Exhibit 10(a)
DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement
("AGREEMENT") is made as of July 10, 2001, by and between Cleveland-Cliffs Inc,
an Ohio corporation (the "COMPANY"), and Xxxxx X. Xxxxxxx (the "INDEMNITEE"), a
Director and an officer of the Company.
RECITALS:
A. The Indemnitee is presently serving as a Director and an
officer of the Company and the Company desires the Indemnitee to continue in
such capacities. The Indemnitee is willing, subject to certain conditions
including without limitation the execution and performance of this Agreement by
the Company, to continue serving in such capacities.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Regulations of the Company (the "REGULATIONS"), the
Company has obtained, at its sole expense, insurance protecting the Company and
its officers and Directors, including the Indemnitee, against certain losses
arising out of actual or threatened actions, suits, or proceedings to which such
persons may be made or threatened to be made parties.
Accordingly, and in order to induce the Indemnitee to continue
to serve in his present capacity, the Company and the Indemnitee agree as
follows:
AGREEMENT:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve, at the
will of the Company or in accordance with a separate contract, to the extent
that such a contract is in effect at the time in question, as a Director and an
officer of the Company so long as he is duly elected and qualified in accordance
with the Regulations or until he resigns in writing in accordance with
applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the Indemnitee if
or when he is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a Director, officer, employee
or agent of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee, member, manager or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, or by
reason of any action alleged to have been taken or omitted in any such capacity,
against any and all costs, charges, expenses (including without limitation fees
and expenses of attorneys and/or others; all such costs, charges and expenses
being herein jointly referred to as "EXPENSES"), judgments, fines, and amounts
paid in settlement, actually and reasonably incurred by the Indemnitee in
connection therewith, including any appeal of or from any judgment or decision,
unless it is proved by clear and convincing evidence in a court of competent
jurisdiction that the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company, and,
with respect to any criminal action or proceeding, if the Indemnitee had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not satisfy the foregoing
standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee if or when he
is a party, or is threatened to be made a party, to any threatened, pending, or
completed action, suit, or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is or
was a Director, officer, employee or agent of the Company or is or was serving
at the request of the Company as a director, trustee, officer, employee, member,
manager or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint venture, trust, or
other enterprise, against any and all Expenses actually and reasonably incurred
by the Indemnitee in connection with the defense or settlement thereof or any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company, except that no indemnification pursuant to
this SECTION 2(b) shall be made in respect of any action or suit in which the
only liability asserted against the Indemnitee is pursuant to Section 1701.95 of
the Ohio Revised Code (the "ORC").
(c) Any indemnification under SECTION 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in SECTION 2(a) or 2(b). Such authorization shall be made (i)
by the Board of Directors of the Company (the "BOARD") by a majority vote of a
quorum consisting of Directors who were not and are not parties to or threatened
with such action, suit, or proceeding, or (ii) if such a quorum of disinterested
Directors is not available or if a majority of such quorum so directs, in a
written opinion by independent legal counsel (designated for such purpose by the
Board) which shall not be an attorney, or a firm having associated with it an
attorney, who has been retained by or who has performed services for the
Company, or any person to be indemnified, within the five years preceding such
determination, or (iii) by the shareholders of the Company (the "SHAREHOLDERS"),
or (iv) by the court in which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including without limitation the dismissal of an action
without prejudice, in defense of any action, suit, or proceeding referred to in
SECTION 2(a) or 2(b), or in defense of any claim, issue, or matter therein, he
shall be indemnified against Expenses actually and reasonably incurred by him in
connection therewith.
(e) Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit, or proceeding shall be paid by
the Company as they are incurred in advance of the final disposition of such
action, suit, or proceeding under the procedure set forth in SECTION 4(b)
hereof.
(f) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the
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Indemnitee with respect to any employee benefit plan; references to "serving at
the request of the Company" shall include any service as a Director, officer,
employee, or agent of the Company which imposes duties on, or involves services
by, the Indemnitee with respect to an employee benefit plan, its participants or
beneficiaries; references to the masculine shall include the feminine;
references to the singular shall include the plural and vice versa; and with
respect to conduct by Indemnitee in his capacity as a trustee, administrator or
other fiduciary of any employee benefit plan of the Company, if the Indemnitee
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants or beneficiaries of such employee benefit plan, he shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to herein.
