STELCO INC. PENSION PLANS

CONTENTS PART I GENERAL 1. Purpose 2. Interpretation 3. End date, “new pension plan” 4. End date, “main pension plan” 5. Application of General Regulation 6. Reports to the Chief Executive Officer — general PART II MAIN PENSION PLANS Appointment of Administrator 7. Appointment of administrator, main pension plans Funding Framework 8. Exemptions re funding 9. Exemptions re trust property 10. Required contributions 11. Contributions for normal cost — 2017 12. Upfront contributions 13. Contributions related to the land limited partnership 14. Minimum contributions to be made monthly 15. Special allocation, wind up ratio below threshold 16. Free cash flow contributions 17. Tax savings contributions 18. Additional contributions 19. Limitation, benefit improvements Reports to the Superintendent 20. Initial valuation report 21. Annual reports 22. Quarterly reports Winding Up 23. Exemption re wind up 24. Wind up order by Chief Executive Officer 25. Wind up notices 26. Funding obligations and allocation process continue 27. Exemption re PBGF 28. PBGF deeming and allocations, s. 102.1 (8) and (9) of the Act Information for Members, Former Members and Retired Members 29. Statement for members, former members and retired members 30. Access to records Miscellaneous 31. Documents to be filed, amendments to pension plan 32. Advisory committees PART III NEW PENSION PLANS Funding Framework 33. Application 34. Election to fund in accordance with General Regulation 35. Exemptions re funding 36. Contributions, 2018 to 2027 37. Benefit improvements — lump sum payment Reports to the Chief Executive Officer 38. Annual reports 39. Final report Miscellaneous 40. Documents to be filed, application for registration of pension plan Schedule 1 PART I General Purpose 1. (1) This Regulation implements, in part, the following agreements, each of which is effective as of June 30, 2017: 1. The agreement between the employer, Bedrock Industries Canada L.P., the Superintendent of Financial Services and Her Majesty the Queen in Right of Ontario. 2. The agreement in respect of the Lake Erie Salaried Plan between the employer and the Non-USW Active and Retiree Beneficiaries of the Lake Erie Salaried Plan, with the exception of the opt-out individuals within the meaning of the representation order. 3. The agreement in respect of the Hamilton Salaried Plan between the employer and the Non-USW Active and Retiree Beneficiaries of the Hamilton Salaried Plan, with the exception of the opt-out individuals within the meaning of the representation order. 4. The agreement in respect of the Pickle Line Plan between the employer and the Non-USW Active and Retiree Beneficiaries of the Pickle Line Plan, with the exception of the opt-out individuals within the meaning of the representation order. 5. The agreement in respect of the Hamilton Bargaining Unit Plan between the employer and Local Union No. 1005 United Steel, Paper and Forestry Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. 6. The agreement in respect of the Lake Erie Bargaining Unit Plan between the employer and Local Union No. 8782 United Steel, Paper and Forestry Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. 7. The agreement in respect of the Pickle Line Plan between the employer and Local Union No. 8782B United Steel, Paper and Forestry Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. (2) The agreement listed in paragraph 1 of subsection (1) provides for, (a) the administration of the main pension plans and the employer’s funding obligations with respect to those plans; (b) the aggregate funding of the main pension plans and the allocation of the aggregate contributions among them; and (c) special funding requirements for the new pension plans from the date of their establishment until December 31, 2027. (3) The agreements listed in paragraphs 2 to 7 of subsection (1) are the agreements referred to in subsections 75 (5) and 102.1 (3) and (6) of the Act. (4) In this section, “Non-USW Active and Retiree Beneficiaries” means, in relation to a pension plan, the individuals described in the definition of “Non-USW Active and Retiree Beneficiaries” in the representation order with respect to that pension plan; “representation order” means the order of the Ontario Superior Court of Justice in court file number CV-14-10695-00CL dated October 8, 2014, entitled “Representative Counsel Appointment Order”. Interpretation 2. (1) In this Regulation, “adjusted solvency assets” has the meaning set out in subsection (3); “adjusted solvency deficiency” has the meaning set out in subsection (4); “allocation process” means the process set out in this Regulation for determining the proportion of the contributions described in sections 13 to 18 that is to be set out in the report described in subsection 20 (4) and annual reports for each of the main pension plans and allocated accordingly; “employer” means Stelco Inc.; “General Regulation” means Regulation 909 of the Revised Regulations of Ontario, 1990 (General) made under the Act; “initial solvency deficiency” means, in relation to a pension plan, the amount, if any, by which the solvency liabilities of the plan exceed the adjusted solvency assets of the plan as set out in the initial valuation report required by section 20; “initial valuation report” means, in relation to a pension plan, the initial valuation report required to be filed under subsection 20 (1); “initial wind up ratio” means, in relation to a pension plan, the initial wind up ratio as set out in the report required to be filed under subsection 20 (4); “main pension plans” means, subject to section 4, the following pension plans: 1. The pension plan known as the Stelco Inc. Retirement Plan for USW Local 8782 Members at Lake Erie Works, registered under the Act as number 0698761 and referred to in this Regulation as the Lake Erie Bargaining Unit Plan. 2. The pension plan known as the Stelco Inc. Retirement Plan for Salaried Employees at Lake Erie Works, registered under the Act as number 0698753 and referred to in this Regulation as the Lake Erie Salaried Plan. 3. The pension plan known as the Stelco Inc. Retirement Plan for USW Local 1005 Members at Hamilton Works, registered under the Act as number 0354878 and referred to in this Regulation as the Hamilton Bargaining Unit Plan. 4. The pension plan known as the Stelco Inc. Retirement Plan for Salaried Employees at Hamilton Works, registered under the Act as number 0338509 and referred to in this Regulation as the Hamilton Salaried Plan. 5. The pension plan known as the Stelco Inc. Retirement Plan for Employees at the Pickle Line Department of Lake Erie Works, registered under the Act as number 1206457 and referred to in this Regulation as the Pickle Line Plan; “new pension plans” means, subject to section 3, pension plans established by the employer to be successor pension plans to one or more of the main pension plans to provide pension benefits, for service on and after January 1, 2018, to individuals who are represented by a trade union and are active members of the Lake Erie Bargaining Unit Plan, the Hamilton Bargaining Unit Plan or the Pickle Line Plan on December 31, 2017; “plan implementation date” means the date on which the plan of arrangement under the Companies’ Creditors Arrangement Act (Canada) proposed by U.S. Steel Canada Inc. to emerge from creditor protection as a going concern has been implemented, which date will be referenced in a certificate of the monitor filed with the Ontario Superior Court of Justice; “wind up ratio” means, in relation to a main pension plan, the ratio of the adjusted solvency assets of the plan to the plan’s solvency liabilities as determined in a report required under this Regulation. (2) Expressions in this Regulation have the