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