Exhibit 10(z)
CLEVELAND-CLIFFS INC
--------------------
VOLUNTARY NON-QUALIFIED
DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED AS OF DECEMBER 1, 1996)
---------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
---------
PURPOSE
-------
1.1 Statement of Purpose; Effective Date................................. 1
ARTICLE II
----------
DEFINITIONS
-----------
2.1 Account............................................................. 1
2.2 Base Salary......................................................... 1
2.3 Beneficiary......................................................... 1
2.4 Board............................................................... 2
2.5 Bonus............................................................... 2
2.6 Cash Award.......................................................... 2
2.7 Cash Dividend Benefit............................................... 2
2.8 Change in Control................................................... 2
2.9 Code................................................................ 3
2.10 Committee........................................................... 3
2.11 Company............................................................. 3
2.12 Compensation........................................................ 3
2.13 Declared Rate....................................................... 3
2.14 Deferral Account.................................................... 3
2.15 Deferral Benefit.................................................... 3
2.16 Deferred Share Award Account........................................ 3
2.17 Deferred Share Award Benefit........................................ 3
2.18 Determination Date.................................................. 3
2.19 Eligible Employee................................................... 3
2.20 Emergency Benefit................................................... 4
2.21 Employer............................................................ 4
2.22 Employment Agreement................................................ 4
2.23 Employment Agreement Contribution................................... 4
2.24 Fair Market Value................................................... 4
2.25 Matching Account.................................................... 4
2.26 Matching Amount..................................................... 4
2.27 Matching Percentage................................................. 4
2.28 Participant......................................................... 4
2.29 Participation Agreement............................................. 4
2.30 Plan................................................................ 4
2.31 Plan Year........................................................... 4
2.32 Savings Plan........................................................ 5
2.33 Selected Affiliate.................................................. 5
2.34 Share............................................................... 5
2.35 Share Award......................................................... 5
2.36 Unit................................................................ 5
ARTICLE III
-----------
Page
----
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligibility......................................................... 5
3.2 Participation....................................................... 5
3.3 Termination of Participation........................................ 6
3.4 Ineligible Participant.............................................. 6
ARTICLE IV
----------
DEFERRAL OF COMPENSATION, CASH AWARDS AND SHARE AWARDS
- ------------------------------------------------------
4.1 Deferral of Compensation............................................ 7
4.2 Matching Amounts.................................................... 7
4.3 Deferral of Cash Awards............................................. 7
4.4 Crediting Deferred Compensation, Matching Amounts,
Cash Awards and Employment Agreement
Contributions....................................................... 7
4.5 Deferral of Share Awards............................................ 8
4.6 Crediting of Deferred Share Awards.................................. 8
ARTICLE V
---------
BENEFIT ACCOUNTS
----------------
5.1 Investment of Deferral and Matching Accounts........................ 8
5.2 Determination of Account............................................ 9
5.3 Crediting of Interest............................................... 9
5.4 Determination of Deferred Share Award Account....................... 9
5.5 Crediting of Dividend Equivalents................................... 10
5.6 Statements.......................................................... 10
5.7 Vesting of Account.................................................. 10
ARTICLE VI
----------
PAYMENT OF BENEFITS
-------------------
6.1 Payment of Deferral Benefit on Termination of
Service or Death.................................................... 10
6.2 Payment of Deferred Share Award Benefit on
Termination of Service or Death..................................... 11
6.3 Emergency Benefit................................................... 11
6.4 In-Service Distribution............................................. 11
6.5 Form of Payment..................................................... 13
6.6 Commencement of Payments............................................ 14
6.7 Special Distributions............................................... 14
6.8 Small Benefit....................................................... 15
ARTICLE VII
-----------
BENEFICIARY DESIGNATION
-----------------------
7.1 Beneficiary Designation............................................. 15
7.2 Amendments.......................................................... 15
Page
----
7.3 No Designation..................................................... 15
7.4 Effect of Payment.................................................. 15
ARTICLE VIII
------------
ADMINISTRATION
--------------
8.1 Committee.......................................................... 15
8.2 Agents............................................................. 16
8.3 Binding Effect of Decisions........................................ 16
8.4 Indemnity of Committee............................................. 16
ARTICLE IX
----------
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
9.1 Amendment......................................................... 16
9.2 Termination....................................................... 16
ARTICLE X
---------
MISCELLANEOUS
-------------
10.1 Funding........................................................... 17
10.2 Nonassignability.................................................. 17
10.3 Legal Fees and Expenses........................................... 18
10.4 Withholding Taxes................................................. 18
10.5 Captions.......................................................... 19
10.6 Governing Law..................................................... 19
10.7 Successors........................................................ 19
10.8 Right to Continued Service........................................ 19
10.9 Prior Plan Provisions............................................. 19
CLEVELAND-CLIFFS INC
--------------------
VOLUNTARY NON-QUALIFIED
DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED AS OF DECEMBER 1, 1996)
---------------------------------------------
ARTICLE I
---------
PURPOSE
-------
1.1 STATEMENT OF PURPOSE; EFFECTIVE DATE. This is the
Cleveland-Cliffs Inc Voluntary Non-Qualified Deferred Compensation Plan (the
"Plan") made in the form of this Plan and in related agreements between an
Employer and certain management and highly compensated employees. The purpose of
the Plan is to provide management and highly compensated employees of the
Employers with the option to defer the receipt of a portion of their regular
compensation, bonuses or performance shares payable for services rendered to the
Employer. It is intended that the Plan will assist in attracting and retaining
qualified individuals to serve as officers and key managers of the Employers.
