<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______ .
Commission File Number:1-8944
CLEVELAND-CLIFFS INC
(Exact name of registrant as specified in its charter)
Ohio 34-1464672
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 694-5700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---- ----
As of August 4, 1997, there were 11,379,448 Common Shares (par value $1.00 per
share) outstanding.
==============================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
(In Millions, Except Per Share Amounts)
--------------------------------------------
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
REVENUES:
<S> <C> <C> <C> <C>
Product sales and services $ 102.7 $ 122.9 $ 123.2 $ 170.8
Royalties and management fees 12.4 13.4 20.7 22.6
------- ------- ------- -------
Total operating revenues 115.1 136.3 143.9 193.4
Investment income (securities) 1.2 1.6 3.4 3.8
Recovery of excess closedown provision 4.3 4.3
Property damage claim recovery 2.0 2.0
Other income 1.5 0.9 1.8 1.4
------- ------- ------- -------
TOTAL REVENUES 122.1 140.8 153.4 200.6
COSTS AND EXPENSES:
Cost of goods sold and operating expenses 96.1 106.2 117.1 152.9
Administrative, selling and general expenses 3.5 3.7 7.2 7.5
Interest expense 0.8 1.2 1.7 2.4
Other expenses 2.2 1.9 3.5 4.7
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 102.6 113.0 129.5 167.5
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 19.5 27.8 23.9 33.1
INCOME TAXES
Currently payable 2.7 8.2 3.3 9.6
Deferred 3.9 1.8 4.7 2.1
------- ------- ------- -------
TOTAL INCOME TAXES 6.6 10.0 8.0 11.7
------- ------- ------- -------
NET INCOME $ 12.9 $ 17.8 $ 15.9 $ 21.4
======= ======= ======= =======
NET INCOME PER COMMON SHARE $ 1.14 $ 1.52 $ 1.40 $ 1.82
======= ======= ======= =======
</TABLE>
See notes to financial statements
2
<PAGE> 3
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
(In Millions)
-----------------------
June 30, December 31,
ASSETS 1997 1996
------ ------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 61.5 $165.4
Marketable securities 4.0
------ ------
61.5 169.4
Accounts receivable - net 61.8 70.2
Inventories:
Finished products 91.7 28.7
Work in process 0.7 0.9
Supplies 14.9 15.4
------ ------
107.3 45.0
Federal income taxes 6.9 4.4
Other 11.2 11.8
------ ------
TOTAL CURRENT ASSETS 248.7 300.8
PROPERTIES 272.0 269.3
Less allowances for depreciation and depletion (142.6) (141.6)
------ ------
TOTAL PROPERTIES 129.4 127.7
INVESTMENTS IN ASSOCIATED COMPANIES 196.4 161.9
OTHER ASSETS
Long-term investments 11.9 10.8
Deferred income taxes 6.2 11.9
Prepaid pensions 38.3 34.8
Other 23.8 25.8
------ ------
TOTAL OTHER ASSETS 80.2 83.3
------ ------
TOTAL ASSETS $654.7 $673.7
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES $ 81.2 $105.5
LONG-TERM OBLIGATIONS 70.0 70.0
POSTEMPLOYMENT BENEFIT LIABILITIES 70.5 67.5
RESERVE FOR CAPACITY RATIONALIZATION 6.2 15.5
OTHER LIABILITIES 48.2 44.6
SHAREHOLDERS' EQUITY
Preferred Stock
Class A - No Par Value
Authorized - 500,000 shares; Issued - None -- --
Class B - No Par Value
Authorized - 4,000,000 shares; Issued - None -- --
Common Shares - Par Value $1 a share
Authorized - 28,000,000 shares 16.8 16.8
Issued - 16,827,941 shares
Capital in excess of par value of shares 67.3 68.8
Retained income 440.5 432.0
Foreign currency translation adjustments 0.3 0.1
Net unrealized gain (loss) on marketable securities 0.3 (1.0)
Cost of 5,453,493 Common Shares in treasury
(1996 - 5,458,224) (143.2) (142.5)
Unearned Compensation (3.4) (3.6)
------ ------
TOTAL SHAREHOLDERS' EQUITY 378.6 370.6
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $654.7 $673.7
====== ======
</TABLE>
See notes to financial statements
3
<PAGE> 4
CLEVELAND-CLIFFS INC
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Increase (Decrease)
in Cash and Cash
Equivalents for
Six Months Ended
June 30,
(In Millions)
----------------------
1997 1996
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 15.9 $ 21.4
Depreciation and amortization:
Consolidated 3.5 3.2
Share of associated companies 6.0 5.4
Provision for deferred income taxes 4.8 2.1
Increase (decrease) in capacity rationalization reserve (14.8) 1.5
Other (0.7) (0.1)
------ ------
Total Before Changes in Operating Assets and Liabilities 14.7 33.5
Changes in operating assets and liabilities (75.3) (44.8)
------ ------
NET CASH USED BY OPERATING ACTIVITIES (60.6) (11.3)
INVESTMENT ACTIVITIES
Capital expenditures:
Consolidated (5.0) (4.0)
Share of associated companies (19.2) (7.4)
Purchase of Wabush interest (15.0) --
Other 4.8 --
------ ------
NET CASH USED BY INVESTMENT ACTIVITIES (34.4) (11.4)
FINANCING ACTIVITIES
Dividends (7.4) (7.6)
Repurchases of common shares (1.7) (8.8)
------ ------
NET CASH USED BY FINANCING ACTIVITIES (9.1) (16.4)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 0.2 0.2
------ ------
DECREASE IN CASH AND CASH EQUIVALENTS (103.9) (38.9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 165.4 148.8
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 61.5 $109.9
====== ======
Income taxes paid $ 10.7 $ 9.9
Interest paid on debt obligations $ 2.5 $ 2.4
</TABLE>
See notes to financial statements
4
<PAGE> 5
CLEVELAND-CLIFFS INC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and should be read in conjunction
with the financial statement footnotes and other information in the Company's
1996 Annual Report on Form 10-K. In management's opinion, the quarterly
unaudited financial statements present fairly the Company's financial position
and results in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
References to the "Company" mean Cleveland-Cliffs Inc and consolidated
subsidiaries, unless otherwise indicated. Quarterly results are not necessarily
representative of annual results due to seasonal and other factors.
Certain prior year amounts have been reclassified to conform to current
year classifications.
NOTE B - ACCOUNTING AND DISCLOSURE CHANGES
In February, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement 128, "Earnings per Share", which simplifies the standards for
computing earnings per share and makes them comparable to international
standards. Under the new requirements, basic earnings per share is expected to
approximate currently reported earnings per share and the impact of the diluted
earnings per share calculation is not expected to be material under the
Company's present capital structure. This Statement is effective for years
ending after December 15, 1997. Early application is not permitted.
In February, 1997, the FASB issued Statement 129, "Disclosure of
Information about Capital Structure," which is effective for years ending after
December 15, 1997. It contains no change in disclosure requirements for the
Company.
In June, 1997, the FASB issued Statement 130, "Reporting Comprehensive
Income," which establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The standard is effective for years beginning after
December 15, 1997. Management is evaluating the disclosure alternatives.
In June, 1997, the FASB issued Statement 131, "Disclosures About
Segments of an Enterprise and Related Information." This Statement changes the
way the Company reports segment information in annual and interim financial
statements. It is effective for years beginning after December 15, 1997.
Management is evaluating the disclosure requirements.
5
<PAGE> 6
In October, 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
96-1, "Environmental Remediation Liabilities," the purpose of which is to
improve the manner in which existing authoritative accounting literature is
applied in recognizing, measuring and disclosing environmental remediation
liabilities. The Company's adoption of this statement in the first quarter of
1997 did not have a significant effect on recorded earnings.
NOTE C - ACCOUNTING POLICY CHANGE
In June, 1997, the Company redefined its accounting policy for cash
equivalents to include highly liquid debt instruments with a put option.
Included in cash equivalents at June 30, 1997 are $12.4 million ($12.3 million
at December 31, 1996 - reclassified) variable rate demand notes. These
investments are revalued every seven days and can be put with seven days notice.
The notes are guaranteed by letters of credit from highly rated financial
institutions. The carrying value of these instruments approximates fair value on
the reporting dates.
The new accounting policy is, "The Company considers investments in
highly liquid debt instruments with a put option exercisable in three months or
less or an initial maturity of three months or less to be cash equivalents."
NOTE D - ENVIRONMENTAL RESERVES
The Company has a formal code of environmental conduct which promotes
environmental protection and restoration. The Company's obligations for known
environmental problems at active mining operations, idle and closed mining
operations, and other sites have been recognized based on estimates of the cost
of investigation and remediation at each site. If the cost can only be estimated
as a range of possible amounts with no specific amount being most likely, the
minimum of the range is accrued in accordance with generally accepted accounting
principles. Estimates may change as additional information becomes available.
Actual costs incurred may vary from the estimates due to the inherent
uncertainties involved. Any potential insurance recoveries have not been
reflected in the determination of the financial reserves.
At June 30, 1997, the Company has an environmental reserve, including
its share of the environmental obligations of associated companies, of $24.0
million, of which $3.6 million is current. The reserve includes the Company's
obligations related to:
- Federal and State Superfund and Clean Water Act sites where the
Company is named as a potential responsible party, including
Cliffs-Dow and Kipling sites in Michigan and the Rio Tinto mine
site in Nevada, all of which sites are independent of the
Company's iron mining operations. The reserves are based on
engineering studies prepared by outside consultants engaged by
the potential responsible parties. The Company continues to
evaluate the recommendations of the studies and other means for
site clean-up. Significant site clean-up activities have taken
place at Rio Tinto and Cliffs-Dow.
- Wholly-owned active and idle operations, including Northshore
mine and Silver Bay power plant in Minnesota. The
Northshore/Silver Bay reserve is based on an environmental
investigation conducted by the Company and an outside consultant.
6
<PAGE> 7
- Other sites, including former operations, for which reserves are
based on the Company's estimated cost of investigation and
remediation of sites where expenditures may be incurred.
NOTE E - SAVAGE RIVER MINE CLOSEDOWN OBLIGATIONS
The remaining assets of Savage River Mines and all related
environmental and rehabilitation obligations were transferred to the Tasmanian
government on March 25, 1997. As a result of completion of the transaction, the
Company has recorded a $2.8 million after-tax ($4.3 million pre-tax) credit in
the second quarter 1997 from recognition of actual Savage River Mines closedown
obligations being less than the accrual.
NOTE F - WABUSH INVESTMENT
On June 30, 1997, the Company completed its previously announced
acquisition of Inland Steel Company's 15.1 percent interest in the Wabush Mines
iron ore joint venture in Canada for $15 million, effective January 1, 1997. The
acquisition raises the Company's interest in the Company-managed venture to 22.8
percent. Depending on the magnitude of future tonnage, additional payments to
Inland may be required, but would not be expected to be material in any year.
Separately, the Company revised existing sales arrangements with Inland
to supply Inland's pellet requirements beyond its 40 percent ownership in the
Company-managed Empire Mine in Michigan and Inland's wholly-owned Minorca Mine
in Minnesota. Sales to Inland under this new 10-year contract are expected to
range between 800,000 and 900,000 tons in 1997.
NOTE G - STOCK PLANS
The 1992 Incentive Equity Plan was amended in May, 1997 to authorize
the Company to issue up to 1,150,000 Common Shares (previously 595,000 common
shares) upon the exercise of Option Rights, as Restricted Shares, in payment of
Performance Shares or Performance Units that have been earned, as Deferred
Shares, or in payment of dividend equivalents paid with respect to awards made
under the Plan.
Under the terms of the 1987 Incentive Equity Plan, effective April,
1997 no further grants or awards may be made from this Plan.
NOTE H - SHAREHOLDERS' EQUITY
In May, 1997, the Company's program to repurchase common shares in the
open market or in negotiated transactions was increased to 1,500,000 common
shares from the previous authorization of 1,000,000 common shares.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
COMPARISON OF SECOND QUARTER AND FIRST SIX MONTHS - 1997 AND 1996
- -----------------------------------------------------------------
Earnings for the second quarter were $12.9 million, or $1.14 per share,
and first-half earnings were $15.9 million, or $1.40 a share. Earnings for both
periods included an after-tax credit of $2.8 million resulting from the second
quarter reversal of an excess accrual for Savage River Mine closedown
obligations recorded in prior years.
Second quarter 1996 earnings were $17.8 million, or $1.52 a share, and
first-half 1996 earnings were $21.4 million, or $1.82 a share. Earnings for both
1996 periods included a $1.3 million after-tax property damage insurance
recovery on a 1996 ore train derailment.
Excluding the special items in both years, second quarter 1997 earnings
were $10.1 million, or $.89 a share, versus $16.5 million, or $1.41 a share in
1996, and first-half 1997 earnings were $13.1 million, or $1.15 a share,
compared to $20.1 million, or $1.71 a share in 1996.
Following is a summary of results:
<TABLE>
<CAPTION>
(In Millions, Except Per Share)
-------------------------------
Second Quarter First-Half
------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Before Special Items:
Amount $10.1 $16.5 $13.1 $20.1
Per Share .89 1.41 1.15 1.71
Special Items:
Amount 2.8 1.3 2.8 1.3
Per Share .25 .11 .25 .11
Net Income:
Amount 12.9 17.8 15.9 21.4
Per Share 1.14 1.52 1.40 1.82
</TABLE>
The $6.4 million decrease in second quarter earnings before special
items was mainly due to the planned termination of Savage River Mine operations
in Australia, in March 1997, and higher North American mine operating costs.
The $7.0 million decrease in first-half earnings before special items
was principally due to the Savage River termination, lower North American sales
volume in the first quarter, and higher mine operating costs.
Pre-tax earnings from Savage River in the second quarter of 1996 were
$5.7 million compared to a loss of $.1 million in 1997. First-half pre-tax
earnings from Savage River in 1996 were $9.2 million compared to $3.6 million in
1997.
* * *
The Company's managed mines in North America produced 9.6 million tons
of pellets in the second quarter of 1997 compared with 9.8 million tons in 1996.
First-half production was 19.2 million tons, up from 18.8 million tons in 1996.
8
<PAGE> 9
The Company's North American iron ore pellet sales in the second
quarter of 1997 were 2.8 million tons compared with 2.9 million tons in 1996.
First-half sales were 3.1 million tons versus 3.9 million tons in 1996. Lower
first quarter sales resulted from certain customers delaying shipments to
correct inventories, and the early 1996 shutdown of McLouth Steel, which had
traditionally purchased consigned ore during the winter months.
LIQUIDITY
- ---------
At June 30, 1997, the Company had cash and marketable securities of
$61.5 million. Since December 31, 1996, cash and marketable securities have
decreased $107.9 million, primarily due to increased working capital, $75.3
million, project investments and capital expenditures, $39.2 million (including
investment in a reduced iron joint venture in Trinidad and Tobago, $17.2
million, and the Wabush Mines investment, $15.0 million), payments associated
with closing Savage River Mines and transferring related assets and liabilities,
$11.6 million, dividends, $7.4 million, and repurchases of common shares, $1.7
million, partially offset by cash flow from operations, $26.3 million.
Capital additions and replacements at the Company and the six Company-
managed mines in North America are projected to total approximately $81 million
in 1997. The Company's share of such 1997 expenditures is expected to
approximate $30 million.
In 1996, the Company announced an international joint venture (with LTV
Corporation and Lurgi AG of Germany), located in Trinidad and Tobago, to produce
and market premium quality reduced iron briquettes to the steel industry. All
definitive project documents were subsequently signed on May 8, 1996. The
Company's share of capital expenditures is estimated to be $75 million, of which
$27 million has been spent through June 30, 1997, and $24 million is expected to
be spent in the remainder of 1997. No project financing will be used. Start-up
is expected to occur in the fourth quarter 1998.
Cliffs and Associates Limited, the venture company, has entered into
forward currency exchange contracts to hedge the Deutsche Mark as part of the
construction project. The purpose of the contracts is to manage the risk of
exchange rate fluctuation with respect to a portion of project construction
costs denominated in the Deutsche Mark. The Company's share of outstanding
contracts, which have varying maturity dates to June 1, 1998, have an aggregate
contract value of $8.5 million and an aggregate estimated fair value of $7.4
million at June 30, 1997.
The Company anticipates further investment in reduced iron projects.
Under the Company's program to repurchase up to 1,500,000 of its common
shares (increased from 1,000,000 common shares in May, 1997) in the open market
or in negotiated transactions, the Company has repurchased 821,900 shares
through August 5, 1997, at a total cost of $32.0 million.
The UMWA Combined Benefit Fund and the UMWA 1992 Benefit Plan have
assigned responsibility to the Company for premium payments with respect to
retirees, dependents, and "orphans" (unassigned beneficiaries) under the Coal
Industry Retiree Health Benefit Act of 1992. The Company is making premium
payments under protest and is contesting the assignments that it believes are
incorrect. At June 30, 1997, the Company's coal retiree reserve was $10.4
million, of which $.9 million is expected to be paid in 1997 ($1.3 million to be
spent, less $.4 million received in April, 1997 as a refund of contested
premiums).
9
<PAGE> 10
CAPITALIZATION
- --------------
The Company has $70.0 million of senior unsecured notes outstanding
with a group of private investors. The notes, which have a fixed interest rate
of 7.0 percent, are due in December, 2005. In addition, the Company has a $100
million revolving credit agreement. No borrowings are outstanding under this
agreement which expires on March 1, 2002. The Company was in compliance with all
financial covenants and restrictions of the agreements.
The fair value of the Company's long-term debt (which had a carrying
value of $70.0 million) at June 30, 1997, was estimated to be $67.4 million
based on a discounted cash flow analysis and estimates of current borrowing
rates.
Following is a summary of common shares outstanding:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -------
<S> <C> <C> <C>
March 31 11,377,322 11,832,767 12,031,392
June 30 11,374,448 11,614,517 12,892,092
September 30 11,367,717 11,898,467
December 31 11,369,717 11,829,267
</TABLE>
AUSTRALIAN OPERATIONS
- ---------------------
On March 25, 1997, the remaining assets (including $8.6 million in
cash) of Savage River Mines and all related environmental and rehabilitation
obligations were transferred to the Tasmanian government. The release from these
obligations includes not only release from previously identified environmental
and rehabilitation obligations but also release from any such obligations that
may be asserted in the future, whether presently known or unknown.
Estimated costs associated with the planned closure of Savage River
Mines, including estimates of previously agreed environmental and rehabilitation
obligations, had been fully provided for in the Capacity Rationalization
Reserve. In light of the completion of the transaction with the Tasmanian
government, the Company has recorded a $2.8 million after-tax ($4.3 million
pre-tax) credit in the second quarter 1997 resulting from reversal of an excess
accrual for Savage River Mines closedown obligations.
OTHER DEVELOPMENTS
- ------------------
On June 30, 1997, the Company completed its previously announced
acquisition of Inland Steel Company's 15.1 percent interest in the Wabush Mine
in Canada, retroactive to January 1, 1997. The acquisition, which adds 900,000
tons to the Company's share of production capacity, raises the Company's total
sales capacity in North America to 11.5 million tons and provides increased
access to international markets.
Separately, the Company revised existing sales arrangements with Inland
to supply Inland's pellet requirements beyond its 40 percent ownership in the
Company-managed Empire Mine in Michigan and Inland's wholly-owned Minorca Mine
in Minnesota. Sales to Inland under this new 10-year contract are expected to
range between 800,000 and 900,000 tons in 1997.
10
<PAGE> 11
OUTLOOK FOR 1997
- ----------------
U.S. and Canadian steelmakers continue to operate at high levels due to
strong demand from key markets, including automotive, appliance and
construction. Most industry analysts are expecting a strong second half with raw
steel production for the full year 1997 exceeding 1996. The increase in steel
production is projected to come from electric furnaces, with production from
integrated steelmakers about equal to 1996. Steel imports, which were relatively
high in the first half of 1997, have slowed recently and the consensus belief is
that imports for the year will fall below 1996.
The six North American mines managed by the Company are expected to
produce 39.5 million tons for the year 1997, a slight decrease from the 39.9
million tons produced in 1996. The Company's share of expected production is
10.8 million tons in 1997 versus 10.4 million tons in 1996, which reflects the
Company's increased equity interest in the Wabush Mine, partly offset by a
production cutback at the Tilden Mine in Michigan to control inventories. The
Company and its partners in the Tilden Mine, Algoma Steel Inc. and Stelco Inc.,
have reduced their 1997 production nominations at Tilden from 7.0 to 6.0 million
tons, which is being accomplished by a six-week shutdown that started June 25.
The Company's North American iron ore pellet sales for the full year
1997 are expected to approximate 10.4 million tons, or about 90 percent of sales
capacity, which is unchanged from the Company's previously announced expectation
but trails last year's record pace. While first-half sales were slower than
normal, sales for the balance of the year are expected to modestly exceed last
year's second-half.
BUSINESS RISK
- -------------
The North American integrated steel industry has experienced high
operating rates in recent years. Most steel company partners and customers of
the Company have improved their financial condition due to improved operating
results and increased equity capital. However, the integrated steel industry
continues to have relatively high fixed costs and obligations.
The improvement in most integrated steel companies' financial positions
has reduced the major business risk faced by the Company, i.e., the potential
financial failure and shutdown of one or more of its significant customers or
partners, with the resulting loss of ore sales or royalty and management fee
income. However, if any such shutdown were to occur without full mitigation
through replacement sales or cost reduction, it would represent a significant
adverse financial development to the Company.
FORWARD-LOOKING STATEMENTS
- --------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. In addition to historical information,
this report contains forward-looking statements that are subject to risks and
uncertainties which could cause future results to differ materially from
expected results. Such statements are based on management's beliefs and
assumptions made on information currently available to it.
11
<PAGE> 12
The Company's dominant business is the production and sale of iron ore
pellets, which is subject to the cyclical nature of the integrated steel
industry. Factors that could cause the Company's actual results to be materially
different from projected results include the following:
- Changes in the financial condition of integrated steel company
partners and customers;
- Domestic or international economic and political conditions;
- Unanticipated geological conditions or ore processing changes;
- Changes in imports of steel or iron ore;
- Development of alternative steel-making technologies;
- Displacement of integrated steel production by electric furnace
production;
- Displacement of steel by competitive materials;
- Energy costs and availability;
- Labor contract negotiations;
- Changes in individual customers' iron ore requirements;
- Changes in tax laws affecting corporate income and deductions;
- Changes in laws, regulations or enforcement practices governing
environmental site remediation requirements and safety standards; and
- Accounting principles or policies imposed by the Financial Accounting
Standards Board or the Securities and Exchange Commission.
The Company is under no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
- ---------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on May 13, 1997.
At the meeting the Company's shareholders acted upon the election of Directors,
a proposal to approve the Cleveland-Cliffs Inc 1992 Incentive Equity Plan (as
Amended and Restated as of May 13, 1997), and a proposal to ratify the
appointment of the Company's independent public accountants. In the election of
Directors, all 11 nominees named in the Company's Proxy Statement, dated March
24, 1997, were elected to hold office until the next Annual Meeting of
Shareholders and until their respective successors are elected. Each nominee
received the number of votes set opposite his or her name:
NOMINEES FOR WITHHELD
-------- --- --------
Ronald C. Cambre 9,748,492 30,500
Robert S. Colman 9,749,099 29,893
James D. Ireland III 9,748,692 30,300
G. Frank Joklik 9,747,715 31,277
Leslie L. Kanuk 9,747,255 31,737
Francis R. McAllister 9,749,149 29,843
M. Thomas Moore 9,748,477 30,515
John C. Morley 9,748,033 30,959
Stephen B. Oresman 9,748,419 30,573
Alan Schwartz 9,748,482 30,510
Alton W. Whitehouse 9,697,009 81,983
Votes cast in person and by proxy at such meeting for and against the
adoption of the proposal to approve the Cleveland-Cliffs Inc 1992 Incentive
Equity Plan (as Amended and Restated as of May 13, 1997) were as follows:
9,426,096 Common Shares were cast for the adoption of the proposal; 306,785
Common Shares were cast against the adoption of the proposal; and 46,111 Common
Shares abstained from voting on the proposal.
Votes cast in person and by proxy at such meeting for and against the
adoption of the proposal to ratify the appointment of the firm of Ernst & Young
LLP, independent public accountants, to examine the books of account and other
records of the Company and its consolidated subsidiaries for the year 1997 were
as follows: 9,748,952 Common Shares were cast for the adoption of the proposal;
8,208 Common Shares were cast against the adoption of the proposal; and 21,832
Common Shares abstained from voting on the proposal.
There were no broker non-votes with respect to the election of
directors, the approval of the Cleveland-Cliffs Inc 1992 Incentive Equity Plan
(as Amended and Restated as of May 13, 1997), or the ratification of the
independent public accountants.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) List of Exhibits - Refer to Exhibit Index on page 15.
(b) There were no reports on Form 8-K filed during the three months
ended June 30, 1997.
13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLEVELAND-CLIFFS INC
Date August 13, 1997 By /s/ J.S. Brinzo
------------------------ ----------------------------------------------
J. S. Brinzo
Executive Vice President-Finance and Planning
and Principal Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------------------------------------------------- --------
4(a) Amendment dated as of June 1, 1997, to the Credit Filed
Agreement dated as of March 1, 1995, as amended, Herewith
among Cleveland-Cliffs Inc, the Banks named therein
and The Chase Manhattan Bank, as Agent
10(a) Trust Agreement No. 1 (Amended and Restated Effective Filed
June 1, 1997), dated June 12, 1997 by and between Herewith
Cleveland-Cliffs Inc and Key Trust Company of Ohio,
N.A., with respect to the Cleveland-Cliffs Inc
Supplemental Retirement Benefit Plan and certain
employment agreements
10(b) Trust Agreement No. 2 (Amended and Restated Effective Filed
June 1, 1997), dated June 12, 1997, by and between Herewith
Cleveland-Cliffs Inc and Key Trust Company of Ohio,
N.A., with respect to the Severance Pay Plan for Key
Employees of Cleveland-Cliffs Inc, the
Cleveland-Cliffs Inc Retention Plan for Salaried
Employees, and certain employment agreements
10(c) First Amendment to Trust Agreement No. 2 (Amended and Filed
Restated Effective June 1, 1997), dated July 15, Herewith
1997, by and between Cleveland-Cliffs Inc and Key Trust
Company of Ohio, N.A., Trustee
10(d) Third Amendment to Trust Agreement No. 4, dated Filed
June 12, 1997, by and between Cleveland-Cliffs Inc and Herewith
Key Trust Company of Ohio, N.A., Trustee
10(e) Fifth Amendment to Trust Agreement No. 5, dated Filed
May 23, 1997, by and between Cleveland-Cliffs Inc Herewith
and Key Trust Company of Ohio, N.A., Trustee
10(f) First Amendment to Amended and Restated Trust Agreement Filed
No. 6, dated June 12, 1997, by and between Cleveland- Herewith
Cliffs Inc and Key Trust Company of Ohio, N.A., Trustee
10(g) Third Amendment to Trust Agreement No. 7, dated Filed
May 23, 1997, by and between Cleveland-Cliffs Inc and Herewith
Key Trust Company of Ohio, N.A., Trustee
10(h) Fourth Amendment to Trust Agreement No. 7, dated Filed
July 15, 1997, by and between Cleveland-Cliffs Inc and Herewith
Key Trust Company of Ohio, N.A., Trustee
15
<PAGE> 16
Exhibit
Number Exhibit
- ------- ---------------------------------------------------- ----
10(i) Second Amendment to Trust Agreement No. 8, dated Filed
June 12, 1997, by and between Cleveland-Cliffs Inc Herewith
and Key Trust Company of Ohio, N.A., Trustee
10(j) Cleveland-Cliffs Inc Amended and Restated Employment Filed
Agreements with certain executive officers Herewith
10(k) Severance Pay Plan for Key Employees of Cleveland- Filed
Cliffs Inc (As Amended and Restated as of Herewith
February 1, 1997) dated June 26, 1997
10(l) Cleveland-Cliffs Inc Supplemental Retirement Filed
Benefit Plan (as Amended and Restated Effective Herewith
January 1, 1997), dated April 24, 1997
10(m) Second Amendment to Cleveland-Cliffs Inc Filed
Nonemployee Directors' Compensation Plan, Herewith
effective May 13, 1997, dated May 13, 1997
10(n) Cleveland-Cliffs Inc Long-Term Performance Share Filed
Program, effective as of March 31, 1994, as amended Herewith
as of January 13, 1997
11 Statement re computation of earnings per share Filed
Herewith
27 Consolidated Financial Data Schedule submitted for
Securities and Exchange Commission information only
16
<PAGE> 1
Exhibit 4(a)
AMENDMENT dated as of June 1, 1997, to the
Credit Agreement dated as of March 1, 1995, as
previously amended (the "Agreement"), among
CLEVELAND-CLIFFS INC, an Ohio corporation (the
"Borrower"), the financial institutions party to such
Agreement (the "Banks") and THE CHASE MANHATTAN BANK,
a New York banking corporation, as agent for the
Banks (in such capacity, the "Agent").
The Borrower has requested that the Banks extend the maturity and
change the pricing of the credit facility provided for in the Agreement, and the
Banks are willing to extend their Commitments and to change the pricing under
the Agreement as provided herein. Accordingly, in consideration of the mutual
agreements herein contained and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Agreement (the
Agreement, as amended by and together with this Amendment, and as hereafter
amended, modified, extended or restated from time to time, being called the
"Amended Agreement").
SECTION 2. AMENDMENTS. (a) The definition of "Maturity Date" in
Section 1.01 of the Agreement is hereby amended, as of the Effective Date (as
defined in Section 4 herein), to read in its entirety as follows:
"MATURITY DATE" shall mean March 1, 2002.
<PAGE> 2
2
(b) The definition of "Applicable Margin" in Section 1.01 of the
Agreement is hereby amended, as of the Effective Date, by replacing the existing
pricing grid set forth therein with the pricing grid set forth below:
<TABLE>
<CAPTION>
Eurodollar
Ratio Spread CD Spread
----- ------ ---------
<S> <C> <C>
Category 1
- ----------
Less than or equal to .20 to 1 .325% .450%
Category 2
- ----------
Greater than .20 to 1 and less
than .35 to 1 .375% .500%
Category 3
- ----------
Greater than or equal to .35 to 1 .625% .750%
</TABLE>
(d) The definition of "Commitment Fee Percentage" in Section 1.01
of the Agreement is hereby amended, as of the Effective Date, by replacing the
existing pricing grid set forth therein with the pricing grid set forth below:
<TABLE>
<CAPTION>
Ratio Commitment Fee
----- Percentage
----------
<S> <C>
Category 1
- ----------
Less than or equal to .20 to 1 .100%
Category 2
- ----------
Greater than .20 to 1 and less than
.35 to 1 .125%
Category 3
- ----------
Greater than or equal to .35 to 1 .200%
</TABLE>
SECTION 3. REPRESENTATIONS AND WARRANTIES. (a) The Borrower hereby
represents and warrants to each of the Banks, on and as of the date hereof, and
then again represents and warrants to each of the Banks on and as of the
Effective Date, that:
(i) This Amendment has been duly authorized, executed and delivered
by the Borrower, and each of this Amendment and the Amended Agreement
constitutes a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
<PAGE> 3
3
(ii) The representations and warranties set forth in Article III of
the Amended Agreement are true and correct in all material respects with
the same effect as if made on and as of the date hereof and on and as of
the Effective Date, after giving effect to this Amendment.
(iii) No Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default has occurred and is
continuing.
(b) If any representation or warranty made by the Borrower pursuant to
the preceding paragraph (a) shall prove to have been incorrect in any material
respect when made, then an Event of Default shall be deemed to have occurred
under item (a) of Article VII of the Amended Agreement.
SECTION 4. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective only upon satisfaction in full, on or prior to June 1, 1997, of the
following conditions precedent (such date, in the event that each of such
conditions has been satisfied, being herein called the "Effective Date"):
(a) The Agent shall have received duly executed counterparts of this
Amendment which, when taken together, bear the authorized signatures of the
Borrower, each of the Banks and the Agent.
(b) The Agent shall have received a certificate dated the Effective Date
and signed by a Responsible Officer, confirming the representations and
warranties set forth in paragraph (a) of Section 2 above.
(c) The Agent shall have received such evidence of the authority of the
Borrower to execute, deliver and perform this Amendment as the Agent or its
counsel shall reasonably have requested.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one agreement. Counterparts of this
Amendment may be delivered via telecopy transmission with
<PAGE> 4
4
the same effect as the delivery of a manually executed counterpart.
SECTION 7. EXPENSES. The Borrower shall pay all reasonable out-of-pocket
expenses incurred by the Agent in connection with the preparation, execution and
delivery of this Amendment, including but not limited to the reasonable fees,
charges and disbursements of Cravath, Swaine & Moore, counsel for the Agent.
SECTION 8. AGREEMENT. Except as specifically amended or modified hereby,
the Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement", "herein",
"hereunder", "hereinafter", "hereto", "hereof" and words of similar import
shall, unless the context otherwise requires, refer to the Amended Agreement.
This Amendment shall not be construed to affect interest or fees accrued prior
to the Effective Date, and amendments herein affecting interest rates and fees
shall apply only to interest and fees accruing on and after the Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date first above
written.
CLEVELAND-CLIFFS INC,
by /s/ Cynthia B. Bezik
------------------------
Name: Cynthia B. Bezik
Title: Vice President and Treasurer
<PAGE> 5
5
THE CHASE MANHATTAN BANK,
individually and as agent,
by /s/ James H. Ramage
-------------------------
Name: James H. Ramage
Title: Vice President
<PAGE> 6
6
NBD BANK,
by /s/ Winifred S. Pinet
-------------------------
Name: Winifred S. Pinet
Title: First Vice President
<PAGE> 7
7
NATIONAL CITY BANK,
by /s/ David R. Evans
------------------------
Name: David R. Evans
Title: Sr. Vice President
<PAGE> 8
8
PNC BANK, NATIONAL
ASSOCIATION,
by /s/Mark W. Rutherford
------------------------
Name: Mark W. Rutherford
Title: Vice President
<PAGE> 9
9
THE HUNTINGTON NATIONAL BANK,
by /s/Dawn M. Enovitch
------------------------
Name: Dawn M. Enovitch
Title: Portfolio Manager
<PAGE> 10
10
KEYBANK NATIONAL ASSOCIATION,
by /s/Thomas A. Crandell
-------------------------
Name: Thomas A. Crandell
Title: Assistant Vice President
<PAGE> 1
Exhibit 10(a)
TRUST AGREEMENT NO. 1
(Amended and Restated Effective June 1, 1997)
---------------------------------------------
This Trust Agreement No. l (Amended and Restated Effective June 1,
1997) ("Trust Agreement No. 1") is made on this 12th day of June, 1997, by and
between Cleveland-Cliffs Inc, an Ohio corporation ("Cleveland-Cliffs"), and
KeyTrust Company of Ohio, N.A., a national banking association, as trustee (the
"Trustee").
WITNESSETH:
-----------
WHEREAS, Cleveland-Cliffs has entered into an agreement with each of
the executives (the "Executives") listed (from time to time as provided in
Section 9(c) hereof) on Exhibit A hereto (the agreements are referred to herein
singularly as an "Agreement" and collectively as the "Agreements");
WHEREAS, pursuant to the provisions of the Cleveland-Cliffs Inc
Supplemental Retirement Benefit Plan (as Amended and Restated Effective January
1, 1997), as the same has been or may hereafter be supplemented, amended or
restated, or any successor thereto (the "Plan"), the Executives and
beneficiaries of the Executives (also listed on Exhibit A hereto from time to
time as provided in Section 9(c) hereof), may become entitled to certain
benefits;
WHEREAS, (a) the Agreements provide for the payment of certain current
and deferred compensation and other benefits to the Executives or their
beneficiaries thereunder following a "Change of Control", as that term is
defined in Exhibit B hereto, and (b) the Plan provides for the payment of
certain benefits to
<PAGE> 2
2
the Executives and beneficiaries of Executives that (i) would be payable
pursuant to the qualified retirement plans established by Cleveland-Cliffs and
its subsidiary corporations and affiliates were it not for certain limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
are or may become due under certain agreements entered into (or which may be
entered into) by Cleveland-Cliffs and its subsidiary corporations and affiliates
granting additional service credit or other features for purposes of computing
retirement benefits, and (c) Cleveland-Cliffs wishes specifically to assure the
payment to the Executives and beneficiaries of Executives (Executives and
beneficiaries of Executives are referred to herein singularly as a "Trust
Beneficiary" and collectively as the "Trust Beneficiaries") of amounts due under
the Agreements and the Plan (collectively referred to herein as the "Benefits");
WHEREAS, subject to Section 9 hereof, the amounts and timing of
Benefits to which each Trust Beneficiary is presently or may become entitled to
are as provided in and determined under the Agreements and the Plan;
WHEREAS, on October 28, 1987, Cleveland-Cliffs and Ameritrust Company
National Association, a predecessor of the Trustee, entered into a trust
agreement ("Trust Agreement No. 1") to provide for the payment of certain
benefits that may become payable to certain executives, beneficiaries of such
executives, and their beneficiaries under agreements then in effect between
<PAGE> 3
3
Cleveland-Cliffs and the executives and under the Plan, as it was in effect at
such time;
WHEREAS, Trust Agreement No. 1 was amended and restated by an Amended
and Restated Trust Agreement No. 1 dated March 9, 1992;
WHEREAS, Cleveland-Cliffs desires to amend and restate Trust Agreement
No. 1 heretofore entered into and has transferred or will transfer to the trust
(the "Trust") established by this Trust Agreement No. 1 assets which shall be
held therein subject to the claims of the creditors of Cleveland-Cliffs to the
extent set forth in Section 3 hereof until paid in full to all Trust
Beneficiaries as Benefits in such manner and at such times as specified herein
unless Cleveland-Cliffs is Insolvent (as defined herein) at the time that such
Benefits become payable; and
WHEREAS, Cleveland-Cliffs shall be considered "Insolvent" for purposes
of this Trust Agreement No. 1 at such time as Cleveland-Cliffs (i) is subject to
a pending voluntary or involuntary proceeding as a debtor under the United
States Bankruptcy Code, as heretofore or hereafter amended, or (ii) is unable to
pay its debts as they mature.
NOW, THEREFORE, the parties amend and restate Trust Agreement No. 1
and agree that the Trust shall be comprised, held and disposed of as follows:
1. TRUST FUND: (a) Subject to the claims of its creditors to the
extent set forth in Section 3 hereof, Cleveland- Cliffs (i) hereby deposits with
the Trustee in trust Ten Dollars
<PAGE> 4
4
($10.00) which shall become the principal of this Trust, and (ii)
Cleveland-Cliffs may from time to time make additional deposits of cash or other
property in the Trust to augment such principal. The principal of the Trust
shall be held, administered and disposed of by the Trustee as herein provided,
but no payments of all or any portion of the principal of the Trust or earnings
thereon shall be made to Cleveland-Cliffs or any other person or entity on
behalf of Cleveland-Cliffs except as herein expressly provided.
(b) The Trust hereby established shall be revocable by
Cleveland-Cliffs at any time prior to the date on which occurs a Change of
Control, and on or after such date (the "Irrevocability Date"), this Trust shall
be irrevocable. In the event that the Irrevocability Date has occurred,
Cleveland-Cliffs shall so notify the Trustee promptly.
(c) The principal of the Trust and any earnings thereon shall be held
in trust separate and apart from other funds of Cleveland-Cliffs exclusively for
the uses and purposes herein set forth. No Trust Beneficiary shall have any
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust prior to the time that such assets are paid to a Trust Beneficiary as
Benefits as provided herein.
(d) The Trust is intended to be a grantor trust, within the meaning of
section 671 of the Code, or any successor provision thereto, and shall be
construed accordingly. The Trust is not designed to qualify under Section 401(a)
of the Code or to
<PAGE> 5
5
be subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Trust established under this Trust Agreement No.
1 does not fund and is not intended to fund the Agreements or the Plan or any
other employee benefit plan or program of Cleveland-Cliffs. Such Trust is and is
intended to be a depository arrangement with the Trustee for the setting aside
of cash and other assets of Cleveland-Cliffs for the meeting of part or all of
its future obligations with respect to Benefits.
2. PAYMENTS TO TRUST BENEFICIARIES. (a) Provided that the Trustee has
not actually received notice as provided in Section 3 hereof that
Cleveland-Cliffs is Insolvent and commencing with the earlier to occur of (i)
appropriate notice by Cleveland-Cliffs to the Trustee, or (ii) the
Irrevocability Date, the Trustee shall make payments of Benefits to each Trust
Beneficiary from the assets of the Trust in accordance with the terms of the
Agreement applicable to such Trust Beneficiary and of the Plan and subject to
Section 9 hereof. The Trustee shall make provision for withholding of any
federal, state, or local taxes that may be required to be withheld by the
Trustee in connection with the payment of any Benefits hereunder.
(b) If the balance of a separate account maintained for a Trust
Beneficiary pursuant to Section 7(b) hereof is not sufficient to provide for
full payment of Benefits to which a Trust Beneficiary is entitled as provided
herein, then an amount up to the amount of such deficiency shall be allocated to
such
<PAGE> 6
6
separate account from the Master Account maintained pursuant to section 7(b)
hereof to the extent of the balance in the Master Account. If, after application
of the preceding sentence, the balance of a Trust Beneficiary's separate account
maintained pursuant to Section 7(b) is not sufficient to provide for full
payment of Benefits to which a Trust Beneficiary is entitled as provided herein,
then Cleveland-Cliffs shall make the balance of each such payment as provided in
the applicable provision of the Agreement or the Plan, as the case may be. No
payment to a Trust Beneficiary from the assets of the Trust shall exceed the
balance of such separate account.
(c) Any payments of Benefits by the Trustee pursuant to this Trust
Agreement No. 1 shall, to the extent thereof, discharge the obligation of
Cleveland-Cliffs to pay such Benefits under the Agreements and the Plan, it
being the intent of Cleveland-Cliffs that assets in the Trust established hereby
be held as security for the obligation of Cleveland-Cliffs to pay Benefits under
the Agreements and the Plan.
3. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO A TRUST
BENEFICIARY WHEN CLEVELAND-CLIFFS IS INSOLVENT: (a) At all times during the
continuance of this Trust, the principal and income of the Trust shall be
subject to claims of creditors of Cleveland-Cliffs as set forth in this Section
3(a). The Board of Directors of Cleveland-Cliffs ("the Board") and the Chief
Executive Officer of Cleveland-Cliffs ("the CEO") shall have the duty to inform
the Trustee if either the Board or the CEO
<PAGE> 7
7
believes that Cleveland-Cliffs is Insolvent. If the Trustee receives a notice
from the Board, the CEO, or a creditor of Cleveland-Cliffs alleging that
Cleveland-Cliffs is Insolvent, then unless the Trustee independently determines
that Cleveland-Cliffs is not Insolvent, the Trustee shall (i) discontinue
payments to any Trust Beneficiary, (ii) hold the Trust assets for the benefit of
the general creditors of Cleveland-Cliffs, and (iii) promptly seek the
determination of a court of competent jurisdiction regarding the Insolvency of
Cleveland-Cliffs. The Trustee shall deliver any undistributed principal and
income in the Trust to the extent of the balances of the accounts maintained
hereunder necessary to satisfy the claims of the creditors of Cleveland-Cliffs
as a court of competent jurisdiction may direct. Such payments of principal and
income shall be borne by the Master Account to the extent thereof, and then by
the separate accounts of the Trust Beneficiaries in proportion to the balances
on the date of such court order of their respective accounts maintained pursuant
to Section 7(b) hereof; provided, however, that (iv) all Account Excesses shall
first be determined and allocated in accordance with Sections 4 and 7(b) hereof,
and (v) for this purpose the Threshold Percentage shall be equal to 100%. If
payments to any Trust Beneficiary have been discontinued pursuant to this
Section 3(a), the Trustee shall resume payments to such Trust Beneficiary only
after receipt of an order of a court of competent jurisdiction. The Trustee
shall have no duty to inquire as to whether
<PAGE> 8
8
Cleveland-Cliffs is Insolvent and may rely on information concerning the
Insolvency of Cleveland-Cliffs which has been furnished to the Trustee by any
person. Nothing in this Trust Agreement No. 1 shall in any way diminish any
rights of any Trust Beneficiary to pursue his rights as a general creditor of
Cleveland-Cliffs with respect to Benefits or otherwise, and the rights of each
Trust Beneficiary shall in no way be affected or diminished by any provision of
this Trust Agreement No. 1 or action taken pursuant to this Trust Agreement No.
1, except as provided in Section 2(c).
(b) If the Trustee discontinues payments of Benefits from the Trust
pursuant to Section 3(a) hereof, the Trustee shall, to the extent it has liquid
assets, place cash equal to the discontinued payments (to the extent not paid to
creditors pursuant to Section 3(a) and not paid to the Trustee pursuant to
Section 10 hereof) in such interest-bearing deposit accounts or certificates of
deposit (including any such accounts or certificate issued or offered by the
Trustee or any successor corporation but excluding obligations of
Cleveland-Cliffs) as determined by the Trustee in its sole discretion. If the
Trustee subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments which would
have been made to the Trust Beneficiaries in accordance with this Trust
Agreement No. 1 during the period of such discontinuance, less the aggregate
amount of payments made to any Trust Beneficiary by Cleveland-Cliffs pursuant to
the
<PAGE> 9
9
Agreement applicable to such Trust Beneficiary and Plan during any such period
of discontinuance, together with interest on the net amount delayed determined
at a rate equal to the rate paid on the accounts or deposits selected by the
Trustee; provided, however, that no such payment shall exceed the balance of the
respective Trust Beneficiary's account as provided in Section 7(b) hereof.
4. PAYMENTS TO CLEVELAND-CLIFFS. Except to the extent expressly
contemplated by Section 1(b) and this Section 4, Cleveland-Cliffs shall have no
right or power to direct the Trustee to return any of the Trust assets to
Cleveland-Cliffs before all payments of Benefits have been made to all Trust
Beneficiaries as herein provided. From time to time, but in no event before the
third anniversary of the date on which occurs a Change of Control, if and when
requested by Cleveland-Cliffs to do so, the Trustee shall engage the services of
Hewitt Associates ("Hewitt") or such other independent actuary as may be
mutually satisfactory to Cleveland-Cliffs and to the Trustee to determine the
maximum actuarial present values of the future Benefits that could become
payable under the Plan and the Agreements with respect to the Trust
Beneficiaries. The Trustee shall determine the fair market values of the Trust
assets allocated to the account of each Trust Beneficiary and to the Master
Account pursuant to Section 7(b) hereof. Cleveland-Cliffs shall pay the fees of
such independent actuary and of any appraiser engaged by the Trustee to value
any property held in the Trust. The
<PAGE> 10
10
independent actuary shall make its calculations based upon the assumption that
each Executive will have base salary and bonus increases from the date of
calculation through the termination of his employment by Cleveland-Cliffs at the
rate of the average increase in such Executive's salary and bonus during the
immediately preceding three years, and that no Executive will leave the employ
of Cleveland-Cliffs for any reason other than (a) death prior to retirement or
(b) retirement on or after age 62 or the corresponding date specified in the
Agreement at the age that would result in the maximum present value of Benefits
payable to him or his Trust Beneficiaries that is possible under the Plan and/or
the Agreement. In addition, the independent actuary shall use the 1983 Group
Annuity Mortality Table, an interest rate of 8%, Gross National Product Price
Deflator increases of 4%, or such other assumptions as are recommended by such
actuary and approved by Cleveland-Cliffs and, after the date of a Change of
Control, a majority of the Trust Beneficiaries (subject to the provisions of
Sections 11(b)(i) and (b)(ii) hereof). For purposes of this Trust Agreement No.
1, the "Fully Funded" amount with respect to the account of a Trust Beneficiary
maintained pursuant to Section 7(b) hereof shall be equal to the maximum
actuarial present value of the future Benefits that could become payable under
the Plan and the Agreements with respect to the Trust Beneficiary. The Trustee
shall then determine any allocations to and from the Master Account in
accordance with Section 7(b) hereof. Thereafter, upon the request of the
<PAGE> 11
11
Company, the Trustee shall pay to Cleveland-Cliffs the excess, if any, of the
balance in the Master Account over 40% of the aggregate of all of the Fully
Funded amounts.
5. INVESTMENT OF TRUST FUND. (a) The Trustee shall invest and
reinvest the principal of the Trust including any income accumulated and added
to principal, as directed by the Organization and Compensation Committee of the
Board of Directors of Cleveland-Cliffs (which direction may not include
investment in common shares of Cleveland-Cliffs). In the absence of any such
direction, the Trustee shall have sole power to invest the assets of the Trust
(excluding investment in common shares of Cleveland-Cliffs). The Trustee shall
act at all times, however, with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent corporate trustee, acting in a
like capacity and familiar with such matters, would use in the conduct of an
enterprise of a like character and with like aims. The investment objective of
the Trustee shall be to preserve the principal of the Trust while obtaining a
reasonable total rate of return, measurement of which shall include market
appreciation or depreciation plus receipt of interest and dividends. The Trustee
shall be mindful, in the course of its management of the Trust, of the liquidity
demands on the Trust and any actuarial assumptions that may be communicated to
it from time to time in accordance with the provisions of this Trust Agreement
No. 1.
<PAGE> 12
12
(b) In addition to authority given to the Trustee under Section 8
hereof, the Trustee is empowered with respect to the assets of the Trust:
(i) To invest and reinvest all or any part of the Trust assets, in
each and every kind of property, whether real, personal or mixed, tangible or
intangible, whether income or non-income producing, whether secured or
unsecured, and wherever situated, including, but not limited to, real estate,
shares of common and preferred stock, mortgages and bonds, leases (with or
without option to purchase), notes, debentures, equipment or collateral trust
certificates, and other corporate, individual or government securities or
obligations, time deposits (including savings deposit and certificates of
deposit in the Trustee or its affiliates if such deposits bear a reasonable rate
of interest), common or collective funds or trusts, and mutual funds or
investment companies, including affiliated investment companies and 12 B-1
funds. Cleveland-Cliffs acknowledges and agrees that the Trustee may receive
fees as a participating depository institution for services relating to the
investment of funds in an eligible mutual fund;
(ii) At such time or times, and upon such terms and conditions as the
Trustee shall deem advisable, to sell, convert, redeem, exchange, grant options
for the purchase or exchange of, or otherwise dispose of, any property held
hereunder, at public or private sale, for cash or upon credit, with or without
security, without obligation on the part of any person dealing
<PAGE> 13
13
with the Trustee to see to the application of the proceeds of or to inquire into
the validity, expediency, or propriety of any such disposal;
(iii) To manage, operate, repair, partition, and improve and mortgage
or lease (with or without an option to purchase) for any length of time any
property held in the Trust; to renew or extend any mortgage or lease, upon such
terms as the Trustee may deem expedient; to agree to reduction of the rate of
interest on any mortgage; to agree to any modification in the terms of any lease
or mortgage or of any guarantee pertaining to either of them; to exercise and
enforce any right of foreclosure; to bid on property in foreclosure; to take a
deed in lieu of foreclosure with or without paying consideration therefor and in
connection therewith to release the obligation on the bond secured by the
mortgage; and to exercise and enforce in any action, suit, or proceeding at law
or in equity any rights, covenants, conditions or remedies with respect to any
lease or mortgage or to any guarantee pertaining to either of them or to waive
any default in the performance thereof;
(iv) To join in or oppose any reorganization, recapitalization,
consolidation, merger or liquidation, or any plan therefor, or any lease (with
or without an option to purchase), mortgage or sale of the property of any
organization the securities of which are held in the Trust; to pay from the
Trust any assessments, charges or compensation specified in any plan of
reorganization, recapitalization, consolidation, merger
<PAGE> 14
14
or liquidation; to deposit any property allotted to the Trust in any
reorganization, recapitalization, consolidation, merger or liquidation, to
deposit any property with any committee or depository; and to retain any
property allotted to the Trust in any reorganization, recapitalization,
consolidation, merger or liquidation;
(v) To compromise, settle, or arbitrate any claim, debt or obligation
of or against the Trust; to enforce or abstain from enforcing any right, claim,
debt, or obligation; and to abandon any property determined by it to be
worthless;
(vi) To make, execute and deliver, as Trustee, any deeds, conveyances,
leases (with or without option to purchase), mortgages, options, contracts,
waivers or other instruments that the Trustee shall deem necessary or desirable
in the exercise of its powers under this Agreement; and
(vii) To pay out of the assets of the Trust all taxes imposed or
levied with respect to the Trust and in its discretion may contest the validity
or amount of any tax, assessment, penalty, claim, or demand respecting the Trust
and may institute, maintain, or defend against any related action or proceeding
either at law or in equity (and in such regard, the Trustee shall be indemnified
in accordance with Section 8(d) hereof).
6. INCOME OF THE TRUST. Except as provided in Section 3 hereof, during
the continuance of this Trust all net income of the Trust shall be allocated not
less frequently than monthly
<PAGE> 15
15
among the Trust Beneficiaries' separate accounts in accordance with Section 7(b)
hereof.
7. ACCOUNTING BY TRUSTEE. (a) The Trustee shall keep records in
reasonable detail of all investments, receipts, disbursements and all other
transactions required to be done, including such specific records as shall be
agreed upon in writing by Cleveland-Cliffs and the Trustee. All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by Cleveland-Cliffs, by any Trust Beneficiary, or in the event of a Trust
Beneficiary's death or adjudged incompetence, by an agent or representative of
any of the foregoing (as to such Trust Beneficiary's account). Within 60
calendar days following the close of each calendar year and within 60 calendar
days after the removal or resignation of the Trustee, the Trustee shall deliver
to Cleveland-Cliffs and, following the Irrevocability Date, to each Trust
Beneficiary, or in the event of a Trust Beneficiary's death or adjudged
incompetence, any agent or representative of the Trust Beneficiary (as to his or
her account), a written account of its administration of the Trust during such
year or during the period from the end of the last preceding year to the date of
such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing
<PAGE> 16
16
all cash, securities, rights and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
Such written accounts shall reflect the aggregate of the Trust accounts and
status of each separate account maintained for each Trust Beneficiary. Unless
Cleveland-Cliffs or any Trust Beneficiary shall have filed with the Trustee
written exception or objection to any such statement and account within 90 days
after receipt thereof, Cleveland-Cliffs and the Trust Beneficiary shall be
deemed to have approved such statement and account, and in such case, the
Trustee shall be forever released and discharged with respect to all matters and
things reported in such statement and account as though it had been settled by a
decree of a court of competent jurisdiction in an action or proceeding to which
Cleveland-Cliffs and the Trust Beneficiaries were parties.
(b) (i) The Trustee shall maintain a separate subaccount for each
Trust Beneficiary (a "Trust Beneficiary Account") and an account (the "Master
Account") that shall be kept separate from all Trust Beneficiary Accounts and
shall not be identified with any Trust Beneficiary. The Trustee shall credit or
debit each Trust Beneficiary Account and the Master Account as appropriate to
reflect the respective allocable portion of the Trust assets, as such Trust
assets may be adjusted from time to time pursuant to the terms of this Trust
Agreement No. 1. Prior to the date of a Change of Control, all deposits of
principal pursuant to Section 1(a) shall be allocated and
<PAGE> 17
17
reallocated as directed by Cleveland-Cliffs. On or after the date of a Change of
Control deposits of principal may be allocated, but not reallocated by
Cleveland-Cliffs. If any deposit of principal is not allocated by the Company,
such amount shall be allocated by the Trustee to the Master Account.
(ii) As further described in this Section 7(b)(ii), as of the
beginning of each calendar quarter ending after the Trust has become
irrevocable, the Trustee shall (A) ascertain (or cause to be determined) the
Fully Funded amounts (as defined in Section 4 hereof), (B) allocate the income
of the Trust, (C) determine the amount of all Account Excesses (as hereinafter
defined), and (D) allocate amounts to and from the Master Account. The "Account
Excess" with respect to a Trust Beneficiary Account shall be equal to the
excess, if any, of the fair market value of the assets held in the Trust
allocated to a Trust Beneficiary Account over the respective Fully Funded
amount. The Trustee shall allocate the income of the Trust and all Account
Excesses to the Master Account. The balance in the Master Account shall then be
allocated to any Trust Beneficiary Accounts that are not Fully Funded in
proportion to the differences between the respective Fully Funded amount and the
balance of the Trust Beneficiary Account, insofar as possible, until all Trust
Beneficiary Accounts are Fully Funded.
(c) Nothing in this Section 7 shall preclude the commingling of Trust
assets for investment.
<PAGE> 18
18
8. RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent corporate trustee, acting in a like capacity and familiar with such
matters, would use in the conduct of an enterprise of a like character and with
like aims; provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or approval,
contemplated by and complying with the terms of this Trust Agreement No. 1,
given in writing by Cleveland-Cliffs or by a Trust Beneficiary applicable to his
or her beneficial interest herein; and provided, further, that the Trustee shall
have no duty to seek additional deposits of principal from Cleveland-Cliffs for
additional amounts accrued under the Agreement or the Plan, and the Trustee
shall not be responsible for the adequacy of this Trust.
(b) The Trustee may vote any stock or other securities and exercise
any right appurtenant to any stock, other securities or other property held
hereunder, either in person or by general or limited proxy, power of attorney or
other instrument.
(c) The Trustee may hold securities in bearer form and may register
securities and other property held in the trust fund in its own name or in the
name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, and deposit, or arrange for deposit of property with any depository;
provided that the books and records of the Trustee shall at all times show
<PAGE> 19
19
that all such securities are part of the trust fund under this Trust Agreement
No. 1.
(d) If the Trustee shall undertake or defend any litigation arising in
connection with this Trust Agreement No. 1, it shall be indemnified by
Cleveland-Cliffs against its costs, expenses and liabilities (including without
limitation attorneys' fees and expenses) relating thereto.
(e) The Trustee may consult with legal counsel, independent
accountants and actuaries (who may be counsel, independent accountants or
actuaries for Cleveland-Cliffs) with respect to any of its duties or obligations
hereunder, and shall be fully protected in acting or refrain from acting in
accordance with the advice of such counsel, independent accountants and
actuaries.
(f) The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement No. 1 upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties.
(g) The Trustee may hire agents, accountants, actuaries, and financial
consultants, who may be agents, accountants, actuaries, or financial
consultants, as the case may be, for Cleveland-Cliffs, and shall not be
answerable for the conduct of same if appointed with due care.
<PAGE> 20
20
(h) The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payments of which the Trustee is
the designated beneficiary.
(i) The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law unless expressly provided otherwise herein.
9. AMENDMENTS, ETC., TO AGREEMENTS AND PLAN; COOPERATION OF
CLEVELAND-CLIFFS.
(a) Cleveland-Cliffs has previously furnished the Trustee a complete
and correct copy of each Agreement and of the Plan, and Cleveland-Cliffs shall,
and any Trust Beneficiary may, promptly furnish the Trustee true and correct
copies of any amendment, restatement or successor thereto, whereupon such
amendment, restatement or successor shall be incorporated herein by reference,
provided that such amendment, restatement or successor shall not affect the
Trustee's duties and responsibilities hereunder without the consent of the
Trustee.
(b) Cleveland-Cliffs shall provide the Trustee with all information
requested by the Trustee for purposes of determining payments to the Trust
Beneficiaries or withholding of taxes as provided in Section 2. Upon the failure
of Cleveland- Cliffs or any Trust Beneficiary to provide any such information,
the Trustee shall, to the extent necessary in the sole judgment of the Trustee,
(i) compute the amount payable hereunder to any Trust Beneficiary; and (ii)
notify Cleveland-Cliffs and the Trust Beneficiary in writing of its
computations. Thereafter this
<PAGE> 21
21
Trust Agreement No. l shall be construed as to the Trustee's duties and
obligations hereunder in accordance with such Trustee determinations without
further action; provided, however, that no such determinations shall in any way
diminish the rights of any Trust Beneficiary hereunder or under any Agreement or
the Plan; and provided, further, that no such determinations shall be deemed to
modify this Trust Agreement No. 1, any Agreement or the Plan. Nothing in this
Trust Agreement No. l shall restrict Cleveland-Cliffs' right to amend, modify or
terminate the Plan.
(c) At such times as may in the judgment of Cleveland-Cliffs be
appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of Trust Beneficiaries to Exhibit A
(or the deletion of Trust Beneficiaries from Exhibit A who have no Benefits
currently due or payable in the future); provided, however, that no such
amendment shall be made after the date of a Change of Control.
10. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by Cleveland-Cliffs and the Trustee. The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant to
Sections 8(d), 8(e) and 8(g) and liabilities to creditors pursuant to court
direction as provided in Section 3(a) hereof. Such compensation and expenses
shall in all events be payable either directly by Cleveland-Cliffs or, in the
event that
<PAGE> 22
22
Cleveland-Cliffs shall refuse, from the assets of the Trust and charged pro rata
in proportion to each separate account balance. The Trust shall have a claim
against Cleveland-Cliffs for any such compensation or expenses so paid.
11. REPLACEMENT OF THE TRUSTEE. (a) Prior to the date of a Change of
Control, the Trustee may be removed by Cleveland-Cliffs. On or after the date
of a Change of Control, the Trustee may be removed at any time by agreement of
Cleveland-Cliffs and a majority of the Trust Beneficiaries. The Trustee may
resign after providing not less than 90 days' notice to Cleveland-Cliffs and to
the Trust Beneficiaries. In case of removal or resignation, a new trustee, which
shall be independent and not subject to control of either Cleveland-Cliffs or
the Trust Beneficiaries, shall be appointed as shall be agreed by
Cleveland-Cliffs and a majority of the Trust Beneficiaries. No such removal or
resignation shall become effective until the acceptance of the Trust by a
successor trustee designated in accordance with this Section 11. If the Trustee
should resign, and within 45 days of the notice of such resignation,
Cleveland-Cliffs and the Executives shall not have notified the Trustee of an
agreement as to a replacement trustee, the Trustee shall appoint a successor
trustee, which shall be a bank or trust company, wherever located, having a
capital and surplus of at least $500,000,000 in the aggregate.
(b) For purposes of the removal or appointment of a Trustee under this
Section 11, (i) if any Trust Beneficiary shall
<PAGE> 23
23
be deceased or adjudged incompetent, such Trust Beneficiary's personal
representative (including his or her guardian, executor or administrator) shall
participate in such Trust Beneficiary's stead, and (ii) a Trust Beneficiary
shall not participate if all payments of Benefits then currently due or payable
in the future have been made to such Trust Beneficiary.
12. AMENDMENT OR TERMINATION. (a) This Trust Agreement No. 1 may be
amended by Cleveland-Cliffs and the Trustee without the consent of any Trust
Beneficiary provided the amendment does not adversely affect any Trust
Beneficiary. This Trust Agreement No. 1 may also be amended at any time and to
any extent by a written instrument executed by the Trustee, Cleveland-Cliffs and
the Trust Beneficiaries, except to alter Section 12(b), and except that
amendments to Exhibit A contemplated by Section 9(c) hereof shall be made as
therein provided.
