Exhibit 10(oo)
[TRUST FOR NONEMPLOYEE DIRECTORS' SUPPLEMENTAL
COMPENSATION PLAN]
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TRUST AGREEMENT NO. 9
Between
CLEVELAND-CLIFFS INC
and
KEY TRUST COMPANY OF OHIO, N.A.
___________________
November 20, 1996
___________________
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TABLE OF CONTENTS
Page
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I. TRUST FUND....................................................... 2
II. PAYMENTS TO TRUST BENEFICIARIES.................................. 6
III. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO
A TRUST BENEFICIARY WHEN THE COMPANY IS INSOLVENT......... 8
IV. PAYMENTS TO COMPANY.............................................. 10
V. INVESTMENT OF TRUST FUND......................................... 12
VI. INCOME OF THE TRUST.............................................. 13
VII. ACCOUNTING BY TRUSTEE............................................ 13
VIII. RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE.................... 15
IX. AMENDMENTS, ETC., TO PLAN AND EXHIBITS........................... 20
X. REPLACEMENT OF TRUSTEE........................................... 22
XI. AMENDMENT OR TERMINATION OF AGREEMENT............................ 23
XII. GENERAL PROVISIONS............................................... 24
XIII. NOTICES.......................................................... 26
TRUST AGREEMENT NO. 9
---------------------
This Trust Agreement ("Agreement") made as of the 20th day of
November, 1996 by and between Cleveland-Cliffs Inc, an Ohio corporation
("Company"), and Key Trust Company of Ohio, N.A., an Ohio corporation
("Trustee").
WITNESSETH:
-----------
WHEREAS, certain benefits are or may become payable to the
nonemployee directors of the Company listed (from time to time as provided in
Sections 1.6 and 9.2 hereof) on Exhibit A hereto ("Directors") under the
provisions of the Cleveland-Cliffs Inc Nonemployee Directors' Supplemental
Compensation Plan, effective July 1, 1995 ("Effective Date") as the same have
been or in the future may be amended or restated, or any successor thereto
("Plan"), a copy of which is appended to this Agreement as Exhibit B;
WHEREAS, the Plan provides for the payment, following retirement
from the Board of Directors ("Board") of the Company of post-retirement income
to Directors who commence service on or after the Effective Date, and their
beneficiaries, if applicable, as provided in the Plan, and the Company wishes to
assure the payment to the Directors and to their beneficiaries (the Directors
and their respective beneficiaries are collectively referred to as the "Trust
Beneficiaries") of amounts due under the Plan (the amounts so payable are
collectively referred to as the "Benefits");
WHEREAS, the Company wishes to establish a trust ("Trust") and to
transfer to the Trust assets which shall be held subject
to the claims of the creditors of the Company to the extent set forth in Article
III until (i) paid in full to all Trust Beneficiaries as Benefits in such manner
and as specified in this Agreement unless the Company is Insolvent (as that term
is defined below) at the time that such Benefits become payable or (ii)
otherwise disposed of pursuant to the terms of this Agreement; and
WHEREAS, the Company shall be considered "Insolvent" for purposes
of this Agreement at such time as the Company (i) is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code, as amended from
time to time, or (ii) is unable to pay its debts as they become due.
NOW, THEREFORE, the Company and the Trustee establish the Trust
and agree that the Trust shall be comprised, held and disposed of as follows:
I. TRUST FUND
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1.1 Subject to the claims of creditors to the extent set forth in
Article III, the Company shall deposit with the Trustee in trust One Hundred
Dollars ($100), which shall become the principal of this Trust, to be held,
administered and disposed of by the Trustee as provided in this Agreement.
1.2 This Trust shall be irrevocable.
1.3 In the event that a Change in Control has occurred, the Chief
Executive Officer of the Company ("CEO") or the Secretary of the Company shall
notify the Trustee promptly. The Trustee shall be entitled to rely upon such
notice as to whether and when
2
a Change in Control has occurred and shall not be required to make any
independent verification of a Change in Control.
1.4 The principal of the Trust and any earnings shall be held in
trust separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes set forth in this Agreement. No Trust
Beneficiary shall have any preferred claim on, or any beneficial ownership
interest in, any assets of the Trust prior to the time that such assets are paid
to a Trust Beneficiary as Benefits. Any rights created under the Plan and this
Agreement shall be mere unsecured contractual rights of Trust Beneficiaries with
respect to the Company. The obligation of the Trustee to pay Benefits pursuant
to this Agreement constitutes merely an unfunded and unsecured promise to pay
such benefits.
1.5 (a) The Company may at any time or from time to time make
additional deposits of cash or other property as may be acceptable to the
Trustee in the Trust, or make provision for cash or other property as may be
acceptable to the Trustee to be transferred to the Trust, such as by means of a
letter of credit or otherwise, to augment the principal to be held, administered
and disposed of by the Trustee, but no payment of all or any portion of the
principal of the Trust or earnings shall be made to the Company or any other
person or entity on behalf of the Company except as expressly provided in this
Agreement.
(b) Within 10 days following the occurrence of a Potential
Change in Control (as that term is defined in this Section 1.5), the Company
shall make a contribution to the Trust
3
that is sufficient, taking into account the assets of the Trust prior to such
contribution, to provide for the payment of all Benefits at the Threshold
Percentage (as defined in Section 4.1 hereof) equal to 140%, and any other
amounts payable or reimbursable pursuant to the terms of this Agreement.
(c) Within 30 days after the end of any calendar year ending
after a Change of Control, the Company shall make a contribution to the Trust
that is sufficient, taking into account the assets of the Trust prior to such
contribution, to provide for the payment of all Benefits at the Threshold
Percentage (as defined in Section 4.1 hereof) equal to 140%, and any other
amounts payable or reimbursable pursuant to the terms of this Agreement.
