Document:

EXHIBIT 10.6.2

                              DATED NOVEMBER, 2002

                             SPV MANAGEMENT LIMITED
                                       and

                             HOLMES HOLDINGS LIMITED
                                       and

                          HOLMES FINANCING (NO. 6) PLC
                                       and

                               ABBEY NATIONAL PLC
                                       and

                      [THE BANK OF NEW YORK], LONDON BRANCH

              ----------------------------------------------------
                    SIXTH ISSUER CORPORATE SERVICES AGREEMENT
              ----------------------------------------------------

                                SLAUGHTER AND MAY
                                 ONE BUNHILL ROW
                                 LONDON EC1Y 8YY
                                   (MSXH/AGL)
                                   CB022910136

<PAGE>

                                    CONTENTS
                                                                            PAGE

1.  DEFINITIONS AND INTERPRETATION ........................................  1

2.  SHARE TRUSTEESHIP .....................................................  2

3.  NOMINATION OF DIRECTORS PRIOR TO SERVICE OF AN ENFORCEMENT NOTICE .....  2

4.  NOMINATION OF DIRECTORS AFTER SERVICE OF A SIXTH ISSUER NOTE
    ENFORCEMENT NOTICE ....................................................  4

5.  CONFIDENTIALITY .......................................................  5

6.  REMUNERATION ..........................................................  6

7.  COVENANT BY HOLDINGS ..................................................  6

8.  NO RECOURSE AGAINST EMPLOYEES, OFFICERS OR DIRECTORS ..................  6

9.  TERMINATION ...........................................................  7

10. NON-ASSIGNMENT ........................................................  7

11. GOVERNING LAW .........................................................  7

12. THE ISSUER SECURITY TRUSTEE ...........................................  7

<PAGE>

THIS AGREEMENT is made on the  ___  November, 2002

BETWEEN:

(1)   SPV MANAGEMENT LIMITED (registered number 2548079) whose business address
      is at 78 Cannon Street, London EC4N 6HH ("SPV");

(2)   HOLMES HOLDINGS LIMITED (registered number 3689577) whose registered
      office is at 2 Triton Square, Regents Place, London NW1 3AN ("HOLDINGS");

(3)   HOLMES FINANCING (NO. 6) PLC (registered number 4359738) whose registered
      office is at 2 Triton Square, Regents Place, London NW1 3AN (the "SIXTH
      ISSUER");

(4)   ABBEY NATIONAL PLC (registered number 2294747), a public limited company
      incorporated under the laws of England and Wales, whose registered office
      is at 2 Triton Square, Regents Place, London NW1 3AN ("ANPLC"); and

(5)   [THE BANK OF NEW YORK], LONDON BRANCH whose principal office is at ___
      (the "ISSUER SECURITY TRUSTEE" which expression shall include such person
      and all other persons for the time being acting as trustee or trustees
      under the Sixth Issuer Deed of Charge).

WHEREAS:

(A)   SPV in its own right and SPV and Martin McDermott (a director of SPV,
      Holdings and the Sixth Issuer) jointly are the registered holders of the
      whole of the issued share capital of Holdings.

(B)   Martin McDermott is jointly registered with Holdings as the holder of one
      share in the Sixth Issuer.

(C)   SPV has agreed with the other parties to this Agreement to provide certain
      corporate and personnel services to the Sixth Issuer as described below.

IT IS HEREBY AGREED as follows:

1.    DEFINITIONS AND INTERPRETATION

      The Amended and Restated Master Definitions and Construction Schedule and
      the Sixth Issuer Master Definitions and Construction Schedule, both signed
      for the purposes of identification by Allen & Overy and Slaughter and May
      on ___ November, 2002 (as the same may be amended, varied or supplemented
      from time to time with the consent of the parties hereto) are expressly
      and specifically incorporated into this Agreement and, accordingly, the
      expressions defined in the Master Definitions and Construction Schedule
      and the Sixth Issuer Master Definitions and Construction Schedule (as so
      amended, varied or supplemented) shall, except where the context otherwise
      requires and save where otherwise defined herein, have the meanings in
      this Agreement,

<PAGE>
                                       2

      including the Recitals hereto, and this Agreement shall be construed in
      accordance with the interpretation provisions set out in Clause 2 of the
      Master Definitions and Construction Schedule and the Sixth Issuer Master
      Definitions and Construction Schedule.

      In the event of a conflict between the Master Definitions Schedule and the
      Sixth Issuer Master Definitions and Construction Schedule, the Sixth
      Issuer Master Definitions and Construction Schedule shall prevail.

2.    SHARE TRUSTEESHIP

2.1   HOLDINGS

      (A)   Pursuant to a declaration of trust dated 11th February, 1999, a
            letter dated 9th June, 2000 from Piers Minoprio to (and
            countersigned by) Martin McDermott and SPV Management Limited and a
            share transfer dated 9th June, 2000 transferring one share in
            Holdings from SPV and Piers Minoprio to SPV and Martin McDermott
            (together, the "FIRST DECLARATION OF TRUST"), SPV and Martin
            McDermott jointly hold one share in the share capital of Holdings on
            a fixed trust for SPV in its own right.

      (B)   Pursuant to a declaration of trust dated 17th February, 1999 (the
            "SECOND DECLARATION OF TRUST") SPV holds the entire beneficial
            interest in the issued share capital of Holdings on a discretionary
            trust for the Discretionary Objects (as defined in the Second
            Declaration of Trust).

2.2   THE SIXTH ISSUER

      Pursuant to a declaration of trust dated 26th March, 2002 (the "ELEVENTH
      DECLARATION OF TRUST"), Martin McDermott holds his interest in one jointly
      owned share in the share capital of the Sixth Issuer on a fixed trust for
      Holdings.

3.    NOMINATION OF DIRECTORS PRIOR TO SERVICE OF AN ENFORCEMENT NOTICE

3.1   ENTITLEMENT TO NOMINATE

      Prior to the service of a Sixth Issuer Note Enforcement Notice and for so
      long as this Agreement remains in force:

      (A)   ANPLC is entitled to nominate one person willing to serve in the
            capacity of director of the Sixth Issuer and ANPLC shall be deemed
            to have so nominated Richard Wise as its first nominee in such
            capacity; and

      (B)   SPV is entitled to nominate two persons willing to serve in the
            capacity of director of the Sixth Issuer (and shall be deemed to
            have so nominated SPV and Martin McDermott as its first nominees in
            such capacity) and nothing herein shall prevent SPV from nominating
            itself as a corporate director of the Sixth Issuer.

<PAGE>
                                       3

3.2   APPOINTOR

      In relation to any person nominated or deemed to be nominated under clause
      3.1 above or clause 3.3 below, whichever of ANPLC or SPV nominated that
      person is referred to below as that person's "APPOINTOR".