The Plan, originally effective as of June 1, 1989, as amended, is amended and
restated as of December 1, 1996.
ARTICLE II
----------
DEFINITIONS
-----------
When used in this Plan and initially capitalized, the following
words and phrases shall have the meanings indicated:
2.1 ACCOUNT. "Account" means the sum of a Participant's
Deferral Account and Matching Account under the Plan.
2.2 BASE SALARY. "Base Salary" means a Participant's base
earnings paid by an Employer to a Participant without regard to any increases or
decreases in base earnings as a result of an election to defer base earnings
under this Plan, or an election between benefits or cash provided under a plan
of an Employer maintained pursuant to Section 125 or 401(k) of the Code.
2.3 BENEFICIARY. "Beneficiary" means the person or persons
designated or deemed to be designated by the Participant pursuant to Article VII
to receive benefits payable under the Plan in the event of the Participant's
death.
2
2.4 BOARD. "Board" means the Board of Directors of the Company.
2.5 BONUS. "Bonus" means a Participant's annual bonus paid by
an Employer to a Participant under the Cleveland-Cliffs Inc Management
Performance Incentive Plan without regard to any decreases as a result of an
election to defer all or any portion of a bonus under this Plan, or an election
between benefits or cash provided under a plan of an Employer maintained
pursuant to Section 401(k) of the Code.
2.6 CASH AWARD. "Cash Award" means any compensation payable in
cash to an Eligible Employee for his or her services to the Company or a
Selected Affiliate pursuant to the Company's 1992 Incentive Equity Plan.
2.7 CASH DIVIDEND BENEFIT. "Cash Dividend Benefit" means an
in-service distribution described in Section 6.4(c).
2.8 CHANGE IN CONTROL. "Change in Control" means 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 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 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
3
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.
2.9 CODE. "Code" means the Internal Revenue Code of 1986, as
amended.
2.10 COMMITTEE. "Committee" has the meaning set forth in
Section 8.1.
2.11 COMPANY. "Company" means Cleveland-Cliffs Inc and any
successor thereto.
2.12 COMPENSATION. "Compensation" means the Base Salary and
Bonus payable with respect to an Eligible Employee for each calendar year.
2.13 DECLARED RATE. "Declared Rate" for any period means the
Moody's Corporate Average Bond Yield, as adjusted on the first business day of
each January, April, July and October.
2.14 DEFERRAL ACCOUNT. "Deferral Account" means the account
maintained on the books of the Employer pursuant to Article V for the purpose of
accounting for (i) the amount of Compensation that a Participant elects to defer
under the Plan, (ii) the portion of a Cash Award that a Participant elects to
defer under the Plan, and (iii) an Employment Agreement Contribution (if any)
made on behalf of a Participant.
2.15 DEFERRAL BENEFIT. "Deferral Benefit" means the benefit
payable to a Participant or his or her Beneficiary pursuant to Article VI and
based on such Participant's Account.
2.16 DEFERRED SHARE AWARD ACCOUNT. "Deferred Share Award
Account" means the account maintained on the books of the Employer for a
Participant pursuant to Article V.
2.17 DEFERRED SHARE AWARD BENEFIT. "Deferred Share Award
Benefit" means the benefits payable in Shares to a Participant or his or her
Beneficiary pursuant to Article V and based on such Participant's Deferred Share
Award Account.
2.18 DETERMINATION DATE. "Determination Date" means a date on
which the amount of a Participant's Account is determined as provided in Article
V. The last business day of each month and any other date selected by the
Committee shall be a Determination Date.
2.19 ELIGIBLE EMPLOYEE. "Eligible Employee" means a senior
corporate officer of the Company or a full-time salaried
4
employee of an Employer who has a Management Performance Incentive Plan Salary
Grade EX-28 or above.
2.20 EMERGENCY BENEFIT. "Emergency Benefit" has the meaning set
forth in Section 6.3.
2.21 EMPLOYER. "Employer" means, with respect the Participant,
the Company or the Selected Affiliate which pays such Participant's
Compensation.
2.22 EMPLOYMENT AGREEMENT. "Employment Agreement" means a
written agreement between an Employer and an Eligible Employee that provides for
the deferral of compensation, and that may also provide for vesting, the
crediting of earnings and other terms and conditions with respect to such
deferred compensation.
2.23 EMPLOYMENT AGREEMENT CONTRIBUTION. "Employment
Agreement Contribution" means any amount contributed to the Plan by an Employer
pursuant to an Employment Agreement.
2.24 FAIR MARKET VALUE. "Fair Market Value" means the average
of the highest and lowest sales prices of a Share on the specified date (or, if
no Share was traded on such date, on the next preceding date on which it was
traded) as reported in The Wall Street Journal.
2.25 MATCHING ACCOUNT. "Matching Account" means the account
maintained on the books of an Employer pursuant to Article V for the purpose of
accounting for the Matching Amount for each Participant.
2.26 MATCHING AMOUNT. "Matching Amount" means the amount
credited to a Participant's Matching Account under Section 4.3.