(d) A "Potential Change in Control" means the
occurrence of any of the following events:
(i) The Company enters into a letter of intent,
agreement in principle or other agreement, the consummation of
which would constitute a Change in Control; or
(ii) any person (including the Company) makes a public
announcement (including, without limitation, an announcement made by filing a
Schedule 13D or Schedule 14D-1 (or any successor schedule, form, report or
item), each as promulgated pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act")) stating a present intention to take actions that, if
consummated, would constitute a Change in Control.
1.6 Not later than the date of any Change of Control, the
Company shall (a) specify the nature, amounts and timing of
4
the Benefits to which each Trust Beneficiary may become entitled, subject to
Article IX, in an exhibit ("Exhibit C") which shall become a part of this
Agreement and be incorporated by this reference, (b) provide any corresponding
revisions to Exhibits A and B that may be required and (c) provide the Trustee
with copies of the Plan and any amendments thereto.
1.7 The Trust is intended to be a grantor trust, within the
meaning of section 671 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor provision, and shall be construed accordingly. The
purpose of the Trust is to assure that the Company's obligations to the Trust
Beneficiaries pursuant to the Plan are fulfilled. The Trust is neither intended
nor designed to qualify under section 401(a) of the Code or to be subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
1.8 As used in this Agreement, the term "Change in Control" shall
mean the occurrence of any of the following events:
(a) The Company shall merge into itself, or be merged
or consolidated with, another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed immediately prior to
such merger or consolidation;
(b) The Company shall sell or otherwise transfer all or
substantially all of its assets to any other corporation or other legal person,
and immediately after such sale or transfer
5
less than 70% of the combined voting power of the outstanding voting securities
of such corporation or person is held in the aggregate by the former
shareholders of the Company as the same shall have existed immediately prior to
such sale or transfer;
(c) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) of the Securities Exchange
Act of 1934, shall become the beneficial owner (as defined in Rule 13d-3 of the
Securities and Exchange Commission pursuant to the Securities and Exchange Act
of 1934) of 30% or more of the outstanding voting securities of the Company
(whether directly or indirectly); or
(d) During any period of three consecutive years, individuals
who at the beginning of any such period constitute the Board of Directors of the
Company cease, for any reason, to constitute at least a majority thereof, unless
the election, or the nomination for election by the shareholders of the Company,
of each director first elected during any such period was approved by a vote of
at least one-third of the directors of the Company who are directors of the
Company on the date of the beginning of any such period.
II. PAYMENTS TO TRUST BENEFICIARIES
-------------------------------
2.1 Provided that the Company is not Insolvent and commencing
with the earlier to occur of (a) appropriate notice to the Trustee by the
Company, or (b) the date on which the Trustee has been notified in accordance
with Section 1.3 that a Change of Control has occurred, the Trustee shall make
payments of Benefits to each Trust Beneficiary from the assets of the
6
Trust in compliance and conformity with the terms of the Plan and in accordance
with Exhibit C, and subject to Article IX.
2.2 The Trustee shall continue to pay Benefits to the Trust
Beneficiaries until the assets of the Trust are depleted, subject to Section
11.2. If any current payment by the Trustee under the terms of this Agreement
would deplete the assets of the Trust below the amount necessary to provide
adequately for Benefits known to the Trustee to be payable in the future, the
Trustee shall nevertheless make the current payment when due. If, after
application of the preceding sentence, amounts in the Trust are not sufficient
to provide for full payment of the Benefits to which any Trust Beneficiary is
entitled as provided in this Agreement, the Company shall make the balance of
each such payment directly to the Trust Beneficiary as it becomes due.
2.3 The Company may make payments of Benefits directly to each or
any Trust Beneficiary. The Company shall notify the Trustee of its decision to
pay Benefits directly at least 3 days prior to the time amounts are due to be
paid to a Trust Beneficiary.
2.4 Nothing in this Agreement shall in any way diminish any
rights of any Trust Beneficiary to pursue such Trust Beneficiary's rights as a
general creditor of the Company with respect to Benefits or otherwise, and the
rights of each Trust Beneficiary under the Plan shall in no way be affected or
diminished by any provision of this Agreement or action taken pursuant to this
Agreement, except that any payment actually received by any Trust Beneficiary
shall reduce dollar-per-dollar
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amounts otherwise due to such Trust Beneficiary pursuant to the
Plan.
2.5 The Trustee shall withhold from any payment to a Trust
Beneficiary the amount required by law to be so withheld under federal, state
and local tax withholding requirements, and shall pay over to the appropriate
government authority the amounts withheld.
III. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO
A TRUST BENEFICIARY WHEN THE COMPANY IS INSOLVENT
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3.1 At all times during the continuance of this Trust, the
principal and income of the Trust shall be subject to claims of creditors of the
Company as set forth in this Section 3.1. The Board of Directors of the Company
("Board") and the CEO shall have the duty to inform the Trustee in writing if
either the Board or the CEO believes that the Company is Insolvent. If the
Trustee receives a notice in writing from the Board or the CEO stating that the
Company is Insolvent or if a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become Insolvent, the
Trustee shall independently determine within 30 days after receipt of such
notice whether the Company is Insolvent. In making this determination, the
Trustee may engage the outside accountants of the Company to render an opinion
as to the solvency of the Company and shall be fully protected under Section 8.7
in relying upon the advice of such accountants. In addition, the Company shall
provide the Trustee or its agents, including the outside accountants of the
Company, with any information reasonably requested, and otherwise cooperate with
the Company or its agents
8
in making the determination. Pending such determination, or if the Trustee has
actual knowledge or has determined that the Company is Insolvent, the Trustee
shall discontinue or refrain from making payments to any Trust Beneficiary and
hold the Trust assets for the benefit of the general creditors of the Company.
