Document:

Exhibit 10.12

 

EXHIBIT 10.12

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

FIRST AMENDMENT TO PELLET SALE AND PURCHASE AGREEMENT

     This FIRST AMENDMENT TO PELLET SALE AND PURCHASE AGREEMENT (the “Amendment”) is entered into,
dated and effective as of December 16, 2004, by and among THE CLEVELAND-CLIFFS IRON COMPANY, an
Ohio corporation (“CCIC”), CLIFFS MINING COMPANY, a Delaware corporation (“CMC”), NORTHSHORE MINING
COMPANY, a Delaware corporation (“Northshore”), CLIFFS SALES COMPANY, an Ohio corporation formerly
known as Northshore Sales Company (“Sales”; CCIC, CMC, Northshore and Sales, collectively,
"Cliffs”), INTERNATIONAL STEEL GROUP INC., a Delaware corporation (“ISG”), ISG CLEVELAND INC., a
Delaware corporation (“ISG Cleveland”), and ISG INDIANA HARBOR INC., a Delaware corporation (“ISG
Indiana Harbor”; ISG, ISG Cleveland and ISG Indiana Harbor, collectively, “Steel”).

RECITALS

     WHEREAS, Cliffs and Steel desire to enter into this Amendment to amend their Pellet Sale and
Purchase Agreement, dated as of April 10, 2002 (the “Agreement”);

     NOW, THEREFORE, in consideration of the premises, their mutual covenants and other good and
valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:

1. The WHEREAS clause appearing on pages 1 and 2 of the Agreement is hereby deleted and the
following added as a new WHEREAS clause:

     WHEREAS, Cliffs desires to sell to Steel and Steel desires to purchase from Cliffs
certain quantities of grades of iron ore pellets as follows: (i) such grades of iron ore
standard pellets being those produced at the [****] iron ore pellet plant (“[****]
Pellets”), located in [****] (“[****] Mine”); (ii) such grades of iron ore flux pellets
being those produced at the [****] iron ore plant (“[****] Pellets”), located in [****]
(“[****] Mine”); (iii) such grades of iron ore standard pellets being those produced at the
[****] iron ore pellet plant (“[****] Pellets”), located in [****] (“[****] Mine”); (iv)
such grades of iron ore standard pellets being those produced at the [****] iron ore pellet
plant (“[****] Pellets”), located in [****] (“[****] Mine”); (v) such grades of iron ore
partial flux pellets being those produced at the [****] iron ore plant (“[****] Pellets”),
located in [****] (“[****] Mine”); or (vi) such other pellet grades as may be mutually
agreed to by the parties hereto (such [****] Pellets, [****] Pellets, [****] Pellets, [****]
Pellets, [****] Pellets, and other mutually agreed upon pellets collectively being referred
to herein as “Cliffs Pellets”), all on the conditions contained herein.

 

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

2. Section 4(c) of the Agreement is hereby deleted and the following added as a new Section 4(c):

     (c) With respect to the tonnage of [****] Pellets which Cliffs will have available for
sale to Steel, on or before December 31 of each year Cliffs shall notify Steel in writing as
to the tonnage of [****] Pellets Cliffs shall sell to Steel, which tonnage shall equal
Steel’s Annual Pellet Tonnage Requirements for such year.

3. Section 5(c) of the Agreement is hereby deleted and the following is added as a new Section
5(c):

     (c) The prices for the specific grades of Cliffs Pellets sold and purchased in each of
the years 2003 and 2004 for the Cleveland Works or other dock area designated by Steel
pursuant to Section 8(a), and the Indiana Harbor Works shall be based on the [****] prices
per iron unit as described in Section 5(a) (iii) and 5(b)(ii) above (“[****] prices per iron
unit for each of the Cleveland Works and the Indiana Harbor Works”), which [****] prices per
iron unit for each of the Cleveland Works and the Indiana Harbor Works shall then be
adjusted, up or down, in the year [****] by an amount as determined in accordance with
Section 5(d) below.

4. Sections 5(g)(i)(1) and (2) of the Agreement are hereby deleted and the following is added as
new Sections 5(g)(i)(1) and 5(g)(i)(2):

     (g)(1) In [****], annual special steel pricing payments (“Special Payment”) shall be
made, wherein Cliffs shall pay Steel or Steel shall pay Cliffs, as the case may be, [****].
The amount of the Special Payment shall be determined as follows:

	 	(1)  	If during [****], Steel’s [****], Cliffs shall pay Steel an amount equal to:
(w) the amount [****], (x) multiplied by [****], (y) multiplied by [****], (z)
multiplied by [****].
	 
