Document:

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                                                                   Exhibit 10.22

                              EMPLOYMENT AGREEMENT

          This Employment Agreement (this "Agreement") is entered into this
September 3, 2002 between Arthur J. Gallagher & Co., a Delaware corporation (the
"Company"), and Michael J. Cloherty (the "Executive").

          WHEREAS, the Executive currently serves as the Executive Vice
President, Secretary and Chief Financial Officer of the Company, as a member of
the board of directors of the Company (the "Board"), as the Chief Executive
Officer of AJG Financial Services, Inc. ("AJG Financial") and as Chairman of the
board of directors of AJG Financial;

          WHEREAS, the Company and the Executive have agreed to reduce the
Executive's substantial duties and responsibilities with the Company and its
affiliates; and

          WHEREAS, both the Company and the Executive desire that the Executive
continue to participate in the business of the Company and its affiliates.

          NOW, THEREFORE, for good and valuable consideration, receipt of which
is acknowledged, the Company and the Executive hereby agree as follows:

          1. Employment. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to continue to be employed by the
Company upon the terms and subject to the conditions contained in this
Agreement. The term of employment of the Executive by the Company pursuant to
this Agreement (the "Employment Period") shall commence on the date hereof (the
"Effective Date") and shall end on December 31, 2012 (the "Termination Date"),
unless earlier terminated pursuant to Section 6 hereof.

          2. Duties.

     (a) Initial Employment Period. During the period commencing on the
     Effective Date and ending on December 30, 2002 (the "Initial Employment
     Period"), the Executive hereby agrees to continue his employment with the
     Company and to perform such duties of an executive nature with respect to
     such matters related to the businesses conducted by the Company and its
     affiliates as the Board or the Chief Executive Officer of the Company
     designates from time to time. The Company and the Executive agree that,
     effective as of September 3, 2002, the Executive will resign as Executive
     Vice President, Secretary and Chief Financial Officer of the Company, as a
     member of the Board, as Chief Executive Officer of AJG Financial, as
     Chairman and a member of the board of directors of AJG Financial and from
     all committee memberships and other officer and director positions (if any)
     with the Company, AJG Financial and their affiliates.

     (b) Subsequent Employment Period. During the period commencing on December
     31, 2002 and ending on the Termination Date (the "Subsequent Employment
     Period"), the Executive hereby agrees to continue his employment with the
     Company and to perform such duties of an executive nature with respect to
     such matters related to the businesses conducted by the

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     Company and its affiliates as the Board or the Chief Executive Officer of
     the Company designates from time to time.

          3. Compensation during Initial Employment Period.

     (a) Base Salary. During the Initial Employment Period, the Company shall
     continue to pay to the Executive a base salary at the level currently
     received by the Executive, payable in accordance with the Company's
     executive payroll policy.

     (b) Bonus. For the 2002 calendar year, the Executive shall be entitled to
     receive a bonus equal to thirty percent (30%) of the calculated bonus pool
     under the AJG Financial Services, Inc. Bonus Plan (the "Bonus Plan," a copy
     of which is attached as Exhibit A) for such calendar year; provided,
     however, that (i) in calculating such bonus pool for purposes of this
     Agreement, (1) "extra-ordinary gains" for such calendar year shall not
     include any unrealized or unrecognized gains and (2) the $10,000,000 cap on
     the annual aggregate payments to eligible Financial Services Division Team
     Members shall not apply and (ii) the bonus shall be payable in a lump sum
     on or before April 15, 2003, subject to certification by the Company's
     outside auditors.

     (c) Employee Benefits. During the Initial Employment Period, the Executive
     shall be eligible to participate, in accordance with the terms thereof, in
     the Company's employee benefit plans, programs and arrangements generally
     available to similarly situated executives of the Company.

     (d) Expense Reimbursement. During the Initial Employment Period, the
     Company shall reimburse the Executive, in accordance with the Company's
     policies and procedures, for all proper and reasonable expenses incurred by
     the Executive in the performance of the Executive's duties hereunder.

          4. Compensation during Subsequent Employment Period.

     (a) Base Salary. During the Subsequent Employment Period, the Company shall
     pay to the Executive a base salary at the rate of $350,000 per annum,
     payable in accordance with the Company's executive payroll policy.

     (b) Additional Annual Payments. Within 120 days after the end of each
     calendar year within the Subsequent Employment Period (other than with
     respect to the 2002 calendar year), the Company shall pay to the Executive
     a lump sum amount equal to the Annual Amount (as defined herein) minus
     $350,000. The "Annual Amount" for purposes of this Agreement shall be three
     percent (3%) of the "extra-ordinary gains" for the calendar year (as
     defined under the Bonus Plan, attached as Exhibit A), calculated as if the
     Executive was a participant during such calendar year in the Bonus Plan as
     in effect on the date of this Agreement (provided the $10,000,000 cap on
     the annual aggregate payments to eligible Financial Services Division Team
     Members shall not apply) but excluding any unrealized or unrecognized gains
     and including as eligible for the bonus pool for the calendar year only
     those projects commenced by AJG Financial prior to July 31, 2002, as set
     forth on Exhibit B hereto. In the event any of the projects set forth on
     Exhibit B hereto has not been disposed of by the Company (and the gains or
     losses in connection therewith realized and recognized) prior to the
     Termination Date, the payments to the Executive pursuant to this Section
     4(b) shall continue in accordance with the provisions hereof

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     for calendar years subsequent to the Termination Date until such disposal
     and realization and recognition; provided, however, that (i) the Annual
     Amount shall not be reduced by $350,000 with respect to such payments for
     calendar years subsequent to the Termination Date and (ii) if any gain or
     loss in connection with the Company's investment in Asset Alliance
     Corporation has not been fully realized and recognized prior to December
     31, 2022, then for purposes of this Section 4(b) the Company's investment
     in Asset Alliance Corporation shall be deemed to have been disposed of on
     December 31, 2022, in which case the gain or loss thereon shall be
     determined based upon a then current appraisal made by an appraiser
     mutually acceptable to the Company and the Executive or, absent the mutual
     selection of an appraiser, upon the average of the appraisals made by a
     professionally qualified, reputable appraiser selected separately by each
     of the Company and the Executive. The Executive shall be entitled, upon
     reasonable advance request to the Company, to review at the Company's
     offices all work papers utilized to calculate payments to the Executive
     pursuant to this Section 4(b) and at his own expense may engage an auditor
     to review such work papers and calculations. To the extent that the Annual
     Amount for any calendar year is less than $350,000, an amount equal to such
     difference up to $350,000 with respect to any one year shall reduce the
     amounts payable to the Executive pursuant to this Section 4 in subsequent
     calendar years, or if no such amounts remain payable to the Executive, the
     Executive shall pay to the Company an amount equal to such difference by
     cash or check within five days after receiving written notice from the
     Company that such payment is due.

