereto). (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is 19 understood and agreed, however, that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate counsel for all such indemnified parties (and any local counsel) and that all such fees and expenses shall be reimbursed as they are incurred. The indemnifying party shall not be liable for any settlement of any claim, action, suit or proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify any indemnified party from and against any loss or liability by reason of such settlement or judgment except as otherwise provided herein. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Initial Purchaser agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "LOSSES") to which the Company or the Initial Purchaser may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand or the Initial Purchaser on the other, as applicable, from the offering of the Securities; provided, however, that in no case shall the Initial Purchaser be responsible for any amount in excess of the purchase discount or commission applicable to the Securities purchased by the Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Initial Purchaser shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand or the Initial Purchaser on the other hand, as applicable, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering of the Securities (before deducting expenses), and benefits received by the Initial Purchaser shall be deemed to be equal to the total purchase discounts and commissions, in each case 20 as set forth on the cover page of the Final Memorandum. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company on the one hand, or the Initial Purchaser on the other, the intent of the parties and their relative knowledge, information and opportunity to correct or prevent such untrue statement or omission. The Company and the Initial Purchaser agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls the Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee and such agent of the Initial Purchaser shall have the same rights to contribution as the Initial Purchaser, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). The indemnity and contribution agreements contained in this Section 8 are in addition to any liability which the indemnifying parties may otherwise have to the indemnified parties referred to above. The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchaser or any person controlling the Initial Purchaser or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Securities. 9. Default by the Initial Purchaser. If the Initial Purchaser shall fail -------------------------------- to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its obligations under this Agreement, this Agreement will terminate without liability to the Company. Nothing contained in this Agreement shall relieve the Initial Purchaser, if it is defaulting hereunder, of its liability, if any, to the Company for damages occasioned by its default hereunder. 21 10. Termination. This Agreement shall be subject to termination in ----------- absolute discretion of the Initial Purchaser, by notice given to the Company prior to delivery of and payment for the Securities, if prior to such time (i) trading in any of the Company's securities shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Initial Purchaser, impracticable or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereto). 11. Representations and Indemnities to Survive. The respective ------------------------------------------ agreements, representations, warranties, indemnities and other statements of the Company, or its officers and of the Initial Purchaser set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchaser, the Company or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement. 12. Notices. All communications hereunder will be in writing and effective ------- only on receipt, and, if sent to the Initial Purchaser, will be mailed, delivered or sent by fax and confirmed to Salomon Smith Barney Inc., General Counsel (fax no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith Barney Inc. at 388 Greenwich Street, New York, New York 10013 Attention: General Counsel; or, if sent to the Company will be mailed, delivered or faxed to (219) 273-7609 and confirmed to it at 4100 Edison Lakes Parkway, Mishawaka, Indiana 46545-3440 attention: General Counsel. 13. Successors. This Agreement will inure to the benefit of and be ---------- binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN -------------- ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF). 22 15. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which will be deemed to be an original, but all such counterparts will together constitute one and the same instrument. 16. Headings. The section headings used herein are for convenience only -------- and shall not affect the construction hereof. 17. Definitions. The terms which follow, when used in this Agreement, ----------- shall have the meanings indicated. "Affiliate" shall have the meaning specified in Rule 501(b) of Regulation D. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in The City of New York. "Commission" shall mean the Securities and Exchange Commission. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Investment Company Act" shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder. "NASD" shall mean the National Association of Securities Dealers, Inc. "Regulation D" shall mean Regulation D under the Act. "Regulation S" shall mean Regulation S under the Act. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. 23 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement among the Company and the Initial Purchaser. Very truly yours, NATIONAL STEEL CORPORATION By /s/ William E. McDonough --------------------------- Name: William E. McDonough Title: Treasurer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON SMITH BARNEY INC. By________________________ Name: Title: 24 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement among the Company and the Initial Purchaser. Very truly yours, NATIONAL STEEL CORPORATION By________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON SMITH BARNEY INC. By /s/ David R. Dowdle ----------------------- Name: David R. Dowdle Title: Associate 24 EX-4.D 4 FIFTH SUPPLEMENTAL INDENTURE DATED MAY 1, 1962 Exhibit 4.D [CONFORMED COPY] ================================================================================ FIFTH SUPPLEMENTAL INDENTURE BETWEEN NATIONAL STEEL CORPORATION, FIRST NATIONAL CITY TRUST COMPANY AND FIRST NATIONAL CITY BANK Dated as of May 1, 1962 ------------------ Resignation of First National City Trust Company, as Trustee, and Appointment of First National City Bank, as Successor Trustee ------------------ Supplemental to Indenture of Mortgage and Deed of Trust Dated May 1, 1952 ================================================================================ THIS FIFTH SUPPLEMENTAL INDENTURE, dated as of May 1, 1962, between NATIONAL STEEL CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware (hereinafter called the "Company"), FIRST NATIONAL CITY TRUST COMPANY (formerly City Bank Farmers Trust Company), a national banking association incorporated and existing under and by virtue of the laws of the United States of America, and FIRST NATIONAL CITY BANK, a national banking association incorporated and existing under and by virtue of the laws of the United States of America; WHEREAS, the Company heretofore executed and delivered to City Bank Farmers Trust Company and Ralph E. Morton, as Trustees, its Indenture of Mortgage and Deed of Trust dated May 1, 1952; and WHEREAS, said Indenture of Mortgage and Deed of Trust has been heretofore amended and supplemented by a FIRST Supplemental Indenture dated as of November 1, 1956, a Second Supplemental Indenture dated as of January 1, 1957, a Third Supplemental Indenture dated as of June 1, 1959 and a Fourth Supplemental Indenture dated as of December 1, 1960 (the Indenture of Mortgage and Deed of Trust as so amended and supplemented by such Supplemental Indentures or otherwise being hereinafter called the "Indenture"); and WHEREAS, the Indenture provides in Section 14.05 of Article Fourteen that the Trustee thereunder may resign and be discharged from the trust created by the Indenture by giving written notice thereof to the Company specifying the date when such resignation shall take effect, and by publishing such notice in the manner provided in such Section 14.05; and the Indenture provides that such resignation shall take effect on the date specified in such notice unless previously a successor Trustee shall have been appointed in the manner provided in such Section 14.05 and in Section 14.06 of such Article Fourteen; and WHEREAS, First National City Trust Company, pursuant to the provisions of such Section 14.05, has given written notice to the Company of its resignation as Trustee under the Indenture, such resignation to take effect on the earlier of June 1, 1962 and the date of the appointment of a successor to it as Trustee under the Indenture and notice of such resignation has been published in accordance with the provisions of the Indenture; and WHEREAS, the Indenture provides in said Section 14.05 that in case the Trustee thereunder shall resign, and until the appointment of a successor by the holders of a majority in principal amount of the bonds issued under the Indenture and at the time outstanding, a successor Trustee shall be appointed by the Company, and no successor has been so appointed by the bondholders; and WHEREAS, the Company desires to appoint First National City Bank as successor Trustee and First National City Bank is willing to accept such appointment; and WHEREAS, First National City Bank represents that it is eligible under Section 14.05 of Article Fourteen of the Indenture and is not disqualified under any of the provisions of Section 14.04 of Article Fourteen of the Indenture to be appointed successor Trustee thereunder; NOW, THEREFORE, in consideration of the premises, THIS SUPPLEMENTAL INDENTURE W I T N E S S E T H : FIRST. The Company, in the exercise of the authority vested in it pursuant to Section 14.05 of Article Fourteen of the Indenture, and by order of its Board of Directors, hereby appoints First National City Bank to be the successor Trustee thereunder, with all the estates, properties, rights, powers and trusts of First National City Trust Company as predecessor in the trust under the Indenture, such appointment to be effective on the date hereof. SECOND. First National City Bank hereby accepts its appointment as successor Trustee under the Indenture, effective on the date hereof, and assumes the duties of the Trustee thereunder, subject to all the terms and provisions therein contained. THIRD. First National City Trust Company, as Trustee under the Indenture, hereby conveys, assigns, transfers, sets over and confirms to such successor Trustee, and to its successors in such trust and its and their assigns, all the estates, properties, rights, powers, duties, trusts, title and interest vested in First National City Trust Company as such Trustee under the Indenture. 2 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be executed in their respective corporate names by their respective officers thereunto duly authorized and their respective corporate seals to be hereto attached and to be duly attested, all as of the day and year FIRST above written. NATIONAL STEEL CORPORATION, By PAUL E. SHROADS PAUL E. SHROADS, Vice-President Attest: GEORGE A. STINSON GEORGE A. STINSON, Secretary [CORPORATE SEAL] Signed, sealed and delivered by NATIONAL STEEL CORPORATION in the presence of: WILLIAM S. SCHWOEBEL WILLIAM S. SCHWOEBEL JOHN E. LAUGHLIN, JR. JOHN E. LAUGHLIN, JR. As Witnesses FIRST NATIONAL CITY TRUST COMPANY, By J. E. ROBERTSON J. E. ROBERTSON, Vice President Attest: J. N. KRUSE J. N. KRUSE, Assistant Cashier [CORPORATE SEAL] Signed, sealed and delivered by FIRST NATIONAL CITY TRUST COMPANY in the presence of: J. F. NASH J. F. NASH A. HALL A. HALL As Witnesses 3 FIRST NATIONAL CITY BANK, By E. F. MITCHELL E. F. MITCHELL, Vice President [CORPORATE SEAL] Attest: D. NEIL D. NEIL, Assistant Cashier Signed, sealed and delivered by FIRST NATIONAL CITY BANK in the presence of: J. F. NASH J. F. NASH A. HALL A. HALL As Witnesses 4 COMMONWEALTH OF PENNSYLVANIA ) ) ss.: COUNTY OF ALLEGHENY ) I, ROBERT M. GUISER, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and f or said County in said Commonwealth, hereby certify, that on this 1st day of May, 1962: [INDIANA] Before me personally appeared National Steel Corporation by PAUL E. SHROADS and GEORGE A. STINSON, its Vice President and Secretary, respectively, and acknowledged the execution of the foregoing instrument; [MICHIGAN] Before me appeared PAUL E. SHROADS, to me personally known, who, being by me duly sworn, did say that he is a Vice President of National Steel Corporation, one of the corporations named in the foregoing instrument, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors, and the said PAUL E. SHROADS acknowledged the said instrument to be the free act and deed of said corporation; [MINNESOTA] Before me appeared PAUL E. SHROADS and GEORGE A. STINSON, to me personally known, who being by me duly sworn, did say that they are respectively a Vice President and the Secretary of National Steel Corporation, that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that the instrument was executed on behalf of the corporation by authority of its Board of Directors, and the said PAUL E. SHROADS and GEORGE A. STINSON acknowledged said instrument to be the free act and deed of the corporation; [OHIO] Personally appeared PAUL E. SHROADS and GEORGE A. STINSON, known to me to be the persons who, as a Vice President and the Secretary, respectively, of National Steel Corporation, one of the corporations which executed the foregoing instrument, signed the same, and acknowledged to me that they did so sign said 5 instrument in the name and on behalf of said corporation as such officers, respectively; that the same is their free act and deed as such officers, respectively, and the free and corporate act and deed of said corporation; that they were duly authorized thereunto by its Board of Directors; and that the seal affixed to said instrument is the corporate seal of said corporation; [WEST VIRGINIA] PAUL E. SHROADS and GEORGE A. STINSON who signed the writing above dated as of May 1, 1962, for National Steel Corporation, have this day in my said county, before me acknowledged the said writing to be the act and deed of said corporation; and [WISCONSIN] Personally came before me PAUL E. SHROADS, a Vice President, and GEORGE A. STINSON, the Secretary of National Steel Corporation, to me known to be the persons who executed the foregoing instrument, and to me known to be such Vice President and Secretary of said corporation, and acknowledged that they executed the foregoing instrument as such officers as the deed of said corporation, by its authority. IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year FIRST above written. My Commission expires: Dec. 9, 1962 ROBERT M. GUISER, [NOTARIAL SEAL] ROBERT M. GUISER, Notary Public Pittsburgh, Allegheny County, Pa. My Commission Expires Dec. 9, 1962 6 STATE OF NEW YORK, ) ) ss.: COUNTY OF NEW YORK, ) I, MAURICE E. FRANZONI, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 1st day of May, 1962: [INDIANA] Before me personally appeared First National City Trust Company by J. E. ROBERTSON and J. N. KRUSE, a Vice President and an Assistant Cashier, respectively, and acknowledged the execution of the foregoing instrument; [NEW YORK] Before me personally came J. E. ROBERTSON, to me known, who, being by me duly sworn, did depose and say that he resides at 3510 Avenue H, Brooklyn 10, New York; that he is a Vice President of First National City Trust Company, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority; [MICHIGAN] Before me appeared J. E. ROBERTSON, to me personally known, who, being by me duly sworn, did say that he is a Vice President of First National City Trust Company, one of the corporations named in the foregoing instrument, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors, and the said J. E. ROBERTSON acknowledged the said instrument to be the free act and deed of said corporation; [MINNESOTA] Before me appeared J. E. ROBERTSON and J. N. KRUSE, to me personally known, who, being by me duly sworn, did say that they are, respectively, a Vice President and an Assistant Cashier of First National City Trust Company, that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that the 7 instrument was executed on behalf of the corporation by authority of its Board of Directors, and the said J. E. ROBERTSON and J. N. KRUSE acknowledged said instrument to be the free act and deed of the corporation; [OHIO] Personally appeared J. E. ROBERTSON and J. N. KRUSE, known to me to be the persons who, as a Vice President and an Assistant Cashier, respectively, of First National City Trust Company, one of the corporations which executed the foregoing instrument, signed the same, and acknowledged to me that they did so sign said instrument in the name and on behalf of said corporation as such officers, respectively; that the same is their free act and deed as such officers, respectively, and the free and corporate act and deed of said corporation; that they were duly authorized thereunto by its Board of Directors; and that the seal affixed to said instrument is the corporate seal of said corporation; [WEST VIRGINIA] J. E. ROBERTSON and J. N. KRUSE who signed the writing above dated as of May 1, 1962, for First National City Trust Company, have this day in my said county, before me acknowledged the said writing to be the act and deed of said corporation; and [WISCONSIN] Personally came before me J. E. ROBERTSON, a Vice President, and J. N. KRUSE, an Assistant Cashier of First National City Trust Company, to me known to be the persons who executed the foregoing instrument, and to me known to be such Vice President and an Assistant Cashier of said corporation, and acknowledged that they executed the foregoing instrument as such officers as the deed of said corporation, by its authority. 8 IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. My Commission expires: March 30, 1963 [NOTARIAL SEAL] MAURICE E. FRANZONI MAURICE E. FRANZONI [Certificate of County Clerk, Notary Public, State of New York New York County, New York] No. 52-1304250 Qualified in Suffolk County Cert. Filed in N. Y. County Term Expires March 30, 1963 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK, ) I, MAURICE E. FRANZONI, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 1st day of May, 1962: [INDIANA] Before me personally appeared FIRST NATIONAL CITY BANK by E. F. MITCHELL and D. NEIL, a Vice President and an Assistant Cashier, respectively, and acknowledged the execution of the foregoing instrument; [NEW YORK] Before me personally came E. F. MITCHELL, to me known, who being by me duly sworn, did depose and say that he resides at 6515 Boulevard East, West New York, New Jersey; that he is a Vice President of First National City Bank, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority; [MICHIGAN] Before me appeared E. F. MITCHELL, to me personally known, who, being by me duly sworn, did say that he is a Vice President of First National City Bank, one of the corporations named in the foregoing instrument, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors, and the said E. F. MITCHELL acknowledged the said instrument to be the free act and deed of said corporation; [MINNESOTA] Before me appeared E. F. MITCHELL and D. NEIL, to me personally known, who, being by me duly sworn, did say that they are respectively a Vice President and an Assistant Cashier of First National City Bank, that the seal affixed to the foregoing instrument is the corporate seal of said corporation, and that the instrument was 10 executed on behalf of the corporation by authority of its Board of Directors, and the said E. F. MITCHELL and D. NEIL acknowledged said instrument to be the free act and deed of the corporation; [OHIO] Personally appeared E. F. MITCHELL and D. NEIL, known to me to be the persons who, as a Vice President and an Assistant Cashier, respectively, of First National City Bank, one of the corporations which executed the foregoing instrument, signed the same, and acknowledged to me that they did so sign said instrument in the name and on behalf of said corporation as such officers, respectively; that the same is their free act and deed as such officers, respectively, and is the free and corporate act and deed of said corporation; that they were duly authorized thereunto by its Board of Directors; and that the seal affixed to said instrument is the corporate seal of said corporation; [WEST VIRGINIA] E. F. MITCHELL and D. NEIL who signed the writing above dated as of May 1, 1962, for First National City Bank, have this day in my said county, before me acknowledged the said writing to be the act and deed of said corporation; and [WISCONSIN] Personally came before me E. F. MITCHELL, a Vice President, and D. NEIL, an Assistant Cashier of First National City Bank, to me known to be the persons who executed the foregoing instrument, and to me known to be such a Vice President and an Assistant Cashier of said corporation, and acknowledged that they executed the foregoing instrument as such officers as the deed of said corporation, by its authority. 11 IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. My Commission expires: March 30, 1963 MAURICE E. FRANZONI MAURICE E. FRANZONI Notary Public, State of New York No. 52-1304250 Qualified in Suffolk County Cert. Filed in N. Y. County Term Expires March 30, 1963 [NOTARIAL SEAL] 12 [MICHIGAN CHATTEL MORTGAGE CERTIFICATE PURSUANT TO MICHIGAN STATUTES ANNOTATED (S) 26.929] COMMONWEALTH OF PENNSYLVANIA, ) ) ss.: COUNTY OF ALLEGHENY, ) On this 1st day of May, 1962, before me appeared PAUL E. SHROADS, to me personally known, who, being duly sworn, deposes and says that he is a Vice President of National Steel Corporation, named as one of the corporations in the foregoing instrument; that he makes this affidavit for said Corporation; that he has knowledge of the facts; and that the consideration of said instrument was actual and adequate; and that the same was given in good faith for the purposes therein set forth. My Commission expires: Dec. 9, 1962 PAUL E. SHROADS PAUL E. SHROADS, Vice President [NOTARIAL SEAL] [Certificate of Prothonotary, Allegheny County, Pennsylvania] Subscribed and sworn to before me this 1st day of May, 1962. ROBERT M. GUISER ROBERT M. GUISER, Notary Public Pittsburgh, Allegheny County, Pa. My Commission Expires Dec. 9, 1962 13 EX-4.G 5 TENTH SUPPLEMENTAL INDENTURE DATED MAR. 8, 1999 EXHIBIT 4.G ================================================================================ NATIONAL STEEL CORPORATION AND THE CHASE MANHATTAN BANK and FRANK J. GRIPPO, As Trustees _____________ Tenth Supplemental Indenture Dated as of March 8, 1999 To INDENTURE OF MORTGAGE AND DEED OF TRUST Dated May 1, 1952 _____________ First Mortgage Bonds, 9 7/8% Series Due 2009 ================================================================================ TABLE OF CONTENTS* _____________
Page ---- ARTICLE 1 Definitions and Incorporation by Reference Section 1.01. Definitions................................................. 10 Section 1.02. Other Definitions........................................... 33 Section 1.03. Incorporation by Reference of Trust Indenture Act........... 34 Section 1.04. Rules of Construction....................................... 34 ARTICLE 2 2009 Bonds Forms Section 2.01. Forms Generally............................................. 35 Section 2.02. Form of Trustee's Certificate of Authentication............. 36 Section 2.03. Restrictive Legends......................................... 36 Section 2.04. Form of Certificate to Be Delivered upon Termination of Restricted Period.......................... 39 ARTICLE 3 The 2009 Series Bonds Section 3.01. Maturity; Payment........................................... 40 Section 3.02. Denominations............................................... 41 Section 3.03. Execution. Authentication, Delivery and Dating.............. 41 Section 3.04. Temporary 2009 Series Bonds................................. 42 Section 3.05. Registration, Registration of Transfer and Exchange.................................................. 43 Section 3.06. Payment of Interest, Interest Rights Preserved.............. 44 Section 3.07. Persons Deemed Owners....................................... 46 Section 3.08. Cancellation................................................ 46 Section 3.09. Computation of Interest..................................... 47 Section 3.10. Book Entry Provisions for Global Bonds...................... 47 Section 3.11. Transfer Provisions......................................... 48 Section 3.12. Form of Regulation S Certificate............................ 57 Section 3.13. Form of Rule 144A Certificate............................... 60
__________________ . This Table of Contents has been inserted for purposes of convenience and ready reference. It does not constitute a part of the Tenth Supplemental Indenture.
Page ---- Section 3.14. CUSIP Numbers............................................... 61 Section 3.15. Notice to Holders; Waiver................................... 61 ARTICLE 4 Particular Covenants of the Corporation Section 4.01. Payment of Securities....................................... 62 Section 4.02. SEC Reports................................................. 62 Section 4.03. Limitation on Lines of Business............................. 63 Section 4.04. Covenant Suspension......................................... 63 Section 4.05. Limitation on Debt and Restricted Subsidiary Preferred Stock........................................... 63 Section 4.06. Limitation on Restricted Payments........................... 63 Section 4.07. Limitation on Pledged Subsidiaries to Incur Indebtedness or Issue Capital Stock....................... 66 Section 4.08. Limitation on Sale of Mortgaged Property.................... 67 Section 4.09. Change of Control........................................... 68 Section 4.10. Limitation on Sale of Assets Other Than Mortgaged Property........................................ 70 Section 4.11. Limitation on Restrictions on Distributions from Restricted Subsidiaries................................... 74 Section 4.12. Limitation on Transactions with Affiliates.................. 75 Section 4.13. Limitation on Sale and Leaseback Transactions............... 77 Section 4.14. Designation of Restricted and Unrestricted Subsidiaries.............................................. 77 Section 4.15. Compliance Certificate...................................... 78 Section 4.16. Further Instruments and Acts................................ 78 ARTICLE 5 Successor Corporation Section 5.01. When Corporation May Merge or Transfer Assets............... 78 ARTICLE 6 Defaults and Remedies Section 6.01. Events of Default........................................... 80 Section 6.02. Acceleration................................................ 82 Section 6.03. Other Remedies.............................................. 82 Section 6.04. Waiver of Defaults.......................................... 83
ii
Page ---- ARTICLE 7 Redemption of 2009 Series Bonds Section 7.01. Optional Redemption of 2009 Series Bonds; Premiums Payable.......................................... 83 Section 7.02. Surrender of Partially-redeemed 2009 Series Bonds..................................................... 84 Section 7.03. Regarding Issue, Transfer and Exchange of 2009 Series Bonds to be Redeemed.......................... 84 Section 7.04. Notices to Trustee.......................................... 84 Section 7.05. Notice of Redemption........................................ 84 Section 7.06. Effect of Notice of Redemption.............................. 85 ARTICLE 8 Miscellaneous Section 8.01. Acceptance of Trusts........................................ 85 Section 8.02. Benefits Restricted to Parties and Holders of Bonds..................................................... 86 Section 8.03. Execution in Counterparts................................... 86 Section 8.04. Original Indenture and Supplements Construed as One Instrument......................................... 86 Section 8.05. Amount Advanced under Indenture............................. 86 Section 8.06. With Consent of Holders..................................... 86 Section 8.07. Governing Law............................................... 87 Section 8.08. Compliance with Trust Indenture Act......................... 87 Section 8.09. Recitals.................................................... 87
iii THIS TENTH SUPPLEMENTAL INDENTURE (hereinafter called "THIS SUPPLEMENTAL INDENTURE"), dated as of March 8, 1999 made by and among NATIONAL STEEL CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "CORPORATION"), THE CHASE MANHATTAN BANK, a New York corporation (hereinafter called the "TRUSTEE") and FRANK J. GRIPPO (hereinafter called the "INDIVIDUAL TRUSTEE"), as Trustees under the Indenture hereinafter referred to (the Trustee and the Individual Trustee being hereinafter collectively called the "TRUSTEES"). WHEREAS, under date of May 1, 1952, the Corporation and Great Lakes Steel Corporation, then a wholly-owned subsidiary of the Corporation which was subsequently merged into the Corporation, entered into an Indenture of Mortgage and Deed of Trust (hereinafter called the "ORIGINAL INDENTURE") with City Bank Farmers Trust Company, as Trustee, and Ralph E. Morton, as Individual Trustee; and WHEREAS, the Original Indenture has heretofore been amended and supplemented by a First Supplemental Indenture dated as of November 1, 1956, a Second Supplemental Indenture dated as of January 1, 1957, a Third Supplemental Indenture dated as of June 1, 1959, a Fourth Supplemental Indenture dated as of December 1, 1960, a Fifth Supplemental Indenture dated as of May 1, 1962, a Sixth Supplemental Indenture dated as of December 1, 1970, a Seventh Supplemental Indenture dated as of September 19, 1973, an Eighth Supplemental Indenture dated as of September 19, 1973, and a Ninth Supplemental Indenture dated as of August 1, 1976; and WHEREAS, The Chase Manhattan Bank is now the duly appointed successor Trustee under the Original Indenture and all instruments supplemental thereto (hereinafter together called the "INDENTURE") and FRANK J. GRIPPO is now the duly appointed successor Individual Trustee under the Indenture; and WHEREAS, there have heretofore been authenticated and delivered pursuant to the Original Indenture First Mortgage Bonds, 3 1/8% Series Due 1982, there have heretofore been authenticated and delivered pursuant to the Original Indenture and said First Supplemental Indenture First Mortgage Bonds, 3 7/8% Series Due 1986, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Third Supplemental Indenture First Mortgage Bonds, 4 5/8% Series Due 1989, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Sixth Supplemental Indenture First Mortgage Bonds, 8% Series Due 1995, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Seventh Supplemental Indenture First Mortgage Bonds, 4 7/8% Series Due 1987 and First Mortgage Bonds, 5.30% Series Due 1990, and there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Ninth Supplemental Indenture First Mortgage Bonds, 8 3/8% Series Due 2006; and WHEREAS, the Corporation has determined to issue, pursuant to the Original Indenture, and this Supplemental Indenture, two series of Bonds to be designated the "First Mortgage Bonds, 9 7/8% Series A due 2009" (hereinafter called the "INITIAL 2009 SERIES BONDS") and the "First Mortgage Bonds, 9 7/8% Series B due 2009 (hereinafter called the "EXCHANGE 2009 SERIES BONDS" and, together with the 2009 Series A Bonds, the "2009 SERIES BONDS"), in the aggregate principal amount of $225,000,000, all as hereinafter more fully provided; and WHEREAS, the fully registered 2009 Series Bonds and the Trustee's Authentication Certificate to be endorsed on all the 2009 Series Bonds are to be substantially in the following forms, with necessary or appropriate variations, omissions and insertions, as permitted or required by the Original Indenture and this Supplemental Indenture: [FORM OF FACE OF 2009 SERIES BOND] NATIONAL STEEL CORPORATION First Mortgage Bond, 9 7/8% Series [A/B] Due 2009 Cusip No............ $............. No.............. NATIONAL STEEL CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "CORPORA TION", which term shall include any successor corporation to the extent provided in the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns, the principal sum of Dollars on March 1, 2009, in such coin or currency of the United States of America as at the time of payment shall be legal tender for public and private debts, and to pay interest thereon in like coin or currency, semiannually on March 1 and September 1 of each year, at the rate of 9 7/8% per annum, from the March 1 or September 1, as the case may be, next preceding the date of this Bond to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case 2 from the date of this Bond, or unless no interest has been paid on the First Mortgage Bonds, 9 7/8% Series [A/B] Due 2009 (hereinafter called the "2009 SERIES BONDS"), in which case from March 8, 1999, until payment of said principal sum has been made or duly provided for. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the 2009 Series Bonds, if the date hereof is after a regular record date (which shall be the close of business on February 15 or August 15, as the case may be, next preceding an interest payment date) and before the next succeeding interest payment date, this Bond shall bear interest from such interest payment date; provided, however, that if the Corporation shall default in the payment of interest due on such interest payment date, then this Bond shall bear interest from the next preceding interest payment date to which interest has been paid, or, if no interest has been paid on the 2009 Series Bonds, from March 8, 1999. The interest so payable, and punctually paid or duly provided for, on any interest payment date will, as provided in said Indenture, be paid to the person in whose name this Bond (or one or more predecessor Bonds) is registered on the regular record date for such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Both the principal of, premium, if any, and interest on, this Bond are payable at the office or agency of the Corporation in the Borough of Manhattan, The City of New York, New York; provided, that interest may be paid, at the option of the Corporation, by check mailed to the person entitled thereto at his address last appearing on the Bond register or by wire transfer to an account maintained by the payee located in the United States provided that appropriate written wire transfer instructions have been provided at least two Business Days prior to the relevant record date. [The Holder of this Bond is entitled to the benefits of the Registration Rights Agreement, dated as of March 8, 1999 (the "Registration Rights Agreement"), among the Corporation and the Initial Purchasers named therein. In the event that either (a) an Exchange Offer Registration Statement (as such term is defined in the Registration Rights Agreement) is not filed with the SEC on or prior to the 60th day following the date of the Tenth Supplemental Indenture, (b) such Exchange Offer Registration Statement has not been declared effective on or prior to the 150th day following the date of the Tenth Supplemental Indenture, (c) the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or, if required, a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Bond is not declared effective on or prior to the 180th day following the date of the Indenture or Tenth Supplemental Indenture or (d) the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable (each such event referred to in clauses (a) through (d) above, a "Registration Default") then the per annum interest rate borne by this Bond shall be increased by 0.25 percent per annum for the first 90-day period following the 3 Registration Default. The per annum interest rate borne by this Bond will increase by an additional 0.25 percent per annum for each subsequent 90-day period following such Registration Default to a maximum of 1.00 percent per annum until such Registration Default has been cured. Upon (w) the filing of the Exchange Offer Registration Statement after the 60-day period described in clause (a) above, (x) the effectiveness of the Exchange Offer Registration Statement after the 150-day period described in clause (b) above or (y) the consummation of the Exchange Offer or the effectiveness of a Shelf Registration Statement, as the case may be, after the 180-day period described in clause (c) above, or (z) the cure of any Registration Default described in clause (d) above, the interest rate borne by the Bond from the date of such filing, effectiveness or consummation, as the case may be, will be reduced to the original interest rate set forth in the title of this Bond above if the Corporation is otherwise in compliance with this paragraph; provided, however, that, if after such reduction in interest rate, a different event specified in clause (a), (b), (c) or (d) above occurs, the interest rate may again be increased and thereafter reduced pursuant to the foregoing provisions.]/**/ Reference is made to the further provisions of this Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until The Chase Manhattan Bank, the Trustee under the Indenture, or a successor Trustee thereto under the Indenture, shall have signed the form of certificate hereon. IN WITNESS WHEREOF, National Steel Corporation has caused this Bond to be duly executed under its corporate seal. Dated: NATIONAL STEEL CORPORATION By:_______________________ Name: Title: Attest: _______________________ Title: _______________________ /**/ To be inserted in the case of a Bond that has not been registered under the Securities Act. 4 [FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE] TRUSTEE'S AUTHENTICATION CERTIFICATE This is one of the Bonds, of the series designated therein, described in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Trustee, By:_______________________ Authorized Officer [FORM OF REVERSE OF 2009 SERIES BOND] NATIONAL STEEL CORPORATION First Mortgage Bond, 9 7\8% Series [A/B] Due 2009 This Bond is one of the Bonds of the Corporation (hereinafter called the "BONDS") all duly authorized or from time to time to be duly authorized and not otherwise limited in aggregate principal amount, all issued and to be issued in one or more series from time to time under and (except as otherwise provided in the Indenture hereinafter mentioned) equally secured by an Indenture of Mortgage and Deed of Trust dated May 1, 1952, executed by the Corporation, as Mortgagor, and by Great Lakes Steel Corporation, a former wholly-owned subsidiary of the Corporation which was merged into the Corporation, as Co-Mortgagor, to City Bank Farmers Trust Company, as Trustee and Ralph E. Morton, as Individual Trustee, under which The Chase Manhattan Bank is now successor Trustee and FRANK J. GRIPPO is now successor Individual Trustee (said Trustee and said Individual Trustee from time to time being herein together called the "TRUSTEES"), to which Indenture of Mortgage and Deed of Trust and all instruments supplemental thereto (hereinafter together sometimes referred to as the "INDENTURE") reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the holders of the Bonds in respect of the security, the rights, duties and immunities of the Trustees and the rights and obligations of the Corporation in respect of the Bonds, and the terms and conditions upon which the Bonds are, and are to be, secured. The Bonds of different series may be for various principal sums, may mature at different times, may bear interest at different rates and may otherwise 5 vary as in the Indenture provided. This Bond is issued pursuant to the Tenth Supplemental Indenture dated as of March 8, 1999, executed by the Corporation and the Trustees (the "TENTH SUPPLEMENTAL INDENTURE"), and is the series of Bonds described in said Tenth Supplemental Indenture and designated as the "First Mortgage Bonds, 9 7\8% Series [A/B] Due 2009" of the Corporation (hereinafter called the "2009 SERIES BONDS"), limited in aggregate principal amount to $225,000,000 at any one time outstanding, except as otherwise provided in the Original Indenture with respect to Bonds of such Series issued in exchange and substitution for Bonds of such Series as have been mutilated, destroyed, lost or stolen or as otherwise provided in the Tenth Supplemental Indenture. The terms of the 2009 Series Bonds include those stated in the Indenture and those made or deemed to be part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as amended a nd ------ as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The 2009 Series Bonds are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of those terms. The provisions of the Indenture may be modified or amended by a supplemental indenture to the extent and in the manner provided in the Indenture, with the consent and approval of the holders of at least 66 2/3% in aggregate principal amount of the Bonds at the time outstanding under the Indenture; provided that no such modification or amendment shall be made so as to (a) alter the date fixed in any of the Bonds or coupons for the payment of the principal of, or any installment of interest on, such Bonds, or otherwise modify the terms of payment of the principal at maturity of, or interest on, the Bonds or impose any conditions with respect to such payment or affect the right of any Bondholder to institute suit for the enforcement of any such payment on or after the respective due dates expressed in the Bonds or in such coupons appertaining thereto, all of which shall always be unconditional, (b) alter the amount of principal of, or the rate of interest or premium payable on, any of the Bonds, (c) affect the rights of the holders of less than all the Bonds of any series then outstanding, (d) affect the rights of the holders of one or more, but less than all, series of Bonds then outstanding, except with the consent of the holders of not less than 66 2/3% in aggregate principal amount of the Bonds of each of the series so affected then outstanding, or (e) reduce the percentage of the principal amount of Bonds, or of the Bonds of any series, the consent of the holders of which shall be required for the authorization of any such modification or amendment. Except as set forth in the next paragraph, the 2009 Series Bonds may not be redeemed prior to March 1, 2004. Thereafter, the 2009 Series Bonds will be redeemable at the option of the Corporation, in whole or in part, on not less than 30 nor more than 60 days' prior notice mailed to each Holder of 2009 Series Bond 6 being redeemed and otherwise in accordance with the procedures set forth in the Indenture, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on or after March 1 of the years set forth below:
YEAR REDEMPTION PRICE - ---- ---------------- 2004.......................... 104.938% 2005.......................... 103.292% 2006.......................... 101.646% 2007 and thereafter........... 100.000%
Notwithstanding the foregoing, at any time and from time to time prior to March 1, 2002, the Corporation may redeem up to a maximum of 35% of the original aggregate principal amount of the 2009 Series Bonds with the proceeds of one or more Public Equity Offerings, at a redemption price equal to 109.875% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the 2009 Series Bonds remains outstanding. Any such redemption shall be made within 90 days of such Public Equity Offering upon not less than 30 nor more than 60 days' notice mailed to each Holder of 2009 Series Bond being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Upon a Change of Control, any Holder of 2009 Series Bonds will have the right, subject to certain conditions specified in the Indenture, to cause the Corporation to repurchase all or any part of the 2009 Series Bonds of such Holder at a purchase price equal to 101% of the principal amount of the 2009 Series Bonds to be repurchased plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. This Bond is transferable by the registered owner hereof or by his duly authorized attorney at the agency of the Corporation in the Borough of Manhattan, The City of New York, New York, upon surrender of this Bond for cancellation, accompanied by a written instrument of transfer in a form approved by the Corporation or the Trustee, duly executed by the registered owner of this Bond, and thereupon one or more new registered 2009 Series Bonds for the same 7 aggregate principal amount will be issued in the name of the transferee or transferees in exchange herefor, as provided in the Indenture. 2009 Series Bonds are issuable only as fully registered Bonds without coupons in the denominations of $1,000 and integral multiples thereof. In the manner provided in the Indenture, 2009 Series Bonds may be exchanged for a like aggregate principal amount of 2009 Series Bonds of other authorized denominations. No service charge will be made for any such transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. No recourse shall be had for the payment of the principal of, premium, if any, or the interest on, this Bond, or for any claim based hereon or on the Indenture, against any incorporator, or against any shareholder, director or officer, past, present or future, of the Corporation or of any predecessor or successor corporation, as such, either directly or through the Corporation or any such predecessor or successor corporation, whether by virtue of any constitutional provision, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitutional provision, statute or otherwise, of incorporators, shareholders, directors, or officers being released by every holder hereof by the acceptance of this Bond and as part of the consideration for the issue hereof, and being likewise released by the terms of the Indenture. The Indenture may be canceled and the lien thereof discharged if the Corporation shall pay, or make provision for the payment of, the principal, interest and premium, if any, on all the Bonds at the times and in the manner stipulated in the Indenture. Any moneys deposited with the Trustee by the Corporation for the payment or redemption of 2009 Series Bonds, and remaining unclaimed by the Holders for six years after the date of maturity or the date fixed for redemption of such Bonds upon written request and subject to applicable abandoned property laws, shall be repaid to the Corporation and thereafter such Holders shall be limited to a claim against the Corporation. In case an event of default, as defined in the Indenture, shall occur, the principal of all the Bonds at any such time outstanding under the Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events, such default and its consequences may be waived and such 8 declaration may be rescinded by the holders of a majority in principal amount of the Bonds outstanding. In addition, in case a Tenth Supplemental Indenture Event of Default (as defined in the Tenth Supplemental Indenture), shall occur, the principal of all the 2009 Series Bonds at any such time outstanding under the Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Tenth Supplemental Indenture. The Tenth Supplemental Indenture provides that in certain events, such default and its consequences may be waived and such declaration may be rescinded by the holders of a majority in principal amount of the 2009 Series Bonds outstanding. THIS 2009 SERIES BOND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. The person in whose name this Bond shall be registered shall be deemed and regarded as the absolute owner hereof for all purposes, and payment of or on account of the principal of, premium, if any, and interest on this Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid. The Corporation will furnish to any Holder of 2009 Series Bonds upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this 2009 Series Bond. ___________ And WHEREAS, all acts and proceedings required by law duly to authorize the execution and delivery of this Supplemental Indenture have been done and taken and the execution and delivery of this Supplemental Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: 9 That the Corporation, in consideration of the premises, and of the purchase and acceptance of the 2009 Series Bonds by the registered owners thereof, and of the sum of one dollar to the Corporation duly paid by the Trustees at or before the ensealing and delivery of these presents, and for other valuable considerations, the receipt whereof is hereby acknowledged, has entered into this Supplemental Indenture with the Trustees to create the 2009 Series Bonds, to establish the forms thereof and to declare the terms and conditions upon and subject to which they are to be issued: ARTICLE 1 Definitions and Incorporation by Reference Section 1.01. Definitions. "ADDITIONAL ASSETS" means (a) any Property (other than cash, Cash Equivalents or securities) to be owned by the Corporation or any Restricted Subsidiary; or (b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Corporation or another Restricted Subsidiary from any Person other than the Corporation or an Affiliate of the Corporation. "AFFILIATE" of any specified Person means (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (b) any other Person who is a director or officer of (i) such specified Person, (ii) any Subsidiary of such specified Person or (iii) any Person described in clause (a) above. For the purposes of this definition, "CONTROL" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. For purposes of the covenants contained in Section 4.10, Section 4.12 and the definition of the term "ADDITIONAL ASSETS" only, "AFFILIATE" shall also mean any beneficial owner of shares representing 5% or more (on a fully diluted basis) of the total voting power of the Voting Stock of the Corporation and/or of rights or warrants to purchase Voting Stock representing 5% or more (on a fully diluted basis) of the total voting power of the Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. 10 "AFFILIATE JOINT VENTURE" means a Person, other than a Subsidiary of the Corporation, in which the Corporation or any Restricted Subsidiary has an Investment and which is an Affiliate of the Corporation only because the Corporation or such Restricted Subsidiary has the ability to control such Person, and for no other reason. "ASSET SALE" means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Corporation or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "DISPOSITION"), of (a) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares), (b) all or substantially all the assets of any division or line of business of the Corporation or any Restricted Subsidiary or (c) any other assets of the Corporation or any Restricted Subsidiary outside of the ordinary course of business of the Corporation or such Restricted Subsidiary (other than (i) in the case of clauses (a), (b) and (c) above, any disposition by a Restricted Subsidiary to the Corporation or by the Corporation or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) in the case of clauses (b) and (c) above, (x) any disposition of accounts receivable or inventory by or to the Corporation or any Restricted Subsidiary to or from NSFC or any other bankruptcy-remote, special-purpose Subsidiary of the Corporation in connection with the Incurrence of Debt by such Subsidiary under the Credit Facilities or (y) any disposition of Property having, together with other Property disposed of pursuant to such clauses during the same fiscal year, an aggregate Fair Market Value of less than $25 million, (iii) in the case of clause (c) above, (x) any disposition effected in compliance with Section 5.01(a) and (y) a disposition of obsolete assets in the ordinary course of business and (iv) in the case of clauses (a), (b) and (c) above, but only for the purposes of Section 4.10, dispositions of Mortgaged Property made in compliance with Section 4.08. "ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction means, at any date of determination, (a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of the term "Capital Lease Obligation" and (b) in all other instances, the present value (discounted at the actual rate of interest implicit in such transaction, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). "AVERAGE LIFE" means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing (a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) 11 from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (b) the sum of all such payments. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation or any committee thereof duly authorized to act on behalf of such Board. "BOARD RESOLUTION" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "BUSINESS DAY", when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the 2009 Series Bonds, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by law or executive order to close. "CAPITAL EXPENDITURE DEBT" means Debt Incurred by any Person to finance a capital expenditure so long as (a) such capital expenditure is or should be included as an addition to "Property, Plant and Equipment" in accordance with GAAP and (b) such Debt is Incurred within 180 days of the date such capital expenditure is made. "CAPITAL LEASE OBLIGATION" means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.07, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased. "CAPITAL STOCK" means, with respect to any Person, any shares or other equivalents (however designated) of corporate stock, partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest. "CAPITAL STOCK SALE PROCEEDS" means the aggregate Net Cash Proceeds received by the Corporation from the issuance or sale (other than to a Subsidiary 12 of the Corporation or an employee stock ownership plan or trust established by the Corporation or any of its Subsidiaries for the benefit of their employees) by the Corporation of any class of its Capital Stock (other than Disqualified Stock) after the Issue Date. "CASH EQUIVALENTS" means (a) any evidence of Debt with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), (b) certificates of deposit, Eurodollar time deposits, bankers' acceptances and other similar unsubordinated debt instruments with a maturity of 360 days or less and overnight bank deposits of any bank, trust company, investment bank or other financial institution (including any branch thereof) that is organized or regulated under the laws of the United States of America or any state thereof, and which bank, trust company, investment bank or other financial institution has capital, surplus and undivided profits aggregating in excess of US$1.0 billion and has outstanding unsecured debt which is rated "A3" or higher by Moody's or "A-" or higher by S&P; provided that up to $25 million of the aggregate amount of investments of the type described in this clause (b) may be with banks (or branches thereof) of the type described above with outstanding unsecured debt that has an Investment Grade Rating or higher, (c) commercial paper with a maturity of 360 days or less issued by a corporation that is not an Affiliate of the Corporation and is organized under the laws of any state of the United States or the District of Columbia and rated at least A- 2 by S&P or at least P-2 by Moody's, (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (a) and (b) above entered into with a bank, trust company, investment bank or other financial institution meeting the qualifications described in clause (b) above or (e) funds (including, without limitation, any fund for which the Trustee or any affiliate of the Trustee serves as an administrator, shareholder servicing agent and/or custodian or subcustodian) invested exclusively in cash and investments of the type described in clauses (a) through (d) above. "CHANGE OF CONTROL" means the occurrence of any of the following events: (a) if any "person" or "group" (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than Permitted Holders, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a Person will be deemed 13 to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 30% or more of the total voting power of all classes of the Voting Stock of the Corporation; or (b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Corporation and the Restricted Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Subsidiary) shall have occurred, or the Corporation merges, consolidates or amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Corporation, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Corporation is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where (i) the outstanding Voting Stock of the Corporation is reclassified into or exchanged for Voting Stock of the surviving corporation and (ii) the Holders of the Voting Stock of the Corporation immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction and in substantially the same proportion as before the transaction; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of the Corporation was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (d) the shareholders of the Corporation shall have approved any plan of liquidation or dissolution of the Corporation. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMODITY PRICE PROTECTION AGREEMENT" means, in respect of a Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices. 14 "CONSOLIDATED CURRENT LIABILITIES" means, as of any date of determination, the aggregate amount of liabilities of the Corporation and its consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), after eliminating (a) all intercompany items between the Corporation and any Restricted Subsidiary or between Restricted Subsidiaries and (b) all current maturities of long-term Debt. "CONSOLIDATED INTEREST COVERAGE RATIO" means, as of any date of determination, the ratio of (a) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to such determination date to (b) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (i) if the Corporation or any Restricted Subsidiary has Incurred any Debt since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence of Debt, or both, Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Debt as if such Debt had been Incurred on the first day of such period and the discharge of any other Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as if such discharge had occurred on the first day of such period, (ii) if since the beginning of such period the Corporation or any Restricted Subsidiary shall have made any Asset Sale or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Asset Sale, or both, EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, in either case as if such Asset Sale had occurred on the first day of such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Debt of the Corporation or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Corporation and its continuing Restricted Subsidiaries in connection with such Asset Sale for such period, as if such Asset Sale had occurred on the first day of such period (or, if the Capital Stock of any Restricted Subsidiary is sold, by an amount equal to the Consolidated Interest Expense for such period directly attributable to the Debt of such Restricted Subsidiary to the extent the Corporation and its continuing Restricted Subsidiaries are no longer liable for such Debt after such sale), (iii) if since the beginning of such period the Corporation or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property, including any acquisition of Property occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and 15 Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period and (iv) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Corporation or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Sale, Investment or acquisition of Property that would have required an adjustment pursuant to clause (ii) or (iii) above if made by the Corporation or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Sale, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of Property, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Debt incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer and as further contemplated by the definition of the term "PRO FORMA". If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt if such Interest Rate Agreement has a remaining term in excess of 12 months). "CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest expense of the Corporation and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Corporation or its Restricted Subsidiaries, (a) interest expense attributable to capital leases, (b) amortization of debt discount and debt issuance cost, (c) capitalized interest, (d) non-cash interest expenses, (e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (f) net costs associated with Hedging Obligations under Interest Rate Agreements (including amortization of fees), (g) Redeemable Dividends, (h) Preferred Stock dividends in respect of all Preferred Stock of Restricted Subsidiaries held by Persons other than the Corporation or a Wholly Owned Subsidiary, and (i) interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by the Corporation or any Restricted Subsidiary. "CONSOLIDATED NET INCOME" means, for any period, the net income (loss) of the Corporation and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income (a) any net income (loss) of any Person (other than the Corporation) if such Person is not a Restricted Subsidiary, except that (i) subject to the exclusion contained in clause (d) below, 16 the Corporation's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Corporation or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (c) below) and (ii) the Corporation's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period shall be included in determining such Consolidated Net Income, (b) any net income (loss) of any Person acquired by the Corporation or any of its consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition, (c) any net income (loss) of any Restricted Subsidiary to the extent that such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Corporation, except that (i) subject to the exclusion contained in clause (d) below, the Corporation's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Corporation or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause) and (ii) the Corporation's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, (d) any gain (but not loss) realized upon the sale or other disposition of any Property of the Corporation or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and (e) any extraordinary gain or loss. "CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Corporation and its consolidated Restricted Subsidiaries as the total assets (less accumulated depreciation, depletion and amortization, allowances for doubtful receivables, adjustments for pension liabilities, other applicable reserves and other properly deductible items) of the Corporation and its Restricted Subsidiaries, after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of (without duplication): (a) the excess of cost over fair market value of assets or businesses acquired; (b) any revaluation or other write-up in book value of assets subsequent to the last day of the fiscal quarter of the Corporation immediately preceding the Issue Date as a result of a change in the method of valuation in accordance with GAAP; (c) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or 17 developmental expenses and other intangible items; (d) minority interests in consolidated Subsidiaries held by Persons other than the Corporation or any Restricted Subsidiary; (e) treasury stock; (f) cash or securities set aside and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities; and (g) Investments in and assets of Unrestricted Subsidiaries. "CONSOLIDATED NET WORTH" means the total of the amounts shown on the consolidated balance sheet of the Corporation and its Restricted Subsidiaries as of the end of the most recent fiscal quarter of the Corporation ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (a) the par or stated value of all outstanding Capital Stock of the Corporation plus (b) paid-in capital or capital surplus relating to such Capital Stock plus (c) any retained earnings or earned surplus less (i) any accumulated deficit, (ii) any amounts attributable to Disqualified Stock and (iii) any adjustments for pension liabilities. "CORPORATE TRUST OFFICE" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office on the date of execution of this Tenth Supplemental Indenture is located at 450 West 33rd Street, New York, NY 10001. "CORPORATION" means the party named as such in this Indenture until a successor replaces it pursuant to the applicable provisions hereof and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "CORPORATION REQUEST" or "CORPORATION ORDER" means a written request or order signed in the name of the Corporation by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "CREDIT FACILITIES" means the Receivables Purchase Agreement and the Inventory Facilities, in each case together with any extensions, revisions, refinancings or replacements thereof by a lender or syndicate of lenders (including through the sale of accounts receivable or inventory to such lender or lenders or to NSFC or any other bankruptcy-remote, special-purpose Subsidiary of the Corporation that purchases such accounts receivable or inventory). "CURRENCY EXCHANGE PROTECTION AGREEMENT" means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency option 18 or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates. "DEBT" means, with respect to any Person on any date of determination (without duplication), (a) the principal in respect of (i) debt of such Person for money borrowed and (ii) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; (c) all obligations of such Person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding Trade Accounts Payable arising in the ordinary course of business); (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (e) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); (f) all obligations of the type referred to in clauses (a) through (e) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (g) all obligations of the type referred to in clauses (a) through (f) of other Persons secured by any Lien on any Property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such Property or assets or the amount of the obligation so secured; (h) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and (i) to the extent not otherwise included in this definition, any financing of accounts receivable or inventory of such Person (whether or not treated as a sale or debt for accounting purposes); provided that such accounts receivable or inventory shall be deemed to be on the consolidated balance sheet of the Corporation for purposes of clause (b)(ii) of the definition of "PERMITTED DEBT". The amount of Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. 