2.27 MATCHING PERCENTAGE. "Matching Percentage" means the
matching contribution percentage in effect for a specific Plan Year under the
Savings Plan.
2.28 PARTICIPANT. "Participant" means any Eligible Employee who
elects to participate by filing a Participation Agreement as provided in Section
3.2.
2.29 PARTICIPATION AGREEMENT. "Participation Agreement" means
the agreement filed by a Participant, in the form prescribed by the Committee,
pursuant to Section 3.2.
2.30 PLAN. "Plan" means the Cleveland-Cliffs Inc Voluntary
Non-Qualified Deferred Compensation Plan, as amended from time to time.
2.31 PLAN YEAR. "Plan Year" means a twelve-month period
commencing January 1 and ending the following December 31.
5
2.32 SAVINGS PLAN. "Savings Plan" means, with respect to a
Participant, one or more of the Cliffs and Associated Employers Salaried
Employees Supplemental Retirement Savings Plan and the Northshore Mining Company
and Silver Bay Power Company Retirement Savings Plan for which he or she is
eligible to contribute.
2.33 SELECTED AFFILIATE. "Selected Affiliate" means (1) any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the chain owns or
controls, directly or indirectly, stock possessing not less than 50 per cent of
the total combined voting power of all classes of stock in one of the other
corporations, or (2) any partnership or joint venture in which one or more of
such corporations is a partner or venturer, each of which shall be selected by
the Committee.
2.34 SHARE. "Share" means a share of common stock of the
Company.
2.35 SHARE AWARD. "Share Award" means any compensation payable
in Shares to an Eligible Employee for his or her services to the Company or a
Selected Affiliate pursuant to the Company's 1992 Incentive Equity Plan.
2.36 UNIT. "Unit" means an accounting unit equal in value to
one (1) Share. The number of Units included in any Deferred Share Award Account
shall be adjusted as appropriate to reflect any stock dividend, stock split,
recapitalization, merger or other similar event affecting Shares.
ARTICLE III
-----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 ELIGIBILITY. Eligibility to participate in the Plan for any
Plan Year with respect to deferral of Compensation is limited to those Eligible
Employees who have elected to make the maximum elective contributions permitted
them under the terms of the Savings Plan for such Plan Year. Any Eligible
Employee is eligible to participate in the Plan for any Plan Year with respect
to deferral of a Cash Award and/or a Share Award.
3.2 PARTICIPATION. Participation in the Plan shall be limited
to Eligible Employees who elect to participate in the Plan by filing a
Participation Agreement with the Committee, or on whose behalf an Employment
Agreement Contribution is made to the Plan by an Employer. A properly completed
and executed Participation Agreement shall be filed on or prior to the December
31 immediately preceding the Plan Year in which the Participant's participation
in the Plan will commence. The election to participate shall be effective on the
first day of
6
the Plan Year following receipt by the Committee of the Participation Agreement.
In the event that an Eligible Employee first becomes eligible to participate in
the Plan or first commences employment during the course of a Plan Year, a
Participation Agreement shall be filed with the Committee not later than 30 days
following his eligibility date or date of employment. Each Participation
Agreement shall be effective only with regard to (i) Compensation earned and
payable following the later of the effective date of the Participation Agreement
or the date the Participation Agreement is filed with the Committee, and (ii) a
Cash Award and/or a Share Award the payment of which, if subsequently earned, is
not earlier than the beginning of the second Plan Year following the date the
Participation Agreement is filed with the Committee.
3.3 TERMINATION OF PARTICIPATION. A Participant may elect to
terminate his or her participation in the Plan by filing a written notice
thereof with the Committee. The termination shall be effective at any time
specified by the Participant in the notice but (i) with respect to deferral of
Compensation not earlier than the first day of the Plan Year immediately
succeeding the Plan Year in which such notice is filed with the Committee, and
(ii) with respect to deferral of a Cash Award and/or a Share Award, only with
respect to a Cash Award and/or a Share Award which becomes vested not earlier
than the last day of the Plan Year which next follows the Plan Year in which
such notice is filed with the Committee. Amounts credited to such Participant's
Account or Deferred Share Award Account with respect to periods prior to the
effective date of such termination shall continue to be payable pursuant to,
receive interest on (where applicable), and otherwise governed by, the terms of
the Plan. Notwithstanding any other provision of this Article III, a Participant
who is actively employed by the Employer and who elects a distribution pursuant
to Section 6.7 shall immediately terminate his or her participation in the Plan
for the balance, if any, of the Plan Year during which the Participant's
election is submitted to the Committee and for the next two Plan Years.
3.4 INELIGIBLE PARTICIPANT. Notwithstanding any other
provisions of this Plan to the contrary, if the Committee determines that any
Participant may not qualify as a "management or highly compensated employee"
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or regulations thereunder, the Committee may determine, in
its sole discretion, that such Participant shall cease to be eligible to
participate in this Plan. Upon such determination, the Employer shall make an
immediate lump sum payment to the Participant equal to the vested amount
credited to his Account and Deferred Share Award Account. Upon such payment no
benefit shall thereafter be payable under this Plan either to the Participant or
any Beneficiary of the Participant, and all of the Participant's elections as to
the time and manner of payment
7
of his or her Account and Deferred Share Award Account will be deemed to be
cancelled.