same meaning as in the General Regulation, except where otherwise indicated. (3) The adjusted solvency assets of a main pension plan as of a particular valuation date is the amount of the solvency assets of the plan excluding, (a) any estimated wind up expenses; (b) any contingent assets, such as the special partnership interest and any interest in, or amounts payable from, any trust established on the plan implementation date; and (c) any accrued or receivable contributions not yet received as of the filing date of the valuation report with respect to the valuation date. (4) The adjusted solvency deficiency of a main pension plan as of a particular valuation date or other specified date is the amount, if any, by which the solvency liabilities exceed the adjusted solvency assets of the pension plan. (5) For the purposes of this Regulation, benefit improvements are made under a pension plan if, (a) an amendment to the plan affects the pensions, pension benefits or ancillary benefits provided by the plan and increases the amount of the normal cost, the going concern liabilities or the solvency liabilities of the plan; and (b) the amendment is filed on or after June 30, 2017. End date, “new pension plan” 3. (1) A pension plan ceases to be a new pension plan for the purposes of this Regulation on the earliest of the following days: 1. The plan has been wound up and all of the assets of the pension plan’s pension fund have been disbursed. 2. The day an election is filed under section 34 to fund the pension plan in accordance with the General Regulation. 3. December 31, 2027. (2) Despite subsection (1), a pension plan that was a new pension plan before the earliest of the days described in subsection (1) continues to be governed by section 28 of this Regulation until the pension plan is wound up and all the assets of its pension fund have been disbursed. End date, “main pension plan” 4. A pension plan ceases to be a main pension plan for the purposes of this Regulation when it has been wound up and all of the assets of its pension fund have been disbursed. Application of General Regulation 5. (1) The General Regulation applies to the main pension plans and the new pension plans except as provided in this Regulation. (2) For greater certainty, the General Regulation applies instead of this Regulation with respect to the funding of the new pension plans on and after the earlier of, (a) the day an election is filed under section 34 to fund the pension plan in accordance with the General Regulation; and (b) December 31, 2027. Reports to the Chief Executive Officer — general 6. (1) Every report required under this Regulation must be prepared and certified by an actuary. (2) The following are not permitted in the preparation of a report required under this Regulation: 1. The use of an averaging method that stabilizes short-term fluctuations in the market value of the plan assets in the calculation of a “solvency asset adjustment”, as that term is defined in subsection 1 (2) of the General Regulation, in a solvency valuation. 2. The use of an averaging method to determine the value of going concern assets for the purposes of a going concern valuation. (3) In a report filed under this Regulation, the prior year credit balance shall be set at zero. (4) If the period covered by a valuation report filed under this Regulation has ended, and no report covering a subsequent period has been filed under section 21, the employer shall continue to make contributions in accordance with the most recently filed annual report. PART II MAIN PENSION PLANS Appointment of Administrator Appointment of administrator, main pension plans 7. (1) The following is prescribed as a circumstance in which the Chief Executive Officer may appoint an administrator for a main pension plan under subsection 8 (1.1) of the Act or act as administrator of a main pension plan under subsection 8 (1.2) of the Act: 1. A court order has been made under the Companies’ Creditors Arrangement Act (Canada) approving the plan of arrangement proposed by U.S. Steel Canada Inc. to emerge from creditor protection as a going concern and the plan implementation date has occurred. O. Reg. 255/17, s. 7 (1); O. Reg. 156/19, s. 1 (1). (2) For the purposes of subsection (1), an appointment of an administrator made by the Superintendent under subsection 8 (1.1) or (1.2) of the Act, as it read prior to June 8, 2019, is deemed to have been an appointment made by the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 2. Funding Framework Exemptions re funding 8. (1) Subsection 55 (1) and section 55.1 of the Act do not apply to the main pension plans. O. Reg. 256/18, s. 1 (1). (2) Section 75 of the Act does not apply to the employer in respect of the main pension plans. (3) Sections 4, 5, 7, 7.0.1, 7.0.2, 7.0.3 and 8 and subsections 40 (3), 40.1 (4) and 40.2 (4) of the General Regulation do not apply to the main pension plans or to the employer with respect to those pension plans. O. Reg. 255/17, s. 8 (3); O. Reg. 256/18, s. 1 (2). Exemptions re trust property 9. Subsections 57 (3), (4), (5) and (6) of the Act do not apply to the main pension plans or to the employer with respect to those pension plans. Required contributions 10. (1) The employer is required to make the following contributions in 2017: 1. Contributions for normal cost in 2017, as described in section 11. 2. Upfront contributions, as described in section 12. 3. Contributions related to the land limited partnership, as described in section 13. (2) The employer is required to make contributions, to a maximum total of $400 million, in respect of the following: 1. Minimum monthly contributions, as described in section 14 and, if applicable, section 15. 2. Free cash flow contributions, as described in section 16, until the day on which the last of the main pension plans is wound up and all of the assets of its pension fund have been disbursed. 3. Tax savings contributions, as described in section 17. (3) The employer is not required to make any contributions to the main pension plans, including special payments in respect of a going concern unfunded liability or solvency deficiency, other than the contributions listed in subsections (1) and (2), regardless of whether any valuation of any of the main pension plans discloses a going concern unfunded liability or a solvency deficiency. (4) For greater certainty, section 55.2 of the Act does not apply to the employer in respect of the main pension plans. Contributions for normal cost — 2017 11. The employer shall continue to make contributions for normal cost to the main pension plans until December 31, 2017 in accordance with the General Regulation. Upfront contributions 12. On June 30, 2017, the employer shall make the following contributions to the following main pension plans: 1. $14.86 million to the Lake Erie Bargaining Unit Plan. 2. $15 million to the Hamilton Bargaining Unit Plan. 3. $0.14 million to the Pickle Line Plan. Contributions related to the land limited partnership 13. (1) On June 30, 2017, the employer shall make an aggregate contribution of $69,766,395, in respect of interests in the land limited partnership, which shall be allocated among the main pension plans as follows: 1. $10,604,492 to the Lake Erie Bargaining Unit Plan. 2. $3,188,324 to the Lake Erie Salaried Plan. 3. $46,534,186 to the Hamilton Bargaining Unit Plan. 4. $9,341,720 to the Hamilton Salaried Plan. 5. $97,673 to the Pickle Line Plan. (2) The administrator of each main pension plan shall use the pension plan’s allocated portion of the contribution received under this section to subscribe for a special land partnership interest. (3) For greater certainty, the subscription amount for the special land partnership interest for a main pension plan shall be the