19 "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DEPOSITARY" means The Depository Trust Company, its nominees and successors. "DISQUALIFIED STOCK" means, with respect to any Person, Redeemable Stock of such Person as to which the maturity, mandatory redemption, redemption at the option of the holder thereof, conversion or exchange occurs, or may occur, on or prior to the first anniversary of the Stated Maturity of the 2009 Series Bonds; provided, however, that Redeemable Stock of such Person that would not otherwise be characterized as Disqualified Stock under this definition shall not constitute Disqualified Stock if such Redeemable Stock is convertible or exchangeable into Debt solely at the option of the issuer thereof. "EBITDA" means, for any period, an amount equal to, for the Corporation and its consolidated Restricted Subsidiaries, (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (i) the provision for taxes for such period based on income or profits or utilized in computing net loss, (ii) Consolidated Interest Expense, (iii) depreciation and amortization of fixed and intangible assets and (iv) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period, except amortization of any SFAS 106 transaction obligation of the Corporation), minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Corporation by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE OFFER" means the offer by the Corporation to the Holders of the Initial 2009 Series Bonds to exchange all of the Initial 2009 Series Bonds for 20 Exchange 2009 Series bonds, as provided for in the Registration Rights Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" means the Exchange Offer Registration Statement as defined in the Registration Rights Agreement. "EXCHANGE 2009 SERIES BONDS" refers to the First Mortgage Bonds, 9 7/8% Series B due 2009 containing terms substantially identical to the Initial 2009 Series Bonds (except that (i) such Exchange 2009 Series Bonds shall not contain terms with respect to transfer restrictions and shall be registered under the Securities Act, and (ii) certain provisions relating to an increase in the stated rate of interest thereon shall be eliminated) that are issued and exchanged for the Initial 2009 Series Bonds in accordance with the Exchange Offer, as provided for in the Registration Rights Agreement and this Supplemental Indenture. "FAIR MARKET VALUE" means, with respect to any Property, the price (or, in the case of a lease, the rent) which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller (or lessor) and a willing buyer (or lessee), neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value will be determined, except as otherwise provided, (a) if such Property has a Fair Market Value equal to or less than $10,000,000, by any Officer of the Corporation or (b) if such Property has a Fair Market Value in excess of $10,000,000, by a majority of the Board of Directors and evidenced by a Board Resolution, dated within 30 days of the relevant transaction, delivered to the Trustee. "GAAP" means United States generally accepted accounting principles as in effect on the Issue Date, including those set forth (a) in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) in the statements and pronouncements of the Financial Accounting Standards Board, (c) in such other statements by such other entity as approved by a significant segment of the accounting profession and (d) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, 21 or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part); provided, however, that the term "GUARANTEE" shall not include endorsements for collection or deposit in the ordinary course of business. The term "GUARANTEE" used as a verb has a corresponding meaning. The term "GUARANTOR" shall mean any Person Guaranteeing any obligation. "HEDGING OBLIGATION" of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement. "HOLDER"or "BONDHOLDER" means the Person in whose name a Bond is registered on the Bond Register. "INCUR" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and "Incurrence"and "Incurred" shall have meanings correlative to the foregoing); provided, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further, however, that solely for purposes of determining compliance with Section 4.05, amortization of debt discount shall not be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount, the amount of such Debt Incurred shall at all times be the aggregate principal amount at Stated Maturity. "INDENTURE" means the Original Indenture as amended or supplemented from time to time, as defined in the recitals hereto. "INDEPENDENT FINANCIAL ADVISOR" means an investment banking firm of national standing or any third party appraiser of national standing, provided that such firm or appraiser is not an Affiliate of the Corporation. "INITIAL 2009 SERIES BONDS" has the meaning specified in the recitals to this Supplemental Indenture. "INTEREST PAYMENT DATE" means March 1 and September 1 of each year, commencing September 1, 1999. 22 "INTEREST RATE AGREEMENT" means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates. "INVENTORY FACILITIES" means (i) the $100 million Inventory Credit Agreement, dated as of July 18, 1996, among the Corporation, the Long-Term Credit Bank of Japan Ltd, New York Branch, as Administrative Agent and the Long- Term Credit Bank of Japan Ltd., New York Branch, as Structuring Agent and Collateral Agent and (2) the $50 million Credit Agreement, dated as of July 18, 1996, between the Corporation and The Fuji Bank and Trust Company. "INVESTMENT" by any Person means any direct or indirect loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person. In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment. "INVESTMENT GRADE RATING" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P. "INVESTMENT GRADE STATUS" shall be deemed to have been reached on the date that the 2009 Series Bonds have an Investment Grade Rating from both Rating Agencies. "ISSUE DATE" means the date on which the 2009 Series Bonds are initially issued. "LIEN" means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction, but excluding any operating lease (except Sale and Leaseback Transactions) entered into in the ordinary course of such Person's business). 23 "MOODY'S" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof. "MORTGAGED PROPERTY" means any Property of the Corporation or any of its Subsidiaries that is subjected to, or is intended to be subjected to, the lien of the Indenture. "NET AVAILABLE CASH" from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non- cash form), in each case net of (a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale, (b) all payments made on any Debt which is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale, (c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale and (d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by the Corporation or any Restricted Subsidiary after such Asset Sale. "NET CASH PROCEEDS" means, with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "NKK" means NKK U.S.A. Corporation and its Affiliates. "NON-MORTGAGED PROPERTY" means Property of the Corporation or any of its Subsidiaries other than Mortgaged Property. "NSFC" means National Steel Funding Corp., a Delaware corporation, and its successors. 24 "OFFICER" means the President, the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or the Comptroller or the Chief Financial Officer or any Vice President of the Corporation. "OFFICERS' CERTIFICATE" means a certificate signed by the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or the Comptroller or an Assistant Comptroller of the Corporation. "OPINION OF COUNSEL" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Corporation. "PERMITTED DEBT" means: (a) Debt of the Corporation evidenced by the 2009 Series Bonds; (b) Debt of the Corporation or any Restricted Subsidiary under the Credit Facilities; provided that the aggregate principal amount of all such Debt under the Credit Facilities at any one time outstanding shall not exceed the greater of (i) $350 million less the sum of the aggregate amount of all required payments of principal applied to reduce the aggregate amount available to be borrowed under the Credit Facilities including pursuant to Section 4.10, and (ii) the sum of the amounts equal to (x) 60% of the book value of the inventory of the Corporation and the Restricted Subsidiaries and (y) 85% of the book value of the accounts receivable of the Corporation and the Restricted Subsidiaries, in each case as of the most recently ended quarter of the Corporation prior to such Incurrence for which financial statements of the Corporation have been provided to the Holders of 2009 Series Bonds; (c) Capital Expenditure Debt of the Corporation or any Restricted Subsidiary; provided that (i) the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased and (ii) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c), together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c), does not exceed $175 million; (d) Debt of the Corporation owing to and held by any Wholly Owned Subsidiary and Debt (including Preferred Stock) of a Restricted 25 Subsidiary owing to and held by the Corporation or any Wholly Owned Subsidiary; provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such Debt (except to the Corporation or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the Corporation or such Restricted Subsidiary; (e) Debt of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by the Corporation or otherwise became a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Corporation or was otherwise acquired by the Corporation); provided that at the time such Restricted Subsidiary was acquired by the Corporation or otherwise became a Restricted Subsidiary and after giving pro forma effect to the Incurrence of such Debt, the Corporation would have been able to Incur $1.00 of additional Debt pursuant to Section 4.05(a); (f) Debt under Interest Rate Agreements entered into by the Corporation or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Corporation or such Restricted Subsidiary and not for speculative purposes; provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by Section 4.05; (g) Debt under Currency Exchange Protection Agreements entered into by the Corporation or a Restricted Subsidiary for the purpose of limiting currency exchange rate risk in the ordinary course of the financial management of the Corporation or such Restricted Subsidiary and not for speculative purposes; (h) Debt under Commodity Price Protection Agreements entered into by the Corporation or a Restricted Subsidiary in the ordinary course of the financial management (including cost control) of the Corporation or such Restricted Subsidiary and not for speculative purposes; (i) Debt in connection with one or more standby letters of credit or performance bonds issued by the Corporation or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations 26 and not in connection with the borrowing of money or the obtaining of advances or credit; (j) Debt outstanding on the Issue Date not otherwise described in clauses (a) through (i) above; (k) Debt of the Corporation or any Restricted Subsidiary (other than Debt permitted by Section 4.05(a) or the other clauses of this definition) in an aggregate principal amount outstanding at any one time not to exceed $75,000,000; an d (l) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to Section 4.05(a) and clauses (a), (c), (e) and (j) above, subject, in the case of clause (c) above, to the limitations set forth in the respective proviso thereto. "PERMITTED INVESTMENTS" means any Investment by the Corporation or any Restricted Subsidiary in any of the following: (a) Cash Equivalents; (b) the Corporation or any Restricted Subsidiary; (c) another Person, if as a result of such Investment (i) such other Person becomes a Restricted Subsidiary or (ii) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Corporation or a Restricted Subsidiary; (d) loans or advances made to employees or directors of the Corporation or any Restricted Subsidiary in the ordinary course of business in an aggregate amount not to exceed US$1 million at any one time outstanding; (e) Hedging Obligations which constitute Permitted Debt; (f) Investments consisting of non-cash consideration received in the form of securities, Notes or similar obligations in connection with an Asset Sale permitted by Section 4.08 and Section 4.10, as applicable, provided that the aggregate amount of such non-cash consideration received in connection with any such Asset Sale shall not exceed the amount permitted under Section 4.08 and Section 4.10 or the terms of the Original Indenture, as applicable; 27 (g) the purchase by the Company or any Restricted Subsidiary in one or more transactions of all or any portion of NKK's ownership interest in DNN Galvanizing Limited Partnership; and (h) Investments in joint ventures engaged in the steel business or other businesses reasonably related thereto in an aggregate amount not to exceed $20 million. "PERMITTED HOLDERS" means NKK U.S.A. Corporation and its Affiliates. "PERMITTED REFINANCING DEBT" means any Debt that Refinances any other Debt, including any successive Refinancings, so long as (a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of (i) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced and (ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing, (b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced, (c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced and (d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; provided, however, that Permitted Refinancing Debt shall not include (a) Debt of a Subsidiary that Refinances Debt of the Corporation or (b) Debt of the Corporation or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. "PERSON" means any individual, corporation, company (including any limited liability or joint-stock company), partnership, joint venture, association, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PLACE OF PAYMENT" means the place or places where the principal of (and premium, if any, on) and interest on the 2009 Series Bonds are payable as specified as contemplated by Section 3.01 hereof and Section 4.04 of the Original Indenture. "PREDECESSOR 2009 SERIES BOND" of any particular 2009 Series Bond means every previous 2009 Series Bond evidencing all or a portion of the same debt as that evidenced by such particular 2009 Series Bond; and, for the purposes of this definition, any 2009 Series Bond authenticated and delivered in compliance with Section 3.03 of the Original Indenture in exchange for or in lieu of a mutilated, destroyed , lost or stolen 2009 Series Bond shall be deemed to 28 evidence the same debt as the mutilated, destroyed, lost or stolen 2009 Series Bond. "PREFERRED STOCK" means any Capital Stock of a Person, however designated, which entitles the Holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person. "PRINCIPAL" of any Debt (including the 2009 Series Bonds) means the principal amount of such Debt plus the premium, if any, on such Debt. "PROPERTY" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to the Indenture, the value of any Property shall be its Fair Market Value. "PUBLIC EQUITY OFFERING" means an underwritten public offering of common stock of the Corporation pursuant to an effective registration statement under the Securities Act. "RATING AGENCIES" mean Moody's and S&P. "RECEIVABLES PURCHASE AGREEMENT" means the Receivables Purchase Agreement dated as of May 18, 1994, as amended through the Issue Date, among NSFC, Morgan Guaranty Trust Company of New York (as successor to J.P. Morgan Delaware), as structuring and collateral agent and facility agent, and various financial institutions parties thereto as lenders and issuing banks. "REDEEMABLE DIVIDEND" means, for any dividend with respect to Redeemable Stock, the quotient of the dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Redeemable Stock. "REDEEMABLE STOCK" means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or otherwise (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may become redeemable or repurchasable at the option of the holder thereof, in whole or in part, or (c) is convertible or exchangeable for Debt or Disqualified Stock. 29 "REFINANCE" means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall have correlative meanings. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement dated as of March 8,1999, among the Corporation and the Holders of Initial 2009 Series Bonds. "REGISTRATION STATEMENT" shall mean any registration statement of the Corporation which covers any of the 2009 Series Bonds pursuant to the provisions of the Registration Rights Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments. "RESTRICTED PAYMENT" means (a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Corporation or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Corporation or any Restricted Subsidiary), except for any dividend or distribution which is made solely to the Corporation or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Redeemable Stock) of the Corporation; (b) any payment made by the Corporation or any Restricted Subsidiary to purchase, redeem, repurchase, acquire or retire for value any Capital Stock of the Corporation or any Restricted Subsidiary (other than (I) Capital Stock of a Wholly Owned Restricted Subsidiary or (II) from all holders of Capital Stock of a non-wholly owned Restricted Subsidiary on a pro rata basis); (c) any payment made by the Corporation or any Restricted Subsidiary to purchase, redeem, repurchase, defease or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled sinking fund or mandatory redemption payment, any Subordinated Obligation (other than the purchase, repurchase, or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition); or (d) any Investment (other than any Permitted Investment) in any Person (including, without limitation, any Unrestricted Subsidiary). "RESTRICTED SUBSIDIARY" means (a) any Subsidiary of the Corporation in existence on or after the Issue Date unless such Subsidiary shall have been designated an Unrestricted Subsidiary as permitted or required pursuant to Section 4.14 and (b) an Unrestricted Subsidiary which is redesignated as a Restricted Subsidiary as permitted pursuant to Section 4.14. 30 "S&P" means Standard & Poor's Ratings Service or any successor to the rating agency business thereof. "SALE AND LEASEBACK TRANSACTION" means any arrangement relating to Property now owned or hereafter acquired whereby the Corporation or a Restricted Subsidiary transfers such Property to another Person and the Corporation or a Restricted Subsidiary leases it from such Person, other than any such arrangement with respect to Property acquired or placed into service by the Corporation or any Restricted Subsidiary after the Issue Date to the extent entered into within 365 days after the date of such acquisition or placement into service and not constituting a Capital Lease Obligation. "SEC" means the Securities and Exchange Commission or any successor thereto. "SECURED DEBT" means any Debt of the Corporation or any Restricted Subsidiary secured by a Lien. "SENIOR DEBT" of the Corporation means (a) all obligations consisting of the principal, and accrued and unpaid interest in respect of (i) Debt of the Corporation for borrowed money and (ii) Debt of the Corporation evidenced by notes, debentures, bonds or other similar instruments permitted under the Indenture for the payment of which the Corporation is responsible or liable; (b) all Capital Expenditure Debt of the Corporation; (c) all obligations of the Corporation (i) for the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction or (ii) under Hedging Obligations; and (d) all obligations of other Persons of the type referred to in clauses (a) and (b) for the payment of which the Corporation is responsible or liable as Guarantor; provided, however, that Senior Debt of the Corporation shall not include (A) Debt of the Corporation that is by its terms subordinate in right of payment to the 2009 Series Bonds; (B) any Debt Incurred in violation of the provisions of the Indenture; (C) accounts payable or any other obligations of the Corporation to trade creditors created or assumed by the Corporation in the ordinary course of business in connection with the obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities); (D) any liability for Federal, state, local or other taxes owed or owing by the Corporation; (E) any obligation of the Corporation to any Subsidiary; or (F) any obligations with respect to any Capital Stock. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Corporation pursuant to the provisions of the Registration Rights Agreement. 31 "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Corporation within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the 2009 Series Bonds means a date fixed by the Trustee pursuant to Section 3.06. "STATED MATURITY" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "SUBORDINATED OBLIGATION" means any Debt of the Corporation (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the 2009 Series Bonds or the Guaranty pursuant to a written agreement to that effect. "SUBSIDIARY" means, in respect of any specified Person, any corporation, company, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as amended and in effect on the date of this Indenture except as required by Section 8.08 hereof; provided that in the event the Trust Indenture Act of 1939 is amended after such date, "TRUST INDENTURE ACT" means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as so amended. "2009 SERIES BONDS" has the meaning stated in the first recital of this Supplemental Indenture. "UNITED STATES" means the United States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of the Corporation in existence on the Issue Date that is not a Restricted Subsidiary; (b) any 32 Subsidiary of an Unrestricted Subsidiary; and (c) any Subsidiary of the Corporation that is designated after the Issue Date as an Unrestricted Subsidiary as permitted pursuant to Section 4.14 and not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto. "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "VOTING STOCK" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "WHOLLY OWNED SUBSIDIARY" means, at any time, a corporation all the stock of which (except directors' qualifying shares, where necessary) is at such time owned, directly or indirectly, by the Corporation or by one or more Wholly Owned Subsidiaries. Section 1.02. Other Definitions.
Term Defined in Section "Affiliate Transaction"................................... 4.12 "Bankruptcy Law".......................................... 6.01 "Bond Registrar".......................................... 3.05 "Change of Control Offer"................................. 4.09(a) "Change of Control Purchase Price"........................ 4.09(a) "Change of Control Payment Date".......................... 4.09(b) "Custodian"............................................... 6.01 "Excess Proceeds"......................................... 4.10(c) "Offer Amount"............................................ 4.10(d)(ii) "Offer Period"............................................ 4.10(d)(ii) "Offshore Bond Exchange Date"............................. 2.03 "Offshore Physical Bond".................................. 2.01 "Prepayment Offer"........................................ 4.10(c) "Prepayment Offer Notice"............................... 4.10(d)(1) "Private Placement Legend"................................ 2.03 "Purchase Date"......................................... 4.10(d)(1) "Tenth Supplemental Indenture Event of Default"........... 6.01 "Surviving Person"........................................ 5.01(a)
33 Unless otherwise defined herein, terms defined in Article One of the Original Indenture shall have the same meanings when used herein. All the terms and provisions of this Supplemental Indenture shall be and be deemed to be a part of the terms and provisions of the Indenture for any and all purposes. Section 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the 2009 Series Bonds. "indenture security holder" means a Bondholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Corporation, and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. Section 1.0. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; 34 (6) unsecured Debt shall not be deemed to be subordinate or junior to secured Debt merely by virtue of its nature as unsecured Debt; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and (8) the principal amount of any Preferred Stock shall be the greater of (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock. ARTICLE 2 2009 Bonds Forms Section 2.01. Forms Generally. The Initial 2009 Series Bonds shall be known and designated as the "FIRST MORTGAGE BONDS, 9 7\8% SERIES A DUE 2009" and the Exchange 2009 Series Bonds shall be known and designated as the "FIRST MORTGAGE BONDS, 9 7\8% SERIES B DUE 2009", in each case, of the Corporation. The 2009 Series Bonds and the Trustee's certificate of authentication shall be in substantially the forms set forth in the recitals to the supplement of this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such 2009 Series Bonds, as evidenced by their execution of the 2009 Series Bonds. Any portion of the text of any 2009 Series Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the 2009 Series Bond. Each Bond shall be dated the date of its authentication. The definitive 2009 Series Bonds shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Corporation executing such 2009 Series Bonds, as evidenced by their execution of such 2009 Series Bonds. Initial 2009 Series Bonds offered and sold in reliance on Rule 144A promulgated under the Securities Act of 1933, as amended ("RULE 144A"), may be issued in the form of one or more permanent global Notes substantially in the 35 form set forth in the recitals to this Supplemental Indenture (the "U.S. GLOBAL BOND") deposited with The Chase Manhattan Bank, as custodian for the Depositary or its nominee, duly executed by the Corporation and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Bond may from time to time be increased or decreased by adjustments made on the records of The Chase Manhattan Bank, as custodian for the Depositary or its nominee, as hereinafter provided. Initial 2009 Series Bonds offered and sold in offshore transactions in reliance on Regulation S promulgated under the Securities Act of 1933, as amended ("REGULATION S"), shall be issued in the form of a single permanent global bond in substantially the form set forth in the recitals to this Supplemental Indenture (the "OFFSHORE GLOBAL BOND") deposited with The Chase Manhattan Bank, as custodian for the Depositary or its nominee, duly executed by the Corporation and authenticated by the Trustee as hereinafter provided. The aggregate principal amount at maturity of the Offshore Global Bond may from time to time be increased or decreased by adjustments made in the records of the The Chase Manhattan Bank, as custodian for the Depositary or its nominee, as herein provided. Bonds issued pursuant to Section 3.05 in exchange for or upon transfer of beneficial interests in the U.S. Global Bond ("U.S. PHYSICAL BONDS") or the Offshore Global Bond (the "OFFSHORE PHYSICAL BONDS") shall be in the form of permanent certificated Bonds substantially in the form set forth in the recitals to this Supplemental Indenture. The Offshore Physical Bonds and U.S. Physical Bonds are sometimes collectively herein referred to as the "PHYSICAL BONDS". The U.S. Global Bond and the Offshore Global Bond are sometimes collectively referred to as the "GLOBAL BONDS". Section 2.02. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the form set forth in the recitals to this Indenture. Section 2.03. Restrictive Legends. Unless and until (i) an Initial 2009 Series Bond is sold pursuant to an effective Shelf Registration Statement or (ii) an Initial 2009 Series Bond is exchanged for an Exchange 2009 Series Bond in an Exchange Offer pursuant to an effective Exchange Offer Registration Statement, in each case pursuant to the Registration Rights Agreement, (A) each U.S. Global Bond and U.S. Physical 36 Bond shall bear the following legend set forth below (the "PRIVATE PLACEMENT LEGEND") on the face thereof and (B) the Offshore Physical Bonds and Offshore Global Bond shall bear the Private Placement Legend on the face thereof until at least 41 days after the date hereof (the "OFFSHORE BOND EXCHANGE DATE") and receipt by the Corporation and the Trustee of a certificate substantially in the form provided in Section 2.04: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR OF A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THE SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AN OTHER INFORMATION 37 AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-UNITED STATES PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OR RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. Each Global Bond, whether or not an Initial 2009 Series Bond, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY IN WHOLE, BUT NOT IN PART SHALL BE LIMITED TO TRANSFERS, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.11 AND 3.12 OF THE TENTH SUPPLEMENTAL INDENTURE. 38 Section 2.04. Form of Certificate to Be Delivered upon Termination of Restricted Period. [Date] THE CHASE MANHATTAN BANK 450 West 33rd Street, 15th Floor New York, New York 10001 Attention: Corporate Trust Administration Re: NATIONAL STEEL CORPORATION (the "Corporation") First Mortgage Bonds, 9 7/8% Series A due 2009 of the ----------------------------------------------------- Corporation (the "2009 Series Bonds") ------------------------------------ Ladies and Gentlemen: This letter relates to $ _________ principal amount of 2009 Series Bonds represented by a offshore global bond certificate (the "Offshore Global Bond"). Pursuant to Section 2.04 of the Indenture dated as of March 8, 1999 relating to the 2009 Series Bonds (the "Indenture"), we hereby certify that (1) we are the beneficial owner of such principal amount of 2009 Series Bonds represented by the Offshore Global Bond and (2) we are a non-U.S. Person to whom the 2009 Series Bonds could be transferred in accordance with Rule 904 of Regulation S promulgated under the Securities Act of 1933, as amended ("Regulation S"). Accordingly, you are hereby requested to issue an Offshore Physical Bond representing the undersigned's interest in the principal amount of 2009 Series Bonds represented by the Offshore Global Bond, all in the manner provided by the Indenture. You and the Corporation are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to 39 the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By:_______________________________ Authorized Signature ARTICLE 3 The 2009 Series Bonds Section 3.01. Maturity; Payment. The Stated Maturity of the 2009 Series Bonds shall be March 1, 2009, and they shall bear interest at the rate of 9 7\8% per annum from March 8, 1999, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on September 1, 1999 and semi-annually thereafter on March 1 and September 1 in each year, until the principal thereof is paid in full and to the Person in whose name the 2009 Series Bond (or any predecessor 2009 Series Bond) is registered at the close of business on the February 15 or August 15 next preceding such Interest Payment Date (each a "REGULAR RECORD DATE"). The principal of (and premium, if any) and interest on the 2009 Series Bonds shall be payable at the office or agency of the Corporation maintained for such purpose in The City of New York, or at such other office or agency of the Corporation as may be maintained for such purpose; provided, however, that, at the option of the Corporation, interest may be paid (a) by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Bond Register or (b) by wire transfer to an account maintained by the payee located in the United States provided that appropriate written wire instructions have been provided at least two Business Days prior to the relevant record date. Holders shall have the right to require the Corporation to purchase their 2009 Series Bonds, in whole or in part, in the event of a Change of Control pursuant to Section 4.09. The 2009 Series Bonds shall be redeemable as provided in Article 7 and in the 2009 Series Bonds. 40 Section 3.02. Denominations. The 2009 Series Bonds shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 3.03. Execution. Authentication, Delivery and Dating. The 2009 Series Bonds shall be executed on behalf of the Corporation in accordance with Section 2.12 of the Original Indenture. Notwithstanding any provision of Section 2.12 of the Original Indenture to the contrary, the signature of any of these officers on the 2009 Series Bonds may be the manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the 2009 Series Bonds. 2009 Series Bonds bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such 2009 Series Bonds or did not hold such offices at the date of such 2009 Series Bonds. On Corporation Order, the Trustee shall, pursuant to Section 3.05 and Section 3.09 of the Original Indenture, authenticate for original issue Initial 2009 Series Bonds in an aggregate principal amount not to exceed $225,000,000; provided, that the Trustee shall also authenticate, pursuant to Section 3.05 and Section 3.09 of the Original Indenture, for original issue Exchange 2009 Series Bonds in an aggregate principal amount not to exceed $225,000,000; provided further that such Exchange 2009 Series Bonds shall be issuable only upon the valid surrender for cancellation of Initial 2009 Series Bonds of a like aggregate principal amount in accordance with an Exchange Offer pursuant to the Registration Rights Agreement. In each case, the Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Corporation that it may reasonably request in connection with such authentication of Initial 2009 Series Bonds and Exchange 2009 Series Bonds in accordance with Section 3.05 and Section 3.09 of the Original Indenture. Such order shall specify the amount of Initial 2009 Series Bonds or Exchange 2009 Series Bonds to be authenticated and the date on which the original issue of Initial 2009 Series Bonds or Exchange 2009 Series Bonds is to be authenticated. Each 2009 Series Bond shall be dated the date of its authentication. No 2009 Series Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such 2009 Series Bond a certificate of authentication substantially in the form provided for herein 41 duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any 2009 Series Bond shall be conclusive evidence, and the only evidence, that such 2009 Series Bond has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any 2009 Series Bond shall have been authenticated and delivered hereunder but never issued and sold by the Corporation, and the Corporation shall deliver such 2009 Series Bond to the Trustee for cancellation as provided in Section 3.08 together with a written statement by an Officer (which need not be accompanied by an Opinion of Counsel) stating that such 2009 Series Bond has never been issued and sold by the Corporation, for all purposes of this Indenture such 2009 Series Bond shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. In case the Corporation, pursuant to Article 5, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Corporation shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article 5, any of the 2009 Series Bonds authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other 2009 Series Bonds executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the 2009 Series Bonds surrendered for such exchange and of like principal amount; and the Trustee, upon Corporation Request of the successor Person and an Officers' Certificate and an opinion of counsel as to such exchange conforming with this paragraph, shall authenticate and deliver 2009 Series Bonds as specified in such request for the purpose of such exchange. If 2009 Series Bonds shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 3.03 in exchange or substitution for or upon registration of transfer of any 2009 Series Bonds, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all 2009 Series Bonds at the time Outstanding for 2009 Series Bonds authenticated and delivered in such new name. Section 3.04. Temporary 2009 Series Bonds. Pending the preparation of definitive 2009 Series Bonds, the Corporation may execute, and upon Corporation Order the Trustee shall authenticate in accordance with Section 3.05 and 3.09 of the Original Indenture and deliver, 42 temporary 2009 Series Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive 2009 Series Bonds in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as conclusively the officers executing such 2009 Series Bonds may determine, as conclusively evidenced by their execution of such 2009 Series Bonds. If temporary 2009 Series Bonds are issued, the Corporation will cause definitive 2009 Series Bonds to be prepared without unreasonable delay. After the preparation of definitive 2009 Series Bonds, the temporary 2009 Series Bonds shall be exchangeable for definitive 2009 Series Bonds, upon surrender of the temporary 2009 Series Bonds at the office or agency of the Corporation in a Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary 2009 Series Bonds, the Corporation shall execute and, upon Corporation Order, the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary 2009 Series Bonds shall in all respects be entitled to the same benefits under this Indenture as definitive 2009 Series Bonds. Section 3.05. Registration, Registration of Transfer and Exchange. The Corporation shall cause to be kept at the Corporate Trust Office of the Trustee a register for the 2009 Series Bonds (the register maintained in the Corporate Trust Office of the Trustee and in any other office or agency of the Corporation in a Place of Payment being herein sometimes collectively referred to as the "BOND REGISTER") in which, subject to such reasonable regulations as it may prescribe, the Corporation shall provide for the registration of 2009 Series Bonds and of transfers of 2009 Series Bonds. The Bond Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Bond Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as note registrar (the "BOND REGISTRAR") for the purpose of registering 2009 Series Bonds and transfers of 2009 Series Bonds as herein provided. Upon surrender for registration of transfer of any 2009 Series Bond at the office or agency in a Place of Payment, the Corporation shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee, one or more new 2009 Series Bonds, of any authorized denominations and of a like aggregate principal amount and tenor. At the option of the Holder, 2009 Series Bonds may be exchanged for other 2009 Series Bonds, of any authorized denomination and of a like aggregate 43 principal amount, upon surrender of the 2009 Series Bonds to be exchanged at such office or agency. Whenever any 2009 Series Bonds are so surrendered for exchange, the Corporation shall execute, and the Trustee shall authenticate and deliver, the 2009 Series Bonds which the Holder making the exchange is entitled to receive; provided that no exchange of Initial 2009 Series Bonds for Exchange 2009 Series Bonds shall occur until an Exchange Offer Registration Statement shall have been declared effective by the SEC, the Trustee shall have received an Officers' Certificate confirming that the Exchange Offer Registration Statement has been declared effective by the SEC and the Initial 2009 Series Bonds to be exchanged for the Exchange 2009 Series Bonds shall be canceled by the Trustee. All 2009 Series Bonds issued upon any registration of transfer or exchange of 2009 Series Bonds shall be the valid obligations of the Corporation, evidencing the same debt, and entitled to the same benefits under this Indenture, as the 2009 Series Bonds surrendered upon such registration of transfer or exchange. Every 2009 Series Bond presented or surrendered for registration of transfer or for exchange shall (if so required by the Corporation or the Bond Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Corporation or the Bond Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of 2009 Series Bonds, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of 2009 Series Bonds, other than exchanges pursuant to (i) the Exchange Offer or (ii) exchanges pursuant to this Section 3.05 not involving any transfer. The Corporation shall not be required (i) to issue, register the transfer of or exchange 2009 Series Bonds during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of 2009 Series Bonds and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any 2009 Series Bond so selected for redemption in whole or in part, except the unredeemed portion of any 2009 Series Bond being redeemed in part, or (iii) to issue, register the transfer of or exchange any 2009 Series Bond which has been surrendered for repayment at the option of the Holder, except the portion, if any, of such 2009 Series Bond not to be so repaid. Section 3.06. Payment of Interest, Interest Rights Preserved. Interest on any 2009 Series Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such 44 2009 Series Bond (or one or more Predecessor 2009 Series Bonds) is registered at the close of business on the Regular Record Date for such interest at the Place of Payment provided, however, that each installment of interest on any 2009 Series Bond may at the Corporation's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 3.07, to the address of such Person as it appears on the Bond Register or (ii) wire transfer to an account maintained by the payee located in the United States. Any interest on any 2009 Series Bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in the 2009 Series Bonds (such defaulted interest and, if applicable, interest thereon herein collectively called "DEFAULTED INTEREST") may be paid by the Corporation, at its election in each case, as provided in clause (1) or (2) below: (1) The Corporation may elect to make payment of any Defaulted Interest to the Persons in whose names the 2009 Series Bonds (or their respective Predecessor 2009 Series Bonds) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Corporation shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each 2009 Series Bond and the date of the proposed payment, and at the same time the Corporation shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Corporation of such Special Record Date and, in the name and at the expense of the Corporation, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided in Section 3.15, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose name the 2009 Series Bonds 45 (or their respective Predecessor 2009 Series Bonds) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Corporation may make payment of any Defaulted Interest on the 2009 Series Bonds in any other lawful manner not inconsistent with the requirements of any securities exchange on which such 2009 Series Bonds may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Corporation to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 3.05, each 2009 Series Bond delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other 2009 Series Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other 2009 Series Bond. Section 3.07. Persons Deemed Owners. Prior to due presentment of a 2009 Series Bond for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name such 2009 Series Bond is registered as the owner of such 2009 Series Bond for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Sections 3.05 and 3.06) interest on such 2009 Series Bond and for all other purposes whatsoever, whether or not such 2009 Series Bond be overdue, and none of the Corporation, the Trustee or any agent of the Corporation or the Trustee shall be affected by notice to the contrary. Section 3.08. Cancellation. All 2009 Series Bonds surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All 2009 Series Bonds so delivered to the Trustee shall be promptly canceled by it. The Corporation may at any time deliver to the Trustee for cancellation any 2009 Series Bonds previously authenticated and delivered hereunder which the Corporation may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any 2009 Series Bonds previously authenticated hereunder which the Corporation has not issued and sold, and all 2009 Series Bonds so delivered shall be promptly canceled by the Trustee. If the Corporation shall so acquire any of the 2009 Series Bonds, however, such acquisition shall not operate as a redemption or satisfaction 46 of the indebtedness represented by such 2009 Series Bonds unless and until the same are surrendered to the Trustee for cancellation. No 2009 Series Bonds shall be authenticated in lieu of or in exchange for any 2009 Series Bonds canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled 2009 Series Bonds held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures unless by Corporation Order the Corporation shall direct that canceled 2009 Series Bonds be returned to it. Section 3.09. Computation of Interest. Interest on the 2009 Series Bonds shall be computed on the basis of a 360- day year of twelve 30-day months. Section 3.1. Book Entry Provisions for Global Bonds. (a) Each Global Bond initially shall (i) be registered in the name of the Depositary for such Global Bonds or the nominee of such Depositary, (ii) be delivered to The Chase Manhattan Bank as custodian for such Depositary and (iii) bear legends as set forth in Section 2.03. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Bond, and the Depositary may be treated by the Corporation, the Trustee and any agent of the Corporation or the Trustee as the absolute owner of such Global Bond for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Trustee or any agent of the Corporation or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial owner of any 2009 Series Bond. The registered holder of a Global Bond may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the 2009 Series Bonds. (b) Interests of beneficial owners in a Global Bond may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of Section 3.11. Transfers of a Global Bond shall be limited to transfers of such Global Bond in whole, but not in part, to the Depositary, its successors or their respective nominees, except (i) as otherwise set forth in Section 3.11 and (ii) U.S. Physical Bonds or Offshore Physical Bonds shall be transferred to all beneficial owners in exchange for their beneficial interests in the U.S. Global Bond or the Offshore Global Bond, respectively, in the following circumstances: (x) the Depositary notifies the Corporation that it is unwilling or 47 unable to continue as Depositary for the applicable Global Bond or the Depositary ceases to be a "CLEARING AGENCY" registered under the Exchange Act and a successor depositary is not appointed by the Corporation within 90 days or (y) an Event of Default has occurred and is continuing and Holders of more than 25 % in aggregate principal amount of the Bonds at the time Outstanding represented by the Global Bonds advise the Trustee through the Depositary in writing that the continuation of a book-entry system through the Depositary with respect to the Global Bonds is no longer required. In connection with a transfer of an entire Global Bond to beneficial owners pursuant to clause (ii) of this paragraph (b), the applicable Global Bond shall be deemed to be surrendered to the Trustee for cancellation, and the Corporation shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the applicable Global Bond, an equal aggregate principal amount at maturity of U.S. Physical Bonds (in the case of the U.S. Global Bond) or Offshore Physical Bonds (in the case of the Offshore Global Bond), as the case may be, of authorized denominations. (c) Any beneficial interest in one of the Global Bonds that is transferred to a person who takes delivery in the form of an interest in the other Global Bond will, upon transfer, cease to be an interest in such Global Bond and become an interest in the other Global Bond and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Bond for as long as it remains such an interest. (d) Any U.S. Physical Bond delivered in exchange for an interest in the U.S. Global Bond pursuant to paragraph (b) of this Section shall, except as otherwise provided in Section 3.11, bear the Private Placement Legend. Section 3.11. Transfer Provisions. Unless and until (i) an Initial 2009 Series Bond is sold pursuant to an effective Registration Statement, or (ii) an Initial 2009 Series Bond is exchanged for an Exchange 2009 Series Bond in the Exchange Offer pursuant to an effective Registration Statement, in each case, pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) General. The provisions of this Section 3.11 shall apply to all transfers involving any Physical Bond and any beneficial interest in any Global Bond. (b) Certain Definitions. As used in this Section 3.11 only, "DELIVERY" of a certificate by a transferee or transferor means the delivery to the Bond Registrar by such transferee or transferor of the applicable certificate duly completed; 48 "HOLDING" includes both possession of a Physical Bond and ownership of a beneficial interest in a Global Bond, as the context requires; "TRANSFERRING" a Global Bond means transferring that portion of the principal amount of the transferor's beneficial interest therein that the transferor has notified the Bond Registrar that it has agreed to transfer; and "TRANSFERRING" a Physical Bond means transferring that portion of the principal amount thereof that the transferor has notified the Bond Registrar that it has agreed to transfer. As used in this Indenture, "REGULATION S CERTIFICATE" means a certificate substantially in the form set forth in Section 3.12; "RULE 144A CERTIFICATE" means a certificate substantially in the form set forth in Section 3.13; and "NON-REGISTRATION OPINION AND SUPPORTING EVIDENCE" means a written opinion of counsel reasonably acceptable to the Corporation and to the Trustee to the effect that, and such other certification or information as the Corporation may reasonably require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. (c) Deemed Delivery of a Rule 144A Certificate in Certain Circumstances. A Rule 144A Certificate, if not actually delivered, will be deemed delivered if (A) (i) the transferor advises the Corporation and the Trustee in writing that the relevant offer and sale were made in accordance with the provisions of Rule 144A (or, in the case of a transfer of a Physical Bond, the transferor checks the box provided on the Physical Bond to that effect) and (ii) the transferee advises the Corporation and the Trustee in writing that (x) it and, if applicable, each account for which it is acting in connection with the relevant transfer, is a qualified institutional buyer within the meaning of Rule 144A, (y) it is aware that the transfer of 2009 Series Bonds to it is being made in reliance on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A, and (z) prior to the proposed date of transfer it has been given the opportunity to obtain from the Corporation the information referred to in Rule 144A(d)(4), and has either declined such opportunity or has received such information (or, in the case of a transfer of a Physical Bond, the transferee signs the certification provided on the Physical Bond to that effect); or (B) the transferor holds the U.S. Global Bond and is transferring to a transferee that will take delivery in the form of the U.S. Global Bond. (d) Procedures and Requirements. (i) If the proposed transfer occurs prior to the Offshore Bond Exchange Date, and the proposed transferor holds: 49 (A) a U.S. Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the Bond Registrar shall (x) register such transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such surrendered U.S. Physical Bond and (z) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being transferred of such surrendered U.S. Physical Bond. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the Bond Registrar shall (x) cancel such surrendered U.S. Physical Bond, (y) record an increase in the principal amount of the U.S. Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (x) cancel such surrendered U.S. Physical Bond, (y) record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. In the case described in Section 3.11(e)(i)(A)(1), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. 50 (B) a beneficial interest in the U.S. Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor. (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the Offshore Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (C) a beneficial interest in the Offshore Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests 51 delivery in the form of Physical Bonds, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the Bond Registrar shall (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor; provided, however, that until the Offshore Bond Exchange Date occurs, beneficial interests in the Offshore Global Bond may be held only in or through accounts maintained at the Depositary by Euroclear Clearance System ("EUROCLEAR") or Cedel Bank S.A. ("CEDEL") (or by Agent Members acting for the account thereof), and no person shall be entitled to effect any transfer or exchange that would result in any such interest being held otherwise than in or through such an account. (ii) If the proposed transfer occurs on or after the Offshore Bond Exchange Date and the proposed transferor holds: 52 (A) a U.S. Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the procedures set forth in Section 3.11(e)(i)(A)(1) shall apply. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the procedures set forth in Section 3.11(e)(i)(A)(2) shall apply. (3) delivers a Regulation S Certificate, then the Bond Registrar shall cancel such surrendered U.S. Physical Bond and at the direction of the transferee, either: (x) register such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Bond to such transferee in principal amount equal to the principal amount being transferred of such surrendered U.S. Physical Bond, or (y) if the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and notify the Depositary in accordance with the procedures of the Depositary of such transfer. In any of the cases described in this Section 3.11(e)(ii)(A)(1) or (3)(x), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. (B) a beneficial interest in the U.S. Global Bond, and the proposed transferee or transferor, as applicable: 53 (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the procedures set forth in Section 3.11(e)(i)(B)(1) shall apply. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the procedures set forth in Section 3.11(e)(i)(B)(2) shall apply. (3) delivers a Regulation S Certificate, then the Bond Registrar shall (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) notify the Depositary in accordance with the procedures of the Depositary of such transfer and (z) at the direction of the transferee, either: (x) register such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Bond to such transferee in principal amount equal to the amount of such decrease, or (y) if the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Bond equal to the amount of such decrease. (C) an Offshore Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests delivery in the form of the U.S. Global Bond, then the Bond Registrar shall (x) cancel such surrendered Offshore Physical Bond, (y) record an increase in the principal amount of the U.S. Global Bond equal to the principal amount being transferred of such surrendered Offshore Physical Bond and 54 (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) where the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (x) cancel such surrendered Offshore Physical Bond, (y) record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered Offshore Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (3) does not make a request covered by Section 3.11(e)(ii)(C)(1) or Section 3.11(e)(ii)(C)(2), then the Bond Registrar shall (x) register such transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such surrendered Offshore Physical Bond and (z) deliver a new Offshore Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being transferred of such surrendered Offshore Physical Bond. In any of the cases described in this Section 3.11(e)(ii)(C), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. (D) a beneficial interest in the Offshore Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests delivery in the form of the U.S. Global Bond, then the Bond Registrar shall (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. 55 (2) where the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor. (3) does not make a request covered by Section 3.11(e)(ii)(D)(1) or Section 3.11(e)(ii)(D)(2), then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new Offshore Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (e) Execution, Authentication and Delivery of Physical Bonds. In any case in which the Bond Registrar is required to deliver a Physical Bond to a transferee, the Corporation shall execute, and the Trustee shall authenticate, in accordance with Section 3.05 and Section 3.09 of the Original Indenture, and deliver, such Physical Bond. (f) Certain Additional Terms Applicable to Physical Bonds. (i) Any transferee entitled to receive a Physical Bond may request that the principal amount thereof be evidenced by one or more Physical Bonds in any authorized denomination or denominations and the Bond Registrar shall comply with such request if all other transfer restrictions are satisfied. (ii) In the event that a transferor transfers less than the entire principal amount of a Physical Bond surrendered for transfer, following the transfer the Bond Registrar shall deliver to the transferor a new Physical Bond of the same type in principal amount equal to the untransferred portion of the surrendered Physical Bond. (g) Transfers Not Covered by Section 3.11(e). The Bond Registrar shall effect and record, upon receipt of a written request from the Corporation so to do, a transfer not otherwise permitted by Section 3.11(e), such recording to be done in accordance with the otherwise applicable provisions of Section 3.11(e), upon the 56 furnishing by the proposed transferor or transferee of a Non-Registration Opinion and Supporting Evidence. (h) General. By its acceptance of any 2009 Series Bond bearing the Private Placement Legend, each Holder of such 2009 Series Bond acknowledges the restrictions on transfer of such 2009 Series Bond set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such 2009 Series Bond only as provided in the Indenture. The Bond Registrar shall not register a transfer of any 2009 Series Bond unless such transfer complies with the restrictions with respect thereto set forth in this Indenture. The Bond Registrar shall not be required to determine (but may rely upon a determination made by the Corporation) the sufficiency of any such certifications, legal opinions or other information. Section 3.12. Form of Regulation S Certificate. REGULATION S CERTIFICATE To: The Chase Manhattan Bank, as Trustee (the "Trustee") 450 West 33rd Street New York, NY 10001 Attention: Corporate Trust Trustee Administration Re: Tenth Supplemental Indenture (the "Indenture") dated as of March 8, 1999 between National Steel Corporation (the "Corporation") and the ------------------------------------------------------ Trustee ------- Ladies and Gentlemen: This Certificate relates to our proposed transfer of $_____ principal amount of bonds issued under the Indenture and to be designated the "First Mortgage Bonds, 9 7/8% Series A due 2009" (hereinafter called the "2009 Series Bonds"). Terms are used in this Certificate as defined in Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). We hereby certify as follows: 1. The offer of the 2009 Series Bonds was not made to a person in the United States (unless such person or the account held by it for which it is acting is excluded from the definition of "U.S. person" pursuant to Rule 902(k) of Regulation S under the circumstances described in Rule 57 902(k)(2) of Regulation S) or specifically targeted at an identifiable group of U.S. citizens abroad. 2. Either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States. 3. Neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States. 