(g) No amendment to the Amended Articles of Incorporation of
the Company (the "ARTICLES"), or the Regulations shall deny, diminish, or
encumber the Indemnitee's rights to indemnity pursuant to the Regulations, the
Ohio Revised Code (the "ORC"), or any other applicable law as applied to any act
or failure to act occurring in whole or in part prior to the date (the
"EFFECTIVE DATE") upon which the amendment was approved by the Shareholders. In
the event that the Company shall purport to adopt any amendment to its Articles
or Regulations or take any other action, the effect of which is to deny,
diminish, or encumber the Indemnitee's rights to indemnity pursuant to the
Articles, the Regulations, the ORC, or any such other law, such amendment shall
apply only to acts or failures to act occurring entirely after the Effective
Date thereof.
3. ADDITIONAL INDEMNIFICATION. (a) Pursuant to Section 1701.13(E)(6) of
the ORC, without limiting any right which the Indemnitee may have pursuant to
SECTION 2 hereof or any other provision of this Agreement or the Articles, the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under applicable
law at the time of any request for indemnity hereunder and subject to the
following provisions of this SECTION 3(a), the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim made against him because of any act, failure to
act, or neglect or breach of duty, including any actual or alleged error,
misstatement, or misleading statement, which he commits, suffers, permits, or
acquiesces in while acting in his capacity as a Director or an officer of the
Company. The payments which the Company is obligated to make pursuant to this
SECTION 3(a) shall include without limitation judgments, fines, and amounts paid
in settlement and any and all Expenses actually and reasonably incurred by the
Indemnitee in connection therewith including any appeal of or from any judgment
or decision; provided, however, that the Company shall not be obligated under
this SECTION 3(a) to make any payment in connection with any claim against the
Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by
applicable law from paying which results from a
final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee having actually realized a personal gain
or profit to which he was not legally entitled,
including without limitation profit from the purchase
and sale by the Indemnitee of equity securities of
the
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Company which are recoverable by the Company pursuant
to Section 16(b) of the Securities Exchange Act of
1934, or profit arising from transactions in publicly
traded securities of the Company which were effected
by the Indemnitee in violation of Section 10(b) of
the Securities Exchange Act of 1934, or Rule 10b-5
promulgated thereunder.
(b) A determination as to whether the Indemnitee shall be
entitled to indemnification under this SECTION 3(a) shall be made in accordance
with SECTION 4(a) hereof. Expenses incurred by the Indemnitee in defending any
claim to which this SECTION 3(a) applies shall be paid by the Company as they
are actually and reasonably incurred in advance of the final disposition of such
claim under the procedure set forth in SECTION 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For purposes of
pursuing his rights to indemnification under SECTION 3(a) hereof, the Indemnitee
shall (i) submit to the Board a sworn statement of request for indemnification
substantially in the form of Exhibit l attached hereto and made a part hereof
(the "INDEMNIFICATION STATEMENT") averring that he is entitled to
indemnification hereunder; and (ii) present to the Company reasonable evidence
of all amounts for which indemnification is requested. Submission of an
Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification hereunder, and the Company shall,
within 60 calendar days after submission of the Indemnification Statement, make
the payments requested in the Indemnification Statement to or for the benefit of
the Indemnitee, unless (i) within such 60-calendar-day period the Board shall
resolve by vote of a majority of the Directors at a meeting at which a quorum is
present that the Indemnitee is not entitled to indemnification under SECTION
3(a) hereof, (ii) such vote shall be based upon clear and convincing evidence
(sufficient to rebut the foregoing presumption), and (iii) the Indemnitee shall
have received within such period notice in writing of such vote, which notice
shall disclose with particularity the evidence upon which the vote is based. The
foregoing notice shall be sworn to by all persons who participated in the vote
and voted to deny indemnification. The provisions of this SECTION 4(a) are
intended to be procedural only and shall not affect the right of Indemnitee to
indemnification under SECTION 3(a) of this Agreement so long as Indemnitee
follows the prescribed procedure, and any determination by the Board that
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to SECTION 2(e) or the last sentence of SECTION
3(b), the Indemnitee shall submit to the Company a sworn request for advancement
of Expenses substantially in the form of Exhibit 2 attached hereto and made a