amount allocated to the pension plan under subsection (1). (4) Section 16 of Schedule III of the federal investment regulations does not apply in respect of the purchase or holding of a special land partnership interest under this section. (5) In this section, “land limited partnership” means a limited partnership established on the plan implementation date that holds the lands; “lands” means the freehold and leasehold property owned by U.S. Steel Canada Inc. immediately prior to the plan implementation date, located in Nanticoke, Ontario and Hamilton, Ontario and interests therein including all rights of way, licences or rights of occupation, easements or other similar rights of U.S. Steel Canada Inc. in connection with such freehold and leasehold property; “special land partnership interest” means class C special limited partnership units issued by the land limited partnership. Minimum contributions to be made monthly 14. (1) Subject to the maximum total set out in subsection 10 (2), the employer shall make minimum contributions in accordance with this section in the following aggregate amounts: 1. $5 million in total from July 1, 2017 to December 31, 2017. 2. $10 million per year for the years 2018 to 2021 inclusive. 3. $15 million per year for the years 2022 to 2036 inclusive. 4. $5 million in total from January 1, 2037 to June 30, 2037. (2) Subject to section 15, the employer shall make the contributions to each main pension plan in the amounts determined in accordance with subsection (5). (3) The employer shall make the contributions to each main pension plan in equal monthly instalments on or before the last business day of the month in which the contribution is due. (4) For greater certainty, the first monthly contribution under paragraph 1 of subsection (1) is due no later than July 31, 2017. (5) Each valuation report for a main pension plan with a valuation date up to and including December 31, 2018 shall set out the amount of the minimum contributions that shall be paid into the pension fund of each main pension plan using the formula, A × B/C in which, “A” is the aggregate amount of the minimum contributions described in the applicable paragraph of subsection (1), “B” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the initial valuation report for that pension plan, and “C” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the initial valuation reports for the pension plans. (6) Each valuation report for a main pension plan with a valuation date on or after December 31, 2019 shall set out the amount of the minimum contributions that shall be paid into the pension fund of each main pension plan using the formula, A × D/E in which, “A” is the aggregate amount of the minimum contributions described in the applicable paragraph of subsection (1), “D” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the annual report for that pension plan for that year, and “E” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the annual reports for the pension plans for that year. (7) In the formulas set out in subsections (5) and (6), the amounts represented by the expressions “B/C” and “D/E” are to be calculated to eight decimal places. (8) Despite subsections (1) to (7), subsections (9) to (12) apply if the initial valuation report required by section 20 is not filed on or before July 31, 2017. (9) The employer shall make the following monthly contributions to the main pension plans: 1. $126,667 to the Lake Erie Bargaining Unit Plan. 2. $38,083 to the Lake Erie Salaried Plan. 3. $555,833 to the Hamilton Bargaining Unit Plan. 4. $111,583 to the Hamilton Salaried Plan. 5. $1,167 to the Pickle Line Plan. (10) The employer shall make the contributions to each main pension plan set out in subsection (9) on or before the last business day of the month in which the contribution is due. (11) For greater certainty, the first monthly contribution under subsection (9) is due no later than July 31, 2017. (12) The following rules apply after the administrator’s first valuation report is filed: 1. The employer shall discontinue making the monthly contributions set out in subsection (9), beginning with the contribution due in the first month after the valuation report is filed. 2. The employer shall begin making the minimum contributions in accordance with subsections (1) to (7), beginning in the first month after the valuation report is filed. 3. The contributions set out in subsection (9) shall be adjusted as necessary and as soon as practicable to ensure the allocation of the minimum contributions under subsections (1) to (7) are made in accordance with those subsections. Special allocation, wind up ratio below threshold 15. (1) The following rules apply if the wind up ratio of one or more of the main pension plans has fallen below 85 per cent of the particular pension plan’s initial wind up ratio: 1. If the total minimum contributions that the employer is required to make under subsection 14 (1) for the 12 months immediately following the valuation date of the annual report would not be sufficient to bring the wind up ratio (determined taking into account such contributions) of any particular main pension plan up to 85 per cent of its initial wind up ratio, that pension plan is a disregarded plan for the purposes of paragraphs 2 to 4. 2. Unless paragraph 3 applies, if the total minimum contributions that the employer is required to make under subsection 14 (1) for the 12 months immediately following the valuation date of the annual report would be sufficient to bring the wind up ratios (determined taking into account such contributions) of the one or more main pension plans, other than any disregarded pension plans referred to in paragraph 1, up to 85 per cent of their initial wind up ratios, the following apply: i. The employer shall increase the portion of the minimum contributions allocated to those pension plans by the amounts necessary to bring their wind up ratios (determined taking into account such contributions) up to 85 per cent of their initial wind up ratios. ii. The total of the amounts referred to in subparagraph i shall be deducted from the total minimum contributions that the employer is required to make under subsection 14 (1) and the resulting total minimum contributions shall be allocated only to the main pension plans other than those to referred to in subparagraph i, but including any disregarded pension plans referred to in paragraph 1, in proportion to their allocations under section 14. 3. The following rules apply if the wind up ratio of all of the main pension plans has fallen below 85 per cent of their respective initial wind up ratios and none of the plans are a disregarded pension plan referred to in paragraph 1 and the total minimum contributions that the employer is required to make under subsection 14 (1) for the 12 months immediately following the valuation date of the annual report would be sufficient to bring the wind up ratios (determined taking into account such contributions) of all of the main pension plans up to 85 per cent of their initial wind up ratios: i. The employer shall contribute to each pension plan an amount sufficient to bring the wind up ratio of each plan up to 85 per cent of its initial wind up ratio. ii. The total of the amounts referred to in subparagraph i shall be deducted from the total minimum contributions that the employer is required to make under subsection 14 (1) and the resulting reduced total minimum contributions shall be allocated among the pension plans in proportion to their allocations under section 14. 