4. The proposed transfer of 2009 Series Bonds is not part of a plan or scheme to evade the registration requirements of the Securities Act. 5. If we are a dealer or a person receiving a selling concession or other fee or remuneration in respect of the 2009 Series Bonds, and the proposed transfer takes place before the Offshore 2009 Series Bond Exchange Date referred to in the Indenture, or we are an officer or director of the Corporation or a distributor, we certify that the proposed transfer is being made in accordance with the provisions of Rule 904 of Regulation S. You and the Corporation are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Seller] By:___________________________ Name: Title: Address: Date of this Certificate: _________, 199__ 58 Signature Guarantee: _______________________________ Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 59 Section 3.13 Form of Rule 144A Certificate. RULE 144A CERTIFICATE To: The Chase Manhattan Bank, as Trustee (the "Trustee") 450 West 33rd Street New York, NY 10001 Attention: Corporate Trust Trustee Administration Re: Tenth Supplemental Indenture (the "Indenture") dated as of March 8, 1999 between National Steel Corporation (the "Corporation") and the Trustee -------------------------------------------------------------- Ladies and Gentlemen: This Certificate relates to our proposed purchase of $_____ principal amount of bonds issued under the Indenture and to be designated the "First Mortgage Bonds, 9 7/8% Series A due 2009" (hereinafter called the "2009 Series Bonds"). We and, if applicable, each account for which we are acting, are "qualified institutional buyers" within the meaning of Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act"). We are aware that the transfer of 2009 Series Bonds to us is being made in reliance on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this Certificate we have been given the opportunity to obtain from the Corporation the information referred to in Rule 144A(d)(4), and have either declined such opportunity or have received such information. You and the Corporation are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF PURCHASER] By:__________________________ Name: Title: Address: Date of this Certificate: _____________ __, 199__ 60 Signature Guarantee: _______________________________ Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. Section 3.14. CUSIP Numbers. The Corporation in issuing the 2009 Series Bonds may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the 2009 Series Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the 2009 Series Bonds, and any such redemption shall not be affected by any defect in or omission of such numbers. The Corporation will promptly notify the Trustee of any change in the CUSIP numbers. Section 3.15. Notice to Holders; Waiver. Where this Supplemental Indenture provides for notice of any event to Holders of 2009 Series Bonds by the Corporation or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each such Holder affected by such event, at his address as it appears in the Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impractical to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be sufficient giving of such notice for every purpose hereunder. 61 Where this Supplemental Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. ARTICLE 4 Particular Covenants of the Corporation Each of the following covenants contained in this Article 4 shall remain in effect, subject to Section 4.04, for so long as any of the 2009 Series Bonds are outstanding: Section 4.01. Payment of Securities. The Corporation shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the 2009 Series Bonds and in this Supplemental Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee holds in accordance with this Supplemental Indenture money sufficient to pay all principal and interest then due and the Trustee is not prohibited from paying such money to the holders of the 2009 Series Bonds on that date pursuant to the terms of this Supplemental Indenture. The Corporation shall pay interest on overdue principal at the rate specified therefor in the 2009 Series Bonds, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Section 4.02. SEC Reports. Notwithstanding that the Corporation may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Corporation shall file with, or furnish to, the SEC such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and reports to be so filed at the times specified for the filing of such information, documents and reports under such Sections (the "REQUIRED FILING TIMES"); provided, however, that the Corporation shall not be so obligated to file such information, documents and reports with the SEC if the SEC does not permit such filings. The Corporation shall also in any event (a) within 15 days of each Required Filing Time, provide the Trustee and the Holders of 2009 Series Bonds with copies of such information, documents and reports and (b) if the SEC does 62 not permit the filing of such information, documents and reports, promptly upon written request by a prospective Holder of 2009 Series Bonds supply copies of such information, documents and reports to such prospective Holder of 2009 Series Bonds. Section 4.03. Limitation on Lines of Business. Neither the Corporation nor any of its Restricted Subsidiaries shall directly or indirectly engage to any substantial extent in any line or lines of business activity other than the business of the Corporation and its Restricted Subsidiaries on the Issue Date (and any business reasonably related thereto). Section 4.04. Covenant Suspension. If and for so long as the Corporation reaches and maintains Investment Grade Status, the Corporation and the Restricted Subsidiaries shall be released from their obligations to comply with Sections 4.03, 4.05, 4.06, 4.10, 4.11, 4.12, 5.01(a)(v) and (vi), and clause (x) of the second paragraph (and such clause (x) as referred to in the first paragraph) of Section 4.14. The Corporation shall notify the Trustee in writing when it reaches Investment Grade Status and when it ceases to have Investment Grade Status. Section 4.05. Limitation on Debt and Restricted Subsidiary Preferred Stock. The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur any Debt (which includes, in the case of Restricted Subsidiaries, Preferred Stock); provided however that (a) the Corporation and Restricted Subsidiaries may Incur Debt if (i) after giving pro forma effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and (ii) after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio would be greater than 2.50 to 1.00 and, (b) the Corporation and its Restricted Subsidiaries may incur debt if such Debt is Permitted Debt. Section 4.06. Limitation on Restricted Payments. (a) The Corporation shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving pro forma effect to, such proposed Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing; (ii) the Corporation could not Incur at least $1.00 of additional Debt pursuant to Section 4.05 (a); or 63 (iii) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value) would exceed an amount equal to the sum of: (A) 50% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from and after the first day of the fiscal quarter following the end of the most recent fiscal quarter ended immediately prior to the Issue Date to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit); (B) Capital Stock Sale Proceeds; (C) the amount by which Debt (other than Subordinated Obligations issued or sold prior to the Issue Date) of the Corporation is reduced on the Corporation's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Corporation) subsequent to the Issue Date of any Debt of the Corporation convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Corporation (less the amount of any cash or other Property distributed by the Corporation or any Restricted Subsidiary upon such conversion or exchange); and (D) to the extent not otherwise included in the Consolidated Net Income of the Corporation, an amount equal to the sum of (x) the net reduction in Investments in any Person (other than reductions in Permitted Investments) resulting from the payment in cash of interest on Debt, dividends, repayments of loans or advances, or other transfers of assets, in each case to the Corporation or any Restricted Subsidiary after the Issue Date from such Person and (y) the portion (proportionate to the Corporation's equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that in the case of (x) or (y) above the foregoing sum shall not exceed the amount of Investments previously made (and treated as a Restricted Payment) by the Corporation or any Restricted Subsidiary in such Person or Unrestricted Subsidiary. 64 (b) Notwithstanding the foregoing limitation, the Corporation may: (i) pay dividends on its Capital Stock within 60 days of the declaration thereof if, on said declaration date, such dividends could have been paid in compliance with this Indenture; provided, however, that at the time of such payment of such dividend, no other Default or Event of Default shall have occurred and be continuing (or would result therefrom); provided further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; (ii) purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of the Corporation or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Corporation (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Corporation or an employee stock ownership plan or trust established by the Corporation or any of its Subsidiaries for the benefit of their employees); provided, however, that (A) such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such exchange or sale shall be excluded from the calculation of the amount of Capital Stock Sale Proceeds; (iii) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments; (iv) expend up to $5,000,000 in any fiscal year of the Corporation to repurchase common stock of the Corporation (i) to distribute to current or former employees, officers and directors of the Corporation and its Subsidiaries, including upon the exercise of stock options granted to such employees, officers and directors, (ii) from such current or former employees, officers or directors or (iii) otherwise in order to distribute as employee compensation; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such repurchase shall be excluded in the calculation of the amount of Restricted Payments; 65 (v) to repurchase up to 700,000 shares of common stock of the Corporation pursuant to the stock repurchase approved by the Board of Directors of the Corporation on August 26, 1998; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such repurchase shall be included in the calculation of the amount of Restricted Payments; and (vi) expend up to $50 million for Restricted Payments in addition to amounts permitted pursuant to clauses (i) through (v) above; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such expenditures shall be included in the calculation of the amount of Restricted Payments. Section 4.07. Limitation on Pledged Subsidiaries to Incur Indebtedness or Issue Capital Stock. The Corporation will not: (a) permit any Wholly-Owned Subsidiary the stock of which is at the time pledged under the Indenture to incur any indebtedness, direct or contingent, except: (i) current liabilities (other than for money borrowed) incurred in the ordinary and regular conduct of business and payable within one year after the date of the incurring thereof; and (ii) indebtedness to the Corporation, and the extension, renewal or refunding thereof from time to time; or (b) permit any Wholly-Owned Subsidiary the stock of which is at the time pledged under the Indenture to issue any capital stock (other than directors' qualifying shares, where necessary) except to the Corporation. Nothing contained in this Supplemental Indenture shall prevent any such Wholly-Owned Subsidiary from acquiring property subject to any mortgage or other lien to which the property is subject at the time of the acquisition, or from creating any mortgage upon, or pledge of, any property hereafter acquired, at the time of acquisition thereof, in order to secure payment of the purchase price thereof or in order to secure any loan incurred for the purpose of financing such acquisition, provided that the Corporation shall deposit with the Trustee to be held as part of the trust estate cash equal to: 66 (i) the aggregate principal amount of additional Bonds, if any, issued upon the basis of the stock of such subsidiary, and (ii) the amount of cash, if any, withdrawn upon the basis of the stock of such Wholly-Owned Subsidiary pursuant to Sections 9.01 and 9.03 of the Original Indenture; and provided, further, that the principal amount of the indebtedness secured by any such mortgage, lien or pledge shall not exceed 66 2/3% of the cost to such Wholly-Owned Subsidiary of the property subject to such mortgage, lien or pledge; or prevent the renewal or extension of any indebtedness secured by any lien permitted by this paragraph; or prevent the refunding of any such indebtedness by a new loan not exceeding the amount of the indebtedness refunded and secured by the property which secured such refunded indebtedness. If such property shall thereafter be subjected to the lien of the Indenture pursuant to any provision thereof, the existence of such mortgage, lien or pledge shall not constitute a breach of any covenant hereunder. The Corporation will not assign any indebtedness of a Wholly-Owned Subsidiary the stock of which is pledged under the Indenture, except to the Trustees or, after such assignment to the Trustees, except as provided in the following sentence. The Corporation will not sell or otherwise dispose of any indebtedness or capital stock of any such Wholly-Owned Subsidiary pledged under the Indenture unless prior to such sale or other disposition, or at the same time, all other indebtedness and capital stock of such Wholly-Owned Subsidiary owned directly or indirectly by the Corporation and its other subsidiaries is sold or otherwise disposed of. Section 4.08. Limitation on Sale of Mortgaged Property. The Corporation will not sell or otherwise dispose of a part (less than substantially all) of the Mortgaged Property except as provided in Section 7.04, 8.01 or 8.02 of the Original Indenture or upon the release thereof as provided in Section 8.03 or 8.04 of the Indenture, or consolidate or merge with or into, or transfer or convey all or substantially all the Mortgaged Property, as an entirety to, any other Person, or permit any other Person to merge into it, except as provided in Article 13 of the Original Indenture. Notwithstanding the provisions of Section 8.03 of the Original Indenture but subject to the provisions of Section 4.16 thereof, the Corporation from time to time may sell, exchange or otherwise dispose of any property constituting Mortgaged Property other than shares of stock or other securities or indebtedness of any corporation pledged hereunder and the Trustees shall release the same from the lien of this Indenture without compliance with any of the provisions of said 67 Section 8.03 and without the deposit of cash with the Trustees, but only subject to certain exceptions described below upon receipt by the Trustee of: (a) A request evidenced by an Officers' Certificate; and (b) An engineer's certificate, stating in substance: (i) A description in reasonable detail of the property to be released; (ii) A description in reasonable detail of the consideration, if any, for the property to be released; (iii) The then fair value, in the opinion of the signer, of the property to be released, which fair value shall in no event exceed $100,000; (iv) That neither (i) the aggregate fair value of all property released under this Section 4.08 in the calendar year in which the property described in the certificate is to be released nor (ii) the aggregate consideration received by the Corporation for all property so released for such calendar year, exceeds $250,000; and (v) That, in the opinion of the signer, such property is not useful or necessary in the conduct of the business of the Corporation and that such release will not impair the security under the Indenture in contravention of the provisions of the Indenture and is desirable in the proper conduct of the business of the Corporation or is otherwise in the best interests of the Corporation. No property shall be released under the provisions described in this Section 4.08 in any calendar year after either (i) aggregate fair value of all property released under the provisions described in this Section 4.08 for such calendar year, or (ii) the aggregate consideration received by the Corporation for such property for such calendar year, exceeds $250,000. Section 4.09. Change of Control. (a) Upon the occurrence of a Change of Control, each Holder of 2009 Series Bonds shall have the right to require the Corporation to repurchase all or any part of such Holder's 2009 Series Bonds pursuant to the offer described below (the "CHANGE OF CONTROL OFFER") at a purchase price (the "CHANGE OF CONTROL PURCHASE PRICE") equal to 101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the purchase date (subject to the right of Holders of record on the relevant record date 68 to receive interest due on the relevant interest payment date that is on or prior to the purchase date). (b) Within 30 days following any Change of Control, the Corporation shall (a) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar business news service in the United States and (b) send, by first-class mail, with a copy to the Trustee, to each Holder of 2009 Series Bonds, at such Holder's address appearing in the Bond Register, a notice stating: (i) that a Change of Control has occurred and a Change of Control Offer is being made pursuant to this Section 4.09 and that all 2009 Series Bonds timely tendered will be accepted for payment; (ii) the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE"); (iii) that any 2009 Series Bonds (or portion thereof) accepted for payment (and duly paid on the Change of Control Payment Date) pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (iv) that any 2009 Series Bonds (or portions thereof) not tendered will continue to accrue interest; (v) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); and (vi) the procedures that Holders of 2009 Series Bonds must follow in order to tender their 2009 Series Bonds (or portions thereof) for payment, and the procedures that Holders of 2009 Series Bonds must follow in order to withdraw an election to tender 2009 Series Bonds (or portions thereof) for payment. (c) Holders electing to have a 2009 Series Bond purchased will be required to surrender the 2009 Series Bond, with an appropriate form (which may include the form on the reverse thereof) duly and properly completed, to the Corporation or its agent at the address specified in the notice at least three Business Days prior to the Change of Control Payment Date. Holders will be entitled to withdraw their election if the Trustee or the Corporation receives not later than one Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the 2009 Series Bond which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such 2009 Series Bonds purchased. Holders whose 2009 Series Bond are purchased only in part shall be issued new 2009 Series Bonds equal in principal amount to the unpurchased portion of the 2009 Series Bonds surrendered. (d) On or prior to the Change of Control Payment Date, the Corporation shall irrevocably deposit with the Trustee or with the Paying Agent (or, if the 69 Corporation or any of its Wholly Owned Subsidiaries is acting as the Paying Agent, segregate and hold in trust) in cash an amount equal to the Change of Control Purchase Price payable to the Holders entitled thereto, to be held for payment in accordance with the provisions of this Section. On the Change of Control Payment Date, the Corporation shall deliver to the Trustee the 2009 Series Bonds or portions thereof which have been properly tendered to and are to be accepted by the Corporation for payment. The Trustee or the Paying Agent shall, on the Change of Control Payment Date, mail or deliver payment to each tendering Holder of the Change of Control Purchase Price. In the event that the aggregate Change of Control Purchase Price is less than the amount delivered by the Corporation to the Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may be, shall deliver the excess to the Corporation immediately after the Change of Control Payment Date. (e) At the time the Corporation delivers 2009 Series Bonds to the Trustee which are to be accepted for purchase, the Corporation shall also deliver an Officers' Certificate stating that such 2009 Series Bonds are to be accepted by the Trustee pursuant to and in accordance with the terms of this Section. (f) The Corporation will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of 2009 Series Bonds pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section by virtue of such compliance. Section 4.10. Limitation on Sale of Assets Other Than Mortgaged Property. (a) The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale, which term for purposes of this Section 4.10, shall exclude sales or other dispositions of Mortgaged Property made in compliance with the terms of the Original Indenture and Section 4.08, unless (i) the Corporation or such Restricted Subsidiary receives consideration at the time of such Asset Sale (or, in the case of a lease that is an Asset Sale, the Corporation or such Restricted Subsidiary is to receive over the term of such lease) consideration at least equal to the fair value of the Property subject to such Asset Sale; (ii) at least 75% of the consideration paid to the Corporation or such Restricted Subsidiary in connection with such Asset Sale is in the form of cash, Cash Equivalents, Additional Assets or the assumption by the purchaser of liabilities of the Corporation or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the 2009 Series Bonds) as a result of which the Corporation and the Restricted Subsidiaries are no longer obligated 70 with respect to such liabilities; and (iii) the Corporation delivers an Officers' Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (i) and (ii). (b) The Net Available Cash (or any portion thereof) from Asset Sales may be applied by the Corporation or a Restricted Subsidiary, to the extent the Corporation or such Restricted Subsidiary elects (or is required by the terms of any Debt): (i) to prepay, repay, legally defease or purchase Senior Debt of the Corporation or Debt of any Restricted Subsidiary (excluding, in any such case, Debt owed to the Corporation or an Affiliate of the Corporation); (ii) to permanently fund pension or other post-retirement employee benefit obligations ("OPEB") obligations of the Corporation; or (iii) to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Corporation or another Restricted Subsidiary) or to commit to reinvest in Additional Assets (such commitments to include amounts anticipated to be expended pursuant to the Corporation's capital investment plan (x) as adopted by the Board of Directors and (y) evidenced by the filing of an Officers' certificate with the Trustee stating that the total amount of the Net Available Cash from such Asset Sale, after giving effect to the prior application of any portion thereof pursuant to clause (i) or (ii) of this paragraph (b), is less than the aggregate amount contemplated to be expended pursuant to such capital investment plan within 24 months of the consummation of such Asset Sale)); provided, however, that in connection with any prepayment, repayment, legal defeasance or purchase of Debt pursuant to clause (i) above, the Corporation or such other Restricted Subsidiary shall retire such Debt and shall cause the related loan commitment (if any) to be permanently reduced by an amount equal to the principal amount so prepaid, repaid, legally defeased or purchased. (c) Any Net Available Cash from an Asset Sale not applied in accordance with the preceding paragraph within twelve months from the date of the receipt of such Net Available Cash (or committed to be reinvested in Additional Assets pursuant to clause (iii) of the preceding paragraph within twelve months from the date of the receipt of such Net Available Cash and not actually reinvested in Additional Assets pursuant to such investment commitment within twenty-four months from the date of the receipt of such Net Available Cash) shall constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $5,000,000 (taking into account income earned on such Excess Proceeds, if any), the Corporation will be required to make an offer to purchase (the "PREPAYMENT OFFER") the 2009 Series Bonds which offer shall be in the amount of the Excess Proceeds, on a pro rata basis according to principal amount, at a purchase price 71 equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the Purchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the purchase date) in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Supplemental Indenture. To the extent that any portion of the amount of Net Available Cash remains after compliance with the preceding sentence and provided that all Holders of 2009 Series Bonds have been given the opportunity to tender their 2009 Series Bonds for purchase as described in Section 4.10(d), the Corporation or such Restricted Subsidiary may use such remaining amount for any purpose permitted by this Indenture and the amount of Excess Proceeds will be reset to zero. (d) (i) Within five Business Days after the Corporation is obligated to make a Prepayment Offer as described in Section 4.10(c), the Corporation will send a written notice, by first-class mail, to the Trustee and the Holders of 2009 Series Bonds (the "PREPAYMENT OFFER NOTICE"), accompanied by such information regarding the Corporation and its Subsidiaries as the Corporation in good faith believes will enable such Holders to make an informed decision with respect to such Prepayment Offer (which at a minimum shall include the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Corporation, the most recent subsequently filed Quarterly Report on Form 10-Q of the Corporation and any Current Report on Form 8-K of the Corporation filed subsequent to such Quarterly Report, other than Current Reports describing Asset Sales otherwise described in the offering materials, or corresponding successor reports (or, during any time that the Corporation is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, corresponding reports prepared pursuant to Section 4.02), a description of material developments in the Corporation's business subsequent to the date of the latest of such reports and if material, appropriate pro forma financial information). The Prepayment Offer Notice shall state, that a Prepayment Offer is being made pursuant to this Section 4.10 and that all 2009 Series Bonds timely tendered will be accepted for payment (subject to proration), that any 2009 Series Bonds (or any portion thereof) accepted for payment (and duly paid on the Purchase Date) pursuant to the Prepayment Offer shall cease to accrue interest after the Purchase Date, the purchase price and purchase date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date the Prepayment Offer Notice is mailed (the "PURCHASE DATE"), the aggregate principal amount of 2009 Series Bonds eligible to be purchased, that any 2009 Series Bonds (or portions thereof) not tendered will continue to accrue interest and the procedures that Holders of 2009 Series Bonds must follow in order to tender their 2009 Series Bonds (or portions thereof) for payment and the 72 procedures that Holders of 2009 Series Bonds must follow in order to withdraw an election to tender 2009 Series Bonds (or portions thereof) for payment. (ii) Not later than the date upon which written notice of a Prepayment Offer is delivered to the Trustee as provided above, the Corporation shall deliver to the Trustee an Officers' Certificate as to (A) the amount of the Prepayment Offer (the "OFFER AMOUNT"), (B) the allocation of the Net Available Cash from the Asset Sales pursuant to which such Prepayment Offer is being made and (C) the compliance of such allocation with the provisions of Section 4.10(b). On such date, the Corporation shall also irrevocably deposit with the Trustee or with the Paying Agent (or, if the Corporation or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) in Cash Equivalents, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section. Upon the expiration of the period for which the Prepayment Offer remains open (the "OFFER PERIOD"), the Corporation shall deliver to the Trustee for cancellation the 2009 Series Bonds or portions thereof which have been properly tendered to and are to be accepted by the Corporation. The Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the 2009 Series Bonds delivered by the Corporation to the Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall deliver the excess to the Corporation immediately after the expiration of the Offer Period for application in accordance with this Section. (iii) Holders electing to have a 2009 Series Bond purchased shall be required to surrender the 2009 Series Bond, with an appropriate form (which may include the form on the reverse thereof) duly and properly completed, to the Corporation or its agent at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Corporation receives not later than one Business Day prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the 2009 Series Bond which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such 2009 Series Bond purchased. If at the expiration of the Offer Period the aggregate principal amount of 2009 Series Bonds surrendered by Holders exceeds the Offer Amount, the Corporation shall select the 2009 Series Bonds to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the 73 Corporation so that only 2009 Series Bonds in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose 2009 Series Bonds are purchased only in part shall be issued new 2009 Series Bonds equal in principal amount to the unpurchased portion of the 2009 Series Bonds surrendered. (iv) At the time the Corporation delivers 2009 Series Bonds to the Trustee which are to be accepted for purchase, the Corporation shall also deliver an Officers' Certificate stating that such 2009 Series Bonds are to be accepted by the Trustee pursuant to and in accordance with the terms of this Section. A 2009 Series Bond shall be deemed to have been accepted for purchase at the time the Trustee or the Paying Agent mails or delivers payment therefor to the surrendering Holder. (e) The Corporation will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of 2009 Series Bonds pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section by virtue thereof. Section 4.11. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Corporation or any other Restricted Subsidiary, (b) make any loans or advances to the Corporation or any other Restricted Subsidiary, (c) transfer any of its Property to the Corporation or any other Restricted Subsidiary or (d) guarantee any Debt of the Corporation or any other Restricted Subsidiary. The foregoing limitations will not apply (i) with respect to clauses (a), (b), (c) and (d), to restrictions (A) in effect on the Issue Date, (B) relating to Debt of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Corporation, (C) which result from the Refinancing of Debt Incurred pursuant to an agreement referred to in the immediately preceding clause (i)(A) or (B) above or in clause (ii)(A) or (B) below, provided that such restriction is no less favorable to the Holders of 2009 Series Bonds than those under the agreement evidencing the Debt so Refinanced, (D) on Sales Finance or any other bankruptcy- remote special-purpose 74 Subsidiary of the Corporation that purchases or sells accounts receivable or inventory pursuant to the Credit Facilities or (E) arising or agreed to in a joint venture agreement, entered into by the Corporation or a Restricted Subsidiary in the ordinary course of business that do not (as determined by the Corporation and certified in a resolution of the Board of Directors or a certificate of the chief financial or chief accounting officer of the Corporation delivered to the Trustee prior to or promptly following such encumbrance or restriction becoming effective), individually or in the aggregate, (1) detract from the value of property or assets of the Corporation or any Restricted Subsidiary in any manner material to the Corporation or any Restricted Subsidiary or (2) materially adversely affect the Corporation's ability to make principal or interest payments on the 2009 Series Bonds and (ii) with respect to clause (c) only, to restrictions (A) relating to Debt that is permitted to be Incurred and secured pursuant to Section 4.05 and Section 4.12 of the Original Indenture that limit the right of the debtor to dispose of the Property securing such Debt, (B) encumbering Property at the time such Property was acquired by the Corporation or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition, (C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder or (D) customary restrictions contained in asset sale agreements limiting the transfer of such Property pending the closing of such sale. Section 4.12. Limitation on Transactions with Affiliates. (a) The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Corporation (an "AFFILIATE TRANSACTION"), unless (i) the terms of such Affiliate Transaction are (A) set forth in writing and (B) no less favorable to the Corporation or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm's-length transaction with a Person that is not an Affiliate of the Corporation, (ii) if such Affiliate Transaction involves aggregate payments or value in excess of $10,000,000, the Board of Directors (including a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (i) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee and (iii) if such Affiliate Transaction involves aggregate payments or value in excess of $20,000,000, the Corporation obtains a written opinion from an Independent Financial Advisor to the effect that such Affiliate Transaction is fair, from a financial point of view, to the Corporation or such Restricted Subsidiary, as the case may be. 75 (b) Notwithstanding the foregoing limitation, the Corporation or any Restricted Subsidiary may enter into or suffer to exist the following: (i) any transaction or series of transactions between the Corporation and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries; provided that no more than 5% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of the Corporation (other than a Restricted Subsidiary); (ii) any Restricted Payment permitted to be made pursuant to Section 4.06; (iii) any issuance of securities, or other payments, awards or grants in securities or otherwise pursuant to, or the funding of, employment arrangements, pension or other benefit plans, stock options and stock ownership plans and other compensatory arrangements approved by the Board of Directors; (iv) the payment of reasonable fees to directors of the Corporation or such Restricted Subsidiary who are not employees of the Corporation or any Restricted Subsidiary; (v) loans and advances to employees made in the ordinary course of business and consistent with the past practices of the Corporation or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $5,000,000 in the aggregate at any one time outstanding; and (vi) any payments for the purchase of steel products from NKK or any of its Affiliates or the provision of services by NKK or any of its Affiliates, including the construction by NKK or an Affiliate of the new hot dip galvanizing facility at the Great Lakes Division; provided, that, in each case, the terms of such payments are determined on an arm's length basis and are approved by the disinterested members of the Board of Directors of the Corporation; and (vii) any Affiliate Transactions between the Corporation or any Restricted Subsidiary and one or more Affiliate Joint Ventures that (x) are on terms no less favorable to the Corporation or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm's length transaction with a Person that is not an Affiliate of the Corporation and (y) if such Affiliate Transactions involve aggregate 76 payments or value in excess of $10 million, the Board of Directors (including a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction, and in its good faith judgment believes that such Affiliate Transaction complies with clause (x) of this paragraph (vii). Section 4.13. Limitation on Sale and Leaseback Transactions. The Corporation shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Property unless (a) the Corporation or such Restricted Subsidiary would be entitled to (i) Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to Section 4.05 and (ii) create a Lien on such Property securing such Attributable Debt, and (b) such Sale and Leaseback Transaction is effected in compliance with Section 4.10. Section 4.14. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors may designate any Subsidiary of the Corporation to be an Unrestricted Subsidiary if (a) the Subsidiary to be so designated does not own any Capital Stock or Debt of, or own or hold any Lien on any Property of, the Corporation or any other Restricted Subsidiary (b) the Subsidiary to be so designated is not obligated under any Debt, Lien or other obligation that, if in default, would result (with the passage of time or notice or otherwise) in a default on any Debt of the Corporation or of any Restricted Subsidiary and (c) either (i) the Subsidiary to be so designated has total assets of $1,000 or less or (ii) such designation is effective immediately upon such entity becoming a Subsidiary of the Corporation or any Restricted Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Corporation or of any Wholly Owned Subsidiary will be classified as a Restricted Subsidiary, provided that the requirements set forth in clauses (x) and (y) of the immediately following paragraph would be satisfied after giving pro forma effect to such classification. Any Person not permitted by the terms of the immediately preceding sentence to be classified as a Restricted Subsidiary shall be automatically classified as an Unrestricted Subsidiary. Except as provided in the first sentence of this paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma effect to such designation, (x) the Corporation could Incur at least $1.00 of additional Debt pursuant to Section 4.05 and (y) no Default or Event of Default shall have occurred and be continuing or would result therefrom. 77 Any such designation or redesignation by the Board of Directors will be evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such designation or redesignation and an Officers' Certificate (a) certifying that such designation or redesignation complies with the foregoing provisions and (b) giving the effective date of such designation or redesignation, such filing with the Trustee to occur within 45 days after the end of the fiscal quarter of the Corporation in which such designation or redesignation is made (or, in the case of a designation or redesignation made during the last fiscal quarter of the Corporation's fiscal year, within 90 days after the end of such fiscal year). Section 4.15. Compliance Certificate. The Corporation shall deliver to the Trustee within 120 days after the end of each fiscal year of the Corporation an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Corporation they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Corporation is taking or proposes to take with respect thereto. The Corporation also shall comply with TIA (S) 314(a)(4). Section 4.16. Further Instruments and Acts. Upon request of the Trustee, the Corporation will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 5 Successor Corporation Section 5.01. When Corporation May Merge or Transfer Assets. (a) The Corporation shall not merge, consolidate or amalgamate with or into any other Person (other than a merger of a Wholly Owned Subsidiary into the Corporation) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions unless: (i) the Corporation shall be the surviving Person (the "SURVIVING PERSON") or the Surviving Person (if other than the Corporation) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (ii) the Surviving Person (if other than the Corporation) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of and interest on all the 2009 Series Bonds, according to their tenor, and the due and punctual 78 performance and observance of all the covenants and conditions of this Indenture to be performed by the Corporation and confirms in writing the lien of the Indenture, including the after-acquired property clauses thereof, on the Property subject to the Indenture; (iii) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Corporation's Property, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; (iv) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (iv) and clauses (v) and (vi) below, any Debt which becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; (v) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Corporation or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under Section 4.05; (vi) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Surviving Person shall have a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Corporation immediately prior to such transaction or series of transactions; and (vii) the Corporation shall deliver, or cause to be delivered, to the Trustee, in form reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and any supplemental indenture in respect thereto comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied. (b) The Surviving Person will succeed to, and be substituted for, and may exercise every right and power of the Corporation under this Indenture, but the predecessor Corporation in the case of a sale, transfer, assignment, lease, conveyance or other disposition, shall not be released from the obligation to pay the principal of and interest on the 2009 Series Bonds. 79 ARTICLE 6 Defaults and Remedies Section 6.01. Events of Default. The following events shall be "TENTH SUPPLEMENTAL INDENTURE EVENTS OF DEFAULT" specific to the 2009 Series Bonds and in addition to the Events of Default set forth in the Original Indenture: (a) the Corporation defaults in any payment of interest on any 2009 Series Bond when the same becomes due and payable, and such default continues for a period of 30 days; (b) the Corporation defaults in the payment of the principal of any 2009 Series Bond when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon required repurchase, upon acceleration or otherwise; (c) the Corporation fails to comply with Article 5; (d) the Corporation fails to comply with any of its agreements or covenants in the 2009 Series Bonds or this Indenture (other than those referred to in clause (a), (b) or (c) above) and such failure continues for 30 days after notice is given to the Corporation as specified below; (e) a default by the Corporation or any Restricted Subsidiary under any Debt of the Corporation or any Restricted Subsidiary which results in the acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $10,000,000 or its foreign currency equivalent at the time; (f) the Corporation or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case; (ii) consents to the entry of an order for relief against it in an involuntary case; (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; or (iv) makes a general assignment for the benefit of its creditors; 80 or takes any comparable action under any foreign laws relating to insolvency; (g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Corporation or any Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Corporation or any Significant Subsidiary or for any substantial part of its property; (iii) orders the winding up or liquidation of the Corporation or any Significant Subsidiary; or (iv) is for any similar relief granted under any foreign laws; and in each such case the order or decree remains unstayed and in effect for 60 days; or (h) any judgment or judgements for the payment of money in an aggregate amount in excess of $10,000,000 or its foreign currency equivalent at the time is entered against the Corporation or any Restricted Subsidiary, and shall not be waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect. The foregoing will constitute Tenth Supplemental Indenture Events of Default whatever the reason for any such Tenth Supplemental Indenture Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "BANKRUPTCY LAW" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Tenth Supplemental Indenture Event of Default under clause (d) is not a Tenth Supplemental Indenture Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the 2009 Series Bonds then 81 outstanding notify the Corporation (and, in the case of such notice by Holders, the Trustee) of the Tenth Supplemental Indenture Event of Default and the Corporation does not cure such Tenth Supplemental Indenture Event of Default within the time specified after receipt of such notice. Such notice must specify the Tenth Supplemental Indenture Event of Default, demand that it be remedied and state that such notice is a "NOTICE OF DEFAULT". The Corporation shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any event which with the giving of notice or the lapse of time would become a Tenth Supplemental Indenture Event of Default, its status and what action the Corporation is taking or proposes to take with respect thereto. Section 6.02. Acceleration. The 2009 Series Bonds may be declared due and payable, upon these conditions and in the manner and with the effect provided in Section 10.01 of the Original Indenture. In addition, if a Tenth Supplemental Indenture Event of Default (other than an Event of Default specified in Section 6.01(f) or 6.01(g)) occurs and is continuing, the Trustee by notice to the Corporation, or the Holders of at least 25% in aggregate principal amount of the 2009 Series Bonds then outstanding by notice to the Corporation and the Trustee, may declare the principal amount of all the 2009 Series Bonds then outstanding plus accrued but unpaid interest to the date of acceleration to be immediately due and payable. In case a Tenth Supplemental Indenture Event of Default specified in Section 6.01(f) or 6.01(g) shall occur, such amount with respect to all the 2009 Series Bonds shall be due and payable immediately without any declaration or other act on the part of the Trustee or the Holders of the 2009 Series Bonds. Subject to the rights of the holders of 25% in principal amount of all Bonds to accelerate the maturity of all of the Bonds as provided by Section 10.01 of the Original Indenture, the Holders of a majority in aggregate principal amount of the outstanding 2009 Series Bonds may by written notice to the Trustee and the Corporation rescind any declaration of acceleration if the rescission would not conflict with any judgment or decree, and if all existing Tenth Supplemental Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. No such rescission shall affect any subsequent Tenth Supplemental Indenture Event of Default or impair any right consequent thereto. Section 6.03. Other Remedies. If a Tenth Supplemental Indenture Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the 2009 Series Bonds or to enforce the performance of any provision of the 2009 Series Bonds or the Indenture. 82 The Trustee may maintain a proceeding even if it does not possess any of the 2009 Series Bonds or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Bondholder in exercising any right or remedy accruing upon a Tenth Supplemental Indenture Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Tenth Supplemental Indenture Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04. Waiver of Defaults. The Holders of a majority in aggregate principal amount of the 2009 Series Bonds by written notice to the Trustee may waive an existing Tenth Supplemental Indenture Event of Default and its consequences, except a Tenth Supplemental Indenture Event of Default in the payment of the principal of or interest on a 2009 Series Bond or a Tenth Supplemental Indenture Event of Default in respect of a provision that under Section 8.07 cannot be amended without the consent of each Bondholder affected. When a Tenth Supplemental Indenture Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Tenth Supplemental Indenture Event of Default or impair any consequent right. ARTICLE 7 Redemption of 2009 Series Bonds Section 7.01. Optional Redemption of 2009 Series Bonds; Premiums Payable. Except as set forth in the following paragraph, the 2009 Series Bonds will not be redeemable at the option of the Corporation prior to March 1, 2004. Thereafter, the 2009 Series Bonds will be redeemable at the option of the Corporation, in whole or in part, on not less than 30 nor more than 60 days' prior notice, upon payment of the redemption prices specified in the form of definitive 2009 Series Bond hereinbefore set forth for redemption, together with accrued interest (if any) to the date fixed for redemption. At any time and from time to time prior to March 1, 2002 the Corporation may redeem up to a maximum of 35% of the original aggregate principal amount of the 2009 Series Bonds with the proceeds of one or more Public Equity Offerings within 90 days after receipt of such proceeds, upon payment of a redemption price equal to 109.875% of the principal amount thereof, together with accrued interest, if any, to the date fixed for redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the 83 2009 Series Bonds remains outstanding. Any such redemption should be made on a pro rate basis among all holders of 2009 Series Bonds. Section 7.02. Surrender of Partially-redeemed 2009 Series Bonds. In the event of the partial redemption of any of the 2009 Series Bonds the Trustee shall not make any notation thereon as to the payment of a portion of the principal amount of such partially-redeemed Bonds, but in accordance with Section 5.01 of the Original Indenture such Bonds may be surrendered in exchange for 2009 Series Bonds of authorized denominations for the unredeemed balance of the principal amount of such partially-redeemed Bonds. Section 7.03. Regarding Issue, Transfer and Exchange of 2009 Series Bonds to be Redeemed. The Corporation shall not be required (i) to issue, transfer or exchange any 2009 Series Bonds during a period beginning at the opening of business 15 days next preceding any selection of 2009 Series Bonds to be redeemed or thereafter until after the mailing of a notice of redemption of 2009 Series Bonds selected for redemption and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any 2009 Series Bonds so selected for redemption in whole or in part. Section 7.04. Notices to Trustee. If the Corporation elects to redeem 2009 Series Bonds pursuant to this Article, it shall notify the Trustee in writing of the redemption date, the principal amount of 2009 Series Bonds to be redeemed and that such redemption is being made pursuant to the 2009 Series Bonds. The Corporation shall give each notice to the Trustee provided for in this Section at least 45 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Corporation to the effect that such redemption will comply with the conditions herein. Section 7.05. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of 2009 Series Bonds, the Corporation shall mail a notice of redemption by first-class mail to each Holder of 2009 Series Bonds to be redeemed. The notice shall identify the 2009 Series Bonds to be redeemed and shall state: (i) the redemption date; (ii) the redemption price; 84 (iii) the name and address of the Place of Payment; (iv) that 2009 Series Bonds called for redemption must be surrendered at the Place of Payment to collect the redemption price; (v) if fewer than all the outstanding 2009 Series Bonds are to be redeemed, the identification and principal amounts of the particular 2009 Series Bonds to be redeemed; (vi) that, unless the Corporation defaults in making such redemption payment or the Trustee or paying agent is prohibited from making such payment pursuant to the terms of the Indenture, interest on 2009 Series Bonds (or portion thereof) called for redemption ceases to accrue on and after the redemption date; and (vii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the 2009 Series Bonds. At the Corporation's request, the Trustee shall give the notice of redemption in the Corporation's name and at the Corporation's expense. In such event, the Corporation shall provide the Trustee with the information required by this Section. Section 7.06. Effect of Notice of Redemption. Once notice of redemption is mailed, 2009 Series Bonds called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender at the Place of Payment, such 2009 Series Bonds shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date that is on or prior to the date of redemption). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. ARTICLE 8 Miscellaneous Section 8.01. Acceptance of Trusts. The Trustees accept the trust created by this Supplemental Indenture and agree to execute the same, but only on the terms and conditions set forth in the Indenture, including the terms and provisions 85 defining and limiting the liabilities and responsibilities of the Trustees. The Trustees make no representations and shall have no responsibility as to the validity of this Supplemental Indenture or the Bonds issued hereunder or the due execution thereof by the Corporation. Section 8.02. Benefits Restricted to Parties and Holders of Bonds. Nothing in this Supplemental Indenture, expressed or implied, is intended or shall be construed to confer upon, or to give to, any person, other than the parties hereto, and the holders of 2009 Series Bonds, any right, remedy or claim under or by reason of this Supplemental Indenture or any covenant, condition or stipulation hereof; all the covenants, stipulations, promises and agreements in this Supplemental Indenture contained are and shall be for the sole and exclusive benefit of the parties hereto and their successors and the holders of such Bonds. Section 8.03. Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original and all of such counterparts shall together constitute a single instrument. Section 8.04. Original Indenture and Supplements Construed as One Instrument. The Original Indenture as heretofore supplemented and as supplemented by this Supplemental Indenture is in all respects ratified and confirmed; and the Original Indenture as heretofore supplemented and as supplemented by this Supplemental Indenture shall be read, taken and construed together as one instrument. Section 8.05. Amount Advanced under Indenture. The amount which at the time of the execution and delivery of this Supplemental Indenture has been advanced or accrued and remains outstanding under the Original Indenture and all instruments supplemental thereto, to and including this Supplemental Indenture, is $300,000,000. Section 8.06. With Consent of Holders. For so long as the 2009 Series Bonds are outstanding, the Company may not amend this Supplemental Indenture or the 2009 Series Bonds without the written consent of the Holders of at least a majority in aggregate principal amount of the 2009 Series Bonds. Further, without the consent of each holder of 2009 Series Bonds affected thereby, an amendment may not: (1) reduce the amount of 2009 Series Bonds whose Holders must consent to an amendment or waiver; 86 (2) reduce the rate of or change the time for payment of interest on any 2009 Series Bonds; (3) reduce the principal of or extend the Stated Maturity of any 2009 Series Bonds; (4) reduce the amount payable upon the redemption or repurchase of any 2009 Series Bonds under Article 7 or Section 4.09 or 4.10 or change the time at which any 2009 Series Bonds may be redeemed in accordance with Article 7; (5) make any 2009 Series Bonds payable in a currency other than that stated in the 2009 Series Bonds; (6) subordinate the 2009 Series Bonds to any other obligation of the Corporation; or (7) at any time after a Change of Control or Asset Sale has occurred, change the time at which the Change of Control Offer or Prepayment Offer relating thereto must be made or at which the 2009 Series Bonds must be repurchased pursuant to such Change of Control Offer or Prepayment Offer. Section 8.07. Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE 2009 SERIES BONDS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 8.08. Compliance with Trust Indenture Act. Every amendment to this Indenture or the 2009 Series Bonds shall comply with the TIA as then in effect. Section 8.09. Recitals. The recitals contained herein shall be taken as the statements of the Company, and the Trustees assume no responsibility for their correctness. The Trustees make no representations as to the validity or sufficiency of this Tenth Supplemental Indenture. 87 IN WITNESS WHEREOF, said National Steel Corporation has caused this Supplemental Indenture to be executed on its behalf by one of its Senior Vice Presidents and its Treasurer; said The Chase Manhattan Bank has caused this Supplemental Indenture to be executed on its behalf as Trustee under the Indenture by one of its Senior Trust Officers and its corporate seal to be hereto affixed and said seal and this Supplemental Indenture to be attested by one of its Trust Officers; and said Frank J. Grippo, as Individual Trustee under the Indenture, has executed this Supplemental Indenture under seal; all as of March 8, 1999. NATIONAL STEEL CORPORATION By: /s/ Glenn H. Gage --------------------------------- Name: Glenn H. Gage Title: Senior Vice President and Chief Financial Officer By: /s/ William E. McDonough --------------------------------- Name: William E. McDonough Title: Treasurer 90 [CORPORATE SEAL] The Chase Manhattan Bank, as Trustee By: /s/ L. O'Brien -------------------------------- Name: L. O'Brien Title: VICE PRESIDENT Attest: /s/ N. Rodriguez - ------------------------- Name: Natalia Rodriguez Title: Trust Officer Signed, sealed and delivered by The Chase Manhattan Bank in the presence of: /s/ Eric S. Butler - ------------------------ Eric S. Butler Administrator /s/ Melissa Oldsmith /s/ Frank J. Grippo - ----------------------------- ----------------------------- As Witness FRANK J. GRIPPO As Individual Trustee Signed, sealed and delivered by Frank J. Grippo in the presence of: /s/ Eric S. Butler - ------------------------ Administrator /s/ Melissa Oldsmith - ------------------------- As Witnesses 91 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) I, Miguel Flores, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 8th day of March, 1999: MICHIGAN STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by Glenn H. Gage of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF ___________ ) ss.: COUNTY OF___________ ) Before me, a Notary Public, this 8 day of March, 1999, personally appeared National Steel Corporation, a Delaware corporation, by Glenn H. Gage, Senior Vice President and Chief Financial Officer, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 9, 1999, by Glenn H. Gage as Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation. [Notary Seal] ILLINOIS STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by Glenn H. Gage, Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [SEAL] 2 MINNESOTA STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 8, 1999, by Glenn H. Gage as Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Jose Miguel Flores ----------------------------- Notary Public [Notary Seal] 3 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) I, Jose Miguel Flores, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 8th day of March, 1999: MICHIGAN STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by William E. McDonough of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF ___________ ) ss.: COUNTY OF___________ ) Before me, a Notary Public, this 8 day of March, 1999, personally appeared National Steel Corporation, a Delaware corporation, by William E. McDonough, Treasurer, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 9, 1999, by William E. McDonough as Treasurer of National Steel Corporation, a Delaware corporation. [Notary Seal] ILLINOIS STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by William E. McDonough, Treasurer of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [SEAL] 2 MINNESOTA STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 8, 1999, by William E. McDonough as Treasurer of National Steel Corporation, a Delaware corporation. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Jose Miguel Flores ----------------------------- Notary Public [Notary Seal] 3 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) I, Emily Fayan, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 8th day of March, 1999: MICHIGAN STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by L. O'Brien of The Chase Manhattan Bank, a New York corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF ___________ ) ss.: COUNTY OF___________ ) Before me, a Notary Public, this 8 day of March, 1999, personally appeared The Chase Manhattan Bank, a New York corporation, by L. O'Brien, Vice President, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 9, 1999, by L. O'Brien as Vice President of The Chase Manhattan Bank, a New York corporation. [Notary Seal] ILLINOIS STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by L. O'Brien, Vice President of The Chase Manhattan Bank, a New York corporation, on behalf of the corporation. [SEAL] 2 STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) I, Emily Fayan, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 8th day of March, 1999: MICHIGAN STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by Frank J. Grippo. [Notary Seal] INDIANA STATE OF ___________ ) ss.: COUNTY OF___________ ) Before me, a Notary Public, this 8 day of March, 1999, Frank J. Grippo, acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 8, 1999, by Frank J. Grippo. [Notary Seal] ILLINOIS STATE OF ___________ ) ss.: COUNTY OF___________ ) The foregoing instrument was acknowledged before me this 8 day of March, 1999 by Frank J. Grippo. [Notary Seal] 2 MINNESOTA STATE OF ___________ ) ss.: COUNTY OF___________ ) This instrument was acknowledged before me on March 8, 1999, by Frank J. Grippo. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Emily Fayan ----------------------------- Notary Public [Notary Seal] 3 EX-4.H 6 ELEVENTH SUPPLEMENTAL INDENTURE EXHIBIT 4.H ================================================================================ NATIONAL STEEL CORPORATION AND THE CHASE MANHATTAN BANK and FRANK J. GRIPPO, As Trustees ________________ Eleventh Supplemental Indenture Dated as of March 31, 1999 To INDENTURE OF MORTGAGE AND DEED OF TRUST Dated May 1, 1952 ________________ First Mortgage Bonds, 9 7/8% Series C and D Due 2009 ================================================================================ TABLE OF CONTENTS* __________________
Page ---- ARTICLE 1 Definitions and Incorporation by Reference SECTION 1.01. Definitions................................................. 10 SECTION 1.02. Other Definitions........................................... 33 SECTION 1.03. Incorporation by Reference of Trust Indenture Act........... 34 SECTION 1.04. Rules of Construction....................................... 34 ARTICLE 2 2009 Bonds Forms Section 2.01. Forms Generally............................................. 35 Section 2.02. Form of Trustee's Certificate of Authentication............. 36 Section 2.03. Restrictive Legends......................................... 36 Section 2.04. Form of Certificate to Be Delivered upon Termination of Restricted Period.................................................. 39 ARTICLE 3 The 2009 Series Bonds Section 3.01. Maturity; Payment........................................... 40 Section 3.02. Denominations............................................... 41 Section 3.03. Execution. Authentication, Delivery and Dating.............. 41 Section 3.04. Temporary 2009 Series Bonds................................. 42 Section 3.05. Registration, Registration of Transfer and Exchange......... 43 Section 3.06. Payment of Interest, Interest Rights Preserved.............. 45 Section 3.07. Persons Deemed Owners....................................... 46 Section 3.08. Cancellation................................................ 46 Section 3.09. Computation of Interest..................................... 47 Section 3.10. Book Entry Provisions for Global Bonds...................... 47 Section 3.11. Transfer Provisions......................................... 48 Section 3.12. Form of Regulation S Certificate............................ 57 Section 3.13. Form of Rule 144A Certificate............................... 60 Section 3.14. CUSIP Numbers............................................... 61 Section 3.15. Notice to Holders; Waiver................................... 61
________________ * This Table of Contents has been inserted for purposes of convenience and ready reference. It does not constitute a part of the Eleventh Supplemental Indenture.
