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Exhibit 10(d)
FORM OF CONTINGENT EMPLOYMENT AGREEMENT
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This CONTINGENT EMPLOYMENT AGREEMENT ("Agreement"), dated as of
_____________ (the "Effective Date"), by and between Cleveland-Cliffs Inc, an
Ohio corporation ("Cleveland-Cliffs"), and _______________ who is presently
________________ of Cleveland-Cliffs (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:
OPERATION OF AGREEMENT; CERTAIN DEFINITIONS: This Agreement shall be
effective and binding immediately upon its execution, 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
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:
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(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 of
Cleveland-Cliffs, 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.
Upon the occurrence of a Change of Control at any time during the Term,
this Agreement shall become immediately operative.
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 (1) the close of business on the third anniversary of the Effective Date and
(2) the expiration of the Period of Employment (as that term is hereafter
defined); provided, however, that (i) this Agreement may be continued in full
force and effect for an additional
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period or periods of one (1) year if Cleveland-Cliffs and the Executive mutually
agree to such extension or extensions, (ii) this Agreement 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 (iii) 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.
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 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".
EMPLOYMENT; PERIOD OF EMPLOYMENT: 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 (1) 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), (2) engaging in charitable and community activities, or (3) 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.
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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 (1) the expiration of the third anniversary
of the occurrence of the Change of Control, (2) the Executive's death, or (3)
the Executive's attainment of age 65.
COMPENSATION DURING PERIOD OF EMPLOYMENT: During the Period of
Employment the Executive shall receive and be entitled to the following:
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;
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, the 1987
Incentive Equity Plan and the 1992 Incentive Equity Plan, without material
reduction in the reward opportunities available to the Executive, and without
reduction in the target bonus percentage applicable to the Executive immediately
prior to the occurrence of a Change of Control (with annual amounts awarded
pursuant to such plans and arrangements collectively referred to as "Incentive
Pay");
participation in the Cleveland-Cliffs Inc Supplemental Retirement
Benefit Plan (As Amended and Restated as of January 1, 1991) ("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
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, retirement plans and supplemental arrangements, and the
Investment Credit Employee Stock Ownership Plan), as the same may be modified,
supplemented or replaced without material reduction in total value of the
benefits to Executive (collectively, "Employee Benefits").
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TERMINATION FOLLOWING A CHANGE IN CONTROL: The Executive's employment
may be terminated at will by Cleveland-Cliffs during the Period of Employment;
provided, however, the death of the Executive shall not be deemed to be a
termination of employment by Cleveland-Cliffs. In the event of such a
termination by Cleveland-Cliffs the Executive shall not be entitled to the
benefits provided by Section 5 hereof only if such termination is for "Cause",
which for purposes of this Agreement shall mean that, prior to any termination
pursuant to Section 4(b) hereof, 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)(2) 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.
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:
Any termination by Cleveland-Cliffs of the employment of the
Executive prior to the date upon which the Executive shall have attained
age 65, which termination shall be for any reason other than for Cause;
The Executive's "Disability", which 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
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Termination by the Executive of his employment with Cleveland-Cliffs
upon the occurrence of any of the following events:
The failure to elect, reelect or otherwise maintain the Executive
in the office or position in 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, if the
Executive shall have been a Director of Cleveland-Cliffs immediately
prior to the Change of Control;
A reduction in the Executive's Base 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) provided by Cleveland-Cliffs, or a reduction or termination
of any benefits described in Section 3 hereof to which the Executive was
entitled immediately prior to the Change of Control, any of which is not
remedied 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;
A determination by the Executive made in good faith that as a
result of a Change of Control and a change in circumstances thereafter
significantly affecting his position, including without limitation a
change in the scope of the business or other activities for which he was
responsible immediately prior to the Change of Control, he 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 Executive immediately prior to the
Change of Control, which situation is not remedied within 10 calendar
days after written notice to Cleveland-Cliffs from the Executive of such
determination;
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;
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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 significantly more (in terms of
either consecutive days or aggregate days in any calendar 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
Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by Cleveland-Cliffs or any successor
thereto.
A termination by Cleveland-Cliffs pursuant to Section 4(a) hereof 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.
SEVERANCE COMPENSATION: If Cleveland-Cliffs shall terminate the
Executive's employment during the Period of Employment, other than pursuant to
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:
Severance Pay. Within five business days after the Termination
Date:
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
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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")) of
the amount of Base Pay that would have been paid to the
Executive pursuant to Section 3(a) for the duration of the Period
of Employment 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
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 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 (A) 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 (B) the amount of
the most recent award of Incentive Pay.
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.
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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.
Employee Benefits. For the remainder 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) hereof, 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 third anniversary of the occurrence of the
Change of Control.
Stock Options and Restricted Stock. Upon the Termination Date, all
Stock Options granted to the Executive pursuant to 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 to the Executive 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.
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.
