Exhibit 10(h)
CLEVELAND-CLIFFS INC
1987 INCENTIVE EQUITY PLAN
SECTION 1. PURPOSE.
The 1987 Incentive Performance Plan (the "Plan"), is intended to
encourage key executives and managerial employees of Cleveland-Cliffs Inc (the
"Company") and its Subsidiaries or Affiliates to become owners of Stock of the
Company in order to increase their interest in the Company's long-term success,
to provide incentive equity opportunities which are competitive with other
similarly situated corporations and to stimulate the efforts of such employees
by giving suitable recognition for services which contribute materially to the
Company's success.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries which the Board designates as an "Affiliate" for purposes
of this Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, or a
participant's willful misconduct or dishonesty, any of which is directly
and materially harmful to the business or reputation of the Company or
any Subsidiary or Affiliate.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 3 of
the Plan. If at any time a Committee shall not be in existence, then the
functions of the Committee specified in the Plan shall be exercised by
the Board.
(f) "Deferral Period" means the initial period of time during
which shares of Deferred Stock awarded pursuant to Section 8 are subject
to deferral limitations under Section 8(c).
(g) "Deferred Stock" means an award made pursuant to Section 8
of the right to receive Stock at the end of a specified deferral period.
(h) "Disability" means permanent and total disability as
determined under the Company's long term disability program.
(i) "Disinterested Person" shall have the meaning set forth in
Rule 16b-3(d)(3) as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or any successor
definition adopted by the Commission.
(j) "Early Retirement" means retirement, with the consent for
purposes of this Plan of the Committee (or any officer designated by the
Committee) at or prior to the time of retirement, from active employment
with the Company or any Subsidiary or Affiliate pursuant to the early
retirement provisions of the applicable pension plan of such employer.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(l) "Company" means Cleveland-Cliffs Inc, a corporation
organized under the laws of the State of Ohio, or any successor
corporation.
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(m) "Elective Deferral Period" means the deferral period
described in Section 8(c)(v).
(n) "Fair Market Value" means, as of any given date, the mean
between the highest and lowest quoted selling price, regular way, of the
Stock on the New York Stock Exchange or, if no such sale of Stock occurs
on the New York Stock Exchange on such date, the fair market value of
the Stock as determined by the Committee in good faith.
(o) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of
Section 422A of the Code.
(p) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(q) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary or Affiliate on or after the normal
retirement date specified in the applicable pension plan of such
employer.
(r) "Plan" means the Cleveland-Cliffs Inc 1987 Incentive Equity
Plan, as hereinafter amended from time to time.
(s) "Restriction Period" means the period of time during which
shares of Stock awarded to a participant pursuant to Sections 8(a) and
(b) remain subject to the restrictions referred to in Section 8(b).
(t) "Restricted Stock" means an award of shares of stock that is
subject to restrictions under Section 8.
(u) "Retirement" means Normal or Early Retirement.
(v) "Rule 16b-3" as promulgated and amended from time to time by
the Securities and Exchange Commission pursuant to Section 16(b) of the
Exchange Act.
(w) "Stock" means the Common Shares, par value $1.00 per share,
of the Company.
(x) "Stock Appreciation Right" means the right granted under
Section 7 to surrender to the Company all or a portion of a Stock Option
in exchange for a payment in cash or Stock.
(y) "Stock Option" or "Option" means any option to purchase
shares of Stock granted pursuant to Section 6.
(z) "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each
of the corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the
chain.
In addition, the terms "Approval Date," "Change in Control," "Potential Change
in Control" and "Change in Control Price" shall have meanings set forth in
Section 9.
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee of the
Board of Directors, which shall consist of not less than three Disinterested
Persons who are appointed by, and serve at the pleasure of, the Board.
The Committee shall have the power and authority to grant to eligible
employees Stock Options, Stock Appreciation Rights, Restricted Stock and
Deferred Stock.