Page ---- ARTICLE 4 Particular Covenants of the Corporation Section 4.01. Payment of Securities....................................... 62 Section 4.02. SEC Reports................................................. 62 Section 4.03. Limitation on Lines of Business............................. 63 Section 4.04. Covenant Suspension......................................... 63 Section 4.05. Limitation on Debt and Restricted Subsidiary Preferred Stock.............................................................. 63 Section 4.06. Limitation on Restricted Payments........................... 63 Section 4.07. Limitation on Pledged Subsidiaries to Incur Indebtedness Or Issue Capital Stock............................................. 66 Section 4.08. Limitation on Sale of Mortgaged Property.................... 67 Section 4.09. Change of Control........................................... 68 Section 4.10. Limitation on Sale of Assets Other Than Mortgaged Property........................................................... 70 Section 4.11. Limitation on Restrictions on Distributions from Restricted Subsidiaries....................................................... 74 Section 4.12. Limitation on Transactions with Affiliates.................. 75 Section 4.13. Limitation on Sale and Leaseback Transactions............... 77 Section 4.14. Designation of Restricted and Unrestricted Subsidiaries..... 77 Section 4.15. Compliance Certificate...................................... 78 Section 4.16. Further Instruments and Acts................................ 78 ARTICLE 5 Successor Corporation Section 5.01. When Corporation May Merge or Transfer Assets............... 78 ARTICLE 6 Defaults And Remedies Section 6.01. Events of Default........................................... 80 Section 6.02. Acceleration................................................ 82 Section 6.03. Other Remedies.............................................. 82 Section 6.04. Waiver of Defaults.......................................... 83
ii
Page ---- ARTICLE 7 Redemption Of 2009 Series Bonds Section 7.01. Optional Redemption of 2009 Series Bonds; Premiums Payable........................................................... 83 Section 7.02. Surrender of Partially-redeemed 2009 Series Bonds.......... 84 Section 7.03. Regarding Issue, Transfer and Exchange of 2009 Series Bonds to be Redeemed.............................................. 84 Section 7.04. Notices to Trustee......................................... 84 Section 7.05. Notice of Redemption....................................... 84 Section 7.06. Effect of Notice of Redemption............................. 85 ARTICLE 8 Miscellaneous Section 8.01. Acceptance of Trusts....................................... 86 Section 8.02. Benefits Restricted to Parties and Holders of Bonds........ 86 Section 8.03. Execution in Counterparts.................................. 86 Section 8.04. Original Indenture and Supplements Construed as One Instrument........................................................ 86 Section 8.05. Amount Advanced under Indenture............................ 86 Section 8.06. With Consent of Holders.................................... 86 Section 8.07. Governing Law.............................................. 87 Section 8.08. Compliance with Trust Indenture Act........................ 87 Section 8.09. Recitals................................................... 87
iii THIS ELEVENTH SUPPLEMENTAL INDENTURE (hereinafter called "THIS SUPPLEMENTAL INDENTURE"), dated as of March 31, 1999 made by and among NATIONAL STEEL CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "CORPORATION"), THE CHASE MANHATTAN BANK, a New York corporation (hereinafter called the "TRUSTEE") and FRANK J. GRIPPO (hereinafter called the "INDIVIDUAL TRUSTEE"), as Trustees under the Indenture hereinafter referred to (the Trustee and the Individual Trustee being hereinafter collectively called the "TRUSTEES"). WHEREAS, under date of May 1, 1952, the Corporation and Great Lakes Steel Corporation, then a wholly-owned subsidiary of the Corporation which was subsequently merged into the Corporation, entered into an Indenture of Mortgage and Deed of Trust (hereinafter called the "ORIGINAL INDENTURE") with City Bank Farmers Trust Company, as Trustee, and Ralph E. Morton, as Individual Trustee; and WHEREAS, the Original Indenture has heretofore been amended and supplemented by a First Supplemental Indenture dated as of November 1, 1956, a Second Supplemental Indenture dated as of January 1, 1957, a Third Supplemental Indenture dated as of June 1, 1959, a Fourth Supplemental Indenture dated as of December 1, 1960, a Fifth Supplemental Indenture dated as of May 1, 1962, a Sixth Supplemental Indenture dated as of December 1, 1970, a Seventh Supplemental Indenture dated as of September 19, 1973, an Eighth Supplemental Indenture dated as of September 19, 1973, a Ninth Supplemental Indenture dated as of August 1, 1976, and a Tenth Supplemental Indenture dated as of March 8, 1999; and WHEREAS, The Chase Manhattan Bank is now the duly appointed successor Trustee under the Original Indenture and all instruments supplemental thereto (hereinafter together called the "INDENTURE") and FRANK J. GRIPPO is now the duly appointed successor Individual Trustee under the Indenture; and WHEREAS, there have heretofore been authenticated and delivered pursuant to the Original Indenture First Mortgage Bonds, 3 1/8% Series Due 1982, there have heretofore been authenticated and delivered pursuant to the Original Indenture and said First Supplemental Indenture First Mortgage Bonds, 3 7/8% Series Due 1986, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Third Supplemental Indenture First Mortgage Bonds, 4 5/8% Series Due 1989, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Sixth Supplemental Indenture First Mortgage Bonds, 8% Series Due 1995, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Seventh Supplemental Indenture First Mortgage Bonds, 4 7/8% Series Due 1987 and First Mortgage Bonds, 5.30% Series Due 1990, there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Ninth Supplemental Indenture First Mortgage Bonds, 83/8% Series Due 2006, and there have heretofore been authenticated and delivered pursuant to the Original Indenture, as theretofore supplemented, and said Tenth Supplemental Indenture First Mortgage Bonds, 9 7/8% Series A Due 2009; and WHEREAS, the Corporation has determined to issue, pursuant to the Original Indenture, and this Supplemental Indenture, two series of Bonds to be designated the "First Mortgage Bonds, 9 7/8% Series C due 2009" in the aggregate principal amount of $75,000,000 (hereinafter called the "INITIAL 2009 SERIES BONDS") and the "First Mortgage Bonds, 9 7/8% Series D due 2009" in the initial aggregate principal amount of up to $300,000,000, (hereinafter called the "EXCHANGE 2009 SERIES BONDS" and, together with the 2009 Series C Bonds, the "2009 SERIES BONDS"), all as hereinafter more fully provided; and WHEREAS, the fully registered 2009 Series Bonds and the Trustee's Authentication Certificate to be endorsed on all the 2009 Series Bonds are to be substantially in the following forms, with necessary or appropriate variations, omissions and insertions, as permitted or required by the Original Indenture and this Supplemental Indenture: [FORM OF FACE OF 2009 SERIES BOND] NATIONAL STEEL CORPORATION First Mortgage Bond, 9 7/8% Series [C/D] Due 2009 Cusip No......................... $.............. No................ NATIONAL STEEL CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "CORPORATION", which term shall include any successor corporation to the extent provided in the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns, the principal sum of Dollars on March 1, 2009, in such coin or currency of the United States of America as at the time of 2 payment shall be legal tender for public and private debts, and to pay interest thereon from March 8, 1999 in like coin or currency, semiannually on March 1 and September 1 of each year, at the rate of 9 7/8% per annum, from the March 1 or September 1, as the case may be, next preceding the date of this Bond to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this Bond, or unless no interest has been paid on the First Mortgage Bonds, 9 7/8% Series [C/D] Due 2009 (hereinafter called the "2009 SERIES BONDS"), in which case from March 8, 1999, until payment of said principal sum has been made or duly provided for. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the 2009 Series Bonds, if the date hereof is after a regular record date (which shall be the close of business on February 15 or August 15, as the case may be, next preceding an interest payment date) and before the next succeeding interest payment date, this Bond shall bear interest from such interest payment date; provided, however, that if the Corporation shall default in the payment of interest due on such interest payment date, then this Bond shall bear interest from the next preceding interest payment date to which interest has been paid, or, if no interest has been paid on the 2009 Series Bonds, from March 8, 1999. The interest so payable, and punctually paid or duly provided for, on any interest payment date will, as provided in said Indenture, be paid to the person in whose name this Bond (or one or more predecessor Bonds) is registered on the regular record date for such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Both the principal of, premium, if any, and interest on, this Bond are payable at the office or agency of the Corporation in the Borough of Manhattan, The City of New York, New York; provided, that interest may be paid, at the option of the Corporation, by check mailed to the person entitled thereto at his address last appearing on the Bond register or by wire transfer to an account maintained by the payee located in the United States provided that appropriate written wire transfer instructions have been provided at least two Business Days prior to the relevant record date. [The Holder of this Bond is entitled to the benefits of the Registration Rights Agreement, dated as of March 31, 1999 (the "Registration Rights Agreement"), among the Corporation and the Initial Purchasers named therein. In the event that either (a) an Exchange Offer Registration Statement (as such term is defined in the Registration Rights Agreement) is not filed with the SEC on or prior to the 60th day following the date of the Tenth Supplemental Indenture (as defined in the Eleventh Supplemental Indenture), (b) such Exchange Offer Registration Statement has not been declared effective on or prior to the 150th day following the date of the Tenth Supplemental Indenture, (c) the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or, if required, a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Bond is not 3 declared effective on or prior to the 180th day following the date of the Tenth Supplemental Indenture or (d) the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable (each such event referred to in clauses (a) through (d) above, a "Registration Default") then the per annum interest rate borne by this Bond shall be increased by 0.25 percent per annum for the first 90-day period following the Registration Default. The per annum interest rate borne by this Bond will increase by an additional 0.25 percent per annum for each subsequent 90-day period following such Registration Default to a maximum of 1.00 percent per annum until such Registration Default has been cured. Upon (w) the filing of the Exchange Offer Registration Statement after the 60-day period described in clause (a) above, (x) the effectiveness of the Exchange Offer Registration Statement after the 150-day period described in clause (b) above or (y) the consummation of the Exchange Offer or the effectiveness of a Shelf Registration Statement, as the case may be, after the 180-day period described in clause (c) above, or (z) the cure of any Registration Default described in clause (d) above, the interest rate borne by the Bond from the date of such filing, effectiveness or consummation, as the case may be, will be reduced to the original interest rate set forth in the title of this Bond above if the Corporation is otherwise in compliance with this paragraph; provided, however, that, if after such reduction in interest rate, a different event specified in clause (a), (b), (c) or (d) above occurs, the interest rate may again be increased and thereafter reduced pursuant to the foregoing provisions.]** Reference is made to the further provisions of this Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth at this place. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until The Chase Manhattan Bank, the Trustee under the Indenture, or a successor Trustee thereto under the Indenture, shall have signed the form of certificate hereon. IN WITNESS WHEREOF, National Steel Corporation has caused this Bond to be duly executed under its corporate seal. Dated: NATIONAL STEEL CORPORATION ___________________ ** To be inserted in the case of a Bond that has not been registered under the Securities Act. 4 By: _________________________________ Name: Title: Attest: ______________________________________ Title: [FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE] TRUSTEE'S AUTHENTICATION CERTIFICATE This is one of the Bonds, of the series designated therein, described in the within-mentioned Indenture. THE CHASE MANHATTAN BANK, as Trustee, By: _________________________________ Authorized Officer [FORM OF REVERSE OF 2009 SERIES BOND] NATIONAL STEEL CORPORATION First Mortgage Bond, 9 7/8% Series [C/D] Due 2009 This Bond is one of the Bonds of the Corporation (hereinafter called the "BONDS") all duly authorized or from time to time to be duly authorized and not otherwise limited in aggregate principal amount, all issued and to be issued in one or more series from time to time under and (except as otherwise provided in the Indenture hereinafter mentioned) equally secured by an Indenture of Mortgage and Deed of Trust dated May 1, 1952, executed by the Corporation, as Mortgagor, and by Great Lakes Steel Corporation, a former wholly-owned subsidiary of the Corporation which was merged into the Corporation, as Co-Mortgagor, to City Bank Farmers Trust Company, as Trustee and Ralph E. Morton, as Individual Trustee, under which The Chase Manhattan Bank is now successor Trustee and FRANK J. GRIPPO is now successor Individual Trustee (said Trustee and said Individual Trustee from time to time being herein together called the "TRUSTEES"), to which Indenture of Mortgage and Deed of Trust and all instruments 5 supplemental thereto (hereinafter together sometimes referred to as the "INDENTURE") reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the holders of the Bonds in respect of the security, the rights, duties and immunities of the Trustees and the rights and obligations of the Corporation in respect of the Bonds, and the terms and conditions upon which the Bonds are, and are to be, secured. The Bonds of different series may be for various principal sums, may mature at different times, may bear interest at different rates and may otherwise vary as in the Indenture provided. This Bond is issued pursuant to the Eleventh Supplemental Indenture dated as of March 31, 1999, executed by the Corporation and the Trustees (the "ELEVENTH SUPPLEMENTAL INDENTURE"), and is the series of Bonds described in said Eleventh Supplemental Indenture and designated as the "First Mortgage Bonds, 9 7/8% Series [C/D] Due 2009" of the Corporation (hereinafter called the "2009 SERIES BONDS"), limited in aggregate principal amount to [$75,000,000/$300,000,000] at any one time outstanding, except as otherwise provided in the Original Indenture with respect to Bonds of such Series issued in exchange and substitution for Bonds of such Series as have been mutilated, destroyed, lost or stolen or as otherwise provided in the Eleventh Supplemental Indenture. The terms of the 2009 Series Bonds include those stated in the Indenture and those made or deemed to be part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) ------ 77aaa-77bbbb) as amended and as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The 2009 Series Bonds are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of those terms. The provisions of the Indenture may be modified or amended by a supplemental indenture to the extent and in the manner provided in the Indenture, with the consent and approval of the holders of at least 66 2/3% in aggregate principal amount of the Bonds at the time outstanding under the Indenture; provided that no such modification or amendment shall be made so as to (a) alter the date fixed in any of the Bonds or coupons for the payment of the principal of, or any installment of interest on, such Bonds, or otherwise modify the terms of payment of the principal at maturity of, or interest on, the Bonds or impose any conditions with respect to such payment or affect the right of any Bondholder to institute suit for the enforcement of any such payment on or after the respective due dates expressed in the Bonds or in such coupons appertaining thereto, all of which shall always be unconditional, (b) alter the amount of principal of, or the rate of interest or premium payable on, any of the Bonds, (c) affect the rights of the holders of less than all the Bonds of any series then outstanding, (d) affect the rights of the holders of one or more, but less than all, series of Bonds then outstanding, except with the consent of the holders of not less than 66 2/3% in aggregate principal amount of the Bonds of each of the series so affected then 6 outstanding, or (e) reduce the percentage of the principal amount of Bonds, or of the Bonds of any series, the consent of the holders of which shall be required for the authorization of any such modification or amendment. Except as set forth in the next paragraph, the 2009 Series Bonds may not be redeemed prior to March 1, 2004. Thereafter, the 2009 Series Bonds will be redeemable at the option of the Corporation, in whole or in part, on not less than 30 nor more than 60 days' prior notice mailed to each Holder of 2009 Series Bond being redeemed and otherwise in accordance with the procedures set forth in the Indenture, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on or after March 1 of the years set forth below:
YEAR REDEMPTION PRICE - ---- ---------------- 2004........................................ 104.938% 2005........................................ 103.292% 2006........................................ 101.646% 2007 and thereafter......................... 100.000%
Notwithstanding the foregoing, at any time and from time to time prior to March 1, 2002, the Corporation may redeem up to a maximum of 35% of the original aggregate principal amount of the 2009 Series Bonds with the proceeds of one or more Public Equity Offerings, at a redemption price equal to 109.875% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the 2009 Series Bonds remains outstanding. Any such redemption shall be made within 90 days of such Public Equity Offering upon not less than 30 nor more than 60 days' notice mailed to each Holder of 2009 Series Bond being redeemed and otherwise in accordance with the procedures set forth in the Indenture. Upon a Change of Control, any Holder of 2009 Series Bonds will have the right, subject to certain conditions specified in the Indenture, to cause the Corporation to repurchase all or any part of the 2009 Series Bonds of such Holder at a purchase price equal to 101% of the principal amount of the 2009 Series Bonds to be repurchased plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to 7 receive interest due on the relevant interest payment date that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. This Bond is transferable by the registered owner hereof or by his duly authorized attorney at the agency of the Corporation in the Borough of Manhattan, The City of New York, New York, upon surrender of this Bond for cancellation, accompanied by a written instrument of transfer in a form approved by the Corporation or the Trustee, duly executed by the registered owner of this Bond, and thereupon one or more new registered 2009 Series Bonds for the same aggregate principal amount will be issued in the name of the transferee or transferees in exchange herefor, as provided in the Indenture. 2009 Series Bonds are issuable only as fully registered Bonds without coupons in the denominations of $1,000 and integral multiples thereof. In the manner provided in the Indenture, 2009 Series Bonds may be exchanged for a like aggregate principal amount of 2009 Series Bonds of other authorized denominations. No service charge will be made for any such transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. No recourse shall be had for the payment of the principal of, premium, if any, or the interest on, this Bond, or for any claim based hereon or on the Indenture, against any incorporator, or against any shareholder, director or officer, past, present or future, of the Corporation or of any predecessor or successor corporation, as such, either directly or through the Corporation or any such predecessor or successor corporation, whether by virtue of any constitutional provision, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitutional provision, statute or otherwise, of incorporators, shareholders, directors, or officers being released by every holder hereof by the acceptance of this Bond and as part of the consideration for the issue hereof, and being likewise released by the terms of the Indenture. The Indenture may be canceled and the lien thereof discharged if the Corporation shall pay, or make provision for the payment of, the principal, interest and premium, if any, on all the Bonds at the times and in the manner stipulated in the Indenture. Any moneys deposited with the Trustee by the Corporation for the payment or redemption of 2009 Series Bonds, and remaining unclaimed by the Holders for six years after the date of maturity or the date fixed for redemption of 8 such Bonds upon written request and subject to applicable abandoned property laws, shall be repaid to the Corporation and thereafter such Holders shall be limited to a claim against the Corporation. In case an event of default, as defined in the Indenture, shall occur, the principal of all the Bonds at any such time outstanding under the Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events, such default and its consequences may be waived and such declaration may be rescinded by the holders of a majority in principal amount of the Bonds outstanding. In addition, in case an Eleventh Supplemental Indenture Event of Default (as defined in the Eleventh Supplemental Indenture), shall occur, the principal of all the 2009 Series Bonds at any such time outstanding under the Indenture may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Eleventh Supplemental Indenture. The Eleventh Supplemental Indenture provides that in certain events, such default and its consequences may be waived and such declaration may be rescinded by the holders of a majority in principal amount of the 2009 Series Bonds outstanding. THIS 2009 SERIES BOND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. The person in whose name this Bond shall be registered shall be deemed and regarded as the absolute owner hereof for all purposes, and payment of or on account of the principal of, premium, if any, and interest on this Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid. The Corporation will furnish to any Holder of 2009 Series Bonds upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this 2009 Series Bond. ___________________ And 9 WHEREAS, all acts and proceedings required by law duly to authorize the execution and delivery of this Supplemental Indenture have been done and taken and the execution and delivery of this Supplemental Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: That the Corporation, in consideration of the premises, and of the purchase and acceptance of the 2009 Series Bonds by the registered owners thereof, and of the sum of one dollar to the Corporation duly paid by the Trustees at or before the ensealing and delivery of these presents, and for other valuable considerations, the receipt whereof is hereby acknowledged, has entered into this Supplemental Indenture with the Trustees to create the 2009 Series Bonds, to establish the forms thereof and to declare the terms and conditions upon and subject to which they are to be issued: ARTICLE 1 Definitions and Incorporation by Reference Section 1.0. Definitions. "ADDITIONAL ASSETS" means (a) any Property (other than cash, Cash Equivalents or securities) to be owned by the Corporation or any Restricted Subsidiary; or (b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Corporation or another Restricted Subsidiary from any Person other than the Corporation or an Affiliate of the Corporation. "AFFILIATE" of any specified Person means (a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (b) any other Person who is a director or officer of (i) such specified Person, (ii) any Subsidiary of such specified Person or (iii) any Person described in clause (a) above. For the purposes of this definition, "CONTROL" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. For purposes of the covenants contained in Section 4.10, Section 4.12 and the definition of the term "ADDITIONAL ASSETS" only, "AFFILIATE" shall also mean any 10 beneficial owner of shares representing 5% or more (on a fully diluted basis) of the total voting power of the Voting Stock of the Corporation and/or of rights or warrants to purchase Voting Stock representing 5% or more (on a fully diluted basis) of the total voting power of the Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "AFFILIATE JOINT VENTURE" means a Person, other than a Subsidiary of the Corporation, in which the Corporation or any Restricted Subsidiary has an Investment and which is an Affiliate of the Corporation only because the Corporation or such Restricted Subsidiary has the ability to control such Person, and for no other reason. "ASSET SALE" means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Corporation or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "DISPOSITION"), of (a) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares), (b) all or substantially all the assets of any division or line of business of the Corporation or any Restricted Subsidiary or (c) any other assets of the Corporation or any Restricted Subsidiary outside of the ordinary course of business of the Corporation or such Restricted Subsidiary (other than (i) in the case of clauses (a), (b) and (c) above, any disposition by a Restricted Subsidiary to the Corporation or by the Corporation or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) in the case of clauses (b) and (c) above, (x) any disposition of accounts receivable or inventory by or to the Corporation or any Restricted Subsidiary to or from NSFC or any other bankruptcy-remote, special-purpose Subsidiary of the Corporation in connection with the Incurrence of Debt by such Subsidiary under the Credit Facilities or (y) any disposition of Property having, together with other Property disposed of pursuant to such clauses during the same fiscal year, an aggregate Fair Market Value of less than $25 million, (iii) in the case of clause (c) above, (x) any disposition effected in compliance with Section 5.01(a) and (y) a disposition of obsolete assets in the ordinary course of business and (iv) in the case of clauses (a), (b) and (c) above, but only for the purposes of Section 4.10, dispositions of Mortgaged Property made in compliance with Section 4.08. "ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction means, at any date of determination, (a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of the term "Capital Lease Obligation" and (b) in all other instances, the present value (discounted at the actual rate of interest implicit in such transaction, compounded annually) of the total obligations of the lessee for rental 11 payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). "AVERAGE LIFE" means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing (a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (b) the sum of all such payments. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation or any committee thereof duly authorized to act on behalf of such Board. "BOARD RESOLUTION" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "BUSINESS DAY", when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the 2009 Series Bonds, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by law or executive order to close. "CAPITAL EXPENDITURE DEBT" means Debt Incurred by any Person to finance a capital expenditure so long as (a) such capital expenditure is or should be included as an addition to "Property, Plant and Equipment" in accordance with GAAP and (b) such Debt is Incurred within 180 days of the date such capital expenditure is made. "CAPITAL LEASE OBLIGATION" means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.07, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased. 12 "CAPITAL STOCK" means, with respect to any Person, any shares or other equivalents (however designated) of corporate stock, partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest. "CAPITAL STOCK SALE PROCEEDS" means the aggregate Net Cash Proceeds received by the Corporation from the issuance or sale (other than to a Subsidiary of the Corporation or an employee stock ownership plan or trust established by the Corporation or any of its Subsidiaries for the benefit of their employees) by the Corporation of any class of its Capital Stock (other than Disqualified Stock) after March 8, 1999. "CASH EQUIVALENTS" means (a) any evidence of Debt with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), (b) certificates of deposit, Eurodollar time deposits, bankers' acceptances and other similar unsubordinated debt instruments with a maturity of 360 days or less and overnight bank deposits of any bank, trust company, investment bank or other financial institution (including any branch thereof) that is organized or regulated under the laws of the United States of America or any state thereof, and which bank, trust company, investment bank or other financial institution has capital, surplus and undivided profits aggregating in excess of US$1.0 billion and has outstanding unsecured debt which is rated "A3" or higher by Moody's or "A-" or higher by S&P; provided that up to $25 million of the aggregate amount of investments of the type described in this clause (b) may be with banks (or branches thereof) of the type described above with outstanding unsecured debt that has an Investment Grade Rating or higher, (c) commercial paper with a maturity of 360 days or less issued by a corporation that is not an Affiliate of the Corporation and is organized under the laws of any state of the United States or the District of Columbia and rated at least A- 2 by S&P or at least P-2 by Moody's, (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (a) and (b) above entered into with a bank, trust company, investment bank or other financial institution meeting the qualifications described in clause (b) above or (e) funds (including, without limitation, any fund for which the Trustee or any affiliate of the Trustee serves as an administrator, shareholder servicing agent and/or custodian or subcustodian) invested exclusively in cash and investments of the type described in clauses (a) through (d) above. "CHANGE OF CONTROL" means the occurrence of any of the following events: 13 (a) if any "person" or "group" (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than Permitted Holders, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a Person will be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 30% or more of the total voting power of all classes of the Voting Stock of the Corporation; or (b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Corporation and the Restricted Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Subsidiary) shall have occurred, or the Corporation merges, consolidates or amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Corporation, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Corporation is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where (i) the outstanding Voting Stock of the Corporation is reclassified into or exchanged for Voting Stock of the surviving corporation and (ii) the Holders of the Voting Stock of the Corporation immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction and in substantially the same proportion as before the transaction; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of the Corporation was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or (d) the shareholders of the Corporation shall have approved any plan of liquidation or dissolution of the Corporation. 14 "CODE" means the Internal Revenue Code of 1986, as amended. "COMMODITY PRICE PROTECTION AGREEMENT" means, in respect of a Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices. "CONSOLIDATED CURRENT LIABILITIES" means, as of any date of determination, the aggregate amount of liabilities of the Corporation and its consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), after eliminating (a) all intercompany items between the Corporation and any Restricted Subsidiary or between Restricted Subsidiaries and (b) all current maturities of long-term Debt. "CONSOLIDATED INTEREST COVERAGE RATIO" means, as of any date of determination, the ratio of (a) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to such determination date to (b) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (i) if the Corporation or any Restricted Subsidiary has Incurred any Debt since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence of Debt, or both, Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Debt as if such Debt had been Incurred on the first day of such period and the discharge of any other Debt repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Debt as if such discharge had occurred on the first day of such period, (ii) if since the beginning of such period the Corporation or any Restricted Subsidiary shall have made any Asset Sale or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Asset Sale, or both, EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, in either case as if such Asset Sale had occurred on the first day of such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Debt of the Corporation or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Corporation and its continuing Restricted Subsidiaries in connection with such Asset Sale for such period, as if such Asset Sale had occurred on the first day of such period (or, if the Capital Stock of any Restricted Subsidiary is sold, by an amount equal to the Consolidated Interest Expense for such period directly attributable to the Debt of such Restricted Subsidiary to the extent the Corporation and its continuing 15 Restricted Subsidiaries are no longer liable for such Debt after such sale), (iii) if since the beginning of such period the Corporation or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property, including any acquisition of Property occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Debt) as if such Investment or acquisition occurred on the first day of such period and (iv) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Corporation or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Sale, Investment or acquisition of Property that would have required an adjustment pursuant to clause (ii) or (iii) above if made by the Corporation or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Sale, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of Property, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Debt incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer and as further contemplated by the definition of the term "PRO FORMA". If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt if such Interest Rate Agreement has a remaining term in excess of 12 months). "CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest expense of the Corporation and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Corporation or its Restricted Subsidiaries, (a) interest expense attributable to capital leases, (b) amortization of debt discount and debt issuance cost, (c) capitalized interest, (d) non-cash interest expenses, (e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (f) net costs associated with Hedging Obligations under Interest Rate Agreements (including amortization of fees), (g) Redeemable Dividends, (h) Preferred Stock dividends in respect of all Preferred Stock of Restricted Subsidiaries held by Persons other than the Corporation or a Wholly Owned Subsidiary, and (i) interest accruing on any Debt of any other Person to 16 the extent such Debt is Guaranteed by the Corporation or any Restricted Subsidiary. "CONSOLIDATED NET INCOME" means, for any period, the net income (loss) of the Corporation and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income (a) any net income (loss) of any Person (other than the Corporation) if such Person is not a Restricted Subsidiary, except that (i) subject to the exclusion contained in clause (d) below, the Corporation's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Corporation or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (c) below) and (ii) the Corporation's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period shall be included in determining such Consolidated Net Income, (b) any net income (loss) of any Person acquired by the Corporation or any of its consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition, (c) any net income (loss) of any Restricted Subsidiary to the extent that such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Corporation, except that (i) subject to the exclusion contained in clause (d) below, the Corporation's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Corporation or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause) and (ii) the Corporation's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, (d) any gain (but not loss) realized upon the sale or other disposition of any Property of the Corporation or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and (e) any extraordinary gain or loss. "CONSOLIDATED NET WORTH" means the total of the amounts shown on the consolidated balance sheet of the Corporation and its Restricted Subsidiaries as of the end of the most recent fiscal quarter of the Corporation ending at least 45 days prior to the taking of any action for the purpose of which the determination is being made, as (a) the par or stated value of all outstanding Capital Stock of the Corporation plus (b) paid-in capital or capital surplus relating to such Capital Stock plus (c) any retained earnings or earned surplus less (i) any accumulated 17 deficit, (ii) any amounts attributable to Disqualified Stock and (iii) any adjustments for pension liabilities. "CORPORATE TRUST OFFICE" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office on the date of execution of this Eleventh Supplemental Indenture is located at 450 West 33rd Street, New York, NY 10001. "CORPORATION" means the party named as such in this Indenture until a successor replaces it pursuant to the applicable provisions hereof and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "CORPORATION REQUEST" or "CORPORATION ORDER" means a written request or order signed in the name of the Corporation by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "CREDIT FACILITIES" means the Receivables Purchase Agreement and the Inventory Facilities, in each case together with any extensions, revisions, refinancings or replacements thereof by a lender or syndicate of lenders (including through the sale of accounts receivable or inventory to such lender or lenders or to NSFC or any other bankruptcy-remote, special-purpose Subsidiary of the Corporation that purchases such accounts receivable or inventory). "CURRENCY EXCHANGE PROTECTION AGREEMENT" means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates. "DEBT" means, with respect to any Person on any date of determination (without duplication), (a) the principal in respect of (i) debt of such Person for money borrowed and (ii) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; (c) all obligations of such Person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding Trade Accounts Payable arising in the ordinary course of business); (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in 18 (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (e) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); (f) all obligations of the type referred to in clauses (a) through (e) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (g) all obligations of the type referred to in clauses (a) through (f) of other Persons secured by any Lien on any Property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such Property or assets or the amount of the obligation so secured; (h) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and (i) to the extent not otherwise included in this definition, any financing of accounts receivable or inventory of such Person (whether or not treated as a sale or debt for accounting purposes); provided that such accounts receivable or inventory shall be deemed to be on the consolidated balance sheet of the Corporation for purposes of clause (b)(ii) of the definition of "PERMITTED DEBT". The amount of Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DEPOSITARY" means The Depository Trust Company, its nominees and successors. "DISQUALIFIED STOCK" means, with respect to any Person, Redeemable Stock of such Person as to which the maturity, mandatory redemption, redemption at the option of the holder thereof, conversion or exchange occurs, or may occur, on or prior to the first anniversary of the Stated Maturity of the 2009 Series Bonds; provided, however, that Redeemable Stock of such Person that would not otherwise be characterized as Disqualified Stock under this definition shall not constitute Disqualified Stock if such Redeemable Stock is convertible or exchangeable into Debt solely at the option of the issuer thereof. 19 "EBITDA" means, for any period, an amount equal to, for the Corporation and its consolidated Restricted Subsidiaries, (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (i) the provision for taxes for such period based on income or profits or utilized in computing net loss, (ii) Consolidated Interest Expense, (iii) depreciation and amortization of fixed and intangible assets and (iv) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period, except amortization of any SFAS 106 transaction obligation of the Corporation), minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Corporation by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE OFFER" means the offer by the Corporation to the Holders of the Initial 2009 Series Bonds and the Series A 2009 Bonds to exchange all of the Initial 2009 Series Bonds and the Series A 2009 Bonds for Exchange 2009 Series Bonds, as provided for in the Registration Rights Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" means the Exchange Offer Registration Statement as defined in the Registration Rights Agreement. "EXCHANGE 2009 SERIES BONDS" refers to the First Mortgage Bonds, 9 7/8% Series D due 2009 containing terms substantially identical to the Initial 2009 Series Bonds and the Series A 2009 Bonds (except that (i) such Exchange 2009 Series Bonds shall not contain terms with respect to transfer restrictions and shall be registered under the Securities Act, and (ii) certain provisions relating to an increase in the stated rate of interest thereon shall be eliminated) that are issued and exchanged for the Initial 2009 Series Bonds and the Series A 2009 Bonds in accordance with the Exchange Offer, as provided for in the Registration Rights Agreement and this Supplemental Indenture. 20 "FAIR MARKET VALUE" means, with respect to any Property, the price (or, in the case of a lease, the rent) which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller (or lessor) and a willing buyer (or lessee), neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value will be determined, except as otherwise provided, (a) if such Property has a Fair Market Value equal to or less than $10,000,000, by any Officer of the Corporation or (b) if such Property has a Fair Market Value in excess of $10,000,000, by a majority of the Board of Directors and evidenced by a Board Resolution, dated within 30 days of the relevant transaction, delivered to the Trustee. "GAAP" means United States generally accepted accounting principles as in effect on March 8, 1999, including those set forth (a) in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) in the statements and pronouncements of the Financial Accounting Standards Board, (c) in such other statements by such other entity as approved by a significant segment of the accounting profession and (d) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part); provided, however, that the term "GUARANTEE" shall not include endorsements for collection or deposit in the ordinary course of business. The term "GUARANTEE" used as a verb has a corresponding meaning. The term "GUARANTOR" shall mean any Person Guaranteeing any obligation. "HEDGING OBLIGATION" of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement. 21 "HOLDER" or "BONDHOLDER" means the Person in whose name a Bond is registered on the Bond Register. "INCUR" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and "Incurrence" and "Incurred" shall have meanings correlative to the foregoing); provided, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further, however, that solely for purposes of determining compliance with Section 4.05, amortization of debt discount shall not be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount, the amount of such Debt Incurred shall at all times be the aggregate principal amount at Stated Maturity. "INDENTURE" means the Original Indenture as amended or supplemented from time to time, as defined in the recitals hereto. "INDEPENDENT FINANCIAL ADVISOR" means an investment banking firm of national standing or any third party appraiser of national standing, provided that such firm or appraiser is not an Affiliate of the Corporation. "INITIAL 2009 SERIES BONDS" has the meaning specified in the recitals to this Supplemental Indenture. "INTEREST PAYMENT DATE" means March 1 and September 1 of each year, commencing September 1, 1999. "INTEREST RATE AGREEMENT" means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates. "INVENTORY FACILITIES means (i) the $100 million Inventory Credit Agreement, dated as of July 18, 1996, among the Corporation, the Long-Term Credit Bank of Japan Ltd, New York Branch, as Administrative Agent and the Long- Term Credit Bank of Japan Ltd., New York Branch, as Structuring Agent and Collateral Agent and (2) the $50 million Credit Agreement, dated as of July 18, 1996, between the Corporation and The Fuji Bank and Trust Company. "INVESTMENT" by any Person means any direct or indirect loan (other than advances to customers in the ordinary course of business that are recorded as 22 accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person. In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment. "INVESTMENT GRADE RATING" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P. "INVESTMENT GRADE STATUS" shall be deemed to have been reached on the date that the 2009 Series Bonds have an Investment Grade Rating from both Rating Agencies. "ISSUE DATE" means the date on which the 2009 Series Bonds are initially issued. "LIEN" means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction, but excluding any operating lease (except Sale and Leaseback Transactions) entered into in the ordinary course of such Person's business). "MOODY'S" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof. "MORTGAGED PROPERTY" means any Property of the Corporation or any of its Subsidiaries that is subjected to, or is intended to be subjected to, the lien of the Indenture. "NET AVAILABLE CASH" from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non- cash 23 form), in each case net of (a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale, (b) all payments made on any Debt which is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale, (c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale and (d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by the Corporation or any Restricted Subsidiary after such Asset Sale. "NET CASH PROCEEDS" means, with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "NKK" means NKK U.S.A. Corporation and its Affiliates. "NON-MORTGAGED PROPERTY" means Property of the Corporation or any of its Subsidiaries other than Mortgaged Property. "NSFC" means National Steel Funding Corp., a Delaware corporation, and its successors. "OFFICER" means the President, the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or the Comptroller or the Chief Financial Officer or any Vice President of the Corporation. "OFFICERS' CERTIFICATE" means a certificate signed by the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or the Comptroller or an Assistant Comptroller of the Corporation. "OPINION OF COUNSEL" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Corporation. 24 "PERMITTED DEBT" means: (a) Debt of the Corporation evidenced by the 2009 Series Bonds and the Series A 2009 Bonds; (b) Debt of the Corporation or any Restricted Subsidiary under the Credit Facilities; provided that the aggregate principal amount of all such Debt under the Credit Facilities at any one time outstanding shall not exceed the greater of (i) $350 million less the sum of the aggregate amount of all required payments of principal applied to reduce the aggregate amount available to be borrowed under the Credit Facilities including pursuant to Section 4.10, and (ii) the sum of the amounts equal to (x) 60% of the book value of the inventory of the Corporation and the Restricted Subsidiaries and (y) 85% of the book value of the accounts receivable of the Corporation and the Restricted Subsidiaries, in each case as of the most recently ended quarter of the Corporation prior to such Incurrence for which financial statements of the Corporation have been provided to the Holders of 2009 Series Bonds; (c) Capital Expenditure Debt of the Corporation or any Restricted Subsidiary; provided that (i) the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased and (ii) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c), together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c), does not exceed $175 million; (d) Debt of the Corporation owing to and held by any Wholly Owned Subsidiary and Debt (including Preferred Stock) of a Restricted Subsidiary owing to and held by the Corporation or any Wholly Owned Subsidiary; provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such Debt (except to the Corporation or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the Corporation or such Restricted Subsidiary; (e) Debt of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by the Corporation or otherwise became a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the 25 funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Corporation or was otherwise acquired by the Corporation); provided that at the time such Restricted Subsidiary was acquired by the Corporation or otherwise became a Restricted Subsidiary and after giving pro forma effect to the Incurrence of such Debt, the Corporation would have been able to Incur $1.00 of additional Debt pursuant to Section 4.05(a); (f) Debt under Interest Rate Agreements entered into by the Corporation or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Corporation or such Restricted Subsidiary and not for speculative purposes; provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by Section 4.05; (g) Debt under Currency Exchange Protection Agreements entered into by the Corporation or a Restricted Subsidiary for the purpose of limiting currency exchange rate risk in the ordinary course of the financial management of the Corporation or such Restricted Subsidiary and not for speculative purposes; (h) Debt under Commodity Price Protection Agreements entered into by the Corporation or a Restricted Subsidiary in the ordinary course of the financial management (including cost control) of the Corporation or such Restricted Subsidiary and not for speculative purposes; (i) Debt in connection with one or more standby letters of credit or performance bonds issued by the Corporation or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit; (j) Debt outstanding on March 8, 1999 not otherwise described in clauses (a) through (i) above; (k) Debt of the Corporation or any Restricted Subsidiary (other than Debt permitted by Section 4.05(a) or the other clauses of this definition) in an aggregate principal amount outstanding at any one time not to exceed $75,000,000; and 26 (l) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to Section 4.05(a) and clauses (a), (c), (e) and (j) above, subject, in the case of clause (c) above, to the limitations set forth in the respective proviso thereto. "PERMITTED INVESTMENTS" means any Investment by the Corporation or any Restricted Subsidiary in any of the following: (a) Cash Equivalents; (b) the Corporation or any Restricted Subsidiary; (c) another Person, if as a result of such Investment (i) such other Person becomes a Restricted Subsidiary or (ii) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Corporation or a Restricted Subsidiary; (d) loans or advances made to employees or directors of the Corporation or any Restricted Subsidiary in the ordinary course of business in an aggregate amount not to exceed US$1 million at any one time outstanding; (e) Hedging Obligations which constitute Permitted Debt; (f) Investments consisting of non-cash consideration received in the form of securities, Notes or similar obligations in connection with an Asset Sale permitted by Section 4.08 and Section 4.10, as applicable, provided that the aggregate amount of such non-cash consideration received in connection with any such Asset Sale shall not exceed the amount permitted under Section 4.08 and Section 4.10 or the terms of the Original Indenture, as applicable; (g) the purchase by the Company or any Restricted Subsidiary in one or more transactions of all or any portion of NKK's ownership interest in DNN Galvanizing Limited Partnership; and (h) Investments in joint ventures engaged in the steel business or other businesses reasonably related thereto in an aggregate amount not to exceed $20 million. "PERMITTED HOLDERS" means NKK U.S.A. Corporation and its Affiliates. 27 "PERMITTED REFINANCING DEBT" means any Debt that Refinances any other Debt, including any successive Refinancings, so long as (a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of (i) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced and (ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing, (b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced, (c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced and (d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; provided, however, that Permitted Refinancing Debt shall not include (a) Debt of a Subsidiary that Refinances Debt of the Corporation or (b) Debt of the Corporation or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. "PERSON" means any individual, corporation, company (including any limited liability or joint-stock company), partnership, joint venture, association, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PLACE OF PAYMENT" means the place or places where the principal of (and premium, if any, on) and interest on the 2009 Series Bonds are payable as specified as contemplated by Section 3.01 hereof and Section 4.04 of the Original Indenture. "PREDECESSOR 2009 SERIES BOND" of any particular 2009 Series Bond means every previous 2009 Series Bond evidencing all or a portion of the same debt as that evidenced by such particular 2009 Series Bond; and, for the purposes of this definition, any 2009 Series Bond authenticated and delivered in compliance with Section 3.03 of the Original Indenture in exchange for or in lieu of a mutilated, destroyed , lost or stolen 2009 Series Bond shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen 2009 Series Bond. "PREFERRED STOCK" means any Capital Stock of a Person, however designated, which entitles the Holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person. "PRINCIPAL" of any Debt (including the 2009 Series Bonds) means the principal amount of such Debt plus the premium, if any, on such Debt. 28 "PROPERTY" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to the Indenture, the value of any Property shall be its Fair Market Value. "PUBLIC EQUITY OFFERING" means an underwritten public offering of common stock of the Corporation pursuant to an effective registration statement under the Securities Act. "RATING AGENCIES" mean Moody's and S&P. "RECEIVABLES PURCHASE AGREEMENT" means the Receivables Purchase Agreement dated as of May 18, 1994, as amended through March 8, 1999, among NSFC, Morgan Guaranty Trust Company of New York (as successor to J.P. Morgan Delaware), as structuring and collateral agent and facility agent, and various financial institutions parties thereto as lenders and issuing banks. "REDEEMABLE DIVIDEND" means, for any dividend with respect to Redeemable Stock, the quotient of the dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Redeemable Stock. "REDEEMABLE STOCK" means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or otherwise (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may become redeemable or repurchasable at the option of the holder thereof, in whole or in part, or (c) is convertible or exchangeable for Debt or Disqualified Stock. "REFINANCE" means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall have correlative meanings. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of March 31, 1999, between the Corporation and the Initial Purchaser. "REGISTRATION STATEMENT" shall mean any registration statement of the Corporation which covers any of the 2009 Series Bonds pursuant to the provisions of the Registration Rights Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments. 