4. If the total minimum contributions that the employer is required to make under subsection 14 (1) for the 12 months immediately following the valuation date of the annual report would not be sufficient to bring the wind up ratios (determined taking into account such contributions) of the one or more main pension plans, other than any disregarded pension plan referred to in paragraph 1, up to 85 per cent of their initial wind up ratios, the minimum contributions required under section 14 shall be made and allocated in accordance with that section. (2) Contributions required under subsection (1) shall be made in equal monthly instalments in accordance with the payment provisions in section 14. Free cash flow contributions 16. (1) Subject to subsection (2) and the maximum total set out in subsection 10 (2), the employer shall make an aggregate contribution to the main pension plans each year beginning in 2018 in the amount represented by the formula, X – Y in which, “X” is 10 per cent of the employer’s free cash flow for the previous financial year of the employer, and “Y” is the aggregate amount of the minimum contributions described in subsection 14 (1) for the previous financial year of the employer. (2) Subsection (1) does not apply unless, (a) the value of the employer’s free cash flow in the previous financial year of the employer is a positive amount; and (b) the difference between “X” and “Y” is a positive amount. (3) A contribution required in a year shall be made on or before May 10 in the year and shall be allocated among the main pension plans in accordance with the most recent valuation reports. (4) Each valuation report for a main pension plan with a valuation date up to and including December 31, 2018 shall set out the proportion of the free cash flow contribution, if any, that shall be paid into the pension fund of each main pension plan using the formula, B/C in which, “B” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the initial valuation report for that pension plan, and “C” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the initial valuation reports for the pension plans. (5) Each valuation report for a main pension plan with a valuation date on or after December 31, 2019 shall set out the proportion of the free cash flow contribution, if any, that shall be paid into the pension fund of each main pension plan using the formula, D/E in which, “D” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the annual report for that pension plan for that year, and “E” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the annual reports for the pension plans for that year. (6) In the formulas set out in subsections (4) and (5), the amounts represented by the expressions “B/C” and “D/E” are to be calculated to eight decimal places. (7) The employer may include contributions made under this section as contributions in transit in the year with respect to which the contribution is made. (8) In this section, “free cash flow” has the same meaning as in the agreement listed in paragraph 1 of subsection 1 (1), and the definition of “free cash flow”, as it appears in that agreement, and the definition of “GAAP”, which appears in the definition of “free cash flow” in the agreement, are set out in Schedule 1 to this Regulation. References in those definitions to “Stelco” shall be read as references to the “employer” for the purposes of this Regulation. Tax savings contributions 17. (1) Subject to the maximum total set out in subsection 10 (2), beginning in 2018 the employer shall make a contribution to the main pension plans each year in the aggregate amount of, (a) 33.5 per cent of its tax savings for the previous taxation year of the employer until the aggregate amount of $75 million has been contributed under this section; and (b) after that, 16.75 per cent of its tax savings for the taxation year of the employer. (2) The employer’s obligation to contribute under this section shall cease on the earlier of the following: 1. The employer’s first taxation year that ends more than twenty calendar years after the plan implementation date. 2. The employer’s first taxation year in which the aggregate amount of the tax savings is less than $1 million. (3) A contribution required in a year shall be made within 30 days after the employer receives the notice of assessment from the Canada Revenue Agency in respect of its corporate income tax for the previous financial year of the employer and shall be allocated among the main pension plans in accordance with the most recent valuation reports. (4) Each valuation report for a main pension plan with a valuation date up to and including December 31, 2018 shall set out the proportion of the tax savings contribution, if any, that shall be paid into the pension fund of each main pension plan using the formula, B/C in which, “B” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the initial valuation report for that pension plan, and “C” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the initial valuation reports for the pension plans. (5) Each valuation report for a main pension plan with a valuation date on or after December 31, 2019 shall set out the proportion of the tax savings contribution, if any, that shall be paid into the pension fund of each main pension plan using the formula, D/E in which, “D” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the annual report for that pension plan for that year, and “E” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the annual reports for the pension plans for that year. (6) In the formulas set out in subsections (4) and (5), the amounts represented by the expressions “B/C” and “D/E” are to be calculated to eight decimal places. (7) The employer may include contributions made under this section as contributions in transit in the year with respect to which the contribution is made. (8) The amount of the tax savings contribution for a financial year of the employer shall be recalculated if the amount of the employer’s tax savings for the previous financial year changes as a result of a reassessment by the Canada Revenue Agency of the employer’s corporate income tax filing for that previous financial year, and a corresponding adjustment to the amount of the contribution shall be made in accordance with the following rules: 1. In the case of a notice of reassessment that indicates that the employer’s tax savings were higher than indicated in the notice of assessment, the employer shall make a further contribution in the amount of 33.5 per cent or 16.75 per cent of the difference, as applicable. The contribution shall be made within 30 days after receiving the notice of reassessment and shall be allocated among the main pension plans in accordance with the same valuation reports that were used to allocate the tax savings contribution for the year under subsection (3). 2. In the case of a second or subsequent notice of reassessment that indicates that the employer’s tax savings were higher than indicated in the most recent prior notice of assessment or reassessment, as the case may be, paragraph 1 applies except that the comparison shall be made as against the most recent prior notice of reassessment and not as against the original notice of assessment. 3. Subject to paragraph 4, in the case of a notice of reassessment that indicates that the employer’s tax savings were lower than indicated in the notice of assessment, an amount that is equal to 33.5 per cent or 16.75 per cent of the difference, as applicable, shall be treated, at the employer’s discretion, as one of the following two options: i. An overpayment that shall be credited against contributions required under section 10 that are otherwise due or coming due. ii. An additional contribution under section 18. 