In particular, the Committee shall have the authority:
(i) to select the key employees of the Company, its Subsidiaries
and Affiliates to whom Stock Options and other awards may from time to
time be granted;
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(ii) to determine whether and to what extent Stock Options,
Stock Appreciation Rights, Restricted Stock and Deferred Stock are
granted;
(iii) to determine the number of shares to be covered by each
such award granted;
(iv) to determine the terms and conditions, not inconsistent
with the terms hereof, of any award granted (including, but not limited
to, the share price and any restriction or limitation on, or any
vesting, acceleration or forfeiture waiver regarding, any award, based
on such factors and criteria as the Committee shall determine, in its
sole discretion);
(v) to determine and adjust the performance goals and
measurements applicable to performance-based Deferred Stock and
Restricted Stock awards to include or exclude the impact of
extraordinary or unusual items, events or circumstances and/or to
reflect change in applicable tax or accounting rules and other
developments;
(vi) to determine whether and under what circumstances a Stock
Option may be settled in cash, Deferred Stock and/or Restricted Stock
under Section 6(j); and
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any Stock Option or other award granted and any agreements relating
thereto; and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions hereof
shall be made in the Committee's sole discretion and shall be final and binding
on all persons.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company, its Subsidiaries and
its Affiliates (but excluding members of the Committee and any person who serves
only as a director) who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company, its Subsidiaries or
its Affiliates are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards.
The participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among those eligible.
SECTION 5. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
distribution pursuant to Stock Options or other awards hereunder shall be
750,000 shares, plus an amount of shares equal to the sum of the remaining
shares reserved for issuance and otherwise available for distribution under the
Company's Restricted Stock Plan as of , 1987 (the date on which such plan
is discontinued and superceded by the Plan). Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
Subject to Section 7(b)(iv), if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any such shares of Stock
that are subject to any Restricted Stock or Deferred Stock award granted
hereunder are forfeited or any such Option or other award otherwise terminates
without a payment being made to the participant in the form of Stock, such
shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan, in the number and option
price of shares subject to outstanding Options granted under the Plan, and in
the number
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of shares subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Board, provided that the number of shares
subject to any award shall always be a whole number. Such adjusted option price
shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right associated with any Stock Option.
SECTION 6. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Option granted under the Plan shall be in such
form as the Committee may from time to time approve and the provisions of Stock
Option awards need not be the same with respect to each optionee.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options; and (ii) Non-Qualified Stock Options (provided that Incentive
Stock Options may not be granted to employees of Affiliates). The Committee may
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify the Plan under Section 422A of the Code, or,
without the consent of the optionee(s) affected, to disqualify any Incentive
Stock Option under such Section 422A.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan, as the Committee deems appropriate:
(a) Exercise Price. The exercise price per share of Stock purchasable
under a Stock Option shall be no less than the Fair Market Value on the day
the Option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date such Option is granted and no Non-Qualified Stock
Option shall be exercisable more than ten years and one day after the date
such Option is granted.
(c) Exercise of Options. Options shall become exercisable at such time
or times and subject to such terms and conditions (including, without
limitation, installment exercise provisions) as shall be determined by the
Committee, provided, however, that, except as provided in Section 6(f) or
(g) (in the case of Disability) and Section 9, unless otherwise determined
by the Committee at or after grant, no Stock Option shall be exercisable
prior to the first anniversary date of the granting of the option. If the
Committee provides that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions
at any time in whole or in part based on performance and/or such other
factors as the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or in part
by giving written notice of exercise to the Company specifying the number
of shares to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, either by certified or bank check, or such
other instrument as may be permitted in accordance with rules or procedures
adopted by the Committee.
As determined by the Committee, at or after grant, payment in full or
in part may also be made in the form of unrestricted Stock already owned by
the optionee or, in the case of the exercise of a Non-Qualified Stock
Option, Restricted Stock or Deferred Stock subject to an award hereunder
(based in each case, on the Fair Market Value on the date the option is
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exercised, as determined by the Committee), provided, however, that, in the
case of an Incentive Stock Option, the right to make a payment in the form
of already owned shares may be authorized only at the time the Option is
granted.