	 	(2)  	If during [****], Steel’s [****], Steel shall pay Cliffs an amount equal to:
(w) the amount [****], (x) multiplied by [****], (y) multiplied by the [****], (z)
multiplied by the [****].

Page 2 of 7

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

5. The following is added as a new section 5A:

     5A(a) The prices for specific grades of Cliffs Pellets sold and purchased in each of
the years [****] and thereafter for the Cleveland Works or other dock areas designated by
Steel pursuant to Section 8(a), and Indiana Harbor Works shall be based on [****] Prices as
described in Section 5A(b), below, which [****] Prices for each of the Cleveland Works and
the Indiana Harbor Works shall then be adjusted quarterly, up or down, in the year [****]
and thereafter by an amount as determined in accordance with Section 5A(c) below.

     (b) For purposes of this Section 5A, the [****] Prices per iron unit for Cliffs Pellets
shall be as follows:

Cleveland Works

	 	 	 	 	 	 	 
	 	 	 	 	Expected	 	Estimated
	 	 	[****]	 	Natural	 	Price
	Grade	 	[****] Price	Iron Content	Per Ton
	[****] Flux

	 	$[****]
	 	[****]
	 	$[****]
	[****] Partial Flux

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]

Indiana Harbor Works

	 	 	 	 	 	 	 
	 	 	 	 	Expected	 	Estimated
	 	 	[****]	 	Natural	 	Price
	Grade	 	[****] Price	Iron Content	Per Ton
	[****] Flux

	 	$[****]
	 	[****]
	 	$[****]
	[****] Partial Flux

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]
	[****] Standard

	 	$[****]
	 	[****]
	 	$[****]

Page 3 of 7

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

     (c) In order to determine the adjusted prices to be paid during the years [****] and
thereafter for the Cliffs Pellets, the [****] Prices for each of the Cleveland Works and the
Indiana Harbor Works and each of the following respective year’s then-adjusted prices per
iron unit for each of the Cleveland Works and the Indiana Harbor Works shall be further
adjusted, up or down, each year for the year in determination as follows:

	 	(1)  	Divide (x) the numerator, which is the amount by which the [****] (“[****]”)
for the calendar year in determination changes (up or down) from the immediately
preceding calendar year’s [****]; by (y) the denominator, which is the immediately
preceding calendar year’s [****], and multiply the result obtained by [****]; and
	 
	 	(2)  	Divide (x) the numerator, which is the amount by which the [****] (“[****]”)
for the calendar year in determination changes from the immediately preceding calendar
year’s [****]; by (y) the denominator, which is the immediately preceding calendar
year’s [****], and multiply the result obtain by [****]; and
	 
	 	(3)  	Sum the results obtained in paragraphs (1) and (2) above and multiply that
total by [****]; and
	 
	 	(4)  	Multiply the results determined in (3) above by the preceding year’s adjusted
prices per iron unit, which will then equal the current year’s price adjustment per
	 
	 	(5)  	Add the result determined in (4) above to the preceding year’s adjusted price
per iron unit for the Cleveland Works and the Indiana Harbor Works, which will then
equal the current year’s adjusted prices per iron unit for the Cleveland Works and the
Indiana Harbor Works; and
	 
	 	(6)  	Multiply the result determined in (5) above by the current year’s expected
natural iron content, which will then equal the current year’s estimated price per ton
for the Cleveland Works and the Indiana Harbor Works.

     Those adjusted prices per ton shall then become the contract’s year estimated price for the
Cliffs Pellets delivered to the Cleveland Works and the Indiana Harbor Works for the year in
determination.

     (d) The final price for all tons sold by Cliffs to Steel shall be based on actual
natural iron content shipped, as provided in Section 6 of this Agreement.

Page 4 of 7

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

     (e) Attached as Exhibit 5 is an example of the adjustment formula applying the
provisions of Sections 5A(b) and 5A(c).

     (f) (i) Beginning in [****], a Special Payment shall be made in each year, wherein
Cliffs shall pay Steel or Steel shall pay Cliffs, as the case may be, if [****]. The amount
of the Special Payment shall be determined as follows:

	 	(1)  	In any contract year in which [****], Cliffs shall pay Steel an amount equal
to: (w) the amount [****], (x) multiplied by [****], (y) multiplied by [****], (z)
multiplied by the total tons of Cliffs Pellets which Steel [****] in the contract year.
	 