ARTICLE IV
----------
DEFERRAL OF COMPENSATION, CASH AWARDS AND SHARE AWARDS
------------------------------------------------------
4.1 DEFERRAL OF COMPENSATION. With respect to each Plan Year, a
Participant may elect to defer a specified dollar amount or percentage of his or
her Compensation, provided the amount of Compensation the Participant elects to
defer under this Plan and the Savings Plan shall not exceed, in the aggregate,
the sum of 25% (50% effective January 1, 1997) of his or her Base Salary net of
such Participant's pretax elective deferrals under the Savings Plan, if any,
plus 100% of his or her Bonus. A Participant may choose to have amounts of
Compensation deferred under this Plan deducted from his or her Base Salary,
Bonus or a combination of both. A Participant may change the dollar amount or
percentage of his or her Compensation to be deferred by filing a written notice
thereof with the Committee. Any such change shall be effective as of the first
day of the Plan Year immediately succeeding the Plan Year in which such notice
is filed with the Committee. Notwithstanding the foregoing, any Employment
Agreement Contribution shall be deferred in accordance with the terms of the
Employment Agreement.
4.2 MATCHING AMOUNTS. An Employer shall provide Matching
Amounts under this Plan with respect to each Participant who is eligible to be
allocated matching contributions under the Savings Plan. The total Matching
Amounts under this Plan on behalf of a Participant for each Plan Year shall not
exceed (i) the Matching Percentage of the Compensation deferred by a Participant
under Section 4.1, up to a maximum of 7% of Compensation, less (ii) the Employer
matching contributions allocated to the Participant under the Savings Plan for
such Plan Year.
4.3 DEFERRAL OF CASH AWARDS. A Participant may elect to defer
all or a specified dollar amount or percentage of his or her Cash Award with
respect to a Plan Year, to be credited to his or her Deferral Account. A
Participant may change the dollar amount or percentage of his or her Cash Award
to be deferred by filing a written notice thereof with the Committee, which
shall be effective only with respect to Cash Awards which become vested not
earlier than the last day of the Plan Year which next follows the Plan Year in
which such notice is filed with the Committee.
4.4 CREDITING DEFERRED COMPENSATION, MATCHING AMOUNTS, CASH
AWARDS AND EMPLOYMENT AGREEMENT CONTRIBUTIONS.
(a) The amount of Compensation that a Participant elects to
defer shall be credited by the Employer to the
8
Participant's Deferral Account as of the time such Compensation
would otherwise become payable to the Participant.
(b) The amount of the Employment Agreement Contribution (if
any) contributed for a Participant shall be credited by the Employer to
the Participant's Deferral Account in accordance with the terms of the
Employment Agreement.
(c) The amount of any Cash Award that a Participant elects to
defer shall be credited to the Participant's Deferral Account as of the
time such Cash Award would otherwise become payable to the Participant.
(d) The Matching Amount under the Plan for each Participant
shall be credited by the Employer to the Participant's Matching Account
at the same time that matching contributions are allocated under the
Savings Plan.
4.5 DEFERRAL OF SHARE AWARDS. A Participant may elect to defer
all or a specified number of Shares, or percentage of his or her Share Award
with respect to a Plan Year, to be credited to his or her Deferred Share Award
Account in Units. A Participant may change the percentage of his or her Share
Awards to be deferred by filing a written notice thereof with the Committee,
which shall be effective only with respect to Share Awards which become vested
not earlier than the last day of the Plan Year which next follows the Plan Year
in which such notice is filed with the Committee. No fractional Shares shall be
deferred, but the number of Shares deferred shall be rounded down to the nearest
whole Share.
4.6 CREDITING OF DEFERRED SHARE AWARDS. The number of Shares in
a Share Award or percentage of Share Awards that a Participant elects to defer
shall be credited to the Participant's Deferred Share Award Account in Units as
of the time such Share Award would otherwise become payable to the Participant.
The number of Units credited to the Participant's Deferred Share Award Account
shall be equal to the number of Shares of a Participant's Share Award which the
Participant has elected to defer.
ARTICLE V
---------
BENEFIT ACCOUNTS
----------------
5.1 INVESTMENT OF DEFERRAL AND MATCHING ACCOUNTS. As soon as
practicable after the crediting of any amount to a Participant's Deferral
Account or Matching Account, the Company may, in its sole discretion, direct
that the Company invest the amount credited, in whole or in part, in such
property (real,
9
personal, tangible or intangible), other than securities of the Company,
(collectively the "Investments"), as the Committee shall direct, or may direct
that the Company retain the amount credited as cash to be added to its general
assets. The Committee may, but is under no obligation to, direct the investment
of amounts credited to a Participant's Deferral Account or Matching Account in
accordance with requests made by the Participant and communicated to the
Committee. Earnings from Investments shall be credited to a Participant's
Deferral Account or Matching Account and shall be reinvested, as soon as
practicable, in the manner provided above. The Company shall be the sole owner
and beneficiary of all Investments, and all contracts and other evidences of the
Investments shall be registered in the name of the Company. The Company, under
the direction of the Committee, shall have the unrestricted right to sell any of
the Investments included in any Participant's Deferral Account or Matching
Account, and the unrestricted right to reinvest the proceeds of the sale in
other Investments or to credit the proceeds of the sale to a Participant's
Deferral Account or Matching Account as cash. Amounts credited to a
Participant's Deferral Account or Matching Account that are not invested in
Investments shall be credited to a Participant's Account as cash.