3.3   RESIGNATION OR RETIREMENT OF DIRECTOR

      Each appointor hereby confirms to the other that, if the person nominated
      or deemed to be nominated by it should resign or retire or for any other
      reason cease to act as director of the Sixth Issuer, it will promptly:

      (A)   procure that such director shall acknowledge in writing that he has
            no claim of any nature whatsoever against the Sixth Issuer;

      (B)   nominate another person willing to act in the relevant capacity; and

      (C)   procure the consent of that other person to act in that capacity.

3.4   ACCEPTANCE OF APPOINTMENT AND PAYMENT

      Each appointor shall procure that each of the persons respectively
      nominated or deemed to be nominated by it from time to time as provided
      above accepts the relevant appointment and acts in the relevant capacity
      without fee or remuneration (including, for the avoidance of doubt, upon
      resignation or retirement) from the Sixth Issuer, save that nothing in
      this Agreement shall prejudice the right of SPV to be remunerated for its
      services under Clause 6.

3.5   COMPOSITION OF BOARDS

      SPV undertakes and agrees:

(A)   subject to its duties and obligations as trustee under the First
      Declaration of Trust and the Second Declaration of Trust and subject to
      Clause 4.4, that it shall exercise its rights as a shareholder of Holdings
      and all rights and powers vested in it under the Articles of Association
      of Holdings so as to procure that the board of directors of the Sixth
      Issuer comprises at all times one nominee of ANPLC (provided that ANPLC
      shall have nominated a person to such office) and two nominees of SPV, as
      provided under Clause 3.1; and

(B)   to procure that, subject to his duties under the First Declaration of
      Trust and the Eleventh Declaration of Trust, Martin McDermott (and any
      successor shareholder) shall exercise his rights as a shareholder of
      Holdings and the Sixth Issuer and all rights and powers vested in him
      under the Articles of Association of Holdings and the Sixth Issuer so as
      to procure that the board of directors of the Sixth Issuer comprises at
      all times one nominee of ANPLC (provided that ANPLC shall have nominated a
      person to such office) and two nominees of SPV, as provided under Clause
      3.1.

<PAGE>
                                       4

4.    NOMINATION OF DIRECTORS AFTER SERVICE OF A SIXTH ISSUER NOTE ENFORCEMENT
      NOTICE

4.1   RIGHTS AND POWERS UPON A SIXTH ISSUER NOTE ENFORCEMENT NOTICE

      In the event that a Sixth Issuer Note Enforcement Notice is served on the
      Sixth Issuer, Holdings shall exercise its rights as a joint holder with
      Martin McDermott (and any successor shareholder) of one share in the Sixth
      Issuer and as sole beneficial owner of forty-nine thousand nine hundred
      and ninety-nine shares in the Sixth Issuer and the rights and powers
      vested in it under the Articles of Association of the Sixth Issuer so as
      to procure that:

      (A)   such new or additional directors of the Sixth Issuer as the Issuer
            Security Trustee shall direct shall be duly appointed; and

      (B)   such of the directors nominated pursuant to Clauses 3.1 or 3.3 as
            the Issuer Security Trustee requests shall tender their resignation,
            if so requested by the Issuer Security Trustee,

      and nothing shall prevent the Issuer Security Trustee from nominating
      itself for appointment as a director of the Sixth Issuer.

4.2   NOMINEES

      In the event that a Sixth Issuer Note Enforcement Notice is served on the
      Sixth Issuer, Holdings shall procure that, subject to his duties under the
      Eleventh Declaration of Trust, Martin McDermott (and any successor
      shareholder) ensures that the results described in Clause 4.1 are
      achieved.

4.3   TERMS OF APPOINTMENT

      Any director nominated or appointed pursuant to Clause 4.1 shall be
      appointed upon such terms (including reasonable remuneration) as may be
      agreed between its appointees and the Issuer Security Trustee.

4.4   REQUESTS OF THE ISSUER SECURITY TRUSTEE

      For so long as SPV and SPV and Martin McDermott (and any successor
      shareholder) jointly are the registered holders of the whole of the issued
      share capital of Holdings, and in the event (but only in the event) that
      the provisions of Clause 4.1 apply, SPV undertakes and agrees, subject to
      its duties and obligations as trustee under the First Declaration of Trust
      and the Second Declaration of Trust, to comply and shall procure that
      subject to his duties under the First Declaration of Trust and the
      Eleventh Declaration of Trust, Martin McDermott (and any successor
      shareholder) complies, with all reasonable requests of the Issuer Security
      Trustee as to:

      (A)   the exercise of its and/or Martin McDermott's (and any successor
            shareholder's) rights as shareholder of Holdings; and

<PAGE>
                                       5

      (B)   all rights and powers vested in it and/or Martin McDermott (and any
            successor shareholder) under the Articles of Association of
            Holdings,

      in relation to the appointment and/or removal from office by Holdings of
      any of the directors of the Sixth Issuer.

4.5   RESIGNATION

      In the event that a Sixth Issuer Note Enforcement Notice is served on the
      Sixth Issuer, any appointment of a director in office at such time validly
      made pursuant to Clauses 3.1 or 3.3 shall continue to be effective in
      accordance with the provisions of this Agreement unless and until such
      director has resigned pursuant to Clause 4.1(B).

5.    CONFIDENTIALITY

      SPV shall not, and hereby undertakes to procure that each person nominated
      or deemed to be nominated as director of the Sixth Issuer by it pursuant
      to Clause 3 shall not, and that Martin McDermott (and any successor
      shareholder) shall not (regardless of whether or not such person shall
      still be in office or is still a shareholder), at any time disclose to any
      person, firm or company whatsoever, and shall treat as confidential, any
      information relating to the business, finances or other matters of ANPLC
      or the Sixth Issuer which it or he may have obtained as a result of (in
      the case of SPV) its role under this Agreement or as employer or principal
      to any such director or shareholder and (in the case of any such director
      or shareholder) his or its position as director or shareholder of the
      Sixth Issuer, or otherwise have become possessed, and SPV shall use its
      best endeavours to prevent any such disclosure, provided however that the
      provisions of this clause shall not apply:

      (A)   to the disclosure of any information already known to the recipient;

      (B)   to the disclosure of any information which is or becomes public
            knowledge otherwise than as a result of such disclosure being made
            in breach of this Clause 5, or as a result of the unauthorised or
            improper conduct of the recipient;

      (C)   to the extent that disclosure is required pursuant to any law or
            order of any court or pursuant to any direction, request or
            requirement (whether or not having the force of law) of any central
            bank or any governmental or other regulatory or taxation authority
            (including, but without limitation to, any official bank examiners
            or regulators or the United Kingdom Listing Authority or the London
            Stock Exchange plc);

      (D)   to the disclosure of any information to professional advisers who
            receive the information under a duty of confidentiality;

      (E)   to the disclosure of any information with the consent of the parties
            hereto; and

      (F)   to the disclosure of any information to the Issuer Security Trustee,

<PAGE>
                                       6

      and SPV hereby agrees to indemnify and hold harmless ANPLC, the Issuer
      Security Trustee and the Sixth Issuer on an after tax basis for all
      losses, damages, expenses, costs, claims and charges arising from or
      caused by any disclosure of information by any of SPV, Martin McDermott
      (and any successor shareholder) or any director nominated by it, which
      disclosure is made contrary to the provisions of this clause.