     (c) Employee Benefits. During the Subsequent Employment Period, the
     Executive shall be eligible to participate, in accordance with the terms
     thereof, in the defined benefit pension plan, 401(k) plan, supplemental
     401(k) plan, health insurance plans (including retiree health, if any),
     section 125 flexible spending plan, disability plan and life and AD&D plan
     maintained by the Company.

     (d) Stock Options. The Board shall amend the Arthur J. Gallagher & Co. 1988
     Nonqualified Stock Option Plan (restated as of January 22, 1998) (the
     "Option Plan") to provide that the Option Committee of the Board shall have
     the authority to amend the option agreements pursuant to which options to
     purchase shares of common stock of the Company have been granted under the
     Option Plan to the Executive to provide that all of the Executive's
     outstanding options which are not exercisable on January 1, 2003 shall
     become fully exercisable on such date. The Company hereby agrees to cause
     the Option Committee of the Board to amend each of the Executive's option
     agreements accordingly.

     (e) Office. During the Subsequent Employment Period, the Company shall
     provide the Executive with appropriate office facilities, including without
     limitation the use of a telephone, computer and facsimile machine and the
     services of a secretary.

     (f) Expense Reimbursement. During the Subsequent Employment Period, the
     Company shall reimburse the Executive, in accordance with the Company's
     policies and procedures, for all proper and reasonable expenses incurred by
     the Executive in the performance of the Executive's duties hereunder.

          5. Receipt of Other Compensation. The Company acknowledges and agrees
that nothing in this Agreement terminates its obligation to (i) pay to the
Executive, in accordance with the terms thereof, amounts deferred by the
Executive under the AJG Financial Services, Inc. Bonus Deferral

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Plan (the "Bonus Deferral Plan") or amounts declared and assigned to the
Executive under the Bonus Plan for years prior to 2002 not yet paid to the
Executive as a result of the three-year term of payment under such plan or (ii)
forgive repayment, in accordance with the terms of the Promissory Note dated
March 15, 2001, of the principal amount plus interest of the loan by the Company
to the Executive in the amount of $2,382,900. In the event of the Executive's
death prior to his receipt of any amount payable to the Executive under the
Bonus Deferral Plan or the Bonus Plan, such amount shall be paid, in accordance
with the terms thereof, to the Executive's Beneficiary (as defined in Section
6(d)(2) hereof), notwithstanding any provision within the Bonus Deferral Plan or
the Bonus Plan designating a beneficiary other than the Executive's Beneficiary.
The Executive acknowledges and agrees that (i) Sections 3, 4 and 5 of this
Agreement set forth the sole and exclusive payments and employee benefits due to
the Executive in connection with his services to the Company and its affiliates
during the Employment Period; (ii) except as otherwise expressly provided in
Section 6 of this Agreement, at the termination of the Employment Period the
Executive will not be entitled to any severance, separation or similar payments
from the Company or any of its affiliates and (iii) the payments to the
Executive pursuant to this Agreement will satisfy in full any and all of the
Company's obligations to the Executive under the Bonus Plan and under any
agreements between the Company and the Executive in connection with the Bonus
Plan.

          6. Termination.

     (a) Termination by the Company for Cause. Upon prior written notice to the
     Executive, the Company may terminate the Executive's employment under this
     Agreement for Cause (as hereinafter defined). If pursuant to this Section
     6(a) the Company terminates the Executive's employment under this Agreement
     for Cause, the obligations of the Company to provide to the Executive the
     payments and benefits set forth in Sections 3 and 4 immediately shall
     cease; provided, however, that notwithstanding such termination the Company
     shall (i) pay to the Executive, pursuant to Section 3(a) or Section 4(a),
     any accrued and unpaid base salary as of the date of the termination; (ii)
     provide the Executive with any employee benefits described in Section 3(c)
     or Section 4(c) to which the Executive is entitled upon the termination of
     the Executive's employment with the Company, in accordance with the terms
     of the applicable plans, programs or arrangements of the Company; (iii)
     reimburse the Executive, pursuant to Section 3(d) or Section 4(f), for any
     proper and reasonable expenses incurred by the Executive prior to the date
     of such termination; and (iv) fulfill any of its obligations described in
     the first sentence of Section 5, in accordance with the terms described
     therein. The exercise of the right of the Company to terminate the
     Executive's employment for Cause pursuant to this Section 6(a) shall not
     abrogate the rights or remedies of the Company in respect of the breach
     giving rise to such termination.

     (b) Disability or Death. Upon 30 days prior written notice to the Executive
     (or such shorter period as may be acceptable to the Executive), the Company
     may terminate the Executive's employment under this Agreement because of
     the Executive's Disability (as defined under the long-term disability plan
     maintained by the Company). Upon the death of the Executive during the
     Employment Period, this Agreement automatically shall terminate. If
     pursuant to this Section 6(b) the Company terminates the Executive's
     employment under this Agreement because of the Executive's Disability, or
     this Agreement automatically terminates as a result of the Executive's
     death, the obligations of the Company to provide to the Executive the
     payments and benefits set forth in Sections 3 and 4 immediately shall
     cease; provided, however, that