4. In the case of a notice of reassessment that indicates that the employer’s tax savings were lower than indicated in the notice of assessment and where a main pension plan’s assets exceed its wind up liability, including liability for wind up expenses, an amount that is equal to 33.5 per cent or 16.75 per cent of the difference, as applicable, shall be treated as an overpayment within the meaning of section 62.1 of the Act. (9) Before the later of the following days, the employer shall notify the administrator in writing of which of the two options described in paragraph 3 of subsection (8) the employer has chosen: 1. If the employer appeals the reassessment, the day that is 30 days after the employer receives the final decision from the Canada Revenue Agency indicating that the employer’s tax savings were lower than indicated in the notice of assessment. 2. If the employer does not appeal the reassessment, the day that is 30 days after the employer receives the reassessment. (10) In a case described in paragraph 4 of subsection (8) where the employer applies under subsection 62.1 (3) of the Act for the Chief Executive Officer’s consent to a payment from the pension fund to reimburse the employer for an overpayment and the Chief Executive Officer consents under subsection 62.1 (5) of the Act, the following rules apply: 1. The employer shall make a contribution in the amount of the reimbursement within 30 days after receiving the Chief Executive Officer’s consent. 2. In making the contribution referred to in subsection (1), the employer may do either of the following: i. Credit the amount against any of the required contributions otherwise due or becoming due under this Regulation and allocate in accordance with the applicable allocation formula for those types of contributions. ii. Treat the amount as additional contributions and allocate in accordance with the formula for additional contributions. O. Reg. 255/17, s. 17 (10); O. Reg. 156/19, s. 1 (1), (2). (11) In a case described in paragraph 4 of subsection (8) where the employer does not apply under subsection 62.1 (3) of the Act for the Chief Executive Officer’s consent to a payment from the pension fund to reimburse the employer for an overpayment or where the employer has applied for the Chief Executive Officer’s consent under subsection 62.1 (3) and the Chief Executive Officer does not consent under subsection 62.1 (5) of the Act, the amount of the overpayment shall be treated as an additional contribution to the main pension plan to which the contribution was made. However, the contribution is not subject to the allocation process set out in section 18 with respect to additional contributions. O. Reg. 255/17, s. 17 (11); O. Reg. 156/19, s. 1 (1), (2). (11.1) For the purposes of subsections (10) and (11), the Superintendent’s consent or refusal to consent given under subsection 62.1 (5) of the Act, as it read prior to June 8, 2019, is deemed to have been the Chief Executive Officer’s consent or refusal to consent, as the case may be. O. Reg. 156/19, s. 1 (2), 3. (12) In this section, a reference to tax savings means, in respect of a financial year of the employer, the amount of the employer’s losses or depreciation base, or both, which were claimed, deducted or applied by the employer in that financial year in order to reduce the employer’s taxable income, multiplied by the employer’s applicable combined federal and provincial tax rate. However, a reference to tax savings only includes amounts that are available in respect of the main pension plans. Additional contributions 18. (1) If the employer makes any contributions in excess of those referred to in section 10, the contributions shall be allocated among the main pension plans in accordance with this section. (2) The first $20 million of the additional contributions shall be paid as a lump sum and allocated to the following main pension plans as follows: 1. $9.91 million to the Lake Erie Bargaining Unit Plan. 2. $10 million to the Hamilton Bargaining Unit Plan. 3. $90,000 to the Pickle Line Plan. (3) Each valuation report for a main pension plan with a valuation date up to and including December 31, 2018 shall set out the proportion of the additional contributions in excess of $20 million, if any, that shall be paid into the pension fund of each main pension plan using the formula, B/C in which, “B” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the initial valuation report for that pension plan, and “C” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the initial valuation reports for the pension plans. (4) Each valuation report for a main pension plan with a valuation date on or after December 31, 2019 shall set out the proportion of the additional contributions in excess of $20 million, if any, that shall be paid into the pension fund of each main pension plan using the formula, D/E in which, “D” is the amount of the adjusted solvency deficiency of the main pension plan as set out in the annual report for that pension plan for that year, and “E” is the aggregate amount of the adjusted solvency deficiency of all of the main pension plans as set out in the annual reports for the pension plans for that year. (5) In the formulas set out in subsections (3) and (4), the amounts represented by the expressions “B/C” and “D/E” are to be calculated to eight decimal places. Limitation, benefit improvements 19. (1) A main pension plan must not be amended to provide benefit improvements other than benefit improvements required by law. (2) Subsection (1) applies whether the benefit improvements are effective before or after this Regulation comes into force. Reports to the Superintendent Initial valuation report 20. (1) The administrator of each main pension plan shall cause the plan to be reviewed and shall file an initial valuation report with a valuation date of December 31, 2016. (2) Except as otherwise provided in this Regulation, the initial valuation report must meet the requirements of the General Regulation as if it were a report required under section 14 of that Regulation and must also set out the following information: 1. The contributions to the main pension plan required to be made in 2017 under the General Regulation. 2. The contributions to the main pension plan that are required to be made with respect to normal cost in 2017. 3. The initial solvency deficiency of the main pension plan. (3) The administrator shall give the employer, a trade union that represents members of the pension plan and any advisory committee established under the Act a copy of the initial valuation report within 15 business days after it is filed. (4) The administrator of each main pension plan shall cause a report to be prepared based on the initial valuation report setting out the following information: 1. The allocation of the contributions to be made under this Regulation among the main pension plans, as determined in accordance with the allocation process. 2. The initial wind up ratio of the main pension plan as at the valuation date. 3. The wind up ratio that is equal to 85 per cent of the initial wind up ratio of the main pension plan that would give the Superintendent a basis to require the wind up of the pension plan in connection with the criterion described in subparagraph 2 i of subsection 24 (1). (5) The report required under subsection (4) shall be filed within 30 days after the initial valuation report is filed. (6) The administrator shall give the employer, a trade union that represents members of the pension plan and any advisory committee established under the Act a copy of the report required under subsection (4) within 15 business days after it is filed. Annual reports 21. (1) The administrator of each main pension plan shall cause the pension plan to be reviewed annually and a report prepared with a valuation date of December 31. (2) The annual report must be filed no later than June 30 of the following year. (3) The administrator of each main pension plan shall ensure that the annual report for the main pension plan is filed on the same day as the annual reports for the other main pension plans. (4) Except as otherwise provided in this Regulation, the annual report must meet the requirements of the General Regulation as if it were a report required under section 14 of that Regulation and must also set out the following information: 1. The pension plan’s adjusted solvency deficiency at the valuation date. 2. All gains and losses to the pension plan during the period since the valuation date of the most recent prior valuation report that resulted from the difference between the actual experience and the experience expected by the actuarial assumptions on which the preceding report was based. 