6.    REMUNERATION

6.1   INITIAL FEE

      SPV shall be entitled to an initial fee of (pound)[17,500] (together with
      VAT thereon) in consideration of the services provided by it under this
      Agreement, payment of which shall be made on the Sixth Issuer Closing
      Date.

6.2   REMUNERATION FOR PROVISION OF DIRECTORS

      For so long as any director nominated by SPV is in office, SPV shall be
      entitled to remuneration for the services provided by it under this
      Agreement of (pound)[12,250] per annum (together with VAT thereon).

      (A)   The remuneration payable pursuant to this Clause 6.2 shall be borne
            by Funding and payable as to (pound)[3,062.50] (together with VAT
            thereon) quarterly in advance on each Interest Payment Date if, on
            the relevant Interest Payment Date, SPV, in respect of the Sixth
            Issuer, has at least one director in office appointed pursuant to
            Clauses 3.1(B) or 3.3 of this Agreement.

      (B)   [The payment in respect of the Interest Payment Date falling in
            November, 2002 shall be made on the Sixth Issuer Closing Date.]

7.    COVENANT BY HOLDINGS

      Holdings hereby covenants with the Issuer Security Trustee that it shall
      not sell, charge, exchange, transfer or otherwise deal in the shares which
      it holds in the Sixth Issuer at any time prior to the Final Redemption
      relating to the Sixth Issuer without the prior written consent of the
      Issuer Security Trustee.

8.    NO RECOURSE AGAINST EMPLOYEES, OFFICERS OR DIRECTORS

      The obligations of SPV under this Agreement and the obligations of the
      Sixth Issuer under the Transaction Documents are solely the corporate
      obligations of SPV and the Sixth Issuer. No recourse shall be had in
      respect of any obligation or claim arising out of or based upon this
      Agreement or any of the Transaction Documents against any employee,
      officer or director of SPV save where the claim, demand, liability, cost
      or expense in connection therewith arises from the negligence, wilful
      default or breach of duty of such employee, officer or director.

<PAGE>
                                       7

9.    TERMINATION

      In respect of rights and obligations relating to the Sixth Issuer under
      this Agreement, such rights and obligations shall terminate automatically
      on the date falling 90 days after all Sixth Issuer Secured Obligations are
      discharged in full.

10.   NON-ASSIGNMENT

      The rights and obligations of the parties hereto are personal and, save in
      the case of the Sixth Issuer in accordance with the Sixth Issuer Deed of
      Charge, shall not be capable of assignment, except that the Issuer
      Security Trustee may assign its rights hereunder to any successor trustee
      or trustees under the Sixth Issuer Deed of Charge.

11.   GOVERNING LAW

      This Agreement is governed by, and shall be construed in accordance with,
      the laws of England.

12.   THE ISSUER SECURITY TRUSTEE

      The Issuer Security Trustee has agreed to become a party to this Agreement
      for the better preservation and enforcement of its rights under this
      Agreement but shall have no obligation or liability whatsoever to any of
      the parties under or arising from or by virtue of the Issuer Security
      Trustee joining as a party to this Agreement.

<PAGE>
                                       8

SIGNED by the authorised representative of the parties hereto the day and year
first before written.

SIGNED by                             )
for and on behalf of                  )
SPV MANAGEMENT LIMITED                )

SIGNED by                             )
for and on behalf of                  )
HOLMES HOLDINGS LIMITED               )

SIGNED by                             )
for and on behalf of                  )
HOLMES FINANCING (NO. 6) PLC          )

SIGNED by                             )
for and on behalf of                  )
ABBEY NATIONAL PLC                    )

SIGNED by                             )
for and on behalf                     )
[THE BANK OF NEW YORK], LONDON BRANCH )<PAGE>
                                                                    EXHIBIT 10.1

                    SUBORDINATED LOAN AND SECURITY AGREEMENT

                                  by and among

                              ROUGE STEEL COMPANY,
                                 as the Borrower

                                       and

                             ROUGE INDUSTRIES, INC.
                                  QS STEEL INC.
                            EVELETH TACONITE COMPANY,
                                as the Guarantors

                                       and

                              CLEVELAND-CLIFFS INC
                                  as the Lender

                              Dated: July 12, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
<S>                                                                                                           <C>
1.       LOAN....................................................................................................1

2.       INTERCREDITOR AGREEMENT.................................................................................1

3.       CONDITIONS TO BORROWING.................................................................................1

4.       LOAN TERMS..............................................................................................1

5.       CONDITIONS PRECEDENT....................................................................................2

6.       GUARANTEES..............................................................................................3

7.       GRANT OF SECURITY INTEREST..............................................................................4

8.       INCORPORATION BY REFERENCE..............................................................................5

9.       REPRESENTATIONS AND WARRANTIES..........................................................................5

10.      COVENANTS...............................................................................................5

11.      EVENTS OF DEFAULT; REMEDIES.............................................................................5

12.      U.C.C. FINANCING STATEMENTS.............................................................................7

13.      SUCCESSORS AND ASSIGNS; AMENDMENTS......................................................................7

14.      COUNTERPARTS; EFFECTIVENESS.............................................................................7

15.      MISCELLANEOUS...........................................................................................7

16.      GOVERNING LAW; JURISDICTION.............................................................................8

17.      DEFINITIONS.............................................................................................8

</TABLE>

                                      -i-
<PAGE>

                               INDEX TO SCHEDULES

Schedule A -- Note

Schedule B -- Description of Collateral

Schedule C -- Disclosure Schedule

                                      -ii-
<PAGE>

                    SUBORDINATED LOAN AND SECURITY AGREEMENT

         This Subordinated Loan and Security Agreement (as may be amended from
time to time, this "AGREEMENT") is entered into as of July 12, 2002, by and
among Rouge Steel Company, a Delaware corporation (the "BORROWER"), Rouge
Industries, Inc., a Delaware corporation ("RII"), QS Steel Inc., a Michigan
corporation ("QS"), Eveleth Taconite Company, a Minnesota corporation
("EVELETH," and together with RII and QS, the "GUARANTORS"), and
Cleveland-Cliffs Inc, an Ohio corporation (the "LENDER").

1. Loan. Subject to the terms and conditions hereof, the Lender hereby agrees to
make a loan (the "LOAN") to the Borrower by wire transfer of immediately
available funds on the date hereof, in the principal amount of Ten Million and
No/100 Dollars ($10,000,000). The proceeds of the Loan shall be used for the
Borrower's working capital and other operating needs. The Loan shall be
evidenced by a promissory note of the Borrower substantially in the form of
Schedule A hereto (the "NOTE").

2. Intercreditor Agreement. The rights and obligations of the parties hereto are
subject to the provisions of the Intercreditor Agreement, and in the event of
any inconsistency between the provisions hereof and thereof, the provisions of
the Intercreditor Agreement shall prevail.