5.2 DETERMINATION OF ACCOUNT. As of each Determination Date, a
Participant's Account shall consist of the following: (i) the balance of the
Participant's Account as of the immediately preceding Determination Date, plus
(ii) the Participant's deferred Compensation, Matching Amounts, deferred Cash
Awards and Employment Agreement Contribution (if any) credited pursuant to
Section 4.4 since the immediately preceding Determination Date and any earnings
and/or income credited to such amounts pursuant to Sections 5.1 and 5.3 as of
such Determination Date, minus (iii) any losses or other diminution in the value
of assets in such Account since the immediately preceding Determination Date,
minus (iv) the aggregate amount of distributions, if any, made from such
Participant's Account since the immediately preceding Determination Date.
5.3 CREDITING OF INTEREST. As of each Determination Date, the
amounts credited to a Participant's Account as cash shall be increased by the
amount of interest earned since the immediately preceding Determination Date.
Interest shall be credited at the Declared Rate as of such Determination Date
based on the balance of the cash amounts credited to the Account since the
immediately preceding Determination Date, but after such Account has been
adjusted for any contributions or distributions to be credited or deducted for
such period. Interest for the period prior to the first Determination Date
applicable to a Participant's Account shall be deemed earned ratably over such
period.
5.4 DETERMINATION OF DEFERRED SHARE AWARD ACCOUNT. On any
particular date, a Participant's Deferred Share Award
10
Account shall consist of the aggregate number of Units credited thereto pursuant
to Section 4.6, plus any dividend equivalents credited pursuant to Section 5.5,
minus the aggregate amount of distributions, if any, made from such Deferred
Share Award Account.
5.5 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Share
Award Account shall be credited, as of the payment date of any cash dividend
paid on Shares, with additional Units equal in value to the amount of cash
dividends paid by the Company on that number of Shares equivalent to the Units
in such Deferred Share Award Account on such payment date. Such dividend
equivalents shall be valued using Fair Market Value. A Participant may elect to
convert the Units representing such dividend equivalents to cash to be credited
to his or her Deferral Account by filing a written notice thereof with the
Committee, which shall be effective only with respect to cash dividends paid
after the Plan Year in which such notice is filed with the Committee. Until a
Participant or his or her Beneficiary receives his or her entire Deferred Share
Award Account, the unpaid balance thereof credited in Units shall earn dividend
equivalents as provided in this Section 5.5, except as provided in Section
6.4(c).
5.6 STATEMENTS. The Committee shall cause to be kept a detailed
record of all transactions affecting each Participant's Account and Deferred
Share Award Account and shall provide to each Participant, within 120 days after
the close of each Plan Year, a written statement setting forth a description of
the Investments and Units in such Participant's Account and Deferred Share Award
Account and the cash balance, if any, of such Participant's Account, as of the
last day of the preceding Plan Year and showing all adjustments made thereto
during such Plan Year.
5.7 VESTING OF ACCOUNT. Subject to the provisions of any
Employment Agreement relating to an Employment Agreement Contribution (if any),
a Participant shall be 100% vested in his or her Account and Deferred Share
Award Account at all times.
ARTICLE VI
----------
PAYMENT OF BENEFITS
-------------------
6.1 Upon the earlier of (i) termination of service of the
Participant as an employee of the Employer and all Selected Affiliates, for
reasons other than death, or (ii) the death of a Participant, the Employer
shall, in accordance with this Article VI, pay to the Participant or his or her
Beneficiary, as the case may be, a Deferral Benefit equal to the balance of his
or her vested Account determined pursuant to Article V, less any amounts
previously distributed; provided,
11
however, that the Participant may by written notice filed with the Committee at
least one (1) year prior to the Participant's voluntary termination of
employment with, or retirement from, the Company and any affiliate of the
Company, whether or not such affiliate is a Selected Affiliate, elect to defer
commencement of the payment of his or her Deferral Benefit until a date selected
in such election. Any such election may be changed by the Participant at any
time and from time to time without the consent of any other person by filing a
later signed written election with the Committee; provided that any election
made less than one (1) year prior to the Participant's voluntary termination of
employment or retirement shall not be valid, and in such case payment shall be
made in accordance with the Participant's prior election, or otherwise in
accordance with the first sentence of this Section 6.1.
6.2 PAYMENT OF DEFERRED SHARE AWARD BENEFIT ON TERMINATION OF
SERVICE OR DEATH. Upon the earlier of (i) termination of service of the
Participant as an employee of the Employer and all Selected Affiliates, for
reasons other than death, or (ii) the death of a Participant, the Employer
shall, in accordance with this Article VI, pay to the Participant or his or her
Beneficiary, as the case may be, a Deferred Share Award Benefit equal to the
balance of the Units in his or her Deferred Share Award Account determined
pursuant to Article V, less any amounts previously distributed.
6.3 EMERGENCY BENEFIT. In the event that the Committee, upon
written petition of a Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency, the Employer
shall pay to the Participant, as soon as practicable following such
determination, an amount necessary to meet the emergency (the "Emergency
Benefit"), but not exceeding the aggregate balance of such Participant's vested
Deferral Account, Matching Account and Deferred Share Award Account as of the
date of such payment. For purposes of this Section 6.3, an "unforeseeable
financial emergency" shall mean an unexpected need for cash arising from an
illness, disability, casualty loss, sudden financial reversal or other such
unforeseeable occurrence. Cash needs arising from foreseeable events such as the
purchase of a house or education expenses for children shall not be considered
to be the result of an unforeseeable financial emergency. The amount of the
Deferral Benefit and Deferred Share Award Benefit otherwise payable under the
Plan to such Participant shall be adjusted to reflect the early payment of the
Emergency Benefit.