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     notwithstanding such termination the Company shall (i) pay to the Executive
     or the Executive's Beneficiary (as hereinafter defined), as applicable,
     pursuant to Section 3(a) or Section 4(a), any accrued and unpaid base
     salary as of the date of the termination; (ii) to the extent not previously
     paid to the Executive, pay to the Executive or the Executive's Beneficiary,
     as applicable, the bonus amount set forth in Section 3(b) and the annual
     payments set forth in Section 4(b), in each case at the time and in the
     manner and in accordance with the other terms set forth therein; provided,
     however, that for purposes of the annual payments set forth in Section
     4(b), the Annual Amount shall not be reduced by $350,000 with respect to
     annual payments for the calendar years subsequent to the year in which the
     Executive's employment terminates as a result of his Disability or death
     and shall only be reduced on a pro rata basis (i.e., the portion of the
     year in which the Executive was no longer employed) with respect to the
     calendar year in which the Executive's employment terminates as a result of
     his Disability or death; (iii) provide the Executive or the Executive's
     Beneficiary, as applicable, with any employee benefits described in Section
     3(c) or Section 4(c) to which the Executive or the Executive's Beneficiary
     is entitled upon the termination of the Executive's employment with the
     Company, in accordance with the terms of the applicable plans, programs or
     arrangements of the Company; (iv) cause the Option Plan and the Executive's
     option agreements to be amended pursuant to Section 4(d); (v) reimburse the
     Executive or the Executive's Beneficiary, as applicable, pursuant to
     Section 3(d) or Section 4(f), for any proper and reasonable expenses
     incurred by the Executive prior to the date of such termination; and (vi)
     fulfill any of its obligations described in the first sentence of Section
     5, in accordance with the terms described therein.

     (c) Resignation by Executive. If the Executive voluntarily terminates the
     Executive's employment under this Agreement for any reason, the obligations
     of the Company to provide to the Executive the payments and benefits set
     forth in Sections 3 and 4 immediately shall cease; provided, however, that
     notwithstanding such termination the Company shall provide the Executive
     with the payments and benefits specified in clauses (i) through (iv) of
     Section 6(a).

     (d) Termination of Additional Annual Payments. If at any time the Company
     shall cease to have an obligation to make any payments to the Executive
     pursuant to Section 4(b) hereof because either (i) the Company ceases to
     have an investment interest in all of the projects set forth on Exhibit B
     hereto or (ii) the Company and Executive agree that none of the projects
     set forth on Exhibit B hereto will thereafter produce a positive Annual
     Amount, as defined in Section 4(b), then the Employment Period shall
     terminate and the obligations of the Company to provide the Executive with
     any of the payments and benefits set forth in Sections 3 and 4 immediately
     shall cease; provided, however, that notwithstanding such termination the
     Company shall provide the Executive with the payments and benefits
     specified in clauses (i) through (iv) of Section 6(a).

     (e) Definitions. As used in this Agreement, the following terms shall have
     the following respective meanings:

          (1) "Cause" shall mean any one or more of the following: (i) the
     Executive's conviction of a felony or of any crime involving moral
     turpitude, fraud, embezzlement, theft or misrepresentation; or (ii) any
     material breach by the Executive of any one or more of the covenants
     contained in Section 8 or 9 hereof, as determined by the Board.

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          (2) "Executive's Beneficiary" shall mean the Executive's spouse, or in
     the event the Executive's spouse predeceases the Executive or dies prior to
     the payment of the amounts set forth hereunder, as provided under the last
     will of the Executive (or if none, the Executive's estate).

          7. Tax Withholding. The Company shall deduct from the amounts payable
to the Executive pursuant to this Agreement the amount of all required federal,
state and local withholding taxes in accordance with the Executive's Form W-4 on
file with the Company, and all applicable federal employment taxes.

          8. Noncompetition; Nonsolicitation. (a) General. The Executive
acknowledges that in the course of the Executive's employment with the Company
the Executive has and will become familiar with trade secrets and other
confidential information concerning the Company and its affiliates and that the
Executive's services will be of special, unique and extraordinary value to the
Company and its affiliates.

     (b) Noncompetition. The Executive agrees that, except with the prior
     written approval of the Chief Executive Officer of the Company, during the
     Employment Period and a period of two years after the Employment Period
     (the "Noncompetition Period"), the Executive will not in any manner,
     directly or indirectly, through any person, firm or corporation, alone or
     as a member of a partnership or as an officer, director, stockholder,
     investor or employee of or consultant to any other corporation or
     enterprise or otherwise, engage or be engaged, or assist any other person,
     firm, corporation or enterprise in engaging or being engaged, in the United
     States or the United Kingdom, in the insurance brokerage business, risk
     management business, synthetic coal and waste to energy businesses, Florida
     real estate development investments or business, and hedge fund and fund of
     funds management or business.

     (c) Nonsolicitation. The Executive further agrees that, except with the
     prior written approval of the Chief Executive Officer of the Company,
     during the Noncompetition Period the Executive will not (i) in any manner,
     directly or indirectly, induce or attempt to induce any employee of the
     Company or any of its affiliates to terminate or abandon his or her
     employment for any purpose whatsoever or (ii) in connection with any
     business to which Section 8(b) applies, call on, service, solicit or
     otherwise do business with any customer of the Company or any of its
     affiliates (unless on behalf of the Company or any of its affiliates).

     (d) Reformation. If, at any time of enforcement of this Section 8, a court
     holds that the restrictions stated herein are unreasonable under
     circumstances then existing, the parties hereto agree that the maximum
     period, scope or geographical area reasonable under such circumstances
     shall be substituted for the stated period, scope or area and that the
     court shall be allowed to revise the restrictions contained herein to cover
     the maximum period, scope and area permitted by law. This Agreement shall
     not authorize a court to increase or broaden any of the restrictions in
     this Section 8.

          9. Confidentiality. The Executive will not, at any time during the
Employment Period or thereafter, make use of or disclose, directly or
indirectly, any (i) trade secret or other confidential or secret information of
the Company or of any of its affiliates or (ii) other technical, business,
proprietary or financial information of the Company or of any of its affiliates
not available to

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the public generally or to the competitors of the Company or to the competitors
of any of its affiliates ("Confidential Information"), except to the extent that
such Confidential Information (a) becomes a matter of public record or is
published in a newspaper, magazine or other periodical or on electronic or other
media available to the general public, other than as a result of any act or
omission of the Executive, (b) is required to be disclosed by any law,
regulation or order of any court or regulatory commission, department or agency,
provided that the Executive gives prompt notice of such requirement to the
Company to enable the Company to seek an appropriate protective order, or (c) is
required to be used or disclosed by the Executive to perform properly the
Executive's duties under this Agreement. Promptly following the termination of
the Employment Period, or on such earlier date determined by the Chief Executive
Officer of the Company and communicated to the Executive, the Executive will
surrender to the Company all records, memoranda, notes, plans, reports, computer
tapes and software and other documents and data which constitute Confidential
Information which the Executive may then possess or have under the Executive's
control (together with all copies thereof).