3. Conditions to Borrowing. The obligation of the Lender to make the Loan
hereunder is subject to the satisfaction of the following conditions, which
satisfaction will be determined in the reasonable discretion of Lender:

(a)      No Event of Default shall have occurred and be continuing;

(b)      The conditions precedent set forth in Section 5 shall have been
         satisfied; and

(c)      All representations and warranties of the Borrower as set forth in this
         Agreement shall be true and correct in all material respects.

4. Loan Terms.

(a)      The Borrower promises to repay the principal amount of the Loan in four
         equal installments of Two Million Five Hundred Thousand and No/100
         Dollars ($2,500,000) each on June 30 of each year commencing June 30,
         2004, with the balance thereof, together with all unpaid interest
         thereon, payable in full on June 30, 2007.

(b)      (i)      The principal amount of the Loan outstanding from time to
                  time shall bear interest for the period from and including the
                  date that the Loan is made to but excluding the date that the
                  Loan is paid in full at a rate equal to 10% per annum (the
                  "INTEREST RATE").

         (ii)     Notwithstanding the foregoing, if all or a portion of the
                  principal amount of the Loan or any interest payable thereon
                  shall not be paid when due (whether at the stated maturity, by
                  acceleration or otherwise), such overdue amount shall bear
                  interest at a rate of 12% per annum from the date of such
                  non-payment until such amount is paid in full. In no event
                  will the rate of interest hereunder exceed the maximum rate
                  allowable by law.

         (iii)    The Borrower shall pay interest on the unpaid principal
                  amount of the Loan outstanding from time to time from the date
                  thereof until paid, on December 15 of each year and at

<PAGE>

                  the maturity of the Loan (whether by acceleration or
                  otherwise), commencing December 15, 2003, at a rate per annum
                  equal to the Interest Rate. Such interest shall be calculated
                  on the basis of a 365 day year and the actual number of days
                  elapsed.

(c)      (i)      The Borrower may, at any time and from time to time,
                  prepay the Loan, in whole or in part, without premium or
                  penalty, upon at least three Business Days' irrevocable
                  written notice to the Lender.

         (ii)     If any Pellet Agreement Prepayment Event shall occur, the
                  Borrower shall prepay the aggregate outstanding principal
                  amount of the Loan, together with all accrued and unpaid
                  interest thereon, no later than 30 days after the occurrence
                  of such Pellet Agreement Prepayment Event.

(d)      The Borrower shall make all payments to the Lender no later than the
         close of business on the date due to such account of the Lender as the
         Lender may from time to time designate to the Borrower in writing. All
         payments shall be made in Dollars in immediately available funds. If
         any payment is due on a day that is not a Business Day, such payment
         shall be due and payable on the next succeeding Business Day.

(e)      The Borrower agrees to indemnify the Lender and to hold the Lender
         harmless from any loss or expense which the Lender may sustain or incur
         as a consequence of (i) default by the Borrower in payment when due of
         the principal amount of or interest on any Loan or (ii) default by the
         Borrower in making any prepayment after the Borrower has given notice
         thereof in accordance with the provisions of this Agreement, including,
         without limitation, in each case, any such loss or expense arising from
         the reemployment of funds obtained by the Lender or from fees payable
         to terminate the deposits from which such funds were obtained. This
         covenant shall survive the termination of this Agreement and the
         payment of the Loan and all other amounts payable hereunder.

5. Conditions Precedent. The obligation of the Lender to make the Loan is
subject to the Borrower satisfying each of the following conditions:

(a)      The Borrower shall have executed and delivered to the Lender the Note.

(b)      Each of the Guarantors shall have executed and delivered to the Lender
         this Agreement.

(c)      The Lender shall have received a copy of the fully executed
         Intercreditor Agreement.

(d)      The Borrower and each Guarantor shall have delivered to the Lender an
         officer's certificate certifying the names of the officers of the
         Borrower or such Guarantor authorized to sign the Financing Agreements,
         together with the true signatures of such officers and certified copies
         of (a) the resolutions of the board of directors of the Borrower and
         each Guarantor evidencing approval of the execution and delivery of the
         Financing Agreements to which the Borrower or such Guarantor, as the
         case may be, is a party, and (b) the Articles (or Certificate) of
         Incorporation and all amendments thereto of the Borrower and each
         Guarantor.

(e)      The Borrower and each Guarantor shall have delivered to the Lender
         U.C.C. financing statements satisfactory to the Lender.

(f)      The Borrower shall have delivered to the Lender (i) the executed
         consent of Congress and the lenders party to the Congress Agreement to
         this Agreement, and (ii) the executed consent of Ford

                                      -2-
<PAGE>

         Motor Company to this Agreement, each of which shall be in form and
         substance satisfactory to the Lender.

(g)      The Borrower shall have delivered to the Lender the July 2002 amendment
         to the Pellet Agreement, in form and substance satisfactory to the
         Lender.

(h)      The Borrower shall have provided to the Lender such other items and
         shall have satisfied such other conditions as are reasonably required
         by the Lender.

6. Guarantees.

(a)      Subject to Section 6(c) below, the Guarantors hereby jointly,
         severally, unconditionally and irrevocably guarantee to the Lender the
         due and punctual payment of all present and future indebtedness of the
         Borrower evidenced by or arising out of the Financing Agreements,
         including, but not limited to, the due and punctual payment of
         principal of and interest on the Loan and the due and punctual payment
         of all other sums now or hereafter owed by the Borrower under any
         Financing Agreement as and when the same become due and payable,
         whether at maturity, by declaration or otherwise, according to the
         terms thereof. In case of failure by the Borrower punctually to pay the
         indebtedness guaranteed hereby, the Guarantors, subject to Section 6(c)
         below, hereby jointly, severally and unconditionally agree to cause
         such payment to be made punctually as and when the same become due and
         payable, whether at maturity or by declaration or otherwise, and as if
         such payment were made by the Borrower.

(b)      The obligations of each Guarantor hereunder are unconditional and
         absolute and, without limiting the generality of the foregoing, will
         not be released, discharged or otherwise affected by:

         (i)      any extension, renewal, settlement, compromise, waiver or
                  release in respect of any obligation of the Borrower or any
                  other Guarantor under any Financing Agreement, by operation of
                  law or otherwise;

         (ii)     any modification or amendment of or supplement to any
                  Financing Agreement;

         (iii)    any modification, amendment, waiver, release, non-perfection
                  or invalidity of any direct or indirect security, or of any
                  guarantee or other liability of any third party, for any
                  obligation of the Borrower or any other Guarantor under any
                  Financing Agreement;

         (iv)     any change in the corporate existence, structure or ownership
                  of any other Guarantor, or any insolvency, bankruptcy,
                  reorganization or other similar proceeding affecting the
                  Borrower or any other Guarantor or its assets or any resulting
                  release or discharge of any obligation of the Borrower or any
                  other Guarantor contained in any Financing Agreement;

         (v)      the existence of any claim, set-off or other rights which any
                  Guarantor may have at any time against the Borrower or any
                  other Guarantor, the Lender or any other person, whether or
                  not arising in connection with the Financing Agreements,
                  provided that nothing herein prevents the assertion of any
                  such claim by separate suit or compulsory counterclaim;

         (vi)     any invalidity or unenforceability relating to or against the
                  Borrower or any other Guarantor for any reason of any
                  Financing Agreement, or any provision of applicable law or
                  regulation purporting to prohibit the payment by the Borrower
                  or any other Guarantor

                                      -3-
<PAGE>

                  of the principal of or interest on any Note or any other
                  amount payable by the Borrower or any other Guarantor under
                  the Financing Agreements; or

         (vii)    any other act or omission to act or delay of any kind by the
                  Borrower or any other Guarantor, the Lender or any other
                  person or any other circumstance whatsoever (other than
                  payment) that might, but for the provisions of this paragraph,
                  constitute a legal or equitable discharge of or defense to the
                  obligations of any Guarantor hereunder.