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Outplacement Counseling. Cleveland-Cliffs shall reimburse the
Executive for reasonable expenses incurred for outplacement counseling (1) which
are pre-approved by the Chief Human Resources Officer of Cleveland-Cliffs, (2)
which do not exceed 15% of the Executive's annual Base Pay, and (3) which are
incurred by the Executive within six months following the Termination Date.
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.
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.
Calculation. The calculation of all payments of compensation and
other benefits to be provided to Executive under this Agreement shall be made by
Xxxxxx Associates ("Xxxxxx"), 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.
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 l.K of the SRP. If
Cleveland-Cliffs shall terminate the Executive's employment during the Period of
Employment, other than 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:
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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 (1)
the number of his actual years of continuous service or (2) 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 (3) his actual chronological age or (4) 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 upon the earlier of
(5) 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 (6) the
date upon 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
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.
WELFARE BENEFIT CONTINUATION FOLLOWING TERMINATION AFTER PERIOD OF
EMPLOYMENT. Following the end of the Period of Employment, and upon Executive's
termination of employment with Cleveland-Cliffs, Cleveland-Cliffs shall:
Provide medical, hospital, surgical and prescription drug
coverage, equivalent to that presently furnished 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;
Provide life insurance on the Executive, equivalent to that
presently furnished to officers who retire after January 1, 1990 by
Cleveland-Cliffs, to the Executive during his retirement; and
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 Xxxxxxx
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0 xxxxx xx 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.
LIMITATION AND INDEMNIFICATION. Notwithstanding anything in this
Agreement to the contrary, Cleveland-Cliffs shall not be obligated to pay the
Executive any amount of money, or provide the Executive with any benefits, which
are in excess of the then maximum amount which Cleveland-Cliffs can deduct for
Federal income tax purposes.
Without limiting the generality of paragraph (a) of this Section
8, if the Executive is a "disqualified individual", as defined in Section
280G(c) of the Code, the present value of payments under this Agreement made to
the Executive shall not in the aggregate be greater than the excess, if any, of
(1) 299% of the Executive'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 Executive's benefit that are considered
"contingent on a change" in ownership or control of Cleveland-Cliffs 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
Xxxxx, Day, Xxxxxx & Xxxxx or such other tax counsel selected by
Cleveland-Cliffs' independent accountants and acceptable to the Executive.
Unless otherwise prohibited by applicable law, if,
notwithstanding the application of paragraph (b) of this Section 8, an amount
paid to the Executive under this Agreement is subject to the excise tax imposed
by Section 4999 of the Code, or any successor provision thereto,
Cleveland-Cliffs shall pay to the Executive an additional amount in cash equal
to the amount necessary to cause the aggregate remuneration received by the
Executive under this Agreement, 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 Section 280G and 4999 of the Code or any successor provision
thereto) to be equal to the aggregate
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remuneration the Executive 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.
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.
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.
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.
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
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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.
LEGAL FEES AND EXPENSES: 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.
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To ensure that the provisions of this Agreement can be enforced by
Executive, certain trust arrangements ("Trusts") have been established between
Ameritrust Company National Association, as Trustee ("Trustee"), and
Cleveland-Cliffs. A Trust Agreement No. 1 ("Trust Agreement No. 1") and a Trust
Agreement No. 2 ("Trust Agreement No. 2") each dated October 28, 1987, as
amended and/or restated, between the Trustee and Cleveland-Cliffs, are attached
as Exhibits B and C, respectively. A Trust Agreement Xx. 0 ("Xxxxx Xxxxxxxxx Xx.
0") 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 and 5 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.
Upon the earlier to occur of (1) a Change of Control or (2) 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:
transfer to Trustee to be added to the principal of the Trust under
Trust Agreement No. 1 a sum equal to (A) 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 and 6 hereof, such present
value to be computed using the assumptions set forth in Section 5(a) hereof
less (B) 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 (C) 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
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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
transfer to the Trustee to be added to the principal of the Trust
under Trust Agreement No. 2 the sum of _______________________________
($______) 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.
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.
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.
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SUCCESSORS AND BINDING AGREEMENT: 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.
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.
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.
The agreement of Cleveland-Cliffs to make payments and/or provide
benefits hereunder shall represent an unsecured obligation of Cleveland-Cliffs.
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.
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
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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
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
If to the Executive, to the last address shown on the records of the Employer.
Notices of change of address shall be effective only upon receipt.
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.
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.
AMENDMENT. This Agreement may be amended only by a written instrument
signed by the parties hereto, which makes specific reference to this Agreement.
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.
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.
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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.
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.
PRIOR AGREEMENT: This Agreement supersedes the Amended and Restated
Agreement, dated _______________ (the "Prior Agreement"), between
Cleveland-Cliffs and the Executive, which Prior Agreement shall, without further
action, be terminated as of the date 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____________________________
______________________________
Name:
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Exhibits Intentionally Omitted