If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Deferred Stock, the shares received upon the exercise of such Stock Option
shall be restricted or deferred, (as the case may be, in accordance with
the original terms of the Restricted Stock award or Deferred Stock award in
question) equal in number to the number of shares of Restricted Stock or
Deferred Stock surrendered upon the exercise of such Option.
No shares of Stock shall be transferred until full payment therefor
has been made. An optionee shall generally have the rights of a shareholder
with respect to shares subject to the Option only when the optionee has
given written notice of exercise, has paid in full for such shares and, if
requested, given the representation described in Section 12(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
At the request of an optionee, Stock purchased upon exercise of an
Option may be issued or transferred into the name of the optionee and
another person jointly with rights of survivorship.
(f) Termination by Death. Subject to Section 6(i), if an optionee's
employment by the Company or any Subsidiary or Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant, by the
legal representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such other period up
to three years as the Committee may specify) from the date of death or
until the expiration of the stated term of such Stock Option, whichever
period is shorter.
(g) Termination by Reason of Disability or Retirement. Subject to
Section 6(i), if an optionee's employment by the Company or any Subsidiary
or Affiliate terminates by reason of Disability or Retirement, any Stock
Option held by such optionee may thereafter be exercised by the optionee,
to the extent it was exercisable at the time of such termination or on such
accelerated basis as the Committee may determine at or after grant, for a
period of three years (or such shorter period as the Committee may specify
at grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter, provided, however, that, if the optionee dies within such
three-year period (or such shorter period), any unexercised Stock Option
held by such optionee shall thereafter be exercisable, to the extent to
which it was exercisable at the time of death, for a period of one year
from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability or Retirement, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422A of the Code, such Stock
Option shall thereafter be treated as a Non-Qualified Stock Option.
(h) Other Termination of Employment. Unless otherwise determined by
the Committee at or after grant, if an optionee's employment by the Company
or any Subsidiary or Affiliate terminates for any reason other than death,
Disability or Retirement, the optionee will have three months from the date
of termination to exercise any and all Stock Options that are then
exercisable, except that, if the termination was for Cause, any and all
Options shall be immediately cancelled.
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(i) Incentive Stock Option Limitations. To the extent required for
"incentive stock option" status under Section 422A of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted after 1986 are
exercisable for the first time by the optionee during any calendar year
under the Plan and any other stock option plan of the Company or any
Subsidiary or parent corporation (within the meaning of Section 425 of the
Code) or any predecessor of any such corporation, in each case after 1986
shall not exceed $100,000.
The Committee may provide at grant, to the extent permitted under
Section 422A of the Code, that, if (i) a participant's employment with the
Company or its Subsidiaries is terminated by reason of death, Disability or
Retirement and (ii) the portion of any Incentive Stock Option that is
otherwise exercisable during the post-termination period specified under
Sections 6(f), (g) or (h), applied without regard to this Section 6(i), is
greater than the portion of such Option that is exercisable as an
"incentive stock option" during such post-termination period under Section
422A, such post-termination period shall automatically be extended (but not
beyond the original option term) to the extent necessary to permit the
optionee to exercise such Incentive Stock Option either as an Incentive
Stock Option or, if exercised after the expiration of the applicable
exercise periods under Section 422A(a), as a Non-Qualified Stock Option.
The Committee is also authorized to provide at grant for a similar
extension of the post-termination exercise period in the event of a Change
in Control or a Potential Change in Control.
(j) Cashout of Option; Settlement of Spread Value in Deferred or
Restricted Stock. On receipt of written notice to exercise, the Committee
may, in its sole discretion, elect to cashout all or part of the portion of
the Stock Option(s) to be exercised with respect to Deferred or Restricted
Stock by paying the optionee an amount, in cash or Stock, equal to the
excess of the Fair Market Value of the Stock over the option price (the
"Spread Value") on the effective date of such cashout.