6.4 IN-SERVICE DISTRIBUTION.
(a) A Participant may elect to receive an in-service
distribution of his or her deferred Compensation, Matching Amount and
earnings thereon with respect to a Plan Year beginning at any time at
least four years after the date
12
such Compensation otherwise would have been first payable. A
Participant's election for an in-service distribution from his or her
Account with respect to a Plan Year shall be filed in writing with the
Committee before the first day of the Plan Year in which his or her
deferred Compensation otherwise would have been first payable. The
Participant may elect to receive an in-service distribution as provided
in Section 6.5(a); provided, however, that Section 6.5(c) shall not
apply to an in-service distribution. Any Deferral Benefit paid to the
Participant as an in-service distribution shall reduce the amount of
Deferral Benefit otherwise payable to the Participant under the Plan.
(b) A Participant may elect to receive an in-service
distribution of his or her deferred Share Award and earnings with
respect to a Plan Year beginning at any time at least four (4) years
after the date such deferred Share Award otherwise would have been
first payable. A Participant's election for an in-service distribution
from his or her Deferred Share Award Account with respect to a Plan
Year shall be filed in writing with the Committee not later than during
the second Plan Year preceding the date the Share Award otherwise would
have been first payable. The Participant may elect to receive such
Deferred Share Award Benefit as an in-service distribution as provided
in Section 6.5(b); provided, however, that Section 6.5(c) of the Plan
shall not apply to such an in-service distribution. Any Deferred Share
Award Benefit paid to the Participant as an in-service distribution
shall reduce the amount of Deferred Share Award Benefit otherwise
payable to the Participant under the Plan.
(c) A Participant may elect to receive an in-service
distribution of his or her deferred Cash Award and earnings with a
respect to a Plan Year beginning at any time at least four (4) years
after the date such deferred Cash Award otherwise would have been first
payable. A Participant's election for an in-service distribution from
his or her Account with respect to a Cash Award for a Plan Year shall
be filed in writing with the Committee not later during the second Plan
Year preceding the date the Cash Award otherwise would have been first
payable. The Participant may elect to receive such Deferral Benefit as
an in-service distribution as provided in Section 6.5(a); provided,
however, that Section 6.5(c) shall not apply to such an in-service
distribution. Any Deferral Benefit paid to the Participant is an
in-service distribution shall reduce the amount of Deferral Benefits
otherwise payable to the Participant under the Plan.
(d) A Participant may elect to receive an in-service
distribution of a Cash Dividend Benefit equal to the amount of the
dividend equivalent to be credited to his or her
13
Deferred Share Award Account pursuant to Section 5.5 as of the payment
date of a cash dividend on Shares. A Participant's election for a Cash
Dividend Benefit shall be filed in writing with the Committee not later
than during the second Plan Year preceding the date the dividend
equivalent otherwise would be so credited to his or her Deferred Share
Award Account.
6.5 FORM OF PAYMENT.
(a) The Deferral Benefit payable pursuant to Section 6.1,
Section 6.4(a) or Section 6.4(c) shall be paid in one of the following
forms, as elected by the Participant in his or her Participation
Agreement or by written notice as provided in subsection (c) below:
(1) Annual payments of a fixed amount which shall
amortize the vested Account balance, or the in-service
distribution portion thereof, as of the payment commencement
date elected by the Participant over a period not to exceed
fifteen years (together, in the case of each payment, with
earnings thereon credited after the payment commencement date
pursuant to Article V).
(2) A lump sum.
(3) A combination of (1) and (2) above. The
Participant shall designate the percentage payable under each
option.
Notwithstanding the foregoing, the Committee may, at any time, direct
that installment payments under (1) or (3) above shall be made
quarterly.
(b) The Deferred Share Award Benefit payable pursuant to
Section 6.2 or Section 6.4(b) shall be paid in whole Shares plus cash
equal in value to any fractional Share in one of the forms set forth in
Section 6.5(a), without interest, but with dividend equivalents
reinvested as provided in Section 5.5; subject, however, to Section
6.4(d). For the purpose of this Section 6.5(b), each distribution from
a Deferred Share Award Account shall be valued on the basis of the Fair
Market Value of the Shares on the date prior to the date payment of
such distribution is made.
(c) The Participant's election of the form of payment shall be
made by written notice filed with the Committee at least one (1) year
prior to the Participant's voluntary termination of employment with, or
retirement from, the Company and any affiliate of the Company, whether
or not such affiliate is a Selected Affiliate. Any such election
14
may be changed by the Participant at any time and from time to time
without the consent of any other person by filing a later signed
written election with the Committee; provided that any election made
less than one (1) year prior to the Participant's voluntary termination
of employment or retirement shall not be valid, and in such case
payment shall be made in accordance with the Participant's prior
election; and provided, further, that the Committee may, in its sole
discretion, waive such one (1) year period upon a request of the
Participant made while an active employee of the Company.