(c)      Each Guarantor is liable under this Agreement only for amounts
         aggregating up to the largest amount that would not render its
         obligations hereunder subject to avoidance under Section 548 of the
         United States Bankruptcy Code or any comparable provisions of any
         applicable state law.

(d)      Each Guarantor's obligations hereunder remains in full force and effect
         until the principal of and interest on the Loan and all other amounts
         payable by the Borrower under the Financing Agreements are paid in
         full. If at any time any payment of the principal of or interest on the
         Loan or any other amount payable by the Borrower under any Financing
         Agreement is rescinded or must be otherwise restored or returned upon
         the insolvency, bankruptcy or reorganization of the Borrower or any
         other Guarantor or otherwise, each Guarantor's obligations hereunder
         with respect to such payment will be reinstated at such time as though
         such payment had become due but had not been made at such time.

(e)      Each Guarantor irrevocably waives acceptance hereof, presentment,
         demand, protest and any notice not provided for herein, as well as any
         requirement that at any time any action be taken by any person against
         any other Guarantor or any other person.

(f)      Each Guarantor irrevocably waives any and all rights to which it may be
         entitled, by operation of law or otherwise, upon making any payment
         hereunder (i) to be subrogated to the rights of the payee against the
         Borrower with respect to such payment or otherwise to be reimbursed,
         indemnified or exonerated by the Borrower in respect thereof or (ii) to
         receive any payment, in the nature of contribution or for any other
         reason, from any other Guarantor with respect to such payment.

(g)      If acceleration of the time for payment of any amount payable by the
         Borrower under the Financing Agreements is stayed upon the insolvency,
         bankruptcy or reorganization of the Borrower, all such amounts
         otherwise subject to acceleration under the terms of the Financing
         Agreements are nonetheless payable by each Guarantor hereunder
         forthwith on demand by the Lender.

7. Grant of Security Interest.

(a)      To secure payment and performance of all Obligations, the Borrower and
         each Guarantor hereby grant to the Lender a continuing security
         interest in, a lien upon, and a right of set off against, and hereby
         assign to the Lender, as security, the property and interests in
         property of the Borrower and such Guarantor, whether now owned or
         hereafter acquired or existing, and wherever located, in the Collateral
         described in Schedule B hereto.

         (b) Notwithstanding anything to the contrary contained in Section 7(a)
         above, the types or items of Collateral described in such Section shall
         not include any rights or interest in any contract, lease, permit,
         license, charter or license agreement covering real or personal
         property of the Borrower or any Guarantor, as such, if under the terms
         of such contract, lease, permit, license, charter or license agreement,
         or applicable law with respect thereto, the valid grant of a security
         interest or

                                      -4-

<PAGE>

         lien therein to the Lender is prohibited as a matter of law or under
         the terms of such contract, lease, permit, license, charter or license
         agreement and such prohibition has not been or is not waived or the
         consent of the other party to such contract, lease, permit, license,
         charter or license agreement has not been or is not otherwise obtained;
         provided that the foregoing exclusion shall in no way be construed (i)
         to apply if any such prohibition is unenforceable under the provisions
         of Article 9 of the U.C.C. or other applicable law or (ii) so as to
         limit, impair or otherwise affect the Lender's unconditional continuing
         security interests in and liens upon any rights or interests of the
         Borrower or any Guarantor in or to monies due or to become due under
         any such contract, lease, permit, license, charter or license
         agreement.

8. Incorporation by Reference. Certain provisions (the "INCORPORATED
PROVISIONS") contained in this Agreement are incorporated by reference from or
defined with reference to the Congress Agreement as in effect on the date hereof
solely for the convenience of the parties hereto in documenting this Agreement
and the transactions referred to herein. Each such Incorporated Provision is
incorporated or referred to as though all references therein to the "Agreement"
and any "Note(s)," and all references to the "Agent," the "Lenders" and the
"Required Lenders" were references to this Agreement, the Note and to the
Lender, respectively, and other changes shall be made (as required by the
context) so that such Incorporated Provisions are made solely for the benefit of
the Lender with respect to this Agreement. No Incorporated Provision shall be
amended, waived or otherwise modified after the date hereof for purposes of this
Agreement by any amendment, waiver or other modification by the parties to the
Congress Agreement without the agreement of the Lender, and such Incorporated
Provisions shall remain in effect hereunder as they existed prior to such
amendment, waiver or modification not agreed to by the Lender. If this Agreement
remains in effect after the commitments under the Congress Agreement have been
terminated and the loans thereunder have been paid in full, the Incorporated
Provisions shall continue to be incorporated herein by reference (and, without
limitation, the covenants incorporated herein shall continue to be in full force
and effect) as set forth above as such provisions were in effect on the date of
such termination and repayment, without regard to any amendment, waiver or other
modification not agreed to by the Lender hereunder. The Ford Agreement shall not
be amended without the consent of the Lender, which consent will not be
unreasonably withheld.

9. Representations and Warranties. The Borrower represents and warrants that
each of the representations and warranties set forth in Section 8 of the
Congress Agreement is true and correct in all material respects on and as of the
date hereof (except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representatives and
warranties are true and correct, in all material respects, on and as of such
earlier date and, in addition, except as set forth in the Disclosure Schedule
attached as Schedule C hereto), and all such representations and warranties are
hereby incorporated by reference into this Agreement.

10. Covenants. Unless compliance is waived in writing by the Lender, the
Borrower and each Guarantor will comply with each covenant contained in Section
9 of the Congress Agreement, and all such covenants are hereby incorporated by
reference into this Agreement.