(b) The Trust shall terminate on the date on which the Trust no longer
contains any assets, or, if earlier, the date on which each Trust Beneficiary is
entitled to no further payments hereunder.
(c) Upon termination of the Trust as provided in Section 12(b) hereof,
any assets remaining in the Trust shall be returned to Cleveland-Cliffs or as it
directs.
13. SPECIAL DISTRIBUTION. (a) It is intended that (i) the creation of,
and transfer of assets to, the Trust will not cause any Agreement or the Plan to
be other than "unfunded" for
<PAGE> 24
24
purposes of title I of ERISA; (ii) transfers of assets to the Trust will not be
transfers of property for purposes of section 83 of the Code, or any successor
provision thereto, nor will such transfers cause a currently taxable benefit to
be realized by a Trust Beneficiary pursuant to the "economic benefit" doctrine;
and (iii) pursuant to section 451 of the Code, or any successor provision
thereto, amounts will be includable as compensation in the gross income of a
Trust Beneficiary in the taxable year or years in which such amounts are
actually distributed or made available to such Trust Beneficiary by the Trustee.
(b) Notwithstanding anything to the contrary contained in this Trust
Agreement No. 1, in the event it is determined by a final decision of the
Internal Revenue Service, or, if an appeal is taken therefrom, by a court of
competent jurisdiction that (i) by reason of the creation of, and a transfer of
assets to the Trust, the Trust is considered "funded" for purposes of title I of
ERISA; or (ii) a transfer of assets to the Trust is considered a transfer of
property for purposes of section 83 of the Code or any successor provision
thereto; or (iii) a transfer of assets to the Trust causes a Trust Beneficiary
to realize income pursuant to the "economic benefit" doctrine; or (iv) pursuant
to section 451 of the Code or any successor provision thereto, amounts are
includable as compensation in the gross income of a Trust Beneficiary in a
taxable year that is prior to the taxable year or years in which such amounts
would, but for this Section 13, otherwise actually be distributed or made
available to such Trust
<PAGE> 25
25
Beneficiary by the Trustee, then (A) the assets held in Trust shall be allocated
in accordance with Section 7(b) hereof, and (B) promptly after the next
quarterly allocation and reallocation pursuant to Section 7(b) hereof, the
Trustee shall distribute to each affected Trust Beneficiary an amount equal to
the lesser of (i) the amount which, after taking into account the federal, state
and local income tax consequences of the special distribution itself, is equal
to the sum of any federal, state and local income taxes, interest due thereon,
and penalties assessed with respect thereto, which are attributable to amounts
that are includable in the income of such Trust Beneficiary, or (ii) the balance
of the Trust Beneficiary Account corresponding to such amount.
14. SEVERABILITY, ALIENATION, ETC. (a) Any provision of this Trust
Agreement No. 1 prohibited by law shall be ineffective to the extent of any such
prohibition without invalidating the remaining provisions hereof.
(b) To the extent permitted by law, Benefits to Trust Beneficiaries
under this Trust Agreement No. l may not be anticipated, assigned (either at law
or in equity), alienated or subject to attachment, garnishment, levy, execution
or other legal or equitable process and no benefit provided for herein and
actually paid to any Trust Beneficiary by the Trustee shall be subject to any
claim for repayment by Cleveland-Cliffs or Trustee.
<PAGE> 26
26
(c) This Trust Agreement No. 1 shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.
(d) This Trust Agreement No. l may be executed in two or more
counterparts, each of which shall be considered an original agreement. This
Trust Agreement No. 1 shall become effective immediately upon the execution by
Cleveland-Cliffs of at least one counterpart, it being understood that all
parties need not sign the same counterpart, but shall not bind any Trustee until
such Trustee has executed at least one counterpart.
15. NOTICES; IDENTIFICATION OF CERTAIN TRUST BENEFICIARIES. (a) All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been duly given when received:
If to the Trustee, to:
KeyTrust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Trust Counsel
If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc.
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Secretary
If to the Trust Beneficiaries, to the addresses
listed on Exhibit A hereto
provided, however, that if any party or any Trust Beneficiary or his or its
successors shall have designated a different address
<PAGE> 27
27
by written notice to the other parties, then to the last address
so designated.
(b) Cleveland-Cliffs shall provide the Trustee with the names of any
beneficiary or beneficiaries designated by the Executives (and who are,
therefore, Trust Beneficiaries hereunder).
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have caused
counterparts of this Trust Agreement No. 1 (Amended and Restated Effective June
1, 1997) to be executed on their behalf on June 12, 1997, each of which shall
be an original agreement.
CLEVELAND-CLIFFS INC
By /s/ R.F. Novak
--------------------------------
Its V.P.-H.R.
-----------------------------
KEYTRUST COMPANY OF OHIO, N.A.,
as Trustee
By /s/ Kelley Clark
--------------------------------
Its Vice President
-----------------------------
and
By /s/ J.A. Radazzo
--------------------------------
Its VP
-----------------------------
<PAGE> 28
EXHIBIT A
---------
EXECUTIVE TITLE TRUST BENEFICIARY
- --------- ----- -----------------
M. Thomas Moore Chairman and Chief M. T. Moore Family
Executive Officer Trust
The M. Thomas Moore
Family Trust
Dated 11/29/85
Co-Trustees are:
Robert Bouhall and
William E. Reichard
of the Firm of
Conway, Patton,
Bouhall and Reichard
1220 Huntington
Building
Cleveland, OH 44115
John S. Brinzo Executive Vice Marlene J. Brinzo
President-Finance (wife)
William R. Calfee Executive Vice Society National
President- Bank, or its
Commercial successor, as Trustee
under the William R.
Calfee
Revocable Trust
Agreement dated
5/9/89, as the same
may hereafter be
amended,
800 Superior Ave.,
Cleveland, OH 44114
Thomas J. O'Neill Executive Vice
President - Operations
<PAGE> 29
EXHIBIT B
---------
"Change of Control" shall be deemed to have occurred if
(i) Cleveland-Cliffs shall merge into itself, or be
merged or consolidated with, another corporation and as a result of
such merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of Cleveland-Cliffs as the
same shall have existed immediately prior to such merger or
consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) during any period of three consecutive years,
individuals who at the beginning of any such period
<PAGE> 30
2
constitute the Board of Directors of Cleveland-Cliffs cease, for any
reason, to constitute at least a majority thereof, unless the election,
or the nomination for election by the shareholders of Cleveland-Cliffs,
of each Director first elected during any such period was approved by a
vote of at least one-third of the Directors of Cleveland-Cliffs who are
Directors of Cleveland-Cliffs on the date of the beginning of any such
period.
<PAGE> 1
Exhibit 10(b)
TRUST AGREEMENT NO. 2
(Amended and Restated Effective June 1, 1997)
---------------------------------------------
This Trust Agreement No. 2 (Amended and Restated Effective June 1,
1997) ("Trust Agreement No. 2") is made on this 12th day of June, 1997, by and
between Cleveland-Cliffs Inc, an Ohio corporation ("Cleveland-Cliffs"), and
KeyTrust Company of Ohio, N.A., a national banking association, as trustee (the
"Trustee").
WITNESSETH:
-----------
WHEREAS, under the provisions of certain agreements between each of
the executives of Cleveland-Cliffs (the "Executives") listed (from time to time
as provided in Section 9(c) hereof) on Exhibit A hereto and Cleveland-Cliffs
(the "Executive Agreements"), as each of the same may hereafter be amended or
restated, or any successor thereto, the Executives may become entitled to
certain compensation, pension and other benefits;
WHEREAS, under the provisions of the Severance Pay Plan for Key
Employees of Cleveland-Cliffs Inc (the "Severance Plan"), effective February 1,
1992, as the same may be supplemented, amended, or restated, or any successor
thereto, certain key employees (the "Key Employees") also listed (from time to
time as provided in Section 9(c) hereof) on Exhibit A hereto, may become
entitled to compensation, pension and other benefits;
WHEREAS, under the provisions of the Cleveland-Cliffs Inc Retention
Plan for Salaried Employees (the "Retention Plan"),
<PAGE> 2
2
adopted January 14, 1992, as the same may be supplemented, amended, or restated,
or any successor thereto, certain salaried employees identified therein (the
"Covered Employees") may become entitled to compensation and other benefits;
WHEREAS, in addition to the compensation, pension and other benefits
provided by the Executive Agreements, the Severance Plan and the Retention Plan,
in order to ensure that the obligations of Cleveland-Cliffs under the Executive
Agreements, the Severance Plan and the Retention Plan can be enforced by the
Executives, the Key Employees, and the Covered Employees, respectively,
(referred to herein singularly as an "Indemnitee" and collectively as the
"Indemnitees") in the event of a "Change of Control" (as defined herein), the
Executive Agreements, the Severance Plan and the Retention Plan all provide that
Cleveland-Cliffs will establish a trust to fund reasonable attorneys' and
related fees and expenses associated with a lawsuit, action or other proceeding
brought by or on behalf of an Indemnitee to enforce provisions of an Executive
Agreement (referred to collectively herein as "Expenses");
WHEREAS, the Executive Agreements, the Severance Plan and the
Retention Plan all provide that the foregoing trust arrangement will be
considered a part of the Executive Agreements, the Severance Plan and the
Retention Plan, and will set forth the terms and conditions relating to the
payment of Expenses;
<PAGE> 3
3
WHEREAS, Cleveland-Cliffs and Ameritrust Company National Association,
a predecessor of the Trustee, entered into a trust agreement ("Trust Agreement
No. 2"), dated October 28, 1987, to provide for the payment of reasonable
attorneys' and related fees and expenses incurred by certain executives in the
enforcement of their rights under agreements between such executives and
Cleveland-Cliffs in effect at that time;
WHEREAS, Trust Agreement No. 2 was amended and restated by an Amended
and Restated Trust Agreement No. 2, dated March 24, 1992; and
WHEREAS, Cleveland-Cliffs desires to amend and restate this Trust
Agreement No. 2 heretofore entered into and has transferred or will transfer to
the trust (the "Trust") established by this Trust Agreement No. 2 assets which
shall be held therein until paid to Indemnitees with respect to Expenses in such
manner and at such times as specified herein.
NOW, THEREFORE, the parties amend and restate the Trust Agreement No.
2 and agree that the Trust shall be comprised, held and disposed of as follows:
1. TRUST FUND. (a) Cleveland-Cliffs hereby deposits with the Trustee
in trust Ten Dollars ($10.00), which shall become the principal of this Trust,
to be held, administered and disposed of by the Trustee as herein provided.
(b) The Trust hereby established shall be revocable by
Cleveland-Cliffs at any time prior to the date on which occurs a "Change of
Control," as that term is defined in this Section
<PAGE> 4
4
1(b); on or after such date, this Trust shall be irrevocable. Cleveland-Cliffs
shall notify the Trustee promptly in the event that a Change of Control has
occurred. The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the
former shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of the
combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former shareholders
of Cleveland-Cliffs as the same shall have existed immediately prior to
such sale or transfer;
(iii) a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act
of 1934, shall become the beneficial owner (as defined in Rule 13d-3 of the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934) of 30% or more of the outstanding voting
<PAGE> 5
5
securities of Cleveland-Cliffs (whether directly or indirectly); or
(iv) during any period of three consecutive years, individuals who at
the beginning of any such period constitute the Board of Directors of
Cleveland-Cliffs cease, for any reason, to constitute at least a majority
thereof, unless the election, or the nomination for election by the
shareholders of Cleveland-Cliffs, of each Director first elected during any
such period was approved by a vote of at least one-third of the Directors
of Cleveland-Cliffs who are Directors of Cleveland-Cliffs on the date of
the beginning of any such period.
(c) The principal of the Trust and any earnings thereon shall be held
in trust separate and apart from other funds of Cleveland-Cliffs exclusively for
the uses and purposes herein set forth. No Indemnitee shall have any preferred
claim on, or any beneficial ownership interest in, any assets of the Trust prior
to the time that such assets are paid to an Indemnitee as Expenses as provided
herein.
(d) Any Company (as defined in paragraph (e) below) may at any time or
from time to time make additional deposits of cash or other property in the
Trust to augment the principal to be held, administered and disposed of by the
Trustee as herein provided, but no payments of all or any portion of the
principal of the Trust or earnings thereon shall be made to Cleveland-
<PAGE> 6
6
Cliffs or any other person or entity on behalf of Cleveland-Cliffs except as
herein expressly provided.
(e) The term "Company" as used herein shall mean Cleveland-Cliffs, any
wholly owned subsidiary or any partnership or joint venture in which
Cleveland-Cliffs and/or any wholly-owned subsidiary is a partner or venturer and
Empire Iron Mining Partnership, or any entity that is a successor to Cleveland-
Cliffs in ownership of substantially all of its assets.
(f) This Trust Agreement No. 2 shall be construed as a part of the
Executive Agreements, the Severance Plan and the Retention Plan.
(g) This Trust is intended to be a grantor trust, within the meaning
of Section 671 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto, and shall be construed accordingly. The Trust
is not designed to qualify under Section 401(a) of the Code or to be subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
2. PAYMENTS TO INDEMNITEES. (a) The Trustee shall promptly pay
Expenses to the Indemnitees from the assets of the Trust in accordance with
Section 13 of the Executive Agreements, Section 12 of the Severance Plan,
Article IX of the Retention Plan and this Section 2, provided that (i) this
Trust Agreement No. 2 has not been terminated pursuant to Section 12 hereof;
(ii) the Trust has become irrevocable; (iii) with respect to the first demand
for payment of Expenses hereunder received by the Trustee,
<PAGE> 7
7
the Trustee shall immediately give appropriate notice thereof to all
Indemnitees, and shall make no payment of Expenses until the 21st day after such
notice has been given; and (iv) the requirements of Section 2(c) and 2(d) hereof
have been satisfied. The Trustee shall promptly inform the Company as to amounts
paid to any Indemnitee pursuant to this Section.
(b) It is the intention of Cleveland-Cliffs that during the 21-day
period prescribed by Section 2(a) (iii) hereof, the Indemnitees will make
reasonable efforts to consult with each other and to take into account the
interests of all Indemnitees in deciding on how best to proceed to enforce the
provisions of the Executive Agreements, the Severance Plan, and/or the Retention
Plan such that the assets of the Trust are utilized most effectively; provided,
however, that this Section 2(b) is to be construed as precatory in nature, and
in the absence of any other agreement or arrangement, this Trust Agreement No. 2
(without regard to this Section 2(b)) shall apply to the payment of Expenses.
(c) A demand for payment by an Indemnitee hereunder must be made
within two months of the date on which the Indemnitee receives a bill, invoice
or other statement setting forth the Expenses that have been incurred. In order
to demand payment hereunder, the Indemnitee must deliver to the Trustee (i) a
certificate signed by or on behalf of such Indemnitee, certifying to the Trustee
that the Company is in default in paying the Indemnitee a specified amount which
the Indemnitee
<PAGE> 8
8
states to be owed under an Executive Agreement, the Severance Plan or the
Retention Plan, and (ii) a notice in writing and in reasonable detail of the
Expenses that are to be paid hereunder.
(d) To the extent payments hereunder may be made only from funds held
in the form of a deposit or obligation, such payments may be postponed until
such deposit or obligation shall have matured. Payments shall be made to the
Indemnitee in the full amount noticed until the Trust is depleted; provided that
if on the date such amount is to be paid from the Trust other amounts have been
claimed but not yet paid to the same or other Indemnitees and the aggregate
amount so claimed exceeds the amount available in the Trust, the Trustee shall
only pay that portion of the amount then payable to each such Indemnitee
determined by multiplying such amount by a fraction, the numerator of which is
the amount then in the Trust and the denominator of which is the aggregate
amount noticed by the Indemnitees to be owed but not yet paid to that date.
3. RIGHTS OF INDEMNITEES. (a) Nothing in this Trust Agreement No. 2
shall in any way diminish any rights of any Indemnitee to pursue his rights as a
general creditor of the Company with respect to Expenses or otherwise, and (b)
the rights of the Indemnitees under the Executive Agreements, Severance Plan or
Retention Plan shall in no way be affected or diminished by any provision of
this Trust Agreement No. 2 or action taken pursuant to this Trust Agreement No.
2, it being the intent of Cleveland-Cliffs that rights of the Indemnitees be
security for
<PAGE> 9
9
obligations of the Company under the Executive Agreements, Severance Plan or
Retention Plan, except that any payment actually received by any Indemnitee
hereunder shall reduce dollar-per-dollar amounts otherwise due to such
Indemnitee pursuant to Section 13 of the Executive Agreements, Section 12 of the
Severance Plan, or Article IX of the Retention Plan, as applicable.
4. PAYMENTS TO CLEVELAND-CLIFFS. Except to the extent expressly
contemplated by Section 1(b), Cleveland-Cliffs shall have no right or power to
direct the Trustee to return any of the Trust assets to Cleveland-Cliffs before
all payments of Expenses have been made to all Indemnitees as herein provided.
5. INVESTMENT OF TRUST FUND. The Trustee shall invest the principal of
the Trust including any income accumulated and added to principal in (a)
interest-bearing deposit accounts or certificates of deposit (including any such
accounts or certificates issued or offered by the Trustee or any successor or
affiliated corporation but excluding obligations of the Company), (b) direct
obligations of the United States of America, or obligations the payment of which
is guaranteed, as to both principal and interest, by the government or an agency
of the government of the United States of America, or (c) one or more mutual
funds or commingled funds, whether or not maintained by the Trustee,
substantially all of the assets of which is invested in obligations the income
from which is not subject to taxation; provided, however, that no such
investment may mature more than
<PAGE> 10
10
90 days after the date of purchase. Nothing in this Trust
Agreement No. 2 shall preclude the commingling of Trust assets
for investment. The Trustee shall not be required to invest
nominal amounts.
6. INCOME OF THE TRUST. During the continuance of
this Trust all net income of the Trust shall be retained in the
Trust.
7. ACCOUNTING BY TRUSTEE. The Trustee shall keep records in
reasonable detail of all investments, receipts, disbursements and all other
transactions required to be done, including such specific records as shall be
agreed upon in writing by Cleveland-Cliffs and the Trustee. All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by Cleveland-Cliffs, by any Indemnitee or by any agent or representative of any
of the foregoing. Within 60 calendar days following the end of each calendar
year and within 60 calendar days after the removal or resignation of the
Trustee, the Trustee shall deliver to Cleveland-Cliffs and, if such year end,
removal or resignation occurs on or after the date on which a Change of Control
has occurred, to each Indemnitee a written account of its administration of the
Trust during such year or during the period from the end of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions affected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of
<PAGE> 11
11
such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities, rights and other property held in
the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. The Trustee shall furnish to Cleveland-Cliffs
on a quarterly basis (or as Cleveland-Cliffs shall direct from time to time) and
in a timely manner such information regarding the Trust as Cleveland-Cliffs
shall require for purposes of preparing its statements of financial condition.
Unless Cleveland-Cliffs or any Indemnitee shall have filed with the Trustee
written exception or objection to any such statement and account within 90 days
after receipt thereof, Cleveland-Cliffs or the Indemnitee shall be deemed to
have approved such statement and account, and in such case the Trustee shall be
forever released and discharged with respect to all matters and things reported
in such statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding to which
Cleveland-Cliffs and the Indemnitees were parties.
8. RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent corporate trustee, acting in like capacity and familiar with such
matters, would use in the conduct of an enterprise of a like character and with
like aims; provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or approval which
is contemplated by and in
<PAGE> 12
12
conformity and compliance with the terms of this Trust Agreement No. 2, the
Executive Agreements, the Severance Plan and the Retention Plan, and is given in
writing by Cleveland-Cliffs or by an Indemnitee with respect to his beneficial
interest herein; and provided, further, that the Trustee shall have no duty to
seek additional deposits of principal from Cleveland-Cliffs, and the Trustee
shall not be responsible for the adequacy of this Trust.
(b) The Trustee shall not be required to undertake or to defend any
litigation arising in connection with this Trust Agreement No. 2 unless it be
first indemnified by Cleveland-Cliffs against its prospective costs, expenses,
and liabilities (including without limitation attorneys' fees and expenses)
relating thereto, and Cleveland-Cliffs hereby agrees to indemnify the Trustee
and to be primarily liable for such costs, expenses and liabilities.
(c) The Trustee may consult with legal counsel (which, after a Change
of Control, shall be independent with respect to the Company) with respect to
any of its duties or obligations hereunder, and shall be fully protected in
acting or refraining from acting in accordance with the advice of such counsel.
(d) The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement No. 2 upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties, including, without limiting the scope of
<PAGE> 13
13
this Section 8(d), (i) the notice of a Change of Control required by Section
1(b) hereof, and (ii) the certification and notice required by Section 2(c)
hereof.
(e) The Trustee may hire agents, accountants and financial
consultants, who may be agent, accountant, or financial consultant, as the case
may be, for the Company, and shall not be answerable for the conduct of same if
appointed with due care.
(f) The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law unless expressly provided otherwise herein.
(g) The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payment of which the Trustee is
the designated beneficiary.
9. AMENDMENTS, ETC. TO EXECUTIVE AGREEMENTS, THE SEVERANCE PLAN AND
THE RETENTION PLAN; COOPERATION OF CLEVELAND-CLIFFS. (a) Cleveland-Cliffs has
previously furnished the Trustee a complete and correct copy of each Executive
Agreement, the Severance Plan and the Retention Plan. Any Indemnitee may, and
Cleveland-Cliffs shall, provide the Trustee with true and correct copies of any
amendment, restatement or successor to any Executive Agreement, the Severance
Plan and the Retention Plan, whereupon such amendment, restatement or successor
shall be incorporated herein by reference, provided that such amendment,
restatement or successor shall not affect the Trustee's duties and
responsibilities hereunder without the consent of the Trustee.
<PAGE> 14
14
(b) Cleveland-Cliffs shall provide the Trustee with all information
requested by the Trustee for purposes of determining payments to the Indemnitees
as provided in Section 2. Upon the failure of Cleveland-Cliffs or any Indemnitee
to provide any such information requested by the Trustee for purposes of
determining payments to the Indemnitees as provided in Section 2, the Trustee
shall, to the extent necessary in the sole judgment of the Trustee, (i) compute
the amount payable hereunder to any Indemnitee; and (ii) notify Cleveland-Cliffs
and the Indemnitee in writing of its computations. Thereafter this Trust
Agreement No. 2 shall be construed as to the Trustee's duties and obligation
hereunder in accordance with such Trustee determinations without further action;
provided, however, that no such determinations shall in any way diminish the
rights of the Indemnitees hereunder or under the Executive Agreements, Severance
Plan or Retention Plan, and provided, further, that no such determination shall
be deemed to modify this Trust Agreement No. 2 or any Executive Agreement, the
Severance Plan, or the Retention Plan.
(c) At such times as may in the judgment of Cleveland-Cliffs be
appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of Indemnitees to Exhibit A (or the
deletion of Indemnitees from Exhibit A who are not currently and shall not in
the future be entitled to Expenses); provided, however, that no such amendment
shall be made after the date of a Change of
<PAGE> 15
15
Control, other than to designate a different address pursuant to Section 14
hereof.
10. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by Cleveland-Cliffs and the Trustee. The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant to
Sections 8(c) and 8(e) hereof. Such compensation and expenses shall in all
events be payable either directly by Cleveland-Cliffs or, in the event that
Cleveland-Cliffs shall refuse, from the assets of the Trust. The Trust shall
have a claim against Cleveland-Cliffs for any such compensation or expenses so
paid.
11. REPLACEMENT OF THE TRUSTEE. (a) The Trustee may resign after
providing not less than 90 days' notice to Cleveland-Cliffs and, on or after the
date on which a Change of Control has occurred, to the Indemnitees. Prior to the
date on which a Change of Control has occurred, the Trustee may be removed at
any time by Cleveland-Cliffs. On or after such date, such removal shall also
require the agreement of a majority of the Indemnitees. Prior to the date on
which a Change of Control has occurred, a replacement or successor trustee shall
be appointed by Cleveland-Cliffs. On or after such date, such appointment shall
also require the agreement of a majority of the Indemnitees. No such removal or
resignation shall become
<PAGE> 16
16
effective until the acceptance of the trust by a successor trustee designated in
accordance with this Section 11. If the Trustee should resign, and within 45
days of the notice of such resignation Cleveland-Cliffs and a majority of the
Indemnitees (if required) shall not have notified the Trustee of an agreement as
to a replacement trustee, the Trustee shall appoint a successor trustee, which
shall be a bank or trust company, wherever located, having a capital and surplus
of at least $500,000,000 in the aggregate. Notwithstanding the foregoing, a new
trustee shall be independent and not subject to control of either
Cleveland-Cliffs or the Indemnitees. Upon the acceptance of the trust by a
successor trustee, the Trustee shall release all of the monies and other
property in the Trust to its successor, who shall thereafter for all purposes of
this Trust Agreement No. 2 be considered to be the "Trustee."
(b) For purposes of the removal or appointment of a trustee under this
Section 11, if any Indemnitee shall be deceased or adjudged incompetent, such
Indemnitee's personal representative (including his or her guardian, executor or
administrator) shall participate in such Indemnitee's stead.
12. AMENDMENT OR TERMINATION. (a) This Trust Agreement No. 2 may be
amended at any time and to any extent by a written instrument executed by the
Trustee, Cleveland-Cliffs and, on or after the date on which a Change of Control
has occurred, a majority of the Indemnitees, except to make the Trust revocable
after it has become irrevocable in accordance with Section 1(b)
<PAGE> 17
17
hereof, or to alter Section 12(b) hereof, except that amendments contemplated by
Section 9 hereof shall be made as therein provided.
(b) The Trust shall terminate upon the earliest of (i) the tenth
anniversary of the date on which a Change of Control has occurred; (ii) the
third anniversary of the date on which a Change of Control has occurred,
provided that the Trustee has received no demand for payment of Expenses prior
to such anniversary; (iii) such time as the Trust no longer contains any assets;
(iv) such time as the Trustee shall have received consents from all Indemnitees
to the termination of this Trust Agreement No. 2; or (v) there is no longer any
living Indemnitee under this Trust Agreement No. 2 and there is no pending
demand by the estate of any Indemnitee against the Trust.
(c) Upon termination of the Trust as provided in Section 12(b) hereof,
any assets remaining in the Trust shall be returned to Cleveland-Cliffs unless a
determination is made by legal counsel experienced in such matters that the
assets of the Trust may not be returned to Cleveland-Cliffs without violating
Section 403(d) (2) of ERISA, or any successor provision thereto. If such a
determination is made, any assets remaining in the Trust, after satisfaction of
liabilities hereunder, pursuant to the written direction of Cleveland-Cliffs,
shall be (i) distributed to any welfare benefit plan (within the meaning of
ERISA) maintained by Cleveland-Cliffs at the time of distribution so established
at such time in order to receive such assets from
<PAGE> 18
18
this Trust, or (ii) otherwise applied to provide benefits which may be provided
by a welfare benefit plan (within the meaning of ERISA), directly or through the
purchase of insurance.
13. SEVERABILITY, ALIENATION, ETC. (a) Any provision of this Trust
Agreement No. 2 prohibited by law shall be ineffective to the extent of any such
prohibition without invalidating the remaining provisions hereof.
(b) To the extent permitted by law, benefits to Indemnitees under this
Trust Agreement No. 2 may not be anticipated (except as herein expressly
provided), assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process. No
benefit actually paid to any Indemnitee by the Trustee shall be subject to any
claim for repayment by the Company or Trustee, except in the event of (i) a
false claim, or (ii) a payment is made to an incorrect Indemnitee.
(c) This Trust Agreement No. 2 shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.
(d) This Trust Agreement No. 2 may be executed in two or more
counterparts, each of which shall be considered an original agreement. This
Trust Agreement No. 2 shall become effective immediately upon the execution by
Cleveland-Cliffs of at least one counterpart, it being understood that all
parties
<PAGE> 19
19
need not sign the same counterpart, but shall not bind any Trustee until such
Trustee has executed at least one counterpart.
14. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
received:
If to the Trustee, to:
----------------------
KeyTrust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Trust Counsel
If to Cleveland-Cliffs, to:
---------------------------
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Secretary
If to an Indemnitee, to:
------------------------
His or her last address shown on
the records of the Company
provided, however, that if any party or his or its successors shall have
designated a different address by notice to the other parties, then to the last
address so designated.
<PAGE> 20
20
IN WITNESS WHEREOF, each of Cleveland-Cliffs and the Trustee have
caused counterparts of this Trust Agreement No. 2 (Amended and Restated
effective June 1, 1997) to be executed on their behalf on June 12, 1997, each of
which shall be an original agreement.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Its: V.P. - H.R.
-------------------------
KEYTRUST COMPANY OF OHIO, N.A.,
as Trustee
By: /s/ Kelley Clark
----------------------------
Its: Vice President
-------------------------
and
By: /s/ J.A. Radazzo
----------------------------
Its: VP
-------------------------
<PAGE> 21
Exhibit A
---------
Executives
- ----------
Name Title
---- -----
M. T. Moore Chairman and Chief Executive Officer
J. S. Brinzo Executive Vice President-Finance
W. R. Calfee Executive Vice President-Commercial
T. J. O'Neill Executive Vice President-Operations
Key Employees
- -------------
Name Title
---- -----
J. W. Sanders Senior Vice President-Technical
A. S. West Senior Vice President-Sales
C. B. Bezik Vice President and Treasurer
G. N. Chandler II Vice President
R. Emmet Vice President and Controller
F. L. Hartman Vice President and General Counsel
R. F. Novak Vice President-Human Resources
J. A. Trethewey Vice President-Operations Liason
J. E. Lenhard Secretary and Assistant General Counsel
R. C. Berglund General Manager-Northshore Mining Company
L. G. Dykers General Manager-Hibbing
Taconite Company
D. Lebel General Manager-Wabush Mines
M. P. Minar General Manager-Tilden Mine
T. S. Petersen General Manager-Empire Mine
J. N. Tuomi General Manager-LTV Steel Mining Company
R. W. von Bitter General Manager-Cliffs Reduced Iron
Corporation
<PAGE> 1
Exhibit 10(c)
FIRST AMENDMENT
TO
TRUST AGREEMENT NO. 2
(Amended and Restated Effective June 1, 1997)
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust Company
National Association entered into Trust Agreement No. 2 (the "Agreement")
effective October 28, 1987; and
WHEREAS, Key Trust Company of Ohio, N.A. (The "Trustee") is the successor
in interest to Society National Bank, which was the successor in interest to
AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee amended and restated the
Agreement effective as of June 1, 1997; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend an Exhibit to the
Agreement;
NOW, THEREFORE, effective July 1, 1997, Cleveland-Cliffs and the Trustee
hereby amend the Agreement by revising EXHIBIT A thereto, which EXHIBIT A is
attached hereto and made a part hereof, to provide as hereinafter set forth in
such attached EXHIBIT A.
* * *
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed this
First Amendment at Cleveland, Ohio this 15th day of July, 1997.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Title: Vice President - Human Resources
-----------------------
KEYTRUST COMPANY OF OHIO, N.A.,
By: /s/ Kelley Clark
----------------------------
Title: VP
-----------------------
and
By: /s/ J.A. Radazzo
----------------------------
Title: VP
-----------------------
<PAGE> 2
Executives Exhibit A
- ---------- ---------
Name Title
- ----------------------- ------------------------------------------
M. T. Moore Chairman and Chief Executive Officer
J. S. Brinzo Executive Vice President-Finance and Planning
W. R. Calfee Executive Vice President-Commercial
T. J. O'Neil Executive Vice President-Operations
Key Employees
- -------------
Name Title
- ------------------------ ------------------------------------------
J. W. Sanders Senior Vice President-International Development
A. S. West Senior Vice President-Sales
C. B. Bezik Vice President and Treasurer
G. N. Chandler Vice President-Reduced Iron
R. Emmet Vice President and Controller
F. L. Hartman Vice President and General Counsel
R. F. Novak Vice President-Human Resources
J. A. Trethewey Vice President-Operations Services
J. E. Lenhard Secretary and Assistant General Counsel
R. C. Berglund General Manager-Northshore Mine
L. G. Dykers General Manager-Hibbing Taconite
D. Lebel General Manager-Wabush Mines
M. P. Mlinar General Manager-Tilden Mine
T. S. Petersen General Manager-Empire Mine
J. N. Tuomi General Manager-LTV Steel Mining Company
R. W. von Bitter General Manager-Cliffs Reduced Iron Corp.
7-1-97
<PAGE> 1
Exhibit 10(d)
THIRD AMENDMENT TO TRUST AGREEMENT NO. 4
----------------------------------------
WHEREAS, Cleveland Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust Company
National Association entered into Trust Agreement No. 4 (the "Agreement")
effective August 28, 1987, which Agreement was amended on two previous
occasions; and
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the successor
in interest to Society National Bank, which was the successor in interest to
AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to further amend the
Agreement;
NOW, THEREFORE, effective July 1, 1997, Cleveland-Cliffs and the Trustee
hereby amend the Agreement to provide as follows:
The third sentence of Section 1(b) of the Agreement is hereby restated in
its entirety, such third sentence to read as follows:
"The term 'Change of Control' shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or be merged
or consolidated with, another corporation and as a result of such
merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall be
owned in the aggregate by the former shareholders of
Cleveland-Cliffs as the same have existed immediately prior to
such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all
or substantially all of its assets to any other corporation or
other legal person, and immediately after such sale or transfer
less than 70% of the combined voting power of the outstanding
voting securities of such corporation or person is held in the
aggregate by the former shareholders of Cleveland-Cliffs as the
same shall have existed immediately prior to such sale or
transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the
Securities Exchange Act of 1934, shall become the beneficial
owner (as defined in Rule 13d-3 of the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1034) of
30% or more of the outstanding voting securities of
Cleveland-Cliffs (whether directly or indirectly); or
<PAGE> 2
(iv) During any period of three consecutive years,
individuals who at the beginning of any such period constitute
the Board of Directors of Cleveland-Cliffs cease, for any reason,
to constitute at least a majority thereof, unless the election,
or the nomination for election by the shareholders of
Cleveland-Cliffs or each director first elected during any such
period was approved by a vote of at least one-third of the
directors of Cleveland-Cliffs who are directors of the Company
on the date of the beginning of any such period."
* * *
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed this
Third Amendment at Cleveland, Ohio this 12th day of June, 1997.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Title: V.P. - H.R.
-----------------------
KEYTRUST COMPANY OF OHIO, N.A.,
By: /s/ Kelley Clark
----------------------------
Title: Vice President
-----------------------
and
Meg H. Halloran
----------------------------
Title: Trust Officer
-----------------------
<PAGE> 1
Exhibit 10(e)
FIFTH AMENDMENT TO TRUST AGREEMENT NO. 5
----------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into Trust Agreement No. 5, formally known
as Trust Agreement, (the "Agreement") effective October 28, 1987, which
Agreement was amended on four previous occasions;
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend the
Agreement;
NOW, THEREFORE, effective June 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement to provide as follows:
1. The third sentence of Section 1(b) of the Agreement is hereby
amended to read as follows:
"The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or be merged
or consolidated with, another corporation and as a result of such
merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in
the aggregate by the
<PAGE> 2
former shareholders of Cleveland-Cliffs as the same have existed
immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all
or substantially all of its assets to any other corporation or other
legal person, and immediately after such sale or transfer less than
70% of the combined voting power of the outstanding voting securities
of such corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or
indirectly); or
(iv) During any period of three consecutive years,
individuals who at the beginning of any such period constitute the
Board of Directors of Cleveland-Cliffs cease,
- 2 -
<PAGE> 3
for any reason, to constitute at least a majority thereof, unless the
election, or the nomination for election by the shareholders of
Cleveland-Cliffs or each director first elected during any such period
was approved by a vote of at least one-third of the directors of
Cleveland-Cliffs who are directors of the Company on the date of the
beginning of any such period."
2. Section 8(b) of the Agreement shall be amended to read as follows:
"(b) The Trustee may vote any stock (other than Common Shares of
Cleveland-Cliffs for which it receives instructions as provided in
Section 8(j) below) or other securities and exercise any right
pertinent to any such stock, other securities or other property it
holds, either in person or by general or limited proxy, power of
attorney or other instrument."
3. A new subsection (j) shall be added to Section 8 of the Agreement
to read as follows:
"(j) Each Executive who has full or partial Common Shares of
Cleveland-Cliffs allocated to his account on any record date for a
meeting of shareholders of Cleveland-Cliffs may exercise all voting
rights (including dissenter's rights) in connection with such
- 3 -
<PAGE> 4
meeting, and shall have the right to direct the Trustee as to the
manner in which such Common Shares are to be voted with respect to all
matters to be presented at such meeting. Before a meeting, the Trustee
shall cause to be sent to each Executive who has Common Shares
allocated to his account on the record date for such meeting a copy of
the proxy solicitation material therefore and such other information
as the Trustee deems necessary or appropriate, together with a form
requesting confidential directions from the Executive on how to vote
the Common Shares allocated to his account with respect to the matters
to be presented at the meeting. Upon timely receipt of such form
properly completed from an Executive, the Trustee shall vote the
Common Shares (or, as applicable, exercise any dissenter's rights) as
directed. In the event that the Trustee determines that any such
directions with respect to any Commons Shares are not proper, or are
not in accordance with the terms of this Agreement, or in the event
that the Trustee does not receive timely voting directions with
respect to any Common Shares held in the Trust, and with respect to
any Common Shares that are not allocated to any
- 4 -
<PAGE> 5
account under this Agreement, the Trustee shall vote such Common
Shares (or, as applicable, exercise any dissenter's rights) in a
manner that the Trustee determines to be prudent.
The Trustee shall have such powers and authority as are necessary
to discharge its duties and responsibilities as described in this
Section 8(j). The Trustee shall exercise such powers in its sole
discretion.
Fees and expenses of the Trustee or others in connection with the
exercise of any dissenter's rights will be charged against the account
or accounts with respect to which such rights are exercised. If the
Trustee determines that the account or accounts of any Executive
directing the exercise of any dissenter's rights is or are
insufficient to cover the fees and expenses the Trustee reasonably
estimates will be incurred in connection with such exercise, the
Trustee shall so inform each such Executive and the Trustee will not
be required to take and will be held harmless for not taking any
action with respect to the direction to exercise dissenter's rights
unless and until the Executive wishing to exercise such rights
provides the Trustee with surety and/or an
- 5 -
<PAGE> 6
indemnification satisfactory to the Trustee and sufficient to cover
all costs, expenses and fees associated with such exercise."
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed
this Fifth Amendment at Cleveland, Ohio, this 23rd day of May, 1997.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Title: V.P. - H.R.
-----------------------
KEYTRUST COMPANY OF OHIO, N.A.,
By: /s/ Kelley Clark
----------------------------
Title: VP
-----------------------
and
By: /s/ J.A. Radazzo
----------------------------
Title: VP
-----------------------
- 6 -
<PAGE> 1
Exhibit 10(f)
FIRST AMENDMENT TO AMENDED AND RESTATED TRUST AGREEMENT NO. 6
-------------------------------------------------------------
WHEREAS, Cleveland Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into an Amended and Restated Trust
Agreement No. 6 (the "Agreement") effective March 9, 1992; and
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend the
Agreement;
NOW, THEREFORE, effective July 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement to provide as follows:
The third sentence of Section 1(b) of the Agreement is hereby restated
in its entirety, such third sentence to read as follows:
"The term 'Change of Control' shall mean the occurrence of any of
the following events:
(i) Cleveland-Cliffs shall merge into itself, or be
merged or consolidated with, another corporation and as a
result of such merger or consolidation less than 70% of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of Cleveland-Cliffs as the same have existed
immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise
transfer all or substantially all of its assets to any
other corporation or other legal person, and immediately
after such sale or transfer less than 70% of the combined
voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the
former shareholders of Cleveland-Cliffs as the same shall
have existed immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities Exchange Act of 1934, shall
become the beneficial owner (as defined in Rule 13d-3 of
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1034) of 30% or more of the
outstanding voting securities of Cleveland-Cliffs (whether
directly or indirectly); or
<PAGE> 2
(iv) During any period of three consecutive years,
individuals who at the beginning of any such period
constitute the Board of Directors of Cleveland-Cliffs
cease, for any reason, to constitute at least a majority
thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs or each
director first elected during any such period was approved
by a vote of at least one-third of the directors of
Cleveland-Cliffs who are directors of the Company on the
date of the beginning of any such period."
* * *
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed
this First Amendment at Cleveland, Ohio this 12th day of June, 1997.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Title: V.P. - H.R.
-----------------------
KEYTRUST COMPANY OF OHIO, N.A.,
By: /s/ Kelley Clark
----------------------------
Title: Vice President
-----------------------
and
By: /s/ Meg H. Halloran
----------------------------
Title: Trust Officer
-----------------------
<PAGE> 1
Exhibit 10(g)
THIRD AMENDMENT TO TRUST AGREEMENT NO. 7
----------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into Trust Agreement No. 7 (the
"Agreement") effective April 9, 1991, which Agreement was amended on two
previous occasions;
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend the
Agreement;
NOW, THEREFORE, effective June 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement to provide as follows:
1. The second sentence of Section 1(b) of the Agreement is hereby
amended to read as follows:
"The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the
<PAGE> 2
same have existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other
legal person, and immediately after such sale or transfer less than
70% of the combined voting power of the outstanding voting securities
of such corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or
indirectly); or
(iv) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease,
- 2 -
<PAGE> 3
for any reason, to constitute at least a majority thereof, unless the
election, or the nomination for election by the shareholders of
Cleveland-Cliffs or each director first elected during any such period
was approved by a vote of at least one-third of the directors of
Cleveland-Cliffs who are directors of the Company on the date of the
beginning of any such period."
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed
this Third Amendment at Cleveland, Ohio, this 23rd day of May, 1997.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------
Title: V.P. - H.R.
-----------------------
KEYTRUST COMPANY OF OHIO, N.A.,
By: /s/ Kelley Clark
----------------------------
Title: VP
-----------------------
and
By: /s/ J. A. Radazzo
----------------------------
Title: VP
-----------------------
- 3 -
<PAGE> 1
Exhibit (h)
FOURTH AMENDMENT
TO
TRUST AGREEMENT NO. 7
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into Trust Agreement No. 7 (the
"Agreement") effective April 9, 1991, which Agreement was amended on three
previous occasions; and
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend certain
Exhibits to the Agreement;
NOW, THEREFORE, effective July 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement by revising EXHIBIT A and EXHIBIT B thereto,
which EXHIBITS A and B are attached hereto and made a part hereof, to provide
as hereinafter set forth in such attached EXHIBITS A and B.
* * *
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed this Fourth
Amendment at Cleveland, Ohio this 15 day of July, 1997.
CLEVELAND-CLIFFS INC
By /s/ R. F. Novak
-------------------------------------
Title: Vice President-Human Resources
KEY TRUST COMPANY OF OHIO, N.A.
By /s/ Kelley Clark
-------------------------------------
Title: Vice President
By /s/ J.A. Radazzo
-------------------------------------
Title: VP
<PAGE> 2
EXHIBIT A
---------
All Senior Officers and Other Full-Time
Salaried Employees Grade EX-28 and Above/
Eligible Participants in SERP
Name Title
- ---------- --------------------------------------------
M. T. Moore Chairman and Chief Executive Officer
J. S. Brinzo Executive Vice President-Finance and Planning
W. R. Calfee Executive Vice President-Commercial
T. J. O'Neil Executive Vice President-Operations
J. W. Sanders Senior Vice President-International Development
A. S. West Senior Vice President - Sales
F. L. Hartman Vice President and General Counsel
R. F. Novak Vice President-Human Resources
J. A. Trethewey Vice President-Operations Services
C. B. Bezik Vice President and Treasurer
R. Emmet Vice President and Controller
G. N. Chandler Vice President-Reduced Iron
J. E. Lenhard Secretary and Assistant General Counsel
R. C. Berglund General Manager-Northshore Mine
L. G. Dykers General Manager-Hibbing Taconite
D. Lebel General Manager-Wabush Mines
M. P. Mlinar General Manager-Tilden Mine
T. S. Petersen General Manager-Empire Mine
J. N. Tuomi General Manager-LTV Steel Mining Company
R. W. von Bitter General Manager-Cliffs Reduced Iron Corp.
6-30-97
<PAGE> 3
Exhibit B
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
<PAGE> 4
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
1. DEFINITIONS............................................................ 1
-----------
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT................. 3
------------------------------------------------------
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT....................... 4
------------------------------------------------
4. FORFEITABILITY......................................................... 6
--------------
5. GENERAL................................................................ 6
-------
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN....................... 8
------------------------------------------------
7. MISCELLANEOUS.......................................................... 8
-------------
8. AMENDMENT AND TERMINATION............................................... 9
-------------------------
9. EFFECTIVE DATE......................................................... 10
--------------
</TABLE>
<PAGE> 5
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and its
subsidiary corporations and affiliates have established, or may hereafter
establish, one or more qualified retirement plans;
WHEREAS, the qualified retirement plans, pursuant to Sections
401(a) and 415 of the Internal Revenue Code of 1986, as amended, place certain
limitations on the amount of contributions that would otherwise be made
thereunder for certain participants;
WHEREAS, Cleveland-Cliffs now desires to provide for the
contributions which would otherwise have been made for such participants under
certain of its qualified retirement plans except for such limitations, in
consideration of services performed and to be performed by each such participant
for Cleveland-Cliffs and its subsidiaries and affiliates; and
WHEREAS, Cleveland-Cliffs has entered into, and
Cleveland-Cliffs and its subsidiary corporations and affiliates may in the
future enter into, agreements with certain executives providing for additional
service credit and/or other features for purposes of computing retirement
benefits, in consideration of services performed and to be performed by such
executives for Cleveland-Cliffs and its subsidiaries and affiliates.
NOW, THEREFORE, Cleveland-Cliffs hereby amends and restates
and publishes the Supplemental Retirement Benefit Plan heretofore established by
it, which shall contain the following terms and conditions:
1. DEFINITIONS. A. The following words and phrases when
used in this Plan with initial capital letters shall have the following
respective meanings, unless the context clearly indicates otherwise. The
masculine whenever used in this Plan shall include the feminine.
B. "AFFILIATE" shall mean any partnership or joint venture
of which any member of the Controlled Group is a partner or venturer and which
shall adopt this Plan pursuant to paragraph 6.
C. "BENEFICIARY" shall mean such person or persons (natural or
otherwise) as may be designated by the Participant as his Beneficiary under this
Plan. Such a designation may be made, and may be revoked or changed (without the
consent of any previously designated Beneficiary), only by an instrument (in
form acceptable to Cleveland-Cliffs) signed by the Participant and may be
revoked or changed (without the consent of any previously designated
Beneficiary), only by an instrument (in form acceptable to Cleveland-Cliffs)
signed by the Participant
<PAGE> 6
2
and filed with Cleveland-Cliffs prior to the Participant's death. In the absence
of such a designation and at any other time when there is no existing
Beneficiary designated by the Participant to whom payment is to be made pursuant
to his designation, his Beneficiary shall be his beneficiary under the Pension
Plan. A person designated by a Participant as his Beneficiary who or which
ceases to exist shall not be entitled to any part of any payment thereafter to
be made to the Participant's Beneficiary unless the Participant's designation
specifically provided to the contrary. If two or more persons designated as a
Participant's Beneficiary are in existence, the amount of any payment to the
Beneficiary under this Plan shall be divided equally among such persons unless
the Participant's designation specifically provided to the contrary.
Notwithstanding the foregoing, the Beneficiary of a Participant who elects the
form of benefit elected by the Participant under the Pension Plan shall be the
same beneficiary designated by him or her thereunder.
D. "CODE" shall mean the Internal Revenue Code of 1986, as
it has been and may be amended from time to time.
E. "CODE LIMITATIONS" shall mean the limitations imposed by
Sections 401(a) and 415 of the Code, or any successor thereto, on the amount of
the benefits which may be payable to a Participant from the Pension Plan.
F. "CONTROLLED GROUP" shall mean Cleveland-Cliffs and any
corporation in an unbroken chain of corporations beginning with
Cleveland-Cliffs, if each of the corporations other than the last corporation in
the chain owns or controls, directly or indirectly, stock possessing not less
than fifty percent of the total combined voting power of all classes of stock in
one of the other corporations.
G. "EMPLOYER(S)" shall mean Cleveland-Cliffs and any
other member of the Controlled Group and any Affiliate which
shall adopt this Plan pursuant to paragraph 6.
H. "PARTICIPANT" shall mean each person (i) who is a
participant in the Pension Plan, (ii) who is a senior corporate officer of
Cleveland-Cliffs or a full-time salaried employee of an Employer who has a
Management Performance Incentive Plan Salary Grade of EX-28 or above, and (iii)
who as a result of participation in this Plan is entitled to a Supplemental
Benefit under this Plan. Each person who is as a Participant under this Plan
shall be notified in writing of such fact by his Employer, which shall also
cause a copy of the Plan to be delivered to such person.
I. "PENSION PLAN" shall mean, with respect to any
Participant, the defined benefit plan specified on Exhibit A
hereto in which he participates.
J. "SUPPLEMENTAL AGREEMENT" shall mean, with respect
to any Participant, an agreement between the Participant and an
<PAGE> 7
3
Employer, and approved by Cleveland-Cliffs if it is not the Employer, which
provides for additional service credit and/or other features for purposes of
computing retirement benefits.
K. "SUPPLEMENTAL BENEFIT" or "SUPPLEMENTAL PENSION
PLAN BENEFIT" shall mean a retirement benefit determined as
provided in paragraph 2.
L. "SUPPLEMENTAL RETIREMENT BENEFIT PLAN" or "PLAN"
shall mean this Plan, as the same may hereafter be amended or
restated from time to time.
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
Each Participant or Beneficiary of a deceased Participant whose benefits under
the Pension Plan payable on or after January l, 1995 are reduced (a) due to the
Code Limitations, or (b) due to deferrals of compensation by such Participant
under the Cleveland-Cliffs Inc Voluntary Non- Qualified Deferred Compensation
Plan (the "Deferred Compensation Plan"), and each Participant who has entered
into a Supplemental Agreement with his Employer (and, where applicable a
Beneficiary of a deceased Participant), shall be entitled to a Supplemental
Pension Plan Benefit, which shall be determined as hereinafter provided. A
Supplemental Pension Plan Benefit shall be a monthly retirement benefit equal to
the difference between (i) the amount of the monthly benefit payable on and
after January l, 1995 to the Participant or his Beneficiary under the Pension
Plan, determined under the Pension Plan as in effect on the date of the
Participant's termination of employment with the Controlled Group and any
Affiliate (and payable in the same optional form as his Actual Pension Plan
Benefit, as defined below), but calculated without regard to any reduction in
the Participant's compensation pursuant to the Deferred Compensation Plan, and
as if the Pension Plan did not contain a provision (including any phase-in or
extended wear away provision) implementing the Code Limitations, and after
giving effect to the provisions of any Supplemental Agreement, and (ii) the
amount of the monthly benefit in fact payable on and after January 1, 1995 to
the Participant or his Beneficiary under the Pension Plan. If the benefit
payable to a Participant or Beneficiary pursuant to clause (ii) of the
immediately preceding sentence (herein referred to as "Actual Pension Plan
Benefit") is payable in a form other than a monthly benefit, such Actual Pension
Plan Benefit shall be adjusted to a monthly benefit which is the actuarial
equivalent of such Actual Pension Plan Benefit for the purpose of calculating
the monthly Supplemental Pension Plan Benefit of the Participant or Beneficiary
pursuant to the preceding sentence. For any Participant whose benefits become
payable under the Pension Plan on or after January 1, 1995, the Supplemental
Pension Plan Benefit includes any "Retirement Plan Augmentation Benefit" which
the Participant shall have accrued under the Deferred Compensation Plan prior to
the amendment of such Plan as of January l, 1991 to delete such Benefit. The
acceptance by the Participant or his Beneficiary of any Supplemental Pension
Plan Benefit pursuant to paragraph 3 shall constitute payment of the
<PAGE> 8
4
Retirement Plan Augmentation Benefit included therein for purposes of the
Deferred Compensation Plan prior to such amendment.
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
-------------------------------------------------
(a) A Participant's (or his Beneficiary's)
Supplemental Pension Plan Benefit (calculated as
provided in paragraph 2) shall be converted, at
the time of his termination of employment with the
Controlled Group and each Affiliate, into ten
annual installment payments (the "Ten Installment
Payments") of equivalent actuarial value. The
equivalent actuarial value shall be determined by
the actuary selected by Cleveland-Cliffs based on
the 1971 TPF&C Forecast Mortality Table set back
one year, the Pension Benefit Guaranty Corporation
interest rate for immediate annuities then in
effect, and other factors then in effect for
purposes of the Pension Plan.
(b) If the Participant voluntarily terminates
employment with, or retires under the terms of the
Pension Plan from, the Controlled Group and each
Affiliate, or the Participant's employment with
the Controlled Group and each Affiliate is
involuntarily terminated, the Participant's former
Employer shall pay the Ten Installment Payments to
the Participant beginning on the first day of the
month following the Participant's retirement under
the Pension Plan, and on each anniversary
thereafter until the Ten Installment Payments have
been made; provided, however, that if the
Participant has effectively elected another form
of distribution, such Participant's former
Employer shall pay or commence payment in such
other form of distribution beginning on the first
day of the month following the date of the
Participant's retirement under the Pension Plan.
A Participant who voluntarily terminates
employment with, or who retires under the terms of
the Pension Plan from, the Controlled Group and
each Affiliate may by written notice filed with
the Administrator at least one (1) year prior to
the Participant's voluntary termination of
employment with, or retirement from, the
Controlled Group and each Affiliate elect to defer
commencement of the payment of his benefit until a
date selected in such election. Any such election
may be changed by the Participant at any time and
from time to time without the consent of any other
person by filing a later signed written election
with the Administrator; provided that any election
made less than one (1) year prior to the
Participant's voluntary termination of employment
<PAGE> 9
5
or retirement shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election, or otherwise in
accordance with this paragraph 3.
(c) A Participant may elect to receive his Supplemental
Pension Plan Benefit in one of the following forms of
distribution in lieu of the Ten Installment Payments:
(1) Lump sum payment;
(2) Annual installments over 2 to 15 years;
(3) A combination of (1) and (2) above with the
percentage payable under each option
specifically designated by the Participant;
or
(4) The form of benefit distribution elected by
the Participant under the Pension Plan.
Payments made under these options shall commence as
of the first day of the month following the
Participant's retirement under the Pension Plan;
provided, however, that with respect to a lump sum
payment, such payment shall be made at the end of the
of the first month of retirement or at the end of the
month following death.
The payments made under these forms shall be of
equivalent actuarial value to the Ten Installment
Payments as determined by the actuary selected by
Cleveland-Cliffs based on the actuarial factors and
assumptions provided for in the second sentence of
paragraph 3(a). Notwithstanding the foregoing, the
Administrator may, at any time, direct that annual
installments shall be made quarterly. If the
Participant dies before receiving all of the
installment payments, the remaining installment
payments shall be paid in a lump sum to the
Participant's Beneficiary. Any co-pensioner or
survivor payments elected under clause (4) of this
paragraph 3(c) shall be paid to the co-pensioner or
survivor, as appropriate. The Participant's election
of one of the forms of distribution set forth above
shall be made by written notice filed with the
Administrator at least one (1) year prior to the
Participant's voluntary or involuntary termination of
employment, retirement, death or disability. Any such
election may be changed by the Participant at any
time and from time to time without the consent of any
other person by filing a later signed
written election with the Administrator; provided
<PAGE> 10
6
that any election made less than one (1) year prior
to the Participant's voluntary or involuntary
termination of employment, retirement, death or
disability shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election; and provided, further,
that the Administrator may, in its sole discretion,
waive such one (1) year period upon a request of the
Participant made while an active employee of his or
her Employer.
(d) Anything contained in this paragraph 3 to the
contrary notwithstanding, in the event a
Participant's employment with the Controlled Group
and each Affiliate is involuntarily terminated,
the Administrator may, at any time, direct
immediate payment of such Participant's benefit
under the Plan and the manner of distribution for
such payment; provided, however, that if the
administrator elects immediate payment as set
forth in this paragraph 3(d), such payment shall
not be made in accordance with the distribution
alternative described in paragraph 3(c)(4) of the
Plan.
(e) Notwithstanding any other provision of this
paragraph 3, a Participant may elect to receive a
lump sum distribution of part or all of his or her
benefits under clause (1), (2), or (3) of
paragraph 3(c) if (and only if) the amount subject
to such distribution is reduced by six percent
(6%). Any distribution made pursuant to such an
election shall be made within 60 days of the date
such election is submitted to the Administrator.
The remaining six percent (6%) of the electing
Participant's benefit balance subject to such lump
sum distribution shall be forfeited.
4. FORFEITABILITY. Anything herein to the contrary
notwithstanding, if the Board of Directors of Cleveland-Cliffs shall determine
in good faith that a Participant who is entitled to a benefit hereunder by
reason of termination of his employment with the Controlled Group and each
Affiliate, during the period of 5 years after termination of his employment or
until he attains age 65, whichever period is shorter, has engaged in a business
competitive with Cleveland-Cliffs or any member of the Controlled Group or any
Affiliate without the prior written consent of Cleveland-Cliffs, such
Participant's rights to a supplemental Pension Plan Benefit hereunder and the
rights, if any, of his Beneficiary shall be terminated and no further
Supplemental Benefit shall be paid to him or his Beneficiary hereunder.
5. GENERAL. A. The entire cost of this Supplemental
Retirement Benefit Plan shall be paid from the general assets of
<PAGE> 11
7
one or more of the Employers. It is the intent of the Employers to so pay
benefits under the Plan as they become due; provided, however, that
Cleveland-Cliffs may, in its sole discretion, establish or cause to be
established a trust account for any or each Participant pursuant to an
agreement, or agreements, with a bank and direct that some or all of a
Participant's benefits under the Plan be paid from the general assets of his
Employer which are transferred to the custody of such bank to be held by it in
such trust account as property of the Employer subject to the claims of the
Employer's creditors until such time as benefit payments pursuant to the Plan
are made from such assets in accordance with such agreement; and until any such
payment is made, neither the Plan nor any Participant or Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in, such assets. No
liability for the payment of benefits under the Plan shall be imposed upon any
officer, director, employee, or stockholder of Cleveland-Cliffs or other
Employer.
B. No right or interest of a Participant or his Beneficiary
under this Supplemental Retirement Benefit Plan shall be anticipated, assigned
(either at law or in equity) or alienated by the Participant or his Beneficiary,
nor shall any such right or interest be subject to attachment, garnishment,
levy, execution or other legal or equitable process or in any manner be liable
for or subject to the debts of any Participant or Beneficiary. If any
Participant or Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge or otherwise encumber his benefits under the Plan or any part
thereof, or if by reason of his bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be enjoyed by him,
then Cleveland-Cliffs may terminate his interest in any such benefit and hold or
apply it to or for his benefit or the benefit of his spouse, children or other
person or persons in fact dependent upon him, or any of them, in such a manner
as Cleveland-Cliffs may deem proper; provided, however, that the provisions of
this sentence shall not be applicable to the surviving spouse of any deceased
Participant if Cleveland-Cliffs consent: to such inapplicability, which consent
shall not unreasonably be withheld.
C. Employment rights shall not be enlarged or affected
hereby. The Employers shall continue to have the right to discharge or retire a
Participant, with or without cause.
D. Notwithstanding any other provisions of this Plan to the
contrary, if Cleveland-Cliffs determines that any Participant may not qualify as
a "management or highly compensated employee" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or regulations
thereunder, Cleveland-Cliffs may determine, in its sole discretion, that such
Participant shall cease to be eligible to participate in this Plan. Upon such
determination, the Employer shall make an immediate lump sum payment to the
Participant equal to his then vested Supplemental Benefit. Upon such payment, no
benefits shall thereafter be payable under this
<PAGE> 12
8
Plan either to the Participant or any Beneficiary of the Participant, and all of
the Participant's elections as to the time and manner of payment of his
Supplemental Benefit shall be deemed to be cancelled.
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN. Any
member of the Controlled Group or any Affiliate which is an employer under the
Pension Plan may become an Employer hereunder with the written consent of
Cleveland-Cliffs if such member or such Affiliate executes an instrument
evidencing its adoption of the Supplemental Retirement Benefit Plan and files a
copy thereof with Cleveland-Cliffs. Such instrument of adoption may be subject
to such terms and conditions as Cleveland-Cliffs requires or approves.
7. MISCELLANEOUS. A. The Plan shall be administered
by the Plan Administrator (the "Administrator"). The Administrator shall have
such powers as may be necessary to discharge his duties hereunder, including,
but not by way of limitation, to construe and interpret the Plan (including,
without limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies and ambiguities in, the language of the Plan) and
determine the amount and time of payment of any benefits hereunder. The
Administrator may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
legal counsel who may be counsel to Cleveland- Cliffs. The Administrator shall
have no power to add to, subtract from or modify any of the terms of the Plan,
or to change or add to any benefits provided under the Plan, or to waive or fail
to apply any requirements of eligibility for a benefit under the Plan. No member
of the Administrator shall act in respect of his own benefits. All decisions and
determinations by the Administrator shall be final and binding on all parties.
All decisions of the Administrator shall be made by the vote of the majority, if
applicable, including actions and writing taken without a meeting. All
elections, notices and directions under the Plan by a Participant shall be made
on such forms as the Administrator shall prescribe.
B. Cleveland-Cliffs shall be the "Administrator" and the
"Plan Sponsor" under the Plan for purposes of ERISA.
C. Except to the extent federal law controls, all questions
pertaining to the construction, validity and effect of the provisions hereof
shall be determined in accordance with the laws of the State of Ohio.
D. Whenever there is denied, whether in whole or in part, a
claim for benefits under the Plan filed by any person (herein referred to as the
"Claimant"), the plan administrator shall transmit a written notice of such
decision to the Claimant, which notice shall be written in a manner calculated
to be understood by the Claimant and shall contain a statement of the
specific reasons for the denial of the claim and statement
<PAGE> 13
9
advising the Claimant that, within 60 days of the date on which he receives such
notice, he may obtain review of such decision in accordance with the procedures
hereinafter set forth. Within such 60-day period, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing with the
plan administrator a written request therefor, which request shall contain the
following information:
(i) the date on which the Claimant's request was filed with
the plan administrator; provided, however, that the date on which the
Claimant's request for review was in fact filed with the plan
administrator shall control in the event that the date of the actual
filing is later than the date stated by the Claimant pursuant to this
paragraph;
(ii) the specific portions of the denial of his claim
which the Claimant requests the plan administrator to
review;
(iii) a statement by the Claimant setting forth the basis upon
which he believes the plan administrator should reverse the previous
denial of his claim for benefits and accept his claim as made; and
(iv) any written material (offered as exhibits) which the
Claimant desires the plan administrator to examine in its consideration
of his position as stated pursuant to clause (iii) above.