(d) The amount of each installment under Section 6.5(a) shall
be equal to the quotient obtained by dividing the Participant's Account
balance as of the date of such installment payment by the number of
installment payments remaining to be made to or in respect of such
Participant at the time of calculation.
(e) The Cash Dividend Benefit payable pursuant to Section
6.4(c) shall be in the form of a lump sum.
(f) If a Participant fails to make an election with respect to
his or her Account in a timely manner as provided in this Section 6.4,
distribution shall be made in ten (10) annual installments of cash or
Shares, as applicable.
(g) A Participant's Deferral Benefit and Deferred Share Award
Benefit (or the remaining portions thereof if payment to the
Participant had commenced) shall be distributed to his or her
Beneficiary in the form of a single lump sum payment following his or
her death.
6.6 COMMENCEMENT OF PAYMENTS. Commencement of payments under
Section 6.1 or Section 6.2 of the Plan shall begin as soon as practicable, and
in accordance with the payment commencement date elected by the Participant,
following receipt of notice by the Committee of an event which entitles a
Participant (or a Beneficiary) to payments under the Plan.
6.7 SPECIAL DISTRIBUTIONS. Notwithstanding any other provision
of this Article VI, a Participant, whether or not in pay status, may elect to
receive a distribution of part or all of his or her Account or Deferred Share
Award Account in one or more distributions if (and only if) the amount in either
of such accounts subject to such distribution is reduced by six percent (6%).
Any distribution made pursuant to such an election shall be made within 60 days
of the date such election is submitted to the Committee. The remaining six
percent (6%) of the portion of the electing Participant's account subject to
such distribution shall be forfeited.
15
6.8 SMALL BENEFIT. In the event the Committee determines that
the balance of the Participant's Account and Deferred Share Award Account is
less than $50,000 at the time of commencement of payments, the Employer may pay
the benefit in the form of a lump sum payment, notwithstanding any provision of
the Plan to the contrary. Such lump sum payment shall be equal to the balance of
the Participant's Account, or the portion thereof payable to a beneficiary.
ARTICLE VII
-----------
BENEFICIARY DESIGNATION
-----------------------
7.1 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person or persons as his Beneficiary to
whom payment under the Plan shall be made in the event of his or her death prior
to complete distribution to the Participant of his or her Deferral Benefit or
Deferred Share Award Benefit. Any Beneficiary designation shall be made in a
written instrument filed with the Committee and shall be effective only when
received in writing by the Committee.
7.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
7.3 NO DESIGNATION. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant's designated Beneficiary shall be deemed to be
the Participant's estate.
7.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary
(or, upon the death of a Beneficiary, to the Beneficiary's estate) shall
completely discharge the Employer's obligations under the Plan.
ARTICLE VIII
------------
ADMINISTRATION
--------------
8.1 COMMITTEE. The administrative committee for the Plan (the
"Committee") shall be those members of the Compensation Committee of the Board
who are not Participants, as long as there are at least three such members. If
there are not at least three such non-participating persons on the Compensation
Committee, the chief executive officer of the Company shall appoint other
non-participating Directors or Company officers to serve on the Committee. The
Committee shall supervise the administration and operation of the Plan, may from
time to time adopt rules and
16
procedures governing the Plan and shall have authority to construe and interpret
the Plan (including, without limitation, by supplying omissions from, correcting
deficiencies in, or resolving inconsistencies and ambiguities in, the language
of the Plan).
8.2 AGENTS. The Committee may appoint an individual, who may be
an employee of the Company, to be the Committee's agent with respect to the
day-to-day administration of the Plan. In addition, the Committee may, from time
to time, employ other agents and delegate to them such administrative duties as
it sees fit, and may from time to time consult with counsel who may be counsel
to the Company.
8.3 BINDING EFFECT OF DECISIONS. Any decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan shall be final and
binding upon all persons having any interest in the Plan.
8.4 INDEMNITY OF COMMITTEE. The Company shall indemnify and
hold harmless the members of the Committee and their duly appointed agents under
Section 8.2 against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to the Plan, except in
the case of gross negligence or willful misconduct by any such member or agent
of the Committee.
ARTICLE IX
----------
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
9.1 AMENDMENT. The Company, on behalf of itself and of each
Selected Affiliate may at any time amend, suspend or reinstate any or all of the
provisions of the Plan, except that no such amendment, suspension or
reinstatement may adversely affect any Participant's Account or Deferred Share
Award Account, as it existed as of the effective date of such amendment,
suspension or reinstatement, without such Participant's prior written consent.
Written notice of any amendment or other action with respect to the Plan shall
be given to each Participant.
9.2 TERMINATION. The Company, on behalf of itself and of each
Selected Affiliate, in its sole discretion, may terminate this Plan at any time
and for any reason whatsoever. Upon termination of the Plan, the Committee shall
take those actions necessary to administer any Accounts or Deferred Share Award
Accounts existing prior to the effective date of such termination; provided,
however, that a termination of the Plan shall not adversely affect the value of
a Participant's Account or Deferred Share Award Account, the earnings from
Investments credited to a Participant's Account under Section 5.1, the
17
interest on cash amounts credited to a Participant's Account under Section 5.3,
the crediting of dividend equivalents to a Participant's Deferred Share Award
Account under Section 5.5, or the timing or method of distribution of a
Participant's Account, or Deferred Share Award Account, without the
Participant's prior written consent.