11. Events of Default; Remedies.

(a)      If any of the following events (each an "EVENT OF DEFAULT") shall occur
         and be continuing: (i) if the principal of or any interest on any Note
         is not paid in full punctually when due and payable, (ii) if the
         Borrower or any Guarantor fails or omits to perform and observe any
         agreement or other provision contained or referred to in this Agreement
         or any Financing Agreement that is on the Borrower's or such
         Guarantor's part, as the case may be, to be complied with, and that
         default is not fully corrected within thirty (30) days after the giving
         of written notice thereof to the Borrower by the Lender that the
         specified default is to be remedied, (iii) if any representation,

                                      -5-
<PAGE>

         warranty or statement made in or pursuant to this Agreement or any
         Financing Agreement or any other material information furnished by the
         Borrower or any Guarantor to the Lender or any other holder of any
         Note, proves false or erroneous in any material respect, or (iv) if any
         "Event of Default" (as such term in defined in the Congress Agreement)
         shall have occurred and be continuing then, in the case of any of the
         Events of Default specified above, the Lender may, by written notice to
         the Borrower, declare the Loan and other indebtedness hereunder to
         become immediately due and payable, together with accrued interest and
         any other charges, without presentment, demand, protest, or other
         notice, all of which are hereby expressly waived, except that if an
         Event of Default described in Section 10.1(f), 10.1(g) or 10.1(h) of
         the Congress Agreement shall occur, such indebtedness shall
         automatically become due and payable, without presentment, demand,
         protest or other notice, all of which are hereby expressly waived.

(b)      At any time an Event of Default has occurred and is continuing, the
         Lender shall have all rights and remedies provided in this Agreement,
         the other Financing Agreements, the U.C.C. and other applicable law,
         all of which rights and remedies may be exercised without notice to or
         consent by the Borrower or any Guarantor, except as such notice or
         consent is expressly provided for hereunder or required by applicable
         law. All rights, remedies and powers granted to the Lender hereunder,
         under any of the other Financing Agreements, the U.C.C. or under other
         applicable law are cumulative, not exclusive, and enforceable, in the
         Lender's discretion, alternatively, successively or concurrently on any
         one or more occasions, and shall include, without limitation, the right
         to apply to a court of equity for an injunction to restrain a breach or
         threatened breach by the Borrower of this Agreement or any of the other
         Financing Agreements. The Lender may proceed directly against the
         Borrower or any Guarantor without prior recourse to the Collateral.

(c)      Without limiting the foregoing, at any time an Event of Default has
         occurred and is continuing, the Lender may, in its discretion, (i) with
         or without judicial process or the aid or assistance of others, enter
         upon any premises on or in which any of the Collateral may be located
         and take possession of the Collateral or complete processing,
         manufacturing and repair of all or any portion of the Collateral, (ii)
         require the Borrower or any Guarantor, at the Borrower's expense, to
         assemble and make available to the Lender any part or all of the
         Collateral at any place and time designated by the Lender, (iii)
         collect, foreclose, receive, appropriate, set off and realize upon any
         and all of the Collateral, (iv) remove any or all of the Collateral
         from any premises on or in which the same may be located for the
         purpose of effecting the sale, foreclosure or other disposition thereof
         or for any other purpose and/or (v) sell, lease, transfer, assign,
         deliver or otherwise dispose of any and all of the Collateral
         (including entering into contracts with respect thereto, public or
         private sales at any exchange, broker's board, at any office of the
         Lender or elsewhere) at such prices or terms as the Lender may deem
         reasonable, for cash, upon credit or for future delivery, with the
         Lender having the right to purchase the whole or any part of the
         Collateral at any such public sale, all of the foregoing being free
         from any right or equity of redemption of the Borrower or any
         Guarantor, which right or equity of redemption is hereby expressly
         waived and released by the Borrower and each Guarantor. If any of the
         Collateral is sold or leased by the Lender upon credit terms or for
         future delivery, the Obligations shall not be reduced as a result
         thereof until payment therefor is finally collected by the Lender. If
         notice of disposition of Collateral is required by law, ten (10) days'
         prior notice by the Lender to the Borrower designating the time and
         place of any public sale or the time after which any private sale or
         other intended disposition of Collateral is to be made, shall be deemed
         to be reasonable notice thereof and the Borrower and each Guarantor
         waive any other notice. In the event the Lender institutes an action to
         recover any Collateral or seeks recovery of any Collateral by way of
         prejudgement remedy, the Borrower and each Guarantor waives the posting
         of any bond which might otherwise be required.

                                      -6-
<PAGE>

(d)      For the purpose of enabling the Lender to exercise the rights and
         remedies hereunder, the Borrower and each Guarantor hereby grants to
         the Lender, to the extent assignable, an irrevocable, non-exclusive
         license (exercisable at any time any Event of Default shall have
         occurred and for so long as the same is continuing) without payment of
         royalty or other compensation to the Borrower or any Guarantor, to use,
         assign, license or sublicense any of the trademarks, service-marks,
         trade names, business names, trade styles, designs, logos and other
         source of business identifiers and other intellectual property and
         general intangibles now owned or hereafter acquired by the Borrower or
         any Guarantor, wherever the same may be located, including in such
         license reasonable access to all media in which any of the licensed
         items may be recorded or stored and to all computer programs used for
         the compilation or printout thereof; provided that such license shall
         terminate on the date that the Lender has received final and
         indefeasible payment and satisfaction in full of all of the
         Obligations.

(e)      The Lender may apply the cash proceeds of Collateral actually received
         by the Lender from any sale, lease, foreclosure or other disposition of
         the Collateral to payment of the Obligations, in whole or in part in
         such order as the Lender may elect, whether or not then due. The
         Borrower and the Guarantors shall remain liable to the Lender for the
         payment of any deficiency with interest at the highest rate provided
         for herein and all costs and expense of collection and enforcement,
         including outside counsel's reasonable fees and expenses.

12. U.C.C. Financing Statements. The Borrower and each Guarantor hereby
authorize the Lender to file U.C.C. financing statements with respect to the
Collateral. The Borrower and each Guarantor further specifically authorize the
Lender to file U.C.C. financing statements (and any amendments or continuation
statements with respect thereto) describing the Collateral.

13. Successors and Assigns; Amendments.

(a)      This Agreement is binding upon and inures to the benefit of the parties
         hereto and their respective successors and assigns, except that neither
         the Borrower nor any Guarantor may transfer or assign any of its rights
         or interests hereunder without the prior written consent of the Lender.

(b)      Neither this Agreement nor the Note may be amended or modified, except
         pursuant to a writing signed by each of the parties hereto.

14. Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts, and such counterparts taken together constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall become effective as of the
date hereof with respect to Lender and the Borrower when each such party
receives a counterpart hereof signed by each other such party. This Agreement
shall become effective as of the date hereof with respect to any Guarantor who
executes a counterpart hereof when the Lender, the Borrower and such Guarantor
executes a counterpart hereof.

15. Miscellaneous.

(a)      Any waiver of any kind or character on the part of the Lender in
         respect of this Agreement must be in writing and shall be effective
         only to the extent specifically set forth in such writing. No delay on
         the part of the Lender in exercising any of its powers or rights, and
         no partial or single exercise, shall constitute a waiver thereof.

                                      -7-
<PAGE>

(b)      Any notice to be given under this Agreement shall be in writing and
         shall be deemed to have been duly given when received by the recipient.

16. GOVERNING LAW; JURISDICTION. THIS AGREEMENT IS GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THE BORROWER AND EACH
GUARANTOR HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT. THE BORROWER AND EACH GUARANTOR IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

17. Definitions. As used in this Agreement the following terms have the
following meanings:

(a)      "BUSINESS DAY" means a day other than a Saturday, Sunday or other day
         on which commercial banks in New York City or Detroit, Michigan are
         authorized or required by law to close.