The Trustee shall pay any undistributed principal and income in the Trust to the
extent necessary to satisfy the claims of the creditors of the Company as a
court of competent jurisdiction may direct. If the Trustee has discontinued or
refrained from making payments to any Trust Beneficiary pursuant to this Section
3.1, the Trustee shall pay or resume payments to such Trust Beneficiary in
accordance with this Agreement if the Trustee has determined that the Company is
not Insolvent, or is no longer Insolvent (if the Trustee initially determined
the Company to be Insolvent), or pursuant to the order of a court of competent
jurisdiction. Unless the Trustee has actual knowledge of Insolvency, or has
received notice from the Board, the CEO or a person claiming to be a creditor of
the Company alleging that the Company is Insolvent, the Trustee shall have no
duty to inquire as to whether the Company is Insolvent and may rely on
information concerning the Insolvency of the Company that has been furnished to
the Trustee by any creditor of the Company or by any person (other than an
employee or director of the Company) acting with apparent or actual authority
with respect to the Company.
3.2. If the Trustee is precluded from paying Benefits from the
Trust assets pursuant to Section 3.1 and such prohibition is
9
subsequently removed, the Trustee shall pay the aggregate amount of all Benefits
that would have been paid to the Trust Beneficiaries in accordance with this
Agreement during the period of such prohibition, less the aggregate amount of
Benefits otherwise paid to any Trust Beneficiary by the Company during any such
period, together with interest on the delayed amount determined at a rate equal
to the rate actually earned (including, without limitation, market appreciation
or depreciation, plus receipt of interest and dividends) during such period with
respect to the assets of the Trust corresponding to such net amount delayed.
IV. PAYMENTS TO COMPANY
-------------------
4.1 Except to the extent expressly contemplated by this Article
IV, the Company shall have no right or power to direct the Trustee to return any
of the Trust assets to the Company before all payments of Benefits have been
made to all Trust Beneficiaries as provided in this Agreement. From time to
time, if and when requested by the Company to do so and/or in order to comply
with Section 7.2 hereof, the Trustee shall engage the services of Xxxxxx
Associates or such other independent actuary as may be mutually satisfactory to
the Company and to the Trustee to determine the maximum actuarial present values
of the future Benefits that could become payable under the Plan with respect to
each Director. The Trustee shall determine the fair market values of the Trust
assets allocated to the account of each Director pursuant to Section 7.2 hereof.
The Company shall pay the fees of such independent actuary and of any appraiser
engaged
10
by the Trustee to value any property held in the Trust. The independent actuary
shall make its calculations based upon the assumptions that (i) the annual
retainer payable to each active Director shall increase by 10% per year, and
(ii) each Director shall commence payments from the Plan at an age at which the
actuarial present value of the Director's future Benefits are at a maximum. In
addition, the independent actuary shall use the 1983 Group Annuity Mortality
Table, an interest rate of 8%, Gross National Product Price Deflator increases
of 4%, with such other assumptions as are recommended by such actuary and
approved by the Company and, after the date of a Change of Control, a majority
of the Directors (subject to the provision of Section 10.2 hereof). For purposes
of this Agreement, (A) the "Fully Funded" amount with respect to the account of
a Director maintained pursuant to Section 7.2 hereof shall be equal to the
"Threshold Percentage," as defined below, multiplied by the maximum actuarial
present value of the future Benefits that could become payable under the Plan
with respect to the Director, and (B) the "Account Excess" with respect to such
account shall be equal to the excess, if any, of the fair market value of the
assets held in the Trust allocated to a Director's account over the respective
Fully Funded amount. Unless otherwise provided, prior to a Change of Control the
Threshold Percentage shall be equal to 110%, and following a Change of Control
the Threshold Percentage shall be equal to 140%. The Trustee shall allocate any
Account Excess in accordance with Section 7.2 hereof. Thereafter, upon the
request of the Company, the Trustee shall
11
pay to the Company the excess, if any, of the aggregate account balances over
the aggregate Fully Funded amounts computed upon the basis of a Threshold
Percentage equal to 140%.
V. INVESTMENT OF TRUST FUND
------------------------
5.1 Prior to a Change of Control, the Trustee shall invest
and reinvest the assets of the Trust as the Company shall prescribe in writing
from time to time.
5.2 On or after the date of a Change of Control, or in the
absence of the instructions from the Company specified in Section 5.1, the
provisions of this Section 5.2 shall apply to the investment of the Trust
assets. The investment objective of the Trustee shall be to preserve the
principal of the Trust while obtaining a reasonable total rate of return,
measurement of which shall include, without limitation, market appreciation or
depreciation plus receipt of interest and dividends. The Trustee shall be
mindful, in the course of its management of the Trust, of the liquidity demands
on the Trust.
5.3 The Trustee shall have the sole power to invest the assets of
the Trust, in accordance with the provisions of Sections 5.1 and 5.2. The
Trustee shall not be liable for any failure to maximize income on such portion
of the Trust assets as may be from time to time invested or reinvested as set
forth above, nor for any loss of principal or income due to the liquidation of
any investment that the Trustee, in its sole discretion, believes necessary to
make payments or to reimburse expenses under the terms of this Agreement. The
Trustee shall have the right to invest assets of the Trust for short-term
12
investment periods, pending distribution, or long-term investment of such
assets, as the Trustee may deem proper in the circumstances.
5.4 In no event may the Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by Company, other than a
de minimis amount held in common investment vehicles in which the Trustee
invests.
VI. INCOME OF THE TRUST
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6.1 During the continuance of this Trust, all net income of the
Trust shall be retained in the Trust.
