Exhibit 10(x)
Severance Pay Plan for
Key Employees of Cleveland-Cliffs Inc
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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 shall be effective as of
February 1, 1992 (the "Effective Date"). The Plan will automatically
terminate on January 1, 1995 (the "Termination Date"), if there has been no
Change of Control of Cleveland-Cliffs prior to such date.
3. DEFINITIONS.
a. Average Incentive Pay. The term "Average Incentive Pay" shall mean an
amount which is the greater of (1) 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 (2) 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.
c. Change of Control. The term "Change of Control" shall mean the
occurrence of any of the following events:
(1) 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;
(2) Cleveland-Cliffs shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series of
related transactions, more than one-half of the assets accounted for
on the Statement of Consolidated Financial Position of
Cleveland-Cliffs as "properties" or "investments in associated
companies" (or such replacements for these accounts as may be adopted
from time to time) unless by an affirmative vote of two-thirds of the
members of the Board of Directors, the transaction or transactions are
exempted from the operation of this provision based on a good faith
finding that the transaction or transactions are not within the
intended scope of this definition for purposes of this instrument;
(3) 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
(4) During any period of three consecutive years, including, without
limitation, the year 1991, 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 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 1987
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 as
(1) a Senior Vice President, Vice President or Secretary of
Cleveland-Cliffs, or (2) 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 (1) 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 (2)
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,
1991).
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:
(1) The Key Employee's employment with the Company is terminated by
the Company other than For Cause.
(2) The Key Employee voluntarily terminates his or her employment
with the Company following the occurrence of any of the following
events:
(i) The failure to elect, reelect 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;
(ii) A reduction in the Key Employee's Base Salary in effect
immediately prior to the Change of Control, or a reduction
in the Key Employee's opportunity for Incentive Pay
(including, but not limited to, a reduction in the target
bonus percentage applicable to the Key Employee immediately
prior to the Change of Control) or 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;
(iii) A determination by the Key Employee made in good faith that
as a result of the Change of Control and a change in
circumstances thereafter significantly affecting his or her
position, 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, he
or she has been rendered substantially unable to carry out,
has been substantially hindered in the performance of, or
has suffered 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;
(iv) 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; or
(v) The Company relocates its principal executive offices,
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 requires the Key Employee to travel
away from his or her office in the course of discharging his
or her responsibilities or duties hereunder significantly
more (in terms of either consecutive days or aggregate days
in any calendar year) than was required of him or her prior
to the Change of Control, without, in any case, his or her
prior written consent.
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:
(1) 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
prescribed by the Pension Benefit Guaranty Corporation for benefit
valuations in connection with non-multiemployer pension plan
terminations assuming the immediate commencement of benefit payments
(the "Discount Rate") equivalent to:
(i) 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 multiplied by two plus his or her Average
Incentive Pay multiplied by two.
(ii) For a Key Employee other than one described in subparagraph
a.(1)(i) 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.
(2) 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:
(1) A Key Employee described in Section 5.a.(1)(i) 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 (i)
the expiration of the second anniversary of the date of termination,
or (ii) the date upon which the Key Employee becomes eligible for
health and life insurance benefits as a result of subsequent
employment.
(2) A Key Employee described in Section 5.a.(1)(ii) 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 (i)
the expiration of the first anniversary of the date of termination or
(ii) the date upon which the Key Employee becomes eligible for health
and life insurance benefits as a result of subsequent employment.
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 (1) 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 (2)
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:
(i) medical, hospital, surgical and prescription drug coverage,
equivalent to that presently furnished 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;
(ii) life insurance on the Key Employee, to the Key Employee during
his or her retirement, equivalent to that presently furnished by
the Company to officers who retire after January 1, 1990; and
(iii) 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 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 and Restricted Stock. Upon a Key Employee's termination
in accordance with Section 4.b., all stock options granted under the
1979 Restricted Stock Plan, the 1987 Incentive Equity Plan, the 1992
Incentive Equity Plan, or any successor plan or similar plan, shall be
vested, and the restrictions on any restricted stock awarded under the
1979 Restricted Stock Plan, the 1987 Incentive Equity Plan, the 1992
Incentive Equity Plan, or any successor plan or similar plan, shall be
released.