(b)      "CONGRESS" means Congress Financial Corporation, as agent under the
         Congress Agreement.

(c)      "CONGRESS AGREEMENT" means the Loan and Security Agreement, dated as of
         March 13, 2001, by and among the Borrower, the Guarantors, Congress,
         and the financial institutions named therein, as amended to the date
         hereof and as the same may be further amended from time to time in
         accordance with this Agreement.

(d)      "COLLATERAL" has the meaning set forth on Schedule C hereto.

(e)      "DOLLARS" and "$" means dollars in lawful currency of the United States
         of America.

(f)      "EVENT OF DEFAULT" means an event or condition that constitutes an
         event of default as described in Section 11 hereof.

(g)      "FINANCING AGREEMENT" or "FINANCING AGREEMENTS" means this Agreement,
         the Note and any other agreement, document or instrument now or at any
         time hereafter executed and/or delivered by or on behalf of the
         Borrower or any Guarantor in connection with this Agreement.

(h)      "FORD AGREEMENT" means the Subordinated Loan and Security Agreement by
         and among the Borrower, the Guarantors, and Ford Motor Company, dated
         November 21, 2001, as the same may from time to time be amended,
         restated or otherwise modified.

(i)      "GUARANTORS" has the meaning set forth in the introductory paragraph
         hereof.

(j)      "INCORPORATED PROVISIONS" has the meaning set forth in Section 8
         hereof.

(k)      "INTERCREDITOR AGREEMENT" means the Amended and Restated Intercreditor
         and Subordination Agreement dated as of July 12, 2002 by and among
         Congress, Ford Motor Company and the Lender, as the same may from time
         to time be amended, restated or otherwise modified.

                                      -8-
<PAGE>

(l)      "INTEREST RATE" has the meaning set forth in Section 4 hereof.

(m)      "LENDER" has the meaning set forth in the introductory paragraph
         hereof.

(n)      "LOAN" has the meaning set forth in Section 1 hereof.

(o)      "NOTE" has the meaning set forth in Section 1 hereof.

(p)      "OBLIGATIONS" means the Loan and all other obligations, liabilities and
         indebtedness of every kind, nature and description owing by the
         Borrower or any Guarantor to the Lender and/or any of its affiliates,
         including principal, interest, charges, fees, costs and expenses,
         however evidenced, whether as principal, surety, endorser, guarantor or
         otherwise, arising under this Agreement or any of the other Financing
         Agreements, whether now existing or hereafter arising, whether arising
         before, during or after the initial or any renewal terms of this
         Agreement or after the commencement of any case with respect to the
         Borrower or any Guarantor under the United States Bankruptcy Code or
         any similar statute (including the payment of interest and other
         amounts which would accrue and become due but for the commencement of
         such case, whether or not such amounts are allowed or allowable in
         whole or in part in such case), whether direct or indirect, absolute or
         contingent, joint or several, due nor not due, primary or secondary,
         liquidated or unliquidated, secured or unsecured, and however acquired
         by the Lender.

(q)      "PELLET AGREEMENT" means the Pellet Sale and Purchase and Trade
         Agreement dated as of January 1, 1991, by and between the Borrower and
         The Cleveland-Cliffs Iron Company, as amended by Letter Agreements,
         dated as of July 1, 1996, April 7, 1997, June 3, 1997, March 31, 1998,
         August 17, 2001 and July 12, 2002 and as the same may from time to time
         be further amended, restated or otherwise modified or replaced.

(r)      "PELLET AGREEMENT PREPAYMENT EVENT" means the occurrence of any of the
         following events: (i) the failure of the Borrower or any Guarantor to
         purchase or agree to receive trade pellets in accordance with the terms
         and conditions that are specified under the Pellet Agreement, so long
         as such failure is not as a result of The Cleveland-Cliffs Iron
         Company's failure to meet the qualitative, quantitative and delivery
         specifications relating to the pellets that are to be provided pursuant
         to the Pellet Agreement; or (ii) the failure of the Borrower or any
         Guarantor to pay any amounts when due and payable under the Pellet
         Agreement, so long as such payment is not received by The
         Cleveland-Cliffs Iron Company within fifteen (15) days of such payment
         becoming due and payable.

(s)      "U.C.C." means the Uniform Commercial Code as in effect from time to
         time in the State of New York; provided that, if perfection or the
         effect of perfection or non-perfection or the priority of any security
         interest in any Collateral is governed by the Uniform Commercial Code
         as in effect in a jurisdiction other than New York, "U.C.C." means the
         Uniform Commercial Code as in effect from time to time in such other
         jurisdiction for purposes of the provisions hereof relating to such
         perfection, effect of perfection or non-perfection or priority.

                      [signature pages begin on next page]

                                      -9-
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.

                         BORROWER

                         ROUGE STEEL COMPANY

                         By:  /s/ Gary P. Latendresse
                              ------------------------------------------------
                              Name:  Gary P. Latendresse
                              Title: Vice Chairman and Chief Financial Officer

                              Address for notices:
                              3001 Miller Street
                              Dearborn, Michigan 48121
                              Facsimile:  (313) 845-0199

                         GUARANTORS

                         ROUGE INDUSTRIES, INC.

                         By:  /s/ Gary P. Latendresse
                              ------------------------------------------------
                              Name:  Gary P. Latendresse
                              Title: Vice Chairman and Chief Financial Officer

                              Address for notices:
                              3001 Miller Street
                              Dearborn, Michigan 48121
                              Facsimile:  (313) 845-0199

                         QS STEEL INC.

                         By:  /s/ Gary P. Latendresse
                              ------------------------------------------------
                              Name:  Gary P. Latendresse
                              Title: President

                              Address for notices:
                              3001 Miller Street
                              Dearborn, Michigan 48121
                              Facsimile:  (313) 845-0199

<PAGE>

                         EVELETH TACONITE COMPANY

                         By:  /s/ Gary P. Latendresse
                              ------------------------------------------------
                              Name:  Gary P. Latendresse
                              Title: President

                              Address for notices:
                              3001 Miller Street
                              Dearborn, Michigan 48121
                              Facsimile:  (313) 845-0199

                         LENDER

                         CLEVELAND-CLIFFS INC

                         By:    /s/ W. R. Calfee
                              ------------------------------------------------
                              Name:  W. R. Calfee
                              Title: Executive Vice President -- Commercial

                              Address for notices:
                              1100 Superior Avenue, 15th Floor
                              Cleveland, Ohio 44114
                              Facsimile:  (216) 694-5534

<PAGE>

                                                                      SCHEDULE A

THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THE AMENDED AND RESTATED INTERCREDITOR AGREEMENT DATED
AS OF JULY 12, 2002 AMONG THE LENDER, FORD MOTOR COMPANY AND CONGRESS FINANCIAL
CORPORATION TO INDEBTEDNESS INCURRED BY THE MAKER PURSUANT TO THE LOAN AND
SECURITY AGREEMENT BY AND AMONG ROUGE STEEL COMPANY (AS BORROWER) AND ROUGE
INDUSTRIES, INC., QS STEEL, INC., AND EVELETH TACONITE COMPANY (AS GUARANTORS)
AND CONGRESS FINANCIAL CORPORATION (AS AGENT) AND THE FINANCIAL INSTITUTIONS
NAMED THEREIN, DATED AS OF MARCH 13, 2001, AS AMENDED.