VII. ACCOUNTING BY TRUSTEE
---------------------
7.1 The Trustee shall maintain such books, records and accounts
as may be necessary for the proper administration of the Trust assets, including
such specific records as shall be agreed upon in writing by the Company and the
Trustee. Within 60 days following the close of each calendar year that includes
or commences after the date of this Trust until the termination of this Trust or
the removal or resignation of the Trustee (and within 60 days after the date of
such termination, removal or resignation), the Trustee shall render to the
Company an accounting with respect to the Trust assets as of the end of the then
most recent calendar year (and as of the date of such termination, removal or
resignation, as the case may be). The Trustee shall furnish to the Company on a
quarterly basis (or as the Company shall direct from time to time) and in a
timely manner such information regarding the Trust as the Company shall require
for purposes of preparing its statements of financial
13
condition. The Trustee shall at all times maintain separate bookkeeping accounts
for each Director as prescribed in Section 7.2 hereof, and, upon the written
request of a Director, shall provide to the Director an annual statement of the
Director's account. Upon the written request of the Company or, on or after the
date of a Change of Control, a Director, the Trustee shall deliver to the
Company or the Director, as the case may be, a written report setting forth the
amount held in the Trust and a record of the deposits made to the Trust by the
Company.
Unless the Company or any Director shall have filed with the
Trustee written exception or objection to any such statement and account within
90 days after receipt thereof, the Company and the Directors shall be deemed to
have approved such statement and account, and in such case, the Trustee shall be
forever released and discharged with respect to all matters and things reported
in such statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding to which the Company
and the Directors were parties.
7.2 The Trustee shall maintain a separate account for each
Director. The Trustee shall credit or debit each Director's account as
appropriate to reflect such Director's allocable portion of the Trust assets, as
such Trust assets may be adjusted from time to time pursuant to the terms of
this Agreement. Except as provided in this Section 7.2, all allocations shall be
made in proportion to the balances of the separate accounts of the Directors.
Prior to the date of a Change of Control, all
14
deposits of principal pursuant to Section 1.1 and 1.5 hereof shall be allocated
as directed by the Company. On or after such date, deposits of principal shall
be allocated as an Account Excess in accordance with this Section 7.2. Income,
expense, gain or loss on assets allocated to the separate accounts of the
Directors shall be allocated separately to such accounts by the Trustee in
proportion to the balances of the separate accounts of the Directors. Prior to
the date of a Change of Control, at the request of the Company the Trustee shall
determine the amount of all Account Excesses. On or after the date of a Change
of Control, the Trustee shall determine annually the amount of all Account
Excesses. The Trustee shall allocate the aggregate amount of the Account
Excesses to any accounts that are not Fully Funded, as defined in Section 4.1
hereof, in proportion to the differences between the respective Fully Funded
amount and account balance, insofar as possible until all accounts are Fully
Funded. Any remaining aggregate Account Excess shall be allocated to all the
accounts in proportion to the respective Fully Funded amounts.
7.3 Nothing in this Article VII shall preclude the commingling of
Trust assets for investment.
VIII. RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE
---------------------------------------------
8.1 The duties and responsibilities of the Trustee shall be
limited to those expressly set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee.
15
8.2 In addition to and without limiting any other provision of
this Agreement, on or after the date of a Change of Control, the Trustee shall,
in its sole discretion, based upon the information furnished to it by the
Company and/or the Directors and any additional information that it may
reasonably request, (a) make all decisions regarding whether a Trust Beneficiary
is eligible for the payment of Benefits, the nature, amount and timing of such
benefits, and any other decisions pertinent to the exercise of the Trustee's
duties and responsibilities under this Agreement, and (b) exercise any power or
discretion granted pursuant to the Plan to the Board, any committee of the
Board, or to any other committee, entity or person. On or before the date of a
Change in Control, the Company shall furnish the Trustee with calculations and
supporting schedules showing in detail the payments required under the Agreement
in the event of the termination of each of the Director's service with the
Company immediately following the Change in Control. The Trustee shall determine
amounts due under this Agreement in a manner consistent with these calculations
and supporting schedules. In connection with the exercise of the duties,
responsibilities, power and discretion of the Trustee under this Agreement, the
Trustee may employ legal counsel to aid its determinations and shall be fully
protected under Section 8.7 in relying upon the advice of counsel in making such
determinations.
8.3 If all or any part of the Trust assets are at any time
attached, garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of
16
any such property shall be stayed or enjoined by any court order, or in case any
order, judgment or decree shall be made or entered by a court affecting such
property or any part of such property, then and in any of such events the
Trustee shall be authorized, in its sole discretion, to rely upon and comply
with any such order, judgment or decree, and it shall not be liable to the
Company or any Trust Beneficiary by reason of such compliance even though such
order, judgment or decree subsequently may be reversed, modified, annulled, set
aside or vacated.
8.4 The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a
direction, request, or approval given by the Company or any Director or other
Trust Beneficiary contemplated by and complying with the terms of this
Agreement. The Trustee shall discharge its responsibility for the investment,
management and control of the Trust assets solely in the interest of the Trust
Beneficiaries and for the exclusive purpose of assuring that, to the extent of
available Trust assets, and in accordance with the terms of this Agreement, all
payments of Benefits are made when due to the Trust Beneficiaries.
8.5 The Trustee may consult with legal counsel (who shall not
be counsel for the Company) to be selected by it.
17
8.6 The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its duties
(including, but not limited to, the fees and expenses of counsel, accountants
and others incurred pursuant to Section 8.5 or 8.11) and shall be paid
reasonable fees for the performance of such duties in the manner provided by
Section 8.7.