3. The contributions to the pension plan that, but for this Regulation, would have been required to be made in the year following the valuation date. 4. The allocation of the contributions to be made under this Regulation among the main pension plans, as determined in accordance with the allocation process. 5. The wind up ratio for the plan and the wind up ratio for the plan determined taking into account the contributions that would have to be made under sections 14 and 15 over the 12 month period immediately following the valuation date of the annual report. 6. The contributions made to the plan in the year up to the valuation date (including contributions in transit). (5) The annual report shall be prepared using actuarial methods that are consistent with accepted actuarial practice, the Act and the General Regulation. (6) The administrator shall give the employer a copy of the annual report immediately after filing it. (7) For greater certainty, an annual report is a valuation report for the purposes of this Regulation. (8) For greater certainty, this section applies to each main pension plan until the day on which it has been wound up and all of the assets of its pension fund have been disbursed. Quarterly reports 22. (1) The administrator of each main pension plan shall cause a report to be prepared and filed no later than 30 days after the end of each calendar quarter beginning with the quarter that ends on March 31, 2018. (2) A quarterly report must set out the following information as at the end of the quarter: 1. The pension plan’s estimated adjusted solvency deficiency. 2. The plan’s estimated wind up ratio and the estimated wind up ratio for the plan determined taking into account the contributions that would have had to be made under sections 14 and 15, if the quarterly report were an annual report, over the 12 month period immediately following the valuation date of the quarterly report. 3. The market value of the pension plan’s assets at the end of the quarter. 4. The pension plan’s estimated solvency liabilities. 5. The liabilities that were excluded in calculating the pension plan’s estimated solvency liabilities. (3) The estimated adjusted solvency deficiency and estimated wind up ratio mentioned in subsection (2) shall be determined based on the market value of the pension plan’s assets as at the end of the quarter. (4) The quarterly report shall be prepared using methods that are consistent with accepted actuarial practice, the Act and the General Regulation. (5) Within 30 days after the end of each calendar quarter, the administrator shall give a copy of the quarterly report to the employer, to any trade union that represents members of the pension plan, and to any advisory committee established for the pension plan under the Act. (6) For greater certainty, a quarterly report is not a valuation report for the purposes of this Regulation. (7) For greater certainty, this section applies to each main pension plan until the day on which it has been wound up and all of the assets of its pension fund have been disbursed. Winding Up Exemption re wind up 23. Section 68 of the Act does not apply with respect to the wind up of a main pension plan. Wind up order by Chief Executive Officer 24. (1) For the purposes of subsection 69 (1) (i) of the Act, the following are prescribed circumstances under which the Chief Executive Officer by order may require the wind up of a main pension plan: 1. The pension plan’s assets are equal to or exceed its wind up liability, including the liability for expected wind up expenses. 2. Both of the following criteria are met: i. Subject to subsections (2) and (3), the pension plan’s wind up ratio as set out in an annual report or the pension plan’s estimated wind up ratio as set out in a quarterly report has fallen below 85 per cent of its initial wind up ratio. ii. 30 days have passed since the Chief Executive Officer has served to the persons listed in subsection (4) a notice of the Chief Executive Officer’s intention to issue a notice of intended decision to make an order under section 69 of the Act requiring the wind up of the pension plan on this basis. O. Reg. 255/17, s. 24 (1); O. Reg. 156/19, s. 1 (1), (2). (1.1) A notice served or issued by the Superintendent under subparagraph 2 ii of subsection (1), as it read prior to June 8, 2019, is deemed to have been served or issued by the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 4. (2) In the case of the main pension plan’s wind up ratio as set out in an annual report, the criterion in subparagraph 2 i of subsection (1) is not met if the wind up ratio of the plan, determined taking into account the minimum contributions allocated to the plan under section 14 or 15 over the 12 months immediately following the valuation date of the annual report, is equal to or greater than 85 per cent of the pension plan’s initial wind up ratio. (3) In the case of the main pension plan’s estimated wind up ratio as set out a quarterly report, the criterion in subparagraph 2 i of subsection (1) is not met if the estimated wind up ratio of the plan, determined taking into account the minimum contributions that would have been allocated to the plan under sections 14 and 15 (if the quarterly report were an annual report) over the 12 months immediately following the valuation date of the quarterly report, is equal to or greater than 85 per cent of the pension plan’s initial wind up ratio. (4) The persons mentioned in subparagraph 2 ii of subsection (1) are the following: 1. The administrator. 2. The employer. 3. Each trade union that represents members of the pension plan. 4. The advisory committee established under the Act for the pension plan, if any. Wind up notices 25. Despite subsections 28 (2.1) and (2.2) of the General Regulation, if a main pension plan is to be wound up because the criteria set out in paragraph 2 of subsection 24 (1) of this Regulation have been met, the statement required by subsection 72 (1) of the Act must be given to the persons specified in subsection 72 (1) of the Act within 60 days after the administrator receives notice from the Chief Executive Officer to do so. O. Reg. 255/17, s. 25; O. Reg. 156/19, s. 1 (1). Funding obligations and allocation process continue 26. (1) For greater certainty, the employer’s funding obligations and the allocation process set out in this Regulation continue to apply to the main pension plans even if the Chief Executive Officer has issued a wind up order in respect of one or more of the pension plans. O. Reg. 255/17, s. 26 (1); O. Reg. 156/19, s. 1 (1). (2) For the purposes of subsection (1), a wind up order issued by the Superintendent under subsection 69 (1) of the Act, as it read prior to June 8, 2019, is deemed to have been issued by the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 5. Exemption re PBGF 27. Sections 33 and 37 of the General Regulation do not apply with respect to a main pension plan. PBGF deeming and allocations, s. 102.1 (8) and (9) of the Act 28. (1) A main pension plan and the new pension plan that is its successor pension plan are deemed to be one pension plan for the purpose of the application of the limitation described in paragraph 3 of section 85 of the Act.