                                      NOTE

$10,000,000
July 12, 2002

         FOR VALUE RECEIVED, ROUGE STEEL COMPANY, a Delaware corporation (the
"BORROWER"), hereby promises to pay to the order of CLEVELAND-CLIFFS INC (the
"LENDER") in the times and place indicated in the Agreement referred to below,
or at such other place as the holder hereof may hereafter designate in writing,
in lawful money of the United States of America, the principal sum of TEN
MILLION DOLLARS or, if less than such principal sum, the aggregate unpaid
principal amount of the Loan made by the Lender to the Borrower pursuant to the
Agreement and outstanding hereunder from time to time, at the rate per annum
provided for in Section 4 of the Agreement. This Note is the note referred to in
the Subordinated Loan and Security Agreement, dated as of the date hereof, among
the Borrower, the Guarantors named therein and the Lender (as amended, modified
and supplemented from time to time, the "AGREEMENT").

         If an Event of Default (as defined in the Agreement) shall have
occurred and be continuing, the principal of and accrued interest on this Note
may be declared to be due and payable in the manner and with the effect provided
in the Agreement. The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.

                      [signature page begins on next page]

<PAGE>

                                          ROUGE STEEL COMPANY

                                          By:
                                             ---------------------------
                                          Name:  Gary P. Latendresse
                                          Title:  Vice Chairman and
                                          Chief Financial Officer

<PAGE>

                                                                      SCHEDULE B

                            DESCRIPTION OF COLLATERAL

         The following types (or items) of property of the Borrower or any
Guarantor are collectively referred to herein as the "COLLATERAL":

         (a) (i) all present and future rights of the Borrower or any
Guarantor to payment for goods sold or leased or for services rendered, whether
or not evidenced by instruments or chattel paper, and whether or not earned by
performance (collectively, the "ACCOUNTS"); (ii) all amounts at any time payable
to the Borrower or any Guarantor in respect of the sale or other disposition by
the Borrower or such Guarantor of any Account or other obligation for the
payment of money; (iii) all interest, fees, late charges, penalties, collection
fees and other amounts due or to become due or otherwise payable in connection
with any Account; (iv) all letters of credit, indemnities, guarantees, security
or other deposits and proceeds thereof issued payable to the Borrower or any
Guarantor or otherwise in favor of or delivered to the Borrower or any Guarantor
in connection with any Account; and (v) all other contract rights, chattel
paper, instruments, notes, general intangibles and other forms of obligations
owing to the Borrower or any Guarantor, whether from the sale and lease of goods
or other property, licensing of any property (including intellectual property or
other general intangibles), rendition of services or from loans or advances by
the Borrower or any Guarantor or to or for the benefit of any third person
(including loans or advances to any affiliates or subsidiaries) or otherwise
associated with any Accounts, Inventory or general intangibles of the Borrower
or any Guarantor (including, without limitation, choses in action, causes of
action, tax refunds, tax refund claims, any funds which may become payable to
the Borrower or any Guarantor in connection with the termination of any employee
benefit plan and any other amounts payable to the Borrower or any Guarantor from
any employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds
of insurance covering the lives of employees on which the Borrower or any
Guarantor is beneficiary) (all of the property and assets described in this
paragraph (a) being referred to herein collectively as "RECEIVABLES");

         (b) all of the Borrower's and each Guarantor's present and future:
general intangibles (including, but not limited to, tax and duty refunds;
goodwill; licenses, whether as licensor or licensee; choses in action and other
claims and existing and future leasehold interests in real estate and fixtures;
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright registrations, trademarks, trade names,
trade styles, trademark and service mark applications, and licenses and rights
to use any of the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all rights to
sue for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, and contract rights relating to computer software
programs, in whatever form created or maintained; and interests in general
partnerships (including Double Eagle Steel Coating Company in the case of the
Borrower) or limited liability companies (including TWB Company L.L.C., Spartan
Steel Casting, L.L.C. and Delaco Processing L.L.C., in the case of QS, and
Eveleth Mines L.L.C., in the case of Eveleth)); chattel paper; documents;
instruments; securities and other investment property (including securities,
whether certificated or uncertificated, securities account, security
entitlements, commodity contracts or commodity accounts); letters of credit;
bankers' acceptances and guarantees;

         (c) all present and future: monies, securities, credit balances,
deposits, deposit accounts and other property of the Borrower or any Guarantor
now or hereafter held or received by or in transit to the Lender or its
affiliates or at any other depositary or other institution from or for the
account of the

<PAGE>

Borrower, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Receivables and other
Collateral, including, without limitation, rights and remedies under or relating
to guarantees, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing,
Receivables or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and deposits by and property of account debtors
or other persons securing the obligations of account debtors;

         (d) all of the Borrower's and each Guarantor's present and future: raw
materials, work in process, semi-finished goods, finished goods and all other
inventory of whatsoever kind or nature, wherever located (collectively,
"INVENTORY");

         (e) all of the Borrower's present and future: real property, including
leasehold interests, together with all buildings, structures, and other
improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located;

         (f) all of the Borrower's and each Guarantor's present and future:
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of the Borrower
with respect to the foregoing maintained with or by any other person); and

         (g) all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.

<PAGE>

                                                                      SCHEDULE C

         Section 8.17. Payable Practices. Borrower and each Guarantor has not
made any material change in the historical accounts payable practices from those
in effect immediately prior to the date hereof.

         During September 2001, the Borrower began to experience a tightening of
liquidity and, as a result, the Borrower began stretching payments to its
vendors by holding checks. During the subsequent two months, the Borrower
negotiated payment terms with many of its suppliers 15 days in excess of the
historical 45-day terms. The loan from Ford Motor Company under the Ford
Agreement allowed the Borrower to maintain adequate liquidity with the new
payment terms.

         In March 2002, two events occurred that impacted the Borrower's payable
practices. The first was the filing of Chapter 11 bankruptcy protection by
National Steel. As a result of its proximity to the Great Lakes Division of
National Steel, the Borrower shares many suppliers with National Steel. National
Steel's bankruptcy filing caused many of the Borrower's suppliers to reduce
their exposure to steel companies in general and the Borrower in particular. As
a consequence, certain suppliers have placed credit limits on the Borrower,
which limits effectively reduce payment terms. The second event that impacted
the Borrower's payable practices was the going concern opinion filed with Rouge
Industries, Inc.'s Annual Report on Form 10-K. Although most suppliers were not
surprised by the opinion, it caused many to re-evaluate their exposure to the
Borrower. Again, the result of this evaluation was an effective reduction in
payment terms.

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