8.7 The Company agrees to indemnify and hold harmless the Trustee
from and against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of counsel to
the Trustee and any taxes imposed on the Trust assets or income of the Trust)
arising out of or in connection with the performance by the Trustee of its
duties, other than such damages, losses, claims or expenses arising out of the
Trustee's gross negligence or willful misconduct. The Trustee shall not be
required to undertake or to defend any litigation arising in connection with
this Agreement unless it be first indemnified by the Company against its
prospective costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses), and the Company agrees to indemnify the Trustee
and be primarily liable for such costs, expenses, and liabilities. Any amount
payable to the Trustee under Section 8.6 or this Section 8.7 shall be paid by
the Company promptly upon demand by the Trustee or, in the event that the
Company fails to make such payment within 30 days of such demand, from the Trust
assets. In the event that payment is made to the Trustee from the Trust assets,
the Trustee shall promptly notify the Company in writing of the amount of such
payment. The
18
Company agrees that, upon receipt of such notice, it will deliver to the Trustee
to be held in the Trust an amount in cash equal to any payments made from the
Trust assets to the Trustee pursuant to Section 8.6 or this Section 8.7. The
failure of the Company to transfer any such amount shall not in any way impair
the Trustee's right to indemnification, reimbursement and payment pursuant to
Section 8.6 or this Section 8.7.
8.8 The Trustee may vote any stock or other securities and
exercise any right appurtenant to any stock, other securities or other property
it holds, either in person or by general or limited proxy, power of attorney or
other instrument.
8.9 The Trustee may hold securities in bearer form and may
register securities and other property held in the Trust fund in its own name or
in the name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, and deposit, or arrange for deposit of, property with any
depository; provided that the books and records of the Trustee shall at all
times show that all such securities are part of the assets of the Trust.
8.10 The Trustee may exercise all rights appurtenant to any
letter of credit made payable to the Trustee of the Trust for the benefit of the
Trust in accordance with the terms of such letter of credit.
8.11 The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals, who may be
agents, accountants, actuaries, investment advisors, financial consultants, or
otherwise act in a
19
professional capacity, as the case may be, for the Company or with respect to
the Plan, to assist the Trustee in performing any of its duties.
8.12 The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law unless expressly provided otherwise in
this Agreement.
8.13 Notwithstanding any other provision of this Agreement, in
the event of the termination of the Trust, or the resignation or discharge of
the Trustee, the Trustee shall have the right to a settlement of its accounts in
accordance with the procedures set forth in Section 7.1, which may be made, at
the option of the Trustee, either (a) by a judicial settlement in a court of
competent jurisdiction, or (b) by agreement of settlement, release and indemnity
from the Company to the Trustee.
IX. AMENDMENTS, ETC., TO PLAN AND EXHIBITS
--------------------------------------
9.1 On or after the date of a Change of Control, the provisions
of this Section 9.1 shall apply.
9.1.1 Not later than 45 calendar days after the end of
each calendar year and at such other time as may in the judgment of the Company
be appropriate in view of a change in circumstances, the Company and each
Director shall agree upon and furnish any amendment to Exhibit C (but only with
respect to such Director's Benefits) as shall be required to reflect:
(a) any required change in the amounts of Benefits as a
result of any change in such Director's retainer (or otherwise) during the prior
calendar year, or
20
(b) any amendment, restatement or other change in or to the
Plan (Exhibit B), or agreements to amendments to such Exhibit B and Exhibit C
shall be furnished to the Trustee by the Company or the Directors and thereafter
be deemed to be a part of this Agreement; provided, however, that in the event
of the failure of the Company and any Director to reach such agreement, the
provisions of Section 9.1.2 shall control.
9.1.2 The Company shall, and any Trust Beneficiary may,
promptly furnish the Trustee true and correct copies of any amendment,
restatement or successor to the Plan. Upon written notification to the Trustee
by the Company or any Director of the failure of the Company and such Director
to agree as provided in Section 9.1.1, the Trustee shall, to the extent
necessary in the sole judgment of the Trustee, (a) recompute the amount payable
as set forth in Exhibit C to any Trust Beneficiary, and (b) notify the Company
and the Director in writing of its computations. In making these determinations,
the Trustee may employ legal counsel and shall be fully protected under Section
8.7 in relying upon the advice of counsel in relying on such determinations.
Thereafter, this Agreement and all Exhibits shall be amended to the extent of
such Trustee determinations without further action; provided, however, that the
failure of the Company to furnish any such amendment, restatement, successor or
compensation information shall in no way diminish the rights of any Trust
Beneficiary.
9.2 Amendments to Exhibit A (and directly corresponding
amendments to Exhibit B) that modify one or more lists of
21
Directors shall be made only in accordance with Section 1.6. No amendment to
Exhibit A (and no amendment to Exhibit B that would delete a Director may be
made on or after the date on which a Change of Control occurs, except in
accordance with Article XI.
X. REPLACEMENT OF TRUSTEE
----------------------
10.1 The Trustee may resign and be discharged from its duties
after providing not less than 90 days' notice in writing to the Company. On or
after the date of a Change of Control, the Trustee shall also provide notice of
its resignation to all of the Directors. Prior to the date of a Change of
Control, the Trustee may be removed at any time upon notice in writing by the
Company. On or after such date, removal shall also require the agreement of the
Directors. Prior to the date of a Change of Control, a replacement or successor
trustee shall be appointed by the Company. On or after such date, appointment
shall also require the agreement of the Directors. No such removal or
resignation shall become effective until the effectiveness of the acceptance of
the Trust by a successor trustee designated in accordance with this Article X.
If, after making reasonable efforts to appoint a successor trustee, the Trustee
has been unable to do so, the Trustee shall petition a court of competent
jurisdiction to appoint a successor trustee. Upon the acceptance of the Trust by
a successor trustee, the Trustee shall release all of the moneys and other
property in the Trust to its successor, who after such time shall for all
purposes of this Agreement be considered to be the "Trustee." In the event of
its removal or resignation, the Trustee shall duly file with the
22
Company and, after a Change of Control, all of the Directors, a written
statement or statements of accounts and proceedings as provided in Section 7.1
for the period since the last previous accounting of the Trust.
10.2 For purposes of Section 10.1 and Section 11.2, a Director
shall not participate if all payments of Benefits then currently due or payable
in the future have been made to such Director.