29 "RESTRICTED PAYMENT" means (a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Corporation or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Corporation or any Restricted Subsidiary), except for any dividend or distribution which is made solely to the Corporation or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Redeemable Stock) of the Corporation; (b) any payment made by the Corporation or any Restricted Subsidiary to purchase, redeem, repurchase, acquire or retire for value any Capital Stock of the Corporation or any Restricted Subsidiary (other than (I) Capital Stock of a Wholly Owned Restricted Subsidiary or (II) from all holders of Capital Stock of a non-wholly owned Restricted Subsidiary on a pro rata basis); (c) any payment made by the Corporation or any Restricted Subsidiary to purchase, redeem, repurchase, defease or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled sinking fund or mandatory redemption payment, any Subordinated Obligation (other than the purchase, repurchase, or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition); or (d) any Investment (other than any Permitted Investment) in any Person (including, without limitation, any Unrestricted Subsidiary). "RESTRICTED SUBSIDIARY" means (a) any Subsidiary of the Corporation in existence on or after March 8, 1999 unless such Subsidiary shall have been designated an Unrestricted Subsidiary as permitted or required pursuant to Section 4.14 and (b) an Unrestricted Subsidiary which is redesignated as a Restricted Subsidiary as permitted pursuant to Section 4.14. "S&P" means Standard & Poor's Ratings Service or any successor to the rating agency business thereof. "SALE AND LEASEBACK TRANSACTION" means any arrangement relating to Property now owned or hereafter acquired whereby the Corporation or a Restricted Subsidiary transfers such Property to another Person and the Corporation or a Restricted Subsidiary leases it from such Person, other than any such arrangement with respect to Property acquired or placed into service by the Corporation or any Restricted Subsidiary after March 8, 1999 to the extent entered into within 365 days after the date of such acquisition or placement into service and not constituting a Capital Lease Obligation. 30 "SEC" means the Securities and Exchange Commission or any successor thereto. "SECURED DEBT" means any Debt of the Corporation or any Restricted Subsidiary secured by a Lien. "SENIOR DEBT" of the Corporation means (a) all obligations consisting of the principal, and accrued and unpaid interest in respect of (i) Debt of the Corporation for borrowed money and (ii) Debt of the Corporation evidenced by notes, debentures, bonds or other similar instruments permitted under the Indenture for the payment of which the Corporation is responsible or liable; (b) all Capital Expenditure Debt of the Corporation; (c) all obligations of the Corporation (i) for the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction or (ii) under Hedging Obligations; and (d) all obligations of other Persons of the type referred to in clauses (a) and (b) for the payment of which the Corporation is responsible or liable as Guarantor; provided, however, that Senior Debt of the Corporation shall not include (A) Debt of the Corporation that is by its terms subordinate in right of payment to the 2009 Series Bonds; (B) any Debt Incurred in violation of the provisions of the Indenture; (C) accounts payable or any other obligations of the Corporation to trade creditors created or assumed by the Corporation in the ordinary course of business in connection with the obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities); (D) any liability for Federal, state, local or other taxes owed or owing by the Corporation; (E) any obligation of the Corporation to any Subsidiary; or (F) any obligations with respect to any Capital Stock. "SERIES A 2009 BONDS" refers to the First Mortgage Bonds, 9 7/8% Series A due 2009 issued pursuant to the Original Indenture, as theretofore supplemented, and the Tenth Supplemental Indenture. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Corporation pursuant to the provisions of the Registration Rights Agreement. "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Corporation within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the 2009 Series Bonds means a date fixed by the Trustee pursuant to Section 3.06. 31 "STATED MATURITY" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "SUBORDINATED OBLIGATION" means any Debt of the Corporation (whether outstanding on March 8, 1999 or thereafter Incurred) which is subordinate or junior in right of payment to the 2009 Series Bonds or the Guaranty pursuant to a written agreement to that effect. "SUBSIDIARY" means, in respect of any specified Person, any corporation, company, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "TENTH SUPPLEMENTAL INDENTURE" refers to the Tenth Supplemental Indenture dated as of March 8, 1999 between the Corporation and the Trustees supplementing the Original Indenture. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as amended and in effect on the date of this Indenture except as required by Section 8.08 hereof; provided that in the event the Trust Indenture Act of 1939 is amended after such date, "TRUST INDENTURE ACT" means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as so amended. "2009 SERIES BONDS" has the meaning stated in the first recital of this Supplemental Indenture. "UNITED STATES" means the United States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of the Corporation in existence on March 8, 1999 that is not a Restricted Subsidiary; (b) any Subsidiary of an Unrestricted Subsidiary; and (c) any Subsidiary of the Corporation that is designated after March 8, 1999 as an Unrestricted Subsidiary 32 as permitted pursuant to Section 4.14 and not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto. "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "VOTING STOCK" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "WHOLLY OWNED SUBSIDIARY" means, at any time, a corporation all the stock of which (except directors' qualifying shares, where necessary) is at such time owned, directly or indirectly, by the Corporation or by one or more Wholly Owned Subsidiaries. Section 1.02. Other Definitions. Term Defined in Section "Affiliate Transaction".............................. 4.12 "Bankruptcy Law"..................................... 6.01 "Bond Registrar"..................................... 3.05 "Change of Control Offer"............................ 4.09(a) "Change of Control Purchase Price"................... 4.09(a) "Change of Control Payment Date"..................... 4.09(b) "Custodian".......................................... 6.01 "Eleventh Supplemental Indenture Event of Default"... 6.01 "Excess Proceeds".................................... 4.10(c) "Offer Amount"....................................... 4.10(d)(ii) "Offer Period"....................................... 4.10(d)(ii) "Offshore Bond Exchange Date"........................ 2.03 "Offshore Physical Bond"............................. 2.01 "Prepayment Offer"................................... 4.10(c) "Prepayment Offer Notice"............................ 4.10(d)(1) "Private Placement Legend"........................... 2.03 "Purchase Date"...................................... 4.10(d)(1) "Surviving Person"................................... 5.01(a) Unless otherwise defined herein, terms defined in Article One of the Original Indenture shall have the same meanings when used herein. All the terms 33 and provisions of this Supplemental Indenture shall be and be deemed to be a part of the terms and provisions of the Indenture for any and all purposes. Section 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the 2009 Series Bonds. "indenture security holder" means a Bondholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Corporation, and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. Section 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Debt shall not be deemed to be subordinate or junior to secured Debt merely by virtue of its nature as unsecured Debt; 34 (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and (8) the principal amount of any Preferred Stock shall be the greater of (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock. ARTICLE 2 2009 Bonds Forms Section 2.01. Forms Generally. The Initial 2009 Series Bonds shall be known and designated as the "FIRST MORTGAGE BONDS, 9 7/8% SERIES C DUE 2009," and the Exchange 2009 Series Bonds shall be known and designated as the "FIRST MORTGAGE BONDS, 9 7/8% SERIES D DUE 2009," in each case, of the Corporation. The 2009 Series Bonds and the Trustee's certificate of authentication shall be in substantially the forms set forth in the recitals to the supplement of this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such 2009 Series Bonds, as evidenced by their execution of the 2009 Series Bonds. Any portion of the text of any 2009 Series Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the 2009 Series Bond. Each Bond shall be dated the date of its authentication. The definitive 2009 Series Bonds shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Corporation executing such 2009 Series Bonds, as evidenced by their execution of such 2009 Series Bonds. Initial 2009 Series Bonds offered and sold in reliance on Rule 144A promulgated under the Securities Act of 1933, as amended ("RULE 144A"), may be issued in the form of one or more permanent global Notes substantially in the form set forth in the recitals to this Supplemental Indenture (the "U.S. GLOBAL BOND") deposited with The Chase Manhattan Bank, as custodian for the Depositary or its nominee, duly executed by the Corporation and authenticated by 35 the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Bond may from time to time be increased or decreased by adjustments made on the records of The Chase Manhattan Bank, as custodian for the Depositary or its nominee, as hereinafter provided. Initial 2009 Series Bonds offered and sold in offshore transactions in reliance on Regulation S promulgated under the Securities Act of 1933, as amended ("REGULATION S"), shall be issued in the form of a single permanent global bond in substantially the form set forth in the recitals to this Supplemental Indenture (the "OFFSHORE GLOBAL BOND") deposited with The Chase Manhattan Bank, as custodian for the Depositary or its nominee, duly executed by the Corporation and authenticated by the Trustee as hereinafter provided. The aggregate principal amount at maturity of the Offshore Global Bond may from time to time be increased or decreased by adjustments made in the records of the The Chase Manhattan Bank, as custodian for the Depositary or its nominee, as herein provided. Bonds issued pursuant to Section 3.05 in exchange for or upon transfer of beneficial interests in the U.S. Global Bond ("U.S. PHYSICAL BONDS") or the Offshore Global Bond (the "OFFSHORE PHYSICAL BONDS") shall be in the form of permanent certificated Bonds substantially in the form set forth in the recitals to this Supplemental Indenture. The Offshore Physical Bonds and U.S. Physical Bonds are sometimes collectively herein referred to as the "PHYSICAL BONDS". The U.S. Global Bond and the Offshore Global Bond are sometimes collectively referred to as the "GLOBAL BONDS". Section 2.02. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the form set forth in the recitals to this Indenture. Section 2.03. Restrictive Legends. Unless and until (i) an Initial 2009 Series Bond is sold pursuant to an effective Shelf Registration Statement or (ii) an Initial 2009 Series Bond is exchanged for an Exchange 2009 Series Bond in an Exchange Offer pursuant to an effective Exchange Offer Registration Statement, in each case pursuant to the Registration Rights Agreement, (A) each U.S. Global Bond and U.S. Physical Bond shall bear the following legend set forth below (the "PRIVATE PLACEMENT LEGEND") on the face thereof and (B) the Offshore Physical Bonds and Offshore Global Bond shall bear the Private Placement Legend on the face thereof until at 36 least 41 days after the date hereof (the "OFFSHORE BOND EXCHANGE DATE") and receipt by the Corporation and the Trustee of a certificate substantially in the form provided in Section 2.04: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR OF A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THE SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AN OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY 37 PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A NON-UNITED STATES PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OR RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. Each Global Bond, whether or not an Initial 2009 Series Bond, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY IN WHOLE, BUT NOT IN PART, SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.11 AND 3.12 OF THE ELEVENTH SUPPLEMENTAL INDENTURE. 38 Section 2.04. Form of Certificate to Be Delivered upon Termination of Restricted Period. [Date] THE CHASE MANHATTAN BANK 450 West 33rd Street, 15th Floor New York, New York 10001 Attention: Corporate Trust Administration Re: NATIONAL STEEL CORPORATION (the "Corporation") First Mortgage Bonds, 9 7/8% Series C due 2009 of the Corporation ----------------------------------------------------------------- (the "2009 Series Bonds") ------------------------- Ladies and Gentlemen: This letter relates to $ _________ principal amount of 2009 Series Bonds represented by a offshore global bond certificate (the "Offshore Global Bond"). Pursuant to Section 2.04 of the Eleventh Supplemental Indenture dated as of March 31, 1999 relating to the 2009 Series Bonds (the "Indenture"), we hereby certify that (1) we are the beneficial owner of such principal amount of 2009 Series Bonds represented by the Offshore Global Bond and (2) we are a non-U.S. Person to whom the 2009 Series Bonds could be transferred in accordance with Rule 904 of Regulation S promulgated under the Securities Act of 1933, as amended ("Regulation S"). Accordingly, you are hereby requested to issue an Offshore Physical Bond representing the undersigned's interest in the principal amount of 2009 Series Bonds represented by the Offshore Global Bond, all in the manner provided by the Indenture. You and the Corporation are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to 39 the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By:_______________________________ Authorized Signature ARTICLE 3 The 2009 Series Bonds Section 3.01. Maturity; Payment. The Stated Maturity of the 2009 Series Bonds shall be March 1, 2009, and they shall bear interest at the rate of 9 7/8% per annum from March 8, 1999, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on September 1, 1999 and semi-annually thereafter on March 1 and September 1 in each year, until the principal thereof is paid in full and to the Person in whose name the 2009 Series Bond (or any predecessor 2009 Series Bond) is registered at the close of business on the February 15 or August 15 next preceding such Interest Payment Date (each a "REGULAR RECORD DATE"). The principal of (and premium, if any) and interest on the 2009 Series Bonds shall be payable at the office or agency of the Corporation maintained for such purpose in The City of New York, or at such other office or agency of the Corporation as may be maintained for such purpose; provided, however, that, at the option of the Corporation, interest may be paid (a) by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Bond Register or (b) by wire transfer to an account maintained by the payee located in the United States provided that appropriate written wire instructions have been provided at least two Business Days prior to the relevant record date. Holders shall have the right to require the Corporation to purchase their 2009 Series Bonds, in whole or in part, in the event of a Change of Control pursuant to Section 4.09. The 2009 Series Bonds shall be redeemable as provided in Article 7 and in the 2009 Series Bonds. 40 Section 3.02. Denominations. The 2009 Series Bonds shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 3.03. Execution. Authentication, Delivery and Dating. The 2009 Series Bonds shall be executed on behalf of the Corporation in accordance with Section 2.12 of the Original Indenture. Notwithstanding any provision of Section 2.12 of the Original Indenture to the contrary, the signature of any of these officers on the 2009 Series Bonds may be the manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the 2009 Series Bonds. 2009 Series Bonds bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such 2009 Series Bonds or did not hold such offices at the date of such 2009 Series Bonds. On Corporation Order, the Trustee shall, pursuant to Section 3.05 of the Original Indenture, authenticate for original issue Initial 2009 Series Bonds in an aggregate principal amount not to exceed $75,000,000. The Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Corporation that it may reasonably request in connection with such authentication of Initial 2009 Series Bonds in accordance with Section 3.05 of the Original Indenture. Such order shall specify the amount of Initial 2009 Series Bonds to be authenticated and the date on which the original issue of Initial 2009 Series Bonds is to be authenticated. On Corporation Order, the Trustee shall authenticate for original issue Exchange 2009 Series Bonds in an initial aggregate principal amount not to exceed $300,000,000; provided that such Exchange 2009 Series Bonds shall be issuable only upon the valid surrender for cancellation of Initial 2009 Series Bonds and Series A 2009 Bonds of a like aggregate principal amount in accordance with an Exchange Offer pursuant to the Registration Rights Agreement; provided further that subject to compliance with the Indenture, the Corporation may issue additional bonds under the Indenture having the same terms in all respects as previously authenticated Exchange 2009 Series Bonds ( or in all respects except for the payment of interest on Exchange 2009 Series Bonds (i) scheduled and paid prior to the date of issuance of such additional bonds or (ii payable on the first interest payment date for the Exchange 2009 Series Bonds following such date of issuance), and the Exchange 2009 Series Bonds issued 41 pursuant to the Exchange Offer and such additional bonds shall constitute a series under the Indenture. The Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Corporation that it may reasonably request in connection with such authentication of Exchange 2009 Series Bonds. Such order shall specify the amount of Exchange 2009 Series Bonds to be authenticated and the date on which the original issue of Exchange 2009 Series Bonds is to be authenticated. Each 2009 Series Bond shall be dated the date of its authentication. No 2009 Series Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such 2009 Series Bond a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any 2009 Series Bond shall be conclusive evidence, and the only evidence, that such 2009 Series Bond has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any 2009 Series Bond shall have been authenticated and delivered hereunder but never issued and sold by the Corporation, and the Corporation shall deliver such 2009 Series Bond to the Trustee for cancellation as provided in Section 3.08 together with a written statement by an Officer (which need not be accompanied by an Opinion of Counsel) stating that such 2009 Series Bond has never been issued and sold by the Corporation, for all purposes of this Indenture such 2009 Series Bond shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. In case the Corporation, pursuant to Article 5, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Corporation shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article 5, any of the 2009 Series Bonds authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other 2009 Series Bonds executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the 2009 Series Bonds surrendered for such exchange and of like principal amount; and the Trustee, upon Corporation Request of the successor Person and an Officers' Certificate and an opinion of counsel as to such exchange conforming with this paragraph, shall authenticate and deliver 2009 Series Bonds 42 as specified in such request for the purpose of such exchange. If 2009 Series Bonds shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 3.03 in exchange or substitution for or upon registration of transfer of any 2009 Series Bonds, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all 2009 Series Bonds at the time Outstanding for 2009 Series Bonds authenticated and delivered in such new name. Section 3.04. Temporary 2009 Series Bonds. Pending the preparation of definitive 2009 Series Bonds, the Corporation may execute, and upon Corporation Order the Trustee shall authenticate in accordance with Section 3.05 of the Original Indenture and deliver, temporary 2009 Series Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive 2009 Series Bonds in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as conclusively the officers executing such 2009 Series Bonds may determine, as conclusively evidenced by their execution of such 2009 Series Bonds. If temporary 2009 Series Bonds are issued, the Corporation will cause definitive 2009 Series Bonds to be prepared without unreasonable delay. After the preparation of definitive 2009 Series Bonds, the temporary 2009 Series Bonds shall be exchangeable for definitive 2009 Series Bonds, upon surrender of the temporary 2009 Series Bonds at the office or agency of the Corporation in a Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary 2009 Series Bonds, the Corporation shall execute and, upon Corporation Order, the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive 2009 Series Bonds of authorized denominations. Until so exchanged the temporary 2009 Series Bonds shall in all respects be entitled to the same benefits under this Indenture as definitive 2009 Series Bonds. Section 3.05. Registration, Registration of Transfer and Exchange. The Corporation shall cause to be kept at the Corporate Trust Office of the Trustee a register for the 2009 Series Bonds (the register maintained in the Corporate Trust Office of the Trustee and in any other office or agency of the Corporation in a Place of Payment being herein sometimes collectively referred to as the "BOND REGISTER") in which, subject to such reasonable regulations as it may prescribe, the Corporation shall provide for the registration of 2009 Series Bonds and of transfers of 2009 Series Bonds. The Bond Register shall be in written form or any other form capable of being converted into written form 43 within a reasonable time. At all reasonable times, the Bond Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as bond registrar (the "BOND REGISTRAR") for the purpose of registering 2009 Series Bonds and transfers of 2009 Series Bonds as herein provided. Upon surrender for registration of transfer of any 2009 Series Bond at the office or agency in a Place of Payment, the Corporation shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee, one or more new 2009 Series Bonds, of any authorized denominations and of a like aggregate principal amount and tenor. At the option of the Holder, 2009 Series Bonds may be exchanged for other 2009 Series Bonds, of any authorized denomination and of a like aggregate principal amount, upon surrender of the 2009 Series Bonds to be exchanged at such office or agency. Whenever any 2009 Series Bonds are so surrendered for exchange, the Corporation shall execute, and the Trustee shall authenticate and deliver, the 2009 Series Bonds which the Holder making the exchange is entitled to receive; provided that no exchange of Initial 2009 Series Bonds or Series A 2009 Bonds for Exchange 2009 Series Bonds shall occur until an Exchange Offer Registration Statement shall have been declared effective by the SEC, the Trustee shall have received an Officers' Certificate confirming that the Exchange Offer Registration Statement has been declared effective by the SEC and the Initial 2009 Series Bonds and the Series A 2009 Bonds to be exchanged for the Exchange 2009 Series Bonds shall be canceled by the Trustee. All 2009 Series Bonds issued upon any registration of transfer or exchange of 2009 Series Bonds shall be the valid obligations of the Corporation, evidencing the same debt, and entitled to the same benefits under this Indenture, as the 2009 Series Bonds or the Series A 2009 Bonds surrendered upon such registration of transfer or exchange. Every 2009 Series Bond and Series A 2009 Bond presented or surrendered for registration of transfer or for exchange shall (if so required by the Corporation or the Bond Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Corporation or the Bond Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of 2009 Series Bonds, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of 2009 Series Bonds, 44 other than exchanges pursuant to (i) the Exchange Offer or (ii) exchanges pursuant to this Section 3.05 not involving any transfer. The Corporation shall not be required (i) to issue, register the transfer of or exchange 2009 Series Bonds during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of 2009 Series Bonds and ending at the close of business on the day of the mailing of the relevant notice of redemption, or (ii) to register the transfer of or exchange any 2009 Series Bond so selected for redemption in whole or in part, except the unredeemed portion of any 2009 Series Bond being redeemed in part, or (iii) to issue, register the transfer of or exchange any 2009 Series Bond which has been surrendered for repayment at the option of the Holder, except the portion, if any, of such 2009 Series Bond not to be so repaid. Section 3.06. Payment of Interest, Interest Rights Preserved. Interest on any 2009 Series Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such 2009 Series Bond (or one or more Predecessor 2009 Series Bonds) is registered at the close of business on the Regular Record Date for such interest at the Place of Payment provided, however, that each installment of interest on any 2009 Series Bond may at the Corporation's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 3.07, to the address of such Person as it appears on the Bond Register or (ii) wire transfer to an account maintained by the payee located in the United States. Any interest on any 2009 Series Bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in the 2009 Series Bonds (such defaulted interest and, if applicable, interest thereon herein collectively called "DEFAULTED INTEREST") may be paid by the Corporation, at its election in each case, as provided in clause (1) or (2) below: (1) The Corporation may elect to make payment of any Defaulted Interest to the Persons in whose names the 2009 Series Bonds (or their respective Predecessor 2009 Series Bonds) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Corporation shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each 2009 Series Bond and the date of the proposed payment, and at the same time the Corporation shall deposit with 45 the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Corporation of such Special Record Date and, in the name and at the expense of the Corporation, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided in Section 3.15, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose name the 2009 Series Bonds (or their respective Predecessor 2009 Series Bonds) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Corporation may make payment of any Defaulted Interest on the 2009 Series Bonds in any other lawful manner not inconsistent with the requirements of any securities exchange on which such 2009 Series Bonds may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Corporation to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 3.05, each 2009 Series Bond delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other 2009 Series Bond or Series A 2009 Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other 2009 Series Bond or Series A 2009 Bond. Section 3.07. Persons Deemed Owners. Prior to due presentment of a 2009 Series Bond for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name such 2009 Series Bond is registered as the owner of such 2009 Series Bond for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Sections 3.05 and 3.06) interest on such 2009 Series Bond and for all other purposes whatsoever, whether or not such 2009 46 Series Bond be overdue, and none of the Corporation, the Trustee or any agent of the Corporation or the Trustee shall be affected by notice to the contrary. Section 3.08. Cancellation. All 2009 Series Bonds surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or exchange, and all Series A 2009 Series Bonds surrendered for exchange pursuant to the Exchange Offer, shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All 2009 Series Bonds and Series A 2009 Series Bonds so delivered to the Trustee shall be promptly canceled by it. The Corporation may at any time deliver to the Trustee for cancellation any 2009 Series Bonds previously authenticated and delivered hereunder which the Corporation may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any 2009 Series Bonds previously authenticated hereunder which the Corporation has not issued and sold, and all 2009 Series Bonds so delivered shall be promptly canceled by the Trustee. If the Corporation shall so acquire any of the 2009 Series Bonds, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such 2009 Series Bonds unless and until the same are surrendered to the Trustee for cancellation. No 2009 Series Bonds shall be authenticated in lieu of or in exchange for any 2009 Series Bonds canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled 2009 Series Bonds held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures unless by Corporation Order the Corporation shall direct that canceled 2009 Series Bonds be returned to it. Section 3.09. Computation of Interest. Interest on the 2009 Series Bonds shall be computed on the basis of a 360- day year of twelve 30-day months. Section 3.10. Book Entry Provisions for Global Bonds. (a) Each Global Bond initially shall (i) be registered in the name of the Depositary for such Global Bonds or the nominee of such Depositary, (ii) be delivered to The Chase Manhattan Bank as custodian for such Depositary and (iii) bear legends as set forth in Section 2.03. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Bond, and the Depositary may be treated by the Corporation, the Trustee and any agent of the Corporation or the Trustee as the absolute owner of such Global Bond for all 47 purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Trustee or any agent of the Corporation or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial owner of any 2009 Series Bond. The registered holder of a Global Bond may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the 2009 Series Bonds. (b) Interests of beneficial owners in a Global Bond may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of Section 3.11. Transfers of a Global Bond shall be limited to transfers of such Global Bond in whole, but not in part, to the Depositary, its successors or their respective nominees, except (i) as otherwise set forth in Section 3.11 and (ii) U.S. Physical Bonds or Offshore Physical Bonds shall be transferred to all beneficial owners in exchange for their beneficial interests in the U.S. Global Bond or the Offshore Global Bond, respectively, in the following circumstances: (x) the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary for the applicable Global Bond or the Depositary ceases to be a "CLEARING AGENCY" registered under the Exchange Act and a successor depositary is not appointed by the Corporation within 90 days or (y) an Event of Default has occurred and is continuing and Holders of more than 25 % in aggregate principal amount of the Bonds at the time Outstanding represented by the Global Bonds advise the Trustee through the Depositary in writing that the continuation of a book-entry system through the Depositary with respect to the Global Bonds is no longer required. In connection with a transfer of an entire Global Bond to beneficial owners pursuant to clause (ii) of this paragraph (b), the applicable Global Bond shall be deemed to be surrendered to the Trustee for cancellation, and the Corporation shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the applicable Global Bond, an equal aggregate principal amount at maturity of U.S. Physical Bonds (in the case of the U.S. Global Bond) or Offshore Physical Bonds (in the case of the Offshore Global Bond), as the case may be, of authorized denominations. (c) Any beneficial interest in one of the Global Bonds that is transferred to a person who takes delivery in the form of an interest in the other Global Bond will, upon transfer, cease to be an interest in such Global Bond and become an interest in the other Global Bond and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Bond for as long as it remains such an interest. 48 (d) Any U.S. Physical Bond delivered in exchange for an interest in the U.S. Global Bond pursuant to paragraph (b) of this Section shall, except as otherwise provided in Section 3.11, bear the Private Placement Legend. Section 3.11. Transfer Provisions. Unless and until (i) an Initial 2009 Series Bond is sold pursuant to an effective Registration Statement, or (ii) an Initial 2009 Series Bond is exchanged for an Exchange 2009 Series Bond in the Exchange Offer pursuant to an effective Registration Statement, in each case, pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) General. The provisions of this Section 3.11 shall apply to all transfers involving any Physical Bond and any beneficial interest in any Global Bond. (b) Certain Definitions. As used in this Section 3.11 only, "DELIVERY" of a certificate by a transferee or transferor means the delivery to the Bond Registrar by such transferee or transferor of the applicable certificate duly completed; "HOLDING" includes both possession of a Physical Bond and ownership of a beneficial interest in a Global Bond, as the context requires; "TRANSFERRING" a Global Bond means transferring that portion of the principal amount of the transferor's beneficial interest therein that the transferor has notified the Bond Registrar that it has agreed to transfer; and "TRANSFERRING" a Physical Bond means transferring that portion of the principal amount thereof that the transferor has notified the Bond Registrar that it has agreed to transfer. As used in this Indenture, "REGULATION S CERTIFICATE" means a certificate substantially in the form set forth in Section 3.12; "RULE 144A CERTIFICATE" means a certificate substantially in the form set forth in Section 3.13; and "NON-REGISTRATION OPINION AND SUPPORTING EVIDENCE" means a written opinion of counsel reasonably acceptable to the Corporation and to the Trustee to the effect that, and such other certification or information as the Corporation may reasonably require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. (c) Deemed Delivery of a Rule 144A Certificate in Certain Circumstances. A Rule 144A Certificate, if not actually delivered, will be deemed delivered if (A) (i) the transferor advises the Corporation and the Trustee in writing that the relevant offer and sale were made in accordance with the provisions of Rule 144A (or, in the case of a transfer of a Physical Bond, the transferor checks the box provided on the Physical Bond to that effect) and (ii) the 49 transferee advises the Corporation and the Trustee in writing that (x) it and, if applicable, each account for which it is acting in connection with the relevant transfer, is a qualified institutional buyer within the meaning of Rule 144A, (y) it is aware that the transfer of 2009 Series Bonds to it is being made in reliance on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A, and (z) prior to the proposed date of transfer it has been given the opportunity to obtain from the Corporation the information referred to in Rule 144A(d)(4), and has either declined such opportunity or has received such information (or, in the case of a transfer of a Physical Bond, the transferee signs the certification provided on the Physical Bond to that effect); or (B) the transferor holds the U.S. Global Bond and is transferring to a transferee that will take delivery in the form of the U.S. Global Bond. (d) Procedures and Requirements. (i) If the proposed transfer occurs prior to the Offshore Bond Exchange Date, and the proposed transferor holds: (A) a U.S. Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the Bond Registrar shall (x) register such transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such surrendered U.S. Physical Bond and (z) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being transferred of such surrendered U.S. Physical Bond. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the Bond Registrar shall (x) cancel such surrendered U.S. Physical Bond, (y) record an increase in the principal amount of the U.S. Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. 50 (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (x) cancel such surrendered U.S. Physical Bond, (y) record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. In the case described in Section 3.11(e)(i)(A)(1), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. (B) a beneficial interest in the U.S. Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor. (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent 51 Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the Offshore Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (C) a beneficial interest in the Offshore Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new U.S. Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the Bond Registrar shall (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (3) delivers a Regulation S Certificate and the proposed transferee is or is acting through an Agent 52 Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor; provided, however, that until the Offshore Bond Exchange Date occurs, beneficial interests in the Offshore Global Bond may be held only in or through accounts maintained at the Depositary by Euroclear Clearance System ("EUROCLEAR") or Cedel Bank S.A. ("CEDEL") (or by Agent Members acting for the account thereof), and no person shall be entitled to effect any transfer or exchange that would result in any such interest being held otherwise than in or through such an account. (ii) If the proposed transfer occurs on or after the Offshore Bond Exchange Date and the proposed transferor holds: (A) a U.S. Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the procedures set forth in Section 3.11(e)(i)(A)(1) shall apply. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the procedures set forth in Section 3.11(e)(i)(A)(2) shall apply. (3) delivers a Regulation S Certificate, then the Bond Registrar shall cancel such surrendered U.S. Physical Bond and at the direction of the transferee, either: (x) register such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Bond to such transferee in principal amount equal to the principal amount being transferred of such surrendered U.S. Physical Bond, or 53 (y) if the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered U.S. Physical Bond and notify the Depositary in accordance with the procedures of the Depositary of such transfer. In any of the cases described in this Section 3.11(e)(ii)(A)(1) or (3)(x), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. (B) a beneficial interest in the U.S. Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee requests delivery in the form of Physical Bonds, then the procedures set forth in Section 3.11(e)(i)(B)(1) shall apply. (2) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests that the proposed transferee receive a beneficial interest in the U.S. Global Bond, then the procedures set forth in Section 3.11(e)(i)(B)(2) shall apply. (3) delivers a Regulation S Certificate, then the Bond Registrar shall (x) record a decrease in the principal amount of the U.S. Global Bond in an amount equal to the beneficial interest therein being transferred, (y) notify the Depositary in accordance with the procedures of the Depositary of such transfer and (z) at the direction of the transferee, either: (x) register such transfer in the name of such transferee, record the date thereof in its books and records and deliver a new Offshore Physical Bond to such transferee in principal amount equal to the amount of such decrease, or 54 (y) if the proposed transferee is or is acting through an Agent Member, record an increase in the principal amount of the Offshore Global Bond equal to the amount of such decrease. (C) an Offshore Physical Bond which is surrendered to the Bond Registrar, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests delivery in the form of the U.S. Global Bond, then the Bond Registrar shall (x) cancel such surrendered Offshore Physical Bond, (y) record an increase in the principal amount of the U.S. Global Bond equal to the principal amount being transferred of such surrendered Offshore Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) where the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the Bond Registrar shall (x) cancel such surrendered Offshore Physical Bond, (y) record an increase in the principal amount of the Offshore Global Bond equal to the principal amount being transferred of such surrendered Offshore Physical Bond and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (3) does not make a request covered by Section 3.11(e)(ii)(C)(1) or Section 3.11(e)(ii)(C)(2), then the Bond Registrar shall (x) register such transfer in the name of such transferee and record the date thereof in its books and records, (y) cancel such surrendered Offshore Physical Bond and (z) deliver a new Offshore Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the principal amount being transferred of such surrendered Offshore Physical Bond. In any of the cases described in this Section 3.11(e)(ii)(C), the Bond Registrar shall deliver to the transferor a new U.S. Physical Bond in 55 principal amount equal to the principal amount not being transferred of such surrendered U.S. Physical Bond. (D) a beneficial interest in the Offshore Global Bond, and the proposed transferee or transferor, as applicable: (1) delivers (or is deemed to have delivered) a Rule 144A Certificate and the proposed transferee is or is acting through an Agent Member and requests delivery in the form of the U.S. Global Bond, then the Bond Registrar shall (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) record an increase in the principal amount of the U.S. Global Bond equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (2) where the proposed transferee is or is acting through an Agent Member, requests that the proposed transferee receive a beneficial interest in the Offshore Global Bond, then the transfer shall be effected in accordance with the procedures of the Depositary therefor. (3) does not make a request covered by Section 3.11(e)(ii)(D)(1) or Section 3.11(e)(ii)(D)(2), then the Bond Registrar shall (w) register such transfer in the name of such transferee and record the date thereof in its books and records, (x) record a decrease in the principal amount of the Offshore Global Bond in an amount equal to the beneficial interest therein being transferred, (y) deliver a new Offshore Physical Bond to such transferee duly registered in the name of such transferee in principal amount equal to the amount of such decrease and (z) notify the Depositary in accordance with the procedures of the Depositary of such transfer. (e) Execution, Authentication and Delivery of Physical Bonds. In any case in which the Bond Registrar is required to deliver a Physical Bond to a transferee, the Corporation shall execute, and the Trustee shall authenticate and deliver, such Physical Bond. 56 (f) Certain Additional Terms Applicable to Physical Bonds. (i) Any transferee entitled to receive a Physical Bond may request that the principal amount thereof be evidenced by one or more Physical Bonds in any authorized denomination or denominations and the Bond Registrar shall comply with such request if all other transfer restrictions are satisfied. (ii) In the event that a transferor transfers less than the entire principal amount of a Physical Bond surrendered for transfer, following the transfer the Bond Registrar shall deliver to the transferor a new Physical Bond of the same type in principal amount equal to the untransferred portion of the surrendered Physical Bond. (g) Transfers Not Covered by Section 3.11(e). The Bond Registrar shall effect and record, upon receipt of a written request from the Corporation so to do, a transfer not otherwise permitted by Section 3.11(e), such recording to be done in accordance with the otherwise applicable provisions of Section 3.11(e), upon the furnishing by the proposed transferor or transferee of a Non- Registration Opinion and Supporting Evidence. (h) General. By its acceptance of any 2009 Series Bond bearing the Private Placement Legend, each Holder of such 2009 Series Bond acknowledges the restrictions on transfer of such 2009 Series Bond set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such 2009 Series Bond only as provided in the Indenture. The Bond Registrar shall not register a transfer of any 2009 Series Bond unless such transfer complies with the restrictions with respect thereto set forth in this Indenture. The Bond Registrar shall not be required to determine (but may rely upon a determination made by the Corporation) the sufficiency of any such certifications, legal opinions or other information. Section 3.12. Form of Regulation S Certificate. 57 REGULATION S CERTIFICATE To: The Chase Manhattan Bank, as Trustee (the "Trustee") 450 West 33rd Street New York, NY 10001 Attention: Corporate Trust Trustee Administration Re: Eleventh Supplemental Indenture (the "Indenture") dated as of March 31, 1999, among National Steel Corporation (the "Corporation") and the Trustees Ladies and Gentlemen: This Certificate relates to our proposed transfer of $_____ principal amount of bonds issued under the Indenture and to be designated the "First Mortgage Bonds, 97/8% Series C due 2009" (hereinafter called the "2009 Series Bonds"). Terms are used in this Certificate as defined in Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). We hereby certify as follows: 1. The offer of the 2009 Series Bonds was not made to a person in the United States (unless such person or the account held by it for which it is acting is excluded from the definition of "U.S. person" pursuant to Rule 902(k) of Regulation S under the circumstances described in Rule 902(k)(2) of Regulation S) or specifically targeted at an identifiable group of U.S. citizens abroad. 2. Either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States. 3. Neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States. 4. The proposed transfer of 2009 Series Bonds is not part of a plan or scheme to evade the registration requirements of the Securities Act. 58 5. If we are a dealer or a person receiving a selling concession or other fee or remuneration in respect of the 2009 Series Bonds, and the proposed transfer takes place before the Offshore 2009 Series Bond Exchange Date referred to in the Indenture, or we are an officer or director of the Corporation or a distributor, we certify that the proposed transfer is being made in accordance with the provisions of Rule 904 of Regulation S. You and the Corporation are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Seller] By:________________________ Name: Title: Address: Date of this Certificate: _________, 199__ Signature Guarantee: _______________________________ Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 59 Section 3.13. Form of Rule 144A Certificate. RULE 144A CERTIFICATE To: The Chase Manhattan Bank, as Trustee (the "Trustee") 450 West 33rd Street New York, NY 10001 Attention: Corporate Trust Trustee Administration Re: Eleventh Supplemental Indenture (the "Indenture") dated as of March 31, 1999 among National Steel Corporation (the "Corporation") and the Trustees Ladies and Gentlemen: This Certificate relates to our proposed purchase of $_____ principal amount of bonds issued under the Indenture and to be designated the "First Mortgage Bonds, 9 7/8% Series C due 2009" (hereinafter called the "2009 Series Bonds"). We and, if applicable, each account for which we are acting, are "qualified institutional buyers" within the meaning of Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act"). We are aware that the transfer of 2009 Series Bonds to us is being made in reliance on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this Certificate we have been given the opportunity to obtain from the Corporation the information referred to in Rule 144A(d)(4), and have either declined such opportunity or have received such information. You and the Corporation are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF PURCHASER] By:____________________ Name: Title: Address: Date of this Certificate: _____________ __, 199__ 60 Signature Guarantee: _______________________________ Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. Section 3.14. CUSIP Numbers. The Corporation in issuing the 2009 Series Bonds may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the 2009 Series Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the 2009 Series Bonds, and any such redemption shall not be affected by any defect in or omission of such numbers. The Corporation will promptly notify the Trustee of any change in the CUSIP numbers. Section 3.15. Notice to Holders; Waiver. Where this Supplemental Indenture provides for notice of any event to Holders of 2009 Series Bonds by the Corporation or the Trustee, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each such Holder affected by such event, at his address as it appears in the Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impractical to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be sufficient giving of such notice for every purpose hereunder. 61 Where this Supplemental Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. ARTICLE 4 PARTICULAR COVENANTS OF THE CORPORATION Each of the following covenants contained in this Article 4 shall remain in effect, subject to Section 4.04, for so long as any of the 2009 Series Bonds are outstanding: Section 4.01. Payment of Securities. The Corporation shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the 2009 Series Bonds and in this Supplemental Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee holds in accordance with this Supplemental Indenture money sufficient to pay all principal and interest then due and the Trustee is not prohibited from paying such money to the holders of the 2009 Series Bonds on that date pursuant to the terms of this Supplemental Indenture. The Corporation shall pay interest on overdue principal at the rate specified therefor in the 2009 Series Bonds, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Section 4.02. SEC Reports. Notwithstanding that the Corporation may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Corporation shall file with, or furnish to, the SEC such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and reports to be so filed at the times specified for the filing of such information, documents and reports under such Sections (the "REQUIRED FILING TIMES"); provided, however, that the Corporation shall not be so obligated to file such information, documents and reports with the SEC if the SEC does not permit such filings. The Corporation shall also in any event (a) within 15 days of each Required Filing Time, provide the Trustee and the Holders of 2009 Series Bonds with copies of such information, documents and reports and (b) if the SEC does 62 not permit the filing of such information, documents and reports, promptly upon written request by a prospective Holder of 2009 Series Bonds supply copies of such information, documents and reports to such prospective Holder of 2009 Series Bonds. Section 4.03. Limitation on Lines of Business. Neither the Corporation nor any of its Restricted Subsidiaries shall directly or indirectly engage to any substantial extent in any line or lines of business activity other than the business of the Corporation and its Restricted Subsidiaries on March 8, 1999 (and any business reasonably related thereto). Section 4.04 Covenant Suspension. If and for so long as the Corporation reaches and maintains Investment Grade Status, the Corporation and the Restricted Subsidiaries shall be released from their obligations to comply with Sections 4.03, 4.05, 4.06, 4.10, 4.11, 4.12, 5.01(a)(v) and (vi), and clause (x) of the second paragraph (and such clause (x) as referred to in the first paragraph) of Section 4.14. The Corporation shall notify the Trustee in writing when it reaches Investment Grade Status and when it ceases to have Investment Grade Status. Section 4.05 Limitation on Debt and Restricted Subsidiary Preferred Stock. The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur any Debt (which includes, in the case of Restricted Subsidiaries, Preferred Stock); provided however that (a) the Corporation and Restricted Subsidiaries may Incur Debt if (i) after giving pro forma effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and (ii) after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio would be greater than 2.50 to 1.00 and, (b) the Corporation and its Restricted Subsidiaries may incur debt if such Debt is Permitted Debt. Section 4.06 Limitation on Restricted Payments. (a) The Corporation shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving pro forma effect to, such proposed Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing; (ii) the Corporation could not Incur at least $1.00 of additional Debt pursuant to Section 4.05 (a); or 63 (iii) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since March 8, 1999 (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value) would exceed an amount equal to the sum of: (A) 50% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from and after the first day of the fiscal quarter following the end of the most recent fiscal quarter ended immediately prior to March 8, 1999 to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit); (B) Capital Stock Sale Proceeds; (C) the amount by which Debt (other than Subordinated Obligations issued or sold prior to March 8, 1999) of the Corporation is reduced on the Corporation's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Corporation) subsequent to March 8, 1999 of any Debt of the Corporation convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Corporation (less the amount of any cash or other Property distributed by the Corporation or any Restricted Subsidiary upon such conversion or exchange); and (D) to the extent not otherwise included in the Consolidated Net Income of the Corporation, an amount equal to the sum of (x) the net reduction in Investments in any Person (other than reductions in Permitted Investments) resulting from the payment in cash of interest on Debt, dividends, repayments of loans or advances, or other transfers of assets, in each case to the Corporation or any Restricted Subsidiary after March 8, 1999 from such Person and (y) the portion (proportionate to the Corporation's equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that in the case of (x) or (y) above the foregoing sum shall not exceed the amount of Investments previously made (and treated as a Restricted Payment) by the Corporation or any Restricted Subsidiary in such Person or Unrestricted Subsidiary. 