          10. Enforcement. The parties hereto agree that the Company and its
affiliates would be damaged irreparably in the event that any provision of
Section 8 or 9 of this Agreement was not performed in accordance with its terms
or was otherwise breached and that money damages would be an inadequate remedy
for any such nonperformance or breach. Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to an injunction or injunctions to prevent
any breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security). The
Executive agrees that the Executive will submit to the personal jurisdiction of
the courts of the State of Illinois in any action by the Company to obtain
injunctive or other relief.

          11. Indemnification of the Executive; Liability Insurance.

     (a) Indemnification of the Executive. The Company shall indemnify and hold
     harmless the Executive with respect to his actions or omissions as a
     director, officer or employee of the Company or the Company's subsidiaries
     to the maximum extent provided in the By-Laws of the Company and the
     Indemnity Agreement between the Executive and the Company dated as of May
     12, 1987 (the "Indemnity Agreement"). The Company shall indemnify and hold
     harmless the Executive with respect to his actions or omissions as an
     employee of the Company or the Company's subsidiaries during the Employment
     Period to the same extent as the Executive would be entitled to
     indemnification as a director or officer of the Company as provided in the
     By-Laws of the Company and to the same extent as the Executive would have
     been entitled to indemnification for such activities under the Indemnity
     Agreement had the Executive engaged in such actions or omissions as a
     director or officer of the Company.

     (b) Liability Insurance. To the extent that the Company shall maintain in
     effect a policy of directors', officers' and employees' liability
     insurance, the Executive shall be covered by such policy for his actions or
     omissions as a director, officer or employee of the Company, whether
     occurring prior to or during the Employment Period, in accordance with the
     terms of such policy, to the maximum extent of coverage provided for any
     other director, officer or employee of the Company, as applicable, subject
     to policy exceptions applicable to directors, officers and employees
     generally.

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          12. Survival. Sections 8, 9, 10 and 11 of this Agreement shall survive
and continue in full force and effect in accordance with their respective terms,
notwithstanding any termination of the Employment Period.

          13. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (i)
delivered personally or by overnight courier to the following address of the
other party hereto (or such other address for such party as shall be specified
by notice given pursuant to this Section) or (ii) sent by facsimile to the
following facsimile number of the other party hereto (or such other facsimile
number for such party as shall be specified by notice given pursuant to this
Section), with the confirmatory copy delivered by overnight courier to the
address of such party pursuant to this Section:

          If to the Company, to:

              Arthur J. Gallagher & Co.
              Attention:  General Counsel
              The Gallagher Centre
              Two Pierce Place
              Itasca, Illinois  60143-3141
              Facsimile Number:  630-285-3483

          If to the Executive, to:

              Michael J. Cloherty
              975 Stonefield Circle
              Inverness, Illinois  60067

          14. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

          15. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes and terminates any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related in any manner to the subject matter hereof, including but not limited to
(i) the Agreement between the Executive and the Company dated September 18,
1981, (ii) the Executive Agreement between the Executive and the Company dated
August, 1984 and the amendment thereto dated January 15, 1991, (iii) the Change
in Control Agreement between the Executive and the Company dated October 7, 1998
and (iv) except as otherwise expressly provided in the first sentence of Section
5 of this Agreement, any and all Executive Bonus Agreements or similar
agreements between the Executive and the Company in connection with the Bonus
Plan. Notwithstanding the foregoing, the Indemnity Agreement and the promissory
notes and other documentation in connection with loans made

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to the Executive by the Company shall not be superseded, terminated or modified
by this Agreement and shall survive and continue in full force and effect in
accordance with their terms.

          16. Successors and Assigns. This Agreement shall be enforceable by and
against the Executive and the Executive's Beneficiary, executors, administrators
and legal representatives, and by and against the Company and its successors and
assigns.

          17. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois
without regard to principles of conflict of laws.

          18. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

          19. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both 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 written above.

                                               ARTHUR J. GALLAGHER & CO.

                                               By: /s/ J. Patrick Gallagher, Jr.
                                                   -----------------------------
                                               Title: President & CEO

                                               MICHAEL J. CLOHERTY

                                               /s/ Michael J. Cloherty
                                               ---------------------------------<PAGE>
                                                                    Exhibit 10-A

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT is dated and effective as of the
27th day of September, 2002 ("Effective Date"), and is by and between National
Steel Corporation, a Delaware corporation (the "Company"), and Mineo Shimura
("Executive"). In consideration of the mutual covenants contained herein, and
other good and valuable consideration (including the Termination Benefits and
the Special Termination Benefits) the receipt and adequacy of which the Company
and Executive each hereby acknowledges, the Company and Executive hereby agree
as follows:

1.       Employment and Term

         The Company hereby agrees to employ Executive as the Chief Executive
Officer of the Company and Executive hereby agrees to accept such employment and
serve in such capacity on a full-time basis during the Term and upon the terms
and conditions set forth in this Employment Agreement (this "Agreement").
Executive shall report solely to the Company's Board of Directors, and will have
such responsibilities, duties and authorities as are customary for such
positions in a publicly held company of the size, type and nature of the Company
as they may exist from time to time. The term of employment of Executive under
this Agreement shall be the period commencing on the Effective Date and
terminating on February 29, 2004 (the "Term"). The respective rights and
obligations of the parties hereunder shall survive any termination of employment
to the extent necessary to achieve the intended preservation of rights and
obligations.

2.       Salary and Annual Incentive Compensation.

         Executive's annual base salary as in effect on the Effective Date shall
be the Executive's annual base salary hereunder as of the Effective Date,
payable in consecutive equal monthly installments. The term "base salary" as
utilized in this Agreement shall refer to the then current base salary as
adjusted from time to time. Executive's annual base salary shall be reviewed
periodically in accordance with the Company's compensation policies and
practices for senior executives, and may be increased from time to time in
accordance with such policies and practices, but shall not be decreased.
Executive shall also be eligible to receive annual incentive compensation
pursuant to the Company's Management Incentive Compensation Program or any
successor plan (the "MICP") during the Term and as determined in accordance with
the terms and conditions of the MICP. Executive's MICP target annual incentive
compensation for 2002 shall be 50% of base salary, multiplied by a fraction, the
numerator of which shall be the number of days employed by the Company in 2002,
and the denominator of which shall be 365. The Company will maintain in effect,
for each year during the Term, the MICP or an equivalent plan under which
Executive will be eligible for an award not less than the prior year opportunity
level available to Executive. Any such annual incentive compensation payable to
Executive shall be

                                      -1-

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paid in accordance with the Company's usual practices with respect to payment of
incentive compensation of senior executives.