Within 60 days of the date determined pursuant to clause (i) above, the plan
administrator shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits. Within 60 days of the date of such hearing, the
plan administrator shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
E. Supplemental Pension Plan Benefits shall be subject to
applicable withholding and such other deductions as shall at the time of payment
be required or appropriate under any Federal, State or Local law. In addition,
Cleveland-Cliffs may withhold from a Participant's "other income" (as
hereinafter defined) any amount required or appropriate to be currently withheld
from such Participant's other income pursuant to any Federal, State or Local
law. For purposes of this subparagraph E, "other income" shall mean any
remuneration currently paid to a Participant by an Employer.
8. AMENDMENT AND TERMINATION. A. Cleveland-Cliffs
has reserved and does hereby reserve the right to amend, at any time, any or all
of the provisions of the Supplemental Retirement Benefit Plan for all Employers,
without the consent of any other Employer or any Participant, Beneficiary or any
other person. Any such amendment shall be expressed in an instrument executed
<PAGE> 14
by Cleveland-Cliffs and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of its execution.
B. Cleveland-Cliffs has reserved, and does hereby reserve, the
right to terminate the Supplemental Retirement Benefit Plan at any time for all
Employers, without the consent of any other Employer or of any Participant,
Beneficiary or any other person. Such termination shall be expressed in an
instrument executed by Cleveland-Cliffs and shall become effective as of the
date designated in such instrument, or if no date is specified, on the date of
its execution. Any other Employer which shall have adopted the Plan may, with
the written consent of Cleveland-Cliffs, elect separately to withdraw from the
Plan and such withdrawal shall constitute a termination of the Plan as to it,
but it shall continue to be an Employer for the purposes hereof as to
Participants or Beneficiaries to whom it owes obligations hereunder. Any such
withdrawal and termination shall be expressed in an instrument executed by the
terminating Employer and shall become effective as of the date designated in
such instrument or, if no date is specified, on the date of its execution.
C. Notwithstanding the foregoing provisions hereof, no
amendment or termination of the Supplemental Retirement Benefit Plan shall,
without the consent of the Participant (or, in the case of his death, his
Beneficiary), adversely affect (i) the benefit under the Plan of any Participant
or Beneficiary then entitled to receive a benefit under the Plan or (ii) the
right of any other Participant to receive upon termination of his employment
with the Controlled Group and each Affiliate (or the right of his Beneficiary to
receive upon such Participant's death) that benefit which would have been
received under the Plan if such employment of the Participant had terminated
immediately prior to the amendment or termination of the Plan. Upon any
termination of the Plan, each affected Participant's Supplemental Benefit shall
be determined and distributed to him or, in the case of his death, to his
Beneficiary as provided in paragraph 3 as if the employment of the Participant
with the Controlled Group and each Affiliate had terminated immediately prior to
the termination of the Plan.
9. EFFECTIVE DATE. The amended and restated Supplemental
Retirement Benefit Plan shall be effective as of January 1, 1997.
IN WITNESS WHEREOF, Cleveland-Cliffs Inc, pursuant to the
order of its Board of Directors, has executed this amended and restated
Supplemental Retirement Benefit Plan at Cleveland, Ohio, this 24th day of
April, 1997.
CLEVELAND-CLIFFS INC
By /s/ R. F. Novak
------------------------------
Vice President - Human Resources
<PAGE> 15
EXHIBIT A
---------
PENSION PLANS
- -------------
Pension Plan for Salaried Employees of Cleveland-Cliffs Inc
Pension Plan for Salaried Employees of the Cleveland-Cliffs Iron
Company and its Associated Employers
Retirement Plan for Salaried Employees of Northshore Mining
Company and Silver Bay Power Company
<PAGE> 1
Exhibit 10 (i)
SECOND AMENDMENT TO TRUST AGREEMENT NO. 8
-----------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into Trust Agreement No. 8 (the
"Agreement") effective April 9, 1991, which Agreement was amended on one
previous occasion; and
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to further amend the
Agreement;
NOW, THEREFORE, effective July 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement to provide as follows:
The second sentence of Section 1(b) of the Agreement is hereby
restated in its entirety, such third sentence to read as follows:
"The term 'Change of Control' shall mean the occurrence of any of
the following events:
(i) Cleveland-Cliffs shall merge into itself, or
be merged or consolidated with, another corporation and as a
result of such merger or consolidation less than 70% of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former
shareholders of Cleveland-Cliffs as the same have existed
immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise
transfer all or substantially all of its assets to any other
corporation or other legal person, and immediately after such
sale or transfer less than 70% of the combined voting power of
the outstanding voting securities of such corporation or
person is held in the aggregate by the former shareholders of
Cleveland-Cliffs as the same shall have existed immediately
prior to such sale or transfer;
(iii) A person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities Exchange Act of 1934, shall become
the beneficial owner (as defined in Rule 13d-3 of the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934) of 30% or more of the outstanding voting
securities of Cleveland-Cliffs (whether directly or
indirectly); or
<PAGE> 2
(iv) During any period of three consecutive years,
individuals who at the beginning of any such period constitute the
Board of Directors of Cleveland-Cliffs cease, for any reason, to
constitute at least a majority thereof, unless the election, or the
nomination for election by the shareholders of Cleveland-Cliffs or each
director first elected during any such period was approved by a vote of
at least one-third of the directors of Cleveland-Cliffs who are
directors of the Company on the date of the beginning of any such
period."
* * *
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have executed
this Second Amendment at Cleveland, Ohio this 12th day of June, 1997.
CLEVELAND-CLIFFS INC
By /s/ R. F. Novak
-----------------------------------
Title:
KEY TRUST COMPANY OF OHIO, N.A.
By /s/ Kelley Clark
------------------------------------
Title: Vice President
By /s/ Meg H. Halloran
------------------------------------
Title: Trust Officer
<PAGE> 1
EXHIBIT 10(j)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"),
dated as of June 30, 1997, by and between Cleveland-Cliffs Inc, an Ohio
corporation ("Cleveland-Cliffs"), and Thomas J. O'Neil, Social Security Number
___ , who is presently Executive Vice President - Operations of Cleveland-
Cliffs (the "Executive"), amends and restates the Employment Agreement, dated
as of September 10, 1996, between Cleveland-Cliffs and the Executive;
WITNESSETH:
WHEREAS, the Executive is a senior executive of
Cleveland-Cliffs and has made and is expected to continue to make major
contributions to the profitability, growth and financial strength of
Cleveland-Cliffs;
WHEREAS, Cleveland-Cliffs recognizes that, as is the case for
most publicly held companies, the possibility of a Change of Control (as that
term is hereafter defined) exists;
WHEREAS, Cleveland-Cliffs desires to assure itself of both
present and future continuity of management in the event of a Change of Control
and desires to establish certain minimum compensation rights of its senior
executives, including the Executive, applicable in the event of a Change of
Control;
WHEREAS, Cleveland-Cliffs wishes to ensure that its senior
executives are not practically disabled from discharging their duties upon a
Change of Control; and
WHEREAS, this Agreement is not intended to alter materially
the compensation and benefits which the Executive could reasonably expect to
receive from Cleveland-Cliffs absent a Change of Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration including the Release provided for in Section 12
hereof, the receipt of which is hereby acknowledged, Cleveland-Cliffs and the
Executive agree as follows:
1. OPERATION OF AGREEMENT; CERTAIN DEFINITIONS:
(a) This Agreement is a continuation of the employment
agreement originally effective as of September 10, 1996 (the "Effective Date"),
but, anything in this Agreement to the contrary notwithstanding, this Agreement
shall not become operative unless and until there shall have occurred a Change
of Control. For
<PAGE> 2
2
purposes of this Agreement, a "Change of Control" shall have occurred if at any
time during the Term (as that term is hereafter defined) any of the following
events shall occur:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the same shall have
existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d) (3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease, for any reason, to constitute at
least a majority thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of Cleveland-Cliffs who are Directors of
Cleveland-Cliffs on the date of the beginning of any such period.
(b) Upon the occurrence of a Change of Control at any time
during the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the Effective Date hereof and shall expire as
of the later of (i) the close of business on February 1, 2000 and (ii) the
expiration of the Period of Employment (as that term is hereafter defined);
provided, however, that (A) this Agreement may be continued in full force and
effect for an additional period or periods of one (1) year if Cleveland-Cliffs
and the Executive mutually agree to such extension or extensions, (B) this
Agreement shall automatically renew for an additional period or periods of one
(1) year if the end of the
<PAGE> 3
3
Term occurs during the period of any discussions with any party that might
ultimately result in the occurrence of a Change of Control, and (C) subject to
Section 14 hereof, if, prior to a Change of Control, the Executive ceases for
any reason to be an officer of Cleveland-Cliffs, thereupon the Term shall be
deemed to have expired and this Agreement shall immediately terminate and be of
no further effect.
(d) The term "Industry Service" shall mean professionally
related service, prior to his employment by Cleveland-Cliffs or its subsidiaries
and affiliates, by the Executive as an employee within the iron and steel
industry or an industry to which such Executive's position with Cleveland-Cliffs
relates. The Executive shall be given credit for one year of Industry Service
for every two years of service with Cleveland-Cliffs, as designated in writing
by, or in minutes of the actions of, the Compensation and Organization Committee
of the Board of Directors of Cleveland-Cliffs, and such years of credited
Industry Service shall be defined as "Credited Years of Industry Service."
2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and conditions of this Agreement, upon the occurrence of a Change of Control,
Cleveland-Cliffs shall continue the Executive in its employ and the Executive
shall remain in the employ of Cleveland-Cliffs for the period set forth in
Section 2(b) hereof (the "Period of Employment"), in the position and with
substantially the same duties and responsibilities that he had immediately prior
to the Change of Control, or to which Cleveland-Cliffs and the Executive may
hereafter mutually agree in writing. Throughout the Period of Employment, the
Executive shall devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences in accordance with
the policies of Cleveland-Cliffs as in effect for senior executives immediately
prior to the Change of Control) to the business and affairs of Cleveland-Cliffs,
but nothing in this Agreement shall preclude the Executive from devoting
reasonable periods of time during normal business hours to (i) serving as a
director, trustee or member of or participant in any organization or business so
long as such activity would not constitute Competitive Activity (as described in
Section 11 hereof), (ii) engaging in charitable and community activities, or
(iii) managing his personal investments. The business, assets, and properties of
Cleveland-Cliffs, as well as the support services and facilities available to
the Executive, shall not differ materially from those of Cleveland-Cliffs
immediately prior to the date of the Change of Control.
(b) The Period of Employment shall commence on the date of the
occurrence of a Change of Control and, subject only to the provisions of Section
4 hereof, shall continue until the earlier of (i) the expiration of the third
anniversary of the occurrence of the Change of Control, or (ii) the Executive's
death.
<PAGE> 4
4
3. COMPENSATION DURING PERIOD OF EMPLOYMENT: During the
Period of Employment the Executive shall receive and be entitled to the
following:
(a) an annual base salary at a rate not less than the
Executive's annual fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of Cleveland-Cliffs immediately prior to the
occurrence of a Change of Control) or such higher rate as may be determined from
time to time by the Board of Directors of Cleveland-Cliffs (the "Board") or the
Organization and Compensation Committee thereof (the Committee") (which base
salary at such rate is herein referred to as "Base Pay"), reduced by any
disability benefits which the Executive receives under any Cleveland-Cliffs
disability program;
(b) participation, consistent with past practices, in
incentive compensation plans and arrangements of Cleveland-Cliffs in effect as
of the date of the Change of Control, as the same may subsequently be modified,
supplemented or replaced, including, without limitation, the Incentive Bonus
Plan and the 1992 Incentive Equity Plan (including the Long-Term Performance
Share Program), without material reduction in the reward opportunities available
to the Executive, and without reduction in the target bonus and target award
percentages applicable to the Executive immediately prior to the occurrence of a
Change of Control (with annual amounts and opportunities awarded pursuant to
such plans, programs and arrangements collectively referred to as "Incentive
Pay");
(c) participation in the Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan (As Amended and Restated as of January 1, 1997)
("Supplemental Retirement Plan" or "SRP"), as the same hereafter may be amended
prior to a Change of Control, and modified as provided in Section 6 hereof; and
(d) participation, consistent with past practices, in all
other employee benefit plans and practices of Cleveland-Cliffs in effect as of
the date of the Change of Control (including, without limitation, medical,
dental, hospitalization, health and welfare plans, life, long-term disability
and accident insurance programs, employee savings and investment plans, stock
ownership plans and retirement plans and supplemental arrangements), as the same
may be modified, supplemented or replaced without material reduction in total
value of the benefits to Executive (collectively, "Employee Benefits").
4. TERMINATION FOLLOWING A CHANGE OF CONTROL: (a) In the
event of the occurrence of a Change of Control, the Executive's employment may
be terminated by Cleveland-Cliffs during the Period of Employment and the
Executive shall be entitled to the benefits provided by Section 5 unless such
termination is the result of the occurrence of one or more of the following
events:
(i) The Executive's death; or
<PAGE> 5
5
(ii) The Executive's employment is terminated for
Cause.
For purposes of this Agreement, "Cause" shall mean that, prior to any
termination pursuant to Section 4(b), the Executive shall have committed any act
that is materially inimical to the best interests of Cleveland-Cliffs and that
constitutes common law fraud, a felony, or other gross malfeasance of duty. The
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the Board then in office at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive committed an act set
forth in this Section 4(a) and specifying the particulars thereof in detail.
Nothing herein shall limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such determination.
(b) During the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof upon the occurrence of
one or more of the following events:
(i) The Executive's "Disability", shall be deemed to have
occurred six (6) months after the Executive shall have become totally
and permanently disabled by bodily or mental injury or disease so as to
be prevented thereby from engaging in any executive employment or
occupation for remuneration or profit, as determined and certified to
Cleveland-Cliffs and the Executive by The Cleveland Clinic (or if it is
unwilling or unable to act, by one or more physicians designated for
such purpose by the Cleveland Academy of Medicine or its successor
organization); or
(ii) Termination by the Executive of his employment
with Cleveland-Cliffs upon the occurrence of any of the
following events:
(A) The failure to elect, reelect or otherwise to
maintain the Executive in the office or position, or a
substantially equivalent office or position, of or with
Cleveland-Cliffs which the Executive held immediately prior to
a Change of Control, or the removal of, or failure to reelect,
the Executive as a Director of Cleveland-Cliffs (or any
successor thereto), if the Executive shall have been a
Director of Cleveland-Cliffs immediately prior to the Change
of Control;
(B) (I) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with Cleveland-Cliffs which
the Executive held immediately prior to the Change of
Control, (II) a reduction in the
<PAGE> 6
6
aggregate of the Executive's Base Pay and Incentive Pay
received from Cleveland-Cliffs, or a reduction in the
Executive's opportunities for Incentive Pay (including, but
not limited to, a reduction in target bonus percentage or
target award opportunity (whether measured by number of
performance shares or management objectives)) provided by
Cleveland-Cliffs, or (III) a reduction or termination of any
benefits described in Section 3(c) or (d) hereof to which the
Executive was entitled immediately prior to the Change of
Control, any of which is not remedied by Cleveland-Cliffs
within 10 calendar days after receipt by Cleveland-Cliffs of
written notice from the Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive (which
determination will be conclusive and binding upon the parties
hereto provided it has been made in good faith and in all
events will be presumed to have been made in good faith unless
otherwise shown by Cleveland-Cliffs by clear and convincing
evidence) that a change in circumstances has occurred
following a Change of Control, including, without limitation,
a change in the scope of the business or other activities for
which the Executive was responsible immediately prior to the
Change of Control, which has rendered the Executive
substantially unable to carry out, has substantially hindered
the Executive's performance of, or has caused the Executive to
suffer a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change
of Control, which situation is not remedied by
Cleveland-Cliffs within ten calendar days after written notice
to Cleveland-Cliffs from the Executive of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of Cleveland-Cliffs or the
transfer of all or a significant portion of its business
and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of Cleveland-Cliffs under this Agreement pursuant
to Section 16 hereof;
(E) The relocation of Cleveland-Cliffs' principal
executive offices, or a requirement that the Executive change
his principal location of work to any location which is in
excess of 25 miles from the location thereof immediately prior
to the Change of Control, or a requirement that the Executive
travel away from his office in the course of discharging his
<PAGE> 7
7
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of him prior to the Change
of Control without, in any case described above, the prior
written consent of the Executive; or
(F) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by
Cleveland-Cliffs or any successor thereto.
(c) A termination by Cleveland-Cliffs pursuant to Section 4(a)
hereof other than for Cause or by the Executive pursuant to Section 4(b) hereof
shall not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of Cleveland-Cliffs, which
rights shall be governed by the terms thereof, subject, however, to the
modifications in Section 6 hereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not
entitled to any payments under Sections 3 or 5 hereof, the Executive shall have
no further obligation or liability to Cleveland-Cliffs hereunder with respect to
his prior or any future employment by Cleveland-Cliffs.
5. SEVERANCE COMPENSATION: If Cleveland-Cliffs shall terminate
the Executive's employment during the Period of Employment, other than pursuant
to Cause under Section 4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, then in lieu of any further payments
to the Executive for periods subsequent to the date of the Executive's
termination of employment (the "Termination Date"), the date of which shall be
the date of termination or such other date that may be specified by the
Executive if the termination is pursuant to Section 4(b) hereof,
Cleveland-Cliffs shall provide Severance Compensation to the Executive as
described below:
(a) SEVERANCE PAY. Within five business days after the
Termination Date:
(i) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "Severance Payment") in an amount equal to the present
value (using a discount rate prescribed for purposes of valuation
computations under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the then "applicable
interest rate" under Section 417(e)(3)(A)(ii)(II) of the Code for the
month in which the Termination Date occurs (the "Discount Rate")) of
(A) the amount of Base Pay that would have been paid
to the Executive pursuant to Section 3(a) for the
greater of (I) one year or (II) the duration of the
<PAGE> 8
Period of Employment, in each case if the termination had not
taken place (at the rate in effect immediately prior to the
Change of Control or prior to the Termination Date, whichever
is higher) and, if the Termination is on account of the
Executive's Disability, reduced by the amount of disability
benefits that would have been paid to the Executive for the
duration of the Period of Employment if the termination had
not taken place; plus
(B) the amount of Average Incentive Pay (as that term
is hereinafter defined) that would have been paid to the
Executive pursuant to Section 3(b) for the greater of (I) one
year or (II) the duration of the Period of Employment if the
termination had not taken place.
For purposes of this Agreement, Average Incentive Pay for any
12 month period shall mean an amount which is the greater of
(III) the average amount of Incentive Pay (as defined in
Section 3(b) hereof) awarded to the Executive for the three
calendar years immediately prior to the Termination Date, or
(IV) the amount of the most recent award of Incentive Pay.
(ii) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "SRP Payment") in an amount equal to the sum of the future
pension benefits (converted to a lump sum of actuarial equivalence)
which the Executive would have been entitled to receive at or after the
end of the Period of Employment under the SRP, as the same may be
further amended prior to a Change of Control and as modified by Section
6 hereof (assuming Base Salary at the rate in effect immediately prior
to the occurrence of Change of Control and Incentive Pay equivalent to
the amount of Average Incentive Pay), if the Executive had remained in
the full-time employment of Cleveland-Cliffs until the end of the
Period of Employment.
The calculation of the SRP Payment and its actuarial equivalence shall
be made as of the date the Executive is terminated. The lump sum of
actuarial equivalence shall be calculated as of the end of the Period
of Employment using the assumptions and factors used in the SRP, and
such sums shall be discounted to the date of payment using the Discount
Rate.
Payment of the SRP Payment by Cleveland-Cliffs shall be deemed to be a
satisfaction of all obligations of Cleveland-Cliffs to the Executive
under the SRP.
(b) EMPLOYEE BENEFITS. For the greater of (i) one year or
(ii) the duration of the Period of Employment, Cleveland-Cliffs shall arrange to
provide the Executive with Employee Benefits substantially similar to those
which the Executive was receiving
<PAGE> 9
9
or entitled to receive immediately prior to the Termination Date as described in
Section 3(d) (and if and to the extent that such benefits shall not or cannot be
paid or provided under any policy, plan, program or arrangement of
Cleveland-Cliffs solely due to the fact that the Executive is no longer an
officer or employee of Cleveland-Cliffs, then Cleveland-Cliffs shall itself pay
or provide for the payment to the Executive, his dependents and beneficiaries,
such Employee Benefits). Without otherwise limiting the purposes or effect of
this Section 5(b), Employee Benefits payable to the Executive pursuant to this
Section 5(b) by reason of any "welfare benefit plan" of Cleveland-Cliffs (as the
term "welfare benefit plan" is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) shall be reduced
to the extent comparable welfare benefits are actually received by the Executive
from another employer during the period beginning upon the occurrence of the
Termination Date and ending upon the last day during which Cleveland-Cliffs is
required to provide such Employee Benefits pursuant to the first sentence of
this Section 5(b).
(c) STOCK OPTIONS, RESTRICTED STOCK AND PERFORMANCE SHARES.
Upon the Termination Date, (i) all Stock Options granted to the Executive
pursuant to the 1992 Incentive Equity Plan, or any successor plan or similar
plan, shall be vested, (ii) the restrictions on any restricted stock awarded to
the Executive under the 1992 Incentive Equity Plan, or any successor plan or
similar plan, shall be released, and (iii) all Performance Share Awards under
the Long-Term Performance Share Program under the 1992 Incentive Equity Plan for
which the measurement period has not yet expired shall be earned assuming
management objectives have been met at the target level.
(d) METHOD OF PAYMENT. Upon written notice given by the
Executive to Cleveland-Cliffs prior to the occurrence of a Change of Control,
the Executive, at his sole option, without adjustment to reflect the present
value of such amounts as aforesaid, may elect to have all or any of the
Severance Payment described in Section 5(a) hereof paid to him on a quarterly or
monthly basis during the time remaining until the expiration of the third
anniversary of the Change of Control.
(e) OUTPLACEMENT COUNSELING. Cleveland-Cliffs shall reimburse
the Executive for reasonable expenses incurred for outplacement counseling (i)
which are pre-approved by the Chief Human Resources Officer of Cleveland-Cliffs,
(ii) which do not exceed 15% of the Executive's annual Base Pay, and (iii) which
are incurred by the Executive within six months following the Termination Date.
(f) SET-OFF AND COUNTERCLAIM. There shall be no right of
set-off or counterclaim in respect of any claim, debt or obligation against any
payment to or benefit for the Executive provided for in this Agreement.
<PAGE> 10
10
(g) INTEREST. Without limiting the rights of the Executive at
law or in equity, if Cleveland-Cliffs fails to make any payment required to be
made hereunder on a timely basis, Cleveland-Cliffs shall pay interest on the
amount thereof at an annualized rate of interest equal to the then-applicable
Discount Rate.
(h) CALCULATION. The calculation of all payments of
compensation and other benefits to be provided to Executive under this Agreement
(other than payments pursuant to Section 8 hereof) shall be made by Hewitt
Associates ("Hewitt"), or such other actuarial firm selected by
Cleveland-Cliffs' independent accountants and satisfactory to Executive.
Cleveland-Cliffs shall provide to such actuarial firm all information requested
by such actuarial firm as necessary for or helpful to it to make the
calculations hereunder.
6. SUPPLEMENTAL RETIREMENT PLAN. Cleveland-Cliffs hereby
waives the discretionary right, at any time subsequent to the date of a Change
of Control, to amend or terminate the SRP as to Executive as provided in
paragraph 8 thereof or to terminate the rights of Executive or his beneficiary
under the SRP in the event Executive engages in a competitive business as
provided in any plan or arrangement between Cleveland-Cliffs and the Executive
or applicable to the Executive, including but not limited to, the provisions of
paragraph 4 of the SRP, or any similar provisions of any such plan or
arrangement or other plan or arrangement supplementing or superseding the same.
This Section 6 shall constitute a "Supplemental Agreement" as defined in
Paragraph 1.J of the SRP. If Cleveland-Cliffs shall terminate the Executive's
employment during the Period of Employment, other than for Cause pursuant to
Section 4(a) hereof, or if the Executive shall terminate his employment pursuant
to Section 4(b) hereof, or if, following the end of the Period of Employment,
the Executive's employment is terminated for any reason, for the purposes of
computing the Executive's period of continuous service and of calculating and
paying his benefit under the SRP:
(a) The Executive shall be credited with years of continuous
service at the time of his termination of employment with Cleveland-Cliffs (by
death or otherwise) equal to the greater of (i) the number of his actual years
of continuous service or (ii) the number of years of continuous service he would
have had if he had continued his employment with Cleveland-Cliffs until the
expiration of the third anniversary of the Change of Control, and had he
attained the greater of (iii) his actual chronological age or (iv) his
chronological age at the expiration of the third anniversary of the Change of
Control. In addition, the Executive shall be eligible for a 30-year pension
benefit based upon his years of continuous service as computed under the
preceding sentence. The Executive shall be eligible to commence the 30-year
pension benefit on the earlier of (v) the date upon which the Executive would
have otherwise reached 30 years of continuous service with Cleveland-Cliffs but
for his termination of employment after the Change of Control, or (vi) the
date upon
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which the sum of the Executive's years of continuous service (as computed in the
first sentence of this subparagraph (a)) and the Executive's Credited Years of
Industry Service (as defined in Section 1(d) hereof) is equal to 30 years; and
(b) The Executive shall be a "Participant" in the SRP,
notwithstanding any limitations therein.
A copy of the SRP is attached to this Agreement as Exhibit A. The SRP is
incorporated in all respects herein; provided, however, that the terms of this
Agreement shall take precedence to the extent they are contrary to provisions
contained in the SRP.
7. WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION AFTER
PERIOD OF EMPLOYMENT. Following the later of the end of the Period of
Employment, or Executive's termination of employment with Cleveland-Cliffs,
Cleveland-Cliffs shall:
(a) Provide medical, hospital, surgical and prescription drug
coverage, equivalent to that furnished on February 1, 1992 to officers who
retire after January 1, 1990 by Cleveland-Cliffs, to the Executive and his
spouse for their lifetimes, and to eligible dependents of the Executive for
their periods of eligibility, through insurance or otherwise;
(b) Provide life insurance on the Executive, equivalent to
that furnished on February 1, 1992 to officers who retire after January 1, 1990
by Cleveland-Cliffs, to the Executive for his lifetime; and
(c) Without otherwise limiting the purposes or effect of this
Section 7 hereof, welfare benefits payable to the Executive or his spouse or
dependents pursuant to this Section 7 shall be reduced to the extent comparable
welfare benefits are payable pursuant to Section 5(b) hereof or are actually
received by the Executive or his spouse or dependents from another employer.
8. CERTAIN ADDITIONAL PAYMENTS BY CLEVELAND-CLIFFS. (a)
Anything in this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as hereafter
provided) that any payment or distribution by Cleveland-Cliffs to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code by reason of being considered
"contingent on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to
<PAGE> 12
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such tax (such tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section, including
whether an Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required to be paid by Cleveland-Cliffs to
the Executive and the amount of such Gross-Up Payment, if any, shall be made by
a nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Cleveland-Cliffs and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Cleveland-Cliffs or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, Cleveland-Cliffs shall pay the required
Gross-Up Payment to the Executive within five business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall, at the same time as it makes such determination,
furnish Cleveland-Cliffs and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
Cleveland-Cliffs should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Cleveland-Cliffs
exhausts or fails to pursue its remedies pursuant to Subsection (f) of this
Section and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Cleveland-Cliffs and the Executive as promptly
as possible. Any such Underpayment shall be promptly paid by Cleveland-Cliffs
to, or for the benefit of, the
<PAGE> 13
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Executive within five business days after receipt of such determination and
calculations.
(c) Cleveland-Cliffs and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Cleveland-Cliffs or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Subsection (b) of this Section. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon Cleveland-Cliffs and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of Cleveland-Cliffs, provide to
Cleveland-Cliffs true and correct copies (with any amendments) of his federal
income tax return as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by Cleveland-Cliffs,
evidencing such payment. If prior to the filing of the Executive's federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to Cleveland-Cliffs
the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Subsection (b) of this Section shall be borne by Cleveland-Cliffs. If such fees
and expenses are initially paid by the Executive, Cleveland-Cliffs shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.
(f) The Executive shall notify Cleveland-Cliffs in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Cleveland-Cliffs of a Gross-Up Payment.
Such notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise Cleveland-Cliffs of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim prior to
the earlier of (i) the expiration of the 30-calendar-day period following the
date on which he gives such notice to Cleveland-Cliffs and (ii) the date that
any payment of amount with respect to such claim is due. If Cleveland-Cliffs
notifies the Executive in
<PAGE> 14
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writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) provide Cleveland-Cliffs with any written
records or documents in his possession relating to such
claim reasonably requested by Cleveland-Cliffs;
(ii) take such action in connection with contesting such
claim as Cleveland-Cliffs shall reasonably request in writing
from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by Cleveland-Cliffs;
(iii) cooperate with Cleveland-Cliffs in good faith
in order effectively to contest such claim; and
(iv) permit Cleveland-Cliffs to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that Cleveland-Cliffs shall bear and pay directly
all costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
Cleveland-Cliffs shall control all proceedings taken in connection with
the contest of any claim contemplated by this Subsection and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Cleveland-Cliffs shall determine;
PROVIDED, HOWEVER, that if Cleveland-Cliffs directs the Executive to
pay the tax claimed and sue for a refund, Cleveland-Cliffs shall
advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Cleveland-Cliffs's control of any such contested
<PAGE> 15
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claim shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by Cleveland-Cliffs pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive shall
(subject to Cleveland-Cliffs's complying with the requirements of Subsection (f)
of this Section) promptly pay to Cleveland-Cliffs the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by
Cleveland-Cliffs pursuant to Subsection (f) of this Section, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and Cleveland-Cliffs does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by
Cleveland-Cliffs to the Executive pursuant to this Section.
9. NO MITIGATION OBLIGATION: Cleveland-Cliffs hereby
acknowledges that it will be difficult, and may be impossible, for the Executive
to find reasonably comparable employment following the Termination Date and that
the non-competition covenant contained in Section 11 hereof will further limit
the employment opportunities for the Executive. Accordingly, the parties hereto
expressly agree that except as expressly provided in Sections 5(b) and 7 hereof,
the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.
10. CONFIDENTIALITY: The Executive acknowledges that all trade
secrets, customer lists, and other confidential business information are the
exclusive property of Cleveland-Cliffs, and the Executive shall not at any time
during the Term of this Agreement or at any time thereafter, directly or
indirectly reveal or cause to be revealed to any person or entity the trade
secrets, customer lists and other confidential business information obtained as
a result of the Executive's employment or relationship with Cleveland-Cliffs.
11. COMPETITIVE ACTIVITY: For a period of twenty-four (24)
months from and after any termination of employment following the occurrence of
a Change of Control, the Executive shall not become an officer, director, joint
venturer, employee, consultant, 5-percent or more shareholder (directly or
indirectly), or promote or assist (financially or otherwise) any entity which
competes in
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16
any business in which Cleveland-Cliffs or any of its affiliates are engaged as
of the date-of the Change of Control. For this purpose, business is defined as
the iron and steel industry. The provisions of this Section 11 shall, following
a Change of Control, supersede and be in lieu of any similar provision in any
other plan or agreement involving Cleveland-Cliffs and the Executive, whether
now existing or hereinafter adopted or entered into, including, but not limited
to, the SRP.
12. RELEASE: Payment of the Severance Compensation set forth
in Section 5 hereof is conditioned upon the Executive executing and delivering a
release (the "Release") satisfactory to Cleveland-Cliffs releasing
Cleveland-Cliffs, its directors, employees and affiliates from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which the
Executive may have had on account of the termination of his employment,
including, but not limited to claims of discrimination, including on the basis
of sex, race, age, national origin, religion, or handicapped status (with all
applicable periods during which the Executive may revoke the Release or any
provision thereof having expired), and any and all claims, demands and causes of
action for retirement (other than under any "pension benefit plan" or under any
"welfare benefit plan" of Cleveland-Cliffs (as the terms "pension benefit plan"
and "welfare benefit plan" are defined in Section 3 of ERISA) other than the
SRP), severance or other termination pay, and because pursuant to Section 5(a)
the Executive is entitled to lump sum payments of Incentive Pay and benefits
under the SRP, under the SRP and any incentive compensation plans and
arrangements of Cleveland-Cliffs described in Section 3(b). Such Release shall
not, however, apply to the obligations of Cleveland-Cliffs arising under this
Agreement, or rights of indemnification the Executive may have under the
Regulations of Cleveland-Cliffs or by contract or by statute.
13. LEGAL FEES AND EXPENSES: (a) It is the intent of
Cleveland-Cliffs that the Executive not be required to incur any expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that Cleveland-Cliffs has
failed to comply with any of its obligations under this Agreement or in the
event that Cleveland-Cliffs or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation designed to deny,
or to recover from, the Executive the benefits intended to be provided to the
Executive hereunder, Cleveland-Cliffs irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of Cleveland-Cliffs
as hereafter provided, to represent the Executive in connection with the
initiation or defense of any such litigation or other legal action, whether by
or against Cleveland-Cliffs or any Director, officer, stockholder or other
person affiliated with Cleveland-Cliffs, in any jurisdiction. Notwithstanding
any existing or prior attorney-
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client relationship between Cleveland-Cliffs and such counsel, Cleveland-Cliffs
irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection Cleveland-Cliffs and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Cleveland-Cliffs shall promptly pay or cause to be
paid and shall be solely responsible for any and all attorneys' and related fees
and expenses incurred by the Executive as a result of Cleveland-Cliffs' failure
to perform this Agreement or any provision hereof or as a result of
Cleveland-Cliffs or any person contesting the validity or enforceability of this
Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by Executive, certain trust arrangements ("Trusts") have been
established between KeyTrust Company of Ohio, N.A., as Trustee ("Trustee"), and
Cleveland-Cliffs. Trust Agreement No. 1 (Amended and Restated Effective June 1,
1997) ("Trust Agreement No. 1") dated June 12, 1997, and Trust Agreement No. 2
(Amended and Restated Effective June 1, 1997) ("Trust Agreement No. 2") dated
June 12, 1997, as amended and/or restated, between the Trustee and
Cleveland-Cliffs, are attached as Exhibits B and C, respectively. A Trust
Agreement No. 7 ("Trust Agreement No. 7") dated April 9, 1991, as amended,
between the Trustee and Cleveland-Cliffs, is attached as Exhibit D. Each such
Trust Agreement shall be considered a part of this Agreement and shall set forth
the terms and conditions relating to payment under Trust Agreement No. 1 of
compensation and other benefits pursuant to Sections 3, 5 and 8 and pension
benefits pursuant to Sections 3, 5 and 6 owed by Cleveland-Cliffs, payment from
Trust Agreement No. 7 of certain pension benefits pursuant to Sections 3, 5 and
6 owed by Cleveland-Cliffs, and payment from Trust Agreement No. 2 for
attorneys' fees and related fees and expenses pursuant to Section 13(a) hereof
owed by Cleveland-Cliffs. Executive shall make demand on Cleveland-Cliffs for
any payments due Executive pursuant to Section 13(a) hereof prior to making
demand therefor on the Trustee under Trust Agreement No. 2.
(c) Upon the earlier to occur of (i) a Change of a Control or
(ii) a declaration by the Board that a Change of Control is imminent,
Cleveland-Cliffs shall promptly to the extent it has not previously done so, and
in any event within five (5) business days:
(A) transfer to Trustee to be added to the principal of the
Trust under Trust Agreement No. 1 a sum equal to (I) the present value
on the date of the Change of Control (or on such fifth business day if
the Board has declared a Change of Control to be imminent) of the
payments to be made to Executive under the provisions of Sections 3, 5,
6 and 8 hereof, such present value to be computed using the assumptions
set forth in Section 5(a) hereof and the computations provided for in
Section 8 hereof less (II) the balance in the Executive's account
provided for in Section 7(b) of Trust Agreement No. 1 as of the most
recent
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completed valuation thereof, less (III) the balance in the
Executive's account provided for in Section 7(b) of Trust Agreement
No. 7 as of the most recent completed valuation thereof, as certified
by the Trustee under each of Trust Agreement No. 1 and Trust Agreement
No. 7; provided, however, that if the Trustee under Trust Agreement
No. 1 and/or Trust Agreement No. 7, respectively, does not so certify
by the end of the fourth (4th) business day after the earlier of such
Change of Control or declaration, then the balance of such respective
account shall be deemed to be zero. Any payments of compensation,
pension or other benefits by the Trustee pursuant to Trust Agreement
No. 1 or Trust Agreement No. 7 shall, to the extent thereof, discharge
Cleveland-Cliffs' obligation to pay compensation, pension and other
benefits hereunder, it being the intent of Cleveland-Cliffs that
assets in such Trusts be held as security for Cleveland-Cliffs'
obligation to pay compensation, pension and other benefits under this
Agreement; and
(B) transfer to the Trustee to be added to the principal of
the Trust under Trust Agreement No. 2 the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000) less any principal in such Trust on such
fifth business day. Any payments of Executive's attorneys' and related
fees and expenses by the Trustee pursuant to Trust Agreement No. 2
shall, to the extent thereof, discharge Cleveland-Cliffs' obligation
hereunder, it being the intent of Cleveland-Cliffs that assets in such
Trust be held as security for Cleveland-Cliffs' obligation under
Section 13(a) hereof. Executive understands and acknowledges that the
entire corpus of the Trust under Trust Agreement No. 2 will be $250,000
and that said amount will be available to discharge not only the
obligations of the Cleveland-Cliffs to Executive under Section 13(a)
hereof, but also similar obligations of the Cleveland-Cliffs to other
executives and employees under similar provisions of other agreements
and plans.
14. EMPLOYMENT RIGHTS: Nothing expressed or implied in this
Agreement shall create any right or duty on the part of Cleveland-Cliffs or the
Executive to have the Executive remain in the employment of Cleveland-Cliffs at
any time prior to a Change of Control; provided, however, that any termination
of employment of the Executive or the removal of the Executive from the office
or position in Cleveland-Cliffs following the commencement of any discussion
with a third person that ultimately results in a Change of Control shall be
deemed to be a termination or removal of the Executive after a Change of Control
for purposes of this Agreement. Executive expressly acknowledges that he is an
employee at will, and that Cleveland-Cliffs may terminate him at any time during
the Period of Employment for any reason if Cleveland-Cliffs pays the Severance
Compensation provided for under Section 5 of this Agreement, and otherwise
comply with its other continuing covenants in this Agreement, including without
limitation, Sections 3 and 6.
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15. WITHHOLDING OF TAXES: Cleveland-Cliffs may withhold from
any amounts payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or ruling.
16. SUCCESSORS AND BINDING AGREEMENT: (a) Cleveland-Cliffs
shall require any successor (including without limitation any persons acquiring
directly or indirectly all or substantially all of the business and/or assets of
Cleveland-Cliffs whether by purchase, merger, consolidation, reorganization or
otherwise, and such successor shall thereafter be deemed "Cleveland-Cliffs" for
the purposes of this Agreement), by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent Cleveland-Cliffs would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of Cleveland-Cliffs and any successor
to Cleveland-Cliffs but shall not otherwise be assignable, transferable or
delegable by Cleveland-Cliffs.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in this Section 16. Without limiting the generality of the
foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 16, Cleveland-Cliffs shall have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
(d) The agreement of Cleveland-Cliffs to make payments and/or
provide benefits hereunder shall represent an unsecured obligation of
Cleveland-Cliffs.
(e) Cleveland-Cliffs and the Executive recognize that each
party will have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach,
Cleveland-Cliffs and the Executive hereby agree and consent that the other shall
be entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of this Agreement.
17. NOTICE: For all purposes of this Agreement, all
communications including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given when delivered or five business days after having been mailed by
United States registered
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or certified mail, return receipt requested, postage prepaid, addressed to such
party's address as specified below, or at such other address as such party shall
specify by notice to the other. If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114-2589
Attention: Secretary
If to the Executive, to the last address shown on the records of
Cleveland-Cliffs. Notices of change of address shall be effective only upon
receipt.
18. GOVERNING LAW: The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
19. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
20. AMENDMENT: This Agreement may be amended only by a
written instrument signed by the parties hereto, which makes specific reference
to this Agreement.
21. RIGHTS UNDER OTHER PLANS AND PROGRAMS: Anything in this
Agreement to the contrary notwithstanding, no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict any
benefit to which Executive may be entitled under any other agreement, plan or
program providing benefits for Executive, including but not limited to the plans
described in Sections 3 and 5 of this Agreement.
22. MISCELLANEOUS: No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and Cleveland-Cliffs. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
23. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
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original but all of which together will constitute one and the same agreement.
24. CAPTIONS: The captions in this Agreement are for
convenience of reference only and do not define, limit or describe the scope or
intent of this Agreement or any part hereof and shall not be considered in any
construction hereof.
IN WITNESS WHEREOF, Cleveland-Cliffs has caused this Agreement
to be executed on its behalf by its duly authorized representative and Executive
has hereunto set his hand, all as of the date and year first above written.
CLEVELAND-CLIFFS INC
By /s/ M. Thomas Moore
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Chairman and Chief
Executive Officer
/s/ Thomas J. O'Neil
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Thomas J. O'Neil
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"),
dated as of June 30, 1997, by and between Cleveland-Cliffs Inc, an Ohio
corporation ("Cleveland-Cliffs"), and John S. Brinzo, Social Security Number
___ , who is presently Executive Vice President - Finance of Cleveland-Cliffs
(the "Executive"), amends and restates the Employment Agreement, dated as of
February 1, 1992, between Cleveland-Cliffs and the Executive;
WITNESSETH:
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WHEREAS, the Executive is a senior executive of
Cleveland-Cliffs and has made and is expected to continue to make major
contributions to the profitability, growth and financial strength of
Cleveland-Cliffs;
WHEREAS, Cleveland-Cliffs recognizes that, as is the case for
most publicly held companies, the possibility of a Change of Control (as that
term is hereafter defined) exists;
WHEREAS, Cleveland-Cliffs desires to assure itself of both
present and future continuity of management in the event of a Change of Control
and desires to establish certain minimum compensation rights of its senior
executives, including the Executive, applicable in the event of a Change of
Control;
WHEREAS, Cleveland-Cliffs wishes to ensure that its senior
executives are not practically disabled from discharging their duties upon a
Change of Control; and
WHEREAS, this Agreement is not intended to alter materially
the compensation and benefits which the Executive could reasonably expect to
receive from Cleveland-Cliffs absent a Change of Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration including the Release provided for in Section 12
hereof, the receipt of which is hereby acknowledged, Cleveland-Cliffs and the
Executive agree as follows:
1. OPERATION OF AGREEMENT; CERTAIN DEFINITIONS:
(a) This Agreement is a continuation of the employment
agreement originally effective as of February 1, 1992 (the "Effective Date"),
but, anything in this Agreement to the contrary notwithstanding, this Agreement
shall not become operative unless and until there shall have occurred a Change
of Control. For
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purposes of this Agreement, a "Change of Control" shall have occurred if at any
time during the Term (as that term is hereafter defined) any of the following
events shall occur:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the same shall have
existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d) (3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease, for any reason, to constitute at
least a majority thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of Cleveland-Cliffs who are Directors of
Cleveland-Cliffs on the date of the beginning of any such period.
(b) Upon the occurrence of a Change of Control at any time
during the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the Effective Date hereof and shall expire as
of the later of (i) the close of business on the eighth anniversary of the
Effective Date and (ii) the expiration of the Period of Employment (as that term
is hereafter defined); provided, however, that (A) this Agreement may be
continued in full force and effect for an additional period or periods of one
(1) year if Cleveland-Cliffs and the Executive mutually agree to such extension
or extensions, (B) this Agreement shall automatically renew for an additional
period or periods of
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one (1) year if the end of the Term occurs during the period of any discussions
with any party that might ultimately result in the occurrence of a Change of
Control, and (C) subject to Section 14 hereof, if, prior to a Change of Control,
the Executive ceases for any reason to be an officer of Cleveland-Cliffs,
thereupon the Term shall be deemed to have expired and this Agreement shall
immediately terminate and be of no further effect.
(d) The term "Industry Service" shall mean professionally
related service, prior to his employment by Cleveland-Cliffs or its subsidiaries
and affiliates, by the Executive as an employee within the iron and steel
industry or an industry to which such Executive's position with Cleveland-Cliffs
relates. The Executive shall be given credit for one year of Industry Service
for every two years of service with Cleveland-Cliffs, as designated in writing
by, or in minutes of the actions of, the Compensation and Organization Committee
of the Board of Directors of Cleveland-Cliffs, and such years of credited
Industry Service shall be defined as "Credited Years of Industry Service."
2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and conditions of this Agreement, upon the occurrence of a Change of Control,
Cleveland-Cliffs shall continue the Executive in its employ and the Executive
shall remain in the employ of Cleveland-Cliffs for the period set forth in
Section 2(b) hereof (the "Period of Employment"), in the position and with
substantially the same duties and responsibilities that he had immediately prior
to the Change of Control, or to which Cleveland-Cliffs and the Executive may
hereafter mutually agree in writing. Throughout the Period of Employment, the
Executive shall devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences in accordance with
the policies of Cleveland-Cliffs as in effect for senior executives immediately
prior to the Change of Control) to the business and affairs of Cleveland-Cliffs,
but nothing in this Agreement shall preclude the Executive from devoting
reasonable periods of time during normal business hours to (i) serving as a
director, trustee or member of or participant in any organization or business so
long as such activity would not constitute Competitive Activity (as described in
Section 11 hereof), (ii) engaging in charitable and community activities, or
(iii) managing his personal investments. The business, assets, and properties of
Cleveland-Cliffs, as well as the support services and facilities available to
the Executive, shall not differ materially from those of Cleveland-Cliffs
immediately prior to the date of the Change of Control.
(b) The Period of Employment shall commence on the date of the
occurrence of a Change of Control and, subject only to the provisions of Section
4 hereof, shall continue until the earlier of (i) the expiration of the third
anniversary of the occurrence of the Change of Control, or (ii) the Executive's
death.
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3. COMPENSATION DURING PERIOD OF EMPLOYMENT: During the
Period of Employment the Executive shall receive and be entitled to the
following:
(a) an annual base salary at a rate not less than the
Executive's annual fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of Cleveland-Cliffs immediately prior to the
occurrence of a Change of Control) or such higher rate as may be determined from
time to time by the Board of Directors of Cleveland-Cliffs (the "Board") or the
Organization and Compensation Committee thereof (the Committee") (which base
salary at such rate is herein referred to as "Base Pay"), reduced by any
disability benefits which the Executive receives under any Cleveland-Cliffs
disability program;
(b) participation, consistent with past practices, in
incentive compensation plans and arrangements of Cleveland-Cliffs in effect as
of the date of the Change of Control, as the same may subsequently be modified,
supplemented or replaced, including, without limitation, the Incentive Bonus
Plan and the 1992 Incentive Equity Plan (including the Long-Term Performance
Share Program), without material reduction in the reward opportunities available
to the Executive, and without reduction in the target bonus and target award
percentages applicable to the Executive immediately prior to the occurrence of a
Change of Control (with annual amounts and opportunities awarded pursuant to
such plans, programs and arrangements collectively referred to as "Incentive
Pay");
(c) participation in the Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan (As Amended and Restated as of January 1, 1997)
("Supplemental Retirement Plan" or "SRP"), as the same hereafter may be amended
prior to a Change of Control, and modified as provided in Section 6 hereof; and
(d) participation, consistent with past practices, in all
other employee benefit plans and practices of Cleveland-Cliffs in effect as of
the date of the Change of Control (including, without limitation, medical,
dental, hospitalization, health and welfare plans, life, long-term disability
and accident insurance programs, employee savings and investment plans, stock
ownership plans and retirement plans and supplemental arrangements), as the same
may be modified, supplemented or replaced without material reduction in total
value of the benefits to Executive (collectively, "Employee Benefits").
4. TERMINATION FOLLOWING A CHANGE OF CONTROL: (a) In the
event of the occurrence of a Change of Control, the Executive's employment may
be terminated by Cleveland-Cliffs during the Period of Employment and the
Executive shall be entitled to the benefits provided by Section 5 unless such
termination is the result of the occurrence of one or more of the following
events:
(i) The Executive's death; or
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(ii) The Executive's employment is terminated for Cause.
For purposes of this Agreement, "Cause" shall mean that, prior to any
termination pursuant to Section 4(b), the Executive shall have committed any act
that is materially inimical to the best interests of Cleveland-Cliffs and that
constitutes common law fraud, a felony, or other gross malfeasance of duty. The
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the Board then in office at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive committed an act set
forth in this Section 4(a) and specifying the particulars thereof in detail.
Nothing herein shall limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such determination.
(b) During the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof upon the occurrence of
one or more of the following events:
(i) The Executive's "Disability", shall be deemed to have
occurred six (6) months after the Executive shall have become totally
and permanently disabled by bodily or mental injury or disease so as to
be prevented thereby from engaging in any executive employment or
occupation for remuneration or profit, as determined and certified to
Cleveland-Cliffs and the Executive by The Cleveland Clinic (or if it is
unwilling or unable to act, by one or more physicians designated for
such purpose by the Cleveland Academy of Medicine or its successor
organization); or
(ii) Termination by the Executive of his employment
with Cleveland-Cliffs upon the occurrence of any of the
following events:
(A) The failure to elect, reelect or otherwise to
maintain the Executive in the office or position, or a
substantially equivalent office or position, of or with
Cleveland-Cliffs which the Executive held immediately prior to
a Change of Control, or the removal of, or failure to reelect,
the Executive as a Director of Cleveland-Cliffs (or any
successor thereto), if the Executive shall have been a
Director of Cleveland-Cliffs immediately prior to the Change
of Control;
(B) (I) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with Cleveland-Cliffs which
the Executive held immediately prior to the Change of
Control, (II) a reduction in the
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aggregate of the Executive's Base Pay and Incentive Pay
received from Cleveland-Cliffs, or a reduction in the
Executive's opportunities for Incentive Pay (including, but
not limited to, a reduction in target bonus percentage or
target award opportunity (whether measured by number of
performance shares or management objectives)) provided by
Cleveland-Cliffs, or (III) a reduction or termination of any
benefits described in Section 3(c) or (d) hereof to which the
Executive was entitled immediately prior to the Change of
Control, any of which is not remedied by Cleveland-Cliffs
within 10 calendar days after receipt by Cleveland-Cliffs of
written notice from the Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive (which
determination will be conclusive and binding upon the parties
hereto provided it has been made in good faith and in all
events will be presumed to have been made in good faith unless
otherwise shown by Cleveland-Cliffs by clear and convincing
evidence) that a change in circumstances has occurred
following a Change of Control, including, without limitation,
a change in the scope of the business or other activities for
which the Executive was responsible immediately prior to the
Change of Control, which has rendered the Executive
substantially unable to carry out, has substantially hindered
the Executive's performance of, or has caused the Executive to
suffer a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change
of Control, which situation is not remedied by
Cleveland-Cliffs within ten calendar days after written notice
to Cleveland-Cliffs from the Executive of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of Cleveland-Cliffs or the
transfer of all or a significant portion of its business
and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of Cleveland-Cliffs under this Agreement pursuant
to Section 16 hereof;
(E) The relocation of Cleveland-Cliffs' principal
executive offices, or a requirement that the Executive change
his principal location of work to any location which is in
excess of 25 miles from the location thereof immediately prior
to the Change of Control, or a requirement that the Executive
travel away from his office in the course of discharging his
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responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of him prior to the Change
of Control without, in any case described above, the prior
written consent of the Executive; or
(F) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by
Cleveland-Cliffs or any successor thereto.
(c) A termination by Cleveland-Cliffs pursuant to Section 4(a)
hereof other than for Cause or by the Executive pursuant to Section 4(b) hereof
shall not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of Cleveland-Cliffs, which
rights shall be governed by the terms thereof, subject, however, to the
modifications in Section 6 hereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not
entitled to any payments under Sections 3 or 5 hereof, the Executive shall have
no further obligation or liability to Cleveland-Cliffs hereunder with respect to
his prior or any future employment by Cleveland-Cliffs.
5. SEVERANCE COMPENSATION: If Cleveland-Cliffs shall terminate
the Executive's employment during the Period of Employment, other than pursuant
to Cause under Section 4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, then in lieu of any further payments
to the Executive for periods subsequent to the date of the Executive's
termination of employment (the "Termination Date"), the date of which shall be
the date of termination or such other date that may be specified by the
Executive if the termination is pursuant to Section 4(b) hereof,
Cleveland-Cliffs shall provide Severance Compensation to the Executive as
described below:
(a) SEVERANCE PAY. Within five business days after the
Termination Date:
(i) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "Severance Payment") in an amount equal to the present
value (using a discount rate prescribed for purposes of valuation
computations under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the then "applicable
interest rate" under Section 417(e)(3)(A)(ii)(II) of the Code for the
month in which the Termination Date occurs (the "Discount Rate")) of
(A) the amount of Base Pay that would have been paid
to the Executive pursuant to Section 3(a) for the greater of
(I) one year or (II) the duration of the
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Period of Employment, in each case if the termination had not
taken place (at the rate in effect immediately prior to the
Change of Control or prior to the Termination Date, whichever
is higher) and, if the Termination is on account of the
Executive's Disability, reduced by the amount of disability
benefits that would have been paid to the Executive for the
duration of the Period of Employment if the termination had
not taken place; plus
(B) the amount of Average Incentive Pay (as that term
is hereinafter defined) that would have been paid to the
Executive pursuant to Section 3(b) for the greater of (I) one
year or (II) the duration of the Period of Employment if the
termination had not taken place.
For purposes of this Agreement, Average Incentive Pay for any
12 month period shall mean an amount which is the greater of
(III) the average amount of Incentive Pay (as defined in
Section 3(b) hereof) awarded to the Executive for the three
calendar years immediately prior to the Termination Date, or
(IV) the amount of the most recent award of Incentive Pay.
(ii) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "SRP Payment") in an amount equal to the sum of the future
pension benefits (converted to a lump sum of actuarial equivalence)
which the Executive would have been entitled to receive at or after the
end of the Period of Employment under the SRP, as the same may be
further amended prior to a Change of Control and as modified by Section
6 hereof (assuming Base Salary at the rate in effect immediately prior
to the occurrence of Change of Control and Incentive Pay equivalent to
the amount of Average Incentive Pay), if the Executive had remained in
the full-time employment of Cleveland-Cliffs until the end of the
Period of Employment.
The calculation of the SRP Payment and its actuarial equivalence shall
be made as of the date the Executive is terminated. The lump sum of
actuarial equivalence shall be calculated as of the end of the Period
of Employment using the assumptions and factors used in the SRP, and
such sums shall be discounted to the date of payment using the Discount
Rate.
Payment of the SRP Payment by Cleveland-Cliffs shall be deemed to be a
satisfaction of all obligations of Cleveland-Cliffs to the Executive
under the SRP.
(b) EMPLOYEE BENEFITS. For the greater of (i) one year or
(ii) the duration of the Period of Employment, Cleveland-Cliffs shall arrange to
provide the Executive with Employee Benefits substantially similar to those
which the Executive was receiving
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or entitled to receive immediately prior to the Termination Date as described in
Section 3(d) (and if and to the extent that such benefits shall not or cannot be
paid or provided under any policy, plan, program or arrangement of
Cleveland-Cliffs solely due to the fact that the Executive is no longer an
officer or employee of Cleveland-Cliffs, then Cleveland-Cliffs shall itself pay
or provide for the payment to the Executive, his dependents and beneficiaries,
such Employee Benefits). Without otherwise limiting the purposes or effect of
this Section 5(b), Employee Benefits payable to the Executive pursuant to this
Section 5(b) by reason of any "welfare benefit plan" of Cleveland-Cliffs (as the
term "welfare benefit plan" is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) shall be reduced
to the extent comparable welfare benefits are actually received by the Executive
from another employer during the period beginning upon the occurrence of the
Termination Date and ending upon the last day during which Cleveland-Cliffs is
required to provide such Employee Benefits pursuant to the first sentence of
this Section 5(b).
(c) STOCK OPTIONS, RESTRICTED STOCK AND PERFORMANCE SHARES.
Upon the Termination Date, (i) all Stock Options granted to the Executive
pursuant to the 1992 Incentive Equity Plan, or any successor plan or similar
plan, shall be vested, (ii) the restrictions on any restricted stock awarded to
the Executive under the 1992 Incentive Equity Plan, or any successor plan or
similar plan, shall be released, and (iii) all Performance Share Awards under
the Long-Term Performance Share Program under the 1992 Incentive Equity Plan for
which the measurement period has not yet expired shall be earned assuming
management objectives have been met at the target level.
(d) METHOD OF PAYMENT. Upon written notice given by the
Executive to Cleveland-Cliffs prior to the occurrence of a Change of Control,
the Executive, at his sole option, without adjustment to reflect the present
value of such amounts as aforesaid, may elect to have all or any of the
Severance Payment described in Section 5(a) hereof paid to him on a quarterly or
monthly basis during the time remaining until the expiration of the third
anniversary of the Change of Control.
(e) OUTPLACEMENT COUNSELING. Cleveland-Cliffs shall reimburse
the Executive for reasonable expenses incurred for outplacement counseling (i)
which are pre-approved by the Chief Human Resources Officer of Cleveland-Cliffs,
(ii) which do not exceed 15% of the Executive's annual Base Pay, and (iii) which
are incurred by the Executive within six months following the Termination Date.
(f) SET-OFF AND COUNTERCLAIM. There shall be no right of
set-off or counterclaim in respect of any claim, debt or obligation against any
payment to or benefit for the Executive provided for in this Agreement.
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(g) INTEREST. Without limiting the rights of the Executive at
law or in equity, if Cleveland-Cliffs fails to make any payment required to be
made hereunder on a timely basis, Cleveland-Cliffs shall pay interest on the
amount thereof at an annualized rate of interest equal to the then-applicable
Discount Rate.
(h) CALCULATION. The calculation of all payments of
compensation and other benefits to be provided to Executive under this Agreement
(other than payments pursuant to Section 8 hereof) shall be made by Hewitt
Associates ("Hewitt"), or such other actuarial firm selected by
Cleveland-Cliffs' independent accountants and satisfactory to Executive.
Cleveland-Cliffs shall provide to such actuarial firm all information requested
by such actuarial firm as necessary for or helpful to it to make the
calculations hereunder.
6. SUPPLEMENTAL RETIREMENT PLAN. Cleveland-Cliffs hereby
waives the discretionary right, at any time subsequent to the date of a Change
of Control, to amend or terminate the SRP as to Executive as provided in
paragraph 8 thereof or to terminate the rights of Executive or his beneficiary
under the SRP in the event Executive engages in a competitive business as
provided in any plan or arrangement between Cleveland-Cliffs and the Executive
or applicable to the Executive, including but not limited to, the provisions of
paragraph 4 of the SRP, or any similar provisions of any such plan or
arrangement or other plan or arrangement supplementing or superseding the same.
This Section 6 shall constitute a "Supplemental Agreement" as defined in
Paragraph 1.J of the SRP. If Cleveland-Cliffs shall terminate the Executive's
employment during the Period of Employment, other than for Cause pursuant to
Section 4(a) hereof, or if the Executive shall terminate his employment pursuant
to Section 4(b) hereof, or if, following the end of the Period of Employment,
the Executive's employment is terminated for any reason, for the purposes of
computing the Executive's period of continuous service and of calculating and
paying his benefit under the SRP:
(a) The Executive shall be credited with years of continuous
service at the time of his termination of employment with Cleveland-Cliffs (by
death or otherwise) equal to the greater of (i) the number of his actual years
of continuous service or (ii) the number of years of continuous service he would
have had if he had continued his employment with Cleveland-Cliffs until the
expiration of the third anniversary of the Change of Control, and had he
attained the greater of (iii) his actual chronological age or (iv) his
chronological age at the expiration of the third anniversary of the Change of
Control. In addition, the Executive shall be eligible for a 30-year pension
benefit based upon his years of continuous service as computed under the
preceding sentence. The Executive shall be eligible to commence the 30-year
pension benefit on the earlier of (v) the date upon which the Executive would
have otherwise reached 30 years of continuous service with Cleveland-Cliffs but
for his termination of employment after the Change of Control, or (vi) the
date upon
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which the sum of the Executive's years of continuous service (as computed in the
first sentence of this subparagraph (a)) and the Executive's Credited Years of
Industry Service (as defined in Section 1(d) hereof) is equal to 30 years; and
(b) The Executive shall be a "Participant" in the SRP,
notwithstanding any limitations therein.
A copy of the SRP is attached to this Agreement as Exhibit A. The SRP is
incorporated in all respects herein; provided, however, that the terms of this
Agreement shall take precedence to the extent they are contrary to provisions
contained in the SRP.
7. WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION AFTER
PERIOD OF EMPLOYMENT. Following the later of the end of the Period of
Employment, or Executive's termination of employment with Cleveland-Cliffs,
Cleveland-Cliffs shall:
(a) Provide medical, hospital, surgical and prescription drug
coverage, equivalent to that furnished on February 1, 1992 to officers who
retire after January 1, 1990 by Cleveland-Cliffs, to the Executive and his
spouse for their lifetimes, and to eligible dependents of the Executive for
their periods of eligibility, through insurance or otherwise;
(b) Provide life insurance on the Executive, equivalent to
that furnished on February 1, 1992 to officers who retire after January 1, 1990
by Cleveland-Cliffs, to the Executive for his lifetime; and
(c) Without otherwise limiting the purposes or effect of this
Section 7 hereof, welfare benefits payable to the Executive or his spouse or
dependents pursuant to this Section 7 shall be reduced to the extent comparable
welfare benefits are payable pursuant to Section 5(b) hereof or are actually
received by the Executive or his spouse or dependents from another employer.
8. CERTAIN ADDITIONAL PAYMENTS BY CLEVELAND-CLIFFS. (a)
Anything in this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as hereafter
provided) that any payment or distribution by Cleveland-Cliffs to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code by reason of being considered
"contingent on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties
with respect to
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such tax (such tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section, including
whether an Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required to be paid by Cleveland-Cliffs to
the Executive and the amount of such Gross-Up Payment, if any, shall be made by
a nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Cleveland-Cliffs and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Cleveland-Cliffs or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, Cleveland-Cliffs shall pay the required
Gross-Up Payment to the Executive within five business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall, at the same time as it makes such determination,
furnish Cleveland-Cliffs and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
Cleveland-Cliffs should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Cleveland-Cliffs
exhausts or fails to pursue its remedies pursuant to Subsection (f) of this
Section and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Cleveland-Cliffs and the Executive as promptly
as possible. Any such Underpayment shall be promptly paid by Cleveland-Cliffs
to, or for the benefit of, the
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Executive within five business days after receipt of such determination and
calculations.
(c) Cleveland-Cliffs and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Cleveland-Cliffs or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Subsection (b) of this Section. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon Cleveland-Cliffs and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of Cleveland-Cliffs, provide to
Cleveland-Cliffs true and correct copies (with any amendments) of his federal
income tax return as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by Cleveland-Cliffs,
evidencing such payment. If prior to the filing of the Executive's federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to Cleveland-Cliffs
the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Subsection (b) of this Section shall be borne by Cleveland-Cliffs. If such fees
and expenses are initially paid by the Executive, Cleveland-Cliffs shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.