Cashouts relating to options held by optionees who are actually or
potentially subject to Section 16(b) of the Exchange Act shall comply with
the "window period" provisions of Rule 16b-3 referred to in Section
7(b)(ii), to the extent applicable; in addition, in the case of cashouts of
Non-Qualified Stock Options held by such optionees, the Committee may
determine Fair Market Value under the pricing rule set forth in Section
7(b)(ii)(B).
In addition, if the option agreement so provides at grant or is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the
shares of be issued with respect to (i) the Spread Value payable in the
event of a cashout of an unexercised Stock Option or (ii) the Spread Value
portion of an exercised Stock Option take the form of Deferred or
Restricted Stock, which shall be valued on the date of the cashout or
exercise on the basis of the Fair Market Value of such Deferred or
Restricted Stock determined without regard to the deferral limitations
and/or forfeiture restrictions involved.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such rights may be granted either
at or after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
except that, unless otherwise determined by the Committee at the time of
grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall not be
reduced until the
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number of shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with Section 7(b), by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee for such purposes. Upon such exercise and surrender, the optionee
shall be entitled to receive an amount determined in the manner prescribed
in Section 7(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate are
exercisable, in accordance with the provisions of Section 6 and this
Section 7 of the Plan, provided that a Stock Appreciation Right shall not
be exercisable during the first six months of its term by any optionee
except in the event of death of Disability of the optionee prior to the
expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock in
the aggregate equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the related
Stock Option multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable under
Section 6(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 3 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares of Stock
issued under the Stock Appreciation Right based on the value of the Stock
Appreciation Right.
(v) The Committee may provide, at the time of grant, that such Stock
Appreciation Right can be exercised only in the event of a Change in
Control and/or a Potential Change in Control, subject to such terms and
conditions as the Committee may specify at grant.
(vi) The Committee may also provide that, in the event of a Change in
Control and/or a Potential Change in Control, the amount to be paid upon
the exercise of a Stock Appreciation Right shall be based on the Change in
Control Price, subject to such terms and conditions as the Committee may
specify at grant.
SECTION 8. AWARDS OF RESTRICTED STOCK AND DEFERRED STOCK.
(a) Administration. Shares of Restricted Stock and/or Deferred Stock may
be issued either alone or in addition to other awards granted under the Plan.
The Committee shall determine the officers and key employees of the Company and
its Subsidiaries or Affiliates to whom, and the time or times at which, such
grants will be made, the number of shares to be awarded, the price (if any) to
be paid under Section 8(b)(i) by the recipient of a Restricted Stock award, the
time or times within which such awards may be subject to forfeiture, and all
other conditions of the awards.
The Committee may condition grants of Restricted Stock and/or Deferred
Stock upon the attainment of specified performance goals or such other factors
or criteria as the Committee may determine.
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The provisions of Restricted Stock and Deferred Stock awards need not be
the same with respect to each recipient.
(b) Restrictions and Conditions Applicable to Restricted Stock Awards.
Restricted Stock Awards shall be subject to the following restrictions and
conditions:
(i) The purchase price for shares of Restricted Stock shall be equal
to or less than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter periods as the Committee may specify at grant) after
the award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 8(b)(i).
The prospective recipient of a Restricted Stock award shall not have
any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully
executed copy thereof of the Company, and has otherwise complied with the
applicable terms and conditions of such award.
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Cleveland-Cliffs Inc 1987 Incentive Equity Plan and an
Agreement entered into between the registered owner and Cleveland-Cliffs
Inc. Copies of such Plan and Agreement are on file in the offices of
Cleveland-Cliffs Inc, Cleveland, Ohio."
The Committee may require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award,
the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(iv) Subject to the provisions of this Plan and the applicable award
agreement, during a period set by the Committee commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber shares of
Restricted Stock awarded under the Plan.