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 (1) which are
pre-approved by Cleveland-Cliffs Chief Human Resources Officer, (2)
which do not exceed 15% of the Key Employee's Base Salary, and (3)
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
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.(2) 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:
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 (1) 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 (2) 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. LIMITATION AND INDEMNIFICATION.
a. Notwithstanding anything in this Plan to the contrary, the Company
shall not be obligated to pay to any Key Employee any amount of money,
or provide the Key Employee with any benefits, which are in excess of
the then maximum amount which the Company can deduct for Federal
income tax purposes.
b. Without limiting the generality of paragraph a. of this Section 7, if
any Key Employee is a "disqualified individual", as defined in Section
280G(c) of the Code, the present value of payments under this Plan
made to the Key Employee shall not in the aggregate be greater than
the excess, if any, of (1) 299% of the Key Employee's "base amount",
as determined under Section 280G of the Code, or any successor
provision thereto, over (2) the aggregate present value of all
payments in the nature of compensation (other than the payments under
this Agreement) to or for the Key Employee's benefit that are
considered "contingent on a change" in ownership or control of the
Company as determined under Section 280G(b)(2) of the Code, or any
successor provision thereto. If the application of the preceding
sentence should require a reduction in benefits, such reduction shall
be implemented first, by reducing any non-cash benefits to the extent
necessary, and second, by reducing any cash benefits to the extent
necessary. In each case, the reductions shall be made starting with
the latest payment or benefit. In no event, however, will any benefit
be reduced to the extent such benefit is specifically excluded by
Section 280G(b) of the Code as a "parachute payment" or as an "excess
parachute payment". Any decisions regarding the requirement or
implementation of such reductions shall be made by Jones, Day, Reavis
& Pogue or such other tax counsel selected by the Company's
independent accountants and acceptable to the Executive.
c. Unless otherwise prohibited by applicable law, if, notwithstanding the
application of paragraph b. of this Section 7, an amount paid to the
Key Employee under this Plan is subject to the excise tax imposed by
Section 4999 of the Code, or any successor provision thereto, the
Company shall pay to the Key Employee an additional amount in cash
(the "Additional Payment") equal to the amount necessary to cause the
aggregate remuneration received by the Key Employee under this Plan,
including such additional cash payment (net of all federal, state and
local income taxes and all taxes payable as the result of the
application of Sections 280G and 4999 of the Code or
any successor provision thereto) to be equal to the aggregate
remuneration the Key Employee would have received, excluding such
Additional Payment (net of all federal, state and local income taxes),
as if Section 280G and 4999 (and any successors thereto) had not been
enacted into law.
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 Additional 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
Additional Payment shall not be made from any benefit plan funds, and shall
constitute an unfunded unsecured obligation of the Company. Separation Pay
and the Additional 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
Additional 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 or 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 twelve (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.
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.
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 Ameritrust Company National Association, as Trustee
("Trustee"), and Cleveland-Cliffs. The Trust Agreement No. 2 ("Trust
Agreement No. 2") dated October 28, 1987, 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 (1) a Change of Control or (2) 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 (5)
business days, 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 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 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 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 (1) to
determine whether a particular employee is a "Key Employee" under the
Plan, and (2) 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 Additional 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
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 an Additional
Payment hereunder. Any employee or former employee of the Company who
believes that he or she is entitled to receive Severance Compensation
or an Additional 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:
(1) the specific reason or reasons for the denial;
(2) specific reference to pertinent Plan provisions on which the
denial is based;
(3) 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
(4) an explanation of the 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 Severance Compensation or an Additional 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 an
Additional 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 Additional Payment.
8266Q
Exhibits Intentionally Omitted