64 (b) Notwithstanding the foregoing limitation, the Corporation may: (i) pay dividends on its Capital Stock within 60 days of the declaration thereof if, on said declaration date, such dividends could have been paid in compliance with this Indenture; provided, however, that at the time of such payment of such dividend, no other Default or Event of Default shall have occurred and be continuing (or would result therefrom); provided further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; (ii) purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of the Corporation or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Corporation (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Corporation or an employee stock ownership plan or trust established by the Corporation or any of its Subsidiaries for the benefit of their employees); provided, however, that (A) such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such exchange or sale shall be excluded from the calculation of the amount of Capital Stock Sale Proceeds; (iii) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments; (iv) expend up to $5,000,000 in any fiscal year of the Corporation to repurchase common stock of the Corporation (i) to distribute to current or former employees, officers and directors of the Corporation and its Subsidiaries, including upon the exercise of stock options granted to such employees, officers and directors, (ii) from such current or former employees, officers or directors or (iii) otherwise in order to distribute as employee compensation; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such repurchase shall be excluded in the calculation of the amount of Restricted Payments; 65 (v) to repurchase up to 700,000 shares of common stock of the Corporation pursuant to the stock repurchase approved by the Board of Directors of the Corporation on August 26, 1998; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such repurchase shall be included in the calculation of the amount of Restricted Payments; and (vi) expend up to $50 million for Restricted Payments in addition to amounts permitted pursuant to clauses (i) through (v) above; provided, however, that at the time of, and after giving pro forma effect to, any such expenditure, no other Default or Event of Default shall have occurred and be continuing; provided further, however, that such expenditures shall be included in the calculation of the amount of Restricted Payments. Section 4.07. Limitation on Pledged Subsidiaries to Incur Indebtedness or Issue Capital Stock. The Corporation will not: (a) permit any Wholly-Owned Subsidiary the stock of which is at the time pledged under the Indenture to incur any indebtedness, direct or contingent, except: (i) current liabilities (other than for money borrowed) incurred in the ordinary and regular conduct of business and payable within one year after the date of the incurring thereof; and (ii) indebtedness to the Corporation, and the extension, renewal or refunding thereof from time to time; or (b) permit any Wholly-Owned Subsidiary the stock of which is at the time pledged under the Indenture to issue any capital stock (other than directors' qualifying shares, where necessary) except to the Corporation. Nothing contained in this Supplemental Indenture shall prevent any such Wholly-Owned Subsidiary from acquiring property subject to any mortgage or other lien to which the property is subject at the time of the acquisition, or from creating any mortgage upon, or pledge of, any property hereafter acquired, at the time of acquisition thereof, in order to secure payment of the purchase price thereof or in order to secure any loan incurred for the purpose of financing such acquisition, provided that the Corporation shall deposit with the Trustee to be held as part of the trust estate cash equal to: 66 (i) the aggregate principal amount of additional Bonds, if any, issued upon the basis of the stock of such subsidiary, and (ii) the amount of cash, if any, withdrawn upon the basis of the stock of such Wholly-Owned Subsidiary pursuant to Sections 9.01 and 9.03 of the Original Indenture; and provided, further, that the principal amount of the indebtedness secured by any such mortgage, lien or pledge shall not exceed 66 2/3% of the cost to such Wholly-Owned Subsidiary of the property subject to such mortgage, lien or pledge; or prevent the renewal or extension of any indebtedness secured by any lien permitted by this paragraph; or prevent the refunding of any such indebtedness by a new loan not exceeding the amount of the indebtedness refunded and secured by the property which secured such refunded indebtedness. If such property shall thereafter be subjected to the lien of the Indenture pursuant to any provision thereof, the existence of such mortgage, lien or pledge shall not constitute a breach of any covenant hereunder. The Corporation will not assign any indebtedness of a Wholly-Owned Subsidiary the stock of which is pledged under the Indenture, except to the Trustees or, after such assignment to the Trustees, except as provided in the following sentence. The Corporation will not sell or otherwise dispose of any indebtedness or capital stock of any such Wholly-Owned Subsidiary pledged under the Indenture unless prior to such sale or other disposition, or at the same time, all other indebtedness and capital stock of such Wholly-Owned Subsidiary owned directly or indirectly by the Corporation and its other subsidiaries is sold or otherwise disposed of. Section 4.08. Limitation on Sale of Mortgaged Property. The Corporation will not sell or otherwise dispose of a part (less than substantially all) of the Mortgaged Property except as provided in Section 7.04, 8.01 or 8.02 of the Original Indenture or upon the release thereof as provided in Section 8.03 or 8.04 of the Indenture, or consolidate or merge with or into, or transfer or convey all or substantially all the Mortgaged Property, as an entirety to, any other Person, or permit any other Person to merge into it, except as provided in Article 13 of the Original Indenture. Notwithstanding the provisions of Section 8.03 of the Original Indenture but subject to the provisions of Section 4.16 thereof, the Corporation from time to time may sell, exchange or otherwise dispose of any property constituting Mortgaged Property other than shares of stock or other securities or indebtedness of any corporation pledged hereunder and the Trustees shall release the same from the lien of this Indenture without compliance with any of the provisions of said 67 Section 8.03 and without the deposit of cash with the Trustees, but only subject to certain exceptions described below upon receipt by the Trustee of: (a) A request evidenced by an Officers' Certificate; and (b) An engineer's certificate, stating in substance: (i) A description in reasonable detail of the property to be released; (ii) A description in reasonable detail of the consideration, if any, for the property to be released; (iii) The then fair value, in the opinion of the signer, of the property to be released, which fair value shall in no event exceed $100,000; (iv) That neither (i) the aggregate fair value of all property released under this Section 4.08 in the calendar year in which the property described in the certificate is to be released nor (ii) the aggregate consideration received by the Corporation for all property so released for such calendar year, exceeds $250,000; and (v) That, in the opinion of the signer, such property is not useful or necessary in the conduct of the business of the Corporation and that such release will not impair the security under the Indenture in contravention of the provisions of the Indenture and is desirable in the proper conduct of the business of the Corporation or is otherwise in the best interests of the Corporation. No property shall be released under the provisions described in this Section 4.08 in any calendar year after either (i) aggregate fair value of all property released under the provisions described in this Section 4.08 for such calendar year, or (ii) the aggregate consideration received by the Corporation for such property for such calendar year, exceeds $250,000. Section 4.0. Change of Control. (a) Upon the occurrence of a Change of Control, each Holder of 2009 Series Bonds shall have the right to require the Corporation to repurchase all or any part of such Holder's 2009 Series Bonds pursuant to the offer described below (the "CHANGE OF CONTROL OFFER") at a purchase price (the "CHANGE OF CONTROL PURCHASE PRICE") equal to 101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the purchase date (subject to the right of Holders of record on the relevant record date 68 to receive interest due on the relevant interest payment date that is on or prior to the purchase date). (b) Within 30 days following any Change of Control, the Corporation shall (a) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar business news service in the United States and (b) send, by first-class mail, with a copy to the Trustee, to each Holder of 2009 Series Bonds, at such Holder's address appearing in the Bond Register, a notice stating: (i) that a Change of Control has occurred and a Change of Control Offer is being made pursuant to this Section 4.09 and that all 2009 Series Bonds timely tendered will be accepted for payment; (ii) the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE"); (iii) that any 2009 Series Bonds (or portion thereof) accepted for payment (and duly paid on the Change of Control Payment Date) pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (iv) that any 2009 Series Bonds (or portions thereof) not tendered will continue to accrue interest; (v) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); and (vi) the procedures that Holders of 2009 Series Bonds must follow in order to tender their 2009 Series Bonds (or portions thereof) for payment, and the procedures that Holders of 2009 Series Bonds must follow in order to withdraw an election to tender 2009 Series Bonds (or portions thereof) for payment. (c) Holders electing to have a 2009 Series Bond purchased will be required to surrender the 2009 Series Bond, with an appropriate form (which may include the form on the reverse thereof) duly and properly completed, to the Corporation or its agent at the address specified in the notice at least three Business Days prior to the Change of Control Payment Date. Holders will be entitled to withdraw their election if the Trustee or the Corporation receives not later than one Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the 2009 Series Bond which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such 2009 Series Bonds purchased. Holders whose 2009 Series Bond are purchased only in part shall be issued new 2009 Series Bonds equal in principal amount to the unpurchased portion of the 2009 Series Bonds surrendered. (d) On or prior to the Change of Control Payment Date, the Corporation shall irrevocably deposit with the Trustee or with the Paying Agent (or, if the 69 Corporation or any of its Wholly Owned Subsidiaries is acting as the Paying Agent, segregate and hold in trust) in cash an amount equal to the Change of Control Purchase Price payable to the Holders entitled thereto, to be held for payment in accordance with the provisions of this Section. On the Change of Control Payment Date, the Corporation shall deliver to the Trustee the 2009 Series Bonds or portions thereof which have been properly tendered to and are to be accepted by the Corporation for payment. The Trustee or the Paying Agent shall, on the Change of Control Payment Date, mail or deliver payment to each tendering Holder of the Change of Control Purchase Price. In the event that the aggregate Change of Control Purchase Price is less than the amount delivered by the Corporation to the Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may be, shall deliver the excess to the Corporation immediately after the Change of Control Payment Date. (e) At the time the Corporation delivers 2009 Series Bonds to the Trustee which are to be accepted for purchase, the Corporation shall also deliver an Officers' Certificate stating that such 2009 Series Bonds are to be accepted by the Trustee pursuant to and in accordance with the terms of this Section. (f) The Corporation will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of 2009 Series Bonds pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section by virtue of such compliance. Section 4.10. Limitation on Sale of Assets Other Than Mortgaged Property. (a) The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale, which term for purposes of this Section 4.10, shall exclude sales or other dispositions of Mortgaged Property made in compliance with the terms of the Original Indenture and Section 4.08, unless (i) the Corporation or such Restricted Subsidiary receives consideration at the time of such Asset Sale (or, in the case of a lease that is an Asset Sale, the Corporation or such Restricted Subsidiary is to receive over the term of such lease) consideration at least equal to the fair value of the Property subject to such Asset Sale; (ii) at least 75% of the consideration paid to the Corporation or such Restricted Subsidiary in connection with such Asset Sale is in the form of cash, Cash Equivalents, Additional Assets or the assumption by the purchaser of liabilities of the Corporation or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the 2009 Series Bonds) as a result of which the Corporation and the Restricted Subsidiaries are no longer obligated 70 with respect to such liabilities; and (iii) the Corporation delivers an Officers' Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (i) and (ii). (b) The Net Available Cash (or any portion thereof) from Asset Sales may be applied by the Corporation or a Restricted Subsidiary, to the extent the Corporation or such Restricted Subsidiary elects (or is required by the terms of any Debt): (i) to prepay, repay, legally defease or purchase Senior Debt of the Corporation or Debt of any Restricted Subsidiary (excluding, in any such case, Debt owed to the Corporation or an Affiliate of the Corporation); (ii) to permanently fund pension or other post-retirement employee benefit obligations ("OPEB") obligations of the Corporation; or (iii) to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Corporation or another Restricted Subsidiary) or to commit to reinvest in Additional Assets (such commitments to include amounts anticipated to be expended pursuant to the Corporation's capital investment plan (x) as adopted by the Board of Directors and (y) evidenced by the filing of an Officers' certificate with the Trustee stating that the total amount of the Net Available Cash from such Asset Sale, after giving effect to the prior application of any portion thereof pursuant to clause (i) or (ii) of this paragraph (b), is less than the aggregate amount contemplated to be expended pursuant to such capital investment plan within 24 months of the consummation of such Asset Sale)); provided, however, that in connection with any prepayment, repayment, legal defeasance or purchase of Debt pursuant to clause (i) above, the Corporation or such other Restricted Subsidiary shall retire such Debt and shall cause the related loan commitment (if any) to be permanently reduced by an amount equal to the principal amount so prepaid, repaid, legally defeased or purchased. (c) Any Net Available Cash from an Asset Sale not applied in accordance with the preceding paragraph within twelve months from the date of the receipt of such Net Available Cash (or committed to be reinvested in Additional Assets pursuant to clause (iii) of the preceding paragraph within twelve months from the date of the receipt of such Net Available Cash and not actually reinvested in Additional Assets pursuant to such investment commitment within twenty-four months from the date of the receipt of such Net Available Cash) shall constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $5,000,000 (taking into account income earned on such Excess Proceeds, if any), the Corporation will be required to make an offer to purchase (the "PREPAYMENT OFFER") the 2009 Series Bonds which offer shall be in the amount of the Excess Proceeds, on a pro rata basis according to principal amount, at a purchase price 71 equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the Purchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the purchase date) in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Supplemental Indenture. To the extent that any portion of the amount of Net Available Cash remains after compliance with the preceding sentence and provided that all Holders of 2009 Series Bonds have been given the opportunity to tender their 2009 Series Bonds for purchase as described in Section 4.10(d), the Corporation or such Restricted Subsidiary may use such remaining amount for any purpose permitted by this Indenture and the amount of Excess Proceeds will be reset to zero. (d) (i) Within five Business Days after the Corporation is obligated to make a Prepayment Offer as described in Section 4.10(c), the Corporation will send a written notice, by first-class mail, to the Trustee and the Holders of 2009 Series Bonds (the "PREPAYMENT OFFER NOTICE"), accompanied by such information regarding the Corporation and its Subsidiaries as the Corporation in good faith believes will enable such Holders to make an informed decision with respect to such Prepayment Offer (which at a minimum shall include the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Corporation, the most recent subsequently filed Quarterly Report on Form 10-Q of the Corporation and any Current Report on Form 8-K of the Corporation filed subsequent to such Quarterly Report, other than Current Reports describing Asset Sales otherwise described in the offering materials, or corresponding successor reports (or, during any time that the Corporation is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, corresponding reports prepared pursuant to Section 4.02), a description of material developments in the Corporation's business subsequent to the date of the latest of such reports and if material, appropriate pro forma financial information). The Prepayment Offer Notice shall state, that a Prepayment Offer is being made pursuant to this Section 4.10 and that all 2009 Series Bonds timely tendered will be accepted for payment (subject to proration), that any 2009 Series Bonds (or any portion thereof) accepted for payment (and duly paid on the Purchase Date) pursuant to the Prepayment Offer shall cease to accrue interest after the Purchase Date, the purchase price and purchase date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date the Prepayment Offer Notice is mailed (the "PURCHASE DATE"), the aggregate principal amount of 2009 Series Bonds eligible to be purchased, that any 2009 Series Bonds (or portions thereof) not tendered will continue to accrue interest and the procedures that Holders of 2009 Series Bonds must follow in order to tender their 2009 Series Bonds (or portions thereof) for payment and the 72 procedures that Holders of 2009 Series Bonds must follow in order to withdraw an election to tender 2009 Series Bonds (or portions thereof) for payment. (ii) Not later than the date upon which written notice of a Prepayment Offer is delivered to the Trustee as provided above, the Corporation shall deliver to the Trustee an Officers' Certificate as to (A) the amount of the Prepayment Offer (the "OFFER AMOUNT"), (B) the allocation of the Net Available Cash from the Asset Sales pursuant to which such Prepayment Offer is being made and (C) the compliance of such allocation with the provisions of Section 4.10(b). On such date, the Corporation shall also irrevocably deposit with the Trustee or with the Paying Agent (or, if the Corporation or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) in Cash Equivalents, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section. Upon the expiration of the period for which the Prepayment Offer remains open (the "OFFER PERIOD"), the Corporation shall deliver to the Trustee for cancellation the 2009 Series Bonds or portions thereof which have been properly tendered to and are to be accepted by the Corporation. The Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the 2009 Series Bonds delivered by the Corporation to the Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall deliver the excess to the Corporation immediately after the expiration of the Offer Period for application in accordance with this Section. (iii) Holders electing to have a 2009 Series Bond purchased shall be required to surrender the 2009 Series Bond, with an appropriate form (which may include the form on the reverse thereof) duly and properly completed, to the Corporation or its agent at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Corporation receives not later than one Business Day prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the 2009 Series Bond which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such 2009 Series Bond purchased. If at the expiration of the Offer Period the aggregate principal amount of 2009 Series Bonds surrendered by Holders exceeds the Offer Amount, the Corporation shall select the 2009 Series Bonds to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the 73 Corporation so that only 2009 Series Bonds in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose 2009 Series Bonds are purchased only in part shall be issued new 2009 Series Bonds equal in principal amount to the unpurchased portion of the 2009 Series Bonds surrendered. (iv) At the time the Corporation delivers 2009 Series Bonds to the Trustee which are to be accepted for purchase, the Corporation shall also deliver an Officers' Certificate stating that such 2009 Series Bonds are to be accepted by the Trustee pursuant to and in accordance with the terms of this Section. A 2009 Series Bond shall be deemed to have been accepted for purchase at the time the Trustee or the Paying Agent mails or delivers payment therefor to the surrendering Holder. (e) The Corporation will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of 2009 Series Bonds pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section by virtue thereof. Section 4.1. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Corporation or any other Restricted Subsidiary, (b) make any loans or advances to the Corporation or any other Restricted Subsidiary, (c) transfer any of its Property to the Corporation or any other Restricted Subsidiary or (d) guarantee any Debt of the Corporation or any other Restricted Subsidiary. The foregoing limitations will not apply (i) with respect to clauses (a), (b), (c) and (d), to restrictions (A) in effect on March 8, 1999, (B) relating to Debt of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Corporation, (C) which result from the Refinancing of Debt Incurred pursuant to an agreement referred to in the immediately preceding clause (i)(A) or (B) above or in clause (ii)(A) or (B) below, provided that such restriction is no less favorable to the Holders of 2009 Series Bonds than those under the agreement evidencing the Debt so Refinanced, (D) on Sales Finance or any other bankruptcy- remote special-purpose 74 Subsidiary of the Corporation that purchases or sells accounts receivable or inventory pursuant to the Credit Facilities or (E) arising or agreed to in a joint venture agreement, entered into by the Corporation or a Restricted Subsidiary in the ordinary course of business that do not (as determined by the Corporation and certified in a resolution of the Board of Directors or a certificate of the chief financial or chief accounting officer of the Corporation delivered to the Trustee prior to or promptly following such encumbrance or restriction becoming effective), individually or in the aggregate, (1) detract from the value of property or assets of the Corporation or any Restricted Subsidiary in any manner material to the Corporation or any Restricted Subsidiary or (2) materially adversely affect the Corporation's ability to make principal or interest payments on the 2009 Series Bonds and (ii) with respect to clause (c) only, to restrictions (A) relating to Debt that is permitted to be Incurred and secured pursuant to Section 4.05 and Section 4.12 of the Original Indenture that limit the right of the debtor to dispose of the Property securing such Debt, (B) encumbering Property at the time such Property was acquired by the Corporation or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition, (C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder or (D) customary restrictions contained in asset sale agreements limiting the transfer of such Property pending the closing of such sale. Section 4.12. Limitation on Transactions with Affiliates. (a) The Corporation shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Corporation (an "AFFILIATE TRANSACTION"), unless (i) the terms of such Affiliate Transaction are (A) set forth in writing and (B) no less favorable to the Corporation or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm's-length transaction with a Person that is not an Affiliate of the Corporation, (ii) if such Affiliate Transaction involves aggregate payments or value in excess of $10,000,000, the Board of Directors (including a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (i) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee and (iii) if such Affiliate Transaction involves aggregate payments or value in excess of $20,000,000, the Corporation obtains a written opinion from an Independent Financial Advisor to the effect that such Affiliate Transaction is fair, from a financial point of view, to the Corporation or such Restricted Subsidiary, as the case may be. 75 (b) Notwithstanding the foregoing limitation, the Corporation or any Restricted Subsidiary may enter into or suffer to exist the following: (i) any transaction or series of transactions between the Corporation and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries; provided that no more than 5% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of the Corporation (other than a Restricted Subsidiary); (ii) any Restricted Payment permitted to be made pursuant to Section 4.06; (iii) any issuance of securities, or other payments, awards or grants in securities or otherwise pursuant to, or the funding of, employment arrangements, pension or other benefit plans, stock options and stock ownership plans and other compensatory arrangements approved by the Board of Directors; (iv) the payment of reasonable fees to directors of the Corporation or such Restricted Subsidiary who are not employees of the Corporation or any Restricted Subsidiary; (v) loans and advances to employees made in the ordinary course of business and consistent with the past practices of the Corporation or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $5,000,000 in the aggregate at any one time outstanding; and (vi) any payments for the purchase of steel products from NKK or any of its Affiliates or the provision of services by NKK or any of its Affiliates, including the construction by NKK or an Affiliate of the new hot dip galvanizing facility at the Great Lakes Division; provided, that, in each case, the terms of such payments are determined on an arm's length basis and are approved by the disinterested members of the Board of Directors of the Corporation; and (vii) any Affiliate Transactions between the Corporation or any Restricted Subsidiary and one or more Affiliate Joint Ventures that (x) are on terms no less favorable to the Corporation or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm's length transaction with a Person that is not an Affiliate of the Corporation and (y) if such Affiliate Transactions involve aggregate 76 payments or value in excess of $10 million, the Board of Directors (including a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction, and in its good faith judgment believes that such Affiliate Transaction complies with clause (x) of this paragraph (vii). Section 4.13. Limitation on Sale and Leaseback Transactions. The Corporation shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Property unless (a) the Corporation or such Restricted Subsidiary would be entitled to (i) Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to Section 4.05 and (ii) create a Lien on such Property securing such Attributable Debt, and (b) such Sale and Leaseback Transaction is effected in compliance with Section 4.10. Section 4.14. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors may designate any Subsidiary of the Corporation to be an Unrestricted Subsidiary if (a) the Subsidiary to be so designated does not own any Capital Stock or Debt of, or own or hold any Lien on any Property of, the Corporation or any other Restricted Subsidiary (b) the Subsidiary to be so designated is not obligated under any Debt, Lien or other obligation that, if in default, would result (with the passage of time or notice or otherwise) in a default on any Debt of the Corporation or of any Restricted Subsidiary and (c) either (i) the Subsidiary to be so designated has total assets of $1,000 or less or (ii such designation is effective immediately upon such entity becoming a Subsidiary of the Corporation or any Restricted Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Corporation or of any Wholly Owned Subsidiary will be classified as a Restricted Subsidiary, provided that the requirements set forth in clauses (x) and (y) of the immediately following paragraph would be satisfied after giving pro forma effect to such classification. Any Person not permitted by the terms of the immediately preceding sentence to be classified as a Restricted Subsidiary shall be automatically classified as an Unrestricted Subsidiary. Except as provided in the first sentence of this paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma effect to such designation, (x) the Corporation could Incur at least $1.00 of additional Debt pursuant to Section 4.05 and (y) no Default or Event of Default shall have occurred and be continuing or would result therefrom. 77 Any such designation or redesignation by the Board of Directors will be evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such designation or redesignation and an Officers' Certificate (a) certifying that such designation or redesignation complies with the foregoing provisions and (b) giving the effective date of such designation or redesignation, such filing with the Trustee to occur within 45 days after the end of the fiscal quarter of the Corporation in which such designation or redesignation is made (or, in the case of a designation or redesignation made during the last fiscal quarter of the Corporation's fiscal year, within 90 days after the end of such fiscal year). Section 4.15. Compliance Certificate. The Corporation shall deliver to the Trustee within 120 days after the end of each fiscal year of the Corporation an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Corporation they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Corporation is taking or proposes to take with respect thereto. The Corporation also shall comply with TIA (S) 314(a)(4). Section 4.16. Further Instruments and Acts. Upon request of the Trustee, the Corporation will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE 5 Successor Corporation Section 5.01. When Corporation May Merge or Transfer Assets. (a) The Corporation shall not merge, consolidate or amalgamate with or into any other Person (other than a merger of a Wholly Owned Subsidiary into the Corporation) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions unless: (i) the Corporation shall be the surviving Person (the "SURVIVING PERSON") or the Surviving Person (if other than the Corporation) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (ii) the Surviving Person (if other than the Corporation) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual 78 payment of the principal of and interest on all the 2009 Series Bonds, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Corporation and confirms in writing the lien of the Indenture, including the after-acquired property clauses thereof, on the Property subject to the Indenture; (iii) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Corporation's Property, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; (iv) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (iv) and clauses (v) and (vi) below, any Debt which becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; (v) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Corporation or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under Section 4.05; (vi) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Surviving Person shall have a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Corporation immediately prior to such transaction or series of transactions; and (vii) the Corporation shall deliver, or cause to be delivered, to the Trustee, in form reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and any supplemental indenture in respect thereto comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied. (b) The Surviving Person will succeed to, and be substituted for, and may exercise every right and power of the Corporation under this Indenture, but the predecessor Corporation in the case of a sale, transfer, assignment, lease, conveyance or other disposition, shall not be released from the obligation to pay the principal of and interest on the 2009 Series Bonds. 79 ARTICLE 6 Defaults and Remedies Section 6.01. Events of Default. The following events shall be "ELEVENTH SUPPLEMENTAL INDENTURE EVENTS OF DEFAULT" specific to the 2009 Series Bonds and in addition to the Events of Default set forth in the Original Indenture: (a) the Corporation defaults in any payment of interest on any 2009 Series Bond when the same becomes due and payable, and such default continues for a period of 30 days; (b) the Corporation defaults in the payment of the principal of any 2009 Series Bond when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon required repurchase, upon acceleration or otherwise; (c) the Corporation fails to comply with Article 5; (d) the Corporation fails to comply with any of its agreements or covenants in the 2009 Series Bonds or this Indenture (other than those referred to in clause (a), (b) or (c) above) and such failure continues for 30 days after notice is given to the Corporation as specified below; (e) a default by the Corporation or any Restricted Subsidiary under any Debt of the Corporation or any Restricted Subsidiary which results in the acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $10,000,000 or its foreign currency equivalent at the time; (f) the Corporation or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case; (ii) consents to the entry of an order for relief against it in an involuntary case; (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; or 80 (iv) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Corporation or any Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Corporation or any Significant Subsidiary or for any substantial part of its property; (iii) orders the winding up or liquidation of the Corporation or any Significant Subsidiary; or (iv) is for any similar relief granted under any foreign laws; and in each such case the order or decree remains unstayed and in effect for 60 days; or (h) any judgment or judgements for the payment of money in an aggregate amount in excess of $10,000,000 or its foreign currency equivalent at the time is entered against the Corporation or any Restricted Subsidiary, and shall not be waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect. The foregoing will constitute Eleventh Supplemental Indenture Events of Default whatever the reason for any such Eleventh Supplemental Indenture Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "BANKRUPTCY LAW" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. 81 An Eleventh Supplemental Indenture Event of Default under clause (d) is not an Eleventh Supplemental Indenture Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the 2009 Series Bonds then outstanding notify the Corporation (and, in the case of such notice by Holders, the Trustee) of the Eleventh Supplemental Indenture Event of Default and the Corporation does not cure such Eleventh Supplemental Indenture Event of Default within the time specified after receipt of such notice. Such notice must specify the Eleventh Supplemental Indenture Event of Default, demand that it be remedied and state that such notice is a "NOTICE OF DEFAULT". The Corporation shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any event which with the giving of notice or the lapse of time would become an Eleventh Supplemental Indenture Event of Default, its status and what action the Corporation is taking or proposes to take with respect thereto. Section 6.02. Acceleration. The 2009 Series Bonds may be declared due and payable, upon these conditions and in the manner and with the effect provided in Section 10.01 of the Original Indenture. In addition, if an Eleventh Supplemental Indenture Event of Default (other than an Event of Default specified in Section 6.01(f) or 6.01(g)) occurs and is continuing, the Trustee by notice to the Corporation, or the Holders of at least 25% in aggregate principal amount of the 2009 Series Bonds then outstanding by notice to the Corporation and the Trustee, may declare the principal amount of all the 2009 Series Bonds then outstanding plus accrued but unpaid interest to the date of acceleration to be immediately due and payable. In case an Eleventh Supplemental Indenture Event of Default specified in Section 6.01(f) or 6.01(g) shall occur, such amount with respect to all the 2009 Series Bonds shall be due and payable immediately without any declaration or other act on the part of the Trustee or the Holders of the 2009 Series Bonds. Subject to the rights of the holders of 25% in principal amount of all Bonds to accelerate the maturity of all of the Bonds as provided by Section 10.01 of the Original Indenture, the Holders of a majority in aggregate principal amount of the outstanding 2009 Series Bonds may by written notice to the Trustee and the Corporation rescind any declaration of acceleration if the rescission would not conflict with any judgment or decree, and if all existing Eleventh Supplemental Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration. No such rescission shall affect any subsequent Eleventh Supplemental Indenture Event of Default or impair any right consequent thereto. Section 6.03. Other Remedies. If an Eleventh Supplemental Indenture Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the 2009 Series Bonds 82 or to enforce the performance of any provision of the 2009 Series Bonds or the Indenture. The Trustee may maintain a proceeding even if it does not possess any of the 2009 Series Bonds or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Bondholder in exercising any right or remedy accruing upon an Eleventh Supplemental Indenture Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Eleventh Supplemental Indenture Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04. Waiver of Defaults. The Holders of a majority in aggregate principal amount of the 2009 Series Bonds by written notice to the Trustee may waive an existing Eleventh Supplemental Indenture Event of Default and its consequences, except an Eleventh Supplemental Indenture Event of Default in the payment of the principal of or interest on a 2009 Series Bond or an Eleventh Supplemental Indenture Event of Default in respect of a provision that under Section 8.07 cannot be amended without the consent of each Bondholder affected. When an Eleventh Supplemental Indenture Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Eleventh Supplemental Indenture Event of Default or impair any consequent right. ARTICLE 7 Redemption of 2009 Series Bonds Section 7.01. Optional Redemption of 2009 Series Bonds; Premiums Payable. Except as set forth in the following paragraph, the 2009 Series Bonds will not be redeemable at the option of the Corporation prior to March 1, 2004. Thereafter, the 2009 Series Bonds will be redeemable at the option of the Corporation, in whole or in part, on not less than 30 nor more than 60 days' prior notice, upon payment of the redemption prices specified in the form of definitive 2009 Series Bond hereinbefore set forth for redemption, together with accrued interest (if any) to the date fixed for redemption. At any time and from time to time prior to March 1, 2002 the Corporation may redeem up to a maximum of 35% of the original aggregate principal amount of the 2009 Series Bonds with the proceeds of one or more Public Equity Offerings within 90 days after receipt of such proceeds, upon payment of a redemption price equal to 109.875% of the principal amount thereof, together 83 with accrued interest, if any, to the date fixed for redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the 2009 Series Bonds remains outstanding. Any such redemption should be made on a pro rate basis among all holders of 2009 Series Bonds. Section 7.02. Surrender of Partially-redeemed 2009 Series Bonds. In the event of the partial redemption of any of the 2009 Series Bonds the Trustee shall not make any notation thereon as to the payment of a portion of the principal amount of such partially-redeemed Bonds, but in accordance with Section 5.01 of the Original Indenture such Bonds may be surrendered in exchange for 2009 Series Bonds of authorized denominations for the unredeemed balance of the principal amount of such partially-redeemed Bonds. Section 7.03. Regarding Issue, Transfer and Exchange of 2009 Series Bonds to be Redeemed. The Corporation shall not be required (i) to issue, transfer or exchange any 2009 Series Bonds during a period beginning at the opening of business 15 days next preceding any selection of 2009 Series Bonds to be redeemed or thereafter until after the mailing of a notice of redemption of 2009 Series Bonds selected for redemption and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any 2009 Series Bonds so selected for redemption in whole or in part. Section 7.04. Notices to Trustee. If the Corporation elects to redeem 2009 Series Bonds pursuant to this Article, it shall notify the Trustee in writing of the redemption date, the principal amount of 2009 Series Bonds to be redeemed and that such redemption is being made pursuant to the 2009 Series Bonds. The Corporation shall give each notice to the Trustee provided for in this Section at least 45 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Corporation to the effect that such redemption will comply with the conditions herein. Section 7.05. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of 2009 Series Bonds, the Corporation shall mail a notice of redemption by first-class mail to each Holder of 2009 Series Bonds to be redeemed. The notice shall identify the 2009 Series Bonds to be redeemed and shall state: 84 (i) the redemption date; (ii) the redemption price; (iii) the name and address of the Place of Payment; (iv) that 2009 Series Bonds called for redemption must be surrendered at the Place of Payment to collect the redemption price; (v) if fewer than all the outstanding 2009 Series Bonds are to be redeemed, the identification and principal amounts of the particular 2009 Series Bonds to be redeemed; (vi) that, unless the Corporation defaults in making such redemption payment or the Trustee or paying agent is prohibited from making such payment pursuant to the terms of the Indenture, interest on 2009 Series Bonds (or portion thereof) called for redemption ceases to accrue on and after the redemption date; and (vii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the 2009 Series Bonds. At the Corporation's request, the Trustee shall give the notice of redemption in the Corporation's name and at the Corporation's expense. In such event, the Corporation shall provide the Trustee with the information required by this Section. Section 7.06. Effect of Notice of Redemption. Once notice of redemption is mailed, 2009 Series Bonds called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender at the Place of Payment, such 2009 Series Bonds shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date that is on or prior to the date of redemption). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. 85 ARTICLE 8 Miscellaneous Section 8.01. Acceptance of Trusts. The Trustees accept the trust created by this Supplemental Indenture and agree to execute the same, but only on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustees. The Trustees make no representations and shall have no responsibility as to the validity of this Supplemental Indenture or the Bonds issued hereunder or the due execution thereof by the Corporation. Section 8.02. Benefits Restricted to Parties and Holders of Bonds. Nothing in this Supplemental Indenture, expressed or implied, is intended or shall be construed to confer upon, or to give to, any person, other than the parties hereto, and the holders of 2009 Series Bonds, any right, remedy or claim under or by reason of this Supplemental Indenture or any covenant, condition or stipulation hereof; all the covenants, stipulations, promises and agreements in this Supplemental Indenture contained are and shall be for the sole and exclusive benefit of the parties hereto and their successors and the holders of such Bonds. Section 8.03. Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original and all of such counterparts shall together constitute a single instrument. Section 8.04. Original Indenture and Supplements Construed as One Instrument. The Original Indenture as heretofore supplemented and as supplemented by this Supplemental Indenture is in all respects ratified and confirmed; and the Original Indenture as heretofore supplemented and as supplemented by this Supplemental Indenture shall be read, taken and construed together as one instrument. Section 8.05. Amount Advanced under Indenture. The amount which at the time of the execution and delivery of this Supplemental Indenture has been advanced or accrued and remains outstanding under the Original Indenture and all instruments supplemental thereto, to and including this Supplemental Indenture, is $375,000,000. Section 8.06. With Consent of Holders. For so long as the 2009 Series Bonds are outstanding, the Company may not amend this Supplemental Indenture or the 2009 Series Bonds without the written consent of the Holders of at least a majority in aggregate principal amount of the 2009 Series Bonds. Further, without 86 the consent of each holder of 2009 Series Bonds affected thereby, an amendment may not: (1) reduce the percentage of 2009 Series Bonds whose Holders must consent to an amendment or waiver; (2) reduce the rate of or change the time for payment of interest on any 2009 Series Bonds; (3) reduce the principal of or extend the Stated Maturity of any 2009 Series Bonds; (4) reduce the amount payable upon the redemption or repurchase of any 2009 Series Bonds under Article 7 or Section 4.09 or 4.10 or change the time at which any 2009 Series Bonds may be redeemed in accordance with Article 7; (5) make any 2009 Series Bonds payable in a currency other than that stated in the 2009 Series Bonds; (6) subordinate the 2009 Series Bonds to any other obligation of the Corporation; or (7) at any time after a Change of Control or Asset Sale has occurred, change the time at which the Change of Control Offer or Prepayment Offer relating thereto must be made or at which the 2009 Series Bonds must be repurchased pursuant to such Change of Control Offer or Prepayment Offer. Section 8.07. Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE 2009 SERIES BONDS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 8.08. Compliance with Trust Indenture Act. Every amendment to this Indenture or the 2009 Series Bonds shall comply with the TIA as then in effect. Section 8.09. Recitals. The recitals contained herein shall be taken as the statements of the Company, and the Trustees assume no responsibility for their correctness. The Trustees make no representations as to the validity or sufficiency of this Eleventh Supplemental Indenture. 87 IN WITNESS WHEREOF, said National Steel Corporation has caused this Supplemental Indenture to be executed on its behalf by one of its Senior Vice Presidents and its Treasurer; said The Chase Manhattan Bank has caused this Supplemental Indenture to be executed on its behalf as Trustee under the Indenture by one of its Senior Trust Officers and its corporate seal to be hereto affixed and said seal and this Supplemental Indenture to be attested by one of its Trust Officers; and said Frank J. Grippo, as Individual Trustee under the Indenture, has executed this Supplemental Indenture under seal; all as of March 31, 1999. NATIONAL STEEL CORPORATION By: /s/ Glenn H. Gage --------------------------------- Name: Glenn H. Gage Title: Senior Vice President and Chief Financial Officer By: /s/ William E. McDonough ---------------------------------- Name: William E. McDonough Title:Treasurer 88 [CORPORATE SEAL] The Chase Manhattan Bank, as Trustee By: /s/ L. O'Brien --------------------------------- Name: L. O'BRIEN Title: Vice President Attest: /s/ Natalia Rodriguez - ------------------------------ Name: NATALIA RODRIGUEZ Title: TRUST OFFICER Signed, sealed and delivered by The Chase Manhattan Bank in the presence of: /s/ Eric S. Butler - ------------------------------ ERIC S. BUTLER ADMINISTRATOR /s/ Natalie B Pesce - ------------------------------ As Witnesses NATALIE B. PESCE ADMINISTRATOR /s/ Frank J. Grippo --------------------------------- FRANK J. GRIPPO As Individual Trustee Signed, sealed and delivered by Frank J. Grippo in the presence of: /s/ Eric S. Butler - ------------------------------ ERIC S. BUTLER ADMINISTRATOR /s/ Natalie B. Pesce - ------------------------------ As Witnesses NATALIE B. PESCE ADMINISTRATOR 89 STATE OF Indiana ) )ss: COUNTY OF St. Joseph ) I, Angela M. Starzyaski, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 29th day of March, 1999: MICHIGAN STATE OF _______________ ) ss.: COUNTY OF ______________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by Glenn H. Gage of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF _______________ ) ss.: COUNTY OF ______________ ) Before me, a Notary Public, this 31 day of March, 1999, personally appeared National Steel Corporation, a Delaware corporation, by Glenn H. Gage, Senior Vice President and Chief Financial Officer, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF _______________ ) ss.: COUNTY OF ______________ ) This instrument was acknowledged before me on March 31, 1999, by Glenn H. Gage as Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation. [Notary Seal] ILLINOIS STATE OF _______________ ) ss.: COUNTY OF ______________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by Glenn H. Gage, Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [SEAL] MINNESOTA STATE OF ____________ ) ss.: COUNTY OF ___________ ) This instrument was acknowledged before me on March 31, 1999 by Glenn H. Gage as Senior Vice President and Chief Financial Officer of National Steel Corporation, a Delaware corporation. [Notary Seal] In WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Angela M. Starzynski ------------------------------- Notary Public [Notary Seal] Angela M. Starzynski ------------------------------- Notary Public, State of Indiana No.____________________________ Qualified in St. Joseph County Commission Expires Jan. 28, 2000 My County of Residence: St. Joseph STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) I, Jose Miguel Flores, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 31st day of March, 1999: MICHIGAN STATE OF ____________ ) ss.: COUNTY OF ___________ ) The foregoing instrument was acknowledged before me this 31st day of March, 1999 by William E. McDonough of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF ____________ ) ss.: COUNTY OF __________ ) Before me, a Notary Public, this 31st day of March, 1999, personally appeared National Steel Corporation, a Delaware corporation, by William E. McDonough, Treasurer, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ______________ ) ss.: COUNTY OF ____________ ) This instrument was acknowledged before me on March 31, 1999, by William E. McDonough as Treasurer of National Steel Corporation, a Delaware corporation. [Notary Seal] ILLINOIS STATE OF __________ ) ss.: COUNTY OF _________ ) This foregoing instrument was acknowledged before me this 31st day of March, 1999 by William E. McDonough, Treasurer of National Steel Corporation, a Delaware corporation, on behalf of the corporation. [SEAL] MINNESOTA STATE OF __________ ) ss.: COUNTY OF _________ ) This instrument was acknowledged before me on March 31, 1999 by William E. McDonough as Treasurer of National Steel Corporation, a Delaware corporation. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Jose Miguel Flores ---------------------- Notary Public [Notary Seal] JOSE MIGUEL FLORES NOTARY PUBLIC, State of New York No. 01 FL6013568 Qualified in Kings County Commission Expires Sept. 01, 2001 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) I, _______________, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 31th day of March, 1999: MICHIGAN STATE OF ___________ ) ss: COUNTY OF __________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by L. O' Brien of The Chase Manhatten Bank, a New York corporation, on behalf of the corporation. [Notary Seal] INDIANA STATE OF ___________ ) )ss: COUNTY OF __________ ) Before me, a Notary Public, this 31 day of March, 1999, personally appeared The Chase Manhatten Bank, a New york corporation, by L. O Brien, Vice President, and acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF __________ ) ss.: COUNTY OF _________ ) This instrument was acknowledged before me on March 31, 1999, by L. O'Brien as Vice President of The Chase Manhattan Bank, a New York corporation. [Notary Seal] ILLINOIS STATE OF ___________ ) ss.: COUNTY OF __________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by L. O'Brien, Vice President of The Chase Manhattan Bank, a New York corporation, on behalf of the corporation. [SEAL] MINNESOTA STATE OF ___________ ) ss.: COUNTY OF __________ ) This instrument was acknowledged before me on March 31, 1999 by L. O'Brien as Vice President of The Chase Manhattan Bank, a New York corporation. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Emily Fayan -------------------------- Notary Public [Notary Seal] EMILY FAYAN Notary Public, State of New York No. 24-4737006 Qualified in Kings County Certificate Filed in New York County Commission Expires December 31, 1999 STATE OF NEW YORK ______________ ) ) ss: COUNTY OF NEW YORK _____________ ) I, EMILY FAYAN, the undersigned officer, a notary public duly qualified, commissioned, sworn and acting in and for said County in said State, hereby certify, that on this 31th day of March, 1999: MICHIGAN STATE OF _____________ ) ss.: COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by Frank J. Grippo. [Notary Seal] INDIANA STATE OF _____________ ) ss.: COUNTY OF ____________ ) Before me, a Notary Public, this 31 day of March, 1999, Frank J. Grippo, acknowledged the execution of the annexed instrument. [Notary Seal] WISCONSIN STATE OF ____________ ) ss.: COUNTY OF ___________ ) This instrument was acknowledged before me on March 31, 1999 by Frank J. Grippo. [Notary Seal] ILLINOIS STATE OF __________ ) ss.: COUNTY OF _________ ) The foregoing instrument was acknowledged before me this 31 day of March, 1999 by Frank J. Grippo. [Notary Seal] MINNESOTA STATE OF___________ ) ss.: COUNTY OF__________ ) This instrument was acknowledged before me on March 31, 1999 by Frank J. Grippo. [Notary Seal] IN WITNESS WHEREOF I have hereunto set my hand and official seal of office the day and year first above written. /s/ Emily Fayan ---------------------------- Notary Public [Notary Seal] EX-4.I 7 REGISTRATION RIGHTS AGREEMENT DATED 3/8/99 EXHIBIT 4-I NATIONAL STEEL CORPORATION $ 225,000,000 FIRST MORTGAGE BONDS, 9 7/8% SERIES DUE 2009 REGISTRATION RIGHTS AGREEMENT New York, New York March 8, 1999 SALOMON SMITH BARNEY INC. J.P. MORGAN SECURITIES INC. As Representatives of the Initial Purchasers c/o Salomon Smith Barney Inc. 388 Greenwich Street New York, New York 10013 Dear Sirs: National Steel Corporation, a corporation organized under the laws of Delaware (the "Company"), proposes to issue and sell to certain purchasers (the "Initial Purchasers"), upon the terms set forth in a purchase agreement of even date herewith (the "Purchase Agreement"), its $225,000,000 First Mortgage Bonds, 9 7/8% Series A Due 2009 (the "Securities") relating to the initial placement of the Securities (the "Initial Placement"). To induce the Initial Purchasers to enter into the Purchase Agreement and to satisfy a condition of your obligations thereunder, the Company agrees with you for your benefit and the benefit of the holders from time to time of the Securities (including the Initial Purchasers) (each a "Holder" and, together, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Affiliate" of any specified Person shall mean (a) any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such specified Person or (b) any other Person who is a director or officer of (i) such specified Person, (ii) any Subsidiary of such specified Person or (iii) any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Commission" shall mean the Securities and Exchange Commission. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Offer Registration Period" shall mean the one-year period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. "Exchange Offer Registration Statement" shall mean a registration statement of the Company on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Exchanging Dealer" shall mean any Holder (which may include any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New Securities any Securities that it acquired for its own account as a result of market-making activities or other trading activities (but not directly from the Company or any Affiliate of the Company) for New Securities. "Final Memorandum" shall have the meaning set forth in the Purchase Agreement. "Holder" shall have the meaning set forth in the preamble hereto. 2 "Indenture" shall mean the Indenture relating to the Securities, dated as of February ____, Frank J. Grippo, as trustees, as the same may be amended from time to time in accordance with the terms thereof. "Initial Placement" shall have the meaning set forth in the preamble hereto. "Initial Purchasers" shall have the meaning set forth in the preamble hereto. "Losses" shall have the meaning set forth in Section 6(d) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of securities registered under a Registration Statement. "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "New Securities" shall mean debt securities of the Company identical in all material respects to the Securities (except that the interest rate step-up provisions and the transfer restrictions shall be modified or eliminated, as appropriate) and to be issued under the Indenture or the New Securities Indenture. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or the New Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble hereto. "Registered Exchange Offer" shall mean the proposed offer of the Company to issue and deliver to the Holders of the Securities that are not prohibited by any law or policy of the Commission from participating in such offer, in exchange for the Securities, a like aggregate principal amount of the New Securities. 3 "Registration Statement" shall mean any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Securities or the New Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble hereto. "Shelf Registration" shall mean a registration effected pursuant to Section 3 hereof. "Shelf Registration Period" has the meaning set forth in Section 3(b) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 3 hereof which covers some or all of the Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Subsidiary" means, in respect of any specified Person, any corporation, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "Underwriter" shall mean any underwriter of Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offer. (a) The Company shall prepare and, not later than 60 days following the date of the original issuance of the Securities (or if such 60th day is not a Business Day, the next succeeding Business Day), shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Company shall cause the Exchange Offer 4 Registration Statement to become effective under the Act within 150 days of the date of the original issuance of the Securities (or if such 150th day is not a Business Day, the next succeeding Business Day). (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for New Securities (assuming that such Holder is not an Affiliate of the Company, acquires the New Securities in the ordinary course of such Holder's business, has no arrangements with any Person to participate in the distribution of the New Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such New Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offer, the Company shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offer open for not less than 30 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law); (iii) use its best efforts to keep the Exchange Offer Registration Statement continuously effective under the Act, supplemented and amended as required, under the Act to ensure that it is available for sales of New Securities by Exchanging Dealers during the Exchange Offer Registration Period; (iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee, the New Securities Trustee or an Affiliate of either of them; (v) prior to effectiveness of the Exchange Offer Registration Statement, provide a letter to the Commission (A) stating that the Company is conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. 5 avail. May 13, 1988) and, Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the New Securities to be received in the Registered Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Registered Exchange Offer is acquiring the New Securities in the ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Securities; and (vi) comply in all respects with all applicable laws. (d) As soon as practicable after the close of the Registered Exchange Offer, the Company shall: (i) accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (ii) deliver to the Trustee for cancellation in accordance with Section 4(s) all Securities so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver to each Holder of Securities a principal amount of New Securities equal to the principal amount of the Securities of such Holder so accepted for exchange. (e) Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Registered Exchange Offer to participate in a distribution of the New Securities (x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993 and similar no- action letters; and (y) must comply with the registration and prospectus delivery requirements of the Act in connection with any secondary resale transaction and must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act if the resales are of New Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from the Company or one of its Affiliates. Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that, at the time of the commencement of the Registered Exchange Offer: 6 (i) any New Securities received by such Holder will be acquired in the ordinary course of business; (ii) such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Securities or the New Securities within the meaning of the Act; and (iii) such Holder is not an Affiliate of the Company. (f) If any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment, at the request of such Initial Purchaser, the Company shall issue and deliver to such Initial Purchaser or the Person purchasing New Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange for such Securities, a like principal amount of New Securities. The Company shall use its reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such New Securities as for New Securities issued pursuant to the Registered Exchange Offer. 