3.       Benefit and Compensation Plans.

         (a) Executive shall be entitled during the Term to participate in all
executive compensation plans, and other employee and executive benefits,
practices, policies and programs of the Company, as presently in effect or as
they may be modified or added to by the Company from time to time ("Benefit
Plans").

         (b) During the Term, the Company will provide Executive with coverage
by Company-paid group or individual life insurance or a combination thereof, all
in accordance with the plans, policies, programs and arrangements as presently
in effect or as they may be modified or added to by the Company from time to
time.

         (c) During the Term, Executive will participate in the Company's
Executive Deferred Compensation Plan, and any supplemental retirement plans,
benefits, practices, programs, or policies of the Company, as in effect on the
Effective Date or as they may be modified or added to by the Company from time
to time ("Compensation Plans").

4.       Non-Compete Agreement.

         Executive hereby agrees that if Executive terminates his employment
with the Company without Good Reason, then for a period of two (2) years after
the Date of Termination, but in any event only as long as the Company satisfies
its obligations under this Agreement (the "Restricted Period"), Executive will
not engage (either as owner, investor, partner, stockholder, employer, employee,
consultant, advisor or director) in any "Competitive Business" in the
continental United States (the "Territory"). The term "Competitive Business"
means the making, producing, manufacturing or finishing of steel products which
products are in direct competition with steel products that are made, produced,
manufactured or finished by the Company on the Date of Termination. It is agreed
that the ownership of not more than one percent of the equity securities of any
company having securities listed on an exchange or regularly traded in the
over-the-counter market shall not be deemed inconsistent with this Section 4. If
any court of competent jurisdiction shall deem any obligation of this Section 4
too lengthy or the Territory too extensive, the other provisions of this Section
shall nevertheless stand, the Restricted Period shall be deemed to be the
longest period such court deems not to be too lengthy and the Territory shall be
deemed to comprise the portion of the United States east of the Mississippi
River (or such other portion of the United States that such court deems not to
be too extensive).

5.       Non-Inducement.

         Executive hereby agrees that for a period commencing with the Date of
Termination and ending on the second anniversary of the Date of Termination,
Executive shall not induce, or attempt to influence, any employee of the Company
who reports either directly to the Company's

                                      -2-

<PAGE>

Chief Executive Officer or President and Chief Operating Officer or to another
employee who reports directly to the Company's Chief Executive Officer or
President and Chief Operating Officer to terminate his employment with the
Company.

6.       Non-Disclosure.

         For a period commencing on the Date of Termination and ending on the
fifth anniversary of the Date of Termination, Executive shall keep secret and
retain in strictest confidence, and shall not furnish, make available or
disclose to any third party or use for the benefit of himself or any third
party, any Confidential Information. As used in this Section, "Confidential
Information" shall mean any information relating to the business or affairs of
the Company, including but not limited to information relating to financial
statements, customer identities, customer needs, potential customers, employees,
suppliers, servicing methods, equipment, programs, strategies and information,
analyses, profit margins or other proprietary information used by the Company in
connection with its business; provided, however, that Confidential Information
shall not include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Company.

7.       No Unfavorable Publicity.

         Subsequent to Executive's Date of Termination, Executive agrees not to
make statements or communications and not to issue any written communications or
release any other written materials which would likely be materially damaging to
the Company's reputation or standing, whether in the investor or financial
community, the steel industry or otherwise.

8.       Cooperation With the Company.

         Executive agrees to cooperate with the Company for a reasonable period
of time after the Term of this Agreement by making himself available to testify
on behalf of the Company, in any action, suit, or proceeding. In addition, for a
reasonable period of time, Executive agrees to be available at reasonable times
to meet and consult with the Company on matters reasonably within the scope of
his prior duties with the Company so as to facilitate a transition to his
successor. The Company agrees to reimburse Executive, on an after-tax basis, for
all expenses actually incurred in connection with his provision of testimony or
consulting assistance.

9.       Release of Employment Claims.

         Executive and the Company agree that in the event Executive receives
Special Termination Benefits (as defined in Section 11(f)), he and the Company
will execute a mutual release agreement releasing any and all claims which
either of them have or may have against the other arising out of Executive's
employment (other than enforcement of this Agreement). The Executive agrees that
in the event the Executive's employment with the Company terminates or

                                      -3-

<PAGE>

is terminated, 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 payment or reimbursement
of Executive's costs and expenses in accordance with Section 12(b).

10.      Remedies.

         Executive acknowledges and agrees that the covenants set forth in
Sections 4 through 8 are reasonable and necessary for the protection of the
Company's business interests, that irreparable injury will result to the Company
if Executive breaches any of the terms of such covenants, and that in the event
of Executive's actual or threatened breach of any such covenants, the Company
will have no adequate remedy at law. Executive accordingly agrees that in the
event of any actual or threatened breach by him of any of such covenants, the
Company shall be entitled to immediate temporary injunctive and other equitable
relief, without the necessity of showing actual monetary damages, subject to
hearing as soon thereafter as possible. Nothing contained herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of any
damages which it is able to prove.

11.      Termination of Employment.

         (a) Termination Due to Death or Disability. Upon an Executive's Date of
Termination during the Term due to death or Disability, the Company will pay
Executive (or his beneficiaries, dependents or estate), and Executive (or his
beneficiaries, dependents or estate) will be entitled to receive, the
Termination Benefits (as defined in Section 11(e)).

         (b) Termination by the Company for Cause and Termination by Executive
without Good Reason. Upon Executive's Date of Termination during the Term by the
Company for Cause or by Executive without Good Reason the Company shall pay
Executive (or his beneficiaries, dependents or estate), and Executive (or his
beneficiaries, dependents or estate) shall be entitled to receive, the
Termination Benefits (as defined in Section 11(e)), except that no amount shall
be paid and no right accrued in respect of Executive under Section 11(e)(i)(B).