part hereof (the "UNDERTAKING"), averring that he has reasonably incurred actual
Expenses in defending an action, suit or proceeding referred to in SECTION 2(a)
or 2(b) or any claim referred to in SECTION 3(a), or pursuant to SECTION 7
hereof. The Indemnitee shall execute Part A of the Undertaking by which he
undertakes to: (i) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company; and (ii) reasonably cooperate with the Company
concerning the action, suit,
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proceeding or claim. In all cases, Indemnitee shall be eligible to execute Part
B of the Undertaking by which he undertakes to repay such amount if it
ultimately is determined that he is not entitled to be indemnified by the
Company under this Agreement or otherwise. In the event that the Indemnitee is
eligible to and does execute both Part A and Part B of the Undertaking, the
Expenses which are paid by the Company pursuant thereto shall be required to be
repaid by the Indemnitee only if he is required to do so under the terms of both
Part A and Part B of the Undertaking. Upon receipt of the Undertaking, the
Company shall thereafter promptly pay such Expenses of the Indemnitee as are
noticed to the Company in writing in reasonable detail arising out of the matter
described in the Undertaking. No security shall be required in connection with
any Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything contained herein
to the contrary, the Company shall not be required hereby to indemnify the
Indemnitee with respect to any action, suit, or proceeding that was initiated by
the Indemnitee unless (i) such action, suit, or proceeding was initiated by the
Indemnitee to enforce any rights to indemnification arising hereunder and such
person shall have been formally adjudged to be entitled to indemnity by reason
hereof, (ii) authorized by another agreement to which the Company is a party
whether heretofore or hereafter entered, or (iii) otherwise ordered by the court
in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of payment
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy, the
Regulations or otherwise) of the amounts otherwise payable hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the Company
that the Indemnitee not be required to incur the 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 Indemnitee hereunder. Accordingly, if it
should appear to the Indemnitee that the Company has failed to comply with any
of its obligations under this Agreement or in the event that the Company or any
other person takes any action to declare this Agreement void or unenforceable,
or institutes any action, suit or proceeding to deny, or to recover from, the
Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the
Company irrevocably authorizes the Indemnitee from time to time to retain
counsel of his choice, at the expense of the Company as hereafter provided, to
represent the Indemnitee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any
Director, officer, shareholder, or other person affiliated with the Company, in
any jurisdiction. Regardless of the outcome thereof, the Company shall pay and
be solely responsible for any and all costs, charges, and expenses, including
without limitation, fees and expenses of attorneys and others, reasonably
incurred by the Indemnitee pursuant to this SECTION 7.
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8. MERGER OR CONSOLIDATION. In the event that the Company shall be a
constituent corporation in a consolidation, merger, or other reorganization, the
Company, if it shall not be the surviving, resulting, or acquiring corporation
therein, shall require as a condition thereto that the surviving, resulting, or
acquiring corporation agree to assume all of the obligations of the Company
hereunder and to indemnify the Indemnitee to the full extent provided herein.
Whether or not the Company is the resulting, surviving, or acquiring corporation
in any such transaction, the Indemnitee shall also stand in the same position
under this Agreement with respect to the resulting, surviving, or acquiring
corporation as he would have with respect to the Company if its separate
existence had continued.
9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to indemnification
provided by this Agreement shall not be exclusive of any other rights of
indemnification to which the Indemnitee may be entitled under the Articles, the
Regulations, the ORC or any other statute, any insurance policy, agreement, or
vote of shareholders or Directors or otherwise, as to any actions or failures to
act by the Indemnitee, and shall continue after he has ceased to be a Director,
officer, employee, or agent of the Company or other entity for which his service
gives rise to a right hereunder, and shall inure to the benefit of his heirs,
executors and administrators. In the event of any payment under this Agreement,
the Company shall be subrogated to the extent thereof to all rights of recovery
previously vested in the Indemnitee, who shall execute all instruments and take
all other actions as shall be reasonably necessary for the Company to enforce
such rights.