XI. AMENDMENT OR TERMINATION OF AGREEMENT
-------------------------------------
11.1 This Agreement may be amended at any time and to any extent
by a written instrument executed by the Trustee and the Company; provided,
however, that no amendment shall have the effect of altering Section 11.2.
11.2 The Trust shall terminate on or after a Change of Control
upon the earliest to occur of (i) a joint determination by the Trustee and the
Directors made on or after the fifth anniversary of the date of a Change of
Control that no Trust Beneficiary is or will be entitled to any further payment
of Benefits or (ii) such time as the Trustee shall have received consents from
all of the Directors to the termination of this Agreement. Notwithstanding the
previous sentence, if payments under the Plan with respect to any Trust
Beneficiary are the subject of litigation or arbitration, the Trust shall not
terminate and the funds held in the Trust with respect to such Trust Beneficiary
shall continue to be held by the Trustee until the final resolution of such
litigation or arbitration. The Trustee may assume that the Plan is not the
subject of such
23
litigation or arbitration unless the Trustee receives written notice from a
Trust Beneficiary or the Company with respect to such litigation or arbitration.
The Trustee may rely upon written notice from a Trust Beneficiary as to the
final resolution of such litigation or arbitration.
11.3 Upon a termination of the Trust as provided in Section 11.2,
any assets remaining in the Trust, less all payments, expenses, taxes and other
charges under this Agreement as of such date of termination, shall be returned
to the Company.
XII. GENERAL PROVISIONS
------------------
12.1 The Company shall, at any time and from time to time, upon the
reasonable request of the Trustee, provide information, execute and deliver such
further instruments and do such further acts as may be necessary or proper to
effectuate the purposes of this Trust.
12.2 Each Exhibit referred to in this Agreement shall become a part
of this Agreement and is expressly incorporated by reference.
12.3 This Agreement sets forth the entire understanding of the
parties with respect to its subject matter and supersedes any and all prior
agreements, arrangements and understandings. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives.
12.4 This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
24
12.5 In the event that any provision of this Agreement or the
application of any provision to any person or circumstances shall be determined
by a court of competent jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement, or the application of such provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected, and each provision of this Agreement shall
be valid and enforced to the maximum extent permitted by law.
12.6 (a) The preamble to this Agreement shall be considered a part
of the agreement of the parties as if set forth in a section of this Agreement.
(b) The headings and table of contents contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
12.7 The right of any Trust Beneficiary to any benefit or to any
payment may not be anticipated, assigned (either at law or in equity), alienated
or subject to attachment, garnishment, levy, execution or other legal or
equitable process except as required by law. Any attempt by any Trust
Beneficiary. to anticipate, alienate, assign, sell, transfer, pledge, encumber
or charge the same shall be void. The Trust assets shall not in any manner be
subject to the debts, contracts, liabilities, engagements or torts of any Trust
Beneficiary.
12.8 Any dispute between the Directors and the Company or the
Trustee as to the interpretation or application of the
25
provisions of this Agreement and amounts payable may, at the election of any
party to such dispute (or, if more than one Director is such a party, at the
election of two-thirds of such Directors), be determined by binding arbitration
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court of
competent jurisdiction. All fees and expenses of such arbitration shall be paid
by the Trustee and considered an expense of the Trust under Section 8.7.
12.9 Each Director is an intended beneficiary under this Trust, and
as an intended beneficiary shall be entitled to enforce all terms and provisions
with the same force and effect as if such person had been a party to the
Agreement.
12.10 The Trustee shall be permitted to withhold from any payment
due to a Director the amount required by law to be so withheld under federal,
state and local withholding requirements or otherwise, and shall pay over to the
appropriate government authority the amounts so withheld. The Trustee may rely
on reasonable instructions from the Company as to any required withholding and
shall be fully protected under Section 8.7 in relying on such instructions.
12.11 Notwithstanding any other provision, the parties' respective
rights and obligations under Section 12.9 shall survive any termination or
expiration of this Agreement.
XIII. NOTICES
-------
13.1 For all purposes of this Agreement, any communication,
including without limitation, any notice, consent, report, demand
26
or waiver required or permitted to be given shall be in writing and, unless
otherwise provided in this Agreement, shall be deemed to have been duly given
when hand delivered or dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail simultaneously dispatched), or two business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or one business day after having been
dispatched by a nationally recognized overnight courier service to the
appropriate party at the address specified below:
IF TO THE COMPANY, TO: Cleveland-Cliffs Inc
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Secretary
IF TO THE TRUSTEE, TO: Key Trust Company of Ohio, N.A.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention:
IF TO A DIRECTOR, TO: the address of such Director as
listed next to such Director's
name on Exhibit A,
provided, however, that if any party or such party's successors shall have
designated a different address by notice to the other parties, then to the last
address so designated.
IN WITNESS WHEREOF, the Company and the Trustee caused this
Agreement to be executed on its behalf as of the date first above written.
Attested CLEVELAND-CLIFFS INC
By: /s/ X.X. Xxxxxxx By: /s/ X.X. Xxxxx
---------------------------- -------------------------------
Its: Secretary Its: Vice President
------------------------ ---------------------------
27
Attested Key Trust Company of Ohio, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxx
----------------------------- --------------------------------
Its: Vice President Its: Vice President
------------------------- ----------------------------
28
EXHIBIT A
11/20/96
CLEVELAND-CLIFFS INC
--------------------
NONEMPLOYEE DIRECTORS' SUPPLEMENTAL COMPENSATION PLAN PARTICIPANTS
------------------------------------------------------------------
Xxxxxx X. Xxxxxx
Newmont Mining Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Xxxxxxx X. XxXxxxxxxx
ASARCO Incorporated
0000 Xxxxx 0xx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000X
Xxxxxx Xxxx, XX 00000
EXHIBIT B
CLEVELAND-CLIFFS INC
NONEMPLOYEE DIRECTORS' SUPPLEMENTAL COMPENSATION PLAN
WHEREAS, the Board of Directors of Cleveland-Cliffs Inc (the "Board of
Directors") has determined that the "Participants" (as defined in Section 2.1)
have, individually and collectively, made and may continue to make an essential
contribution to the profitability, growth, financial strength and overall
guidance of Cleveland-Cliffs Inc (the "Company") and
WHEREAS, the Company desires to provide an incentive to attract and
maintain the highest quality of individuals to serve as directors (the
"Directors");
NOW, THEREFORE, by approval of the Board of Directors of the Company,
the Company hereby establishes the CLEVELAND-CLIFFS INC NONEMPLOYEE DIRECTORS'
SUPPLEMENTAL COMPENSATION PLAN (the "Plan") to be effective as of July 1, 1995,
which Plan shall contain the following terms and conditions:
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1 THE PLAN. The Company, intending that the Participants and
Directors shall rely thereon, hereby establishes the Plan.