         (c) Termination by the Company Without Cause and Termination by
Executive for Good Reason. Upon Executive's Date of Termination during the Term
by the Company without Cause or by Executive for Good Reason the Company shall
pay Executive (or his beneficiaries, dependents or estate), and Executive (or
his beneficiaries, dependents or estate) shall be entitled to receive, the
Termination Benefits (as defined in Section 11(e)) and the Special Termination
Benefits (as defined in Section 11(f)).

         (d) Termination Following Expiration of the Term. Upon termination of
employment following expiration of the Term, whether by the Executive with or
without Good Reason, or by the Company, without Cause, the Company shall pay
Executive (or his beneficiaries, dependents, or estate), and Executive (or his
beneficiaries, dependents, or estate) shall be entitled to receive,

                                      -4-

<PAGE>

the Termination Benefits (as defined in Section 11(e)) and the Special
Termination Benefits (as defined in Section 11(f)).

         (e) "Termination Benefits". "Termination Benefits" means the aggregate
of all of the following:

             (i)   a single sum cash payment by the Company to Executive within
thirty (30) days after the Date of Termination of

                   (A) Executive's then current annual base salary pro rata
through the Date of Termination to the extent not theretofore paid; (B) the
product of (y) the greater of (aa) the average annual incentive compensation
paid to Executive in the three fiscal years immediately preceding the fiscal
year of the Date of Termination (or all fiscal years Executive was employed if
less than three, and annualized in the event Executive was not employed by the
Company for the whole of any such fiscal year), and (bb) Executive's target
incentive compensation percentage payable under the MICP multiplied by
Executive's then current base salary and (z) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365; and (C) any accrued vacation
pay to the extent not theretofore paid.

             (ii)  All vested amounts owing or accrued at the Date of
Termination under any compensation and benefit plans, programs, and arrangements
set forth or referred to in this Agreement, including, but not limited to,
Sections 2 and 3 hereof; and if the Date of Termination is due to death,
Executive's estate or other beneficiaries shall receive the death benefits
described in Section 3(b).

             (iii) Reasonable business expenses and disbursements incurred by
Executive prior to such Date of Termination will be fully reimbursed within ten
(10) days after the Date of Termination.

         (f) "Special Termination Benefits". "Special Termination Benefits"
means the aggregate of all of the following:

             (i)   The Company shall pay to Executive, in a single sum in cash
within thirty (30) days after the Date of Termination, an amount equal to fifty
percent of Executive's annual base salary (immediately preceding the Date of
Termination).

             (ii)  For two years after Executive's Date of Termination, if
Executive is less than age 69 on his Date of Termination, or such longer period
as may be provided by the terms of the appropriate plan, program, arrangement,
practice or policy, the Company shall continue benefits to Executive and/or
Executive's dependents at least equal to those which would have been provided to
them in accordance with the Benefits Plans or this Agreement if Executive's
employment had not been terminated or, if more favorable to Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and their dependents;

                                      -5-

<PAGE>

provided, however, that notwithstanding anything in this Agreement to the
contrary, if Executive is eligible to receive health benefits or other benefits
under an NKK Corporation sponsored plan or arrangement, or any Japanese
government plan or arrangement, or under any other plan or arrangement, the
health benefits and other benefits described herein shall be secondary to those
provided under such other plan or arrangement during such applicable period of
eligibility; and provided, further, that if Executive shall later become
ineligible for health benefits or other benefits under such other plans and
arrangements, the health benefits or other benefits provided by the Company
shall be primary. If Executive is age 69 or older on his Date of Termination,
the period of "two years" in the first line of this Section 11(f) (ii) shall be
reduced to the period set forth below:

                  Age                          Period
                 -----                        --------
                  69                           One Year

                  70 or older                  Zero

             (iii) Stock options held by Executive as of the date of this
Agreement were granted pursuant to the 1993 National Steel Corporation
Non-Employee Directors' Stock Option Plan and shall continue to be governed by
the terms and conditions of said Non-Employee Directors' Stock Option Plan.
Stock options granted to Executive after the date of this Agreement shall be
issued pursuant to the 1993 National Steel Corporation Long Term Incentive Plan
and shall continue to vest as if Executive had remained an employee of the
Company and shall remain fully exercisable for the lesser of (a) the entire
period that would have been available for exercise had Executive continued in
the employ of the Company through the original option term or (b) five years;
such stock options shall otherwise be governed by the terms and conditions of
said Long Term Incentive Plan (and the agreements and other documents
thereunder) pursuant to which such stock options were granted.

12.      Governing Law; Disputes; Arbitration.

         (a) Governing Law. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Indiana, without regard to Indiana conflicts of law principles, except
insofar as the Delaware General Corporation Law and federal laws and regulations
may be applicable. If under the governing law, any portion of this Agreement is
at any time deemed to be in conflict with any applicable statute, rule,
regulation, ordinance, or other principle of law, such portion shall be deemed
to be modified or altered to the extent necessary to conform thereto or, if that
is not possible, to be omitted from this Agreement. The invalidity of any such
portion shall not affect the force, effect, and validity of the remaining
portion hereof.

                                      -6-

<PAGE>

         (b) Reimbursement of Expenses in Enforcing Rights. All costs and
expenses (including, without limitation, fees and disbursements of actuaries,
accountants and counsel) incurred by Executive in seeking in good faith to
enforce rights pursuant to this Agreement shall be paid on behalf of or
reimbursed to Executive promptly by the Company, whether or not Executive is
successful in asserting such rights. If there shall be any dispute between the
Company and Executive, the Company shall pay or provide, as applicable, all
undisputed amounts or benefits as are then payable to Executive or Executive's
beneficiaries or dependents pursuant to this Agreement. Any amounts that have
become payable pursuant to the terms of this Agreement or any decision by
arbitrators or judgment by a court of law, but which are not timely paid shall
bear interest, payable by the Company, at the lower of (A) the highest lawful
rate or (B) the prime rate in effect at the time such payment first becomes
payable, as quoted by The Wall Street Journal.