	 	(2)  	In any contract year in which [****], Steel shall pay Cliffs an amount equal
to: (w) the amount [****], (x) multiplied by [****], (y) multiplied by [****], (z)
multiplied by the total tons of Cliffs Pellets which Steel [****] in the contract year.
	 
	 	(3)  	For the purpose of estimating the Special Payment, a steel pricing payment
calculation shall be made by Steel following the end of each quarter, using the formula
provided for in Sections 5A(f)(i)(1) and 5A(f)(i)(2) above for each quarter. This
calculation (and payment, if any) shall be based on [****]. Within 30 days following
each quarter Steel shall notify Cliffs in writing of the amount (if any) payable by
Cliffs to Steel or Steel to Cliffs, and a quarterly payment, if any, shall be made by
Cliffs to Steel or Steel to Cliffs, as the case may be, within 45 days after the end of
each quarter.
	 
	 	(4)  	The final Special Payment calculation shall be made after the end of the year
in accordance with Sections 5A(f)(i)(1) and 5A(f)(i)(2) above which will reflect [****]
adjustment will be made to reflect any difference between the actual year’s Special
Payment and the quarterly estimated payments that were made during the year. Payment
due, from either party, as a result of the actual annual calculation shall be made by
February 15 of the year following the contract year.

Page 5 of 7

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

	 	(5)  	Attached as Exhibits 6 and 7 are examples of the calculations applying the
provisions of Sections 5A(f)(i).

     (ii) In the event that in any year [****] are less than [****], then Cliffs and Steel
agree to review the [****]. If the [****] are greater than or equal to [****] of Steel’s
[****], then the provisions of Section 5A(f)(i) shall apply without further modification. If
such [****] threshold is still not satisfied, then Cliffs and Steel agree to substitute
[****]. The [****] which are used for the price ranges, as provided for in Section 5A(f)(i)
above, shall be adjusted as follows: (i) the [****] (ii) the [****], (iii) with the
difference between (i) and (ii) above being added to both the [****] to determine the
revised ranges for the [****] in order to determine the Special Payment.

     (g) Prices for Cliffs Pellets shall be adjusted on a calendar quarterly basis based
upon estimated and/or actual changes, as applicable, in the published indices specified in
Section 5A(c) (“Quarterly Price Adjustment”). Cliffs shall calculate the Quarterly Price
Adjustment and provide Steel with such Quarterly Price Adjustment by the 15th day after the
end of each calendar quarter, or on such later date as may be mutually agreed between Cliffs
and Steel. Cliffs shall issue an invoice or credit memo, as the case may be, to Steel
concurrently with the Quarterly Price Adjustment, and payment from Cliffs to Steel or Steel
to Cliffs, as the case may be, shall be made by the 15th day following issuance of the
invoice or credit memo, as the case may be.

6. Exhibit 1 is hereby deleted and a new Exhibit 1 is hereby attached to this Agreement and
incorporated in the Agreement by reference.

* * * END OF PAGE * * *

Page 6 of 7

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective
authorized officers.

	 	 	 	 	 	 	 	 	 
	THE CLEVELAND-CLIFFS IRON COMPANY	 	INTERNATIONAL STEEL GROUP INC.	 	 
	By:	 	
/s/ William R. Calfee

Name:  William R. Calfee
Title:  President
	 	By:
	 	/s/ Rodney B. Mott

Name:  Rodney B. Mott
Title:
	 	 
	CLIFFS MINING COMPANY	 	ISG CLEVELAND INC.	 	 
	By:	 	
/s/ William R. Calfee

Name:  William R. Calfee
Title:  Executive Vice President — Commercial
	 	By:
	 	/s/ Rodney B. Mott

Name:  Rodney B. Mott
Title:	 	 
	NORTHSHORE MINING COMPANY	 	ISG INDIANA HARBOR INC.	 	 
	By:	 	
/s/ William R. Calfee

Name:  William R. Calfee
Title:  Executive Vice President — Commercial
	 	By:
	 	/s/ Rodney B. Mott

Name:  Rodney B. Mott
Title:	 	 
	CLIFFS SALES COMPANY	 	 	 	 	 	 
	By:	 	
/s/ William R. Calfee