1.2 AMENDMENT, SUSPENSION OR TERMINATION OF PLAN. The Company shall not
amend, suspend or terminate the Plan or any provision hereof, including without
limitation this Section 1.2, without the prior approval of a majority of the
Directors present at a meeting of the Board of Directors at which a "quorum" (as
defined in the Regulations of the Company) is present. Anything contained in the
Plan to the contrary notwithstanding, and notwithstanding any amendment,
suspension or termination (hereinafter collectively referred to in this Section
1.2 as an "Amendment") of the Plan, no right under the Plan of any person who
was a
Participant or a Director immediately prior to any Amendment shall in any way be
amended, modified, compromised, terminated or suspended without the prior
written consent of such person. Without such consent, the rights under the P!an
of a Participant and Director withholding such consent shall be as set forth in
the Plan in the form that the Plan existed on the date such person's rights
under the Plan vested, as set forth in Section 2.2 (as such Section 2.2 may be
amended by any Amendment consented to by such person).
ARTICLE II
PARTICIPANTS
2.1 PARTICIPANTS. Each Director who has never been an employee or
officer of the Company and who first serves as a Director on or after July 1,
1995 (an "Outside Director") shall become a Participant in the Plan upon the
completion of five years of continuous service as a Director.
2.2 VESTING. The rights under the Plan of all persons who are Directors
and who first serve as such on or after July 1, 1995 shall vest immediately upon
their election as Directors; PROVIDED, HOWEVER, that the right of any Director
to receive any benefits pursuant to Article III of the Plan shall be subject to
the qualification of such Director as a Participant hereunder and to such
Director's satisfaction of the requirements of Article III with respect to
benefit entitlement.
2.3 PARTICIPATION UPON CHANGE OF CONTROL. Anything contained herein to
the contrary notwithstanding, in the event of a "Change of Control" (as
hereinafter defined), each Outside Director shall become a Participant in the
Plan. A "Change of Control" shall mean the occurrence of any of the following
events:
-2-
(a) The Company shall merge into itself, or be merged or consolidated
with, another corporation and as a result of such merger or consolidation less
than 70% of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of the
Company as the same shall have existed immediately prior to such merger or
consolidation;
(b) The Company shall sell or otherwise transfer all or substantially
all of its assets to any other corporation or other legal person, and
immediately after such sale or transfer less than 70% of the combined voting
power of the outstanding voting securities of such corporation or person is held
in the aggregate by the former shareholders of the Company as the same have
existed immediately prior to such sale or transfer;
(c) A person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on July 1,1995) of the Securities Exchange Act of 1934,
shall become the beneficial owner (as defined in Rule 13d-3 of the Securities
and Exchange Commission pursuant to the Securities and Exchange Act of 1934) of
30% or more of the outstanding voting securities of the Company (whether
directly or indirectly); or
(d) During any period of three consecutive years, individuals who at
the beginning of any such period constitute the Board of Directors of the
Company cease, for any reason, to constitute at least a majority thereof, unless
the election, or the nomination for election by the shareholders of the Company,
of each Director first elected during any such period was approved by a vote of
at least one-third of the Directors of the Company who are Directors of the
Company on the date of the beginning of any such period.
-3-
ARTICLE III
POST-RETIREMENT INCOME
3.1 POST-RETIREMENT INCOME. Commencing upon a Participant's retirement
from the Board of Directors (i) with at least five years of continuous service
as a Director, or (ii) after a Change of Control (hereinafter collectively
referred to as the Participant's "Commencement Date"), the Company will pay
quarterly to the Participant an amount equal to Fifty Percent (50%) of the
stated quarterly Board of Directors retainer fee for service as an Outside
Director which is in effect on the Participant's retirement; PROVIDED, HOWEVER,
that such amount shall only be payable to a Participant during his "Payment
Period" (as defined in Section 3.2); PROVIDED FURTHER, that payment of such
amount shall not commence prior to the Participant's 65th birthday, except in
the case of disability of the Participant; and, PROVIDED FURTHER, that if a
Participant's Commencement Date is on account of an event described in clause
(ii) of this Section 3.1, such amount shall be reduced for any Participant with
fewer than five years of continuous service as an Outside Director by Twenty
Percent (20%) for each full year of continuous service less than five that such
Participant has served as an Outside Director. For purposes of this Section 3.1,
when determining the amount of an Outside Director's stated quarterly Board of
Directors retainer fee, such retainer fee shall be deemed to include the stock
component (if any, and whether restricted or unrestricted) of such fee. The
duration of post-retirement income payments described in this Section 3.1 shall
be as more fully described in Section 3.2. For purposes of this Section 3.1, the
term "retirement" of an Outside Director shall be deemed to include; (i) the
failure of the stockholders of the Company to re-elect such Outside Director;
PROVIDED, HOWEVER, that the right of any Director to receive benefits pursuant
to the provisions of this Article III shall be subject to the Director's
satisfaction of the applicable requirements of Article III with respect to
benefit entitlement, and (ii) following a Change of
-4-
Control, resignation or the failure of the stockholders of the Company to
re-elect such Outside Director.