(2) Subsections (3) and (4) set out the application of the limitation described in paragraph 3 of section 85 of the Act for the purpose of determining the amount guaranteed by the Guarantee Fund of any pension or pension benefit, including any bridging supplement, to be paid to a person who was a member of both the main pension plan and its successor plan in the event that both of them wind up and the Chief Executive Officer has declared under section 83 of the Act that the Guarantee Fund applies to each of them. O. Reg. 255/17, s. 28 (2); O. Reg. 156/19, s. 1 (1). (2.1) For the purposes of subsection (2), a declaration made by the Superintendent under section 83 of the Act, as it read prior to June 8, 2019, is deemed to have been made by the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 6. (3) With respect to the first pension plan to be wound up, the limitation described in paragraph 3 of section 85 of the Act applies. (4) With respect to the second pension plan to be wound up, the limitation on the amount of any pension or pension benefit, including any bridging supplement, guaranteed by the Guarantee Fund is deemed to be the amount represented by the formula, F – G in which, “F” is the limitation described in paragraph 3 of section 85 of the Act as of the effective date of the second pension plan’s wind up, and “G” is the amount of the pension or pension benefit, including any bridging supplement, guaranteed in respect of the first pension plan to be wound up. Information for Members, Former Members and Retired Members Statement for members, former members and retired members 29. (1) In the annual statement to be given to the members of each main pension plan under subsection 27 (1) of the Act and in the biennial statement to be given to the former members and retired members of each main pension plan under subsection 27 (2) of the Act, the administrator shall include the following information in addition to the information required by section 40, 40.1 or 40.2 of the General Regulation, as the case may be: 1. An explanation of how the security of the pension benefits and the ancillary benefits for members, former members and retired members might be affected as a result of the operation of this Regulation. 2. The amount of the adjusted solvency deficiency of the pension plan as of the valuation date of the most recent annual report. 3. The amounts of the contributions and payments required by this Regulation that the employer made to the pension plan during the period covered by the statement. 4. The amount of all special payments that, but for this Regulation, would have been required under the General Regulation to be made during the period covered by the statement. (2) Subsection (1) begins to apply in 2018 in respect the 2017 plan year. Access to records 30. (1) The administrator of a main pension plan listed in subsection (4) shall make all of the administrator’s records in respect of the administration of the pension plan and the pension fund, including those records filed under this Regulation, available to a trade union that represents members of the pension plan. (2) The administrator shall permit the trade union to make extracts from and copies of the records. (3) Subsections (1) and (2) do not apply in respect of information as to the service, salary, pension benefits or other personal information related to any specific person without the person’s prior consent. (4) The main pension plans referred to in subsection (1) are the following: 1. The Lake Erie Bargaining Unit Plan. 2. The Hamilton Bargaining Unit Plan. 3. The Pickle Line Plan. Miscellaneous Documents to be filed, amendments to pension plan 31. (1) The agreement described in paragraph 1 of subsection 1 (1) is prescribed for the purpose of subsection 12 (2) of the Act with respect to all of the main pension plans. (2) The agreements listed in paragraphs 2 to 7 of subsection 1 (1) are prescribed for the purpose of subsection 12 (2) of the Act with respect to the main pension plan to which the agreement relates. Advisory committees 32. Despite subsection 65 (13) of the General Regulation, advisory committees established for the main pension plans before January 1, 2017, the day subsection 2 (3) of Schedule 22 to the Jobs for Today and Tomorrow Act (Budget Measures), 2016 came into force, are exempt from subsection 24 (3) of the Act until January 1, 2018. PART III New PENSION PLANS Funding Framework Application 33. The funding framework in this Part applies with respect to a new pension plan on the condition that it offers pension benefits for service on and after January 1, 2018 on the same terms as those contained in the main pension plan to which it is a successor pension plan. Election to fund in accordance with General Regulation 34. (1) The employer may file an election with the Chief Executive Officer to commence funding a new pension plan in accordance with the General Regulation instead of in accordance with the funding framework in this Regulation. O. Reg. 255/17, s. 34 (1); O. Reg. 156/19, s. 1 (1). (2) An election may be filed at any time before December 31, 2027 and it cannot be withdrawn. (3) The effective date on which the employer commences funding the pension plan in accordance with the General Regulation shall be January 1 of a particular year and the election shall specify the date. (4) The election must be in writing and filed by the employer before the filing of the annual report for the new pension plan due by June 30 of that year. (5) An election filed with the Superintendent under this section, as it read prior to June 8, 2019, is deemed to have been filed with the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 7. Exemptions re funding 35. The following exemptions apply with respect to a new pension plan until the earlier of January 1, 2028 or the day the employer commences funding the new pension plan in accordance with the General Regulation: 1. Sections 55.1 and 55.2 of the Act do not apply to the employer in respect of the new pension plan. 2. Sections 4, 5, 7, 7.0.1, 7.0.2, 7.0.3 and 8 and subsections 40 (3), 40.1 (4) and 40.2 (4) of the General Regulation do not apply to the employer in respect of the new pension plan. O. Reg. 255/17, s. 35; O. Reg. 256/18, s. 2. Contributions, 2018 to 2027 36. (1) The employer is required to make annual contributions for the years 2018 to 2027 inclusive in accordance with the following: 1. For the successor pension plan to the Hamilton Bargaining Unit Plan, the required contribution for a year in Column 1 of the Table to this subsection is the amount set opposite it in Column 2. 2. For the successor pension plan to the Lake Erie Bargaining Unit Plan, the required contribution for a year in Column 1 of the Table to this subsection is the amount set opposite it in Column 3. 