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Exhibit 10(a)
INDEMNIFICATION AGREEMENT
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This Indemnification Agreement ("Agreement") is made as of
April 16, 2001 by and between Cleveland-Cliffs Inc, an Ohio corporation (the
"Company"), and Xxxxx X. Xxxxxxx (the "Indemnitee"), an officer of the Company.
RECITALS:
A. The Indemnitee is presently serving as an officer of the
Company and the Company desires the Indemnitee to continue in that capacity. The
Indemnitee is willing, subject to certain conditions including without
limitation the execution and performance of this Agreement by the Company, to
continue in that capacity.
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:
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 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 an officer 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, partnership, limited liability
company, 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, if the
Indemnitee acted in good faith and in a manner that he reasonably believed to be
in or not opposed to 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.
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(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 an officer 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, partnership, limited
liability company, 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, if the Indemnitee acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made in respect of (i) any
claim, issue, or matter as to which the Indemnitee is adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless,
and only to the extent that, the court of common pleas or other court in which
such action, suit, or proceeding was brought determines, notwithstanding any
adjudication of liability, that in view of all the circumstances of the case the
Indemnitee is fairly and reasonably entitled to indemnity for such expenses as
such court of common pleas or other court shall deem proper, or (ii) any action
or suit in which the only liability asserted against the Indemnitee is pursuant
to Section 1701.95 of the Ohio Revised Code.
(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 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. 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.
(e) 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 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
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benefit plan, its participants or beneficiaries; references to the masculine
shall include the feminine; and references to the singular shall include the
plural and vice versa; and with respect to conduct by the 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.
(f) No amendment to the Amended Articles of Incorporation of
the Company, as amended (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. 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, 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 an officer of the
Company. The payments which the Company is obligated to make pursuant to this
Section 3 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 to make any payment in connection with any claim against the
Indemnitee:
(a) 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
(b) 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 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.
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A determination as to whether the Indemnitee shall be entitled
to indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to which
this Section 3 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 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification substantially in the form of Exhibit 1 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
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 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 the second sentence of Section 2(d) or the last
sentence of Section 3 hereof, 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, or
pursuant to Section 7 hereof. Unless at the time of the Indemnitee's act or
omission at issue, the Articles of Incorporation or Regulations of the Company
prohibit such advances by specific reference to ORC Section 1701.13(E)(5)(a) and
unless the only liability asserted against the Indemnitee in the subject action,
suit or proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be
eligible to execute Part A of the Undertaking by which he undertakes to: (a)
repay such amount if (1) with respect to any action, suit, proceeding or claim
(other than an action by or in the right of the Company) brought against the
Indemnitee by reason of the fact that the Indemnitee is or was an officer of the
Company for which the Indemnitee has received advancement of Expenses, it is
determined that the Indemnitee did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Company or (2) with respect to any action, suit, proceeding or claim brought
against the Indemnitee by or in the right of the Company for which the
Indemnitee has received advancement of Expenses, the Indemnitee is adjudged to
be liable for negligence or for
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misconduct in the performance of his duty to the Company and the court has not
determined that Indemnitee is entitled to indemnification; and (b) reasonably
cooperate with the Company concerning the action, suit, proceeding or claim. In
all cases, the 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,
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including without limitation, fees and expenses of attorneys and others,
reasonably incurred by the Indemnitee pursuant to this Section 7.
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 right.
(b) 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.
(c) 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.
10. 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.
11. 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.
12. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CLEVELAND-CLIFFS INC
By: /s/ X. X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
/s/ Xxxxx X. Xxxxxxx
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[Signature of Indemnitee]
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Exhibit 1
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INDEMNIFICATION STATEMENT
STATE OF )
---------------)
) SS
COUNTY OF )
---------------)
I, ____________________, being first duly sworn, do depose and
say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated ______________, 2001, between Cleveland-Cliffs
Inc (the "Company"), an Ohio corporation, 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 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 ____________________________________________________________________________
_______________________________________________________________________________
_____________________________________________________________________.
__________________________________________
[Signature of Indemnitee]
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this _____ day of _____________, 20__.
__________________________________________
[Seal]
My commission expires the _____ day of __________, 20__.
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Exhibit 2
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UNDERTAKING
STATE OF )
-------------------------)
) SS
COUNTY OF )
-------------------------)
I, ___________________, being first duly sworn do depose and
say as follows:
1. This Undertaking is submitted pursuant to the
Indemnification Agreement, dated ______________, 2001 between Cleveland-Cliffs
Inc (the "Company"), an Ohio corporation 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, or pursuant to Section 7, of the aforesaid
Indemnification Agreement.
3. The costs, charges, and expenses for which payment is
requested are, in general, all expenses related to ____________________________
_______________________________________________________________________________
_______________________________________________________________________.
4. Part A
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I hereby undertake to: (a) repay all amounts paid pursuant
hereto if (i) with respect to any action, suit, proceeding or claim (other than
an action by or in the right of the Company) brought against me by reason of the
fact that I am or was an officer of the Company for which I have received
advancement of Expenses, it is determined that I did not act in good faith or in
a manner which I reasonably believed to be in or not opposed to the best
interests of the Company or (ii) with respect to any action, suit, proceeding or
claim brought against me by or in the right of the Company for which I have
received advancement of Expenses, I am adjudged to be liable for negligence or
misconduct in the performance of my duty to the Company and the court has not
determined that I am entitled to indemnification; and (b) reasonably cooperate
with the Company concerning the action, suit, proceeding or claim.
_________________________________
[Signature of Indemnitee]
4. Part B
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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.
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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 ____________, 20__.
_________________________________
[Seal]
My commission expires the ____ day of ____________, 20__.
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