(f) The Executive shall notify Cleveland-Cliffs in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Cleveland-Cliffs of a Gross-Up Payment.
Such notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise Cleveland-Cliffs of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim prior to
the earlier of (i) the expiration of the 30-calendar-day period following the
date on which he gives such notice to Cleveland-Cliffs and (ii) the date that
any payment of amount with respect to such claim is due. If Cleveland-Cliffs
notifies the Executive in
<PAGE> 35
14
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) provide Cleveland-Cliffs with any written
records or documents in his possession relating to such
claim reasonably requested by Cleveland-Cliffs;
(ii) take such action in connection with contesting such
claim as Cleveland-Cliffs shall reasonably request in writing
from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by Cleveland-Cliffs;
(iii) cooperate with Cleveland-Cliffs in good faith
in order effectively to contest such claim; and
(iv) permit Cleveland-Cliffs to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that Cleveland-Cliffs shall bear and pay directly
all costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
Cleveland-Cliffs shall control all proceedings taken in connection with
the contest of any claim contemplated by this Subsection and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Cleveland-Cliffs shall determine;
PROVIDED, HOWEVER, that if Cleveland-Cliffs directs the Executive to
pay the tax claimed and sue for a refund, Cleveland-Cliffs shall
advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Cleveland-Cliffs's control of any such contested
<PAGE> 36
15
claim shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by Cleveland-Cliffs pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive shall
(subject to Cleveland-Cliffs's complying with the requirements of Subsection (f)
of this Section) promptly pay to Cleveland-Cliffs the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by
Cleveland-Cliffs pursuant to Subsection (f) of this Section, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and Cleveland-Cliffs does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by
Cleveland-Cliffs to the Executive pursuant to this Section.
9. NO MITIGATION OBLIGATION: Cleveland-Cliffs hereby
acknowledges that it will be difficult, and may be impossible, for the Executive
to find reasonably comparable employment following the Termination Date and that
the non-competition covenant contained in Section 11 hereof will further limit
the employment opportunities for the Executive. Accordingly, the parties hereto
expressly agree that except as expressly provided in Sections 5(b) and 7 hereof,
the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.
10. CONFIDENTIALITY: The Executive acknowledges that all trade
secrets, customer lists, and other confidential business information are the
exclusive property of Cleveland-Cliffs, and the Executive shall not at any time
during the Term of this Agreement or at any time thereafter, directly or
indirectly reveal or cause to be revealed to any person or entity the trade
secrets, customer lists and other confidential business information obtained as
a result of the Executive's employment or relationship with Cleveland-Cliffs.
11. COMPETITIVE ACTIVITY: For a period of twenty-four (24)
months from and after any termination of employment following the occurrence of
a Change of Control, the Executive shall not become an officer, director, joint
venturer, employee, consultant, 5-percent or more shareholder (directly or
indirectly), or promote or assist (financially or otherwise) any entity which
competes in
<PAGE> 37
16
any business in which Cleveland-Cliffs or any of its affiliates are engaged as
of the date-of the Change of Control. For this purpose, business is defined as
the iron and steel industry. The provisions of this Section 11 shall, following
a Change of Control, supersede and be in lieu of any similar provision in any
other plan or agreement involving Cleveland-Cliffs and the Executive, whether
now existing or hereinafter adopted or entered into, including, but not limited
to, the SRP.
12. RELEASE: Payment of the Severance Compensation set forth
in Section 5 hereof is conditioned upon the Executive executing and delivering a
release (the "Release") satisfactory to Cleveland-Cliffs releasing
Cleveland-Cliffs, its directors, employees and affiliates from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which the
Executive may have had on account of the termination of his employment,
including, but not limited to claims of discrimination, including on the basis
of sex, race, age, national origin, religion, or handicapped status (with all
applicable periods during which the Executive may revoke the Release or any
provision thereof having expired), and any and all claims, demands and causes of
action for retirement (other than under any "pension benefit plan" or under any
"welfare benefit plan" of Cleveland- Cliffs (as the terms "pension benefit plan"
and "welfare benefit plan" are defined in Section 3 of ERISA) other than the
SRP), severance or other termination pay, and because pursuant to Section 5(a)
the Executive is entitled to lump sum payments of Incentive Pay and benefits
under the SRP, under the SRP and any incentive compensation plans and
arrangements of Cleveland-Cliffs described in Section 3(b). Such Release shall
not, however, apply to the obligations of Cleveland-Cliffs arising under this
Agreement, or rights of indemnification the Executive may have under the
Regulations of Cleveland-Cliffs or by contract or by statute.
13. LEGAL FEES AND EXPENSES: (a) It is the intent of
Cleveland-Cliffs that the Executive not be required to incur any expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that Cleveland-Cliffs has
failed to comply with any of its obligations under this Agreement or in the
event that Cleveland-Cliffs or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation designed to deny,
or to recover from, the Executive the benefits intended to be provided to the
Executive hereunder, Cleveland-Cliffs irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of Cleveland-Cliffs
as hereafter provided, to represent the Executive in connection with the
initiation or defense of any such litigation or other legal action, whether by
or against Cleveland-Cliffs or any Director, officer, stockholder or other
person affiliated with Cleveland-Cliffs, in any jurisdiction. Notwithstanding
any existing or prior attorney-
<PAGE> 38
17
client relationship between Cleveland-Cliffs and such counsel, Cleveland-Cliffs
irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection Cleveland-Cliffs and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Cleveland-Cliffs shall promptly pay or cause to be
paid and shall be solely responsible for any and all attorneys' and related fees
and expenses incurred by the Executive as a result of Cleveland-Cliffs' failure
to perform this Agreement or any provision hereof or as a result of
Cleveland-Cliffs or any person contesting the validity or enforceability of this
Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by Executive, certain trust arrangements ("Trusts") have been
established between KeyTrust Company of Ohio, N.A., as Trustee ("Trustee"), and
Cleveland-Cliffs. Trust Agreement No. 1 (Amended and Restated Effective June 1,
1997) ("Trust Agreement No. 1") dated June 12, 1997, and Trust Agreement No. 2
(Amended and Restated Effective June 1, 1997) ("Trust Agreement No. 2") dated
June 12, 1997, as amended and/or restated, between the Trustee and
Cleveland-Cliffs, are attached as Exhibits B and C, respectively. A Trust
Agreement No. 7 ("Trust Agreement No. 7") dated April 9, 1991, as amended,
between the Trustee and Cleveland-Cliffs, is attached as Exhibit D. Each such
Trust Agreement shall be considered a part of this Agreement and shall set forth
the terms and conditions relating to payment under Trust Agreement No. 1 of
compensation and other benefits pursuant to Sections 3, 5 and 8 and pension
benefits pursuant to Sections 3, 5 and 6 owed by Cleveland-Cliffs, payment from
Trust Agreement No. 7 of certain pension benefits pursuant to Sections 3, 5 and
6 owed by Cleveland-Cliffs, and payment from Trust Agreement No. 2 for
attorneys' fees and related fees and expenses pursuant to Section 13(a) hereof
owed by Cleveland-Cliffs. Executive shall make demand on Cleveland-Cliffs for
any payments due Executive pursuant to Section 13(a) hereof prior to making
demand therefor on the Trustee under Trust Agreement No. 2.
(c) Upon the earlier to occur of (i) a Change of a Control or
(ii) a declaration by the Board that a Change of Control is imminent,
Cleveland-Cliffs shall promptly to the extent it has not previously done so, and
in any event within five (5) business days:
(A) transfer to Trustee to be added to the principal of the
Trust under Trust Agreement No. 1 a sum equal to (I) the present value
on the date of the Change of Control (or on such fifth business day if
the Board has declared a Change of Control to be imminent) of the
payments to be made to Executive under the provisions of Sections 3, 5,
6 and 8 hereof, such present value to be computed using the assumptions
set forth in Section 5(a) hereof and the computations provided for in
Section 8 hereof less (II) the balance in the Executive's account
provided for in Section 7(b) of Trust Agreement No. 1 as of the most
recent
<PAGE> 39
18
completed valuation thereof, less (III) the balance in the Executive's
account provided for in Section 7(b) of Trust Agreement No. 7 as of the
most recent completed valuation thereof, as certified by the Trustee
under each of Trust Agreement No. 1 and Trust Agreement No. 7;
provided, however, that if the Trustee under Trust Agreement No. 1
and/or Trust Agreement No. 7, respectively, does not so certify by the
end of the fourth (4th) business day after the earlier of such Change
of Control or declaration, then the balance of such respective account
shall be deemed to be zero. Any payments of compensation, pension or
other benefits by the Trustee pursuant to Trust Agreement No. 1 or
Trust Agreement No. 7 shall, to the extent thereof, discharge
Cleveland-Cliffs' obligation to pay compensation, pension and other
benefits hereunder, it being the intent of Cleveland-Cliffs that assets
in such Trusts be held as security for Cleveland- Cliffs' obligation to
pay compensation, pension and other benefits under this Agreement; and
(B) transfer to the Trustee to be added to the principal of
the Trust under Trust Agreement No. 2 the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000) less any principal in such Trust on such
fifth business day. Any payments of Executive's attorneys' and related
fees and expenses by the Trustee pursuant to Trust Agreement No. 2
shall, to the extent thereof, discharge Cleveland-Cliffs' obligation
hereunder, it being the intent of Cleveland-Cliffs that assets in such
Trust be held as security for Cleveland- Cliffs' obligation under
Section 13(a) hereof. Executive understands and acknowledges that the
entire corpus of the Trust under Trust Agreement No. 2 will be $250,000
and that said amount will be available to discharge not only the
obligations of the Cleveland-Cliffs to Executive under Section 13(a)
hereof, but also similar obligations of the Cleveland-Cliffs to other
executives and employees under similar provisions of other agreements
and plans.
14. EMPLOYMENT RIGHTS: Nothing expressed or implied in this
Agreement shall create any right or duty on the part of Cleveland-Cliffs or the
Executive to have the Executive remain in the employment of Cleveland-Cliffs at
any time prior to a Change of Control; provided, however, that any termination
of employment of the Executive or the removal of the Executive from the office
or position in Cleveland-Cliffs following the commencement of any discussion
with a third person that ultimately results in a Change of Control shall be
deemed to be a termination or removal of the Executive after a Change of Control
for purposes of this Agreement. Executive expressly acknowledges that he is an
employee at will, and that Cleveland-Cliffs may terminate him at any time during
the Period of Employment for any reason if Cleveland-Cliffs pays the Severance
Compensation provided for under Section 5 of this Agreement, and otherwise
comply with its other continuing covenants in this Agreement, including without
limitation, Sections 3 and 6.
<PAGE> 40
19
15. WITHHOLDING OF TAXES: Cleveland-Cliffs may withhold from
any amounts payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or ruling.
16. SUCCESSORS AND BINDING AGREEMENT: (a) Cleveland-Cliffs
shall require any successor (including without limitation any persons acquiring
directly or indirectly all or substantially all of the business and/or assets of
Cleveland-Cliffs whether by purchase, merger, consolidation, reorganization or
otherwise, and such successor shall thereafter be deemed "Cleveland-Cliffs" for
the purposes of this Agreement), by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent Cleveland-Cliffs would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of Cleveland-Cliffs and any successor
to Cleveland-Cliffs but shall not otherwise be assignable, transferable or
delegable by Cleveland-Cliffs.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in this Section 16. Without limiting the generality of the
foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 16, Cleveland-Cliffs shall have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
(d) The agreement of Cleveland-Cliffs to make payments and/or
provide benefits hereunder shall represent an unsecured obligation of
Cleveland-Cliffs.
(e) Cleveland-Cliffs and the Executive recognize that each
party will have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach,
Cleveland-Cliffs and the Executive hereby agree and consent that the other shall
be entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of this Agreement.
17. NOTICE: For all purposes of this Agreement, all
communications including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given when delivered or five business days after having been mailed by
United States registered
<PAGE> 41
20
or certified mail, return receipt requested, postage prepaid, addressed to such
party's address as specified below, or at such other address as such party shall
specify by notice to the other. If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114-2589
Attention: Secretary
If to the Executive, to the last address shown on the records of
Cleveland-Cliffs. Notices of change of address shall be effective only upon
receipt.
18. GOVERNING LAW: The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
19. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
20. AMENDMENT: This Agreement may be amended only by a
written instrument signed by the parties hereto, which makes specific reference
to this Agreement.
21. RIGHTS UNDER OTHER PLANS AND PROGRAMS: Anything in this
Agreement to the contrary notwithstanding, no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict any
benefit to which Executive may be entitled under any other agreement, plan or
program providing benefits for Executive, including but not limited to the plans
described in Sections 3 and 5 of this Agreement.
22. MISCELLANEOUS: No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and Cleveland-Cliffs. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
23. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
<PAGE> 42
21
original but all of which together will constitute one and the same agreement.
24. CAPTIONS: The captions in this Agreement are for
convenience of reference only and do not define, limit or describe the scope or
intent of this Agreement or any part hereof and shall not be considered in any
construction hereof.
IN WITNESS WHEREOF, Cleveland-Cliffs has caused this Agreement
to be executed on its behalf by its duly authorized representative and Executive
has hereunto set his hand, all as of the date and year first above written.
CLEVELAND-CLIFFS INC
By /s/ M. Thomas Moore
----------------------------------
Chairman and Chief
Executive Officer
/s/ John S. Brinzo
------------------------------------
John S. Brinzo
<PAGE> 43
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"),
dated as of June 30, 1997, by and between Cleveland-Cliffs Inc, an Ohio
corporation ("Cleveland-Cliffs"), and M. Thomas Moore, Social Security Number
___ , who is presently Chairman and Chief Executive Officer of Cleveland-
Cliffs (the "Executive"), amends and restates the Employment Agreement, dated
as of February 1, 1992, between Cleveland-Cliffs and the Executive;
WITNESSETH:
WHEREAS, the Executive is a senior executive of
Cleveland-Cliffs and has made and is expected to continue to make major
contributions to the profitability, growth and financial strength of
Cleveland-Cliffs;
WHEREAS, Cleveland-Cliffs recognizes that, as is the case for
most publicly held companies, the possibility of a Change of Control (as that
term is hereafter defined) exists;
WHEREAS, Cleveland-Cliffs desires to assure itself of both
present and future continuity of management in the event of a Change of Control
and desires to establish certain minimum compensation rights of its senior
executives, including the Executive, applicable in the event of a Change of
Control;
WHEREAS, Cleveland-Cliffs wishes to ensure that its senior
executives are not practically disabled from discharging their duties upon a
Change of Control; and
WHEREAS, this Agreement is not intended to alter materially
the compensation and benefits which the Executive could reasonably expect to
receive from Cleveland-Cliffs absent a Change of Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration including the Release provided for in Section 12
hereof, the receipt of which is hereby acknowledged, Cleveland-Cliffs and the
Executive agree as follows:
1. OPERATION OF AGREEMENT; CERTAIN DEFINITIONS:
(a) This Agreement is a continuation of the employment
agreement originally effective as of February 1, 1992 (the "Effective Date"),
but, anything in this Agreement to the contrary notwithstanding, this Agreement
shall not become operative unless and until there shall have occurred a Change
of Control. For
<PAGE> 44
2
purposes of this Agreement, a "Change of Control" shall have occurred if at any
time during the Term (as that term is hereafter defined) any of the following
events shall occur:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the same shall have
existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d) (3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease, for any reason, to constitute at
least a majority thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of Cleveland-Cliffs who are Directors of
Cleveland-Cliffs on the date of the beginning of any such period.
(b) Upon the occurrence of a Change of Control at any time
during the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the Effective Date hereof and shall expire as
of the later of (i) the close of business on the eighth anniversary of the
Effective Date and (ii) the expiration of the Period of Employment (as that term
is hereafter defined); provided, however, that (A) this Agreement may be
continued in full force and effect for an additional period or periods of one
(1) year if Cleveland-Cliffs and the Executive mutually agree to such extension
or extensions, (B) this Agreement shall automatically renew for an additional
period or periods of
<PAGE> 45
3
one (1) year if the end of the Term occurs during the period of any discussions
with any party that might ultimately result in the occurrence of a Change of
Control, and (C) subject to Section 14 hereof, if, prior to a Change of Control,
the Executive ceases for any reason to be an officer of Cleveland-Cliffs,
thereupon the Term shall be deemed to have expired and this Agreement shall
immediately terminate and be of no further effect.
(d) The term "Industry Service" shall mean professionally
related service, prior to his employment by Cleveland-Cliffs or its subsidiaries
and affiliates, by the Executive as an employee within the iron and steel
industry or an industry to which such Executive's position with Cleveland-Cliffs
relates. The Executive shall be given credit for one year of Industry Service
for every two years of service with Cleveland-Cliffs, as designated in writing
by, or in minutes of the actions of, the Compensation and Organization Committee
of the Board of Directors of Cleveland-Cliffs, and such years of credited
Industry Service shall be defined as "Credited Years of Industry Service."
2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and conditions of this Agreement, upon the occurrence of a Change of Control,
Cleveland-Cliffs shall continue the Executive in its employ and the Executive
shall remain in the employ of Cleveland-Cliffs for the period set forth in
Section 2(b) hereof (the "Period of Employment"), in the position and with
substantially the same duties and responsibilities that he had immediately prior
to the Change of Control, or to which Cleveland-Cliffs and the Executive may
hereafter mutually agree in writing. Throughout the Period of Employment, the
Executive shall devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences in accordance with
the policies of Cleveland-Cliffs as in effect for senior executives immediately
prior to the Change of Control) to the business and affairs of Cleveland-Cliffs,
but nothing in this Agreement shall preclude the Executive from devoting
reasonable periods of time during normal business hours to (i) serving as a
director, trustee or member of or participant in any organization or business so
long as such activity would not constitute Competitive Activity (as described in
Section 11 hereof), (ii) engaging in charitable and community activities, or
(iii) managing his personal investments. The business, assets, and properties of
Cleveland-Cliffs, as well as the support services and facilities available to
the Executive, shall not differ materially from those of Cleveland-Cliffs
immediately prior to the date of the Change of Control.
(b) The Period of Employment shall commence on the date of the
occurrence of a Change of Control and, subject only to the provisions of Section
4 hereof, shall continue until the earlier of (i) the expiration of the third
anniversary of the occurrence of the Change of Control, or (ii) the Executive's
death.
<PAGE> 46
4
3. COMPENSATION DURING PERIOD OF EMPLOYMENT: During the
Period of Employment the Executive shall receive and be entitled to the
following:
(a) an annual base salary at a rate not less than the
Executive's annual fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of Cleveland-Cliffs immediately prior to the
occurrence of a Change of Control) or such higher rate as may be determined from
time to time by the Board of Directors of Cleveland-Cliffs (the "Board") or the
Organization and Compensation Committee thereof (the Committee") (which base
salary at such rate is herein referred to as "Base Pay"), reduced by any
disability benefits which the Executive receives under any Cleveland-Cliffs
disability program;
(b) participation, consistent with past practices, in
incentive compensation plans and arrangements of Cleveland-Cliffs in effect as
of the date of the Change of Control, as the same may subsequently be modified,
supplemented or replaced, including, without limitation, the Incentive Bonus
Plan and the 1992 Incentive Equity Plan (including the Long-Term Performance
Share Program), without material reduction in the reward opportunities available
to the Executive, and without reduction in the target bonus and target award
percentages applicable to the Executive immediately prior to the occurrence of a
Change of Control (with annual amounts and opportunities awarded pursuant to
such plans, programs and arrangements collectively referred to as "Incentive
Pay");
(c) participation in the Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan (As Amended and Restated as of January 1, 1997)
("Supplemental Retirement Plan" or "SRP"), as the same hereafter may be amended
prior to a Change of Control, and modified as provided in Section 6 hereof; and
(d) participation, consistent with past practices, in all
other employee benefit plans and practices of Cleveland-Cliffs in effect as of
the date of the Change of Control (including, without limitation, medical,
dental, hospitalization, health and welfare plans, life, long-term disability
and accident insurance programs, employee savings and investment plans, stock
ownership plans and retirement plans and supplemental arrangements), as the same
may be modified, supplemented or replaced without material reduction in total
value of the benefits to Executive (collectively, "Employee Benefits").
4. TERMINATION FOLLOWING A CHANGE OF CONTROL: (a) In the
event of the occurrence of a Change of Control, the Executive's employment may
be terminated by Cleveland-Cliffs during the Period of Employment and the
Executive shall be entitled to the benefits provided by Section 5 unless such
termination is the result of the occurrence of one or more of the following
events:
(i) The Executive's death; or
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5
(ii) The Executive's employment is terminated for
Cause.
For purposes of this Agreement, "Cause" shall mean that, prior to any
termination pursuant to Section 4(b), the Executive shall have committed any act
that is materially inimical to the best interests of Cleveland-Cliffs and that
constitutes common law fraud, a felony, or other gross malfeasance of duty. The
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the Board then in office at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive committed an act set
forth in this Section 4(a) and specifying the particulars thereof in detail.
Nothing herein shall limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such determination.
(b) During the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof upon the occurrence of
one or more of the following events:
(i) The Executive's "Disability", shall be deemed to have
occurred six (6) months after the Executive shall have become totally
and permanently disabled by bodily or mental injury or disease so as to
be prevented thereby from engaging in any executive employment or
occupation for remuneration or profit, as determined and certified to
Cleveland-Cliffs and the Executive by The Cleveland Clinic (or if it is
unwilling or unable to act, by one or more physicians designated for
such purpose by the Cleveland Academy of Medicine or its successor
organization); or
(ii) Termination by the Executive of his employment
with Cleveland-Cliffs upon the occurrence of any of the
following events:
(A) The failure to elect, reelect or otherwise to
maintain the Executive in the office or position, or a
substantially equivalent office or position, of or with
Cleveland-Cliffs which the Executive held immediately prior to
a Change of Control, or the removal of, or failure to reelect,
the Executive as a Director of Cleveland-Cliffs (or any
successor thereto), if the Executive shall have been a
Director of Cleveland-Cliffs immediately prior to the Change
of Control;
(B) (I) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with Cleveland-Cliffs which
the Executive held immediately prior to the Change of Control,
(II) a reduction in the
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6
aggregate of the Executive's Base Pay and Incentive Pay
received from Cleveland-Cliffs, or a reduction in the
Executive's opportunities for Incentive Pay (including, but
not limited to, a reduction in target bonus percentage or
target award opportunity (whether measured by number of
performance shares or management objectives)) provided by
Cleveland-Cliffs, or (III) a reduction or termination of any
benefits described in Section 3(c) or (d) hereof to which the
Executive was entitled immediately prior to the Change of
Control, any of which is not remedied by Cleveland-Cliffs
within 10 calendar days after receipt by Cleveland-Cliffs of
written notice from the Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive (which
determination will be conclusive and binding upon the parties
hereto provided it has been made in good faith and in all
events will be presumed to have been made in good faith unless
otherwise shown by Cleveland-Cliffs by clear and convincing
evidence) that a change in circumstances has occurred
following a Change of Control, including, without limitation,
a change in the scope of the business or other activities for
which the Executive was responsible immediately prior to the
Change of Control, which has rendered the Executive
substantially unable to carry out, has substantially hindered
the Executive's performance of, or has caused the Executive to
suffer a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change
of Control, which situation is not remedied by
Cleveland-Cliffs within ten calendar days after written notice
to Cleveland-Cliffs from the Executive of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of Cleveland-Cliffs or the
transfer of all or a significant portion of its business
and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of Cleveland-Cliffs under this Agreement pursuant
to Section 16 hereof;
(E) The relocation of Cleveland-Cliffs' principal
executive offices, or a requirement that the Executive change
his principal location of work to any location which is in
excess of 25 miles from the location thereof immediately prior
to the Change of Control, or a requirement that the Executive
travel away from his office in the course of discharging his
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responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of him prior to the Change
of Control without, in any case described above, the prior
written consent of the Executive; or
(F) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by
Cleveland-Cliffs or any successor thereto.
(c) A termination by Cleveland-Cliffs pursuant to Section 4(a)
hereof other than for Cause or by the Executive pursuant to Section 4(b) hereof
shall not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of Cleveland-Cliffs, which
rights shall be governed by the terms thereof, subject, however, to the
modifications in Section 6 hereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not
entitled to any payments under Sections 3 or 5 hereof, the Executive shall have
no further obligation or liability to Cleveland-Cliffs hereunder with respect to
his prior or any future employment by Cleveland-Cliffs.
5. SEVERANCE COMPENSATION: If Cleveland-Cliffs shall terminate
the Executive's employment during the Period of Employment, other than pursuant
to Cause under Section 4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, then in lieu of any further payments
to the Executive for periods subsequent to the date of the Executive's
termination of employment (the "Termination Date"), the date of which shall be
the date of termination or such other date that may be specified by the
Executive if the termination is pursuant to Section 4(b) hereof,
Cleveland-Cliffs shall provide Severance Compensation to the Executive as
described below:
(a) SEVERANCE PAY. Within five business days after the
Termination Date:
(i) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "Severance Payment") in an amount equal to the present
value (using a discount rate prescribed for purposes of valuation
computations under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the then "applicable
interest rate" under Section 417(e)(3)(A)(ii)(II) of the Code for the
month in which the Termination Date occurs (the "Discount Rate")) of
(A) the amount of Base Pay that would have been paid
to the Executive pursuant to Section 3(a) for the greater of
(I) one year or (II) the duration of the
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8
Period of Employment, in each case if the termination had not
taken place (at the rate in effect immediately prior to the
Change of Control or prior to the Termination Date, whichever
is higher) and, if the Termination is on account of the
Executive's Disability, reduced by the amount of disability
benefits that would have been paid to the Executive for the
duration of the Period of Employment if the termination had
not taken place; plus
(B) the amount of Average Incentive Pay (as that term
is hereinafter defined) that would have been paid to the
Executive pursuant to Section 3(b) for the greater of (I) one
year or (II) the duration of the Period of Employment if the
termination had not taken place.
For purposes of this Agreement, Average Incentive Pay for any
12 month period shall mean an amount which is the greater of
(III) the average amount of Incentive Pay (as defined in
Section 3(b) hereof) awarded to the Executive for the three
calendar years immediately prior to the Termination Date, or
(IV) the amount of the most recent award of Incentive Pay.
(ii) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "SRP Payment") in an amount equal to the sum of the future
pension benefits (converted to a lump sum of actuarial equivalence)
which the Executive would have been entitled to receive at or after the
end of the Period of Employment under the SRP, as the same may be
further amended prior to a Change of Control and as modified by Section
6 hereof (assuming Base Salary at the rate in effect immediately prior
to the occurrence of Change of Control and Incentive Pay equivalent to
the amount of Average Incentive Pay), if the Executive had remained in
the full-time employment of Cleveland-Cliffs until the end of the
Period of Employment.
The calculation of the SRP Payment and its actuarial equivalence shall
be made as of the date the Executive is terminated. The lump sum of
actuarial equivalence shall be calculated as of the end of the Period
of Employment using the assumptions and factors used in the SRP, and
such sums shall be discounted to the date of payment using the Discount
Rate.
Payment of the SRP Payment by Cleveland-Cliffs shall be deemed to be a
satisfaction of all obligations of Cleveland- Cliffs to the Executive
under the SRP.
(b) EMPLOYEE BENEFITS. For the greater of (i) one year or
(ii) the duration of the Period of Employment, Cleveland-Cliffs shall arrange to
provide the Executive with Employee Benefits substantially similar to those
which the Executive was receiving
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or entitled to receive immediately prior to the Termination Date as described in
Section 3(d) (and if and to the extent that such benefits shall not or cannot be
paid or provided under any policy, plan, program or arrangement of
Cleveland-Cliffs solely due to the fact that the Executive is no longer an
officer or employee of Cleveland-Cliffs, then Cleveland-Cliffs shall itself pay
or provide for the payment to the Executive, his dependents and beneficiaries,
such Employee Benefits). Without otherwise limiting the purposes or effect of
this Section 5(b), Employee Benefits payable to the Executive pursuant to this
Section 5(b) by reason of any "welfare benefit plan" of Cleveland-Cliffs (as the
term "welfare benefit plan" is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) shall be reduced
to the extent comparable welfare benefits are actually received by the Executive
from another employer during the period beginning upon the occurrence of the
Termination Date and ending upon the last day during which Cleveland-Cliffs is
required to provide such Employee Benefits pursuant to the first sentence of
this Section 5(b).
(c) STOCK OPTIONS, RESTRICTED STOCK AND PERFORMANCE SHARES.
Upon the Termination Date, (i) all Stock Options granted to the Executive
pursuant to the 1992 Incentive Equity Plan, or any successor plan or similar
plan, shall be vested, (ii) the restrictions on any restricted stock awarded to
the Executive under the 1992 Incentive Equity Plan, or any successor plan or
similar plan, shall be released, and (iii) all Performance Share Awards under
the Long-Term Performance Share Program under the 1992 Incentive Equity Plan for
which the measurement period has not yet expired shall be earned assuming
management objectives have been met at the target level.
(d) METHOD OF PAYMENT. Upon written notice given by the
Executive to Cleveland-Cliffs prior to the occurrence of a Change of Control,
the Executive, at his sole option, without adjustment to reflect the present
value of such amounts as aforesaid, may elect to have all or any of the
Severance Payment described in Section 5(a) hereof paid to him on a quarterly or
monthly basis during the time remaining until the expiration of the third
anniversary of the Change of Control.
(e) OUTPLACEMENT COUNSELING. Cleveland-Cliffs shall reimburse
the Executive for reasonable expenses incurred for outplacement counseling (i)
which are pre-approved by the Chief Human Resources Officer of Cleveland-Cliffs,
(ii) which do not exceed 15% of the Executive's annual Base Pay, and (iii) which
are incurred by the Executive within six months following the Termination Date.
(f) SET-OFF AND COUNTERCLAIM. There shall be no right of
set-off or counterclaim in respect of any claim, debt or obligation against any
payment to or benefit for the Executive provided for in this Agreement.
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(g) INTEREST. Without limiting the rights of the Executive at
law or in equity, if Cleveland-Cliffs fails to make any payment required to be
made hereunder on a timely basis, Cleveland-Cliffs shall pay interest on the
amount thereof at an annualized rate of interest equal to the then-applicable
Discount Rate.
(h) CALCULATION. The calculation of all payments of
compensation and other benefits to be provided to Executive under this Agreement
(other than payments pursuant to Section 8 hereof) shall be made by Hewitt
Associates ("Hewitt"), or such other actuarial firm selected by
Cleveland-Cliffs' independent accountants and satisfactory to Executive.
Cleveland-Cliffs shall provide to such actuarial firm all information requested
by such actuarial firm as necessary for or helpful to it to make the
calculations hereunder.
6. SUPPLEMENTAL RETIREMENT PLAN. Cleveland-Cliffs hereby
waives the discretionary right, at any time subsequent to the date of a Change
of Control, to amend or terminate the SRP as to Executive as provided in
paragraph 8 thereof or to terminate the rights of Executive or his beneficiary
under the SRP in the event Executive engages in a competitive business as
provided in any plan or arrangement between Cleveland-Cliffs and the Executive
or applicable to the Executive, including but not limited to, the provisions of
paragraph 4 of the SRP, or any similar provisions of any such plan or
arrangement or other plan or arrangement supplementing or superseding the same.
This Section 6 shall constitute a "Supplemental Agreement" as defined in
Paragraph 1.J of the SRP. If Cleveland-Cliffs shall terminate the Executive's
employment during the Period of Employment, other than for Cause pursuant to
Section 4(a) hereof, or if the Executive shall terminate his employment pursuant
to Section 4(b) hereof, or if, following the end of the Period of Employment,
the Executive's employment is terminated for any reason, for the purposes of
computing the Executive's period of continuous service and of calculating and
paying his benefit under the SRP:
(a) The Executive shall be credited with years of continuous
service at the time of his termination of employment with Cleveland-Cliffs (by
death or otherwise) equal to the greater of (i) the number of his actual years
of continuous service or (ii) the number of years of continuous service he would
have had if he had continued his employment with Cleveland-Cliffs until the
expiration of the third anniversary of the Change of Control, and had he
attained the greater of (iii) his actual chronological age or (iv) his
chronological age at the expiration of the third anniversary of the Change of
Control. In addition, the Executive shall be eligible for a 30-year pension
benefit based upon his years of continuous service as computed under the
preceding sentence. The Executive shall be eligible to commence the 30-year
pension benefit on the earlier of (v) the date upon which the Executive would
have otherwise reached 30 years of continuous service with Cleveland-Cliffs but
for his termination of employment after the Change of Control, or (vi) the date
upon
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which the sum of the Executive's years of continuous service (as computed in the
first sentence of this subparagraph (a)) and the Executive's Credited Years of
Industry Service (as defined in Section 1(d) hereof) is equal to 30 years; and
(b) The Executive shall be a "Participant" in the SRP,
notwithstanding any limitations therein.
A copy of the SRP is attached to this Agreement as Exhibit A. The SRP is
incorporated in all respects herein; provided, however, that the terms of this
Agreement shall take precedence to the extent they are contrary to provisions
contained in the SRP.
7. WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION AFTER
PERIOD OF EMPLOYMENT. Following the later of the end of the Period of
Employment, or Executive's termination of employment with Cleveland-Cliffs,
Cleveland-Cliffs shall:
(a) Provide medical, hospital, surgical and prescription drug
coverage, equivalent to that furnished on February 1, 1992 to officers who
retire after January 1, 1990 by Cleveland-Cliffs, to the Executive and his
spouse for their lifetimes, and to eligible dependents of the Executive for
their periods of eligibility, through insurance or otherwise;
(b) Provide life insurance on the Executive, equivalent to
that furnished on February 1, 1992 to officers who retire after January 1, 1990
by Cleveland-Cliffs, to the Executive for his lifetime; and
(c) Without otherwise limiting the purposes or effect of this
Section 7 hereof, welfare benefits payable to the Executive or his spouse or
dependents pursuant to this Section 7 shall be reduced to the extent comparable
welfare benefits are payable pursuant to Section 5(b) hereof or are actually
received by the Executive or his spouse or dependents from another employer.
8. CERTAIN ADDITIONAL PAYMENTS BY CLEVELAND-CLIFFS. (a)
Anything in this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as hereafter
provided) that any payment or distribution by Cleveland-Cliffs to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code by reason of being considered
"contingent on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to
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such tax (such tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section, including
whether an Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required to be paid by Cleveland-Cliffs to
the Executive and the amount of such Gross-Up Payment, if any, shall be made by
a nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Cleveland-Cliffs and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Cleveland-Cliffs or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, Cleveland-Cliffs shall pay the required
Gross-Up Payment to the Executive within five business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall, at the same time as it makes such determination,
furnish Cleveland-Cliffs and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by Cleveland-
Cliffs should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Cleveland-Cliffs
exhausts or fails to pursue its remedies pursuant to Subsection (f) of this
Section and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Cleveland-Cliffs and the Executive as promptly
as possible. Any such Underpayment shall be promptly paid by Cleveland-Cliffs
to, or for the benefit of, the
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Executive within five business days after receipt of such determination and
calculations.
(c) Cleveland-Cliffs and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Cleveland-Cliffs or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Subsection (b) of this Section. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon Cleveland-Cliffs and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of Cleveland-Cliffs, provide to
Cleveland-Cliffs true and correct copies (with any amendments) of his federal
income tax return as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by Cleveland-Cliffs,
evidencing such payment. If prior to the filing of the Executive's federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to Cleveland-Cliffs
the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Subsection (b) of this Section shall be borne by Cleveland-Cliffs. If such fees
and expenses are initially paid by the Executive, Cleveland-Cliffs shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.
(f) The Executive shall notify Cleveland-Cliffs in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Cleveland-Cliffs of a Gross-Up Payment.
Such notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise Cleveland-Cliffs of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim prior to
the earlier of (i) the expiration of the 30-calendar-day period following the
date on which he gives such notice to Cleveland-Cliffs and (ii) the date that
any payment of amount with respect to such claim is due. If Cleveland-Cliffs
notifies the Executive in
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writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) provide Cleveland-Cliffs with any written
records or documents in his possession relating to such
claim reasonably requested by Cleveland-Cliffs;
(ii) take such action in connection with contesting such
claim as Cleveland-Cliffs shall reasonably request in writing
from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by Cleveland- Cliffs;
(iii) cooperate with Cleveland-Cliffs in good faith
in order effectively to contest such claim; and
(iv) permit Cleveland-Cliffs to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that Cleveland-Cliffs shall bear and pay directly
all costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
Cleveland-Cliffs shall control all proceedings taken in connection with
the contest of any claim contemplated by this Subsection and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Cleveland-Cliffs shall determine;
PROVIDED, HOWEVER, that if Cleveland-Cliffs directs the Executive to
pay the tax claimed and sue for a refund, Cleveland-Cliffs shall
advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Cleveland-Cliffs's control of any such contested
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claim shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by Cleveland-Cliffs pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive shall
(subject to Cleveland-Cliffs's complying with the requirements of Subsection (f)
of this Section) promptly pay to Cleveland-Cliffs the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by
Cleveland-Cliffs pursuant to Subsection (f) of this Section, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and Cleveland-Cliffs does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by
Cleveland-Cliffs to the Executive pursuant to this Section.
9. NO MITIGATION OBLIGATION: Cleveland-Cliffs hereby
acknowledges that it will be difficult, and may be impossible, for the Executive
to find reasonably comparable employment following the Termination Date and that
the non-competition covenant contained in Section 11 hereof will further limit
the employment opportunities for the Executive. Accordingly, the parties hereto
expressly agree that except as expressly provided in Sections 5(b) and 7 hereof,
the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.
10. CONFIDENTIALITY: The Executive acknowledges that all trade
secrets, customer lists, and other confidential business information are the
exclusive property of Cleveland-Cliffs, and the Executive shall not at any time
during the Term of this Agreement or at any time thereafter, directly or
indirectly reveal or cause to be revealed to any person or entity the trade
secrets, customer lists and other confidential business information obtained as
a result of the Executive's employment or relationship with Cleveland-Cliffs.
11. COMPETITIVE ACTIVITY: For a period of twenty-four (24)
months from and after any termination of employment following the occurrence of
a Change of Control, the Executive shall not become an officer, director, joint
venturer, employee, consultant, 5-percent or more shareholder (directly or
indirectly), or promote or assist (financially or otherwise) any entity which
competes in
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any business in which Cleveland-Cliffs or any of its affiliates are engaged as
of the date-of the Change of Control. For this purpose, business is defined as
the iron and steel industry. The provisions of this Section 11 shall, following
a Change of Control, supersede and be in lieu of any similar provision in any
other plan or agreement involving Cleveland-Cliffs and the Executive, whether
now existing or hereinafter adopted or entered into, including, but not limited
to, the SRP.
12. RELEASE: Payment of the Severance Compensation set forth
in Section 5 hereof is conditioned upon the Executive executing and delivering a
release (the "Release") satisfactory to Cleveland-Cliffs releasing
Cleveland-Cliffs, its directors, employees and affiliates from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which the
Executive may have had on account of the termination of his employment,
including, but not limited to claims of discrimination, including on the basis
of sex, race, age, national origin, religion, or handicapped status (with all
applicable periods during which the Executive may revoke the Release or any
provision thereof having expired), and any and all claims, demands and causes of
action for retirement (other than under any "pension benefit plan" or under any
"welfare benefit plan" of Cleveland-Cliffs (as the terms "pension benefit plan"
and "welfare benefit plan" are defined in Section 3 of ERISA) other than the
SRP), severance or other termination pay, and because pursuant to Section 5(a)
the Executive is entitled to lump sum payments of Incentive Pay and benefits
under the SRP, under the SRP and any incentive compensation plans and
arrangements of Cleveland-Cliffs described in Section 3(b). Such Release shall
not, however, apply to the obligations of Cleveland-Cliffs arising under this
Agreement, or rights of indemnification the Executive may have under the
Regulations of Cleveland-Cliffs or by contract or by statute.
13. LEGAL FEES AND EXPENSES: (a) It is the intent of
Cleveland-Cliffs that the Executive not be required to incur any expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that Cleveland-Cliffs has
failed to comply with any of its obligations under this Agreement or in the
event that Cleveland-Cliffs or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation designed to deny,
or to recover from, the Executive the benefits intended to be provided to the
Executive hereunder, Cleveland-Cliffs irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of Cleveland-Cliffs
as hereafter provided, to represent the Executive in connection with the
initiation or defense of any such litigation or other legal action, whether by
or against Cleveland-Cliffs or any Director, officer, stockholder or other
person affiliated with Cleveland-Cliffs, in any jurisdiction. Notwithstanding
any existing or prior attorney-
<PAGE> 59
17
client relationship between Cleveland-Cliffs and such counsel, Cleveland-Cliffs
irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection Cleveland-Cliffs and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Cleveland-Cliffs shall promptly pay or cause to be
paid and shall be solely responsible for any and all attorneys' and related fees
and expenses incurred by the Executive as a result of Cleveland-Cliffs' failure
to perform this Agreement or any provision hereof or as a result of
Cleveland-Cliffs or any person contesting the validity or enforceability of this
Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by Executive, certain trust arrangements ("Trusts") have been
established between KeyTrust Company of Ohio, N.A., as Trustee ("Trustee"), and
Cleveland-Cliffs. Trust Agreement No. 1 (Amended and Restated Effective June 1,
1997) ("Trust Agreement No. 1") dated June 12, 1997, and Trust Agreement No. 2
(Amended and Restated Effective June 1, 1997) ("Trust Agreement No. 2") dated
June 12, 1997, as amended and/or restated, between the Trustee and
Cleveland-Cliffs, are attached as Exhibits B and C, respectively. A Trust
Agreement No. 7 ("Trust Agreement No. 7") dated April 9, 1991, as amended,
between the Trustee and Cleveland-Cliffs, is attached as Exhibit D. Each such
Trust Agreement shall be considered a part of this Agreement and shall set forth
the terms and conditions relating to payment under Trust Agreement No. 1 of
compensation and other benefits pursuant to Sections 3, 5 and 8 and pension
benefits pursuant to Sections 3, 5 and 6 owed by Cleveland-Cliffs, payment from
Trust Agreement No. 7 of certain pension benefits pursuant to Sections 3, 5 and
6 owed by Cleveland-Cliffs, and payment from Trust Agreement No. 2 for
attorneys' fees and related fees and expenses pursuant to Section 13(a) hereof
owed by Cleveland-Cliffs. Executive shall make demand on Cleveland-Cliffs for
any payments due Executive pursuant to Section 13(a) hereof prior to making
demand therefor on the Trustee under Trust Agreement No. 2.
(c) Upon the earlier to occur of (i) a Change of a Control or
(ii) a declaration by the Board that a Change of Control is imminent,
Cleveland-Cliffs shall promptly to the extent it has not previously done so, and
in any event within five (5) business days:
(A) transfer to Trustee to be added to the principal of the
Trust under Trust Agreement No. 1 a sum equal to (I) the present value
on the date of the Change of Control (or on such fifth business day if
the Board has declared a Change of Control to be imminent) of the
payments to be made to Executive under the provisions of Sections 3, 5,
6 and 8 hereof, such present value to be computed using the assumptions
set forth in Section 5(a) hereof and the computations provided for in
Section 8 hereof less (II) the balance in the Executive's account
provided for in Section 7(b) of Trust Agreement No. 1 as of the most
recent
<PAGE> 60
18
completed valuation thereof, less (III) the balance in the Executive's
account provided for in Section 7(b) of Trust Agreement No. 7 as of the
most recent completed valuation thereof, as certified by the Trustee
under each of Trust Agreement No. 1 and Trust Agreement No. 7;
provided, however, that if the Trustee under Trust Agreement No. 1
and/or Trust Agreement No. 7, respectively, does not so certify by the
end of the fourth (4th) business day after the earlier of such Change
of Control or declaration, then the balance of such respective account
shall be deemed to be zero. Any payments of compensation, pension or
other benefits by the Trustee pursuant to Trust Agreement No. 1 or
Trust Agreement No. 7 shall, to the extent thereof, discharge
Cleveland-Cliffs' obligation to pay compensation, pension and other
benefits hereunder, it being the intent of Cleveland-Cliffs that assets
in such Trusts be held as security for Cleveland-Cliffs' obligation to
pay compensation, pension and other benefits under this Agreement; and
(B) transfer to the Trustee to be added to the principal of
the Trust under Trust Agreement No. 2 the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000) less any principal in such Trust on such
fifth business day. Any payments of Executive's attorneys' and related
fees and expenses by the Trustee pursuant to Trust Agreement No. 2
shall, to the extent thereof, discharge Cleveland-Cliffs' obligation
hereunder, it being the intent of Cleveland-Cliffs that assets in such
Trust be held as security for Cleveland-Cliffs' obligation under
Section 13(a) hereof. Executive understands and acknowledges that the
entire corpus of the Trust under Trust Agreement No. 2 will be $250,000
and that said amount will be available to discharge not only the
obligations of the Cleveland-Cliffs to Executive under Section 13(a)
hereof, but also similar obligations of the Cleveland-Cliffs to other
executives and employees under similar provisions of other agreements
and plans.
14. EMPLOYMENT RIGHTS: Nothing expressed or implied in this
Agreement shall create any right or duty on the part of Cleveland-Cliffs or the
Executive to have the Executive remain in the employment of Cleveland-Cliffs at
any time prior to a Change of Control; provided, however, that any termination
of employment of the Executive or the removal of the Executive from the office
or position in Cleveland-Cliffs following the commencement of any discussion
with a third person that ultimately results in a Change of Control shall be
deemed to be a termination or removal of the Executive after a Change of Control
for purposes of this Agreement. Executive expressly acknowledges that he is an
employee at will, and that Cleveland-Cliffs may terminate him at any time during
the Period of Employment for any reason if Cleveland-Cliffs pays the Severance
Compensation provided for under Section 5 of this Agreement, and otherwise
comply with its other continuing covenants in this Agreement, including without
limitation, Sections 3 and 6.
<PAGE> 61
19
15. WITHHOLDING OF TAXES: Cleveland-Cliffs may withhold from
any amounts payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or ruling.
16. SUCCESSORS AND BINDING AGREEMENT: (a) Cleveland-Cliffs
shall require any successor (including without limitation any persons acquiring
directly or indirectly all or substantially all of the business and/or assets of
Cleveland-Cliffs whether by purchase, merger, consolidation, reorganization or
otherwise, and such successor shall thereafter be deemed "Cleveland-Cliffs" for
the purposes of this Agreement), by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent Cleveland-Cliffs would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of Cleveland-Cliffs and any successor
to Cleveland-Cliffs but shall not otherwise be assignable, transferable or
delegable by Cleveland-Cliffs.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in this Section 16. Without limiting the generality of the
foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 16, Cleveland-Cliffs shall have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
(d) The agreement of Cleveland-Cliffs to make payments and/or
provide benefits hereunder shall represent an unsecured obligation of
Cleveland-Cliffs.
(e) Cleveland-Cliffs and the Executive recognize that each
party will have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach,
Cleveland-Cliffs and the Executive hereby agree and consent that the other shall
be entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of this Agreement.
17. NOTICE: For all purposes of this Agreement, all
communications including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given when delivered or five business days after having been mailed by
United States registered
<PAGE> 62
20
or certified mail, return receipt requested, postage prepaid, addressed to such
party's address as specified below, or at such other address as such party shall
specify by notice to the other.
If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114-2589
Attention: Secretary
If to the Executive, to the last address shown on the records of
Cleveland-Cliffs. Notices of change of address shall be effective only upon
receipt.
18. GOVERNING LAW: The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
19. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
20. AMENDMENT: This Agreement may be amended only by a
written instrument signed by the parties hereto, which makes specific reference
to this Agreement.
21. RIGHTS UNDER OTHER PLANS AND PROGRAMS: Anything in this
Agreement to the contrary notwithstanding, no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict any
benefit to which Executive may be entitled under any other agreement, plan or
program providing benefits for Executive, including but not limited to the plans
described in Sections 3 and 5 of this Agreement.
22. MISCELLANEOUS: No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and Cleveland-Cliffs. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
23. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
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21
original but all of which together will constitute one and the
same agreement.
24. CAPTIONS: The captions in this Agreement are for
convenience of reference only and do not define, limit or describe the scope or
intent of this Agreement or any part hereof and shall not be considered in any
construction hereof.
IN WITNESS WHEREOF, Cleveland-Cliffs has caused this
Agreement to be executed on its behalf by its duly authorized representative and
Executive has hereunto set his hand, all as of the date and year first above
written.
CLEVELAND-CLIFFS INC
By /s/ John C. Morley
-------------------------------
Chairman, Compensation and
Organization Committee
/s/ M. Thomas Moore
---------------------------------
M. Thomas Moore
<PAGE> 64
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"),
dated as of June 30, 1997, by and between Cleveland-Cliffs Inc, an Ohio
corporation ("Cleveland-Cliffs"), and William R. Calfee, Social Security Number
___ , who is presently Executive Vice President - Commercial of Cleveland-
Cliffs (the "Executive"), amends and restates the Employment Agreement, dated
as of February 1, 1992, between Cleveland-Cliffs and the Executive;
WITNESSETH:
WHEREAS, the Executive is a senior executive of
Cleveland-Cliffs and has made and is expected to continue to make major
contributions to the profitability, growth and financial strength of
Cleveland-Cliffs;
WHEREAS, Cleveland-Cliffs recognizes that, as is the case for
most publicly held companies, the possibility of a Change of Control (as that
term is hereafter defined) exists;
WHEREAS, Cleveland-Cliffs desires to assure itself of both
present and future continuity of management in the event of a Change of Control
and desires to establish certain minimum compensation rights of its senior
executives, including the Executive, applicable in the event of a Change of
Control;
WHEREAS, Cleveland-Cliffs wishes to ensure that its senior
executives are not practically disabled from discharging their duties upon a
Change of Control; and
WHEREAS, this Agreement is not intended to alter materially
the compensation and benefits which the Executive could reasonably expect to
receive from Cleveland-Cliffs absent a Change of Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration including the Release provided for in Section 12
hereof, the receipt of which is hereby acknowledged, Cleveland-Cliffs and the
Executive agree as follows:
1. OPERATION OF AGREEMENT; CERTAIN DEFINITIONS:
(a) This Agreement is a continuation of the employment
agreement originally effective as of February 1, 1992 (the "Effective Date"),
but, anything in this Agreement to the contrary notwithstanding, this Agreement
shall not become operative unless
<PAGE> 65
2
and until there shall have occurred a Change of Control. For purposes of this
Agreement, a "Change of Control" shall have occurred if at any time during the
Term (as that term is hereafter defined) any of the following events shall
occur:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the same shall have
existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d) (3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease, for any reason, to constitute at
least a majority thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of Cleveland-Cliffs who are Directors of
Cleveland-Cliffs on the date of the beginning of any such period.
(b) Upon the occurrence of a Change of Control at any time
during the Term, this Agreement shall become immediately operative.
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the Effective Date hereof and shall expire as
of the later of (i) the close of business on the eighth anniversary of the
Effective Date and (ii) the expiration of the Period of Employment (as that term
is hereafter defined); provided, however, that (A) this Agreement may be
continued in full force and effect for an additional period or periods of one
(1) year if Cleveland-Cliffs and the Executive mutually agree to such extension
or extensions, (B) this Agreement
<PAGE> 66
3
shall automatically renew for an additional period or periods of one (1) year if
the end of the Term occurs during the period of any discussions with any party
that might ultimately result in the occurrence of a Change of Control, and (C)
subject to Section 14 hereof, if, prior to a Change of Control, the Executive
ceases for any reason to be an officer of Cleveland-Cliffs, thereupon the Term
shall be deemed to have expired and this Agreement shall immediately terminate
and be of no further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and conditions of this Agreement, upon the occurrence of a Change of Control,
Cleveland-Cliffs shall continue the Executive in its employ and the Executive
shall remain in the employ of Cleveland-Cliffs for the period set forth in
Section 2(b) hereof (the "Period of Employment"), in the position and with
substantially the same duties and responsibilities that he had immediately prior
to the Change of Control, or to which Cleveland-Cliffs and the Executive may
hereafter mutually agree in writing. Throughout the Period of Employment, the
Executive shall devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences in accordance with
the policies of Cleveland-Cliffs as in effect for senior executives immediately
prior to the Change of Control) to the business and affairs of Cleveland-Cliffs,
but nothing in this Agreement shall preclude the Executive from devoting
reasonable periods of time during normal business hours to (i) serving as a
director, trustee or member of or participant in any organization or business so
long as such activity would not constitute Competitive Activity (as described in
Section 11 hereof), (ii) engaging in charitable and community activities, or
(iii) managing his personal investments. The business, assets, and properties of
Cleveland-Cliffs, as well as the support services and facilities available to
the Executive, shall not differ materially from those of Cleveland-Cliffs
immediately prior to the date of the Change of Control.
(b) The Period of Employment shall commence on the date of the
occurrence of a Change of Control and, subject only to the provisions of Section
4 hereof, shall continue until the earlier of (i) the expiration of the third
anniversary of the occurrence of the Change of Control, or (ii) the Executive's
death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT: During the
Period of Employment the Executive shall receive and be entitled to the
following:
(a) an annual base salary at a rate not less than the
Executive's annual fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of Cleveland-Cliffs immediately prior to the
occurrence of a Change of Control) or such higher rate as may be determined from
time to time by the Board of Directors of Cleveland-Cliffs (the "Board") or the
Organization and Compensation Committee thereof (the Committee") (which base
salary at such rate is herein referred to as "Base
<PAGE> 67
4
Pay"), reduced by any disability benefits which the Executive receives under any
Cleveland-Cliffs disability program;
(b) participation, consistent with past practices, in
incentive compensation plans and arrangements of Cleveland-Cliffs in effect as
of the date of the Change of Control, as the same may subsequently be modified,
supplemented or replaced, including, without limitation, the Incentive Bonus
Plan and the 1992 Incentive Equity Plan (including the Long-Term Performance
Share Program), without material reduction in the reward opportunities available
to the Executive, and without reduction in the target bonus and target award
percentages applicable to the Executive immediately prior to the occurrence of a
Change of Control (with annual amounts and opportunities awarded pursuant to
such plans, programs and arrangements collectively referred to as "Incentive
Pay");
(c) participation in the Cleveland-Cliffs Inc Supplemental
Retirement Benefit Plan (As Amended and Restated as of January 1, 1997)
("Supplemental Retirement Plan" or "SRP"), as the same hereafter may be amended
prior to a Change of Control, and modified as provided in Section 6 hereof; and
(d) participation, consistent with past practices, in all
other employee benefit plans and practices of Cleveland-Cliffs in effect as of
the date of the Change of Control (including, without limitation, medical,
dental, hospitalization, health and welfare plans, life, long-term disability
and accident insurance programs, employee savings and investment plans, stock
ownership plans and retirement plans and supplemental arrangements), as the same
may be modified, supplemented or replaced without material reduction in total
value of the benefits to Executive (collectively, "Employee Benefits").
4. TERMINATION FOLLOWING A CHANGE OF CONTROL: (a) In the
event of the occurrence of a Change of Control, the Executive's employment may
be terminated by Cleveland-Cliffs during the Period of Employment and the
Executive shall be entitled to the benefits provided by Section 5 unless such
termination is the result of the occurrence of one or more of the following
events:
(i) The Executive's death; or
(ii) The Executive's employment is terminated for
Cause.
For purposes of this Agreement, "Cause" shall mean that, prior to any
termination pursuant to Section 4(b), the Executive shall have committed any act
that is materially inimical to the best interests of Cleveland-Cliffs and that
constitutes common law fraud, a felony, or other gross malfeasance of duty. The
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative
<PAGE> 68
5
vote of not less than three-quarters of the Board then in office at a meeting of
the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
the Executive committed an act set forth in this Section 4(a) and specifying the
particulars thereof in detail. Nothing herein shall limit the right of the
Executive or his beneficiaries to contest the validity or propriety of any such
determination.
(b) During the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof upon the occurrence of
one or more of the following events:
(i) The Executive's "Disability", shall be deemed to have
occurred six (6) months after the Executive shall have become totally
and permanently disabled by bodily or mental injury or disease so as to
be prevented thereby from engaging in any executive employment or
occupation for remuneration or profit, as determined and certified to
Cleveland-Cliffs and the Executive by The Cleveland Clinic (or if it is
unwilling or unable to act, by one or more physicians designated for
such purpose by the Cleveland Academy of Medicine or its successor
organization); or
(ii) Termination by the Executive of his employment
with Cleveland-Cliffs upon the occurrence of any of the
following events:
(A) The failure to elect, reelect or otherwise to
maintain the Executive in the office or position, or a
substantially equivalent office or position, of or with
Cleveland-Cliffs which the Executive held immediately prior to
a Change of Control, or the removal of, or failure to reelect,
the Executive as a Director of Cleveland-Cliffs (or any
successor thereto), if the Executive shall have been a
Director of Cleveland-Cliffs immediately prior to the Change
of Control;
(B) (I) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities
or duties attached to the position with Cleveland-Cliffs which
the Executive held immediately prior to the Change of Control,
(II) a reduction in the aggregate of the Executive's Base Pay
and Incentive Pay received from Cleveland-Cliffs, or a
reduction in the Executive's opportunities for Incentive Pay
(including, but not limited to, a reduction in target bonus
percentage or target award opportunity (whether measured by
number of performance shares or management objectives))
provided by Cleveland-Cliffs, or (III) a reduction or
termination of any benefits described in Section 3(c) or (d)
hereof to which the Executive was entitled immediately prior
to the Change of Control, any of which is not remedied by
Cleveland-Cliffs within 10
<PAGE> 69
6
calendar days after receipt by Cleveland-Cliffs of written
notice from the Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive (which
determination will be conclusive and binding upon the parties
hereto provided it has been made in good faith and in all
events will be presumed to have been made in good faith unless
otherwise shown by Cleveland-Cliffs by clear and convincing
evidence) that a change in circumstances has occurred
following a Change of Control, including, without limitation,
a change in the scope of the business or other activities for
which the Executive was responsible immediately prior to the
Change of Control, which has rendered the Executive
substantially unable to carry out, has substantially hindered
the Executive's performance of, or has caused the Executive to
suffer a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change
of Control, which situation is not remedied by
Cleveland-Cliffs within ten calendar days after written notice
to Cleveland-Cliffs from the Executive of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of Cleveland-Cliffs or the
transfer of all or a significant portion of its business
and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization or
otherwise) to which all or a significant portion of its
business and/or assets have been transferred (directly or by
operation of law) shall have assumed all duties and
obligations of Cleveland-Cliffs under this Agreement pursuant
to Section 16 hereof;
(E) The relocation of Cleveland-Cliffs' principal
executive offices, or a requirement that the Executive change
his principal location of work to any location which is in
excess of 25 miles from the location thereof immediately prior
to the Change of Control, or a requirement that the Executive
travel away from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to
any prior year) than was required of him prior to the Change
of Control without, in any case described above, the prior
written consent of the Executive; or
(F) Without limiting the generality or effect of
the foregoing, any material breach of this Agreement by
Cleveland-Cliffs or any successor thereto.
<PAGE> 70
7
(c) A termination by Cleveland-Cliffs pursuant to Section
4(a) hereof other than for Cause or by the Executive pursuant to Section 4(b)
hereof shall not affect any rights which the Executive may have pursuant to any
agreement, policy, plan, program or arrangement of Cleveland-Cliffs, which
rights shall be governed by the terms thereof, subject, however, to the
modifications in Section 6 hereof. If this Agreement or the employment of the
Executive is terminated under circumstances in which the Executive is not
entitled to any payments under Sections 3 or 5 hereof, the Executive shall have
no further obligation or liability to Cleveland-Cliffs hereunder with respect to
his prior or any future employment by Cleveland-Cliffs.
5. SEVERANCE COMPENSATION: If Cleveland-Cliffs shall terminate
the Executive's employment during the Period of Employment, other than pursuant
to Cause under Section 4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, then in lieu of any further payments
to the Executive for periods subsequent to the date of the Executive's
termination of employment (the "Termination Date"), the date of which shall be
the date of termination or such other date that may be specified by the
Executive if the termination is pursuant to Section 4(b) hereof,
Cleveland-Cliffs shall provide Severance Compensation to the Executive as
described below:
(a) SEVERANCE PAY. Within five business days after the
Termination Date:
(i) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "Severance Payment") in an amount equal to the present
value (using a discount rate prescribed for purposes of valuation
computations under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the then "applicable
interest rate" under Section 417(e)(3)(A)(ii)(II) of the Code for the
month in which the Termination Date occurs (the "Discount Rate")) of
(A) the amount of Base Pay that would have been paid
to the Executive pursuant to Section 3(a) for the greater of
(I) one year or (II) the duration of the Period of Employment,
in each case if the termination had not taken place (at the
rate in effect immediately prior to the Change of Control or
prior to the Termination Date, whichever is higher) and, if
the Termination is on account of the Executive's Disability,
reduced by the amount of disability benefits that would have
been paid to the Executive for the duration of the Period of
Employment if the termination had not taken place; plus
(B) the amount of Average Incentive Pay (as that
term is hereinafter defined) that would have been paid
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8
to the Executive pursuant to Section 3(b) for the greater of
(I) one year or (II) the duration of the Period of Employment
if the termination had not taken place.
For purposes of this Agreement, Average Incentive Pay for any
12 month period shall mean an amount which is the greater of
(III) the average amount of Incentive Pay (as defined in
Section 3(b) hereof) awarded to the Executive for the three
calendar years immediately prior to the Termination Date, or
(IV) the amount of the most recent award of Incentive Pay.
(ii) Cleveland-Cliffs shall pay to the Executive a lump sum
payment (the "SRP Payment") in an amount equal to the sum of the future
pension benefits (converted to a lump sum of actuarial equivalence)
which the Executive would have been entitled to receive at or after the
end of the Period of Employment under the SRP, as the same may be
further amended prior to a Change of Control and as modified by Section
6 hereof (assuming Base Salary at the rate in effect immediately prior
to the occurrence of Change of Control and Incentive Pay equivalent to
the amount of Average Incentive Pay), if the Executive had remained in
the full-time employment of Cleveland-Cliffs until the end of the
Period of Employment.
The calculation of the SRP Payment and its actuarial equivalence shall
be made as of the date the Executive is terminated. The lump sum of
actuarial equivalence shall be calculated as of the end of the Period
of Employment using the assumptions and factors used in the SRP, and
such sums shall be discounted to the date of payment using the Discount
Rate.
Payment of the SRP Payment by Cleveland-Cliffs shall be deemed to be a
satisfaction of all obligations of Cleveland- Cliffs to the Executive
under the SRP.