Name:  William R. Calfee
Title:  Executive Vice President —
Commercial	 	 	 	 	 	 

Page 7 of 7

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

EXHIBIT 1

CLEVELAND-CLIFFS [****] PELLET TYPICAL ANALYSIS

AS LOADED TO VESSEL FOR SHIPMENT*

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	 	 	Report	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Frequency	 	Typical	 	[***]	 	[***]	 	Typical	 	[***]	 	[***]	 	Typical	 	[***]	 	[***]	 	Typical	 	[***]	 	[***]	 	Typical	 	[***]	 	[***]
	Moisture

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	A. DRY CHEMICAL ANALYSIS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Iron

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	SiO2

	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	Al2O3

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	CaO

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	MgO

	 	[***]
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	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	Mn

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	Phos

	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	 
	 	 
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	S

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	 	 	 	 	 	[***]	 	 	 	 
	TiO2

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	Na2O

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	K2O

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	B. SIZING. Wt. %
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% + 1/2”

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
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	 	 	 	 	 	[***]	 	 	 	 
	% - 1/2” x + 3/8”

	 	[***]
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	 	 	 	 	 	[***]
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	 	 	 	 	 	[***]	 	 	 	 
	% - 3/8 x + 1/4”

	 	[***]
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	 	 	 	 	 	[***]
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	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	% - 1/4”

	 	[***]
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	% - 28 mesh
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	C. TUMBLE TEST
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% + 1/4” before tumble

	 	[***]
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	 	 	 	 	 	[***]	 	 	 	 
	% + 1/4” after tumble

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	Q Index

	 	[***]
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	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	Tumble Index - 28 mesh

	 	[***]
	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]
	 	 	 	 	 	[***]	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	D. COMPRESSION TEST
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minus 1/2” by plus 7/16”
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Minus 1/2” by plus 3/8”

	 	[***]
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	 	 	 	 	 	[***]	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TYPICAL ANALYSIS

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	S.D.

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ANALYSIS LIMITS

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LETTER “V” DENOTES

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LETTER “M” DENOTES

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LETTER “SA” DENOTES

	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

EXHIBIT 5

PRICE ADJUSTMENT FORMULA

[****], [****], [****], [****], AND [****] PELLETS

FOR YEARS 2005 THROUGH 2016

	 	 	 	 	 	 	 
	Current Year’s Price Adjustment Calculation
	 	 	 	 	 	 
	      1. Section 5A(b) and 5A(c)
	 	 	 	 	 	 
	(1)

	 	[****]
	 	X
	 	[****] = A
	

	 	[****]	 	 	 	 
	 
	(2)

	 	[****]
	 	X
	 	[****] = B
	

	 	[****]	 	 	 	 
	 
	(3) (4) ((A + B) X 75.00%) X

	 	Preceding Year’s Adjusted Price Per Iron Unit
	 	=
	 	Current Year’s
Price Adjustment
Per Iron Unit
	 
	Current Year’s Adjusted Price Per Iron Unit
	 	 	 	 	 	 
	 
	(5) Current Year’s Price Adjustment Per Iron Unit

	 	+ Preceding Year’s Adjusted Price Per Iron Unit
	 	=
	 	Current Year’s
Adjusted Price Per
Iron Unit
	 
	Current Year’s Estimated Pellet Price Per Ton
	 	 	 	 	 	 
	 
	(6) Current Year’s Adjusted Price Per Iron Unit

	 	X Current Year’s Expected Natural Iron Content
	 	=
	 	Current Year’s
Estimated Pellet
Price Per Ton

 

 

CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

EXHIBIT 6

[****] FORMULA

[****], [****], [****], [****], AND [****] PELLETS

FOR THE YEARS 2005 THROUGH 2016

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Example 1	 	Example 2	 	Example 3	 	Example 4	 	Example 5	 	Example 6
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	First Quarter
	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Second Quarter
	 	 	 	 	 	 	 	 	 	 	 	 
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
	[****]

	 	[****]
	 	[****]
	 	[****]
	 	[****]
	 	[****]
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CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

EXHIBIT 7

SUBSTITUTE [****] EXAMPLE

[****]

FOR YEARS 2005 THROUGH 2016

Contract [****] — [****]

Contract [****] — [****]

In The Event That [****] Annual Total [****] Are Less Than [****], Then Steel And Cliffs Agree To
Substitute Another [****] — Substitute [****]

Determine Substitute [****]

(1) Current Year’s Actual Average [****] of Substituted [****] — Prior Year’s [****] = A

(2) A + [****] = [****]