ARTICLE X
---------
MISCELLANEOUS
-------------
10.1 FUNDING. Participants, their Beneficiaries, and their
heirs, successors and assigns, shall have no secured interest or claim in any
property or assets of the Employer. The Employer's obligation under the Plan
shall be merely that of an unfunded and unsecured promise of the Employer to pay
money in the future. Notwithstanding the foregoing, in the event of a Change in
Control, the Company shall create an irrevocable trust to hold funds to be used
in payment of the obligations of Employers under the Plan, and the Company shall
fund such trust in an amount equal to no less than the total value of the
Participants' Accounts or Deferred Share Award Accounts under the Plan as of the
Determination Date immediately preceding the Change in Control, provided that
any funds contained therein shall remain liable for the claims of the respective
Employer's general creditors.
10.2 NONASSIGNABILITY. No right or interest under the Plan of a
Participant or his or her Beneficiary (or any person claiming through or under
any of them), other than the surviving spouse of any deceased Participant, 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
Beneficiary. If any Participant or Beneficiary (other than the surviving spouse
of any deceased Participant) shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or other
event happening at any time such benefits would devolve upon anyone else or
would not be enjoyed by him or her, then the Committee, in its discretion, may
terminate his or her interest in any such benefit to the extent the Committee
considers necessary or advisable to prevent or limit the effects of such
occurrence. Termination shall be effected by filing a written "termination
declaration" with the Secretary of the Company and making reasonable efforts to
deliver a copy to the Participant or Beneficiary whose interest is adversely
affected (the "Terminated Participant").
As long as the Terminated Participant is alive, any benefits
affected by the termination shall be retained by the
18
Employer and, in the Committee's sole and absolute judgment, may be paid to or
expended for the benefit of the Terminated Participant, his or her spouse, his
or her children or any other person or persons in fact dependent upon him or her
in such a manner as the Committee shall deem proper. Upon the death of the
Terminated Participant, all benefits withheld from him or her and not paid to
others in accordance with the preceding sentence shall be disposed of according
to the provisions of the Plan that would apply if he or she died prior to the
time that all benefits to which he or she was entitled were paid to him or her.
10.3 LEGAL FEES AND EXPENSES. It is the intent of the Company
and each Selected Affiliate that no Eligible Employee or former Eligible
Employee be required to incur the expenses associated with the enforcement of
his rights under this Plan by litigation or other legal action because the cost
and expense thereof would substantially detract from the benefits intended to be
extended to an Eligible Employee hereunder. Accordingly, if it should appear
that the Employer has failed to comply with any of its obligations under this
Plan or in the event that the Employer or any other person takes any action to
declare this Plan void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Eligible Employee the benefits intended to be
provided to such Eligible Employee hereunder, the Employer irrevocably
authorizes such Eligible Employee from time to time to retain counsel of his
choice, at the expense of the Employer as hereafter provided, to represent such
Eligible Employee in connection with the initiation or defense of any litigation
or other legal action, whether by or against the Employer or any director,
officer, stockholder or other person affiliated with the Employer in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship
between the Employer and such counsel, the Employer irrevocably consents to such
Eligible Employee's entering into an attorney-client relationship with such
counsel, and in that connection the Employer and such Eligible Employee agree
that a confidential relationship shall exist between such Eligible Employee and
such counsel. The Employer shall pay and be solely responsible for any and all
attorneys' and related fees and expenses incurred by such Eligible Employee as a
result of the Employer's failure to perform under this Plan or any provision
thereof; or as a result of the Employer or any person contesting the validity or
enforceability of this Plan or any provision thereof.
10.4 WITHHOLDING TAXES. If the Employer is required to withhold
any taxes or other amounts from a Participant's deferred Compensation,
Employment Agreement Contribution, deferred Cash Award or deferred Share Award
pursuant to any state, federal or local law, such amounts shall, to the extent
possible, be withheld from the Participant's Compensation, Cash Award or Share
Award before such amounts are credited under the Plan. Any additional
withholding amount required shall be paid
19
by the Participant to the Employer as a condition to the crediting of deferred
Compensation, deferred Cash Award or deferred Share Award to the Participant's
Account and Deferred Share Award Account, respectively. The Employer may
withhold any required state, federal or local taxes or other amounts from any
benefits payable in cash or Shares to a Participant or Beneficiary.
10.5 CAPTIONS. The captions contained herein are for
convenience only and shall not control or affect the meaning or construction
hereof.
10.6 GOVERNING LAW. The provisions of the Plan shall be
construed and interpreted according to the laws of the State of Ohio.
10.7 SUCCESSORS. The provisions of the Plan shall bind and
inure to the benefit of the Company, its selected Affiliates, and their
respective successors and assigns. The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise, acquire all or substantially all of the
business and assets of the Company or a Selected Affiliate and successors of any
such corporation or other business entity.
10.8 RIGHT TO CONTINUED SERVICE. Nothing contained herein shall
be construed to confer upon any Eligible Employee the right to continue to serve
as an Eligible Employee of the Employer or in any other capacity.
10.9 PRIOR PLAN PROVISIONS. The provisions of the Plan in
effect prior to December 1, 1996 shall govern periods prior to such date.
Executed this 12th day of December, 1996.
CLEVELAND-CLIFFS INC
By: /s/ R.F. Novak
----------------------------------
Vice President-Human Resources