(b) EMPLOYEE BENEFITS. For the greater of (i) one year or (ii)
the duration of the Period of Employment, Cleveland-Cliffs shall arrange to
provide the Executive with Employee Benefits substantially similar to those
which the Executive was receiving or entitled to receive immediately prior to
the Termination Date as described in Section 3(d) (and if and to the extent that
such benefits shall not or cannot be paid or provided under any policy, plan,
program or arrangement of Cleveland-Cliffs solely due to the fact that the
Executive is no longer an officer or employee of Cleveland-Cliffs, then
Cleveland-Cliffs shall itself pay or provide for the payment to the Executive,
his dependents and beneficiaries, such Employee Benefits). Without otherwise
limiting the purposes or effect of this Section 5(b), Employee Benefits payable
to the Executive pursuant to this Section 5(b) by reason of any "welfare benefit
plan" of Cleveland-Cliffs (as the term "welfare benefit plan" is defined in
Section 3(1) of the
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Employee Retirement Income Security Act of 1974, as amended ("ERISA")) shall be
reduced to the extent comparable welfare benefits are actually received by the
Executive from another employer during the period beginning upon the occurrence
of the Termination Date and ending upon the last day during which
Cleveland-Cliffs is required to provide such Employee Benefits pursuant to the
first sentence of this Section 5(b).
(c) STOCK OPTIONS, RESTRICTED STOCK AND PERFORMANCE SHARES.
Upon the Termination Date, (i) all Stock Options granted to the Executive
pursuant to the 1992 Incentive Equity Plan, or any successor plan or similar
plan, shall be vested, (ii) the restrictions on any restricted stock awarded to
the Executive under the 1992 Incentive Equity Plan, or any successor plan or
similar plan, shall be released, and (iii) all Performance Share Awards under
the Long-Term Performance Share Program under the 1992 Incentive Equity Plan for
which the measurement period has not yet expired shall be earned assuming
management objectives have been met at the target level.
(d) METHOD OF PAYMENT. Upon written notice given by the
Executive to Cleveland-Cliffs prior to the occurrence of a Change of Control,
the Executive, at his sole option, without adjustment to reflect the present
value of such amounts as aforesaid, may elect to have all or any of the
Severance Payment described in Section 5(a) hereof paid to him on a quarterly or
monthly basis during the time remaining until the expiration of the third
anniversary of the Change of Control.
(e) OUTPLACEMENT COUNSELING. Cleveland-Cliffs shall reimburse
the Executive for reasonable expenses incurred for outplacement counseling (i)
which are pre-approved by the Chief Human Resources Officer of Cleveland-Cliffs,
(ii) which do not exceed 15% of the Executive's annual Base Pay, and (iii) which
are incurred by the Executive within six months following the Termination Date.
(f) SET-OFF AND COUNTERCLAIM. There shall be no right of
set-off or counterclaim in respect of any claim, debt or obligation against any
payment to or benefit for the Executive provided for in this Agreement.
(g) INTEREST. Without limiting the rights of the Executive at
law or in equity, if Cleveland-Cliffs fails to make any payment required to be
made hereunder on a timely basis, Cleveland-Cliffs shall pay interest on the
amount thereof at an annualized rate of interest equal to the then-applicable
Discount Rate.
(h) CALCULATION. The calculation of all payments of
compensation and other benefits to be provided to Executive under this Agreement
(other than payments pursuant to Section 8 hereof) shall be made by Hewitt
Associates ("Hewitt"), or such other actuarial firm selected by
Cleveland-Cliffs' independent accountants and satisfactory to Executive.
Cleveland-Cliffs shall
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provide to such actuarial firm all information requested by such actuarial firm
as necessary for or helpful to it to make the calculations hereunder.
6. SUPPLEMENTAL RETIREMENT PLAN. Cleveland-Cliffs hereby
waives the discretionary right, at any time subsequent to the date of a Change
of Control, to amend or terminate the SRP as to Executive as provided in
paragraph 8 thereof or to terminate the rights of Executive or his beneficiary
under the SRP in the event Executive engages in a competitive business as
provided in any plan or arrangement between Cleveland-Cliffs and the Executive
or applicable to the Executive, including but not limited to, the provisions of
paragraph 4 of the SRP, or any similar provisions of any such plan or
arrangement or other plan or arrangement supplementing or superseding the same.
This Section 6 shall constitute a "Supplemental Agreement" as defined in
Paragraph 1.J of the SRP. If Cleveland-Cliffs shall terminate the Executive's
employment during the Period of Employment, other than for Cause pursuant to
Section 4(a) hereof, or if the Executive shall terminate his employment pursuant
to Section 4(b) hereof, or if, following the end of the Period of Employment,
the Executive's employment is terminated for any reason, for the purposes of
computing the Executive's period of continuous service and of calculating and
paying his benefit under the SRP:
(a) The Executive shall be credited with years of continuous
service at the time of his termination of employment with Cleveland-Cliffs (by
death or otherwise) equal to the greater of (i) the number of his actual years
of continuous service or (ii) the number of years of continuous service he would
have had if he had continued his employment with Cleveland-Cliffs until the
expiration of the third anniversary of the Change of Control, and had he
attained the greater of (iii) his actual chronological age or (iv) his
chronological age at the expiration of the third anniversary of the Change of
Control. In addition, the Executive shall be eligible for a 30-year pension
benefit based upon his years of continuous service as computed under the
preceding sentence. The Executive shall be eligible to commence the 30-year
pension benefit on the date upon which the Executive would have otherwise
reached 30 years of continuous service with Cleveland-Cliffs but for his
termination of employment after the Change of Control; and
(b) The Executive shall be a "Participant" in the SRP,
notwithstanding any limitations therein.
A copy of the SRP is attached to this Agreement as Exhibit A. The SRP is
incorporated in all respects herein; provided, however, that the terms of this
Agreement shall take precedence to the extent they are contrary to provisions
contained in the SRP.
7. WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION AFTER
PERIOD OF EMPLOYMENT. Following the later of the end of the Period of
Employment, or Executive's termination of employment with Cleveland-Cliffs,
Cleveland-Cliffs shall:
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(a) Provide medical, hospital, surgical and prescription drug
coverage, equivalent to that furnished on February 1, 1992 to officers who
retire after January 1, 1990 by Cleveland-Cliffs, to the Executive and his
spouse for their lifetimes, and to eligible dependents of the Executive for
their periods of eligibility, through insurance or otherwise;
(b) Provide life insurance on the Executive, equivalent to
that furnished on February 1, 1992 to officers who retire after January 1, 1990
by Cleveland-Cliffs, to the Executive for his lifetime; and
(c) Without otherwise limiting the purposes or effect of this
Section 7 hereof, welfare benefits payable to the Executive or his spouse or
dependents pursuant to this Section 7 shall be reduced to the extent comparable
welfare benefits are payable pursuant to Section 5(b) hereof or are actually
received by the Executive or his spouse or dependents from another employer.
8. CERTAIN ADDITIONAL PAYMENTS BY CLEVELAND-CLIFFS. (a)
Anything in this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as hereafter
provided) that any payment or distribution by Cleveland-Cliffs to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code by reason of being considered
"contingent on a change in ownership or control" of the Corporation, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
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(b) Subject to the provisions of Subsection (f) of this
Section, all determinations required to be made under this Section, including
whether an Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required to be paid by Cleveland-Cliffs to
the Executive and the amount of such Gross-Up Payment, if any, shall be made by
a nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both
Cleveland-Cliffs and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be requested by
Cleveland-Cliffs or the Executive. If the Accounting Firm determines that any
Excise Tax is payable by the Executive, Cleveland-Cliffs shall pay the required
Gross-Up Payment to the Executive within five business days after receipt of
such determination and calculations with respect to any Payment to the
Executive. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall, at the same time as it makes such determination,
furnish Cleveland-Cliffs and the Executive an opinion that the Executive has
substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by Cleveland-
Cliffs should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Cleveland-Cliffs
exhausts or fails to pursue its remedies pursuant to Subsection (f) of this
Section and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both Cleveland-Cliffs and the Executive as promptly
as possible. Any such Underpayment shall be promptly paid by Cleveland-Cliffs
to, or for the benefit of, the Executive within five business days after receipt
of such determination and calculations.
(c) Cleveland-Cliffs and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of Cleveland-Cliffs or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Subsection (b) of this Section. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon Cleveland- Cliffs and the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm
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with respect to the Excise Tax payable by the Executive. The Executive shall
make proper payment of the amount of any Excise Payment, and at the request of
Cleveland-Cliffs, provide to Cleveland-Cliffs true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal Revenue
Service and corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents reasonably
requested by Cleveland-Cliffs, evidencing such payment. If prior to the filing
of the Executive's federal income tax return, or corresponding state or local
tax return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five business
days pay to Cleveland-Cliffs the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Subsection (b) of this Section shall be borne by Cleveland-Cliffs. If such fees
and expenses are initially paid by the Executive, Cleveland-Cliffs shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.
(f) The Executive shall notify Cleveland-Cliffs in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Cleveland-Cliffs of a Gross-Up Payment.
Such notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise Cleveland-Cliffs of the nature of such claim and
the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive shall not pay such claim prior to
the earlier of (i) the expiration of the 30-calendar-day period following the
date on which he gives such notice to Cleveland-Cliffs and (ii) the date that
any payment of amount with respect to such claim is due. If Cleveland-Cliffs
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) provide Cleveland-Cliffs with any written
records or documents in his possession relating to such
claim reasonably requested by Cleveland-Cliffs;
(ii) take such action in connection with contesting such
claim as Cleveland-Cliffs shall reasonably request in writing
from time to time, including without limitation accepting
legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by Cleveland- Cliffs;
(iii) cooperate with Cleveland-Cliffs in good faith
in order effectively to contest such claim; and
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(iv) permit Cleveland-Cliffs to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that Cleveland-Cliffs shall bear and pay directly
all costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Subsection,
Cleveland-Cliffs shall control all proceedings taken in connection with
the contest of any claim contemplated by this Subsection and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Cleveland-Cliffs shall determine;
PROVIDED, HOWEVER, that if Cleveland-Cliffs directs the Executive to
pay the tax claimed and sue for a refund, Cleveland-Cliffs shall
advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Cleveland-Cliffs's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by Cleveland-Cliffs pursuant to Subsection (f) of this Section, the
Executive receives any refund with respect to such claim, the Executive shall
(subject to Cleveland-Cliffs's complying with the requirements of Subsection (f)
of this Section) promptly pay to Cleveland-Cliffs the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by
Cleveland-Cliffs pursuant to Subsection (f) of this Section, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and Cleveland-Cliffs does not notify the Executive in writing of its
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15
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by
Cleveland-Cliffs to the Executive pursuant to this Section.
9. NO MITIGATION OBLIGATION: Cleveland-Cliffs hereby
acknowledges that it will be difficult, and may be impossible, for the Executive
to find reasonably comparable employment following the Termination Date and that
the non-competition covenant contained in Section 11 hereof will further limit
the employment opportunities for the Executive. Accordingly, the parties hereto
expressly agree that except as expressly provided in Sections 5(b) and 7 hereof,
the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.
10. CONFIDENTIALITY: The Executive acknowledges that all trade
secrets, customer lists, and other confidential business information are the
exclusive property of Cleveland-Cliffs, and the Executive shall not at any time
during the Term of this Agreement or at any time thereafter, directly or
indirectly reveal or cause to be revealed to any person or entity the trade
secrets, customer lists and other confidential business information obtained as
a result of the Executive's employment or relationship with Cleveland-Cliffs.
11. COMPETITIVE ACTIVITY: For a period of twenty-four (24)
months from and after any termination of employment following the occurrence of
a Change of Control, the Executive shall not become an officer, director, joint
venturer, employee, consultant, 5-percent or more shareholder (directly or
indirectly), or promote or assist (financially or otherwise) any entity which
competes in any business in which Cleveland-Cliffs or any of its affiliates are
engaged as of the date-of the Change of Control. For this purpose, business is
defined as the iron and steel industry. The provisions of this Section 11 shall,
following a Change of Control, supersede and be in lieu of any similar provision
in any other plan or agreement involving Cleveland-Cliffs and the Executive,
whether now existing or hereinafter adopted or entered into, including, but not
limited to, the SRP.
12. RELEASE: Payment of the Severance Compensation set forth
in Section 5 hereof is conditioned upon the Executive executing and delivering a
release (the "Release") satisfactory to Cleveland-Cliffs releasing
Cleveland-Cliffs, its directors, employees and affiliates from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which the
Executive may have had on account of the termination of his employment,
including, but not limited to claims of discrimination, including on the basis
of sex, race, age, national
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origin, religion, or handicapped status (with all applicable periods during
which the Executive may revoke the Release or any provision thereof having
expired), and any and all claims, demands and causes of action for retirement
(other than under any "pension benefit plan" or under any "welfare benefit plan"
of Cleveland-Cliffs (as the terms "pension benefit plan" and "welfare benefit
plan" are defined in Section 3 of ERISA) other than the SRP), severance or other
termination pay, and because pursuant to Section 5(a) the Executive is entitled
to lump sum payments of Incentive Pay and benefits under the SRP, under the SRP
and any incentive compensation plans and arrangements of Cleveland-Cliffs
described in Section 3(b). Such Release shall not, however, apply to the
obligations of Cleveland-Cliffs arising under this Agreement, or rights of
indemnification the Executive may have under the Regulations of Cleveland-Cliffs
or by contract or by statute.
13. LEGAL FEES AND EXPENSES: (a) It is the intent of
Cleveland-Cliffs that the Executive not be required to incur any expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that Cleveland-Cliffs has
failed to comply with any of its obligations under this Agreement or in the
event that Cleveland-Cliffs or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation designed to deny,
or to recover from, the Executive the benefits intended to be provided to the
Executive hereunder, Cleveland-Cliffs irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of Cleveland-Cliffs
as hereafter provided, to represent the Executive in connection with the
initiation or defense of any such litigation or other legal action, whether by
or against Cleveland-Cliffs or any Director, officer, stockholder or other
person affiliated with Cleveland-Cliffs, in any jurisdiction. Notwithstanding
any existing or prior attorney-client relationship between Cleveland-Cliffs and
such counsel, Cleveland-Cliffs irrevocably consents to the Executive's entering
into an attorney-client relationship with such counsel, and in that connection
Cleveland-Cliffs and the Executive agree that a confidential relationship shall
exist between the Executive and such counsel. Cleveland-Cliffs shall promptly
pay or cause to be paid and shall be solely responsible for any and all
attorneys' and related fees and expenses incurred by the Executive as a result
of Cleveland-Cliffs' failure to perform this Agreement or any provision hereof
or as a result of Cleveland-Cliffs or any person contesting the validity or
enforceability of this Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by Executive, certain trust arrangements ("Trusts") have been
established between KeyTrust Company of Ohio, N.A., as Trustee ("Trustee"), and
Cleveland-Cliffs. Trust Agreement No. 1 (Amended and Restated Effective June 1,
1997) ("Trust Agreement
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No. 1") dated June 12, 1997, and Trust Agreement No. 2 (Amended and Restated
Effective June 1, 1997) ("Trust Agreement No. 2") dated June 12, 1997, as
amended and/or restated, between the Trustee and Cleveland-Cliffs, are attached
as Exhibits B and C, respectively. A Trust Agreement No. 7 ("Trust Agreement No.
7") dated April 9, 1991, as amended, between the Trustee and Cleveland-Cliffs,
is attached as Exhibit D. Each such Trust Agreement shall be considered a part
of this Agreement and shall set forth the terms and conditions relating to
payment under Trust Agreement No. 1 of compensation and other benefits pursuant
to Sections 3, 5 and 8 and pension benefits pursuant to Sections 3, 5 and 6 owed
by Cleveland-Cliffs, payment from Trust Agreement No. 7 of certain pension
benefits pursuant to Sections 3, 5 and 6 owed by Cleveland-Cliffs, and payment
from Trust Agreement No. 2 for attorneys' fees and related fees and expenses
pursuant to Section 13(a) hereof owed by Cleveland-Cliffs. Executive shall make
demand on Cleveland-Cliffs for any payments due Executive pursuant to Section
13(a) hereof prior to making demand therefor on the Trustee under Trust
Agreement No. 2.
(c) Upon the earlier to occur of (i) a Change of a Control or
(ii) a declaration by the Board that a Change of Control is imminent,
Cleveland-Cliffs shall promptly to the extent it has not previously done so, and
in any event within five (5) business days:
(A) transfer to Trustee to be added to the principal of the
Trust under Trust Agreement No. 1 a sum equal to (I) the present value
on the date of the Change of Control (or on such fifth business day if
the Board has declared a Change of Control to be imminent) of the
payments to be made to Executive under the provisions of Sections 3, 5,
6 and 8 hereof, such present value to be computed using the assumptions
set forth in Section 5(a) hereof and the computations provided for in
Section 8 hereof less (II) the balance in the Executive's account
provided for in Section 7(b) of Trust Agreement No. 1 as of the most
recent completed valuation thereof, less (III) the balance in the
Executive's account provided for in Section 7(b) of Trust Agreement No.
7 as of the most recent completed valuation thereof, as certified by
the Trustee under each of Trust Agreement No. 1 and Trust Agreement No.
7; provided, however, that if the Trustee under Trust Agreement No. 1
and/or Trust Agreement No. 7, respectively, does not so certify by the
end of the fourth (4th) business day after the earlier of such Change
of Control or declaration, then the balance of such respective account
shall be deemed to be zero. Any payments of compensation, pension or
other benefits by the Trustee pursuant to Trust Agreement No. 1 or
Trust Agreement No. 7 shall, to the extent thereof, discharge
Cleveland-Cliffs' obligation to pay compensation, pension and other
benefits hereunder, it being the intent of Cleveland-Cliffs that assets
in such Trusts be held as security for Cleveland-Cliffs' obligation to
pay compensation, pension and other benefits under this Agreement; and
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(B) transfer to the Trustee to be added to the principal of
the Trust under Trust Agreement No. 2 the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000) less any principal in such Trust on such
fifth business day. Any payments of Executive's attorneys' and related
fees and expenses by the Trustee pursuant to Trust Agreement No. 2
shall, to the extent thereof, discharge Cleveland-Cliffs' obligation
hereunder, it being the intent of Cleveland-Cliffs that assets in such
Trust be held as security for Cleveland-Cliffs' obligation under
Section 13(a) hereof. Executive understands and acknowledges that the
entire corpus of the Trust under Trust Agreement No. 2 will be $250,000
and that said amount will be available to discharge not only the
obligations of the Cleveland-Cliffs to Executive under Section 13(a)
hereof, but also similar obligations of the Cleveland-Cliffs to other
executives and employees under similar provisions of other agreements
and plans.
14. EMPLOYMENT RIGHTS: Nothing expressed or implied in this
Agreement shall create any right or duty on the part of Cleveland-Cliffs or the
Executive to have the Executive remain in the employment of Cleveland-Cliffs at
any time prior to a Change of Control; provided, however, that any termination
of employment of the Executive or the removal of the Executive from the office
or position in Cleveland-Cliffs following the commencement of any discussion
with a third person that ultimately results in a Change of Control shall be
deemed to be a termination or removal of the Executive after a Change of Control
for purposes of this Agreement. Executive expressly acknowledges that he is an
employee at will, and that Cleveland-Cliffs may terminate him at any time during
the Period of Employment for any reason if Cleveland-Cliffs pays the Severance
Compensation provided for under Section 5 of this Agreement, and otherwise
comply with its other continuing covenants in this Agreement, including without
limitation, Sections 3 and 6.
15. WITHHOLDING OF TAXES: Cleveland-Cliffs may withhold from
any amounts payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or ruling.
16. SUCCESSORS AND BINDING AGREEMENT: (a) Cleveland-Cliffs
shall require any successor (including without limitation any persons acquiring
directly or indirectly all or substantially all of the business and/or assets of
Cleveland-Cliffs whether by purchase, merger, consolidation, reorganization or
otherwise, and such successor shall thereafter be deemed "Cleveland-Cliffs" for
the purposes of this Agreement), by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent Cleveland-Cliffs would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of Cleveland-Cliffs and any successor
to Cleveland-Cliffs but shall not otherwise be assignable, transferable or
delegable by Cleveland-Cliffs.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in this Section 16. Without limiting the generality of the
foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 16, Cleveland-Cliffs shall have no liability
to pay any amount so attempted to be assigned, transferred or delegated.
(d) The agreement of Cleveland-Cliffs to make payments and/or
provide benefits hereunder shall represent an unsecured obligation of
Cleveland-Cliffs.
(e) Cleveland-Cliffs and the Executive recognize that each
party will have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach,
Cleveland-Cliffs and the Executive hereby agree and consent that the other shall
be entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of this Agreement.
17. NOTICE: For all purposes of this Agreement, all
communications including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given when delivered or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed to such party's address as specified below, or at such other
address as such party shall specify by notice to the other.
If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114-2589
Attention: Secretary
If to the Executive, to the last address shown on the records of
Cleveland-Cliffs. Notices of change of address shall be effective only upon
receipt.
18. GOVERNING LAW: The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.
<PAGE> 83
20
19. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
20. AMENDMENT: This Agreement may be amended only by a
written instrument signed by the parties hereto, which makes specific reference
to this Agreement.
21. RIGHTS UNDER OTHER PLANS AND PROGRAMS: Anything in this
Agreement to the contrary notwithstanding, no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict any
benefit to which Executive may be entitled under any other agreement, plan or
program providing benefits for Executive, including but not limited to the plans
described in Sections 3 and 5 of this Agreement.
22. MISCELLANEOUS: No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and Cleveland-Cliffs. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
23. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
24. CAPTIONS: The captions in this Agreement are for
convenience of reference only and do not define, limit or describe the scope or
intent of this Agreement or any part hereof and shall not be considered in any
construction hereof.
<PAGE> 84
21
IN WITNESS WHEREOF, Cleveland-Cliffs has caused this Agreement
to be executed on its behalf by its duly authorized representative and Executive
has hereunto set his hand, all as of the date and year first above written.
CLEVELAND-CLIFFS INC
By /s/ M. Thomas Moore
--------------------------------------
Chairman and Chief
Executive Officer
/s/ W. R. Calfee
----------------------------------------
William R. Calfee
<PAGE> 85
Exhibit A
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
<PAGE> 86
TABLE OF CONTENTS
PAGE
1. DEFINITIONS...................................................... 1
-----------
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT........... 3
------------------------------------------------------
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT................. 4
------------------------------------------------
4. FORFEITABILITY................................................... 6
--------------
5. GENERAL.......................................................... 6
-------
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN................. 8
------------------------------------------------
7. MISCELLANEOUS.................................................... 8
-------------
8. AMENDMENT AND TERMINATION......................................... 9
-------------------------
9. EFFECTIVE DATE................................................... 10
--------------
<PAGE> 87
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and its
subsidiary corporations and affiliates have established, or may hereafter
establish, one or more qualified retirement plans;
WHEREAS, the qualified retirement plans, pursuant to Sections
401(a) and 415 of the Internal Revenue Code of 1986, as amended, place certain
limitations on the amount of contributions that would otherwise be made
thereunder for certain participants;
WHEREAS, Cleveland-Cliffs now desires to provide for the
contributions which would otherwise have been made for such participants under
certain of its qualified retirement plans except for such limitations, in
consideration of services performed and to be performed by each such participant
for Cleveland-Cliffs and its subsidiaries and affiliates; and
WHEREAS, Cleveland-Cliffs has entered into, and
Cleveland-Cliffs and its subsidiary corporations and affiliates may in the
future enter into, agreements with certain executives providing for additional
service credit and/or other features for purposes of computing retirement
benefits, in consideration of services performed and to be performed by such
executives for Cleveland-Cliffs and its subsidiaries and affiliates.
NOW, THEREFORE, Cleveland-Cliffs hereby amends and restates
and publishes the Supplemental Retirement Benefit Plan heretofore established by
it, which shall contain the following terms and conditions:
1. DEFINITIONS. A. The following words and phrases
when used in this Plan with initial capital letters shall have the following
respective meanings, unless the context clearly indicates otherwise. The
masculine whenever used in this Plan shall include the feminine.
B. "AFFILIATE" shall mean any partnership or joint venture
of which any member of the Controlled Group is a partner or venturer and which
shall adopt this Plan pursuant to paragraph 6.
C. "BENEFICIARY" shall mean such person or persons (natural or
otherwise) as may be designated by the Participant as his Beneficiary under this
Plan. Such a designation may be made, and may be revoked or changed (without the
consent of any previously designated Beneficiary), only by an instrument (in
form acceptable to Cleveland-Cliffs) signed by the Participant and may be
revoked or changed (without the consent of any previously designated
Beneficiary), only by an instrument (in form acceptable to Cleveland-Cliffs)
signed by the Participant
<PAGE> 88
2
and filed with Cleveland-Cliffs prior to the Participant's death. In the absence
of such a designation and at any other time when there is no existing
Beneficiary designated by the Participant to whom payment is to be made pursuant
to his designation, his Beneficiary shall be his beneficiary under the Pension
Plan. A person designated by a Participant as his Beneficiary who or which
ceases to exist shall not be entitled to any part of any payment thereafter to
be made to the Participant's Beneficiary unless the Participant's designation
specifically provided to the contrary. If two or more persons designated as a
Participant's Beneficiary are in existence, the amount of any payment to the
Beneficiary under this Plan shall be divided equally among such persons unless
the Participant's designation specifically provided to the contrary.
Notwithstanding the foregoing, the Beneficiary of a Participant who elects the
form of benefit elected by the Participant under the Pension Plan shall be the
same beneficiary designated by him or her thereunder.
D. "CODE" shall mean the Internal Revenue Code of 1986, as
it has been and may be amended from time to time.
E. "CODE LIMITATIONS" shall mean the limitations imposed by
Sections 401(a) and 415 of the Code, or any successor thereto, on the amount of
the benefits which may be payable to a Participant from the Pension Plan.
F. "CONTROLLED GROUP" shall mean Cleveland-Cliffs and any
corporation in an unbroken chain of corporations beginning with
Cleveland-Cliffs, if each of the corporations other than the last corporation in
the chain owns or controls, directly or indirectly, stock possessing not less
than fifty percent of the total combined voting power of all classes of stock in
one of the other corporations.
G. "EMPLOYER(S)" shall mean Cleveland-Cliffs and any
other member of the Controlled Group and any Affiliate which
shall adopt this Plan pursuant to paragraph 6.
H. "PARTICIPANT" shall mean each person (i) who is a
participant in the Pension Plan, (ii) who is a senior corporate officer of
Cleveland-Cliffs or a full-time salaried employee of an Employer who has a
Management Performance Incentive Plan Salary Grade of EX-28 or above, and (iii)
who as a result of participation in this Plan is entitled to a Supplemental
Benefit under this Plan. Each person who is as a Participant under this Plan
shall be notified in writing of such fact by his Employer, which shall also
cause a copy of the Plan to be delivered to such person.
I. "PENSION PLAN" shall mean, with respect to any Participant,
the defined benefit plan specified on Exhibit A hereto in which he participates.
J. "SUPPLEMENTAL AGREEMENT" shall mean, with respect
to any Participant, an agreement between the Participant and an
<PAGE> 89
3
Employer, and approved by Cleveland-Cliffs if it is not the Employer, which
provides for additional service credit and/or other features for purposes of
computing retirement benefits.
K. "SUPPLEMENTAL BENEFIT" or "SUPPLEMENTAL PENSION PLAN
BENEFIT" shall mean a retirement benefit determined as provided in paragraph 2.
L. "SUPPLEMENTAL RETIREMENT BENEFIT PLAN" or "PLAN" shall
mean this Plan, as the same may hereafter be amended or restated from time to
time.
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
Each Participant or Beneficiary of a deceased Participant whose benefits under
the Pension Plan payable on or after January l, 1995 are reduced (a) due to the
Code Limitations, or (b) due to deferrals of compensation by such Participant
under the Cleveland-Cliffs Inc Voluntary Non-Qualified Deferred Compensation
Plan (the "Deferred Compensation Plan"), and each Participant who has entered
into a Supplemental Agreement with his Employer (and, where applicable a
Beneficiary of a deceased Participant), shall be entitled to a Supplemental
Pension Plan Benefit, which shall be determined as hereinafter provided. A
Supplemental Pension Plan Benefit shall be a monthly retirement benefit equal to
the difference between (i) the amount of the monthly benefit payable on and
after January l, 1995 to the Participant or his Beneficiary under the Pension
Plan, determined under the Pension Plan as in effect on the date of the
Participant's termination of employment with the Controlled Group and any
Affiliate (and payable in the same optional form as his Actual Pension Plan
Benefit, as defined below), but calculated without regard to any reduction in
the Participant's compensation pursuant to the Deferred Compensation Plan, and
as if the Pension Plan did not contain a provision (including any phase-in or
extended wear away provision) implementing the Code Limitations, and after
giving effect to the provisions of any Supplemental Agreement, and (ii) the
amount of the monthly benefit in fact payable on and after January 1, 1995 to
the Participant or his Beneficiary under the Pension Plan. If the benefit
payable to a Participant or Beneficiary pursuant to clause (ii) of the
immediately preceding sentence (herein referred to as "Actual Pension Plan
Benefit") is payable in a form other than a monthly benefit, such Actual Pension
Plan Benefit shall be adjusted to a monthly benefit which is the actuarial
equivalent of such Actual Pension Plan Benefit for the purpose of calculating
the monthly Supplemental Pension Plan Benefit of the Participant or Beneficiary
pursuant to the preceding sentence. For any Participant whose benefits become
payable under the Pension Plan on or after January 1, 1995, the Supplemental
Pension Plan Benefit includes any "Retirement Plan Augmentation Benefit" which
the Participant shall have accrued under the Deferred Compensation Plan prior to
the amendment of such Plan as of January l, 1991 to delete such Benefit. The
acceptance by the Participant or his Beneficiary of any Supplemental Pension
Plan Benefit pursuant to paragraph 3 shall constitute payment of the
<PAGE> 90
4
Retirement Plan Augmentation Benefit included therein for purposes of the
Deferred Compensation Plan prior to such amendment.
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
(a) A Participant's (or his Beneficiary's)
Supplemental Pension Plan Benefit (calculated as
provided in paragraph 2) shall be converted, at
the time of his termination of employment with the
Controlled Group and each Affiliate, into ten
annual installment payments (the "Ten Installment
Payments") of equivalent actuarial value. The
equivalent actuarial value shall be determined by
the actuary selected by Cleveland-Cliffs based on
the 1971 TPF&C Forecast Mortality Table set back
one year, the Pension Benefit Guaranty Corporation
interest rate for immediate annuities then in
effect, and other factors then in effect for
purposes of the Pension Plan.
(b) If the Participant voluntarily terminates
employment with, or retires under the terms of the
Pension Plan from, the Controlled Group and each
Affiliate, or the Participant's employment with
the Controlled Group and each Affiliate is
involuntarily terminated, the Participant's former
Employer shall pay the Ten Installment Payments to
the Participant beginning on the first day of the
month following the Participant's retirement under
the Pension Plan, and on each anniversary
thereafter until the Ten Installment Payments have
been made; provided, however, that if the
Participant has effectively elected another form
of distribution, such Participant's former
Employer shall pay or commence payment in such
other form of distribution beginning on the first
day of the month following the date of the
Participant's retirement under the Pension Plan.
A Participant who voluntarily terminates
employment with, or who retires under the terms of
the Pension Plan from, the Controlled Group and
each Affiliate may by written notice filed with
the Administrator at least one (1) year prior to
the Participant's voluntary termination of
employment with, or retirement from, the
Controlled Group and each Affiliate elect to defer
commencement of the payment of his benefit until a
date selected in such election. Any such election
may be changed by the Participant at any time and
from time to time without the consent of any other
person by filing a later signed written election
with the Administrator; provided that any election
made less than one (1) year prior to the
Participant's voluntary termination of employment
<PAGE> 91
5
or retirement shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election, or otherwise in
accordance with this paragraph 3.
(c) A Participant may elect to receive his Supplemental
Pension Plan Benefit in one of the following forms of
distribution in lieu of the Ten Installment Payments:
(1) Lump sum payment;
(2) Annual installments over 2 to 15 years;
(3) A combination of (1) and (2) above with the
percentage payable under each option
specifically designated by the Participant;
or
(4) The form of benefit distribution elected by
the Participant under the Pension Plan.
Payments made under these options shall commence as
of the first day of the month following the
Participant's retirement under the Pension Plan;
provided, however, that with respect to a lump sum
payment, such payment shall be made at the end of the
of the first month of retirement or at the end of the
month following death.
The payments made under these forms shall be of
equivalent actuarial value to the Ten Installment
Payments as determined by the actuary selected by
Cleveland-Cliffs based on the actuarial factors and
assumptions provided for in the second sentence of
paragraph 3(a). Notwithstanding the foregoing, the
Administrator may, at any time, direct that annual
installments shall be made quarterly. If the
Participant dies before receiving all of the
installment payments, the remaining installment
payments shall be paid in a lump sum to the
Participant's Beneficiary. Any co-pensioner or
survivor payments elected under clause (4) of this
paragraph 3(c) shall be paid to the co-pensioner or
survivor, as appropriate. The Participant's election
of one of the forms of distribution set forth above
shall be made by written notice filed with the
Administrator at least one (1) year prior to the
Participant's voluntary or involuntary termination of
employment, retirement, death or disability. Any such
election may be changed by the Participant at any
time and from time to time without the consent of any
other person by filing a later signed written
election with the Administrator; provided
<PAGE> 92
6
that any election made less than one (1) year prior
to the Participant's voluntary or involuntary
termination of employment, retirement, death or
disability shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election; and provided, further,
that the Administrator may, in its sole discretion,
waive such one (1) year period upon a request of the
Participant made while an active employee of his or
her Employer.
(d) Anything contained in this paragraph 3 to the
contrary notwithstanding, in the event a
Participant's employment with the Controlled Group
and each Affiliate is involuntarily terminated,
the Administrator may, at any time, direct
immediate payment of such Participant's benefit
under the Plan and the manner of distribution for
such payment; provided, however, that if the
administrator elects immediate payment as set
forth in this paragraph 3(d), such payment shall
not be made in accordance with the distribution
alternative described in paragraph 3(c)(4) of the
Plan.
(e) Notwithstanding any other provision of this
paragraph 3, a Participant may elect to receive a
lump sum distribution of part or all of his or her
benefits under clause (1), (2), or (3) of
paragraph 3(c) if (and only if) the amount subject
to such distribution is reduced by six percent
(6%). Any distribution made pursuant to such an
election shall be made within 60 days of the date
such election is submitted to the Administrator.
The remaining six percent (6%) of the electing
Participant's benefit balance subject to such lump
sum distribution shall be forfeited.
4. FORFEITABILITY. Anything herein to the contrary
notwithstanding, if the Board of Directors of Cleveland-Cliffs shall determine
in good faith that a Participant who is entitled to a benefit hereunder by
reason of termination of his employment with the Controlled Group and each
Affiliate, during the period of 5 years after termination of his employment or
until he attains age 65, whichever period is shorter, has engaged in a business
competitive with Cleveland-Cliffs or any member of the Controlled Group or any
Affiliate without the prior written consent of Cleveland-Cliffs, such
Participant's rights to a supplemental Pension Plan Benefit hereunder and the
rights, if any, of his Beneficiary shall be terminated and no further
Supplemental Benefit shall be paid to him or his Beneficiary hereunder.
5. GENERAL. A. The entire cost of this Supplemental
Retirement Benefit Plan shall be paid from the general assets
<PAGE> 93
7
of one or more of the Employers. It is the intent of the Employers to so pay
benefits under the Plan as they become due; provided, however, that
Cleveland-Cliffs may, in its sole discretion, establish or cause to be
established a trust account for any or each Participant pursuant to an
agreement, or agreements, with a bank and direct that some or all of a
Participant's benefits under the Plan be paid from the general assets of his
Employer which are transferred to the custody of such bank to be held by it in
such trust account as property of the Employer subject to the claims of the
Employer's creditors until such time as benefit payments pursuant to the Plan
are made from such assets in accordance with such agreement; and until any such
payment is made, neither the Plan nor any Participant or Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in, such assets. No
liability for the payment of benefits under the Plan shall be imposed upon any
officer, director, employee, or stockholder of Cleveland-Cliffs or other
Employer.
B. No right or interest of a Participant or his Beneficiary
under this Supplemental Retirement Benefit Plan shall be anticipated, assigned
(either at law or in equity) or alienated by the Participant or his Beneficiary,
nor shall any such right or interest be subject to attachment, garnishment,
levy, execution or other legal or equitable process or in any manner be liable
for or subject to the debts of any Participant or Beneficiary. If any
Participant or Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge or otherwise encumber his benefits under the Plan or any part
thereof, or if by reason of his bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be enjoyed by him,
then Cleveland-Cliffs may terminate his interest in any such benefit and hold or
apply it to or for his benefit or the benefit of his spouse, children or other
person or persons in fact dependent upon him, or any of them, in such a manner
as Cleveland-Cliffs may deem proper; provided, however, that the provisions of
this sentence shall not be applicable to the surviving spouse of any deceased
Participant if Cleveland-Cliffs consent: to such inapplicability, which consent
shall not unreasonably be withheld.
C. Employment rights shall not be enlarged or affected hereby.
The Employers shall continue to have the right to discharge or retire a
Participant, with or without cause.
D. Notwithstanding any other provisions of this Plan to the
contrary, if Cleveland-Cliffs determines that any Participant may not qualify as
a "management or highly compensated employee" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or regulations
thereunder, Cleveland-Cliffs may determine, in its sole discretion, that such
Participant shall cease to be eligible to participate in this Plan. Upon such
determination, the Employer shall make an immediate lump sum payment to the
Participant equal to his then vested Supplemental Benefit. Upon
such payment, no benefits shall thereafter be payable under this
<PAGE> 94
8
Plan either to the Participant or any Beneficiary of the Participant, and all of
the Participant's elections as to the time and manner of payment of his
Supplemental Benefit shall be deemed to be cancelled.
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN. Any
member of the Controlled Group or any Affiliate which is an employer under the
Pension Plan may become an Employer hereunder with the written consent of
Cleveland-Cliffs if such member or such Affiliate executes an instrument
evidencing its adoption of the Supplemental Retirement Benefit Plan and files a
copy thereof with Cleveland-Cliffs. Such instrument of adoption may be subject
to such terms and conditions as Cleveland-Cliffs requires or approves.
7. MISCELLANEOUS. A. The Plan shall be administered by the
Plan Administrator (the "Administrator"). The Administrator shall have such
powers as may be necessary to discharge his duties hereunder, including, but not
by way of limitation, to construe and interpret the Plan (including, without
limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies and ambiguities in, the language of the Plan) and
determine the amount and time of payment of any benefits hereunder. The
Administrator may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
legal counsel who may be counsel to Cleveland-Cliffs. The Administrator shall
have no power to add to, subtract from or modify any of the terms of the Plan,
or to change or add to any benefits provided under the Plan, or to waive or fail
to apply any requirements of eligibility for a benefit under the Plan. No member
of the Administrator shall act in respect of his own benefits. All decisions and
determinations by the Administrator shall be final and binding on all parties.
All decisions of the Administrator shall be made by the vote of the majority, if
applicable, including actions and writing taken without a meeting. All
elections, notices and directions under the Plan by a Participant shall be made
on such forms as the Administrator shall prescribe.
B. Cleveland-Cliffs shall be the "Administrator" and
the "Plan Sponsor" under the Plan for purposes of ERISA.
C. Except to the extent federal law controls, all questions
pertaining to the construction, validity and effect of the provisions hereof
shall be determined in accordance with the laws of the State of Ohio.
D. Whenever there is denied, whether in whole or in part, a
claim for benefits under the Plan filed by any person (herein referred to as the
"Claimant"), the plan administrator shall transmit a written notice of such
decision to the Claimant, which notice shall be written in a manner calculated
to be understood by the Claimant and shall contain a statement of the
specific reasons for the denial of the claim and statement
<PAGE> 95
9
advising the Claimant that, within 60 days of the date on which he receives such
notice, he may obtain review of such decision in accordance with the procedures
hereinafter set forth. Within such 60-day period, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing with the
plan administrator a written request therefor, which request shall contain the
following information:
(i) the date on which the Claimant's request was filed with
the plan administrator; provided, however, that the date on which the
Claimant's request for review was in fact filed with the plan
administrator shall control in the event that the date of the actual
filing is later than the date stated by the Claimant pursuant to this
paragraph;
(ii) the specific portions of the denial of his claim
which the Claimant requests the plan administrator to
review;
(iii) a statement by the Claimant setting forth the basis upon
which he believes the plan administrator should reverse the previous
denial of his claim for benefits and accept his claim as made; and
(iv) any written material (offered as exhibits) which the
Claimant desires the plan administrator to examine in its consideration
of his position as stated pursuant to clause (iii) above.
Within 60 days of the date determined pursuant to clause (i) above, the plan
administrator shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits. Within 60 days of the date of such hearing, the
plan administrator shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
E. Supplemental Pension Plan Benefits shall be subject to
applicable withholding and such other deductions as shall at the time of payment
be required or appropriate under any Federal, State or Local law. In addition,
Cleveland-Cliffs may withhold from a Participant's "other income" (as
hereinafter defined) any amount required or appropriate to be currently withheld
from such Participant's other income pursuant to any Federal, State or Local
law. For purposes of this subparagraph E, "other income" shall mean any
remuneration currently paid to a Participant by an Employer.
8. AMENDMENT AND TERMINATION. A. Cleveland-Cliffs has
reserved and does hereby reserve the right to amend, at any time, any or all of
the provisions of the Supplemental Retirement Benefit Plan for all Employers,
without the consent of any other Employer or any Participant, Beneficiary or any
other person. Any such amendment shall be expressed in an instrument executed
<PAGE> 96
10
by Cleveland-Cliffs and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of its execution.
B. Cleveland-Cliffs has reserved, and does hereby reserve, the
right to terminate the Supplemental Retirement Benefit Plan at any time for all
Employers, without the consent of any other Employer or of any Participant,
Beneficiary or any other person. Such termination shall be expressed in an
instrument executed by Cleveland-Cliffs and shall become effective as of the
date designated in such instrument, or if no date is specified, on the date of
its execution. Any other Employer which shall have adopted the Plan may, with
the written consent of Cleveland-Cliffs, elect separately to withdraw from the
Plan and such withdrawal shall constitute a termination of the Plan as to it,
but it shall continue to be an Employer for the purposes hereof as to
Participants or Beneficiaries to whom it owes obligations hereunder. Any such
withdrawal and termination shall be expressed in an instrument executed by the
terminating Employer and shall become effective as of the date designated in
such instrument or, if no date is specified, on the date of its execution.
C. Notwithstanding the foregoing provisions hereof, no
amendment or termination of the Supplemental Retirement Benefit Plan shall,
without the consent of the Participant (or, in the case of his death, his
Beneficiary), adversely affect (i) the benefit under the Plan of any Participant
or Beneficiary then entitled to receive a benefit under the Plan or (ii) the
right of any other Participant to receive upon termination of his employment
with the Controlled Group and each Affiliate (or the right of his Beneficiary to
receive upon such Participant's death) that benefit which would have been
received under the Plan if such employment of the Participant had terminated
immediately prior to the amendment or termination of the Plan. Upon any
termination of the Plan, each affected Participant's Supplemental Benefit shall
be determined and distributed to him or, in the case of his death, to his
Beneficiary as provided in paragraph 3 as if the employment of the Participant
with the Controlled Group and each Affiliate had terminated immediately prior to
the termination of the Plan.
9. EFFECTIVE DATE. The amended and restated Supplemental Retirement
Benefit Plan shall be effective as of January 1, 1997.
IN WITNESS WHEREOF, Cleveland-Cliffs Inc, pursuant to the
order of its Board of Directors, has executed this amended and restated
Supplemental Retirement Benefit Plan at Cleveland, Ohio, this 24th day of
April, 1997.
CLEVELAND-CLIFFS INC
By /s/ R.F. Novak
-----------------------------
Vice President - Human Resources
<PAGE> 97
11
EXHIBIT A
---------
Pension Plans
- -------------
Pension Plan for Salaried Employees of Cleveland-Cliffs Inc
Pension Plan for Salaried Employees of the Cleveland-Cliffs Iron
Company and its Associated Employers
Retirement Plan for Salaried Employees of Northshore Mining
Company and Silver Bay Power Company
<PAGE> 98
Exhibit B
TRUST AGREEMENT NO. 1
(Amended and Restated Effective June 1, 1997)
---------------------------------------------
This Trust Agreement No. l (Amended and Restated Effective
June 1, 1997) ("Trust Agreement No. 1") is made on this 12th day of June, 1997,
by and between Cleveland-Cliffs Inc, an Ohio corporation ("Cleveland-Cliffs"),
and KeyTrust Company of Ohio, N.A., a national banking association, as trustee
(the "Trustee").
WITNESSETH:
WHEREAS, Cleveland-Cliffs has entered into an agreement with
each of the executives (the "Executives") listed (from time to time as provided
in Section 9(c) hereof) on Exhibit A hereto (the agreements are referred to
herein singularly as an "Agreement" and collectively as the "Agreements");
WHEREAS, pursuant to the provisions of the Cleveland-Cliffs
Inc Supplemental Retirement Benefit Plan (as Amended and Restated Effective
January 1, 1997), as the same has been or may hereafter be supplemented, amended
or restated, or any successor thereto (the "Plan"), the Executives and
beneficiaries of the Executives (also listed on Exhibit A hereto from time to
time as provided in Section 9(c) hereof), may become entitled to certain
benefits;
WHEREAS, (a) the Agreements provide for the payment of certain
current and deferred compensation and other benefits to the Executives or their
beneficiaries thereunder following a "Change of Control", as that term is
defined in Exhibit B hereto, and (b) the Plan provides for the payment of
certain benefits to
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2
the Executives and beneficiaries of Executives that (i) would be payable
pursuant to the qualified retirement plans established by Cleveland-Cliffs and
its subsidiary corporations and affiliates were it not for certain limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
are or may become due under certain agreements entered into (or which may be
entered into) by Cleveland-Cliffs and its subsidiary corporations and affiliates
granting additional service credit or other features for purposes of computing
retirement benefits, and (c) Cleveland-Cliffs wishes specifically to assure the
payment to the Executives and beneficiaries of Executives (Executives and
beneficiaries of Executives are referred to herein singularly as a "Trust
Beneficiary" and collectively as the "Trust Beneficiaries") of amounts due under
the Agreements and the Plan (collectively referred to herein as the "Benefits");
WHEREAS, subject to Section 9 hereof, the amounts and timing
of Benefits to which each Trust Beneficiary is presently or may become entitled
to are as provided in and determined under the Agreements and the Plan;
WHEREAS, on October 28, 1987, Cleveland-Cliffs and Ameritrust
Company National Association, a predecessor of the Trustee, entered into a trust
agreement ("Trust Agreement No. 1") to provide for the payment of certain
benefits that may become payable to certain executives, beneficiaries of such
executives, and their beneficiaries under agreements then in effect between
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3
Cleveland-Cliffs and the executives and under the Plan, as it was in effect at
such time;
WHEREAS, Trust Agreement No. 1 was amended and restated
by an Amended and Restated Trust Agreement No. 1 dated March 9, 1992;
WHEREAS, Cleveland-Cliffs desires to amend and restate Trust
Agreement No. 1 heretofore entered into and has transferred or will transfer to
the trust (the "Trust") established by this Trust Agreement No. 1 assets which
shall be held therein subject to the claims of the creditors of Cleveland-Cliffs
to the extent set forth in Section 3 hereof until paid in full to all Trust
Beneficiaries as Benefits in such manner and at such times as specified herein
unless Cleveland-Cliffs is Insolvent (as defined herein) at the time that such
Benefits become payable; and
WHEREAS, Cleveland-Cliffs shall be considered "Insolvent" for
purposes of this Trust Agreement No. 1 at such time as Cleveland-Cliffs (i) is
subject to a pending voluntary or involuntary proceeding as a debtor under the
United States Bankruptcy Code, as heretofore or hereafter amended, or (ii) is
unable to pay its debts as they mature.
NOW, THEREFORE, the parties amend and restate Trust Agreement
No. 1 and agree that the Trust shall be comprised, held and disposed of as
follows:
1. TRUST FUND: (a) Subject to the claims of its creditors
to the extent set forth in Section 3 hereof, Cleveland-Cliffs (i) hereby
deposits with the Trustee in trust Ten Dollars
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4
($10.00) which shall become the principal of this Trust, and (ii)
Cleveland-Cliffs may from time to time make additional deposits of cash or other
property in the Trust to augment such principal. The principal of the Trust
shall be held, administered and disposed of by the Trustee as herein provided,
but no payments of all or any portion of the principal of the Trust or earnings
thereon shall be made to Cleveland-Cliffs or any other person or entity on
behalf of Cleveland-Cliffs except as herein expressly provided.
(b) The Trust hereby established shall be revocable by
Cleveland-Cliffs at any time prior to the date on which occurs a Change of
Control, and on or after such date (the "Irrevocability Date"), this Trust shall
be irrevocable. In the event that the Irrevocability Date has occurred,
Cleveland-Cliffs shall so notify the Trustee promptly.
(c) The principal of the Trust and any earnings thereon shall
be held in trust separate and apart from other funds of Cleveland-Cliffs
exclusively for the uses and purposes herein set forth. No Trust Beneficiary
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust prior to the time that such assets are paid to a Trust
Beneficiary as Benefits as provided herein.
(d) The Trust is intended to be a grantor trust, within the
meaning of section 671 of the Code, or any successor provision thereto, and
shall be construed accordingly. The Trust is not designed to qualify under
Section 401(a) of the Code or to
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5
be subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Trust established under this Trust Agreement No.
1 does not fund and is not intended to fund the Agreements or the Plan or any
other employee benefit plan or program of Cleveland-Cliffs. Such Trust is and is
intended to be a depository arrangement with the Trustee for the setting aside
of cash and other assets of Cleveland-Cliffs for the meeting of part or all of
its future obligations with respect to Benefits.
2. PAYMENTS TO TRUST BENEFICIARIES. (a) Provided that the
Trustee has not actually received notice as provided in Section 3 hereof that
Cleveland-Cliffs is Insolvent and commencing with the earlier to occur of (i)
appropriate notice by Cleveland-Cliffs to the Trustee, or (ii) the
Irrevocability Date, the Trustee shall make payments of Benefits to each Trust
Beneficiary from the assets of the Trust in accordance with the terms of the
Agreement applicable to such Trust Beneficiary and of the Plan and subject to
Section 9 hereof. The Trustee shall make provision for withholding of any
federal, state, or local taxes that may be required to be withheld by the
Trustee in connection with the payment of any Benefits hereunder.
(b) If the balance of a separate account maintained for a
Trust Beneficiary pursuant to Section 7(b) hereof is not sufficient to provide
for full payment of Benefits to which a Trust Beneficiary is entitled as
provided herein, then an amount up to the amount of such deficiency shall be
allocated to such
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6
separate account from the Master Account maintained pursuant to section 7(b)
hereof to the extent of the balance in the Master Account. If, after application
of the preceding sentence, the balance of a Trust Beneficiary's separate account
maintained pursuant to Section 7(b) is not sufficient to provide for full
payment of Benefits to which a Trust Beneficiary is entitled as provided herein,
then Cleveland-Cliffs shall make the balance of each such payment as provided in
the applicable provision of the Agreement or the Plan, as the case may be. No
payment to a Trust Beneficiary from the assets of the Trust shall exceed the
balance of such separate account.
(c) Any payments of Benefits by the Trustee pursuant to this
Trust Agreement No. 1 shall, to the extent thereof, discharge the obligation of
Cleveland-Cliffs to pay such Benefits under the Agreements and the Plan, it
being the intent of Cleveland-Cliffs that assets in the Trust established hereby
be held as security for the obligation of Cleveland-Cliffs to pay Benefits under
the Agreements and the Plan.
3. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO
A TRUST BENEFICIARY WHEN CLEVELAND-CLIFFS IS INSOLVENT: (a) At all times during
the continuance of this Trust, the principal and income of the Trust shall be
subject to claims of creditors of Cleveland-Cliffs as set forth in this Section
3(a). The Board of Directors of Cleveland-Cliffs ("the Board") and the Chief
Executive Officer of Cleveland-Cliffs ("the CEO") shall have the duty to inform
the Trustee if either the Board or the CEO
<PAGE> 104
7
believes that Cleveland-Cliffs is Insolvent. If the Trustee receives a notice
from the Board, the CEO, or a creditor of Cleveland-Cliffs alleging that
Cleveland-Cliffs is Insolvent, then unless the Trustee independently determines
that Cleveland-Cliffs is not Insolvent, the Trustee shall (i) discontinue
payments to any Trust Beneficiary, (ii) hold the Trust assets for the benefit of
the general creditors of Cleveland-Cliffs, and (iii) promptly seek the
determination of a court of competent jurisdiction regarding the Insolvency of
Cleveland-Cliffs. The Trustee shall deliver any undistributed principal and
income in the Trust to the extent of the balances of the accounts maintained
hereunder necessary to satisfy the claims of the creditors of Cleveland-Cliffs
as a court of competent jurisdiction may direct. Such payments of principal and
income shall be borne by the Master Account to the extent thereof, and then by
the separate accounts of the Trust Beneficiaries in proportion to the balances
on the date of such court order of their respective accounts maintained pursuant
to Section 7(b) hereof; provided, however, that (iv) all Account Excesses shall
first be determined and allocated in accordance with Sections 4 and 7(b) hereof,
and (v) for this purpose the Threshold Percentage shall be equal to 100%. If
payments to any Trust Beneficiary have been discontinued pursuant to this
Section 3(a), the Trustee shall resume payments to such Trust Beneficiary only
after receipt of an order of a court of competent jurisdiction. The Trustee
shall have no duty to inquire as to whether
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8
Cleveland-Cliffs is Insolvent and may rely on information concerning the
Insolvency of Cleveland-Cliffs which has been furnished to the Trustee by any
person. Nothing in this Trust Agreement No. 1 shall in any way diminish any
rights of any Trust Beneficiary to pursue his rights as a general creditor of
Cleveland-Cliffs with respect to Benefits or otherwise, and the rights of each
Trust Beneficiary shall in no way be affected or diminished by any provision of
this Trust Agreement No. 1 or action taken pursuant to this Trust Agreement No.
1, except as provided in Section 2(c).
(b) If the Trustee discontinues payments of Benefits from the
Trust pursuant to Section 3(a) hereof, the Trustee shall, to the extent it has
liquid assets, place cash equal to the discontinued payments (to the extent not
paid to creditors pursuant to Section 3(a) and not paid to the Trustee pursuant
to Section 10 hereof) in such interest-bearing deposit accounts or certificates
of deposit (including any such accounts or certificate issued or offered by the
Trustee or any successor corporation but excluding obligations of
Cleveland-Cliffs) as determined by the Trustee in its sole discretion. If the
Trustee subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments which would
have been made to the Trust Beneficiaries in accordance with this Trust
Agreement No. 1 during the period of such discontinuance, less the aggregate
amount of payments made to any Trust Beneficiary by Cleveland-Cliffs pursuant to
the
<PAGE> 106
9
Agreement applicable to such Trust Beneficiary and Plan during any such
period of discontinuance, together with interest on the net amount delayed
determined at a rate equal to the rate paid on the accounts or deposits selected
by the Trustee; provided, however, that no such payment shall exceed the balance
of the respective Trust Beneficiary's account as provided in Section 7(b)
hereof.
4. PAYMENTS TO CLEVELAND-CLIFFS. Except to the extent
expressly contemplated by Section 1(b) and this Section 4, Cleveland-Cliffs
shall have no right or power to direct the Trustee to return any of the Trust
assets to Cleveland-Cliffs before all payments of Benefits have been made to all
Trust Beneficiaries as herein provided. From time to time, but in no event
before the third anniversary of the date on which occurs a Change of Control, if
and when requested by Cleveland-Cliffs to do so, the Trustee shall engage the
services of Hewitt Associates ("Hewitt") or such other independent actuary as
may be mutually satisfactory to Cleveland-Cliffs and to the Trustee to determine
the maximum actuarial present values of the future Benefits that could become
payable under the Plan and the Agreements with respect to the Trust
Beneficiaries. The Trustee shall determine the fair market values of the Trust
assets allocated to the account of each Trust Beneficiary and to the Master
Account pursuant to Section 7(b) hereof. Cleveland-Cliffs shall pay the fees of
such independent actuary and of any appraiser engaged by the Trustee to value
any property held in the Trust. The
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10
independent actuary shall make its calculations based upon the assumption that
each Executive will have base salary and bonus increases from the date of
calculation through the termination of his employment by Cleveland-Cliffs at the
rate of the average increase in such Executive's salary and bonus during the
immediately preceding three years, and that no Executive will leave the employ
of Cleveland-Cliffs for any reason other than (a) death prior to retirement or
(b) retirement on or after age 62 or the corresponding date specified in the
Agreement at the age that would result in the maximum present value of Benefits
payable to him or his Trust Beneficiaries that is possible under the Plan and/or
the Agreement. In addition, the independent actuary shall use the 1983 Group
Annuity Mortality Table, an interest rate of 8%, Gross National Product Price
Deflator increases of 4%, or such other assumptions as are recommended by such
actuary and approved by Cleveland-Cliffs and, after the date of a Change of
Control, a majority of the Trust Beneficiaries (subject to the provisions of
Sections 11(b)(i) and (b)(ii) hereof). For purposes of this Trust Agreement No.
1, the "Fully Funded" amount with respect to the account of a Trust Beneficiary
maintained pursuant to Section 7(b) hereof shall be equal to the maximum
actuarial present value of the future Benefits that could become payable under
the Plan and the Agreements with respect to the Trust Beneficiary. The Trustee
shall then determine any allocations to and from the Master Account in
accordance with Section 7(b) hereof. Thereafter, upon the request of the
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11
Company, the Trustee shall pay to Cleveland-Cliffs the excess, if any, of the
balance in the Master Account over 40% of the aggregate of all of the Fully
Funded amounts.
5. INVESTMENT OF TRUST FUND. (a) The Trustee shall invest and
reinvest the principal of the Trust including any income accumulated and added
to principal, as directed by the Organization and Compensation Committee of the
Board of Directors of Cleveland-Cliffs (which direction may not include
investment in common shares of Cleveland-Cliffs). In the absence of any such
direction, the Trustee shall have sole power to invest the assets of the Trust
(excluding investment in common shares of Cleveland-Cliffs). The Trustee shall
act at all times, however, with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent corporate trustee, acting in a
like capacity and familiar with such matters, would use in the conduct of an
enterprise of a like character and with like aims. The investment objective of
the Trustee shall be to preserve the principal of the Trust while obtaining a
reasonable total rate of return, measurement of which shall include market
appreciation or depreciation plus receipt of interest and dividends. The Trustee
shall be mindful, in the course of its management of the Trust, of the liquidity
demands on the Trust and any actuarial assumptions that may be communicated to
it from time to time in accordance with the provisions of this Trust Agreement
No. 1.
<PAGE> 109
12
(b) In addition to authority given to the Trustee under
Section 8 hereof, the Trustee is empowered with respect to the assets of the
Trust:
(i) To invest and reinvest all or any part of the Trust
assets, in each and every kind of property, whether real, personal or mixed,
tangible or intangible, whether income or non-income producing, whether secured
or unsecured, and wherever situated, including, but not limited to, real estate,
shares of common and preferred stock, mortgages and bonds, leases (with or
without option to purchase), notes, debentures, equipment or collateral trust
certificates, and other corporate, individual or government securities or
obligations, time deposits (including savings deposit and certificates of
deposit in the Trustee or its affiliates if such deposits bear a reasonable rate
of interest), common or collective funds or trusts, and mutual funds or
investment companies, including affiliated investment companies and 12 B-1
funds. Cleveland-Cliffs acknowledges and agrees that the Trustee may receive
fees as a participating depository institution for services relating to the
investment of funds in an eligible mutual fund;
(ii) At such time or times, and upon such terms and conditions
as the Trustee shall deem advisable, to sell, convert, redeem, exchange, grant
options for the purchase or exchange of, or otherwise dispose of, any property
held hereunder, at public or private sale, for cash or upon credit, with or
without security, without obligation on the part of any person dealing
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13
with the Trustee to see to the application of the proceeds of or to inquire into
the validity, expediency, or propriety of any such disposal;
(iii) To manage, operate, repair, partition, and improve and
mortgage or lease (with or without an option to purchase) for any length of time
any property held in the Trust; to renew or extend any mortgage or lease, upon
such terms as the Trustee may deem expedient; to agree to reduction of the rate
of interest on any mortgage; to agree to any modification in the terms of any
lease or mortgage or of any guarantee pertaining to either of them; to exercise
and enforce any right of foreclosure; to bid on property in foreclosure; to take
a deed in lieu of foreclosure with or without paying consideration therefor and
in connection therewith to release the obligation on the bond secured by the
mortgage; and to exercise and enforce in any action, suit, or proceeding at law
or in equity any rights, covenants, conditions or remedies with respect to any
lease or mortgage or to any guarantee pertaining to either of them or to waive
any default in the performance thereof;
(iv) To join in or oppose any reorganization,
recapitalization, consolidation, merger or liquidation, or any plan therefor, or
any lease (with or without an option to purchase), mortgage or sale of the
property of any organization the securities of which are held in the Trust; to
pay from the Trust any assessments, charges or compensation specified in any
plan of reorganization, recapitalization, consolidation, merger or liquidation;
to deposit any property allotted to the Trust in any reorganization,
recapitalization, consolidation, merger
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14
or liquidation, to deposit any property with any committee or depository; and to
retain any property allotted to the Trust in any reorganization,
recapitalization, consolidation, merger or liquidation;
(v) To compromise, settle, or arbitrate any claim, debt or
obligation of or against the Trust; to enforce or abstain from enforcing any
right, claim, debt, or obligation; and to abandon any property determined by it
to be worthless;
(vi) To make, execute and deliver, as Trustee, any deeds,
conveyances, leases (with or without option to purchase), mortgages, options,
contracts, waivers or other instruments that the Trustee shall deem necessary or
desirable in the exercise of its powers under this Agreement; and
(vii) To pay out of the assets of the Trust all taxes imposed
or levied with respect to the Trust and in its discretion may contest the
validity or amount of any tax, assessment, penalty, claim, or demand respecting
the Trust and may institute, maintain, or defend against any related action or
proceeding either at law or in equity (and in such regard, the Trustee shall be
indemnified in accordance with Section 8(d) hereof).
6. INCOME OF THE TRUST. Except as provided in Section
3 hereof, during the continuance of this Trust all net income of
the Trust shall be allocated not less frequently than monthly
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15
among the Trust Beneficiaries' separate accounts in accordance with Section 7(b)
hereof.