(3) A + [****] = [****]

Results From (2) and (3) Above Determine Substitute [****]Exhibit 10.34

 

Exhibit 10.34

ISG Managers Incentive Plan

1. Purpose

The purpose of the Plan is to advance the long-term interests of International Steel Group
Inc. by (i) motivating executive and management personnel by means of long-term incentive
compensation, (ii) furthering the identity of interests of participants with those of the
shareholders of the Corporation through the performance of the Common Stock of the Corporation and
(iii) permitting the Corporation to attract and retain executive and management personnel upon
whose judgment the successful conduct of the business of the Corporation largely depends. Toward
this objective, the Committee may grant stock appreciation rights and performance bonuses to Key
Employees of the Corporation, on the terms and subject to the conditions set forth in the Plan.

2. Definitions

     2.1 “Award” means any form of stock appreciation right or performance bonus granted under the Plan,
whether singly, in combination, or in tandem, to a Participant by the Committee pursuant to such
terms, conditions, restrictions and limitations, if any, as the Committee may establish by the
Award Agreement or otherwise.

     2.2 “Award Agreement” means a written agreement with respect to an Award between the Corporation
and a Participant establishing the terms, conditions, restrictions and limitations applicable to an
Award. To the extent an Award Agreement is inconsistent with the terms of the Plan, the Plan shall
govern the rights of the Participant thereunder.

     2.3 “Board” means the Board of Directors of the Corporation.

     2.4 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     2.5 “Committee” means the Compensation Committee of the Board, or such other committee or persons
designated by the Board, authorized to administer the Plan under Section 3 hereof.

     2.6 “Common Stock” means Common Stock of the Corporation.

     2.7 “Corporation” means International Steel Group Inc.

     2.8 “Key Employee” means an employee of the Corporation who holds a position of responsibility in a
managerial, administrative or professional capacity, and whose performance, as

1

 

determined by the Committee in the exercise of its sole and absolute discretion, can have a
significant effect on the growth, profitability and success of the Corporation.

     2.9 “Participant” means any individual to whom an Award has been granted by the Committee under
this Plan.

     2.10 “Plan” means the International Steel Group Inc. Managers Incentive Plan.

3. Administration

     The Plan shall be administered under the supervision of the Committee composed of such
individuals as the Board shall designate. The Committee shall be authorized to appoint such person
or persons (which may include officers of the Corporation) to administer the Plan as the Committee
shall deem appropriate.

     Members of the Committee shall serve at the pleasure of the Board, and may resign by written
notice filed with the Chief Executive Officer or the Secretary of the Corporation.

     A vacancy in the membership of the Committee shall be filled by the appointment of a successor
member by the Board. Until such vacancy is filled, the remaining members shall constitute a quorum
and the action at any meeting of a majority of the entire Committee, or an action unanimously
approved in writing, shall constitute action of the Committee. Subject to the express provisions
of this Plan, the Committee shall have conclusive authority to construe and interpret the Plan, any
Award Agreement entered into hereunder and to establish, amend and rescind administrative policies
for the administration of this Plan and shall have such additional authority as the Board of
Directors may from time to time determine to be necessary or desirable.

4. Eligibility

     Any Key Employee is eligible to become a Participant in the Plan.

5. Term

     The Plan shall become effective as of its adoption by the Board and shall terminate at such
time as the Board determines.

2

 

6. Participation

     The Committee shall select, from time to time, Participants from those Key Employees who, in
the opinion of the Committee, can further the Plan’s purposes and the Committee shall determine the
type or types of Awards to be made to the Participant. The terms, conditions and restrictions of
each Award shall be set forth in an Award Agreement.

7. Stock Appreciation Rights

     (a) Grants. Awards may be granted in the form of stock appreciation rights (“SARs”). SARs
shall entitle the recipient to receive a payment equal to the appreciation in market value of a
stated number of shares of Common Stock from the price stated in the Award Agreement to the market
value of the Common Stock on the date of exercise or surrender.

     (b) Terms and Conditions of SARs. SARs shall be exercisable in whole or in such installments
and at such times as may be determined by the Committee. The base price of an SAR shall also be
determined by the Committee; provided, however, that such price shall not be less that the fair
market value of the Common Stock, as determined by the Committee, on the date of the award of the
SAR.

     (c) Deemed Exercise. The Committee may provide that an SAR shall be deemed to be exercised at
the close of business on the scheduled expiration date of such SAR, if at such time the SAR by its
terms is otherwise exercisable and, if so exercised, would result in a payment to the Participant.