         (c) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Chicago, Illinois, in accordance with the rules of the American Arbitration
Association in effect at the time of submission to arbitration, by three (3)
arbitrators, one of which shall be chosen by the Company, one of which shall be
chosen by Executive, and one of which shall be chosen by the arbitrators chosen
by Company and Executive. Judgment may be entered on the arbitrators' award in
any court having jurisdiction. For purposes of entering any judgment upon an
award rendered by the arbitrators, the Company and Executive hereby consent to
the jurisdiction of any or all of the following courts: (i) the United States
District Court for the Northern District of Indiana; (ii) any of the courts of
the State of Indiana, or (iii) any other court having jurisdiction. The Company
and Executive further agree that any service of process or notice requirements
in any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied. The Company and Executive hereby
waive, to the fullest extent permitted by applicable law, any objection which it
may now or hereafter have to such jurisdiction and any defense of inconvenient
forum. The Company and Executive hereby agree that a judgment upon an award
rendered by the arbitrators may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. The Company shall bear all
costs and expenses arising in connection with any arbitration proceeding.
Notwithstanding any provision in this Section 12(c), Executive shall be entitled
to seek specific performance of Executive's right to be paid during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.

13.      Definitions.

         Certain terms in this Agreement are defined the first time they appear;
other terms which are capitalized are not defined the first time they appear,
but unless the context indicates otherwise, have the meanings set forth below:

         (a) "Cause". For purposes of this Agreement, "Cause" shall mean
Executive's gross misconduct (as defined herein) or willful and material breach
of this Agreement. For purposes of this definition, "gross misconduct" shall
mean (A) a felony conviction or a plea of nolo

                                      -7-

<PAGE>

contendere to a felony charge in a court of law under applicable federal or
state laws which results in material damage to the Company, or (B) willfully
engaging in one or more acts which is demonstrably and materially damaging to
the Company. Notwithstanding the foregoing, Executive may not be terminated for
Cause unless and until there shall have been delivered to him, within six months
after the Board (A) had knowledge of conduct or an event allegedly constituting
Cause and (B) had reason to believe that such conduct or event could be grounds
for Cause, a copy of a resolution duly adopted by a majority affirmative vote of
the entire membership of the Company's Board of Directors (excluding Executive
if a member of Company's Board of Directors), at a meeting of the Board called
and held for such purpose (after giving Executive reasonable notice specifying
the nature of the grounds for such termination and not less than 30 days to
correct the acts or omissions complained of, if correctable, and affording
Executive the opportunity, together with his counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, Executive was
guilty of conduct set forth above in this Section 13 (a).

         (b) "Date of Termination". "Date of Termination" means (i) if
Executive's employment is terminated by the Company for Cause or by Executive
for Good Reason, the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be; (ii) if Executive's employment is
terminated by the Company without Cause, the Date of Termination shall be the
date on which the Company notifies Executive of such Date of Termination, and
(iii) if Executive's employment is terminated by reason of death or Disability,
or is terminated by Executive without Good Reason, the Date of Termination shall
be the date of death of Executive, the Disability Effective Date, or the date
Executive notifies the Company that Executive's employment will terminate, as
the case may be. If the Company determines in good faith that the Disability of
Executive has occurred during the Term of the Agreement (pursuant to the
definition of Disability set forth in Section 13 (c)), it may give to Executive
written notice in accordance with Section 13(e) of this Agreement of its
intention to terminate Executive's employment. In such event, Executive's Date
of Termination is effective on the date that is six months after receipt of such
notice by Executive (the "Disability Effective Date"), provided that, within
such six month period, Executive shall not have returned to full-time
performance of Executive's duties. Any termination by the Company for Cause, or
by Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 13 (e) of this
Agreement.

         (c) "Disability". "Disability" means the failure of Executive to render
and perform the services required of him under this Agreement, for a total of
180 days or more during any consecutive 12 month period, because of any physical
or mental incapacity or disability as determined by a physician or physicians
selected by the Company and reasonably acceptable to Executive, unless, within
six (6) months after Executive has received written notice from the Company of a
proposed Date of Termination due to such absence, Executive shall have returned
to the full performance of his duties hereunder and shall have presented to the
Company a written certificate of Executive's good health prepared by a physician
selected by Executive and reasonably acceptable to the Company.

                                      -8-

<PAGE>

         (d) "Good Reason". For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following events set forth in paragraphs (i)
through (vii) below, without Executive's prior written consent.

             (i)   the diminution of Executive's status, titles, positions,
duties, offices, authorities, responsibilities, assignments or reporting
relationships, or removal from Executive of any status, titles, positions,
duties, offices, authorities, responsibilities, assignments or reporting
relationships, which is inconsistent in any respect with Executive's status,
titles, positions, duties, offices, authorities, responsibilities, assignments
or reporting relationships, as contemplated by Section 1 of this Agreement,
excluding for this purpose (a) any removal of the title "Chairman of the Board,"
the removal of Executive from the Board, or any failure to elect or re-elect, or
nominate Executive to the Board, (b) any search for a new Chief Executive
Officer or other transition or succession planning for a new Chief Executive
Officer, (c) any announcement of an appointment of a new Chief Executive
Officer, with an effective date after the Term hereof, or (d) an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;

             (ii)  any reduction in Executive's then current base salary or in
Executive's then current target incentive compensation opportunity under the
MICP;

             (iii) any failure by the Company to comply with any of the
provisions of this Agreement, including but not limited to Sections 2 and 3 of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by Executive;

             (iv)  any failure by the Company to perform any obligation under,
or breach by the Company of any provision of, this Agreement;

             (v)   any purported termination by the Company of Executive's
employment otherwise than as expressly permitted by this Agreement;

             (vi)  any failure by the Company to comply with and satisfy Section
14(c) of this Agreement; or

             (vii) voluntary termination of employment by Executive with the
prior approval of a simple majority of the Board.

         (e) "Notice of Termination". "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) if the Date of Termination
is other than the date of receipt of such notice, specifies the Date of
Termination. The failure by Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Executive

                                       -9-

<PAGE>

or the Company, respectively, hereunder or preclude Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing Executive's
or the Company's rights hereunder.

         (f) "Board" or "Board of Directors". "Board" or "Board of Directors"
means the full board of directors of the Company as it may be constituted in
accordance with applicable law from time to time, and any committee of the board
shall not be deemed to be the Board or Board of Directors for purposes of this
Agreement.