7. ACCOUNTING BY TRUSTEE. (a) The Trustee shall keep records
in reasonable detail of all investments, receipts, disbursements and all other
transactions required to be done, including such specific records as shall be
agreed upon in writing by Cleveland-Cliffs and the Trustee. All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by Cleveland-Cliffs, by any Trust Beneficiary, or in the event of a Trust
Beneficiary's death or adjudged incompetence, by an agent or representative of
any of the foregoing (as to such Trust Beneficiary's account). Within 60
calendar days following the close of each calendar year and within 60 calendar
days after the removal or resignation of the Trustee, the Trustee shall deliver
to Cleveland-Cliffs and, following the Irrevocability Date, to each Trust
Beneficiary, or in the event of a Trust Beneficiary's death or adjudged
incompetence, any agent or representative of the Trust Beneficiary (as to his or
her account), a written account of its administration of the Trust during such
year or during the period from the end of the last preceding year to the date of
such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing
<PAGE> 113
16
all cash, securities, rights and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
Such written accounts shall reflect the aggregate of the Trust accounts and
status of each separate account maintained for each Trust Beneficiary. Unless
Cleveland-Cliffs or any Trust Beneficiary shall have filed with the Trustee
written exception or objection to any such statement and account within 90 days
after receipt thereof, Cleveland-Cliffs and the Trust Beneficiary shall be
deemed to have approved such statement and account, and in such case, the
Trustee shall be forever released and discharged with respect to all matters and
things reported in such statement and account as though it had been settled by a
decree of a court of competent jurisdiction in an action or proceeding to which
Cleveland-Cliffs and the Trust Beneficiaries were parties.
(b) (i) The Trustee shall maintain a separate subaccount for
each Trust Beneficiary (a "Trust Beneficiary Account") and an account (the
"Master Account") that shall be kept separate from all Trust Beneficiary
Accounts and shall not be identified with any Trust Beneficiary. The Trustee
shall credit or debit each Trust Beneficiary Account and the Master Account as
appropriate to reflect the respective allocable portion of the Trust assets, as
such Trust assets may be adjusted from time to time pursuant to the terms of
this Trust Agreement No. 1. Prior to the date of a Change of Control, all
deposits of principal pursuant to Section 1(a) shall be allocated and
<PAGE> 114
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reallocated as directed by Cleveland-Cliffs. On or after the date of a Change of
Control deposits of principal may be allocated, but not reallocated by
Cleveland-Cliffs. If any deposit of principal is not allocated by the Company,
such amount shall be allocated by the Trustee to the Master Account.
(ii) As further described in this Section 7(b)(ii), as of the
beginning of each calendar quarter ending after the Trust has become
irrevocable, the Trustee shall (A) ascertain (or cause to be determined) the
Fully Funded amounts (as defined in Section 4 hereof), (B) allocate the income
of the Trust, (C) determine the amount of all Account Excesses (as hereinafter
defined), and (D) allocate amounts to and from the Master Account. The "Account
Excess" with respect to a Trust Beneficiary Account shall be equal to the
excess, if any, of the fair market value of the assets held in the Trust
allocated to a Trust Beneficiary Account over the respective Fully Funded
amount. The Trustee shall allocate the income of the Trust and all Account
Excesses to the Master Account. The balance in the Master Account shall then be
allocated to any Trust Beneficiary Accounts that are not Fully Funded in
proportion to the differences between the respective Fully Funded amount and the
balance of the Trust Beneficiary Account, insofar as possible, until all Trust
Beneficiary Accounts are Fully Funded.
(c) Nothing in this Section 7 shall preclude the commingling
of Trust assets for investment.
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18
8. RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent corporate trustee, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like character and
with like aims; provided, however, that the Trustee shall incur no liability to
any person for any action taken pursuant to a direction, request or approval,
contemplated by and complying with the terms of this Trust Agreement No. 1,
given in writing by Cleveland-Cliffs or by a Trust Beneficiary applicable to his
or her beneficial interest herein; and provided, further, that the Trustee shall
have no duty to seek additional deposits of principal from Cleveland-Cliffs for
additional amounts accrued under the Agreement or the Plan, and the Trustee
shall not be responsible for the adequacy of this Trust.
(b) The Trustee may vote any stock or other securities and
exercise any right appurtenant to any stock, other securities or other property
held hereunder, either in person or by general or limited proxy, power of
attorney or other instrument.
(c) The Trustee may hold securities in bearer form and may
register securities and other property held in the trust fund in its own name or
in the name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, and deposit, or arrange for deposit of property with any depository;
provided that the books and records of the Trustee shall at all times show
<PAGE> 116
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that all such securities are part of the trust fund under this Trust Agreement
No. 1.
(d) If the Trustee shall undertake or defend any litigation
arising in connection with this Trust Agreement No. 1, it shall be indemnified
by Cleveland-Cliffs against its costs, expenses and liabilities (including
without limitation attorneys' fees and expenses) relating thereto.
(e) The Trustee may consult with legal counsel, independent
accountants and actuaries (who may be counsel, independent accountants or
actuaries for Cleveland-Cliffs) with respect to any of its duties or obligations
hereunder, and shall be fully protected in acting or refrain from acting in
accordance with the advice of such counsel, independent accountants and
actuaries.
(f) The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement No. 1 upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties.
(g) The Trustee may hire agents, accountants, actuaries, and
financial consultants, who may be agents, accountants, actuaries, or financial
consultants, as the case may be, for Cleveland-Cliffs, and shall not be
answerable for the conduct of same if appointed with due care.
<PAGE> 117
20
(h) The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payments of which the Trustee is
the designated beneficiary.
(i) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law unless expressly provided otherwise
herein.
9. AMENDMENTS, ETC., TO AGREEMENTS AND PLAN;
COOPERATION OF CLEVELAND-CLIFFS.
(a) Cleveland-Cliffs has previously furnished the Trustee a
complete and correct copy of each Agreement and of the Plan, and
Cleveland-Cliffs shall, and any Trust Beneficiary may, promptly furnish the
Trustee true and correct copies of any amendment, restatement or successor
thereto, whereupon such amendment, restatement or successor shall be
incorporated herein by reference, provided that such amendment, restatement or
successor shall not affect the Trustee's duties and responsibilities hereunder
without the consent of the Trustee.
(b) Cleveland-Cliffs shall provide the Trustee with all
information requested by the Trustee for purposes of determining payments to the
Trust Beneficiaries or withholding of taxes as provided in Section 2. Upon the
failure of Cleveland-Cliffs or any Trust Beneficiary to provide any such
information, the Trustee shall, to the extent necessary in the sole judgment of
the Trustee, (i) compute the amount payable hereunder to any Trust Beneficiary;
and (ii) notify Cleveland-Cliffs and the Trust Beneficiary in writing of its
computations. Thereafter this
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21
Trust Agreement No. l shall be construed as to the Trustee's duties and
obligations hereunder in accordance with such Trustee determinations without
further action; provided, however, that no such determinations shall in any way
diminish the rights of any Trust Beneficiary hereunder or under any Agreement or
the Plan; and provided, further, that no such determinations shall be deemed to
modify this Trust Agreement No. 1, any Agreement or the Plan. Nothing in this
Trust Agreement No. l shall restrict Cleveland-Cliffs' right to amend, modify or
terminate the Plan.
(c) At such times as may in the judgment of Cleveland-Cliffs
be appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of Trust Beneficiaries to Exhibit A
(or the deletion of Trust Beneficiaries from Exhibit A who have no Benefits
currently due or payable in the future); provided, however, that no such
amendment shall be made after the date of a Change of Control.
10. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by Cleveland-Cliffs and the Trustee. The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant to
Sections 8(d), 8(e) and 8(g) and liabilities to creditors pursuant to court
direction as provided in Section 3(a) hereof. Such compensation and expenses
shall in all events be payable either directly by Cleveland-Cliffs or, in the
event that
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22
Cleveland-Cliffs shall refuse, from the assets of the Trust and charged pro rata
in proportion to each separate account balance. The Trust shall have a claim
against Cleveland-Cliffs for any such compensation or expenses so paid.
11. REPLACEMENT OF THE TRUSTEE. (a) Prior to the date of a
Change of Control, the Trustee may be removed by Cleveland-Cliffs. On or after
the date of a Change of Control, the Trustee may be removed at any time by
agreement of Cleveland-Cliffs and a majority of the Trust Beneficiaries. The
Trustee may resign after providing not less than 90 days' notice to
Cleveland-Cliffs and to the Trust Beneficiaries. In case of removal or
resignation, a new trustee, which shall be independent and not subject to
control of either Cleveland-Cliffs or the Trust Beneficiaries, shall be
appointed as shall be agreed by Cleveland-Cliffs and a majority of the Trust
Beneficiaries. No such removal or resignation shall become effective until the
acceptance of the Trust by a successor trustee designated in accordance with
this Section 11. If the Trustee should resign, and within 45 days of the notice
of such resignation, Cleveland-Cliffs and the Executives shall not have notified
the Trustee of an agreement as to a replacement trustee, the Trustee shall
appoint a successor trustee, which shall be a bank or trust company, wherever
located, having a capital and surplus of at least $500,000,000 in the aggregate.
(b) For purposes of the removal or appointment of a
Trustee under this Section 11, (i) if any Trust Beneficiary shall
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23
be deceased or adjudged incompetent, such Trust Beneficiary's personal
representative (including his or her guardian, executor or administrator) shall
participate in such Trust Beneficiary's stead, and (ii) a Trust Beneficiary
shall not participate if all payments of Benefits then currently due or payable
in the future have been made to such Trust Beneficiary.
12. AMENDMENT OR TERMINATION. (a) This Trust Agreement No.
1 may be amended by Cleveland-Cliffs and the Trustee without the consent of any
Trust Beneficiary provided the amendment does not adversely affect any Trust
Beneficiary. This Trust Agreement No. 1 may also be amended at any time and to
any extent by a written instrument executed by the Trustee, Cleveland-Cliffs and
the Trust Beneficiaries, except to alter Section 12(b), and except that
amendments to Exhibit A contemplated by Section 9(c) hereof shall be made as
therein provided.
(b) The Trust shall terminate on the date on which the Trust
no longer contains any assets, or, if earlier, the date on which each Trust
Beneficiary is entitled to no further payments hereunder.
(c) Upon termination of the Trust as provided in Section 12(b)
hereof, any assets remaining in the Trust shall be returned to Cleveland-Cliffs
or as it directs.
13. SPECIAL DISTRIBUTION. (a) It is intended that (i)
the creation of, and transfer of assets to, the Trust will not cause any
Agreement or the Plan to be other than "unfunded" for
<PAGE> 121
24
purposes of title I of ERISA; (ii) transfers of assets to the Trust will not be
transfers of property for purposes of section 83 of the Code, or any successor
provision thereto, nor will such transfers cause a currently taxable benefit to
be realized by a Trust Beneficiary pursuant to the "economic benefit" doctrine;
and (iii) pursuant to section 451 of the Code, or any successor provision
thereto, amounts will be includable as compensation in the gross income of a
Trust Beneficiary in the taxable year or years in which such amounts are
actually distributed or made available to such Trust Beneficiary by the Trustee.
(b) Notwithstanding anything to the contrary contained in this
Trust Agreement No. 1, in the event it is determined by a final decision of the
Internal Revenue Service, or, if an appeal is taken therefrom, by a court of
competent jurisdiction that (i) by reason of the creation of, and a transfer of
assets to the Trust, the Trust is considered "funded" for purposes of title I of
ERISA; or (ii) a transfer of assets to the Trust is considered a transfer of
property for purposes of section 83 of the Code or any successor provision
thereto; or (iii) a transfer of assets to the Trust causes a Trust Beneficiary
to realize income pursuant to the "economic benefit" doctrine; or (iv) pursuant
to section 451 of the Code or any successor provision thereto, amounts are
includable as compensation in the gross income of a Trust Beneficiary in a
taxable year that is prior to the taxable year or years in which such amounts
would, but for this Section 13, otherwise actually be distributed or made
available to such Trust
<PAGE> 122
25
Beneficiary by the Trustee, then (A) the assets held in Trust shall be allocated
in accordance with Section 7(b) hereof, and (B) promptly after the next
quarterly allocation and reallocation pursuant to Section 7(b) hereof, the
Trustee shall distribute to each affected Trust Beneficiary an amount equal to
the lesser of (i) the amount which, after taking into account the federal, state
and local income tax consequences of the special distribution itself, is equal
to the sum of any federal, state and local income taxes, interest due thereon,
and penalties assessed with respect thereto, which are attributable to amounts
that are includable in the income of such Trust Beneficiary, or (ii) the balance
of the Trust Beneficiary Account corresponding to such amount.
14. SEVERABILITY, ALIENATION, ETC. (a) Any provision of
this Trust Agreement No. 1 prohibited by law shall be ineffective to the extent
of any such prohibition without invalidating the remaining provisions hereof.
(b) To the extent permitted by law, Benefits to Trust
Beneficiaries under this Trust Agreement No. l may not be anticipated, assigned
(either at law or in equity), alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process and no benefit provided for
herein and actually paid to any Trust Beneficiary by the Trustee shall be
subject to any claim for repayment by Cleveland-Cliffs or Trustee.
<PAGE> 123
26
(c) This Trust Agreement No. 1 shall be governed by
and construed in accordance with the laws of the State of Ohio,
without giving effect to the principles of conflict of laws thereof.
(d) This Trust Agreement No. l may be executed in two
or more counterparts, each of which shall be considered an original agreement.
This Trust Agreement No. 1 shall become effective immediately upon the execution
by Cleveland-Cliffs of at least one counterpart, it being understood that all
parties need not sign the same counterpart, but shall not bind any Trustee until
such Trustee has executed at least one counterpart.
15. NOTICES; IDENTIFICATION OF CERTAIN TRUST BENEFICIARIES.
(a) All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly given when received:
If to the Trustee, to:
KeyTrust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Trust Counsel
If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc.
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Secretary
If to the Trust Beneficiaries, to the addresses
listed on Exhibit A hereto
provided, however, that if any party or any Trust Beneficiary or
his or its successors shall have designated a different address
<PAGE> 124
27
by written notice to the other parties, then to the last address so designated.
(b) Cleveland-Cliffs shall provide the Trustee with the names
of any beneficiary or beneficiaries designated by the Executives (and who are,
therefore, Trust Beneficiaries hereunder).
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have
caused counterparts of this Trust Agreement No. 1 (Amended and Restated
Effective June 1, 1997) to be executed on their behalf on June 12, 1997, each of
which shall be an original agreement.
CLEVELAND-CLIFFS INC
By /s/ R.F. Novak
------------------------------------
Its V.P. - H.R.
----------------------------------
KEYTRUST COMPANY OF OHIO, N.A.,
as Trustee
By Kelley Clark
-------------------------------------
Its Vice President
----------------------------------
and
By J.A. Radazzo
-------------------------------------
Its V.P.
---------------------------------
<PAGE> 125
Exhibit A
---------
Executive Title Trust Beneficiary
- --------- ----- -----------------
M. Thomas Moore Chairman and Chief M. T. Moore Family
Executive Officer Trust
The M. Thomas Moore
Family Trust
Dated 11/29/85
Co-Trustees are:
Robert Bouhall and
William E. Reichard
of the Firm of
Conway, Patton,
Bouhall and Reichard
1220 Huntington
Building
Cleveland, OH 44115
John S. Brinzo Executive Vice Marlene J. Brinzo
President-Finance (wife)
William R. Calfee Executive Vice Society National
President- Bank, or its
Commercial successor, as Trustee
under the William R.
Calfee
Revocable Trust
Agreement dated
5/9/89, as the same
may hereafter be
amended,
800 Superior Ave.,
Cleveland, OH 44114
Thomas J. O'Neill Executive Vice
President - Operations
<PAGE> 126
EXHIBIT B
---------
"Change of Control" shall be deemed to have occurred if
(i) Cleveland-Cliffs shall merge into itself, or be
merged or consolidated with, another corporation and as a result of
such merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of Cleveland-Cliffs as the
same shall have existed immediately prior to such merger or
consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly or indirectly);
or
(iv) during any period of three consecutive years,
individuals who at the beginning of any such period
<PAGE> 127
2
constitute the Board of Directors of Cleveland-Cliffs cease, for any
reason, to constitute at least a majority thereof, unless the election,
or the nomination for election by the shareholders of Cleveland-Cliffs,
of each Director first elected during any such period was approved by a
vote of at least one-third of the Directors of Cleveland-Cliffs who are
Directors of Cleveland-Cliffs on the date of the beginning of any such
period.
<PAGE> 128
Exhibit C
TRUST AGREEMENT NO. 2
(Amended and Restated Effective June 1, 1997)
---------------------------------------------
This Trust Agreement No. 2 (Amended and Restated Effective
June 1, 1997) ("Trust Agreement No. 2") is made on this 12th day of June, 1997,
by and between Cleveland-Cliffs Inc, an Ohio corporation ("Cleveland-Cliffs"),
and KeyTrust Company of Ohio, N.A., a national banking association, as trustee
(the "Trustee").
WITNESSETH:
----------
WHEREAS, under the provisions of certain agreements between
each of the executives of Cleveland-Cliffs (the "Executives") listed (from time
to time as provided in Section 9(c) hereof) on Exhibit A hereto and
Cleveland-Cliffs (the "Executive Agreements"), as each of the same may hereafter
be amended or restated, or any successor thereto, the Executives may become
entitled to certain compensation, pension and other benefits;
WHEREAS, under the provisions of the Severance Pay Plan for
Key Employees of Cleveland-Cliffs Inc (the "Severance Plan"), effective February
1, 1992, as the same may be supplemented, amended, or restated, or any successor
thereto, certain key employees (the "Key Employees") also listed (from time to
time as provided in Section 9(c) hereof) on Exhibit A hereto, may become
entitled to compensation, pension and other benefits;
WHEREAS, under the provisions of the Cleveland-Cliffs Inc
Retention Plan for Salaried Employees (the "Retention Plan"),
<PAGE> 129
2
adopted January 14, 1992, as the same may be supplemented, amended, or restated,
or any successor thereto, certain salaried employees identified therein (the
"Covered Employees") may become entitled to compensation and other benefits;
WHEREAS, in addition to the compensation, pension and other
benefits provided by the Executive Agreements, the Severance Plan and the
Retention Plan, in order to ensure that the obligations of Cleveland-Cliffs
under the Executive Agreements, the Severance Plan and the Retention Plan can be
enforced by the Executives, the Key Employees, and the Covered Employees,
respectively, (referred to herein singularly as an "Indemnitee" and collectively
as the "Indemnitees") in the event of a "Change of Control" (as defined herein),
the Executive Agreements, the Severance Plan and the Retention Plan all provide
that Cleveland-Cliffs will establish a trust to fund reasonable attorneys' and
related fees and expenses associated with a lawsuit, action or other proceeding
brought by or on behalf of an Indemnitee to enforce provisions of an Executive
Agreement (referred to collectively herein as "Expenses");
WHEREAS, the Executive Agreements, the Severance Plan and the
Retention Plan all provide that the foregoing trust arrangement will be
considered a part of the Executive Agreements, the Severance Plan and the
Retention Plan, and will set forth the terms and conditions relating to the
payment of Expenses;
<PAGE> 130
3
WHEREAS, Cleveland-Cliffs and Ameritrust Company National
Association, a predecessor of the Trustee, entered into a trust agreement
("Trust Agreement No. 2"), dated October 28, 1987, to provide for the payment of
reasonable attorneys' and related fees and expenses incurred by certain
executives in the enforcement of their rights under agreements between such
executives and Cleveland-Cliffs in effect at that time;
WHEREAS, Trust Agreement No. 2 was amended and restated
by an Amended and Restated Trust Agreement No. 2, dated March 24,
1992; and
WHEREAS, Cleveland-Cliffs desires to amend and restate this
Trust Agreement No. 2 heretofore entered into and has transferred or will
transfer to the trust (the "Trust") established by this Trust Agreement No. 2
assets which shall be held therein until paid to Indemnitees with respect to
Expenses in such manner and at such times as specified herein.
NOW, THEREFORE, the parties amend and restate the Trust
Agreement No. 2 and agree that the Trust shall be comprised, held and disposed
of as follows:
1. TRUST FUND. (a) Cleveland-Cliffs hereby deposits
with the Trustee in trust Ten Dollars ($10.00), which shall become the principal
of this Trust, to be held, administered and disposed of by the Trustee as herein
provided.
(b) The Trust hereby established shall be revocable by
Cleveland-Cliffs at any time prior to the date on which occurs a "Change of
Control," as that term is defined in this Section
<PAGE> 131
4
1(b); on or after such date, this Trust shall be irrevocable. Cleveland-Cliffs
shall notify the Trustee promptly in the event that a Change of Control has
occurred. The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the aggregate
by the former shareholders of Cleveland-Cliffs as the same shall have
existed immediately prior to such merger or consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal
person, and immediately after such sale or transfer less than 70% of
the combined voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the former
shareholders of Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall become the beneficial owner (as defined in
Rule 13d-3 of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the outstanding
voting
<PAGE> 132
5
securities of Cleveland-Cliffs (whether directly or indirectly); or
(iv) during any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of
Directors of Cleveland-Cliffs cease, for any reason, to constitute at
least a majority thereof, unless the election, or the nomination for
election by the shareholders of Cleveland-Cliffs, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of Cleveland-Cliffs who are Directors of
Cleveland-Cliffs on the date of the beginning of any such period.
(c) The principal of the Trust and any earnings thereon shall
be held in trust separate and apart from other funds of Cleveland-Cliffs
exclusively for the uses and purposes herein set forth. No Indemnitee shall have
any preferred claim on, or any beneficial ownership interest in, any assets of
the Trust prior to the time that such assets are paid to an Indemnitee as
Expenses as provided herein.
(d) Any Company (as defined in paragraph (e) below) may at any
time or from time to time make additional deposits of cash or other property in
the Trust to augment the principal to be held, administered and disposed of by
the Trustee as herein provided, but no payments of all or any portion of the
principal of the Trust or earnings thereon shall be made to Cleveland-
<PAGE> 133
6
Cliffs or any other person or entity on behalf of Cleveland-Cliffs except as
herein expressly provided.
(e) The term "Company" as used herein shall mean
Cleveland-Cliffs, any wholly owned subsidiary or any partnership or joint
venture in which Cleveland-Cliffs and/or any wholly-owned subsidiary is a
partner or venturer and Empire Iron Mining Partnership, or any entity that is a
successor to Cleveland- Cliffs in ownership of substantially all of its assets.
(f) This Trust Agreement No. 2 shall be construed as a
part of the Executive Agreements, the Severance Plan and the
Retention Plan.
(g) This Trust is intended to be a grantor trust, within the
meaning of Section 671 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor provision thereto, and shall be construed accordingly.
The Trust is not designed to qualify under Section 401(a) of the Code or to be
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
2. PAYMENTS TO INDEMNITEES. (a) The Trustee shall promptly pay
Expenses to the Indemnitees from the assets of the Trust in accordance with
Section 13 of the Executive Agreements, Section 12 of the Severance Plan,
Article IX of the Retention Plan and this Section 2, provided that (i) this
Trust Agreement No. 2 has not been terminated pursuant to Section 12 hereof;
(ii) the Trust has become irrevocable; (iii) with respect to the first demand
for payment of Expenses hereunder received by the Trustee,
<PAGE> 134
7
the Trustee shall immediately give appropriate notice thereof to all
Indemnitees, and shall make no payment of Expenses until the 21st day after such
notice has been given; and (iv) the requirements of Section 2(c) and 2(d) hereof
have been satisfied. The Trustee shall promptly inform the Company as to amounts
paid to any Indemnitee pursuant to this Section.
(b) It is the intention of Cleveland-Cliffs that during the
21-day period prescribed by Section 2(a) (iii) hereof, the Indemnitees will make
reasonable efforts to consult with each other and to take into account the
interests of all Indemnitees in deciding on how best to proceed to enforce the
provisions of the Executive Agreements, the Severance Plan, and/or the Retention
Plan such that the assets of the Trust are utilized most effectively; provided,
however, that this Section 2(b) is to be construed as precatory in nature, and
in the absence of any other agreement or arrangement, this Trust Agreement No. 2
(without regard to this Section 2(b)) shall apply to the payment of Expenses.
(c) A demand for payment by an Indemnitee hereunder must be
made within two months of the date on which the Indemnitee receives a bill,
invoice or other statement setting forth the Expenses that have been incurred.
In order to demand payment hereunder, the Indemnitee must deliver to the Trustee
(i) a certificate signed by or on behalf of such Indemnitee, certifying to the
Trustee that the Company is in default in paying the Indemnitee a specified
amount which the Indemnitee
<PAGE> 135
8
states to be owed under an Executive Agreement, the Severance Plan or the
Retention Plan, and (ii) a notice in writing and in reasonable detail of the
Expenses that are to be paid hereunder.
(d) To the extent payments hereunder may be made only from
funds held in the form of a deposit or obligation, such payments may be
postponed until such deposit or obligation shall have matured. Payments shall be
made to the Indemnitee in the full amount noticed until the Trust is depleted;
provided that if on the date such amount is to be paid from the Trust other
amounts have been claimed but not yet paid to the same or other Indemnitees and
the aggregate amount so claimed exceeds the amount available in the Trust, the
Trustee shall only pay that portion of the amount then payable to each such
Indemnitee determined by multiplying such amount by a fraction, the numerator of
which is the amount then in the Trust and the denominator of which is the
aggregate amount noticed by the Indemnitees to be owed but not yet paid to that
date.
3. RIGHTS OF INDEMNITEES. (a) Nothing in this Trust
Agreement No. 2 shall in any way diminish any rights of any Indemnitee to pursue
his rights as a general creditor of the Company with respect to Expenses or
otherwise, and (b) the rights of the Indemnitees under the Executive Agreements,
Severance Plan or Retention Plan shall in no way be affected or diminished by
any provision of this Trust Agreement No. 2 or action taken pursuant to this
Trust Agreement No. 2, it being the intent of Cleveland-Cliffs that rights of
the Indemnitees be security for
<PAGE> 136
9
obligations of the Company under the Executive Agreements, Severance Plan or
Retention Plan, except that any payment actually received by any Indemnitee
hereunder shall reduce dollar-per-dollar amounts otherwise due to such
Indemnitee pursuant to Section 13 of the Executive Agreements, Section 12 of the
Severance Plan, or Article IX of the Retention Plan, as applicable.
4. PAYMENTS TO CLEVELAND-CLIFFS. Except to the extent
expressly contemplated by Section 1(b), Cleveland-Cliffs shall have no right or
power to direct the Trustee to return any of the Trust assets to
Cleveland-Cliffs before all payments of Expenses have been made to all
Indemnitees as herein provided.
5. INVESTMENT OF TRUST FUND. The Trustee shall invest the
principal of the Trust including any income accumulated and added to principal
in (a) interest-bearing deposit accounts or certificates of deposit (including
any such accounts or certificates issued or offered by the Trustee or any
successor or affiliated corporation but excluding obligations of the Company),
(b) direct obligations of the United States of America, or obligations the
payment of which is guaranteed, as to both principal and interest, by the
government or an agency of the government of the United States of America, or
(c) one or more mutual funds or commingled funds, whether or not maintained by
the Trustee, substantially all of the assets of which is invested in obligations
the income from which is not subject to taxation; provided, however, that no
such investment may mature more than
<PAGE> 137
10
90 days after the date of purchase. Nothing in this Trust
Agreement No. 2 shall preclude the commingling of Trust assets
for investment. The Trustee shall not be required to invest
nominal amounts.
6. INCOME OF THE TRUST. During the continuance of
this Trust all net income of the Trust shall be retained in the
Trust.
7. ACCOUNTING BY TRUSTEE. The Trustee shall keep records in
reasonable detail of all investments, receipts, disbursements and all other
transactions required to be done, including such specific records as shall be
agreed upon in writing by Cleveland-Cliffs and the Trustee. All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by Cleveland-Cliffs, by any Indemnitee or by any agent or representative of any
of the foregoing. Within 60 calendar days following the end of each calendar
year and within 60 calendar days after the removal or resignation of the
Trustee, the Trustee shall deliver to Cleveland-Cliffs and, if such year end,
removal or resignation occurs on or after the date on which a Change of Control
has occurred, to each Indemnitee a written account of its administration of the
Trust during such year or during the period from the end of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions affected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of
<PAGE> 138
11
such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities, rights and other property held in
the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. The Trustee shall furnish to Cleveland-Cliffs
on a quarterly basis (or as Cleveland-Cliffs shall direct from time to time) and
in a timely manner such information regarding the Trust as Cleveland-Cliffs
shall require for purposes of preparing its statements of financial condition.
Unless Cleveland-Cliffs or any Indemnitee shall have filed with the Trustee
written exception or objection to any such statement and account within 90 days
after receipt thereof, Cleveland-Cliffs or the Indemnitee shall be deemed to
have approved such statement and account, and in such case the Trustee shall be
forever released and discharged with respect to all matters and things reported
in such statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding to which
Cleveland-Cliffs and the Indemnitees were parties.
8. RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent corporate trustee, acting in like capacity and familiar with such
matters, would use in the conduct of an enterprise of a like character and with
like aims; provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or approval which
is contemplated by and in
<PAGE> 139
12
conformity and compliance with the terms of this Trust Agreement No. 2, the
Executive Agreements, the Severance Plan and the Retention Plan, and is given in
writing by Cleveland-Cliffs or by an Indemnitee with respect to his beneficial
interest herein; and provided, further, that the Trustee shall have no duty to
seek additional deposits of principal from Cleveland-Cliffs, and the Trustee
shall not be responsible for the adequacy of this Trust.
(b) The Trustee shall not be required to undertake or to
defend any litigation arising in connection with this Trust Agreement No. 2
unless it be first indemnified by Cleveland-Cliffs against its prospective
costs, expenses, and liabilities (including without limitation attorneys' fees
and expenses) relating thereto, and Cleveland-Cliffs hereby agrees to indemnify
the Trustee and to be primarily liable for such costs, expenses and liabilities.
(c) The Trustee may consult with legal counsel (which, after a
Change of Control, shall be independent with respect to the Company) with
respect to any of its duties or obligations hereunder, and shall be fully
protected in acting or refraining from acting in accordance with the advice of
such counsel.
(d) The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement No. 2 upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties, including, without limiting the scope of
<PAGE> 140
13
this Section 8(d), (i) the notice of a Change of Control required by Section
1(b) hereof, and (ii) the certification and notice required by Section 2(c)
hereof.
(e) The Trustee may hire agents, accountants and financial
consultants, who may be agent, accountant, or financial consultant, as the case
may be, for the Company, and shall not be answerable for the conduct of same if
appointed with due care.
(f) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law unless expressly provided otherwise
herein.
(g) The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payment of which the Trustee is
the designated beneficiary.
9. AMENDMENTS, ETC. TO EXECUTIVE AGREEMENTS, THE SEVERANCE
PLAN AND THE RETENTION PLAN; COOPERATION OF CLEVELAND- CLIFFS. (a)
Cleveland-Cliffs has previously furnished the Trustee a complete and correct
copy of each Executive Agreement, the Severance Plan and the Retention Plan. Any
Indemnitee may, and Cleveland-Cliffs shall, provide the Trustee with true and
correct copies of any amendment, restatement or successor to any Executive
Agreement, the Severance Plan and the Retention Plan, whereupon such amendment,
restatement or successor shall be incorporated herein by reference, provided
that such amendment, restatement or successor shall not affect the Trustee's
duties and responsibilities hereunder without the consent of the Trustee.
<PAGE> 141
14
(b) Cleveland-Cliffs shall provide the Trustee with all
information requested by the Trustee for purposes of determining payments to the
Indemnitees as provided in Section 2. Upon the failure of Cleveland-Cliffs or
any Indemnitee to provide any such information requested by the Trustee for
purposes of determining payments to the Indemnitees as provided in Section 2,
the Trustee shall, to the extent necessary in the sole judgment of the Trustee,
(i) compute the amount payable hereunder to any Indemnitee; and (ii) notify
Cleveland-Cliffs and the Indemnitee in writing of its computations. Thereafter
this Trust Agreement No. 2 shall be construed as to the Trustee's duties and
obligation hereunder in accordance with such Trustee determinations without
further action; provided, however, that no such determinations shall in any way
diminish the rights of the Indemnitees hereunder or under the Executive
Agreements, Severance Plan or Retention Plan, and provided, further, that no
such determination shall be deemed to modify this Trust Agreement No. 2 or any
Executive Agreement, the Severance Plan, or the Retention Plan.
(c) At such times as may in the judgment of Cleveland-Cliffs
be appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of Indemnitees to Exhibit A (or the
deletion of Indemnitees from Exhibit A who are not currently and shall not in
the future be entitled to Expenses); provided, however, that no such amendment
shall be made after the date of a Change of
<PAGE> 142
15
Control, other than to designate a different address pursuant to Section 14
hereof.
10. COMPENSATION AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by Cleveland-Cliffs and the Trustee. The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant to
Sections 8(c) and 8(e) hereof. Such compensation and expenses shall in all
events be payable either directly by Cleveland-Cliffs or, in the event that
Cleveland-Cliffs shall refuse, from the assets of the Trust. The Trust shall
have a claim against Cleveland-Cliffs for any such compensation or expenses so
paid.
11. REPLACEMENT OF THE TRUSTEE. (a) The Trustee may resign
after providing not less than 90 days' notice to Cleveland-Cliffs and, on or
after the date on which a Change of Control has occurred, to the Indemnitees.
Prior to the date on which a Change of Control has occurred, the Trustee may be
removed at any time by Cleveland-Cliffs. On or after such date, such removal
shall also require the agreement of a majority of the Indemnitees. Prior to the
date on which a Change of Control has occurred, a replacement or successor
trustee shall be appointed by Cleveland-Cliffs. On or after such date, such
appointment shall also require the agreement of a majority of the Indemnitees.
No such removal or resignation shall become
<PAGE> 143
16
effective until the acceptance of the trust by a successor trustee designated in
accordance with this Section 11. If the Trustee should resign, and within 45
days of the notice of such resignation Cleveland-Cliffs and a majority of the
Indemnitees (if required) shall not have notified the Trustee of an agreement as
to a replacement trustee, the Trustee shall appoint a successor trustee, which
shall be a bank or trust company, wherever located, having a capital and surplus
of at least $500,000,000 in the aggregate. Notwithstanding the foregoing, a new
trustee shall be independent and not subject to control of either
Cleveland-Cliffs or the Indemnitees. Upon the acceptance of the trust by a
successor trustee, the Trustee shall release all of the monies and other
property in the Trust to its successor, who shall thereafter for all purposes of
this Trust Agreement No. 2 be considered to be the "Trustee."
(b) For purposes of the removal or appointment of a trustee
under this Section 11, if any Indemnitee shall be deceased or adjudged
incompetent, such Indemnitee's personal representative (including his or her
guardian, executor or administrator) shall participate in such Indemnitee's
stead.
12. AMENDMENT OR TERMINATION. (a) This Trust Agreement
No. 2 may be amended at any time and to any extent by a written instrument
executed by the Trustee, Cleveland-Cliffs and, on or after the date on which a
Change of Control has occurred, a majority of the Indemnitees, except to make
the Trust revocable after it has become irrevocable in accordance with Section
1(b)
<PAGE> 144
17
hereof, or to alter Section 12(b) hereof, except that amendments contemplated by
Section 9 hereof shall be made as therein provided.
(b) The Trust shall terminate upon the earliest of (i) the
tenth anniversary of the date on which a Change of Control has occurred; (ii)
the third anniversary of the date on which a Change of Control has occurred,
provided that the Trustee has received no demand for payment of Expenses prior
to such anniversary; (iii) such time as the Trust no longer contains any assets;
(iv) such time as the Trustee shall have received consents from all Indemnitees
to the termination of this Trust Agreement No. 2; or (v) there is no longer any
living Indemnitee under this Trust Agreement No. 2 and there is no pending
demand by the estate of any Indemnitee against the Trust.
(c) Upon termination of the Trust as provided in Section 12(b)
hereof, any assets remaining in the Trust shall be returned to Cleveland-Cliffs
unless a determination is made by legal counsel experienced in such matters that
the assets of the Trust may not be returned to Cleveland-Cliffs without
violating Section 403(d) (2) of ERISA, or any successor provision thereto. If
such a determination is made, any assets remaining in the Trust, after
satisfaction of liabilities hereunder, pursuant to the written direction of
Cleveland-Cliffs, shall be (i) distributed to any welfare benefit plan (within
the meaning of ERISA) maintained by Cleveland-Cliffs at the time of distribution
so established at such time in order to receive such assets from
<PAGE> 145
18
this Trust, or (ii) otherwise applied to provide benefits which may be provided
by a welfare benefit plan (within the meaning of ERISA), directly or through the
purchase of insurance.
13. SEVERABILITY, ALIENATION, ETC. (a) Any provision
of this Trust Agreement No. 2 prohibited by law shall be ineffective to the
extent of any such prohibition without invalidating the remaining provisions
hereof.
(b) To the extent permitted by law, benefits to Indemnitees
under this Trust Agreement No. 2 may not be anticipated (except as herein
expressly provided), assigned (either at law or in equity), alienated or subject
to attachment, garnishment, levy, execution or other legal or equitable process.
No benefit actually paid to any Indemnitee by the Trustee shall be subject to
any claim for repayment by the Company or Trustee, except in the event of (i) a
false claim, or (ii) a payment is made to an incorrect Indemnitee.
(c) This Trust Agreement No. 2 shall be governed by
and construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
(d) This Trust Agreement No. 2 may be executed in two
or more counterparts, each of which shall be considered an original agreement.
This Trust Agreement No. 2 shall become effective immediately upon the execution
by Cleveland-Cliffs of at least one counterpart, it being understood that all
parties
<PAGE> 146
19
need not sign the same counterpart, but shall not bind any Trustee until such
Trustee has executed at least one counterpart.
14. NOTICES. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
deemed to have been duly given when received:
If to the Trustee, to:
----------------------
KeyTrust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Trust Counsel
If to Cleveland-Cliffs, to:
---------------------------
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Secretary
If to an Indemnitee, to:
------------------------
His or her last address shown on
the records of the Company
provided, however, that if any party or his or its successors shall have
designated a different address by notice to the other parties, then to the last
address so designated.
<PAGE> 147
20
IN WITNESS WHEREOF, each of Cleveland-Cliffs and the Trustee
have caused counterparts of this Trust Agreement No. 2 (Amended and Restated
effective June 1, 1997) to be executed on their behalf on June 12, 1997, each of
which shall be an original agreement.
CLEVELAND-CLIFFS INC
By: /s/ R. F. Novak
------------------------------
Its: V.P. - H.R.
--------------------------
KEYTRUST COMPANY OF OHIO, N.A.,
as Trustee
By: Kelley Clark
------------------------------
Its: Vice President
--------------------------
and
By: J.A. Radazzo
------------------------------
Its: VP
--------------------------
<PAGE> 148
Exhibit A
---------
Executives
- ----------
Name Title
- ----------------------- ------------------------------------------
M. T. Moore Chairman and Chief Executive Officer
J. S. Brinzo Executive Vice President-Finance and Planning
W. R. Calfee Executive Vice President-Commercial
T. J. O'Neil Executive Vice President-Operations
Key Employees
- -------------
Name Title
- ------------------------ ------------------------------------------
J. W. Sanders Senior Vice President-International Development
A. S. West Senior Vice President-Sales
C. B. Bezik Vice President and Treasurer
G. N. Chandler Vice President-Reduced Iron
R. Emmet Vice President and Controller
F. L. Hartman Vice President and General Counsel
R. F. Novak Vice President-Human Resources
J. A. Trethewey Vice President-Operations Services
J. E. Lenhard Secretary and Assistant General Counsel
R. C. Berglund General Manager-Northshore Mine
L. G. Dykers General Manager-Hibbing Taconite
D. Lebel General Manager-Wabush Mines
M. P. Mlinar General Manager-Tilden Mine
T. S. Petersen General Manager-Empire Mine
J. N. Tuomi General Manager-LTV Steel Mining Company
R. W. von Bitter General Manager-Cliffs Reduced Iron Corp.
<PAGE> 149
Exhibit D
TRUST AGREEMENT NO. 7
---------------------
This Trust Agreement ("Trust Agreement No. 7") made this 9th day of
April, 1991 by and between Cleveland-Cliffs Inc, an Ohio corporation
("Cleveland-Cliffs"), and Ameritrust Company National Association, a national
banking association (the "Trustee");
WITNESSETH:
-----------
WHEREAS, certain benefits are or may become payable under the
provisions of the Cleveland-Cliffs Inc Supplemental Retirement Benefit Plan, as
Amended and Restated Effective January 1, 1991 as the same may hereafter be
supplemented, amended or restated, or any successor thereto (the "Plan"), a
current copy of which is attached hereto as Exhibit B and incorporated herein by
reference, to the participants in the Plan (the "Participants") listed (from
time to time as provided in Section 9(b) hereof) on Exhibit A hereto or to the
beneficiaries of such Participants (the "Beneficiaries") as the case may be;
WHEREAS, the Plan provides for the payment of benefits resulting
from contributions made to the Plan which would have been made for the
Participants to the qualified retirement plans established by Cleveland-Cliffs
and its subsidiary corporations and affiliates were it not for certain
limitations imposed by the Internal Revenue Code of 1986, as amended
(the"Code"), and the Plan also provides for the payment of benefits due under
agreements entered into by Cleveland-Cliffs (and which may be entered into in
the future by Cleveland-Cliffs and its subsidiary corporations and affiliates)
with certain executives providing for
<PAGE> 150
additional service credit and/or other features for purposes of computing
retirement benefits;
WHEREAS, Cleveland-Cliffs wishes specifically to assure the
payment to the Participants and Beneficiaries of amounts due under the Plan (the
amounts so payable being collectively referred to herein as the "Benefits");
WHEREAS, subject to Section 9 hereof, the amounts and timing of
Benefits to which each Participant or Beneficiary is presently or may become
entitled are as provided in the Plan;
WHEREAS, Cleveland-Cliffs wishes to establish a trust (the
"Trust") under which Cleveland-Cliffs and each of its subsidiaries or affiliates
that executes a Participating Subsidiary Deposit Agreement ("Deposit Agreement")
as provided in Section 14 hereof (a "Participating Subsidiary"; and
"Participating Employer" shall mean Cleveland-Cliffs or any Participating
Subsidiary) may transfer to the Trust assets which shall be held therein subject
to the claims of the creditors of each Participating Employer to the extent set
forth in Section 3 hereof until paid in full to all Participants and
Beneficiaries as Benefits in such manner and at such times as specified herein
unless the Participating Employer with respect to the Participant or Beneficiary
is Insolvent (as defined herein) at the time that such Benefits become payable;
<PAGE> 151
WHEREAS, each Participating Subsidiary that executes a Deposit
Agreement has irrevocably appointed Cleveland-Cliffs its agent and attorney for
purposes of acting on its behalf with respect to this Trust; and
WHEREAS, a Participating Employer shall be considered "Insolvent"
for purposes of this Trust Agreement at such time as such Participating Employer
(i) is subject to a pending voluntary or involuntary proceeding as a debtor
under the United States Bankruptcy Code, as heretofore or hereafter amended, or
(ii) is unable to pay its debts as they mature.
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
1. TRUST FUND: (a) Subject to the claims of creditors of
Participating Employers to the extent set forth in Section 3 hereof,
Cleveland-Cliffs hereby deposits with the Trustee in trust Ten Dollars ($10.00)
which shall become the principal of this Trust, to be held, administered and
disposed of by the Trustee as herein provided, but no payments of all or any
portion of the principal of the Trust or earnings thereon shall be made to
Cleveland-Cliffs or any other person or entity on behalf of Cleveland-Cliffs
except as herein expressly provided. The Trust hereby established shall be
irrevocable.
(b) Cleveland-Cliffs shall notify the Trustee promptly in the
event that a "Change of Control", (as defined herein) has occurred. The term
"Change of Control" shall mean the occurrence of any of the following events:
<PAGE> 152
(i) a tender offer shall be made and consummated for
the ownership of 30% or more of the outstanding voting securities of
Cleveland-Cliffs;
(ii) Cleveland-Cliffs shall be merged or consolidated with
another corporation and as a result of such merger or consolidation less
than 70% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of Cleveland-Cliffs, other than affiliates (within the
meaning of the Securities Exchange Act of 1934) of any party to such
merger or consolidation, as the same shall have existed immediately
prior to such merger or consolidation;
(iii) Cleveland-Cliffs shall sell substantially all of
its assets to another corporation which is not a wholly owned
subsidiary;
(iv) a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall acquire 30% or more of the outstanding
voting securities of Cleveland-Cliffs (whether directly, indirectly,
beneficially or of record), or
(v) during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Board
of Directors of Cleveland-Cliffs cease for any reason to constitute at
least a majority thereof,
<PAGE> 153
unless the election, or the nomination for election by the shareholders
of Cleveland-Cliffs, of each Director first elected during any such
period was approved by a vote of at least two-thirds of the Directors of
Cleveland-Cliffs then still in office who are Directors of
Cleveland-Cliffs on the date at the beginning of any such period.
For purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Securities
Exchange Act of 1934.
(c) Any payments by the Trustee pursuant to this Agreement shall,
to the extent thereof, discharge the obligation of the Participating Employers
to pay benefits under the Plan, it being the intent of the Participating
Employers that assets in the Trust established hereby be held as security for
the obligation of the Participating Employers to pay benefits under the Plan.
(d) The principal of the Trust and any earnings thereon shall be
held in trust separate and apart from other funds of each Participating Employer
exclusively for the uses and purposes herein set forth. No Participant or
Beneficiary shall have any preferred claim on, or any beneficial ownership
interest in, any assets of the Trust prior to the time that such assets are paid
to a Participant or Beneficiary as Benefits as provided herein.
(e) A Participating Employer may at any time or from time to
time
<PAGE> 154
make additional deposits of cash or other property in the Trust to augment the
principal to be held, administered and disposed of by the Trustee as herein
provided, but no payments of all or any portion of the principal of the Trust or
earnings thereon shall be made to a Participating Employer or any other person
or entity on behalf of a Participating Employer except as herein expressly
provided.
(f) The Trust is intended with respect to each Participating
Employer, to be a grantor trust, within the meaning of Section 671 of the Code,
or any successor provision thereto, and shall be construed accordingly. The
Trust is not designed to qualify under Section 401(a) of the Code or to be
subject to the provisions of the Employee Retirement Income Security Act Or
1974, as amended ("ERISA"). The Trust established under this Trust Agreement No.
7 does not fund and is not intended to fund the Plan or any other employee
benefit plan or program of a Participating Employer. Such Trust is and is
intended to be a depository arrangement with the Trustee for the setting aside
of cash and other assets of the Participating Employers as and when each of the
so determines in its sole discretion for the meeting of part or all of its
future obligations with respect to Benefits to some or all of the Participants
under the Plan.
2. PAYMENTS TO PARTICIPANTS OR BENEFICIARIES. (a)Provided
that the Trustee has not actually received notice as provided in Section 3
hereof that a Participant's or
<PAGE> 155
Beneficiary's Participating Employer is Insolvent, the Trustee shall make
payments of Benefits to each Participant or Beneficiary from the assets of the
Trust in accordance with the term of the Plan and subject to Section 9 hereof.
The Trustee shall make provision for withholding of any federal, state, or local
taxes that may be required to be withheld by the Trustee in connection with the
payment of any Benefits hereunder.
(b) If the balance of a Participant's separate account maintained
pursuant to Section 7(b) hereof is not sufficient to provide for full payment of
Benefits to which a Participant or Beneficiary is entitled as provided herein,
the respective Participating Employer shall make the balance of each such
payment as provided in the Plan. No payment from the Trust assets to a
Participant or Beneficiary shall exceed the balance of such separate account.
3. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO A
PARTICIPANT OR BENEFICIARY WHEN A PARTICIPATING EMPLOYER IS INSOLVENT:
(a) At all times during the continuance of this Trust, the
principal and income of the Trust with respect to accounts maintained hereunder
on behalf of a Participating Employer shall be subject to claims of creditors of
such Participating Employer as set forth in this Section 3(a). The Board of
Directors ("Board") of Cleveland-Cliffs and of each Participating Subsidiary and
the Chief Executive Officer ("CEO") of Cleveland-Cliffs and of each
Participating Subsidiary shall have the duty to inform the Trustee if either
<PAGE> 156
the Board or the CEO believes that his or their respective Participating
Employer is Insolvent. If the Trustee receives a notice from the Board, the CEO,
or a creditor of a Participating Employer alleging that such Participating
Employer is insolvent, then unless the Trustee independently determines that
such Participating Employer is not Insolvent, the Trustee shall (i) discontinue
payments to any Participant or his Beneficiary from accounts maintained
hereunder on behalf of such Participating Employer (the "Identified
Participating Employer"), (ii) determine and allocate all Account Excesses in
accordance with Sections 4 and 7(b) hereof for the accounts of the Participants
then employed by the Identified Participating Employer, or for whom such
Identified Participating Employer has obligations and liabilities pursuant to a
Deposit Agreement, treating such accounts solely for this purpose as if they
comprised all of the accounts of the Trust, and provided that for this purpose
the Threshold Percentage shall be equal to 100%, (iii) hold the Trust assets
attributable to accounts maintained hereunder on behalf of Participants then
employed by the Identified Participating Employer, or for whom such Identified
Participating Employer has obligations and liabilities or has assumed
obligations and liabilities pursuant to a Deposit Agreement, for the benefit of
the general creditors of such Identified Participating Employer, and (iv)
promptly seek the determination of a court of competent jurisdiction regarding
the Insolvency of the Identified Participating Employer. The Trustee shall
deliver any
<PAGE> 157
undistributed principal and income in the Trust to the extent of the balances of
the accounts maintained hereunder on behalf of the Identified Participating
Employer to the extent necessary to satisfy the claims of the creditors of such
Identified Participating Employer as a court of competent jurisdiction may
direct. Such payments of principal and income shall be borne by the separate
accounts of the Participants in proportion to the balances on the date of such
court order of their respective accounts maintained pursuant to Section 7(b)
hereof. If payments to any Participant or Beneficiary have discontinued pursuant
to this Section 3(a), the Trustee shall resume payments to such Participant or
Beneficiary only after receipt of an order of a court of competent jurisdiction.
The Trustee shall have no duty to inquire as to whether a Participating Employer
is Insolvent and may rely on information concerning the Insolvency of a
Participating Employer which has been furnished to the Trustee by any creditor
of a Participating Employer or by any person. Nothing in this Trust Agreement
shall in any way diminish any rights of any Participant or Beneficiary to pursue
his rights as a general creditor of the Participant's or Beneficiary's
Participating Employer with respect to Benefits or otherwise, and the rights of
each Participant or Beneficiary under the Plan shall in no way be affected or
diminished by any provision of this Trust Agreement No. 7 or action taken
pursuant to this Trust Agreement No. 7 except that any payment actually received
by any Participant or Beneficiary hereunder shall reduce
<PAGE> 158
dollar-per-dollar amounts otherwise due to such Participant or Beneficiary
pursuant to the Plan.
(b) If the Trustee discontinues payment of Benefits from the
Trust pursuant to Section 3(a) hereof, the Trustee shall, to the extent it has
liquid assets, place cash equal to the discontinued payments (to the extent not
paid to creditors pursuant to Section 3(a) and not paid to the Trustee pursuant
to Section 10 hereof) in such interest-bearing deposit accounts or certificates
of deposit (including any such accounts or certificates issued or offered by the
Trustee or any successor corporation but excluding obligations of any
Participating Employer) as determined by the Trustee in its sole discretion. If
the Trustee subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments which would
have been made to the Participants and Beneficiaries in accordance with this
Trust Agreement No. 7 during the period of such discontinuance, less the
aggregate amount of payments made to any Participant or Beneficiary by the
Participating Employer pursuant to the Plan during any such period of
discontinuance, together with interest on the net amount delayed determined at a
rate equal to the rate paid on the accounts or deposits selected by the Trustee;
provided, however, that no such payment shall exceed the balance of the
respective Participant's or Beneficiary's account as provided in Section 7(b)
hereof.
<PAGE> 159
4. PAYMENTS TO PARTICIPATING EMPLOYERS: Except to the extent
expressly contemplated by this Section 4, no Participating Employer shall have
any right or power to direct the Trustee to return any of the Trust assets to
such Participating Employer before all payments of Benefits have been made to
all Participants or Beneficiaries of such Participating Employer as herein
provided. From time to time, if and when requested by Cleveland-Cliffs to do so
and/or in order to comply with Section 7(b) hereof, the Trustee shall engage the
services of Hewitt Associates or such other independent actuary as may be
mutually satisfactory to Cleveland-Cliffs and to the Trustee to determine the
maximum actuarial present values of the future Benefits that could become
payable by each Participating Employer under the Plan with respect to the
Participants and Beneficiaries. The Trustee shall determine the fair market
values of the Trust assets allocated to the account of each Participant pursuant
to Section 7(b) hereof Cleveland-Cliffs shall pay the fees of such independent
actuary and of any appraiser engaged by the Trustee to value any property held
in the Trust. The independent actuary shall make its calculations using the 1983
Group Annuity Mortality Table, an interest rate of 8%, Gross National Product
Price Deflator increases of 4%, or such other assumptions as are recommended by
such actuary and approved by Cleveland-Cliffs and, after the date of a Change of
Control, a majority of the Participants (subject to the provisions of Sections
11(b)(i) and (b)(ii) hereof). For purposes or this Trust Agreement, (A) the
"Fully Funded"
<PAGE> 160
amount with respect to the account of a Participant or Beneficiary maintained
pursuant to Section 7(b) hereof shall be equal to the "Threshold Percentage," as
defined below, multiplied by the maximum actuarial present value of the future
Benefits that could become payable under the Plan with respect to the
Participants and Beneficiaries, (B) the "Account Excess" with respect to such
account shall be equal to the excess, if any, of the fair market value of the
assets held in the Trust allocated to a Participant's account over the
respective Fully Funded amount, and (C) the "Aggregate Account Excess" with
respect to a Participating Employer shall be equal to the excess, if any, of the
aggregate account balances of Participants then employed by the Participating
Employer, or for whom such Participating Employer has obligations and
liabilities or has assumed obligations and liabilities or has assumed
obligations and liabilities pursuant to a Deposit Agreement, over their
aggregate Fully Funded amounts. Unless otherwise provided, prior to a Change of
Control the Threshold Percentage shall be equal to 110%, and following a Change
of Control the Threshold Percentage shall be equal to 140%. The Trustee shall
allocate any Account Excess in accordance with Section 7(b) hereof. Thereafter,
upon the request of Cleveland-Cliffs, the Trustee shall pay to the Participating
Employer its Aggregate Account Excess computed upon the basis of a Threshold
Percentage equal to 140%.
5. INVESTMENT OF PRINCIPAL: (a) The Trustee shall invest and
<PAGE> 161
reinvest the principal of the Trust including any income accumulated and added
to principal, as directed by the Compensation Committee of the Board of
Directors of Cleveland Cliffs (which direction may include investment in Common
Shares of Cleveland-Cliffs). In the absence of any such direction, the Trustee
shall have sole power to invest the assets of the Trust (including investment in
common shares of Cleveland-Cliffs). The Trustee shall act at all times however,
with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent corporate trustee, acting in a like capacity and
familiar with such matters, would use in the conduct of an enterprise of a like
character and with like aims. The investment objective of the Trustee shall be
to preserve the principal of the Trust while obtaining a reasonable total rate
of return, measurement of which shall include market appreciation or
depreciation plus receipt of interest and dividends. The Trustee shall not be
required to invest nominal amounts. The Trustee shall be mindful, in the course
of its management of the Trust, of the liquidity demands on the Trust and any
actuarial assumptions that may be communicated to it from time to time in
accordance with the provisions of this Trust Agreement No. 7.
(b) In addition to authority given to the Trustee under Section 8
hereof, the Trustee is empowered with respect to the assets of the Trust:
(i) To invest and reinvest all or any part of the Trust
assets, in each and every kind of property, whether real, personal or
mixed, tangible or
<PAGE> 162
intangible, whether income or non-income producing, whether secured or
unsecured, and wherever situated, including, but not limited to, real
estate, shares of common and preferred stock, mortgages and bonds,
leases (with or without option to purchase), notes, debentures,
equipment or collateral trust certificates, and other corporate,
individual or government securities or obligations, time deposits
(including savings deposit and certificates of deposit in the Trustee or
its affiliates if such deposits bear a reasonable rate of interest),
common or collective funds or trusts, and mutual funds or investment
companies, including affiliated investment companies and 12 B-l funds.
Cleveland-Cliffs acknowledges and agrees that the Trustee may receive
fees as a participating depository institution for service relating to
the investment of funds in an eligible mutual fund.
(ii) At such time or times, and upon such terms and
conditions as the Trustee shall deem advisable, to sell, convert,
redeem, exchange, grant options for the purchase or exchange of, or
otherwise dispose of, any property held hereunder, at public or private
sale, for cash or upon credit, with or without security, without
obligation on the part of any person dealing with the Trustee to see to
the application of the proceeds of or to inquire into the validity,
expediency, or propriety of any such disposal;
(iii) To manage, operate, repair, partition, and improve
and mortgage or lease (with or without an option to
<PAGE> 163
purchase) for any length of time any property held in the Trust; to
renew or extend any mortgage or lease, upon such terms as the Trustee
may deem expedient; to agree to reduction of the rate of interest on any
mortgage; to any modification in the terms of any lease or mortgage or
of any guarantee pertaining to either of them; to exercise and enforce
any right of foreclosure; to bid on property in foreclosure; to take a
deed in lieu of foreclosure with or without paying consideration
therefor and in connection therewith to release the obligation on the
bond secured by the mortgage; and to exercise and enforce in any action,
suit, or proceeding at law or in equity any rights, covenants,
conditions or remedies with respect to any lease or mortgage or to any
guarantee pertaining to either of them or to waive any default in the
performance thereof;
(iv) To join in or oppose any reorganization,
recapitalization, consolidation, merger or liquidation, or any plan
therefor, or any lease (with or without an option to purchase), mortgage
or sale of the property of any organization the securities of which are
held in the Trust; to pay from the Trust any assessments, charges or
compensation specified in any plan of reorganization, recapitalization,
consolidation, merger or liquidation; to deposit any property allotted
to the Trust in any reorganization, recapitalization, consolidation,
merger or liquidation; to deposit any property with any committee or
<PAGE> 164
depository; and to retain any property allotted to the Trust in any
reorganization, recapitalization, consolidation, merger or liquidation;
(v) To compromise settle, or arbitrate any claim, debt or
obligation of or against the Trust; to enforce or abstain from enforcing
any right, claim, debt, or obligation; and to abandon any property
determined by it to be worthless;
(vi) To make, execute and deliver, as Trustee, any deeds,
conveyances, leases (with or without option to purchase), mortgages,
options, contracts, waivers or other instruments that the Trustee shall
deem desirable in the exercise of its powers under this Agreement; and
(vii) To pay out of the assets of the Trust all taxes
imposed or levied with respect to the Trust and in its discretion may
contest the validity or amount of any tax, assessment, penalty, claim,
or demand respecting the Trust and may institute, maintain, or defend
against any related action or proceeding either at law or in equity (and
in such regard, the Trustee shall be indemnified in accordance with
Section 8(d) hereof).
6. INCOME OF THE TRUST: Except as provided in Section 3
hereof, during the continuance of this Trust all net income of the Trust shall
be allocated not less frequently than monthly among the Participants' separate
accounts in accordance with Section 7(b) hereof.
<PAGE> 165
7. ACCOUNTING BY TRUSTEE: (a) The Trustee shall maintain
books, records and accounts as may be necessary for the proper administration of
Trust assets, including such specific records as shall be agreed upon in writing
by Cleveland-Cliffs and the Trustee, and shall render to Cleveland-Cliffs within
60 days following the close of each calendar year following the date of this
Trust until the termination of this Trust or the removal or resignation of the
Trustee (and within 60 days after the date of such termination, removal or
resignation), an accounting with respect to the Trust assets as of the end of
the then most recent calendar year (and as of the date of such termination,
removal or resignation, as the case may be). The Trustee shall furnish to each
Participating Employer on a quarterly basis (or as Cleveland-Cliffs shall direct
from time to time) and in a timely manner such information regarding the Trust
as each Participating Employer shall require for purposes of preparing its
statements of financial condition. The Trustee shall at all times maintain
separate bookkeeping accounts for each Participating Employer and for each
Participant as prescribed by Section 7(b) hereof, and, upon the written request
of a Participant, shall provide to him an annual statement of his account. Upon
the written request of Cleveland-Cliffs or, on or after the date of a Change of
Control, a Participant, the Trustee shall deliver to such Participant or
Cleveland-Cliffs, as the case may be, a written report setting forth the amount
held in the Trust and a record of the deposits made with respect thereto by each
Participating
<PAGE> 166
Employer. Unless Cleveland-Cliffs or any Participant shall have filed with the
Trustee written exception or objection to any such statement and account within
90 days after receipt thereof, Cleveland-Cliffs and the Participants shall be
deemed to have approved such statement and account, and in such case the Trustee
shall be forever released and discharged with respect to all matters and things
reported in such statement and account as though it had been settled by a
decreee of acourt of competent jurisdiction in an action or proceeding to which
Cleveland-Cliffs, the Participating Employers and the Participants were parties.
(b) The Trustee shall maintain a separate account for each
Participating Employer (a "Participating Employer Account") and within such
Participating Employer Account, a separate account for each Participant who
performs services for such Participating Employer and from whom such Participant
is entitled to Benefits (a "Participant account"). Each asset of the Trust shall
be allocated to the account of a Participating Employer. Participant accounts
within a Participating Employer Account shall reflect undivided portions of each
asset in such Account. The Trustee shall credit or debit each Participant
account as appropriate to reflect such Participant's allocable portion of the
Trust assets allocated to each Participating Employer Account, as such Trust
assets may be adjusted from time to time pursuant to the terms of this Trust
Agreement No. 7. Except as otherwise provided in this Section 7(b), the Trustee
shall allocate the income (or loss) of the Trust with
<PAGE> 167
respect to each Participating Employer Account, and within such Account, to the
separate Participant accounts maintained thereunder in proportion to the
balances of the separate accounts of the Participants. Prior to the date of a
Change of Control, all deposits of principal pursuant to Section 1(a) and 1(e)
shall be allocated and reallocated as directed by the Participating Employer
making such deposit. On or after such date of a Change of Control deposits of
principal shall be allocated as Account Excess in accordance with this Section
7(b). Prior to the date of a Change of Control, at the request of
Cleveland-Cliffs the Trustee shall determine the amount of all Account Excesses.
On or after the date of a Change of Control, the Trustee shall determine
annually the amount of all Account Excesses. The Trustee shall allocate the
aggregate amount of the Account Excess of a Participating Employer to any
accounts of Participants then employed by such Participating Employer that are
not Fully Funded, as defined in Section 4 hereof, in proportion to the
differences between the respective Fully Funded amount and account balance,
insofar as possible until all accounts of Participants then employed by such
Participating Employer are Fully Funded. Any then remaining aggregate Account
Excess of a Participating Employer shall be allocated to all the accounts of
Participants then employed by such Participating Employer, in proportion to the
respective Fully Funded amounts.
(c) Nothing in this Section 7 shall preclude the commingling of
Trust assets for investment.
<PAGE> 168
8. RESPONSIBILITY OF TRUSTEE: (a) The Trustee shall act with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent corporate trustee, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like character and
with like aims; provided, however, that the Trustee shall incur no liability to
any person for any action taken pursuant to a direction, request or approval,
contemplated by and complying with the terms of this Trust Agreement No. 7,
given in writing by any Participating Employer, by the Compensation Committee or
by a Participant or Beneficiary applicable to his or her beneficial interest
herein; and provided, further, that the Trustee shall have no duty to seek
additional deposits of principal from any Participating Employer for additional
amounts accrued under the Plan, and the Trustee shall not be responsible for the
adequacy of this Trust.