(b) Except as provided in SECTION 9(a), the rights to
indemnification provided by this Agreement are personal to Indemnitee and are
non-transferable by Indemnitee, and no party other than the Indemnitee is
entitled to indemnification under this Agreement.
(c) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons 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.
10. SECURITY. To ensure that the Company's obligations pursuant to this
Agreement can be enforced by Indemnitee, the Company may, at its option,
establish a trust pursuant to which the Company's obligations pursuant to this
Agreement and other similar agreements can be funded.
11. NOTICES. All notices and other communications hereunder shall be in
writing and shall be personally delivered or sent by recognized overnight
courier service (a) if to the Company, to the then-current principal executive
offices of the Company (Attention: General Counsel) or (b) if to the Indemnitee,
to the last known address of Indemnitee as reflected in the Company's records.
Either party may change its address or the delivery of notices or other
communications hereunder by providing notice to the other party as provided in
this SECTION 12. All notices shall be effective upon actual delivery by the
methods specified in this SECTION 12.
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12. GOVERNING LAW. This Agreement 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.
13. MODIFICATION. This Agreement and the rights and duties of the
Indemnitee and the Company hereunder may be modified only by an instrument in
writing signed by both parties hereto.
14. PRIOR AGREEMENT. This Agreement amends and restates the Officer
Indemnification Agreement, dated as of April 16, 2001 (the "PRIOR AGREEMENT"),
between the Company and the Indemnitee, which Prior Agreement shall, without
further action, be superseded as of the date first above written.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CLEVELAND-CLIFFS INC
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF )
-----------------------------------
) SS
COUNTY OF )
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I, ________________ , being first duly sworn, do depose and say as
follows:
1. This Indemnification Statement is submitted pursuant to the Director
and Officer Indemnification Agreement, dated August __, 2001, between
Cleveland-Cliffs Inc, an Ohio corporation (the "COMPANY"), and the undersigned.
2. I am requesting indemnification against costs, charges, expenses
(which may include fees and expenses of attorneys and/or others), judgments,
fines, and amounts paid in settlement (collectively, "LIABILITIES"), which have
been actually and reasonably incurred by me in connection with a claim referred
to in SECTION 3(a) of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled
to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
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______________________________
[Signature of Indemnitee]
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ____ day of ________________, ____.
______________________________
[Seal]
My commission expires the ____ day of _____________, ______.
EXHIBIT 2
UNDERTAKING
STATE OF )
-----------------------------------
) SS
COUNTY OF )
----------------------------------
I, ____________________, being first duly sworn, do depose and
say as follows:
l. This Undertaking is submitted pursuant to the Director and
Officer Indemnification Agreement, dated August __, 2001, between
Cleveland-Cliffs Inc, an Ohio corporation (the "COMPANY") and the undersigned.
2. I am requesting payment of costs, charges, and expenses
which I have reasonably incurred or will reasonably incur in defending an
action, suit or proceeding, referred to in SECTION 2(a) or 2(b) or any claim
referred to in SECTION 3(a), or pursuant to SECTION 8, of the aforesaid
Indemnification Agreement.
3. The costs, charges, and expenses for which payment is requested are,
in general, all expenses related to
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4. PART A(1)
I hereby undertake to (a) repay all amounts paid pursuant hereto if it
is proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
______________________________
[Signature of Indemnitee]
4. PART B
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(1) The Indemnitee shall not be eligible to execute Part A of this Undertaking
if, at the time of the Indemnitee's act or omission at issue, the Articles or
the Regulations of the Company prohibit such advances by specific reference to
the Ohio Revised Code (the "ORC") Section 1701.13(E)(5)(a), or if the only
liability asserted against the Indemnitee is in an action, suit or proceeding on
the Company's behalf pursuant to ORC Section 1701.95. In the event that the
Indemnitee is eligible to and does execute both Part A and Part B hereof, the
costs, charges and expenses which are paid by the Company pursuant hereto shall
be required to be repaid by the Indemnitee only if he is required to do so under
the terms of both Part A and Part B hereof.
I hereby undertake to repay all amounts paid pursuant hereto if it
ultimately is determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.
______________________________
[Signature of Indemnitee]
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ____ day of ___________, ____.
______________________________
[Seal]
My commission expires the _____ day of _______________, ____.