3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations thereof by the Commission's staff, the Company determines upon advice of its outside counsel that it is not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof; or (ii) for any other reason the Exchange Offer Registration Statement is not declared effective within 150 days after the date of the original issuance of the Securities or the Registered Exchange Offer is not consummated within 180 days after the date of the original issuance of the Securities; (iii) the Initial Purchasers so request with respect to Securities that are not eligible to be exchanged for New Securities in the Registered Exchange Offer and that are held by it following consummation of the Registered Exchange Offer; (iv) any Holder (other than an Initial Purchaser) is not eligible to participate in the Registered Exchange Offer and so notifies the Company as soon as practicable, but in any event not later than 30 days following the consummation of the Registered Exchange Offer; or (v) in the case of any Initial Purchaser that participates in the Registered Exchange Offer or acquires New Securities pursuant to Section 2(f) hereof, such Initial Purchaser does not receive freely tradeable New Securities in exchange for Securities constituting any portion of an unsold allotment (it being understood that (x) the requirement that an Initial Purchaser deliver a Prospectus containing the information required by Item 507 or 508 of Regulation S-K under the Act in connection with sales of New Securities acquired in exchange for such Securities shall result in such New Securities being not "freely tradeable"; and (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of New 7 Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a result of market-making activities or other trading activities shall not result in such New Securities being not "freely tradeable"), the Company shall effect a Shelf Registration Statement in accordance with subsection (b) below. (b)(i) The Company shall as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 3), file with the Commission and thereafter shall use its best efforts to cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale of the Securities or the New Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder; and provided further, that with respect to New Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Company may, if permitted by current interpretations by the Commission's staff, file a post- effective amendment to the Exchange Offer Registration Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in satisfaction of its obligations under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (ii) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration Statement is declared effective by the Commission or such shorter period that will terminate when all the Securities or New Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless (A) such action is required by applicable law; or (B) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with the requirements of Section 4(k) hereof, if applicable. 8 (iii) The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4. Additional Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply. (a) The Company shall: (i) furnish to you, and provide a reasonable opportunity to review and comment upon, prior to the filing thereof with the Commission, a copy of any Exchange Offer Registration Statement and any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall give reasonable consideration to any comments that you reasonably propose; (ii) include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained in the Exchange Offer Registration Statement, and in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer; provided, however, that the Company may make such changes as it considers reasonably necessary to comply with the "Plain English" rules of the SEC; (iii) if requested by an Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange Offer Registration Statement; and (iv) in the case of a Shelf Registration Statement, include the names of the Holders that propose to sell Securities pursuant to the Shelf Registration Statement as selling security holders. 9 (b) The Company shall ensure that (other than with respect to information required to be provided by the selling Holders: (i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder; and (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (c) The Company shall advise you and the Holders of Securities covered by any Shelf Registration Statement, and any Exchanging Dealer under the Exchange Offer Registration Statement that has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or Exchanging Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post- effective amendment thereto has become effective; (ii) of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements 10 therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Company shall use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement or the qualification of the securities therein for sale in any jurisdiction at the earliest possible time. (e) The Company shall furnish to each Holder of Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of securities in connection with the offering and sale of the securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (h) The Company shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and each other Person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such Person may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer and any such other Person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement. 11 (i) Prior to the Registered Exchange Offer or any other offering of Securities pursuant to any Registration Statement, the Company shall arrange, if necessary, for the qualification of the Securities or the New Securities for sale under the laws of such jurisdictions as any Holder shall reasonably request and will maintain such qualification in effect so long as required; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject. (j) The Company shall cooperate with the Holders of Securities to facilitate the timely preparation and delivery of certificates representing New Securities or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request. (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Company shall promptly prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to Initial Purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such circumstances, the period of effectiveness of the Exchange Offer Registration Statement provided for in Section 2 and the Shelf Registration Statement provided for in Section 3(b) shall each be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(c) to and including the date when the Initial Purchasers, the Holders of the Securities and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section. (l) Not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Securities or the New Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed certificates for such Securities or New Securities, in a form eligible for deposit with The Depository Trust Company. (m) The Company shall comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders as soon as practicable after the effective date of the applicable Registration 12 Statement an earnings statement satisfying the provisions of Section 11(a) of the Act. (n) The Company shall cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (o) The Company may require each Holder of securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such securities as the Company may from time to time reasonably require for inclusion in such Registration Statement. The Company may exclude from such Shelf Registration Statement the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (p) In the case of any Shelf Registration Statement, the Company shall enter into such agreements and take all other appropriate actions (including if requested an underwriting agreement in customary form) in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 6 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified pursuant to Section 6). (q) In the case of any Shelf Registration Statement, the Company shall: (i) make reasonably available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that the Company may require that such persons execute a confidentiality agreement (which shall include customary exceptions) prior to the receipt of any such information; (iii) make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, if any, in form, 13 substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 4(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (r) In the case of any Exchange Offer Registration Statement, the Company shall: (i) make reasonably available for inspection by such Initial Purchaser, and any attorney, accountant or other agent retained by such Initial Purchaser, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; 14 (ii) cause the Company's officers, directors and employees to supply all relevant information reasonably requested by such Initial Purchaser or any such attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that the Company may require that such persons execute a confidentiality agreement (which shall include customary exceptions) prior to the receipt of any such information; (iii) make such representations and warranties to such Initial Purchaser, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to such Initial Purchaser and its counsel, addressed to such Initial Purchaser, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Initial Purchaser or its counsel; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to such Initial Purchaser, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings, or if requested by such Initial Purchaser or its counsel in lieu of a "cold comfort" letter, an agreed-upon procedures letter under Statement on Auditing Standards No. 35, covering matters requested by such Initial Purchaser or its counsel; and (vi) deliver such documents and certificates as may be reasonably requested by such Initial Purchaser or its counsel, including those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements. The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this Section shall be performed at the close of the Registered Exchange Offer and the effective date of any post-effective amendment to the Exchange Offer Registration Statement. 15 (s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the New Securities, the Company shall mark, or caused to be marked, on the Securities so exchanged that such Securities are being canceled in exchange for the New Securities. In no event shall the Securities be marked as paid or otherwise satisfied. (t) The Company will use its reasonable best efforts if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the New Securities, as the case may be, covered by a Registration Statement. (u) In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by: (i) if such Rules or By-Laws shall so require, engaging a "qualified independent underwriter" (as defined in such Rules) to participate in the preparation of the Registration Statement, to exercise usual standards of due diligence with respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities; (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof; and (iii) providing such information to such Broker-Dealer as may be required in order for such Broker-Dealer to comply with the requirements of such Rules. (iv) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Securities or the New Securities, as the case may be, covered by a Registration Statement. 5. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2, 3 16 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchasers for the reasonable fees and disbursements of counsel acting in connection therewith. 6. Indemnification and Contribution. The Company agrees to indemnify and hold harmless each Holder of Securities or New Securities, as the case may be, covered by any Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each Person who controls any such Holder within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several (including, without limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted), to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such Holder specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have. The Company also agrees to indemnify or contribute as provided in Section 6(d) to Losses of any underwriter of Securities or New Securities, as the case may be, registered under a Shelf Registration Statement, their directors, officers, employees or agents and each Person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchasers 17 and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p) hereof. (b) Each Holder of securities covered by a Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees to indemnify and hold harmless the Company, its directors and officers and each other Person who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 6 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the 18 indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood and agreed, however, that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate counsel for all such indemnified parties (and any local counsel) and that all such fees and expenses shall be reimbursed as they are incurred. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify any indemnified party from and against any loss or liability by reason of such settlement or judgment except as otherwise provided herein. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall any Initial Purchaser or any subsequent Holder of any Security or New Security be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the case of a New Security, applicable to the Security that was exchangeable into such New Security, as set forth on the cover page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion 19 as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the sum of (x) the total net proceeds from the Initial Placement (before deducting expenses) as set forth on the cover page of the Final Memorandum and (y) the total amount of additional interest which the Company was not required to pay as a result of registering the securities covered by the Registration Statement which resulted in such Losses. Benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or New Securities, as applicable, registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to, among other things, whether any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each Person who controls a Holder within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act and each director, officer, employee and such agent of such Holder shall have the same rights to contribution as such Holder, and each Person who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The indemnity and contribution agreements contained in this Section 6 are in addition to any liability which the indemnifying parties may otherwise have to the indemnified parties referred to above. The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any 20 investigation made by or on behalf of any indemnified party or any person controlling any indemnified party or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of or exchange of any of the Securities for any of the New Securities. 7. Underwritten Registrations. (a) If any of the Securities or New Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders. (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such Person (i) agrees to sell such Person's Securities or New Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and (ii completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 8. No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 9. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders (or, after the consummation of any Registered Exchange Offer in accordance with Section 2 hereof, of New Securities); provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or New Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of Securities or New Securities, as the case may be, being sold rather than registered under such Registration Statement. 21 10. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery: (a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Salomon Smith Barney Inc; (b) if to you, initially at the respective addresses set forth in the Purchase Agreement; and (c) if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. The Initial Purchasers or the Company by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 11. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Securities and the New Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities and the New Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 12. Counterparts. This agreement may be in signed counterparts, each of which shall an original and all of which together shall constitute one and the same agreement. 13. Headings. The headings used herein are for convenience only and shall not affect the construction hereof. 14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. 22 15. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 16. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or New Securities is required hereunder, Securities or New Securities, as applicable, held by the Company or its Affiliates (other than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 23 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a building agreement among the Company and the several Initial Purchasers. Very truly yours, NATIONAL STEEL CORPORATION By: /s/ Glen H. Gage -------------------------------- Name: Glen H. Gage Title: Senior Vice President Chief Financial Officer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON SMITH BARNEY INC. By: /s/ Rick Dowdle --------------------------- Name: Rick Dowdle Title: Associate J.P. MORGAN SECURITIES INC. By: /s/ --------------------------- Name: Title: 24 ANNEX A Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of New Securities received in exchange for Securities where such Securities were acquired by such Broker-Dealer as a result of market-making activities or other trading activities. The Company has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business one year after the Expiration Date, it will make this Prospectus available to any Broker-Dealer for use in connection with any such resale. See "Plan of Distribution". 25 ANNEX B Each Broker-Dealer that receives New Securities for its own account in exchange for Securities, where such Securities were acquired by such Broker-Dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. See "Plan of Distribution". 26 ANNEX C PLAN OF DISTRIBUTION Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of New Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, starting on the Expiration Date and ending on the close of business one year after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any Broker-Dealer for use in connection with any such resale. In addition, until __________, 199__, all dealers effecting transactions in the New Securities may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of New Securities by brokers-dealers. New Securities received by Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Broker-Dealer and/or the purchasers of any such New Securities. Any Broker- Dealer that resales New Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of New Securities and any commissions or concessions received by any such Persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of one year after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any Broker-Dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holder of the Securities) other than commissions or concessions of any brokers or 27 dealers and will indemnify the holders of the Securities (including any Broker- Dealers) against certain liabilities, including liabilities under the Securities Act. [If applicable, add information required by Regulation S-K Items 507 and/or 508.] 28 ANNEX D Rider A CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ____________________________________ Address: ____________________________________ ____________________________________ Rider B If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the New Securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of New Securities and it has not arrangements or understandings with any Person to participate in a distribution of the New Securities. If the undersigned is a Broker-Dealer that will receive New Securities for its own account in exchange for Securities, it represents that the Securities to be exchange for New Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such New Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 29 EX-4.J 8 REGISTRATION RIGHTS AGREEMENT DATED 3/31/99 EXHIBIT 4-J NATIONAL STEEL CORPORATION $ 75,000,000 FIRST MORTGAGE BONDS, 9 7/8% SERIES C DUE 2009 REGISTRATION RIGHTS AGREEMENT New York, New York March 31, 1999 Salomon Smith Barney Inc. 388 Greenwich Street New York, New York 10013 Dear Sirs: National Steel Corporation, a corporation organized under the laws of Delaware (the "Company"), proposes to issue and sell to the purchaser (the "Initial Purchaser") $75,000,000 of its First Mortgage Bonds, 9 7/8% Series C Due 2009 (the "Securities"), upon the terms set forth in a purchase agreement dated March 24, 1999 (the "Purchase Agreement") relating to the initial placement of the Securities (the "Initial Placement"). To induce the Initial Purchaser to enter into the Purchase Agreement and to satisfy a condition of your obligations thereunder, the Company agrees with you for your benefit and the benefit of the holders from time to time of the Securities (including the Initial Purchaser) and the Series A Bonds (as defined below) (each, a "Holder" and, together, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Affiliate" of any specified Person (as defined in the Indenture) shall mean (a) any other Person that, directly or indirectly through one or more intermediaries, is in control of, is controlled by, or is under common control with, such specified Person or (b) any other Person who is a director or officer of (i) such specified Person, (ii) any Subsidiary of such specified Person or (iii) any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Commission" shall mean the Securities and Exchange Commission. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Offer Registration Period" shall mean the one-year period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. "Exchange Offer Registration Statement" shall mean a registration statement of the Company on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Exchanging Dealer" shall mean any Holder (which may include the Initial Purchaser) that is a Broker-Dealer and elects to exchange for New Securities any Securities or Series A Bonds that it acquired for its own account as a result of market-making activities or other trading activities (but not directly from the Company or any Affiliate of the Company) for New Securities. "Final Memorandum" shall have the meaning set forth in the Purchase Agreement. "Holder" shall have the meaning set forth in the preamble hereto. 2 "Indenture" shall mean the Indenture of Mortgage and Deed of Trust dated May 1, 1952 from the Company and Great Lakes Steel Corporation, a former wholly- owned subsidiary of the Company which in 1966 was merged into the Company, to City Bank Farmers Trust Company and Ralph E. Morton, as Trustees, as supplemented by all instruments supplemental thereto, including a proposed Eleventh Supplemental Indenture to be dated as of March 31, 1999, among the Company and The Chase Manhattan Bank and Frank J. Grippo, as Trustees. "Initial Placement" shall have the meaning set forth in the preamble hereto. "Initial Purchaser" shall have the meaning set forth in the preamble hereto. "Losses" shall have the meaning set forth in Section 6(d) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of securities registered under a Registration Statement. "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "New Securities" shall mean debt securities of the Company of a single series identical in all material respects to the Securities and the Series A Bonds (except that the interest rate step-up provisions and the transfer restrictions shall be modified or eliminated, as appropriate) and to be issued under the Indenture. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities, the Series A Bonds or the New Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble hereto. "Registered Exchange Offer" shall mean the proposed offer of the Company to issue and deliver to the Holders of the Securities and the Series A Bonds that are not prohibited by any law or policy of the Commission from 3 participating in such offer, in exchange for the Securities and the Series A Bonds, a like aggregate principal amount of the New Securities. "Registration Statement" shall mean any Exchange Offer Registration Statement that covers any of the Securities, the Series A Bonds or the New Securities or Shelf Registration Statement that covers any of the Securities, the Series A Bonds or the New Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble hereto. "Series A Bonds" refers to the Company's First Mortgage Bonds, 9 7/8% Series A Due 2009 limited in aggregate principal amount to $225,000,000 issued on March 8, 1999 under the Indenture. "Shelf Registration" shall mean a registration effected pursuant to Section 3 hereof. "Shelf Registration Period" has the meaning set forth in Section 3(b) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 3 hereof which covers some or all of the Securities or New Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Subsidiary" means, in respect of any specified Person, any corporation, partnership, joint venture, association or other business entity of which more than 50% of the total voting power of shares or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. 4 "Underwriter" shall mean any underwriter of Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offer. (a) The Company shall prepare and, not later than 60 days following the date of the original issuance of the Series A Bonds (or if such 60th day is not a Business Day, the next succeeding Business Day), shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Company shall cause the Exchange Offer Registration Statement to become effective under the Act within 150 days of the date of the original issuance of the Series A Bonds (or if such 150th day is not a Business Day, the next succeeding Business Day). (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities or Series A Bonds for New Securities (assuming that such Holder is not an Affiliate of the Company, acquires the New Securities in the ordinary course of such Holder's business, has no arrangements with any Person to participate in the distribution of the New Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such New Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offer, the Company shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offer open for not less than 30 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law); (iii) use its best efforts to keep the Exchange Offer Registration Statement continuously effective under the Act, supplemented and amended as required, under the Act to ensure that it is available for sales of New Securities by Exchanging Dealers during the Exchange Offer Registration Period; 5 (iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee, the Trustee or an Affiliate of either of them; (v) prior to effectiveness of the Exchange Offer Registration Statement, provide a letter to the Commission (A) stating that the Company is conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and, Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the New Securities to be received in the Registered Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Registered Exchange Offer is acquiring the New Securities in the ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Securities; and (vi) comply in all respects with all applicable laws. (d) As soon as practicable after the close of the Registered Exchange Offer, the Company shall: (i) accept for exchange all Securities and/or Series A Bonds tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (ii) deliver to the Trustee for cancellation in accordance with Section 4(s) all Securities and/or Series A Bonds so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver to each holder of Securities and/or Series A Bonds a principal amount of New Securities equal to the principal amount of the Securities and/or Series A Bonds of such holder so accepted for exchange. (e) Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Registered Exchange Offer to participate in a distribution of the New Securities (x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the 6 Commission's letter to Shearman & Sterling dated July 2, 1993 and similar no- action letters; and (y) must comply with the registration and prospectus delivery requirements of the Act in connection with any secondary resale transaction and must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act if the resales are of New Securities obtained by such Holder in exchange for Securities or Series A Bonds acquired by such Holder directly from the Company or one of its Affiliates. Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that, at the time of the commencement of the Registered Exchange Offer: (i) any New Securities received by such Holder will be acquired in the ordinary course of business; (ii) such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Securities, the Series A Bonds or the New Securities within the meaning of the Act; and (iii) such Holder is not an Affiliate of the Company. (f) If the Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities and Series A Bonds constituting any portion of an unsold allotment, at the request of the Initial Purchaser, the Company shall issue and deliver to the Initial Purchaser or the Person purchasing New Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from the Initial Purchaser, in exchange for such Securities or Series A Bonds, a like principal amount of New Securities. The Company shall use its reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such New Securities as for New Securities issued pursuant to the Registered Exchange Offer. 3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations thereof by the Commission's staff, the Company determines upon advice of its outside counsel that it is not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof; or (ii) for any other reason the Exchange Offer Registration Statement is not declared effective within 150 days after the date of the original issuance of the Series A Bonds or the Registered Exchange Offer is not consummated within 180 days after the date of the original issuance of the Series A Bonds; (iii) the Initial Purchaser so requests with respect to Securities that are not eligible to be exchanged for New Securities in the Registered Exchange Offer and that are held by it following consummation of the Registered Exchange Offer; (iv) any Holder (other than the Initial Purchaser) is 7 not eligible to participate in the Registered Exchange Offer and so notifies the Company as soon as practicable, but in any event not later than 30 days following the consummation of the Registered Exchange Offer; or (v) in the case the Initial Purchaser participates in the Registered Exchange Offer or acquires New Securities pursuant to Section 2(f) hereof, the Initial Purchaser does not receive freely tradeable New Securities in exchange for Securities or Series A Bonds constituting any portion of an unsold allotment (it being understood that (x) the requirement that the Initial Purchaser deliver a Prospectus containing the information required by Item 507 or 508 of Regulation S-K under the Act in connection with sales of New Securities acquired in exchange for such Securities or Series A Bonds shall result in such New Securities being not "freely tradeable"; and (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of New Securities acquired in the Registered Exchange Offer in exchange for Securities or Series A Bonds acquired as a result of market-making activities or other trading activities shall not result in such New Securities being not "freely tradeable"), the Company shall effect a Shelf Registration Statement in accordance with subsection (b) below. (b)(i) The Company shall as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 3), file with the Commission and thereafter shall use its best efforts to cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale of the Securities, the Series A Bonds or the New Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than the Initial Purchaser) shall be entitled to have the Securities or Series A Bonds held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder; and provided further, that with respect to New Securities received by the Initial Purchaser in exchange for Securities or Series A Bonds constituting any portion of an unsold allotment, the Company may, if permitted by current interpretations by the Commission's staff, file a post- effective amendment to the Exchange Offer Registration Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in satisfaction of its obligations under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (ii) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years from the date the Shelf Registration 8 Statement is declared effective by the Commission or such shorter period that will terminate when all the Securities, the Series A Bonds or New Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities or Series A Bonds covered thereby not being able to offer and sell such Securities during that period, unless (A) such action is required by applicable law; or (B) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, so long as the Company promptly thereafter complies with the requirements of Section 4(k) hereof, if applicable. (iii) The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Act and the rules and regulations of the Commission; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4. Additional Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply. (a) The Company shall: (i) furnish to you, and provide a reasonable opportunity to review and comment upon, prior to the filing thereof with the Commission, a copy of any Exchange Offer Registration Statement and any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall give reasonable consideration to any comments that you reasonably propose; (ii) include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained 9 in the Exchange Offer Registration Statement, and in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer; provided, however, that the Company may make such changes as it considers reasonably necessary to comply with the "Plain English" rules of the SEC; (iii) if requested by the Initial Purchaser, include the information required by Item 507 or 508, as applicable, of Regulation S-K under the Act in the Prospectus contained in the Exchange Offer Registration Statement; and (iv) in the case of a Shelf Registration Statement, include the names of the Holders that propose to sell Securities and/or Series A Bonds pursuant to the Shelf Registration Statement as selling security holders. (b) The Company shall ensure that (other than with respect to information required to be provided by the selling Holders): (i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder; and (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (c) The Company shall advise you and the Holders of Securities or Series A Bonds covered by any Shelf Registration Statement, and any Exchanging Dealer under the Exchange Offer Registration Statement that has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or Exchanging Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post- effective amendment thereto has become effective; 10 (ii) of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Company shall use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement or the qualification of the securities included therein for sale in any jurisdiction at the earliest possible time. (e) The Company shall furnish to each Holder of Securities or Series A Bonds covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities or Series A Bonds covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of securities in connection with the offering and sale of the securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. 11 (g) The Company shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (h) The Company shall promptly deliver to the Initial Purchaser, each Exchanging Dealer and each other Person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such Person may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by the Initial Purchaser, any Exchanging Dealer and any such other Person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement. (i) Prior to the Registered Exchange Offer or any other offering of Securities, Series A Bonds or New Securities pursuant to any Registration Statement, the Company shall arrange, if necessary, for the qualification of the Securities, the New Securities or Series A Bonds for sale under the laws of such jurisdictions as any Holder shall reasonably request and will maintain such qualification in effect so long as required; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject. (j) The Company shall cooperate with the Holders of Securities and the Series A Bonds to facilitate the timely preparation and delivery of certificates representing New Securities, Series A Bonds or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request. (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Company shall promptly prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the 12 circumstances under which they were made, not misleading. In such circumstances, the period of effectiveness of the Exchange Offer Registration Statement provided for in Section 2 and the Shelf Registration Statement provided for in Section 3(b) shall each be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(c) to and including the date when the Initial Purchaser, the Holders of the Securities and the Series A Bonds and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section. (l) Not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Securities, Series A Bonds or the New Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed certificates for such Securities, Series A Bonds or New Securities, in a form eligible for deposit with The Depository Trust Company. (m) The Company shall comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Act. (n) The Company shall cause the Indenture to be qualified under the Trust Indenture Act (as defined in the Purchase Agreement) in a timely manner. (o) The Company may require each Holder of Securities and Series A Bonds to be sold pursuant to any Shelf Registration Statement to furnish the Company such information regarding the Holder and the distribution of such securities as the Company may from time to time reasonably require for inclusion in such Registration Statement. The Company may exclude from such Shelf Registration Statement the Securities and Series A Bonds of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (p) In the case of any Shelf Registration Statement, the Company shall enter into such agreements and take all other appropriate actions (including if requested an underwriting agreement in customary form) in order to expedite or facilitate the registration or the disposition of the Securities and Series A Bonds, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 6 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified pursuant to Section 6). 13 (q) In the case of any Shelf Registration Statement, the Company shall: (i) make reasonably available for inspection by the Holders of Securities and Series A Bonds to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that the Company may require that such persons execute a confidentiality agreement (which shall include customary exceptions) prior to the receipt of any such information; (iii) make such representations and warranties to the Holders of Securities and Series A Bonds registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of Securities or Series A Bonds registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and 14 (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 4(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (r) In the case of any Exchange Offer Registration Statement, the Company shall: (i) make reasonably available for inspection by the Initial Purchaser, and any attorney, accountant or other agent retained by the Initial Purchaser, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries; (ii) cause the Company's officers, directors and employees to supply all relevant information reasonably requested by the Initial Purchaser or any such attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that the Company may require that such persons execute a confidentiality agreement (which shall include customary exceptions) prior to the receipt of any such information; (iii) make such representations and warranties to the Initial Purchaser, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Initial Purchaser and its counsel, addressed to the Initial Purchaser, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by the Initial Purchaser or its counsel; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any 15 subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to the Initial Purchaser, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings, or if requested by the Initial Purchaser or its counsel in lieu of a "cold comfort" letter, an agreed-upon procedures letter under Statement on Auditing Standards No. 35, covering matters requested by the Initial Purchaser or its counsel; and (vi) deliver such documents and certificates as may be reasonably requested by the Initial Purchaser or its counsel, including those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall be performed at the close of the Registered Exchange Offer and the effective date of any post-effective amendment to the Exchange Offer Registration Statement. (s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities and the Series A Bonds by Holders to the Company (or to such other Person as directed by the Company) in exchange for the New Securities, the Company shall mark, or caused to be marked, on the Securities and the Series A Bonds so exchanged that such Securities and Series A Bonds are being canceled in exchange for the New Securities. In no event shall the Securities or Series A Bonds be marked as paid or otherwise satisfied. (t) The Company will use its reasonable best efforts if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the New Securities, as the case may be, covered by a Registration Statement. (u) In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and the By-Laws of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such Broker-Dealer in complying with the requirements of such Rules and By-Laws, including, without limitation, by: 16 (i) if such Rules or By-Laws shall so require, engaging a "qualified independent underwriter" (as defined in such Rules) to participate in the preparation of the Registration Statement, to exercise usual standards of due diligence with respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities; (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof; and (iii) providing such information to such Broker-Dealer as may be required in order for such Broker-Dealer to comply with the requirements of such Rules. (iv) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Securities or the New Securities, as the case may be, covered by a Registration Statement. 5. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchaser for the reasonable fees and disbursements of counsel acting in connection therewith. 6. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each holder of Securities, Series A Bonds or New Securities, as the case may be, covered by any Registration Statement (including the Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each Person who controls any such Holder within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several (including, without limitation, the reasonable legal fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted), to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement 17 or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any holder of Securities, Series A Bonds or New Securities specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have. The Company also agrees to indemnify or contribute as provided in Section 6(d) to Losses of any underwriter of Securities or New Securities, as the case may be, registered under a Shelf Registration Statement, their directors, officers, employees or agents and each Person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchaser and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p) hereof. (b) Each Holder of securities covered by a Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees to indemnify and hold harmless the Company, its directors and officers and each other Person who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 6 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; 18 but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood and agreed, however, that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate counsel for all such indemnified parties (and any local counsel) and that all such fees and expenses shall be reimbursed as they are incurred. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify any indemnified party from and against any loss or liability by reason of such settlement or judgment except as otherwise provided herein. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an 19 unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall the Initial Purchaser or any subsequent Holder of any Security or New Security be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the case of a New Security, applicable to the Security that was exchangeable into such New Security, as set forth on the cover page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the sum of (x) the total net proceeds from the Initial Placement (before deducting expenses) as set forth on the cover page of the Final Memorandum and (y) the total amount of additional interest which the Company was not required to pay as a result of registering the securities covered by the Registration Statement which resulted in such Losses. Benefits received by the Initial Purchaser shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or New Securities, as applicable, registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to, among other things, whether any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative 20 knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each Person who controls a Holder within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act and each director, officer, employee and such agent of such Holder shall have the same rights to contribution as such Holder, and each Person who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, each officer and director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The indemnity and contribution agreements contained in this Section 6 are in addition to any liability which the indemnifying parties may otherwise have to the indemnified parties referred to above. The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any indemnified party or any person controlling any indemnified party or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of or exchange of any of the Securities or the Series A Bonds for any of the New Securities. 7. Underwritten Registrations. (a) If any of the Securities, the Series A Bonds or New Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders. (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such Person (i) agrees to sell such Person's Securities, Series A Bonds or New Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 21 8. No Inconsistent Agreements. The Company has not, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. 9. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders (or, after the consummation of any Registered Exchange Offer in accordance with Section 2 hereof, of New Securities); provided that, with respect to any matter that directly or indirectly affects the rights of the Initial Purchaser hereunder, the Company shall obtain the written consent of the Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities, Series A Bonds or New Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of Securities or New Securities, as the case may be, being sold rather than registered under such Registration Statement. 10. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery: (a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Salomon Smith Barney Inc; (b) if to you, initially at the respective addresses set forth in the Purchase Agreement; and (c) if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. 22 The Initial Purchaser or the Company by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 11. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Securities, the Series A Bonds and the New Securities. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities and the New Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. 12. Counterparts. This agreement may be in signed counterparts, each of which shall be an original and all of which together shall constitute one and the same agreement. 13. Headings. The headings used herein are for convenience only and shall not affect the construction hereof. 14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. 15. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 16. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities, Series A Bonds or New Securities is required hereunder, Securities, Series A Bonds or New Securities, as applicable, held by the Company or its Affiliates (other than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 23 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a building agreement among the Company and the Initial Purchaser. Very truly yours, NATIONAL STEEL CORPORATION By: /s/ Glenn H. Gage -------------------------------------- Name: GLENN H. GAGE Title: Senior Vice President, Chief Financial Officer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON SMITH BARNEY INC. By: /s/ David R. Dowdle ------------------------------ Name: David R. Dowdle Title: Associate 24 ANNEX A Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of New Securities received in exchange for Securities or Series A Bonds where such Securities or Series A Bonds were acquired by such Broker-Dealer as a result of market-making activities or other trading activities. The Company has agreed that, starting on the Expiration Date (as defined herein) and ending on the close of business one year after the Expiration Date, it will make this Prospectus available to any Broker-Dealer for use in connection with any such resale. See "Plan of Distribution". 25 ANNEX B Each Broker-Dealer that receives New Securities for its own account in exchange for Securities or Series A Bonds, where such Securities or Series A Bonds were acquired by such Broker-Dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. See "Plan of Distribution." 26 ANNEX C PLAN OF DISTRIBUTION Each Broker-Dealer that receives New Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of New Securities received in exchange for Securities or Series A Bonds where such Securities or Series A Bonds were acquired as a result of market-making activities or other trading activities. The Company has agreed that, starting on the Expiration Date and ending on the close of business one year after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any Broker-Dealer for use in connection with any such resale. In addition, until __________, 199__, all dealers effecting transactions in the New Securities may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of New Securities by brokers-dealers. New Securities received by Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Broker-Dealer and/or the purchasers of any such New Securities. Any Broker- Dealer that resells New Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Securities may be deemed to be an "underwriter" within the meaning of the Act and any profit of any such resale of New Securities and any commissions or concessions received by any such Persons may be deemed to be underwriting compensation under the Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Broker- Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Act. For a period of one year after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any Broker-Dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the Securities and the Series A Bonds) other than commissions or 27 concessions of any brokers or dealers and will indemnify the holders of the Securities and the Series A Bonds (including any Broker-Dealers) against certain liabilities, including liabilities under the Securities Act. [If applicable, add information required by Regulation S-K Items 507 and/or 508.] 28 ANNEX D Rider A CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ____________________________ Address: ____________________________ ____________________________ Rider B If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the New Securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of New Securities and it has not entered into arrangements or understandings with any Person to participate in a distribution of the New Securities. If the undersigned is a Broker-Dealer that will receive New Securities for its own account in exchange for Securities, it represents that the Securities and the Series A Bonds to be exchanged for New Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such New Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Act. 29 EX-5 9 OPINION OF SKADDE, ARPS, SLATE, MEAGHER & FLOM EXHIBIT 5 May 14, 1999 National Steel Corporation 4100 Edison Lakes Parkway Mishawaka, Indiana 46545-3440 Re: National Steel Corporation Registration Statement on Form S-4 (No. 333-76541) ------------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to National Steel Corporation, a Delaware corporation (the "Company"), in connection with the preparation of a Registration Statement on Form S-4 (No. 333-76541), as filed by the Company with the Securities and Exchange Commission (the "Commission") on April 19, 1999, as amended by Amendment No. 1 thereto filed by the Company with the Commission on May 14, 1999 (collectively, the "Registration Statement"). The Registration Statement relates to the registration under the Securities Act of 1933, as amended (the "Act"), of up to $300,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 9-7/8% Series D due 2009 (the "Series D Bonds") and up to $225,000,000 aggregate principal amount of the Company's First Mortgage Bonds, 9-7/8% Series B due 2009 (the "Series B Bonds" and, together with the Series D Bonds, the "Exchange Bonds"); provided, however, that in no event will the aggregate principal amount of Exchange Bonds issued exceed $300,000,000. The Exchange Bonds are to be offered in exchange (the "Exchange Offer") for up to $225,000,000 aggregate principal amount of the Company's currently outstanding First Mortgage Bonds, 9-7/8% Series A due 2009 (the "Series A Bonds") and up to $75,000,000 aggregate principal amount of the Company's currently outstanding First Mortgage Bonds, 9-7/8% Series C due 2009 (the "Series C Bonds" and, together with the Series A Bonds, the "Original Bonds"), as more fully described in the Registration Statement. The Series B Bonds, if issued, will be issued pursuant to National Steel Corporation May 14, 1999 Page 2 the Tenth Supplemental Indenture, dated as of March 8, 1999 (the "Tenth Supplemental Indenture"), and the Series D Bonds will be issued pursuant to the Eleventh Supplemental Indenture, dated as of March 31, 1999 (the "Eleventh Supplemental Indenture"), in each case by and among the Company and The Chase Manhattan Bank and Frank J. Grippo, as trustees. Each of the Tenth Supplemental Indenture and the Eleventh Supplemental Indenture constitutes a supplemental indenture to the Indenture of Mortgage and Deed of Trust, dated as of May 1, 1952, by and among the Company and Great Lakes Steel Corporation, a former wholly-owned subsidiary of the Company, and City Bank Farmers Trust Company and Ralph E. Morton, as trustees, as supplemented to date (including the Tenth Supplemental Indenture and the Eleventh Supplemental Indenture) (the "Indenture"). Holders of the Series A Bonds have the option to exchange such bonds for an equivalent principal amount of either Series B Bonds or Series D Bonds. This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act. In our examination we have assumed the genuineness of all signatures including endorsements, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which we did not independently establish or verify, we have relied upon statements and representations of the Company and its officers and other representatives and of public officials. In rendering the opinions set forth herein, we have examined and relied on originals or copies of the following: (i) the Registration Statement; (ii) the Tenth Supplemental Indenture, included as Exhibit G to the Registration Statement; (iii) the Eleventh Supplemental Indenture, included as Exhibit H to the Registration Statement; (iv) the Indenture, included as Exhibits 4-A through 4-F to the Registration Statement, in addition to all instruments supplemental thereto not filed as exhibits to the Registration Statement; (v) the form of each of the Series B Bonds and Series D Bonds and a specimen of the certificates representing each of such bonds; (vi) the Registration Rights Agreement, dated as of March 8, 1999, between the Company and the Initial Purchasers defined therein and the Registration Rights Agreement, dated as of March 31, 1999, between the Company and the Initial Purchaser defined therein (collectively, the "Registration Rights Agreements"); (vii) the Certificate of Incorporation and the By-Laws of the Company, as presently in effect; (viii) certain resolutions adopted by the National Steel Corporation May 14, 1999 Page 3 Board of Directors of the Company relating to the issuance and exchange of the Exchange Bonds for the Original Bonds and related matters, and (ix) such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below. We are admitted to the practice of law in the State of Illinois and we express no opinion as to the laws of any jurisdiction other than (i) the Applicable Laws of the State of New York and (ii) the General Corporation Law of the State of Delaware (the "DGCL"). We have relied, with your consent, as to matters of New York law on the opinion of Skadden, Arps, Slate, Meagher & Flom LLP. "Applicable Laws" shall mean those laws, rules, regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Exchange Offer, without our having made any special investigation as to the applicability of any specific law, rule or regulation, and which are not the subject of a specific opinion herein referring expressly to a particular law or laws. Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that: when (i) the Registration Statement becomes effective and assuming that (a) the Indenture as constituted prior to the inclusion of the Tenth Supplemental Indenture and the Eleventh Supplemental Indenture was duly qualified under the then applicable Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission applicable to an indenture qualified thereunder, and (b) the Tenth Supplemental Indenture and the Eleventh Supplemental Indenture have been qualified under the Trust Indenture Act, and (ii) the Exchange Bonds have been duly executed and authenticated in accordance with the terms of the Indenture and delivered in the Exchange Offer in exchange for the Original Bonds in accordance with the terms and conditions of the Registration Rights Agreements, the issuance of the Exchange Bonds will have been duly authorized, and the Exchange Bonds will be valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms pursuant to the Applicable Laws of the State of New York. National Steel Corporation May 14, 1999 Page 4 Our opinion is subject to the following assumptions and qualifications: (a) enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting creditors' rights generally and by principles of equity (regardless of whether enforceability is sought in equity or at law); (b) we have assumed that the Indenture constitutes the valid and binding obligation of each party to such Indenture (other than the Company) and is enforceable against such other party in accordance with its terms; (c) we express no opinion as to the enforceability of the waiver provisions contained in the Indenture; (d) the execution and delivery by the Company and performance of any of its obligations under the Indenture did not and will not conflict with, contravene, violate or constitute a default under (i) the Certificate of Incorporation or the By-Laws of the Company, (ii) any lease, indenture, instrument or other agreement to which the Company or its property is subject, (iii) any rule, law or regulation to which the Company is subject (other than Applicable Laws of the State of New York and the DGCL) or (iv) any judicial or administrative order or decree of any governmental authority; and (e) no authorization, consent or other approval of, notice to or filing with any court, governmental authority or regulatory body was required to authorize or was or is required in connection with the execution, delivery or performance by the Company of the Indenture. We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. Very truly yours, /s/ Skadden, Arps, Slate, Meagher & Flom (Illinois) EX-10.N 10 AMENDED AND RESTATED RECEIVABLES PURCHASE AGRMT. EXHIBIT 10-N EXECUTION COPY AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (the "Amendment and Restatement") dated as of September 30, 1997 among MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("Morgan Guaranty"), in its capacity as Administrative Agent, NATIONAL STEEL FUNDING CORPORATION, a Delaware corporation ("NFSC"), NATIONAL STEEL CORPORATION, a Delaware corporation ("NSC"), the financial institutions party thereto, as buyers (the "Buyers"), the Letter of Credit Issuing Banks party thereto, the Reserve L/C Bank and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as structuring and collateral agent (the "Receivables Collateral Agent"). W I T N E S S E T H : WHEREAS, the parties referred to above have heretofore entered into a Receivables Purchase Agreement dated as of May 16, 1994 (as amended by Amendment No. 1 thereto dated as of May 31, 1995 and Amendment No. 2 and Consent thereto dated as of July 18, 1996, the "Agreement"), and WHEREAS, the parties hereto desire to amend the Agreement as set forth herein and to restate the Agreement in its entirety to read as set forth in the Agreement with the amendments specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each capitalized term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the effective date hereof refer to the Agreement as amended and restated hereby. SECTION 2. Amendments to Definitions. Section 1.01 of the Agreement is amended as follows: (a) The definition of "Collateral Agent" is amended by replacing "J.P. Morgan Delaware" with "Morgan Guaranty". (b) The definition of "Commitment Fee" is amended by replacing ".1875%" with ".15%". (c) The definition of "Euro-Dollar Rate" is amended by replacing ".50%" with ".375%" and by replacing "2.50%" with "2.375%". (d) The definition of "Expiry Date" is amended by replacing "May 16, 2001" with the date "September 30, 2002". (e) The definition of "Fixed CD Rate" is amended by replacing ".625%" with ".50%" and by replacing "2.625%" with "2.50%". (f) The definition of "Issuing Bank Letter of Credit Fee" is amended by replacing ".25%" with ".15%". (g) The definition of "J.P. Morgan Delaware" is hereby deleted. (h) The definition of "Letter of Credit Participation Fee" is amended by replacing ".50%" with ".375%". (i) The definition of "Reserve L/C Fee" is amended by replacing ".625%" with ".50%". (j) The definition of "Reserve Letter of Credit" is amended by replacing "J.P. Morgan Delaware" with "Morgan Guaranty". SECTION 3. Amendment to Section 2.04 of the Agreement. Section 2.04(a) of the Agreement is amended by replacing "A-1+" with "A-1" in the twenty-first line thereof. SECTION 4. Amendment to Section 2.07 of the Agreement. Section 2.07(a)(iii) of the Agreement is amended by replacing "March 15, 1994" with "August 11, 1997". SECTION 5. Amendment to Section 7.02 of the Agreement. Section 7.02 of the Agreement is amended by deleting the references to "J.P. Morgan Delaware". SECTION 6. Amendment to Schedule 1 of the Agreement. Schedule 1 of the Agreement is amended to read in its entirety as set forth in Exhibit A attached hereto. 2 SECTION 7. Representations and Warranties. NSFC hereby represents and warrants that as of the effective date hereof (after giving effect hereto): (a) no Termination Event or Potential Termination Event has occurred and is continuing; and (b) each representation or warranty of NSFC set forth in the Agreement after giving effect to this Amendment and Restatement is true and correct. SECTION 8. Governing Law. This Amendment and Restatement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 9. Counterparts; Effectiveness. This Amendment and Restatement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment and Restatement shall become effective as of the date hereof if each of the following conditions shall have been satisfied on or before October 10, 1997: (i) receipt by the Administrative Agent of duly executed counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party); (ii) evidence satisfactory to the Collateral Agent that a rating of AAA or higher assigned to the Buyer's Certificates shall have been reaffirmed by S&P; and (iii) NSC shall have paid to the Administrative Agent for the account of J.P. Morgan Securities, Inc. the arrangement, syndication and advisory fee set forth in the letter dated August 11, 1997. The Administrative Agent shall promptly notify the parties hereto of the effectiveness of this Amendment and Restatement, and such notice shall be conclusive and binding on all parties hereto. 3 IN WITNESS WHEREOF, the parties have cause this Amendment and Restatement to be duly executed as of the date first above written. NATIONAL STEEL FUNDING CORPORATION By: ___________________________________ Name: Title: NATIONAL STEEL CORPORATION, as Servicer By: ___________________________________ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent, Structuring and Collateral Agent, Reserve L/C Bank and Letter of Credit Issuing Bank By: ___________________________________ Name: Title: THE FUJI BANK AND TRUST COMPANY, as Letter of Credit Issuing Bank By: ___________________________________ Name: Title: 4 BANK OF TOKYO-MITSUBISHI, LTD., as Letter of Credit Issuing Bank By: ___________________________________ Name: Title: COMERICA BANK, as Letter of Credit Issuing Bank By: ___________________________________ Name: Title: 5 COMMITMENTS: BUYERS: $30,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: _____________________________ Name: Title: $30,000,000 THE FUJI BANK AND TRUST COMPANY By: _____________________________ Name: Title: $25,000,000 COMERICA BANK By: _____________________________ Name: Title: $25,000,000 BANK OF TOKYO-MITSUBISHI, LTD. By: _____________________________ Name: Title: $20,000,000 THE LONG-TERM CREDIT BANK OF JAPAN LTD. By: _____________________________ Name: Title: 6 $15,000,000 THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH By: _____________________________ Name: Title: $15,000,000 THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY By: _____________________________ Name: Title: $15,000,000 NBD BANK By: _____________________________ Name: Title: $15,000,000 THE YASUDA TRUST AND BANKING CO., LTD. By: _____________________________ Name: Title: $10,000,000 MELLON BANK, N.A. By: _____________________________ Name: Title: TOTAL COMMITMENTS: $200,000,000 7 Exhibit A Schedule 1 Special Obligors and Concentration Limits ----------------------------------------- Obligor Rating - ------- ------ A-1 A-2 A-3 Unrated --- --- --- ------- Ford Motor Company 15% 8% 7% 4% General Motors Corporation 15% 12% 8% 4% Chrysler Motors Corporation 15% 12% 8% 4% Silgan Containers Corporation 10% 8% 7% 7% Ball Heekin Corporation 10% 8% 7% 6% The rating referred to above at any time is the rating then assigned by S&P to the short-term unsecured debt of the Obligor. 8 EX-10.JJ 11 AMENDMENT NO. 1, DATED MARCH 19, 1999 Exhibit 10-JJ AMENDMENT NO. 1 TO NO. 1 CONTINUOUS GALVANIZING LINE TURNKEY ENGINEERING AND CONSTRUCTION CONTRACT This Amendment No. 1 ("AMENDMENT") made this 19th day of March, 1999 by and between National Steel Corporation, Great Lakes Division, a Delaware corporation with its office at 4100 Edison Lakes Parkway, Mishawaka, Indiana 46545 ("NATIONAL") and NKK Steel Engineering, Inc., a Delaware corporation with its office at 910 Sheraton Drive, Suite 400, Mars, Pennsylvania 16046-9414 ("CONTRACTOR"). RECITALS A. NATIONAL and CONTRACTOR are parties to the No. 1 Continuous Galvanizing Line Turnkey Engineering and Construction Contract dated as of October 23, 1998 ("AGREEMENT"). B. NATIONAL and CONTRACTOR have agreed that CONTRACTOR will perform certain additional WORK pursuant to the AGREEMENT. C. The purpose of this AMENDMENT is to document the terms and conditions under which this additional WORK will be performed. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. All capitalized terms, which are not otherwise defined herein, shall have the meanings given to them in the AGREEMENT. 2. Additional WORK. CONTRACTOR agrees the WORK to be performed by CONTRACTOR pursuant to the AGREEMENT shall include the following additional items which were quoted by CONTRACTOR as "options" in its document dated October 19, 1998 entitled "National Steel No. 1 CGL--Option Price": a. Additional track rail for terminal; b. Additional track rail for furnace; c. Welder monitoring system; d. ITV for GJC; e. Pyrometer for RTF; f. CRT size from 17" to 21" (quantity: 5 sets); g. One additional HMI in entry pulpit; h. One additional PC in entry pulpit i. Space for side trimmer per drawing 2 and CONTRACTOR revision to 6400 mm clearance. The detailed scope of work for the items described in a--i above has been set forth in an amendment to the AS-SOLD SPECIFICATION which has been mutually agreed to by NATIONAL and CONTRACTOR. 3. Amendment of Section 5.1. The first sentence of Section 5.1 of the AGREEMENT is hereby amended and restated in its entirety as follows: "The total amount due CONTRACTOR for full and complete performance by CONTRACTOR of all the WORK, compliance with all of the terms and conditions of this CONTRACT, and for CONTRACTOR's payment of all of its obligations incurred in or applicable to performance of the WORK shall be One Hundred Thirty Nine Million Seven Hundred Eleven Thousand Six Hundred Sixty Five Dollars ($139,711,665)." 4. Amendment of Section 20. Section 20 of the AGREEMENT is hereby amended by adding the following as a new Section 20.7: "20.7 All references to the terms "SUBCONTRACTOR," "SUBCONTRACTORS" or "material suppliers" in Sections 20.1, 20.3, 20.5 and 20.6 shall apply, for purposes of those sections only, to those SUBCONTRACTORS or material suppliers whose total price for goods, services or other work for or on behalf of NATIONAL or CONTRACTOR, exceeds, or is reasonably anticipated to exceed, $250,000." 5. Amendment of Section 21.3. Section 21.3 of the AGREEMENT is hereby amended and restated in its entirety as follows: "21.3 Ownership of DRAWINGS and Other TECHNICAL DATA. NATIONAL and CONTRACTOR shall each own all drawings, plans, documents, writings, and all other sources of technical information (but not including computer software, which is covered by Section 22.1 below) in any form, tangible or intangible (herein called "TECHNICAL DATA") relating to the subject matter of this CONTRACT which was transferred, provided or exhibited to NATIONAL, its employees or agents, in the course of performance of this CONTRACT and which is necessary or useful in the operation of the facilities, equipment, apparatus and/or processes which are the subject matter of this CONTRACT; provided, however, that (i) NATIONAL shall have the right to use the TECHNICAL DATA solely in connection with the GOODS supplied hereunder or in connection with any other aspect of NATIONAL's internal business operations related to the PLANT; and (ii) CONTRACTOR and each SUBCONTRACTOR shall have the unqualified free right to possess and shall be permitted to make use of TECHNICAL DATA supplied or developed by it (as opposed to TECHNICAL DATA supplied or developed by NATIONAL) in connection with the WORK. Any exceptions to the above-described ownership rights of NATIONAL must 2 be agreed to in writing by NATIONAL and made an exhibit to this CONTRACT and must provide for the unqualified free right of NATIONAL to possess and use the TECHNICAL DATA in all of its PLANT operations." 6. Amendment of Section 22.1. Section 22.1 of the AGREEMENT is hereby amended and restated in its entirety as follows: "22.1 License to Use Software. CONTRACTOR agrees, represents and warrants that if any equipment or other GOODS covered by the CONTRACT include computer software or require the use of computer software to enable NATIONAL to use the GOODS, NATIONAL shall have the unrestricted, irrevocable, perpetual, paid-up right and license to use such computer software solely in connection with the GOODS or in connection with any other aspect of NATIONAL's internal business operations related to the PLANT. If requested in writing by CONTRACTOR, NATIONAL will protect any such computer software from disclosure to third parties to the same extent it protects its own confidential information, but the failure by NATIONAL to do so shall not cause the revocation of, or otherwise affect, NATIONAL's right to use such computer software. CONTRACTOR agrees to indemnify and defend NATIONAL from and against any claims of third parties relating to NATIONAL's rights under this Section 22." 7. Amendment of Section 51. Section 51 of the AGREEMENT is hereby amended by adding the following language at the end of such Section: "In the event that any SUBCONTRACTOR desires any proprietary information supplied by it to NATIONAL, either directly or indirectly through CONTRACTOR, to be deemed CONFIDENTIAL INFORMATION hereunder, CONTRACTOR shall in good faith discuss the contents of such information with NATIONAL on a case-by-case basis, and such proprietary information shall be added to Exhibit U as CONFIDENTIAL INFORMATION, unless NATIONAL reasonably objects to the treatment of such proprietary information as CONFIDENTIAL INFORMATION hereunder. It is the intent of the preceding sentence to limit as much proprietary information from SUBCONTRACTORS as possible as being deemed to be CONFIDENTIAL INFORMATION, and CONTRACTOR agrees to work with its SUBCONTRACTORS to that end. 8. Amendment of Exhibit B. The page in Exhibit B of the AGREEMENT which is captioned "NKK Steel Engineering, Inc. Schedule of Field Service Rates" is hereby deleted in its entirety and replaced with the new page with the same caption which is attached hereto. 9. Amendment of Exhibit C. Exhibit C of the AGREEMENT is hereby deleted in its entirety and replaced with the new Exhibit C dated October 29, 1998 which is attached hereto. 10. Amendment of Exhibit Q. Exhibit Q of the AGREEMENT is hereby deleted in its entirety and replaced with the new Exhibit Q dated October 29, 1998 which is attached hereto. 11. Amendment of Exhibit R. Exhibit R of the AGREEMENT is hereby deleted in its entirety and replaced with the new Exhibit R dated October 29, 1998 which is attached hereto. 3 12. No Other Changes. Except as specifically provided for in this AMENDMENT, the terms and conditions of the AGREEMENT and other CONTRACT DOCUMENTS shall remain unchanged and in full force and effect. Without limiting the generality of the foregoing, NATIONAL and CONTRACTOR hereby expressly acknowledge and agree that the additional WORK described above shall not extend, alter or otherwise affect any of the schedules for completion of the WORK set forth in the AGREEMENT or other CONTRACT DOCUMENTS. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above. NATIONAL STEEL CORPORATION By: Title: NKK STEEL ENGINEERING, INC. By: Title: 4 EX-23.A 12 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23-A CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under caption "Experts" in Amendment No. 1 to the Registration Statement (Form S-4) and related Prospectus of National Steel Corporation for the registration of 300,000,000 National Steel Corporation First Mortgage Bond 9-7/8% Series D due 2009 and to the incorporation by reference therein of our report dated January 28, 1999, with respect to the consolidated financial statements and schedule of National Steel Corporation included in its Annual Report (Form 10-K) filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Indianapolis, Indiana May 14, 1999 EX-99.A 13 FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.A LETTER OF TRANSMITTAL To Tender for Exchange First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 of National Steel Corporation Pursuant to the Prospectus dated , 1999 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED. To: The Chase Manhattan Bank, as Exchange Agent By Registered or By Overnight Courier: By Hand: Certified Mail: The Chase Manhattan Bank The Chase Manhattan Bank The Chase Manhattan Bank 55 Water Street--Room 234 55 Water Street--Room 234 55 Water Street--Room 234 North Building North Building North Building New York, New York 10041 New York, New York 10041 New York, New York 10041 By Facsimile: (212) 638-7380 (212) 638-7381 Confirm by telephone: (212) 638-0828 Attn: Carlos Esteves Delivery of this instrument to an address other than as set forth above or transmission of instructions via a facsimile number other than the one listed above will not constitute a valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. The undersigned acknowledges that he or she has received the Prospectus, dated , 1999 (the "Prospectus"), of National Steel Corporation (the "Company") and this Letter of Transmittal (the "Letter of Transmittal"), which together constitute the Company's offer (the "Exchange Offer") to exchange its First Mortgage Bonds, 9 7/8% Series D due 2009 (the "Exchange Bonds") for an equal principal amount of its First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 (collectively, "Original Bonds") and, together with the Exchange Bonds, the "Bonds"). The terms of the Exchange Bonds are identical in all material respects to the Original Bonds, except that the Exchange Bonds have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and, therefore, will not bear legends restricting their transfer and will not contain certain provisions relating to an increase in the interest rate which were included in the Original Bonds under certain circumstances relating to the timing of the Exchange Offer. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1999, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term shall mean the latest date and time to which the Exchange Offer is extended. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. The Letter of Transmittal is to be used by Holders of Original Bonds if certificates are to be forwarded herewith. Holders of Original Bonds whose certificates are not immediately available, or who are unable to deliver their certificates and all other documents required by this Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date, must tender their Original Bonds according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed delivery procedures" section of the Prospectus. See Instruction 1. The term "Holder" with respect to the Exchange Offer means any person in whose name Original Bonds are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Holders who wish to tender their Original Bonds must complete this Letter of Transmittal in its entirety; provided, however, that a Letter of Transmittal need not be submitted with respect to Original Bonds tendered in accordance with the Depository Trust Company's Automated Tender Offer Procedures ("ATOP"). The undersigned acknowledges that if it is a broker-dealer holding Original Bonds acquired for its own account as a result of market-making activities or other trading activities (other than Original Bonds acquired directly from the Company), such Holder may be deemed to be an "Underwriter" within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Bonds received in respect of such Original Bonds pursuant to the Exchange Offer. Notwithstanding the foregoing, the undersigned shall not be deemed to admit that it is an "Underwriter" within the meaning of such term under the Securities Act. PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE LETTER OF TRANSMITTAL DESCRIPTION OF FIRST MORTGAGE BONDS, 9 7/8% SERIES A DUE 2009 - --------------------------------------------------------------------------------
Aggregate Principal Amount Principal Tendered (must Names and Address(es) of Amount be in integral Registered Holder(s) Certificate Represented by multiples (please fill in, if blank) Number(s) Certificate(s) of $1,000)* - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- Total - -----------------------------------------------------------------------------------------------
*Unless indicated in the column labeled "Principal Amount Tendered," any tendering Holder of First Mortgage Bonds, 9 7/8% Series A due 2009 will be deemed to have tendered the entire aggregate principal amount represented by the column labeled "Aggregate Principal Amount Represented by Certificate(s)." If the space provided above is inadequate, list the certificate numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal. The minimum permitted tender is $1,000 in principal amount. All other tenders must be integral multiples of $1,000. DESCRIPTION OF FIRST MORTGAGE BONDS, 9 7/8% SERIES C DUE 2009 - --------------------------------------------------------------------------------
Aggregate Principal Amount Principal Tendered (must Names and Address(es) of Amount be in integral Registered Holder(s) Certificate Represented by multiples (please fill in, if blank) Number(s) Certificate(s) of $1,000)* - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- Total - -----------------------------------------------------------------------------------------------
*Unless indicated in the column labeled "Principal Amount Tendered," any tendering Holder of First Mortgage Bonds, 9 7/8% Series C due 2009 will be deemed to have tendered the entire aggregate principal amount represented by the column labeled "Aggregate Principal Amount Represented by Certificate(s)." If the space provided above is inadequate, list the certificate numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal. The minimum permitted tender is $1,000 in principal amount. All other tenders must be integral multiples of $1,000. 2 [_]CHECK HERE IF THE UNDERSIGNED IS ELECTING TO TENDER FIRST MORTGAGE BONDS, 9 7/8% SERIES A DUE 2009 FOR FIRST MORTGAGE BONDS, 9 7/8% SERIES B DUE 2009. IF ALL OUTSTANDING SERIES A BONDS ARE TENDERED FOR SERIES B BONDS, THERE WILL BE $225,000,000 AGGREGATE PRINCIPAL AMOUNT OF SERIES B BONDS OUTSTANDING FOLLOWING THE CONSUMMATION OF THE EXCHANGE OFFER. [_]CHECK HERE IF TENDERED ORIGINAL BONDS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING (SEE INSTRUCTION 1): Name(s) of Registered Holder(s) ____________________________________________ Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution which Guaranteed Delivery ______________________________ [_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ ---------------------------------------------------------------------- SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 4, 5 and 6) (See Instructions 4, 5 and 6) To be completed ONLY if To be completed ONLY if certificates for Original Bonds in certificates for Original Bonds in a principal amount not tendered, a principal amount not tendered, or Exchange Bonds issued in or Exchange Bonds issued in exchange for Original Bonds exchange for Original Bonds accepted for exchange, are to be accepted for exchange, are to be issued in the name of someone sent to someone other than the other than the undersigned. undersigned, or to the undersigned at an address other than that shown above. Issue certificate(s) to: Name: _____________________________ Deliver certificate(s) to: (Please Print) Name: _____________________________ Address: __________________________ (Please Print) ----------------------------------- Address: __________________________ (Include Zip Code) ----------------------------------- ----------------------------------- (Include Zip Code) (Tax Identification or Social Security No.) 3 Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of Original Bonds indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Original Bonds tendered in accordance with this Letter of Transmittal, the undersigned sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to the Original Bonds tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company) with respect to the tendered Original Bonds with full power of substitution to (i) deliver certificates for such Original Bonds, or transfer ownership of such Original Bonds on the account books at the Depository Trust Company ("DTC"), together, in any such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company and (ii) present such Original Bonds for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Original Bonds, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that he or she has full power and authority to tender, sell, assign and transfer the Original Bonds tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are acquired by the Company. The undersigned and any beneficial owner of Original Bonds hereby further represent that any Exchange Bonds acquired in exchange for Original Bonds tendered hereby will have been acquired in the ordinary course of business of the undersigned and any such beneficial owner of Original Bonds receiving such Exchange Bonds, that neither the Holder nor any such beneficial owner is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such Exchange Bonds and that neither the Holder nor any such beneficial owner is an "affiliate," as defined in Rule 405 under the Securities Act, of the Company. The undersigned and each beneficial owner acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the Exchange Bonds must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transactions of the Exchange Bonds acquired by such person and may not rely on the position of the Staff of the Securities and Exchange Commission set forth in the no-action letters discussed in the Prospectus under the caption "The Exchange Offer." If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a public distribution of Exchange Bonds. The undersigned and each beneficial owner will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment, transfer and purchase of the Original Bonds tendered hereby. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Original Bonds when, as and if the Company has given oral or written notice thereof to the Exchange Agent. If any tendered Original Bonds are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Original Bonds will be returned (or, in the case of Original Bonds tendered by book- entry at DTC, credited to the account at DTC from which such tender originated), without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under "Special Delivery Instructions" as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the undersigned's heirs, personal representatives, successors and assigns. The undersigned understands that tenders of Original Bonds pursuant to the procedures described under the caption "The Exchange Offer--Procedures for tendering original bonds" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the 4 terms and subject to the conditions of the Exchange Offer, subject only to withdrawal of such tenders on the terms set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal rights." Unless otherwise indicated under "Special Registration Instructions," please issue the certificates representing the Exchange Bonds issued in exchange for the Original Bonds accepted for exchange and any certificates for Original Bonds not tendered or not exchanged, (or, in the case of Original Bonds tendered by book-entry transfer at DTC, credit to the account at DTC) in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please send the certificates representing the Exchange Bonds issued in exchange for the Original Bonds accepted for exchange and any certificates for Original Bonds not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s) (or, in the case of Original Bonds tendered by book-entry transfer at DTC, credit to the account at DTC in the undersigned's name). In the event that both "Special Registration Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Bonds issued in exchange for the Original Bonds accepted for exchange in the name(s) of, and return any certificates for Original Bonds not tendered or not exchanged to, (or, in the case of Original Bonds tendered by book-entry transfer at DTC, credit to the account(s) at DTC in the name(s) of) the person(s) so indicated. The undersigned understands that the Company has no obligation pursuant to the "Special Registration Instructions" and "Special Delivery Instructions" to transfer any Original Bonds from the name of the registered Holder(s) thereof if the Company does not accept for exchange any of the Original Bonds so tendered. 5 Holders who wish to tender their Original Bonds and whose Original Bonds are not immediately available or who cannot deliver their certificates and all other documents required by this Letter of Transmittal to the Exchange Agent prior to the Expiration Date, may tender their Original Bonds according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed delivery procedures." See Instruction 1 regarding the completion of this Letter of Transmittal printed below. PLEASE SIGN HERE WHETHER OR NOT ORIGINAL BONDS ARE BEING PHYSICALLY TENDERED HEREBY X Date:____________________ -------------------------------------------------- X Date:____________________ -------------------------------------------------- Signature(s) of Registered Holder(s) or Authorized Signatory Area Code and Telephone Number: _____________________________________________ The above lines must be signed by the registered holder(s) as their name(s) appear(s) on the Original Bonds or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If the Original Bonds to which this Letter of Transmittal relate are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence satisfactory to the Company of such person's authority so to act. See Instruction 4 regarding the completion of this Letter of Transmittal printed below. Name(s): ____________________________________________________________________ (Please Print) ----------------------------------------------------------------------------- Capacity: ___________________________________________________________________ Address: ____________________________________________________________________ (Include Zip Code) Signature(s) Guaranteed by an Eligible Institution: (If required by Instruction 4) ----------------------------------------------------------------------------- (Authorized Signature) ----------------------------------------------------------------------------- (Title) ----------------------------------------------------------------------------- (Name of Firm) Date: ___________________ 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Original Bonds; Guaranteed Delivery Procedures. The tendered Original Bonds as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery of the tendered Original Bonds, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the Holder and, except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that the Holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. No Letter of Transmittal or Original Bonds should be sent to the Company. A Letter of transmittal need not be submitted with respect to Original Bonds tendered in accordance with DTC's Automated Tender Offer Procedures ("ATOP"). Holders who wish to tender their Original Bonds and (i) whose Original Bonds are not immediately available or (ii) who cannot deliver their Original Bonds, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date must tender their Original Bonds according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution (defined below); (b) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number or numbers of such Original Bonds and the principal amount of Original Bonds tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, this Letter of Transmittal (or facsimile hereof) together with the certificate(s) representing the Original Bonds (or a book-entry confirmation with respect to all Original Bonds tendered by book-entry at DTC by the ATOP procedures) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile hereof), as well as the certificate(s) representing all tendered Original Bonds in proper form for transfer (or a book-entry confirmation with respect to all Original Bonds tendered by book-entry at DTC by the ATOP procedures) and all other documents required by this Letter of Transmittal must be received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date, all as provided in the Prospectus under the caption "The Exchange Offer--Guaranteed delivery procedures." Any Holder who wishes to tender his or her Original Bonds pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Original Bonds according to the guaranteed delivery procedures set forth above. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Original Bonds, and withdrawal of tendered Original Bonds will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Original Bonds not properly tendered or any Original Bonds the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Original Bonds. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be firm and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Bonds must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Bonds, nor shall any of them incur any liability for failure to give such 7 notification. Tenders of Original Bonds will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Original Bonds received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 2. Tender by Holder. Only a Holder of Original Bonds may tender such Original Bonds in the Exchange Offer. Any beneficial owner of Original Bonds who is not the registered holder and who wishes to tender should arrange with such registered holder to execute and deliver this Letter of Transmittal on such owner's behalf or must, prior to completing and executing this Letter of Transmittal and delivering his or her Original Bonds, either make appropriate arrangements to register ownership of the Original Bonds in such owner's name or obtain a properly completed bond power from the registered holder. 3. Partial Tenders (Not applicable to Holders who tender by book-entry transfer). Tenders of Original Bonds will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Original Bonds is tendered, the tendering Holder should fill in the principal amount tendered in the fourth column of the box entitled "Description of First Mortgage Bonds, 9 7/8% Series A due 2009" or "Description of First Mortgage Bonds, 9 7/8% Series C due 2009" above. The entire principal amount of any Original Bonds delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Original Bonds is not tendered, then Original Bonds for the principal amount of Original Bonds not tendered and a certificate or certificates representing Exchange Bonds issued in exchange for any Original Bonds accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal, promptly after the Original Bonds are accepted for exchange. 4. Signatures on the Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Original Bonds tendered hereby, the signature must correspond with the name(s) as written on the face of the Original Bonds without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder or holders of Original Bonds tendered and the certificate or certificates for Exchange Bonds issued in exchange therefor is to be issued (or any untendered principal amount of Original Bonds is to be reissued) to the registered holder and neither the "Special Delivery Instructions" nor the "Special Registration Instructions" has been completed, then such holder need not and should not endorse any tendered Original Bonds, nor provide a separate bond power. In any other case, such holder must either properly endorse the Original Bonds tendered or transmit a properly completed separate bond power with this Letter of Transmittal with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered holder or holders of any Original Bonds listed, such Original Bonds must be endorsed or accompanied by appropriate bond powers in each case signed as the name of the registered holder or holders appears on the Original Bonds. If this Letter of Transmittal (or facsimile hereof) or any Original Bonds or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Endorsements on Original Bonds or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution which is a member of (a) the Securities Transfer Agents Medallion Program, (b) the New York Stock Exchange Medallion Signature Program or (c) the Stock Exchange Medallion Program. 8 Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed if (a) this Letter of Transmittal is signed by the registered holder(s) of the Original Bonds tendered herewith and such holder(s) have not completed the box set forth herein entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" or (b) such Original Bonds are tendered for the account of an Eligible Institution. 5. Special Registration and Delivery Instructions. Tendering Holders should indicate, in the applicable box or boxes, the name and address to which Exchange Bonds or substitute Original Bonds for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 6. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the exchange of Original Bonds pursuant to the Exchange Offer. If, however, certificates representing Exchange Bonds or Original Bonds for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered in the name of, any person other than the registered holder of the Original Bonds tendered hereby, or if tendered Original Bonds are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Original Bonds pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or on any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Original Bonds listed in this Letter of Transmittal. 7. Waiver of Conditions. The Company reserves the right, in its sole discretion, to amend, waive or modify specified conditions in the Exchange Offer in the case of any Original Bonds tendered. 8. Mutilated, Lost, Stolen or Destroyed Original Bonds. Any tendering Holder whose Original Bonds have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated herein for further instructions. 9. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 9 EX-99.B 14 FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.B NATIONAL STEEL CORPORATION Notice of Guaranteed Delivery of First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 As set forth in the Prospectus, dated , 1999 (as the same may be amended from time to time, the "Prospectus"), of National Steel Corporation (the "Company") under the caption "The Exchange Offer--Guaranteed delivery procedures," this form or one substantially equivalent hereto must be used to accept the Company's offer (the "Exchange Offer") to exchange its First Mortgage Bonds, 9 7/8% Series D due 2009 (the "Exchange Bonds"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for an equal principal amount of its First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 (collectively the "Original Bonds") if (i) certificates representing the Original Bonds to be exchanged are not lost but are not immediately available or (ii) time will not permit all required documents to reach the Exchange Agent prior to the Expiration Date. This form may be delivered by an Eligible Institution by mail or hand delivery or transmitted, via facsimile, to the Exchange Agent at its address set forth below not later than 5:00 p.m., New York City Time, on , 1999. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Prospectus. The Exchange Agent is: THE CHASE MANHATTAN BANK By Registered or By Overnight Courier: By Hand: Certified Mail: The Chase Manhattan Bank The Chase Manhattan Bank The Chase Manhattan Bank 55 Water Street--Room 234 55 Water Street--Room 55 Water Street--Room North Building 234 234 New York, New York 10041 North Building North Building New York, New York 10041 New York, New York 10041 By Facsimile: (212) 638-7380 (212) 638-7381 Confirm by telephone: (212) 638-0828 DELIVERY, OR TRANSMISSION VIA FACSIMILE, OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. Ladies and Gentlemen: The undersigned hereby tender(s) for exchange to the Company, upon the terms and subject to the conditions set forth in the Prospectus and Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Original Bonds set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed delivery procedures." The undersigned understands and acknowledges that the Exchange Offer will expire at 5:00 p.m., New York City time, on , 1999, unless extended by the Company. With respect to the Exchange Offer, "Expiration Date" means such time and date, or if the Exchange Offer is extended, the latest time and date to which the Exchange Offer is so extended by the Company. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. Principal Amount of Original Bonds Exchanged: $ ________________________ SIGNATURES Certificate Nos. of Original Bonds (if available) ----------------------------------- Signature of Owner ------------------------------------- ----------------------------------- Signature of Owner (if more than ------------------------------------- one) Total $ _____________________________ Dated: IF ORIGINAL BONDS WILL BE DELIVERED Name(s): __________________________ BY BOOK-ENTRY TRANSFER, PROVIDE THE DEPOSITORY TRUST COMPANY ("DTC") AC- COUNT NO.: ---------------------------- (Please Print) Account No.: ________________________ Address: __________________________ ----------------------------- ----------------------------- (Include Zip Code) Area Code and Telephone No. _____________________ Capacity (full title), if signing in a representative capacity____________ Taxpayer Identification or Social Security No.: ______________ GUARANTEE OF DELIVERY (Not to be used for signature guarantee) The undersigned, a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or is a commercial bank or trust company having an office or correspondent in the United States, or is otherwise an "eligible guaranteed institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof), together with the Original Bonds tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Original Bonds into the Exchange Agent's account at the Book- Entry Transfer Facility described in the Prospectus under the caption "The Exchange Offer--Guaranteed delivery procedures" and in the Letter of Transmittal) and any other required document, all by 5.00 p.m., New York City time, on the third New York Stock Exchange trading day following the Expiration Date. Name of Firm: _______________________ ------------------------------------- Authorized Signature Address: ____________________________ Name: _______________________________ - ------------------------------------- Title: ______________________________ Area Code and Telephone No.: ________ Date: _______________________________ NOTE: DO NOT SEND ORIGINAL BONDS WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL BONDS MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, THE LETTER OF TRANSMITTAL. 2 EX-99.C 15 FORM OF LETTER TO BROKERS EXHIBIT 99.C National Steel Corporation Offer to Exchange its First Mortgage Bonds, 9 7/8% Series D due 2009 for any and all of its outstanding First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999 UNLESS EXTENDED. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: May , 1999 National Steel Corporation, a Delaware corporation, (the "Company") is offering upon the terms and conditions set forth in the Prospectus, dated , 1999 (as the same may be amended from time to time, the "Prospectus"), and in the related Letter of Transmittal enclosed herewith, to exchange (the "Exchange Offer") its First Morgtage Bonds, 9 7/8% Series D due 2009 (the "Exchange Bonds") for an equal principal amount of its First Morgtage Bonds, 9 7/8% Series A due 2009 and/or its First Morgtage Bonds, 9 7/8% Series C due 2009 (collectively, the "Original Bonds" and, together with the Exchange Bonds, the "Bonds"). As set forth in the Prospectus, the terms of the Exchange Bonds are identical in all material respects to the Original Bonds, except for certain transfer restrictions relating to the Original Bonds and except that the Exchange Bonds will not contain certain provisions relating to an increase in the interest rate which were included in the Original Bonds under certain circumstances relating to the timing of the Exchange Offer. Original Bonds may only be tendered in integral multiples of $1,000. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE EXCHANGE OFFER--CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Prospectus, dated , 1999. 2. The Letter of Transmittal to exchange Bonds for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to exchange Bonds. 3. A form of letter which may be sent to your clients for whose accounts you hold Original Bonds registered in your name or in the name of your nominee, with space provided for obtaining such client's instructions with regard to the Exchange Offer. 4. A Notice of Guaranteed Delivery. 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 6. A return envelope addressed to The Chase Manhattan Bank, the Exchange Agent. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED. PLEASE FURNISH COPIES OF THE ENCLOSED MATERIALS TO THOSE OF YOUR CLIENTS FOR WHOM YOU HOLD ORIGINAL BONDS REGISTERED IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE AS QUICKLY AS POSSIBLE. In all cases, exchanges of Original Bonds accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of (a) certificates representing such Original Bonds (or, if Original Bonds are to be delivered by book-entry transfer with the Depository Trust Company ("DTC"), confirmation in accordance with DTC's Automated Tender Offer Procedures ("ATOP")), (b) the Letter of Transmittal (or facsimile thereof) properly completed and duly executed with any required signature guarantees, and (c) any other documents required by the Letter of Transmittal. A Letter of Transmittal need not be submitted with respect to Original Bonds tendered in accordance with DTC's ATOP procedures. If holders of Original Bonds wish to tender, but it is impracticable for them to forward their certificates for Original Bonds prior to the expiration of the Exchange Offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be offered by following the guaranteed delivery procedure described in the Prospectus under "The Exchange Offer--Guaranteed delivery procedures." The Exchange Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Original Bonds residing in any jurisdiction in which the making of the Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. The Company will not pay any fees or commissions to brokers, dealers or other persons for soliciting exchanges of Bonds pursuant to the Exchange Offer. The Company will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Bonds to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Questions and requests for assistance with respect to the Exchange Offer or for copies of the Prospectus and Letter of Transmittal may be directed to the Exchange Agent at its address set forth in the Prospectus or at (212) 638-0828. Very truly yours, National Steel Corporation NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.D 16 FORM OF LETTER TO CLIENTS EXHIBIT 99.D National Steel Corporation Offer to Exchange its First Mortgage Bonds, 9 7/8% Series D due 2009 for any and all of its outstanding First Mortgage Bonds, 9 7/8% Series A due 2009 and/or itsFirst Mortgage Bonds, 9 7/8% Series C due 2009 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999 (THE "INITIAL EXPIRATION DATE"), UNLESS EXTENDED. To Our Clients: Enclosed for your consideration is a Prospectus, dated , 1999 (as the same may be amended from time to time, the "Prospectus"), and a Letter of Transmittal (the "Letter of Transmittal") relating to the offer by National Steel Corporation (the "Company") to exchange (the "Exchange Offer") its First Mortgage Bonds, 9 7/8% Series D due 2009 (the "Exchange Bonds") for an equal principal amount of its First Mortgage Bonds, 9 7/8% Series A due 2009 and/or First Mortgage Bonds, 9 7/8% Series C due 2009 (collectively, the "Original Bonds") upon the terms and conditions set forth in the Prospectus and in the related Letter of Transmittal. As set forth in the Prospectus, the terms of the Exchange Bonds are identical in all material respects to the Original Bonds, except for certain transfer restrictions relating to the Original Bonds and except that the Exchange Bonds will not contain certain provisions relating to an increase in the interest rate which were included in the Original Bonds under certain circumstances relating to the timing of the Exchange Offer. The Exchange Offer is subject to certain customary conditions. See "The Exchange Offer" in the Prospectus. Original Bonds may be tendered only in integral multiples of $1,000. The material is being forwarded to you as the beneficial owner of Original Bonds carried by us for your account or benefit but not registered in your name. An exchange of any Original Bonds may only be made by us as the registered Holder and pursuant to your instructions. Therefore, the Company urges beneficial owners of Original Bonds registered in the name of a broker, dealer, commercial bank, trust company or other nominee to contact such Holder promptly if they wish to exchange Original Bonds in the Exchange Offer. Accordingly, we request instructions as to whether you wish us to exchange any or all such Original Bonds held by us for your account or benefit, pursuant to the terms and conditions set forth in the Prospectus and Letter of Transmittal. We urge you to read carefully the Prospectus and Letter of Transmittal before instructing us to exchange your Original Bonds. Your instructions to us should be forwarded as promptly as possible in order to permit us to exchange Original Bonds on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer expires at 5:00 pm., New York City time, on , 1999, unless extended. With respect to the Exchange Offer, "Expiration Date" means the Initial Expiration Date, or if the Exchange Offer is extended, the latest time and date to which the Exchange Offer is so extended by the Company. Tender of Original Bonds may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Your attention is directed to the following: 1. The Exchange Offer is for the exchange of $1,000 principal amount of the Exchange Bonds for each $1,000 principal amount of the Original Bonds, of which $300,000,000 aggregate principal amount of the Original Bonds was outstanding as of , 1999. The terms of the Exchange Bonds are identical in all material respects to the Original Bonds, except for (1) the transfer restrictions and registration rights relating to the Original Bonds do not apply to the Exchange Bonds, (2) the Exchange Bonds will not contain certain provisions relating to an increase in the interest rate which were included in the Original Bonds under certain circumstances relating to the timing of the Exchange Offer and (3) the Exchange Bonds are part of a single series of up to $300,000,000. 2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE EXCHANGE OFFER--CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS. 3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York City time, on , 1999, unless extended. 4. The Company has agreed to pay the expenses of the Exchange Offer. 5. Any transfer taxes incident to the transfer of Bonds from the tendering Holder to the Company will be paid by the Company, except as provided in the Prospectus and the Letter of Transmittal. The Exchange Offer is not being made to, nor will exchanges be accepted from or on behalf of, holders of Original Bonds residing in any jurisdiction in which the making of the Exchange Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. If you wish us to exchange any or all of your Original Bonds held by us for your account or benefit, please so instruct us by completing, executing and returning to us the instruction form that appears below. The accompanying Letter of Transmittal is furnished to you for informational purposes only and may not be used by you to exchange Original Bonds held by us and registered in your name for your account or benefit. 2 INSTRUCTIONS The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offer of National Steel Corporation. This will instruct you to exchange the aggregate principal amount of Original Bonds indicated below (or, if no aggregate principal amount is indicated below, all Original Bonds) held by you for the account or benefit of the undersigned, pursuant to the terms of and conditions set forth in the Prospectus and the Letter of Transmittal. Aggregate Principal Amount of Original Bonds to be exchanged $ * [_]Check here if the undersigned is instructing you to exchange First Mortgage Bonds, 9 7/8% Series A due 2009 held by you for the account or benefit of the undersigned for First Mortgage Bonds, 9 7/8% Series B due 2009. The maximum aggregate principal amount of Series B Bonds that will be outstanding following the consummation of the Exchange Offer will be $225,000,000. *I (we) understand that if I (we) ------------------------------------- sign these instruction forms without ------------------------------------- indicating an aggregate principal Signature(s) amount of Original Bonds in the ------------------------------------- space above, all Original Bonds held ------------------------------------- by you for my (our) account will be ------------------------------------- exchanged. ------------------------------------- (Please print name(s) and address here) Dated: ______________________________ ------------------------------------- (Area Code and Telephone Number) ------------------------------------- (Taxpayer Identification or Social Security Number) - -------- * Unless otherwise indicated, it will be assumed that all of your Original Bonds are to be exchanged. 3 EX-99.E 17 GUIDELINES FOR CERT. OF TIN ON SUB. FORM W-9 EXHIBIT 99E GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. - --------------------------------------- ---------------------------------------
Give the For this type of account: SOCIAL SECURITY number of-- - ----------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner account) of the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, guardian or committee for a or incompetent designated ward, minor, or person(3) incompetent person 7. a. The usual revocable The grantor- savings trust account trustee(1) (grantor is also trustee) b. So-called trust account The actual that is not a legal or owner(1) valid trust under State law 8. Sole proprietorship The owner(4) account
Give the EMPLOYER For this type of account: IDENTIFICATION number of -- -------- 9. A valid trust, estate, or The legal entity pension trust (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held The partnership in the name of the business 13. Association, club, or The organization other tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
--------------------------------------- - --------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 Page 2 Obtaining a Number If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding Payees specifically exempted from backup withholding on ALL payments include the following: .A corporation. .A financial institution. . An organization exempt from tax under section 501(a), or an individual retirement plan. . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. . A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. . An international organization or any agency, or instrumentality thereof. . A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a) . An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). . An entity registered at all times under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. . Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not pro- vided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends un- der section 852). . Payments described in section 6049(b)(5) to non-resident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. Privacy Act Notice.--Section 6109 requires most recipients of dividend, inter- est, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification pur- poses. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penal- ties may also apply. Penalties (1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail to furnish your taxpayer identification number to a payer, you are sub- ject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Failure to Report Certain Dividend and Interest Payments.--If you fail to include any portion of an includible payment for interest, dividends, or pat- ronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under- payment attributable to that failure unless there is clear and convincing evi- dence to the contrary. (3) Civil Penalty for False Information With Respect to Withholding.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) Criminal Penalty for Falsifying Information.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or im- prisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE -----END PRIVACY-ENHANCED MESSAGE-----