(b) The Trustee may vote any stock or other securities and
exercise any right appurtenant to any stock, other securities or other property
held hereunder, either in person or by general or limited proxy, power of
attorney or other instrument.
(c) The Trustee may hold securities in bearer form and may
register securities and other property held in the trust fund in its own name or
in the name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, and deposit, or arrange for deposit of property with any
<PAGE> 169
depository; provided that the books and records of the Trustee shall at all
times show that all such securities are part of the trust fund.
(d) If the Trustee shall undertake or defend any litigation
arising in connection with this Trust Agreement No. 7, it shall be indemnified
jointly and severally by Cleveland-Cliffs and each Participating Subsidiary
against its costs, expenses and liabilities (including without limitation
attorneys' fees and expenses) related thereto.
(e) The Trustee may consult with legal counsel, independent
accountants and actuaries (who may be counsel, independent accountants or
actuaries for any Participating Employer) with respect to any of its duties or
obligations hereunder, and shall be fully protected in acting or refraining from
acting in accordance with the advice of such counsel, independent accountants
and actuaries.
(f) The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement No. 7 upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties.
(g) The Trustee may hire agents, accountants, actuaries, and
financial consultants, who may be agents, accountants, actuaries, or financial
consultants, as the case may be, for any Participating Employer, and shall not
be
<PAGE> 170
answerable for the conduct of same if appointed with due care.
(h) The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payments of which the Trustee is
the designated beneficiary.
(i) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law unless expressly provided otherwise
herein.
9. AMENDMENTS, ETC. TO PLAN; COOPERATION OF PARTICIPATING
EMPLOYERS:
(a) Cleveland-Cliffs has previously furnished the Trustee a
complete and correct copy of the Plan, and Cleveland-Cliffs shall, and any
Participating Subsidiary, Participant, or Beneficiary may, promptly furnish the
Trustee true and correct copies of any amendment, restatement or successor
thereto, whereupon such amendment, restatement or successor shall be
incorporated herein by reference, provided that such amendment, restatement or
successor shall not affect the Trustee's duties and responsibilities hereunder
without the consent of the Trustee.
(b) Cleveland-Cliffs shall provide the Trustee with all
information requested by the Trustee for purposes of determining payments to the
Participants and Beneficiaries or withholding of taxes as provided in Section 2.
Upon the failure of Cleveland-Cliffs or any Participant or Beneficiary to
provide any such information, the Trustee shall, to the extent necessary in the
sole
<PAGE> 171
judgment of the Trustee, (i) compute the amount payable hereunder to any
Participant or Beneficiary; and (ii) notify Cleveland-Cliffs and the Participant
or Beneficiary in writing of its computations. Thereafter this Trust Agreement
No. 7 shall be construed as to the Trustee's duties and obligations hereunder in
accordance with such Trustee determinations without further action; provided,
however, that no such determinations shall in any way diminish the rights of any
Participant or Beneficiary hereunder or under the Plan; and provided, further,
that no such determinations shall be deemed to modify this Trust Agreement No. 7
or the Plan. Nothing in this Trust Agreement No. 7 shall restrict
Cleveland-Cliffs' right to amend, modify or terminate the Plan.
(c) At such times as may in the judgment of Cleveland-Cliffs be
appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of Participants (or the deletion of
Participants who (together with their Beneficiaries) have no Benefits currently
due or payable in the future)) to Exhibit A; provided, however, that no such
amendment shall be made after the date of a Change of Control.
10. COMPENSATION AND EXPENSES OF TRUSTEE: The Trustee shall
be entitled to receive such reasonable compensation for its services as shall be
agreed to upon by Cleveland-Cliffs and the Trustee. The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant to
<PAGE> 172
Sections 8(d), 8(e) and 8(g) and liabilities to creditors pursuant to court
direction as provided in Section 3(a) hereof. Such compensation and expenses
shall in all events be payable either directly by Cleveland-Cliffs or, in the
event that Cleveland-Cliffs shall refuse, from the assets of the Trust and
charged pro rata in proportion to each separate account balance. The Trust shall
have a claim against Cleveland-Cliffs for any such compensation or expenses so
paid.
11. REPLACEMENT OF THE TRUSTEE: (a) Prior to the date of a Change
of Control, the Trustee may be removed by Cleveland-Cliffs. On or after the date
of a Change of Control, the Trustee may be removed at any time by agreement of
Cleveland-Cliffs and a majority of the Participants. The Trustee may resign
after providing not less than 90 days' notice to Cleveland-Cliffs and to the
Participants. In case of removal or resignation, a new trustee, which shall be
independent and not subject to control of either Cleveland Cliffs or the
Participants and Beneficiaries, shall be appointed as shall be agreed by
Cleveland-Cliffs and a majority of the Participants. No such removal or
resignation shall become effective until the acceptance of the trust by a
successor trustee designated in accordance with this Section 11. If the Trustee
should resign, and within 45 days of the notice of such resignation
Cleveland-Cliffs and the Participants shall not have notified the Trustee of an
agreement as to a replacement trustee, the Trustee shall appoint a successor
trustee, which shall be a bank or trust company, wherever located, having a
capital and surplus of at
<PAGE> 173
least $500,000,000 in the aggregate.
(b) For purposes of the removal or appointment of a Trustee under
this Section 11, (i) if any Participant shall be deceased or adjudged
incompetent, such Participant's Beneficiaries shall participate in such
Participant's stead, and (ii) a Participant shall not participate if all
payments of Benefits then currently due or payable in the future have been made
to such Participant or his Beneficiary.
12. AMENDMENT OR TERMINATION: (a) This Trust Agreement No.
7 may be amended by Cleveland-Cliffs and the Trustee without the consent of any
Participant or Beneficiary provided the amendment does not adversely affect any
Participant or Beneficiary. This Trust Agreement No. 7 may also be amended at
any time and to any extent by a written instrument executed by the Trustee, all
Participating Employers, and a majority of the Participants, except to alter
Section 12(b), and except that amendments to Exhibit A contemplated by Section
9(b) hereof shall be made as therein provided.
(b) The Trust shall terminate on the date on which the Trust no
longer contains any assets, or, if earlier, the date on which no Participant or
Beneficiary is entitled to further payments hereunder.
(c) Upon termination of the Trust as provided in Section 12(b)
hereof, any assets remaining in the Trust shall be returned to Cleveland-Cliffs
or as it directs.
13. SPECIAL DISTRIBUTION: (a) It is intended that (i) the
creation of,
<PAGE> 174
and transfer of assets to, the Trust will not cause the Plan to be other than
"unfunded" for purposes of title I of the Employee Retirement Income Security
Act of 1974, as amended, or any successor provision thereto ("ERISA"); (ii)
transfers of assets to the Trust will not be transfers of property for purposes
of section 83 of the Code, or any successor provision thereto, nor will such
transfers cause a currently taxable benefit to be realized by a Participant or
Beneficiary pursuant to the "economic benefit doctrine; and (iii) pursuant to
section 451 of the Code, or any successor provision thereto, amounts will be
includable as compensation in the gross income of a Participant or Beneficiary
in the taxable year or years in which such amounts are actually distributed or
made available to such Participant or Beneficiary by the Trustee.
(b) Notwithstanding anything to the contrary contained in this
Trust Agreement No. 7, in the event it is determined by a final decision of the
Internal Revenue Service, or, if an appeal is taken therefrom, by a court of
competent jurisdiction that (i) by reason of the creation of, and a transfer of
assets to, the Trust, the Trust is considered "funded" for purposes of title I
of ERISA; or (ii) a transfer of assets to the Trust is considered a transfer of
property for purposes of section 83 of the Code or any successor provision
thereto; or (iii) a transfer of assets to the Trust causes a Participant or
Beneficiary to realize income pursuant to the "economic benefit" doctrine; or
(iv) pursuant to section 451 of the Code or any successor provision thereto,
amounts are
<PAGE> 175
includable as compensation in the gross income of a Participant or Beneficiary
in a taxable year that is prior to the taxable year or years in which such
amounts would, but for this Section 13, otherwise actually be distributed or
made available to such Participant or Beneficiary by the Trustee, then (A) the
assets held in Trust shall be allocated in accordance with Section 7(b) hereof,
and (B) subject to the last sentence of Section 2(b) hereof, the Trustee shall
promptly make a distribution to each affected Participant or Beneficiary which,
after taking into account the federal, state and local income tax consequences
of the special distribution itself, is equal to the sum of any federal, state
and local income taxes, interest due thereon, and penalties assessed with
respect thereto, which are attributable to amounts that are includable in the
income of such Participant or Beneficiary for any of the reasons described in
clause (i), (ii), (iii) or (iv) of this Section 13(b).
14. PARTICIPATING SUBSIDIARY DEPOSIT AGREEMENT:(a) Upon
execution of a Deposit Agreement in the form of Exhibit C hereto, a Subsidiary
may at any time or from time to time make deposits of cash or other property in
the Trust pursuant to Section 1(d) hereof. Such Deposit Agreement shall provide,
among other things, for the designation of Cleveland-Cliffs as agent and
attorney for the Participating Subsidiary for all purposes under this Trust
Agreement No. 7, including consenting to any amendments hereto, consenting to
any Trustee accounts and consenting to anything requiring the approval or
consent of a
<PAGE> 176
Participating Employer hereunder.
(b) Cleveland-Cliffs is the sponsoring grantor for this Trust
Agreement No. 7. It reserves to itself, and each Subsidiary by execution of a
Deposit Agreement delegates to Cleveland-Cliffs, the power to amend or
terminate this Trust Agreement No. 7 in accordance with its terms.
15. SEVERABILITY ALIENATION, ETC.: (a) Any provision of
this Trust Agreement No. 7 prohibited by law shall be ineffective to the extent
of any such prohibition without invalidating the remaining provisions hereof.
(b) To the extent permitted by law, benefits to Participants
and Beneficiaries under this Trust Agreement No. 7 may not be anticipated,
assigned (either by law or in equity), alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process and no benefit
provided for herein and actually paid to any Participant or Beneficiary by the
Trustee shall be subject to any claim for repayment by any Participating
Employer or the Trustee.
(c) This Trust Agreement No. 7 shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
(d) This Trust Agreement No. 7 may be executed in two or more
counterparts, each of which shall be considered an original agreement. This
Trust Agreement No. 7 shall become effective immediately upon the execution by
Cleveland-Cliffs of at least one counterpart, it being understood that all
parties
<PAGE> 177
need not sign the same counterpart, but shall not bind any Trustee until such
Trustee has executed at least one counterpart.
(e) Each action taken by Cleveland-Cliffs hereunder shall, unless
otherwise designated in such action by Cleveland-Cliffs or unless the context or
this Trust Agreement No. 7 requires otherwise, be deemed to be an action of
Cleveland-Cliffs on behalf of each Participating Subsidiary pursuant to the
authority granted to Cleveland-Cliffs by such Participating Subsidiary in the
Deposit Agreement.
16. NOTICES; IDENTIFICATION OF CERTAIN PARTICIPANTS OR
BENEFICIARIES:
(a) All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
received:
If to the Trustee, to:
Ameritrust Company National Association
900 Euclid Avenue
Cleveland, Ohio 44115
Attention: Trust Department
Employee Benefit Administration
If to Cleveland-Cliffs, to:
Cleveland-Cliffs Inc
1100 Superior Avenue
Cleveland, OH 44114
Attention: Secretary
If to the Participants, to the addresses listed on Exhibit A
hereto; and if to the Beneficiaries, to the addresses provided to
the Trustee by Cleveland-Cliffs;
provided, however, that if any party or any Participant or Beneficiary or his
or its
<PAGE> 178
successors shall have designated a different address by written notice to the
other parties, then to the last address so designated.
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have caused
counterparts of this Trust Agreement No. 7 to be executed on their behalf on
April 9, 1991, each of which shall be an original agreement.
CLEVELAND-CLIFFS INC
By: Richard F. Novak
-------------------------
Its: V.P. of Human Resources
-------------------------
AMERITRUST COMPANY NATIONAL
ASSOCIATION
By: J.P. Russell
-------------------------
Its: Vice President
-------------------------
<PAGE> 179
EXHIBIT A
---------
All Senior Officers and Other Full-Time
Salaried Employees Grade EX-28 and Above/
Eligible Participants in SERP
Name Title
- -------------- ----------------------------------------------
M. T. Moore Chairman and Chief Executive Officer
J. S. Brinzo Executive Vice President-Finance and Planning
W. R. Calfee Executive Vice President-Commercial
T. J. O'Neil Executive Vice President-Operations
J. W. Sanders Senior Vice President-International Development
A. S. West Senior Vice President-Sales
F. L. Hartman Vice President and General Counsel
R. F. Novak Vice President-Human Resources
J. A. Trethewey Vice President-Operations Services
C. B. Bezik Vice President and Treasurer
R. Emmet Vice President and Controller
G. N. Chandler Vice President-Reduced Iron
J. E. Lenhard Secretary and Assistant General Counsel
R. C. Berglund General Manager- Northshore Mine
L. G. Dykers General Manager- Hibbing Taconite
D. Lebel General Manager-Wabush Mines
M. P. Mlinar General Manager-Tilden Mine
T. S. Petersen General Manager-Empire Mine
J. N. Tuomi General Manager-LTV Steel Mining Company
R. W. von Bitter General Manager-Cliffs Reduced Iron Corp.
6-30-97
<PAGE> 180
Exhibit B
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
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PAGE
----
<S> <C> <C>
1. DEFINITIONS............................................................ 1
-----------
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT................. 3
------------------------------------------------------
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT....................... 4
------------------------------------------------
4. FORFEITABILITY......................................................... 6
--------------
5. GENERAL................................................................ 6
-------
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN....................... 8
------------------------------------------------
7. MISCELLANEOUS.......................................................... 8
-------------
8. AMENDMENT AND TERMINATION............................................... 9
-------------------------
9. EFFECTIVE DATE......................................................... 10
--------------
</TABLE>
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CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997)
---------------------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and its
subsidiary corporations and affiliates have established, or may hereafter
establish, one or more qualified retirement plans;
WHEREAS, the qualified retirement plans, pursuant to Sections
401(a) and 415 of the Internal Revenue Code of 1986, as amended, place certain
limitations on the amount of contributions that would otherwise be made
thereunder for certain participants;
WHEREAS, Cleveland-Cliffs now desires to provide for the
contributions which would otherwise have been made for such participants under
certain of its qualified retirement plans except for such limitations, in
consideration of services performed and to be performed by each such participant
for Cleveland-Cliffs and its subsidiaries and affiliates; and
WHEREAS, Cleveland-Cliffs has entered into, and
Cleveland-Cliffs and its subsidiary corporations and affiliates may in the
future enter into, agreements with certain executives providing for additional
service credit and/or other features for purposes of computing retirement
benefits, in consideration of services performed and to be performed by such
executives for Cleveland-Cliffs and its subsidiaries and affiliates.
NOW, THEREFORE, Cleveland-Cliffs hereby amends and restates
and publishes the Supplemental Retirement Benefit Plan heretofore established by
it, which shall contain the following terms and conditions:
1. DEFINITIONS. A. The following words and phrases when
used in this Plan with initial capital letters shall have the following
respective meanings, unless the context clearly indicates otherwise. The
masculine whenever used in this Plan shall include the feminine.
B. "AFFILIATE" shall mean any partnership or joint
venture of which any member of the Controlled Group is a partner or venturer and
which shall adopt this Plan pursuant to paragraph 6.
C. "BENEFICIARY" shall mean such person or persons (natural
or otherwise) as may be designated by the Participant as his Beneficiary under
this Plan. Such a designation may be made, and may be revoked or changed
(without the consent of any previously designated Beneficiary), only by an
instrument (in form acceptable to Cleveland-Cliffs) signed by the Participant
and may be revoked or changed (without the consent of any previously designated
Beneficiary), only by an instrument (in form acceptable to Cleveland-Cliffs)
signed by the Participant
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2
and filed with Cleveland-Cliffs prior to the Participant's death. In the absence
of such a designation and at any other time when there is no existing
Beneficiary designated by the Participant to whom payment is to be made pursuant
to his designation, his Beneficiary shall be his beneficiary under the Pension
Plan. A person designated by a Participant as his Beneficiary who or which
ceases to exist shall not be entitled to any part of any payment thereafter to
be made to the Participant's Beneficiary unless the Participant's designation
specifically provided to the contrary. If two or more persons designated as a
Participant's Beneficiary are in existence, the amount of any payment to the
Beneficiary under this Plan shall be divided equally among such persons unless
the Participant's designation specifically provided to the contrary.
Notwithstanding the foregoing, the Beneficiary of a Participant who elects the
form of benefit elected by the Participant under the Pension Plan shall be the
same beneficiary designated by him or her thereunder.
D. "CODE" shall mean the Internal Revenue Code of
1986, as it has been and may be amended from time to time.
E. "CODE LIMITATIONS" shall mean the limitations
imposed by Sections 401(a) and 415 of the Code, or any successor
thereto, on the amount of the benefits which may be payable to a
Participant from the Pension Plan.
F. "CONTROLLED GROUP" shall mean Cleveland-Cliffs and any
corporation in an unbroken chain of corporations beginning with
Cleveland-Cliffs, if each of the corporations other than the last corporation in
the chain owns or controls, directly or indirectly, stock possessing not less
than fifty percent of the total combined voting power of all classes of stock in
one of the other corporations.
G. "EMPLOYER(S)" shall mean Cleveland-Cliffs and any
other member of the Controlled Group and any Affiliate which
shall adopt this Plan pursuant to paragraph 6.
H. "PARTICIPANT" shall mean each person (i) who is a
participant in the Pension Plan, (ii) who is a senior corporate officer of
Cleveland-Cliffs or a full-time salaried employee of an Employer who has a
Management Performance Incentive Plan Salary Grade of EX-28 or above, and (iii)
who as a result of participation in this Plan is entitled to a Supplemental
Benefit under this Plan. Each person who is as a Participant under this Plan
shall be notified in writing of such fact by his Employer, which shall also
cause a copy of the Plan to be delivered to such person.
I. "PENSION PLAN" shall mean, with respect to any
Participant, the defined benefit plan specified on Exhibit A
hereto in which he participates.
J. "SUPPLEMENTAL AGREEMENT" shall mean, with respect to any
Participant, an agreement between the Participant and an
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3
Employer, and approved by Cleveland-Cliffs if it is not the Employer, which
provides for additional service credit and/or other features for purposes of
computing retirement benefits.
K. "SUPPLEMENTAL BENEFIT" or "SUPPLEMENTAL PENSION PLAN
BENEFIT" shall mean a retirement benefit determined as provided in paragraph 2.
L. "SUPPLEMENTAL RETIREMENT BENEFIT PLAN" or "PLAN" shall
mean this Plan, as the same may hereafter be amended or restated from time to
time.
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
Each Participant or Beneficiary of a deceased Participant whose benefits under
the Pension Plan payable on or after January l, 1995 are reduced (a) due to the
Code Limitations, or (b) due to deferrals of compensation by such Participant
under the Cleveland-Cliffs Inc Voluntary Non- Qualified Deferred Compensation
Plan (the "Deferred Compensation Plan"), and each Participant who has entered
into a Supplemental Agreement with his Employer (and, where applicable a
Beneficiary of a deceased Participant), shall be entitled to a Supplemental
Pension Plan Benefit, which shall be determined as hereinafter provided. A
Supplemental Pension Plan Benefit shall be a monthly retirement benefit equal to
the difference between (i) the amount of the monthly benefit payable on and
after January l, 1995 to the Participant or his Beneficiary under the Pension
Plan, determined under the Pension Plan as in effect on the date of the
Participant's termination of employment with the Controlled Group and any
Affiliate (and payable in the same optional form as his Actual Pension Plan
Benefit, as defined below), but calculated without regard to any reduction in
the Participant's compensation pursuant to the Deferred Compensation Plan, and
as if the Pension Plan did not contain a provision (including any phase-in or
extended wear away provision) implementing the Code Limitations, and after
giving effect to the provisions of any Supplemental Agreement, and (ii) the
amount of the monthly benefit in fact payable on and after January 1, 1995 to
the Participant or his Beneficiary under the Pension Plan. If the benefit
payable to a Participant or Beneficiary pursuant to clause (ii) of the
immediately preceding sentence (herein referred to as "Actual Pension Plan
Benefit") is payable in a form other than a monthly benefit, such Actual Pension
Plan Benefit shall be adjusted to a monthly benefit which is the actuarial
equivalent of such Actual Pension Plan Benefit for the purpose of calculating
the monthly Supplemental Pension Plan Benefit of the Participant or Beneficiary
pursuant to the preceding sentence. For any Participant whose benefits become
payable under the Pension Plan on or after January 1, 1995, the Supplemental
Pension Plan Benefit includes any "Retirement Plan Augmentation Benefit" which
the Participant shall have accrued under the Deferred Compensation Plan prior to
the amendment of such Plan as of January l, 1991 to delete such Benefit. The
acceptance by the Participant or his Beneficiary of any Supplemental Pension
Plan Benefit pursuant to paragraph 3 shall constitute payment of the
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4
Retirement Plan Augmentation Benefit included therein for purposes of the
Deferred Compensation Plan prior to such amendment.
3. PAYMENT OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
(a) A Participant's (or his Beneficiary's) Supplemental
Pension Plan Benefit (calculated as provided in
paragraph 2) shall be converted, at the time of his
termination of employment with the Controlled Group and
each Affiliate, into ten annual installment payments
(the "Ten Installment Payments") of equivalent actuarial
value. The equivalent actuarial value shall be
determined by the actuary selected by Cleveland-Cliffs
based on the 1971 TPF&C Forecast Mortality Table set
back one year, the Pension Benefit Guaranty Corporation
interest rate for immediate annuities then in effect,
and other factors then in effect for purposes of the
Pension Plan.
(b) If the Participant voluntarily terminates employment
with, or retires under the terms of the Pension Plan
from, the Controlled Group and each Affiliate, or the
Participant's employment with the Controlled Group and
each Affiliate is involuntarily terminated, the
Participant's former Employer shall pay the Ten
Installment Payments to the Participant beginning on the
first day of the month following the Participant's
retirement under the Pension Plan, and on each
anniversary thereafter until the Ten Installment
Payments have been made; provided, however, that if the
Participant has effectively elected another form of
distribution, such Participant's former Employer shall
pay or commence payment in such other form of
distribution beginning on the first day of the month
following the date of the Participant's retirement under
the Pension Plan. A Participant who voluntarily
terminates employment with, or who retires under the
terms of the Pension Plan from, the Controlled Group and
each Affiliate may by written notice filed with the
Administrator at least one (1) year prior to the
Participant's voluntary termination of employment with,
or retirement from, the Controlled Group and each
Affiliate elect to defer commencement of the payment of
his benefit until a date selected in such election. Any
such election may be changed by the Participant at any
time and from time to time without the consent of any
other person by filing a later signed written election
with the Administrator; provided that any election made
less than one (1) year prior to the Participant's
voluntary termination of employment
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5
or retirement shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election, or otherwise in accordance
with this paragraph 3.
(c) A Participant may elect to receive his Supplemental
Pension Plan Benefit in one of the following forms of
distribution in lieu of the Ten Installment Payments:
(1) Lump sum payment;
(2) Annual installments over 2 to 15 years;
(3) A combination of (1) and (2) above with the
percentage payable under each option specifically
designated by the Participant; or
(4) The form of benefit distribution elected by the
Participant under the Pension Plan.
Payments made under these options shall commence as of
the first day of the month following the Participant's
retirement under the Pension Plan; provided, however,
that with respect to a lump sum payment, such payment
shall be made at the end of the of the first month of
retirement or at the end of the month following death.
The payments made under these forms shall be of
equivalent actuarial value to the Ten Installment
Payments as determined by the actuary selected by
Cleveland-Cliffs based on the actuarial factors and
assumptions provided for in the second sentence of
paragraph 3(a). Notwithstanding the foregoing, the
Administrator may, at any time, direct that annual
installments shall be made quarterly. If the Participant
dies before receiving all of the installment payments,
the remaining installment payments shall be paid in a
lump sum to the Participant's Beneficiary. Any
co-pensioner or survivor payments elected under clause
(4) of this paragraph 3(c) shall be paid to the
co-pensioner or survivor, as appropriate. The
Participant's election of one of the forms of
distribution set forth above shall be made by written
notice filed with the Administrator at least one (1)
year prior to the Participant's voluntary or involuntary
termination of employment, retirement, death or
disability. Any such election may be changed by the
Participant at any time and from time to time without
the consent of any other person by filing a later signed
written election with the Administrator; provided
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6
that any election made less than one (1) year prior to
the Participant's voluntary or involuntary termination
of employment, retirement, death or disability shall not
be valid, and in such case payment shall be made in
accordance with the Participant's prior election; and
provided, further, that the Administrator may, in its
sole discretion, waive such one (1) year period upon a
request of the Participant made while an active employee
of his or her Employer.
(d) Anything contained in this paragraph 3 to the contrary
notwithstanding, in the event a Participant's employment
with the Controlled Group and each Affiliate is
involuntarily terminated, the Administrator may, at any
time, direct immediate payment of such Participant's
benefit under the Plan and the manner of distribution
for such payment; provided, however, that if the
administrator elects immediate payment as set forth in
this paragraph 3(d), such payment shall not be made in
accordance with the distribution alternative described
in paragraph 3(c)(4) of the Plan.
(e) Notwithstanding any other provision of this paragraph 3,
a Participant may elect to receive a lump sum
distribution of part or all of his or her benefits under
clause (1), (2), or (3) of paragraph 3(c) if (and only
if) the amount subject to such distribution is reduced
by six percent (6%). Any distribution made pursuant to
such an election shall be made within 60 days of the
date such election is submitted to the Administrator.
The remaining six percent (6%) of the electing
Participant's benefit balance subject to such lump sum
distribution shall be forfeited.
4. FORFEITABILITY. Anything herein to the contrary
notwithstanding, if the Board of Directors of Cleveland-Cliffs shall determine
in good faith that a Participant who is entitled to a benefit hereunder by
reason of termination of his employment with the Controlled Group and each
Affiliate, during the period of 5 years after termination of his employment or
until he attains age 65, whichever period is shorter, has engaged in a business
competitive with Cleveland-Cliffs or any member of the Controlled Group or any
Affiliate without the prior written consent of Cleveland-Cliffs, such
Participant's rights to a supplemental Pension Plan Benefit hereunder and the
rights, if any, of his Beneficiary shall be terminated and no further
Supplemental Benefit shall be paid to him or his Beneficiary hereunder.
5. GENERAL. A. The entire cost of this Supplemental
Retirement Benefit Plan shall be paid from the general assets of
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7
one or more of the Employers. It is the intent of the Employers to so pay
benefits under the Plan as they become due; provided, however, that
Cleveland-Cliffs may, in its sole discretion, establish or cause to be
established a trust account for any or each Participant pursuant to an
agreement, or agreements, with a bank and direct that some or all of a
Participant's benefits under the Plan be paid from the general assets of his
Employer which are transferred to the custody of such bank to be held by it in
such trust account as property of the Employer subject to the claims of the
Employer's creditors until such time as benefit payments pursuant to the Plan
are made from such assets in accordance with such agreement; and until any such
payment is made, neither the Plan nor any Participant or Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in, such assets. No
liability for the payment of benefits under the Plan shall be imposed upon any
officer, director, employee, or stockholder of Cleveland-Cliffs or other
Employer.
B. No right or interest of a Participant or his Beneficiary
under this Supplemental Retirement Benefit Plan shall be anticipated, assigned
(either at law or in equity) or alienated by the Participant or his Beneficiary,
nor shall any such right or interest be subject to attachment, garnishment,
levy, execution or other legal or equitable process or in any manner be liable
for or subject to the debts of any Participant or Beneficiary. If any
Participant or Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge or otherwise encumber his benefits under the Plan or any part
thereof, or if by reason of his bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be enjoyed by him,
then Cleveland-Cliffs may terminate his interest in any such benefit and hold or
apply it to or for his benefit or the benefit of his spouse, children or other
person or persons in fact dependent upon him, or any of them, in such a manner
as Cleveland-Cliffs may deem proper; provided, however, that the provisions of
this sentence shall not be applicable to the surviving spouse of any deceased
Participant if Cleveland-Cliffs consent: to such inapplicability, which consent
shall not unreasonably be withheld.
C. Employment rights shall not be enlarged or affected
hereby. The Employers shall continue to have the right to discharge or retire a
Participant, with or without cause.
D. Notwithstanding any other provisions of this Plan to the
contrary, if Cleveland-Cliffs determines that any Participant may not qualify as
a "management or highly compensated employee" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or regulations
thereunder, Cleveland-Cliffs may determine, in its sole discretion, that such
Participant shall cease to be eligible to participate in this Plan. Upon such
determination, the Employer shall make an immediate lump sum payment to the
Participant equal to his then vested Supplemental Benefit. Upon such payment, no
benefits shall thereafter be payable under this
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8
Plan either to the Participant or any Beneficiary of the Participant, and all of
the Participant's elections as to the time and manner of payment of his
Supplemental Benefit shall be deemed to be cancelled.
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN. Any
member of the Controlled Group or any Affiliate which is an employer under the
Pension Plan may become an Employer hereunder with the written consent of
Cleveland-Cliffs if such member or such Affiliate executes an instrument
evidencing its adoption of the Supplemental Retirement Benefit Plan and files a
copy thereof with Cleveland-Cliffs. Such instrument of adoption may be subject
to such terms and conditions as Cleveland-Cliffs requires or approves.
7. MISCELLANEOUS. A. The Plan shall be administered by the
Plan Administrator (the "Administrator"). The Administrator shall have such
powers as may be necessary to discharge his duties hereunder, including, but not
by way of limitation, to construe and interpret the Plan (including, without
limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies and ambiguities in, the language of the Plan) and
determine the amount and time of payment of any benefits hereunder. The
Administrator may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
legal counsel who may be counsel to Cleveland- Cliffs. The Administrator shall
have no power to add to, subtract from or modify any of the terms of the Plan,
or to change or add to any benefits provided under the Plan, or to waive or fail
to apply any requirements of eligibility for a benefit under the Plan. No member
of the Administrator shall act in respect of his own benefits. All decisions and
determinations by the Administrator shall be final and binding on all parties.
All decisions of the Administrator shall be made by the vote of the majority, if
applicable, including actions and writing taken without a meeting. All
elections, notices and directions under the Plan by a Participant shall be made
on such forms as the Administrator shall prescribe.
B. Cleveland-Cliffs shall be the "Administrator" and
the "Plan Sponsor" under the Plan for purposes of ERISA.
C. Except to the extent federal law controls, all
questions pertaining to the construction, validity and effect of the provisions
hereof shall be determined in accordance with the laws of the State of Ohio.
D. Whenever there is denied, whether in whole or in
part, a claim for benefits under the Plan filed by any person (herein referred
to as the "Claimant"), the plan administrator shall transmit a written notice of
such decision to the Claimant, which notice shall be written in a manner
calculated to be understood by the Claimant and shall contain a statement of the
specific reasons for the denial of the claim and statement
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9
advising the Claimant that, within 60 days of the date on which he receives such
notice, he may obtain review of such decision in accordance with the procedures
hereinafter set forth. Within such 60-day period, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing with the
plan administrator a written request therefor, which request shall contain the
following information:
(i) the date on which the Claimant's request was filed with
the plan administrator; provided, however, that the date on which
the Claimant's request for review was in fact filed with the plan
administrator shall control in the event that the date of the actual
filing is later than the date stated by the Claimant pursuant to
this paragraph;
(ii) the specific portions of the denial of his claim which
the Claimant requests the plan administrator to review;
(iii) a statement by the Claimant setting forth the basis upon
which he believes the plan administrator should reverse the previous
denial of his claim for benefits and accept his claim as made; and
(iv) any written material (offered as exhibits) which the
Claimant desires the plan administrator to examine in its
consideration of his position as stated pursuant to clause (iii)
above.
Within 60 days of the date determined pursuant to clause (i) above, the plan
administrator shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits. Within 60 days of the date of such hearing, the
plan administrator shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
E. Supplemental Pension Plan Benefits shall be subject to
applicable withholding and such other deductions as shall at the time of payment
be required or appropriate under any Federal, State or Local law. In addition,
Cleveland-Cliffs may withhold from a Participant's "other income" (as
hereinafter defined) any amount required or appropriate to be currently withheld
from such Participant's other income pursuant to any Federal, State or Local
law. For purposes of this subparagraph E, "other income" shall mean any
remuneration currently paid to a Participant by an Employer.
8. AMENDMENT AND TERMINATION. A. Cleveland-Cliffs has
reserved and does hereby reserve the right to amend, at any time, any or all of
the provisions of the Supplemental Retirement Benefit Plan for all Employers,
without the consent of any other Employer or any Participant, Beneficiary or any
other person. Any such amendment shall be expressed in an instrument executed
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10
by Cleveland-Cliffs and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of its execution.
B. Cleveland-Cliffs has reserved, and does hereby reserve,
the right to terminate the Supplemental Retirement Benefit Plan at any time for
all Employers, without the consent of any other Employer or of any Participant,
Beneficiary or any other person. Such termination shall be expressed in an
instrument executed by Cleveland-Cliffs and shall become effective as of the
date designated in such instrument, or if no date is specified, on the date of
its execution. Any other Employer which shall have adopted the Plan may, with
the written consent of Cleveland-Cliffs, elect separately to withdraw from the
Plan and such withdrawal shall constitute a termination of the Plan as to it,
but it shall continue to be an Employer for the purposes hereof as to
Participants or Beneficiaries to whom it owes obligations hereunder. Any such
withdrawal and termination shall be expressed in an instrument executed by the
terminating Employer and shall become effective as of the date designated in
such instrument or, if no date is specified, on the date of its execution.
C. Notwithstanding the foregoing provisions hereof, no
amendment or termination of the Supplemental Retirement Benefit Plan shall,
without the consent of the Participant (or, in the case of his death, his
Beneficiary), adversely affect (i) the benefit under the Plan of any Participant
or Beneficiary then entitled to receive a benefit under the Plan or (ii) the
right of any other Participant to receive upon termination of his employment
with the Controlled Group and each Affiliate (or the right of his Beneficiary to
receive upon such Participant's death) that benefit which would have been
received under the Plan if such employment of the Participant had terminated
immediately prior to the amendment or termination of the Plan. Upon any
termination of the Plan, each affected Participant's Supplemental Benefit shall
be determined and distributed to him or, in the case of his death, to his
Beneficiary as provided in paragraph 3 as if the employment of the Participant
with the Controlled Group and each Affiliate had terminated immediately prior to
the termination of the Plan.
9. EFFECTIVE DATE. The amended and restated Supplemental
Retirement Benefit Plan shall be effective as of January 1, 1997.
IN WITNESS WHEREOF, Cleveland-Cliffs Inc, pursuant to the
order of its Board of Directors, has executed this amended and restated
Supplemental Retirement Benefit Plan at Cleveland, Ohio, this 24th day of APRIL,
1997.
CLEVELAND-CLIFFS INC
By R. F.NOVAK
--------------------------------
Vice President - Human Resources
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<PAGE> 192
11
EXHIBIT A
---------
PENSION PLANS
- -------------
Pension Plan for Salaried Employees of Cleveland-Cliffs Inc
Pension Plan for Salaried Employees of the Cleveland-Cliffs Iron
Company and its Associated Employers
Retirement Plan for Salaried Employees of Northshore Mining
Company and Silver Bay Power Company
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<PAGE> 193
Exhibit C
DEPOSIT AGREEMENT FOR PARTICIPATING SUBSIDIARY
----------------------------------------------
WITNESSETH:
-----------
WHEREAS, the undersigned is a subsidiary corporation or
affiliate of Cleveland-Cliffs Inc and contributes to the Plan as defined in a
certain Trust Agreement No. 7 dated April 9, 1991, by and between
Cleveland-Cliffs Inc, an Ohio corporation ("Cleveland-Cliffs"), and Ameritrust
Company National Association, a national banking association ("Trustee"); and
WHEREAS, the undersigned wishes to become a Participating
Subsidiary and Participating Employer pursuant to the terms of Trust Agreement
No. 7.
NOW, THEREFORE, in consideration of the premises the
undersigned ("Subsidiary") hereby adopts Trust Agreement No. 7 and agrees to be
bound by its terms effective the day of , 199 . In addition:
1. Capitalized terms in this Deposit Agreement shall have
the meanings set forth in Trust Agreement No. 7 unless the context clearly
requires otherwise.
2. The Subsidiary by its signature hereto irrevocably makes,
constitutes and appoints Cleveland-Cliffs its agents and its true and lawful
attorney in its name, place and stead, with the power from time to time to
substitute or resubstitute one or more others as such attorney, and to make,
execute, swear
<PAGE> 194
to, acknowledge, verify, deliver, file, record and publish any or all of the
following:
(a) All documents, agreements, requests, undertakings,
certificates or other instruments which may be required or deemed
desirable by Cleveland-Cliffs to effectuate the provisions of any part
of Trust Agreement No. 7 and by way of extension and not in limitation
to do all such other things as shall be necessary to continue the Trust
under the laws of the State of Ohio.
(b) Amendments to Trust Agreement No. 7 authorized or
approved in accordance with Sections 4, 9 and 14 thereof and all
documents, certificates or other instruments deemed desirable by
Cleveland-Cliffs or required in connection therewith.
3. It is expressly intended by the Subsidiary that the foregoing
power of attorney is a special power of attorney coupled with an interest in
favor of Cleveland-Cliffs appointed as attorney-in-fact on the Subsidiary's
behalf, and as such shall be irrevocable and shall survive the Subsidiary's
merger, dissolution or other termination of existence.
4. In the event a Participant is transferred from the employ of the
Subsidiary to another Participating Employer, effective on the date of such
transfer, the Subsidiary may agree to assign assets with a value equal to, or
greater or lesser than, the value of the transferred Participant's account under
Section 7(b) of the Trust to the successor Participating Employer in exchange
for such Participating Employer assuming and being responsible for the
Subsidiary's liabilities and obligations to such transferred Participant under
the Plan.
<PAGE> 195
5. In the event a Participant is transferred from the employ of
another Participating Employer to the Subsidiary, effective on the date of such
transfer, the Subsidiary may agree that upon the assignment by such
Participating Employer to the Subsidiary of assets with a value equal to, or
greater or lesser than, the value of the transferred Executive's account under
Section 7(b) of the Trust, in exchange therefor, the Subsidiary will assume and
be responsible for the Participating Employer's liabilities and obligations to
such participant under the Plan.
6. The Subsidiary agrees to bear its pro rata share (as determined
by Cleveland-Cliffs) of any and all expenses of the Trust.
IN WITNESS WHEREOF, the Subsidiary has caused this Deposit Agreement,
to be executed on its behalf on , 199 .
Subsidiary
By:_________________________
Its:________________________
Accepted CLEVELAND-CLIFFS INC
By:_________________________
Its:________________________
AMERITRUST COMPANY, NATIONAL
ASSOCIATION
By:_________________________
Its:________________________
<PAGE> 196
THIRD AMENDMENT TO TRUST AGREEMENT NO. 7
----------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and AmeriTrust
Company National Association entered into Trust Agreement No. 7 (the
"Agreement") effective April 9, 1991, which Agreement was amended on two
previous occasions;
WHEREAS, Key Trust Company of Ohio, N.A. (the "Trustee") is the
successor in interest to Society National Bank, which was the successor in
interest to AmeriTrust Company National Association; and
WHEREAS, Cleveland-Cliffs and the Trustee desire to amend the
Agreement;
NOW, THEREFORE, effective June 1, 1997, Cleveland-Cliffs and the
Trustee hereby amend the Agreement to provide as follows:
1. The second sentence of Section 1(b) of the Agreement is hereby
amended to read as follows:
"The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) Cleveland-Cliffs shall merge into itself, or
be merged or consolidated with, another corporation and as
a result of such merger or consolidation less than 70% of
the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by
the former shareholders of Cleveland-Cliffs as the
CLTAX01 Doc: 206085_1
<PAGE> 197
same have existed immediately prior to such merger or
consolidation;
(ii) Cleveland-Cliffs shall sell or otherwise
transfer all or substantially all of its assets to any
other corporation or other legal person, and immediately
after such sale or transfer less than 70% of the combined
voting power of the outstanding voting securities of such
corporation or person is held in the aggregate by the
former shareholders of Cleveland-Cliffs as the same shall
have existed immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities Exchange Act of 1934, shall
become the beneficial owner (as defined in Rule 13d-3 of
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of the
outstanding voting securities of Cleveland-Cliffs (whether
directly or indirectly); or
(iv) During any period of three consecutive
years, individuals who at the beginning of any such period
constitute the Board of Directors of Cleveland-Cliffs
cease,
- 2 -
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<PAGE> 198
for any reason, to constitute at least a majority thereof,
unless the election, or the nomination for election by the
shareholders of Cleveland-Cliffs or each director first
elected during any such period was approved by a vote of at
least one-third of the directors of Cleveland-Cliffs who
are directors of the Company on the date of the beginning
of any such period."
IN WITNESS WHEREOF, Cleveland-Cliffs and the Trustee have
executed this Third Amendment at Cleveland, Ohio, this 23rd day of
May, 1997.
CLEVELAND-CLIFFS INC
By /s/ R. F. Novak V.P-H.R.
----------------------------------
Title:
KEY TRUST COMPANY OF OHIO, N.A.
By /s/Kelley Clark
----------------------------------
Title: VP
/s/ J.A. Radazzo
----------------------------------
Title: VP
- 3 -
CLTAX01 Doc: 206085_1
<PAGE> 1
Exhibit 10(k)
SEVERANCE PAY PLAN FOR
KEY EMPLOYEES OF CLEVELAND-CLIFFS INC
-------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. General Statement of Purpose................................................... 1
----------------------------
2. Effective and Termination Dates................................................ 1
-------------------------------
3. Definitions.................................................................... 1
-----------
a. Average Incentive Pay................................................. 1
---------------------
b. Base Salary........................................................... 1
-----------
c. Change of Control..................................................... 1
-----------------
d. Committee............................................................. 2
---------
e. Company............................................................... 2
-------
f. For Cause............................................................. 2
---------
g. Incentive Pay......................................................... 2
-------------
h. Industry Service and Credited Years of Industry Service............... 2
-------------------------------------------------------
i. Key Employee.......................................................... 2
------------
j. Selected Affiliate.................................................... 3
------------------
k. Supplemental Retirement Plan or SRP................................... 3
-----------------------------------
4. Eligibility Under This Plan.................................................... 3
---------------------------
5. Severance Compensation......................................................... 5
----------------------
a. Severance Pay......................................................... 5
-------------
b. Health and Life Benefits.............................................. 5
------------------------
c. Welfare Benefit Continuation Following Termination..................... 6
--------------------------------------------------
d. Stock Options, Restricted Stock and Performance Shares................. 7
------------------------------------------------------
e. Outplacement Counseling ................................................7
-----------------------
f. Calculation............................................................ 7
-----------
6. Supplemental Retirement Benefit Plan............................................ 7
------------------------------------
7. Certain Additional Payments by Cleveland-Cliffs............................... 8
-----------------------------------------------
8. Mitigation..................................................................... 11
----------
9. Timing of Separation Pay, etc.................................................. 11
-----------------------------
10. Confidentiality and Competitive Activity....................................... 12
----------------------------------------
11. Release........................................................................ 12
-------
12. Legal Fees and Expenses........................................................ 13
-----------------------
13. Employment Rights.............................................................. 14
-----------------
14. Withholding of Taxes........................................................... 14
--------------------
15. Successors and Binding Effect.................................................. 14
-----------------------------
16. Governing Law.................................................................. 15
-------------
17. Validity....................................................................... 15
--------
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
18. Captions....................................................................... 15
--------
19. Administration of Plan......................................................... 15
----------------------
a. In General............................................................ 15
----------
b. Delegation of Duties.................................................. 15
--------------------
c. Regulations........................................................... 15
-----------
d. Claims Procedure...................................................... 16
----------------
e. Revocability of Action................................................ 16
----------------------
f. Execution of Receipt.................................................. 17
--------------------
</TABLE>
ii
<PAGE> 4
SEVERANCE PAY PLAN FOR
KEY EMPLOYEES OF CLEVELAND-CLIFFS INC
(As Amended and Restated as of February 1, 1997)
------------------------------------------------
1. GENERAL STATEMENT OF PURPOSE. With the high level of corporate
acquisition and restructuring activity over the past several years,
employees are understandably concerned about their careers and their
personal financial security. As a result, even rumors of acquisitions
and restructuring cause employees to consider major career changes in
an effort to assure financial security for themselves and their
families.
This Severance Pay Plan for Key Employees of Cleveland-Cliffs Inc (the
"Plan") is designed to assure fair treatment of "Key Employees" (as
defined below) in the event of a "Change of Control" (as defined
below). In such circumstances, it would permit Key Employees to make
critical career decisions in an atmosphere free of time pressure and
financial uncertainty, increasing their willingness to remain with
Cleveland-Cliffs Inc ("Cleveland-Cliffs") notwithstanding the outcome
of a possible Change of Control transaction.
2. EFFECTIVE AND TERMINATION DATES. This Plan is a continuation of the
severance plan originally effective as of February 1, 1992 (the
"Effective Date"). The Plan will automatically terminate on January 31,
2000 (the "Termination Date") if there has been no Change of Control
prior to such date.
3. Definitions.
------------
a. AVERAGE INCENTIVE PAY. The term "Average Incentive Pay" shall
mean an amount which is the greater of (i) the average amount
of Incentive Pay awarded to the Key Employee for the three
calendar years immediately prior to the Key Employee's
termination of employment, or (ii) the amount of the most
recent award of Incentive Pay.
b. BASE SALARY. The term "Base Salary" shall mean, with respect
to each Key Employee, the annual base compensation of such Key
Employee at the rate in effect immediately prior to the Change
of Control, or at such higher rate as may be in effect
immediately prior to the Key Employee's termination of
employment, in each case including any portion of the Key
Employee's annual base compensation the receipt of which the
Key Employee has elected to defer.
c. CHANGE OF CONTROL. The term "Change of Control" shall mean the
occurrence of any of the following events:
(i) Cleveland-Cliffs shall merge into itself, or be
merged or consolidated with, another corporation and
as a result of such merger or consolidation less than
70% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of
Cleveland-Cliffs as the same shall have existed
immediately prior to such merger or consolidation;
<PAGE> 5
2
(ii) Cleveland-Cliffs shall sell or otherwise transfer all
or substantially all of its assets to any other
corporation or other legal person, and immediately
after such sale or transfer less than 70% of the
combined voting power of the outstanding voting
securities of such corporation or person is held in
the aggregate by the former shareholders of
Cleveland-Cliffs as the same shall have existed
immediately prior to such sale or transfer;
(iii) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of
the Securities Exchange Act of 1934, shall become the
beneficial owner (as defined in Rule 13d-3 of the
Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934) of 30% or more of
the outstanding voting securities of Cleveland-Cliffs
(whether directly or indirectly); or
(iv) During any period of three consecutive years,
individuals who at the beginning of any such period
constitute the Board of Directors of Cleveland-Cliffs
cease, for any reason, to constitute at least a
majority thereof, unless the election, or the
nomination for election by the shareholders of
Cleveland-Cliffs, of each Director first elected
during any such period was approved by a vote of at
least one-third of the Directors of Cleveland-Cliffs
who are Directors of Cleveland-Cliffs on the date of
the beginning of any such period.
d. COMMITTEE. The term "Committee" shall mean the Compensation
and Organization Committee of the Board of Directors of
Cleveland-Cliffs.
e. COMPANY. The term "Company" shall mean, with respect to a Key
Employee, Cleveland-Cliffs or the Selected Affiliate which
pays such Key Employee's compensation.
f. FOR CAUSE. The term "For Cause" shall mean an act that is
materially inimical to the best interests of the Company and
that constitutes on the part of the Key Employee common law
fraud, a felony, or other gross malfeasance of duty.
g. INCENTIVE PAY. The term "Incentive Pay" shall mean the annual
compensation and awards allocated to a Key Employee pursuant
to any incentive compensation plans and arrangements of the
Company including, but not limited to, the Incentive Bonus
Plan and the 1992 Incentive Equity Plan.
h. INDUSTRY SERVICE AND CREDITED YEARS OF INDUSTRY SERVICE. The
term "Industry Service" shall mean professionally related
service, prior to the Key Employee's employment by the
Company, by a Key Employee as an employee within the iron and
steel industry or an industry to which such Key Employee's
position with the Company relates. A Key Employee shall be
given credit for one year of Industry Service for every two
years of service with the Company, as designated in the case
of each Key Employee in writing by, or in minutes of the
actions of, the Committee, and such years of credited Industry
Service shall be defined as "Credited Years of Industry
Service".
i. KEY EMPLOYEE. The term "Key Employee" shall mean any employee
of the Company who, at the time of the Change of Control,
holds a position
<PAGE> 6
3
as (i) a Senior Vice President, Vice President or Secretary of
Cleveland-Cliffs, or (ii) a mine manager. Notwithstanding the
foregoing, employees who would otherwise be Key Employees
shall not be Key Employees for purposes of this Plan if they
have entered into an Employment Agreement or similar
arrangement with the Company providing for the payment of
severance compensation in specified circumstances following a
Change of Control. In addition, Key Employee shall include
such other employees of the Company as shall be designated in
writing by, or in minutes of the actions of, the Committee.
j. SELECTED AFFILIATE. The term "Selected Affiliate" means (i)
any corporation in an unbroken chain of corporations beginning
with Cleveland-Cliffs if each of the corporations other than
the last corporation in the chain owns or controls, directly
or indirectly, stock possessing not less than 50 percent of
the total combined voting power of all classes of stock in one
of the other corporations, or (ii) any partnership or joint
venture in which one or more of such corporations is a partner
or venturer, each of which shall be selected by the Committee.
k. SUPPLEMENTAL RETIREMENT PLAN OR SRP. The term "Supplemental
Retirement Plan" or "SRP" shall mean the Cleveland-Cliffs Inc
Supplemental Retirement Benefit Plan (As Amended and Restated
Effective January 1, 1997).
4. Eligibility Under This Plan.
----------------------------
a. Subject to the limitations described below, this Plan applies
to Key Employees who are employed on the date that a Change of
Control occurs. The Company reserves the right, at any time
prior to the occurrence of a Change of Control, to amend,
modify, change or terminate this Plan with or without notice
or any liability to Key Employees. This Plan shall not be
amended, modified, changed or terminated after the occurrence
of a Change of Control without the written consent of each Key
Employee.
b. A Key Employee will be eligible for Severance Compensation and
other benefits under this Plan if, within three years after
the occurrence of a Change of Control (the "Severance
Protection Period"):
(i) The Key Employee's employment with the Company is
terminated by the Company other than For Cause.
(ii) The Key Employee voluntarily terminates his or her
employment with the Company following the occurrence
of any of the following events:
(A) The failure to elect, re-elect or otherwise
maintain the Key Employee in the office or
position in the Company which the Key
Employee held immediately prior to the
Change of Control;
(B) (I) A reduction in the aggregate of the Key
Employee's Base Salary and Incentive Pay
received from Cleveland-Cliffs, or a
reduction in the Key Employee's
opportunities for Incentive Pay (including,
but not limited to, a reduction in the
target bonus percentage or
<PAGE> 7
4
target award opportunity (whether measured
by number of performance shares or
management objectives) provided by
Cleveland-Cliffs, or (II) a reduction or
termination of any benefits described in
Section 5.b. hereof to which the Key
Employee was entitled immediately prior to
the Change of Control, any of which is not
remedied by Cleveland-Cliffs within ten
calendar days after receipt by
Cleveland-Cliffs of written notice from the
Key Employee of such reduction or
termination, as the case may be;
(C) A determination by the Key Employee (which
determination will be conclusive and binding
upon the Company provided it has been made
in good faith and in all events will be
presumed to have been made in good faith
unless otherwise shown by the Company by
clear and convincing evidence) that a change
in circumstances has occurred following a
Change of Control, including without
limitation a change in the scope of the
business or other activities for which he or
she was responsible immediately prior to the
Change of Control, which has rendered the
Key Employee substantially unable to carry
out, has substantially hindered the Key
Employee's performance of, or has caused the
Key Employee to suffer a substantial
reduction in, any of the authorities,
powers, functions, responsibilities or
duties attached to the position held by the
Key Employee immediately prior to the Change
of Control, which situation is not remedied
within ten calendar days after written
notice to Cleveland-Cliffs from the Key
Employee of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of
Cleveland-Cliffs or the transfer of all or a
significant portion of its business and/or
assets, unless the successor or successors
(by liquidation, merger, consolidation,
reorganization or otherwise) to which all or
a significant portion of its business and/or
assets have been transferred (directly or by
operation of law) shall have assumed all
duties and obligations of the Company under
this Plan pursuant to Section 15 hereof;
(E) Cleveland-Cliffs relocates its principal
executive offices, or the Company requires
the Key Employee to change his or her
principal location of work to any location
which is in excess of 25 miles from the
location thereof immediately prior to the
Change of Control, or the Company requires
the Key Employee to travel away from his or
her office in the course of discharging his
or her responsibilities or duties hereunder
at least 20% more (in terms of aggregate
days in any calendar year or in any calendar
quarter when annualized for purposes of
comparison to any prior year) than was
required of him or her prior to the Change
of Control, without, in any case, his or her
prior written consent; or
(F) Without limiting the generality or effect of
the foregoing, any material breach of its
obligations under the Plan by the Company or
any successor thereto.
<PAGE> 8
5
5. Severance Compensation.
-----------------------
a. SEVERANCE PAY. Each Key Employee who is terminated in
accordance with Section 4.b. shall, within five business days
after such termination:
(i) Receive severance pay from the Company in a lump sum
payment (the "Severance Payment") in an amount equal
to the present value (using a discount rate
prescribed for purposes of valuation computations
under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") or any successor
provision thereto or if no such rate is so
prescribed, a rate equal to the then "applicable
interest rate" under Section 417(e)(3)(A)(ii)(II) of
the Code for the month in which such termination
occurs (the "Discount Rate")) equivalent to:
(A) For a Key Employee who is a corporate
officer of Cleveland-Cliffs at the senior
vice presidential level or higher, the sum
of his or her Base Salary plus his or her
Average Incentive Pay multiplied by the
lesser of (I) the number of years (with
periods of less than a year expressed as the
number of days remaining in a year divided
by 365) remaining in the Severance
Protection Period (but not less than one),
or (II) two.
(B) For a Key Employee other than one described
in subparagraph a.(i)(A) of this Section 5,
the sum of his or her Base Salary multiplied
by one plus his or her Average Incentive Pay
multiplied by one.
(ii) Receive from the Company a lump sum payment (the "SRP
Payment") in an amount equal to the sum of the future
pension benefits (converted to a lump sum of
actuarial equivalence) which the Key Employee would
have been entitled to receive under the SRP, as the
same may be further amended prior to a Change of
Control and as modified by Section 6 hereof (assuming
Base Salary at the rate in effect immediately prior
to the termination of employment and Incentive Pay
equivalent to the amount of Average Incentive Pay),
if the Key Employee had remained in the full-time
employment of the Company until the expiration of the
third anniversary of the occurrence of the Change of
Control.
The calculation of the SRP Payment and its actuarial
equivalence shall be made as of the date the Key
Employee is terminated. The lump sum of actuarial
equivalence shall be calculated as of the third
anniversary of the occurrence of the Change of
Control using the assumptions and factors used in the
SRP, and such sums shall be discounted to the date of
payment using the Discount Rate.
Payment of the SRP Payment by the Company shall be
deemed to be a satisfaction of all obligations of the
Company to the Key Employee under the SRP.
b. HEALTH AND LIFE BENEFITS. Each Key Employee who is terminated
in accordance with Section 4.b., and his or her eligible
dependents, will receive continued health and life insurance
benefits as follows:
<PAGE> 9
6
(i) A Key Employee described in Section 5.a.(i)(A) will
be covered under the health and life insurance plans
that covered him or her immediately before the date
of termination until the earlier of (A) the
expiration of the lesser of (I) the number of years
(with periods of less than a year expressed as the
number of days remaining in a year divided by 365)
remaining in the Severance Protection Period (but not
less than one year) or (II) two years, or (B) the
date upon which the Key Employee becomes eligible for
health and life insurance benefits as a result of
subsequent employment. If the continued health
coverage under this clause (i) is provided through
participation in the Company's group health plan,
then following such period of continued health
coverage, the Key Employee will be eligible to elect
to continue, for himself or herself and his or her
eligible dependents, health benefits in accordance
with the provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended
("COBRA").
(ii) A Key Employee described in Section 5.a.(ii)(B) will
be covered under the health and life insurance plans
that covered him or her immediately before the date
of termination until the earlier of (A) the
expiration of the first anniversary of the date of
termination, or (B) the date upon which the Key
Employee becomes eligible for health and life
insurance benefits as a result of subsequent
employment. If the continued health coverage under
this clause (ii) is provided through participation in
the Company's group health plan, then following such
period of continued health care coverage, the Key
Employee will be eligible to elect to continue, for
himself or herself and his or her eligible
dependents, health benefits in accordance with the
provisions of COBRA.
c. WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION. Each Key
Employee who is terminated in accordance with Section 4.b.
hereof shall, upon the earlier to occur of (i) the date upon
which the Key Employee would have otherwise reached 30 years
of continuous service with the Company but for his or her
termination of employment after the Change of Control, or (ii)
the date upon which the sum of the Key Employee's years of
continuous service with the Company that the Key Employee
would have attained as of the third anniversary of the Change
of Control (but for his or her termination of employment) and
the Key Employee's Credited Years of Industry Service (as
defined in Section 3.h. hereof) is equal to 30 years, receive
the following post-retirement welfare benefits:
(A) medical, hospital, surgical and prescription drug
coverage, equivalent to that furnished on February 1,
1992 by the Company to officers who retire after
January 1, 1990 for the lifetime of the Key Employee
and the lifetime of his or her spouse, and to the Key
Employee's eligible dependents for their periods of
eligibility, through insurance or otherwise;
(B) life insurance on the Key Employee, to the Key
Employee for his or her lifetime, equivalent to that
furnished on February 1, 1992 by the Company to
officers who retire after January 1, 1990; and
<PAGE> 10
7
(C) without otherwise limiting the purposes or effect of
this Section 5.c. hereof, welfare benefits payable to
the Key Employee or his or her spouse or dependents
pursuant to this Section 5.c. shall be reduced to the
extent comparable welfare benefits are payable
pursuant to Section 5.b. hereof (other than through
COBRA) or are actually received by the Key Employee
or his or her spouse or dependents from another
employer of the Key Employee.
d. STOCK OPTIONS, RESTRICTED STOCK AND PERFORMANCE SHARES. Upon a
Key Employee's termination in accordance with Section 4.b.,
(i) all stock options granted under the 1992 Incentive Equity
Plan, or any successor plan or similar plan, shall be vested,
(ii) the restrictions on any restricted stock awarded under
the 1992 Incentive Equity Plan, or any successor plan or
similar plan, shall be released, and (iii) all performance
share awards under the Long-Term Performance Share Program
under the 1992 Incentive Equity Plan for which the measurement
period has not yet expired shall be earned assuming management
objectives have been met at the target level.
e. OUTPLACEMENT COUNSELING. Each Key Employee who is terminated
in accordance with Section 4.b. shall be reimbursed by the
Company for reasonable expenses incurred for outplacement
counseling (i) which are pre-approved by Cleveland-Cliffs
Chief Human Resources Officer, (ii) which do not exceed 15% of
the Key Employee's Base Salary, and (iii) which are incurred
by the Key Employee within six months following such
termination.
f. CALCULATION. The calculation of all payments of compensation
and other benefits to be provided to each affected Key
Employee under this Plan (other than payments pursuant to
Section 7 hereof) shall be made by Hewitt Associates
("Hewitt"), or such other actuarial firm selected by
Cleveland-Cliffs' independent accountants and satisfactory to
each affected Key Employee. The Company shall provide to such
actuarial firm all information requested by such actuarial
firm as necessary for or helpful to it to make the
calculations hereunder.
6. SUPPLEMENTAL RETIREMENT BENEFIT PLAN. The Company hereby waives the
discretionary right, at any time subsequent to the date of a Change of
Control, to amend or terminate the SRP as to the Key Employee as
provided in paragraph 8 thereof or to terminate the rights of the Key
Employee or his or her beneficiary under the SRP in the event the Key
Employee engages in a competitive business as provided in any plan or
arrangement between the Company and the Key Employee, including but not
limited to, provisions of paragraph 4 of the SRP, or any similar
provisions of any such plan or arrangement or other plan or arrangement
supplementing or superseding the same. The Company agrees that in
consideration for each Key Employee's continuing to perform services
for the Company, this Section 6 shall constitute a "Supplemental
Agreement", as defined in paragraph 1.K of the SRP, between the Company
and each such Key Employee. If, within three years after the occurrence
of a Change of Control, (1) the Company shall terminate the Key
Employee's employment other than For Cause, or (2) the Key Employee
shall terminate his or her employment pursuant to Section 4.b.(ii)
hereof, for purposes of computing the Key Employee's period of
continuous service and of calculating and paying his or her benefit
under the SRP:
<PAGE> 11
8
a. The Key Employee shall be credited with years of continuous
service at the time of his or her termination of employment
with the Company (by death or otherwise) equal to the number
of years of continuous service he or she would have had if he
or she had continued his or her employment with the Company
until the expiration of the third anniversary of the
occurrence of the Change of Control, and had he or she
attained his or her chronological age at the expiration of the
third anniversary of the occurrence of the Change of Control.
In addition, the Key Employee shall be eligible for a 30-year
pension benefit based upon his or her years of continuous
service as computed under the preceding sentence. The Key
Employee shall be eligible to commence the 30-year pension
benefit on the earlier of (i) the date upon which the Key
Employee would have otherwise reached 30 years of continuous
service with Cleveland-Cliffs and any Selected Affiliate but
for his or her termination of employment after the Change of
Control, or (ii) the date upon which the sum of the Key
Employee's years of continuous service (as computed in the
first sentence of this subparagraph a.) and his or her
Credited Years of Industry Service (as defined in Section 3.h.
hereof) is equal to 30 years.
b. The Key Employee shall be a "Participant" in the SRP,
notwithstanding any limitations therein.
A copy of the SRP is attached to this Agreement as Exhibit A. The SRP
is incorporated in all respects herein; provided, however, that the
terms of this Agreement shall take precedence to the extent they are
contrary to provisions contained in the SRP.