Based on service, performance and/or such other factors or criteria as
the Committee may determine, the Committee may, however, at or after grant
provide for the lapse of such restrictions in installments and/or may
accelerate or waive such restrictions in whole or in part.
(v) Except as provided in this Section 8(b), the recipient shall have,
with respect to the shares of Restricted Stock covered by any award, all of
the rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any dividends, provided, however, that
unless otherwise determined by the Committee, any dividends on such shares
shall be automatically deferred and reinvested in additional Restricted
Stock subject to the same restrictions as the underlying award, to the
extent shares are available under Section 3.
(vi) Except as otherwise provided in this Section 8(b) and in the
applicable award agreement, upon termination of a participant's employment
with the Company or any Subsidiary or Affiliate for any reason during the
Restriction Period for a given award, all shares still subject to
restriction shall be forfeited by the participant, provided, however, the
Committee may provide for waiver of the restrictions in the event of
termination of employment due to death, Disability or Retirement.
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(vii) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Subsidiary or
Affiliate is involuntarily terminated (other than for Cause), the Committee
may waive in whole or in part any or all remaining restrictions with
respect to any or all of the participant's Restricted Stock, based on such
factors and criteria as the Committee may deem appropriate.
(viii) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
unrestricted certificates for such shares shall be delivered to the
participant.
(c) Terms and Conditions Applicable to Deferred Stock Awards. Deferred
Stock Awards shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the applicable award
agreement, Deferred Stock awards may not be sold, transferred, pledged,
assigned or otherwise encumbered during the period specified by the
Committee for purposes of such award (the "Deferral Period"). At the
expiration of the Deferral Period (or the Elective Deferral Period defined
in Section 8(c)(v), where applicable), share certificates shall be
delivered to the participant, or his legal representative, in a number
equal to the number of shares covered by the Deferred Stock award.
Based on service, performance and/or such other factors or criteria as
the Committee may determine, the Committee may, however, at or after grant,
accelerate the vesting of all or any part of any Deferred Stock award
and/or waive the deferral limitations for all or any part of such award.
(ii) Unless otherwise determined by the Committee, amounts equal to
any dividends that would have been payable during the Deferral Period with
respect to the number of shares covered by a Deferred Stock award if such
shares had been outstanding shall be automatically deferred and deemed to
be reinvested in additional Deferred Stock, subject to the same deferral
limitations as the underlying award.
(iii) Except to the extent otherwise provided in this Section 8(c) and
in the applicable award agreement, upon termination of a participant's
employment with the Company or any Subsidiary or Affiliate for any reason
during the Deferral Period for a given award, the Deferred Stock covered by
such award shall be forfeited by the participant, provided, however, the
Committee may provide for accelerated vesting in the event of termination
of employment due to death, Disability or Retirement.
(iv) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Subsidiary or
Affiliate is involuntarily terminated (other than for Cause), the Committee
may waive in whole or in part any or all of the remaining deferral
limitations imposed hereunder with respect to any or all of the
participant's Deferred Stock, based on such factors and criteria as the
Committee deems appropriate.
(v) A participant may elect to further defer receipt of Deferred Stock
for a specified period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval and to such
terms as are determined by the Committee. Subject to any exceptions adopted
by the Committee, such election must generally be made at least twelve
months prior to completion of the Deferral Period for the Deferred Stock
award in question (or for the applicable installment of such an award).
(vi) Each award shall be confirmed by, and subject to the terms of, a
Deferred Stock agreement executed by the Company and the participant.
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SECTION 9. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 9(b), or
(y) a "Potential Change in Control" as defined in Section 9(c),
the Committee or the Board may provide that one or more of the following
acceleration and valuation provisions shall apply:
(i) Any or all Stock Appreciation Rights outstanding for at least six
months on the date that such Change in Control or Potential Change in
Control is determined to have occurred and any or all Stock Options awarded
under this Plan not previously exercisable and vested shall become fully
exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any or
all Restricted Stock and Deferred Stock awards shall lapse and such shares
and awards shall be fully vested.