     (d) Maximum Value. Any SAR awarded under this Plan shall contain a limit on the maximum
amount payable thereunder, which maximum amount shall not exceed the fair market value (as of the
date of the Award) of the stated number of shares to which the SAR relates.

     (e) Additional Terms and Conditions. The Committee may, consistent with the Plan, by way of
the Award Agreement or otherwise, determine such other terms, conditions, restrictions and/or
limitations, if any, on any SAR Award, including but not limited to determining the manner in which
payment of the appreciation in value shall be made.

3

 

8. Performance Bonuses

     (a) Grants. Awards may be granted in the form of performance bonuses, which may be
conditioned upon the achievement of such individual or corporate performance targets, service
criteria, or other factors as the Board shall determine.

     (b) Additional Terms and Conditions. The Committee may, consistent with the terms of this
Plan, by way of the Award Agreement or otherwise, determine the manner of payment of Awards of
Performance Bonuses and other terms, conditions, restrictions or limitations, if any, on any Award
of Performance Bonuses.

9. Payment of Awards

     SARs and Performance Bonuses shall be payable in cash, except to the extent otherwise set
forth in an Award Agreement.

10. Dividends and Dividend Equivalents

     If an Award is granted in the form of an SAR, the Committee may choose, at the time of the
grant of the Award, to include as part of such Award an entitlement to receive dividends or
dividend equivalents, subject to such terms, conditions, restrictions or limitations, if any, as
the Committee may establish. Dividends and dividend equivalents shall be paid in such form and
manner and at such time as the Committee shall determine.

11. Termination of Employment

     The Committee shall adopt administrative policies determining the entitlement of Participants
who cease to be employed by the Corporation whether because of death, disability, resignation,
termination or retirement and shall set forth in the applicable Award Agreement the effect any such
cessation of employment shall have on the Award.

12. Assignment and Transfer

     The rights and interests of a Participant under the Plan may not be assigned, encumbered or
transferred except, in the event of the death of a Participant, by will or the laws of descent and
distribution.

4

 

13. Adjustments Upon Changes in Capitalization or Corporate Transactions

     In the event of any change in the outstanding shares of Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares
merger, consolidation or any change in the corporate structure or shares of the Corporation, the
terms of outstanding Awards shall be appropriately adjusted by the Committee whose determination
shall be final.

     If significant acquisitions or sales by the Corporation occur, or other events, which in the
sole judgment of the Compensation Committee (at the direction of the Board, may have a material
effect upon the operation of the Plan, the Committee may make such adjustments to this Grant
(including an adjustment in the base price of a grant or the number of SARs granted) so as to avoid
inequities or windfall payments to Participants, and to carry out the overall goals of the Plan.

14. Withholding Taxes

     The Corporation shall be entitled to deduct from any payment under the Plan the amount of all
applicable federal, state, and local income and employment taxes required by law to be withheld
with respect to such payment or may require the Participant to pay to it such tax prior to and as a
condition of the making of such payment.

15. Satisfaction of Regulatory Requirements

     Notwithstanding anything contained in this Plan to the contrary, no Participant shall have the
right to exercise an SAR, and the Corporation shall have no obligation to make any payment pursuant
to an Award Agreement, if such exercise or the making of such payment would violate any federal or
state securities laws.

16. No Right to Continued Employment or Grants

     Participation in the Plan shall not give any Key Employee any right to remain in the employ of
the Corporation. The Corporation reserves the right to terminate the employment of any Key
Employee at any time. The adoption of this Plan shall not be deemed to give any Key Employee or
any other individual any right to be selected as a Participant, to be granted any Awards hereunder
or, if granted an Award in any year, to receive Awards in any subsequent year.

5

 

17. Amendment

     The Committee may suspend, amend, or terminate the Plan at any time provided, however, that no
such suspension, amendment, or termination shall adversely affect the rights of any Participant
under any outstanding Award Agreement without the consent of such Participant.

18. Governing Law

     The Plan shall be governed by and construed in accordance with the laws of the State of Ohio,
except as preempted by applicable Federal law.

19. No Right, Title, or Interest In Corporation Assets

     No Participant shall have any rights as a shareholder as a result of participation in the
Plan. To the extent any person acquires a right to receive payments from the Corporation under this
Plan, such rights shall be no greater than the rights of an unsecured creditor of the Corporation.

6

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