7. Certain Additional Payments by Cleveland-Cliffs.
------------------------------------------------
(a) Anything in this Plan to the contrary notwithstanding, in the
event that it shall be determined (as hereafter provided) that
any payment or distribution by the Company to or for the
benefit of the Key Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this
Plan or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including
without limitation any stock option, stock appreciation right,
phantom share right or similar right, or the lapse or
termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code
by reason of being considered "contingent on a change in
ownership or control" of Cleveland-Cliffs, within the meaning
of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law,
or any interest or penalties with respect to such tax (such
tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"),
then the Key Employee shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up
Payment"); PROVIDED, HOWEVER, that no Gross-up Payment shall
be made with respect to the Excise Tax, if any, attributable
to (i) any incentive stock option, as defined by Section 422
of the Code ("ISO"), or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with any ISO
described in clause (i). The Gross-Up Payment shall be in an
amount such that, after payment by the Key Employee of all
taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon
the Gross-Up
<PAGE> 12
9
Payment, the Key Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 7(f), all determinations
required to be made under this Section 7, including whether an
Excise Tax is payable by the Key Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to
be paid by Cleveland-Cliffs to the Key Employee and the
amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm")
selected by the Key Employee in his sole discretion. The Key
Employee shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both
Cleveland-Cliffs and the Key Employee within 30 calendar days
after the Key Employee's termination date, if applicable, and
any such other time or times as may be requested by
Cleveland-Cliffs or the Key Employee. If the Accounting Firm
determines that any Excise Tax is payable by the Key Employee,
Cleveland-Cliffs shall pay the required Gross-Up Payment to
the Key Employee within five business days after receipt of
such determination and calculations with respect to any
Payment to the Key Employee. If the Accounting Firm determines
that no Excise Tax is payable by the Key Employee, it shall,
at the same time as it makes such determination, furnish
Cleveland-Cliffs and the Key Employee an opinion that the Key
Employee has substantial authority not to report any Excise
Tax on his or her federal, state or local income or other tax
return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto)
and the possibility of similar uncertainty regarding
applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by
Cleveland-Cliffs should have been made (an "Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that Cleveland-Cliffs exhausts or
fails to pursue its remedies pursuant to Section 7(f) and the
Key Employee thereafter is required to make a payment of any
Excise Tax, the Key Employee shall direct the Accounting Firm
to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting
calculations to both Cleveland-Cliffs and the Key Employee as
promptly as possible. Any such Underpayment shall be promptly
paid by Cleveland-Cliffs to, or for the benefit of, the Key
Employee within five business days after receipt of such
determination and calculations.
(c) Cleveland-Cliffs and the Key Employee shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of Cleveland-Cliffs or the Key
Employee, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section 7(b).
Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon Cleveland-Cliffs
and the Key Employee.
(d) The federal, state and local income or other tax returns filed
by the Key Employee shall be prepared and filed on a
consistent basis with the determination of the Accounting Firm
with respect to the Excise Tax payable by the Key Employee.
The Key Employee shall make proper payment of the amount of
any Excise Payment, and at the request of
<PAGE> 13
10
Cleveland-Cliffs, provide to Cleveland-Cliffs true and correct
copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents
reasonably requested by Cleveland-Cliffs, evidencing such
payment. If prior to the filing of the Key Employee's federal
income tax return, or corresponding state or local tax return,
if relevant, the Accounting Firm determines that the amount of
the Gross-Up Payment should be reduced, the Key Employee shall
within five business days pay to Cleveland-Cliffs the amount
of such reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations
contemplated by Section 7(b) shall be borne by
Cleveland-Cliffs. If such fees and expenses are initially paid
by the Key Employee, Cleveland-Cliffs shall reimburse the Key
Employee the full amount of such fees and expenses within five
business days after receipt from the Key Employee of a
statement therefor and reasonable evidence of his payment
thereof.
(f) The Key Employee shall notify Cleveland-Cliffs in writing of
any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by
Cleveland-Cliffs of a Gross-Up Payment. Such notification
shall be given as promptly as practicable but no later than
ten business days after the Key Employee actually receives
notice of such claim and the Key Employee shall further
apprise Cleveland-Cliffs of the nature of such claim and the
date on which such claim is requested to be paid (in each
case, to the extent known by the Key Employee). The Key
Employee shall not pay such claim prior to the earlier of (i)
the expiration of the 30-calendar-day period following the
date on which he gives such notice to Cleveland-Cliffs, and
(ii) the date that any payment of an amount with respect to
such claim is due. If Cleveland-Cliffs notifies the Key
Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Key Employee shall:
(i) provide Cleveland-Cliffs with any written records or
documents in his or her possession relating to such
claim reasonably requested by Cleveland-Cliffs;
(ii) take such action in connection with contesting such
claim as Cleveland-Cliffs shall reasonably request in
writing from time to time, including without
limitation accepting legal representation with
respect to such claim by an attorney competent in
respect of the subject matter and reasonably selected
by Cleveland-Cliffs;
(iii) cooperate with Cleveland-Cliffs in good faith in
order effectively to contest such claim; and
(iv) permit Cleveland-Cliffs to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that Cleveland-Cliffs shall bear and pay
directly all costs and expenses (including interest and
penalties) incurred in connection with such contest and shall
indemnify and hold harmless the Key Employee, on an after-tax
basis, for and against any Excise
<PAGE> 14
11
Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the
foregoing provisions of this Section 7(f), Cleveland-Cliffs
shall control all proceedings taken in connection with the
contest of any claim contemplated by this Section 7(f) and, at
its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim (provided,
however, that the Key Employee may participate therein at his
own cost and expense) and may, at its option, either direct
the Key Employee to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Key
Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as
Cleveland-Cliffs shall determine; PROVIDED, HOWEVER, that if
Cleveland-Cliffs directs the Key Employee to pay the tax
claimed and sue for a refund, Cleveland-Cliffs shall advance
the amount of such payment to the Key Employee on an
interest-free basis and shall indemnify and hold the Key
Employee harmless, on an after-tax basis, from any Excise Tax
or income or other tax, including interest or penalties with
respect thereto, imposed with respect to such advance; and,
PROVIDED FURTHER, HOWEVER, that any extension of the statute
of limitations relating to payment of taxes for the taxable
year of the Key Employee with respect to which the contested
amount is claimed to be due is limited solely to such
contested amount. Furthermore, Cleveland-Cliffs' control of
any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder
and the Key Employee shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Key Employee of an amount
advanced by Cleveland-Cliffs pursuant to Section 7(f), the Key
Employee receives any refund with respect to such claim, the
Key Employee shall (subject to Cleveland-Cliffs' complying
with the requirements of Section 7(f)) promptly pay to
Cleveland-Cliffs the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Key Employee of an
amount advanced by Cleveland-Cliffs pursuant to Section 7(f),
a determination is made that the Key Employee shall not be
entitled to any refund with respect to such claim and
Cleveland-Cliffs does not notify the Key Employee in writing
of its intent to contest such denial or refund prior to the
expiration of 30 calendar days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be
paid by Cleveland-Cliffs to the Key Employee pursuant to this
Section 7.
8. MITIGATION. A Key Employee shall not be required to mitigate the amount
of any payment or benefit provided for in this Plan by seeking other
employment or otherwise.
9. TIMING OF SEPARATION PAY, ETC. Separation Pay and the Gross-Up Payment
are not included as earnings for the purpose of calculating benefits
under any employee benefit plan of the Company. The Separation Pay and
the Gross-Up Payment shall not be made from any benefit plan funds, and
shall constitute
<PAGE> 15
12
an unfunded unsecured obligation of the Company. Separation Pay and the
Gross-Up Payment shall be paid in a lump sum on the date of termination
or promptly thereafter. Upon the request of the Key Employee and at the
option of the Company, Separation Pay may be paid in two equal
installments with the first installment to be made at the time of
termination, and the second installment to be made on the January 1st
immediately after the date of termination. Separation Pay and the
Gross-Up Payment shall be net of any income, excise or employment taxes
which are required to be withheld from such payment.
10. CONFIDENTIALITY AND COMPETITIVE ACTIVITY. Payment of the severance pay
and benefits set forth in Sections 5 and 6 hereof to a Key Employee is
conditioned upon the Key Employee agreeing in writing with the Company
that:
a. All trade secrets, customer lists and other confidential
business information are the exclusive property of the
Company, and the Key Employee shall not at any time directly
or indirectly reveal or cause to be revealed to any person or
entity such trade secrets, customer lists and other
confidential business information obtained as a result of the
Key Employee's employment or relationship with the Company.
b. For a period of 12 months from and after any termination of
employment following a Change of Control, the Key Employee
shall not become an officer, director, joint venturer,
employee, consultant, 5-percent or more shareholder (directly
or indirectly) of, or promote or assist (financially or
otherwise), any entity which competes in any business in which
the Company or any of its affiliates are engaged as of the
date of the Change of Control. For this purpose, business is
defined as the iron and steel industry. The provisions of this
Section 10.b shall, following a Change of Control, supersede
and be in lieu of any similar provision in any other plan or
agreement involving the Company or any of its affiliates and
the Key Employee, whether now existing or hereinafter adopted
or entered into, including, but not limited to, the SRP.
11. RELEASE. Payment of the severance pay and benefits set forth in
Sections 5 and 6 hereof to a Key Employee is conditioned upon the Key
Employee executing and delivering a release satisfactory to the Company
releasing Cleveland-Cliffs and each Selected Affiliate from any and all
claims, demands, damages, actions and/or causes of action whatsoever,
which he or she may have had on account of the termination of his or
her employment, including, but not limited to claims of discrimination,
including on the basis of sex, race, age, national origin, religion or
handicapped status (with all applicable periods during which the Key
Employee may revoke the release or any provision thereof having
expired), and any and all claims, demands and causes of action for
retirement (other than under the Pension Plan for Salaried Employees of
Cleveland-Cliffs Inc or under any "welfare benefit plan" of the Company
(as the term "welfare benefit plan" is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended)),
severance or other termination pay, and because, pursuant to Section
5.a, the Key Employee is entitled to lump sum payments of Incentive Pay
and benefits under the SRP, under the SRP and under the incentive
compensation plans and arrangements of the Company described in Section
3.d. Such release shall not, however, apply to the ongoing obligations
of the Company arising under this Plan, or rights of indemnification
the Key Employee may have under Cleveland-Cliffs' Regulations or by
contract or by statute.
<PAGE> 16
13
12. Legal Fees and Expenses.
------------------------
a. It is the intent of the Company that no Key Employee be
required to incur the expenses associated with the enforcement
of his or her rights under this Plan by litigation or other
legal action because the cost and expense thereof would
substantially detract from the benefits intended to be
extended to the Key Employee hereunder. Accordingly, if it
should appear to the Key Employee that the Company has failed
to comply with any of its obligations under this Plan or in
the event that the Company or any other person takes any
action to declare this Plan void or unenforceable, or
institutes any litigation designed to deny, or to recover
from, the Key Employee the benefits intended to be provided to
the Key Employee hereunder, the Company irrevocably authorizes
the Key Employee from time to time to retain counsel of his or
her choice, at the expense of the Company as hereafter
provided, to represent the Key Employee in connection with the
initiation or defense of any litigation or other legal action,
whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company in any
jurisdiction.
Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company
irrevocably consents to the Key Employee's entering into an
attorney-client relationship with such counsel, and in that
connection the Company and the Key Employee agree that a
confidential relationship shall exist between the Key Employee
and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Key Employee as a
result of the Company's failure to perform under this Plan or
any provision hereof or as a result of the Company or any
person contesting the validity or enforceability of this Plan
or any provision hereof as aforesaid; or as a result of the
Company or any person contesting the validity or
enforceability of this Plan or any provision thereof.
b. To ensure that the provisions of this Plan can be enforced by
the Key Employee, a trust arrangement ("Trust No. 2") has been
established between KeyTrust Company of Ohio, N.A., as Trustee
("Trustee"), and Cleveland-Cliffs. Trust Agreement No. 2
(Amended and Restated Effective June 1, 1997) ("Trust
Agreement No. 2") dated June 12, 1997, as amended and/or
restated, between the Trustee and Cleveland-Cliffs is attached
as Exhibit B and shall be considered a part of this Plan and
shall set forth the terms and conditions relating to payment
under Trust Agreement No. 2 for attorneys' fees and related
fees and expenses pursuant to Section 12.a. hereof owed by the
Company. The Key Employee shall make demand on the Company for
any payments due the Key Employee pursuant to Section 12.a.
hereof prior to making demand therefor on the Trustee under
Trust Agreement No. 2. Payments by such Trustee shall
discharge the Company's liability under Section 12.a. hereof
only to the extent that trust assets are used to satisfy such
liability.
c. Upon the earlier to occur of (i) a Change of Control or (ii) a
declaration by the Board of Directors of Cleveland-Cliffs that
a Change of Control is imminent, Cleveland-Cliffs shall
promptly to the extent it has not previously done so, and in
any event within five business days, transfer to the Trustee
to be added to the
<PAGE> 17
14
principal of the Trust under Trust Agreement No. 2 the sum of
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) less any
principal in such Trust as of the date of such transfer. Any
payments of attorneys' and related fees and expenses by the
Trustee pursuant to Trust Agreement No. 2 shall, to the extent
thereof, discharge the Company's obligation hereunder, it
being the intent of Cleveland-Cliffs that assets in such
Trust be held as security for the Company's obligation under
Section 12.a. hereof. The Key Employee understands and
acknowledges that the entire corpus of the Trust under Trust
Agreement No. 2 will be $250,000 and that said amount will be
available to discharge not only the obligations of the Company
to the Key Employee under Section 12.a. hereof, but also
similar obligations of the Company to other employees under
similar provisions.
13. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Plan shall
create any right or duty on the part of the Company or the Key Employee
to have the Key Employee remain in the employment of the Company at any
time prior to a Change of Control. The Key Employee is an employee at
will, and following a Change of Control the Company may terminate him
or her at any time for any reason if the Company pays the Severance
Compensation provided for under Section 5 of this Plan.
14. WITHHOLDING OF TAXES. The Company may withhold from any amounts payable
under this Plan all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.
15. Successors and Binding Effect.
------------------------------
a. The Company shall require any successor, (including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company
whether by purchase, merger, consolidation, reorganization or
otherwise, and such successor shall thereafter be deemed the
Company for the purposes of this Plan), to assume and agree to
perform the obligations under this Plan in the same manner and
to the same extent the Company would be required to perform if
no such succession had taken place. This Plan shall be binding
upon and inure to the benefit of the Company and any successor
to the Company, but shall not otherwise be assignable,
transferable or delegable by the Company.
b. The rights under this Plan shall inure to the benefit of and
be enforceable by the Key Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees and/or legatees.
c. The rights under this Plan are personal in nature and neither
the Company nor any Key Employee shall, without the consent of
the other, assign, transfer or delegate this Plan or any
rights or obligations hereunder except as expressly provided
in this Section 15. Without limiting the generality of the
foregoing, a Key Employee's right to receive payments
hereunder shall not be assignable, transferable or delegable,
whether by pledge, creation of a security interest or
otherwise, other than by a transfer by his or her will or by
the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
<PAGE> 18
15
Section 15, the Company shall have no liability to pay any
amount so attempted to be assigned, transferred or delegated.
d. The obligation of the Company to make payments and/or provide
benefits hereunder shall represent an unsecured obligation of
the Company.
e. The Company and each Key Employee recognize that each party
will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of
any such breach, the Company and each Key Employee hereby
agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy
to enforce performance of obligations under this Plan.
16. GOVERNING LAW. The validity, interpretation, construction and
performance of this Plan shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of
such State.
17. VALIDITY. If any provision of this Plan or the application of any
provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of this Plan and the
application of such provision to any other person or circumstances
shall not be affected, and the provision so held to be invalid,
unenforceable or otherwise illegal shall be reformed to the extent (and
only to the extent) necessary to make it enforceable, valid and legal.
18. CAPTIONS. The captions in this Plan are for convenience of reference
only and do not define, limit or describe the scope or intent of this
Plan or any part hereof and shall not be considered in any construction
hereof.
19. Administration of Plan.
-----------------------
a. IN GENERAL. The Plan shall be administered by
Cleveland-Cliffs, which shall be the plan administrator and
named fiduciary under the Plan. Cleveland-Cliffs shall have
the sole and absolute discretion to interpret where necessary
all provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or
resolving inconsistencies or ambiguities in, the language of
the Plan), to determine the rights and status under the Plan
of Key Employees or other persons, to resolve questions or
disputes arising under the plan and to make any determinations
with respect to the benefits payable hereunder and the persons
entitled thereto as may be necessary for the purposes of the
Plan. Without limiting the generality of the foregoing,
Cleveland-Cliffs is hereby granted the authority (i) to
determine whether a particular employee is a "Key Employee"
under the Plan, and (ii) to determine whether a particular Key
Employee is eligible for Severance Compensation and other
benefits under the Plan.
b. DELEGATION OF DUTIES. Cleveland-Cliffs may delegate any of its
administrative duties, including, without limitation, duties
with respect to the processing, review, investigation,
approval and payment of Severance Compensation and Gross-Up
Payments, to a named administrator or administrators.
c. REGULATIONS. Cleveland-Cliffs shall promulgate any rules and
regulations it deems necessary in order to carry out the
purposes of
<PAGE> 19
16
the Plan or to interpret the terms and conditions of the Plan;
provided, however, that no rule, regulation or interpretation
shall be contrary to the provisions of the Plan.
d. CLAIMS PROCEDURE. Cleveland-Cliffs shall determine the rights
of any employee of the Company to any Severance Compensation
or a Gross-up Payment hereunder. Any employee or former
employee of the Company who believes that he or she is
entitled to receive Severance Compensation or a Gross-up
Payment under the Plan, including other than that initially
determined by Cleveland-Cliffs, may file a claim in writing
with the Cleveland-Cliffs' Chief Human Resources Officer.
Cleveland-Cliffs shall, no later than 90 days after the
receipt of a claim, either allow or deny the claim by written
notice to the claimant. If a claimant does not receive written
notice of Cleveland-Cliffs' decision on his or her claim
within such 90-day period, the claim shall be deemed to have
been denied in full.
A denial of a claim by Cleveland-Cliffs, wholly or partially,
shall be written in a manner calculated to be understood by
the claimant and shall include:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent Plan provisions upon
which the denial is based;
(iii) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
(iv) an explanation of the Plan's claim review procedure.
A claimant whose claim is denied (or his or her duly
authorized representative) may, within 30 days after receipt
of denial of his or her claim, request a review of such denial
by Cleveland-Cliffs by filing with the Secretary of
Cleveland-Cliffs a written request for review of his or her
claim. If the claimant does not file a request for review with
Cleveland-Cliffs within such 30-day period, the claimant shall
be deemed to have acquiesced in the original decision of the
Company on his or her claim. If a written request for review
is so filed within such 30-day period, Cleveland-Cliffs shall
conduct a full and fair review of such claim. During such full
review, the claimant shall be given the opportunity to review
documents that are pertinent to his or her claim and to submit
issues and comments in writing and, if he or she requests a
hearing, to present his or her case in person at a hearing
scheduled by Cleveland-Cliffs. Cleveland-Cliffs shall notify
the claimant of its decision on review within 60 days after
receipt of a request for review. Notice of the decision on
review shall be in writing. If the decision on review is not
furnished to the claimant within such 60-day period, the claim
shall be deemed to have been denied on review.
e. REVOCABILITY OF ACTION. Any action taken by Cleveland-Cliffs
with respect to the rights or benefits under the Plan of any
employee shall be revocable by Cleveland-Cliffs as to payments
or distributions not yet made to such person, and acceptance
of
<PAGE> 20
17
Severance Compensation or a Gross-up Payment under the Plan
constitutes acceptance of and agreement to Cleveland-Cliffs
making any appropriate adjustments in future payments or
distributions to such person to offset any excess or
underpayment previously made to him or her.
f. EXECUTION OF RECEIPT. Upon receipt of any Severance
Compensation or Gross-Up Payment hereunder, Cleveland-Cliffs
reserves the right to require any Key Employee to execute a
receipt evidencing the amount and payment of such Severance
Compensation and/or Gross-up Payment.
IN WITNESS WHEREOF, the Company, pursuant to the order of its
Board of Directors, has executed this Severance Pay Plan for Key Employees of
Cleveland-Cliffs Inc (as Amended and Restated as of February 1, 1997) at
Cleveland, Ohio, this 26th day of June, 1997
CLEVELAND-CLIFFS INC
By /s/ R.F. Novak
--------------------------------------
Vice President - Human Resources
<PAGE> 1
Exhibit 10(l)
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(as Amended and Restated Effective January 1, 1997)
---------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions................................................... 1
-----------
2. Determination of the Supplemental Pension Plan Benefit........ 3
------------------------------------------------------
3. Payment of the Supplemental Pension Plan Benefit.............. 4
------------------------------------------------
4. Forfeitability................................................ 6
--------------
5. General....................................................... 6
-------
6. Adoption of Supplemental Retirement Benefit Plan.............. 8
------------------------------------------------
7. Miscellaneous................................................. 8
-------------
8. Amendment and Termination...................................... 9
-------------------------
9. Effective Date................................................ 10
--------------
</TABLE>
<PAGE> 3
CLEVELAND-CLIFFS INC
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(as Amended and Restated Effective January 1, 1997)
---------------------------------------------------
WHEREAS, Cleveland-Cliffs Inc ("Cleveland-Cliffs") and its
subsidiary corporations and affiliates have established, or may hereafter
establish, one or more qualified retirement plans;
WHEREAS, the qualified retirement plans, pursuant to Sections
401(a) and 415 of the Internal Revenue Code of 1986, as amended, place certain
limitations on the amount of contributions that would otherwise be made
thereunder for certain participants;
WHEREAS, Cleveland-Cliffs now desires to provide for the
contributions which would otherwise have been made for such participants under
certain of its qualified retirement plans except for such limitations, in
consideration of services performed and to be performed by each such participant
for Cleveland-Cliffs and its subsidiaries and affiliates; and
WHEREAS, Cleveland-Cliffs has entered into, and
Cleveland-Cliffs and its subsidiary corporations and affiliates may in the
future enter into, agreements with certain executives providing for additional
service credit and/or other features for purposes of computing retirement
benefits, in consideration of services performed and to be performed by such
executives for Cleveland-Cliffs and its subsidiaries and affiliates.
NOW, THEREFORE, Cleveland-Cliffs hereby amends and restates
and publishes the Supplemental Retirement Benefit Plan heretofore established by
it, which shall contain the following terms and conditions:
1. DEFINITIONS. A. The following words and phrases when used
in this Plan with initial capital letters shall have the following respective
meanings, unless the context clearly indicates otherwise. The masculine whenever
used in this Plan shall include the feminine.
B. "AFFILIATE" shall mean any partnership or joint venture of
which any member of the Controlled Group is a partner or venturer and which
shall adopt this Plan pursuant to paragraph 6.
C. "BENEFICIARY" shall mean such person or persons (natural or
otherwise) as may be designated by the Participant as his Beneficiary under this
Plan. Such a designation may be made, and may be revoked or changed (without the
consent of any previously designated Beneficiary), only by an instrument (in
form acceptable to Cleveland-Cliffs) signed by the Participant and may be
revoked or changed (without the consent of any previously designated
Beneficiary), only by an instrument (in form acceptable to Cleveland-Cliffs)
signed by the Participant
<PAGE> 4
2
and filed with Cleveland-Cliffs prior to the Participant's death. In the absence
of such a designation and at any other time when there is no existing
Beneficiary designated by the Participant to whom payment is to be made pursuant
to his designation, his Beneficiary shall be his beneficiary under the Pension
Plan. A person designated by a Participant as his Beneficiary who or which
ceases to exist shall not be entitled to any part of any payment thereafter to
be made to the Participant's Beneficiary unless the Participant's designation
specifically provided to the contrary. If two or more persons designated as a
Participant's Beneficiary are in existence, the amount of any payment to the
Beneficiary under this Plan shall be divided equally among such persons unless
the Participant's designation specifically provided to the contrary.
Notwithstanding the foregoing, the Beneficiary of a Participant who elects the
form of benefit elected by the Participant under the Pension Plan shall be the
same beneficiary designated by him or her thereunder.
D. "CODE" shall mean the Internal Revenue Code of 1986, as it
has been and may be amended from time to time.
E. "CODE LIMITATIONS" shall mean the limitations imposed by
Sections 401(a) and 415 of the Code, or any successor thereto, on the amount of
the benefits which may be payable to a Participant from the Pension Plan.
F. "CONTROLLED GROUP" shall mean Cleveland-Cliffs and any
corporation in an unbroken chain of corporations beginning with
Cleveland-Cliffs, if each of the corporations other than the last corporation in
the chain owns or controls, directly or indirectly, stock possessing not less
than fifty percent of the total combined voting power of all classes of stock in
one of the other corporations.
G. "EMPLOYER(S)" shall mean Cleveland-Cliffs and any other
member of the Controlled Group and any Affiliate which shall adopt this Plan
pursuant to paragraph 6.
H. "PARTICIPANT" shall mean each person (i) who is a
participant in the Pension Plan, (ii) who is a senior corporate officer of
Cleveland-Cliffs or a full-time salaried employee of an Employer who has a
Management Performance Incentive Plan Salary Grade of EX-28 or above, and (iii)
who as a result of participation in this Plan is entitled to a Supplemental
Benefit under this Plan. Each person who is as a Participant under this Plan
shall be notified in writing of such fact by his Employer, which shall also
cause a copy of the Plan to be delivered to such person.
I. "PENSION PLAN" shall mean, with respect to any Participant,
the defined benefit plan specified on Exhibit A hereto in which he participates.
J. "SUPPLEMENTAL AGREEMENT" shall mean, with respect to any
Participant, an agreement between the Participant and an
<PAGE> 5
3
Employer, and approved by Cleveland-Cliffs if it is not the Employer, which
provides for additional service credit and/or other features for purposes of
computing retirement benefits.
K. "SUPPLEMENTAL BENEFIT" or "SUPPLEMENTAL PENSION PLAN
BENEFIT" shall mean a retirement benefit determined as provided in paragraph 2.
L. "SUPPLEMENTAL RETIREMENT BENEFIT PLAN" or "PLAN" shall mean
this Plan, as the same may hereafter be amended or restated from time to time.
2. DETERMINATION OF THE SUPPLEMENTAL PENSION PLAN BENEFIT.
Each Participant or Beneficiary of a deceased Participant whose benefits under
the Pension Plan payable on or after January l, 1995 are reduced (a) due to the
Code Limitations, or (b) due to deferrals of compensation by such Participant
under the Cleveland-Cliffs Inc Voluntary Non-Qualified Deferred Compensation
Plan (the "Deferred Compensation Plan"), and each Participant who has entered
into a Supplemental Agreement with his Employer (and, where applicable a
Beneficiary of a deceased Participant), shall be entitled to a Supplemental
Pension Plan Benefit, which shall be determined as hereinafter provided. A
Supplemental Pension Plan Benefit shall be a monthly retirement benefit equal to
the difference between (i) the amount of the monthly benefit payable on and
after January l, 1995 to the Participant or his Beneficiary under the Pension
Plan, determined under the Pension Plan as in effect on the date of the
Participant's termination of employment with the Controlled Group and any
Affiliate (and payable in the same optional form as his Actual Pension Plan
Benefit, as defined below), but calculated without regard to any reduction in
the Participant's compensation pursuant to the Deferred Compensation Plan, and
as if the Pension Plan did not contain a provision (including any phase-in or
extended wear away provision) implementing the Code Limitations, and after
giving effect to the provisions of any Supplemental Agreement, and (ii) the
amount of the monthly benefit in fact payable on and after January 1, 1995 to
the Participant or his Beneficiary under the Pension Plan. If the benefit
payable to a Participant or Beneficiary pursuant to clause (ii) of the
immediately preceding sentence (herein referred to as "Actual Pension Plan
Benefit") is payable in a form other than a monthly benefit, such Actual Pension
Plan Benefit shall be adjusted to a monthly benefit which is the actuarial
equivalent of such Actual Pension Plan Benefit for the purpose of calculating
the monthly Supplemental Pension Plan Benefit of the Participant or Beneficiary
pursuant to the preceding sentence. For any Participant whose benefits become
payable under the Pension Plan on or after January 1, 1995, the Supplemental
Pension Plan Benefit includes any "Retirement Plan Augmentation Benefit" which
the Participant shall have accrued under the Deferred Compensation Plan prior to
the amendment of such Plan as of January l, 1991 to delete such Benefit. The
acceptance by the Participant or his Beneficiary of any Supplemental Pension
Plan Benefit pursuant to paragraph 3 shall constitute payment of the
<PAGE> 6
4
Retirement Plan Augmentation Benefit included therein for purposes of the
Deferred Compensation Plan prior to such amendment.
3. Payment of the Supplemental Pension Plan Benefit.
-------------------------------------------------
(a) A Participant's (or his Beneficiary's)
Supplemental Pension Plan Benefit (calculated as
provided in paragraph 2) shall be converted, at
the time of his termination of employment with the
Controlled Group and each Affiliate, into ten
annual installment payments (the "Ten Installment
Payments") of equivalent actuarial value. The
equivalent actuarial value shall be determined by
the actuary selected by Cleveland-Cliffs based on
the 1971 TPF&C Forecast Mortality Table set back
one year, the Pension Benefit Guaranty Corporation
interest rate for immediate annuities then in
effect, and other factors then in effect for
purposes of the Pension Plan.
(b) If the Participant voluntarily terminates
employment with, or retires under the terms of the
Pension Plan from, the Controlled Group and each
Affiliate, or the Participant's employment with
the Controlled Group and each Affiliate is
involuntarily terminated, the Participant's former
Employer shall pay the Ten Installment Payments to
the Participant beginning on the first day of the
month following the Participant's retirement under
the Pension Plan, and on each anniversary
thereafter until the Ten Installment Payments have
been made; provided, however, that if the
Participant has effectively elected another form
of distribution, such Participant's former
Employer shall pay or commence payment in such
other form of distribution beginning on the first
day of the month following the date of the
Participant's retirement under the Pension Plan.
A Participant who voluntarily terminates
employment with, or who retires under the terms of
the Pension Plan from, the Controlled Group and
each Affiliate may by written notice filed with
the Administrator at least one (1) year prior to
the Participant's voluntary termination of
employment with, or retirement from, the
Controlled Group and each Affiliate elect to defer
commencement of the payment of his benefit until a
date selected in such election. Any such election
may be changed by the Participant at any time and
from time to time without the consent of any other
person by filing a later signed written election
with the Administrator; provided that any election
made less than one (1) year prior to the
Participant's voluntary termination of employment
<PAGE> 7
5
or retirement shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election, or otherwise in
accordance with this paragraph 3.
(c) A Participant may elect to receive his Supplemental
Pension Plan Benefit in one of the following forms of
distribution in lieu of the Ten Installment Payments:
(1) Lump sum payment;
(2) Annual installments over 2 to 15 years;
(3) A combination of (1) and (2) above with the
percentage payable under each option
specifically designated by the Participant;
or
(4) The form of benefit distribution elected by
the Participant under the Pension Plan.
Payments made under these options shall commence as
of the first day of the month following the
Participant's retirement under the Pension Plan;
provided, however, that with respect to a lump sum
payment, such payment shall be made at the end of the
of the first month of retirement or at the end of the
month following death.
The payments made under these forms shall be of
equivalent actuarial value to the Ten Installment
Payments as determined by the actuary selected by
Cleveland-Cliffs based on the actuarial factors and
assumptions provided for in the second sentence of
paragraph 3(a). Notwithstanding the foregoing, the
Administrator may, at any time, direct that annual
installments shall be made quarterly. If the
Participant dies before receiving all of the
installment payments, the remaining installment
payments shall be paid in a lump sum to the
Participant's Beneficiary. Any co-pensioner or
survivor payments elected under clause (4) of this
paragraph 3(c) shall be paid to the co-pensioner or
survivor, as appropriate. The Participant's election
of one of the forms of distribution set forth above
shall be made by written notice filed with the
Administrator at least one (1) year prior to the
Participant's voluntary or involuntary termination of
employment, retirement, death or disability. Any such
election may be changed by the Participant at any
time and from time to time without the consent of any
other person by filing a later signed written
election with the Administrator; provided
<PAGE> 8
6
that any election made less than one (1) year prior
to the Participant's voluntary or involuntary
termination of employment, retirement, death or
disability shall not be valid, and in such case
payment shall be made in accordance with the
Participant's prior election; and provided, further,
that the Administrator may, in its sole discretion,
waive such one (1) year period upon a request of the
Participant made while an active employee of his or
her Employer.
(d) Anything contained in this paragraph 3 to the
contrary notwithstanding, in the event a
Participant's employment with the Controlled Group
and each Affiliate is involuntarily terminated,
the Administrator may, at any time, direct
immediate payment of such Participant's benefit
under the Plan and the manner of distribution for
such payment; provided, however, that if the
administrator elects immediate payment as set
forth in this paragraph 3(d), such payment shall
not be made in accordance with the distribution
alternative described in paragraph 3(c)(4) of the
Plan.
(e) Notwithstanding any other provision of this
paragraph 3, a Participant may elect to receive a
lump sum distribution of part or all of his or her
benefits under clause (1), (2), or (3) of
paragraph 3(c) if (and only if) the amount subject
to such distribution is reduced by six percent
(6%). Any distribution made pursuant to such an
election shall be made within 60 days of the date
such election is submitted to the Administrator.
The remaining six percent (6%) of the electing
Participant's benefit balance subject to such lump
sum distribution shall be forfeited.
4. FORFEITABILITY. Anything herein to the contrary
notwithstanding, if the Board of Directors of Cleveland-Cliffs shall determine
in good faith that a Participant who is entitled to a benefit hereunder by
reason of termination of his employment with the Controlled Group and each
Affiliate, during the period of 5 years after termination of his employment or
until he attains age 65, whichever period is shorter, has engaged in a business
competitive with Cleveland-Cliffs or any member of the Controlled Group or any
Affiliate without the prior written consent of Cleveland-Cliffs, such
Participant's rights to a supplemental Pension Plan Benefit hereunder and the
rights, if any, of his Beneficiary shall be terminated and no further
Supplemental Benefit shall be paid to him or his Beneficiary hereunder.
5. GENERAL. A. The entire cost of this Supplemental Retirement
Benefit Plan shall be paid from the general assets of
<PAGE> 9
7
one or more of the Employers. It is the intent of the Employers to so pay
benefits under the Plan as they become due; provided, however, that
Cleveland-Cliffs may, in its sole discretion, establish or cause to be
established a trust account for any or each Participant pursuant to an
agreement, or agreements, with a bank and direct that some or all of a
Participant's benefits under the Plan be paid from the general assets of his
Employer which are transferred to the custody of such bank to be held by it in
such trust account as property of the Employer subject to the claims of the
Employer's creditors until such time as benefit payments pursuant to the Plan
are made from such assets in accordance with such agreement; and until any such
payment is made, neither the Plan nor any Participant or Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in, such assets. No
liability for the payment of benefits under the Plan shall be imposed upon any
officer, director, employee, or stockholder of Cleveland-Cliffs or other
Employer.
B. No right or interest of a Participant or his Beneficiary
under this Supplemental Retirement Benefit Plan shall be anticipated, assigned
(either at law or in equity) or alienated by the Participant or his Beneficiary,
nor shall any such right or interest be subject to attachment, garnishment,
levy, execution or other legal or equitable process or in any manner be liable
for or subject to the debts of any Participant or Beneficiary. If any
Participant or Beneficiary shall attempt to or shall alienate, sell, transfer,
assign, pledge or otherwise encumber his benefits under the Plan or any part
thereof, or if by reason of his bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be enjoyed by him,
then Cleveland-Cliffs may terminate his interest in any such benefit and hold or
apply it to or for his benefit or the benefit of his spouse, children or other
person or persons in fact dependent upon him, or any of them, in such a manner
as Cleveland-Cliffs may deem proper; provided, however, that the provisions of
this sentence shall not be applicable to the surviving spouse of any deceased
Participant if Cleveland-Cliffs consent: to such inapplicability, which consent
shall not unreasonably be withheld.
C. Employment rights shall not be enlarged or affected hereby.
The Employers shall continue to have the right to discharge or retire a
Participant, with or without cause.
D. Notwithstanding any other provisions of this Plan to the
contrary, if Cleveland-Cliffs determines that any Participant may not qualify as
a "management or highly compensated employee" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or regulations
thereunder, Cleveland-Cliffs may determine, in its sole discretion, that such
Participant shall cease to be eligible to participate in this Plan. Upon such
determination, the Employer shall make an immediate lump sum payment to the
Participant equal to his then vested Supplemental Benefit. Upon such payment, no
benefits shall thereafter be payable under this
<PAGE> 10
8
Plan either to the Participant or any Beneficiary of the Participant, and all of
the Participant's elections as to the time and manner of payment of his
Supplemental Benefit shall be deemed to be cancelled.
6. ADOPTION OF SUPPLEMENTAL RETIREMENT BENEFIT PLAN. Any
member of the Controlled Group or any Affiliate which is an employer under the
Pension Plan may become an Employer hereunder with the written consent of
Cleveland-Cliffs if such member or such Affiliate executes an instrument
evidencing its adoption of the Supplemental Retirement Benefit Plan and files a
copy thereof with Cleveland-Cliffs. Such instrument of adoption may be subject
to such terms and conditions as Cleveland-Cliffs requires or approves.
7. MISCELLANEOUS. A. The Plan shall be administered by the
Plan Administrator (the "Administrator"). The Administrator shall have such
powers as may be necessary to discharge his duties hereunder, including, but not
by way of limitation, to construe and interpret the Plan (including, without
limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies and ambiguities in, the language of the Plan) and
determine the amount and time of payment of any benefits hereunder. The
Administrator may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
legal counsel who may be counsel to Cleveland-Cliffs. The Administrator shall
have no power to add to, subtract from or modify any of the terms of the Plan,
or to change or add to any benefits provided under the Plan, or to waive or fail
to apply any requirements of eligibility for a benefit under the Plan. No member
of the Administrator shall act in respect of his own benefits. All decisions and
determinations by the Administrator shall be final and binding on all parties.
All decisions of the Administrator shall be made by the vote of the majority, if
applicable, including actions and writing taken without a meeting. All
elections, notices and directions under the Plan by a Participant shall be made
on such forms as the Administrator shall prescribe.
B. Cleveland-Cliffs shall be the "Administrator" and the "Plan
Sponsor" under the Plan for purposes of ERISA.
C. Except to the extent federal law controls, all questions
pertaining to the construction, validity and effect of the provisions hereof
shall be determined in accordance with the laws of the State of Ohio.
D. Whenever there is denied, whether in whole or in part, a
claim for benefits under the Plan filed by any person (herein referred to as the
"Claimant"), the plan administrator shall transmit a written notice of such
decision to the Claimant, which notice shall be written in a manner calculated
to be understood by the Claimant and shall contain a statement of the specific
reasons for the denial of the claim and statement
<PAGE> 11
9
advising the Claimant that, within 60 days of the date on which he receives such
notice, he may obtain review of such decision in accordance with the procedures
hereinafter set forth. Within such 60-day period, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing with the
plan administrator a written request therefor, which request shall contain the
following information:
(i) the date on which the Claimant's request was filed with
the plan administrator; provided, however, that the date on which the
Claimant's request for review was in fact filed with the plan
administrator shall control in the event that the date of the actual
filing is later than the date stated by the Claimant pursuant to this
paragraph;
(ii) the specific portions of the denial of his claim which
the Claimant requests the plan administrator to review;
(iii) a statement by the Claimant setting forth the basis upon
which he believes the plan administrator should reverse the previous
denial of his claim for benefits and accept his claim as made; and
(iv) any written material (offered as exhibits) which the
Claimant desires the plan administrator to examine in its consideration
of his position as stated pursuant to clause (iii) above.
Within 60 days of the date determined pursuant to clause (i) above, the plan
administrator shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits. Within 60 days of the date of such hearing, the
plan administrator shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
E. Supplemental Pension Plan Benefits shall be subject to
applicable withholding and such other deductions as shall at the time of payment
be required or appropriate under any Federal, State or Local law. In addition,
Cleveland-Cliffs may withhold from a Participant's "other income" (as
hereinafter defined) any amount required or appropriate to be currently withheld
from such Participant's other income pursuant to any Federal, State or Local
law. For purposes of this subparagraph E, "other income" shall mean any
remuneration currently paid to a Participant by an Employer.
8. AMENDMENT AND TERMINATION. A. Cleveland-Cliffs has reserved
and does hereby reserve the right to amend, at any time, any or all of the
provisions of the Supplemental Retirement Benefit Plan for all Employers,
without the consent of any other Employer or any Participant, Beneficiary or any
other person. Any such amendment shall be expressed in an instrument executed
<PAGE> 12
10
by Cleveland-Cliffs and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of its execution.
B. Cleveland-Cliffs has reserved, and does hereby reserve, the
right to terminate the Supplemental Retirement Benefit Plan at any time for all
Employers, without the consent of any other Employer or of any Participant,
Beneficiary or any other person. Such termination shall be expressed in an
instrument executed by Cleveland-Cliffs and shall become effective as of the
date designated in such instrument, or if no date is specified, on the date of
its execution. Any other Employer which shall have adopted the Plan may, with
the written consent of Cleveland-Cliffs, elect separately to withdraw from the
Plan and such withdrawal shall constitute a termination of the Plan as to it,
but it shall continue to be an Employer for the purposes hereof as to
Participants or Beneficiaries to whom it owes obligations hereunder. Any such
withdrawal and termination shall be expressed in an instrument executed by the
terminating Employer and shall become effective as of the date designated in
such instrument or, if no date is specified, on the date of its execution.
C. Notwithstanding the foregoing provisions hereof, no
amendment or termination of the Supplemental Retirement Benefit Plan shall,
without the consent of the Participant (or, in the case of his death, his
Beneficiary), adversely affect (i) the benefit under the Plan of any Participant
or Beneficiary then entitled to receive a benefit under the Plan or (ii) the
right of any other Participant to receive upon termination of his employment
with the Controlled Group and each Affiliate (or the right of his Beneficiary to
receive upon such Participant's death) that benefit which would have been
received under the Plan if such employment of the Participant had terminated
immediately prior to the amendment or termination of the Plan. Upon any
termination of the Plan, each affected Participant's Supplemental Benefit shall
be determined and distributed to him or, in the case of his death, to his
Beneficiary as provided in paragraph 3 as if the employment of the Participant
with the Controlled Group and each Affiliate had terminated immediately prior to
the termination of the Plan.
9. EFFECTIVE DATE. The amended and restated Supplemental Retirement
Benefit Plan shall be effective as of January 1, 1997.
IN WITNESS WHEREOF, Cleveland-Cliffs Inc, pursuant to the
order of its Board of Directors, has executed this amended and restated
Supplemental Retirement Benefit Plan at Cleveland, Ohio, this 24th day of April,
1997.
CLEVELAND-CLIFFS INC
By /s/ R.F. Novak
-------------------------------------
Vice President - Human Resources
<PAGE> 13
Exhibit A
---------
Pension Plans
- -------------
Pension Plan for Salaried Employees of Cleveland-Cliffs Inc
Pension Plan for Salaried Employees of the Cleveland-Cliffs Iron Company and its
Associated Employers
Retirement Plan for Salaried Employees of Northshore Mining Company and Silver
Bay Power Company
<PAGE> 1
Exhibit 10(m)
SECOND AMENDMENT
TO
CLEVELAND-CLIFFS INC NONEMPLOYEE DIRECTORS'
-------------------------------------------
COMPENSATION PLAN
-----------------
RECITALS
--------
WHEREAS, Cleveland-Cliffs Inc ("Company"), with approval of the
Company's shareholders on May 14, 1996, established the Cleveland-Cliffs Inc
Nonemployee Directors' Compensation Plan ("Plan"), effective July 1, 1996;
WHEREAS, with the approval of the Board of Directors of the Company,
the Plan was amended by the First Amendment to the Plan on November 12, 1996;
WHEREAS, the Company desires to amend the Plan further to provide for
an election to defer receipt of dividends declared and paid on Restricted Shares
("Second Amendment"); and
WHEREAS, the Board of Directors of the Company has approved the Second
Amendment in accordance with the provisions of Section 8.2 of the Plan and such
Second Amendment does not require approval by the shareholders of the Company.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. The Plan is amended, effective May 13, 1997, by adding the following
paragraph (e) to Section 3.1 of the Plan:
"(e) A Director who was awarded Restricted Shares on or before
May 13, 1997, may elect within 30 days after such date that all cash
dividends declared after May 13, 1997 with respect to such Restricted
Shares during the period of such restrictions shall be deferred and
reinvested in additional Common Shares which shall be subject to the
same restrictions as the underlying award. All such deferred dividends
(based on the number
1
<PAGE> 2
of Restricted Shares, including the then determined reinvested
additional Common Shares) shall be reinvested and shall be delivered as
additional unrestricted Common Shares on the applicable Vesting Date,
subject to proration as provided in Section 3.1(c) hereof. A Director
who receives an award of Restricted Shares after May 13, 1997, may
likewise elect such deferral not later than 30 days after becoming a
Director."
2. Except as amended by the First Amendment and this Second Amendment,
the Plan shall remain in full force and effect.
Executed in Cleveland, Ohio, as of May 13, 1997.
CLEVELAND-CLIFFS INC
By /s/ M.T. Moore
--------------------------------------
Chairman and Chief Executive Officer
And /s/ J.E. Lenhard
-------------------------------------
Secretary
2
<PAGE> 1
Exhibit 10(n)
CLEVELAND-CLIFFS INC
LONG-TERM PERFORMANCE SHARE PROGRAM
-----------------------------------
ARTICLE I
---------
GENERAL
-------
1.1 INCENTIVE EQUITY PLAN. The provisions of this Long-Term Performance
Share Program ("Performance Share Program") shall supplement and operate under
the provisions of the Cleveland-Cliffs Inc ("Company") 1992 Incentive Equity
Plan ("1992 ICE Plan"), approved by the shareholders of the Company on April 14,
1992, as may be amended from time to time, a copy of which 1992 ICE Plan is
attached hereto as Appendix A. Unless otherwise expressly qualified by the terms
of this Performance Share Program, the conditions contained in the 1992 ICE Plan
shall be applicable to the Performance Share Program. In the event of any
conflict between the terms of this Performance Share Program and the 1992 ICE
Plan, the 1992 ICE Plan shall control.
1.2 PURPOSE. The purpose of the Performance Share Program is to align
the interests of key executives and managerial employees of the Company and its
subsidiaries directly with the interests of the shareholders of the Company in
increasing the Company's long-term value and exceeding the performance of peer
companies.
1
<PAGE> 2
ARTICLE II
----------
DEFINITIONS
-----------
All terms used herein with initial capital letters shall have the
meanings assigned to them in Article I and the following additional terms, when
used herein with initial capital letters, shall have the following meanings:
2.1 "BOARD" shall have the meaning assigned thereto in the 1992 ICE
Plan.
2.2 "CHANGE IN CONTROL" shall mean the date on which any of the
following is effective:
(a). The Company shall merge into itself, or be merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed immediately prior to
such merger or consolidation;
(b). The Company shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal person,
and immediately after such sale or transfer less than 70% of the combined voting
power of the outstanding voting securities of such corporation or person is held
in the aggregate by the former shareholders of the Company as the same shall
have existed immediately prior to such sale or transfer;
(c). A person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of
1934, shall become the beneficial owner (as defined in Rule 13d-3 of the
Securities and Exchange Commission pursuant to the Securities and Exchange Act
of 1934) of 30% or more of the outstanding voting securities of the Company
(whether directly or indirectly); or
2
<PAGE> 3
(d). During any period of three consecutive years, individuals who
at the beginning of any such period constitute the Board cease, for any reason,
to constitute at least a majority thereof, unless the election, or the
nomination for election by the shareholders of the Company, of each Director
first elected during any such period was approved by a vote of at least
one-third of the Directors of the Company who are Directors of the Company on
the date of the beginning of any such period.
2.3 "CODE" shall have the meaning assigned thereto in the 1992 ICE
Plan.
2.4 "COMMITTEE" shall have the meaning assigned thereto in the 1992 ICE
Plan.
2.5 "COMMON SHARES" shall have the meaning assigned thereto in the 1992
ICE Plan.
2.6 "COVERED EMPLOYEES" shall mean those Participants named in the
proxy statement summary compensation table of the Company for that year, or are
determined by the Committee likely to become a "covered employee" within the
meaning of Section 162(m) of the Code.
2.7 "DATE OF GRANT" shall mean the date specified by the Committee on
which a grant of Performance Shares shall become effective, which shall not be
earlier than the date on which the Committee takes action with respect thereto.
2.8 "DISABILITY" shall mean the disability of a Participant as defined
by the long-term disability plan of the Company in effect for such Participant.
2.9 "MANAGEMENT OBJECTIVES" shall have the meaning assigned thereto in
the 1992 ICE Plan.
2.10 "MARKET VALUE PRICE" shall mean the latest available closing price
of a Common Share of the Company on the New York Stock Exchange at the relevant
time.
3
<PAGE> 4
2.11 "PARTICIPANT" shall have the meaning assigned thereto in the 1992
ICE Plan.
2.12 "PERFORMANCE PERIOD" shall have the meaning assigned thereto in
the 1992 ICE Plan.
2.13 "PERFORMANCE SHARE" shall have the meaning assigned thereto in the
1992 ICE Plan.
2.14 "PARTICIPANT AWARD AND AGREEMENT" shall mean the agreement entered
into between the Participant and the Company pursuant to Section 5.3(b)(iv) of
this Performance Share Program.
2.15 "PERFORMANCE SHARES EARNED" shall mean the number of Common Shares
of the Company (or cash equivalent) earned by a Participant following the
conclusion of a Performance Period in which a required minimum of Management
Objectives were met or exceeded.
2.16 "PLAN YEAR" shall mean a period corresponding to the calendar year
of the Company.
2.17 "RETIREMENT" shall mean retirement as defined in the retirement
plan of the Company, including without limitation any supplemental retirement
plan.
2.18 "RULE 16B-3" shall have the meaning assigned thereto in the 1992
ICE Plan.
2.19 "SUBSIDIARY" shall have the meaning assigned thereto in the 1992
ICE Plan.
ARTICLE III
-----------
TERM OF PERFORMANCE SHARE PROGRAM
---------------------------------
3.1 TERM. The Performance Share Program shall be effective from March
31, 1994, the date of adoption by the Committee, and shall remain in effect
until terminated by the Committee.
4
<PAGE> 5
ARTICLE IV
----------
ADMINISTRATION
--------------
4.1 COMMITTEE. The Performance Share Program shall be administered by
the Committee, which shall be constituted so as to enable the Performance Share
Program to comply with the administration requirement of Code Section 162(m). A
majority of the Committee shall constitute a quorum, and the acts of the members
of the Committee who are present at any meeting thereof at which a quorum is
present, or acts unanimously approved by the members of the Committee in
writing, shall be the acts of the Committee.
4.2 AUTHORITY AND DETERMINATIONS. Subject to the terms of the 1992 ICE
Plan, the Committee shall have full and complete authority, in its sole and
absolute discretion to: (i) exercise all of the powers granted to it under the
1992 ICE Plan and Performance Share Program; (ii) interpret and implement the
Performance Share Program and any related document; (iii) prescribe rules and
guidelines relating to the Performance Share Program; (iv) make all
determinations necessary or advisable in administering the Performance Share
Program; and (v) correct any defect, supply any omission and reconcile any
inconsistency in the Performance Share Program. No member of the Committee shall
be liable for any such action taken or determination made in good faith.
4.3 EXPENSES. The Company shall pay all costs and expenses of
administering the Performance Share Program, including but not limited to the
payment of expert or consulting fees.
4.4 DELEGATION. The Committee may delegate to the Chief Executive
Officer of the Company the authority to execute and deliver such instruments and
documents, do all such acts, and take all such other steps deemed necessary,
advisable or convenient for the effective administration of the Performance
Share
5
<PAGE> 6
Program in accordance with its terms and purpose, except that the Committee may
not delegate any authority with respect to decisions regarding the Management
Objectives, amount or other material terms of any awards of Performance Shares.
4.5 CODE SECTION 162(M).
--------------------
(a). It is intended that this Performance Share Program and the
Performance Shares Earned, satisfy and be interpreted in a manner that satisfies
the applicable requirements of Code Section 162(m) so that the tax deduction for
the Company for performance-base compensation for services performed by such
Participants is not disallowed in whole or in part by the operation of such Code
Section. If any provision of the Performance Share Program or if any Performance
Shares Earned would otherwise frustrate or conflict with the intent expressed in
this Section, that provision to the extent possible shall be interpreted and
deemed amended so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, such provision shall be deemed void as
applicable to such Participants.
(b). The Committee may, in its sole discretion, require the
deferral of receipt of all or a portion of Performance Shares Earned by a
Covered Employee so as to assure the Company will not be prevented from
deducting the value of the Performance Shares Earned by a Covered Employee. Any
such deferral required by the Committee for a Covered Employee shall be in
accordance with the terms and conditions of an agreement between the Covered
Employee and the Committee, and such deferral shall remain in effect until the
earlier of Retirement of the Covered Employee or such time as receipt of the
Performance Shares Earned would no longer prevent the Company from deducting the
value of the Performance Shares Earned.
6
<PAGE> 7
ARTICLE V
---------
OPERATION OF THE PERFORMANCE SHARE PROGRAM
------------------------------------------
5.1 ESTABLISHMENT OF PERFORMANCE PERIOD AND MANAGEMENT OBJECTIVES.
------------------------------------------------------------------
Within 90 days of the beginning of each year, the Committee shall establish the
Performance Period and the Management Objectives for achievement from the
beginning to the end of the Performance Period.
5.2 ADJUSTMENT OF MANAGEMENT OBJECTIVES. The Committee may only adjust
the Management Objectives as permitted under the 1992 ICE Plan. No adjustment of
the Management Objectives shall be permitted in respect of any Performance
Shares granted to any Participant who is, or is determined by the Committee to
be likely to become, a Covered Employee.
5.3 PERFORMANCE SHARE GRANTS.
-----------------------------
(a). At the start of each Performance Period, the Committee shall
determine the Participants to be granted Performance Shares with due regard to
the relative position of such Participant in the Company, salary level and such
other factors as the Committee, in its discretion, deems appropriate. Upon such
determination, the Committee shall grant such designated Participant a number of
Performance Shares to be earned on the basis of achievement of the Management
Objectives over the Performance Period.
(b). The Committee shall authorize grants of Performance Shares in
accordance with the following:
(i) Each grant shall specify the number of Performance Shares
to which it pertains.
(ii) Each grant shall specify the Performance Period.
(iii) Each grant shall specify the Management Objectives that
are to be achieved by the Company and a required minimum level of
7
<PAGE> 8
achievement below which no payment of Performance Shares will be
made. Each grant of Performance Shares shall set forth a formula for
determining the amount of any payment to be made if performance is
at or above the required minimum level and shall specify the maximum
amount of any payment to be made.
(iv) Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Company by the Chief Executive
Officer, or by such officer of the Company as may be designated by
the Chief Executive Officer, and delivered to and accepted by the
Participant. The agreement shall state the specific Management
Objectives, target level of achievement, payout for the Performance
Period, and that the Performance Shares are subject to all of the
terms and conditions of the 1992 ICE Plan, this Performance Share
Program and such other terms and provisions as the Committee may
determine consistent with this Performance Share Program.
(c). The Committee may provide for such adjustments in the number
of Common Shares covered by outstanding Performance Shares granted hereunder, as
may be provided for under Section 10 (anti-dilution provisions) of the 1992 ICE
Plan.
5.4 PERFORMANCE SHARES EARNED.
------------------------------
(a). At the end of each Performance Period, the Committee shall
assess the degree to which the Management Objectives were achieved and certify
in writing, prior to any payment, whether the Management Objectives and any
other material terms are in fact satisfied.
8
<PAGE> 9
(b). Payout of Performance Shares Earned shall be based upon the
degree of achievement of the Management Objectives by the Company, all as to be
more particularly set forth in the Participant's Grant and Agreement.
(c). Upon such certification as provided for in Section (a) above,
the Committee shall advise the Participant as to the number of Performance
Shares Earned.
(d). Each Performance Share Earned shall entitle the holder to
receive Common Shares of the Company (or cash or a combination of Common Shares
and cash, as decided by the Committee in its sole discretion).
(e). The value of the number of Common Shares calculated to be
earned by a Participant as Performance Shares Earned at the end of the
Performance Period (Calculated Value) shall not exceed a value determined by
multiplying the number of Common Shares calculated to be earned by a Participant
by twice the Market Value Price per share of a Common Share on the Date of Grant
(Maximum Value), and the number of actual Performance Shares Earned will be
reduced to the extent necessary to prevent the Calculated Value of the
Performance Shares Earned from exceeding the calculated Maximum Value, except as
otherwise provided for in Section 7.4, or except as such Performance Shares may
be adjusted under Section 10 (anti-dilution provision of the 1992 ICE Plan).
ARTICLE VI
----------
PAYMENT OF AWARDS
-----------------
6.1 PAYMENT. Performance Shares Earned shall be paid as soon as
practicable after the receipt of audited financial statements relating to the
last fiscal year of the Performance Period and the written certification by the
Committee.
9
<PAGE> 10
ARTICLE VII
-----------
HARDSHIP, TERMINATIONS OF EMPLOYMENT AND CHANGE IN CONTROL
----------------------------------------------------------
7.1 HARDSHIP AND APPROVED ABSENCE. In the event of leave of absence to
enter public service with the consent of the Company or other leave of absence
approved by the Company, or in the event of hardship or other special
circumstances, of a Participant who holds any Performance Shares that have not
been fully earned, the Committee may in its sole discretion take any action that
it deems to be equitable under the circumstances or in the best interests of the
Company, including without limitation waiving or modifying any limitation with
respect to any award under this Performance Share Program; provided, however,
that no such action shall be taken with respect to any Covered Employee. If no
such equitable action is taken by the Committee for a Participant who is not a
Covered Employee, the Participant shall forfeit all right to any Performance
Shares that would have been earned for the Performance Period in which the leave
of absence or other special circumstances occurred.
7.2 DEATH, DISABILITY, RETIREMENT OR OTHER. In the event the employment
of a Participant with the Company is terminated before completion of a
Performance Period(s) because of death, Disability, Retirement, or other reasons
and the Management Objectives are achieved by the Company for the Performance
Period to the minimum required level or greater, such Participant, or the
beneficiary of such Participant, may be eligible to receive all or a portion of
the Performance Shares granted to such Participant as Performance Shares Earned,
as is determined in accordance with the Participant's Grant and Agreement.
7.3 A Participant shall not render services for any organization or
engage directly or indirectly in any business which is a competitor of the
Company or any affiliate of the Company, or which organization or business is or
10
<PAGE> 11
plans to become prejudicial to or in conflict with the business interests of the
Company or any affiliate of the Company. Failure to comply with the foregoing
will cause a Participant to forfeit the right to Performance Shares as is
determined in accordance with the Participant's Grant and Agreement.
7.4 CHANGE IN CONTROL. Except as may otherwise be determined in
accordance with the Participant's Grant and Agreement, in the event a Change in
Control occurs before completion of a Performance Period(s), all Performance
Shares granted to a Participant shall immediately become Performance Shares
Earned, the value of which shall be paid in cash within 10 days of the Change in
Control and the number of Common Shares to be earned as Performance Shares
Earned will not be reduced proportionately, as provided for in Section 5.4(e).
SECTION VIII
------------
MISCELLANEOUS
-------------
8.1 WITHHOLDING TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
of Performance Shares Earned to a Participant under this Performance Share
Program, and the amounts available to the Company for such withholding are
insufficient, it shall be a condition to the receipt of such payment of
Performance Shares Earned or the realization of such benefit that the
Participant make arrangements satisfactory to the Company for payment of the
balance of such taxes required to be withheld. If necessary, the Committee may
require relinquishment of a portion of such Performance Shares Earned. The
Participant may elect to satisfy all or any part of any such withholding
obligation by surrendering to the Company a portion of the Common Shares that
are issued or transferred or that become nontransferable by the Participant, and
the Common Shares so surrendered by the Participant shall be credited against
any such
11
<PAGE> 12
withholding obligation at the Market Value Price per share of such Common Shares
on the date of such surrender; provided, however, if the Participant is subject
to Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), such
election (if then required by Rule 16b-3 under the Exchange Act) shall be
subject to approval by the Committee.
8.2 CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No Participant shall have
any claim or right to be granted another award under the Performance Share
Program. This Performance Share Program shall not confer upon any Participant
any right with respect to the continuance of employment or other service with
the Company or any Subsidiary and shall not interfere in any way with any right
that the Company or any Subsidiary would otherwise have to terminate any
employment or other service of the Participant at any time.
8.3 BENEFICIARIES. Any payments of Performance Shares Earned due under
this Performance Share Program to a deceased Participant shall be paid to the
beneficiary designated by the Participant and filed with the Company. If no such
beneficiary has been designated or survives the Participant, payment shall be
made to the estate of the Participant. A beneficiary designation may be changed
or revoked by a Participant at any time, provided the change or revocation is
filed with the Company.
8.4 NON-TRANSFERABILITY. The rights and interest of a Participant under
this Performance Share Program, including amounts payable, may not be assigned,
pledged, or transferred, except, in the event of the death of a Participant, to
his or her designated beneficiary as provided in the Performance Share Program,
or in the absence of such designation, by will or the laws of descent and
distribution.
12
<PAGE> 13
8.5 AMENDMENTS. This Performance Share Program may be amended from time
to time by the Committee; provided, however, that any such amendment shall not
be inconsistent with the terms of the 1992 ICE Plan.
8.6 GOVERNING LAW. This Performance Share Program shall be construed and
governed in accordance with the laws of the State of Ohio.
8.7 EFFECTIVE DATE. This Performance Share Program is effective as of
March 31, 1994, as amended as of January 13, 1997.
13
<PAGE> 1
COMPUTATION OF EARNINGS PER SHARE Exhibit 11
CLEVELAND-CLIFFS INC AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
(In Millions, Except
Per Share Amounts)
Six Months Ended
June 30
------------------
1997 1996
------ ------
<S> <C> <C>
Primary and fully diluted earnings per share:
Average shares outstanding 11.4 11.8
Net effect of dilutive stock options
and performance shares based on
treasury stock method using
average market price -- --
------ ------
Average shares and equivalents 11.4 11.8
====== ======
Net income applicable to average
share and equivalents $ 17.8 $ 21.4
====== ======
Income per share $ 1.52 $ 1.82
====== ======
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF CONSOLIDATED INCOME, CONSOLIDATED FINANCIAL POSITION AND COMPUTATION OF
EARNINGS PER SHARE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000764065
<NAME> CLEVELAND-CLIFFS INC
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 62
<SECURITIES> 0
<RECEIVABLES> 62
<ALLOWANCES> 1
<INVENTORY> 107
<CURRENT-ASSETS> 249
<PP&E> 272
<DEPRECIATION> 143
<TOTAL-ASSETS> 655
<CURRENT-LIABILITIES> 81
<BONDS> 0
<COMMON> 17
0
0
<OTHER-SE> 362
<TOTAL-LIABILITY-AND-EQUITY> 655
<SALES> 123
<TOTAL-REVENUES> 153
<CGS> 117
<TOTAL-COSTS> 124
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 24
<INCOME-TAX> 8
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 0
</TABLE>