3.2 FORM OF PAYMENT. Post-retirement income payable pursuant to Section
3.1 shall be paid to the Participant for a period equal to his years of
continuous service on the Board of Directors (the "Payment Period"). Such
post-retirement income shall be paid in cash to the Participant in equal
quarterly installments, each installment to be paid in advance on the first day
of each quarter, beginning with the quarter that begins on the first day of the
January, April, July or October coinciding with or next following such
Participant's Commencement Date. In the event a Participant who is married on
his Commencement Date dies during his Payment Period and prior to the
distribution of all post-retirement income to which he is entitled hereunder,
the remaining post-retirement income installment payments shall be paid to his
"Surviving Spouse" (as hereinafter defined) for the remainder of the Payment
Period or, if earlier, until the death of such Surviving Spouse. For purposes of
this Section 3.2, "Surviving Spouse" means the person to whom a Participant is
legally married on his Commencement Date. In the event a Participant who is not
married on his Commencement Date dies during his Payment Period and prior to the
distribution of all post-retirement income to which he is entitled hereunder,
the last payment made hereunder shall be the payment made to the Participant for
the quarter during which his death occurs.
-5-
ARTICLE IV
GENERAL PROVISIONS
4.1 SUCCESSORS AND BINDING AGREEMENTS.
(a) The Company shall require any successer (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business and/or assets of the Company expressly
to assume and agree to perform hereunder the Plan in the same manner and to the
same extent the Company would be required to perform if no such succession had
taken place. The Plan shall be binding upon and inure to the benefit of the
Company and any successor of or to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed to be
the "Company" for purposes of this Plan), but shall not otherwise be
assignable or delegatable by the Company.
(b) The Plan shall inure to the benefit of and be enforceable by each
of the Participants or Directors and his respective personal or legal
representatives, executors, administrators, successors, heirs, distributees
and/or legatees.
(c) Neither the Company nor any Participant or Director hereunder shall
assign, transfer or delegate the Plan or any rights or obligations hereunder,
except as expressly provided in Section 4.1(a). Without limiting the generality
of the foregoing, no right or interest under the Plan of a Participant or
Director (or of any person claiming under or through any of them) shall be
assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner
be liable for or subject to the debts or liabilities of any such Participant or
Director or designated beneficiary. If any Participant or Director or designated
beneficiary shall attempt to or shall transfer, assign,
-6-
alienate, anticipate, sell, pledge or otherwise encumber his benefits hereunder
or any part thereof, or if by reason of his bankruptcy or other event occurring
at any time such benefits would devolve upon anyone else or would not be enjoyed
by him, then the Company, acting through the Board Affairs Committee of the
Board of Directors, in its discretion, may terminate his interest in any such
benefit to the extent the Company considers it necessary or advisable in order
to prevent or limit the effects of such occurrence. Such termination shall be
affected by filing a written "termination declaration" with the Plan's records
and by making reasonable efforts to deliver a copy of such "termination
declaration" to the Participant or Director or designated beneficiary (the
"Terminated Participant") whose interest is adversely affected.
As long as the Terminated Participant is alive, any benefits affected
by the termination shall be retained by the Company and, in the Company's sole
and absolute judgment, may be paid to or expended for the benefit of the
Terminated Participant, his spouse, his children or any other person or persons
in fact dependent upon him in such a manner as the Company shall deem proper.
Upon the death of the Terminated Participant, all benefits withheld from him
and not paid to others in accordance with the preceding sentence shall be paid
to the Terminated Participant's then living descendants, including adopted
children, per stirpes, or, if there are none then living, to his estate.
4.2 NOTICES. For all purposes of this Plan, all communications provided
for herein shall be in writing and shall be deemed to have been duly given when
delivered on five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to a Participant at his principal residence,
or to such other address as any party may have furnished to the other in writing
and
-7-
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
4.3 FORFEITURE OF POST-RETIREMENT INCOME. No post-retirement income
shall be paid to any Participant or Surviving Spouse hereunder unless the
Participant agrees (i) to be available to the Company in an unpaid advisory
capacity on and after his Commencement Date, and (ii) not to engage in any
activity adverse to the interests of the Company. In the event the Participant
breaches such agreement, no further payments to the Participant or his Surviving
Spouse shall be made hereunder. Anything contained herein to the contrary
notwithstanding, the provisions of this Section 4.3 shall not apply in the event
of a Change of Control.
4.4 GOVERNING LAW. The validity, interpretation, construction and
performance of this Plan shall be governed by the laws of the State of Ohio,
without giving effect to the principles of conflict of laws of such State.
4.5 SEVERABILITY. Each Section, subsection and lesser section of the
Plan constitutes a separate and distinct undertaking, covenant and/or provision
hereof. Whenever possible, each provision of the Plan shall be interpreted in
such manner as to be effective and valid under applicable law. In the event that
any provision of the Plan shall finally be determined to be unlawful, such
provision shall be deemed severed from the Plan, but every other provision of
the Plan shall remain in full force and effect, and in substitution for any such
provision held unlawful, there shall be substituted a provision of similar
import reflecting the original intention of the parties hereto to the extent
permissible under law.
4.6 WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under the Plan all federal, state, city and other taxes as shall be
legally required.
-8-
4.7 GENDER AND NUMBER. As used in the Plan, the singular shall include
the plural and the masculine shall include the feminine, and vice versa, all as
required by the context.
* * *
IN WITNESS WHEREOF, this Plan has been duly adopted by the Company as
of July 1, 1995.
CLEVELAND-CLIFFS INC
By /s/ M. T. Xxxxx
-------------------------------------
Chairman and Chief Executive Officer
-9-