(iii) The value of any or all outstanding Stock Options, Restricted
Stock and Deferred Stock awards shall be cashed out on the basis of the
"Change in Control Price" as defined in Section 9(d) as of the date such
Change in Control or such Potential Change in Control is determined to have
occurred or such other date as the Committee may determine prior to the
Change in Control.
(b) Definition of "Change in Control". For purposes of Section 9(a), a
"Change in Control" means the happening of any of the following:
(i) A tender offer is made and consummated for the ownership of 30% or
more of the outstanding voting securities of Cleveland-Cliffs Inc;
(ii) Cleveland-Cliffs Inc shall merge or consolidate with another
corporation and as a result of such merger or consolidation less than 75%
of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of
Cleveland-Cliffs Inc, other than affiliates (within the meaning of the
Exchange Act as in effect on the date the Plan was first approved by the
shareholders of the Company (the "Approval Date")) of any party to such
merger or consolidation, as the same shall have existed immediately prior
to such merger or consolidation;
(iii) Cleveland-Cliffs Inc shall sell substantially all of its assets
to another corporation which is not a Subsidiary; or
(iv) A person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the Approval Date) of the Exchange Act, shall
acquire 30% or more of the outstanding voting securities of
Cleveland-Cliffs Inc (whether directly, indirectly, beneficially or of
record).
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(1)(i) (as in effect on the Approval Date)
pursuant to the Exchange Act.
(c) Definition of"Potential Change in Control". For purposes of Section
9(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The entering into an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as defined in
Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or a Subsidiary or
any Company employee benefit plan) (including any trustee of such plan
acting as such trustee) of securities of the Company representing 5% or
more of the combined voting power of the Company's
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outstanding securities, and the adoption by the Board of a resolution
to the effect that a "Potential Change in Control" of the Company has
occurred for the purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 9, "Change
in Control Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Index, or paid or offered in
any bona fide transaction related to an actual or Potential Change in Control of
the Company, at the time during the preceding sixty-day period as determined by
the Committee, except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date as of which the Committee
decides to cashout such options.
SECTION 10. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right or
Deferred Stock award theretofore granted, without the optionee's or
participant's consent, or which, without the approval of the Company's
stockholders, would:
(a) except as expressly provided in the Plan, increase the total number of
shares reserved for purposes of the Plan;
(b) change the class of employees eligible to participate in the Plan;
(c) extend the maximum option period under Section 6(b) of the Plan; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent. The Committee may
also substitute new Stock Options for previously granted Stock Options,
including previously granted Stock Options having higher option prices.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
SECTION 11. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. The Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to deliver
Stock or payments hereunder consistent with the foregoing.
SECTION 12. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or Restricted Stock award under the Plan to represent to and agree
with the Company in writing that the optionee or participant is acquiring the
shares without a view to distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange
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Commission, any stock exchange upon which the Stock is then listed and any
applicable Federal or state securities law, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or an Affiliate from adopting other or additional compensation arrangements for
its employees.
(c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the optionee for Federal income tax purposes with respect
to any Stock Option or other award under the Plan, the participant shall pay to
the Company, or make any arrangements satisfactory to the Committee regarding
the payment of any Federal, state or local taxes of any kind required by law to
be withheld with respect to such amount. Unless otherwise determined by the
Company, withholding obligations may be settled with Stock, including Stock that
is part of the award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional on such
payment or arrangements, and the Company and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from the payment(s) otherwise due to the participant.
(e) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid.
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Ohio.
SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the stockholders
of the Company. Grants made prior to such stockholder approval shall be
contingent on such approval.
SECTION 14. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Restricted Stock or Deferred
Stock shall be granted pursuant to the Plan on or after the tenth anniversary of
the effective date of the Plan, but awards granted prior to such tenth
anniversary may extend beyond that date.
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