3. For the successor pension plan to the Pickle Line Plan, the required contribution for a year in Column 1 of the Table to this subsection is the amount set opposite it in Column 4. TABLE Column 1 Year Column 2 Required Contribution — Successor pension plan to the Hamilton Bargaining Unit Plan Column 3 Required Contribution — Successor pension plan to the Lake Erie Bargaining Unit Plan Column 4 Required Contribution — Successor pension plan to the Pickle Line Plan 2018 $1,850,000 $1,700,000 $450,000 2019 $1,850,000 $1,700,000 $450,000 2020 $1,850,000 $1,700,000 $450,000 2021 $1,700,000 $1,700,000 $350,000 2022 $1,700,000 $1,700,000 $350,000 2023 $1,700,000 $1,700,000 $350,000 2024 $1,400,000 $1,500,000 $300,000 2025 $1,400,000 $1,500,000 $300,000 2026 $1,400,000 $1,500,000 $300,000 2027 $1,400,000 $1,500,000 $300,000 (2) The employer shall make the contributions in equal monthly instalments on or before the last business day of the month in which the contribution is due. (3) For greater certainty, the first monthly contribution under subsection (1) is due no later than the last business day of January 2018. Benefit improvements — lump sum payment 37. (1) If benefit improvements are made under a new pension plan, the employer shall make a payment in accordance with this section to fund the additional liabilities related to the benefit improvements. (2) Subsection (1) does not apply with respect to benefit improvements that are required by law. (3) The amount of the payment is the greater of “J” and “K” where, “J” is the increase in going concern liabilities attributable to the benefit improvements, determined as of the effective date of the benefit improvements, and “K” is the increase in solvency liabilities attributable to the benefit improvements, determined as of the same date. (4) The payment (together with interest from the effective date of the benefit improvements) is payable as a lump sum not more than 30 days after the required report is filed under section 3 of the General Regulation. Reports to the Chief Executive Officer Annual reports 38. (1) The administrator of each new pension plan shall cause the plan to be reviewed annually and a report prepared with a valuation date of December 31. (2) The annual report must be filed no later than June 30 in the year following the valuation date. (3) Except as otherwise provided in this Regulation, the annual report must meet the requirements of the General Regulation as if it were a report required under section 14 of that Regulation and must also set out the following information: 1. The contributions to the new pension plan that are required to be made in accordance with section 36. 2. The amount of contributions made to the pension plan in the year up to the valuation date. 3. The contributions to the new pension plan that, but for this Regulation, would have been required to be made in the year following the valuation date. 4. All gains and losses to the pension plan during the period since the valuation date of the most recent valuation report that resulted from the difference between the actual experience and the experience expected by the actuarial assumptions on which the preceding report was based. (4) The annual report shall be prepared using actuarial methods that are consistent with accepted actuarial practice, the Act and the General Regulation. Final report 39. (1) The administrator of a new pension plan that ceases to be a new pension plan in accordance with section 3 shall submit to the Chief Executive Officer a final report with a valuation date that is the day on which the plan ceases to be a new pension plan, and shall do so within 120 days after the valuation date. O. Reg. 255/17, s. 39 (1); O. Reg. 156/19, s. 1 (1). (2) The final report must set out the following information: 1. All gains and losses to the pension plan during the period since the valuation date of the preceding report that resulted from the difference between the actual experience and the experience expected by the actuarial assumptions on which the preceding report was based. 2. All gains and losses to the pension plan during the period since the valuation date of the preceding report that resulted from changes in actuarial assumptions since the preceding report. (3) The final report must include an appendix that, (a) sets out the information respecting the plan that is required under subsections 13 (1) and (1.1) of the General Regulation, determined as if the plan were newly registered on the valuation date of the final report; and (b) separately identifies any liability for benefit improvements described in section 37 that remains to be funded as of the valuation date of the final report. (4) A final report submitted to the Superintendent under this section, as it read prior to June 8, 2019, is deemed to have been submitted to the Chief Executive Officer. O. Reg. 156/19, s. 1 (1), 8. Miscellaneous Documents to be filed, application for registration of pension plan 40. The agreement listed in paragraph 1 of subsection 1 (1) is prescribed for the purpose of clause 9 (2) (f) of the Act with respect to the new pension plans. Part IV (OMITTED) 41. Omitted (provides for coming into force of provisions of this Regulation). Schedule 1 “Free Cash Flow” shall have the meaning ascribed thereto on Schedule “A” hereto and be calculated in accordance with GAAP using the formula set out on Schedule “A” hereto. “GAAP” means, as determined by Stelco in its discretion on notice to the FCF Beneficiaries (defined below) not less than 30 days prior to the date of Stelco’s first financial year end following the execution of this Agreement, one of the following three accounting standards, which Stelco shall use to prepare its audited financial statements: (a) generally accepted accounting principles in the United States of America as published by the Financial Accounting Standards Board, (b) the Accounting Standards for Private Enterprises which are in effect from time to time in Canada, as published in Part II of the Handbook of the Canadian Institute of Chartered Accountants or any successor thereof (the “Handbook”), or (c) International Financial Reporting Standards which are in effect from time to time in Canada, as published in Part I of the Handbook ((a), (b) and (c) collectively, the “Accounting Standards”), provided that if Stelco determines that it is required or preferred, based on advice of its auditor, to change the Accounting Standard it uses to prepare its audited financial statements, GAAP shall mean the Accounting Standard pursuant to which Stelco prepares its audited financial statements at such time. Schedule “A” References to Stelco’s “Free Cash Flow” mean the following: A. Consolidated net income after tax, before free cash flow sweep plus/minus B. All non-cash charges/credits (e.g. depreciation, deferred tax, etc.) included in the calculation of A above plus/minus C. Changes in working capital in the year less D. Capital expenditures incurred in the course of Stelco’s business in the year (net of any government grants or subsidies for capital expenditures) = E. Free Cash Flow _______________________________ Note: A already includes deductions for all operating costs, including payments in respect of OPEBS and any labour costs, including profit-sharing. However, A is calculated before the calculations of the Free Cash Flow Contribution and the Free Cash Flow Payment. A is to be calculated before Tax Savings Payments are paid or accounted for by Stelco. In addition, any interest incurred by Stelco on intercompany indebtedness provided by any non-arm’s length party in excess of available market interest rates shall be added back to consolidated net income after tax. In the event Stelco enters into or undertakes any non-arm’s length transactions that are not on a strictly cost recovery basis or that otherwise contain non-market terms the Free Cash Flow shall be adjusted to reflect such transactions; provided, however, that no adjustment shall be required in respect of, and Stelco shall be entitled to deduct, management, services, administrative, cost sharing or other fees and expenses payable by Stelco or its subsidiaries to Bedrock or any of its affiliates, to the extent that such fees do not exceed the total of: (A) 102% of the lesser of: (1) the costs of Bedrock and any of its affiliates in providing such services; and (2) $5,000,000 per fiscal year; and (B) the amount, if any, by which the costs of Bedrock and any of its affiliates in providing such services for the applicable fiscal year exceeds $5,000,000.