14.      Miscellaneous.

         (a) Integration. This Agreement modifies and supersedes any and all
prior employment agreements. This Agreement constitutes the entire agreement
among the parties with respect to the matters herein provided, and no
modification or waiver of any provision hereof shall be effective unless in
writing and signed by the parties hereto.

         (b) Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company during the Term of this Agreement and
for which Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as Executive may have under any contract or agreement with
the Company. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement. In the event of any conflict between the terms and provisions of this
Agreement and any of the Company's plans, policies, practices, programs,
contracts or agreements, the terms and provisions of whichever is more favorable
to the Executive shall prevail.

         (c) Non-Transferability. Neither this Agreement nor the rights or
obligations hereunder of the parties hereto shall be transferable or assignable
by Executive, except in accordance with the laws of descent and distribution or
as specified in Section 14(d). The Company may, but only with the consent of
Executive, assign this Agreement and the Company's rights and obligations
hereunder, and the Company shall, as a condition of the succession, require such
Successor to assume (jointly and severally with the Company) the Company's
obligations and be bound by this Agreement. Any such assignment shall not
release the Company of any of its obligations under this Agreement. For purposes
of this Agreement, "Successor" shall mean any person that succeeds to, or has
the practical ability to control (either immediately or with the passage of
time), the Company's business directly, by merger or consolidation, or
indirectly, by purchase of the Company's voting securities or all or
substantially all of its assets, or otherwise.

         (d) Beneficiaries. Executive shall be entitled to designate (and
change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or

                                      -10-

<PAGE>

benefits payable hereunder following Executive's death. If Executive should die
while any amount would still be payable to him hereunder had 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.

         (e) Notices. Whenever under this Agreement it becomes necessary to give
notice, such notice shall be in writing, signed by the party or parties giving
or making the same, and shall be served on the person or persons for whom it is
intended or who should be advised or notified, by overnight courier service or
by certified or registered mail, return receipt requested, postage prepaid and
addressed to such party at the address set forth below or at such other address
as may be designated by such party by like notice:

         If to the Company:

         General Counsel
         National Steel Corporation
         4100 Edison Lakes Parkway
         Mishawaka, Indiana  46545-3440

         If to the Executive at his then current address reflected in the
Company's records.

         If the parties by mutual agreement supply each other with telecopier
numbers for the purposes of providing notice by facsimile, such notice shall
also be proper notice under this Agreement when sent. In the case of overnight
courier service, such notice or advice shall be effective when sent, and, in the
cases of certified or registered mail, shall be effective 2 days after deposit
into the mails by delivery to the U.S. Post Office.

         (f) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

         (g) No General Waivers. The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.

         (h) No Obligation To Mitigate. Executive shall not be required to seek
other employment or otherwise to mitigate Executive's damages on or after
Executive's Date of

                                      -11-

<PAGE>

Termination, and the amount of any payment or benefit provided for in this
Agreement shall not be reduced by any compensation or benefits earned by
Executive as the result of employment by another employer or by retirement
benefits; provided, however, that, the health benefits or other benefits that
Executive is entitled to receive after the Date of Termination may be reduced in
accordance with the terms of Section 11 (f) (ii).

         (i) Offsets; Withholding. The amounts required to be paid by the
Company to Executive pursuant to this Agreement shall not be subject to offset.
The foregoing and other provisions of this Agreement notwithstanding, all
payments to be made to Executive under this Agreement, including under Section
11, or otherwise by the Company, will be subject to required withholding taxes
and other required deductions.

         (j) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of Executive, his heirs, executors, administrators
and beneficiaries, and shall be binding upon and inure to the benefit of the
Company and its permitted successors and assigns as provided in Section 14(c).
This Agreement is a personal contract and the rights and interests of 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 Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

         (k) Actuarially Equivalent Value Calculation. For the purpose of
determining an actuarially equivalent value under the terms of this Agreement,
the interest rate specified in Section 417(e) (3) of the Internal Revenue Code
of 1986, or any successor section thereto, as of the date of such determination,
and the 1994 Group Annuitants Mortality Table, shall be used and for purposes of
determining present value under the terms of this Agreement, the interest rate
specified immediately above shall be used. All calculations shall be made at the
expense of the Company, by the independent auditors of the Company. As soon as
practicable after the need for such calculation arises, the Company shall
provide to its auditors all information needed to perform such calculations.

         (l) Construction of Agreement. Executive has been appointed as Chairman
of the Board and Chief Executive Officer of the Company in replacement of
Hisashi Tanaka ("Tanaka"), who is a party to an Employment Agreement dated as of
March 4, 2001 (the "Tanaka Employment Agreement"). Notwithstanding anything to
the contrary set forth herein, this Agreement shall be construed and interpreted
so as to provide Executive with the same rights, obligations and benefits as
were available to Tanaka pursuant to the Tanaka Employment Agreement, including
any modifications and limitations of those rights, obligations and benefits that
may have resulted from (i) the filing by the Company of a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code on March 6, 2002, and (ii) the
adoption by the Company of the Chapter 11 Retention Program which was approved
by the Bankruptcy Court on May 28, 2002 (the "Retention Program"); provided,
however, that pursuant to paragraph 4 of the section

                                      -12-

<PAGE>

of the Retention Program which is entitled "Retention and Emergence Incentive
Compensation Program," the amounts set forth in the table shall be as follows
for Executive:

------------------------------------------------------------------------
   4 months   10 months  16 months   22 months       At         Total
   07/06/02   01/06/03    07/06/03   01/06/04     Emergence     Payment
------------------------------------------------------------------------
     0.0%       6.45%      11.75%     11.75%         47%        76.95%
------------------------------------------------------------------------

Under no circumstances shall any claim by Executive pursuant to this Agreement
be considered an administrative claim, except to the extent that the same claim
by Tanaka pursuant to the Tanaka Employment Agreement would have been considered
an administrative claim.

         IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company
has caused this instrument to be duly executed as of the day and year first
above written.

                           NATIONAL STEEL CORPORATION

                           By: /s/ Ronald J. Werhnyak
                              -------------------------------------------
                           Name:    Ronald J. Werhnyak
                                 ----------------------------------------
                           Title: Senior Vice President, General Counsel
                                  ---------------------------------------
                                  and Secretary
                                  -------------

                           /s/ Mineo Shimura
                           ----------------------------------------------
                           Mineo Shimura

                                      -13-

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